Things tagged economics:
Sandeep Jauhar in the NYT:
Of all the ways to limit health care costs, perhaps none is as popular as cutting payments to doctors. In recent years payment cuts have resulted in a sharp downturn in revenue for many hospitals and private practices. What this has meant for most physicians is that in order to maintain their income, they’ve had to see more patients. When you reduce the volume of air per breath, the only way to maintain ventilation is to breathe faster.
As our workdays have gotten busier, we doctors have had less time to devote to individual patients. An internist I know in private practice used to see 15 patients a day. “Now reimbursement is so low I have to see at least 30,” he told me. “If I stay in the room more than 10 minutes, my assistant will call me and tell me to hurry up.”
Racing through patient encounters, we practice with an ever-present fear that we will miss something, hurt someone and open ourselves up to legal (not to mention moral) liability. To cope with the anxiety, we start to call in experts for problems that perhaps we could handle ourselves if we had more time to think through a case. The specialists, in turn, order more tests, scans and the like.
And therein lies the sad irony of the health cost containment paradigm in this country. There is no more wasteful entity in medicine than a rushed doctor.
In the southeast corner of Belgium, there is a town of about 20,000 that is known, to the extent it is known at all, as a key battleground during the Battle of the Bulge and, more recently, as the center of the tiny slice of this country that speaks German instead of French.
Time moves slowly here. There is a quaint stretch of shops and a small train station and a hotel, the Ambassador, which has 28 rooms. The biggest commotion on any given day is when the children at the school in town go outside for recess.
Except on soccer days. Then, much of the town treks up a steep hill to a modest soccer stadium, the Kehrweg-Stadion, home to K.A.S. Eupen, the local professional team that has spent most of its 69-year existence in the lower divisions of Belgium’s national league. The stadium is unremarkable, with its squat, steel stands and patchy grass, and yet it was the site, on a March morning two years ago, of one of the strangest couplings in professional sports.
On that day, a group of about 20 men toured the 8,000-seat stadium, examining its sparse amenities and looking out at the drab surrounding areas. They then moved on to K.A.S. Eupen’s small offices, where a candid meeting between club officials and executives from Qatar’s Aspire Academy, based in Doha some 3,000 miles away, began promptly at 10 a.m.
Those in the room would later describe this meeting between the officials of a mostly anonymous Belgian soccer team and representatives of a Middle Eastern royal family as surreal. As they negotiated the details of an acquisition, four languages were spoken — English, French, German and Arabic — and while the club had a multilingual staff member on hand to help translate, there were still moments of inevitable confusion.
Thomas Piketty’s Capital in the 21st Century is the most important economics book of the year, if not the decade. It’s also 696 pages long, translated from French, filled with methodological asides and in-depth looks at unique data, packed with allusions to 19th century novels, and generally a bit of a slog.
The good news is that there’s no advanced math, and anyone who puts in the time can read the book. But if you just want the bottom line, we have you covered.
And a more academic one at Harvard Business Review.
Absolutely amazing TV, William O’Brien of BATS gets into it with Brad Katsuyama of IEX live on the NYSE floor, traders stop trading, and start shouting at the TVs.
Backstory is here: The Wolf Hunters of Wall Street
Alexis C. Madrigal in The Atlantic with a great long form on Califonian water crisis:
Lund doesn’t expect a grand bargain. “It’s hard to ask us to value things explicitly,” he told me. Everything has to at least seem like a win-win for everybody. Who wants to look farmers in the face and tell them that it’s their land that should be fallowed? Or tell the farmworkers who labor for that farmer that it’s their jobs that are going to go? Or tell the urban poor that their water bills are going to go up?
“We need alcohol to function, that’s the disadvantage of chronic alcoholism,” said the 45-year-old, somewhat fatalistically.
For lunch, the team returns to the shed where they get two beers and a warm meal, before heading off again for the afternoon shift.
The working day ends with a final beer at around 3:30 pm.
“You have to see things like this: everyone benefits,” said Gerrie.
“They’re no longer in the park, they drink less, they eat better and they have something to keep them busy during the day.”
This is the first of a multi-part series detailing what I learned from operating our farm-to-table flagship restaurant, the Linkery, as a “no-tipping” restaurant that instead charged a fixed percentage for service, from 2006 to 2013. We also operated a sister restaurant, El Take It Easy, that followed the traditional tipping model, allowing for a fairly direct comparison.
This has been making the rounds, I read the Slate piece a while ago, but was re linked to this, and sat down to read it today. Absolutely worth reading. Starts off slow and obvious, but really gets to the good bits around part 4 and 5.
