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

Cactus updates story after McArdle critique

by cactus

I have been somewhat out of contact, but while sitting in a lawn chair far from home I had a brief opportunity to read some of the comments to the post I put up courtesy of someone else’s internet access. (Also, Tom Bozzo’s excellent follow-up and Megan McArdle’s critique.) I’d like to provide an update…

1. Time Warner informed us they’re again postponing when they can ignore an appointment with us. Why they need to send someone by I have no idea.
2. Verizon sent us a modem. However, they also told us they won’t be able to get us hooked up until the middle of next month. Having worked for a phone company, I can tell you that for a phone company to hook up a person with DSL if they live close enough to a switch or a remote requires little more than having a tech spend three minutes entering data into a computer terminal.
3. AT&T, which is SBC renamed, includes among its component parts the ILEC (incumbent local exchange company – the the baby bell that used to provide all service around here pre-1996), tells us they can’t offer DSL service at all.

Now, because AT&T is the former ILEC for the area, I assume Verizon’s DSL service comes courtesy of co-location. That is, Verizon probably offers DSL service using AT&T equipment. So either Verizon cannot offer us service at all despite what it is telling us, or AT&T can offer us service despite what it is telling us.

I realize that the 96 Telecom Act didn’t exactly deregulate the industry, but it was supposed to provide for more competition. Now, maybe its all in my head, but I’m just not seeing it apply to me.

BTW, to everyone who feels that complete deregulation is the solution – regulation is what allowed the phone system to exist in the first place. Rights of way through people’s back yard had to come from somewhere and the phone companies didn’t exactly pay for them. I’m no attorney, but I imagine that complete deregulation (or at least no more collective action to go down the route of another Tom Bozzo plus Megan McArdle set of posts) means AT&T is going to have to do an infinite amount of costly negotiation, since there are an awful lot of people with telephone polls in their backyard. And BTW, there are an awful lot of power lines out there too.
This one by cactus

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Politically impossible health care cost sharing

This is odd. Matthew Yglesias just excerpted a bit of a post at my personal blog, which I didn’t think was up to AngryBear standards. Far from it for me to question the judgment of a man who recently reached half my age. Here is the bit he liked

One politically unfeasible approach to this would be to assign people randomly to HMO’s and pay the HMO’s based on their health but have the HMO’s pay for their health care. Then the HMO decides incentives. You have to decide how much a life is worth (and eyesight and all that) but it doesn’t depend on individual income and the decisions are made by an organisation with tons of data.

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Does McCain Think Those Are Al Qaeda Troops Shooting Hoops with Obama?

Did John McCain lie when he said he wanted a clean campaign? Eric Kleefeld covers a vicious and very dishonest ad from Team McCain:

The McCain campaign has this brutal new attack ad against Barack Obama, making the blatantly false charge that he doesn’t care about the troops unless there are cameras around … “And now, he made time to go to the gym, but cancelled a visit with wounded troops,” the announcer says. “Seems the Pentagon wouldn’t allow him to bring cameras.” “John McCain is always there for our troops.”

Greg Sargent noted the real reason why Obama did not visit the wounded troops:

A Pentagon spokesperson confirms to me that because of longstanding Department of Defense regulations, Pentagon officials told Obama aides that he couldn’t visit the base with campaign staff. This left Obama with little choice but to cancel the trip, since the plan to visit with campaign aides had been in the works for weeks. The Obama campaign yesterday announced that it had decided to cancel the visit to Landstuhl Regional Medical Center, saying that it would be “inappropriate” to make such a visit as part of a campaign trip.

This only makes McCain both a liar and a petty little man. But check out this Youtube of where Obama played hoops – sure looks like American soldiers to me. Jonathan Martin has the details. In addition to being petty and dishonest, Team McCain is also incredibly stupid.

Update: Jeff Zeleny adds more context:

