Saturday, October 24, 2009

Acklin and Freakonomics

Over at the Pittsburgh Comet, Bram has had a series of posts on Kevin Acklin’s accusations that John Verbanac has wielded undue influence over the Ravenstahl administration, and Our Mayor’s denials. A glance at the PG indicates some attention is being paid, but even as they notice Verbanac’s connection to Rick Santorum (!) they dismiss the seriousness of the accusations. Apparently what Acklin has released includes, and is possibly limited to, a portion of emails Verbanac has sent to Ravenstahl. Acklin alleges this indicates the degree of influence Verbanac has.

As a general geek, and a geek familiar with Star Wars, I want to see the email from Verbanac that reads: “Luke, I am your father” and Our Mayor’s reply:

There is another thing I have been thinking about in the last week or so (well, several things, but I am only going to talk about one for now). The authors of Freakonomics (Levitt and Dubner) have written a sequel, Superfreakonomics. As far as I am concerned, they might just as well have borrowed a line from Mel Brooks, and subtitled it “The quest for more money” (or at least “The quest to maintain the lifestyle to which we have become accustomed”). Now, I thoroughly enjoyed the first Freakonomics, although even I had trouble slogging through all of it. I am looking forward to the new one, but I gather in their last chapter they cross some lines that may have been ill considered.

Before I discuss what I know about that, a brief tangent. I knew a guy who was interested in bicycles, and in fact wavered between what would have been a good career in classical music and running a bike shop (I believe the shop may have won). One time, I praised Consumer Reports, the magazine that won’t take advertising to be able to produce unquestionable objective reports to my friend/acquaintance. He responded that the bicycle community did not like Consumer Reports because while they might employ very smart scientists, they only knew a little about a lot of things. As far as he was concerned, the CU guys did not know enough about bikes to produce good recommendations.

The reason I told that story is the last chapter of Superfreakonomics, on how to address climate change. Smart guys Levitt and Dubner reference a scientist named Ken Caldeira, who has suggested injecting sulphate into the atmosphere for the purposes of blocking some of the sun rays. An apparently very smart guy Nathan Myhrvold also weighed in in the book, pointing out that because solar panels are (often) black and also take energy to manufacture, rather like hybrids they take some time to become carbon neutral and then carbon positive. Also Myhrvold calls for at least research into this sulphate injection thing.

And for what it is worth I agree. But apparently Levitt and Dubner suggested people suggesting we need carbon taxes and sacrifice are ignoring, deliberately or otherwise, this sulphate thing. Myhrvold has been taken to task by a climate change person (even though even Myhrvold does advocate using solar power, he just disputes the timing of the payoff), this Calderia says he was mischaracterized (he in fact thinks our carbon footprint needs to be near zero even for his idea to work), and Levitt and Dubner must be delighted by all his publicity.

But someone, I think a conservative, suggested that Levitt in particular is an economist that makes his living by punching holes in conventional wisdom; rather like Consumer Reports makes a living by deflating industry claims. However, sometimes when you try to skewer an accepted wisdom, like the accepted wisdom in climate change that reduction in burning fossil fuels with taxes and switching to new methods of power like solar and wind will have a positive effect on climate, you end up stretching the claims of another person, in this case Calderia, past where that person intended they go.

I am suspicious of any panacea for climate change. I think that a more measured and retrained use of our natural resources (burning carbon more frugally) by driving smaller cars, driving less than we do now, driving slower on the highway than we do now and gradually switching over to electric power provided by solar and wind (perhaps with supplemental nuclear until wind and solar get efficient enough) is a good idea. Future generations will appreciate both having oil, coal and natural gas available, and a cleaner, temperate planet to live on. Now, sulphate injection into the air may be necessary at some point. But I would like to give the reduction thing a chance, even while scientists look at a variety of ideas (sulphate injections, biodiesel using non-food parts of plants like corn, etc) as either factors in reduction or supplements to it. And shame on Levitt and Myhrvold for belittling the efforts of mainstream climate change scientists, and giving aid and comfort to entities like that American Petroleum Institute.

Thursday, October 15, 2009

A complicated world ...

One of the problems I have always had with Democrats is their willingness to embrace ideas that have economic consequences while not wanting to discuss those economic consequences. Probably my favorite example is the minimum wage. An economist will tell you that the minimum wage is pad to any and all types of workers, not only bread winners for a family of four make the minimum, but also teenagers at a summer job. You hope that not many bread winners do make the minimum, but you know some do (and there are things to say about that, that I don’t have space for). Now, if you raise the minimum, the bread winners get that raise, but it is also possible that the summer job teenagers will be put out of work (by their employer instead of him/her paying the teenager the higher wage). How do we evaluate that result? Well, when I try to talk about that with many liberals, they think I am trying to find an excuse not to raise the minimum wage, when in fact I think I am just trying to find a way to help the bread winners without harming the summer job teenagers (an increase in the earned income tax credit perhaps, for example).

