~ Archive for Uncategorized ~

U.S. versus German infrastructure spending and results

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“Quality, Not Just Quantity, of Infrastructure Needs Attention” (Wall Street Journal, May 20, 2015) has some interesting data. The U.S. has spent, adjusted for deprecation, 52 percent of GDP on “public capital stock” (infrastructure such as roads, bridges, train tracks, etc.) while the Germans have spent just 35 percent of GDP. What results have been achieved? “global executives” rated the German infrastructure superior to that of the U.S.

In other words the Germans are getting substantially better value for each public dollar invested.

Why the constant calls by Americans to put more money into public infrastructure if it turns out this is not one of the things that we can do competitively?

Related:

Monica Lewinsky’s lost child support profits

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I was chatting with a litigator about Real World Divorce and politics. The subject of the Clintons’ roughly $22 million/year in earnings came up and the litigator noted “Monica Lewinsky could have done pretty well for herself if she hadn’t left the white gold on her blue dress.” What did she mean? It turns out that if Monica had stayed in the District of Columbia with Bill Clinton’s child she would have been entitled to roughly $2 million per year for 21 years, i.e., about $42 million total in tax-free profit.

What about the fact that some of the money was earned by Hillary? “A judge could use discretion to award child support based on the combined income in a variety of ways,” she explained. “One is by awarding a higher percentage of Bill’s income with the explanation that Hillary’s earnings can replace those lost to a child support plaintiff. Another is by accepting the argument that Hillary wouldn’t be earning any of her speaking fees but for her relationship with Bill and being part of the couple. A third way of getting a child support award based on the full $22 million would be to argue that much of the Clinton Foundation spending, e.g., on travel or parties, should be considered income to Bill and Hillary. Adding in a judge-determined amount from the Foundation to Bill’s income would bring his income for child support calculation up to $22 million per year.”

How does the $5.6 billion fine against the banks discourage future collusion?

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Employees at five banks colluded to earn supranormal profits in rigged markets (nytimes). Presumably they were rewarded by their employers with correspondingly huge bonuses. Those bonuses by now have been turned into beach houses, Gulfstreams, etc. The government comes along more recently and fines “the banks” $5.6 billion. But it seems to me that this fine has to be paid by the shareholders of the banks, not past, present, or future employees. If we assume a labor market the employees of banks are paid a competitive wage. So the banks that have been fined can’t reduce salaries or their better people will jump ship. Thus it will be shareholders who pay. But public company shareholders, due to SEC regulations that prevent them from directly nominating board members, exercise virtually no control over what actions bank employees might take. How then can this fine reduce the likelihood of similar behavior in the future? Wouldn’t a rational current bank employee still seek to collude with counterparts at other banks, rig a market, make huge profits for a while, take home and keep huge bonuses, etc. Why does the employee care if at some future date a shareholder will have to pay a fine because of his or her behavior?

 

Book review: Last Man Off (a.k.a. “Why fishing in a lake or stream is probably a better idea”)

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If you want to stop feeling sorry for yourself and/or can’t find a gift for that co-worker who constantly complains about the job, Last Man Off: A True Story of Disaster and Survival on the Antarctic Seas is an awesome book. Certainly you won’t be surprised to find that fishing is the most dangerous occupation in the U.S. (BLS paper), though of course our workers face nothing like the risks presented by those going after Patagonian Toothfish (“Chilean seabass”) in seas where the standard characterization is “Below the 40th latitude there is no law; below the 50th no god.”

The book is written by an English marine biologist who signs on as a “scientific observer” that fishing boats are required to carry as a condition for hunting this semi-endangered species with 15,000-hook longlines. His particular boat is operated out of South Africa with a multinational crew that does not include any Americans:

After picking up our licence from King Edward Point [South Georgia Island], we sailed sixty miles north to the edge of the continental shelf. We would be fishing in water 800 metres deep, but just a few miles further north the seabed dropped off into the abyss. When darkness fell it was time to put our first fishing line in the water. Boats hunting for tuna, marlin or swordfish will set their long-lines to float near the surface, but we were interested in Dissostichus eleginoides, also known as Patagonian toothfish, which feed near the bottom.

