Sustainability 09/26/2009

• Ezra Klein – An Interview With Atul Gawande

  tags: Sustainability

  • People say that the most expensive piece of medical equipment is the doctor’s pen. It’s not that we make all the money. It’s that we order all the money.
  • But you can learn from good hospitals. They do peer review, for instance, and that changes what doctors do in their offices. They blunt the financial incentives in various ways that we haven’t studied at all. It’s kind of ridiculous that there haven’t been very many people putting feet on the ground and studying what the positive deviants are doing. There are hundreds of examples out there. They’re not just the Mayo Clinic and not just Grand Junction. Go to Portland, Oregon; Temple, Texas; Pensacola, Florida. These are places that are doing something differently.
  • There are also more than 6,000 drugs and 4,000 types of operations and procedures. That’s what a hospital has to be able to manage and a doctor’s office has to manage. Our system in my hometown struggles with how to manage that. We’re trying to reform a system to be prepared for the 21st century of medicine and we’ll be struggling for answers for awhile.
  • And part of what’s such a marvel about a place like a Mayo or places like it is that they’ve been able to get teams of doctors work with nurses and nutritionists to work together.
  • We’re doing dress rehearsals on how to talk to each other. It’s hilarious. But when we do it, we not only lower costs, we lower the death rate 40 percent and the complication rate 30 percent. And that’s why I think the answers will be there.

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Policy 09/26/2009

• Reading the McChrystal Report: Interesting Times : The New Yorker

  tags: Policy

  • Obama has Kennedy’s confidence in his own judgment, which Johnson tragically lacked. Gordon Goldstein’s very good book “Lessons in Disaster,” about McGeorge Bundy—national security adviser to both J.F.K. and L.B.J.—pretty much proves that Kennedy, if he’d lived, would not have committed ground troops to Vietnam at the start of his second term. After the disaster at the Bay of Pigs, Kennedy stopped trusting his military advisers, and went on to overrule them during the Cuban missile crisis and, again and again, on Vietnam. Perhaps this is Obama’s J.F.K. moment. We’ll know in a few weeks. And if so, perhaps he would be right.

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Economics 09/26/2009

• Why capitalism fails – The Boston Globe

  tags: Economics

  • “Minsky” was shorthand for Hyman Minsky, a hitherto obscure macroeconomist who died over a decade ago. Many economists had never heard of him when the crisis struck, and he remains a shadowy figure in the profession. But lately he has begun emerging as perhaps the most prescient big-picture thinker about what, exactly, we are going through. A contrarian amid the conformity of postwar America, an expert in the then-unfashionable subfields of finance and crisis, Minsky was one economist who saw what was coming. He predicted, decades ago, almost exactly the kind of meltdown that recently hammered the global economy.
  • In other words, the one person who foresaw the crisis also believed that our whole financial system contains the seeds of its own destruction. “Instability,” he wrote, “is an inherent and inescapable flaw of capitalism.”

  • Although Keynes had never stated this explicitly, Minsky argued that Keynes’s collective work amounted to a powerful argument that capitalism was by its very nature unstable and prone to collapse. Far from trending toward some magical state of equilibrium, capitalism would inevitably do the opposite. It would lurch over a cliff.

    This insight bore the stamp of his advisor Joseph Schumpeter, the noted Austrian economist now famous for documenting capitalism’s ceaseless process of “creative destruction.”

  • To prevent the Minsky moment from becoming a national calamity, part of his solution (which was shared with other economists) was to have the Federal Reserve – what he liked to call the “Big Bank” – step into the breach and act as a lender of last resort to firms under siege. By throwing lines of liquidity to foundering firms, the Federal Reserve could break the cycle and stabilize the financial system. It failed to do so during the Great Depression, when it stood by and let a banking crisis spiral out of control. This time, under the leadership of Ben Bernanke – like Minsky, a scholar of the Depression – it took a very different approach, becoming a lender of last resort to everything from hedge funds to investment banks to money market funds.

