Deinonychus antirrhopus

Energy Competition in California...Again

Gov. Schwarzenegger has come out in favor of competition for large scale electricity users (a.k.a. large power customers) in California. But there is a catch,

Schwarzenegger stepped squarely into the contentious debate about whether large energy consumers, such as manufacturing plants, should have the option to buy power from independent generators to get a better price than through the utility company that serves them. He cautioned that such a plan must not come at the expense of smaller users. The state froze so-called "direct access" during California's energy crisis in 2001.

First of lets get some of the terminology out of the way, direct access is the name use for those customers who can choose their energy supplier. Right now there aren't many of them. For example in the L.A. area there are maybe 35,000 or so, and the bulk of them are domestic customers. However, when you look at the large power customers you find that about half of all large power customers are direct access (there aren't many large power customers).

What is the catch? Getting your energy via the utility means paying alot. The reason is that the state is still paying for those awful contracts that former Gov. "Low Beam" Davis got the state into. So where exactly is the catch? The catch is if you open up direct access for the large power guys many of them will jump ship. they will go direct access and try to avoid paying those charges. If they do that, this will mean higher rates for those customers who don't (trust me on this unless you want me to go through the basics of electricity rate making...I can if you want just let me know).

So what happens is that to keep the rates from rising on the remaining customers you keep charging these large power customers who go direct access the charge for the long term contracts noted above. This takes a lot of the attractiveness out of going direct access (on a similar note this is also why many areas are looking at municipalizing their area). However, there might still be some that can benefit by going direct access.

The thing about large power customers that is different from small power customers is that they watch their bill very, very, very closely. When your annual electric bill is $15,000,000 it pays to have 3 or 4 guys sitting around figuring out if it is worthwhile to move more production to the off peak hours (i.e., say a graveyard shift). Small customers with a $50 to $100 monthly bill don't have the same incentive to sit around monitoring the situation all that closely. Typically most small power customers wont see the effects of temporary price spikes until the next month. It is similar to the old cob-web models that have been used to describe agriculture. Last month the bill was high, so this month people cut back and the bill is low. Since that bill is low, the following month people increase usage and the bill is high. Throw in the summer (global) and winter (local) peaks as well as the rotten load shape¹ most small power customers are going to have and you have a fairly complex price signal. Large power customers are noted for having rather flat load shapes which can give them an edge in negotiating prices/contracts.

For customers to have the same kind of demand responsiveness would require a change in the type of meter they have and probably some sort of new technology that lets the consumer see their load shape as well. Most large power customers will have what are called interval meters. Not only will such meters record kilo-Watt hours (kWh) but also instantaneous usage (kW). A consumer with a $75 bill doesn't have as much incentive to check that meter periodically and then record it, graph it, look up prices and so forth. So some sort of technology is needed to relay that kind of information in a simple form to the customer. With the rise in home computers that time is probably not too far off.

However, there is still a catch. This will entail taking out millions of meters and replacing them with even more expensive meters. Such a cost could go over a billion dollars. That money will go into the utilities rate base and will raise rates. So the issue is will the savings of doing something like that offset the temporary increase in rates?

So the problem with competition for the small power user is due to the information being so diffuse. The cost of gathering all that information and then going through the process to find out if you should set your thermostat at 77 degrees or 79 degrees probably isn't worth it (i.e., just go with 79 degrees). So, the reason this probably wont work for smaller customers is the problem of asymmetrical information and the cost of over-coming those asymmetries.

Link via Truck & Barter.
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¹A customer's load is the amount of electricity they are using at any given instant. This is measured in kW (kilowatts). If you were to graph out all those instants of usage it would describe the "load shape" or "load profile". The usage over time is the area under the load profile and is denoted in terms of kWh (kilo-Watt hours). Typically the instantaneous usage is called demand, and the usage over time is simply called usage.

Passing the Torch

This is kinda/sorta a followup to my Presumptive Nominee post. Hugh Hewitt wrote an interesting piece entitled The Torricelli Option: Will Dems Dump Kerry?

Dems know he's a loser. But can anything be done?

Who knows? Don't bother looking up the rules governing nominations. There were rules in Florida, and the Florida Supreme Court tore those up when Gore needed help. There were rules in New Jersey, but when Torricelli flamed, the New Jersey Supreme Court tossed those aside. There were rules in California, and three judges ordered a halt to the recall that only went forward because the luck of an en banc draw brought sanity to the review panel.

So how exactly would the Torricelli Option work? Short of trumping up some outlandish criminal charges agaist Kerry that is. Either Kerry will have to fall on his own figurative sword (ignominiously withdrawing) like the Torch did, or the Powers That Be in the Democrat party will have to somehow force through some rules changes at the convention, allowing the delegates to vote freely on the first ballot.

I just don't see someone with Kerry's ego dropping out on his own accord. "Defeating George Bush is the most important goal for Democrats, urrr, I mean the country. I realize now that I am inadequate to the task, so therefore I will not accept the nomination, for the good of the party, urrr, I mean country." I don't think even J.K. Rowlings could make that scenario plausible.

So we're left with a rules change prior to / during the convention. Who within the party establishment would have the chutzpah to make the call? Certainly not Terry McAulliffe, since it would show what a blunder his front-loaded primary plan was.

Hillary can't do it either, since it would appear that she's after the nomination. That would be just too blatantly venal even for her.

From Hewitt's piece:

And Dean – what's he thinking when he can get the voices to quiet down? He was robbed, you know ... by the same people now conspiring against Kerry. Dean doesn't forget, and there's not enough Ambien in America to get him a night's sleep. What if, with another yell, he decides to demand an open convention. "Let the delegates vote!" isn't a bad slogan. Bring back all the orange hats and the blog and all that. Quite a party could be had by all.

That smells of possibility, if it could be turned into a groundswell during the convention.

I know, this is just wild speculation. Most likely, the calls for Kerry's ouster will die down over the next month.

2004 First Quarter GDP (Advanced Estimate)

According to the Bureau of Economic Analysis the economy grew at an annual rate of 4.2%.

The major contributors to the increase in real GDP in the first quarter were personal consumption expenditures (PCE), equipment and software, government spending, exports, and private inventory investment. Imports, which are a subtraction in the calculation of GDP, increased.

May 27th is when the Preliminary estimate will be released and the above figure can move up or down.

Climate Change Movie Crap

Given the upcoming release of the movie The Day After Tomorrow, it would be good to link to MIT Global Change Joint Program. To answer Al Gore's question of can this happen, the short answer is,

NO!

The longer answer is: Al Gore is full of shit, and it is amazing anybody thought he had higher brain activity.

The idea of something like this happening is simply laughable. Temperatures going from sweltering to freezing in one day. Yeah right. That is exactly what climate change is predicting.

What kind of effects are we looking at? This report gives you an idea of what kind of temperature changes and changes in sea leve we are looking at.

In the next 50 years the kind of change we are going to see is unlikely to be large at all. It would be similar to driving from New York in the winter to Virginia. Do catastrophic things happen when somebody makes such a drive? Generally no.

There is no way this movie will come close to representing reality. For example, in visiting the website they trot out the old canard about disease due to global warming. I'm sorry, but places like Louisiana are already ripe for things like maleria. How come we don't see huge problems there now? How about because we live in a first world country were people take precautions that minimize such risks. This is a complete lie on the part of the global warming crowd. From the CDC website:

U.S. President Franklin D. Roosevelt signed a bill that created the TVA on May 18, 1933. The law gave the federal government a centralized body to control the Tennessee river's potential for hydroelectric power and improve the land and waterways for development of the region. An organized and effective malaria control program stemmed from this new authority in the Tennessee River valley. Malaria affected 30 percent of the population in the region when the TVA was incorporated in 1933. The Public Health Service played a vital role in the research and control operations and by 1947, the disease was essentially eliminated. Mosquito breeding sites were reduced by controlling water levels and insecticide applications.

Did it get suddenly colder in the region overseen by the TVA? No. There is also this,

The National Malaria Eradication Program, a cooperative undertaking by state and local health agencies of 13 Southeastern states and the CDC, originally proposed by Louis Laval Williams, commenced operations on July 1, 1947. By the end of 1949, over 4,650,000 housespray applications had been made. In 1947, 15,000 malaria cases were reported. By 1950, only 2,000 cases were reported. By 1951, malaria was considered eradicated from the United States.

So this idea that we'll have more disease is highly dubious. We'll have more disease if we do nothing about it. Of course given the way many of today's environmentalists think that might be exactly what they want. After all Al Gore is scared of chemicals (never mind chemicals also played a role in saving his son's life).

John Kerry: No Negative Ads?

Oh really? This ad that slams Bush, falsely claims Bush said something he didn't, and then takes a comment by Greg Mankiew out of context is not a negative ad?

This one that slams Bush for job losses, people losing health care, education funding, etc. The basic jist of the ad is that Bush is a liar.

This one that basically says George Bush is letting corporate cronies plunder the enivronment is not negative? Uhhh...okay.

I find is amazing that John Kerry can sit there and claim he hasn't run a single negative ad. Please. These ads attack Bush implying his is a bad guy. Some of these ads make Bush out to be a liar, and some question Bush's basic humanity.

(Note to Kerry supporters: I'm not complaining that Kerry is running these ads. Go for it. Complaining the other guy's policies are wrong if fine with me. You want to attack his basic humanity fine. Just don't lie and say you haven't.)

When in Doubt...Conflate

So today on the Larry Elder Show Larry was playing lots of bits of Democrats reacting to Kerry's Good Morning America flop.

First up was Frank Lautenberg who got blabbered on about how the "Chickenhawks" have been attacking Kerry's patriotism. Then next up was Nancy Pelosi doing the same basic shuffle, but this time talking about Kerry's service record vs. Bush's service record. There is only one problem, they are lying through their teeth.

