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

Trump Administration’s Infrastructure Plan

Via International Business Times (via RSN):

Trump Administration’s Infrastructure Plan Involves Privatizing America’s Assets and Selling Them to Goldman Sachs>/a>

President Donald Trump’s administration this week touted an infrastructure plan that would sell off public assets to private financial firms. Left unsaid in the White House promotional materials was any mention that the Trump aide who is overseeing the initiative comes from a Wall Street firm that says it is seeking to buy up the very same kind of assets the Trump administration plans to sell off.

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Ted Cruz failed to properly disclose Goldman Sachs loans: FEC

Via Salon, another Goldman Sachs story:

Ted Cruz failed to properly disclose Goldman Sachs loans: FEC

This has not been a good week for Republican Sen. Ted Cruz of Texas. First he is the butt of a cutting joke by Democratic Sen. Al Franken of Minnesota (who told “USA Today” that “I like Ted Cruz probably more than my colleagues like Ted Cruz, and I hate Ted Cruz”), and now the Federal Election Commission has ruled against him — unanimously, no less.

The three Republican FEC members joined the two Democrats to find that Cruz failed to properly account for loans he had received from two banks, Goldman Sachs and Citigroup, during the 2012 election, according to a report by Bloomberg. Cruz borrowed $1.1 million worth of loans from the banks during his Senate campaign in Texas, with the FEC determining that Cruz had loaned his campaign $800,000 from Goldman Sachs (where his wife Heidi works) and $264,000 from Citigroup.

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Fighting Zombies with Zombies

Fighting Zombies with Zombies

Larry Mishel and Josh Bivens enlist zombie government policy ponies in their battle against “the zombie robot argument“:

Technological change and automation absolutely can, and have, displaced particular workers in particular economic sectors. But technology and automation also create dynamics (for example, falling relative prices of goods and services produced with fewer workers) that help create jobs in other sectors. And even when automation’s job-generating and job-displacing forces don’t balance out, government policy can largely ensure that automation does not lead to rising overall unemployment.

The catch here is that the displacement of workers by technology and the investment that re-absorbs workers displaced by technology are largely, but not entirely, independent factors. “Government policy” in the quoted paragraph is just another name for investment. Hans Neisser observed in his 1942 article on technological unemployment that “it is impossible to predict the outcome of the race between the two [investment and displacement] on purely theoretical grounds.”

The conclusion is inevitable: there is no mechanism within the framework of rational economic analysis that, in any situation, would secure the full absorption of displaced workers and render “permanent” technological unemployment in any sense impossible.

The “robot apocalypse” is neither impossible nor inevitable. It is probably unlikely, but unlikely things do happen, especially when people become complacent about the impossibility of unlikely things happening.

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Trucking And Blue-Collar Woes

Paul Krugman talks unions:

Trucking And Blue-Collar Woes

MAY 23, 2017 5:11 PM May 23, 2017

What with everything else going on, this Trip Gabriel essay on truckers hasn’t gotten as much attention as it should. But it’s awesome — and says a lot about what is and isn’t behind the decline of blue-collar wages.

Trucking used to be a well-paying occupation. Here are wages of transportation and warehousing workers in today’s dollars, which have fallen by a third since the early 1970s:

Photo


Why? This is neither a trade nor a technology story. We’re not importing Chinese trucking services; robot truck drivers are a possible future, but not here yet. The article mentions workers displaced from manufacturing, but that’s a pretty thin reed. What it doesn’t mention is the obvious thing: unions.

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A thought for Sunday: no, Trump approval *still* isn’t imploding. BUT …

A thought for Sunday: no, Trump approval *still* isn’t imploding. BUT …

Democrats continue to delude themselves about Presidential approval polls — with one very big possible exception.

