Fix Medicare First

As the health care battle rages on, we take time to look back at the last major federal health care plan, the $600 billion-a-year elephant in the room: Medicare. Why should we look at Medicare you ask? Because Medicare, you may be intersted to know, was broken before it even started, as is clear in this interview with Joe Califano, the major decision maker of LBJ's 1965 Medicare initiative:

Mr. CALIFANO: By late '67, the budget data was just stunning. I mean 1968, we knew that system should be changed. We asked Congress for authority to change it.

JOFFE-WALT: But you just created it.

Mr. CALIFANO: I know it. But we saw what was happening with costs so fast. So fast.

KESTENBAUM: But they couldn't change it. Doctors now like the system. They were getting paid for work they'd previously done for free. And that was that. This system, with all its problems, stayed in place for almost 30 years. Meanwhile, medicine got more expensive.

The fee-for-service model that Medicare cemented into practice drove costs up so fast that within 2 years even President Johnson exclaimed that they needed to rework the payment system. They never did.

There have been some band-aid solutions proposed here and there, but despite its fundamental flaws, most of the original Medicare model is still in place. It is still causing medical costs to skyrocket, and the cost of Medicare itself doubles every four years.

So to all you would-be health care reformers, before you go mucking with the rest of the system, how about you fix Medicare first.

Why Economic Stimulus is Pointless

And how minimum wage laws do more harm than good. Also, why Paul Krugman is an idiot. From 'Underconsumption is not the problem':

The problem in our economy is not that we are “producing too many goods,” or that “people cannot buy back what is produced” because they are not paid enough, or that government has not flooded the economy with enough new money. No, the problem is that much of the structure of production has been geared toward generating projects that cannot be sustained.

The only way that the economy truly can recover is for us to permit these malinvestments either to be liquidated or be directed toward other, sustainable lines of production. Instead, the government tries to throw new money at us and claim that we just are not spending enough.

That’s a prescription for disaster.

Keynesians would have you believe that the problem with our economy is that there are too many goods and not enough buyers, and that with a large enough stimulus we could take up this economic slack, and kickstart the economy back to life.

The problem is that economic slack, or 'underconsumption,' does not cause recessions, but is rather a symptom of a malinvested economy. The problem is not that people are not buying the fruits of production, but rather that production is making things people don't want.

By 'stimulating' the economy, we merely put off necessary shifts in production. We do not allow unproductive firms to fail and be liquidated, and we do not allow successful firms to use that excess capital to rise up.

Economic recessions are a sign of changing times. We can fight against them, but doing so is as useful as trying to stop the tide from coming in. Instead, we must learn to flow with recessions, to allow capital to move from one industry to another, freely and quickly, so that we can reorganize our economy quicker, and get back to business faster.

How to Build a Better Teacher

No Child Left Behind was put into place as a means to measure student performance, and by extention, teacher performance. Many have claimed that No Child Left Behind was a failure, in that it only identifies problem areas, but does nothing to fix them. They are right, but problem identification can also be valuable.

When researchers ran the numbers in dozens of different studies, every factor under a school’s control produced just a tiny impact, except for one: which teacher the student had been assigned to. Some teachers could regularly lift their students’ test scores above the average for children of the same race, class and ability level. Others’ students left with below-average results year after year. William Sanders, a statistician studying Tennessee teachers with a colleague, found that a student with a weak teacher for three straight years would score, on average, 50 percentile points behind a similar student with a strong teacher for those years. Teachers working in the same building, teaching the same grade, produced very different outcomes. And the gaps were huge. Eric Hanushek, a Stanford economist, found that while the top 5 percent of teachers were able to impart a year and a half’s worth of learning to students in one school year, as judged by standardized tests, the weakest 5 percent advanced their students only half a year of material each year.

Identifying weak and strong teachers is a great, but hardly solves the problem. The issue facing educators now is: what makes strong teachers good, and how can we teach these skills to the weaker teachers?

When Doug Lemov conducted his own search for those magical ingredients, he noticed something about most successful teachers that he hadn’t expected to find: what looked like natural-born genius was often deliberate technique in disguise. “Stand still when you’re giving directions,” a teacher at a Boston school told him. In other words, don’t do two things at once. Lemov tried it, and suddenly, he had to ask students to take out their homework only once.

The mechanics of teaching are woefully underrepresented in teaching curricula. Concrete ideas for dealing with common classroom issues are often left to the individual teacher to devise, leaving many first year teachers completely unprepared.

However, there is hope. The mechanics of teaching are not innate, non-transferable characteristics, but rather can be learned like any other skill. Take one highly-skilled teacher for example.