The thing about Kerry's medals is has nothing to do with his courage during the Vietnam war. Contrary to what the Democrats might want everybody to believe it is not about Kerry's war record. What it is about is Kerry's ability to tell the truth, to be honest. To give a straight forward answer...or more accurately Kerry's complete inability to provide a straight forward answer on his actions after he returned from the Vietnam war.

As I noted here Kerry basically wants to have it both ways,

• He threw his medals away.
• He didn't throw his medals away.

While it was convienent to have people believe he had tossed his medals that was his story. At the very least he didn't correct the incorrect conclusions people arrived at. When that story became a problem, then the medals weren't tossed only the ribbons.

It isn't even the tossing of the ribbons or medals that is the issue, but what looks very much like Kerry wanting to try and be on both sides of the issue. If Kerry had tossed the actual medals I could respect that. It was an emotional time and maybe he felt strong actions like that were necessary. Okay fine. If it was only the ribbons, that's fine too. But it is this, back and forth, being on both sides, the continual wishy-washy crap.

And now these claims about calling his patriotism into question are a joke. Kerry has been hurling around terms like Benedict Arnolds. Kerry has been calling the basic humanity of George Bush into question (e.g. Bush is endangering women, Bush doesn't care about children, Bush doesn't care about people losing health care, etc.). Kerry is the one who has made his Vietnam service a central element of his campaign. He should have expected something like this. He should have been prepared for it. Nobody doubts that Kerry behaved couragously in Vietnam. What they are looking at is his rather dubious behavior after he got back.

Somebody should tell John Kerry he should display the same courage he did in Vietnam and stop being such a whiner and give a straight answer for once.

Oh I Can't Wait

I can't wait to see what one of the most overrated "intellectuals" has to say at the Premiere. I'm indeed curious to see if Al Gore tries to pass the movie off as anything that could be remotely connected to reality. He has tried this before with his suggestions that bad weather events and things like brush fires are the result of global climate change.

VARIETY reporter Gabriel Snyder is planning to quote Gore: “THE DAY AFTER TOMORROW presents us with a great opportunity to talk about the scientific realities of climate change. Millions of people will be coming out of theaters on Memorial Day weekend asking the question, ‘Could this really happen?’ I think we need to answer that question.”

Good Lord. I can't believe people actually think Al Gore is smart. Of course, the scenario depicted in the movie isn't going to happen at all. Global climate change is a possible problem over a very long span of time (100 years). It is unlikely there will be any sudden disasters that will occur in the next 20 years connected to climate change and I'm not sure anything dire will happen in the next 100 years.

Further, the climate does change. There was a time where the poles actually had forests and all kinds of animals living there. When the climate changed and poles started freezing, it changed weather patterns wiped out entire species and so forth, but guess what? Life went on (the proof of this is that you are sitting here reading this).

Will the predicted global climate change be severe enough to cause massive loss to humanity? Maybe, but those scenarios are the more unlikely scenarios.

This is basically the kind of scientific lying that the Stephen Schneider advocated years ago. To get action scientists, according to Schneider, have to offer up deliberately scary stories. It is a trade off between being honest and being effective. I don't know about you, but that kind of a view I find very alarming, not the scary scenarios. Since Schneider has basically admitted to being perfectly willing to lie, the question is why trust him on anything?

Kerry's Nomination

Given Dave's two posts (here and here) I thought I'd follow up with my own question is, to what extent does Kerry owe his nomination to the quirkiness of Iowa's caucuses? As I have noted before the Iowa Caucuses are sound very similar to a Borda Count. And the notably thing about the Borda Count is its unpredictable nature when candidates are either added or deleted. So was Kerry's "victory" (IIRC Kerry got the largets percentage, but that percentage was still under a simple majority) there really due to his being the first choice amongst the voters? It is hard to say, but it does leave one wondering. Winning there could help in contests held in other states. The win there would likely bring in more money, get media attention (free advertising), get the attention of the party big wigs, and could have a bandwagon effect.

Also, the field of Democratic contenders was pretty thin for the most part. They all looked rather similar in terms of policies. Bush tax cuts bad (well okay not really, just parts of them). The deficit a huge problem (unless we are the ones causing it). Iraq is a giant problem that needs to be dealt with (but we'll stay the course, but with more international help). So on those issues they weren't that different from each other...or Bush. On health care they were/are different than Bush, but not each other. The only real differences was that Kerry and Clark had very, very respectable military records.

But with regards to Clark he may have crippled himself at the outset by ignoring Iowa. By ignoring Iowa there was no way he could score points there, which in the next contest made Kerry look relatively stronger by comparison. The bandwagon effect.

My guess is the Democratic Party would probably be happier right now with John Edwards. A good looking articulate guy (and being articulate doesn't mean coming up with overly long tortured sentences that can be read a number of ways). Also an amazing success story of poverty to riches. Oh well, too late now.

The Presumptive Nominee

Presumptive seems to be the adjective of choice when describing John Kerry's nomination. I've heard it on ABC Radio news, and in several newspapers. It's just too close to "heir presumptive":

An heir whose claim can be defeated by the birth of a closer relative before the death of the ancestor

When King James II ascended to the throne in 1685, he had no male heirs, just two daughters (Mary and Anne). At the time, Mary was his heir presumptive. James remarried and had a male child named James in 1688, who supplanted Mary in the order of succession and became the heir apparent.

Of course, Parliament, which couldn't tolerate a Catholic dynasty, promptly booted James II and his infant son, and installed Mary and her good Protestant hubby William (his army of Dutchmen was a big plus).

James II and his son retired to France. Rebellions in James's son's name led to his getting the nickname "The Old Pretender".

Mary got the throne afterall, but largely due to her mate.

So the question are:

1) Will Parliament (Dem Convention) accept the continuation of a pumpkin-rolling Clinton dynasty and give the nod to Hillary, or opt for the presumptive nominee Mary, err, Kerry?

2. Can Mary, err, Kerry find a suitable (running) mate with the army (of supporters) necessary to drive off a challenge from the Old Pretender and her batallions of Draft Hillary! Covenenters?

3. If he is successful, will the running-mate become dominant and force Mary, err, Kerry into the shadows?

Ooh, I love historical analogies, even if they have to be folded spindled and mutilated a bit to fit.

Rush's Poll Question

Limbaugh has suggested a couple of times that Zogby, et al, should put the following question into their next poll:

If the presidential primaries were held today, which of the following candidates would you vote for?" Followed by the list of candidates, including "Other".

Limbaugh is of the opinion that Other (a.k.a Hillary) would win the poll.

Well, that may be true, but **donning my amateur psychologists cap** I don't think it would really mean "Democrats Want Hillary!" I think it would be a reflection of the pounding Kerry has been receiving (including self=inflicted wounds) since he presumpted the nomination. The other candidates might look better in hindsght, but in a nearby parallel universe (one where Janine Garrofolo is insightful and witty) where Dean got the nomination, Democrats are also suffering from buyers-remorse.

No matter which one of Nucklehead Nine had been picked, the situation would be pretty much as it is now. Only the specifics of the gaffes / lies / foot-in-mouth moments would be different.

The pool of candidates just wasn't anything to write home about. Maybe Kerry seemed at the time to be the least likely to gaffe.

(I mean, can you imagine Dean's response to being questioned repeadely about his medical defferment? Or Clark's reaction when the murky end to his service in Europe received some intense scrutinizing? Deam would have a nutty and let loose a primal howl at Charlie Gibson, while Clark would make thinly veiled threats.)

Good Lord

I suppose one could say this shows how important blogs are becoming. However, it makes me wonder what the heck they are thinking. Don't they have better ways to allocate their resources. I know there are lots of cargo containters coming into Long Beach, CA. Have they checked all those, so that now they have time to worry about bloggers?

Some blogs are whimsical and deal with "soft" subjects. Others, though, are cutting edge in delivering information and opinion.

As a result, some analysts say U.S. intelligence and law enforcement officials might be starting to track blogs for important bits of information. This interest is a sign of how far Web media such as blogs have come in reshaping the data-collection habits of intelligence professionals and others, even with the knowledge that the accuracy of what's reported in some blogs is questionable.

The Village Voice Printed That!?!?!

With the air gushing out of John Kerry's balloon, it may be only a matter of time until political insiders in Washington face the dread reality that the junior senator from Massachusetts doesn't have what it takes to win and has got to go. As arrogant and out of it as the Democratic political establishment is, even these pols know the party's got to have someone to run against George Bush. They can't exactly expect the president to self-destruct into thin air.

Good lord.

Via Drudge.

George Bush and His Tax Cuts

Bush wants to sped up the tax cuts. Why? Well to,

• Speeding up the 2001 tax cuts to increase the pace of economic recovery and job creation
• Encouraging job-creating investment in America’s businesses by providing dividend and capital gains tax relief and giving small businesses incentives to grow
• Providing $20 billion in aid to States for necessary services

The problem with the jobs claim is that the various jobs growth projections by the Bush Administration are a return to trend. A return to trend, while good, kind of says that the tax cuts wont add additional jobs. That is, if the economy returns to trend without the tax cuts we get the same number of jobs as with the tax cut. Further, the economy has not returned to trend despite the tax cuts, spending increases, and low interest rates. So will speeding up the tax cuts help with job growth? Doubtful. Now this doesn't mean the tax cuts were wrong. They did provide some stimulus to the economy and probably did help end the recession sooner rather than later. This by itself probably ended the hemorrhaging of jobs earlier rather than later.

Two Great Posts By Roger Simon

I love reading Roger's blog. He is a very good writer (well duh that is his profession after all), and he usually gets things right...or at least I agree with him. So check out these two posts.