    Minsky’s other solution, however, was considerably more radical and less palatable politically. The preferred mainstream tactic for pulling the economy out of a crisis was – and is – based on the Keynesian notion of “priming the pump” by sending money that will employ lots of high-skilled, unionized labor – by building a new high-speed train line, for example.

    Minsky, however, argued for a “bubble-up” approach, sending money to the poor and unskilled first. The government – or what he liked to call “Big Government” – should become the “employer of last resort,” he said, offering a job to anyone who wanted one at a set minimum wage. It would be paid to workers who would supply child care, clean streets, and provide services that would give taxpayers a visible return on their dollars. In being available to everyone, it would be even more ambitious than the New Deal, sharply reducing the welfare rolls by guaranteeing a job for anyone who was able to work. Such a program would not only help the poor and unskilled, he believed, but would put a floor beneath everyone else’s wages too, preventing salaries of more skilled workers from falling too precipitously, and sending benefits up the socioeconomic ladder.

  • If nothing else, an expensive full-employment program would veer far too close to socialism for the comfort of politicians. For his part, Wray thinks that the critics are apt to misunderstand Minsky. “He saw these ideas as perfectly consistent with capitalism,” says Wray. “They would make capitalism better.”
  • Minsky did not share his profession’s quaint belief that everything could be reduced to a tidy model, or a pat theory. His was a kind of existential economics: capitalism, like life itself, is difficult, even tragic.

• The Financial Crisis and America’s Casino Culture – NYTimes.com

  tags: Economics

  • The shock that accompanied the end of the American real estate boom once seemed a sentinel event that would bring tighter government scrutiny of the financial realm. Yet as fear of catastrophe fades, the question is how quickly the momentum in Washington for tighter financial rules is diminishing and whether unemployed workers and strapped homeowners will feed a groundswell for change strong enough to offset government turf wars and the influence of financial industry lobbyists.

  • In Washington, on Wall Street and on Main Street, many are aware that the era of lightly supervised markets was fabulously lucrative for those positioned to capture a piece. Financial services and real estate — nurtured by easy money — swelled into major sources of employment, while boosting stock portfolios for huge institutions and ordinary people alike. New York cemented itself as the global financial capital.

    Over the last quarter-century, moreover, the traditional faith in unfettered markets deepened, and became entwined with the belief in the abundance of American opportunity, reinforcing a justification for laissez-faire: In a land that subscribes to the Horatio Alger story — in which anyone can supposedly make it — the market can be trusted to make the rules. For Milton Friedman, the most influential economic thinker of the last half-century, political and economic freedom were synonymous.

  • So the question now is how many people have similarly changed their sense of what the American economy needs. Mostly, it is a matter of whether the country is still feeling lucky; whether the recent crisis will come to feel like an unavoidable toll on the highway to fortune, or whether something deeper has shifted in the American psyche, leaving us shaken in a lasting way.

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Policy 09/21/2009

• Karel van Wolferen

  tags: Policy

  • To be considered “professional” journalists could no longer “take sides”. They had to be neutral. Court reporting, local political conflicts between equals, and party political platforms were suited to such an approach. But when there were no two sides to choose from, when there was one overwhelming side, or when there were perhaps six sides, the reality had to be reduced to fit the mandatory two equal sides.
  • Objectivity was the big loser as the result of this passion for neutrality. The blindness to the difference in meaning of neutral and objective continues to rule the trade. American reporters are not supposed to insert themselves into the stories they write, in the sense of trusting their own brains to do the filtering of the buzzing, cacophonous reality around them. The neutrality command also means that reporters must pass on to their audience utterances and explanations that they know for sure are bullshit.

Posted from Diigo. The rest of my favorite links are here.

Economics 09/21/2009

• Priceless: How The Federal Reserve Bought The Economics Profession

  tags: Economics

  • The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession

  • Paul Krugman, in Sunday’s New York Times magazine, did his own autopsy of economics, asking “How Did Economists Get It So Wrong?” Krugman concludes that “[e]conomics, as a field, got in trouble because economists were seduced by the vision of a perfect, frictionless market system.”

