I think this article makes it clear that, no matter what the rhetoric, the only health care cost control idea Obama and the Democrats ever had was saying "no" to care.  Whatever one calls this (managed care, rationing, death panels) it is really not that much different from what insurance companies have been doing for years.  And it is areal irony that Democrats passed this legislation feeding off anger of voters with insurance companies saying "no", when their plan really depends on the government saying "no" even more often  (or else there won't be any cost savings).

The author argues that information is important for patients to make better decisions:

When patients are given information about potential benefits and risks, they seem to choose less invasive care, on average, than doctors do, according to early studies. Some people, of course, decide that aggressive care is right for them "” like the cancer patient (and palliative care doctor) profiled in this newspaper a few days ago. They are willing to accept the risks and side effects that come with treatment. Many people, however, go the other way once they understand the trade-offs.

They decide the risk of incontinence and impotence isn't worth the marginal chance of preventing prostate cancer. Or they choose cardiac drugs and lifestyle changes over stenting. Or they opt to skip the prenatal test to determine if their baby has Down syndrome. Or, in the toughest situation of all, they decide to leave an intensive care unit and enter a hospice.

I agree, but I would go further -- information and incentives are important.  And the absolute most important bit of information when it comes to cost control is price, and patients under Obamacare have absolutely no incentive to give a sh*t about price even if they were informed of it.  Exactly the opposite of the incentives I have had since I took on a high-deductible health care policy several years ago.

Update: Brad Warbiany discusses the proposed IPAB and its powers to shape health care spending in the context of Congress as an addict trying to control its impulses.  However, I think Brad underestimates the power of the board to be captured.  What will result is rulings for more coverage of procedures with powerful lobbies, offset by less coverage of procedures with weaker lobbies, irrespective of the science.   Just look at the diseases the NIH and NSF gives grant money for -- the grants have nothing to do with the science of where research could be most productive and everything to do with diseases that have large and powerful constituencies.

Update #2: Isn't it interesting to see the NY Times, after arguing for months that Obamacare was not about rationing, is now admitting that rationing is the key to success.  It reminds me of this that I wrote a while back:

I have decided there is something that is very predictable about the media:  they usually are very sympathetic to legislation expanding government powers or spending when the legislation is being discussed in Congress.  Then, after the legislation is passed, and there is nothing that can be done to get rid of it, the media gets really insightful all of a sudden, running thoughtful pieces about the hidden problems and unintended consequences of the legislation.

A while back, Megan McArdle had what I thought was good advice - using betting as a way to hedge emotional risks.  For example, I was going to be really disappointed if the health care bill passed, so I bet that its passage would occur.  I am still unhappy, but I have some extra cash.

I have been buying on the dips for a while now.  I predicted way back last July that it was going to pass no matter what

It is totally clear to me that Obama and Pelosi will spend any amount of money to pass their key legislative initiatives.  In the case of Waxman-Markey, the marginal price per vote turned out to be about $3.5 billion.  But they didn't even blink at paying this.  That is why I fear that some horrible form of health care "reform" may actually pass.  If it does, the marginal cost per vote may be higher, but I don't think our leaders care.

From the SEC web site (via frequent contributor LK)

The Securities and Exchange Commission today voted to provide public companies with interpretive guidance on existing SEC disclosure requirements as they apply to business or legal developments relating to the issue of climate change.

I haven't seen anyone explain the reason for this requirement, so I thought I would do so.  Companies know that no real investor is going to pay any attention to these climate disclosures, so to avoid any future action accusing them of not being forthcoming enough, companies are going to go overboard outlining potential risks far beyond what they think is likely.  These exaggerations will protect them from the SEC while at the same time having no effect on their stock price.  Then, alarmists will collate all of these and use them as evidence of the high cost of climate change, saying "see, look at what all these public companies are saying climte change will do to them."  Lacking any evidence of harmful climate change in the actual climate or economy, this is one way to manufacture fake evidence.

By the way, here is the diclosure every oil company should put in their reports:

Notice:  Poplist politicians are very likely to demagogue this company for a wide-range of imagined crimes in an attempt to get re-elected, including crimes against the climate in various forms.   Politicians will attempt to preferentially saddle this company with new taxes and regulations given that this company is not liked by many voters (despite the fact that many of these voters freelydo business with this company).  Politicians will likely continue to try to sieze portions of this company's earnings, despite the fact that those earnings are relatively low given the magnitude of the our investments and the amount of value we add.

Consider the incentives for a bank trying to set the risk profile of its investments.  Should it go for higher returns at higher risk, or dial back the risk at a cost to near-term profits?  Now consider this decision in the context of two actions from the past year:

• Large banks that took on too much risk are bailed out and management mostly preserved
• Banks that eschewed higher profits by avoiding bad risks are now forced to pay for the bailout of those that went wild:

Obama administration officials and lawmakers are scrambling to find a way to funnel some of the financial industry's record earnings back to the taxpayers who helped rescue the industry from looming disaster.The White House is considering a fee on banks and other financial companies

as one approach, with revenues earmarked to help recoup any losses from the government's $700 billion bailout fund, a senior administration official said.

Some in Congress want to add a new tax on bonuses or assess a small fee on all stock transactions, which would hit large banking companies the hardest.

Note that there is no attempt here to only charge banks who received bailout money, but all banks will be charged equally.  To each according to his need, from each according to his ability.  This is moral hazard in spades.

Via the Dallas Morning News:

A last-minute change in the federal health care bill ditched a proposed 5 percent tax on cosmetic medical procedures and replaced it with a 10 percent tax on indoor tanning services.

Goodbye Botox tax. Hello tan tax.

This seems really random.  Why should either of these businesses foot a special, disproportionate share of my health care bill?  Well, things that seem random to most of us make perfect sense in Congress.

The tan tax popped up in the health care bill last weekend after powerful medical lobbies "“ including the American Academy of Dermatology Association, American Medical Association, American Society of Plastic Surgeons and Botox-maker Allergan "“ persuaded Congress to remove a tax on cosmetic medical procedures and replace it with a 10 percent surcharge on indoor tanning services.

Lobbyists are very good at punching political hot-buttons.  Since they couldn't argue that botox is "for the children," and since it is generally used by rich white people they could not place the race or class card, they played the only card they had:

"Since 90 percent of cosmetic surgery patients are women, this would have been a very discriminatory tax," said White, who opposed the cosmetic surgery tax.