White Oliphant

Women Hold Up Half the Sky!

Ha Ha...Its Gonna Be a Fun Election

Kerry gets $1,000 hair "touch up" before his Meet the Press appearance.

"Senator Kerry thinks Isabelle does a superb job," a campaign source said.

I should hope so.

Kerry and MedalGate

The problem Kerry is having with his medals is a problem Kerry usually have: He wants to have it both ways.

• To the anti-war Left he wants to be seen as having chucked his medals.
• To Moderate America he wants to be seen as still having his medals and being proud of them.

So he is doing the tap dance about how he threw "just his ribbons".

The problem is that Kerry's own words damn him. He tells Charlie Gibson that "back then medals and ribbons were absolutely interchangable" But he didn't throw his medals...he threw his ribbons...see the difference? So on the one hand we have no difference, on the other there is a difference. Kerry is being misleading and dishonest.

Kerry also has a problem with the medals themselves. First we are told they threw them back because they felt the war was wrong, unjust, and should be stopped. That there were wide spread war crimes, and that the medals were in some way representative of these crimes. Hence they are no good. But at the same time Kerry is proud of them and his service. Again he wants to have it both ways. His service was wrong, he committed war crimes (as per his own admission) and yet he is proud of this.

We have seen this before. Kerry initially voted for the $87 billion...then he voted against it. He supports the troops, so he claims. But, he wont vote for the money to allow them to be properly equipped. Then there is the Helms-Burton Act which would have toughened sanctions on Cuba. Kerry claimed to have voted for it, yet in reality he voted against it. To use Kevin Drum's phrase, how come he has to lie about things that are so easily checked? Is it pathological?

Then we have Kerry loudly proclaiming the evils of Benedict Arnold CEOs. But it turns out that Kerry is taking money from such economic traitors. Again, both sides of an issue.

Kerry has spent the entire compaign...well okay that part of the campaign when he isn't speaking about Vietnam, going on about the evils of the Bush tax cuts. Then in his policy proposals we find out that in many cases Bush didn't go far enough. The deficit, according the Kerry is really, really bad, but Kerry's policies (if enacted) will actually make the deficit worse. Both sides of the issues. Too much, not enough, not big enough, too small.

We saw it again with Kerry and Yasir Arafat. Kerry proclaimed Arafat a thug, but met with him in 2001. Kerry just can't take a position and stick to it. The reason for this is that Kerry takes both positions either simultaneously or shifts position when politically expedient.

I keep hearing about how people don't know the real John Kerry. That is true. The reason it is true is that there is no real John Kerry. John Kerry is a pure political opportunist. He'll take a position, but abandon it as soon as it is no longer advantageous to Kerry. But he'll return to it if it becomes expedient to do so, and he'll pretend he never left that position. What are John Kerry's principles? Who the Hell knows, Kerry is all over the place, misrepresents his own positions, dissembles when put on the spot, tries to shift the focus of any discussion away from himself, and just can't give a straight forward answer. Some say this is "nuance" and it is a good thing. I see it more as a person who is deceptive and undependable. When the chips are down and you need somebody who will dig in and gut it out, Kerry will tuck his tail and run. MedalGate is a minor issue overall, but it is part of a much larger problem that is prevelant in just about every aspect of Kerry's campaign. He is a shifty, two faced double talker who you cannot and dare not trust, because he'll sell you down the road if it is in his best interest.

I probably wont vote for George Bush. He has staked out positions and I disagree with them. However, I will never ever vote for John Kerry. I wont vote for him becuase I simply can't trust him.

Update Has it come to this. Do we now have to take screen shots of Kerry's website to make sure the things being linked to are not surreptitiously removed after linking? Sheesh.'

Update II: Jay also has a post on this that looks at how Kos and Oliver Willis think this is a good thing. I'm inclined to agree with Jay that it really isn't a "Good Thing". Kerry needs to stop trying to be so nuanced and practice looking like somebody who has some key positions. Not only for the reason I note above, but also because of the point Jay brings up.

Update III: In comments Quaker points to this link to the Daily Howler that errr....well confirms Kerry taking money not from the economic traitors...just their assitants.

VANDEHEI (3): Executives and employees at such companies have contributed more than $140,000 to Kerry’s presidential campaign, a review of his donor records shows. Additionally, two of Kerry’s biggest fundraisers, who together have raised more than $400,000 for the candidate, are top executives at investment firms that helped set up companies in the world’s best-known offshore tax havens, federal records show. Kerry has raised nearly $30 million overall for his White House run.

Somerby's attempt to turn this into an exoneration of Kerry is a bit misleading, IMO. Kerry writes,

It is plainly absurd to criticize Kerry for accepting money from employees of these companies, the sleight-of-hand which VandeHei work in the first sentence of this paragraph. Should candidates really reject contributions from employees of various companies—from people who have nothing to do with decisions made by the firms for which they work?

This suggests to me that Somerby has not worked for a corporation in a long time. Employees is a vague term, it could include people in the management that could have some impact on such decisions. One does not have to be an executive to suggest certain solutions...say suggesting offshoring an operatino to save money.

Plus it ignores the $400,000 in donations raised by those who help set such off-shoring deals up. Its smarmy and Kerry should either return the money, or recant his earlier rhetoric. Failure to do so makes Kerry a complete hipocrite.

Somerby's quibbling here is like two men quibbling with each other over the exact model of gun their mugger used while making a police report ("No you idiot it was Glock 17!" "No moron it was a Glock 20!"). Somebody send a note to Somerby with the sentence,

"You're noooot helllping."

Trolling In Shallow Waters

I have added a fledgling blog to the list. It is run by a fellow I met through Debunkers.org (a site for debunking junk science). He is very knowledgable about physics and math.

Anyhow his third post is very good (his first two posts are also good, but I like this one the best), and full or some wonderful statements,

A couple of years ago, when I lived in a different city, I met my school board representative at a town meeting, and found him to be a sincere, straightforward, flaming idiot. He meant well but would have been an unarmed man in any battle of wits.

But he is clearly not an intellectual, and his policies suggest that he is not much more knowledgeable about economics than was FDR. (And I consider that a deep insult.) Bush sometimes comes across as a spoiled rich kid who was promoted too quickly in the family business.

Forgive me for a long post that ends by stating the obvious, but: We have made the job of being a politician so unpleasant that the only folks who are interested are mentally unstable, intoxicated by power, or bored rich kids looking for personal affirmation.

You would do well to swing by periodically and read his stuff. Hopefully soon he'll get some comments going.

An Interesting Hypothesis

Bevan's over at Real Clear Politics suggests a serious potential problem for Kerry with regards to Iraq.

First up we have this quote from Walter Russel Mead,

''The nightmare for Kerry is that all of his criticisms become moot, except the woulda-shoulda-coulda criticism about the war," said Walter Russell Mead, a fellow at the Council on Foreign Relations. ''In this sense, voters are going to say to themselves: 'What's the difference? If I vote for Kerry, I will get a war in Iraq and someone who doesn't believe in the war but is going to have to fight it anyway. If I vote for Bush, I get a war in Iraq, fought by somebody who believes in the war....'

''I think they are moving toward a merge," Mead said. ''Most of the people I talk to don't think there's going to be that much difference between them, in substance, because the options are so limited. I think in a second term, the Bush administration would try to get more foreign support, and a Kerry administration would sometimes have to go it alone." That view will be expressed in next month's issue of Foreign Policy magazine in an article titled ''Meet George W. Kerry."

The problem is that Bush and Kerry are moving towards each other. If on election day their positions are rather close then Kerry faces some serious problems here. Many moderates might look at the issue and say, "Hmmm, why switch since they are both very similar here." The only thing Kerry has left are domestic issues and he has serious problems there...or more accurately a serious problem there: a Republican controlled Congress. If the Republicans retain control of Congress (both houses) then many of his legislative proposals would likely run into a brick wall. So on the domestic front Kerry doesn't look that good in terms of passing policy.

Further, Kerry faces a problem on his Left flank as well. By moving to meet Bush it entails a move rightward. This could leave many of Kerry's more hardcore lefty supporters looking for a "better" candidate. Enter stage Left, Ralph Nader.

Kerry's best bet might be that many moderates might be in favor of more gridlock. However, I doubt this. I would be happy with domestic gridlock and I don't consider myself to be a moderate. I think many moderates do see problems in areas such as education, health care, etc. and are not opposed to micro-management plans that many candidates love to put forward. So the success in terms of passing such policies will be important to such voters.

Memo To Kerry Campaign

Don't Have Your Candidate Lie

i mean, this is a controversy that the republicans are pushing , the republicans have spent $60 million in the last few weeks trying to attack me. and this comes from a president and a republican party that can't even answer whether or not he showed up for duty in the national guard.--link

There is ample evidence that Bush showed up for duty in the Texas Air National Gaurd. The only question is did he put in enough time to complete his obligations.

Especially don't have your candidate lie on national television.

More Fallout from the Gorelick Memo

From CNSNews.com: Gorelick Memo Allegedly Impeded Probe of Clinton Fundraising Scandal.

A senior U.S. government official has told CNSNews.com that the 1995 memo written by former Assistant Attorney General Jamie Gorelick and currently at issue in the 9/11 Commission's investigation of U.S. intelligence failures, also created "a roadblock" to the probe of the 1996 Clinton re-election campaign fundraising scandal.

The memo's relevance in the investigation of the fundraising scandal has received scant attention in the media, but four different sources, including the government official, have explained and corroborated details of the connection for CNSNews.com.

{snip}

The fundraising investigation involved the Clinton campaign's alleged acceptance of donations from operatives working for the People's Republic of China (PRC) as well as other foreign sources. But the Gorelick memo of 1995 prevented intelligence collected by U.S. agents overseas from being used in domestic criminal investigations.