    So who seduced them?

    The Fed did it.

• The Atlantic Online | September 2009 | How American Health Care Killed My Father | David Goldhill

  tags: Economics

  • What amazed me most during five weeks in the ICU with my dad was the survival of paper and pen for medical instructions and histories. In that time, Dad was twice taken for surgical procedures intended for other patients (fortunately interrupted both times by our intervention). My dry cleaner uses a more elaborate system to track shirts than this hospital used to track treatment.
  • It’s astonishingly difficult for consumers to find any health-care information that would enable them to make informed choices—based not just on price, but on quality of care or the rate of preventable medical errors.
  • A wasteful insurance system; distorted incentives; a bias toward treatment; moral hazard; hidden costs and a lack of transparency; curbed competition; service to the wrong customer. These are the problems at the foundation of our health-care system, resulting in a slow rot and requiring more and more money just to keep the system from collapsing.

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Policy 09/16/2009

• The Bush Presidency in One Line

  tags: Policy

  • I suppose in a way this indicates the neutralizing of the 9-11 powerbase.

    Prior to that pivotal event Bush was portrayed in political cartoons as a child with a short attention span, while “Mr. Cheney” took care of the dull, adult things.

    Without that terrible event in 2001 Bush by 2004 would certainly have been running on the “competence” issue, trying to demonstrate that his laughing-stock administration wasn’t the most incompetent in decades, and that he himself wasn’t some kind of simpleton.

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Policy 09/12/2009

• 9/11

  tags: Policy

  • In the sadness of the days following I think most of the country was prepared to set aside partisanship and see political difference laid to rest for a common cause.

    It could have been a great uniter, a transcendent event.

    Instead, we know what happened. Within days it was converted into a kind of high-octane political capital by the administration and the Republicans in Congress, and used self-servingly to drive a very tangible division through our society.

    I agree with everyone who says it’s a personal thing, but I’ll never forget how quickly it became a political tool, and used to inflict great damage on our Union.

• Ezra Klein – The New Bipartisanship

  tags: Policy

  • It’s like the old joke that you don’t have to outrun the bear, you just have to outrun the other guy. Obama doesn’t have to be bipartisan. He just has to look more bipartisan than the Republicans.

  • I have always seen Obama as having a vast meta message, operating through all his moves: he actually believes we can have civil discourse, and that our political process can represent its nation.

    As time passes, if he can also muscle through the things that need to be done, we will see the country change, and regain some of that character he talks about. I believe this is his real agenda, and the plays and ploys we agonize over daily are just small-scale compared with his true reach.

    Unfortunately for punditry, but fortunately for sanity, this will take the passage of time to become clear.

    Posted by: wapomadness | September 11, 2009 11:38 AM
    | Report abuse

    more to Ezra’s point, I’ve always thought Obama was just outrunning the other guy – the Republicans are throwing themselves deep into the moral low ground, while the game being played is for the high ground.

    Obama by his existence has changed the stakes, and I’m sure he knows this very well.

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Policy 09/11/2009

• Facebook | Home

  tags: Policy

  • thinks President Obama’s health care speech was great.
  • Ross Hunter

    yep, me too. There’s a meta message about Obama, and he held to that all through the focus on health care. The meta is that he believes we can have civil discourse.

    As time passes and we see him continue to express this belief and act accordingly, and still muscle through what needs to get done, the country will change. And regain some character.

Posted from Diigo. The rest of my favorite links are here.

Economics 09/11/2009

• Op-Ed Contributor – Big Food vs. Big Insurance – NYTimes.com

  tags: Economics

  • When health insurers can no longer evade much of the cost of treating the collateral damage of the American diet, the movement to reform the food system — everything from farm policy to food marketing and school lunches — will acquire a powerful and wealthy ally, something it hasn’t really ever had before.

