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wSaturday, June 01, 2002


Well, if you want to get something done, you have to do it yourself. So I'm hereby declaring Blogapalooza 2002 for Friday, June 21. There will be no live music or anything else associated with the original Lollapalooza, except of course, fun. The bar's a great little Moroccan place with a ton of small rooms to hang out in, and it's conveniently located near the 1-9 trains. . . . Hope to see all the bloggers out in force. The information is here, at this disgraceful display of my lack of web design skills. Be there or be . . . somewhere else more fun, I guess.

Update: People Who Can't Count, and the People Who Love Them
Ack!!!! That's Friday, June 14. On Friday, June 21st I myself will not be here, but in glamorous Berwyn, PA. I will update the invite page tomorrow.

Also, email me if you're planning to attend; I'll make a reservation, of sorts, once I know who's coming.

posted by Jane Galt at 5:49 PM |


w


Instapundit dropped me from his permalinks. Sniffle. Sob. What did I do, O Fearless Leader, to offend thee?

It's just you and me, dear reader. But don't worry -- we'll muddle through. We're going to keep a stiff upper lip, and keep blogging just as if nothing had happened, and -- WAAAAAAA! Why doesn't he love me any more? Is it my hair style? My Florida vacation? The way I used to nag him about teen sex? Whatever it is, I could change! I could be shorter, blonder, more focused on tort reform!

We're going to get him back, reader. [maniacal gleam] You'll see. [/maniacal gleam]

posted by Jane Galt at 4:20 PM |


w


Followed a Tapped link to this Ted Barlow piece on single-payer health care.

I'm not going to wax sarcastic about it, because it's a serious piece that deserves a serious rejoinder. But I will point out that the primary thrust of his argument is that single-payer is less expensive in Europe than our system, and therefore it will be here, too. This is a common logical fallacy -- but I must point out that several posts later he (correctly) slams the National Review for making exactly the same logical mistake in equating Russia's tax environment to ours.

But Russia's much different than we are! I hear my rosacious readers cry. Europe's practically the same!

Umm. . . European health care takes place in the context of a broad social welfare system that we haven't got, and which imposes serious costs on its society, like an ENORMOUS tax burden and a stagnant entrepreneurial environment, that we aren't willing to bear.

We can sit around and argue for weeks about what those differences are and which are relevant. The point is that it is not valid to make an a priori assumption that our experience will be like Europe's.

For one thing, there's the empirical evidence that turning anything over to the government makes it cost more, and suck more, than leaving it private. Exhibit 1, the Post Office, which provides worse service than UPS or FedEx, charges almost as much, and is still hemorraghing money despite its special tax status and the implied government funding guarantee that lowers capital costs. Exhibit 2, municipal swimming pools. Exhibit 3, public education versus Catholic schools. Etc. . . . You need some powerful model of how health care will be different to overcome that.

And how will it be different? Why, administrative costs, of course! Not so fast. Those administrative costs don't come from the outrageous price of paper; they come either from competing technological/administrative systems inefficiencies (and if you think that the government will fix these in a snap, note that some agencies are still finishing up their Y2K work), or labor. The idea that the government would arrange to fire a large group of potential voters is of dubious merit, and not borne out by historical experience, here or in Europe. Which applies to all labor costs: if you nationalize 15% of GNP, that means an additional 15% of our labor force in a civil service union. Prosperity is not just around the corner. There are certainly savings from having one set of billing procedures -- but absent competitive cost pressures, not as many as you'd think.

Please note that the wastefulness of competition was the almost plausible argument for every socialist system ever proposed. Which is true; it is wasteful. Just not as wasteful as a centralized bureacracy that only knows how to do things the same way it always has. Anyone who wants to convince me that centralizing billing is going to provide all the costs savings we'll ever need is going to need a passel o' proof.

Other costs might be lowered, but not to good effect. Medical and pharmaceutical research, and medical technology entrepreneurship, are vastly more innovative here than in Europe. Because here it pays. But after we've realized those vast administrative savings, and taken out the incredibly modest savings to be had from better preventative medicine (sure it saves money on more expensive emergency room treatments. Two problems: it also loses money to people who run to the doctor every time they have a sniffle. And the infrastructure for all that non-emergency care for the uninsured doesn't exist anywhere near where they live. Maybe we should build it, as a moral issue. But it isn't going to be cheap.

Third problem: much preventative medicine is dependant on the patients. Demonstrating that they will follow preventative regimes as well as the hyper-attended people in the expensive studies that showed reduced disease incidence will be a challenge.) -- after we've done those things, there's only one place the money is coming from: price controls on inputs.

So who's it gonna be? The doctors? They don't get paid all that much now, given their workload and education level, and the years they currently sacrifice being paid 32K a year with 100K of debt hanging over their heads while they finish their residency. Oh, you could make their education free, but that's an added cost you have to take into account -- and no matter how free you make it, they aren't going to go to grad school for 4 years to make 32K for working 100 hour weeks when they get out -- not when you cap their ultimate salary at, say, $75K. Sure, social workers do it, but forgive me, my English major friends -- social workers don't have many lucrative alternatives in the private sector. Smart people with a flair for science do. No one will work the hours residents do no matter what you do, for that kind of money. In other words, your costs for doctors are going up, or your quality is going down.

