Debt Ceiling

Consider a person who is well to do and has good credit. He decides to semi-retire for 10 years and then buys two fast cars. The cars keep breaking down and he's not earning enough. So he borrows money to make up for it. Folks are happy to lend him because he has good prospects and he has always paid back the money he owes. Then he signs a magnanimous contract to pay regularly to a charity even though he doesn't have the money. But folks are again happy to lend him cos' he always pays back with interest. Suddenly, his accountants skip town with a lot of his cash and folks begin to question his prospects. But he still continues to pay the interest on his loans. He needs to have good credit because he's not making as much as he's spending and he needs to continue to borrow to keep things running. He tries to revive his prospects with advertising. This costs more money but he shortchanges on the advertising and his prospects continue to be bleak. But he continues to pay interest on his loans.

Then, he decides cold that he just won't borrow anymore even though he knows he doesn't have enough to pay for what he has borrowed already and his prospects for income are still bleak. He's gonna have to get out of semi-retirement, dump his cars and re-negotiate with that charity. But he'd rather cut down on his essentials than give up on those things. And if that isn't enough to pay folks back, he'll just default on his loans. His lenders are livid and stop lending him money and his credit rating tanks.

This is as close an analogy as I can conjure to explain the debt ceiling fight going on in Congress.

Update:
Apologies to Felix Salmon for the metaphor.

Vegetarianism - good for the environment!

The chart shows greenhouse gas emissions of various food items while they are being produced (green) and after production until disposal (orange). Vegetarian - good, Meat -  bad. And yikes, don't eat Lamb! [h/t Matt Yglesias].


And Kevin Drum makes a great point:

This, of course, highlights the genius of the best answer to all of this: a carbon tax. If you tax carbon, nobody makes these decisions for you. You make them for yourself just by deciding what you want to spend your money on. If a carbon tax increases the price of carbon-intensive activities, some people will prefer giving up their hot rod to going without beef. Some will prefer eating more vegetables to giving up their SUV. Some will end up doing neither and giving up something else. But whatever it is, each individual will reduce his or her carbon use in the way that's the least personally onerous. No regulation can do that and no PR campaign can do that, but a price on carbon can. And in addition to all the awesomeness of letting the market work its magic to reduce carbon emissions with minimum pain and maximum consumer surprlus, it also produces a pot of money that can be used to motivate research into better energy alternatives for everyone. We are almost literally insane for not doing this.

Beautiful!

Gimme Shelter..

And this is also from the same group.. Fantastic.

Capitalism and Healthcare

Great article with an anecdotal example of what drives the medical industry in a capitalistic environment and why this can result in more expensive and relatively poor care. Its mostly marketing!

A medical technology company is going public to generate the money it needs to advertise its products to hospital directors and insurance-company reimbursement officers. This entails significant extra expenditures for marketing, the new stocks issued to fund the marketing will ultimately have to pay dividends, banks will have to be paid to supervise the IPO that was needed to generate the funds to finance the marketing campaign (presumably charging the industry-cartel standard 7%)...and all this will have to be paid for by driving up the price the company charges to deliver its technologies. But beyond the added expense, why would anyone think that a system in which marketing plays such a large role is likely to be more effective, to lead to better treatment, than the kind of process of expert review that governs grant awards at NIH or publishing decisions at peer-reviewed journals? Why do we think that a system in which ads for Claritin are all over the subways will generate better overall health results than one where a national review board determines whether Claritin delivers treatment outcomes for some populations sufficiently superior to justify its added expense over similar generics? What do we expect from a system in which, as ProPublica reports today, body imaging companies hire telemarketers to sell random people CT scans over the phone?

Also,

The other key thing to pay attention to is who this marketing campaign was targeted at: key decision makers at providers and insurance companies. Those are the people who decide whether medical procedures get ordered. It's not patients. Patients aren't going to experience a loss of freedom or satisfaction because an expert reviewer at the Independant Payment Advisory Board makes the call as to whether a procedure is medically beneficial, rather than the corresponding bureaucrat at their insurance provider or at the for-profit clinic they're attending. Health care is different from buying shoes. Which is why it wouldn't be at all surprising if a board of 15 experts could play a major role in reducing expenses and improving care outcomes in the American medical industry.