Toothfish do not have the gas-filled swim bladder that allows other fish to adjust their buoyancy to cope with changes in depth. Many deep-water species lack these and are forced either to sink to the bottom or waste energy by perpetually swimming to stay up in the water column. Instead, toothfish have changed the very composition of their bodies to become neutrally buoyant. Their skeletons and even the fringes of their scales contain more cartilage and less calcium than do shallow-water species, making them lighter. Their big, dense muscles contain large deposits of lipids, and these buoyant fats are carefully distributed through the fish’s body to be most abundant near the centres of gravity and buoyancy. At their largest, the streamlined and powerfully finned toothfish can reach well over a hundred kilos in weight and two metres in length. They are an abyssal cruise missile with a toothy grin.

It takes a toothfish nine or ten years to reach maturity, when it can reproduce, at which point it is about three feet long and its only predators are elephant seals and sperm whales. The seventy-kilo fish we were hoping to catch may well have been alive for thirty, forty or even fifty years.

Death is always just a few seconds away:

Hannes leant over the rusty guardrail to hand the end of a rope to the deck below when a hook snagged his jacket arm. Within seconds, the fishing line began to tighten. He wouldn’t stand a chance if he was pulled overboard, whether he could swim or not. The water was just above zero, and the shock of the cold water would probably kill him before he could be freed. Within ten metres of the boat he would disappear into the ink of the night, no floodlights to illuminate his flailing arms as the anchor and weights towed him under, like a sardine bait in cheap oilskins. Even the weakest component, the nylon monofilament snood holding the hook, was strong enough to hold a struggling hundred-kilo toothfish underwater, which was plenty strong enough to pull a man overboard and down. Near my feet, a knife stood with its tip embedded in the wood of the bench. I had guessed that it was there for emergencies. It would take minutes to alert the bridge and to stop and turn the boat around as it steamed at six knots. Even if Hannes managed to free himself of the line in the water, I reasoned that he would flounder and drown before he could be found in the darkness. ‘Wo! Wo! Wo!’ Hannes cried out. His voice rang out over the thrum of the engine and the wind. The line went tight. Joaquim grabbed the knife and leant over the guardrail. Moments before Hannes was dragged overboard, the thin nylon sprang apart under the blade.

Whales can be formidable competitors:

The orca were not popular with the crew and were known to steal fish from the line, but I had been waiting to see them all trip; I tried to restrain my excitement. The fishing line twanged and Hannes swore as the whale plucked a toothfish from the hook just before it broke the surface. A dangling pair of fishy lips was all that remained on the hook, taunting the fishermen. The whale was not black and white, but brown and cream, like a sixties retro version. The tint is due to a film of diatoms (planktonic algae) that builds up on the whales’ skin in the Antarctic waters. No less intimidating than their northern cousins, they usually arrive in pods of seven to ten animals. There are several types of killer whales recognized in the Southern Ocean. Some are bigger, and are thought to specialize in attacking minke whales. Others patrol the edge of the ice pack hunting seals. The killer whale now lurking around our boat was of the type thought to eat mostly fish – two thirds of its diet – with seals making up most of the remainder. Toothfish would normally be out of their reach in the depths, but now they were like sushi on a fourteen-kilometre conveyor belt. More orca appeared, as the rest of the pod joined in. We were losing more to the whales than we were hauling aboard. I looked up to see a whale, fifty metres off to starboard, throwing a large fish into the air.

The boat gains a lot of weight mid-voyage:

The boat we were to meet, the Hai Gong You #302, was a ‘reefer’, one of the nomadic tankers that act as fuel stations for the world’s mariners. A bitter-sweet triumph of modern cost-cutting and efficiency is that a boat no longer needs to return to port to refuel or even to offload her cargo. Our reefer was waiting just outside the twelve-mile limit of the Falkland Islands’ territorial waters.