The nurses? There's a shortage now; you have no leverage to lower their pay. You can't change the total cost equation, though you can certainly shift where those costs lie. If you reduce their pay, you'll have to reduce their working hours, up their benefits or vacation pay, or something else to compensate them -- or soon you'll have only the dregs of the nursing community left.

The assistants? Maybe. But unlikely. The shortage of skilled PA's and lab technicians is forcing hospitals to raise their pay as well.

The adjunct staff, such as orderlies and janitors and cooks and receptionists and administrative staff and nutritionists? Brother, you do not grok civil service. These are the last people who will ever have their salaries reduced. Plus their benefits package just got much more generous when they joined the good old AFSCME.

Oh, you weren't going to let them join the civil service? I'm flat broke and I'll bet anyone who likes $1,000 that if we nationalize our health care system, all employees at nurse level or below, and possibly physicians, are unionized. But I'd check with the airline screeners before you make that bet.

The executives? 'Kay -- though I'd be uncomfortable trying to run a hospital without some administrators. And if you think that the guys you're working with now are bad, just wait until you meet Big John, who's been toiling at a back desk in Health and Human Services for 20 years and just wants to get out in five with a higher pension.

Plus their salaries may seem outsized, but are not the major component of most organizations' budgets.

Plus, I think we already cut them as part of our vast administrative savings.

So not much there.

Labor, in America, and unlike in most European nations, is subject to the call of more lucrative positions from the private sector. That's why it's the fastest growing element of our health care costs, after prescription drugs.

Oh, those prescription drugs. How are we going to save money? Cap prices on drugs and medical technology. And where are those savings going to come from? Well, the angry health-care investors you just bankrupted, of course (wouldn't try that in an election year!) That's not what we want, the advocates say, but c'mon -- if health care gets nationalized, you can kiss the biotech and pharmaceutical industries good-bye.

I'm being alarmist, you say. No I'm not; I'm being totally realistic. Where's the money going to come from? The profits that cover a) financing and b) R&D.

But that's not what you want, you say. You're willing to let 'em make a reasonable return, say 5%. It's those outsized profits you want to recapture.

Oh? Going to subsidize their losses, then, in bad years?

Ahem -- anyone home? Oh, hear that hollow echo.

The outsized profit argument is based on a misunderstanding of the way capital markets work. Those profit margins are what is necessary, more or less, to get investors to subsidize the risk inherent in an industry where profits are completely dependant on luck. If it were not, we'd have more me-too drugs than we do already, until profits were competed down the to point where new entrants couldn't raise capital. Bio-tech firms, which are even riskier, make even bigger profits -- the ones that survive. The other 9 out of 10 don't make any money at all. Kill the profit margins, and you kill their access to capital.

We'll arrange loans, you say.

Which worked so well in Japan and Indonesia.

Oh, you're just being ridiculous, I hear. We'll get the money back from advertising. Okay, in 1999 the Pharmaceutical industry spent $1.6 billion on consumer advertising. (Many people are confused because the SG&A -- selling, general and administrative expenses -- item on the Income Statement includes pretty much all non-factory overhead, which is a much larger number than marketing expenses. And even then, 85% of pharmaceutical marketing consists of providing fact sheets and samples -- and, to be fair, dinners -- to physicians. But that doesn't change when you do business with the government). Now, the revenues of Pfizer -- which was hurting, pre-Viagra -- were $14 billion. That's one company that wasn't doing much business. How much did you say we were going to save on advertising?

Not to mention that if we really thought this could work, we could accomplish it much more cheaply by banning consumer advertising again.

No, the money's coming out of profits. And that means investment and R&D. And that goes double for pricey new medical technology.

Which means we aren't getting any new pricey medical technology, or drugs either. The day we nationalize health care is the day we say bye-bye to medical innovation. Think I'm being alarmist? Almost 50% of the world's pharma companies now reside here, many of which moved in the last ten years, as we became their primary market. The reason pharmaceutical prices are increasing so fast is that we're subsidizing R&D for the rest of the world. Don't tell me we're not, feisty person: the rest of the world buys close to marginal cost -- the cost of producing one extra pill. Yet R&D is close to 20% of worldwide revenues. Someone's paying for that R&D, and I don't think it's the health care fairy. Now, do you think that the politicians who will set prices will, when push comes to shove, consider the long term consequences of cutting pharma profits below the level required to sustain R&D, or the short-term consequences of making the AARP pay more for their drugs? If you think a) is the answer, justify this in the light of Europe's unwillingness to do so.

But what about all that needless duplication? You cry. Again, that was the rational for central planning. "We do not need all these wasteful 'me-too' shoes! We will produce one best shoe for all workers and save much money!" Zoloft and Prozac do basically the same thing (or so I'm told) but sometimes one works where the other doesn't. And in cases where that isn't true, having two drugs on the market that do almost exactly the same thing pushes down prices for consumers.

