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

To pay for the next war…we raise taxes, cut spending elsewhere?

The Armed Services full committee meeting in light of the end of the latest round of talks with Iran and harsher sanctions (oil embargo) scheduled to take effect, points us to the need to figure out how to pay for another conflict that is not quick and victorious.

The Washington Post quotes Senator Leahy:

At last, after 11 years of the United States at war, a few minutes of public discussion of a tax to pay for the fighting. But that would be for the next war.

“What would be the impact of going to war again without committing to pay for that war with up-front taxes, something we did not do in either Iraq or Afghanistan, for the first time in the history of the country?” Sen. Patrick J. Leahy (D-Vt.) asked Defense Secretary Leon E. Panetta at a Senate Defense Appropriation subcommittee hearing on June 13.

That’s a question that should be asked before any president sends U.S. forces into a fight overseas or members of Congress propose legislation that authorizes some sort of military action abroad.

“We basically ran that war [Iraq] on a credit card,” Leahy told Panetta, who was there to discus the fiscal 2013 Defense Appropriations bill. “Now we find people who are calling for more military action in other parts of the world; at the same time, they do not want to consider any way of paying for it.”

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German Construction Is Looking a Bit ‘Bubbly’

by Rebecca Wilder

German Construction Is Looking a Bit ‘Bubbly’

Eurostat released its volume-adjusted estimate of construction for April (release here, .pdf). Over the month, Euro area construction declined 2.75% following a large 11.41% monthly increase in March. Across the countries that make monthly data available (8 countries total), Slovenia and Portugal saw the largest decline in April construction activity, -9.3% and -6.7%, respectively, while France was the only country to see an increase in construction, +2.3%. The trend is clearly down, as 3-month over 3-month Euro area construction declined 4.8% through April.

Germany is getting a bit bubbly as regards domestic construction. This shouldn’t be surprising, given that longer dated bunds (even the 10yr) are negative on a real ex-post basis, i.e., using historical measures of inflation.

Note: I re-scaled the volume-adjusted indices to 2001=100 to fully capture the bubble in countries like Spain – the bubble illustration wouldn’t be quite as obvious with Eurostat’s index to 2005. Furthermore, the chart illustrates the monthly construction, while some countries, like Greece or Ireland, for example, list construction solely on a quarterly basis. Eurostat simply estimates construction in these countries to produce the Euro area aggregate on a monthly basis.

Going forward, this construction data does give real-time evidence that the German economy is moving marginally toward domestic-led growth….or we’re seeing the outset of a bubble in German construction

crossposted with The Wilder View…Economonitors

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Methinks Jonathan Haidt Doth Protest Too Much: Southern Whites Edition

Lots of excellent pushback against Jonathan Haidt’s crazy assertion that Republicans have become the party of working people. A great takedown by Larry Bartells, you can follow the rest from there.

Haidt uses an awful lot of words, numbers, pictures, and general hand-waving to point out obscure the fact that white southern Democrats have gone Republican since the 60s. The “Southern Strategy” has worked.

As my teenage daughter would say, “no duh.”

Johnson predicted this when he passed civil rights legislation — the South has been lost to the Democrats “for a generation.” But Johnson may have underestimated the duration. These are the people, after all, who still haven’t accepted the fact that they lost the Civil War 147 years ago. Haidt’s apparently chosen role as an apologist for this group is…less than admirable.

Cross-posted at Asymptosis.

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Sorta Interesting … (Updated!)*

Thought y’all would enjoy this post, on one of THE BIG DEAL law-profs’ blogs.  It’s bloggers are right- to center-right libertarians, all (or at least most) of them former law clerks to one of the conservative Supreme Court justices.

Ah. And this is even moreinteresting.  Woo-hoo!

UPDATE: Welll.  Hmmm.  As I said earlier today in a comment in response to JackD’s comment about my post, I was surprised to read the original law-prof blogger’s interpretation of Ginsburg’s weekend comments, because on Monday I had concluded the opposite after reading a quote from Ginsburg’s speech. 

The quote was:

As one may expect, many of the most controversial cases remain pending. So it is likely that the sharp disagreement rate will go up next week and the week after.

As I noted in my comment to Jack, “Sharp disagreement,” in Supreme Court coverage, usually means 5-4 decisions, although sometimes it means “fractured,” as in, there were a zillion separate concurring and dissenting opinions, and no one can actually figure out what the hell the actual result was. 