Technocrats want to believe, and perhaps honestly believe themselves, that care guidelines in the new Federal health care system will be science-based.  What possible basis do they have for thinking that?  We have 50 state laboratories, where states specify must-carry rules on procedures, and not a single one of these lists are science based -- they are loaded with special interest handouts.   I even show in this post how special interests give money to academia to produce studies whose entire conclusion is that certain procedures (performed by the special interest group funding the study) need to be in the minimum coverage laws.   The very first time out, when confronted with a science-based care recommendation (that women not receive breast cancer screening until after 50), the Congress specifically overrode it in the bill under a firestorm of public outcry.

But maybe the dermatologist guys are really looking after us?  After all:

The American Academy of Dermatology warns of significant health risks caused by indoor tanning.

But, as it turns out, it only sees health risks in the use of ultra-violet light by practitioners who are not members of their trade group.  I have bolded the key passage that gives away the game.

Indoor tanning industry groups note that dermatologists use tanning equipment in their offices for cosmetic skin conditions, such as eczema and psoriasis, in phototherapy treatments that cost up to $100 per visit billed to health insurance companies. In contrast, indoor tanning salons cost as little as $6 to $20 per session.

The tan tax would exempt phototherapy services performed by a licensed medical professional.

"This is like Coke being allowed to lobby the government to tax Pepsi, but that Coke be allowed to sell the same product and not be taxed for it," International Smart Tan Network Vice President Joseph Levy said in a statement. "It's unbelievable."

This was sent to me by a reader, something called the "Environmental Justice Small Grants Program."  Over the last 20 years, socialists who realized their message wasn't selling anymore remarketed themselves under the green "global warming" banner.  Coincidentally, all the exact same things socialists wanted 20 years ago are what we need to do to fight global warming.

It appears that ACORN may be getting a second life using this same strategy.  I can't bear to read all this leftish public policy psychobabble in the document, but did note this early on:

The primary purposes of proposed projects should be to develop an understanding of environmental and public health issues and to identify ways to address these issues at the local level, and educate and empower the community. The long-term goals of the EJSG Program are to help build the capacity of the communities with environmental justice concerns and create self-sustaining, community-based partnerships that will continue to improve local environments in the future.

There is a well-established scientific consensus that climate change will cause disproportionate impacts upon vulnerable populations. [1] Thus, the program is adding emphasis this year on addressing the disproportionate impacts of climate change in communities with environmental justice concerns. The goal is to recognize the critical role of grassroots efforts in helping shape climate change strategies to avoid, lessen, or delay the risks and impacts associated with climate change. An overarching goal of including this emphasis is to help increase the number of underrepresented communities and ensure equitable green economic development in ways that build healthy sustainable communities.

This translates to "we have found a way to hand out government money to leftish groups like ACORN to do things that are impossible to measure and thus bear little accountability by calling it all "Green."

By the way, the little footnote to prove the statement above is this:

[1]  As stated in the Technical Support Document for the Endangerment and Cause or Contribute Findings for Greenhouse Gases under Section 202(a) of the Clean Air Act (April 2009), "Within settlements experiencing climate change, certain parts of the population may be especially vulnerable; these include the poor, the elderly, those already in poor health, the disabled, those living alone, those with limited rights and power (such as recent immigrants with limited English skills), and/or indigenous populations dependent on one or a few resources. Thus, the potential impacts of climate change raise environmental justice issues."

Given that cap-and-trade is almost certainly going to impose a very large regressive tax disproportionately on the poor, I wonder why no one ever discusses environmental-solution justice issues?  Maybe it really has nothing to do with the poor, but just with power.

Having read this:

In his proposed budget for 2010, Chu wanted $480 million to start eight Energy Innovation Hubs, or "Bell Lablets," as he called them, to stimulate research in areas ranging from solar energy to new materials for the electric grid. Each would receive $35 million to get started, and $25 million more in each of the following 4 years.

Last week Congress poured semi-cold water on the idea....Its skepticism was no surprise, having been included this summer in reports accompanying the spending bills in the House of Representatives and Senate (House, Senate versions). In August, Science reporter Jeffrey Mervis described how Chu admitted to a mediocre job of selling the idea and overcoming congressional concerns that the concept was poorly thought out and not well-coordinated with other energy research at the Department of Energy. House appropriators were particularly unkind to the idea, noting:

A new set of centers with overlapping research goals risks adding confusion and redundancy to the existing fleet of research and development initiatives

So since everyone agreed it was a bad idea, they killed it right? Ha ha, cute idea, actually voting and spending money based on efficacy. In fact, they gave Chu quite a bit

Conferees to the Energy and Water spending bill approved funding for three of the centers, two in energy efficiency and renewable energy and one in nuclear energy.

If they really make no sense, how about "zero"

From Kevin Drum today on health care:

But here's the tidbit that caught my eye:

A fascinating series of pilot programs, including for prostate cancer, has shown that when patients have clinical information about treatments, they often choose a less invasive one. Some come to see that the risks and side effects of more invasive care are not worth the small "” or nonexistent "” benefits. "We want the thing that makes us better," says Dr. Peter B. Bach, a pulmonary specialist at Memorial Sloan-Kettering Cancer Center, "not the thing that is niftier."

When I read about healthcare, pretty much the only thing I hear is that everyone wants infinite amounts of it.  And they always want the latest and greatest stuff.

Not me.  My motto is, "That healthcare is best that cares the least."  Or something like that.  Basically, I prefer to get the minimum reasonable amount of healthcare possible, and I have a strong preference for the simplest, oldest, best-known treatments.  I'm not exactly a fanatic about this, but generally speaking I think that most new treatments turn out not to be nearly as effective as we think, and the more time you spend around hospitals the better your chances of catastrophe.

Wow, that's amazing!  Its almost as if we shouldn't have one bureaucracy in Washington making health care decisions for everyone!  In fact, there are several things in here that tend to challenge leftish assumptions:

1. Contrary to leftish assumptions, individuals do seem to be grown up enough to make health care tradeoffs for themselves
2. Individuals seem to want to make different cost-benefit-treatment trade offs from each other, belying the notion there is some universal optimum that bureaucrats in Washington are capable of achieving
3. Allowing individuals to actually shop and make price-benefit decisions in health care might actually reduce costs and improve satisfaction (though absolutely no one in DC seems to be proposing a plan along these lines)

Unfortunately, Drum seems to take none of these lessons from his own post.  Here is the conclusion he draws:

But maybe the difference is just information: I read an awful lot about this stuff, and it's convinced me that there dangers to overtreatment just as there are dangers to undertreatment.  Leonhardt's "fascinating series of pilot programs" suggests that with better information, more people might agree.