We had taken on ninety-two tonnes of diesel – much more than the small top-up we had required – and had offloaded only one sack of toothfish. This meant that we were now carrying over one hundred tonnes of fuel, sixty tonnes of fish and a few tonnes of bait, food, water and kit. The Sudur Havid was low in the water.

With our decks now closer to the sea’s surface, we would be more prone to taking on water from incoming waves. A heavy load could also affect our ability to return upright after being rolled to one side. Instead of bobbing like a duck, in the way Bubbles had described, the boat could struggle to rebalance after each swell. Almost forty years old, altered again and again from her original design, the Sudur Havid was being made to carry a dangerously heavy load.

The sea turns rough from Force 7 winds (Beaufort scale) and the senior officers decide to keep pulling in fish despite the fact that this requires some doors to be open that also admit water. The pumps clog from fish guts. The backup pump can’t be started.

At this precise moment, as I was on my knees, a tipping point was reached and passed. Unannounced, unacknowledged, but apparent to all of us just minutes later. The boat had been taking on more water than she could drain for some time but now the process had accelerated. Click. A light suddenly went on in my mind. I was no longer getting wet, the well was not being refilled. For once, the water hadn’t come back over to port. I looked over with dread at the starboard side of the factory, which was now six feet deep in grey murk. The water almost reached the ceiling, and the weight pinned the Sudur Havid down. A bird’s eye would see through the spray that she now lay with her heavy bow low in the water, and her stern slightly raised. She leant heavily, with her port side twelve feet up in the air and her starboard rail down in the sea. Waves broke over her and ran down her decks. The boat was no longer rolling, she was listing.

There had been no evacuation drill and the officers don’t have any plan to take EPIRBs or other essential gear into the life rafts. It turns out that an inflatable life raft is a wonderful device for abandoning ship in flat sunny conditions. With high winds and waves, though, getting into the raft and away from the boat is a challenge:

Relenting momentarily, we rolled away just enough to pop out from underneath her. The swells took us in the right direction away from the hull – five metres of freedom – only for the wind and the painter to reel us back. … It felt as if the boat were out to kill us. The underside of the stern tried to crush us, and the once-protective railings were now sharp edges to catch and tear the rubber tubes. … Morné had found a safety cutter, a small plastic item the size of a credit card, attached to the inside of the raft. He passed the serrated blade to Big Danie, who cut the painter. … Just when we thought we were clear, the boat shifted and the stern gantry came slamming down. This arch of heavy steel had once supported the trawl cables, but now the girders were slicing down on to the raft’s roof, folding the raft in two and forcing us underwater. The gantry caught my head: an irresistible force bearing down on me through the canvas canopy. The flat steel pressed against my skull so hard I wanted to cry out, but I was being smothered. Cold water rushed past my cheek. The raft flooded instantly as its rim was submerged. Frigid grey seawater plunged in, swirling around us. To my right, Morné felt someone push his head underwater at the last second, narrowly avoiding the full brunt of the crushing gantry. Fighting for breath, it felt as though he was metres below the surface. And then we were free. The boat shifted in the water and the gantry relinquished its hold. We were less buoyant now but still afloat and the wind and waves carried us slowly away. Our collision with the gantry had flooded the raft with thousands of litres of freezing seawater. Only the top tube of the raft now sat clear of the ocean’s surface; the other two that formed the walls were submerged. The floor bowed down away from us, sagging under the weight of the flooding. This made standing difficult and we were up to our waists and chests in –1°C seawater. But, thank God, we were leaving the boat behind.

The author sits in about three feet of freezing seawater:

At first we bailed through both hatches on the raft, but the waves breaking over us and bursting through the windward side were undoing all of our hard work. Hannes and Big Danie held the windward hatch closed, and Morné and I bailed through the leeward opening instead. But when the raft rotated this soon suffered the same problem and the water poured back in. With the doors held closed, I tried bailing through a gap between the tubes and the canopy, but the amount I could discharge was piteous. … We busied ourselves checking the raft for more supplies. Morné opened the bag that Bubbles [the South African captain] had been packing on the bridge and looked inside. It contained our passports, Joaquim’s video camera and a bottle of KWV brandy. What a disappointment. Where were the EPIRBs, the handheld VHF radio and the flares?

