Monday Highlights

Yo. Links?

  1. A book noted, still in my inbox.
  2. Some lessons forgotten in peacetime.
  3. Some science and short animations.
  4. Tax money wasted.
  5. An Evangelical and the East.
  6. As a Rightie who “supports” him (in the sense of don’t fire/suspend), that one supports the right of a man to say a thing doesn’t (oddly enough) mean you support what he says. That seems to be lost on the linked blogger.
  7. Some income inequality for discussion.
  8. Missing a major point, that is, the reason that civilians are being targeted it because the rebels dress like and hide among the same. War crimes beget the same, but the original crime it seems can be laid at the feet of rebels.
  9. Remember this.
  10. A meaningless statement by the Democrat organ of record noted.
  11. An elephant does the high hurdles.
  12. After all, the more time a doctor spends doing paperwork/data entry the better off we’ll all be, according ACA supporters is yet another one of their non-economic economic claims. Kinda like taxes on new medical equipment development will spur the same.

 

8 Responses to Monday Highlights

  1. Missing a major point, that is, the reason that civilians are being targeted it because the rebels dress like and hide among the same. War crimes beget the same, but the original crime it seems can be laid at the feet of rebels.

    How is this a factor when you’re talking about carpet bombing of cities? You’re arguing that if rebels do anything short of massing on an empty field in brightly colored uniforms so they could be more easily shot they are automatically guilty of war crimes? Your position on uniforms bascially confuses a ‘best practice’ in war with a requirement of war crime doctrine.

    After all, the more time a doctor spends doing paperwork/data entry the better off we’ll all be,

    This is, of course, a problem with fee-for-service. The doctor wants to bill as many ‘services’ as he can, the payer wants to cap the # of ‘services’ he can bill. The payer requires that paperwork be filled out, the doctor and his office respond by gaming the payment system. The insurance company counters by upping the paperwork to catch the gaming and so on.

    An alternative model is the accountable care organization (ACO) where the doctor is paid a bit like a coach of a sports team. The doctor is free to do whatever he feels will work for his patients and he gets paid a set amount. Since each item is not getting paid for, there’s no need to double check every little thing the doctor wants to do.

    The downside, though, is that you have less flexibility on doctors. Probably equally as dificult is the fact that coming up with a formula to compensate under this model that doesn’t end up rewarding doctors who simply provide skimpy, cut-rate care, is fiendishly difficult.

    A meaningless statement by the Democrat organ of record noted.

    Hardley a meaningless statement, you yourself stated that any health care reform that doesn’t lower or at least stop health care spending as a % of GDP from growing is a failure. Well last I checked health is maybe 8% of GDP so you shouldn’t be surprised with people asserting spending more than 10% of income on health is ‘unaffordable’.

    But Mankiw stumbles upon the argument from The Cost Disease that I’ve been pushing. Productivity has been growing slowly over time but not all industries experience the exact same rate. Industries with faster than average productivity growth will produce products that ‘feel’ cheaper and cheaper (think computers), those with lower than average growth will become more and more expensive. The mix of what types of things we spend money on will change with the faster than average things falling, the slower than average things rising.

    In essence, this is why all the deficit doom and gloomers are turning out to be bunk. They base their long term projections on Medicare growing faster than the entire economy for decades out into the future. The problem with their idea is that they fail to note that health care is a piece of the whole economy. If a piece is growing faster than the whole, then it becomes a larger portion of the whole. At some point either the whole will start experiencing a higher growth rate, or the fast growing piece will have to experience a slower growth rate. In other words, you cannot simply ‘straight line’ both the piece and the whole out forever.

  2. Some income inequality for discussion.

    Of all types of income inequality, sports and entertainment seem to be the ones that provoke the least angst. The NRO article, though, seems to suffer from the fallacy of composition. Just because there’s a huge amount of inequality between the NBA’s highest paid player and lowest paid player and most people accept that as a just reward for different skill levels, then that must apply to the larger economy.

    It’s kind of ironic that conservatives like to put down the entertainment industry for being so liberal when the fact is the entertainment industry is probably the closest you can get to the Ayn Rand vision of how things should work. Whatever you think of Alec Baldwin, for example, every dollar he makes is directly linked to viewers he gets. Every dollar Michael Moore makes is linked to a ticket sale or DVD sale he makes.

    But this type ‘superstar’ inequality has been examined by economists and makes a lot of sense. 50 years ago JRR Tolkein could only, at best, sell tens of thousands of The Hobbit books to children and curious adults. Today JRR Rowling can harness the ability to sell to hundreds of millions in multiple countries in multiple formats. Her earnings then are unequal to Tolkein’s even though many will argue the latter produced a better or more valuable work. The NBA, NFL and other sports work along the same principle today. Likewise the top athletes in the NBA or NFL today are almost certainly better than the top ones from ages ago. With big profits has come big investment to make the sport as a whole much better (although some may disagree).

