Coyote Blog

I am not sure I understand Kevin Drum's argument for capital controls.  He seems to be arguing that these controls are a sort of financial speed limit and making an awkward analogy to highway speed limits to justify them.

In a world where I as a taxpayer have to bail out banks, I don't have a huge problem with capital requirements for banks, though this seemingly simply topic is rife with unintended consequences -- I have seen it argued persuasively that the pre-2008 Basil capital requirements helped fuel the housing bubble by giving special preference to MBS in computing capital.  In fact, one might argue the same for the sovereign debt crisis, that by creating a huge demand for sovereign debt for bank balance sheets it fueled an unsustainable expansion in such debt.

Anyway, the point of this post was capital controls.  Drum quotes this from an IMF report:

19. Indeed, as the recent global financial crisis has shown, large and volatile capital flows can pose risks even for countries that have long been open and drawn benefits from capital flows and that have highly developed financial markets. For example, in several advanced economies, financial supervision and regulation failed to prevent unsustainable asset bubbles and booms in domestic demand from developing that were partly fueled by cheap external financing. Rather than favoring closed capital accounts, these experiences highlight the need for policymakers to remain vigilant to the risks. In particular, there is a constant need for sound prudential frameworks to manage the risks that capital inflows can give rise to, which may be exacerbated by financial innovation.

The logic, then, is that bubbles are exacerbated by inflows of foreign capital so capital controls can keep bubbles from getting worse.  I have very little knowledge of international finance, but let me test three thoughts I have on this:

1. Doesn't this cut both ways?  If bubbles can be inflated by capital inflows, can't they also be deflated by capital outflows?  Presumably, if people domestically see the bubble, they would logically look for other places to invest their money.  International investments outside of the overheated domestic market are a logical alternative, and such capital flows would act a s a safety valve to reduce pressure on the bubble.  So wouldn't capital controls just as likely make bubbles worse, by confining capital within the bubble, as make them better by preventing new capital from outside the country flowing in?
2. The implication here is that the controls would be dynamic.  In other words, some smart person in government would close the gates when a bubble starts to build and open them at other times.  But does that not presupposed the ability to see the bubble when one is in it?  Certainly there were a few who pointed out the housing bubble before 2008, but few in power did so.  And even if they had seen it, what is the likelihood that they would have pointed it out or taken action?  Who wants to be the politician who pops the bubble?  Remember the grief Greenspan got for pointing to an earlier bubble?
3. Controls on capital inflows tend to be anti-consumer.  Yeah, I know, no one in government ever seems to care when they pass protectionist laws that protect 100 tire workers at the cost of higher tires for 100 million drivers.  But limiting capital inflows would reduce the value of the dollar, and make anything imported (or made from imported parts or materials) more expensive.

Kevin Drum posts this chart with a straight face as "proof" that sea level rise is out-pacing forecasts.

I don't really think I need to even point out the problem to most of my readers, but you can see the differences in ending value is because the starting values are different.  Likely the two are drawing from different data sources with a shifted zero value.  The slopes are the same, confirmed by the fact that the 3.2 mm trend per year is well within the IPCC forecast range that was centered, if I remember right, around 3.3 mm per year.  It is also well under Al Gore's forecast, which was for 20 feet by 2100, or about 61 mm per year.

For years I have argued that Obama is leading us to a European-style corporate state rather than socialism per se (though the two have many things in common).  It seems like his defenders on the Left have figured that out, and are getting on board.

The other day, Kevin Drum seems to agree with a Washington Monthly article that defends corporatism in the name of attacking it.  In this case, it was an example from the beer industry:

Prior to the 2008 takeover, Anheuser-Busch generally accepted the regulatory regime that had governed the U.S. alcohol industry since the repeal of Prohibition. It didn’t attack the independent wholesalers in control of its supply chain, and generally treated them well. “Tough but fair” is a phrase used by several wholesale-business sources to describe their dealings with the Busch family dynasty. Everyone was making money; there was no need to rock the boat.

All that changed quickly after Anheuser-Busch lost its independence....Today, with only one remaining real competitor, MillerCoors, the pressure it can put on its wholesalers is extraordinary. A wholesaler who loses its account with either company loses one of its two largest customers, and cannot offer his retail clients the name-brand beers that form the backbone of the market. The Big Two in effect have a captive system by which to bring their goods to market.

.... So distributors are caught in an impossible bind: they either do the brewer’s bidding, including selling their businesses to favored “Anchor Wholesalers,” or they lose Anheuser-Busch InBev as a client. And if the wholesalers try to push back? Anheuser-Busch InBev will get rough.

I don't know if this is just tremendous ignorance or some sort of calculated scheming.  The article decries the growing power of beer manufacturers vis a vis liquor distributors, and wants to call this some sort of slide into corporatism.    Actually just the opposite is true -- what we see is Anheuser-Busch taking on some of the largest beneficiaries of government cronysism:  the liquor wholesalers.

The liquor distribution scheme, and resulting government enforced monopolies, created post-Prohibition have been the worst sort of corporate statism, and what is going on here is that the beer manufacturers are finally fed up with it.  Regional liquor wholesalers are generally some of the most politically powerful forces in local and state politics.  These distribution monopolies have all created multi-millionaire owners who deploy money and political clout to prevent any changes in law that might weaken their government-enforced monopoly position.  Wonder why you still can't mail order from Amazon that bottle of California Merlot -- thank the liquor wholesale lobby.  Without all this government protection of distributors, the soft drink business went through identical changes, relatively quietly, decades ago.

This whole liquor distribution scheme we have today is consistent with FDR's corporatist thinking (he was a great admirer of the economic aspects of Mussolini's fascism, and modeled the National Recovery Act after this Italian system).  But it is also thoroughly anti-consumer, and has both raised prices of alcohol to consumers as well as stifled innovation and competition.  We are living in a glorious age of incredible micro-brew choice, but this almost didn't happen.  The biggest hurdle these early pioneers had to clear was cracking this liquor distribution monopoly.