The point is that the much vaunted potential savings in health care come almost always from people who've either never worked for the government, or never worked for a business. They assume that they can cut here and there without much thought for the systemic changes that such cutting would make. This is not to say that you couldn't cut some costs; you could. But I'm sorry -- the government is not going to squeeze major new efficiencies out of the system; if you think that insurance billing is byzantine, go check out some government procedures for reference. It's going to cut costs by cutting back on some of the stuff that the health care system currently does. Pharma and medical research. Training. Service provision. The reason that Canada can do things on the cheap is first, that they have a different population from ours whose health care needs are probably not the same, and second, that they free ride on our research establishment. I'm sure it's possible to cut some of the profits out of that establishment without destroying it -- but do you trust the government to surgically detect that amount? Because the companies can be destroyed quickly -- their R&D burn rates are huge. But once you've pulverized them, it will take a decade or more to rebuild. More, actually, because the organic chemistry students and medical technology engineers will drop out of the pipeline. And investors will be a little gun-shy about handing money over to a firm after you nationalized it once -- better make that profit margin 40%.

An industrial economy is like a complicated engine. You can't pull a big chunk out of it and expect it to keep working -- nor imagine that once you've disassembled it, you'll be able to put it back together the way it was.

Advocates of single payer claim that the problem is the free market -- when health care hasn't functioned like a free market since WWII. Oh, it's freer than elsewhere -- but Medicare spending is 17% of the total market; Medicaid another 5% or so, and almost all of the rest comes from employer subsidized health insurance -- which is not a free market item, thank you very much; it's a product of the deductibility of medical insurance, which is an otherwise ludicrously inefficient item for employers to buy. And what does that mean? It means that the consumer of the health care -- you -- is not the one paying for it. The free market doesn't work? An economist could predict exactly what is happening in the health care market. The consumers want to consume as much as possible. The payers want to pay as little as possible. And the companies providing the insurance pretty much don't care, because they're screwed either way -- either they get unhappy employees, or higher insurance prices.

And the government will do so much better? No. Remember, the government isn't incented to see that you get good health care; it's incented to see that you don't get mad enough to vote the politicians out of office.

But you've just created another, immensely powerful interest group who will vote on the issue, every single time: the employees 15% of the economy you just nationalized. Focused interest groups, unless they are very small, and the costs are very high, almost always win over the national interest, because for you and me our crappy health care is just one of many issues that we vote on, while for that fifteen percent, if their interest is harmed by, say, budget cuts, it's the only one -- and 15% is enough to swing a lot of districts. Imagine our health care system as the school system with IV's and blinking lights.

All right, feisty person: explain to me how health care is different from education, politically speaking. It's vital and we all use it at one time or another, and most of us who use it lack the background to determine whether we're getting good care. That's exactly the place where special interest groups with a lot of votes, like the one we just created, exert the most leverage.

We'd do a lot better to try a free market mechanism: let the people consuming the health care pay for it. End the tax deduction, or transfer it to the individuals in the form of Medical Savings Accounts. They're the only people, ever, who will be incented to make sure that they get the best possible deal for their money.

And that's what we call a free market.

posted by Jane Galt at 12:56 PM |


w


This is a treasure from TNR:
But no matter how the ASDC is reorganized, it's unlikely to have the money to conduct the extensive issue ad campaigns on which both parties have lavished millions since the days of Dick Morris. It's here that Democrats hope liberal interest groups will pick up the slack. The problem, of course, is that a wave of chaotic, uncoordinated ads funded by a variety of liberal groups interested in different issues could do nearly as much harm as good. Enter Mike Lux, a veteran of People for the American Way and of Bill Clinton's Office of Public Liaison. Last year, long before it was clear McCain-Feingold would pass, Lux set up a group called the Progressive Donor Network to improve the electoral coordination and efficiency of liberal groups like the League of Conservation Voters (LCV) and the National Abortion Rights Action League (NARAL). And McCain-Feingold's passage makes Lux's network much more powerful. "We're always going to do independent work," says NARAL's Kate Michelman. "But Mike Lux's group could help us think carefully about the issues that really are most mobilizing. We can save ourselves from duplicating efforts and coordinate where each of us is going to be."

Explain to me, please, how moving soft money from the Democratic party to a closely allied PAC is going to revolutionize our campaigns, except by making them less accountable?

posted by Jane Galt at 12:50 PM |


w


I'm no evolutionary biologist, but this article was certainly thought provoking -- particularly this bit:
This leads to a subject that Ewald is not shy about bringing up in discussions with colleagues and in professional lectures: homosexuality. Various pieces of evidence have been adduced in recent years, by prominent researchers, for some sort of genetic component to homosexuality. The question arises as to whether natural selection would sustain a homosexual trait in the gene pool for any length of time. The best estimates of the fitness cost of homosexuality hover around 80 percent: in other words, gay men (in modern times, at least) have only 20 percent as many offspring as heterosexuals have. Simple math shows how quickly an evolutionarily disadvantageous trait like this should dwindle, if it is a simple genetic phenomenon. The researchers Richard Pillard, at the Boston University School of Medicine, and Dean Hamer, at the National Cancer Institute, are not persuaded that natural selection would necessarily have eliminated a homosexual trait, and offer ingenious counterarguments. (And they note that historically the fitness cost may not have been very high, when gay men stayed in the closet, married, and had children.)

