Relevant and even prescient commentary on news, politics and the economy.

Noni Mausa on The Efnysien Effect

This post is by reader Noni Mausa…

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Myths and legends are not mere entertainment — instead, they can be viewed as concentrated and abstracted wisdom, offering us insight on human nature and our problems.

Case in point: In the legendary days of pre-Christian Britain, one of the early kings was called Bran the Blessed, who held court together with his brothers and their beautiful sister Branwen.

The legend tells that two of these siblings were twins — Nysien and Efnysien. Nysien was a kindly lad, whose very presence brought harmony to any room he might enter, even if the worst of enemies were there. And his brother Efnysien was just the opposite — he would raise discord between the firmest of friends or between bride and groom.

Efnysien was a proud and savage man, and his overweening pride led him to a series of atrocities when the King of Ireland came to visit. Because of Efnysien, a war arose between the British and the Irish, leading in the end to disaster for both nations — the poisoning of the Irish land and to the death of all but seven of the British warriors.

Of course this is just a legend (one clue is the Bran the Blessed was so large that when his nation went to war he could gather the anchor ropes of his whole fleet and cross the channel dragging them behind). But legends are useful for telling us things we already know. The spirit of Efnysien is still around, powerful in its ability to drag international discourse downwards into atrocity, savagery and hatred.

The Efnysien Effect is currently finding its expression through what is being called international terrorism. So, the question facing responsible international players is, how to deal with the Efnysien Effect and avoiding their atrocities to reduce all participants to the same level of barbarism?

Atrocity unilaterally redefines the context within which the social parties will act. As such, atrocity (if you lack moral barriers to doing it) is one of the most powerful tactics, if you want to prevent concord, rational and genial interaction, and abstract planning and thought. Efnysien was completely free of scruples, to the detriment of Ireland and his own country.

However, Efnysien needed more than lack of scruples in order to have the effect that he did. In addition, he had a social position which dictated he be treated with respect. As a prince of the royal family, he could not be imprisoned, exiled, or otherwise punished. Instead, his kindly and farseeing elder brother the King offered apologies over and over again to the Irish, seeking civility and dealing generously.

What came of it according to legend was not reconciliation but disaster. the King acted with civility, and that did not work. Then the king and his nation went to war, and that did not work either — all because of his inability to deal with his royal brother.

Our modern Efnysiens have both these necessary qualities — a willingness to commit atrocity, and some sort of protection or legitimacy. Their ability to drag international relationships willy-nilly into war seems to be built into our nature as social animals. Their legitimacy, whether family, religion, nation or other, prevents us from addressing the atrocity– it destroys or neuters our nature as rational and spiritual animals.

Knowing this, the real question we face when dealing with terrorism is; how do we prevent the Efnysiens of the world from setting the agenda unilaterally?

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This post was by reader Noni Mausa.

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Giulani on Democratic Tax Proposals

What on earth is Rudy babbling about now:

Republican presidential hopeful Rudy Giuliani on Monday accused Democrats of favoring a controlling “nanny government” as he continued his bashing of the rival party. The former New York mayor, opening a two-day campaign trip in the first primary state, also claimed that Democrats would raise taxes between 20 percent to 30 percent. He offered no specifics to back up those figures.

No specifics to back up his claims is about right. I get really tired of the spend and spend and borrow and borrow free lunch freaks in the GOP bashing us Democrats over taxes since all these massive deficits that their tax shifts in disguise of tax “cuts: amount to deferred taxation. But that’s not what ticks me off with respect to the latest babbling from Rudy. This is:

“It looks like they’re going to raise taxes anywhere between 20 to 30 percent. John Edwards just said he’s going to raise the capital gains tax double that. Last time we did that, we lost 40 percent in revenue. The last time we did what John Edwards is discussing, the United States lost revenue by basically discouraging people from making investments.”

Two problems here. John Edwards is not proposing a 60 percent tax on capital gains (double of 30 percent). The bigger problem is that Rudy has no evidence that treating capital gains like any other form of capital income with respect to taxation discourages investment.

