Posted by Marc Hodak on August 30, 2010 under Collectivist instinct, Patterns without intention | 
From a speech today:
“Every single day, I’m pushing this economy forward, repairing the damage that’s been done to the middle class over the past decade and promoting the growth we need to get out people back to work,” Obama said.
No statement better reflects the fatal conceit.
Contrast with this, from one of Hayek’s discliples:
There were two great triumphs, two things that I’m proudest of. One is the economic recovery, in which the people of America created — and filled — 19 million new jobs.
Good god, what a difference.
Posted by Marc Hodak on July 29, 2010 under Patterns without intention, Unintended consequences |
A frequent complaint about standardized tests as a measure of scholastic achievement is that teachers, who know the general content, can simply “teach to the test,” i.e., they will focus on those content areas to the exclusion of others in order to maximize the performance of their students so that they, as teachers, look good. This is not good. It limits the range of inquiry to those that are bureaucratically mandated, and can actually inhibit real learning.
If the teachers know the particular content of a test, then you get a double distortion: On top of the inhibition on real learning, you will now also get artificially high scores that don’t reflect any learning at all. And if the teachers are being paid or selected based on their students achievements on such tests, then the teachers must teach to the tests as a matter of personal career survival–a real and legitimate sore point for teachers and their unions.
The problem is that we can’t generally know when a teacher is teaching to the test. In certain extreme cases, one can use statistical analysis to see if a teacher is actually cheating. But generally, it’s hard to see in a sea of “gains” how illusory those gains are, and how much of them were the result of teaching to the test rather than real learning, even learning limited to the content of the content areas to be covered by the test.
Well, now we know the answer for New York State. By slightly increasing their standards, proficiency in English went statewide dropped from 77% to 53%.
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Posted by Marc Hodak on July 7, 2010 under Economics, Patterns without intention |
The first approach is counting on government to do it from the center, as reported a few weeks back:
Don’t laugh, but Uncle Sam wants to teach you how to manage your money.
Tucked into the new financial-overhaul bill that Congress is working to finish is a new Office of Financial Literacy to help consumers learn about savings, debt and credit scores.
There is an obvious irony in a debt-laden, budget-challenged government offering financial education. But there is a deeper problem: While nearly everyone agrees that Americans of all ages and income levels could be more financially astute, no one has a good plan for making it happen.
(Raising my hand.) Oh, I have a great idea! Choose me! Choose me!
Why not just ask all those government run schools to teach financial literacy alongside reading, writing, and math, and before inorganic chemistry and trigonometry. If a school really wants to go whole hog, they have only to look at a great example of what works.
Posted by Marc Hodak on December 8, 2009 under Patterns without intention |
They don’t just work directly for the government.
My new, provisional test for credibility is this: If your conclusions go against, or at least are neutral with respect to the interests of your funding source, you’re credible. For instance, if you are being paid by the government, you are credible only if you come up with conclusions that imply less government intervention. Sloppy, I admit, but it would cull a lot of questionable research.
Posted by Marc Hodak on October 20, 2009 under Collectivist instinct, Patterns without intention |
Elizabeth Warren is discouraged. Not with regards to her job of overseeing TARP spending, on which the Harvard professor has done a decent job. Instead, she is “speechless” at the prospects that certain bankers may get record bonuses this year.
“I do not understand how financial institutions could think they could take taxpayer money and turn around and act like it’s business as usual,” Warren says. “I don’t understand how they can’t see that the world has changed in a fundamental way - it’s not business as usual. All I can say right now is they seem to be winning this argument.”
It’s not an argument, Liz; it’s a business model. The financial services business model is actually quite simple: employees get 50 percent of net revenues. The stable portion of this net revenue is paid out in “salaries” and the uncertain, variable portion of this net revenue is paid out in “bonuses.” The “bonus” portion gets split in rough proportion to who brought in the revenues. All this goes on regardless of how “the world has changed.” Last year, net revenue was lower, and bankers on average got much less. This year, net revenues are higher, and bankers (the ones who survived the carnage, anyway) get more. What’s not to understand?
