Quotes of the day

The continuing development of prediction markets is important because of their success in foretelling the future in politics, economics, and science.--Miriam Cherry, Robert Rogers

What we ended up with is a program in which you trade in old clunkers for new clunkers.--Senior Obama administration official

Our media and culture are permeated with romanticism about politics and voting. I wish to disenchant people for whom democratic government is a sort of religion, so that they will consider alternatives.--Arnold Kling

In fact there are diseconomies of scale in governance, which is why Ireland is richer than Britain, Austria is richer than Germany, HK is richer than Taiwan which is richer than China. Singapore is richer than Malaysia (even controlling for ethnicity.)--Scott Sumner

We find that, by standards of OECD countries, the US does well in terms of screening for cancer, survival rates from cancer, survival rates after heart attacks and strokes, and medication of individuals with high levels of blood pressure or cholesterol. We consider in greater depth mortality from prostate cancer and breast cancer, diseases for which effective methods of identification and treatment have been developed and where behavioral factors do not play a dominant role. We show that the US has had significantly faster declines in mortality from these two diseases than comparison countries. We conclude that the low longevity ranking of the United States is not likely to be a result of a poorly functioning health care system.--Samuel H. Preston, Jessica Y. Ho

In designing Medicare and Medicaid in 1965, the government essentially adopted this comprehensive-insurance model for its own spending, and by the next year had enrolled nearly 12 percent of the population. And it is no coinci­dence that the great inflation in health-care costs began soon after. We all believe we need comprehensive health insurance because the cost of care—even routine care—appears too high to bear on our own. But the use of insurance to fund virtually all care is itself a major cause of health care’s high expense. --David Goldhill

All of us sports fans see all sorts of “patterns” that we think are correct. Players have hot streaks, certain hitters or teams are “clutch,” great pitchers get better with age, etc. And [Bill] James showed most of these were just hogwash, or more politely what I call cognitive illusions. What I find interesting about all this is that these illusions are almost identical to the sort of faulty thinking that led people to think Keynes and Livermore were great investors. Seeing patterns where there are no patterns. James showed that sports fans routinely engage in exactly the sort of thinking that would lead someone to falsely reject the EMH, even if the EMH was true. So who are you going to believe? Me or your lying mind?--Scott Sumner

... Your Majesty [Queen Elizabeth of England], economists did something even better than predict the crisis. We correctly predicted that we would not be able to predict it. The most important part of the much-maligned Efficient Markets Hypothesis (EMH) is that nobody can systematically beat the stock market. Which implies nobody can predict a market crash, because if you could, then you would obviously beat the market. This applies also to other asset markets like housing prices. If you think it is useless to be told you cannot predict the market, then you should change your Palace investment advisor. This knowledge will protect you from a lot of investment scams like Mr. Madoff’s and will also provoke a serious discussion of how to protect your Royal Wealth against risk in an uncertain world. ... So please tell your subjects in poor countries to keep studying basic mainstream economics. This economics not only survived the crisis, it also is the proven set of ideas that get countries out of poverty.--William Easterly

... the solution to most of the major problems that confront many black people won't be found in the political arena and by electing more blacks to high office. In fact, politicians tend to be hostile to some of the solutions to problems many blacks face such as school choice as a means to strengthen education, the elimination of oppressive licensing restrictions for various occupations, and supportive of job-destroying labor legislation such as minimum wage laws. The bottom line is there is very little evidence anywhere on the planet that political power is a necessary condition for economic power. --Walter Williams

Consistent with the prior literature, when children enter kindergarten, girls and boys are observationally equivalent in both math and reading. By the end of fifth grade, however, girls have fallen more than 0.2 standard deviations behind their male counterparts in math. The math gap is equivalent to 2.5 months of schooling. Girls are losing ground in math in every region of the country, every racial group, all levels of the socio-economic distribution, every family structure, and in both public and private schools. By the end of the sample, girls do significantly worse than boys on every math skill tested. Underperformance by girls is evident not just in mean test scores, but also in the upper tail of the math distribution. On entry to kindergarten, girls make up 45% of the top five-percentiles in math test scores; by the end of fifth grade just 28% of the top five percent are female. Girls are underrepresented in the bottom tail of the math distribution in kindergarten, but overrepresented in the bottom tail by fifth grade.--Roland Fryer and Steven Levitt

I'm a little surprised that the Republicans, who are generally very good at coming up with diminutive nicknames for their opponents, never latched on to calling Sonia Sotomayor "So-So."--Jesse Livermore

Huh?

Paul Krugman may not bet with others. My speculations as to why here.

But now, it appears he'll bet against himself.

Update on government arbitrage

And it's more egregious then the simple levying of taxes.

80 percent of all job losses in the last two years were among men

Just imagine if we replaced 'men' with 'women' in the above statement.

Would we see more of this? Even though she got a new job in the last 2 years, and he didn't?

Quotes of the day

The EMH was a kind of jiu-jitsu response on the part of economists to turn weakness into strength. "I can't figure out how things work, so I'll make that a principle."--Emanuel Derman

See? Economists are scientists, after all. That which they can’t explain, they turn into an axiom.--Felix Salmon

It's remarkable that in the current debate over how to control health care costs so little attention is being given to the important results of our 10-year experiment with consumer driven health plans.--Alex Tabarrok

Political risk is like the worst kind of tax. It stifles valuable economic activity without raising any revenue for the government.--Paul Romer

I think most of the people demanding that I discuss nothing but current [healthcare] legislation understand this very well. That's because they feel exactly the same way about pro-lifers advocating for bans on partial-birth abortion, various sorts of counseling, waiting periods, and parental consent.--Megan McArdle

The [Bank of America] deal [for Merrill Lynch] was not altogether voluntary; as details have slowly emerged, the coercive role of the Fed and Treasury has loomed larger. What exactly happened in the weeks leading up to the merger? Did the deal save us all from economic apocalypse? And what does the government’s unprecedented role in it portend for the future of our economy?--William Cohan

Because earnings are taxed via income and payroll taxes, people have too little incentive to work and consume. In addition, because there is a negative externality associated with carbon, people have too little incentive to move their consumption basket toward less carbon-intensive products. In other words, the relative price of consumption compared to leisure is too high, and the relative price of carbon consumption compared to non-carbon consumption is too low. The trick is how to fix the second distortion [of consuming more expensive but less carbon-intensive goods] without making the first one [the disincentive of taxes to work and spend] worse. A tax on carbon with the revenues used to cut income taxes does that. Everyone who thinks there are negative carbon externalities should agree that is the efficient policy. A tax on carbon with the revenue squandered via lump-sum handouts to powerful special interests, however, fixes the second distortion but makes the first one worse. ... But there is a consensus, more or less, that we could fix one margin of adjustment without distorting the other margin more. That requires a cut in income or payroll taxes to be a key part of the environmental policy.--Greg Mankiw

The real question on the table is: Do we want to empower our government to punish bad behavior that was perfectly legal when it occurred? If you answer one way, you'll favor compensation for slaveholders, retraining programs for displaced workers and free (or at least inexpensive) cap-and-trade permits for polluting firms. If you answer the other way, you'll reverse those judgments.--Steve Landsburg