I find it incredible that a Progressive like Drum sees fit to defend such a system and castigate Anheuser-Busch for challenging it.  It is even more amazing to see him positing that anti-trust is all about protecting millionaire corporate players in one part of the supply chain from billionaire corporate players in another part.  I have said for years that anti-trust has been corrupted from protecting consumers to protecting weaker competitors, even when this protection hurts consumers  (remember, Microsoft was convicted of anti-trust violations for giving away free stuff to consumers).  I just am amazed that the Left has come so far that it has now openly adopted this view of anti-trust.

Update:  Here is another example of the Left describing market attacks on a government-protected corporation "Corporatist."  There are always beneficiaries of deregulation (consumers being the most unsung of these).  It is crazy and disingenuous for the Left to call those who win in a newly deregulated market "cronies."

Kevin Drum writes:

...for the first time that I can remember, this means that I have a personal stake in the election. It's not just that I find one side's policies more congenial in the abstract, but that one policy in particular could have a substantial impact on my life.

You see, I've never really intended to keep blogging until I'm 65. I might, of course. Blogging is a pretty nice job. But I'd really like to have a choice, and without Obamacare I probably won't. That's because I'm normal: I'm in my mid-50s, I have high blood pressure and high cholesterol, a family history of heart trouble, and a variety of other smallish ailments. Nothing serious, but serious enough that it's unlikely any insurance company would ever take me on. So if I decided to quit blogging when I turned 60, I'd be out of luck. I couldn't afford to be entirely without health insurance (the 4x multiplier that hospitals charge the uninsured would doom me all by itself), and no one would sell me an individual policy. I could try navigating the high-risk pool labyrinth, but that's a crapshoot. Maybe it would work, maybe it wouldn't.

But if Obamacare stays on the books, I have all the flexibility in the world. If I want to keep working, I keep working. If I don't, I head off to the exchange and buy a policy that suits me. No muss, no fuss.

So yes, this election matters, and it matters in a very personal way. It does to me, anyway. It's not just about gridlock as far as the eye can see.

I usually have a pretty thick skin for this type of stuff, but this got to me.  I wrote:

Great.  Those of us who are comfortable actually, you know, working to support ourselves look forward to subsidizing your future indolence.
Sorry, I am not usually that much of a snarky jerk, but really, that is what you are celebrating.  You are not celebrating some medical or scientific breakthrough that allows you to stay healthy at a lower cost.  You are celebrating a system to force other people to pay for your body's maintenance.  All so you don't have to support yourself for over a quarter of your life.

If you were to say that, "wow the health dice really rolled against me and I need help," few would begrudge you the help.  But this notion of an indolent retirement is radically new.  It is a product of our century's and our country's great wealth.  Retirement is a luxury good.  I have no problem with anyone consuming this luxury good out of their savings, but consuming it out of mine, and then crowing about it to my face, is highly irritating.

If I were a Republican, or if I had one iota of trust in them, I might write that this is what the election is about.  Since I don't have such trust, I will instead merely highlight Drum's thoughts as a good representation of modern entitled thinking.  For God sakes this guy is not even trying to use my money to escape, say, a coal mine early.  He wants my cash to escape blogging early, perhaps the cushiest job there is (as indicated by the fact that many of us do it for no compensation what-so-ever).

OK, to go along with the bad study in the last chart, I will offer up a terrible chart.  From Kevin Drum:

Drum uses this chart to hammer home the point that the current deficit is Bush's, rather than Obama's fault.  I have absolutely no problem with blaming Bush for all variety of stupid spending and handing him a share of the blame for the Federal debt.   Even using this bad chart (more in a moment), I think Obama gets a lot of the blame, though.  The highlighted bars don't really substantially move the debt until 2009 and after, on Obama's watch.   His complete lack of any effort to take on the rising debt, to pare back past spending programs (or wars, or whatever) has been unparalleled.  In fact, I think it is his absolute indifference to deficit spending and the debt levels that saddles him with a lot of the blame.

Anyway, back to the chart.  Notice that these are just a few of the many components of Federal spending, all of which are increasing in this period.  Picking out which ones "caused the debt" is not a neutral procedure.  Money is fungible.  One could just as easily substitute rising Medicare and Social Security costs (or education funding or transportation funding or government employee salaries) for any of the bars above and be just as correct.  Even if one wanted to just look at Bush actions, one would reasonably need to include the debt associated with the costs of Medicare part D, something left off this chart presumably because Drum supports that particular spending.    All this chart does is demonstrate the biases or preferences of the author, showing us which categories of spending the author most opposes (or which the author feels Obama can't be blamed for, like the down economy).

By the way, the chart's construction actually worse than this, because the chart is only "public debt" rather than total debt (for example debt bought in QE is no longer public debt).  If one looks at public debt, the total number should have crossed 100% some time in the last year, rather than the 70% or so in the chart.   So there are a lot of other things, presumably that the author likes, that are also causing total debt to rise.  But these are hidden, because presumably the Fed only buys debt created by the good spending, and the public buys all the debt created by the bad spending.

Finally, my suspicion is that some of these numbers are just plain wrong.  The chart implies Fannie, Freddie, and Tarp are only going to cause a total of 1% of GDP in debt, or about $160 billion.  That is WAY below the loss numbers that Fannie and Freddie have already acknowledged, with more to come.

I am encouraged to see this from the Left.  Kevin Drum writes, in response to a proposal for California state licensing of dog groomers:

What's unfortunate, I guess, is that this would all be unobjectionable if it were a voluntary certification program. If you want to pay more to take Fido to a certified groomer, go right ahead. If you want to save money, then don't. But critics are almost certainly right that a voluntary license would become a required license in pretty short order. After all, Vargas's proposal may be for a voluntary license right now, but that's only because he's failed to get support for a required license in the past.

What's more, if the program were voluntary I'm not sure why you'd need the state involved in the first place. If there's really a demand for this kind of certification, it seems likely that a trade association of some kind would set something up. And if there isn't, then why bother?