I know Rudy wants to sound like a rightwing in the tradition of Donald Luskin or Rush Limbaugh. On that score – he is succeeding wonderfully as this babbling is either really stupid or really dishonest, if not both.

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Reader DXC Sends an E-Mail

Reader dxc sends me an e-mail, edited slightly for readability:

Look at the number of reputations that have gone down the toilet since “the grownups” arrived. An amazing number of pundits, economists, generals and others have brown stuff all over their faces.

The weird thing is a lot of the pundit class (not just the wingnuts) are still talking in Friedman Units.

I wonder what possessed Paulson to take the sec treas job, and if he will survive it intact? It sure wasn’t the money…

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Reader Dan on the President’s Rhetoric When it Comes to the War on Terror

This one is by reader Dan…

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The Boston Globe reports:

A day after President Bush sought to present evidence showing that Iraq is now the main battlefront against Al Qaeda, the chief US intelligence analyst for international terrorism told Congress that the network’s growing ranks in Pakistan and Afghanistan pose a more immediate threat to the United States.

In rare testimony before two House committees, Edward Gistaro, the national intelligence officer for transnational threats, said that Al Qaeda terrorists operating in South Asia are better equipped to attack the United States than the network’s followers in Iraq are.
Asked which arm of Al Qaeda concerned him the most, Gistaro told a joint session of the House armed services and intelligence panels that it was South Asia.

“The primary concern is in Al Qaeda in South Asia organizing its own plots against the United States,” he said. Al Qaeda planned the Sept. 11, 2001, attacks from its bases in Afghanistan.

The top leaders of the terrorist network, Gistaro added, are “able to exploit the comfort zone in the tribal areas” of Pakistan and Afghanistan and are “bringing people in to train for Western operations.”

“We see increased efforts on the part of Al Qaeda to try and find, train, and deploy people who could get into this country,” he testified.

Meanwhile, a top US general in Afghanistan told Pentagon reporters in a video teleconference that the number of Al Qaeda foot soldiers traveling to South Asia has increased up to 60 percent over the past year.

“It’s increased probably 50 to 60 percent over what it was last year . . . and they come from multiple areas in the Middle East,” said Army Major General David Rodriguez, commander of the 82d Airborne Division.

What is the purpose of the President’s rhetoric?

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This post was brought to you by Reader Dan.

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Reader Dan on Medicare Rates

Questions about establishing rates for Medicare Service can be approached in at least two ways according to this article:

These payment differences raise important questions about how Medicare should pay for the same procedure offered in different settings. Should payment rates vary based on cost differences between sites of care, or should they be uniform across settings? One option is to allow the rate to vary between sites of care and to base the setting-specific rate on the costs incurred by efficient providers in that setting. This is similar to Medicare’s current payment approach.11 A second option is to pay the same amount for the same service regardless of the setting, adjusting for the mix of patients. A uniform rate could be based on the cost of providing the service in the most efficient setting. Whichever option is chosen, it is important to understand how the health status of patients treated in each setting differs.
Basing payment on underlying costs. Under the first payment approach, payment variations by setting should reflect underlying cost differences among settings, such as differences in the mix of patients or providers’ cost structure. However, there is the potential for payment variations to instead be related to the separate development of each reimbursement system. Payment variations that are unrelated to differences in underlying costs could mean that the service is more profitable in one setting than another. Varying profitability could create financial incentives to shift services between settings, which might increase costs to Medicare and its beneficiaries.12

Because of the potential for differences in profitability, it is important to investigate whether payment variations reflect cost differences between the settings. Such an analysis would ideally be based on recent data on the costs incurred by efficient providers in each setting. In many cases, however, recent cost data are incomplete or unavailable. In the ASC setting, for instance, the most recent data on facility costs are from a survey conducted by the Centers for Medicare and Medicaid Services (CMS, then known as HCFA) in 1994. Thus, indirect measures of costliness also should be considered. Factors that affect the cost of providing care include regulatory requirements, productivity, infrastructure and medical equipment, staffing levels, types of procedures provided, and patients’ health status. It is presumably more costly to provide care to patients with more health problems. For example, surgical patients with comorbidities could require additional time in the operating and recovery rooms and more sophisticated monitoring during the surgery.