    In contrast, though, most of the growing inequality in the rest of the economy does NOT seem to follow this logic. Your boss makes more than you, that’s the way things have always worked. But your boss today makes more than you than your father’s boss made more than him. It’s not at all clear that your boss today is a better boss than your father had nor that his ‘bossiness’ generates more income than your father’s one.

    Likewise inequality at the top has grown much more. When you boss goes to the convention for his industry, the other bosses he meets in the industries top companies are making much more than him. This difference is larger than what your father’s boss found when he meet all the other bosses at the country club. In some cases this may make sense. When Microsoft ruled the O/S market, they did in fact make more than Apple by making more hard sales. But as a whole economic growth has slowed over the last 40 years and inequality has risin. This implies that as a whole the growth of inequality has been bad for the economy as a whole, not positive.

  3. Boonton,

    But as a whole economic growth has slowed over the last 40 years and inequality has risin. This implies that as a whole the growth of inequality has been bad for the economy as a whole, not positive.

    Correlation is not cause. You need to work harder at that.

    I’m unclear on what you are driving at, you point at authorial and atheletic disparities of income. Is this good or bad?

    Let’s set some things straight. When an economist talks about “income inequality” = “bad” they aren’t talking about actual income inequality. They all agree income inequality is a necessary good. If I do no work (or no useful work) and make the same as someone who does much good work then the incentive to work is diminished. This was one of the essential failures in Marxism which replaced the desire to work for myself and my family to better ourselves by our efforts with fear of reprisal if I am caught malingering. The former is a far better incentive than the latter. So income disparity is essential. However the economists also claim that “too much” income disparity between either the highly educated and the untrained laborer or management and labor is causing problems. So of this thing which is required apparently “too much” is a bad thing. How much is too much. Chirp chirp, no mention of that is made in public. Why? Likely because there is not consensus on that. Woops. So just the highly erroneous claim that “income inequality is bad” gets paraded.

    Higher minimum wage is touted (for example) as one band-aid for this. However, that is just hastening unemployment for the unskilled labor. The higher you raise the unskilled labor price, the larger the incentive is to replace that same with automation. Another alternative touted which is equally bad is increasing out of work benefits, which had another name in the Roman era “bread and circuses”. That worked so well for the Romans. Ragesh (whom you both don’t read and you dismiss) instead presses for education programs which aren’ working very well, likely partly because the effective disincentive programs previously mentioned.

  4. Actually I’m linking authorial and atheletic income disparities. The difference between the world’s best selling author and a modest selling author is bigger today than in the past. Ditto for the difference in atheletic income. Same goes for a lot of entertainment based income.

    The economics of these markets was explored by Sherwin Rosen in 1981 (see ‘economics of superstars’). These are cases of ‘winner take all markets’. The ‘superstar’ typically is not producing a much better product than others in the market, he is just able to capture all or most of the market so his high income is due to quantity. So if you looked at a graph of sales of children’s books, you’ll basically see JK Rowling producing all the sales on one side and a vast ‘fat tail’ where everyone else peddles their more modest books. Let’s say she is paid 100,000 times more than the average children’s author. It isn’t that her work is 100,000 times better. She might in fact be better than average, but maybe only 10 or 20 times better. The bulk of her income comes from capturing 99,980 times more readers than the average author. You can probably find a similiar result for star atheletes, although there the relationship is a little less direct since they generate various types of sales (tickets, broadcasting rights, merchandising etc.) and when you’re talking about a sports team it’s often fuzzy who exactly is contributing to the successes.

    I think this type of income inequality is more accepted because generally ‘superstars’ work by expanding the market. Rowling didn’t gobble up all the children’s book sales, I suspect the bulk of her income was generated off of spending that was NOT going into the children’s book market originally. In that case the average children’s author need not have lost any actual income from Rowling, but they would have lost positional income. No doubt being in the ‘top ten highest paid’ childrens authors before Rowling must have given someone a lot more pride than after she came along and blew the scale away. But many of them probably don’t mind so much since if anything she probably expanded the market by making movies take note of children’s literature and motivating more book sales to children so it’s quite likely they gained more in absolute income than they lost in positional income.

    So of this thing which is required apparently “too much” is a bad thing. How much is too much

    So this brings us to a different type of income inequality, that which is not caused by an obvious ‘winner take all market winner’. This is why I used the example of you versus your boss versus your dad versus his boss from decades ago. I suspect that elements of ‘superstardom’ might be at play here (for example, Wal-Mart has captured the discount retailer market in a way that older players like Kmart or Sears never did in their heyday….Amazon and B&N have captured the book market), but I think most people feel that there is more to it than that. While your boss might be better than your dad’s boss, it’s a bit hefty to imagine he’s a true ‘superstar’.