David Goldhill on healthcare

Read the whole thing; must, must, must read. Here are some excerpts:

Everyone I know has at least one personal story about how screwed up our health-care system is; before spending (another) $1trillion or so on reform, we need a much clearer understanding of the causes of the problems we all experience.
...
How often have you heard a politician say that millions of Americans “have no health care,” when he or she meant they have no health insurance? How has a method of financing health care become synonymous with care itself?
...
Society’s excess cost from health insurance’s administrative expense pales next to the damage caused by “moral hazard”—the tendency we all have to change our behavior, becoming spendthrifts and otherwise taking less care with our decisions, when someone else is covering the costs. Needless to say, much medical care is unavoidable; we don’t choose to become sick, nor do we seek more treatment than we think we need. Still, hospitals, drug companies, health insurers, and medical-device manufacturers now spend roughly $6 billion a year on advertising. If the demand for health care is purely a response to unavoidable medical need, why do these companies do so much advertising?
...
Want further evidence of moral hazard? The average insured American and the average uninsured American spend very similar amounts of their own money on health care each year—$654 and $583, respectively. But they spend wildly different amounts of other people’s money—$3,809 and $1,103, respectively. Sometimes the uninsured do not get highly beneficial treatments because they cannot afford them at today’s prices—something any reform must address. But likewise, insured patients often get only marginally beneficial (or even outright unnecessary) care at mind-boggling cost.
...
Perhaps the greatest problem posed by our health-insurance-driven regime is the sense it creates that someone else is actually paying for most of our health care—and that the costs of new benefits can also be borne by someone else. Unfortunately, there is no one else.
...

Every proposal for health-care reform has featured some element of cost control to “balance” the inflationary impact of expanding access. Yet it goes without saying that in the big picture, all government efforts to control costs have failed. Why? One reason is a fixation on prices rather than costs. The government regularly tries to cap costs by limiting the reimbursement rates paid to providers by Medicare and Medicaid, and generally pays much less for each service than private insurers. But as we’ve seen, that can lead providers to perform more services, and to steer patients toward higher-priced, more lightly regulated treatments. The government’s efforts to expand “access” to care while limiting costs are like blowing up a balloon while simultaneously squeezing it. The balloon continues to inflate, but in misshapen form.

... less complicated surgical cases (the kind specialty clinics typically take on) tend to be more profitable than complex surgeries and nonsurgical admissions. Without those profitable cases, hospitals can’t subsidize the cases on which they lose money. But why are simple surgeries more profitable? Because of the nonmarket methods by which Medicare sets prices.
...
So what exactly makes an ER more expensive than other forms of treatment? Perhaps it’s the accounting. Since charity care, which is often performed in the ER, is one justification for hospitals’ protected place in law and regulation, it’s in hospitals’ interest to shift costs from overhead and other parts of the hospital to the ER, so that the costs of charity care—the public service that hospitals are providing—will appear to be high. Hospitals certainly lose money on their ERs; after all, many of their customers pay nothing. But to argue that ERs are costly compared with other treatment options, hospitals need to claim expenses well beyond the marginal (or incremental) cost of serving ER patients.
...
Why has adoption of clinical information technology been so slow? Companies invest in IT to reduce their costs, reduce mistakes (itself a form of cost-saving), and improve customer service. Better information technology would have improved my father’s experience in the ICU—and possibly his chances of survival. But my father was not the customer; Medicare was. And although Medicare has experimented with new reimbursement approaches to drive better results, no centralized reimbursement system can be supple enough to address the many variables affecting the patient experience.
...
I requested the total cost of the delivery and related procedures from our hospital. The answer: the hospital discussed price only with uninsured patients. What about my co-pay? They would discuss my potential co-pay only if I were applying for financial assistance. Keeping prices opaque is one way medical institutions seek to avoid competition and thereby keep prices up. And they get away with it in part because so few consumers pay directly for their own care—insurers, Medicare, and Medicaid are basically the whole game. But without transparency on prices—and the related data on measurable outcomes—efforts to give the consumer more control over health care have failed, and always will. Here’s a wonderful example of price opacity. Advocates for the uninsured complain that hospitals charge uninsured patients, on average, 2.5 times the amount charged to insured patients. Hospitals defend themselves by contending that they earn from uninsured patients only 25 percent of the amount they do from insured ones. Both statements appear to be true! How is this possible? Well, hospitals bill according to their price lists, but provide large discounts to major insurers. Individual consumers, of course, don’t benefit from these discounts, so they receive their bills at full list price (typically about 2.5 times the bill to an insured patient). Uninsured patients, however, pay according to how much of the bill the hospital believes they can afford (which, on average, amounts to 25 percent of the amount paid by an insured patient). Nonetheless, whatever discount a hospital gives to an uninsured patient is entirely at its discretion—and is typically negotiated only after the fact. Some uninsured patients have been driven into bankruptcy by hospital collections. American industry may offer no better example of pernicious “price discrimination,” nor one that entails greater financial vulnerability for American families.
...

One of the most widely held pieces of conventional wisdom about health care is that new technology is relentlessly driving up costs. Yet over the past 20 years, I’ve bought several generations of microwave ovens, personal computers, DVD players, GPS devices, mobile phones, and flat-screen TVs. I bank mostly at ATMs, check out my own goods at self-serve supermarket scanners, and attend company meetings by video­conference. Technology has transformed much of our daily lives, in almost all cases by adding quantity, speed, and quality while lowering costs. So why is health care different? Well, for the most part, it isn’t. Whether it’s new drugs to control previously untreatable conditions, diagnostic equipment that enhances physician productivity, or minimally invasive techniques that speed patient recovery, technology-driven innovation has been transforming care at least as greatly as it has transformed the rest of our lives. But most health-care technologies don’t exist in the same world as other technologies. Recall the MRI my wife needed a few years ago: $1,200 for 20 minutes’ use of a then 20-year-old technology, requiring a little electricity and a little labor from a single technician and a radiologist. Why was the price so high? Most MRIs in this country are reimbursed by insurance or Medicare, and operate in the limited-competition, nontransparent world of insurance pricing.

...

I hope that whatever reform is finally enacted this fall works—preventing people from slipping through the cracks, raising the quality standard of the health-care industry, and delivering all this at acceptable cost. But looking at the big picture, I fear it won’t. So I think we should at least begin to debate and think about larger reforms, and a different direction—if not for this round of reform, then for the next one. Politics is, of course, the art of the possible. If our health-care crisis does not abate, the possibilities for reform may expand beyond their current, tight limits.

The most important single step we can take toward truly reforming our system is to move away from comprehensive health insurance as the single model for financing care. And a guiding principle of any reform should be to put the consumer, not the insurer or the government, at the center of the system. I believe if the government took on the goal of better supporting consumers—by bringing greater transparency and competition to the health-care industry, and by directly subsidizing those who can’t afford care—we’d find that consumers could buy much more of their care directly than we might initially think, and that over time we’d see better care and better service, at lower cost, as a result.

...