Perhaps they had been washed or torn away in our battering as we departed, but if there had been any other supplies or equipment in the raft, we couldn’t find them now. We had no way to communicate with the outside world, and no way to attract the attention of potential rescuers. There were no paddles or bailers and, crucially, no sea anchor. The latter was a big loss. Like an underwater parachute, it would have dragged below us through the water to stabilize the raft and stop us from spinning around. Instead, we were at the mercy of the wind that could blow us far away from the potential search area.

We needed to fasten the doors, to seal out the weather. Until now we had been relying on an elastic hem on the door, but this was not strong enough to hold against a wave or a strong gust. Inside the doors, Morné and I found inch-wide Velcro straps. Once threaded through an eyelet, these could be attached to a corresponding patch on the rubber tube. It was not an easy task and, as our fingers chilled, it became more and more awkward. Infuriatingly, each time I succeeded in fastening the strap, a large wave swept through and crashed against the canopy, ripping open the doors and soaking us. My bare hands stiffened. I knelt in the water, holding the flap of the life-raft down with my teeth while I threaded the Velcro strap through the eyelet with my two numb hands. Finally, after I strapped the last Velcro down, I leant back to admire my handiwork once more. Seconds later the hatch ripped open again. We abandoned our attempts to bail and retreated to find our own spaces within the raft, jostling for positions at the edge, away from the deepest water in the centre. I managed to squeeze myself into a gap at the back of the raft and hooked my arm over the rope that ran around the inner edge of the tube.

The book exists due to Ernesto Sandoval Agurto, a Chilean fishing captain:

On the bridge of the Isla Camila, Captain Ernesto Sandoval Agurto heard Bubbles’ Mayday and wrote on the whiteboard: Barque abandonar: 53º56´S, 041º30´W He picked up the radio microphone to hail his sister-ship. ‘Isla Sofia, Isla Sofia . . .’ The frantic Spanish voice heard on the Sudur Havid as she was sinking was actually Chilean, and belonged to Captain Sandoval. At fifty-four metres and with a GRT of 653 tonnes, the Isla Camila was substantially larger than the Sudur Havid and probably almost twice her weight. Now registered in Punta Arenas, Chile, but built in Holland in 1972, she was old but capable.

Any fisherman working in such distant seas knows that, when it all goes wrong, there are no rescue services to be called upon. There are no lifeboats to respond to a Mayday, and no helicopters to lift a crew to safety. A distress flare fired high into the sky will most likely fade unnoticed. In the Southern Ocean, boats work hundreds or even thousands of miles from the nearest port, city or rescue service. A boat’s best chance lies with its competitors.

Of all the boats in the Southern Ocean, the Isla Camila was the closest to the Sudur Havid’s last position, but she was still thirty-three miles away. While the Captain continued to issue calls for assistance, the crew attached a massive buoy to the half-hauled line and prepared to cut the ropes. This would free the Isla Camila to sprint towards the Sudur Havid’s final co-ordinates, and to whatever was left behind.

For the next three hours the crew of the Isla Camila pushed the boat as hard as they dared, crashing south-east on a bearing of 117° through the furious seas. …  The Chilean fishermen changed into thick layers of jumpers, coats, hats and gloves, and put their oilskins and boots back on to keep the freezing wind and spray at bay. Taking into account the wind chill factor, they could expect –15°C on deck. They knew the search could take hours, and that they could expect to be outside the entire time, directing spotlights and peering into the darkness.

Thirty minutes into the search and more than four miles from the last known position of the Sudur Havid, one of the deck crew at the rail started waving his arms frantically. He had glimpsed a flashing light.