Creepily, he seems to conclude from all this that if we can just "educate" the public more, they will be more likely to accept the one-size-fits-all treatment constraints to be implemented by Washington.

PS: I am generally with Drum on doing the absolute minimum for run of the mill health problems I encounter.  If I have a cold, for example, I don't start dosing myself with every over the counter drug I can find.  And our family tries very hard not to use antibiotics unless the condition is really serious.

But my sense is that my attitude will change a lot if the "C" word ever comes into play.  Cancers are much more solveable early than late, and my tendency would be to hit the crap out of it early with  as much of the arsenal as I could.  I don't know what Drum's personal medical history is, but my sense is that it is unwise to extrapolate linearly one's treatment preferences from colds to cancer.

Via the environmental blog Thin Green Line:

Check out this post on Bay Area Moms revealing that products with high fructose corn syrup contain mercury. Scary!

I have had some experience working with recreation on lakes that have mercury-contaminated fish  (not good for business) so I thought I would check out the articles.  Mommy Files blog here.  Advocacy group quoted here.  Actual study here.  Test results here.

This strikes me as being right at the focal point of where both the environmental and consumer protection movements went off the rails -- the issue of relative risks.  In short, risks for things with scary names (mercury and radiation being two great examples) cannot seem to be processed rationally.  Everything is toxic, at some concentration.  The key is understanding concentration and relative risks, and not panicking when anyone yells "mercury" in a crowded grocery store.

Before I get into this more, it is a little hard to discuss because I can't really find in the study or the advocacy press releases what forms the mercury take in the HFCS -- it may be they just don't know yet.  The form the mercury is in matters.  Most people would be surprised, but while pure liquid mercury is not good for you, but it isn't particularly toxic when compared to other forms  (just ask Sir Isaac Newton, who used to drink the stuff).  Mercury vapor is really bad, as are certain chemical derivatives of mercury, such as the form often found in fish.

So here is some perspective on mercury concentrations, again remembering these standards often apply to specific chemical variants.  The US legal limit on fish is 1 part per million, or 1 ppm.    The legal US limit on mercury in water is 2 parts per billion, or 2 ppb.  One might think that means the mercury in water is more dangerous, but it is actually in a much less dangerous form (according to my imperfect understanding) than the mercury in fish.  However, it is assumed that one drinks more grams of water a day than grams of fish.  This does not entirely explain the 500-fold discrepancy -- my guess is that this is also a matter of attention, as drinking water standards and contaminants get much more headline plan than for fish (again, in part due to a general inability, particularly in the media, to sort through relative risks).

So then we have HFCS.  The worst test value was apparently in Quaker Oatmeal to Go, which had a value of 350 parts per trillion (ppt).  In other words, the worst sample found anywhere had a mercury level nearly 6 times lower than the federal drinking water standard (2 ppb = 2000 ppt).   What this means is that you would have to eat 63 pounds of Quaker Oatmeal to Go a day to have the same mercury risk as drinking 5 liters of water at the federal standard each day.  And that is the worst product.  Only 17 of 55 products tested had any detectable mercury at all, and only 7 had concentrations over 100 ppt.

Don't even get me started on fish.  8 ounces of fish at the federal standard would have the same mercury as 1,429 pounds of Quaker oatmeal.  The risks are not even in the same ballpark.  The oatmeal risk is three orders of magnitude lower than the fish risk.   I wonder how many of the moms who now quiver at giving their kids oatmeal still feed their kids lots of nutritious fish?

The right way to write this story is not "scary!"  The right way to write this story is "Hey, we found some mercury where we did not expect it, this bears further study, but right now the concentrations are so far lower than you would find in many other everyday foods you eat or drink that it's not worth worrying about.  If you really want to protect your kids from mercury, stay away from fish."

Postscript: I lament the passing of sugar in favor of HFCS.  So often food activists gloss over this issue, preferring to imply it is some kind of corporate conspiracy to give us worse food.  But in fact, the main blame for this shift lies entirely on Congress, which maintains absurdly high sugar tariffs and a continued blockade of Cuba that give us among the highest sugar prices in the world.  Faced with this reality, food manufacturers cleverly found an alternative.   I prefer good old sugar, and implore Congress to ditch corporate welfare for sugar manufacturers

Via TJIC, who had a much better title, "poor credit risks remain poor credit risks, even after you give them a free pony"

Recent data suggests that many borrowers who received help with mortgage modifications earlier this year tended to re-default on their payments, a top U.S. banking regulator said on Monday.

"The results, I confess, were somewhat surprising, and not in a good way," said John Dugan, head of the U.S. Office of the Comptroller of the Currency, in prepared remarks for a U.S. housing forum.

"Put simply, it shows that over half of mortgage modifications seemed not to be working after six months," he said.

You can absolutely, without a doubt, add the Big 3 to the list of folks who will be facing default once again just months after getting their first dollop of federal money.

It's fascinating that our local paper, after months of positive Obama coverage, manages to express its first printed criticism of Obama on ... the day after the election.

With President-elect Barack Obama promising tougher government regulations on some sectors, including the financial markets, a handful of business leaders expressed concern Wednesday.

"The key thing is to not choke us to death with regulation," said Ioanna Morfessis, an economic-development consultant and Greater Phoenix Economic Council founding member.

With the faltering of the financial markets and a massive federal bailout this fall, Obama and congressional Democrats, who expanded their majorities with an upset electorate, have called for more federal oversight on Wall Street. Obama also has called for more regulation in the energy and health-care sectors, and Democrats could more strictly enforce environmental rules....

Morfessis said before lunch Wednesday, she received phone calls from 11 entrepreneurs concerned there would be a "higher premium for taking risks or entering new markets."

This is taken from and expanded from the end of this post.

Everyone involved in the bailout plan says, at least publicly, that they are not trying to bail out a bunch of Wall Street folks who lived high off the risk premium of these investments but now want to avoid the costs when the actual risks become clear.  They claim to be bailing out Wall Street and various large banks because they fear that a financial meltdown and liquidity crisis will starve main street businesses of cash, and create a deep economic slowdown.