Right on!  I wish Drum would carry this same thinking further into other economic spheres (why are consumers powerful enough to handle dog grooming choices suddenly infantile when it comes to health care decisions) but I am encouraged none-the-less.  There is room, I think, for a left-right coalition against corporate cronyism (of which licensing is among the worst forms, helping to protect incumbent businesses against upstart competitors).  Unfortunately, such cronyism is so deeply ingrained in both Romney and Obama that it is certainly not going to happen in this election.

After years of apparently being OK with California's absurd restrictions on development and crazy environmental laws that tied most everything new up in the courts for years, Kevin Drum suddenly thinks they may be flawed now that they are slowing development he likes (wind, solar, high density housing around transit stations).  Drum is a classic technocrat, who is OK with absolute state authority as long as the state is doing what he wants it to do.  I am reminded of what I wrote technocrats 7(!) years ago:

Technocratic idealists ALWAYS lose control of the game.  It may feel good at first when the trains start running on time, but the technocrats are soon swept away by the thugs, and the patina of idealism is swept away, and only fascism is left.  Interestingly, the technocrats always cry “our only mistake was letting those other guys take control”.  No, the mistake was accepting the right to use force on another man.  Everything after that was inevitable.

I am reminded of all this because the technocrats that built our regulatory state are starting to see the danger of what they created.  A public school system was great as long as it was teaching the right things and its indoctrinational excesses were in a leftish direction.  Now, however, we can see the panic.  The left is freaked that some red state school districts may start teaching creationism or intelligent design.  And you can hear the lament – how did we let Bush and these conservative idiots take control of the beautiful machine we built?  My answer is that you shouldn’t have built the machine in the first place – it always falls into the wrong hands.  Maybe its time for me to again invite the left to reconsider school choice.

Today, via Instapundit, comes this story about the GAO audit of the decision by the FDA to not allow the plan B morning after pill to be sold over the counter.  And, knock me over with a feather, it appears that the decision was political, based on a conservative administration’s opposition to abortion.  And again the technocrats on the left are freaked.  Well, what did you expect?  You applauded the Clinton FDA’s politically motivated ban on breast implants as a sop to NOW and the trial lawyers.  In establishing the FDA, it was you on the left that established the principal, contradictory to the left’s own stand on abortion, that the government does indeed trump the individual on decision making for their own body  (other thoughts here).  Again we hear the lament that the game was great until these conservative yahoos took over.  No, it wasn’t.  It was unjust to scheme to control other people’s lives, and just plain stupid to expect that the machinery of control you created would never fall into your political enemy’s hands.

Kevin Drum is back on his "because Republicans won't agree to more massive deficit spending, they must be purposefully trying to destroy the economy."   Literally.  He translates Republican opposition to Obama's proposed stimulus packages as being explained by this strategy:

Basically, the Republican strategy for the past three years has been this:

1. Do everything humanly possible to prevent the economy from recovering.
2. Wait for 2012.
3. Run a campaign focused on the fact that the economy is lousy.

This is such a shabby bit of false logic it is amazing anyone even attempts this any more, or more accurately, it's amazing that folks continue to buy it.  Is it really so impossible to believe that there are actually people of goodwill who wish to see the economy improve but disagree with Drum and Obama as to the correct course to achieve that?  Apparently not  (I suppose the last stimulus was so wildly succesful that it is impossible to doubt the success of another trillion or so of deficit spending?)

The irony is that for some reason I simply cannot fathom, from a political tactics point of view, he points to this chart when talking about Truman and his "do-nothing" Congress:

He's is trying to make some political tactical point, but he is so blinded by his own assumptions that he misses the real point -- that the American economy grew at records rates through a "do-nothing" Congress.  Now, I suppose Drum might argue that this was an accident of timing, but in fact Truman inherited what should have been, by Drum's Keynesian thinking, the worst economic situation ever since an enormous amount of government spending was going away after the war and new workers were simultaneously flooding back into the job market.  If any time in recent history should have demanded Keynesian stimulus, this was it, and yet a do-nothing Congress led to a massive expansion.  Hmmmm.

I have written a number of times before that having only a few page-limited scientific journals is creating a bias towards positive results that can't be replicated

During a decade as head of global cancer research at Amgen, C. Glenn Begley identified 53 “landmark” publications — papers in top journals, from reputable labs — for his team to reproduce. Begley sought to double-check the findings before trying to build on them for drug development.

Result: 47 of the 53 could not be replicated. He described his findings in a commentary piece published on Wednesday in the journal Nature.

I observed:

This is not really wildly surprising.    Consider 20 causal relationships that don’t exist.  Now consider 20 experiments to test for this relationship.  Likely 1 in 20 will show a false positive at the 95% certainty level — that’s what 95% certainty means.  All those 1 in 20 false positives get published, and the other studies get forgotten.

Actually, XKCD did a better job of making this point.  It's a big image so I won't embed it but check it out.

Also, Kevin Drum links a related finding that journal retractions are on the rise (presumably from false positives that could not be replicated or were the results of bad process).

In 1890, there were technological and cost reasons why only a select few studies were culled into page-limited journals.  But that is not the case today.  Why do we still tie science to the outdated publication mechanism.  Online publication would allow publication of both positive and negative results.  It would also allow mechanisms for attaching critiques and defenses to the original study as well as replication results.  Sure, this partially breaks the academic pay and incentive system, but I think most folks are ready to admit that it needs to be broken.

I don't really want to ridicule Kevin Drum here for thinking out loud.  I really hate partisan Conservative and Liberal team-politics blogs, but I read a few to stay out of the echo chamber, and Drum is smarter and incrementally more objective (a relative thing) than most.

But this is really terrible, awful engineering intuition:

These two things together reminded me about an energy factoid that's always struck me as slightly odd: virtually every form of energy seems to be almost as efficient as burning oil, but not quite.

For example, on either a power/weight basis or a cost basis, batteries are maybe 2x or 3x bigger and less efficient than an internal combustion engine. Not 50x or 100x. Just barely less efficient. And you see the same thing in electricity generation. Depending on how you do the accounting, nuclear power is maybe about as efficient as an oil-fired plant, or maybe 2x or 3x less efficient. Ditto for solar. And for wind. And geothermal. And tidal power.