How am I supposed to be able to afford health care in this system? Well, what if I gave you $1.77 million? Recall, that’s how much an insured 22-year-old at my company could expect to pay—and to have paid on his and his family’s behalf—over his lifetime, assuming health-care costs are tamed. Sure, most of that money doesn’t pass through your hands now. It’s hidden in company payments for premiums, or in Medicare taxes and premiums. But think about it: If you had access to those funds over your lifetime, wouldn’t you be able to afford your own care? And wouldn’t you consume health care differently if you and your family didn’t have to spend that money only on care?

...

Ten days after my father’s death, the hospital sent my mother a copy of the bill for his five-week stay: $636,687.75. He was charged $11,590 per night for his ICU room; $7,407 per night for a semiprivate room before he was moved to the ICU; $145,432 for drugs; $41,696 for respiratory services. Even the most casual effort to compare these prices to marginal costs or to the costs of off-the-shelf components demonstrates the absurdity of these numbers, but why should my mother care? Her share of the bill was only $992; the balance, undoubtedly at some huge discount, was paid by Medicare. Wasn’t this an extraordinary benefit, a windfall return on American citizenship? Or at least some small relief for a distraught widow? Not really. You can feel grateful for the protection currently offered by Medicare (or by private insurance) only if you don’t realize how much you truly spend to fund this system over your lifetime, and if you believe you’re getting good care in return.

...

Imagine my father’s hospital had to present the bill for his “care” not to a government bureaucracy, but to my grieving mother. Do you really believe that the hospital—forced to face the victim of its poor-quality service, forced to collect the bill from the real customer—wouldn’t have figured out how to make its doctors wash their hands?

If consensus is where you place your global warming faith

well, then, you must have even more faith in Ben Bernanke:

Economists are nearly unanimous that Ben Bernanke should be reappointed to another term as Federal Reserve chairman, and they said there is a 71% chance that President Barack Obama will ask him to stay on, according to a survey.

The weaker, and diminishing case for climate change.

I remain long this:

The problem with debates over objective and subjective beliefs

... is that we have no God-like entity to referee the debates. So all we can do is muddle through on our own. Science can make a lot of neat predictions, and hence is very useful, but only for our purposes. The way I like to think about these issues is to imagine a cat taking a nap on top of a big old boxy TV set. Does the cat know what he is sleeping on? She thinks she does. She thinks she knows that it is a 3 foot cube with a hard surface that gets a bit warm when noise and flickering light are emitted.--Scott Sumner

As a parent of 2 feisty kids, I can tell you that I've got much better things to do than to referee their debates. I don't expect a Creator-type of entity to referee mine.

This is deja vu, all over again, for some of us.

And we thought Wall Street bonuses were bad

... the taxpayer, is being represented by government employees wh will get paid the same paid regardless of how well muni bonds price.--Vincent Fernando

Quotes of the day

Failure is not something to be avoided. It may be an early warning sign for success.--Dan Heath

The [South] Korean fishing fleet gives off more light than all of [North] Korea except Pyongyang.--Eric

Real freedom is the absence of monopoly. --Arnold Kling

51% of the nation’s voters fear the federal government more than private insurance companies.--Rasmussen Reports

Although different types of preventive care have different effects on spending, the evidence suggests that for most preventive services, expanded utilization leads to higher, not lower, medical spending overall.--Douglas Elmendorf

Four out of 10 Britons going abroad for surgery do so to avoid NHS waiting lists at home, a survey has revealed. ... The poll found that 34% of people went abroad because they were uninsured for particular treatments or surgery in the UK, while 32% wanted a treatment or surgery not available at home.--UK Press Association

In the last few years, I have had the opportunity to compare the human and veterinary health services of Great Britain, and on the whole it is better to be a dog. As a British dog, you get to choose (through an intermediary, I admit) your veterinarian. If you don’t like him, you can pick up your leash and go elsewhere, that very day if necessary. Any vet will see you straight away, there is no delay in such investigations as you may need, and treatment is immediate. There are no waiting lists for dogs, no operations postponed because something more important has come up, no appalling stories of dogs being made to wait for years because other dogs—or hamsters—come first. ... I also want, wherever I am, the Americans to go on paying for the great majority of the world’s progress in medical research and technological innovation by the preposterous expense of their system: for it is a truth universally acknowledged that American clinical research has long reigned supreme, so overall, the American health-care system must have been doing something right. The rest of the world soon adopts the progress, without the pain of having had to pay for it.--Theodore Dalrymple

... most of us realize that there are huge differences between price rationing and government rationing, and that the latter is usually much worse for everyone. This is one of the things that most puzzles me about the health care debate: statements that would strike almost anyone as stupid in the context of any other good suddenly become dazzling insights when they're applied to hip replacements and otitis media. ... But there is also a real difference between having something rationed by a process and having it rationed by a person. That is, in fact, why progressives are so fond of rules. They don't want to tell grandma to take morphine instead of getting a pacemaker. It's much nicer if you create a mathematical formula that makes some doctor tell grandma to take morphine instead of getting a pacemaker. Then the doctor can disclaim responsibility too, because after all, no one really has any agency here--we're all just in the grips of an impersonal force.--Megan McArdle

... things like going back to school, entering the peace corps, joining the army and declining immigration are signs of a bad economy. Even if they don't count as worker discouragement from a government stats perspective, they are, strictly speaking, symptoms of worker discouragement. So it's possible that we'll not hit the 10% [unemployment rate] number, but the number is pure fiction. What we want to know is whether people who want to work can find jobs -- and that isn't something which the unemployment rate, below or above 10% actually tells us.--Joe Weisenthal

In my own life, in my own small way, I have tried to give back to this country that has given me so much. See, that’s why I left a job at a big law firm for a career in public service.--Michelle Obama

What she doesn’t mention is that the helping industry has treated her pretty well. In 2006, the Chicago Tribune reported that Mrs. Obama’s compensation at the University of Chicago Hospital, where she is a vice president for community affairs, jumped from $121,910 in 2004, just before her husband was elected to the Senate, to $316,962 in 2005, just after he took office. And that does not count the money Mrs. Obama receives from serving on corporate boards.--Byron York

President Barack Obama reminds me of Felix the Cat. One of the best-loved cartoon characters of the 1920s, Felix was not only black. He was also very, very lucky. ... Six months in, Mr Obama still has the look of a lucky, two-term president. But that could change if voters become even more disenchanted with the legislative branch and start blaming the president for the looming fiscal train-wreck. The scariest possibility for Mr Obama is that the runaway deficit could leave him with the worst of both worlds: exploding debt and flat-lining growth.--Niall Ferguson

... if Joe Cassano (of AIG) was the "man who crashed the world," Spitzer was the guy who gave him the keys to the car. And all this for his supposed non-fraudulent responsibility for a barely material (if that) accounting mistake, plus, of course, the boost to Spitzer's then career.--Larry Ribstein

One of the few uncontested causes of the current crisis is the 2004 decision by the Securities and Exchange Commission to let the largest investment banks increase their leverage ratio from about 12-to-1 to 30-to-1, or even higher.--Megan McArdle

I think that the challenge is to come up with a reward system for the regulator/entrepreneurs. It isn't just fraud that you are trying to find. What you want is a set of incentives that in 2004 and 2005 would have rewarded the social entrepreneur for identifying and measuring the exposure of key financial firms to stress in the housing market and to the misbehavior in the mortgage market. It's even tougher than that, because there are two types of errors the regulator/entrepreneur can make. One is to fail to spot a dangerous situation. The other is to incorrectly characterize a benign situation as dangerous. Too much incentive to avoid one type of error will increase the errors of the other type.--Arnold Kling

