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Jun 30, 2009

Obama: Honduras Should Accept Tyranny

Banana Democrats
06/29/09 - Investor's Business Daily - Editorial

We might think that President Obama likes ballot-box stuffing and doesn't like term limits.

[edited] President Obama while campaigning, strongly criticized leaders who are elected democratically but don't govern democratically. He has not applied this to Honduras.

Mel Zelaya is Honduras' now ex-president after defying a Honduras Supreme Court ruling last Thursday. He tried to hold a "survey" to rewrite the constitution for his permanent re-election. It's the same blueprint for a rigged political system that has made the former democracies Venezuela, Bolivia, Nicaragua, and Ecuador into shells of free countries.

Zelaya's operatives did their dirt all the way through. First, they used threats to collect signatures to launch their "citizen's power" survey. They warned those who didn't sign that they would be denied medical care, and worse. Zelaya then flew the ballots to Tegucigalpa on Venezuelan planes. This was declared illegal by the Supreme Court, but he did it anyway.

As a result of his brazen disregard for the law, the military escorted Zelaya into exile Sunday morning. Venezuela's Hugo Chavez and Cuba's Fidel Castro rushed to blame the U.S., calling it a "yanqui coup".

Zelaya committed the coup, not the U.S. or the Honduran court. Zelaya defied the law, and Hondurans overwhelmingly supported his removal. A pro-Zelaya rally Monday drew a mere 200 acolytes.

The U.S. response has been disgraceful. The administration stands with Chavez and Castro, calling Zelaya's lawful removal "a coup". A State Department official told reporters: "We recognize Zelaya as the duly elected and constitutional president of Honduras. We see no other". Obama called the action "not legal and a terrible precedent", and said Zelaya remains president. The U.S. now contemplates sanctions on the tiny, drug-plagued, dirt-poor country of 7 million.

The U.S. condemns Honduran democrats who acted to save their democracy. Honduras' actions are actually a historic turning of the tide against the false democracies of the region. It's time for a more sophisticated definition of democracy — one that includes the rule of law and the will of the people.

Honduras Under the Bus
06/30/09 - National Review by Jonah Goldberg

A Honduran writes:

[excerpt] The country is bewildered that the world, especially the United States, is not on their side. Zelaya was confident of his plans to convert Honduras into a Venezuelan satellite.

The Honduran people are proud of their constitution and are proud to have a functioning democratic system. Zelaya was replaced by a member of his own party who vows to see that this November's presidential election takes place. What happened was not a "coup" but a bipartisan effort to save the nation.

Coup Rocks Honduras Coup Rocks Honduras
07/01/09 - WSJ by Paul Kiernan, Jose De Cordoba, and Jay Solomon (via American Thinker)

It seems that the Honduran constitution anticipated and excluded the type of referendum that Zelaya wanted to hold. I find it reasonable to keep a President from declaring himself "popular leader for life".

[edited] Honduran soldiers rousted President Manuel Zelaya from his bed and exiled him at gunpoint Sunday to Costa Rica. This halted his controversial push to redraw the constitution, and raised concerns about democratic rule.

Mr. Zelaya said he was kidnappped and was still president. The U.S. and other countries condemned the coup. President Barack Obama said he was "deeply concerned" and called on all political actors in Honduras to "respect democratic norms."

Venezuela President Hugo Chávez is a close ally of Mr. Zelaya and nemesis of the U.S. He said it would be an "act of war" if there were hostilities against his diplomats, and "I have put the armed forces of Venezuela on alert".

Mr. Zelaya is a frequent critic of the U.S. He has been locked in a growing confrontation with his country's Congress, courts, and military over his plans for the Sunday referendum. It would have asked voters whether they want to scrap the constitution, which the president says benefits the country's elites.

The Supreme Court had ruled the vote was illegal because it flouted the constitution's own ban on such referendums within six months of elections. The military had refused to take its usual role of distributing ballots. But Mr. Zelaya fired the chief of the army last week and pledged to press ahead.

The Wages of Chavismo
07/01/09 - WSJ Opinion (via Instapundit)

[edited] The Honduran coup is a reaction to Chávez's rule by mob in Venezuela. As military "coups" go, the one in Honduras was strangely democratic. The military didn't oust President Manuel Zelaya on its own, but followed an order of the Supreme Court. It also quickly turned power over to the president of the Honduran Congress, a man from the same party as Mr. Zelaya. The legislature and legal authorities remain intact.

We mention these not so small details because they are being overlooked as the world, including the U.S. President, denounces tiny Honduras in a way that it never has Iran. President Obama is joining the U.N., Fidel Castro, Hugo Chávez, and other model democrats (smile) in demanding that Mr. Zelaya be allowed to return from exile and be restored to power. Maybe it's time to sort the real from the phony Latin American democrats.

A 'coup' in Honduras? Nonsense
07/02/09 - Christian Science Monitor by Octavio Sánchez

[edited] Don't believe the myth. The arrest of President Zelaya represents the triumph of the rule of law.