As I also said, the ACA case, of course, isn’t the only high-profile case the Court will decide in the next 10 days or so.  But I still read that comment as suggesting a 5-4 result in the ACA case.  The CW is that if the ACA is stricken down, it will be 5-4, but that if it’s upheld it will be 6-3.  But Kerr could be right.  Ginsburg might have just been sending out a red herring.  Who knows?  Or: Oh, what the hell.

Ooooh.  This is more nerve-wracking than betting on your Kentucky Derby favorite, who’s no one else’s favorite; your odds are even worse. And there’s no “place” or “show” here.  Unless ….

As I also said in responding to comments to my post—JackD’s and run’s—the impact of the poll I linked to in the last sentence of my post is, I think, that it suggests that, contrary to the CW of the last two years, the healthcare-insurance issue could be a big positive, rather than a negative, for the Dems in November, if the Court does strike down the entire ACA or the mandate part of it.  (And even if it doesn’t, since by the election most people finally will actually know what’s in the law, what’s not in the law, and what the purpose of the mandate is and how it relates to the preexisting-conditions provision.)  The Repubs want the status quo.  The Dems and a substantial majority of the public don’t.

*In response to a comment by Gary, in the Comments to this post, asking what “CW” is, I wrote:

Conventional wisdom.  I’m sorry.  I did exactly what I hate when other people do that.  Especially mainstream-media bloggers like Matthew Yglesias, who regularly drops names of people I’ve never heard of, and the like, on his blog on Slate.  I guess now I qualify to blog on Slate.    
Again, sorry.

Beverly, 6/21

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What if the Doctor Market Was Like the Lawyer Market?

Andrew Oh-Willeke points us to this, on the job market for lawyers:

Slightly more than half of the class of 2011 — 55 percent — found full-time, long-term jobs that require bar passage nine months after they graduated, according to employment figures released on June 18 by the American Bar Association.

I couldn’t find a comparable figure for medical graduates on a quick search, but I’m guessing the number’s in the low single digits.

The lawyer glut has been going on for a while, and at least in Canada (the only place I’ve found data) it’s been having predictable effects on legal fees — down 40% in nine years ’01–’10:

I doubt that doctors’ fees are the prime driver behind our crisis of rising health-care costs (what providers charge). But at least one analysis says it’s an important part (Todd Hixon, Forbes):

U.S. spending annual on physicians per capita is about five times higher than peer countries: $1,600 versus $310 in a sample of peer countries, a difference of $1,290 per capita or $390 billion nationally, 37% of the health care spending gap. These conclusions come from an analysis co-authored by Miriam Laugesen of the Columbia University School of Public Health and Sherry Gleid, an Assistant Secretary in the U.S. Department of Health and Human Services (source)**.

This suggests that relieving the supply shortage – especially for primary care doctors — could have a big impact. Not a new insight, but I thought this data point would be of interest.

Cross-posted at Asymptosis.

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"The Red Light District of Sorts"

by Run 75441

“The Red Light District of Sorts”

The Democrats and the Republicans cannot agree on much these days. Because of the inability to agree, healthcare reform is aflame with controversy and in SCOTUS waiting for a decision on its constitutionality. Stimulating the economy languishes between cutting taxes for the rich in income to create jobs and another Federal Stimulus Package to do the same. Reducing the deficit cannot be done without raising taxes on the rich in income or cutting programs for the poor and the middle class. Do we spend to increase defense beyond economic growth or do we cut programs providing for people when the economy is struggling? Actions in Congress about what to do on anything have boiled down to roadblocks tossed up with every suggestion and criticism with no alternatives. Hence, action is delayed or never taken.

Where there are more deals occurring in the formerly smoky back rooms needing conclusion in the openness of Congressional halls, the Democrats and the Republicans can openly agree upon one thing to fix and take swift action to resolve. Two political heavyweights of Congress who cannot get it right or agree on anything when it comes to the economy and the welfare of the people are capable of agreeing on one thing . . . establishing a federal commission to fix the sport of Boxing and strip the states of the ability to oversee it. So much for state rights when it comes to sports and entertainment.

“Sen. John McCain, R-Ariz., who boxed while at the U.S. Naval Academy, and Senate Majority Leader Harry Reid, D-Nev., a former middleweight boxer, are pushing the measure establishing the U.S. Boxing Commission, an entity that would carry out federal boxing law, work with the industry and local commissions and license boxers, promoters, managers and sanctioning organizations.”