No one, of course, has ever isolated a bacterium or a virus responsible for sexual orientation, and speculations about the manner in which such an agent would be transmitted can be nothing more than that. But Ewald and Cochran contend that the severe "fitness hit" of homosexuality is a red flag that should not be ignored, and that an infectious process should at least be explored. "It's a very sensitive subject,"Ewald admits, "and I don't want to be accused of gay-bashing. But I think the idea is viable. What scientists are supposed to do is evaluate an idea on the soundness of the logic and the testing of the predictions it can generate."

Which leads to the question: if we could cure it, would we?

posted by Jane Galt at 12:50 PM |


w


Hmmmm. . . . The C-Man suggests that all those public service programs like the Peace Corps and Teach for America are really jobs programs for the affluent.

posted by Jane Galt at 12:37 PM |


w


Another thought about the infantilisation of teens: perhaps the problem is less that we infantilize them than that we treat them like adults before they're ready.

In the 19th century, a boy was the property of his father until he turned 21 -- he was owed that son's labor and obedience until his majority. A girl remained under the control of her parents until she was married. In neither case were they adults at 16, no matter how much responsibility they were taking.

Nor were they permitted to act like adults. The way that today's ninth graders are allowed to comport themselves would be wildly libertine for a 19th century community. They were not allowed to go to mixed-sex parties without a chaperone. Girls weren't allowed to go much of anywhere without a chaperone, even in very poor communities. They didn't have the run of the house when their parents weren't there, because there parents were never not there -- and if their parents went away, they would be left either with servants, or with relatives, to make sure that they didn't stray. The opportunities for premarital sexual activity were not non-existant, of course, but they were drastically restricted -- and extremely risky. A couple caught was, as long as the couple stayed within broad class and race lines (and fifties movies aside, most girls didn't stray too far outside those lines), a couple married.

All of which goes back to my original point, which is that early sexual activity and parenthood took place within a strong, broad community structure that supported early marriage -- and took great pains to prevent premarital sexual activity. Trobriand Island tropes aside, this is true, as far as I know, in most communities that endorse teenagers having sex. Without the latter two systems in place, I see no reason to think that we can healthily endorse the early sex -- not without aiding children in pretending that pregnancy is vastly less serious than it is.

posted by Jane Galt at 6:31 AM |


w


After reading this bit by Tony Blankley, all I could say was "Ouch! That's gotta hurt."
Presumably without checking with their own intelligence experts or the White House, the three Democratic leaders went public with their incendiary innuendos. The next morning, Friday, both the New York Times and The Washington Post wrote stern editorials in which they completely exonerated the president of culpability in the matter. The Post had a major front-page story that provided the history and context of the briefing and pointed the finger, correctly, at the FBI bureaucracy.

But by then it was too late for the heroic Democratic Three. They had allowed themselves to be swept up on a high-tabloid tide. Then, as the tide receded, they were stranded on the beach — three jellyfish, their venomous sticker-laden extremities hanging helplessly and harmlessly on their drying bodies. This is not the sort of loyal opposition leadership that the Democrats need and our nation deserves.


posted by Jane Galt at 6:16 AM |


w


Professor Volokh writes about the curve at UCLA law school. Is it fair? Well, I have some experience in the area; the University of Chicago Graduate School of Business had a mandatory curve to a ceiling of 3.25. Professors could distribute this in any way they liked -- or as we liked to say, every C subsidized an A for someone else.

Broadly, I'd guess it was fair, although I had some very pungent words for one of my professors who deprived me of an A by deciding to curve to a 3.0 -- I was one point lower than the lowest A.

Of course, there were always people who complained when an absurdly easy test, or class, meant that everyone below a 97 or 98 average got a B. That happened to almost everyone at least once. On the other hand, I didn't see them complaining when the curve lifted their substandard performance up to B level. I'm pretty sure it evened out in the end. And grade inflation is a problem; at Northwestern, down the road from us, rumor had it that the average GPA was a 3.8 or 3.9. At that point, grades are no longer useful information -- why bother giving them? Unless you're a total screw-up, you're getting an A. This isn't uncommon at Business schools, which put us in the uncomfortable position of trying to explain to interviewers who hadn't attended Chicago why my 3.6 was really more impressive than a Northwestern grad with a 3.8 -- but other than that, really not a big deal. So while ideally I think it would be nice to have an objective, fairly difficult standard that you need to reach, in a world of essays and case studies, you need some quasi-objective way to make grading fair. It's certainly fairer than the alternative: my professor's average grade is a C, yours is an A- -- and both of us have to compete for the same job.