Pulling people from the rafts is a non-trivial task:

Although the Isla Camila was a long-liner like the Sudur Havid, her line and the fish were brought aboard through a more sheltered hatch positioned higher in the hull, about two metres above the waterline, on the starboard side. This was the best point on the boat from which to mount a rescue but the timing would be crucial – the rise of the swell would have to be judged to perfection to lift the raft close enough to the boat. With swells seven metres in height, or more, the raft would drop down the side of the boat. A fall from that height could easily result in injury or the casualty being pinned underneath the boat. Normal training scenarios are designed for the recovery of a single man lost overboard. On this night, the potential numbers involved, combined with the weather conditions, raised the complications and danger immeasurably.

With no strobe aboard that raft to mark its position, it was imperative that the Isla Camila kept the new survivors in sight. Once the men were recovered from the first raft, Captain Sandoval ordered their vessel to be hauled aboard to avoid confusion. Paco turned the Isla Camila and gave a burst of throttle. The ship rolled as she went broadside to the swells.

Illuminated in the harsh glare of the Isla Camila’s work lights, the flooded bowels of the second raft came grimly into focus. Phil [the scientific observer on the Isla Camila] shuddered. After years of service with the Whitby lifeboat, he was used to the sight of death, but it was the state of the survivors that shocked him. Those within were lying awkwardly: a knotted melee of arms, legs and heads floated in the water, and the odd foot or hand protruded from the surface, or was caught in a twisted web of lifejackets and ropes. Full of water, and sitting lower in the waves, the second raft was going to be much more challenging to recover. Phil’s fellow deckhands began throwing ropes to those inside, but their arms weren’t working; the men in the raft seemed to be frozen from the shoulders down. A few casualties came within reach, and were hoicked over the side of the boat. Others waited in the raft, their arms outstretched in a desperate plea for rescue. They were unable to help themselves. Phil found a rope and tied a bowline to make a loop, gesturing to his crewmates to do the same and to lasso over their shoulders. When a man was hoisted out in this way, it looked painful but there was no other alternative. He counted seven men alive, some almost unconscious. Many more remained in the raft, inert. Once the survivors had been hauled aboard, the crew of the Isla Camila faced the problem of recovering the inactive bodies, which were either comatose or already dead.

Being prepared is useful in the Southern Ocean: “Watching the crew of the Isla Camila, I studied their clothes. They weren’t just differently dressed, they were better dressed than us. Their chunky, thick-soled wellington boots, which had at first looked silly to me, offered insulation from the cold metal deck. Their oilskins were neatly belted in at their waists to seal out the draughts and spray. Each belt held a sheathed knife where it was needed: to hand. I knew that they would not have been caught as unprepared as we were.”

More: Read the book.

Rooftop solar panels considered harmful?

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“The Hole in the Rooftop Solar-Panel Craze” is a Wall Street Journal editorial (May 17, 2015) that heaps scorn on the way that America’s crony capitalist system encourages domestic rooftop solar power.  Here’s a sample:

Recent studies by Lazard and others, however, have found that large, utility-scale solar power plants can cost as little as five cents (or six cents without a subsidy) per kilowatt-hour to build and operate in the sunny Southwest.

Large-scale solar-power prices are falling because the cost to manufacture solar panels has been decreasing and because large solar installations permit economies of scale. Rooftop solar, on the other hand, often involves microinstallations in inefficient places, which makes the overall cost as much as 3½ times higher.

Yet the federal subsidies for solar amount to about $5 billion a year, with more than half of that amount going to rooftop and other, more expensive, non-utility solar plants. If the federal government spent the $5 billion instead subsidizing only utility-scale solar plants, I estimate that it could increase the amount of solar power installed in this country every year by about 65%. And without net metering and all of the other nonsensical state and local subsidies for rooftop solar, we could save this country billions of dollars every year.

The author doesn’t calculate the full amount of the wasted dollars because, presumably, it is too hard to find out what each of the 50 states is doing.

First, do we believe this guy? Brian H. Potts is the author and (1) he is a lawyer who works mostly for utilities, (2) he doesn’t look old enough to shave.

