Saturday, January 30, 2010

The Natural

This novel by Bernard Malamud focuses on Roy Hobbes, a spectacular baseball player. Due to an unlucky turn of events, Roy isn't able to enter professional baseball until his late 30s, but he still manages to have a great season. He single-handedly brings his team from last place to first place in the league. However, throughout the season, he is plagued by regrets of his past and other circumstances that conspire to bring him down.

The Natural was made into a movie starring Robert Redford and Glenn Close in 1984, and I much prefer the movie to this novel. In the book, Roy is a bit of an arrogant jerk who chases after the ladies all the time, whereas movie Roy is much more likable. Plus, I liked the ending of the movie more.

Here is a clip of Roy when he first starts batting practice, and nobody knows what he can do:

I don't really like watching sports on TV, perhaps for the following reason:

Actual football played in a 60-min NFL game: about 11 minutes.

So what do the networks do with the other 174 minutes in a typical broadcast? Not surprisingly, commercials take up about an hour. As many as 75 minutes, or about 60% of the total air time, excluding commercials, is spent on shots of players huddling, standing at the line of scrimmage or just generally milling about between snaps.

However, I enjoy a lot of sports movies, and there are quite a few great baseball movies. Here are a few of my favs (click on the title to watch the video trailer):

1) The Natural
2) Field of Dreams
3) The Sandlot
4) A League of Their Own

Thursday, January 28, 2010

I, Pencil

Continuing the theme of experts not knowing enough to get everything right, here is a mini-essay for your enjoyment. Written in 1958, I, Pencil is a classic among free market thinkers, and it tells of all the complexities that go into making something as simple as a pencil. It's an excellent essay, and I encourage you to read the whole thing:

I am a lead pencil—the ordinary wooden pencil familiar to all boys and girls and adults who can read and write.

Writing is both my vocation and my avocation; that’s all I do.

You may wonder why I should write a genealogy. Well, to begin with, my story is interesting. And, next, I am a mystery —more so than a tree or a sunset or even a flash of lightning. But, sadly, I am taken for granted by those who use me, as if I were a mere incident and without background. This supercilious attitude relegates me to the level of the commonplace. This is a species of the grievous error in which mankind cannot too long persist without peril. For, the wise G. K. Chesterton observed, “We are perishing for want of wonder, not for want of wonders.”

I, Pencil, simple though I appear to be, merit your wonder and awe, a claim I shall attempt to prove. In fact, if you can understand me—no, that’s too much to ask of anyone—if you can become aware of the miraculousness which I symbolize, you can help save the freedom mankind is so unhappily losing. I have a profound lesson to teach. And I can teach this lesson better than can an automobile or an airplane or a mechanical dishwasher because—well, because I am seemingly so simple.

Simple? Yet, not a single person on the face of this earth knows how to make me. This sounds fantastic, doesn’t it? Especially when it is realized that there are about one and one-half billion of my kind produced in the U.S.A. each year.

Pick me up and look me over. What do you see? Not much meets the eye—there’s some wood, lacquer, the printed labeling, graphite lead, a bit of metal, and an eraser.

Innumerable Antecedents

Just as you cannot trace your family tree back very far, so is it impossible for me to name and explain all my antecedents. But I would like to suggest enough of them to impress upon you the richness and complexity of my background.

My family tree begins with what in fact is a tree, a cedar of straight grain that grows in Northern California and Oregon. Now contemplate all the saws and trucks and rope and the countless other gear used in harvesting and carting the cedar logs to the railroad siding. Think of all the persons and the numberless skills that went into their fabrication: the mining of ore, the making of steel and its refinement into saws, axes, motors; the growing of hemp and bringing it through all the stages to heavy and strong rope; the logging camps with their beds and mess halls, the cookery and the raising of all the foods. Why, untold thousands of persons had a hand in every cup of coffee the loggers drink!

The logs are shipped to a mill in San Leandro, California. Can you imagine the individuals who make flat cars and rails and railroad engines and who construct and install the communication systems incidental thereto? These legions are among my antecedents.

Consider the millwork in San Leandro. The cedar logs are cut into small, pencil-length slats less than one-fourth of an inch in thickness. These are kiln dried and then tinted for the same reason women put rouge on their faces. People prefer that I look pretty, not a pallid white. The slats are waxed and kiln dried again. How many skills went into the making of the tint and the kilns, into supplying the heat, the light and power, the belts, motors, and all the other things a mill requires? Sweepers in the mill among my ancestors? Yes, and included are the men who poured the concrete for the dam of a Pacific Gas & Electric Company hydroplant which supplies the mill’s power!