posted by Jane Galt at 5:39 AM |


w


Brilliant article by Robert Kagan (Via Mindles:
Thus we arrive at what may be the most important reason for the divergence in views between Europe and the United States. America's power, and its willingness to exercise that power - unilaterally if necessary - represents a threat to Europe's new sense of mission. Perhaps the greatest threat. American policymakers find it hard to believe, but leading officials and politicians in Europe worry more about how the United States might handle or mishandle the problem of Iraq - by undertaking unilateral and extralegal military action - than they worry about Iraq itself and Saddam Hussein's weapons of mass destruction. And while it is true that they fear such action might destabilize the Middle East and lead to the unnecessary loss of life, there is a deeper concern.7 Such American action represents an assault on the essence of "postmodern" Europe. It is an assault on Europe's new ideals, a denial of their universal validity, much as the monarchies of eighteenth- and nineteenth-century Europe were an assault on American republican ideals. Americans ought to be the first to understand that a threat to one's beliefs can be as frightening as a threat to one's physical security.

I've wondered over the last few months whether Europeans really, genuinely don't get it that their peace is purchased by our willingness to act militarily. The European miracle of integration, after all, was made possible first by our destruction of Germany, and then by the military guarantees that made intra-European belligerence not only unnecessary, but also impossible. Oh, they did a fine thing, I'm sure, weaving all those disparate states together; I might not like the hyper-statist form of the EU, but I applaud the idea. Nonetheless, it wouldn't have succeeded without our military guarantees, and not just because they'd have to hold their meetings in Russian.

But Kagan makes the opposite point as well, which is that we, for many years, dreamed of a peaceful isolationism that many of us, including me, still look back upon wistfully. It wouldn't particularly bother me if the situations were reversed, and we had to retreat within our borders and look inward. Or at least, I don't think it would. If we were not threatened by Iraq et al. I think I could be quite content to let the Europeans handle it whatever way they like. Oh, I'm a champion of liberty to all the corners of the earth, but there's sufficient ambiguity in pursuing it for foreign nations that I'd be content to let Sweden and Italy handle the job. So it's not too hard to understand that the Europeans have built their own ideology out of powerlessness; nor is it necessary to ridicule it in order to point out its insufficiency. Multilateralism does have its charms.

But for now, I guess, I'll stick with our way.

posted by Jane Galt at 5:32 AM |


w


I have a terrible fear that we are going to see, over the next few days, the first offensive use of a Nuclear weapon since Hiroshima.

I could be wrong. I certainly hope so. But I don't think it's an exaggeration to say that we're closer now to a nuclear war than we were in 1962; than we have been, really, since the unstable days following Russia's acquisition of a nuclear bomb.

And I think that this, more than anything, points to why we must invade Iraq.

The anti-warblogger crowd has plaintively demanded to know why we're all so gung ho to go after Iraq when so many will be killed in the effort, and there is no clear path for regime change. This is why. If we have to occupy Iraq and rebuild it and wait around until someone normal comes up the ranks, so be it. Oh, my faith in the ability of the United States to perform a Marshall miracle anywhere in the world is limited. But do we really have any other choice but to try?

Sadaam simply cannot be allowed to have weapons of mass destruction. This confrontation shows exactly why. Nuclear actors no longer fear, as they once did, that a limited use of nuclear weapons could touch off a worldwide nuclear conflagration. We have lowered the cost of nuclear use. Nor do they fear invasion. Twenty years ago, Sadaam would have known that acquiring a nuclear weapon would turn his country into the next theater of operation for the cold war. Now there is no prior restraint.

And post-acquisition restraint isn't all that effective either. Having lowered the cost of use, we find that for Pakistan, which risks obliteration by India's superior forces, has in its own mind no choice but to use nuclear weapons if attacked. And the nuts in the Indian government are willing to risk it rather than risk what they see as the unacceptable political fallout from holding a referendum in Kashmir. Diplomacy? If ever the European idea that diplomacy could be the solution to any and all problems was disproven, it's here. If there is an external resolution to this conflict, it will come from the US threatening to invade any country that uses a nuclear weapon; not from blather blather blather about things the governments on both sides should do that would cause the deaths of those we're asking to implement the plan, either electorally or otherwise.

Once a nuclear weapon is used, it will lower the threshold for using them again. The horror of nuclear weapons, after all, was that we feared world annihilation. This is awfully unlikely now.

Which means that after a first use, whether by India or Pakistan or someone else, there will be a second. So if we weren't making plans to invade before, I certainly hope we're kick starting them now.

posted by Jane Galt at 5:23 AM |


wFriday, May 31, 2002


I can't be the only one who noticed this um. . . misunderstanding over at Tapped:
Among religious conservatatives, it's long been a popular claim that there are "no atheists in foxholes." In other words, only those possessed of deep religious beliefs are capable laying down their lives for their country. For an atheist, the logic goes, the fear of death would simply be too overwhelming.

The trouble is, the facts quite obviously belie this argument. Indeed, the atheist Kurt Vonnegut fought in World War II and wrote a famous book about it, Slaughterhouse Five. Those who blithely repeat the "atheists in foxholes" mantra -- like that congressional pariah Rep. James A. Traficant, Jr. -- are really slandering the memory of atheists who fought and died for this nation.