In the first place, can we all agree that Trump has had a particularly nasty last several weeks? Including firing Comey, blabbing secrets to the Russian ambassador, blabbing about our submarines to the Philippines’ now-dictator, compromising the intelligence sources of Israel (and then confirming it!) and later Britain, and reports of multiple occasions with multiple officials in which he blatantly appeared to be attempting to shut down a criminal investigation?

Can you imagine what the public opinion polling would look like after several weeks like that, for virtually any past US President, let alone if the president were Hillary Clinton?

Well, here is what Trump’s looks like as of today:


His approval stands at 41%, right in the middle of where it has been since he assumed office in January.

A variation of the Trump-support-is-imploding mantra showed up later in the week when FiveThirtyEight wrote that “Trump’s Base is Shrinking” based on strong vs. weak approval. Typically this is the graph that was shown:

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Of Memorial Day and Confederate statues

Of Memorial Day and Confederate statues

Memorial Day is a particularly fitting time to write about the issue of Confederate monuments. That’s because Memorial Day originated as a day set aside to honor the Civil War dead, not just those who fought for the Union, but those on both sides, including those who died in service of the Confederacy.  It was part of the process of magnanimous victory which enabled the country to heal, perhaps epitomized nowhere better than when both William Tecumseh Sherman and Joseph Johnston served as pallbearers for Ulysses S. Grant.

Part of that process was the erection of monuments in the South to honor their dead, at Civil War battlefields, and also at cemeteries throughout the South. For example, here is one in Foysth Park in Savannah:


I don’t remember if it this monument or not, but supposedly there was a mix-up in the deliveries of two civil war statues, and about 50 years later Savannahan’s learned that atop their monument was – a Union soldier!  A cemetery in Maine is supposedly watched over by a Confederate.  Go figure.

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Healthcare Costs, Externalities, and Changing Social Norms

One of the topics I’ve railed about many times during the decade and change in which I’ve been blogging is that society would be much better off if we forced people to pay the cost of negative externalities they impose on other people through their behavior. An obvious example would be making polluters pay for the cost that the pollution they emit inflicts on everyone else.

But it turns out there are a lot of these behavioral externalities in healthcare. For instance, here’s an infographic I took from Blue Cross Blue Shield:

screen capture bcbs unhealthy behavior healthcare cost 20170528a

I imagine there are a few instances where obesity is a medical condition due to circumstances outside the control of a patient’s willpower, but I suspect that accounts for very few cases. Most people in today’s America have the ability, during most of their life, to control to a fair extent how much they eat, drink, smoke and exercise.

Elsewhere, Blue Cross Blue Shield also tells us this:

screen capture bcbs cost of treating chronic diseases 20170528a

So assuming BCBS is correct, 86 percent of US healthcare costs come from treating chronic diseases. Chronic diseases include:

screen capture bcbs list of chronic diseases 20170528a

I am no doctor, but I understand some (and I hasten to repeat the word  “some”) of the conditions can, in some cases, be brought about by a person’s behavior. For example, HIV can come from unprotected sex with prostitutes or IV drug use, diabetes from poor dietary choices and lack of exercise, and some psychotic disorders can be brought on or worsened by by drug use.

What if, going forward, we should cease to cover the costs of health conditions brought on by a person’s own behavior (when they can be identified as such)? This would be disruptive, so I don’t think it should be done cold turkey, but rather the way Social Security benefits get cut by ratcheting up the age at which a person can get benefits. For example, we could simply state that on date X, any new cases of lung cancer which are traceable to a person’s tobacco use are not to be treated at the expense of Medicare or Medicaid, and private insurance companies might be encouraged to do the same.

Note – people who used to smoke, or eat unhealthy, or not exercise a long time ago might have been submitting to societal pressures. But for the past few decades, the world has been a different place. Societal pressures now are to eat healthy, eschew illegal drugs, avoid smoking, avoid drinking in excess, and to exercise. We’ve moved from “smoke ’em if you got ’em” to “if you want to smoke, you need to do it in the smoking section.” Then we went to “you need to go outside to smoke.” These days you see smokers forced to stand some distance away from many office buildings if they want to get their nicotine hit.  Next to where I work are some office buildings occupied by a health insurance company.  Smokers who work there seem to be forced leave the premises completely  (they are usually standing in the street, even in the rain).   For many people, getting lung cancer went from the cost of conforming to social norms to being a consequence of anti-social behavior.