Don’t overlook the ancestors present and distant who have a hand in transporting sixty carloads of slats across the nation.

Once in the pencil factory—$4,000,000 in machinery and building, all capital accumulated by thrifty and saving parents of mine—each slat is given eight grooves by a complex machine, after which another machine lays leads in every other slat, applies glue, and places another slat atop—a lead sandwich, so to speak. Seven brothers and I are mechanically carved from this “wood-clinched” sandwich.

My “lead” itself—it contains no lead at all—is complex. The graphite is mined in Ceylon [Sri Lanka]. Consider these miners and those who make their many tools and the makers of the paper sacks in which the graphite is shipped and those who make the string that ties the sacks and those who put them aboard ships and those who make the ships. Even the lighthouse keepers along the way assisted in my birth—and the harbor pilots.

The graphite is mixed with clay from Mississippi in which ammonium hydroxide is used in the refining process. Then wetting agents are added such as sulfonated tallow—animal fats chemically reacted with sulfuric acid. After passing through numerous machines, the mixture finally appears as endless extrusions—as from a sausage grinder—cut to size, dried, and baked for several hours at 1,850 degrees Fahrenheit. To increase their strength and smoothness the leads are then treated with a hot mixture which includes candelilla wax from Mexico, paraffin wax, and hydrogenated natural fats.

My cedar receives six coats of lacquer. Do you know all the ingredients of lacquer? Who would think that the growers of castor beans and the refiners of castor oil are a part of it? They are. Why, even the processes by which the lacquer is made a beautiful yellow involve the skills of more persons than one can enumerate!

Observe the labeling. That’s a film formed by applying heat to carbon black mixed with resins. How do you make resins and what, pray, is carbon black?

My bit of metal—the ferrule—is brass. Think of all the persons who mine zinc and copper and those who have the skills to make shiny sheet brass from these products of nature. Those black rings on my ferrule are black nickel. What is black nickel and how is it applied? The complete story of why the center of my ferrule has no black nickel on it would take pages to explain.

Then there’s my crowning glory, inelegantly referred to in the trade as “the plug,” the part man uses to erase the errors he makes with me. An ingredient called “factice” is what does the erasing. It is a rubber-like product made by reacting rapeseed oil from the Dutch East Indies [Indonesia] with sulfur chloride. Rubber, contrary to the common notion, is only for binding purposes. Then, too, there are numerous vulcanizing and accelerating agents. The pumice comes from Italy; and the pigment which gives “the plug” its color is cadmium sulfide.

No One Knows

Does anyone wish to challenge my earlier assertion that no single person on the face of this earth knows how to make me?

Actually, millions of human beings have had a hand in my creation, no one of whom even knows more than a very few of the others. Now, you may say that I go too far in relating the picker of a coffee berry in far-off Brazil and food growers elsewhere to my creation; that this is an extreme position. I shall stand by my claim. There isn’t a single person in all these millions, including the president of the pencil company, who contributes more than a tiny, infinitesimal bit of know-how. From the standpoint of know-how the only difference between the miner of graphite in Ceylon and the logger in Oregon is in the type of know-how. Neither the miner nor the logger can be dispensed with, any more than can the chemist at the factory or the worker in the oil field—paraffin being a by-product of petroleum.

Here is an astounding fact: Neither the worker in the oil field nor the chemist nor the digger of graphite or clay nor any who mans or makes the ships or trains or trucks nor the one who runs the machine that does the knurling on my bit of metal nor the president of the company performs his singular task because he wants me. Each one wants me less, perhaps, than does a child in the first grade. Indeed, there are some among this vast multitude who never saw a pencil nor would they know how to use one. Their motivation is other than me. Perhaps it is something like this: Each of these millions sees that he can thus exchange his tiny know-how for the goods and services he needs or wants. I may or may not be among these items.

No Master Mind

There is a fact still more astounding: The absence of a master mind, of anyone dictating or forcibly directing these countless actions which bring me into being. No trace of such a person can be found. Instead, we find the Invisible Hand at work. This is the mystery to which I earlier referred.

It has been said that “only God can make a tree.” Why do we agree with this? Isn’t it because we realize that we ourselves could not make one? Indeed, can we even describe a tree? We cannot, except in superficial terms. We can say, for instance, that a certain molecular configuration manifests itself as a tree. But what mind is there among men that could even record, let alone direct, the constant changes in molecules that transpire in the life span of a tree? Such a feat is utterly unthinkable!