Basing payment on the most efficient setting. Even if payment reflects cost in each setting, one setting might be able to provide a given set of services more efficiently—at lower cost with equal or better outcomes. If so, Medicare might wish to pay a uniform rate across settings based on the costs of the most efficient setting. This policy would provide a financial incentive for services to shift to the most desirable setting while encouraging providers in other settings to become more efficient.13 If this approach were to be pursued, policymakers would need better data on the costs of care, treatment outcomes, and patients’ health status to determine the most efficient setting. Because patients’ prior health status affects both costs and outcomes, it is important to control for this variable when comparing costs and outcomes between settings.

A piece of the puzzle in setting rates.

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Comparing Presidents – Interest Payments on the National Debt

This post looks at interest on the national debt by presidency. Its kind of a strange series… the President has some influence over this – if he cuts spending, for instance, all else equal, there will eventually be a decrease in the interest payments on the debt. (It can take a while.) On the other hand, movements in the Fed Funds Rate (controlled by the Federal Reserve) set an effective floor on the interest rate paid on treasury bonds… thus, the Fed probably has more influence over the interest on the debt than the President does. That said, the President can react to these changes by the Fed. A smart President will direct the Treasury to issue more short term debt if interest rates are high and expected to drop, or to issue more long term debt if interest rates are low and expected to drop. On the other hand, with real interest rates at their lowest in almost three decades, GW directed the Treasury to retire the 30 year bond, resurrecting it only after rates began to move up. (No doubt pointing out that GW did the opposite of what just about every home owner in America did (i.e., refinancing and locking in low rates in the past few years) constitutes another manifestation of my Bush Derangement Syndrome.)

Here’s a graph of interest payments on the National Debt as a percentage of the budget, and another with debt as a percent of GDP.

The huge increases under Reagan… that’s because of the huge increases in the debt. And I note… normally, this is where someone insists that whatever positive we observe under Clinton is due to the Republican Revolution, even when the trend for whatever series we’re looking at begins in 1993. So to help out those folks, who can spot the year that Newt took over on the graph? (A less snide comment – what happened in 1995?)

Here are summary tables to match…

So what do we learn? Well, GW has been incredibly lucky so far – the combination of the Fed’s keeping interest rates low and Clinton’s paying down the debt has helped to ensure interest payments on the debt have not had consequences as bad as they might otherwise have been. (Of course, his little stunt with the 30 year bond plus the now increasing debt means he won’t be passing along any of that luck to his successor. In fact, the upward trend on interest payments mean we, the American public, will get hosed sooner rather than later. When I write, as I have many times, that in my opinion this administration is qualitatively different than all the other ones that I can remember, this is an example of what I mean.)

BTW… notice the numbers… 8 cents on every dollar spent by the Federal government these days go to pay interest on the debt. And about a cent and three quarters of every dollar produced in this country goes to pay the national debt. These are non-trivial expenses bequeathed in large part by the massive run up in debt courtesy of St. Ronald the Reagan and George Bush the elder. (What, you didn’t think all that debt was gonna come at no cost, did you? Put another way… you didn’t think Reagan’s “tax cuts” were going to be free, did you? Now is when the bill gets paid.)

Data on the debt is for the total net debt, and it comes from Office of Management of Budget Table 3.2, as does data on total outlays. That table only contains data going back to 1962.
Data for GDP comes from Office of Management of Budget Table 1.2.

Next post in the series… Farm Subsidies. And if I can get the data, I hope to follow that with Welfare.

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Healthcare Part IV – Medicare for All?

The healthy healthcare discussion on Saturday (courtesy of Dan) led me to thinking (yes, that is dangerous) about the Medicare-for-all concept. I’ve spent 30 years coping with the business details of Medicare so I wondered if I could simulate a program.