The article states that CNN hasn't found any evidence to support the theory that protecting Clinton et al from the ChinaGate scandal was the intent of the Gorelick memo. Just a happy coincidence, I guess.

(I don't really buy the theory that this was the intent of the memo. The ChinaGate scandals didn't really come to light until after the 1996 election, so for this theory to be correct, ti would mean that Gorelick knew ahead of time when she wrote the memo in 1995 that this was going to be an issue. It just seems too Machiavellian.)

Peter M. Leitner, a long-time employee at the Department of Defense and currently a senior strategic trade advisor at DoD, was responsible at one point for deciding whether to issue a license to a Chinese corporation seeking to buy a McDonnell Douglass machine tools factory.

At the same time, according to congressional investigations of the fundraising controversy, the Clinton campaign was receiving millions of dollars in donations from Chinese businessmen.

Leitner told CNSNews.com that he repeatedly saw investigations that would have led directly to foreign agents stymied by the wall erected by Gorelick in her 1995 memo.

"The Gorelick memo guidelines created a firewall that protected the [Clinton] administration" from the Justice Department's investigation into foreign campaign donations, Leitner said.

I wonder how long it will be before Mr. Leitner gets vilified as a partisan hack with an axe to grind against the Clintons. "Hello, DNC Character Assassinations Desk? I'd like to order an attack..."

Initial link from Henry Hanks.

Edit -- corrected original source. I should have known it wasn't CNN.

Memo to Kerry Campaign

John Kerry's Talking Points

After reading this, it seems that perhaps the best thing is to keep the candidate's answers short and simple. The continual "nuanced" answers make him look like a dishonest scoundrel.

Michael Demmons

Godspeed.

Carnival of the Capitalists

The Carnival is at Venturpreneur this week. Lots of good posts there.

For me some of the posts I hope to have time to read (pretty busy now) are this one by Arnold Kling which looks at the drugs and prescriptions and how ending the war on drugs would effect the latter.

Micha Ghertner over at Catallarchy also has a post on drugs this week and provides everybody with a useful tip.

"when in doubt, the answer is opportunity costs" -- to law enforcement and the illegal drug trade.

In fact, I'd go further here. I think one of the big problems with many blog posts and many politician's policy stances is...yep opportunity costs.

If those two don't catch your interest there quite a few other posts so go check it out.

Universal Health Care: Problems and Issues

I have blogged quite a bit about universal/government provided health care over the years. This time I thought I'd put many of the criticisms in one post. This means this will be a long post, but it should cover most of the objections/problems I know of about when the government gets into providing health care. So click the link below to keep reading.

The first problem deals with the issue of universal health care and how it creates both winners and losers. Universal health care is basically a big pooling equilibrium. A pooling equilibrium is basically where everybody is put into the same "pool" and insurance contracts are designed around that pool. The simple version would be where the premium for the plan would be determined by subtracting off the deductible amount from the expected total cost and then dividing by the number of people in the pool. The problem is that every pooling equilibrium is broken by a separating equilibrium. A separating equilibrium derives its name from the idea that individuals with different risk levels will be separated into smaller groups. Typically this is simplified to two groups (high risk/low risk). The low risk contracts will have higher deductibles since the individual has a lower chance of getting sick they will see the expected deductible as being reasonable. A person who is higher risk wont want to pay such a deductible and will hence voluntarily select the high risk contract (lower deductible, but higher premiums).

Thus, with a pooling equilibrium the low risk individuals end up subsidizing the high risk individuals. Thus, with a pooling equilibrium enforced by the threat of State sanctioned coercion, those who are low risk are the losers.

One counter argument to this is that even high risk people who don't have insurance still receive treatment and so the low risk people still subsidize those without insurance. The problem here is the conflation of those who are high risk with those who are uninsured. In other words it is possible for people who are low risk to voluntarily go without insurance (i.e., make a rational decision to be uninsured). Thus, the subsidy for the uninsured is born by both high and low risk individuals who have insurance. Or to put it slightly differently, the argument above about the pooling vs. separating equilibiria is not about the uninsured, but about forcing high and low risk people into the same category when determining how the cost of the government provided plan is to be shared.

Another argument by many who support government provided health care/universal health care is this almost religious belief that by having the government provide health care the costs will grow at a much slower rate or even decline. Those making such arguments note that the U.S. system of health care has a very high administrative price tag on it. Thus, they assume that with the government taking over they would reduce this price tag to a smaller level. There are some problems with this kind of thinking.

First off, is the implicit assumption that the firms that pay the high administrative cost do so out of stupidity, ignorance, or just plan on incompetence. While this is possible, I think it is extremely unlikely. Granted any given firm might be stupid, ignorant, incompetent or even all three. But every single company possesses one or more or all of these traits? That I find rather hard to believe. It seems to me that some smart enterprising young person would come along see all this wasted profit and set up a well run health care providing company. Others would see this and emulate him, and soon the gross bureaucratic waste is wiped out.

So, this leaves us looking for another reason why there is such a high administrative price tag. One possibility is that it due to the institutional environment. For example: lawsuits. Could lawsuits result in unnecessary documentation/administrative expenditures? Also, there is the regulatory structure. The government is already a large presence in the health care industry and it could be that complying with various local, state, and federal regulations impose an additional regulatory burden on health care firms.

The things is I see no reason either of these two factors to go away if the federal government to either take over of assume a larger role. In fact, one could argue that the burden imposed by regulations might actually increase under a scenario where the federal government expands its current role. So on this cost savings I see a great big maybe. I find it rather misleading when people use this kind of argument. Not that they are using this argument, but that it is presented as a sure thing instead of being couched in terms of uncertainty.

Another erroneous argument is the preventative argument. This basically relies on the shibboleth, "an ounce of prevention is worth a pound of cure." While there is some truth in this saying, it has to be approached very carefully. Incentives are a rather tricky thing; in that there is usually hidden information, hidden actions, and/or non-verifiability are work. For the approach to work, the system should have fairly easy access for the consumer. After all, one wants to catch an illness before it gets to the later and more costly stages. But and easy access system is also one that is ripe for abuse and waste. People might start going for non-serious issues. Also, people not knowing when something is or is not serious might just figure on going no matter what. Thus it is possible that the extra costs in prevention outweigh the savings due to prevention. In other words, while the state, "an ounce of prevention is worth a pound of cure," works on the individual level, it might not work at an aggregated level such with the health care market. There is a reason there is the fallacy of composition.

Finally there is the normative issue of is this how government revenues should be spent? There is an implicitly assumption on the part of those who favor government provided/universal health care. This assumption is that hte government is Right to spend this money in this way. However, that is indeed not the case every time. It is quite possible that people would rather take those government revenues and spend them on other things. That is suppose the government provided health care cost $1,000 per person. Now, which would people rather have,

1. The health care,
2. The money?

It is hard to argue that everybody would want the health care. In fact, I say it is impossible to argue this way. If it were true that people would rather have the health care instead of the money, then it is also true that if you gave them the money they could buy health care coverage themselves. If they don't do this with the $1,000 then it is saying that they do not want the health care coverage, but something else. Thus, the government could make people better off by simply giving them a monetary transfer vs. forcing them to consume something. Is it ethical to force such an outcome on people? I don't know, but it hardly looks like an open and shut case. My initial inclination is to say, "No, it is not ethical."

All of these considerations do not mean the government provided health care is un-necessary or undesirable. However, it is the refusal to honestly discuss these kinds of issues that makes the Left misleading and deceptive. Instead of focusing on these serious policy issues they resort to emotion filled arguments, insults or both. When somebody raises these objections they are called right wing whack jobs. The problems our downplayed with little or no empirical research or evidence. Alternatives that give people greater choice are dismissed out of hand. And yes, I have my own personal prefrences/biases on this issue too. I'd prefer a system with a monetary transfer vs. a Nanny like program that comes with a horde of bureaucrats and a truck full or regulations. Even a subsidy for health care spending would be preferable in that at least we'd still have many of the beneficial aspects of the market that help restrain costs.¹
_____
¹This may come as a shock, but profit maximization also implies cost minimization (at the profit maximizing level of output).

Weekend Fluff Blogging

I did a little landscaping this past week, and I'm quite proud of how it turned out, given how mechanically declined I ususally am.

It only took 2 additional trips to the store to finish it. (Incidentally, the guys at Suburban Lawn and Garden are humorless -- when I had to buy some additional supplies, they didn't laugh at my "I was a few bricks shy of a load" comment.)

FYI, the tree is a Red Sunset Maple. which has nice dark red leaves in the fall.

Bush & Co. Aren't This Silly Are They?

Federal employees have been ordered not to talk to people about Fox' new upcoming disaster movie about climate change. Of course, this is Matt Drudge and it could be different than he is reporting. I just can't see the issue here...unless the Administration fears these scientists will pull a Stephen Schneider--i.e., they'll tell outright lies to get face time on television. Given that one scientist. The afore mentioned Stephen Schneider has admitted that scientist interested in climate change must,

"...what the right balance is between being effective and being honest. I hope that means being both."

In other words, he hopes to be honest, nothing more.

The problem is that climate change is something that at the worst is going to be something a long time coming. Climate change, if the dire preditions are to be believed, are to take place in 100 years. Of course, you can't have a very good action packed disaster movie about a 100 year process.

The Face of a Bigot

"This is as good as we can get without jeopardizing everything. You don't want to throw the baby out with the bathwater," said Ald. William Beavers (7th), chairman of the City Council's Budget Committee who presided over the rewrite.

"We did exactly what the judge wanted us to do. We're not taking any chances. . . . White folks ain't going to give up. We expect them to come back with another lawsuit. We want to be prepared and be able to justify this ordinance."--link

Holy Sheep Dip, Part II

I didn't realize that Kevin Drum is this naive.

