Wednesday, April 4, 2012

Dear Justice Alito

I sure hope that fifty million people won't continue to go without health insurance and many of them die prematurely or have to declare bankruptcy because you didn't understand the basic principle of insurance.

JUSTICE ALITO: But isn't that really a
2 small part of what the mandate is doing? You can
3 correct me if these figures are wrong, but it appears to
4 me that the CBO has estimated that the average premium
5 for a single insurance policy in the non-group market
6 would be roughly $5,800 in -- in 2016.
7 Respondents -- the economists who have
8 supported the Respondents estimate that a young, healthy
9 individual targeted by the mandate on average consumes
10 about $854 in health services each year. So the mandate
11 is forcing these people to provide a huge subsidy to the
12 insurance companies for other purposes that the Act
13 wishes to serve, but isn't -- if those figures are
14 right, isn't it the case that what this mandate is
15 really doing is not requiring the people who are subject
16 to it to pay for the services that they are going to
17 consume? It is requiring them to subsidize services
18 that will be received by somebody else.
19 GENERAL VERRILLI: No, I think that -- I do
20 think that's what the Respondents argue. It's just not
21 right. I think it -- it really gets to a fundamental
22 problem with their argument.
23 JUSTICE GINSBURG: If you're going to have
24 insurance, that's how insurance works.

Saturday, March 24, 2012

Citizens Untied

One of the concerns about the Supreme Court's "Citizens United" ruling is that big money will monopolize the public dialog. After all, if money is speech, then those who have more money have more speech. Which in turn means that speech isn't really free, after all.

That aside, the presumed outcome would be that establishment candidates will steamroll over anyone independent enough to not have unlimited resources behind them. Which conventionally gives the advantage to Republicans, since they're the party of the rich.

But it turns out that you don't have to be part of the Establishment to be rich. This year's Republican primary isn't really Mitt Romney against Rick Santorum, Newt Gingrich, and Ron Paul - it's really Mitt Romney against Foster Freiss and Sheldon Adelman, in which a couple of rich, independent fanatics can bankroll the process of pulling the Republican Party to pieces along its fault lines of libertarian freedoms, religious moralism, nationalist xenophobia, and commercial pragmatism. Instead of locking in a sustainable Republican advantage, "Citizens United" may end up being its Achilles Heel.

Stand Your Ground

If Florida's "stand your ground" law had worked as intended, Trayvon Martin would have shot George Zimmerman.

Saturday, September 17, 2011

Forget 9/11

The tenth anniversary of 9/11 was last weekend, and it was full of exhortations to remember the event, as if merely remembering it were a patriotic act. Apparently, taking care of the first responders and volunteers who cleaned up afterward isn't so patriotic, as demonstrated by the ongoing refusal to pay for those victims' cancers, just in case one of those illnesses wasn't actually caused by the event and taxpayers get saddled with someone's medical expenses unjustly.

To illustrate our reverence for the event, if not for the victims, pieces of the World Trade Center are being shipped to build memorials around the country just so we never forget. Which makes me wonder - why is it so important to remember it? If you were a terrorist, what would be more rewarding than to have your victims build monuments to remember your deeds? Wouldn't a more effective, and probably healthy, response be to take care of the victims who still live, remember those who died, and forget the rest?

Monday, May 30, 2011


When I started putting money into a 401K plan, the conventional formula assumed that a conservative investment mix would deliver about 8% per year.


This was back when real estate values were expected to never retreat, the stock market was presumed an almost sure bet, and bonds were suggested as a kind of seasoning to the recipe, basically a head-nod to the faint possibility of risk, a demonstration of being a responsible investor rather than a speculator pinning one's star to the flighty fancies of the stock market.

According to US News, the average 401K account balance is now back to about where it was in 2007, before the latest financial unpleasantness. That's about $70,000, up about $20 K from the low in 2008. Of course, only a few people had the foresight to bet against the housing bubble and subprime mortgage gold rush. The breadth and depth of the bailouts required to keep the world's economy afloat are pretty strong evidence that most investors failed to see the end coming.

Efficient market theories assume that the price of an asset always reflects the perfect balance of valuations by informed investors acting out of rational self interest. Market behaviorists have recently shown that most investors don't qualify as perfectly rational or informed, and this is certainly even more true among the amateurs who make up the bulk of 401K owners. Since most actively managed funds fail to beat the market, even the experts get it wrong more often than right.

Recently, Steve Levitt and Thomas Miles at the University of Chicago demonstrated that poker is a game of skill rather than strictly one of chance. They showed that high performing poker players continue to perform well from year to year, while mutual fund managers' successes and failures are random.

It's ironic that online poker is outlawed in the US because it's considered to be gambling, while investments in mutual funds are a mandatory part of retirement planning.

Sunday, February 6, 2011


Sarah Palin, speaking at a celebration of Ronald Reagan at the Reagan Ranch Center, proclaimed that the US was on the "road to ruin" because of mounting debt. Being the astute student of history that Sarah is, I'm sure she was fully aware of the irony.