Good read. [h/t Paul Krugman]

Return of the Oligarchy!

The chart shows the income share of the Top 5% in the United States from 1913 to 2008. Generated from this excellent and free income database site. As you can see, the income share of the rich was pretty high before and during the Great Depression. Then it tanked after the signing of the New Deal in direct response to the depression. It stayed even during the better part of the New Deal Era when the American middle class has its greatest growth. Then it started climbing again back to the those old levels when the New Deal policies were slowly dismantled.

Chart of the day

The Center on Budget and Policy Priorities put together this nice chart showing what the main causes of the growing deficit are.

Anyone complaining about the size of the government and the monstrous government spending should take a careful look at this chart. The budget shortfall going forward are mainly due to three factors: The economic downturn, The Bush tax-cuts and The ongoing war expenditures. Not the economic stimulus, TARP or Unemployment benefits. While recovery measures (Stimulus, TARP, GSE etc.) add to the deficit in the short-term (2009-2011), their contribution to the deficit fades pretty quickly.

So how do the good folks in the GOP address this issue? Privatize Medicare! Cut Medicaid! Repeal the Health Care Law (which actually reduces the deficit in the long run)! Bust up Unions! Don't let the Bush tax cuts expire! In fact, add to it for Corporations and Millionaires! Gotta invade Iran!

Good policy cannot become law unless there is common sense in both parties. Unfortunately, one of them is mostly bent on misinformation and winning the next election.

The Debt to GDP ratio is growing at an alarming rate. So, how should we address the issue?

The most urgent recommendation from the CBPP is to let the Bush-era tax cuts expire after 2012. Not just for individuals making $200K or more and couples making $250K or more. Of course, if the economy is still in bad shape, Congress can continue some of the tax cuts for those making less but they have to come up with steps to offset the cost.  A second chart shows that the curve flattens if we just take this one step.

Any concrete attempt at addressing our mushrooming debt should begin with a factual examination of what is causing the debt. Will more folks become aware of the facts so we can have a better Congress?

Last Book I read

How to Teach Physics to Your Dog by Chad Orzel




Well written. Explains complex topics with simple analogies. Wonderful monologues (dialogs?) with his Dog.

Animals Talking

LOL. [h/t Balloon Juice]

Casualties of war

An incident of the drone war gone horribly wrong in Afghanistan: Anatomy of an Afghan war tragedy. It is worth it to flip through the slide show but there is much more detail in the article that follows it. 


These are some of the relevant facts:

1. The story is based on hundreds of pages of previously unreleased military documents, including transcripts of cockpit and radio conversations obtained through the Freedom of Information Act, the results of two Pentagon investigations and interviews with the officers involved as well as Afghans who were on the ground that day. 
2. This incident happened on a cold morning of Feb 21, 2010. Meaning, this was after we have been there for close to 9 years. We still cannot distinguish between insurgents and harmless folk with women and children among them and no identifiable weapons. 
3. "We all had it in our head, 'Hey, why do you have 20 military age males at 5 a.m. collecting each other?' " an Army officer involved in the incident would say later. "There can be only one reason, and that's because we've put [U.S. troops] in the area." In a hair-trigger environment, critical life and death decisions can be made based on such flimsy premises. 
4. Cell phone chatter was intercepted and they suspected a high-level Taliban Commander was nearby. But neither the identities of those talking nor (more importantly) their precise location was known. But that's all it took for them to conclude that these folks were insurgents. 
5. By the U.S. count, 15 or 16 men were killed and 12 people were wounded, including a woman and three children. Elders from the Afghans' home villages said in interviews that 23 had been killed, including two boys, Daoud, 3, and Murtaza, 4. Regardless of who got the figures right, it is horrible and preventable tragedy.
6. McChrystal issued letters of reprimand to four senior and two junior officers in Afghanistan. The Air Force said the Predator crew was also disciplined, but it did not specify the punishment. No one faced court-martial, the Pentagon said.
7. Several weeks after the attack, American officers travelled to the villages to apologize to survivors and the victims' families. They gave each survivor 140,000 afghanis, or about $2,900. Families of the dead received $4,800.

