Michael Lewis has a new book out called Flash Boys. Imagine yourself looking over some clothes, say, at a large departmental store. You check the price tags and select the jacket that you want. You take it up to the counter only to discover that the price has been jacked up after you showed interest in it! The store clerk tells you that someone else watching on a camera saw your interest and bought it just before you got up to the counter. That person is willing to sell it on to you for $5.00 extra. This is essentially the story that Lewis tells. Continue reading
Scott Burns has a pretty eye-popping article today on American longevity. White women without a college education are living five years less than they used to – yes less. And that in a world where longevity is increasing! College-educated whites live ten years longer than blacks without a high school diploma. So, all the talk about deferring the age at which one can draw Social Security does wonders for the college educated – who really don’t need it. But it devastates the poor who really need it and are unable to draw their full benefits until they are almost on their deathbeds. Continue reading
What we know as “economics” today used to be called, much more appropriately, “political economy.” Gregory Mankiw, Harvard economics professor, reminds us in his article in The New York Times (http://nyti.ms/1fOSiNz) that in giving policy advice, economists are also making their own political judgments.” Sadly, despite being one of those economics professors himself, he seems to exclude himself from this judgment. He ends his essay by commenting that “they” are the ones whose policy prescriptions reflect “their” political philosophy. The general point that he makes is an excellent one. Economics is politics disguised with a few figures to give it the veneer of respectability. But this applies as much to his views as to those of his foils.
I am troubled by the way that everything has been monetized e.g., not serving gays is bad for business instead of being just plain morally wrong, wrong, wrong! And I am troubled that the church seems to have fallen into the same trap. We don’t have a distinct voice in economic — or moral — debates e.g., we discuss how life might be terminated when the Texas Legislature says it can with no reflection on when a Christian says that it might be appropriate. That’s a bit of a chicken and egg problem. We don’t talk about “our” answers to problems so we don’t have any answers to offer so we don’t talk about the problem on our terms because we have nothing to add.
Might we start with the assertion that man was not made for the economy; the economy was made for man. This morning’s news was that sequestration was working, meaning that the budget deficit was falling; meaning that more people were out of a job. Small businesses reported, in the same newscast, that their hiring was down. In short, more people on the street. It was all good news, though, according to the young bank analyst quoted on NPR!
Do people and their representatives do any real thinking about issues? Or is politics nothing but a power struggle between (greedy but Christian) Republicans and (irresponsible and pagan) Democrats? Take the mindless healthcare issue for example:
People seem to argue that healthcare is not a fundamental right. But when they or their kids is injured or falls ill, they are the first to run to the nearest hospital where they expect to be treated. They may not “believe” it is a right but they sure treat it as a right!
These same people seem to think that they save money if they don’t buy healthcare insurance or pay for someone else’s healthcare insurance. But they expect the hospital to be there when they need it. And they don’t seem to realize that the “free” care of their neighbor is paid for by their own taxes. In fact requiring people to buy their own healthcare insurance like they buy car insurance, will reduce the financial burden of the taxpayer.
In other words, if we all expect to find medical care at hand whenever we need it then the question is not whether people should be required to buy insurance, but rather what is the most cost-effective way to deliver the care that people expect.
All the evidence seems to suggest that prevention is much less costly than cure. We would all save money if we could prevent disease. So, one would think that business people who are supposedly Republican in their orientation would be all in favor of universal healthcare with and emphasis on prevention. But no, they vote against their own economic interests! So back to my opening question: Is politics completely irrational?
I taught managerial accounting for many years and complained for all those years that economists simply did not understand fixed costs. I also complained that we accountants liked talking about variable costs even though there were none. Now comes Jeremy Rifkin, talking in a NY Times article about what happens to capitalism, as we know it, when all costs become fixed and variable costs (marginal costs in economic lingo) tend to zero. Continue reading
Many moons ago, my mother was given a little book by JB Phillips called Ring of Truth. This is the JB who produced those marvelous modern translations of the New Testament. He reflects in the book on what it was like to be a translator and the effect on him of getting close to the text. And then he picks out seven verses that stuck in his mind. They are an unusual selection (I think). I’ve typed them out and given a one-sentence summary of why they stuck in his head. Enjoy his list. Continue reading
Thomas Piketty in Capital shows that the rate of return on capital tends to exceed the rate of growth with the inevitable result that inequality is going to increase, possibly sharply. This tends to confirm Marx’s fears about capitalism. This inequality can be curbed by political means but the political will to do anything about it seems to be lacking, particularly as elites appear to control the levers of political power. I am rather intrigued by the role of the church in all this. Their focus on sexual issues to the exclusion of economic issues has led many to vote for a party that does not act in their economic interest. Others, such as Thomas Frank, have long since noticed this.
Newsweek has a fascinating article about how our prisons are full of people who essentially lack healthcare — and we pay a fortune to keep them there. Apparently over 60% of those booked for a crime are mentally ill and another whole segment are suffering from addictions. If, and I suppose it is a big IF, healthcare reforms can connect to these people then the author suggests that we could (a) empty the prisons and (b) save a bundle of money.