OK, if this is the real policy goal -- to maintain the ability of main street businesses to borrow -- then here is my alternative proposal:

1. Immediately increase the SBA loan gaurantee authority by $100 billion dollars.  That is enough for a million new small business loans of $100,000 each.
2. Authorize treasury to spend up to X hundred billion to buy rated new issues of bonds and commercial paper of US non-financial companies.  Some limits should be applied - such as the feds cannot buy any more than 30% of a single issue and/or more than 10% of the entire outstanding debt of one company.

That's the plan.  Here are the advantages:

• The government is addressing the actual policy goal of keeping liquidity in main street business directly
• The government is investing in success, in main street companies trying to grow, and not in failed banks and financial institutions
• Moral hazard issues are avoided with financial institutions. 
• The SBA loan guarantees cost nothing today.  In fact, they are cash positive in the short term due to loan guarantee payments by borrowers.  Of course, they risk future losses,  but such losses in the future are in part covered by the guarantee payments, and a future loss is cheaper than a loss today.
• Investments in corporate bond issues are much easier to value, and are far less risky, than investments in illiquid mortgage securities.  The taxpayer is far less likely to take a beating on these purchases.
• Banks may still fail, but the FDIC has an infrastructure and experience for handling this.  If necessary to calm people, the FDIC could make a public commitment to assisted mergers to maintain all depositors.
• If there is some big financial meltdown, which I still doubt, there might be a need to inject some mortgage liquidity, but since the Feds now own Fannie and Freddie, the vehicle for doing so is easily available.

Update:  I was not clear -- this is actually an alternative to by alternative.  My first, preferred alternative plan is "do nothing."

I was thinking a bit about Jeff Skilling (former Enron CEO) today.  What must he be thinking as a series of large firms that were supposedly far more stable than Enron go down one after the other to liquidity crises much like that of Enron?  Bear Stearns and Lehman, two firms that should have been rock solid, go down in the blink of an eye in a credit crunch, and all we hear from the media is how the firms fell victim to larger forces beyond their control.  At least at Enron they were up-front with the market about their taking on large risks.  Now, the government is running around in the background trying to match-make these failing companies and helping to save at least a squidge of shareholder equity.  The only thing the government did in the Enron collapse was hound Skilling and others into jail.   

Sure, Skilling may have made some overly optimistic statements about his company as he was trying to stave off the crunch, but no more so that the happy-face statements issuing from Bear or Lehman in their final days.  Executives who find themselves in a credit crunch are in a nearly impossible position.  The best way they can serve equity holders is to downplay or even bury bad news to head off the looming crisis of confidence.  But if they do so, they face presecution for making false statements about the company, ironically under laws meant to protect equity holders.

First it was breast implants, then thimerosal, and now it is phthalates.  Each have been attacked in turn by the junk-science / media / tort law complex.  Nobel Prize-winning chemist William Knowles wrote this week:

Lawmakers -- representing the concern of parents influenced by certain
environmentalists -- are calling for an outright ban of phthalates from
children's toys because of the misguided belief that by exposing
children to toys made with these chemicals we are putting their health
at risk.

Phthalates have a long history of attacks by environmental groups
dating back more than 30 years. Even then babies were of prime
consideration. Few chemicals have undergone such extensive testing and
survived as being safe. In fact, diisononyl phthalate, the most
commonly used phthalate in children's toys, has been subjected to more
than 200 tests....

Today, with no new scientific evidence, we are again challenging
phthalates as dangerous to babies and threatening to ban them. These
are products that have survived the toughest test of all, the test of
time. There is no evidence that babies or anyone else has ever been
harmed by them.

Eliminating phthalates from consumer products would be a true
challenge. Even more worrisome, however, is the notion that any
replacement would ever be able to pass the extreme scrutiny diisononyl
phthalate and other phthalates have.

There is nothing wrong with examining the products our children
come into contact with to be sure they pose no health risks. However,
in this case, it would be a great mistake to ban what has been proven
to be a benign product without some further scientific evidence.

I am just fine with prosecuting mortgage brokers for fraud  who deliberately misrepresented the payments and risks of the loan products they were selling.  However, to be fair, we must then also prosecute borrowers and home buyers who deliberately misrepresented their assets and income to lenders, actions that are equally fraudulent.

Or, we could just let the whole foreclosure and bankruptcy system sort everything out and let bygones by bygones. 

Interestingly, it seems to be advocates for borrowers who want to stir the whole fraud thing up and are reluctant to just let the system play itself out.  I find this odd, for a couple of reasons:

• Fraud by lenders will be hard to prove, since they all are covered by written disclosures that I am sure reveal all the terms of the loan.  The government itself has designed a number of written disclosures lenders must use  [by the way, if reformers want to start somewhere, they might begin with these government disclosures.  My experience is that they are silly and uninformative, and were put together by someone in the government who does not actually understand loans].  Fraud by borrowers, on the other hand, should be dead-easy to discover - they signed their name to an income statement and list of assets and liabilities which are quite easy to check.
• The current foreclosure and bankruptcy system is pretty fair to borrowers.  In particular, in the case of subprime loans where the borrower has little equity, foreclosure costs almost nothing in current dollars - all the loss is on the bank, with absolutely no come-backs on the borrower in the future.  The borrower must endure years of difficult credit and rebuilding trust in the system, but that is the kind of minimum cost we should expect a foreclosure or bankruptcy to carry.  We always seem to get worked up about foreclosures, because we have this picture of someone losing a home they have lived in 20 years and losing all their equity.   But in these subprime cases, where the buyer has been in the home only a few months and put in virtually no equity, I think our mental picture of the costs, at least to the borrower, of foreclosure are overblown.

As an aside, I am easily convinced that there were many mortgage brokers offering their customers atrociously bad deals and rates.  I can't imagine personally not shopping around for mortgage rates from multiple suppliers, but there are clearly people who want to walk into one guy's office and buy something from that first person.   And a number of these people chose to do business with firms that gave them really poor service (if service is defined as getting the best possible loan for the buyer).  Which gets me to the subject of branding.

I know that there are a lot of folks, particularly on the left, who hate large corporations and national brands, but to a large extent the uneven and unpredictable quality of mortgage brokers may be due to a lack of national players and national brands in mortgage brokering. 

Mortgage brokers, stock brokers, and real estate brokers are all licensed by the government.  By statist thinking, that should be enough to ensure quality.  But while stock brokers and real estate brokers can be independent, most of them have organized themselves into groups under a brand name (e.g. Merrill Lynch or Century 21).  Few such national brands, if any, exist in mortgage brokering.