If Potts is right, is it reasonable for him to expect a program run by the U.S. government to be efficient? Car emissions reductions, for example, have been handled in what economists would call the dumbest and most expensive possible way. Instead of measuring emissions every year when cars are inspected and taxing each car owner according to miles driven and pollution emitted per mile, standards are promulgated for new cars and society has to wait 10-20 years to see an effect. The result is that a small percentage of older/mistuned cars generate most of the pollution (example study). Why wouldn’t we expect solar energy production to be handled in a similarly inefficient manner?

Related:

Not enough rich bastards to keep Bombardier Global Express production going

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Somebody forgot to tell Bombardier how much richer the global rich are getting. “Bombardier to Cut Production of Most Lucrative Jets” is a May 14, 2015 Wall Street Journal article about how “tough economic conditions world-wide and geopolitical issues have reduced demand for its Global 5000 and 6000 jets, its most expensive long-range business jets currently in serial production. The production cuts will result in the loss of about 1,750 jobs and weigh most heavily on its Montreal-area operations, where about 1,000 workers will be laid off.”

[The Global Express is a Gulfstream competitor and costs about $50 million if moderately pimped out. It is a cousin to the Canadair Regional Jet that I used to fly (previous post about landing at LGA; another visual approach posting).]

New Yorker pokes into the venture capital world

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“Tomorrow’s Advance Man” is a New Yorker story (May 18, 2015 issue) about the world of Marc Andreessen, NCSA Mosaic browser programmer turned venture capitalist.

The story explains how the top firms get consistently better returns than the less-known ones: “The imprimatur of a top firm’s investment is so powerful that entrepreneurs routinely accept a twenty-five per cent lower valuation to get it.” (i.e., they are buying at a lower price than competitors)

The market-clearing price for a competent venture capital partner is not very high: “[A16z] general partners make about three hundred thousand dollars a year, far less than the industry standard of at least a million dollars, and the savings pays for sixty-five specialists in executive talent, tech talent, market development, corporate development, and marketing.” Presumably the partners get some kind of boost when a portfolio company is sold, but $300,000 per year is what a senior programmer at Apple or Google could expect to earn (and more evidence that Ellen Pao would have made more money by getting pregnant than by working as a VC).

What would be a fair price for the job? Maybe $0:

The dirty secret of the trade is that the bottom three-quarters of venture firms didn’t beat the Nasdaq for the past five years. In a stinging 2012 report, the L.P. Diane Mulcahy calculated, “Since 1997, less cash has been returned to V.C. investors than they have invested.” The truth is that most V.C.s subsist entirely on fees, which they compound by raising a new fund every three years. Returns are kept hidden by nondisclosure agreements, and so V.C.s routinely overstate them, both to encourage investment and to attract entrepreneurs. “You can’t find a venture fund anywhere that’s not in the top quartile,” one L.P. said sardonically. V.C.s also logo shop, buying into late rounds of hot companies at high prices so they can list them on their portfolio page.

Smart Chinese-American: Stop watching TV and don’t follow your passion

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This interview with Andrew Ng, founder of Coursera and now head of a Silicon Valley lab for Baidu, is kind of interesting for revealing the divide between the Hong Kong/Singapore culture in which Ng grew up and standard American culture. Some choice lines:

I think that “follow your passion” is not good career advice. It’s actually one of the most terrible pieces of career advice we give people. If you are passionate about driving your car, it doesn’t necessarily mean you should aspire to be a race car driver.

When I talk to researchers, when I talk to people wanting to engage in entrepreneurship, I tell them that if you read research papers consistently, if you seriously study half a dozen papers a week and you do that for two years, after those two years you will have learned a lot. This is a fantastic investment in your own long term development. [Fortunately in engineering we are not necessary plagued by “Why Most Published Research Findings are False”]

… if you spend a whole Saturday studying rather than watching TV, there’s no one there to pat you on the back or tell you you did a good job. Chances are what you learned studying all Saturday won’t make you that much better at your job the following Monday. There are very few, almost no short-term rewards for these things. But it’s a fantastic long-term investment. This is really how you become a great researcher, you have to read a lot.