Robert Gibbs, a senior strategist, said the Obama campaign received official permission two weeks ago from the Pentagon to land a plane in Ramstein, Germany. But on Wednesday, he said, military officials advised the campaign of concerns about a political visit being a violation of government rules. “It is entirely likely that someone would have attacked us for having gone,” Mr. Gibbs said, “and it’s entirely likely – and it has come about – that people have attacked us for not going.” An earlier statement on Thursday from Mr. Gibbs seemed to suggest it was the senator’s decision. “The senator decided out of respect for these servicemen and women that it would be inappropriate to make a stop to visit troops at a U.S. military facility as part of a trip funded by the campaign,” Mr. Gibbs said. In any case, had Mr. Obama ended up visiting soldiers who are recovering from wounds in Iraq and Afghanistan, he was not planning to take reporters along. But it never came to pass because of the controversy. Geoff Morrell, the Pentagon press secretary, issued a statement emphasizing that the Pentagon did not cancel Mr. Obama’s visit. “Senator Obama, in his official capacity, is always welcome to visit Landstuhl or any other military hospital. But it is not permitted to bring with him campaign staff. His team was notified of that, and they made a decision not to visit the hospital. But we were ready and willing to host him there. In fact, we had made arrangements for his campaign plane to land at Ramstein, and to take care of the campaign staff and press in a passenger terminal there, while the senator and senate staff, if he liked, went on to visit wounded warriors. They made a decision based on their own calculations not to visit. Senator Obama, like any other member of the senate, is always welcome to visit our wounded warriors or our military hospitals around the world. But they do so in their official capacity, and not as a candidate. He can come in and bring senate staffers as well, if he likes, but campaign staffers and press are not permitted to accompany him. That would be a violation of DoD directives.”

Well – the DoD made this clear as mud! But if Obama never intended to take reporters and cameras along, McCain’s ad was dishonest on another score as well.

Update II: Senator Hagel weighs in:

The Republican senator from Nebraska agreed, saying on Face The Nation that the GOP’s presumptive nominee is “treading on some very thin ground here when he impugns motives, and when we start to get into ‘You’re less patriotic than me, I’m more patriotic.’ “They’re better off to focus on policy differences,” he said. “It’s just not responsible to be saying things like that, again, if for no other reason than for the good of this country and the world.

Hagel like McCain is a conservative Republican who served in the Vietnam War. Hagel, however, is not a neocon nutjob.

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Other blogs than econ

Clinical Psychology and Psychiatry: A Closer Look carries articles of interest in the mental health field that are directly related to things we talk about at Angry Bear. Save the Rustbelt had a few links he has suggested as well…maybe we can make a referral list of interest.

Tech Dirt went bonkers over cactus’s post on his bad service and Megan McArdle’s response to the post as well. Wow. Links to all in the Tech Dirt post.

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First lesson in econ for kids….scarcity

Wikipedia says:

In economics, scarcity is the problem of infinite human needs and wants, in a world of finite resources. In other words, society does not have sufficient productive resources to fulfill those wants and needs. Alternatively, scarcity implies that not all of society’s goals can be pursued at the same time; trade-offs are made of one good against others. In an influential 1932 essay, Lionel Robbins defined economics as “the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.”

In the Thinkfinity series, the first lesson is the idea of scarcity, and I assume economic goods as example. Modern economic theory is based on this notion, which seems rather obvious. Duh?? How is such an obvious idea important in particular to a whole field of study?

In biology, scarcity can refer to the uncommonness or rarity of certain species. Such species are often protected by local, national or international law in order to prevent extinction.

Goods and services
Goods and services are scarce because of the limited availability of resources (the factors of production) along with the limits on our technology and skillful people relative to the total amount desired. If somehow people desired nothing, there would be no scarcity. If resources were great enough to produce more than anyone desired, there would also be no scarcity. Scarce resources determine the location of society’s production possibilities frontier or curve (PPF). Inefficiencies in the use of resources (less than full employment or inappropriate employment of inputs like land and capital) may limit the amount produced so that the economy operates below its PPF. It is difficult to abolish all inefficiencies, and some characterize institutional inefficiency as artificial scarcity.

Goods (including services) that are scarce are called economic goods (or simply ‘goods’ if their scarcity is presumed). Other goods are called free goods if they are desired but in such abundance that they are not scarce, such as air and seawater. Too much of something freely available can informally be referred to as a ‘bad’, but then its absence can classified as a good, thus, a mown lawn, clean air, etc.

Where goods are scarce it is necessary for society to make choices as to how they are allocated and used. Economists study (among other things) how societies perform the optimal allocation of these resources — along with how societies often fail to attain this optimality and are instead inefficient.

For example, some fruits, such as strawberries, are scarce in markets on occasion because they grow only at certain times of the year. When the supply of strawberries is lower, they become scarce, or not always available. This scarcity may have an effect on the demand for strawberries. If enough people want strawberries when none are available, then the demand increases. And this demand is high not because the price is low but because the supply is low.

Another example is gold jewellery. Because the amount of gold available is limited, it is necessary to make choices as to how it is allocated. In a market economy, this is achieved by trade. Other ways to make this decision involve tradition, community democracy and centralized command. In the market, individuals and organizations, such as corporations, trade resources amongst themselves, reallocating resources to where they are most wanted by those with purchasing power. In a smoothly operating market system, the rate of exchange between different resources, or price will adjust so that demand is equal to supply. One of the roles of the economist is to discover the relationship between demand and supply and to develop mechanisms (such as pricing, incentives, or penalties) to achieve an optimal outcome (in terms of consumer welfare).