The clip opens at the start of class, which Zimmerli was teaching for the first time, with children — fifth graders, all of them black, mostly boys — looking everywhere but at the board. One is playing with a pair of headphones; another is slowly paging through a giant three-ring binder. Zimmerli stands at the front of the class in a neat tie. “O.K., guys, before I get started today, here’s what I need from you,” he says. “I need that piece of paper turned over and a pencil out.” Almost no one is following his directions, but he is undeterred. “So if there’s anything else on your desk right now, please put that inside your desk.” He mimics what he wants the students to do with a neat underhand pitch. A few students in the front put papers away. “Just like you’re doing, thank you very much,” Zimmerli says, pointing to one of them. Another desk emerges neat; Zimmerli targets it. “Thank you, sir.” “I appreciate it,” he says, pointing to another. By the time he points to one last student — “Nice . . . nice” — the headphones are gone, the binder has clicked shut and everyone is paying attention.

This teacher settled and prepared an unruly class effortlessly, using very basic techniques, like being direct and specific, narrating the positive ('Thank you,' 'Nice'), and remaining calm and patient. These parts of the Taxonomy of Teaching are being researched by Doug Lemov and Uncommon Schools, as well as others.

We can only hope this kind of clear thinking persists and has a real impact on education in America. Spread the word.

The Lost Decade II

The Lost Decade (失われた10年 Ushinawareta Jūnen?) is the time after the Japanese American asset price bubble's collapse (崩壊, hōkai) within the Japanese American economy, which occurred gradually rather than catastrophically. It consists of the years 1991 2008 to 2000 2017.[1]

The strong economic growth of the 1980s 1990s ended abruptly at the start of the 1990s mid 2000s. In the late 1980s 1990s, early 2000s, abnormalities within the Japanese American economic system had fueled a massive wave of speculation by Japanese American and foreign companies, banks and securities companies. A combination of exceptionally high land values and exceptionally low interest rates briefly led to a position in which credit was both easily available and extremely cheap. This led to massive borrowing, the proceeds of which were invested mostly in domestic and foreign stocks and mortgage backed securities.

Recognizing that Because this bubble was unsustainable, the Finance Ministry sharply raised interest rates in late 1989 mortgage delinquencies and foreclosures skyrocketed due to sub-prime mortgage rate hikes. This abruptly terminated the bubble, leading to a massive crash in the stock market. It also led to a debt crisis; a large proportion of the debts that had been run up turned bad, which in turn led to a crisis in the banking sector, with many banks being bailed out by the government.

Michael Schuman of Time Magazine noted that banks kept injecting new funds into unprofitable "zombie firms" to keep them afloat, arguing that they were too big to fail. However, most of these companies were too debt-ridden to do much more than survive on further cuts, which led to an economist describing Japan America as a "loser's paradise," replete with bank bonuses. Schuman states that Japan's America’s economy did not begin to recover until this practice had ended. [2]

Eventually, many became unsustainable, and a wave of consolidation took place, resulting in only four national banks in Japan America. Critically for the long-term economic situation, it meant many Japanese American firms were burdened with massive debts, affecting their ability for capital investment. It also meant credit became very difficult to obtain, due to the beleaguered situation of the banks; even now the official interest rate is at 0% and has been for several years, and despite this credit is still difficult to obtain[citation needed].

This led to the phenomenon known as the "lost decade", when economic expansion came to a total halt in Japan during the 1990s. The impact on everyday life was muted, however. Unemployment ran rather high, but not at crisis levels. This has combined with the traditional Japanese emphasis on frugality and saving (saving money is a cultural habit in Japan) to produce a quite limited impact on the average Japanese family, which continues much as it did in the period of the miracle.

On February 9, 2009, in warning of the dire consequences facing the United States economy after its housing bubble, U.S. President Barack Obama cited the "lost decade" as a prospect the American economy faced. [5]

-Lost Decade (Japan)
From Wikipedia, the free encyclopedia

Japan went through a nearly identical asset bubble, and it's government reacted with bailouts and extremely low central bank interest rates, just like America's government. With frugality and savings, Japan managed to get through it in ten years. American's are not notorious savers of money, as we are the world's biggest debtor nation, so it will probably take us longer.

Can't Wait For This

LIFE, from the BBC (the same folks who brought you the incredible Planet Earth series) makes its American premier on March 21st on the Discovery Channel.

The Road to Hell is Paved with Unintended Consequences

Even with the best of intentions, there are always unintended consequences.