I, Pencil, am a complex combination of miracles: a tree, zinc, copper, graphite, and so on. But to these miracles which manifest themselves in Nature an even more extraordinary miracle has been added: the configuration of creative human energies—millions of tiny know-hows configurating naturally and spontaneously in response to human necessity and desire and in the absence of any human masterminding! Since only God can make a tree, I insist that only God could make me. Man can no more direct these millions of know-hows to bring me into being than he can put molecules together to create a tree.

The above is what I meant when writing, “If you can become aware of the miraculousness which I symbolize, you can help save the freedom mankind is so unhappily losing.” For, if one is aware that these know-hows will naturally, yes, automatically, arrange themselves into creative and productive patterns in response to human necessity and demand— that is, in the absence of governmental or any other coercive master-minding—then one will possess an absolutely essential ingredient for freedom: a faith in free people. Freedom is impossible without this faith.

Once government has had a monopoly of a creative activity such, for instance, as the delivery of the mails, most individuals will believe that the mails could not be efficiently delivered by men acting freely. And here is the reason: Each one acknowledges that he himself doesn’t know how to do all the things incident to mail delivery. He also recognizes that no other individual could do it. These assumptions are correct. No individual possesses enough know-how to perform a nation’s mail delivery any more than any individual possesses enough know-how to make a pencil. Now, in the absence of faith in free people—in the unawareness that millions of tiny know-hows would naturally and miraculously form and cooperate to satisfy this necessity—the individual cannot help but reach the erroneous conclusion that mail can be delivered only by governmental “masterminding.”

Testimony Galore

If I, Pencil, were the only item that could offer testimony on what men and women can accomplish when free to try, then those with little faith would have a fair case. However, there is testimony galore; it’s all about us and on every hand. Mail delivery is exceedingly simple when compared, for instance, to the making of an automobile or a calculating machine or a grain combine or a milling machine or to tens of thousands of other things. Delivery? Why, in this area where men have been left free to try, they deliver the human voice around the world in less than one second; they deliver an event visually and in motion to any person’s home when it is happening; they deliver 150 passengers from Seattle to Baltimore in less than four hours; they deliver gas from Texas to one’s range or furnace in New York at unbelievably low rates and without subsidy; they deliver each four pounds of oil from the Persian Gulf to our Eastern Seaboard—halfway around the world—for less money than the government charges for delivering a one-ounce letter across the street!

The lesson I have to teach is this: Leave all creative energies uninhibited. Merely organize society to act in harmony with this lesson. Let society’s legal apparatus remove all obstacles the best it can. Permit these creative know-hows freely to flow. Have faith that free men and women will respond to the Invisible Hand. This faith will be confirmed. I, Pencil, seemingly simple though I am, offer the miracle of my creation as testimony that this is a practical faith, as practical as the sun, the rain, a cedar tree, the good earth.

Wednesday, January 27, 2010

Anna Karenina

I decided to read this book by Leo Tolstoy because it has frequently been ranked as the best novel ever. While I would not rate it that highly, Tolstoy does spin a good story. At over 800 pages, it understandably is slow at times, but overall it kept a good pace. I don't think I would rank Anna Karenina in the top ten of my favorite books ever, but it is in my top five best written books I have read.

The novel basically has two stories, one about Anna and one about Levin, both upperclassfolk. Anna runs off with a fellow who is not her husband and earns the scorn of society; her story is rather pitiable. Levin tries to follow his high-minded principles of peace with nature and happiness through hard work. I particularly liked Levin, especially his philosophies on society, government, and economics.

As I mentioned before, Anna Karenina dragged a bit around the three-quarter mark, which was really unfortunate. I went from enjoying the book thoroughly to ambivalence in short order, and subsequently couldn't muster much enthusiasm for the end, even though the final 150 pages were probably the best in the book.

Tolstoy's greatest skill, I think, is his ability to depict a person's stream of consciousness. I was frequently struck with how vivid and natural his characters' inner monologues were, and this really helped me identify with them.

Obviously, for a book to become a timeless classic, it needs a few themes. My main impression of Tolstoy's theme is that society is shallow and frivolous, and true happiness comes from living a simple life. The high society members, although living with all the comforts of a modern 19th century city and having many hours each day to gossip about their peers, never seem fully happy. Most of the rural farmers we meet, on the other hand, really appear to have it together and are content with their lives. Not a bad theme, I guess.


During a health care discussion recently, my interlocutor mentioned her belief that if we had enough really smart (bipartisan) people focusing on the issue, with no outside interferences, they would be able to come up with a great solution. These hypothetical experts may be able to solve the problems in this case, although I am skeptical. A far-reaching plan has so many chances to go awry that it is a wonder any positive legislation ever occurs. Plus, the downside of having bad plans adversely affect so much of a country when a large plan fails is, in my opinion, too high.