Perhaps the most troubling aspect of the House bill, however, is its reliance on regulators to recognize and rein in compensation practices that encourage risky actions by executives at financial services companies. Under the bill, federal regulators would write new rules to prevent “inappropriate or imprudently risky compensation practices” that could threaten the safety and soundness of major financial institutions. It’s hard to believe that regulators are savvy enough about both pay packages and risky compensation incentives at financial companies to recognize when either or both have become dysfunctional. Remember, these are the same regulators who allowed brokerage firms to increase their leverage to wildly high levels, who helped break down investor protections put in place during the Great Depression, who let big banks balloon their balance sheets with poisonous assets and who were unable to spot the decades-long fraud of Bernie Madoff. That’s some track record. How do you think they will do when it comes to pay? A much better fix would be to hold compensation committees and directors themselves accountable for pay policies and responsible for discouraging reckless managerial practices.--Gretchen Morgenson

Hillary is NOT channeling Bill

She is channeling political feminist Gloria Steinem (who, in turn, channels Bill).

Quotes of the day

You don't stop laughing because you grow old. You grow old because you stop laughing.--Michael Pritchard

If Obama has his way, his health care plan will be funded by his treasury chief who did not pay his taxes, overseen by his surgeon general who is obese, signed by a president who smokes, and financed by a country that is just about broke.--Ron Hart

I can calculate the motions of the heavenly bodies, but not the madness of people.--Isaac Newton, reputedly

I’m of the persuasion that budget contraints are very, very good for creativity. I think people having unlimited amounts of money makes you really lazy.--Matthew Weiner

Perhaps the only other producer as committed to the rules of [Matthew Weiner's] imagined universe is George Lucas. --Bruce Handy

I will always go to the country that has the best crew coupled with the most tax incentives.--George Lucas

Historically, Indian reservations are a great place to be poor if you are Indian—and a fantastic place to get rich if you're not. It is only recently that this pattern is being reversed.--David Treuer

Rob Arnott tells a lovely story of a speech he was giving to some 200 finance professors. He asked how many of them taught [Efficient Market Hypothesis] - pretty much everyone’s hand was up. Then he asked how many of them believed it. Only two hands stayed up!--John Maudlin

A sure way to create inflation? Subsidies!

The federal government, through subsidization, has made everything from education to healthcare to corn and sugar more expensive by throwing money at those industries.

Now it's happening with cars.

So our taxes are going up, while our buying power goes down. Thanks, Dear Leaders.

Most people realize that taxes make some things more expensive (e.g. sales and gasoline taxes), which, I theorize, makes the inflation effects of subsidization counterintuitive. Of course, taxes can make thing cheaper--income taxes and property taxes can really drive down the value of real estate. No one said economics was easy. But that's no excuse to deny the realities.

A logical followup question: how can we make things more affordable? (Hint: Airline tickets and telecom services used be really expensive decades ago).

Government reminds me of mafia sometimes

Frequently, actually.

Simultaneous and parallel inventions

are the rule, rather than the exception (via TheBrowser).

It turns out that lots of people can have similar ideas, and several people will innovate in near identical ways to make something new. Here is a nice graphic from that article:

Quotes of the day

It has not occurred to many people, at least not yet, that [Ken] Lewis is a bank branch manager who was promoted a dozen too many times.--Douglas McIntyre

A study has found that companies with women on their boards are less profitable and have smaller market caps than those governed by solely alpha-males. ... The results suggest that women like to keep companies neat and tidy and nice-smelling, but if you want to kick ass, hire men.--Henry Blodget

And I don't think this is a gap we can bridge by discussing the [tension in innovation between academics and profit seekers]. We're doomed to keep getting angry at each other.--Megan McArdle

Let's say that every bank on Wall Street took every penny of bonus money paid out for 2005, 2006 and 2007 and put it in their treasuries instead for capital cushion. According to two articles I tracked down, the grand total of all Wall Street bonuses for these three years combined was $83.4 billion. ... the big bailout bank portion was smaller than this $83.4 billion. Let's compare that with the money that was used to bail out these banks. Combining Citigroup, Bank of America, JP Morgan, Goldman Sachs and Morgan Stanley, you get $140 billion. That far exceeds the bonuses paid. So we can officially stop blaming bonuses for causing the crisis. --Daniel Indiviglio

Well, we don't need birth control either--we could just decide to be celibate--but I don't hear so much complaining about the [Big Pharma] commercials for Seasonale or the HPV vaccine.--Megan McArdle

Government is not always the solution

If it were, then there would not be headlines like this one:

Fannie Mae Seeks $10.7 Billion in Aid After Loss

Healthcare quotes of the day

As [my British dentist] put it starkly, why risk a lawsuit doing a root canal that takes several hours to do properly when you could just pull the tooth and be done with it? I went private.--Delia Lloyd

... the drug companies only spend about 15 cents of every dollar on research and development. That's compared to more than 30 cents in administration and marketing and more than 20 cents on shareholder equity. As an investment in R&D, I think any venture capitalist would say a company spending 15 percent on research is not a robust innovation engine.--Jerry Avorn

This makes about as much sense as saying that Dr. Jerry Avorn cannot be that smart because his brain only weighs about three pounds. Presumably, you can't be really smart--really innovative--unless your brain is at least 30 percent of your body weight! --Megan McArdle

... Jerry Avorn, chief of the division of pharmacoepidemiology and pharmacoeconomics at Brigham and Women's Hospital, announces that companies don't do anything. It's no mystery how Dr. Avorn formed this belief: he pretty clearly has absolutely no idea what companies do. But the fact that he mistakes his ignorance for a fact about the universe makes me wonder if pharmacoeconomics is what my college boyfriend's roommate used to do with a few grams of cocaine and a copy of Mankiw's Principles. ... I am completely unsurprised to find out that Dr. Jerry Avorn has completed no work in economics, and indeed, so far as I can tell, no work in anything except being a professor of medicine? I'm sure he's a very good researcher on how patients use drugs. But he's pretty clearly no sort of expert at all on how companies actually make them--or anything else gracing our store shelves.--Megan McArdle

BCWUW4: Be careful what you wish for.

Good for strategy and innovation. Not so much diet

Cannibalism, that is.

That's me in the corner, ~233 days per year

Source here.

Actually, I'm the guy standing up, and I've found the subway a good place for prayer.