Warren’s block is not the arithmetic. Warren’s block is that she hates bankers. Her real problem is that the world has not changed the way she wishes it would have changed, where the money that a bank makes flows to someone other than the bankers.
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Posted by Marc Hodak on July 30, 2009 under Patterns without intention |
Here is one of the best articles I have ever read about health care. It probably could have only been written by a doctor.
The article basically asks why the average cost per patient could be twice as high in one town versus another town in the same state with similar demographics and culture, as well as similar medical outcomes. The author looked at all the usual suspects: treatments, technologies, and torts. The culprit turns out to be all three–overutilization of expensive treatments. This is not necessarily driven by fear of torts, but that doesn’t help. The more expensive places that prescribe more tests and treatments don’t tend to have better patient outcomes. In fact, they tend to be worse because every treatment has risks as well as benefits, and it’s quite possible for unwarranted treatments to have a net cost in public health.
When he asked why certain places were more expensive, it unsurprisingly came down to the prevailing incentives of different models of health care practiced in different towns. In the high-cost model, physicians focused on revenue maximization by looking at the patient as a revenue source. In these environments, which evolved over time to become the culture of medicine as it’s practiced in that area, doctors tended to over-prescribe tests and treatments where judgment allowed (which covers a lot of illnesses), often referring patients to facilities in which the doctors had a financial interest. The lower cost, higher quality models were less individualistic. The doctors worked as a team, easily shared information, and got paid salaries in (generally) non-profit organizations. They were content to not maximize their personal profits as long as they were comfortably paid and allowed to act as professionals.
The author was agnostic about most of the things bandied about in today’s health care debate. It doesn’t matter if the government or private insurers are paying for treatments. The doctors are (properly) in control. If they are intent on gaming the system, they can game it regardless of who is paying. Doctors in systems built around putting their patient’s interests first can work quite well with any payers, although they will actually save more money by being given the discretion to spend what they think is appropriate. The idea of having the patients bear more of their own costs was pooh-poohed as nonsense. As one doctor asked:
“I’ll do three vessels for thirty thousand, but if you take four I’ll throw in an extra night in the I.C.U.”—that sort of thing?
The bottom line is that the current level of waste in the high cost portion of our health care system is unsustainable. Worse yet, communities are migrating from the more effective, efficient, collaborative system toward the more individualistic, wasteful, and profitable model. The key (and this may be my conclusion more than the author’s) is to figure out a way to reward the more collaborative, higher quality, lower cost, model so that it is actually the more profitable as well.
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Posted by Marc Hodak on June 7, 2009 under Patterns without intention |
This time...
...it is based entirely...
...on science!
When it comes to “global warming scientists” Freeman Dyson puts lays it out so beautifully:
The whole livelihood of all these people depends on people being scared.
Really, just psychologically, it would be very difficult for them to come out and say, “Don’t worry, there isn’t a problem.” It’s sort of natural, since their whole life depends on it being a problem. I don’t say that they’re dishonest. But I think it’s just a normal human reaction. It’s true of the military also. They always magnify the threat. Not because they are dishonest; they really believe that there is a threat and it is their job to take care of it. I think it’s the same as the climate community, that they do in a way have a tremendous vested interest in the problem being taken more seriously than it is.
If someone is paid to say something, that doesn’t necessarily mean they’re lying–not by a long shot. But it does color what they say, because you know they couldn’t possibly say otherwise, even if that were the truth. I don’t expect an advocate to be balanced. But I never confuse an advocate for a scientist, even if one could be both.
Posted by Marc Hodak on May 15, 2009 under Patterns without intention, Politics |
Peter Orszag, White House OMB director, published an editorial about the importance of containing health care costs, and how to do it. The portion of our health care that is nationalized, i.e., Medicare and Medicaid, indeed threatens to bankrupt the country. From this, Mr. Orszag concludes that “we” are in big fiscal trouble and “we” need to do something about it, “we” being code for “the government.”