The first one deals with Amazon.com announcing that for the third straight quarter it has turned a profit. Kevin feels a sense of loss in that Amazon.com has no become just "another business". My question is: Why did he think anything else? I mean did he think Amazon.com (or more accurately its senior executives and shareholders) were uninterested in profits?

The second post is shock at Larry Flynt acting like a businessman. Flynt wrote an Op-Ed arguing that the porn industry already has safegaurds against not only HIV but other STDs and that it is in the industry's best interest to have such safegaurds. Further, that further rules and regulations would not help matters. Kevin finds is shocking that like most other sensible businessmen, Flynt is arguing to be left alone to do his job vs. dealing with government regulations.

The final one is Kevin's surprise that Bush hasn't used the pictures of coffins carrying the remains of American's killed in Iraq returning to the U.S. He notes the pictures are quite moving, and could push him into supporting the war.

The thing is, we saw the reaction to using the imagry of 9/11 in campaign commercials. Showing actual coffins and not the smoke and flames of an attack on the U.S. would be seen by the Left as being even more ghoulish...and they'd run with that message. Further, it seems that Kevin just can't envision Bush wanting to keep such things from becoming political fodder out of respect for the families of these deceased G.I.s. Apparently Kevin's opinion of the President is so low, the idea of Bush doing something out of decency just doesn't cross his mind.

The only thing "jarring" at times is Kevin Drum's naiveté.

Teresa Heinz Kerry: International Terrorism Expert

Yes, I'm sure many of you were completely unaware that the rich dilettante Teresa Heinz Kerry is also one of the foremost experts on terrorism. Forget Richard Clarke, Condoleeza Rice, and everybody else! The person whose opinion on this should carry the most weight is Teresa Heinz Kerry.

And it doesn't stop there. Heinz Kerry is truely a Renaissance woman. She is an expert on the environment, health care, human rights, and health care. How did she get to become such a world renowned expert in so many fields? Well she married John Heinz who was a U.S. Senator, and when he died she got all his money. See?

"I think the American people are beginning to see the dichotomy between terrorism on the one hand and Iraq on the other. There're not the same. The only thing that is the same is that Iraq has made terrorism worse, not better. ... It's exasperated terrorism worldwide," Teresa Heinz Kerry said during a brief news conference at Franklin Canyon Park.

Exasperates terrorism? Kind of like exasperating capitalism, feminism and racism? I dunno, but it sounds kind of weird to exasperate an "-ism". But what do I know I don't have $500 million dollars. Clearly she knows much more about this than I do, which is why her comment on it is seen as news worthy.

You Know What I'd Like

A Candidate that is actually worth a damn.

Whew, That's A Relief: Part II

Well now that both George Bush and John Kerry are going to make sure my child is safe, healthy and ready to learn, and that schools will be better I guess I don't even have to worry about my son's education. I am so glad to know that John Kerry is going to intervene in my family life and do my job for me. This way I can become lazy and complacent about my son's education. I'm so glad both parties in this country want to be Nannies for us stupid folk.

Update: In comments Kevin Brancato writes,

Note to politicians, if you want my vote, send somebody to change my son's diapers, and to hold him when he cries.

Well my son is a bit older than that now, but back when diapers were an issue, yeah that'd really impress. Or course, so would a diaper subsidy....hey who says I can't whore myself out like any good special interest group?

The Obvious Answer is: More Government

A recent report of airport security screeners has come back with a poor performance grade. Even though the government has taken over this function is should be obvious that what is needed is even more government. Clearly we are not wasti...errr spending enough money on this.

Airport security remains lax despite billions of dollars and thousands of federal employees added since the Sept. 11 attacks, lawmakers were told Thursday.

See, you have to read between the lines here. We actually need to spend more money. By spending more money people will obviously work better because they'll have access to things like health insurance, DVDs and Cheetos...and we all know everybody works better with Cheetos.

A pair of government investigations submitted to the House aviation subcommittee found dangerous objects still get past security checkpoints. And they said neither government nor privately employed screeners performed their jobs well.

Cheetos also make you more observant.

I find this funny actually (can you tell?). I find it funny because this deals with something pretty serious. People's lives are at risk here, and as we saw on 9/11 not just the lives of the people on any given airplane as well. Yet, what do we routinely see? People calling for more government in other areas. Health care costs rising "too" fast--government! Education is a problem--government! Cheetos getting too expensive--government!

Government, government, government. And even more amusing, all these government programs which would employ more people will actually increase the misery in this country. How do we know this? John Kerry told us so.

Whew! What a Relief

Now that President Bush is going to make sure my son gets a quality education, I can stop helping him with his home work, stop reading to him at night, and let him watch more television. I must say that is a relief, now I'll have more time to do other things like watch television too.

The Latino Vote

Is Kerry going to lose the Latino vote? I doubt it, but he might lose enough of it to lose the election in November. I don't know if it is the uniform nature of Kerry's campaign staff or not, but it could be a factor.

Update: In Comments LationPundit posts that Bush might be on the verge of losing a good chunk of his Latino support. LatinoPundit points to an article in La Opinión about the weak support in the Lation community for the war on Iraq.

While this isn't good news, I'm not sure it means Bush is going to lose a significant amount of whatever support he has in the Latino community. First, he doesn't have all that much support (although from my understanding for a Republican he does) compared to what Democrats traditionally get. That is, weak support for the war in Iraq doesn't tell me Bush is about to lose support. For example, if Republicans typically receive say 25% of the Latino votes, then if Bush has support of 45% of Latinos he is doing very well...for a Republican. Further, if the support has increasd considerably, but hasn't reached a majority yet (like the 45%) it wouldn't be unusual to see surveys where 55% oppose the war in Iraq.

Holy Sheep Dip!

Looks like Paul Krugman is now the most partisan hack...errr columnist in America. What is even more surprising is that the reason is due to Anne Coulter going on the offensive against a Republican. This raised her Negative Republican References from a 3 to a 20, which dropped her Partisan Index down to 78, one point behind Paul Krugman.

Krugman must be happy (or maybe delusional). The towering "intellectual" from Princeton is now the most partisan columnist. In other words, his ideological blinders are now the biggest on the block.

Also of note, the top 5 slots are held by liberal columnists and the when looking at the top 10, 6 slots are filled by liberals.

New Overtime Rules

The Department of Labor released its revised rules for overtime requirements under the FLSA. Here is the DoL press release.

I was listening to a local talk radio show yesterday and I couldn't believe the ignorance being spouted about it. Callers were whining that they'll be forced to work unpaid overtime, the government will come and confiscate any money they earned above $X, cats and dogs will be living together, etc. Unfortunately, the host of the show didn't shed any light on the issue, and I was unable to get through when I called.

(Note, IANAL, nor have I read the 500 pages of the new regulations, but I have looked into this because of a situation at my previous employer.*)

As I understand it, the follow statements are true (feel free to correct any misperceptions). In no particular order:

1. The Fair Labor Standards Act sets the 40 hour workweek, and requires employers to pay time-and-a half for any exceess hours worked during a week.

2. The new regulations apply to exempt salaried employees. Dock workers, factory workers, plumbers, electricians (and basically anyone who gets paid by the hour except some computer employees) are not affected by the revised rules.

3. There are some employees that are exempt from the time-and-a-half requirement. Professionals (engineers, doctors, architects, etc), managers, and executives can be exempted from the rule, but it isn't necessarily automatic -- there are some requirements that the employee must meet to qualify as "exempt".

3a) Salary test -- the employee must be paid a weekly (or less frequent) salary, his pay cannot be reduced based on decreased work output or hours worked. (This is sometimes called the "no docking rule".)

3b) Duties test -- the employee must meet a certain list of job requirements (an overview of these duties is listed here). Just because a person is being paied a weekly salary doesn't mean he automatically is exempted from getting time-and-a-half overtime pay. His duties must also qualify.

4. Just because someone qualifies as an exempt employee does not necessarily mean that they won't get paid for overtime. It merely means that the employer is not required to pay time-and-a-half overtime pay. The company may well set up it's own rules for overtime pay as part of its employement package.

Again, feel free to correct any misperceptions I have above.

I'm sick of hearing people bitching "they're trying to take away my overtime pay!" No, they're not. They're just clarifying the rules that determine who automatically qualifies for time-and-a-half overtime.

(I keep emphasizing time-and-a-half because that phrase wasn't used once during the 2 hour show).

* -- my boss's secretary sent out a nasty email to a bunch of my coworkers because they hadn't turned in their weekly timesheets. (The timesheets were allegedly used for billing clients, not for deteriming pay for that week.) Her email said that people who didn't get their timesheets in on time wouldn't get paid for that week. Threatening to withhold pay from exempt employees is a no-no, and she got into a bit of trouble for it. (As she was a harpy she deserced the trouble).

Update

I forgot to add, one of the nincompoops who is misstating the facts about the new rules is none other than Flipper, err, John Kerry.

"Overtime pay makes up a significant part of workers' income. To deny this long-established right to workers is an outrage. Denying it to millions of American working families during this jobs crisis demonstrates once again the Bush administration's disregard for the struggles every day Americans are facing.

"Today's action - imposed over the opposition of the vast majority of Americans and much of the Congress - demonstrates the urgent need for leadership committed to strengthening the economic security of working families, instead of undermining it."

The new rules don't affect "working families" (i.e., blue-collar workers in Democratspeke). Ignorant or lying? You decide.