After the Jan. 12 quake, which killed as many as 300,000 people, the world launched a massive relief effort to bring food, water, medicine and other supplies to needy Haitians. The U.S. alone has spent more than $665 million, official figures show.

But only a tiny fraction of that money is being spent in Haiti, buying goods from local businesses. Worse, the aid is having the unintended consequence of making life harder for many businesses here, because of competition from free goods brought in by relief agencies. The damage to Haitian companies is making it harder for them to get back on their feet and create the jobs the country needs for a lasting recovery. …

“I have fewer customers now because they are handing out free food down the street,” says the 52-year-old [food vendor], pointing to the nearby Champs de Mars plaza where aid organizations regularly hand out food to tens of thousands of people camped there in tents.

Obviously the people of Haiti need help after the devastation of a natural disaster of this scale, and the hundreds of millions of dollars coming into the country are a positive, but how might the lessons learned there apply here in America?

[WSJ via Freakonomics]

Not Enough Money

Federal tax receipts for 2010 are estimated $2.381 trillion. Obama's budget for 2010 wants to spend $3.55 trillion (plus another $137 billion for the wars). That leaves us $1.3 trillion dollars in the hole.

You read that correctly. One third of our federal government's expenditures this year will be paid for by...

If that wasn't bad enough, we are running a hefty trade deficit. In 2009, we exported $1.553 trillion worth of goods and services. In the same year, we imported $1.934 trillion. That means last year a whopping $380.7 billion left our country.

Taken together, that puts us $1.687 trillion in the hole FOR A SINGLE YEAR. People, that is BAD.

And it's only going to get worse unless we change course NOW.

Humans Love Charity

For decades, economists have thought that humans are self-interested to the detriment of their fellow man. New scientific findings about the brain call that assumption into question.

Specifically, the team found that the reward centers in the human brain respond more strongly when a poor person receives a financial reward than when a rich person does. The surprising thing? This activity pattern holds true even if the brain being looked at is in the rich person's head, rather than the poor person's.

In the experiment, half the participants were given $50 at the beginning of the study, and half were given nothing.

"People who started out poor had a stronger brain reaction to things that gave them money, and essentially no reaction to money going to another person," Camerer says. "By itself, that wasn't too surprising."

What was surprising was the other side of the coin. "In the experiment, people who started out rich had a stronger reaction to other people getting money than to themselves getting money," Camerer explains. "In other words, their brains liked it when others got money more than they liked it when they themselves got money."

"We now know that these areas are not just self-interested," adds O'Doherty. "They don't exclusively respond to the rewards that one gets as an individual, but also respond to the prospect of other individuals obtaining a reward."

So what does this mean? It means humans are naturally predisposed to be charitable. We are evolutionarily designed to give to the poor. It also means we do not need to be forced to help the less fortunate; we are, quite literally, happy to do it.

This, O'Doherty notes, is somewhat contrary to the prevailing views about human nature. "As a psychologist and cognitive neuroscientist who works on reward and motivation, I very much view the brain as a device designed to maximize one's own self interest," says O'Doherty. "The fact that these basic brain structures appear to be so readily modulated in response to rewards obtained by others highlights the idea that even the basic reward structures in the human brain are not purely self-oriented."

Humans love charity - what can I say? It's science.

[Caltech via Freakonomics]

The Constitution is Dead

Every person elected as President of the United States must recite the following oath.

"I do solemnly swear (or affirm) that I will faithfully execute the office of President of the United States, and will to the best of my ability, preserve, protect and defend the Constitution of the United States."

Every president since FDR has utterly failed to uphold this oath.

Upholding the Constitution's sharp limits on government was once a sacred duty for the men who worked in the oval office, even if that meant making unpopular decisions.

They knew that limiting the scope of the federal government was crucial to the continuation of the American experiment. They knew that turning the federal government into a giant money pool would ultimately destroy the freedoms our forefathers had fought so hard for. They knew that, sometimes, they would have to make the hard choices, even if it meant they would be ostracized.

That is why they took that oath.

President Franklin Pierce’s 1854 veto of a measure to help the mentally ill read, “I cannot find any authority in the Constitution for public charity. [To approve the measure] would be contrary to the letter and spirit of the Constitution and subversive to the whole theory upon which the Union of these States is founded.”

One cannot even imagine a president today vetoing a reading program for the mentally ill. But that is exactly what presidents of the past did, on a regular basis. Our government, by design, was never meant to be a public charity. But that is exactly what it has become.