Certain goods are likely to remain inherently scarce by definition or by design; examples include land and positional goods such as awards generated by honor systems, fame, and membership of elites. These things are said to derive all or most of their value from their scarcity. Even in a theoretical post scarcity society, certain goods, such as desirable land and original art pieces, would most likely remain scarce. But these may be seen as examples of artificial scarcity, reflecting societal institutions. That is, the resource cost of giving someone the title of “knight of the realm” is much less than the value that individuals attach to that title.

As informational goods can be copied at negligible cost, they do not need to be scarce. This is why copies of software such as GNU/Linux are typically available for very little cost. However, proprietary software and many other products are kept artificially scarce through intellectual property protection laws, most commonly copyrights and patents.

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Soc Sec XXXIV: Open Thread/Assignment Desk

Well open threads are good enough for Kos and Duncan and both Matt and Ezra have opened up Assignment Desk threads so I might as well jump on the bandwagon.

I just got finished updating my index for this series at More Social Security Posts from Angry Bear and see that XXXIII was exactly a week ago. While I have been mulling some ideas nothing super compelling comes to mind. So here is your shot to get the discussion going or perhaps suggest ways I could get the discussion going. In the meanwhile I am going to list some useful Social Security resources below the fold.

First it all starts with the Reports of the Trustees of Social Security Recent Reports are available in PDF, HTML and paper formats (delivered with free first class postage paid), older Reports are available in a variety of formats back to 1941. The Reports are a little daunting at first, probably the best way to approach them is through the List of Tables which allows you first to examine the numbers and then scroll up or down to read the relevant text. The key tables are V.B1 and V.B2 which give you the economic projections, V.A1 which gives you demographic projections, VI.A4 historical operations back to 1957, and VI.F7 and VI.F8 which give you projected results out to 2085. Familiarize yourself with these and you too can be a Social Security maven.

Second you want to pay some homage to the godfathers. In 1999 Dean Baker and Mark Weisbrot published the ur-text Social Security: the Phony Crisis of which the introduction is online via this link. In all honesty I never read the whole thing, by the time it came out I had pretty much formed my own line of thinking, but if you want some actual professionally trained experts takes on this and an explanation of why the ‘crisis’ is ‘phony’ (not ‘wrongheaded’ mind you, but ‘phony’ as in ‘fake’), this is probably the place to start. (Though the link failed to load this morning).

Third I would take a look at the single most useful visual guide to what I have been trying to convey. EPI: Changes in Trustees Projections over time. The dates and numbers of Social Security are not static they are instead quite dynamic or were from 1997 to 2004 which is the span covered by this table. The point being that ‘crisis’ language that might have been justifiable in 1996 became wildly outdated by 2004. Yet the rhetoric didn’t change even though the major players all knew the score. Which BTW fully justifies Baker and Weisbrot’s title ‘Phony Crisis’. EPI shows you why in a glance.

And to finish it all off Lee A. Arnold put up a first version of Social Security (Ecolanguage) in 2005 and put up a slightly modified version on YouTube in 2006. It is an excellent animation that explains the basics.

If you want to see where Coberly and I are coming from and where we are trying to take people to you could do worse than reviewing these four critical sources.

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Cuba’s reforms

One Salient Oversight sends this thought on gung-ho idealogists:

From the department of not a communist country:

Cuba is to put more state-controlled farm land into private hands,
in a move to increase the island’s lagging food production.

Private farmers who do well will be able to increase their holdings by
up to 99 acres (40 hectares) for a 10-year period that can be renewed.

Until now, private farmers have only been able to run small areas of

President (Raul) Castro, who took over from his ailing brother Fidel in February, considers reducing costly food imports as a matter of national security.

Since the 1959 revolution, some Cubans have been allowed to run small family farms. But most agriculture has been placed in the hands of large, state-owned enterprises.

…these (enterprises) have proved highly inefficient – half the land is unused and today Cuba imports more than half its needs. Rising world food prices will cost the country an extra $1bn this year.

The presidential decree was published in the country’s Communist Party newspaper, Granma.
This is good news. I think it was me who argued that the reason communism was so successful in Cuba was because it wasn’t communism. Of course, there is nothing in this that suggests long-overdue democratic reforms – but it does allow some level of economic freedom. I guess Raul Castro weighed up the advantages of increasing food production with the disadvantages of allowing a spread of market capitalism and worked out that food triumphed blind ideology.

