“The U.S. ambassador to the European Union, Gordon Sondland,” is a law abiding citizen and also a team player. He has been subpoenaed and will have to testify about Trump and Ukraine. Also he seems to be very well understood by some guy who is talking and talking and talking with Washington Post Reporters Aaron C. Davis and John Hudson

This mysterious source seems to have the impression that Mr Sondland is going to try to toss Trump under the bus. The extremely funny part about this article is the way in which anonymity can be a total joke. I quote some bits

“Sondland declined to comment through his lawyers.” Sondland says Sondland is keeping his mouth shut. The other guy … well he talks a lot and he seems to know Sondland really really really well and to have both ESP and precognition.

Sondland plans to tell lawmakers he has no knowledge of whether the president was telling him the truth at that moment. “It’s only true that the president said it, not that it was the truth,” said the person familiar with Sondland’s planned testimony, who spoke on the condition of anonymity to discuss sensitive diplomatic matters.

“Sondland will hold out the possibility that Trump wasn’t truthful”

“Whether he’s deciding it’s getting too hot to handle and he backs off whatever his position really was a month earlier, I don’t know,” the person said of Sondland’s understanding.

“That’s when Sondland, according to the person’s understanding, called Trump, ”

“If people find that incredulous, it strikes me that the incredulity is hindsight bias,” said the person familiar with Sondland’s testimony. “The things that seem so clear to people now didn’t seem so clear in real time.”

“according to Sondland’s perspective.”

“Sondland, while acknowledging a close relationship with Trump, viewed Volker as more of a presence on the Ukraine issue. “

” Giuliani’s requests for investigations seemed odd but not overly concerning to Sondland, the person said.”

“By Sept. 9, Sondland, however, had grown increasingly concerned,”

“The person said Sondland was never briefed about Biden being part of the issue and was not aware of it until the transcript of the phone call was released. “If he had known earlier, he never would have touched this.””

At this point I half expected to read “the person demanded we be particularly careful to protect his anonymity as he mentioned the personal matter that he was wearing Sondland’s underwear while talking with us”

I mean what’s the point of refusing to name someone who happens to be familiar with Sondlands thoughts, feelings and plans.

I think the point is that Trump is so obviously depraved and utterly selfish that only selfish dishonest people will work with him. The are all trying to stab each other in the back. We have a Republic if we can keep it better than they can keep a secret. Frankly, I am beginning to have some hope.

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Real average and aggregate wages for September

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Interesting stuff from the One Handed Economist

From Intellectual to influencer: “In the case of the public intellectual, the institution was the academy and the role was thinking. In the case of the public influencer, the institution is the corporation and the role is marketing. The shift makes sense. Marketing, after all, has displaced thinking as our primary culture-shaping activity, the source of what we perceive ourselves to be.”

How true does this seem?

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Closing The Open Skies

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Drain the Ukrainian Swamp

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This is news: Jane Fonda Arrested While Protesting in D.C.

Not particularly a news outlet (Hollywood Reporter – Ryan Parker reporting) I would read but, they have it out front and center in reporting on Ms. Fonda protesting about “the industries that are destroying our planet for profit.”

“I will be on the Capitol every Friday, rain or shine, inspired and emboldened by the incredible movement our youth have created. I can no longer stand by and let our elected officials ignore – and even worse – empower – the industries that are destroying our planet for profit. We can not continue to stand for this,”

It is not the first time Ms. Fonda has been taken into custody. She did protest the Vietnam war and taken into custody. Today Ms. Fonda was arrested with 15 other people for protesting in front of The White House. The protest focused on the lack of action by this administration, big business, and the overall nation on the overall inaction to climate change. Claiming to be “emboldened by the incredible movement our youth have created,” She has moved to Washington to be near the epicenter of the fight for climate change.

Maybe others will follow . . .

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I plan to vote for Warren in the primary and general election, but I am not thrilled by all aspects of her plan for economic patriotism. I also have doubts about medicare for all (good policy bad politics) and forgiving student debt (good politics bad policy).

Trying to be brief and actually get to the topic of this post, my problem with Medicare for All is that people fear change and, while a majority support a Medicare option, a minority supports just enrolling everyone in Medicare aotomatically. I am in that minority, but Medicare for All is bad politics and also will never actually be approved by the Senate. Student loan forgiveness is the opposite. Many people burdened by student debt will vote for a candidate who promises to forgive it. But they are not the people most in need. They are US college graduates and relatively wealthy (even if not as fortunate as older graduates who got degrees when tuition was much lower). I do support free (public) college. The difference is that not charging tuition encourages people to get bachelors degrees which reduces supply of people without bachelors degrees and increases their relative wages (see the huge accidental experiment of enrollment to avoid the draft during the Vietnam war and the dramatic decline in the college wage premium). Given to someone who has already made the decision does not have this effect. It is special interest politics with beneficiaries who know exactly who they are at the cost of other programs or lower taxes or who knows ? (well rich people know they will be hammered by Warren and will vote for her only if they are patriotic, but there aren’t many of them).