On the issue of using federal funds to build up infrastructure, something similar to Obama's recent Stimulus Program, President James Madison had this to say:

“Having considered the bill this day presented to me . . . which sets apart and pledges funds ‘for constructing roads and canals, and improving the navigation of water courses, in order to facilitate, promote, and give security to internal commerce among the several States, and to render more easy and less expensive the means and provisions for the common defense,’ I am constrained by the insuperable difficulty I feel in reconciling the bill with the Constitution. . . .”

Madison could find no provision in the Constitution allowing federal infrastructure projects precisely because no provision ever existed. The federal government, as the founders envisioned, was never intended to take on the responsibility of building roadways or transport. In their minds, these were best left to the states.

The definition for what is allowable under our constitution has shifted so much in the last 100 years that today's federal government would be unrecognizable to presidents of the past.

Today, every congressman goes to Washington with his or her hand out, trying desperately to funnel as much money as possible into their districts. This comes in the form of road projects, bridges, government office buildings, financial assistance, tax breaks, etc.

This system has shifted the focus of our lawmakers from good governance to begging. They beg for campaign contributions so that they can go to Washington, D.C. to beg for money to pay back their campaign contributors. Then they must beg for more to keep their constituents happy, so that they can win another election and beg for more. This cycle is destroying our nation. It is obvious from our ballooning federal debt. And We always want more. But we never want to pay for it.

This is where principled men and women are supposed to stand up and shout "No!" No to stimulus spending! No to health care spending! No to education spending! No to welfare spending!

We want all these things, of course. We think these things will end our reliance on our crappy jobs, or on our crappy economy, we think these things will set us free, free to do the things we really want to do.

But what many do not realize is that these things end up controlling us. Huge swathes of our economy, including millions of jobs, live or die depending on how much our government wants to spend on a particular project.

Our spending through Medicare and on health insurance tax cuts is driving health care prices through the roof, making health care unaffordable to anyone who is not receiving federal benefits.

Our spending on education has centralized control of tens of thousands of schools, millions of teachers, and tens of millions of students into the hands of a few people in Washington, D.C.

Our welfare spending, which we say helps people without jobs, takes money out of the economy, money that could have been used to create jobs for the very people we claim to be helping.

Just Say No

It is time to say "No." If you want special interests out of Washington, remove what is bringing them there: the money. If you want to cut spending and reduce the deficit, you have to remove money. If you want to bring politics back to the state and local level, where you actually have a voice, then you need to take back the money. But it begins by saying "No."

The transition will not be an easy one, but when have Americans ever shied away from a challenge? Living under a paternalistic government is easy, but it quickly builds dependence. And once you are dependent, you are no longer free. We claim we want freedom, but we need the government constantly. We need the benefits it gives us. We have stopped providing for ourselves. Instead we look up to the government, with our hands out. We have given our freedom away, in exchange for convenience.

America was not meant to have a government that cares for you, that picks you up when you skin your knee, that makes you sandwich when you get hungry. Americans are supposed to be brave. We are supposed to take what life gives us, good or bad, and thrive.

America was meant to be the land of opportunity, the land of freedom, the land where you did what you want, and took responsibility for yourself. That is what the founders had in mind when they penned the Constitution 224 years ago. The government was there to protect your freedom to follow your dreams, and little more.

America was not supposed to be easy. It was supposed to be free. We have strayed so far from that ideal that I do not know if we can ever find our way back. But I will try, because I know what must be done. I know what must be done to revive the American spirit, to get back to the ideals upon which this country was founded, to get back the ideals that made this country great.

It starts by saying "No."

Write-ins Only, Please

What do you guys think about a write-in only ballot?

In the past, poll taxes and tests have been used to weed out the more ignorant/ethnic citizens from voting. We obviously don't want to do that, but it would be nice if voters were more informed, and people who were totally ignorant of the candidates and issues just stayed home.

Say candidates must register with the election board for consideration, but once registered that is all they have to do to qualify. After that, they just have to get their name out to as many people as possible.

This would eliminate the wholly ignorant voters without stopping people from voting. Only votes from people who actually know candidate names would count, without confronting the problem of denying suffrage to some people.

It might also elminate the endless R-D duopoly by allowing anyone and everyone an equal footing on the ballot, instead of just having the top 2 candidates listed.

This way, a candidate who might be hated by R's and D's would have a better chance.

Also, it would reduce the negative influence of primaries, wherein strongly partisan candidates are able to play to their base to get their party's nomination. If party 'nomination' became nothing more than an endorsement, perhaps we might see a different class of candidates (or, if we're lucky, a different class of parties).


I'm just thinking out loud hear. Does anyone see any serious potential drawbacks to this plan?