My point is that the Democrats have seemed to lack a single, coherent, thought out sort of plan to alleviate poverty for quite some time, so the battles over programs have to be fought internally (before being fought externally) time after time. I think that the reason for that is the Democrats attempt’s to lure Reagan (conservative) Democrats to vote for actual Democrats can’t include a fixed message of helping the poor.

By contrast, Republicans have had it easy, they can use a simple message of lower taxes, fiscal discipline and less government intrusion to reassure their base and lure conservative, rural white voters who in the past might have voted Democratic (as well as luring corporate donors). But there are some problems with that. First of all, the Republicans demonstrated during the last Presidency, especially from 2002 to the end of 2005 (when they controlled Congress as well), that they were unable to actually restrain themselves from spending at least as much or more than Democrats do. A related problem is that Republicans want to reward their districts for voting them into office just like Democrats do, and Republicans also want to reward corporate sponsors. Republicans can reward big business in two ways, by giving them taxpayer money for contracts, and by loosening regulations. Of course, we just had a lesson in what happens when you loosen regulations (in this case on financial markets). Their willingness to indulge their philosophy when it came to regulations and ignore their philosophy when it came to spending brought this country to the brink of disaster.

The thing is, we found out that the Republicans' famous discipline carries the price of tolerating no dissent, which in this case meant there were no ideological purists criticizing the party or Congress or the President for violating their ideology. Glenn Greenwald talks about this in his Wednesday column in Salon, in the context of why Democrats need to not be afraid to criticize Obama. Now, some criticism might have the problem of what I described in the first paragraph, of not at least considering all factors. I think, for example, we probably do have to send more troops to Afghanistan (because I think we do need to try to bring at least temporary stability to the country), although I also think we need to carefully distance ourselves from Karzai, who seems incapable of dealing with the corruption in his administration. And I think advocating simply withdrawing is reckless, although a discussion of those positions would be a good thing. Greenwald’s point, and I would agree, is that the Republicans would not and did not criticize Bush on that or any issue, and simply criticize Obama on all his policies and everything he doesn’t do as well.

So while the Democrats are all over the map, the Republicans pay lip service to their core ideals without trying to actually work towards them, and criticize nothing when they are in charge and everything when they aren’t. It’s hard to defend the current political situation when people say they are tired of it.

Tuesday, October 13, 2009

How free a market?

There are a bunch of elements in the health care/insurance reform story. Just the latest piece from a health insurance company association, a report prepared by Price Waterhouse Coopers that says that health insurance premiums will go up by more than they would have anyway if reform is passed. I saw the woman who is the association spokesman or maybe a/the boss on the PBS News Hour last night, and she was claiming that reform did not go far enough, so the health insurance companies that are members of her organization would be forced to raise rates (for example, not everyone would be forced to join, so the health insurance companies wouldn’t have access to young health people to gouge for insurance). Apparently there are holes in the report, which were reported on by the White House and admitted by Price Waterhouse.

Meanwhile, though, just to be clear, health insurance companies right now are benefitting from the current situation. So are pharmaceutical companies and to a lesser extent some doctors, but I am not going to address their situations right now. Health insurance companies are reported to only return 80% of premiums paid in as claims, on average. In Europe/Japan, in those places where they have private health insurance the rates are more like 95%.I don’t know what the levels are here in Pittsburgh, where the two biggest health insurance companies are “not for profit” (UPMC and Highmaek). But I assume we have all heard of “excess revenue”, the money beyond pay outs in claims that both these companies have. Some of that money likely goes into reserves (insurance companies are inventive at creating reasons to have larger reserves), some likely goes into additional purchases of land, buildings and quite frankly probably more lavish of offices. And some probably goes into executive compensation, bonuses for creating the very excess revenues used to pay the bonuses (a nice sort of symmetry).

Now given this sort of situation, Republicans are saying that our problems would be over if people and companies could buy health insurance across state lines. Currently there are state rules that prevent or at least limit that sort of thing. I know that there are other health insurance companies in the Pittsburgh area besides Highmark and UPMC; Aetna provides insurance for Rite Aid employees here. I don’t know if Aetna provides insurance for individuals, but given the lousy service they seem to provide Rite Aid employees, no one might want it. Still, from the point of view of the health insurance companies, right now everything is pretty hunky dory. I assume if the Republicans did mange to tear down state rules for health insurance companies, they might oblige by slowing the rate of increase of the growth in health insurance premiums, to show their gratitude.