These brands exist because they have proven themselves useful and valuable to consumers.  Presumably they communicate some form of quality or reliability or capability beyond the level that having a government license affords.  This is not necessarily a gaurantee of perfection, of course.  Certainly Merrill Lynch brokers, form time to time, have been accused of fraudulent behavior.  But Merrill has been very fast to act on these occasions, taking actions designed to save its brand from being tainted.  It is this incentive, plus the history such brands carry in the collective memory, that gives consumers extra confidence to use brokers with these brands rather than individual practitioners.

If I was a contrarian with a load of money and a knowledge of mortgage brokering, I might be thinking about building a Century 21 or Remax-type brand in mortgage brokering.

The likely Republican presidential nominee is well to the left of the last Democratic president on economic issues.  And George McGovern sounds Laissez Faire:

Under the guise of protecting us from ourselves, the
right and the left are becoming ever more aggressive in regulating
behavior. Much paternalist scrutiny has recently centered on personal
economics...

Since leaving office I've written about public
policy from a new perspective: outside looking in. I've come to realize
that protecting freedom of choice in our everyday lives is essential to
maintaining a healthy civil society.

Why do we think we are
helping adult consumers by taking away their options? We don't take
away cars because we don't like some people speeding. We allow state
lotteries despite knowing some people are betting their grocery money.
Everyone is exposed to economic risks of some kind. But we don't
operate mindlessly in trying to smooth out every theoretical wrinkle in
life.

The nature of freedom of choice is that some people will
misuse their responsibility and hurt themselves in the process. We
should do our best to educate them, but without diminishing choice for
everyone else.

Really, its that George McGovern.

And David Mamet questions the power of government:

And I began to question my hatred for "the Corporations" - the
hatred of which, I found, was but the flip side of my hunger for those
goods and services they provide and without which we could not live.

And I began to question my distrust of the "Bad, Bad Military"
of my youth, which, I saw, was then and is now made up of those men and
women who actually risk their lives to protect the rest of us from a
very hostile world"¦

But if the government is not to intervene, how will we, mere human beings, work it all out?

I wondered and read, and it occurred to me that I knew the
answer, and here it is: We just seem to. How do I know? From
experience"¦

Strand unacquainted bus travelers in the middle of the night,
and what do you get? A lot of bad drama, and a shake-and-bake Mayflower
Compact. Each, instantly, adds what he or she can to the solution. Why?
Each wants, and in fact needs, to contribute - to throw into the pot
what gifts each has in order to achieve the overall goal, as well as
status in the new-formed community. And so they work it out.

And so I, like many of the liberal congregation, began, teeth
grinding, to attempt to do so. And in doing so, I recognized that I
held those two views of America (politics, government, corporations,
the military). One was of a state where everything was magically wrong
and must be immediately corrected at any cost; and the other - the
world in which I actually functioned day to day - was made up of
people, most of whom were reasonably trying to maximize their comfort
by getting along with each other (in the workplace, the marketplace,
the jury room, on the freeway, even at the school-board meeting).

And I realized that the time had come for me to avow my
participation in that America in which I chose to live, and that that
country was not a schoolroom teaching values, but a marketplace"¦

At a recent meeting of the National Associate of State Treasurers
(Yawn), John Podesta, after stating hilariously that what the world
really needed was continued leadership by state treasurers on the
global warming issue, argued: 

"Climate change is a threat to the long-term value of the economy and
failure to calculate its impacts or manage or reduce its harm mean that
our assets are being over valued, and the risks we face are being under
reported."

I have a lot of interest in global warming, which is why I created a second blog Climate Skeptic to deal with these issues.  There is a lot about anthropogenic warming we do not understand.  But what is nearly a total 100% lock is that, at least for the United States, the cost to our economy of regulations to limit CO2 will be far higher than the likely net-negative effects of warming (Al Gore's 20 foot sea level rises and other anti-rational claims notwithstanding).  At its heart, isn't the risk really of damage from government regulation, rather than the climate?

Via Michael Giberson of Knowledge Problem, the NY Attorney General is concerned that certain companies are not disclosing global warming-related risks, but he is at least more honest about what those risks are:

Last Friday, New York Attorney General Andrew Cuomo sent subpoenas
to five power generating companies seeking to find out if the companies
had properly disclosed financial risks associated with proposed new
coal-fired power plants.

All five of the letters accompanying the subpoenas are available from the NYAG's website.  Here is the opening paragraph of the letter to Dominion Resources, Inc.:

We are aware that Dominion Resources, Inc., ("Dominion")
has plans to build a coal-fired electric generating unit that would
generate 585 megawatts of electricity without current plans to capture
and sequester the resulting carbon dioxide (CO2) emissions. The
increase in CO2 emissions from the operating of this unit, in
combination with Dominion's other coal-fired plants, will subject
Dominion to increased financial, regulatory, and litigation risks. We
are concerned that Dominion has not adequately disclosed these risks to
its shareholders, including the New York State Common Retirement Fund,
which is a significant holder of Dominion stock. Pursuant to the
Attorney General's investigatory authority under New York General
Business Law § 352, and New York Executive Law § 63(12), accompanying
this letter is a subpoena seeking information regarding Dominion's
analysis of its climate risks and its disclosures of such risks to
investors.

A little later, the letter gets more specific: "For example, any one
of the several new or likely regulatory initiatives for CO2 emissions
from power plants "“ including state carbon controls, EPA's regulations
under the Clean Air Act, or the enactment of federal global warming
legislation "“ would add a significant cost to carbon-intensive coal
generation, such as the new coal plant planned by Dominion." In
addition to Dominion, the NYAG's office sent subpoenas to AES, Dynegy,
Peabody, and Xcel. Here is the story from the New York Times.

The letter doesn't say so explicitly, but I'm sure the message was
clear, that in addition to new or likely legislative actions and
substantive regulatory initiatives, the companies also faced the risks
and costs associated with being harassed by swarms of officers from the
NYAG's office.

You can see what is going on here -- following in the rich tradition established by the egregious Eliot Spitzer, the NY AG is again overreaching his office's authority and attempting to set regulatory policy rather than enforce it.  But at least he is honest in portraying the main risk to be a government regulatory backlash on these companies.