So what would be the effect of taking the treatment for these conditions off the public purse? I’d say the following:

1. We would see some number of cases of fraud where people would insist their behavior did not induce some outcome. A lying patient is harder to treat, so I’m guessing this would go some way toward worsening the outcomes of successful fraudsters.
2. The life expectancy and perhaps qualify of life of people who self-induce these problems would go down.
3. The incentive of people to minimize these behaviors would go up. Of course, not all of them would respond the right way, but some would. Particularly in light of the life expectancy issue in point 2. Overall healthcare costs would go down.
4. The cost to the public would go down.

Thoughts?

(One comment… I am pretty sure I recently read something proposing some part of this recently, but for the life of me, I cannot remember what or where. My apologies if I’m inadvertently stealing someone else’s idea.)

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Some Saudi-US History

Some Saudi-US History

Given Donald Trump’s new commitment to support military adventurism by Saudi Arabia in Yemen and more generally against Iran, it might be worth reconsidering how this alliance developed.

The beginning for Saudi Arabia was in 1744 when a wandering radical cleric, Mohammed bin Abdel-Wahhab met up with a local chieftain, Mohammed bin Saud in the village of Diriyah, whose ruins are now located in the suburbs of the current Saudi Arabian capital, Riyadh. Wahhab converted Saud to his cause of spreading the strictest of the four Sunni shari’as, the Hanbali code, throughout the world, and this remains to this day the ideology of the House of Saud, the ruling family of Saudi Arabia, with this ideology widely known as Wahhabism. The territory ruled by the early Saudis expanded to cover a fair amount of the Nejd, the central portion of the Arabian peninsula, but when they threatened control of Mecca in 1818, ruled by Egyptians under the Ottomans who collected the moneys gained from pilgrims visiting there, the Egyptian leader, Muhammed Ali, invaded the Nejd and destroyed Diriyah. The Saud family moved to the next village over, Riyadh, and reconstructed their small state, which expanded again in the mid-1800s, although near the end of the century they were defeated and exiled to Kuwait by the rival Rashid family from Hail to the north of Riyadh.

In 1902 the 27 year old family leader, Abdulaziz bin al-Rahman bin Faisal al Saud, reconquered Riyadh and would eventually establish the modern Kingdom of Saudi Arabia (KSA) through marital and martial conquests, with its modern boundaries established in 1932, and Abdulaziz (known in the West as “Ibn Saud”) bearing the title of King and Protector of the Two Holy Places (Mecca and Medina), which he had conqurered in 1924. He would have 43 sons, and today’s king, 81-year old Salman, is one of the last of them, and Abdulaziz would die in 1953. It should be noted that Saudi Arabia was independent of the Ottoman Empire, and was one of the few parts of the Muslim world that did not fall under the rule of a European power, along with Turkey, Persia/Iran, and Afghanistan.

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Moving to Opportunity: Katz, Ludwig, Chetty and Hendren — discussant Bruce Springsteen

This very important paper “Moving to Opportunity” is well summarized by the discussant.

Baby this town rips the bones from your back
It’s a death trap, it’s a suicide rap
We gotta get [them] out while [they]’re young
`Cause tramps like us, baby we were born to run
[regressions]

As noted by the discussant, the authors find that the benefits for young children of moving out of high poverty areas are very large. In contrast moving in ones teens helps girls but not teenage boys many of whom have already begun “steppin’ out over the line” & are harmed by increased access to “suicide machines”.

As noted, the paper is excellent and important, but I think the more striking fact is that the discussant has managed to summarize it so briefly and accurately while rhyming and playing a guitar.

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