Let's look at a few well known historical examples. Shortly after FDR became president during the Great Depression, he developed what is known as the Brain Trust:
he called together the people he regarded as the most powerful and important corporate, banking, and labor interests – together with a gaggle of professors from Columbia – and essentially asked them what they wanted to get the economy going again.
FDR, with the help of these experts, then implemented his New Deal, which most economists these days credit with prolonging the Great Depresh.

Next, we have JFK (how many presidents are known just by their initials?) with his group of the best and the brightest,
fellows who '"carried with them an exciting sense of American elitism, a sense that the best men had been summoned forth from the country" to bring "a new, strong, dynamic spirit to our historic role in world affairs"'. Through pursuing its goal of stopping the spread of Communism, this group is mostly responsible for the disaster that was the Vietnam War.

OK, but maybe people have gotten a lot smarter in the last 40 years. But we need to remember all the experts, both in government and finance, who thought we had conquered economic cycles with our brilliant financial innovations. These same experts even now don't really know why we are in our current economic mess. Scott Sumner, a prominent economics blogger, laments that
in the last year my respect for authority, which was never very high, has fallen to a new low. As I read each interview in the Big Think, it becomes more and more obvious that the experts don’t have a clue as to what went wrong, nor how to fix the problem. Indeed they don’t even agree with each other, and none of them agree with me.
The point so far has been that, despite high hopes and good intentions, experts basically never have all of the knowledge they need in order to make perfect decisions. The upshot of this is that when they are given a lot of power and fail, bad things happen to a lot of people. And the nature of government is such that even when something is recognized as a bad policy, it is very difficult to change it (ethanol subsidies, anyone?)

Time to move on to health care. Health care spending made up around 17% of the economy last year; that is more than 1/6 of all the goods and services produced in America last year. Going into this spending are innumerable decisions made by innumerable agents: doctors, nurses, insurance companies, pharmacists, consumers (healthy and otherwise), bureaucrats, researchers, inventors, manufacturers, and many more.

What group of experts would be necessary to ensure that all the requisite information was considered in any health care legislation? How could such a team possibly be assembled? Especially today, with the Internet's making information so diffuse, the only way to build an effective team would be to include just about everybody.

Luckily, this team can actually be assembled pretty easily: don't give a small group of experts all the power. If more decision-making is left up to individuals, they will automatically use the best information they have on hand. If an individual makes a spectacularly bad decision, it doesn't harm the entire country. Most importantly, they will respond to the ever-changing health care environment more nimbly than any government agency could.

Turn out the lights

From the NYT:

With no clear path forward on major health care legislation, Democratic
leaders in Congress effectively slammed the brakes on President Obama's top
domestic priority on Tuesday, saying they no longer felt pressure to move
quickly on a health bill after eight months of setting deadlines and missing

With popularity of this legislation plummeting as time goes on, and November's interim elections steadily approaching, it looks like this is over.

Sunday, January 24, 2010


There appears to be a food drive this month in Union Station, and I walk past the attractions every day on my stroll to and from the office. These are all made out of food packages (mostly cans), and are really neat.Above is, obviously, Mr. Potato Head, which was the first toy ever advertised on TV. Below is a tornado weaving a swath of devastation across the countryside.
This is a picture of Marilyn Monroe, who was recently featured in another exhibit at Union Station.
This guy is goofy.
A shoe...
There are many others, but these are my favs.

Wednesday, January 20, 2010

The Politically Incorrect Guide to Capitalism

This was an interesting primer on free-market economic thinking by Bob Murphy, an economics blogger whom I enjoy. It is not terribly intellectually rigorous; most of the arguments are just appeals to common sense. However, these appeals are quite sensical, and there is ample data to back up many of his points.

A lot of the book was standard stuff, like how minimum wage laws hurt poor workers, or how outsourcing benefits everyone in the long run, or how tariffs hurt Americans as much as they hurt anybody else. But there was one chapter about how the free market prevents racism.

Murphy's major examples of this free market anti-racism were related to slavery. Murphy himself can summarize his arguments better than I can:
If you think about it for a moment, slavery really makes no sense economically. If you're a slave, then your incentive is to produce the bare minimum to avoid a whipping. But if you're a free laborer, you have an incentive to produce more than the guy next to you, because you'll get paid more (or get promoted, etc.).