I'm just noodling vaguely here. Maybe there's an obvious thermodynamic explanation that I'm missing. It's just that I wouldn't be surprised if there were lots of ways of generating energy that were all over the map efficiency-wise. But why are there lots of ways of generating energy that are all surprisingly similar efficiency-wise? In the great scheme of things, a difference of 2x or 3x is practically invisible.

First, we have to translate a bit.  He mentions power to weight ratios for batteries in the second paragraph.  In fact, batteries have terrible power (actually energy storage) to weight ratios vs. fossil fuels, much worse than 2-3x for energy storage per unit of weight or volume.  That is why gasoline is still the transportation energy source of choice, because very few things short of plutonium have so much potential energy locked up in so little volume.  But I will assume he is comparing an entire electric drive system compared to a gasoline drive system (including not just energy storage but the drive itself) and in this case the power to weight ratios are indeed closer.

But here is the problem:  in engineering, a 2-3x difference in most anything -- strength, energy efficiency, whatever -- is a really big deal.  It's the difference between 15 and 45 MPG.   Perhaps this is Moore's Law corrupting our intuition.  We see electronic equipment becoming twice as powerful every 18 months, and we start to assume that 2x is not that much of a difference.

But this is why Moore's Law is so much discussed, because of its very uniqueness.  In most fields, engineers tinker for decades for incremental improvements, sometimes in the single digit percentages.

The fact that alternative energy supporters feel like their preferred technologies are just so close, meaning they are only 2x-3x less efficient than current technologies, explains a lot about why we skeptics of these technologies have a hard time getting through to them.

Here is Kevin Drum, where he quotes from an Op/Ed about a new Southern California "Regional Transportation Plan/Sustainable Communities Strategy"

The plan includes expansion of housing near public transit by 60%....and projections of more than 4 million new jobs — with public transit within half a mile of most of them. Amanda Eaken of the Natural Resources Defense Council praised it as "the strongest transportation plan" in the history of "car-loving Southern California."

.... SCAG's new plan is born of the realization that as a region, we have to grow up, not out. That doesn't mean Hong Kong skyscrapers in Whittier and Redlands. It does mean more apartments near light-rail stations and more vibrant mixed-use areas like the ones in downtown Pasadena, Ventura and Brea. It doesn't mean wresting the car keys from suburban commuters. It does mean making jobs and housing accessible via foot, bike, bus and rail.

Here is his comment on this:

In theory, a plan like this should have almost unanimous support. Developers like it because they can put up denser buildings. Environmentalists like it because it's more sustainable. Urbanists like it because it creates more walkable communities. City governments like it because it creates a stronger tax base.

There's really only one constituency that doesn't like it much: every single person who already lives in these communities and hates the idea of dense, high-rise construction near their homes. So there's going to be fireworks. It'll be interesting to see how the NIMBY bloc gets bought off.

Can you spot which group of people whose  preferences have been left out?   He considers the preferences of planners, developers, environmentalists, urbanists, and current community residents.  That's everyone, right?

Yeah, except for the freaking people who are moving in and actually shopping for a home.  Apparently if you are looking for a place to live in California, everyone except for you has a say in what living choices you will find.  Want a suburban home on an acre of land -- you are out of luck (unless you get an existing one that is grandfathered in, but those are really, really expensive because they are what everyone really wants but no one in power in California will allow to be built).  Your chosen lifestyle has not been approved by your betters.

from Kevin Drum

Today, Aaron Carroll tells us the story of TriCor, aka fenofibrate, a cholesterol drug licensed by Abbott Labs in 1998. Unfortunately, TriCor's patent was due to run out in 2000 and a maker of generic drugs was all set to produce a generic version. So Abbott sued, which delayed the generic version by 30 months:

In the interim, Abbott sought and obtained FDA approval for Tricor-2. That drug was nothing more than a branded reformulation of Tricor-1.Tricor-1 came in 67-mg, 134-mg, and 200-mg capsules; Tricor-2 came in 54-mg and 160-mg tablets. No new trials involving Tricor-2 were submitted to the FDA. But Tricor-2 came out while the generic company was still waiting to make Tricor-1, and thus Tricor-2 began selling with no direct competition.

Six months later, Tricor-2 evidently accounted for 97% of all fenofibrate prescriptions. By the time the generic copies of Tricor-1 came out, no one was taking it anymore, and they couldn’t penetrate the market.

Wash, rinse, repeat. The generic companies petitioned to make generic Tricor-2. Abbott filed a patent infringement suit buying them a 30 month delay. They got to work on Tricor-3. That tablet came in 48-mg and 145-mg doses. No new studies. They got approval. Evidently, 70 days after Tricor-3 was introduced, 70% of users were switched to the new branded drug. By the time the other companies got generic Tricor-2 out, Tricor-3 had 96% of the market.

Apparently, the entire moral blame for this accrues to Abbott, though he admits maybe physicians have some culpability for never prescribing the generic.

Really?  I have no particular desire to defend serial rent-seekers like Abbott, but the farce here seems to be in the regulatory system where small changes in what is essentially the packaging size allow companies to protect a government-enforced monopoly for their product.  Given the enormous difference in earnings between a monopoly product and one with a generic competitor, it is no surprise that Abbott is going to react to these incentives and use the system as presented to it.  In fact, if it did not, its executives would be making a huge ethical lapse in failing in their fiduciary responsibilities.

If you really think this is a corporate greed problem, then why is it that Apple doesn't keep competitors out of the smartphone market by making tiny tweaks to the screen size of the iPhone.  Wait, you say, screen size changes don't act as a barrier to competition?  Of course not.  But then why do changes in capsule size for a given chemical compound?  Because of the involvement of the government.

No, the problem here is not Abbott, the problem is a broken government regulatory system.  And you can pretty much count on Drum and his allies responding to anyone who actually tries to initiate a reform by streamlining this craziness by screaming that they just want to kill people by relaxing government regulations.