Thinking about this, couldn't every company put this in their boilerplate?  I mean, for most of us, the number one risk we face all the time is that the government will either do something to us specifically or the economy in general to hurt results.  Let's just have everyone add the line "the government poses a huge risk to our business plan" and be done with it.

I could probably fill this blog with absurd examples of American middle class snobbery, but I thought this one from TJIC was particularly good:

"¦Eleven tonnes of papayas were dumped outside the Agriculture and
Cooperatives Ministry yesterday by Greenpeace in protest at "¦
open-field trials of genetically-modified crops.

"¦people flocked to load up on the free papayas, ignoring the environmental organisation's campaign against "¦ GM fruit"¦

Many passers-by, who mostly knew nothing about transgenic fruit, said they did not care about any health risks.

They were just thinking about how hungry they were"¦

A while back I wrote about this same phenomenon:

Progressives do not like American factories appearing in third world
countries, paying locals wages progressives feel are too low, and
disrupting agrarian economies with which progressives were more
comfortable.  But these changes are all the sum of actions by
individuals, so it is illustrative to think about what is going on in
these countries at the individual level. 

One morning, a rice farmer in southeast Asia might faces a choice.
He can continue a life of brutal, back-breaking labor from dawn to dusk
for what is essentially subsistence earnings.  He can continue to see a
large number of his children die young from malnutrition and disease.
He can continue a lifestyle so static, so devoid of opportunity for
advancement, that it is nearly identical to the life led by his
ancestors in the same spot a thousand years ago.

Or, he can go to the local Nike factory, work long hours (but
certainly no longer than he worked in the field) for low pay (but
certainly more than he was making subsistence farming) and take a shot
at changing his life.  And you know what, many men (and women) in his
position choose the Nike factory.

Much of the opposition to factory wages in Asia can be boiled down to members of the American middle class saying "I would never accept that job at that rate, so they should not either."

From Fred Thompson, via Insty:

But he received his biggest applause for blasting the bipartisan plan
for immigration reform, which he called unworkable. "We are a nation of
compassion, a nation of immigrants," he said. "But this is our home . .
. and we get to decide who comes into our home."

Isn't this an essentially socialist view of property, that the whole country is essentially owned by all of us collectively and it is our government's responsibility to administer access to this community property?

I am just completing a course on the history of Rome from the Teaching Company (whose products have been universally excellent in my experience).  One of the interesting things that contributed substantially to Rome's strength, at least through the BC years, was their flexibility and success in absorbing many different peoples into the state.  They actually had various grades of citizenship, including such things as Latin Rights where certain peoples could get access to some aspects of citizenship (e.g. ability to conduct commerce and access to the judicial system) while being denied others (e.g. voting). 

Can't we figure out something similar?  Shouldn't it be possible to allow fairly open access to being present and conducting commerce in this country, while still having much tougher and tighter standards for voting and getting government handouts?  The taxes immigrants pay easily cover things like emergency services and extra load on the courts, but fall short of covering extra welfare and education. 

Unfortunately, the debate seems to be dominated either by Lou Dobbs racists who see Mexicans as spreading leprosy or by Marxists who see poor immigrants as a wedge to push socialism.  The problem is again traceable to a President who tries to lead on divisive issues without trying to clearly communicate a moral high ground.  For example, I would have first tried to establish one simple principle that has the virtue of being consistent with most of America's history:   

"The US should allow easy access to our country for immigrants, but immigrants should expect that immigration involves financial risks which they, not current Americans, will need to bear.  Over time, they will have access to full citizenship but the bar for such rights will be set high."

OK, it needs to be shorter and pithier, but you get the idea.  Reagan was fabulous at this, and Clinton was pretty good in his own way.  Bush sucks at it.

FIRE points out yet another university that is attempting to restrict speech it does not agree with, in the name of, uh, freedom or something.  The university's Student Union proposed to close down the campus humor magazine that made a joke about race relations.  The reason?

Specifically, in response to the "overtly racist, sexist, and generally
offensive articles, statements, and images published in the Spring
Issue of Gravity Magazine," and because the publication of this joke
had caused "members of our community to feel "˜unsafe,' "˜powerless,'
"˜unsupported,' "˜harassed,' and "˜threatened;'"

Now, this university is private, so I suppose as a private body they can define acceptable speech in their private confines any way they want (just as my kids dropping F bombs is legal by the first amendment, but banned in my household).  However, I fear that the folks involved do not understand that they need to leave these attitudes behind when they leave their private little cocoon university, because speech that hurts your feelings is not illegal, thank goodness, in the rest of the country. 

Unfortunately, it is almost too much to ask nowadays that universities understand that, as Louis Brandeis wrote, the best response to speech you don't like is more speech.  The rich irony comes from the fact that this occurred at ... Brandeis University.  The freaking place was named after the man who wrote:

Those who won our independence believed"¦ that freedom to think as
you will and to speak as you think are means indispensable to the
discovery and spread of political truth; that without free speech and
assembly discussion would be futile; that with them, discussion affords
ordinarily adequate protection against the dissemination of noxious
doctrine"¦

They recognized the risks to which all human institutions are
subject. But they knew that order cannot be secured merely through fear
of punishment for its infraction; that it is hazardous to discourage
thought, hope and imagination; that fear breeds repression; that
repression breeds hate; that hate menaces stable government; that the
path of safety lies in the opportunity to discuss freely supposed
grievances and proposed remedies; and that the fitting remedy for evil counsels is good ones.

Fear of serious injury cannot alone justify suppression of free
speech and assembly"¦ To justify suppression of free speech there must
be reasonable ground to fear that serious evil will result if free
speech is practiced"¦ [N]o danger flowing from speech can be deemed
clear and present unless the incidence of the evil apprehended is so
imminent that it may befall before there is opportunity for full
discussion. If there be time to expose through discussion the
falsehoods and fallacies, to avert the evil by the process of
education, the remedy to be applied is more speech, not enforced silence. Only an emergency can justify repression.   (Emphasis added.)

Check out the FIRE article to learn much more about the events in question, including what the original joke was.

I don't have any particularly intelligent analysis of the SCOTUS's upholding the constitutionality of a partial birth abortion ban, so I won't offer any.

However, I have a question for women's groups.  Groups like NOW support the federal government's constitutional right to ban breast implants,and in fact call for such a ban on the NOW web site.  Simultaneously, they oppose the federal government's constitutional right to ban partial birth abortions.