Quotes of the day

The Economist does not understand marginal analysis.--Will Ambrosini

... most philosophies that frown on reproduction don't survive.--Darwin Catholic

... international labor standards and product boycotts may delay the ultimate eradication of child labor.--Matthias Doepke, Fabrizio Zilibotti

Students do not find professor-specific explanations to be very satisfactory.--Michael, an economics Ph.D. candidate

However, consideration of the ratings for "reward" (as opposed to pleasure) told a rather different story, with "work" now the top scorer, and "time with children" not far behind.--White & Dolan

Hard times whet the appetite for survival stories.--Judith Thurman

I keep saying that the sexy job in the next 10 years will be statisticians. And I’m not kidding.--Hal Varian

[Critics of high frequency trading have] an odd mix of views about the relevance of the short run. ... Even if you think HFT is bad, on an actual list of bad policies or practices in our world, would it be in the top million? Mostly it's a canvas on which to paint complaints about the continuing political and economic power of finance, but we shouldn't let that skew our judgment of the practice itself. ... When I read that HFT may give markets "a new, currently unknown set of emergent properties" I think buying opportunity.--Tyler Cowen

Rules matter because they determine whether we reach our collective potential. Bad rules divide us and diminish us. Good rules free us to collaborate and grow.--Paul Romer

[In the film The Tunnel] we see the tyranny of Communism in its most visceral form - "No one gets out of here alive."--Bryan Caplan

In fact, the entire mainstream economics profession is built around [experts controlling the economy]. When you write a paper, if you don't include a section on "policy implications" (i.e, how a benevolent technocrat would use the findings in your paper), the paper is considered incomplete.--Arnold Kling

The theory of aggregate output ... can nevertheless be much more easily adapted to the conditions of the totalitarian state ...--John Maynard Keynes

Transactions in the private sector are voluntary, but transactions with government are often not. So it seems to me that Progressives are at the totalitarian end of a totalitarianism continuum, and Libertarians are at the opposite end.--Les

Of course the Progressives are Totalitarian, and they don't really try to hide it. Afterall, the perfect society cannot be achieved without total control. At present they are constrained by what remains of liberal tradition, but they work constantly to remove the constraint, and this is what they mean by Progress.--Randy

The ad shows cartoons of everyone — from aliens to King Kong — urinating in the shower and ends with the slogan: “Pee in the shower! Save the Atlantic rainforest!”--Freakonomics

Aw, gee, I am sorry I described L[ibertarian], C[onservative], and P[rogressive] in terms of how each type thinks social problems should be addressed. That is such a "straw man" view of progressives. What progressives are all about is that unlike L's and C's who are cruel and mean, P's are really good people who really care. There, does that provide a description that the P's can relate to?--Arnold Kling

Harvard sent me admissions materials in Spanish along with a letter from their Hispanic union promising that I could be provided with inculturation opportunities and remedial English help if I came to Harvard. I didn't know any Spanish, so I had to get someone to read the letter to me. They never did send me any materials in English, even based on my SAT scores which were a fairly respectable 99th percentile. Apparently a 75th percentile Hispanic student was a lot more appealing to them than a 99th percentile white one.--Darwin Catholic

Congress erodes the First Amendment, yet again

This time, its children's books.

On the heels of my previous confession comes another prediction

PIMCO is the next Fannie Mae.

Goldman's trading machine is humming

according to this Bloomberg article.

Maybe I was wrong; certainly my GS short in the personal account is not doing so well (I am long some other banks and financial ETF against it, but its still underwater).

"Cash For Clunkers" is not adding up

Steven Levitt notes that if you divide $1 billion by $4,500 subsidy per car purchase, it's a lot more than the 125,000 cars sold in the first week of the program.

And people want government run healthcare because we'll spend less?

I guess if we keep taxes and deficits behind the curtain.

And monkeys could fly out of ...

Bryan Caplan makes an interesting point on insurance claims in Nazi Germany

In 1938, Jewish businesses and synagogues through Germany were burned and looted in a massive pogrom. Historians call the incident Kristallnacht. The Nazis naturally blamed the Jews. So the Nazis were horrified when they realized that Aryan-owned insurance companies were liable for the damages!

The obvious solution for the Nazis was to let the insurance companies weasel out of their contracts. But contrary to what critics of private health insurance would have you think, insurance companies aggressively lobbied against this solution. Why? Because they greatly valued their reputation.

A stimulating new economic indicator

The Hot Waitress Index (via Felix Salmon):

The hotter the waitresses, the weaker the economy. In flush times, there is a robust market for hotness. Selling everything from condos to premium vodka is enhanced by proximity to pretty young people (of both sexes) who get paid for providing this service. That leaves more-punishing work, like waiting tables, to those with less striking genetic gifts. But not anymore.

A waitress at one Lower East Side club described to me what happened there: “They slowly let the boys go, then the less attractive girls, and then these hot girls appeared out of nowhere. All in the hope of bringing in more business. The managers even admitted it. These hot girls that once thrived on the generosity of their friends in the scene for hookups—hosting events, marketing brands, modeling—are now hunting for work.”

Graph of the day

via The Economist.

Quotes of the day

In a sense, having players testing positive for performance enhancing drugs in this circumstance doesn't represent anything extraordinary. It's pretty much the result predicted from a combination of Game Theory and Human Behavior. Somewhere, John Nash is nodding patiently.--Steve Buffum

If you give someone a fish, you feed them for a day. If you teach someone to fish, you destroy another aquatic ecosystem. --Paul Romer

Obama seems unable to recognize he has pinned the fate of his presidency on two people, Geithner and Summers, who are part of the problem.--Yves Smith

Inflating your way out of debt works if you're planning to run a pretty sizeable budget surplus--big enough that you won't have to roll your debt over. Otherwise, your debt starts to march upward even faster, as old notes come due, and you have to roll them at ruinous interest rates. Hyperinflation might wipe out that debt, but also your tax base. This applies, in reverse, to the notion that it was perfectly okay for the Bush and Obama administrations to borrow any amount of money, no matter how large, because the flight-to-safety was keeping interest rates low. In a few years, the Treasury is going to have to roll over a huge chunk of that debt at newer, almost certainly higher, interest rates.--Megan McArdle

The very latest in bank CEOs circumventing stimulus goals

Lloyd Blankfein's leadership at Goldman Sachs.

It's a good thing that the NY Times doesn't manage your money

when they've got this type of error rate.

Gary Becker and Richard Posner weigh in on obesity and what to do about it

Posner says:

The economist Tomas Philipson and I have written about the economics of obesity. We have pointed out that the decline in the price of fatty foods, along with the rise in the opportunity cost of physical activity (work is more sedentary than it used to be, so one has to invest extra time to get exercise, and television and video games have increased the utility that people derive from sedentary leisure pursuits), explains the dramatic long-term increase in the percentage of Americans who are seriously overweight.
...
Obesity is highly correlated with education. Highly educated people are much more likely to be thin than people who are not highly educated. This is partly but not only because highly educated people have on average higher incomes than other people. They can afford more expensive foods, which are low in calories, and the cost of exercise, which can be considerable, as it may require joining a gym or having a personal trainer.
...
One of the health-care-reform bills pending in the Senate would relax legal limitations on "discrimination" by private group-health insurers; that is a step in the right direction, as are growing efforts by employers to encourage their workers to control weight (the motive is to reduce the cost of health insurance to the employer). Medicare could be modified to reduce fees to thin people. In addition, a calorie-based food tax (which would, for example, fall heavily on sugar-flavored soft drinks), would reduce obesity at negative cost to the public fisc. Such a tax may seem "unfair" to people who consume such foods but are thin, but this is just to say that the tax would be at once a regulatory and a revenue tax, and in the latter aspect would be subject to criticism only if it were an inefficient tax relative to alternative methods of taxation.