As former VP Cheney once said; “Finally, something for us!” We can all feel good about this one.

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When the rivers run dry — the review

by David Zetland

When the rivers run dry — the review
re-posted with permission from author from Aguanomics 

Fred Pearce is an English journalist who’s been covering water issues for 20+ years (he’s just published a book on land grabs, review to come). I read the second edition of When the rivers run dry: Water — the defining crisis of the twenty-first century (2006) several months ago.

The 320pp book — one of the best general overviews of water problems that I’ve read [1] — is organized into 10 sections with 34 short chapters. Each chapter describes how “a river runs dry” (abundance ends) in some part of the world. Here are some ideas I noted and thoughts I had while reading:

  • Small-scale farmers and fishermen who cannot make a living when water is directed to larger and more powerful groups will not only be unemployed — they can turn to violence. (That’s not an excuse to subsidize them; it’s an excuse to protect their legal/traditional property rights and NOT subsidize others!)
  • The “risk-free” living of Indian farmers who use subsidized electricity to pump water that’s sold at market prices to dyeing manufacturers (polluters) is an appalling example of unintended consequences. The same can be said of the “confident” engineers who sank so many wells into arsenic-laced groundwater in Bangladesh, contributing to the (ongoing) poisoning of millions.
  • The rise of our modern consumptive lifestyle since the Industrial Revolution is not just based on mining (and burning) fossil fuels, but mining (and using) fossil water. Neither trend is sustainable in terms of growth, consumption or the environment, and I doubt that human ingenuity will overcome the damages that come from these consumptions, either to maintain our own quality of life or restore the ecosystems that make that quality of life possible.
  • Fewer Saudi farmers are growing wheat in the desert (good!). Instead, they are growing alfalfa to feed to cows for milk (arg!). Along the same lines, note that the solution to high “virtual water” consumption is NOT to stop international trade but to make sure that virtual-water-exporting countries have sustainable management practices in place. These will raise the price of traded goods (food, textiles, etc.). Higher prices that reflect water scarcity will reduce demand for that product.
  • Israel may not have any wells in the West Bank, but their wells on the border of the West Bank draw water from the Mountain Aquifer that underlies both Israel and the West Bank. Those wells — combined with Israeli controls over Palestinian wells (no new wells or repairs) — means that Israel has a de facto “apartheid” water policy that transfers Palestinian water to Israelis and deprives Palestinian people and farmers of the water they could use for their own living and economic activities. These under-ground policies match above-ground settlements in nationalist cruelty.
  • Every civilization has diverted water to its own uses (without respect to nature), but the Soviets — citing perhaps their typical excuse that the ends (a proletarian paradise) justifies the means — took diversions and pollution to an extreme in implementing policies that disastrously damaged the Aral Sea. It’s interesting to see these policies continued in Uzbekistan (but not so much in Kazakhstan) under its Stalinist dictator.
  • “Sewage irrigation” may be efficient in terms of directing water to another use, but it is not good for one’s health. Better to clean the water in some way (the Israelis ARE good at that) before applying it to food — or better — fiber crops.
  • “Desalination is an [expensive] supply-side solution to a demand-side problem” (p. 255). Definitely.
  • The return of rain harvesting and check dams in rural India is doing a lot to conserve water and restore water tables. These low tech solutions are more efficient than big dams that evaporate water. Given that observation, ask yourself which is better, flood- or drip-irrigation? Flood can be better if the excess water is absorbed into groundwater (to be used later) instead of being held/stored in a surface reservoir that evaporates more water than is saved through “efficient” drip. Remember to keep track of water in the ENTIRE system.
  • A move away from hard infrastructure (dams, dikes, levees) towards natural infrastructure (flood plains, groundwater aquifers, wetlands) promises to deliver human safety, environmental health, and economic efficiency. Engineers who like concrete and politicians who like cutting ribbons may be upset with this change, but there are advantages to using the tools that Nature has refined over those that humans think they understand.

When I was planning TEoA, I was unsure whether to write a book discussing water issues around the world or in the western US. I ended up writing an “locationless” book, so that readers could mold the ideas and discussion to fit their local details. I am glad that I did this, especially since Pearce has had written an excellent book with examples from around the world. I think his book (like the ones with * below) complements TEoA, in the sense that he describes problems while I describe the forces underlying the problems and how to address them (books with ** describe problems, origins, and solutions).