So in a truly free market -- even if it started out with some people classified as the "property" of other people -- there would be tremendous incentives for the slaves to buy their freedom from their masters. Don't get me wrong, that would be horribly unfair and they shouldn't have to do that in the first place, but nonetheless widespread slavery wouldn't persist if the rest of the economy were a free market.

Yet that's not what happened historically. Indeed, there were all sorts of government interventions that propped up the "peculiar institution." Just a few examples: (1) mandatory slave patrols, in which the local governments forced non-slave owners to defray the costs of the institution, (2) laws against educating slaves, and (3) laws curtailing manumission, i.e. the practice of freeing one's slaves (often in one's will).
Really, this book is pretty good if you are sort of interested in free market thinking, but don't really know much about it. It's an excellent, quick introduction to this type of thinking.

This guy's blog also has an interesting twist. Evidently, he used to be an atheist but has come back to Christianity, an every Sunday he has a long post about applying religion to our daily lives.

A Bear Called Paddington

I just finished this charming, short book by Michael Bond. It revolves around a bear from darkest Peru who is adopted by a British family. I've got to say, every place sounds way cooler when preceded by "darkest." I grew up in the darkest Midwest, and attended college in darkest Kirksville. Doesn't my life already sound exciting?

Being from darkest Peru, Paddington doesn't know a lot about getting around in modern (1950s) Britain, so he is constantly getting into scrapes. For example, he's never owned a new coat before, so when the hood falls over his eyes, he thinks he's gone blind and gets lost.

The best part about this book is how everyone is so nonchalant about Paddington. He rides the subway and orders tea at a restaurant, and the most surprised thing anybody says is "You're rather small for a bear, aren't you?"

This is really a fabulous book for children. I can't believe I have never read it before, but I recommend it to anyway who has, is, or was a child.

Also, this is probably the best line to use before going on an outing: "I've got a funny feeling about if things were going to happen."

Tuesday, January 19, 2010

Alcatraz Versus the Evil Librarians

I recently polished off this book by Brandon Sanderson, and it was pretty good. Sanderson is a relatively new fantasy author who has written several fabulous books for adults. Evidently, he writes a new novel in this Alcatraz series, which is targeted for middle school youth, as a break from more serious books.

As you may be able to guess from the title, this series isn't terribly serious. Alcatraz, an angsty youth, finds out that he is an Oculator, a type of person who can perform magic with various magical eyeglass lenses. He uses this nifty skill to combat the Librarians, an insidious cult that pretty much controls the world as we know it through information hoarding and other manipulations.

It was really a light and funny book, and I will likely read the rest of the series as well. However, some of my readers (Mom) may not be very appreciative of the premise, so read at your own risk.

road trip?

I would like to stay here. Canada evidently has a hotel made entirely from ice:

My plan, part 2

I left you with a bit of a cliffhanger yesterday, and I'm sure you spent a sleepless night trying to figure out what comes next. Now I'll explain why putting more costs on the actual consumer will do the trick as far as health reform. Incidentally, I've been focusing on health care a lot lately, and I promise to try to find something else to cover for a little while.

One interesting aspect of health cost growth is that it's not constant throughout the country. Consider the following graph from a study on regional variation in health cost increases:

Clearly, Oregon has got it figured out. Miami is in trouble. But why these differences?

They can't be caused simply by new technology in certain areas, because that doesn't vary a ton from one major city to another. The researchers also controlled for health outcomes, so everyone in Oregon isn't walking around with pneumonia. This study's authors found that
Using clinical vignettes to present standardized patient care scenarios to physicians throughout the country, the researchers found that physicians in high- and low-spending regions were about equally likely to recommend specific clinical interventions when the supporting evidence was strong. Those in higher-spending regions, however, were much more likely than those in lower-spending regions to recommend discretionary services, such as referral to a subspecialist for typical gastroesophageal reflux or stable angina or, in another vignette, hospital admission for an 85-year-old patient with an exacerbation of end-stage congestive heart failure. And they were three times as likely to admit the latter patient directly to an intensive care unit and 30% less likely to discuss palliative care with the patient and family. Differences in the propensity to intervene in such gray areas of decision making were highly correlated with regional differences in per capita spending.
Basically, getting more stuff makes things cost more. While the study's authors advocate for more doctor advocacy to solve this problem, I think it could be much more easily dealt with by making consumers pay for more procedures. This will make them much less likely to go for a procedure that will probably not do them much good.

If people are getting less health care, this doesn't mean that we'll all be much sicker. Many studies have found, for example, that "Medicare patients in regions with higher health care spending levels do not experience better health outcomes, nor do they gain better access to care or report greater satisfaction."