As a first quick step I pulled some physician office financials and budgets and made the following modifications:

1) dropped private pay fees to match Medicare, increased Medicaid fees to match Medicare; the change was a reduction in collected revenue of about 35% – ( this would be different for a practice that was primarily Medicaid.)

2) the billing effort would be somewhat simplified (although not as much as some might think) so I dropped 30% of the billing cost, which translated to about 5% of collected revenue

3) I did not adjust ancillaries or procedures not currently covered by Medicare, but the impact would be small in many practices, practices with imaging centers or etc. would need a more complex model

This is a rough study based on a small sample of practices, and the result is equivalent to a 30% reduction (-35+5) in collected revenue and likely a 15% – 20% reduction in take home pay and benefits.

For a surgeon earning $500,000 this would result in an income of $400,000.

For a family practice doc, this would knock an income of $120,000 down to $96,000. My model may be flawed however, a better data sample would likely tell us that the family practice doc takes a bigger hit – it depends on practice mix.

For an OB/GYN, this could mean an increase or decrease, depending on the percent of Medicaid patients, and the balance of deliveries to surgeries.

I think this would be tough to sell to physicians (Medicare has a history of political shenanigans with reimbursement rates) unless some way could be found to relieve the docs of billing and/or IT costs as an offset. Also, there would have to be some fairly sophisticated modeling to determine where proper reimbursement levels would be. The rationing issue lurks.

Medicare and Medicaid assume the government patients will be subsidized by high paying private pay. Changing the system would be an interesting challenge. I have not addressed “who do we pay for this yet.”

Your thoughts?

PS: I just signed off on my manuscript proof for a book-and-CD on medical office management. I am going to sit on my back porch this evening and have a cold brewski. I request all AB regulars join me in that ritual.

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How Can You Tell if Things are Getting Better in Iraq? Metrics

I am on record stating, before the Surge began, that I expected it to fail. I hope it succeeds – I hope something succeeds, but I don’t think this administration has the competence to get anything to work in Iraq at this point.

But a lot of people are insisting the Surge is working. Some of the signs are kind of dubious – we’re now arming and paying some of the Sunni fundamentalists that were previously shooting at US troops (and will likely be shooting at US troops again in the near future) because they’ve turned away from Al Qaeda. But there seem to be a bunch of folks who were predisposed to think the Surge was going to work telling us it is, the latest beig O”Hanlon and Pollack.

So what’s going on in Iraq? Are things getting better? Well, how would we know? The obvious metric would be – how many Iraqis are getting killed and/or fleeing their homes. But the administration won’t tell us that – they won’t even hazard a guess. Sure, we’re told that the figures printed in the Lancet were waaaay out of the ballpark, but what we aren’t told is what figures are in the ballpark.

What about alternative metrics? There was that report a month or two back, but according to the US ambassador to Iraq, electricity is “more important to the average Iraqi than all 18 benchmarks rolled up into one.” So electricity proviced to Iraqis it is… except that that funny things are happening with that metric too.

So how are we supposed to know if things are getting better? Well, maybe the lack of metrics is itself a metric. If things were getting better, wouldn’t the administration want to make it easier, not harder, for us to know? Wouldn’t they want to put out a report showing that fewer Iraqis are getting killed, that people are returning to areas that had been ethnically cleansed, that there was more electricity?

And that pardoxical metric… the lack of metrics – is a metric that everyone understands. Even the people who tell us things are getting better. Because after all, there is one more metric of how well or how poorly things are going in Iraq that we all understand. The number of westerners willing to walk the streets of Baghdad (and perhaps anyplace else in Iraq), openly, unarmed and unescorted by the military, dropped to zero per month somewhere in early 2004 and it hasn’t budged since. I think the first sign of improvement will be a change in that metric.

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Reaer Dan on Terrorism, Part 2

This post is by Reader Dan…

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Another try at a serious discussion of terrorism.

This post follows up a previous post on terrorismlisting four very general outlooks.