Bottom Line: I give this book FIVE STARS for Pearce’s varied examples, clear analysis and accurate message: we cannot continue to dry out our rivers for special interests and traditional methods of mismanagement. We, the people, will benefit from restoring water flows into their traditional paths, borrowing and repaying water as it passes by.

[1] Here are my reviews of other water-related books that you might consider reading — after mine, of course 🙂
General discussions of water management, use and crisis:
* Blue Revolution (5 stars): Excellent examples and theme.
Take Me to the Source (5 stars): A nice wonder around the way we live with water.
* The Big Thirst (4 stars): Snappy writing, sometimes sloppy.
The Future of Water (4 stars): A look into the future but uneven quality.
* Unquenchable (4 stars): Good examples but perhaps too many.
Running Out of Water (3 stars): Verges on boring.
Aqua Shock (1 star): A waste of paper (or electrons).
Specialized discussions of a particular water dimension:
* Dead Pool (5 stars): Updating Cadillac Desert on mismanaged infrastructure in the western US.
** Heart of Dryness (5 stars): Botswana’s Bushmen can thrive in the desert, despite the government.
** Priests and Programmers (5 stars): Amazing description of traditional irrigation in Bali.
* Water and the California Dream (5 stars): Excellent history of disastrous policies.
** Water Follies (5 stars): A fantastic discussion of the mismanagement of groundwater in the US.
** Water for Sale (5 stars): Why private water companies can help the poor.
Elixir: A History of Water and Humankind (4 stars): A detailed archaeologist’s exploration (see Water below).
Governing the Tap (4 stars): A detailed look into water management districts in the US.
* Liquid Assets (4 stars): A deep look at water mismanagement in the Middle East.
Rivers of Gold (4 stars): Some case studies of water markets in the western US.
* Water: The Epic Struggle for Wealth, Power, and Civilization (4 stars): Excellent (see Elixir above).

NB: I give stars based on the author’s fulfillment of the promises made on the cover. I am also biased in my reviews to the extent that they reflect my knowledge when I write them. I may be a tougher reviewer over time, but I TRY to review for readers who may not have read any/all of these books — let alone worked on water issues for years!

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Will the Euro survive,,,

Yves Smith asks

…I’ll throw it out to you: what do you deem the odds of Euro breakup to be (with “breakup” defined as at least one country exiting the Eurozone) in the next month? In the next six months? And if you think it will come apart, but later, guesstimate how much later and why you think it will occur later rather than sooner.

How about the AB crowd?

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Health Care Thoughts: Human Capital Edition

by Tom aka Rusty Rustbelt

Health Care Thoughts: Human Capital Edition
In the past six weeks I have talked to and with health care executives and practitioners from at least 40 states. All of the conversations have been interesting to say the least.

What I hear from the hospital and (integrated) health system levels is the combination of PPACA (Obamacare), economics, health finance, technology and assorted regulations are making health care incredibly complicated, which is driving an executive feeding frenzy as organizations try to staff up to cope with change and as executives see new opportunities for their careers.

This is not all for the good.

One of my former students is, IMHO, one of the top integrated-with-hospital physician group managers in the country. Her take?

“The biggest danger now to health care are 30-something MBAs who are career builders.”
And clinical human capital? Right now it is important but not as important as the executive career hustle.

Take away?  Send your college-age children to study health care administration.

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Why Equality Drives Entrepreneurship and Innovation

Coming at this question from my typical perspective: a business owner facing a national economy.

You run a mid-sized business selling high-quality furniture. You’ve developed a new chair that’s better than the other chairs on the market. (Think: the Herman Miller Aeron Chair.) Say you’re planning to sell it for $700. (You can’t sell it for much less, no matter the volume, without losing money.)

Would you rather be selling into an economy with wide disparities of income and wealth, or one that’s more equal?

Let’s build one of each.

Imagine a million-dollar economy with ten people in it.

Economy 1: Each person has an income of $100,000.

Economy 2: Two people earn $300K each, and the other eight earn $50K each.

In which economy can you expect to sell more chairs?

In which economy would you expect to see more innovators and entrepreneurs thriving?

This is not quantum physics.

Cross-posted at Asymptosis.

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