So now we've got more empowered consumers, less distortion of salaries and health insurance, more transparency, slower growth (and therefore, more affordability for everyone), and less waste. Everyone wins! And the best part is that, as costs are tamed, more people are able to afford the health care they need. Plus, with insurance not covering everything under the sun, just about everybody who wants it will be able to buy catastrophic coverage, which is what insurance should cover in the first place.
Impending legislation, unfortunately, further entrenches workers' dependency on their employers for coverage, requires more comprehensive and widespread insurance, and does little that will actual control cost growth. Everyone loses...

Monday, January 18, 2010

My plan

I've been doing quite a bit of bashing of the current health legislation without providing anything productive. Well, this post is intended to remedy that by outlining my ideal health care reform.

It is pretty obvious that health care spending has been increasing at a pretty good clip:

This is really unsustainable (I think). Health expenditures increased by just over 6% in 2007, which is much higher than GDP growth. At current trends, we'll be directing one quarter of all of our country's expenditures to health care (we're currently spending around 16%). This represents a huge amount of money and resources that could be applied to things that provide us with more benefits.

Now, there are a lot of things driving this growth: new medical technology, increasing personal wealth, the aging population, and increasing third party payment (insurance) are generally cited. The aging population is a trick issue, and I'm not completely sure what to do with it. Earlier, I indicated I wasn't positive about the unsustainable health cost growth. This is because there is a chance that, as people live longer and longer, we really will just come to an equilibrium wherein a huge amount of our wealth is spent on health care. This is not my preferred alternative, but it is possible.

The other items, however, can be addressed. I think that getting rid of so much third party payment--that is, depending on health insurance to pay for just about everything--is the key. After all, we don't use our car insurance whenever we get an oil change, and car maintenance costs are not skyrocketing. But a dental cleaning or a routine doctor's visit are almost never paid entirely by the consumer. This is distorting expenditures because consumers don't know how much stuff really costs and, since they're not really paying, they elect to have more done than is necessary.

Currently, health insurance premiums provided by one's employer are tax deductible. This provides an incentive to beef up compensation packages by providing better health insurance to workers. Getting rid of this tax benefit would reduce the amount of companies that provide substantial health insurance. And since nearly 200 million people have insurance through an employer, this would push a ton of people out into the individual market.

This may sound like a no-win for workers, but employee salaries are currently reduced by however much a company spends on their health insurance. Getting rid of this cost would lead to higher salaries, and they could pay for the insurance they want rather than whatever their company offers. Or, if they just wanted to pay medical expenses out of pocket and keep the extra $2 million or so that their employers will pay for their health insurance over their career, they could do that too!

Under this scenario, many people will probably not elect the most comprehensive coverage. This means that, if they want or need some care, they will pay are larger portion of it themselves. This will force consumers to evaluate costs and benefits, and will lead to less wasteful spending. Perhaps consumers don't know enough about health care to evaluate these trade-offs, but I am absolutely positive that hospitals and doctors would make costs more transparent so this would be easier.

Another crucial step is to get rid of so many mandated insurance requirements. Throughout the states, there are nearly 1,000 mandated benefits, and they don't come cheap.
A new analysis prepared for the National Center for Policy Analysis by the actuarial firm Milliman & Robertson estimates the costs of 12 of the most common mandates and finds that, collectively, they can increase the cost of insurance by as much as 30 percent.
Mandating coverage of things people don't need or want covered is no good. People should have the freedom to sell and purchase what they want. If a person wants podiatry coverage (or not), that should be up to him.

Phew! This is super-long, so I will go into more detail of why I think this will work tomorrow. Stay tuned!

Saturday, January 16, 2010


My earlier post was not too diverting, so here is something fun. In Calvin and Hobbes, my favorite comic strip, Calvin has a history of making unique snow scenes. In honor of all the snow we've gotten recently, here are a couple. Click the pictures for a larger version, and click here to see more.

More health care

One of the initial goals of the health care writers was to allow people with pre-existing conditions to get insurance. This really is a big deal for a lot of people, and is a really thorny problem. Someone who has, say, a heart condition and loses insurance for whatever reason will be hard-pressed to get new insurance. The proposed legislation ostensibly will fix this problem by requiring that insurance companies not nix people for these conditions.

This leads to a lot of problems and certainly expands the scope of the bill dramatically. If you just change this one thing, then insurance companies will go out of business. Many people will simply dance through life with no insurance until they begin ailing, at which point they will run out and buy a nice, comprehensive policy. The insurance folks will forgo years of premium income and then have a bunch of expenses. Clearly, this will be bad for their solvency.