Posted from Diigo. The rest of my favorite links are here.

Policy 09/10/2009

• Ezra Klein – Gang of Six Death Watch: Moving Forward

  tags: Policy

  • Baucus is clearly slow-walking this and Grassley has publicly predicted a “miniscule” bill by Christmas.

    The claim that Democrats are obstructionist is silly. The House passed a bill, Senate HELP passed a bill, Baucus himself put out a plan last September called “Call to Action: Health Care 2009″ which itself would be a fine place to start a final compromise, But for reasons of his own Max Baucus just decided to say “No”.

    That is NOT a useful spirit to forge good public policy, at this point arguing that Baucus is operating in good faith is a fools game.

  • BTW it is my opinion that the stalling point is not the Public Option but the potentially very strict profit controls built into Sec 116 of the House Bill. The wording seems deliberately innocuous but its effect would be to gut the current insurance industry model of making money by denying care. The insurance companies are already publicly gunning for Sec 113 which limits the premium gap you can charge between young and old, but 116 is actually more deadly to them. Watch for Finance to push out a bill against some deadline hoping nobody notices what they did to Secs 111-116 which together are the core of insurance reform.

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Economics 09/10/2009

• Ezra Klein – The Provider Problem

  tags: Economics

  • Nobody likes insurers so they make a good target, but of course providers are the main problem. We need to get providers to organize themselves more efficiently. Specifically solo and small group practice has got to go. Those are the docs screaming that they can’t survive on Medicare rates–because their overhead is so high and they can’t afford to implement the best information technology. And you need good I.T. to deal with the complicated reimbursement schemes that are envisioned.

    The public option would have been great to accelerate the transition to larger more integrated delivery systems. If you set it up like Kaiser where all the docs are on salary in a closed system–beautiful.

  • The problem with your argument is that it ASSUMES that providers are the main problem. There are a whole host of factors driving up costs, and provider compensation is only a problem for some specialties and under some circumstances; and this is more a matter of the current cost structure than provider greed. Why do I have to write this?

    1. Fee for service plans, coupled with insurers unwillingness to pay reasonable rates for compensation, cause doctors to overbill in the expectation that they aren’t going to get paid what they bill. The result is that prices are gamed rather than negotiated. Some Doctors make out handsomely from this, but many simply can’t afford to bill at the medicare rates. Cutting compensation will drive these doctors out of business.

    2. Medical equipment, inflated Hospital and Clinical fees, and drugs inflate costs even faster than provider fees. All these are rated. Drugs are over-priced where-ever there is low rate production or a partial monopoly. Equipment is sold 10-20 times or leased at rates more expensive than it would cost to buy the equipment outright. There is little incentive to keep such costs down because both the hospitals, labs, and insurance companies prefer to bill piecework because they can get away with it.

  • 3. Hospital and Clinic administrators could control these costs, but only if the system as a whole is allowed to negotiate prices with the drug companies, to bargain for equipment; and if the various companies involved are subject to vigorous anti-trust enforcement.

    4. In some cases there are conflicts of interests from Doctors who own labs, or wear inappropriate multiple hats — that could be contained by some internal policing and new laws.

    5. Controlling provider costs would be simple too. If Doctors are paid a retainer, and given incentives based on outcomes, on the Mayo Clinic Model, costs can be contained reasonably and in a manner acceptable to both groups. Blaming any one group for the problem is kind of dumb because Provider Companies, Insurance Companies, Hospitals, Drug Companies, and Medical Equipment companies are all playing in a system that requires them to play billing games just to stay in business, and rewards them handsomely for what others outside the business might see as fraud, monopolistic practices, and profiteering.