Kevin Drum quotes favorably from Chad Terhune at the LA Times

Some insurers are chasing after much smaller customers with new plans designed to limit employer payouts for big claims using what's called stop-loss policies. This guarantees that businesses won't be responsible for anything over a certain amount per employee, perhaps as low as $10,000 or $20,000, with the rest paid by an insurer. Regulators and health-policy experts say this arrangement undercuts the notion of self-insurance since employers aren't bearing much of the risk, and it allows companies to circumvent some state insurance rules.

"This is not real self-insurance. This is clearly a sham," said Mark Hall, a professor of law and public health at Wake Forest University who has studied the small-business insurance market. "Regulators have good reason to be concerned about the potential harm to the market."

Self-insurance is attractive for many reasons, particularly the prospect of lower costs. It's exempt from state insurance regulations such as mandated benefits, granting employers the flexibility to design their own benefit package and the opportunity to reap some of the savings from employee wellness programs. A federal law, the Employee Retirement Income Security Act, or ERISA, governs self-funded plans. Some aspects of the Affordable Care Act do apply to self-insurance, such as the elimination of caps on lifetime benefits and some preventive care at no cost.

Drum agrees

Yeah, it's a scam.

In a reasonably sane world, and in all other contexts outside of health care, insurance is obtained at relatively low prices to cover only catastrophic events that would be potentially bankrupting.  Car insurance does not cover oil changes and home insurance does not cover oven repairs.  So why is it that Drum is arguing that we should ban insurance policies that only cover catastrophic losses and not routine costs?   After all, the second sentence in the first paragraph from the LA Times sure seems to define exactly what insurance should be (and is similar to my personal policy, which has a high deductible attached to a health savings account).

The problem is that when Drum and the Left use the word "health insurance" they are actually referring to a bundle of four items

• Traditional catastrophic insurance against large, unexpected, bankrupting charges
• Third party payment / capitation for entirely routine and expected health expenditures, from physicals to contraception
• Crony payoffs for favored constituencies, mainly via mandated benefits rules.  This payoff may be to consumers, e.g. young women like Sandra Fluke who have the rest of us pay to maintain her sex life; or it may be to corporate cronies, who are able to get their particular device or procedure or service included in the mandated benefits, guaranteeing a large stream of customers who don't care a bit what the product or service costs because it is now paid for by a third party.
• Social engineering, in the form of embedded incentives to promote certain favored behaviors like seeking preventative care or eating better.  And when the government is paying the bill, the policy becomes a Trojon horse for government micro-management of our lives in the name of health cost reduction.

The second item seems to be a paradigm embedded in the mind of everyone in the US today, that health plans somehow need to cover every imaginable health-related expense.  Outside of an HMO model where these expenses are managed, this is a recipe for a cost explosion.  If we all had pre-paid car policies that bought our cars for us with low deductibles, no one would be driving a seven-year-old Nova.  The third and fourth items are Trojan horses for state control and cronyism that politicians are desperate to preserve.   So it is not surprising that efforts to roll back insurance to just be, well, insurance is met with anger by would-be authoritarians.  The question is, why do we listen to them?

Since I am on the subject today of topics my thinking has changed on over the last 30 years, I will link this post from Kevin Drum arguing that we need to make war hard again.  I have not read Rachel Maddow's book and am unlikely to, if for no other reason than style issues, but I must say that I have come around to the point Drum derives from it

If you can get past that, though, there's a deadly serious argument here that deserves way more attention than it gets. The book is, basically, a series of potted histories that explain how we drifted away from our post-Vietnam promise to make sure we never again went to war without the full backing and buy-in of the American public. Maddow's premise is that, just as the founders intended, our aim was to make war hard. Presidents would need Congress on their side. The Abrams Doctrine ensured that reserves would have to be called up. Wars would no longer unfold almost accidentally, as Vietnam did.

And for a while that was the case. ...

Maddow's argument is that we need to start rolling back these changes of the past two decades. When we go to war, we should raise taxes to pay for it. We should get rid of the secret military. The reserves should go back to being reserves. We should cut way back on the contractors and let troops peel their own potatoes. And above all, Congress should start throwing its weight around again. It's fine to criticize presidents for accreting ever more power to themselves, but what do you expect when Congress just sits back and allows it happen? Our real problem is congressional cowardice: they don't want the responsibility of declaring war, but they also don't want the responsibility of stopping it. So they punt, and war becomes ever more a purely executive function.

I am mostly in agreement with this (though I am not sure why soldiers rather than contractors should peel potatoes).  War has become way too easy -- though I would argue that Drum needs to look in a mirror a bit here.  He has been a huge supporter of Obama using executive powers to end-around Congressional opposition on things like the budget.  It's hard for him to credibly turn around and say that this same executive end-around Congress is bad in war-making.   I will be consistent and say it's bad for both.

I have not read the book, so perhaps this is covered, but I would argue that there are external factors driving this change in addition to internal factors.

The current Presidential ability to fight small wars without much Congressional backing is not entirely unprecedented.  Teddy Roosevelt did much the same thing with his gunboat diplomacy.  There were two external conditions that allowed TR to get away with this that are similar to conditions that obtain today.  One, we had a decisive economic and technological advantage over the countries we were pushing around (e.g. Columbia).  And two, there was no superpower willing to challenge us when we meddled in small countries, particularly in Latin America where the major European powers were willing to let us do whatever we wanted.

I would argue that these conditions again obtain since the fall of the Soviet Union, and allow the US to lob around cruise missiles (the gunboat diplomacy of the 21st century) with relative impunity.

I don't often defend Conservatives but I will say that there is nothing much more useless to the public discourse that bullsh*t sociology studies trying to show that Conservatives are dumber or whatever (and remember, those same studies show libertarians the smartest, so ha ha).

In this general category of schadenfreude masquerading as academics is the recent "finding" that conservatives are increasingly anti-science or have lost trust in science.  But here is the actual interview question:

166. I am going to name some institutions in this country. Some people have complete confidence in the people running these institutions. Suppose these people are at one end of the scale at point number 1. Other people have no confidence at all in teh people running these institutions. Suppose these people are at the other end, at point 7. Where would you place yourself on this scale for: k. Scientific community?