Okay, raise your hand if you thought that the phrase "There are no atheists in foxholes" meant that only the religious could fight for their country? Hmm. . . you there, with your hand up, leave. You're having a bad day. The rest of us knew that the phrase refers to the blossoming of religious belief -- or we might call it "hope" -- in those who are afraid they are about to die.

Tapped. Debunking the undebunkable since 2002.

posted by Jane Galt at 4:35 PM |


w


And in other bad news, they've downgraded Japan's debt rating again. It's now equivalent to that economic powerhouse, Latvia. The reaction from Japan encapsulates brilliantly the reason that their debt is being downgraded:
And the decision was slammed by Japanese Finance Minister Masajuro Shiokawa.

"They're doing it for business," Mr Shiokawa said.

"Just because they do such things we won't change our policies."

Yup, those fools at Moody's just downgraded Japan's rating so that people would continue buying their reports. Just goes to show you what's wrong with America, folks. There's certainly no reason for us to change.


posted by Jane Galt at 12:47 PM |


w


Oh my. Americans have been advised to leave India, even the diplomatic personnel. Does this mean that the State Department thinks the balloon is really about to go up, or is this just a little CYA by the boys in Foggy Bottom?

posted by Jane Galt at 12:36 PM |


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So now that the teen sex debate is dying down, I'm going to weigh in.

My fundamental belief about the whole thing is that you shouldn't have sex unless you're prepared to have a baby. Not that I'm against birth control, mind you; but it isn't 100%. And I don't think that you should be engaging in it unless you are willing to cope with the baby that might result. I'll be generous with exceptions for those with health problems. But as a general rule, there's where I stand.

And 99.999999% of teenagers in our society are both unwilling and unable to do what is necessary to raise a child well.

Oh, I agree with Our Fearless Leader that this is because our society infantilizes teenagers. But I don't think that that's going to change any time soon.

Teenage girls, historically, were literally little women -- they followed Momma around cooking, cleaning, taking care of younger siblings, working in the garden, etc. When my farm-raised Grandmother wasn't in school, she had a full workday that was pretty much the same as her mother's.

The boys were little men, doing a man's work by the time they were fourteen or fifteen.

In a community like that, both boys and girls knew exactly what was likely to come from having sex, and were able to comprehend the consequences emotionally as well as intellectually.

Those days are simply not coming back.

It's not practical for teenagers to work with adults, for one thing, and even if it were, it does take longer for someone to garner the education necessary to make a career choice than it used to; my great-grandparents could start working at 13 or so because they didn't really get career choices. They could stay on the farm, or they could try to find a farm a ways down the road. That was what they'd been taught how to do. Imagine, now, sticking with the career choice you made at 13. Oh, sure, those of us with Masters degrees and such don't have to. But your average metalworker or cop is pretty much doing what he decided to do at the age of 21.

And there aren't a passel of younger children around to give your daughters a close-up view of what having one of your own to care for twenty-four hours a day, seven days a week, with no time off for good behavior, might look like. The families who have them, by and large, have already been infantilized by the welfare system. Nor does your average fourteen year old really know what it might be like to drive a forklift for the next 30 years to keep junior in diapers and baby wipes and such. We wouldn't actually want him to -- such work is too dangerous for children in a rich society, and our bodies aren't really up to the strain of physical labor for our new, improved lifespans.

I agree that the legal system that has turned our schools into baby-sitters is a contributing factor. But not the only one. Society really is different from what it was 100 years ago. A farm community is totally different from an urban environment. Girls were able to become mothers earlier in large part because there were a lot of family members -- or friends -- around to teach her what to do, and make sure that she didn't go off the deep-end. Not possible when those women all have jobs outside the home. Her husband was also within shouting distance. It's a completely different way to raise kids. Almost no one now has the kind of support network that made intermediate adulthood possible.

Girls also menstruated at 14 or 16, and probably ovulated irregularly for years after that, making it much less likely that very young girls would get pregnant in the first place. Which is good, because girls under 16 or 17 aren't physically ready to have babies, whether or not they have a job and an apartment.

So while I agree completely that the problem is not teen sex per se, I think that morally neutral distribution of birth control is not the answer; not even if you make the little nippers get a taste of real life with after school jobs. And I'm not talking about Christian values, so calm down. I'm talking about basic human values like responsibility. The affluent girls in my high school who had abortions were no more responsible than the poor girls at John F. Kennedy High School down the road who had babies they weren't equipped to care for. And it's hardly surprising that the sex education in both schools was focused entirely on you: Are you ready for sex? How do you feel? Do you understand that it's a serious step? Potential babies, and how you intended to dispose of them, were glossed over in favor of condom demonstrations.

Catholic readers may disagree, but I view birth control as the responsible action of mitigating possible consequences. But it doesn't eliminate them; merely reduces the possibility. I personally know of two pill-users, both of whom swear they never missed a dose, who are currently proud mothers of babies they didn't intend to have. And neither teens, nor sex education, really focus on those consequences as much as they should.