I'm thinking that, in a future job interview, I will be asked to step on a scale ... Here is Becker's take, where he breaks to some degree from his co-blogger:

Posner believes that consumer ignorance of the health consequences of their eating and sedentary activities also contributed significantly-particularly since lower educated persons have the highest incidence of obesity. I am doubtful, however, if ignorance of these effects has been important. Poor information is a last resort crutch that economists are increasingly relying on to explain consumer behavior that they fail to explain in other ways. For example, "behavioral economists" are arguing that many consumers run up large credit card debts in good part because these consumers are not aware of the level of interest payments, and that poorer borrowers took out mortgages during the housing boom years of a few years ago because they could not calculate the difficulty of meeting monthly payments. In both these cases, virtually no evidence is presented to support this thesis. In the eating case, most reasonably well-executed studies find quite small effects on eating patterns of providing nutritional and other information about foods.
...
Since taxpayers finance Medicare and Medicaid, these organizations do not have the same incentives as private insurance companies to penalize overweight persons for their excess weight. The cost imposed by overweight persons on public expenditures has been one of the justifications for taxes on fast foods and soft drinks since these are important inputs into weight gain. However, such a tax would be inefficient, perhaps highly inefficient, because it targets all persons who eat fast foods and drink sodas, yet most of these persons do not become obese. It is akin to taxing the sale of wines and liquor to reduce drunk driving, even though most drinkers do not drive drunk and cause accidents. This distinction between taxing inputs into drunk driving and taxing drunk driving explains the tendency to heavily punish people who are drunk, especially when they cause accidents.

The corresponding approach with regard to weight would be for Medicare to institute surcharges for very overweight persons (or discounts for thinner persons) and for Medicaid to impose various costs on obese persons who use their services, such as requiring them to spend time at educational classes on the control of weight, or to pay a fee for any Medicaid services they receive. Such charges and fees probably would run into strong political opposition, but they point the way to more appropriate ways to discourage obesity that causes medical problems that utilize public funds.

Weeds that don't show up on Showtime

Poignant biography/autobiography by Tony Dokoupil about his dad, the smuggler (via Robert Cottrell).

Quotes of the day

So it’s finally come to pass – America has embarked on the same road down which ancient Rome marched to its ruin: Uncle Sam not only subsidizes bread (by subsidizing wheat production) but now also circuses.--Don Boudreaux

... why not impose a windfall profits tax on the place that really earns a windfall profit: Washington, DC?--Brian Wesbury

The president wants to govern America like a blue state. But for that to work, he’ll need the nation’s economy to start performing more like Texas.--Ross Douthat

It’s rather like getting a Picasso and saying, ‘You know, the canvas costs $200, the paint cost $300, so we’ll sell it to you for $500'.--Jeffrey Lindsay, on Yahoo and Microsoft's search deal

Private equity is an investment banker’s revenge.--Steve Fishman

He let the CEOs be the stars. [Steve] Rattner appeared to possess the subordinate ego in the room, an alpha carefully disguised as a beta. Rattner’s approach came naturally. He can seem effete, almost precious. He wears nicely cut suits with high-waisted pants, round tortoiseshell glasses, and speaks about almost every topic in the same even-toned, matter-of-fact way. “I’ve never encountered anybody with as much mojo who has less charisma,” says one person who worked for him.--Steve Fishman

... to stay very level and to focus on execution fits with the culture of this administration.--Larry Summers

[The Obama administration] acted unilaterally anytime it saw fit. --Steve Fishman

There’s nothing illegal about hiring a fixer. Like lobbyists, they sell access for a fee. Still, depending on circumstance, a fee can look like a bribe.--Steve Fishman

Tyler muses over the comparative economics of vacations

in Europe and America.

Quotes of the day

... sometimes things aren't going to be in your favor but your job description doesn't change. Find a way to win. Period.--Bill Belichick

... based solely on run differential, the best three teams in baseball reside in the American League East.--Tony Massaroti

I am impressed with this NFL linebacker's freakonomics

even though he plays for a divisional rival:

"What you want to do is limit your reps," [Bart] Scott explained after a recent training camp session at SUNY Cortland. "You want to lead the league in three-and-outs.

"You want to play the least amount of plays than anybody in the NFL. That should be your goal, to be No. 1. To have a lot of tackles? That means nothing. I could stand on the field all day and make tackles, but our team isn't going to be very good."

...

Only one defender listed among the top 10 tacklers on NFL.com was on a team that made the playoffs.

I learned something cool about Canadian healthcare

from John Stossel on ABC's 20/20 last night. Some patients actually have access to advanced technologies and treatments just like Americans enjoy, and the waiting times are practically non-existent, very similar to the quick turnarounds in the U.S.

Unfortunately for its citizens, it is a privatized system for Canada's pets. The six-minute video can be found here.

Stossel, as usual, does a great job demonstrating how as bad as things are in our health care system, its much better than Canada or Europe, and how much industrialized countries rely on our medical innovation and how their wealthy come to the U.S. because it is far superior to the single-payer systems in their home countries.

BCWUW4: Be careful what you wish for.

Eureka!

Alex has found it!

Willem Buiter advocates Janet Yellen for Fed Chair

Via Greg Mankiw, Buiter's nicely written piece is here. If I might sum:

1. Our Fed Chair terms of service are bad

2. The process by which the Fed Chair is appointed is bad

3. Bernanke is defending himself, in response to criticism

4. Buiter knows Yellen personally

5. Yellen has no experience as a supervisor or regulator

Perhaps my lack of intellect is a crucial factor, but why am I unconvinced?

So that's what really burns Derek Lowe's toast

Ben Domenech's view of pharmaceuticals:

So Pharma is interested in making money as their primary goal — that should surprise no one. But they’re also interested in avoiding litigation. Suppose for a moment that Pharma produces a drug to treat one non-life threatening condition, and it’s a monetary success, earning profits measured in billions of dollars. But then one of their researchers discovers it might have other applications, including life-saving ones. Instead of starting on research, Pharma will stand pat. Why? Because it doesn’t make any business sense to go through an entire FDA approval process and a round of clinical trials all over again, and at the end of the day, they could just be needlessly jeopardizing the success of a multi-billion dollar drug. It makes business sense to just stand with what works perfectly fine for the larger population, not try to cure a more focused and more deadly condition.

To which Derek responds:

Ummm. . .isn't this exactly what happened with Vioxx? Merck was trying to see if Cox-2 inhibitors could be useful for colon cancer, which is certainly deadly, and certainly a lot less common than joint and muscle pains. Why didn't Merck "stand pat"? Because they wanted to make even more money of course. They'd already spent some of the cash that would have to have been spent on developing Vioxx, and cancer trials aren't as long and costly as they are in some other therapeutic areas. So it was actually a reasonable thing to look into. If you're staying in the same dosing range, you're not likely to turn up tox problems that you didn't already see in your earlier trials. (That's where Merck got into real trouble, actually - the accusation was that they'd seen signs of Vioxx's cardiovascular problems before the colon cancer trial, but breezed past them). But you just might come up with a benefit that allows you to sell your drug to a whole new market.

And that might also explain why, in general, drug companies look for new therapeutic opportunities like this all the time with their existing drugs. In fact, sometimes we look for them so aggressively that we get nailed for off-label promotion. No, instead of standing pat, we get in trouble for just the opposite. Your patented drug is a wasting asset, remember, and your job is to make the absolute most of it while it's still yours. Closing your eyes to new opportunities is not the way to do that.