A loss of trust in the scientific community is way, way different than a loss of trust in science.   Confusing these two is roughly like equating a loss in trust of Con Edison to not believing in electricity.  Here is an example from Kevin Drum describing this study's results

In other words, this decline in trust in science has been led by the most educated, most engaged segment of conservatism. Conservative elites have led the anti-science charge and the rank-and-file has followed.

There are a lot of very good reasons to have lost some trust in our scientific institutions, in part due to non-science that gets labeled as real science today.  I don't think that makes me anti-science.  This sloppy mis-labeling of conclusions in ways that don't match the data, which Drum is ironically engaging in, is one reason may very scientific-minded people like myself are turned off  by much of the public discourse on science.  The irony here is that while deriding skepticism in the scientific community, Drum provides a perfect case example of why this skepticism has grown.

The game the Left is playing with the Supreme Court is interesting.  Their argument going into last week's Supreme Court frackas boiled down either to, "this is really needed so it must be Constitutional" or something like "we thought the Federal government could do anything."  By the way, while I find the latter depressing and it should be wrong, I can understand after decisions like Raich why one might come to that conclusion.

After getting pummeled in court this week, the Left has a couple of new takes.  The first is that while their side's lawyers did not offer any good arguments, particularly vis a vis limiting principles, it's the Court's obligation to do it for them.  The second is an interesting sort of brinksmanship.  It says that this is so big, so massive, so important a legislation, that the Supreme Court basically does not have the cojones to overturn it on a 5-4.  The extreme example of this argument, which I am seeing more and more, is that its so big a piece of legislation that it is wrong for the Supreme Court to overturn it whatever the vote, the implication being that Constitutional muster can be passed merely by making legislation comprehensive enough.

Kevin Drum has been taking both these tacks, and included this gem in one post:

So what will the court do? If they don't want a rerun of the 1930s, which did a lot of damage to the court's prestige, but they do want to put firmer limits on Congress's interstate commerce power, the answer is: find a limiting principle of their own. But find one that puts Obamacare just barely on the constitutional side of their new principle. This would avoid a firestorm of criticism about the court's legitimacy — that they're acting as legislators instead of judges — but it would satisfy their urge to hand down a landmark decision that puts firm limits on further expansion of congressional power. Liberals would be so relieved that Obamacare survived that they'd probably accept the new rules without too much fuss, and conservatives, though disappointed, would be thrilled at the idea that the court had finally set down clear limits on Congress's interstate commerce power.

You can see both arguments here - the proposition that the Court owes it to the defense attorney to make up a better argument for him, as well as the notion that the stakes are too high to overturn the legislation.

By the way, maybe I just went to some right-wing fascist school, but I sure don't remember any discussion of a loss of prestige by the Court as they overruled large swaths of the New Deal, particularly since their decisions were pretty consistent with past precedent.  I always considered it was FDR who lost prestige with this authoritarian impulse to pack the Court to get the Constitutional answer he wanted.  And taking the 1930's as an example, it sure seems both Left and Right are wildly hypocritical and inconsistent on when they are in favor and against Court activism.

Kevin Drum asks whether money corrupts politics, and comes to the conclusion that it does.  I disagree.

Money does not corrupt politics, the expansion of state power corrupts politics.  Every time the state gains a new power to take money from person A and give it to person B, or to throttle company A's business in favor of company B, private individuals start to scheme how they might access that power to their own benefit.

Think back to the much smaller US government of the 19th century.  Don't you long for the day when political corruption mainly meant packing the Post Office with one's kin?  It is absolutely no coincidence that the largest political scandal of that century (the Crédit Mobilier) accompanied the largest expansion of Federal power in that century (the Federally-funded construction of the Transcontinental Railroad).

Political corruption follows the power.  Sure, this power is often bought in dollars, but if we were to entirely ban money from the political process, the corruptions would remain.  And it would shift payment from money to other goods, like quid pro quo's, barter, and access to grass roots labor supplies.  Anyone remember machine politics?

Here is an example from an Administration schooled from an early age in Chicago machine politics

The Heritage Foundation has issued a new report that charges the Obama administration sent presidential earmarks, taxpayer dollars, to Democratic lawmakers to help convince them to vote for controversial proposals such as cap and trade and the health care bill.

“When you examine the recipients of those grants, there were at least 32 vulnerable house Democrats who received significant federal grant money during the run-up or directly after the votes on those pieces of legislation,” says Lachlan Markay, one of the authors of the report.

The amount of earmarks spiked around the time of difficult votes such as cap and trade, then dropped, only to spike again around controversial financial regulations known as Dodd/Frank, and spiked the most just before the vote on the health care bill....

On their websites, lawmakers didn’t advertise their votes, but did tout at length the money they’d gotten for various local projects.

“As a way to counteract the negative voter sentiment that would come from voting for unpopular legislation,” says Markay. “These were attempts to make sure that constituents knew they were bringing money home to their district.”...

Numbers from the non-partisan Congressional Research Service show that the value of administration earmarks under President Obama increased by a 126 percent in his first two years in office and the actual number of administrative earmarks increased by 54 percent.

Those are dramatic increases that are 11 times more than Congress itself increased earmarks, which the White House did not explain today.

By the way, of all the ways that access to political power can be bought, political spending under our current rules is by far the most transparent.   Just as in narcotics or prostitution, a ban wouldn't eliminate it, it would simply drive it further underground and into other forms of currency.

First, I will admit that this was probably a throwaway line, but it does represent the worldview of a lot of Americans.  In an article showing a funny story about poor preparation of college students, Kevin Drum ended with this:

This does not bode well for our coming economic war with China, does it?

Trade is not war.  Trade is cooperation, exactly the opposite of war.   By definition, it benefits both parties or it would not occur, though of course it can benefit one more than the other.

Treating trade like war is a very dangerous game engaged in by some politicians.  At best, it leads to protectionism that makes the country poorer.  At worst, it can lead to real war.