The history of communism is very useful for us all to remember. Blind adherence to ideological dogma was based upon the assumption that Marx, Engels and Lenin were 100% correct in what they said, thus elevating them to demigods and their writings as inerrant and pure. But, as time went by, it became obvious that adherence to ideology did not result in the outcomes that were needed, namely a growing standard of living for all segments of society. Cuba, like China, has chosen the path of measured economic reform while maintaining a strong, authoritative government.

Raul Castro has obviously discovered that there is something good to be learned from capitalism. We who live in market-friendly capitalist economies also need to learn that there is something good to be learned from communism.

Update: Hat tip to PeoninChief for Raul Castro’s recent speech

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McCain’s Backdoor Employment Tax Increase v. His Anti-Growth Fiscal Fiasco

Don Pedro lets loose what he really thinks about the supposed fair and balanced coverage of the fiscal policies of McCain v. Obama. I’ll let others judge whether his general commentary hits a home run or is just biased in favor of Obama, but two statements reflect precisely a couple of things I’ve been saying since I began blogging:

The only way he could make these promises add up would to largely dismantle Medicare and Social Security, while continuing to collect the payroll tax dedicated to the programs. It is inconceivable that Americans would stand for this.

Under George W. Bush, we have opened up a large and persistent General Fund deficit that is unsustainable unless it is subsidized by raiding the “lock box”. Bush’s supposed desire to save Social Security is in reality an attempt to drastically lower Social Security benefits without corresponding reductions in payroll “contributions”, which in reality is a backdoor employment tax increase designed to maintain the reductions in taxes on capital income. Some of the debate on the Social Security gets around to conceding this fundamental point, but much of it is designed to disguise what is really going on. But hey – bank robbers do not generally call in advance.

Don Pedro continues by suggesting this fiscal fraud will fail, which would mean McCain’s proposed fiscal policies will be even more of a long-run fiasco than those of Bush’s. He then adds this:

Let’s say we pretend that McCain didn’t promise to balance the budget–then his program would be if anything a net negative for growth over the long term. While some research suggests that lower taxes paired with lower spending promotes growth (although this depends on particular circumstances, etc.), there is NO evidence for the proposition that tax cuts financed by debt promote growth.

“Giving people their money back so they can consume more” as George W. Bush has suggested means less national savings, which crowds out investment. The Reagan fiscal expansion had this effect. The Bush43 fiscal expansion had this effect. Let’s not pretend that a McCain fiscal fiasco would be any different.

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Elevating the Discourse at the

Shorter McMegan:

I once heard these terms of art from the electricity industry. No quizzes!

P.S., Al Gore is fat.


Update: Hoisted from comments…


A quick point for the negative team – the required* additions to the power grid, (i.e. new hv power lines, speficially 765 kV ones) will not really get started, much less be able to come on line in less than 10 years due to the (legitimate) length of the permitting process and (illegitimate) lawsuits brought by NIMBY’ers and uncomprimising environmentalists.

*required because the re-located power generating facilities (e.g. boone’s wind farm) do not currently have the capacity that electrical export regions (applachia, tenn/ohio valleys) currently do. See page 8 of this pdf – recently linked by the daily kos when discussing the 20% wind strategy – for one (industry) revised power distribution plan.


Pretty much, Al Gore suggests collective action to build the infrastructure needed to handle solar and wind. The Liberations hear ‘collective action’ which is ‘bad’ and decide Al Gore is ‘one of those’ and then proceed to make fun of him.

Me I made it half way through the comments and nary a mention of return on investment.


The issue with his proposal is maintaining a viable baseload. Wind and solar do not produce at any near peak capacity for days on end and when that happens where you gonna get your power? Who is going to maintain investment in that level of backup? maintain that level at peak? Actually test that level? And on and on.

So for the new sources to work we need nearly 100% of the old to back it up.


If only it were as hard for the US to waste a trillion in warfare state waste securing China’s oil flow as to fight the NIMBY world order.

CoRev would do well to read the detailed post by Jerome a Paris at The Oil Drum on a program to meet a substantial fraction of the Gore challenge via wind. The key distinction is substitution of generation vs. generating capacity — a distinction also seemingly lost on McArdle. Intermittent renewables provide the latter, which is what primarily matters for decarbonization, quite well. That does require a fair amount of grid reinforcement, which will be a challenge for current opponents of long-distance transmission projects (who on the environmentalist side are often motivated by concern that they’re being asked to foot bills to import power from dirty-coal plants).

As for cost, I’ve been living the cost decreases for wind generation. At the beginning of the year, the green-power premium we’d been paying dropped from 2.7 cents/kWh to 1 cent. Net of an increase in the base dirty-power rates, we still saw a price decrease of more than 1 cent/kWh on our electric bill. So the green electricity is not ruinously expensive by any means, and the premium plus the production tax credit comes to about $30/ton of CO2 reduction.

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