The thing is, Domenech's heart seems to be mostly in the right place. He just doesn't understand the drug industry, and neither do his NIH sources. Talking to someone who works in it would have helped a bit.

The subtle telecom tax

a.k.a. voice mail instructions.

Quotes of the day

Remember that old comic book where they had Superman race against The Flash? The Flash won. Someone had to, just keep that in mind.--Tyler Cowen

Instead of an in-depth report on the compensation practices at Wall Street firms, both past and future, the only thing we got [from Andrew Cuomo] was compensation porn.--Steven Davidoff

Remarkably, the share of the tax burden borne by the top 1 percent now exceeds the share paid by the bottom 95 percent of taxpayers combined.--Scott Hodge

At birth, someone living in the Netherlands can expect to live 2.35 years longer than someone born in the US, but at age 65, the difference is reversed, and someone living in the US can expect to live 0.4 years longer than someone living in the Netherlands. This difference can be explained by assuming that semi-socialized health care is better for young and worse for old people, or, at least as likely, different policies are not the main cause of the difference.--Adam

One interesting feature of this data is that it can be used to argue for a number of different points of view.--Tyler Cowen

The worst outcome for China would be one that includes ever-rising inflation pressures, as money and credit flows augmented by "hot money" capital inflows push the inflation rate up to a level that threatens China's stability. Since that would be most likely under a scenario in which industrial economies are not recovering in the second half of the year, we could see a situation in which disappointment over the recovery in the big three economies coincides with disappointment about the sustainability of China's planned 8 percent growth path. That outcome would coincide with a likely bursting of the stock and property market bubbles that are inflating in China now on the hopes that a second-half recovery will validate China's goal of sustained 8 percent growth in 2009. --John Makin

For many years now, Americans have been putting in longer hours at work and enjoying less time at home. Since 1967, we’ve added 167 hours — the equivalent of a month’s full-time labor — to the total amount of time we spend at work each year, and in households where both parents work, the figure is more like 400 hours. Americans today spend more time working than people in any other industrialized nation — an extra two weeks or more a year. Not surprisingly, in those countries where people still take cooking seriously, they also have more time to devote to it. --Michael Pollan

So cooking matters — a lot. Which when you think about it, should come as no surprise. When we let corporations do the cooking, they’re bound to go heavy on sugar, fat and salt; these are three tastes we’re hard-wired to like, which happen to be dirt cheap to add and do a good job masking the shortcomings of processed food. And if you make special-occasion foods cheap and easy enough to eat every day, we will eat them every day. The time and work involved in cooking, as well as the delay in gratification built into the process, served as an important check on our appetite. Now that check is gone, and we’re struggling to deal with the consequences.--Michael Pollan

[The French Chef] all felt more like life than TV, though Julia [Child’s] voice was like nothing I ever heard before or would hear again until Monty Python came to America: vaguely European, breathy and singsongy, and weirdly suggestive of a man doing a falsetto impression of a woman. The BBC supposedly took “The French Chef” off the air because viewers wrote in complaining that Julia Child seemed either drunk or demented. ... Today the average American spends a mere 27 minutes a day on food preparation (another four minutes cleaning up); that’s less than half the time that we spent cooking and cleaning up when Julia arrived on our television screens. It’s also less than half the time it takes to watch a single episode of “Top Chef” or “Chopped” or “The Next Food Network Star.” What this suggests is that a great many Americans are spending considerably more time watching images of cooking on television than they are cooking themselves — an increasingly archaic activity they will tell you they no longer have the time for. ... Second-wave feminists were often ambivalent on the gender politics of cooking. Simone de Beauvoir wrote in “The Second Sex” that though cooking could be oppressive, it could also be a form of “revelation and creation; and a woman can find special satisfaction in a successful cake or a flaky pastry, for not everyone can do it: one must have the gift.” This can be read either as a special Frenchie exemption for the culinary arts (féminisme, c’est bon, but we must not jeopardize those flaky pastries!) or as a bit of wisdom that some American feminists thoughtlessly trampled in their rush to get women out of the kitchen. ... The glamour of food has made it something of a class leveler in America, a fact that many of these shows implicitly celebrate. Television likes nothing better than to serve up elitism to the masses, paradoxical as that might sound. How wonderful is it that something like arugula can at the same time be a mark of sophistication and be found in almost every salad bar in America? Everybody wins! ... Freed from the need to spend our days gathering large quantities of raw food and then chewing (and chewing) it, humans could now devote their time, and their metabolic resources, to other purposes, like creating a culture.--Michael Pollan

Myrna Ulfik shares her perspective of US healthcare

as a cancer patient. Read the whole thing if you can; here's some excerpts:

I have been battling non-Hodgkin’s lymphoma, an incurable blood cancer, for the past nine years. Last year, I was also diagnosed with uterine cancer.

I didn’t run to Canada for treatment. Medicare took care of my needs right here in New York City. To endure, I just need the freedom to choose my insurance, my doctors, and get the diagnostic scans and care I need. And one more thing: I need hope that a treatment will be developed that can control my diseases the way insulin controls diabetes.

Every cancer patient needs these things, especially hope. But the government’s plan to reform the health-care system in this country threatens all of this—particularly the development of new treatments.

...

I am still here because my care was managed by doctors—not a government agency. My doctors do what the bureaucracy can’t: They see me as a human being.

Patient-as-person will be a lost concept under the new health-care plan, where treatments will be based not upon individual patient needs, but upon what’s best for everyone. So cancer drugs for seniors might take second place to jungle gyms and farmers’ markets—so-called preventive care—which are covered under both the House and Senate versions of the health bill.

...

Tom Daschle, Mr. Obama’s original pick to head Health and Human Services, argues in his book “Critical: What We Can Do About the Health-Care Crisis,” that we should accept “hopeless diagnoses” and “forgo experimental treatments.” Mr. Daschle blames the “use and overuse of new technologies and treatments” for runaway health-care costs. He suggests a Federal Health Board modeled after the British “NICE” board to make decisions on health-care rationing.

But the British system is infamous for denying state-of-the-art drugs to cancer patients. Thus cancer-survival rates in Britain are far below those in America, just as they are in Canada.

Canadian cancer patients told to wait months for treatment and diagnostic scans frequently go south and pay out-of-pocket for care in the United States. A number of Quebeckers even sued their government for violating their “right to life and security” under the Quebec Charter of Rights and Freedoms. Canada’s Supreme Court has acknowledged the pervasive rationing that occurs. In the 2005 case Chaoulli v. Quebec (Attorney General) , the majority opinion stated: “The evidence in this case shows that delays in the public health care system are widespread, and that, in some serious cases, patients die as a result of waiting lists for public health care.”

Despite such evidence, the Obama plan is likely to target various treatments—including radiology scans—in order to cut costs. I survived this long because my radiologist examines each of my scans with me in detail.

One of those scans also saved my life by picking up unsuspected uterine cancer. The congressional majority seems blissfully unaware that all cancer patients need those scans to monitor their diseases.

...