This article on electrical grids in Iraq has wider implications than causing havoc in Baghdad. John Robb has an intelligent opinion that covers part of the terrorist movement in Iraq.

The aha moment for Iraq’s global guerrillas when they discovered how to accomplish an effects based operation using broad-based systems disruption:

Electricity officials say the decisive moment came July 6, when saboteurs mounted coordinated attacks across the country, gaining a lead in the battle that the government has not been able to reverse. “They targeted all the lines at the same time, and they all came down,” Mr. Abbo said. Mr. Abbo said a typical strategy was to set off explosives at the four support points of a single tower, which would then pull down two or three more towers as it toppled. As repair crews moved in hours or days later, another tower farther up the line might be struck, and then another, in a race the government had little chance of winning.

NOTE: this is a great example of how ideas are driving the evolution of warfare and will ultimately decide the winners and losers in this long war. It’s interesting to note that the DoD doesn’t have a mechanism for purchasing ideas that would help them win. They can spend trillions on contextually useless weapons systems and personnel but can barely free up a couple of thousand dollars on the ideas necessary to win this war (let alone a couple of million on a research firm dedicated to this).

And another outlook comes from this article:

While such data may have been omitted to protect the group’s clandestine sources and methods — the document has a bold heading on the front page saying “secret” and a warning that it is not to be shared with foreign governments — several security and intelligence consultants said in telephone interviews that the vagueness of the estimates reflected how little American intelligence agencies knew about the opaque and complex world of Iraq’s militant groups.

“They’re just guessing,” said W. Patrick Lang, a former chief of Middle East intelligence at the Defense Intelligence Agency, who now runs a security and intelligence consultancy. “They really have no idea.” He added, “They’ve been very unsuccessful in penetrating these organizations.” He said he was equally skeptical about the report’s assertion that the insurgent and militant groups may have surpluses to finance terrorism outside Iraq. “That’s another guess,” he said.

“A judgment like that, coming from an N.S.C.-generated document,” he said, is not an analytical assessment as much as it is a political statement to support the administration’s contention that Iraq is a central front in the war on terrorism. “It’s a statement put in there to support a policy judgment,” he said.

Several analysts said that, except for the possibility that Al Qaeda of Mesopotamia might be transferring money to Qaeda factions elsewhere, the assertion that insurgent money might be flowing out of the country was doubtful considering the single-minded regional focus of most of the militants operating here.

Dr. Magnus Ranstorp of the Swedish National Defense College, an author of extensive studies of the Iraqi insurgency, said he doubted Iraqi groups were ready to finance terrorism outside the country. “There’s very little evidence that they’re preparing to export terrorism from Iraq to the West,” he said. “I think it’s much too early for that.”

The document tracing the money flows acknowledges that investigators have had limited success in penetrating or choking off terrorist financing networks. The report says American efforts to follow the financing trails have been hamstrung by several factors. They include a weak Iraqi government and its nascent intelligence agencies; a lack of communication between American agencies, and between the Americans and the Iraqis; and the nature of the insurgent economy itself, primarily sustained by couriers carrying cash rather than more easily traceable means involving banks and the hawala money transfer networks traditional in the Middle East.

If we are not nimble enough and are consistently out maneuvered, at least in the public part of the problem, it seems we will be constantly leveraged in effort to contain the threat.

Part III will include AQ in SE Asia, where the sophisticated threat is located.

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This post was by Reader Dan.

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The Collapse of the Refinery Cartel?

Reuters reports:

U.S. average retail gasoline prices fell 17 cents per gallon as Midwest refiners recovered from recent difficulties and produced more gas, according to an industry analyst. The national average for self-serve, regular, unleaded gas was nearly $2.8843 a gallon on July 27, down from the July 13 level of $3.0577, according to the nationwide Lundberg survey of about 7,000 gas stations. Prices fell after refining capacity in Coffeyville, Kansas and Whiting, Indiana came back online.

Reuters seems to be arguing that prices have declined as the supply curve shifted out, which we noted here as we also argued for a cartel model explanation of the same facts.

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