OK now the plan for economic patriotism. I am sure this is excellent politics. I support some of the proposals (more money for apprenticeships so not all of the subsidies for education go to fancy pants bachelor’s degrees). I object to some. I also disagree with some of the analysis (which is a critique of work by friends of mine and is provocative and very high quality for a candidates web site).

First the general focus is on helping US workers also against foreign workers. I know this is almost universally accepted as a goal, but I find myself in the tiny minority who are against that. The income of US blue collar workers is pretty high up the world income distribution. I reject nationalism and oppose the aspects of patriotism which overlap with nationalism. This is a question of values not analysis and I won’t type more about it.

Second, the web page argues that the problem for US manufacturing workers is trade not technology. This is actually engaging in the economics debate at a reasonably high level.

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I haven’t Applebaum’s book, just a column. I think the elite embrace of economics 101 occurred throughout the rich world. Certainly including Massimo D’Alema (Italian Prime Minister raised as a communist). In any case, I recognise the type over here in Rome (not just in my home town Washington DC)

The book is “The Economists’ Hour: False Prophets, Free Markets, and the Fracture of Society”
by Binyamin Appelbaum
My tweet which I copied above is a reply to this tweet by Scott Winship @swinshi

Any explanation for slower US growth has to explain slowed growth THROUGHOUT THE RICH WORLD. But sure, economists and elites are THAT powerful and influential and homogeneous. The merging of progressives & national conservatives continues apace.

I think Winship claims that Applebaum just assumed that the whole rich world is similar to his circle of acquaintances. It seems to be the common claim that members of the coastal liberal establishment elite are out of touch.
I defend Applebaum. The ideology, movement, policy shifts and consequences he discusses are certainly all strong in continental Europe. I think there is extremely strong evidence that an elite which includes economists but mostly consists of non economists who respect economists and have a particular opinion of what economists say is exceedingly powerful influential and homogenous. It is definitely not just a US phenomenon.
Explaining the tweet. First I was born in Washington DC. The ideology is often called neoliberalism or The Washington Consensus. I like Noah Smith’s term Economics 101. Smith’s point is that many non-economists think economics consists of the very simplest economic models which are now mainly used to introduce the subject to undergraduates (and now high school students including 2 of my nieces). He has a lot to say. I just googled Noah Smith Economics 101

Massimo D’Alema was Prime minister of Italy 1998-2000. He is the first ex-Communist Italian Prime Minister. I am showing my age by still thinking of him. He is an example which comes to my mind of a powerful, influential, and homogeneous elite. In particular, he hosted a summit of center left politicians including Clinton, Blair, German Chancellor Gerhard Shroeder, Tony Blair, and (reluctantly attending) Lionel Jospin. This was a declaration of victory by the victors after the end of history (narrator: History didn’t agree that it had ended).
D’Alema is the son of a prominent Italian Communist. He was raised in the Communist Party as some of his contemporaries were raised in the Catholic Church. He remained loyal to the party when he was an undergraduate at the super elite Scuola Normale Superiore, where almost everyone else was way to the left of the party (think a Lyndon Johnson fan at Harvard in 1968 if you are even older than me).

A source tells me that, at another meeting this one of the post communist democratic party of the left, D’Alema said roughly (and in Italian — he is very elite but not multilingual) that
[Tony Blair is lucky, because Thatcher did what had to be done and then he could come in and take care of the wounded. We are going to have to do what has to be done ourselves.] (I use [] for paraphrases and in this case translations of vague memories)
So the first Italian Prime Minister coming from the Italian Communist Party explicitly presented Margaret Thatcher as a model to emulate. I wasn’t there, I heard this second hand, but I promise you, it wasn’t surprising at the time. When a longtime loyal party member finally became prime minister, he was dedicated to privatization and deregulation.
“Neoliberalism” has two meanings on different sides of the Atlantic. In the USA it means “like Bill Clinton” or “typical of the Clinton administration and say the guys who wrote for “The New Republic” when Clinton was in office. In the rest of the world it refers to the extreme pro-market small government ideology. I am very very sad to say that the two meanings aren’t all that different, because Clinton administration policies were far right by the standards of the rest of the world.