So how to solve this problem? Obviously, you could require that people buy insurance. This would eliminate the free rider problem and guarantee that insurance companies get the premium income they need in order to pay the bills when they come due.

But wait! If people are required to make this large purchase, the poor are going to be in a pickle. How can they justify buying expensive insurance if they don't already have many thousands of dollars per year in disposable income? This, of course, can be solved by providing subsidies to people below a certain income level.

And there we go: a triangle of solved problems. are some more problems. Adding subsidies to the poor really increases the cost (to the government) of the legislation. Maybe some of this cost can be recouped by the fines on people who don't get insurance. However, the Senate version of the bill makes the fine uselessly small, $95 in the first year. Not only will this not bring in a lot of dough, but it will not enforce the individual mandate very well. A young, healthy person might very rationally conclude that a $95 (or whatever it increases to over future years) is less than $8,500, which is the average cost of an individual policy per year.

Well, now we are back to just having insurance companies losing a lot of money. My prediction is that, if this health care legislation as I understand it passes, an actual public option will be inevitable in about 10 years.

Wednesday, January 13, 2010

The Mating Season

I had better fill you in on this excellent book by P. G. Wodehouse before I forget. This is another installment in the Jeeves saga, of which I have read several. In this, Bertie is forced by a comical turn of events to pretend to be his friend Gussie Fink-Nottle. He then tries to (with success!) reunite six sundered hearts throughout the rest of the novel.

In order to give you an idea of how enjoyable this book was, consider the following.

Books which have induced tears, in chronological order (as far as I can remember):

1) The Merry Adventures of Robin Hood
2) Where the Red Fern Grows
3) The Outsiders
4) Harry Potter and the Deathly Hallows
5) Where the Red Fern Grows
6) The Mating Season

Items 1-5 were tear-jerkers, as you can maybe guess, because sad things happen. Item six is a tad different; I literally had tears pouring down my cheeks from laughing so hard. Seriously, if you want a comical book, read P. G. Wodehouse. Even better, listen to an audio recording of one of his books, because the readers are spectacular.

What are some of the best books that have made you cry?

Tuesday, January 12, 2010


If you are following the health care leviathan as it wends its way to Obama, you are aware the the Senate and House are currently trying to resolve their two bills. One feature that Nancy Pelosi and others are pushing in the final bill is a provision to require insurance companies to spend no more than 15 (or 20) percent of their income on administration:
Additionally, House Democrats want to require insurers to spend a minimum amount of premium income on benefits, thereby limiting what is available for salaries, bonuses, advertising and other items. The House bill sets the floor at 85 percent; the Senate-passed measure lowers it to 80 percent for policies sold to small groups and individuals.

This sounds pretty reasonable, especially if an individual mandate gets through: why should insurance companies, with all their earnings potential, get to keep a ton of this money for themselves when it could do much more good actually paying medical bills?

For one thing, a private insurance company should remain...private, and should be allowed to spend its money how it pleases. If customers don't like how much is being spent on overhead at one company, they can switch to another. Perhaps requiring more transparency in this issue would be helpful so customers could evaluate more easily.

Another reason is that a lot of the money spent on "other items" is really contesting sketchy claims, a major component of keeping cost inflation down. The Congressional Budget Office has indicated that a requirement like this would cause medical costs to go through the roof for this very reason. And insurance folk would have very little incentive to try to reduce costs further because bonuses and profits would be strictly capped, so why try to save money?

The CBO also, for some reason, thinks that requiring a firm to spend 15% or less of its income on overhead might send several insurance companies out of business...

Monday, January 11, 2010

The Diverting History of John Gilpin:

Showing how he went farther than he intended, and came home safe again. I am having internet issues, so my thoughts on this story by William Cowper, with illustrations by Randolph Caldecott, will be brief. John Gilpin is a picture book in which the titular character has some issues with his recalcitrant horse.
The story is pretty silly, yet comical, and at only seven minutes for a full read-through, it's well worth it. Don't just take my word for can read it on your own by clicking here.

You may recognize the Caldecott name from the Caldecott Medal, which is given to the most distinguished children's picture book each year. Clearly, this is named for old Randolph because of his efficiency with a pencil. Coincidentally, the Medal in question even has a scene from this story on it!

Sunday, January 10, 2010


The word of the year ("tweet") and word of the decade ("google") have been named. But my favorite is the Most Creative word of the year:
the winner by a big margin was Dracula sneeze, defined as "covering one's mouth with the crook of one's elbow when sneezing, seen as similar to popular portrayals of the vampire Dracula, in which he hides the lower half of his face with a cape."
The purpose of this, as I understand it, is to keep sneeze germs off one's hands, and subsequently, everything those hands touch. But it seems as if one would have an opportunity to wash the hands much more quickly than the elbows...