A Follow Up to the Wal-Mart/HIV Post

This is a follow up to this post about a worker at Wal-Mart who also unfortunately has HIV. Rivka has posted a follow up as well and wants to take me (and others) to task for not letting my emotions get the better of me. Apparently I am an unfeeling ogre because I did not immediately side with Rivka and decide that Wal-Mart is evil, evil, evil. I compounded my error by then going on to look at broader implications of changing policies so that companies like Wal-Mart are not allowed to get away with such evil.¹

Here is my problem. I did't want to get caught up in the emotion. I wanted to look at the issue of making an employer cover the medical expenses of a worker who has a pre-existing condition. Now while Rivka didn't actually advocate such a position, it was strongly hinted at in the initial post. I looked at how insurance works, and why in this poor woman's case it can't work for her.² Yes I am looking at this from an abstract point of view. You have to do this to look at all the potential problems with policy. You cannot ignore the impact on incentives...or if you do, you do so at your own and many other people's risk. I know it is a favorite "trick" of politician's to put a "human face" on a situation, but that is to some degree an argument by pity. Feel sorry for them, and then vote for me.³

Another aspect that is a bit annoying is a failure to understand the way wages and compensation work. Right now many people receive health benefits via their employer. That is we can impute an hourly "wage and benefits" dollar amount--i.e., W +B (W=wage, B=Benefit). So when Rivka writes,

After all, my employer didn't give me allergies or hip dysplasia, and they didn't give my Significant Otter high cholesterol. When I fell down the stairs, I wasn't pushed by my boss. Why should they pay for any of the medical visits or treatments related to these various problems? And shouldn't the person who works in the next office be jealous that I got my salary AND some X-rays, and she just got her salary?

No. The employee is not going to be wondering anything of the sort. First, the X-ray indicates something that is welfare reducing--e.g., falling down and breaking/damaging something. Further, so long as the employee is getting the same benefits package the only place for difference is in the wage component and that can be different for a variety of reasons. Also Rivka writes,

Moving on to Wal-Mart's defenders: I'm perplexed to see anyone make the argument that "you'd think Wal-Mart had given this woman AIDS. (They didn't.) So why does Wal-Mart owe her payment for her treatments, in addition to her regular wages? And if I'm her co-worker, and I don't have HIV, why should she be paid more than me?"

Now, the first part is harsh and I'm not going to defend that. However, when a worker has a pre-existing condition insurance doesn't work. Insurance works like this (super simplified version): Suppose we have 10 people and there is a 10% chance of getting sick and the cost of getting sick is $10. Now we expect one person to get sick, so we set the premium for all 10 people to be $1.⁴ Now we have a person who is sick, and always will be sick. If we force them into the same pool as everybody else everybody's insurance premium goes up. However, this outcome (a pooling equilibrium) is always broken by one that separates out people by risk (separating equilibria). Thus, the sick person will be in their own category and their premium will be $10, the cost of the treatment. So yeah, if Wal-Mart of any other company were to pay for "insurance" for people with a pre-existing condition it is effect paying for the entire cost of their medical care, and such employees are indeed getting paid a heck of alot more (assuming the wage is the same).

Rivka goes on and writes,

Predictably, lots of people argued that Wal-Mart would inevitably have to either cut staffing or raise prices in order to provide adequate health coverage to its employees. None of the folks on the pro-Wal-Mart side seemed willing to consider the possibility of shareholders accepting reduced profits in order to provide employees with adequate salaries and benefits. It turns out that people who are quick to scorn the idea that corporations have any moral obligations to their employees are simultaneously very protective of the moral obligation corporations have to maximize shareholder value.

There are two problems here. The first is that it ignores the purpose of Wal-Mart. Wal-Mart and practically all businesses are formed to pursue profit. Their motive/reason for existence is the pursuit of profit. In one way this is a good thing in that it helps provide for our current standard of living. However, it is not going to do "good things" like ensure that people who have HIV get the appropriate treatment. The market is a great thing, it allocates a huge amount of resources and does so quite well...generally speaking. But the market is not perfect and expecting markets to do things that are beyond its scope is wishful thinking. The second beef has to do with the moral obligations. The maximizing of shareholder value is not a moral obligation, but a fiduciary one. Granted a small point. However, there is also a larger point. Exactly whose moral compass do we use when we determine moral obligations? I am not very comfortable with the idea that we have to try and find some sort of "ideal" moral compass by which to judge the actions of people.

Finally Rivka quotes a commenter from Kevin Drum's site, never a good sign.

Practically speaking...at the moment the health system in the US, insofar as it exists, it set up on the basis that your employer will pay for your health insurance. If every employer in the US simply decided that from now on the money they paid to subsidize employee health insurance was to go to their shareholders instead, and people would only have health insurance if they could afford to buy an individual plan, then the US would suddenly face a health care crisis the like of which it's never seen: not just 45 million people without health insurance, but probably more like 250 million. The whole health "system" would crumble into bankruptcy. [...] Wal Mart's moral obligation to provide health insurance for all its employees arises from the fact that it makes its profits from a system which assumes that all major employers do so. If all major employees imitated its business model, the system would collapse and kill hundreds of thousands.

The problem here is that it completely ignores a competitive markets. Not only are the workers competing, but so are firms. Currently the firm is paying W + B. Clearly the firm must see W + B as being worth paying for the worker. Now if the firms all start paying W, then employees will look for new jobs. These will be workers who's value as a worker is worth more than W, so the wage will rise due to competition so that down the road the workers will be paid V = W + B. Granted this would take time and there would be the pain of displacement, but the idea that suddenly nobody would have health insurance is bordering on stupid.

After reading stuff like this is almost enough to make one want to run screaming from any discussion of policy with people like this. The only things that matter are emotions, feelings, and doing what is "right" according to each person's view of what is "right" but on a grandiose scale. Trying to divorce it from the emotion and look at it dispassionately to get an idea of what potential problems and pitfalls are going to arise is indicative of being cold and callous. Pointing out that something might not work the way they like it means you are a Right Wing Nut. Quite simply there is almost no room for debate.
_____
¹Yes I am fully aware that I am putting words in Rivka's mouth (so to speak given this is a written medium), but I figure it is only fair to return the favor.
²Note I am not in anyway saying this woman should suffer, deserves what she got or anything of hte sort.
³I'd also say it is a rather smarmy campaign technique, taking advantage of somebody else's pain and suffering for your own political career.
⁴Yes I know the numbers are too small and that there is a good chance two people could get sick, but I said it was super simplified. With larger numbers things work better.

Bush's Band Aid

Given that the Democrats are trying really hard to make health care an issue this election and plan on giving away the store in doing it, Bush has taken a position on health care as well. For the most part it is uninspiring drivel, although it doesn't have the same cost potential as the Kerry's plan (although the Elderly Prescription Drug Plan looks like it'll cost an arm and a leg...not that the Democrats mind, they just don't like how that plan works).

At the top of the list are what Bush calls Association Health Plans. Basically small businesses will band together and gain a bargaining advantage that small businesses typically don't have. In short it is simply a band aid. There are a several of reasons why health care expenditures are rising.

• Medicare,
• employer provided health care,
• simply the nature of the commodity.

The first one, subsidizes the segment of society that consumes the most health care resources. Naturally, this will have an upward impact on prices.

The second one seperates, at least for many people, the cost of health care and the benefits. You don't see the prices and costs, all that is observed are the benefits. This means that people will be inclined to over consume. However, from the employers perspective each employee has a wage/benefit cost. In other words, if employers didn't pay for health care the employees wage/salary would increase by an amount equal to the value of the benefits (or more accurately that would be, in theory, the new equilibria that the labor markets would move too). The reason for this is competition. Here is how it works. Currently a firm pays an employee a wage, W and benefits B. Total compensation is W + B. Firm's right now see paying W + B as being to their advantage/benefit. So if firms stopped paying such benefits, then workers would first experience a decrease in their standard of living. Then they'd look for a new job. Since the value of the workers marginal product was W + B other employers will be willing to pay them a new wage of V = W + B. However, this new wage is all wage, no benefits--i.e., the new wage has gone up by an amount equal to the value of the benefit.

The problem for the consumer though is that health care expenditures by firms on the part of employees is not taxable. This policy has not caused a distortion in the labor market. The value to the firm is W + B, but the worker only pays taxes on W. With the removal of benefits and the increased new wage the employee pays taxes on V (= W + B)--i.e., it would be identical to taxing health benefits that workers currently recieve.

This highlights the problem with government policies. Government policies are imposed from outside the market. They aren't exactly externalities in that once imposed they become part of the market, but they distort individual and firm behavior. This policy, implemented about 60 or so years ago, is one factor in driving up health care costs. This is why policy makers need to be very careful in how they craft policy. Of course, pointing out these kinds of problems makes one a Right Wing Nut.

The last issue is that health care is basically something people are almost always going to want as much as they need (at least) and also want the latest procedures, drugs, and treatments. Nobody says, "Hey, that new procedure is expensive, I'd rather have the older and cheaper procedure." Given liability laws, I doubt any doctor would go along with such a request anyways. This aspect of health care means that even without the effects of the subsidy for the elderly and the whacky tax treatment of employer provided health benefits health care costs would probably rise fairly quickly compared to say something like a car.

So the problems with health care are not that people don't have enough bargaining power, or at best that is only a small part of the problem. After all, people don't have lots of bargaining power when buying other commodities like bread or wine, but then again there are notable differences between bread and wine. So this idea of Association Health Plans, while probably not a bad idea, it is just not a "big" idea.