I think the perfect expression of the ideology was found in “The Economist”, but the old “New Republic” gave them a race for their money.
The Washington Consensus is a consensus of staffers (prominently including economists) at the IMF, the World Bank and the Clinton Treasury. A central figure is Larry Summers who went from chief economist at the world bank to first chairman of the National Economic Council under Bill Clinton.
He is one of many people who can confirm that there was an international elite which prominently included economists and which was convinced in the 1990s that it had found the answers, alll the answers. They were interested in, among other things, globalization, by which they meant economic globalization and especially the massive increase in trade in intermediate goods due to offshoring and the globalization of value added chains. I am pretty sure that they are willing to call themselves globalists (I sure am).
I’m sure Applebaum can defend himself, and does make a case in the book (which I haven’t read).
I have a critique of Applebaum’s op-ed “Blame Economists for the Mess We’re In” https://www.nytimes.com/2019/08/24/opinion/sunday/economics-milton-friedman.html which I have read. It is unfair to economists and to economics. Applebaum describes the economic theory which was extremely influential in the 1980s & 1990s. It is economics 101, or rather really the first semester or so of economics 101. This tiny subset of economic theory (which has little to do with current academic research) the economy is described as a market with demand and supply. Without regulation, markets in these models clear with demand equal to supply. This outcome is not so horrible that a policy maker can help everyone, without one exception, by intervening. The economics 101ism is an ideology which says that the answer to all policy questions can be found by assuming that these models describe the world and that an government intervention which helps all but one person and hurts that person a little is unacceptable.

So it has two components. First exceedingly strong positive assumptions about how the world works. These are testable (and overwhelmingly rejected by the data). They include complete markets (if you want to bet that the temperature at a given address in Deluth will be between 73.2 and 73.3 degrees at 11:14 AM on March 14th 2023 you can) perfect competition (so if a store owner raised the unit price of a good by 1 cent then no one would buy it and if she cut it by one cent she would sell out instantly) and no externalities (so you don’t care if I decide to end it all by releasing a ton of nerve gas) and symmetric information (so you know exactly how much I prefer chocolate ice cream to vanilla ice cream, that is exactly how much more I would be willing to pay for a pint of chocolate than for a pint of Vanilla).

With all these absurd assumptions, one can reach an absurdly weak conclusion — there is no intervention which helps everyone. The full 100% 200 proof economics 101 ideology concludes that this means that laissez faire (no government intervention except for protecting people and their property rights from violence) is the best policy.
This is insane. The actual ideology is that the models are useful approximations, and we will separately consider equity and Pareto efficiency and hem and haw, so in this case moving towards laissez faire is an improvement (notice that the Pareto improvement implies that approximations can’t be useful as a tiny harm to one person makes a huge difference – the ideology requires both assuming that approximations must be useful and that approximations can’t be useful – it is not just totally wrong, it is internally inconsistent https://angrybearblog.com/2009/10/schizzo-welfare-economics.html

This is very weak argument, but it was strong enough to change the world.

However, even introductory economics courses go on to teach about imperfect competition, externalities, something about welfare economics other than the Pareto principle and maybe asymmetric information. They don’t discuss what can happen if markets are incomplete (as they are). That involves hard math. I will try to explain it in plain English in another post. Also economic research is now mostly based on assessing the effects of policy by finding natural experiments (or even conducting actual experiments). It no longer relies on assuming that hypotheses which have been rejected by the data must therefore be useful approximations. Also members of the American Economic Association tend to favor more rather than less government intervention. Also there are no anti-Keynesians in foxholes.

So Applebaum is wrong wrong wrong about everything except about the power of a homogeneous international elite and its recent (now weakening) pro-market ideology.

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It is a given, Trump’s new executive order  is calling for “market-based” pricing or whatever the market will bear pricing to replace Medicare set pricing. Trump sees a conflict between Medicare and the market. Well he is right; but, his solution ll only aggravate the problem of costs.  It will drive up costs for everyone in Medicare, destroy traditional Medicare as healthcare for the elderly, steer more people into costly commercial healthcare, reduce Medicare funds at a faster pace, and allow the already profitable healthcare industry to increase profits well beyond what it is today.

But, but are Medicare Advantage Plans ripping people and Medicare off? “Yes they are” a for-profit industry is profiteering by taking advantage of a system of healthcare for which they wanted to be a part. As Trump signed the EO, it is stunning to watch a bunch of seniors up on the stage clapping as el jefe was showing off his executive order allowing commercial healthcare to further pickpocket them, exploit healthcare, and destroy Medicare. All smiles there . . .

Medicare Advantage programs are managed differently than Fee for Service traditional Medicare. Besides providing a series of services not found in regular Medicare, the MA plans instituted a different form of physician/hospital payment called Capitation. Capitation Payments are theoretically used by managed care organizations to control health care costs. The VA is a good example of this type of managing costs. A capitation payment model  controls the use of health care resources by putting the physician at a financial risk if too many services are provided to patients or if quality decreases as witnessed by return patients for the same disorder or illness. To ensure patients do not receive suboptimal care through under-utilization of health care services, MAOs measure the rates of resource utilization in physician practices. These utilization reports are then made available to CMS to measure health care quality, utilization, costs, etc.. They are also linked to financial rewards such as withheld fees and bonuses.

Past the leap, I explain how the capitation model can be gamed by Advantage plans.

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