Also, having consumed Dracula earlier this year, I don't recall his ever actually making that motion. Perhaps he would have been hiding his fangs, but his piercing, menacing eyes (see below) were always enough to tip people off to his identity anyway.

Saturday, January 09, 2010


I have been on the edge of my seat for quite some time. On November 9, I sat for my fifth actuarial exam, and a brief two months later I finally found out that I passed! So my many grueling hours of study have paid off.

After this test, I am finally more than halfway finished, which seems like a huge milestone. In order to be a full-fledged actuary (that is, an FSA), I will still need to pass four more exams, but the end seems to be in sight.

Abbie and I are celebrating this weekend by relaxing and eating a lot of buffalo chicken nachos!

You might not know much about actuaries, so here's a quick description from Wikipedia:
Actuaries evaluate the likelihood of events and quantify the contingent outcomes in order to minimize losses, both emotional and financial, associated with uncertain undesirable events.

Before you conclude that that sounds exceedingly boring and useless, consider that the comic series Batman featured a villain named the Actuary, a mathematical genius who applies formulas to aid the Penguin in committing crimes. So, before mocking an actuary in the future, be aware that we are a force with which to be reckoned.

Thursday, January 07, 2010

A Child's Garden of Verses

I just re-perused this collection of poems by Robert Louis Stevenson. I've got a copy of it on my computer, along with quite a few other literary gems (a subject for another post), and I like to go over them again when I run out of blogs to read.

Stevenson's Treasure Island is perhaps my favorite book, so I may be slightly biased in his favor, but he is pretty skilled with a pen. In addition to many excellent novels, he wrote several poetry collections, but this is my favorite of his. This stanza from "Winter-Time" is especially apposite today:
Black are my steps on silver sod;
Thick blows my frosty breath abroad;
And tree and house, and hill and lake,
Are frosted like a wedding-cake.

I am much more a fan of poetry for the youth than for adults. They just seem to be filled with such wonder or tell better stories. I would take Lewis Carroll over Ezra Pound any day. Probably to Abbie's annoyance, I frequently browse a poetry anthology we have at home and grace the family with random tidbits that strike my fancy.

One of my favorite activities that go down in Anne of Green Gables are the poetry concerts in which Anne participates. Once Abbie and I start raising the next generation, I intend to be an avid promoter of weekly household poetry concerts.

Wednesday, January 06, 2010


Keith Hennessey, one of my favorite economic policy bloggers, gives sweeping healthcare legislation a 90% chance of passing. This is unlucky for an abundance of reasons that will not be addressed now.

My main concern with heathcare is its roughly 8% annual growth rate, which as my mother could tell you, means that medical expenditures will double just about every nine years. To me, this is much more of a problem than people not having insurance because 1) eventually, even government/insurance will run out of money and 2) an overabundance of insurance is one of the roots of the problem.

How can people be conservative with their medical expenditures with this trend:

The article continues,

Because so many Americans rely on an insurance policy or a government program to
pay their health care bills, the internal governors that temper the rest of
their purchases are turned off. When a visit to the doctor's office or a
diagnostic test costs them a mere $10 or $20 co-payment out of pocket — or there
is no charge at all — cost has little impact on their decision to see a doctor.

A rising tide may raise all boats, but a dropping tide lowers just as many, and rising costs will lower the quality and abundance of healthcare. Even if the government is paying for it.

Tuesday, January 05, 2010


You may have noticed a little facelift around this blog. This is to signify that I am now taking my blogging in an entirely new direction: instead of blogging about books I read, I will now blog about...books I read and economic tidbits! I may, on occasion, even combine the two and blog about the economics in books, but I'm thinking that one step at a time is in order.

So evidently after Obama slapped Chinese tires with a 35% import tariff several months ago, things have been becoming downright tense. China followed up with its own tariffs, and now everybody is trying to protect everything. Steel, chickens, and salt are just a few more disputed imports.

The whole thing is ridiculous because protectionism like this doesn't accomplish anything useful. Sure, some tiremen might go out of business, but there is no way they are the real target. The target in China would be some political leader who gave Obama the crook eye, and running tiremen out of business is an exceedingly roundabout way of evening the score. (Actually, the real goal is almost definitely to help out US manufacturers who are rather philanthropic to lawmakers).

Additionally, it makes things worse for everyone in the state doing the protecting. Now stuff we buy from China (that is, everything) is going to be more expensive, so we protected Americans are all having a little bit lower of a standard of living.