Now, there may be some Blue Cross/Blue Shields or other health insurance companies dotted around the landscape that do hold to their original mission of providing health insurance without taking a substantial profit. Everyone might flock to them across state lines for individual and/or corporate health insurance, if permitted. But I have two, really three concerns about that.

First of all, they are not going to know all the physicians all over the country. Health insurance companies work now by negotiating with some physicians to be part of a network, and giving those doctors a lower but guaranteed payment. Maybe that won’t matter because my mythical BC/BS has a lower profit rate, but it makes me wonder.

Second, someone will have a problem sometime with a claim (it is inevitable), and when they go to complain, how difficult will it be to reach across state lines and contact this mythical BC/BS. Often, when you are dealing with a health insurance problem, you are yourself not 100% and may have trouble pursuing this. Of course, with UPMC or Highmark, you can visit offices, and talk to a person. Plus you can contact the state insurance commissioner and/or KDKA, WTAE or WIIC to put pressure on the insurance company. That will be more difficult if the BC/BS is out of state.

Finally, I wonder if lower cost health insurance companies taking business from all across the country might become victims of their own success. First, they would have to hire more staff and expand operations. There is always a danger of finding excuses to increase rates because of that expansion. And also there is a danger the health insurance company might go from being a local oligopy to being a regional or national oligopy, and find it attractive to raise rates in different parts of the country to levels just below the local health insurance companies.

I can’t say for sure these things would happen. But I will say that by capitalist standards health insurance companies are very successful now. They should be able to maintain that level of success even if deregulated, although it is possible that we might see health insurance firms trying to push other firms out of business, and an emergence of only a few national firms (a la oil companies). I am not sure that would be an improvement in our situation.

Monday, October 12, 2009

The big story ...

Not the stillers defense. In fact, being at Podcamp this weekend, I missed the game. Speaking of Podcamp (more on that perhaps in the future), one presenter (the person who does “burghbaby”, accessible through “That’s Church”) said never to post just to apologize for not posting. I don’t believe I do that, but I do try to apologize whenever I get back to posting when I haven’t done it in a while. Like now. There are other things going on in my life, and I have been distracted.

Still, how could anyone fail to hear about Obama getting the peace prize? Ross Douthat has a column today that hits all the high notes of the conservative reaction to the news. The title of the column is actually “Heckuva job, Barack”. While he lands the slap in the face, the title is also a reminder of how bankrupt the Republican party is in terms of leadership. I won’t go through the whole column except to say that Douthat hits many of anti-Obama themes of the Republican opposition, without necessarily endorsing them (walking that thin line so as to seem a “reasonable” and “thoughtful” conservative). He managed to inject religion and Marxism into his narrative while seeming to take Obama’s side: “Here was a place to draw a clean line between himself and all the overzealous Obamaphiles, at home and abroad, who poured their post-Christian, post-Marxist yearnings into the vessel of his 2008 campaign.” Douthat calls for Obama to decline the award after Obama has agreed to accept it. Actually, it doesn’t matter whether Obama accepts or declines, this “unearned” award will find its way into statements of most Republican for at least the next three years.

And by the way, I don’t think Obama really does deserve the award myself. I think the Nobel people (apparently there are five Norwegians on the this committee) could have given it to someone else, and waited to see what Obama does for the next three years. But it is a fait accompli, and at least Obama has been humble in talking about it. He is very good at knowing what to say.

I think a more interesting question is why did the five Norwegians give Obama the peace prize? Douthat suggests that world leaders are snickering at Obama for not deserving the award, and no doubt some are. Lech Walesa (remember him?) was particularly ungracious in his reaction. But I suspect the Norwegians were trying themselves to do their part to promote peace, to be the change they want to see (as apparently Gandhi said). I think they were trying to bolster Obama’s support at home by giving him this international accolade. I think the world (by which I mean Europe, which most of us probably think as guys speaking English with funny accents, unlike our clear, unaccented English) is aware of the opposition Obama has faced, and desperately wants Obama to be successful. I believe the rest of the world that was aware of the second President Bush was afraid of him. I mean, Bush invaded countries that had nothing to do with 9/11, we tortured and imprisoned people indefinitely and we let our economy get so bad that it dragged down the rest of the world (again). I think at least the five Norwegians think that by giving Obama the Nobel peace prize, they might persuade us the rest of the world thinks highly of Obama, and we should too.

I can’t see it as a negative that at least five Norwegians, and probably quite a few more Europeans and others, think Obama is pretty important. Who am I to argue?

By the way, Saturday Night had a cute on paper but painful to watch bit with their Obama impersonator. He not only won the Peace Prize, but the Powerball as well. He commented that the staffer carrying the giant novelty check plays the lottery every day (as she went from frozen smile to glower).