If there's a silver lining, it is only the fact that we can get hold of this information through the FOIA. Awareness helps us understand what we are up against. The military has taken steps to address the problems that caused this tragedy. When two cultures, vastly different from each other, are forced to co-exist in a violent environment such mistakes are inevitable. But a  justifiable war at one stage is turning slowly but surely into a catastrophy. 

All roads lead to Dad

In my childhood, I always turned to my Mom for emotional solace.  Mom's have that comforting aura around them that you can't find in anyone else. You can always go to Mom to explain away your worries, your pains, your distress. Unless of course, she was the cause of the pain and distress which was quite often in my case, since she'd be the de facto punisher for any indiscretion on my part. Even then I'd go to my Mom.

I remember one incident during 1st grade when I was eying this fruity ice on a stick (pop on a stick, don't call it popsicle since its trademarked by Unilever!) sold by a street vendor right outside our school. He had all kinds-orange, grape, cherry, peach. But, Mom had forbidden us from even having ideas about it. She'd warned us that its not hygienic. And she always ends all such warnings with 'It'll give you the common cold'. Anything cold can give us the common cold in my Mom's handbook. My elder sister (by just a year and I never seriously counted it against me) went to that school. My big bro must've been in some other school because he was blame free on this one! Naturally I got hold of some money and enjoyed a delicious grape pop. We come home and my sis rats me out. Mom asks me. I say 'No! What is she talking about??'. Mom's clever: 'Open your mouth and stick your tongue out'. Uh oh.. How do I explain this purple tongue? Mom brings out the tongs from the kitchen. 'Stick your hand out, knuckles on top'. I get whacked. Bruised and bloodied (mostly emotionally) I am balling my eyes out. And I go straight to my Mom for solace! She massages my hand, kisses my tears away and she's my Best Friend!

But my Dad was the Rock. He will shower you with love but you'll never see him distressed. He won't show emotion. When he does show it, and only on extremely rare occasions, it is anger and it is a sight to see. Well, actually, its a sight I hoped I would never see because it was scary! But very very rare. I've never seen him cry in my life. Never. I was told that he cried once but I didn't see it. This was 1992. I had my tickets to the USA. I was going to grad-school with a scholarship! I was going to fly 10,000 miles away to Boston and then to Durham, New Hampshire.  I'd never spent any time in a dorm. Always went to School and College from Home. Don't know how to cook. Don't know how to wake up in the morning by myself. Don't know when to eat, when to sleep, when to shower. It was mostly Mom keeping me on track on all of these things. I'd been on one flight and it was to a town called Trichy about 300km (~200 miles) from Chennai where we lived.  On a twin-propeller small plane. We took off and the stewardess gave us kids, chocolates and then it was time to land! This was the mother of all trips for me. So, I say my final goodbyes and my Mom's crying, my sister's crying (this was a pleasant surprise!), even my big bro looks emotional. I look at my Dad. Of course, he's not crying. He's wishing me good luck and I feel his emotional strength flow into me. I am not gonna cry. I feel a sense of calm in me. I take off. My family is preparing to leave the airport after waiting a very long time to symbolically wave goodbye at the plane as it successfully takes off. And they can't find my Dad. They locate him in a corner in a chair and he is crying and shaking with tears. He is crying like a baby. They are shocked! This man, who is never out of control, is as vulnerable as a child. It takes a long while to calm him down. I am emotionally touched whenever I remember this story. I know I have been truly loved by someone special.