There is much less appreciation for the status quo in the Chinese internet economy and I think there’s a much bigger sense that all assumptions can be challenged and everything is up for grabs. The Chinese internet ecosystem is very dynamic. Everyone sees huge opportunity, everyone sees massive competition. Stuff changes all the time. New inventions arise, and large companies will one day suddenly jump into a totally new business sector.

To give you an idea, here in the United States, if Facebook were to start a brand new web search engine, that might feel like a slightly strange thing to do. Why would Facebook build a search engine? It’s really difficult. But that sort of thing is much more thinkable in China, where there is more of an assumption that there will be new creative business models.

I didn’t finish the article because there was an important NBA playoff game that I needed to watch…

British fondness for conservatives doesn’t mean anything for the U.S. election in 2016

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Britons rejected a Labour Party Manifesto that is pretty similar to what Democrats here in the U.S. promise voters, e.g.,

Britain’s route to prosperity and higher living standards is through more secure and better paid jobs. But Conservative policies are causing whole sectors of the economy to be dragged into a race to the bottom on wages and skills. The Government has weakened employment rights and promoted a hire-and-fire culture. Labour believes our economy can only succeed in a race to the top – competing in the world with better work, better pay and better skills. Too many people do a hard day’s work but remain dependent on benefits. We will raise the National Minimum Wage to more than £8 an hour by October 2019, bringing it closer to average earnings. We will give local authorities a role in strengthening enforcement against those paying less than the legal amount. … Labour will ban exploitative zero-hours contracts. Those who work regular hours for more than 12 weeks will have a right to a regular contract. We will abolish the loophole that allows firms to undercut permanent staff by using agency workers on lower pay.

We will introduce tougher penalties for those abusing the tax system, end unfair tax breaks used by hedge funds and others, and bear down on disguised employment.

In other words, the rich will be taxed, the working class will earn more without having to develop any new skills, and the government will decide what are fair wages, at least for people towards the bottom of the wage distribution.

Should the Conservative victory in the UK lead to skepticism about my prediction that Republicans cannot possibly win the 2016 Presidential election? I don’t think so. The U.S. tends to lag Britain politically and economically by at least a few decades. Britons endured many decades of economic stagnation (chronicled and explained by Mancur Olson) and watched the defeated Germans and the invaded French overtake them economically before questioning the idea that government was going to solve all of their problems. Americans, on the other hand, still have a strong prejudice in favor of drama, expecting growth, and can’t accept that boring stagnation while interest groups fight over the scraps (Mancur Olson-style) is a real possibility.

A voter who expects growth as a birthright isn’t going to listen to Republicans talking about how taxes and regulation need to be reduced to encourage economic growth.

[Separately, a Web site whose initial programming friends and I were involved with (back in the 1990s) is supporting the election news. Guidestar.org made IRS Form 990s (tax returns of non-profit organizations) readily available.  Here’s an analysis of the Clinton Foundation’s spending that links to the 990s on Guidestar.]

Collecting Medicare cash on the way up and on the way down

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In 2009, Atul Gawande wrote “The Cost Conundrum” about how physicians in McAllen, Texas were making serious bank from running Medicare patients through extra tests, typically at facilities that they themselves own. “Overkill” (New Yorker, May 11, 2015) is a kind of follow-up. It turns out that the docs who previously ran up the huge bills now each get $800,000 from an Obamacare provision that rewards doctors who reduce the government’s costs.

[Separately the article notes that between 25-42 percent of Medicare patients per year get an expensive unnecessary test or treatment. Dr. Gawande says that our fancy machines are best at finding cancers that grow so slowly we’ll probably die of something else before they grow to become a real problem (the cancer is thus dubbed a “turtle”). Unfortunately they are not good at finding the fast-growing cancers (“rabbits”), which is why cancer death rates haven’t moved much.]

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