Cancer patients need nothing more than such innovation. Yes, developing more effective, less toxic treatments is expensive. The prices of new cancer therapies reflect the billion-dollar cost of developing each new drug. But such treatments can be life-saving, as they have been for me.

Despite its warts, our system works. Carelessly tinkering with it will have a world-wide penalty—the stifling of new drug development. What company would spend a billion dollars to develop a drug that will not be reimbursed by the new health plan? This would be a direct, devastating blow to the most vulnerable Americans.

In spite of the president’s assurances, there is every sign that this plan will be financed by deep cuts to Medicare, which, like the public option, will limit payments for specialists, radiology scans, and cutting-edge cancer drugs. These are prime targets because they are more expensive than other services. But are we really expected to forgo new medical technology and return to the cancer care of the 1970s?

When members of Congress are asked if they will opt for the public plan, they say no. That’s for the rest of us.

The number of Americans who have cancer exceeds 10 million. It’s time for cancer patients and their families to remind those on Capitol Hill that health-care reform is a matter of life and death for us.

Another high news profile tax-and-spend advocate

with tax problems.

Heroes help bring perspective, like a better prescribed lens

Heroes like Jared Monti.

Perhaps Barney Frank should chair a different committee

seeing as how his track record on banking could not be much worse (via Russell Roberts).

Eric Falkenstein makes a great case on high frequency trading

here, making similar points that I did last week. But he also articulates something that I only mentioned in subsequent comments on other sites, namely that the 'front running' of 'flash orders' pales in moral comparison to the shenanigans of the 'good ol' days':

An algorithm chasing micropennies does not instigate trends the way portfolio insurance did in the 1987 crash, because in that case long-only funds were looking at their total long position, selling into declines (emulating a put option). The current algorithms generally look at relative value trades between sectors or issues, momentary order imbalances, a very different beast. Trade imbalances have always and will continue to move prices, but that isn't the computers fault. If there's continually 10x as many sell orders as buy orders, the result is going to be lower prices no matter what market is created. When buys and sells are coming in with equal size, price stability will be restored. To suggest the computers could exaggerate a movement is hysterical fear mongering in this context, because while anything is possible, it's a baseless hypothetical. Maybe we should regulate financial textbook writers as they popularize models that create things like CDO's that were so prominent in our latest financial crisis? Perhaps he is diverting our attention from his crime of the century?

2008 Investment bank standings

+$1 mil		Tot				($ mil)
bonuses		Empl		Pct		Net Inc*	Inc/Empl	Bank
953		29,400		3.24%		$ 2,322	$ 78,980	Goldman Sachs
44		27,500		0.16%		$ 1,811	$ 65,855	State Street
74		41,800		0.18%		$ 1,419	$ 33,947	Bank of New York Mellon
428		62,215		0.69%		$ 1,707	$ 27,437	Morgan Stanley
1,144		220,255		0.52%		$ 5,605	$ 25,448	JPMorgan Chase
172		223,908		0.08%		$ 4,008	$ 17,900	Bank of America
62		272,800		0.02%		$ 2,655	$ 9,732	Wells Fargo
738		279,000		0.26%		$(27,684)	$ (99,226)	Citigroup
696		58,500		1.19%		$(27,612)	$(472,000)	Merrill Lynch

Bonus information procured here. Employee and net income via Bloomberg.

UPDATE: Some good summary and details by bank here.

UPDATE: John Carney makes a great point about Merrill here.

Conflict resolution on meeting schedules

by Paul Graham:

There are two types of schedule, which I'll call the manager's schedule and the maker's schedule. The manager's schedule is for bosses. It's embodied in the traditional appointment book, with each day cut into one hour intervals. You can block off several hours for a single task if you need to, but by default you change what you're doing every hour.

When you use time that way, it's merely a practical problem to meet with someone. Find an open slot in your schedule, book them, and you're done.

Most powerful people are on the manager's schedule. It's the schedule of command. But there's another way of using time that's common among people who make things, like programmers and writers. They generally prefer to use time in units of half a day at least. You can't write or program well in units of an hour. That's barely enough time to get started.
...
Till recently we weren't clear in our own minds about the source of the problem. We just took it for granted that we had to either blow our schedules or offend people. But now that I've realized what's going on, perhaps there's a third option: to write something explaining the two types of schedule. Maybe eventually, if the conflict between the manager's schedule and the maker's schedule starts to be more widely understood, it will become less of a problem.

Those of us on the maker's schedule are willing to compromise. We know we have to have some number of meetings. All we ask from those on the manager's schedule is that they understand the cost.

Heidi Moore's refreshing take on Goldman Sachs

here. Some excerpts to wet your whistle:

The basic rule of Goldman culture is that the company manages its people exactly the opposite of how every other Wall Street firm does. It's not that Goldman doesn't have its egos—it surely does—but as a matter of management, the firm also has several safeguards in place to keep rampant egos from destroying decision-making. Another thing that makes Goldman different from other firms is not that all Goldman bankers agree but that they are free—and, in fact, encouraged—to disagree.

...

The difference is that Goldman Sachs bankers can disagree only before decisions are made; once all opinions are solicited, consensus is reached, and decisions are made, the decision is one made by the firm, on behalf of everyone, and it's final. Mostly, other Wall Street firms—from partnerships to giant investment banks—are hotbeds of infighting, and you need only talk to a few bankers before you find evidence that they undermine management decisions, subvert prominent colleagues, or openly ignore one another. Even worse, at many firms, bankers or traders will attempt to hide information about bad deals or trades until they can "fix" them and preserve year-end bonuses, as Brian Hunter was alleged to have done at Amaranth. At Goldman, management is like the Godfather: They want the bad news first. And daily. On a Wall Street where bankers are known to be terrible managers, Goldman also starts training its bankers to be managers early. Every Goldman banker has to do at least a year as chief of staff for one group or another. The firm usually shifts successful people among several areas to make sure they get a well-rounded view of the firm's businesses. At one point, Henry Paulson ran not only investment banking but also corporate and real estate banking.

...

The key to the Goldman culture, its acolytes say, seems to be reciprocity. That's unusual in an industry in which power, or "hand," can sometimes be defined by the ability to take advantage of as many people—colleagues and clients—for as long as possible without getting caught. At many other Wall Street firms, bankers often perceive themselves to be at war with their firms; every bonus season brings negotiations about whether profitability comes from the banker's own work or "the platform," meaning the brand name of the bank. "Ripping someone's face off," or screwing them on a trade, is a common phenomenon on Wall Street. But Goldman, these people say, is refreshingly simple: "If you take care of us, we'll take care of you." And then they deliver. It may sound like the mafia, but you can see why many would rather buy into that idea than risk having their work taken advantage of. It's amazing, these Goldmanites say, what a little incentive can do.

So you can see why Goldman alums sometimes don't do very impressively once they leave Goldman. They find themselves in positions where no one questions their premises and it's hard to get good feedback and pushback. (This is why Paulson employed telephone banks of analysts to call Wall Street to solicit opinions.) Outside of the Goldman womb of debate and ideas, bankers and traders lack perspective. You might say that no Goldman is an island.

The blog is peppered with my prevailing theory on Goldman. (Hint: It's about the smartest Goldman employee ever, who is no longer with the firm).