Perhaps I've inherited this quality of controlling-your-emotions from my Dad. I know I've inherited a ton of other things from him including his anger. Sandy says 'I never see you crying'. Except once.. We are on vacation in South Carolina. The wife and I are driving somewhere and I get a call from my sister. I barely say hello when she blurts out: 'Where have you been? We've all been trying to reach you. It's all over. He's gone! Just like that. Can't even say Goodbye'.

I didn't cry right away. Nobody cries immediately after hearing bad news. You digest it, you get tense. You think things, as you know them, are changing and are out of your control. You calm yourself down. It's not the end of the world. You digest it. You get tense. Rinse. Repeat. We interrupt our vacation and start driving back and I am sitting in the back of the van.

Then the memories come. Before you know it, you're balling.

When my Dad is finally sent into the furnace, my sister's balling. My brother, standing right next to me, suddenly and explosively breaks out. Scares the bejesus out of me. And I am just staring. I am thinking, this is silly.. Why cry now as if this is some final ending. He's been gone for several days. What we've been seeing since is a rock literally. It's been prepped up sure by the fine folks at a funeral home.. But he was never this dark. Never had this expression. This is not my Dad. My Dad is gone already. This final moment when we won't see this rock anymore is nothing special. Then, I feel like the relatives are looking at me odd. Like they're judging me. What's really happening is I am judging myself. And I feel guilty that this is what I should be thinking of at this moment. How I should react to this moment. I force myself to think of something else. STOP THINKING!  My cousin Karthi, who is like a best friend, is by my side anticipating that I'll break out any moment. It's over. We're waiting outside for the ashes. The cremation takes some time and the ashes have to cool down. Then they can be collected. My brother and I have to pick out the pieces. Another excruciating experience to look forward to. We're planning to scatter a sampling of the ashes in the sea. I walk away from everyone. My cousin wants to come along but my Uncle stops him. I sit on a platform under a tree by myself. It's a hot day. It's always hot in Chennai! But I am under a nice shaded tree. There's nothing else to do but wait.

Then the memories come. Before you know it, you're balling.

I believe crying is an emotional outlet when you have cherished memories and know that you'll never again experience them in real life as that participant. But what you can hope for is creating similar memories with your family as a different participant. You're not the child looking up at your Dad. You're the Dad looking down on your child.

The mendacity of a United States Senator

The newly minted Senator of Wisconsin wrote an opinion piece in the Wall Street Journal about the new health reform law (PPACA). The highlight of the article, chosen by the WSJ, is quite personal and emotional.

My daughter probably wouldn't have survived in a system where bureaucrats stifle innovation and ration care.

Unfortunately, the article is full of factual errors, cherry-picks and vacuous political rhetoric. A thorough take down of the piece can be found here. If one is inclined to be charitable (after all he is talking about his daughter), one can surmise that perhaps the Senator is genuinely ignorant of the facts. But I suspect that is a more scary supposition.

Argument Clinic

From the brilliant duo of John Cleese and Micheal Palin!

Best Healthcare in the world

Great insights on wait times, time-spent with patient, doctor-patient ratio etc. here. The number of doctors per 100,000 chart is interesting and could explain partly why our costs are enormous. Here's another report I found from 2009 data. So, why are there so few doctors? Contrary to what you may hear, Tom Baker argues persuasively that folks aren't turned away from the profession because of malpractice lawsuits.

I haven't researched this but I've heard and seen (in grad school) that more American grads choose law or business over engineering or medicine. Are these disciplines perceived to be harder (at least in school)? The engineering shortfall (at least in IT) has been addressed by either bringing in folks from overseas or (more recently) outsourcing work. The shortfall in medicine is not being addressed similarly. Clearly outsourcing wouldn't work. And perhaps the medical lobby does not want to saturate the field with foreign doctors thereby diluting their income.  But something has to be done if the cost is high and the service does not justify it.

Charts!

Income inequality in America. I cannot help but feel that this is unsustainable. Continuing on this tangent will hurt everyone financially including the rich. Unfortunately, right now the 'free market' is neither free nor is it a market.