Mr. Orszag is optimistic about what “we” can do:
Representatives from some of the most important parts of the health-care sector — doctors, pharmaceutical companies, hospitals, insurers and medical-device manufacturers — confirmed that major efficiency improvements in health-care are possible. They met with the president and pledged to take aggressive steps to cut the currently projected growth rate of national health-care spending by an average of 1.5 percentage points in each of the next 10 years. By making this pledge, the providers and insurers made clear that they agreed the system could remove significant costs without harming quality.
This kind of reminds me of Stalin’s optimism:
A Bolshevik’s word is his bond. Bolsheviks are in the habit of fulfilling promises made by them. But what does the pledge to fulfil the control figures for 1931 mean? It means ensuring a total increase of industrial output by 45 per cent.
Like Stalin’s central planners, Orszag is using this faith in government-led change to make us all into guinea pigs of centrally planned reform. Orszag ignores the 800 lb. gorilla standing next to the guinea pig, i.e., the virtue of competition.
When one casually looks at the areas of our economy, they can judge the relative availability, variety, quality, and cost of different parts:
More competitive … More regulated/socialized
Private/Charter schools Public schools
UPS, FedEx Post Office
Private railroads Amtrak
Phone service post-1984 Phone service pre-1984
Anything pop out?
Imagine what restaurants would look like if their menus, prices, and policies were dictated by central planners.
Never mind what they would look like if they were actually owned and operated by the government.
Unfortunately, most people can’t visualize a free market in health care because they’ve been told, and appear to believe, that our current health care system is “free market.” To others of us, it appears as if the government is heavily involved in nearly all areas of health care, especially insurance, and that the more it has gotten involved, the worse things have gotten.
Posted by Marc Hodak on March 8, 2009 under Movie reviews, Patterns without intention |
Don't mess with the naked blue guy
Notwithstanding the provenance of this film, there are no cartoon characters in Watchmen. They were drawn much more richly and intricately than people you’d find in your average mass-market flick. That alone would differentiate Watchmen from the ordinary pap emanating from Hollywood. And being adapted from a graphic novel, its characters are drawn against a lush background, both literally and figuratively.
The counterfactual element of this background should be interesting for fans of political economy. In the story, the first gen Watchmen appear around the 1940s, when the U.S. was looking for heroes. The public welcomed the “Minutemen” (as they were then called) who fought crime at home and inspired victory abroad.
Alas, no one remains a media darling forever, especially if you’re fallible and powerful. The backlash coalesced around the slogan “Who will watch the Watchmen?” The answer of course was, “the government,” which led to something quite predictable in our world–licensing and regulation. In order to be allowed to continue their heroics, they would have to register with the authorities. The public choice mavens among you would no doubt ask, “Who will watch the people watching the Watchmen?”
So, Dr. Manhattan, the one Watchman with supernatural, almost god-like powers, becomes a civil servant tasked with preventing a nuclear holocaust. He eventually becomes so detached and melancholy that he ends up hardly caring if the whole human race dies. Don’t you get that feeling from the folks behind the counter at the Post Office?
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Posted by Marc Hodak on August 13, 2008 under Patterns without intention |
I don’t understand. How can all this be happening without the government telling us what to do?
Consumers are buying fewer sport-utility vehicles and more energy-saving washing machines. Some trucking companies have rejiggered their engines to max out at lower speeds. Gridlock is easing in California. Americans drove 9.66 billion fewer miles in May than they did a year earlier, a 3.7% decline, according to the Transportation Department.
With shipping costs surging, companies are rethinking overseas production, slimming down packaging and retooling distribution networks. Yogurt maker Stonyfield Farm is only sending out fully loaded delivery trucks. Procter & Gamble Co. is filling smaller bottles with more-powerful laundry detergent. Locally made products, from beets to beer, are becoming a more attractive choice.
I must have missed the big rallies where these solutions were laid out by our dear leaders.