Ben Paynter in New York Magazine:
Shoppers have surprisingly strong feelings about laundry detergent. In a 2009 survey, Tide ranked in the top three brand names that consumers at all income levels were least likely to give up regardless of the recession, alongside Kraft and Coca-Cola. That loyalty has enabled its manufacturer, Procter & Gamble, to position the product in a way that defies economic trends. At upwards of $20 per 150-ounce bottle, Tide costs about 50 percent more than the average liquid detergent yet outsells Gain, the closest competitor by market share (and another P&G product), by more than two to one.
Atul Gawande in The New Yorker:
Restaurant chains have managed to combine quality control, cost control, and innovation. Can health care?
Tim Jackson in the NYT:
Productivity — the amount of output delivered per hour of work in the economy — is often viewed as the engine of progress in modern capitalist economies. Output is everything. Time is money. The quest for increased productivity occupies reams of academic literature and haunts the waking hours of C.E.O.’s and finance ministers. Perhaps forgivably so: our ability to generate more output with fewer people has lifted our lives out of drudgery and delivered us a cornucopia of material wealth.
But the relentless drive for productivity may also have some natural limits. Ever-increasing productivity means that if our economies don’t continue to expand, we risk putting people out of work. If more is possible each passing year with each working hour, then either output has to increase or else there is less work to go around. Like it or not, we find ourselves hooked on growth.
“Ten years ago, we used to dream that cities would become slum-free,” says Muhammad Khadim of UN-Habitat. “The approach has changed. People see the positives. The approach now is not to clear them but to improve them gradually [and] regularise land tenure.”
Cameron Sinclair, who runs the non-profit design firm Architecture for Humanity, goes further. “A slum is a resilient urban animal. You cannot pry it away,” he tells me. “It’s like a good parasite. There are some parasites that attack the body and you have to get rid of them but, within the city, the informal settlement is a parasite that acts in harmony with the city, keeps it in check.”
Chris Martenson: Is that where you are? So in your estimation, conventional oil has peaked? I think that’s in the rearview mirror, but you’re now going out and saying all liquids that we would call oil; forget about the funny stuff out there, the ethanol and whatnot, but in terms of stuff that comes out of the ground we would call oil, we’ve peaked?
Nate Hagens: Well, I’ve stopped paying attention to that, Chris, because I don’t think it really matters. I think Peak Oil is a constraint going forward, but it’s not the real driver on the energy side. It’s that our marginal cost keeps going up for liquid fuels, which are basically the hemoglobin of global trade and global commerce, so that’s relevant. But whether we have another million, or two million, or two million less, isn’t the real story. We’re not going to be able to meaningfully grow something that the entire world depends on, and so I think all this bickering about which month or which year is the highest is missing the point. And then I’m sure, we’ll probably touch on it later, the greater threat right now is not Peak Oil, but Peak Debt or Peak Credit, and that’s the much more clear and present danger.
James Howard Kunstler on his excellently titled blog Clusterfuck Nation:
One wild card is how angry the American people might get. Unlike the 1930s, we are no longer a nation who call each other “Mister” and “Ma’am,” where even the down-and-out wear neckties and speak a discernible variant of regular English, where hoboes say “thank you,” and where, in short, there is something like a common culture of shared values. We’re a nation of thugs and louts with flames tattooed on our necks, who call each other “motherfucker” and are skilled only in playing video games based on mass murder. The masses of Roosevelt’s time were coming off decades of programmed, regimented work, where people showed up in well-run factories and schools and pretty much behaved themselves. In my view, that’s one of the reasons that the US didn’t explode in political violence during the Great Depression of the 1930s - the discipline and fortitude of the citizenry. The sheer weight of demoralization now is so titanic that it is very hard to imagine the people of the USA pulling together for anything beyond the most superficial ceremonies - placing teddy bears on a crash site. And forget about discipline and fortitude in a nation of ADD victims and self-esteem seekers.
The overall set-up of IKEA minimises tax and disclosure, handsomely rewards the founding Kamprad family and makes IKEA immune to a takeover. And if that seems too good to be true, it is: these arrangements are extremely hard to undo. The benefits from all this ingenuity come at the price of a huge constraint on the successors to Ingvar Kamprad, the store’s founder, to do with IKEA as they see fit.
The parent for all IKEA companies—the operator of 207 of the 235 worldwide IKEA stores—is Ingka Holding, a private Dutch-registered company. Ingka Holding, in turn, belongs entirely to Stichting Ingka Foundation. This is a Dutch-registered, tax-exempt, non-profit-making legal entity, which was given the shares of Mr Kamprad in 1982. Stichtingen, or foundations, are the most common form of not-for-profit organisation in the Netherlands; tens of thousands of them are registered.
Most Dutch stichtingen are tiny, but if Stichting Ingka Foundation were listed it would be one of the Netherlands’ ten largest companies by market value.
Posted at The Economist.
Tim Bray on Sun:
Sun is going through a lousy spell right now. Well, so is the world’s economy in general and the IT business in particular, but this is about Sun. This is my opinion about what my employer should do about it. [. . .] Sun should adopt a laser focus on building a Sun Web Suite and becoming the Web application deployment platform of choice. It’s a large space, a growing space, and one where we can win.