Fraudulent Budget Debate

Succinct and brilliant writeup on the current debate regarding our nation's budget: Willie Sutton Wept

There are three things you need to know about the current budget debate. First, it’s essentially fraudulent. Second, most people posing as deficit hawks are faking it. Third, while President Obama hasn’t fully avoided the fraudulence, he’s less bad than his opponents — and he deserves much more credit for fiscal responsibility than he’s getting.

...

What would a serious approach to our fiscal problems involve? I can summarize it in seven words: health care, health care, health care, revenue.

Highly recommend it.

The phenomena of path dependency and lock-in

An entertaining read on path dependency and technology lock-in using space launchers as an example. By one of my favorite science fiction authors: Space Stasis

Government mandate!

Most of the 'unconstitutional' arguments for the repeal of the Affordable Care Act (ACA or Health Care Reform Law) point to the requirement in the law for minimum coverage provision. That is, everyone is required to have a form of minimal insurance whether they want it or not. The folks against this requirement argue that this is "unprecedented governmental mandates that restrict their personal and
economic freedoms". They also contend, “the federal government could mandate
that we all join a health club and indeed impose on us a penalty for not actually attending the club, to take multi-vitamins daily, and to dine only in government approved ‘health’ restaurants.”

A requirement for folks to join a health club or exercise at minimum is not a bad idea considering the obesity problem plaguing this nation. But levity aside, from my perspective, the obvious benefit with this requirement is that everyone will have some form of health insurance. As close to universal care as we can get. Of course, not everyone sees this as a benefit. Especially folks who don't want to pay for some one else's care. I understand this argument. But beyond the moral argument, is there an economic reason for the mandate?

The uninsured, like plaintiffs, benefit from the ‘guaranteed issue’ provision in the Act, which enables them to become insured even when they are already sick. Without the minimum coverage provision, there would be an incentive for some individuals to wait to purchase health insurance until they needed care, knowing that insurance would be available at all times. As a result, the most costly individuals would be in the insurance system and the least costly would be outside it. In turn, this would aggravate current problems with cost-shifting and lead to even higher premiums. [h/t Balloon juice]

This is from a ruling by one of two federal judges who upheld the law in a case filed for repeal. Insurance premiums rise or fall based on costs incurred by the insurance company in reimbursing claims. And the majority of the costs/claims come from a small number of folks who need a lot of care as illustrated by this article on Medical Hotspots. Anything that alleviates this cost is good for everyone.

Of course, how can we ensure that insurers will actually lower their premiums when their claim costs go down? The ACA requires companies to spend a certain amount of the premiums that they collect on medical care for the customers actually paying the premiums—thus limiting the amount that can go for administrative expenses and profits. If their payments for medical care is reduced, they will have to reduce premiums they collect in order to account for this requirement.

There are things that are good in this ACA. It is not ideal, but it is certainly a decent start.

Cutting benefits to seniors

Paul Krugman catches Representative Paul Ryan's 'cutting benefits to seniors' bogeyman in his SOTU response:

Let me also highlight another point from that passage: Ryan warns that if we don’t deal with our fiscal problems, we’ll have to raise taxes and cut benefits for seniors. So what can we do to reduce the deficit? Well, government spending is dominated by the big 5: Social Security, Medicare, Medicaid, defense, and interest payments; you can’t make a significant dent in the deficit without either raising taxes or cutting those big 5. Defense is untouchable, says the GOP; so that leaves the entitlement programs. And 2.7 of the three entitlement programs are benefits to seniors (70 percent of Medicaid spending goes on seniors).

So let’s see: to avoid cuts in benefits to seniors, we must … cut benefits to seniors.

Very serious people. Substance does not matter if you are a politician.

Smooth Criminal by Dueling Cellists

Fantastic. Just another illustration of MJ's brilliance. [h/t ABL]

How does a bill become law

Amidst all the gloating and the 'mission-accomplished' blathering in the House about the repeal of the Affordable Care Act, this video is quite educational. [h/t Kos]