My question is:  How can you reconcile these two views?  Aren't these two procedures similar enough (both are elective medical procedures that are invasive of a woman's body) to be Constitutionally identical?  I understand that from a social conservative's point of view that the abortion procedure might warrant more legal attention if you believe there is a second life (ie the fetus) involved here.  But how do you justify that the feds should have more power to regulate and ban boob jobs than they have to ban one type of abortion?  And please, don't justify it because you think abortion is serious but breast implants are frivolous  Those are legislative and political arguments about what should and should not be done with the fed's power, not Constitutional arguments about what that power actually is.

The women's groups' application of their "its our body" and "pro-choice" positions have always struck me as incredibly selective.  It's a woman's choice to weigh the risks and benefits of an abortion, but apparently it's the government's choice to weight the risks and benefits of breast implants.  I wrote more about this selective libertarianism when I made a plea for applying the privacy and choice logic of abortion supporters to all aspects of government regulation.  I criticized NOW for another instance of selective libertarianism associated with government and women's bodies when NOW supported having the government limit a woman's choice to use Vioxx to relieve pain.

Last weekend I was watching an NFL game (I forget which one) and the team, which already had a solid lead, was considering going for a TD rather than a field goal at fourth and goal.  The announcer was going "Bad idea, bad decision.  Take the field goal and the sure points.  You don't want to risk getting the other team back in the game with the emotional prop of stopping you at fourth and goal."  Well, the team went for it and made the touchdown, after which the announcer said "I guess it was a good decision after all."

But was it?  If you choose to hit a nineteen in blackjack, and pull a deuce, was it a good decision?  If you  placed a 50-50 bet that a normal die roll will come up with a "6", and it does, was that a good decision?  I would say no.  I would argue that both decisions were bad decisions, despite the fact they happened to yield positive results for the decision-maker.  The reason is that, given the information the decision-maker had at the time of the decision, both moves have an expected value less than zero.

I won't bore my audience with a digression too far into expected value and decision trees.  Suffice it to say that the standard approach for making decisions in uncertainty is to list the possible outcomes of the decision, assign values and probabilities to each outcome, and then total up the sums.  The decision that yields the highest value times probability is the is the one that you would expect, on average, to yield the highest value.   Take the example of the bet on the die roll above.  If you bet a dollar, you would win a dollar on a roll of "6", which is a 16.7% probability.  You would lose a dollar on a roll of 1-5, which is a 83.3% probability.   The value of the "don't bet" decision is zero.  The value of the "bet" decision is 16.7% x $1 plus 83.3% x -$1 equals -$0.67.  So the "no bet" decision is best, since at zero it is higher than the negative outcome of the "bet" decision.  Here is a more complete discussion of the decision tree process.

A couple of provisos:

• When the situation is more complex, the trick of course is to assign the right values and probabilities.  We can assign these exactly for cards and dice, but it's a little harder for something in the business world, like say Enron's decision to enter the broadband business.  But managers are paid the big bucks to do their best.  And managers have tools at their disposal to manage their lack of information.  For example, once you build a base-case, you can ask questions like  "OK, I am not sure about the size of the broadband market, but how large does it have to potentially be to offset the risk involved."
• Like many real-world processes as the approach the asymptotes,  things get a bit squirrelly for really small probability events, particularly when they have very large financial values (positive or negative) attached.  Small probability positive events are essentially a lottery, and many people buy lottery tickets, even though we know the expected value is less than the price.  I play blackjack too, despite a negative expected value, because I get non-monetary benefits from the play.  Small probability negative events are called disasters, and are things we insure for.  Many times the decision to buy insurance has a negative expected value, but we do it anyway because we would sleep better at night knowing that we may be throwing away a little expected value, but we have pre-empted an event that would bankrupt us.  Here we get into interesting topics of risk profiles and risk tolerance, which I will avoid.

Unfortunately, in evaluating historical decisions, we often ignore the state of facts and risks the decision-maker faced at the time of the decision.  We argue Mead should have pursued Lee harder after Gettysburg, because we know now Lee's army got trapped behind a swollen river. The Chargers shouldn't have traded half their assets** to move up one spot in the draft to get Ryan Leaf.  And Enron should not have entered the broadband business.   We treat the decision makers in each of these as boneheads today (we even threw Skilling in jail, as much for his failed business decision as for any fraud).  But all of these evaluations are based on the outcomes, not on what the decision-makers were facing at the time.  Mead had been in charge of the army for less than a week, had driven Lee from a battlefield for the first time ever, and had a primary charge of defending Washington.  It is hard to believe today, but the Peyton Manning and Ryan Leaf were considered nearly equivalent in quality in the '98 draft, and the Chargers trade might have been perfectly appropriate if they had actually gotten a Manning-quality quarterback.  Enron's vision of broadband looked like it would become an enormous business, which in fact it did, just five years too late for them.

** The Chargers traded an inventory of picks and players to the Arizona Cardinals, who, true to form, did nothing with this goldmine.  The Cowboys, by contrast, arguably built a whole dynasty in the 90's off the slew of picks they got in the Herschal Walker trade with Minnesota.

Dale Franks at QandO, quoting some from John Derbyshire, raise a key question that certainly has always concerned me as a pro-immigration libertarian:

As to why I think libertarians are nuts to favor mass uncontrolled
immigration from the third world: I think they are nuts because their
enthusiasm on this matter is suicidal to their cause. Their ideological
passion is blinding them to a rather obvious fact: that libertarianism
is a peculiarly American doctrine, with very little appeal to the
huddled masses of the third world. If libertarianism implies mass
third-world immigration, then it is self-destroying. Libertarianism is
simply not attractive either to illiterate peasants from mercantilist
Latin American states, or to East Asians with traditions of
imperial-bureaucratic paternalism, or to the products of Middle Eastern
Muslim theocracies.

In other words, by open immigration, are we letting in waves of people from statist traditions that will drive the US further away from an open, liberal society.  This worries me from time to time, enough that I don't have a fully crafted response that I consider definitive.  However, I want to offer some initial thoughts.  Before I do, here are two background points:

1. I think the freedom to move to another country, take a job there, buy property, live there, etc. is a basic individual right that should not be limited to the accident of not having been born originally in that country.  Freedom of association is a right of all human beings, not merely a result of citizenship.  I go into these arguments in much more detail here.
2. Note that immigrant status and citizen status are two different things.  Immigrant means that you are present in a country but not a citizen.  As an immigrant, I believe you should be able to own property, accept employment, and most of the other things you and I do every day.  However, immigrants don't vote.  Only the narrow class of people called citizens may vote, and there is some process where over time immigrants can meet some hurdles and become citizens.  The key problem for a libertarian, which I think Dale Franks would agree with, is "which status must you be to get government handouts?"  My view is that only citizens should get most handouts, like welfare and food stamps and such, though immigrants should have access to things like infrastructure (highways) and emergency services.  It is when one argues that any immigrant should have access to all this stuff that the whole immigration picture becomes a total mess.