But then, I'm not sure there's much you can do. You can certainly change the system to make kids more responsible; I'm all for it. Personally, I think that everyone should work for four years before they go to college; it certainly focused my mind wonderfully in b-school. Overall, though, I think that our whole culture is infantilized; teen sex is just a symptom. Read nineteenth century literature and you realize that most people didn't expect to be happy; they expected to be good, and hoped happiness would come of it. These days, we've got that reversed. It doesn't seem to have made us all that much happier (I'd credit prosperity for any net increase in happiness). But is it any wonder that our children seem to have difficulty conceiving of any but the most immediate pleasures?

posted by Jane Galt at 12:22 PM |


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KrugmanWatch


All right, PV is at 4.5 out of a possible 5. Reliability, thy name is Paul.

Remember the dust up Paul O'Neill had with Bono, where Bono demanded that we spend more money on foreign aid (no word of how much of Bono's personal wealth would be going to Uganda) and Paul O'Neill demanded that before we spend more money on aid, we figure out how to do foreign aid that works? To Paul Krugman, this is an example of the perfidy of that evil Bush Administration, eager to starve the poor so we can ship their rice bowls and mud huts here for Bush's Republican friends to display in their homes while they cackle with glee at the sight of all that human misery.

First of all, he drags out that tired old saw about how little we spend on foreign aid compared to, say, Canada, without mentioning that we spend a great deal of money on foreign aid directed at making sure that all those countries in Europe and elsewhere get to be a lot less worried about their neighbors deciding to invade, which may not rank as high for some as financing the Mobutu Sese-Seko Memorial Concrete Plant and Nepotism Foundry, but nonetheless aids more foreigners than the rest of the world's governments put together.

Second of all, he castigates us for our foreign aid spending, which may well be too low in a perfect world, but is more than adequate in a world where 85 cents out of every dollar goes to administration, and most of the rest goes into the pockets of the dictators that produce the squalor the aid is designed to alleviate. O'Neill was, in fact, at his finest when he demanded to know why, of the hundreds of millions that had been sent to Uganda, the country couldn't find a million or so to give all its citizens clean water. A majority of aid projects are, quite simply, failures. Are we nasty for failing to fund them -- or are Canada, Sweden, et al. idiots?

Get me a system where the money actually produces real improvements in people's lives, that demands that countries create the social and political infrastructure, such as property rights and the rule of law, that allows real, permanent alleviation of poverty, and I'll shovel my tax money into it -- at heart, I'm a sucker for a good cause. But making it sound as if we're greedy and stupid for failing to fund Stalinesque public-works boondoggles to prop up Hitleresque regimes ignores the fact that there is real, heart-felt and well-meaning objection to the current foreign aid system.

Krugman also fails to note that the US has a far more robust private charity regime than countries like Sweden and Canada -- I can't find any figures, but commentators suggest that we do, in fact, give more to foreign charity aid than any of the countries he cites -- we just do it privately, instead of through tax dollars. And if you're so wedded to tax dollars, you should note that 1/3 of every tax-deductible donation to Save the Children is, in the oddball logic of the welfare state, a donation from Uncle Sam himself.

He then goes on to rail about the estate tax. Yawn. First of all, if I have to give money to rich people, I'd rather it stays here providing jobs for yacht-builders and salegirls at Ungaro, then providing solid-gold toilets for Robert Mugabe's summer palace. Second of all, he complains that the full amount of the estate tax repeal is twice the amount of our foreign aid (ignoring the exceptions I cited above), then tries to ward off critics by semi-advocating a raise on the limit to $5 million from its current $660,000. Can't have it both ways. Estates over $5 mil are a small fraction of all estates, but while they provide disproportionate amount of its revenue, I'm betting it won't be enough to cover even our current foreign aid bill, much less double it. And of course, in this age of inflated home prices and granny investors, it's hard to argue that people with estates in the $1-$5 million range are the super-rich who should be footing the bill for Kim Jong-Il's disastrous agricultural policies, or sending their money to the swiss-bank accounts of Latin American kleptocrats. My grandfather's gas station fits into that range. Come visit my grandparents modest house, take in the 1983 Pontiac and the rusting pickup in the driveway, the furniture they've had since 1947 -- and then tell them that Hafez Assad deserves their money more than they do.

posted by Jane Galt at 12:12 PM |


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Trick Accounting


That's not only the subject of Michael Kinsley's article on Halliburton; it's what he himself does in order to make his point. The article, which has a wickedly funny takedown of CEO's who attempt to fire Anderson and thereby absolve themselves of any guilt in the matter of accounting shenanigans, nonetheless lost all my respect when I read this:
Apparently, large construction projects work just like small ones, such as remodeling the bathroom. That is, the contractor states a price, runs over budget, then tries to get the customer to fork over the difference. Until 1998 Halliburton had the tact to wait until it got the extra money before putting it on the books. In that year, it began guessing how much of a disputed surcharge would ultimately get paid, and crediting itself in advance. Why not? You only live once! This self-administered pick-me-up added $100 million in reported revenue to Halliburton's books.