Consider two examples of a country treating trade like war, both from Japan.  In the 1930's, Japan developed an imperial desire to directly control all the key resources it needed, rather than to trade for them.  The wealthy ports of China and iron-rich Manchuria were early targets.   This desire was compounded when the US used trade embargoes as a policy tool to protest Japanese invasions and occupation of China.  This eventually led to war, with Japan's goal mainly to capture oil and rubber supplies of southeast Asia.  Obviously, this effort led to Japan essentially being left a smoking hole in the ground by late 1945.

The second example was in the 1980's, as Japan, via MITI, actively managed its economy to promote trade.  The "trade as war" vision was common among Japanese leaders of the time.  The results was a gross, government-forced misallocation of resources and bubble in the real estate and stock markets that led to a couple of lost decades.

I had thought the situation in Greece would eventually hammer home for everyone the perils of reckless enlargement of the state and deficit spending.  But apparently, it is not to be.  This is how Kevin Drum describes the core problem in Greece:

the austerity madness prompted by the 2008 financial collapse

So the problem is not a bankrupt state, but the "austerity" which by the way has at best carved only a trivial amount out of spending.  And it was triggered not by a ballooning deficit as a percent of GDP and an inability to meet interest and principle payments, but by the US financial crisis.

This is willful blindness of absolutely astounding proportions.  Which means the same folks are likely just rehearsing to ride the US right into the same hole.

Kevin Drum points to a poll showing that 2/3 of Americans, and a majority of liberal Democrats, support drone strikes, even if the targets are Americans.  Like me, he finds these numbers disturbing, though in a later post he hypothesizes that people may mean they like drones in comparison to using and risking live troops, rather than simply supporting willy nilly drone strikes per se.

It is odd that the children of the sixties -- who grew up protesting push button war and American pilots who bombed Cambodians with impunity and were home for dinner -- now seem to be OK with drone attacks, even on Americans.  (I am reminded of the Al Franken skit on SNL where he editorializes that now that he has assets to protect and is older, he has changed his mind and supports the draft).  While I am happy with the idea of technologies that keep American soldiers safer, I am not happy with something that makes it easier for the President to, without accountability and often in secret, use force against, well, whatever target catches his whim.

Consider drones from the receiving end.  For a Pakistani, American drones resemble nothing so much as alien invaders from a Niven/Pournelle novel dropping meteors on cities.  The Americans might as well be Zeus on Mt Olympus hurling thunderbolts at them for all that they can fight back or retaliate.   It's a lot of responsibility to play God -- and there has been no one in either party over the last several decades I would trust to do it.

Back when he was blogging, TJIC had a nice little animated gif with people running around yelling "Oh Noz."

 [update:  sent to me by by the folks at finem respice]

I wish I had it for this chart and the accompanying text  (via Kevin Drum)

Many young adults have felt the impact of the recession and sluggish recovery in tangible ways. Fully half (49%) of those ages 18 to 34 say that because of economic conditions over the past few years, they have taken a job they didn’t really want just to pay the bills. More than a third (35%) say they have gone back to school because of the bad economy. And one-in-four (24%) say they have taken an unpaid job to gain work experience.

First, this study is great evidence of my "what is normal" fail.  There is no baseline.  OK, 24% moved back in with their parents.  How many did this in good times?  How much worse is this?

But the real eye-catcher to me is that somehow I am supposed to be shocked that people have to find a job to pay the bills.  Even a job that, gasp, they really didn't want.  I have a clue for you.  A lot of jobs 22-year-olds have to take are not that compelling.  Mine were not.  Despite what colleges seem to be telling them, the world does not offer up a lot of really cool jobs to inexperienced young adults.  Long before you are closing deals with CEO's, you are probably writing sales literature in some cubicle.

And by the way, I am struck by how wealthy our society is when I look at this chart.  Look at answers two and three.   In both cases, people are saying that in tough times, they chose to forego income and build their skills, even perhaps paying for the privilege.  What other time in history would people have this luxury?  How many countries today would have so many people with this luxury in hard times?  Even in the Great Depression in this country I don't think we saw the same phenomenon.  Obviously the economy sucks and it would be great for everyone for it to improve, but in most other times and even in many other countries in the world today, a significant bar in bad times would have been "I starved to death."

Kevin Drum apparently believes the reason Republicans are not passing further stimulus spending is because such a stimulus would be too likely to have immediate results improving the economy and thus will help Democrats in the next election.

This is the kind of politcal bullshit that drives me right out of the system.  I am perfectly capable of believing Drum honestly thinks that further deficit spending will improve the economy this year.  I think he's nuts, and working against all historic evidence, but never-the-less I believe he is sincere, and not merely pushing the idea as part of some dark donkey-team conspiracy.  Why is it that he and his ilk, from both sides of the aisle, find it impossible to believe that their opponents have similarly honest intentions?

I mean, is it really so hard to believe -- after spending a trillion dollars to no visible effect, after seeing Europe bankrupt itself, and after seeing the American economy begin to recover only after crazy stimulus programs have mostly stopped -- that some folks have an honest desire to see economic improvement and think further stimulus programs are a bad idea?

I am always fascinated by folks who fear private power but support continuing increases in public / government power.  For me there is no contest - public power is far more threatening.  This is not because I necesarily trust private corporations like Goldman Sachs or Exxon or Google more than I do public officials.  Its because I have much more avenues of redress to escape the clutches of private companies and/or to enforce accountability on them.  I trust the incentives faced by private actors and the accountability mechanisms in the marketplace far more than I trust those that apply to government.

Here is a good example.  First, Kevin Drum laments the end of privacy because Google has proposed a more intrusive privacy policy.  I am not particularly happy about the changes, but at the end of the day, I am comforted by two things.  One:  I can stop using Google services.  Sure, I use them a lot now, but I don't have to.  After all, I used to be a customer or user of AOL, Compuserve, the Source, Earthlink, and Netscape and managed to move on from those guys.  Second:  At the end of the day, the worst they are tying to do to me is sell me stuff.  You mean, instead of being bombarded by irrelevant ads I will be bombarded by slightly more relevant ads?  Short of attempts of outright fraud like identity theft, the legal uses of this data are limited.

