Tuesday, August 31, 2010

Can Thorium reactors provide, safe, clean, green energy?

Saturday, August 28, 2010

The technology sector as a major driver of deflation:
Most high-tech companies have a business model that incorporates a sort of 'bizarro force' that is completely the opposite of what old-economy companies operate under : The price of the products sold by a high-tech company decreases over time. Any other company will manage inventory, pricing, and forecasts under an assumption of inflationary price increases, but a technology company exists under the reality that all inventory depreciates very quickly (at over 10% per quarter in many cases), and that price drops will shrink revenues unless unit sales rise enough to offset it (and assuming that enough unit inventory was even produced). This results in the constant pressure to create new and improved products every few months just to occupy prime price points, without which revenues would plunge within just a year. Yet, high-tech companies have built hugely profitable businesses around these peculiar challenges, and at least 8 such US companies have market capitalizations over $100 Billion. 6 of those 8 are headquartered in Silicon Valley.

Wednesday, August 18, 2010

Jack London: Racist and Socalist.

Monday, August 9, 2010

North Korea:
Kim [Jong Il] must also be aware that the infantilization of the people has come at a price. Away from Pyongyang's carefully monitored tourist sites, North Korea is a much more raucous place than any dictator could be comfortable with. "One surprising thing," Michael Breen writes in Kim Jong Il: North Korea's Dear Leader (2004), "surprising because you expect robots, is … how frequently fights break out." According to refugees, even women fight out their differences, and young female teachers are said to hit children the hardest. This lack of restraint is a problem for many North Koreans trying to adjust to life in the South. Social workers complain that the refugees pick fights with strangers, and storm off jobs on the first day. "I'd have thought they'd be better at controlling themselves, coming from a socialist system," is a common lament.

Saturday, August 7, 2010

The peerless Stephen Ellis on the global drug trade:
A major change in the global cocaine trade is taking place. South American cocaine traders are reacting against the saturation of the North American market, the growing importance of Mexican drug gangs, and effective interdiction along the Caribbean smuggling routes. These factors have induced them to make a strategic shift towards the European market, making use of West Africa's conducive political environment and the existence of well-developed West African smuggling networks.

Friday, August 6, 2010

Universal health insurance saves money by reducing ER visits, right?
Unfortunately, the experience of Massachusetts appears to be disproving the President’s hypothesis. Last week, the Massachusetts Division of Health Care Finance and Policy reported that, despite the imposition of universal health insurance in that state in 2006, emergency room visits increased by 9 percent between 2004 and 2008, even after taking population increases into account...

If the number of doctors stays the same, but more and more people utilize health care resources, the supply of available doctors goes down.

Hence, it takes longer and longer to get an appointment to see a doctor, and people end up right back where they started: in the emergency room. As the Globe points out, “the growing use of emergency rooms has significant cost implications, because private insurers and government programs pay substantially more for a visit to the emergency room than for a doctor’s appointment.”

Massachusetts reminds us: Access to health insurance is not the same thing as access to health care.

Thursday, August 5, 2010

What a successful counterinsurgency looks like, Columbia edition:
President Álvaro Uribe mandated that security forces provide annual, publicly available reports on how money is spent and how effectively it is used.

Colombia also created a civilian Ministry of Defense, making the military accountable to democratically elected leaders. The new ministry put the armed services under a single chain of command directly responsible to the president and developed a cadre of experienced civil servants.

These steps quickly led to a steadier stream of funds devoted to antidrug efforts, more reliable security forces and, most important, strong public support. As a result, Colombia has made significant strides in fighting drug traffickers, guerrillas and paramilitaries: since Mr. Uribe’s election in 2002, coca production has decreased by a third, kidnappings have dropped by 90 percent and murders have fallen significantly.

Wednesday, August 4, 2010

Scott Winship takes down a noxious piece in the Financial Times on our economic stagnation:

Their son, Andy, was recently knocked off his mother’s health insurance and only painfully reinstated for a large fee.

Luce is arguing that there’s a new crisis facing the current generation. About 30 percent of those age 18 to 24 were uninsured in 2008 when the National Health Interview Survey contacted them. I don’t have trends for that age group, but the share of Americans under age 65 without health insurance coverage was 14.7 percent in 2008, up from….14.5 percent in 1984.

And, much like the boarded-up houses that signal America’s epidemic of foreclosures, the drug dealings and shootings that were once remote from their neighbourhood are edging ever closer, a block at a time.