. . .

And where was the future vice president while this was going on? The company insists, graciously, that a mere $100 million flyspeck on the company accounts (1999 income: $438 million) was beneath the notice of a busy CEO such as Dick Cheney. This is believable. Cheney's income in 2000, his last year at Halliburton, was $36 million in salary, bonuses, benefits, deferred compensation, restricted stock sales, exercised options, frequent-flier miles, a turkey at Christmas and other standard elements of the modern CEO compensation package. It is a vital responsibility of anyone who is that valuable to remain completely ignorant of anything improper going on around him. He owes it to the company to be untainted.

Now, first of all, it doesn't add any revenue, permanently; if they don't get the money next year, it comes out of next year's earnings. As earnings manipulation goes, it's a venial sin at best. It's not only nowhere near the Enron level of misstatement that caused the Arthur Anderson scandal; it's not even that uncommon.

But can you spot the point where my ears got red and I had to blink to believe my eyes? It lies in the magical sleight of hand with two words: earnings and revenue.

Revenue is every dollar you take in for providing goods or services to someone. Income is what's left after you subtract all the costs of providing the goods and services -- your profit. This distinction is not known to most readers, who assume that corporate income is the same as person income -- in other words, what you get paid. So comparing those two figures, those readers will figure that the manipulation accounted for a full 1/4 of income -- or, in other words, that Dick Cheney had to have known about a manipulation that increased his company's income by almost 33%.

Now, construction profit margins are typically slim, so as soon as I saw him compare that damning $100 million in revenue to the $438 million in income, I knew that this was a spurious comparison. But I didn't guess how spurious. In 1999, the year Kinsley selected for comparison (because the effects of this particular manipulation are one-off), Halliburton had over $10 billion in revenue. In other words, the change in accounting altered revenue by less than 1%. Suddenly "he must have known" doesn't sound as compelling, does it?

Which is not to say that Cheney didn't know. He may well have -- I don't know, any more than does Michael Kinsley. But frankly, playing around with how you booked revenue was hardly a rare occurrence in the late 1990's -- not that I'm in favor of it, but many of the companies that did it managed to convince themselves -- and their auditors -- that they were perfectly justified. There are reasons to do things like that, most notably to match expenses with the income they generate. At any rate, not a capital crime. More importantly, if Kinsley knew enough about reading a financial statement to pick out those two numbers, he also knew enough not to compare apples to oranges. Perhaps there's an argument that that revenue flowed straight through to the bottom line. But he doesn't make it -- he doesn't even tell us that it's so. He just ignores the distinction as if it were meaningless.

posted by Jane Galt at 12:11 PM |


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KrugmanWatch Teaser:

Something bad happened.

It's the fault of the Bush Administration.

As usual, I haven't read the column yet; I'm testing the predictive validity of claims of Krugman's bias. Current PV is 3.5 out of a possible 4.

posted by Jane Galt at 9:17 AM |


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Headline from the WSJ:
Steel-import tariffs levied in March have resulted in price spikes, supply shortages and layoff threats at U.S. manufacturers.

I'm shocked! Shocked, I tell you! Higher tariffs mean higher prices and less wealth? Whodathunkit?

posted by Jane Galt at 5:20 AM |


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In this article from the Christian Science Monitor, an Israeli security expert tells us how to make sure our planes are secure:
"If you want 100 percent security on flights, every passenger has to take all his clothes off, have his suitcase checked, and be handcuffed and tied to his seat."

Which should give Grandma quite a thrill.

Actually, even the security expert acknowleges this is impractical. Instead, he advocates changing our security system to one more like Israel's:
Israeli specialists have a low regard for American security searches. They say they tend to cause unnecessary discomfort for travelers, while being prone to missing potential assailants. "The United States does not have a security system, it has a system for bothering people," Dror says.

"The difference between the Israeli and American systems is that we are looking for the terrorist, while the Americans look for the weapons," he adds.

At the heart of the Israeli system is the questioning of the passenger, which Dror says is done not only to get answers, but also to gauge the passenger's behavior. "The reason we open the suitcase is to have another few minutes with the passenger, to ask some more questions," he says. The questioning also serves as a way to quickly decide who to send to the plane without probing more thoroughly, he adds. Dror advocates Israeli-style security clearances for all workers at the companies for whom he consults. They entail checking a person's history by interviewing acquaintances and family "We check the man himself, not documents."

There's a small problem with this, which is that our airports and airlines are expected to operate at a profit, not that they've been too successful at this in recent years. Israel picks up the tag for all that extra security, and for every money-losing flight El-Al makes (for one thing, their planes are too heavy to operate at a profit because of all that bombproofing). Are we willing to do the same? I'm not saying we shouldn't, mind you; just wondering if the American public is really willing to pay more, and put up with the lessened civil rights, for a better security system.



posted by Jane Galt at 4:51 AM |


wTuesday, May 28, 2002


Very good column by Lynne Kiesling on gasoline prices and the power of markets.

posted by Jane Galt at 12:37 PM |


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