Kevin Drum, who consistently has more faith in the state than in private actors, actually gets at the real problem in passing (my emphasis added)

And yet…I'm just not there yet. It's bad enough that Google can build up a massive and—if we're honest, slightly scary—profile of my activities, but it will be a lot worse when Google and Facebook and Procter & Gamble all get together to merge these profiles into a single uber-database and then sell it off for a fee to anyone with a product to hawk. Or any government agency that thinks this kind of information might be pretty handy.

The last part is key.  Because the worst P&G will do is try to sell you some Charmin.  The government, however, can throw you and jail and take all your property.  Time and again I see people complaining about private power, but at its core their argument really depends on the power of the state to inspire fear.  Michael Moore criticizes private enterprise in Capitalism:  A Love Story, but most of his vignettes actually boil down to private individuals manipulating state power.  In true free market capitalism, his negative examples couldn't occur.  Crony capitalism isn't a problem of private enterprise, its a problem of the increasingly powerful state.  Ditto with Google:  Sure I don't like having my data get sold to marketers, and at some point I may leave Google over it.  But the point is that I can leave Google .... try leaving your government-enforced monopoly utility provider.  Or go find an alternative to the DMV.

A great example of this contrast comes to us from Hawaii:

There may be some trouble brewing in paradise, thanks to a seemingly draconian law currently under consideration in Hawaii's state legislature. If passed, H.B. 2288 would require all ISPs within the state to track and store information on their customers, including details on every website they visit, as well as their own names and addresses. The measure, introduced on Friday, also calls for this information to be recorded on each customer's digital file and stored for a full two years. Perhaps most troubling is the fact that the bill includes virtually no restrictions on how ISPs can use (read: "sell") this information, nor does it specify whether law enforcement authorities would need a court order to obtain a user's dossier from an ISP. And, because it applies to any firm that "provides access to the Internet," the law could conceivably be expanded to include not just service providers, but internet cafes, hotels or other businesses.

Americans fed up with Google's nosiness can simply switch email providers.  But if they live in Hawaii, they will have no escape from the government's intrusiveness.

This article at Kevin Drum's titled "The Death of Middle Class Neighborhoods" really had me scratching my head.

At first I thought this was about an end to self-segregation of the middle class.  After all, if middle class neighborhoods are gone, but middle class people are still living somewhere, then they must be living mixed up with other groups.

But then Drum says the problem is the increasing self-segregation of the middle class.  Huh?  How can they be self-segregating more but we end up with fewer all middle class neighborhoods?

But then the problem appears to be that the middle class want to hang out with the rich people.    Um, OK, I don't find this wildly surprising, though the evidence he cites for this is awful, the typical low standard of science practiced by sociologists everywhere.  But Drum himself admits he self-segregates with more educated people, so there you have your proof.

Finally, as usually is the case with the Left, the problem turns out to be not with the middle class at all but with rich people

We've been fretting for a long time about the rise of gated communities, the abandonment of public schools by prosperous city residents, and the booming market in McMansions. And more and more, this kind of segregation doesn't apply only to the truly rich. Increasingly, even the merely well off hardly have any social interaction outside their own class: they live in different neighborhoods, eat in different restaurants, send their kids to different schools and different sports leagues, and vacation in different places.

Really?  Like you had a much better chance as a poor person to be hanging out with Andrew Carnegie at the pub than you do today chilling with Bill Gates at a Starbucks?  When was this magic past time when the affluent liked to mix more with the unwashed?  I hate to just use my personal observations, but Drum does, so here is mine:  I feel like many of our meeting places today are less rather than more exclusive.  I know a lot of very rich folks, and they simply don't cloister themselves in exclusive clubs and stores like they used to -- I am not at all surprised to see them in the Costco or at the public golf course.

I can be persuaded to accept schools as an exception to this, but this hardly does much to help Drum's argument as the government school system has been run (and run into the ground) by his fellow progressives for decades.  It says a lot about private vs. public solutions that Costco has found a way to appeal equally to rich and poor but the public schools have not.

Update:  From the NYT article on the underlying study, note the problem on these maps- the urban boundary in the study is static, so as the city expands, more of the metro area is outside the bounds of the study area.  What group likely is the predominent occupant of new suburbs on the leading edge of urban boundaries?  Dare I say middle class?

The central core of older American cities has always been where the richest and poorest live.You can see this on the Philadelphia maps.  The pattern is not changing, just each area is getting larger.  A full picture would show the middle class area expanding out as well, but the study cuts off the boundary at arbitrary country lines and never expands the boundary as the city's geographic size grows.  The "trend" they are supposedly seeing are middle class continuing to move outwards from the city center, and their flawed study methodology  loses visibility to them.  This makes more sense than the study's finding, that somehow there is this weird lake Wobegon-type effect where no one is in the middle band of the percentile range.

Kevin Drum writes that the lesson of OWS is that hard work no longer is enough to be succesful.  I wrote in the comments

I think you are leaving an important portion out of the value proposition kids are hearing.  Its not just "work hard and get an education and you will do well."  The actual proposition they think they are buying into is "work hard and get an education and work at whatever pleases you and you will do well."

I am reminded of Michelle Obama's plea to graduating college students to not go work in for-profit businesses, but to work for government or NGO's.  The problem is that workers, particularly young workers, don't get to define what is productive labor and what is not.  You can't go out in the world expecting to work really really hard at puppeteering or for the cause of Mayan feminism and necessarily expect to get paid a lot.  In any job, how much you make is determined by how valuable others see that work.

Particularly when you are 22, the work the world needs done and is valuable may very well not be what you want to do.  As you get older and more skilled, you often gain more possibilities of monetizing your true interests.  I was never really able to work at what I wanted until I was about 40.   That does not mean you can't do whatever the hell floats your boat when you are 22.  It just means don't expect the world to pay you whatever you want or need for doing it.