Well, the violent crime rate in 2008 was 19.3 per 1,000 people age 12 and up, down from 27.4 in 2000 and 45.2 in 1985...

The slow economic strangulation of the Freemans and millions of other middle-class Americans started long before the Great Recession, which merely exacerbated the “personal recession” that ordinary Americans had been suffering for years. Dubbed “median wage stagnation” by economists, the annual incomes of the bottom 90 per cent of US families have been essentially flat since 1973 – having risen by only 10 per cent in real terms over the past 37 years. That means most Americans have been treading water for more than a generation. Over the same period the incomes of the top 1 per cent have tripled. In 1973, chief executives were on average paid 26 times the median income. Now the multiple is above 300.

Adjusting for household size and using the PCE deflator to adjust for inflation, median household income in the Current Population Survey rose from $29,800 in 1973 to $40,500 in 2008 (in 2009 dollars, again based on my compuatations). Factoring in employer and government noncash benefits would show even more impressive growth.

In the last expansion, which started in January 2002 and ended in December 2007, the median US household income dropped by $2,000 – the first ever instance where most Americans were worse off at the end of a cycle than at the start.

This is entirely a function of changes in the population composition (more Latinos) and in the share of employee compensation going to health insurance and retirement plans.


Tuesday, August 3, 2010

An excellent backgrounder on how Pakistan views the US.

Sunday, August 1, 2010

A number of years ago a progressive friend of mine pointed me to the National Priorities Project (NPP) Cost of War website, commenting on the number of things we could have done without the current wars in Iraq and Afghanistan. Most damningly, he pointed me to the Trade-offs page, which list the things we could have spent the money on instead. It wasn't until later that I went over the details of their calculations and realized how misleading, and downright deceptive they are with their numbers.

First off, the site lumps the wars in Afghanistan and Iraq together, yet very few Americans view Afghanistan as illegitimate as they view the war in Iraq. Iraq alone is about 72% of the total. But these top level numbers are abstract, the spending alternatives are the interesting part, and the most misleading. First off, the site lists a series of programs, delineating them with ORs. Unfortunately, some people will read it as an AND. This is a common rhetorical device, one my friend fell for. More egregiously, the site conflates the 8 year cost of war, and compares that to one year costs of other programs.

But the underlying calculations for the trade-offs are very deceptive. The site lists the cost of hiring firefighters, police or elementary school teachers. To come up with these numbers, their notes and figures page states "Each state's number is based on the average amount of annual pay a firefighter receives, plus 25% for other expenses associated with employment such as benefits." They use the same 25% number for police and teachers as well. However, the Bureau of Labor and Statistics notes that the average cost of an employee is 42% higher than their wages. And that in the private sector, where benefits are significantly less generous than the public sector. But even this isn't the full picture. The cost of hiring and retaining an employee is significantly more than their salary plus their benefits. As you add employees, you need to add more HR people to hire and track these employees. You need more managers to supervise them. You have to provide them with office space, computers and office equipment. You need insurance to cover yourself. You need to pay for training. The typical business school number I've heard is that the cost of an employee is about two to three times their salary, as a rough rule of thumb. This page puts it at 2.7.

These numbers add up. For example, the site tells me that the cost of both wars could have provided 3,466 elementary teachers in Tennessee for one year. But, divide that by eight years to compare one year costs to one year costs. Then, divide that number by 2 to factor in the real cost of hiring a teacher. You wind up at 216 teachers. Then, multiply by .72 to limit yourself to Iraq. 155 teachers still sounds like a lot. But, there are 982 elementary schools in Tennessee. That's 0.16 more teachers per elementary school, or 0.027 teachers per school per grade level. Now, considering that class size doesn't seem actually have all that big of an effect on educational outcomes, the cost of the war seems decidedly muted. The NPP also compares the cost of war to Head Start and Medicaid, two other programs with dubious quantitative outcomes. The other comparisons are similarly misleading.

As of this writing, the site lists the total cost of both wars at a little over $1.023 trillion. $128 billion a year is a lot of money. For comparison, Social Security runs nearly $680 billion per year, Medicare another $680 billion. TARP was over $150 billion last year, and interest on our debt nearly $190 billion. Our government has a lot of trimming it can do, but the war in Iraq will end, eventually. The same isn't true for everything else on our ledger.
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