With those couple of things in mind, here are my thoughts on the issue Franks raises:

• The US is not made up primarily of Scots and Dutch, two areas that can legitimately claim to have strong liberal traditions.  Most of our past immigration has come from Ireland and Germany and Scandinavia and Eastern Europe.  None of these areas particularly have a liberal tradition, and many were nationalistic-militaristic-paternalistic governments.  Also, we may forget it today, but when countries like Ireland where a large source of our immigration in the 19th century, they were a third world country at the time.  Just look at Vietnam -- it has one of the worst traditions I can think of, but as a class Vietnamese immigrants tend to be capitalist tigers.
• Depending on how one counts it, US citizens are already 65%-85% statist anyway, so I am not sure immigration is going to change the mix negatively.  In other words, the statist train has already sailed.  In fact, statism has flourished in this country from 1930-1980 during exactly the same period of time we were most restrictionist in immigration.  Sure, correlation is not causation, but certainly you can't prove to me that restrictionist immigration slows statism in any way. 
• Much of the statist economic policies in this country were launched by Wilson and Roosevelt, from two of the more blue-blooded families in America.  Now this may not mean much.  What I don't know, because I don't know enough history of the period, is this:  Did support for New Deal (and more extreme socialist NRA-type policies) come disproportionately from new immigrants?  My sense is exactly the opposite, that in fact some New Deal policies like the minimum wage were aimed by nativists at circumscribing the opportunities of immigrants.
• In effect, the author is advocating that we limit the freedom of movement and property ownership of people not born in the US because we are afraid that these new entrants into our country will bring political pressure to undermine individual rights.  I think that is a legitimate fear, but if I accept that argument, I don't know why I would not also have to accept the argument that we should take away the freedom of speech from people who argue for limitations of individual rights.  In both cases, we are giving political access to people who want to undermine our basic liberties.  My conclusion:  I can't go there in either case.  I refuse to put a political test on the exercise of individual rights, even for people with really bad politics.
• A well-crafted welfare regime would make the problem a lot better.  I am not so unrealistic to expect the welfare state to go away tomorrow, but I do think that the political will can be mustered to deny substantial benefits to new non-citizen immigrants.  Which way we go on this will decide whether we can open up immigration.  If welfare handouts to immigrants are limited, then new immigrants will tend to self-select towards those looking to work hard and take risks to make it on their own.  This will mitigate the author's concern, and is in fact how we have maintained our culture of liberality through a history that was dominated mostly by open rather than closed immigration.  If welfare handouts are generous to new immigrants, then immigrants will self-select to people looking to live off the state.  If we insist on the latter, then I guess I will agree that immigration needs to be limited (though there is an even better reason for doing so in that we will, in that case, surely bankrupt ourselves.)

In what is becoming a Thursday night tradition, I am posting the next two chapters, numbers three and four, of my book BMOC.  The first two chapters were posted here.  The next chapters after these are here.  Before we start, here are some of the "reviews":

"Who
is this guy?  You're not allowed to portray lawyers in novels as
anything but dedicated warriors for the common good.  In the words we
teach all of our clients when they are suing for millions over
spilled coffee, "Ëœit is not about the money.'  We hate this book,
and if you read it, we will sue you."

"“
America's tort lawyers

"This
Meyer person obviously never read the instruction manual for writing
novels.  Journalists are supposed to be brave and honest, while
corporations are supposed to be evil and rapacious, not the other way
around."

"“
Other modern novel writers

"It's
not that bad here."

"“
The Harvard University administration

"I
was kind of proud that Warren wrote a novel, but then I read it and
saw the dirty stuff and all the bad words.  Now I am really
embarrassed."

"“
Warren's mother

"We
are shocked that anyone would imply that our legislative efforts are
aimed more at helping favored political supporters than championing
the common man."

"“
Congress

"This
is what he was doing at the office instead of driving the kids to
soccer?  Writing a novel? I thought he was doing work!"

"“
Warren's wife

"Warren
was never my student.  I swear.  Don't even think about blaming
this on me."

"“
Warren's high school English teacher

And now, chapters three and four:

chapter three

It was one
of those rare, perfect weather days in New York City "“ sunny and 70
degrees.  A few weeks from now, it would be slit-your-throat weather,
so hot and humid that the grime from the surrounding buildings would
seem to leech into your pores.  On a beautiful day like this,
everyone was in a better mood, and New Yorkers could almost creep up
the attitude scale to "human".  Now, it wasn't like they would
smile at you and wish you a good day, but it did mean that if you
keeled over unconscious in the middle of the sidewalk, someone might
check on you rather than just stepping over your body on their way to
lunch.

Continue reading ‘BMOC, Chapters 3 and 4’ »

Steven Milloy, author of the indispensable Junkscience.com, points out that Harvard's Ascherio and WIllet, authors of the study on which NYC's transfat ban was based, have also identified dangers of a similar magnitude and with similar statistical significance (the latter admittedly low, but it was low for their transfat conclusions as well) of:

• Sunflower oil
• Red meat
• Dairy products
• Soft drinks

If NYC is consistent in its logic, then it must ban these other substances.  These substances showed the same level (or greater) of health risks at the same level of scientific proof by the same study authors. 

Now that the Board has deemed their dubious trans fats research
suitable for dictating public policy, New Yorkers ought to hope that
Ascherio and Willett don't press the Board to implement some of their
other published research that is similar in "quality" to their trans
fats work.

 

New Yorkers could, for example, see restaurants
banned from serving potatoes, peas, peanuts, beans, lentils, orange
juice and grapefruit juice. Ascherio-Willett reported an increase in
the risk of heart disease among consumers of these foods in the Annals of Internal Medicine
(June 2001). Although none of those slight correlations were
statistically meaningful -- and, in all probability, were simply
meaningless chance occurrences -- a similar shortcoming didn't seem to
matter to the Board when it came to their trans fats research.