The next idea are tax free Health Savings Accounts (HSAs) which is a good idea, but the way it will be implemented will mean this too is a policy that will have a small impact overall. As noted, one problem is the tax free nature of Employer Provided Health Care (lets be lazy and call this EPHC). If I work for an employer who already offers EPHC why should I bother with an HSA? I shouldn't and I wont. So for most people it will do nothing. For those who don't have insurance one thing that we need to come to grips with is that this might be a rational decision. People have finite income while their wants, needs and desires pretty much know no bounds. As such people will make consumption decisions. They'll buy commodity X, but forgo commodity Y. Nothing shocking when presented at this level of abstraction. Now, lets say X is a car (to get to work, grocery store, etc.) and Y is health care. This person is not stupid, irrational, or anything similar. The person is making rational decisions as to how to spend his or her income. Research indicates that the amount of money necessary to get people to voluntarily purchase health insurance is rather large. So this will likely have a small impact. Will millions be helped? No. Watch, after the election this plan will fall off the radar screen as the Administration will not want to talk about it because it will be an abject failure.

Bush is also proposing new health care tax deductions. As if the tax code isn't complicated enough now, you have to wade through more of those mind numbing, coma inducing (hey...will that give me more or less health care deductions) tax rules. You know when I start reading the tax code I just can't stop. Again, the same problem arises here. People who are making a rational decision not to have health care are unlikely to change that decision based on the small benefit of allowing low monthly premiums to be deductible on your taxes.

The idea of tax credits is also a bust for the same reason. The research linked above indicates that the smallest transfer necessary to produce significant results $31,000 per person. Sure $1,000 to $3,000 will induce some people to change their behavior, but not many. Again, this will be a band aid policy.

The last item of medical liability reform is practically a throw-away bullet point. Everybody talks about this kind of crud, but does nothing about it (hey doctors, hospitals, and health care industry firms can contribute to politicians too you know). It is one of the magic phrases of politics. "Why if we just reform X everything will be great!" It is a load of horseshit, and the politician's know, which is also why it is at the bottom of the list (i.e., they are hoping nobody would read that far down).

So President Bush's policy proposals here will do little or nothing to address the issue of rising health care costs. The Democrats will suggest more, and the Republicans will be forced to follow along so as to not lose too many center/independent voters to this issue.

Well Looks Like I'm Not Alone

Jonah Goldberg and Steve Antler are with me on the idea that it is hypocrisy to questions a conservatives love of children, people, and puppies, but at the same time cry like a bunch of panty-waists when somebody even suggests they are soft on defense. Typically the "don't you dare question my patriotism" card is trotted out.

It is a tiring things to watch the Democrats get their panties all knotted up. They have no problem talking about how the Conservatives, Right Wingnuts, etc. really want to grind the "little people" up to make their daily bread. What is even more amusing in a sort pick-at-a-scab sort of way is that they define everybody who does not agree with them as a Right Wingnut. I'm more liberal than many liberals on some issues. For example, John Kerry is about as liberal a Senator that there is. Yet, John Kerry cannot seem to come out one way or the other on gay marriage. I can, I have no problem with it. So you're gay and want to get married, good for you, good luck and all that. I'll sign a petition if somebody asks to support this. I'll vote on any ballot measures in favor of allowing it. Yet, I'm a Right Wingnut and John Kerry is...a saint or...something.

So the next time you liberals get ready to bellow about somebody calling your patriotism into question; wonder if you've called anybody's basic humanity into question. If you have then kindly shut the fuck up. And if you are a conservative and are about ready to go off on somebody for calling your humanity into question; wonder if you called somebody's patriotism into question. If you have, then kindly shut the fuck up.

Update: This part of the Goldberg article makes a good point,

Here's the kicker, as Kondracke and others have noted. Kerry is lying when he says the White House has been questioning his patriotism. The only politicians who've been throwing around the unpatriotic charges have been the Democrats.

During the primaries, Howard Dean declared, John Ashcroft "is no patriot. He's a direct descendant of Joseph McCarthy" and John Kerry declared that Bush's economic policies are "unpatriotic." When pressed on such statements, the Democrats routinely cite Bush's record on this or that.

I don't know if the claim that only Democrats have been questioning peoples patriotism and crying wolf about it are true. However, the point that the Democrats have done their fair share of calling people's patriotism into question is indeed accurate. One example Goldberg didn't mention was Kerry's use of the term Benedict Arnold CEOs (some of whom also, ironically, are donors/supporters of Kerry).

As Heart Rending As This Story Is...

...It isn't all that shocking really, that a Wal-Mart or any worker who has HIV does not have access to health insurance.

Here is the deal. Insurance works off of probabilities. You have a non-zero probability of getting sick. The insurance company uses this to construct a schedule of deductibles and premiums that go along with your risk factor (a simple example is high risk vs. low risk). But when a worker has something like HIV, cancer, or some other type of problem, there is no longer simple a non-zero probability you will get sick. In this case the probability is 1 (i.e., it isn't that you will get sick, but that you are sick). You aren't simply high risk, you have the disease with certainty. You cannot construct insurance deductibles and premiums for such people.

Similarly you cannot have insurance with perfect information (i.e., you know who is and who is not going to get sick with certainty). As sad as this is, insurance just does not work this way. One could argue that Wal-Mart should be generous and pay for this person's medical bills, but there is a problem with that. By covering pre-existing conditions you lower the cost of risky behavior. This means people will be more likely to engage in risky behavior.¹ So, should Wal-Mart pay for this person's medical care? No. The responsibility of Wal-Mart is to maximize profits, shareholder value. Covering an employees medical expenses, is not going to help achieve that aim. If we, i.e., "society", feel this person's medical expenses should be covered, it should be done via taxes/transfers.

I think it is rather foolish to expect behavior from a firm that is antithetical to the purpose of a firm. Firms maximize profits. As such it is silly to expect a firm to be run as a charitable organization. We don't expect firms to set their prices to zero, and we shouldn't expect them to give away their profits either.

Via Kevin Drum.

Update: Follow up post here.
______
¹Yes, this same problem exists when the government covers the costs as well.

Crude Oil Prices Fall

I of course, blame the Saudis for this. Crude oil prices were dropping amid reports that the U.S. will be increasing its stock of crude oil.

Oil prices backed further away from recent highs on Wednesday, on forecasts that U.S. inventory data would show the world's biggest consumer further replenishing its crude stock cushion.

There is also this from the article,

London Brent crude was down 46 cents at $32.65 a barrel, off nearly $1.50 from a post-Iraq (news - web sites) war peak reached on Monday. U.S. light crude futures fell 47 cents to $36.03 per barrel, more than $2 down from a 13-year closing high struck last month.

Analysts said price direction would depend on U.S. inventory data due at 1430 GMT on Wednesday and expected to show the seventh rise in crude stocks in eight weeks.

A Reuters poll of analysts forecast a 2.5 million barrel increase in U.S. crude stocks in the week ended April 16. Heavy imports have already pushed up crude inventories to 295.4 million barrels, more than four percent above 2003 levels.

So why are gasoline prices so high? As shocking as it may seem to many, prices are generally not dependent on just one variable. The price of crude oil is indeed one factor, but it is one factor. I have given some of the other factors here. The article has this,

Tight gasoline supplies have blunted the impact of signs of ample availabilities on physical crude markets. U.S. gasoline stocks were only expected to rise by an average of 500,000 barrels, not enough increase to allay fears of a supply crunch when summer holiday driving demand kicks in.

Damn Saudis. How did they ever manage to get the U.S. to decrease refinery capacity and pass laws for requiring special blends?

John Kerry: Dishonest or Just Confused?

I'm not sure, but I do have to wonder if John Kerry is confused or dishonest. Given that most of his supporters think Kerry is smart and nuanced, I guess I have to lean towards dishonest.

John Kerry has a new section on his website about how Bush is damaging the environment, and how Kerry would do good things for the environment. There are items like this,

George Bush Rolled Back The Clean Air Act Causing Premature Deaths and Illness.

Great isn't it? George Bush not only is bad for the enviornment he is killing people (sure indirectly, but hey, lets not let anything get in our way when vilifying somebody!). Of course, it continues with,

It is estimated that pollution from power plants causes over 30,000 premature deaths, hundreds of thousands of asthma attacks, and millions of days of illness and lost work each year. Years of scientific evidence have shown that the effects of pollutants spewed by dirty power plants are more widespread and more hazardous than we first thought.

Right. Estimates. You see, John Kerry can't find one of these poor unfortunates. At least Al Gore would have somebody from his staff go out and find somebody suffering from a litnay of maladies that he could put on show for us. Maybe Kerry is just too tactful and respecting of the grief of these people to stoop to such a level.

Further, lets consider something else that kills lots of people every year. Cars. Tens of thousands die every year in car accidents. And what does John Kerry want to do? LOWER GASOLINE PRICES, THATS WHAT!! See, with lower gas prices, people will tend to drive more. Not only will this spew more of that pollution that causes "premature deaths, hundreds of thousands of asthma attacks, and millions of days of illness and lost work each year," but also puts people at risk of dying in a car accident!

Isn't it great how politicians vilify each other. George Bush is responsible for all those deaths. Nevermind, that Kerry's own postions could very easily be spun that way as well. Also, ignore completely that as a society we understand and accept these deaths as costs associated with having things like electricity. Further, this electricity also saves lives as well. There are trade offs in life, and nothing is cheap or free. For example, suppose we enforce these Clean Air Act regulations and then some, and it forces the price of electricity up. The higher prices induce elderly couples to forgo using their AC unit during a heat storm and they die. Is their blood on the hands of John Kerry? According the KerryLogic, yes! Of course such reasoning is silly. Nobody wants anybody to die prematurely.

Brian Leitner's Ideal Government

This essay on what constitutes the the Perfect Government in the eyes of Mr. Leitner is pretty bad. And this isn't all that shocking as it is coming to us from that cesspit, Democratic Underground.

I've been thinking about our government and you know what? I reckon I could do it a lot better.

I'm quite sure that just about every dictator that has ever come down the pike has thought exactly the same thing. They see a government that has inefficiencies, corruption, incompetence, etc. and they think, "Why if I were in charge things would be just lovely."