He is obviously absolutely right, there is no place for the old Sun in this world. However Sun does have some excellent tech, and importantly they seem to still have a lot of top engineers, so if they can manage a major restructuring they have a fighting chance.
Clay Shirky, author of Here Comes Everybody: The Power of Organizing Without Organizations, talks about the economics of organizations with EconTalk host Russ Roberts. The conversation centers on Shirky’s book. Topics include Coase on the theory of the firm, the power of sharing information on the internet, the economics of altruism, and the creation of Wikipedia.
And a great bit of discussion on representative vs. direct democracy and the possibility that networks can enable direct democracy.
In the Economist:
In the late 1990s a generation of academic economists had their eyes opened by Mr LeDoux’s and other accounts of how studies of the brain using recently developed techniques such as magnetic resonance imaging (MRI) showed that different bits of the old grey matter are associated with different sorts of emotional and decision-making activity. The amygdalas are an example. Neuroscientists have shown that these almond-shaped clusters of neurons deep inside the medial temporal lobes play a key role in the formation of emotional responses such as fear.
These new neuroeconomists saw that it might be possible to move economics away from its simplified model of rational, self-interested, utility-maximising decision-making. Instead of hypothesising about Homo economicus, they could base their research on what actually goes on inside the head of Homo sapiens.
However, not everyone is convinced. The fiercest attack on neuroeconomics, and indeed behavioural economics, has come from two economists at Princeton University, Faruk Gul and Wolfgang Pesendorfer. In an article in 2005, “The Case for Mindless Economics”, they argued that neuroscience could not transform economics because what goes on inside the brain is irrelevant to the discipline. What matters are the decisions people take—in the jargon, their “revealed preferences”—not the process by which they reach them. For the purposes of understanding how society copes with the consequences of those decisions, the assumption of rational utility-maximisation works just fine.
Lewis Page in The Register:
Professor David J C MacKay of the Cambridge University Department of Physics holds a PhD in computation from Cal Tech and a starred first in Physics, so we can take it that he knows his numbers. And, as he points out, numbers are typically lacking in current discussion around carbon emissions and energy use.
MacKay tells The Reg that he was first drawn into this field by the constant suggestion — from the Beeb, parts of the government etc — that we can seriously impact our personal energy consumption by doing such things as turning our TVs off standby or unplugging our mobile-phone chargers.
Anyone with even a slight grasp of energy units should know that this is madness. Skipping one bath saves a much energy as leaving your TV off standby for over six months. People who wash regularly, wear clean clothes, consume hot food or drink, use powered transport of any kind and live in warm houses have no need to worry about the energy they use to power their electronics; it’s insignificant compared to the other things.
The article goes on to summarize some of the solution scenarios MacKay worked out for the UK, and as you would expect nuclear is the only one that is close to achievable.
Via Arts & Letters Daily.
Mr. Paulson was frequently on the phone with Bear and J. P. Morgan executives, negotiating the details of the deal, the senior Treasury official said. Initially, Morgan wanted to pick off select parts of Bear, but Mr. Paulson insisted that it take the entire Bear portfolio, the official said.
This was no normal negotiation, says one person involved in the matter. Instead of two parties, there were three, this person explains, the third being the government. It is unclear what explicit requests were made by the Fed or Treasury. But the deal now in place has a number of features that are highly unusual, according to people who worked on the transaction.
Anthony de Jasay at Cato Unbound:
This paper is a sequel of an article I wrote twenty years ago that I now think can be put more tightly and clearly. That early paper was born of the irritation I felt, and continue to feel, at much of the classical liberal discourse about limited government. At least since Locke, that discourse sets out a normative ideal of government: the protector of “rights” its citizens are in some fashion endowed with, and the guarantor of liberty that ranks above rival values. Such government uses coercion only to enforce the rules of just conduct. This ideal is attractive enough to the liberal mind. The reason why it nevertheless irritates is that it makes it seem that the writing of a constitution of liberty is a plausible means for transforming the normative ideal into positive reality. The message is that “we” can have limited government in the above sense if only “we” understand why we ought to wish it. The “we” is crucial, for it suppresses the essence of collective choice. Collective choice starts where unanimity ends, and involves some deciding for all, where the “some” control the apparatus of government. It is the potential for some to benefit morally and materially at the expense of others that creates the bone of contention and that limits on government are meant to move out of reach. It is odd that little or no awareness is shown of the “incentive-incompatibility” (if we may use ugly but handy jargon) of limits that would exert real rather than illusory restraint.
Fairly simple and easy to read look at the impossibility of legislatively constraining government, and on the other hand the natural economic limits that do constrain all governments (though in a painfully wide band that they can and do tend to oscillate in).