    I suspect this type of inequality (granted it’s not rigerously defined) is toxic to the economy. Essentially what it seems to be about IMO is replacing simple absolute income with positional income as a reward for work and production. Positionial income focuses on rewarding the guy who comes in #1 over all other positions. Since there can only be one person who achieves the #1 slot, you are going to generate a lot of stress and problems unless that #1 person is such a great performer that you can literally afford to say you don’t care about anyone else. In some cases that may make sense. Imagine you are the father of the Jackson Five. Do you really have to care that much about Tito’s music career or should you work on developing Michael and Janet’s career? The hundreds of millions they earn(ed) can more than take care of anything you can develop out of Tito and the rest.

    They all agree income inequality is a necessary good. If I do no work (or no useful work) and make the same as someone who does much good work then the incentive to work is diminished. This was one of the essential failures in Marxism …

    This is the least interesting type of inequality and is a red herring to the discussion. Not even Marixsts dispute that someone who holds down two jobs or who works a lot of overtime should be paid more than someone who isn’t. Even the difference between college educated workers and HS educated workers isn’t all that interesting here. Here we are talking about the difference between someone in the top 10% versus the top 1% versus the top 0.1% which cannot be explained by ‘superstar economics’.

    Higher minimum wage is touted (for example) as one band-aid for this. However, that is just hastening unemployment for the unskilled labor.

    This is an issue. No so much min. wage inducing unemployment for unskilled labor which hasn’t been observed at just about any min. wage enacted in the US anywhere. It’s what policies should be used to address this? My inclination would be to make income taxes more progressive while at the same time expanding income support programs (food stamps, the earned income tax credit) which would make low-wage work more liveable but not at the expense of those employing low wage workers. “How much” inequality is bad and how much policy to address it remain open questions, though.

  5. http://www.slate.com/blogs/moneybox/2014/01/02/progressive_consumption_taxes_are_great_here_s_why.html has an another interesting take on this issue this morning.

    Let me try to sum it briefly. ‘Welfare’ in this context generally means something like ‘happiness’. An ice cream cone costs maybe $3.50? If you give a coupon for a free ice cream cone to someone they may be happy. If you give it to a guy who owns a Dairy Queen, who could dip into the ice cream all day long, he will probably be less happy. Speaking in terms of money, though, both people are $3.50 richer in the sense they both get a free ice cream cone.

    Yglesias points out that when you start getting extreme inequality, you start getting a lot more conspicuous consumption, whose purpose is not really individual enjoyment as much as positional enjoyment. (i.e. I can send my kid to a $150K a year private school, unlike you who can merely afford $75K!). Progressive taxation, though, impacts both the upper/upper and simply upper income bracket. So say now I can only afford $100K a year and you can only afford $50K a year. While I’ve lost $50K and you lost $25K, if the purpose of our consumption was to try to demonstrate that we are on top of everyone else, nothing has really been lost. If that $75K raised in taxes is turned around to give vouchers to regular school kids or Pell Grants for college the welfare gain for the 99% far outstrips the welfare loss for the top 1%.

  6. I know you’re probably falling behind my comments, but an interesting experiment with monkeys demonstrates a problem with inequality:

    http://www.youtube.com/watch?v=meiU6TxysCg

    In this example, two two rewards are given, cucumber and grapes. Monkeys like both but grapes are much more favored. The monkey’s were given the same task, hand the scientist a stone and get a reward. When the monkey paid in the less favored cucumber sees the other monkey is being rewarded with grapes, he goes…well ape.

    The ‘rational man’ theory of classical economics implies the opposite should happen. The monkey should be happy with his reward, trying to deny the grape to the other monkey doesn’t make his cucumber taste any better….and the monkey was perfectly happy to hand over stones for cucumbers before so he clearly wasn’t unhappy with his absolute pay.

    Note how this is different from the example cited. When observing a star athlete, people are rarely upset by unequal pay because they can clearly and objectively see that they are NOT doing the same thing. But this only ‘works’ if you can show that all or most inequality is really due to ‘supermen’ doing ‘superjobs’. I think some on the right would like to push that view as a type of ‘noble lie’ to make society work but it’s not going to work as a lie, only if it’s true and I’m not sure it is.

  7. Boonton,
    I see. The problem has a name. Envy. You make twice as much as you did 30 years ago, this isn’t what you notice. What you notice is that your envy of the other guy has grown. There was a time when people realized envy was a sin (remember those 10 commandments?). As noted earlier, envy-as-a-good thing drives you to work harder. Envy as a bad thing is when you go … well ape. You are apparently defending people’s urge to “go ape.” Is that it?