Presently, we have a two-party system (you're represented or you're not, and if you're unlucky, you never are because you're independent) that favors the biggest spender. Our current system also favors rural areas to urban areas, in a country where 'One person, one vote' is supposed to be the ideal, it is not. A person voting in New York state has about half the electoral power as a person voting in South Dakota because there are more people represented by one NY electoral vote than one SD electoral vote. This is not acceptable.

What is also not acceptable is the way districts are represented in Congress. In most states, between 25% and 49% of the voters in a given district are not represented in Congress because their guy didn't win the election. In some states, there's only one candidate for Congressional seats, with no Democratic competitor for Republican districts and no Republican competitor for Democratic districts. The voters essentially have no choice.

This guy has just figured out that collective choice usually doesn't work well? Arrow's result has been around for decades. The work of people like Buchanan and Tullock, Downes, Black, and others has likewise been around for decades. The Condorcet Paradox is almost 220 years old, yet Mr. Leitner has recently realized that collective choice mechanisms are...flawed. Okay.

5 seperate formidable parties are given federal funding for their federal races. 1 far-left party, 1 liberal party, 1 center party, 1 conservative party, 1 far-right party. Obviously, these parties will change with the times, changing their party lines to the various shifts in the national mood. While this is fickle, it's the price of a free society.

This paragraph is simply amazing. I like the notion that there has to be 5 parties. Not 4, not 3, not 6 or 7, but 5. No more, or less. The number of counting shall be three. Four is wrong, and five is right out. Right then. So first I pull the pin, count to 3....1, 2, 5! Three my lord! Right, 3! Sorry, it is sort of difficult to take this kind of stuff seriously.

Here is my problem with the above. Some theoretical research indicates that political candidates will move about in the space of postions and stake out that position which will give them the best chance of winning. Think of it this way. If we were to list all of the issues that politicians deal with, e.g.,

• Abortion,
• Taxes,
• Trade,
• Military,
• Supreme Court Apppointees,
• Poverty,
• Coroporate governance,
• Environment,
• And lots of other stuff

We could think of a multi-dimensional space. The thing is suppose there is a point in this space that a politician thinks will get him the most support (i.e., the most votes). What is to prevent other politicians from moving to that position? Nothing, at least nothing in Leitner's construct so far. So if the center politician picks some point, and wins alot of votes, what is to keep the far left (or far right) candidates from "redefining" their party's views and moving to that postion? Nothing. In fact, Leitner seems to think this is something that is natural and good when he writes, "Obviously, these parties will change with the times, changing their party lines to the various shifts in the national mood."

So what we are going to end up with are five parties that are quite similar to each other in terms of policy, but clamor loudly that they are actually radically different. On top of this we'll be subsidizing this silliness to the tune of hundreds of millions of dollars. Guess reality television just isn't doing it for Mr. Leitner.

5 Congressional districts would be required to use their allotment of federal funds to evenly divide between at least 3 of the five parties (all parties who wish to run a candidate are allowed), ensuring that voters have at least 3 choices for representation come election day.

This paragraph is hard to understand. The first sentence doesn't make much sense. Are we to take Congressional districts and group them into sets of 5 or something? What happens if we end up with something like 601 districts someday? Does that one extra district get no cash? Is it absorbed into another district, and if so doesn't that go against the opening remarks about diminishing the "value" of voters votes in the district that absorbs this extra district? Do we re-arrange districts periodically to make sure the total number is always nicely divisible by 5?

Second, this rule of 3 looks really bad. What is to keep 3 parties from forming a coalition and screwing the other two parties? Suppose the break down is like this,

• Party 1: 36%
• Party 2: 10%
• Party 3: 18%
• Party 4: 18%
• Party 5: 18%

What if parties 3, 4, and 5 get together to screw parties 1 and 2. If this were to happen 46% of the population would not have a "choice" which is one of the motivating factors for this screed.

In Congress, the 5 seperate parties would hold two seperate purposes. There are two ways a bill could be voted into law.

Scenario 1:

Each party holds a vote on the bill within their own Congressional party. If 3 out of 5 of the parties approve the bill, it becomes law.

Scenario 2:

The entire House of Congress votes on the bill, it becomes law if a simple majority approves it, AND 4 out of 5 parties have at least 1 affirmative vote on the bill.

Again, same problems. Imagine a party with a single Congressional Representative. There would be many situations where that representative would be pivotal in terms of passing a law and could extract quite a few rents. Given that there is only one representative it means a very small group of people in the U.S. could gain at the expense of a much larger percentage.

This would literally force bipartisanship in Congress. There would be no 'all or nothing' bills, where a simple Democratic or Republican majority is capable of enacting a law that the other party does not support. Bills would have to be, to be approved, very compromising and make at least 2 different ideologies content, at least partial support form a 3 ideology, and at least 1 representative content in a fourth party.

Uhhhh...what? In scenario 1, it is entirely possible to pass a bill where 2 parties don't support the bill. Further, if we were to use my break down above, it would be possible for a bill to pass where only a minority of the populace support the bill. This isn't a recipe for bipartisanship, but a recipe for disaster by weakening the requirements for passing legislation. Here is an example tht puts this flaw in even more stark relief: Party break down is as follows,

• Party 1: 100 Reps.
• Party 2: 100 Reps.
• Party 3: 1 Reps.
• Party 4: 1 Reps.
• Party 5: 1 Reps.

Under Scenatio 1, the Congressional represenatives from parties 3, 4, and 5 could get together and pass laws. That is 3 people are passing laws, blocking laws, etc. Is this how you improve the citizens feeling of having more of a voice in the system?

Granted the above scenario is unlikely, but the point isn't that we could have parties with one Congressional representative, but that a coalition of small parties representing a minority of the population could exercise considerable control over bills that are passed into law.

The whole contruct is completely lacking in any thought for strategic behavior by politicians. This kind of ignorance is amusing here, but it is sad, that an essay like this is posted at Democratic Underground as if it were something worth reading. Consider the caveat near the end of the "essay",

I think this pretty much covers my ideal government. I've thought about this for awhile, trying to find a way to make sure that we live in a true Democracy, where multiple viewpoints are constantly represented. This is obviously far from perfect, insofar as that there are scenarios which I have not come up with a solution for.

Despite the title, we now learn this is not a perfect system. Of course, it looks like it is actually a worse system than the one we currently have. There is no assurance that the entire political spectrum is represented, that this new system is just as vulnerable to strategic behavior as the current system, and that the whole silly process is subsidized by tax payers.

The Long Run

I found this question over at Marginal Revolution,

If no sensible person accepts the mantra “in the long run we’re all dead” as an argument against environmental laws and efforts to reduce the budget deficit, why does this mantra have credence in debates over free trade?

What I want to know is why does the phrase carry any weight at all? It is a great bit of rhetoric, but is it in anyway descriptive of reality?

Why do so many people invoke this phrase when discussing long run issues as if it is something meaninful or profound? True, eventually we are all going to die at some point in time. However, very few of us know exactly when that point in time is. How many people structure their life as if they are going to be dead at 75, 81, or 93? Probably damn few. Even if you are 92, do you go out and blow all your money during that year fully expecting to drop dead on your following birthday?

Actually, here is something to consider. That 92 year old probably has a better chance of living to 93 than most 22 year olds, but do 22 year olds act like they aren't going to get to that age?

Granted it is a famous comment uttered by John Maynard Keynes, but the guy was not perfect. He did make mistakes. The fact that he was quite insightful and very smart, does not mean that everything that comes out of his mouth has to be treated as holy scripture.

One way to interpret this phrase is that, in economics the long run is typically a limiting result. A limit result is one you usually don't actually get to. This goes back to the mathematical notion of a limit (and make no mistake, Keynes was quite good at math). If we are looking at a limit over time, we will never really ever get to that point. In this stict context the phrase has some meaning.

The problem is that many people invoke this phrase even when talking about long but finite time periods (25, 50, or 75 years). People trot out, "In the long run we are all dead," as if that settles the issue for whatever is being discussed.

In this case, the strict interpretation does not hold. While a given individual may or may not be alive in 50 years, somebody will be. Further, we might actually care about those people. In 50 years, my son will probably still be alive, and I'd like for his life to be really nice.

Also, many people who are alive right now, probably expect to be alive in 50 years. If you are 20 today, in 50 years you'll be 70 (ain't higher math great?), and I got news for you...lots of people live to be 70. Even in 75 years our hypothetical 20 year will be 95 (assuming he lives that long), and people do live that long. Now we don't treat the future the same as today...this is why we discount things like the value of future earnings.

So the concept, "In the long run we're all dead," is just not true. As Don Boudreaux notes the following positions would all be unimportant if the comment were true.

- eliminating environmental laws (because these impose substantial costs today in return for benefits that arise mostly in the long-run);

- Uncle Sam’s current, unprecedented budget deficit (because the benefits of the deficit are enjoyed today while payment for today’s benefits need not be made until tomorrow);

- eliminating Social Security (which forces people to forego consumption today in favor of the long-run).

So the next time somebody uses that phrase on you, and you know their political leanings, pick a long term policy and tell them that one will have to go too. Watch them become apoplectic and then ask them how they manage going through life being so intellectually dishonest.

Turn About...

...is fair play.

Gasoline Refineries

I have argued in past posts (see here, here and here) that one reason why gasoline prices are high is due to the lack of refinery capacity. Ben Lieberman's Tech Central Station article also makes a similar argument. Here are some things to consider,

• No new refineries have been built since 1976.
• Current refineries operate at 95% of capacity.
• 10% of the U.S. gasoline is imported.

Also consider this,

Until recently, most of the slack has been taken up by capacity expansions at existing