Good Entropy

Just-as-good Medicine » American Scientist

That decrementally cost-effective innovations are so rarely described in the health-care literature suggests that medicine is distinct from most other markets, in which cost-decreasing, quality-reducing products are continuously being introduced—think IKEA, Walmart and the Tata car. Several reasons may explain this “medical exceptionalism.” First, there is fundamentally a lack of incentives both for physicians to control costs, especially under a fee-for-service regime, and for patients to demand less expensive treatment when insurance shields them from the direct costs of care. Second, medical “bargains” frequently come with health risks, and trading health for money strikes some as vulgar, regardless of ratio. The inherent ethical unease that decrementally cost-effective innovations can elicit poses a serious public relations and marketing challenge.

Armed and Dangerous » Blog Archive » Marginal Devolution

Eric S. Raymond writes:

We’ve spent the last seventy years increasing the hidden overhead and
downside risks associated with hiring a worker — which meant the
minimum revenue-per-employee threshold below which hiring doesn’t make
sense has crept up and up and up, gradually. This effect was partly
masked by credit and asset bubbles, but those have now popped.
Increasingly it’s not just the classic hard-core unemployables
(alcoholics, criminal deviants, crazies) that can’t pull enough weight
to justify a paycheck; it’s the marginal ones, the mediocre, and the
mildly dysfunctional.

In the comment section:

Jessica Boxer Says:

I propose Boxer’s law of economics: “The economy interprets taxation and regulation as damage and routes around it.”

Marginal Revolution: Is there a case for a VAT?

from the comments:

It seems to me that the American political system is simply broken. Canada could reduce the size of government and keep health care spending in check because in a parliamentary system with strong party loyalty, individual politicans are given ‘cover’ by their parties and are not held personally responsible for the taxes and benefits of their constituents. If the party in power makes a decision to cut benefits which will harm an individual politician’s district, that politician isn’t necessarily on the hook for it. The voters know that he has to vote the party line even if he disagrees with the legislation. He gets re-elected so long as the public feels his party in general is better than the opposition.

In the U.S. system, where every vote is a free vote, each member of Congress has to answer for his/her votes, and this drives NIMBY-ism and ever-increasing benefits without the tax hikes to pay for them, and it also causes wheeling and dealing which ultimately makes large regulatory packages like health care reform incoherent and bloated with pork.

I think American government works well when it’s strictly limited. When Americans try to implement Euro-style social democracy, they fail due to the nature of American government. It is uniquely unsuited to centralized technocratic governance.

Posted by: Dan H. at Feb 17, 2010 12:27:10 PM

The Roman historian Livy famously described the terminal plight of the late Roman Republic: “Nec vitia nostra nec remedia pati possumus” (“We can bear neither our shortcomings nor the remedies for them”)

america rip: A Look at the Numbers — The Coming Collapse of America

Michael Lewis interviewing an Icelandic fisherman turned failed banker:

“You spent seven years learning every little nuance of the fishing trade before you were granted the gift of learning from this great captain?” I ask.

“Yes.”

“And even then you had to sit at the feet of this great master for many months before you felt as if you knew what you were doing?”

“Yes.”

“Then why did you think you could become a banker and speculate in financial markets, without a day of training?”

Frozen Assets

Also, consider common stocks. No rational regulator concerned with substantive transparency would approve of common stock, if it were a novel investment vehicle. It guarantees no cashflows whatever, its “control rights” are so weak for most purchasers that representations thereof should be viewed as fraudulent. Empirically common stock behavior is very weakly coupled to the performance and health of the firms that stocks fund. The only instrument in wide use more substantatively opaque than common stock is fiat money.

from Seeking Alpha

Saw this quote

Success has literally no meaning if failure is impossible.

here Save the Realtor

Woodrow Wilson. Jailed political dissenters, created the Federal Trade Commission, got us into World War I. He also enacted the first federal income tax, the first modern military draft, and the first federal drug prohibition. Wilson also re-segregated the federal government. When blacks protested, he told them to consider segregation a “benefit,” not a debasement. An all-around loathesome human being.

Radley Balko

From Megan McCardle

In a discussion of the causes of the Financial Crisis:

Confirmation bias: The tendency to look for data that confirms your theory, rather than data that falsifies it. Yes, we all know how this works in politics, but it’s a much broader problem. People will repeatedly devise tests that give positive proofs of their theories, but much less often devise tests to falsify them.

And this harmonious chord from Hamming referencing Darwin:

Darwin writes in his autobiography that he found it necessary to write down every piece of evidence which appeared to contradict his beliefs because otherwise they would disappear from his mind.

In the debate over the economics of global warming the correct discount rate to apply to future generations is a key variable with those arguing that we should do something now, implicitly (and explicitly) arguing for a low discount rate. But if we count future generations highly we ought also to be in favor of reforming social security. Investing social security in the stock market “royally screws” current retirees but increases the savings rate which will be benefit future generations. Thus, a low discount rate ought to weigh in favor of doing something about global warming and investing social security funds in the stock market. Not many people come out consistent on these grounds (I think Brad DeLong is one of the few.) I know, I don’t but Landsburg has got me thinking.

Full text at marignal revolution