• Back to Business – Wall Street Pursues Profit in Bundles of Life Insurance – Series – NYTimes.com

  tags: Economics

  • Undeterred, Wall Street is racing ahead for a simple reason: With $26 trillion of life insurance policies in force in the United States, the market could be huge.
  • But even if a small fraction of policy holders do sell them, some in the industry predict the market could reach $500 billion. That would help Wall Street offset the loss of revenue from the collapse of the United States residential mortgage securities market, to $169 billion so far this year from a peak of $941 billion in 2005, according to Dealogic, a firm that tracks financial data.

Posted from Diigo. The rest of my favorite links are here.

Policy 09/09/2009

• Why the public option matters – Paul Krugman Blog – NYTimes.com

  tags: Policy

  • Let me add a sort of larger point: aside from the essentially circular political arguments — centrist Democrats insisting that the public option must be dropped to get the votes of centrist Democrats — the argument against the public option boils down to the fact that it’s bad because it is, horrors, a government program. And sooner or later Democrats have to take a stand against Reaganism — against the presumption that if the government does it, it’s bad.

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Economics 09/09/2009

• How Did Economists Get It So Wrong? – NYTimes.com

  tags: Economics

  • It’s important to understand that Keynes did much more than make bold assertions. “The General Theory” is a work of profound, deep analysis — analysis that persuaded the best young economists of the day. Yet the story of economics over the past half century is, to a large degree, the story of a retreat from Keynesianism and a return to neoclassicism.
  • Many economists will find these changes deeply disturbing. It will be a long time, if ever, before the new, more realistic approaches to finance and macroeconomics offer the same kind of clarity, completeness and sheer beauty that characterizes the full neoclassical approach. To some economists that will be a reason to cling to neoclassicism, despite its utter failure to make sense of the greatest economic crisis in three generations.

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Policy 09/05/2009

• The Primacy of Congress

  tags: Policy

  • I’m glad to see this point made Ezra, please keep addressing this theme. The executive is one of three powers, and no president gets to buck a Congress that doesn’t want to allow it, not for long, not in the end.

    I know there’s a lot of doubt about Obama’s skill at using his one-third piece of the leverage, but I will quietly wait a good couple of years yet to make that judgement, despite the wavering nature of daily appearances. I think he plays his limited power over a very long hand. Time will tell.

Posted from Diigo. The rest of my favorite links are here.

Policy 09/02/2009

• Should the Polls Doom Health-Care Reform?

  tags: Policy

  • practically since the Inauguration I’ve considered that Obama’s greatest contribution to our nation in its current state is to stand unwaveringly as a voice of reason, and illustrate the noise-to-signal ratio across the land.

    What happens to subdue all this noise, I don’t quite know. I’m not sure if Obama himself has a plan beyond this, or simply intends to prevail with reason even if it takes eight years. Or fail trying even, perhaps.

    But the media having bite-size words to describe it, and the people beginning to see its insanity, are together the sine qua non for progress out of it.

    Posted by: wapomadness | September 1, 2009 3:46 PM
    | Report abuse

    and I neglected to say thank you to Ezra – I appreciate your making the effort to put this into words, to help cut through the cacophony.

    It’s not about health care, or even politics. It’s about the overthrow of reason through sheer scale of unreason, by actions unskillful and meaningless, but coldly willing to inflict massive violence on the truth.

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Economics 09/02/2009

• What Will the Market Think?

  tags: Economics

  • Guys- when you talk about markets you’re talking about two seperate things. Most of the public thinks the market = the stock market. And yes, no reform is good for health insurance stocks. But Ezra is talking about the bond market, specifically the market for US Gov’t debt. This market absolutely dwarfs the stock market in size. And he is technically correct- if the US enacts policy to signal it will contain healthcare costs then interest rates will go down and we won’t find it as hard to issue debt down the line.

    Posted by: Quant | September 1, 2009 3:39 PM
    | Report abuse

    Quant has it right. And the Federal Reserve System, which controls the choke points of our economy, and which we seem to be offering evermore power to for some reason, holds the bond market as its principal focus of fidelity (after the banks, which are family).

    In other words, how the bondholders perceive America is how the Fed will either cripple or unencumber our productive economy, at any given time.

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