    Remember my point, inequality if required. Apparently too much inequality is bad. But how much? You still won’t say or be able to back it up objectively.

    When observing a star athlete, people are rarely upset by unequal pay because they can clearly and objectively see that they are NOT doing the same thing.

    Well, to be honest a bricklayer and a lawyer aren’t “doing the same thing” either. Mr Bryant makes 5,000 times more than the min player. He’s not “doing 5000″ more on the court. So, no … the inequality in sports isn’t due to supermen doing superjobs.

    The reason you aren’t envious of Mr Bryant’s larger salary is you aren’t getting the lower one. Both salaries are not connected to yours. The guy making 20k instead of 40M is also (compared to the rest of us schmo’s) a superman too.

    ’. I think some on the right would like to push that view as a type of ‘noble lie’ to make society work but it’s not going to work as a lie, only if it’s true and I’m not sure it is.

    Why do you think this is “pushed as a noble lie”. Cite? By whom?

  8. I see. The problem has a name. Envy.

    And do we design an economic system around human nature or try to design human nature around an economic system? The latter method was attempted in the Soviet Union and human nature won.

    In the monkey experiment, ‘envy’ destroyed the economic system (this system ‘produced’ the service of the monkey handing stones to the scientists, fewer stones were handed than could have been because the incentive system sparked envy thereby destroying the system).

    But I don’t really buy that this experiment demonstrates envy. There’s another famous one involving babies. Babies were shown a puppet show, in the show one puppet is trying to do something hard like climbing a mountain. Another puppet either helps him out or hurts him in his efforts. The infants are then given a choice of puppet to play with, they choose the helpful puppet more often than the harmful one.

    I suspect if this experiment had a 3rd monkey who could only observe the unfair scientist and then observe a fair scientist who ‘paid’ both monkeys in cucumbers, the observer monkey would show a preference for the ‘fairer’ scientists. Strictly speaking, though, a rationally selfish monkey would like the unfair one more. After all, there’s a 50% chance he will pay you in the prized grapes as a treat while the other one just pays crappy cucumbers.

    Human nature has a very strong inclination for fairness and will reject unfairness even if it’s economically irrational to do so. There’s another experiment which plays out like this. You and an anonymous partner are given a bounty of $10. You get to decide how much too keep for yourself and how much to give your partner. Your partner can only veto your proposal, in which case neither of you get any thing. A ‘fair’ breakout would be $5-$5. After all it’s only blind luck that put you in charge of the $10 rather than the other chap, so neither of you should get more or less of the good fortune. An economically rational one would be like $9.99 – $0.01. Why? Well why would your partner veto? He at least gets a penny otherwise he gets nothing. When played, the average is more like $7 – $3. People will tolerate some measure of unfairness but beyond that they will actually pay to ‘punish’ the person who acts in too greedy a manner.

    You may call that envy (“if I can’t have at least $3, I’d rather see him get nothing!!!”) but it’s probably more connected to our social nature. It’s a social value to disapprove of gross violations of our unwritten social codes and in some way’s it’s a public service to ‘punish’ those who break that code even if it costs us something. Hence the baby will dislike the harmful puppet even though the puppet has done nothing to harm the baby.

    Well, to be honest a bricklayer and a lawyer aren’t “doing the same thing” either. Mr Bryant makes 5,000 times more than the min player. He’s not “doing 5000″ more on the court. So, no … the inequality in sports isn’t due to supermen doing superjobs.

    Here I think you’re trying to apply an unlinear measurement to sports output. A bricklayer who lays 5,000 times more bricks per hour than another one will almost certainly command 5,000 times more in pay. But ‘# of bricks laid’ is a pretty linear measurement. Sports output is not. Take the top NFL team and the bottom NFL team. I’m sure the top team has NOT produced 5,000 times more touchdowns or 5,000 times more yards. Nonetheless the top team probably does produce many times more value in the form of revenue than the bottom team and owners reward accordingly. In the corporate world salesmen paid on commission can command quite a bit but are rarely the focus of concerns about inequality. Commissions are a very objective and hard to dispute metric of value.

    But contrast that to, say, what CEO’s make today versus 3 decades ago. The argument that today’s CEO is smarter and better than 1980′s CEO doesn’t go down as well. In fact it seems a lot more like the experiment with the $10.

    Why do you think this is “pushed as a noble lie”. Cite? By whom?

    You’ve defined a lie as a purposeful attempt to knowingly convince others of something you believe is false. That would seem by definition to mean you’re never going to be able to cite someone saying something like “this is a lie”.

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