Constitutional assemblies are convened to write new constitutions. When Zelaya published his decree to initiate an "opinion poll" about the possibility of convening a national assembly, he contravened the unchangeable articles of the Constitution that deal with the prohibition of reelecting a president and of extending his term.

His actions showed intent, and our Constitution takes such intent seriously. According to Article 239:

No citizen who has already served as head of the Executive Branch can be President or Vice-President. Whoever violates this law or proposes its reform, as well as those that support such violation directly or indirectly, will immediately cease in their functions and will be unable to hold any public office for a period of 10 years.

The Chavez Playbook
07/18/09 - Babalu Blog by Alberto de la Cruz

[edited] Honduran authorities have seized computers from the Presidential Palace belonging to deposed president Mel Zelaya. These computers contained the official and certified results of the illegal constitutional referendum that Zelaya wanted to conduct and which never took place.

The results of this fraudulent vote heavily favored Zelaya, ensuring he could illegally change the constitution and remain in power.

Introduction to Medical Billing

Medical Economics
06/30/09 - M.D.O.D by ERDoc85

Read the whole thing. The quote only gives a map and a feeling about the post. Will the best, most caring people continue to choose medicine under these conditions?

[edited] You may want to know how the government determines what to pay physicians. Government involvement is already a major problem in medicine!

As you read through the following (it might be hazardous to your health), consider the vast bureaucracy of people necessary to determine, process, audit, and bill all of this stuff. You will understand why there are so many clipboard carrying, useless flesh-bags in hospitals today.

RVU is Relative Value Unit
RVUwork        = Actual Physician Work
RVUexpense     = Practice Expenses
RVUliability   = Liability Insurance
RVUtotal = RVUwork + RVUexpense + RVUliability

GPCI = Geographic Practice Cost Index
       1.0 to 1.5 according to geographic area

CF = Medicare Conversion Factor
     $36.067 (for 2009) per RVUtotal
BF = Billing factor by treatment level 1-5
     or Critical (according to medical records)
Medicare Payment = RVUtotal × GPCI × CF × BF

You thought your medical record was only for keeping your medical history, but it also serves for legal defense and billing.

It is a source of medico-legal protection for the health care staff. Your record is replete with exactly what you said, including symptoms you denied having and warnings you were given. Anything you refused or argued about will be in great detail. This isn't for your benefit. It's to protect us from the vultures.

And, it has become your billing template! In order to bill you at any of the 6 billing levels, it must be documented that you were asked certain numbers of questions and examined in a specific number of areas.

( The complicated part is omitted here to protect the sanity of vulnerable readers. You have been warned. Smile. )

Legions of people known as "Medical Coders" sit down with every chart, count these items, and bill accordingly! All of these people make a good living, and their salaries are built into your medical care costs. It is government regulations that cause these people to exist.

Will it be simple to reform the health care system? The government has simplified it so far. No doubt (smile) more government involvement will simplify it further, supposedly lowering expenses without cutting services.

Now you know why your doc has his/her face buried in a chart instead of making eye contact with you. And why your doc spends 5 minutes with you, then excuses himself to sit outside for 15 minutes with the chart.

The Department of Work and Production

The average guy hasn't seen government control close up, except for those in banking and auto manufacturing. Why can't knowledgeable, fact-based, systematic government oversight bring community and efficiency to everyone? (smile)

A possible encounter of an ordinary guy with a government agency that is going to make his profession more efficient, by saving or increasing his salary.

Jun 29, 2009

Predicting No Climate Change

MIT's unscientific, catastrophic climate forecast
06/17/09 - Financial Post by Kesten C. Green and J. Scott Armstrong   (via John Stossel)

Forcasting is the heart of science. It is easy to convince yourself that you understand something until you must predict what will happen. It is hard to predict things even when you can repeat the experiment. You must be very careful when you are predicting events that cannot be repeated.

The Massachusetts Institute of Technology (MIT) sponsors a Joint Program on the Science and Policy of Global Change. It released a report last month: "Probabilistic Forecast for 21st Century Climate based on uncertainties in emissions (without policy) and climate parameters."

Green and Armstrong examined this report. They found serious problems in trusting the MIT results, related to proper forcasting methods and skepticism. A forcast of "climate change" may seem to fit the data, until you find out that "no change" fits the data better.

[edited] The MIT authors predicted that global warming could be twice as severe as previously forecast, and more severe than the official projections of the UN Intergovernmental Panel on Climate Change (IPCC). Their prediction is based in part on 400 runs of a computer model of climate and economic activity. So, they recommend massive government action.

The MIT group espouses lofty objectives based on "independent policy analysis and public education in global environmental change". But, we found they violated 49 important forcasting principles. For such an important problem, they should not have violated even one.

So what's really wrong with their report? Their phrase "global environmental change" provides a clue. The group implicitly rejects the possibility of no or unimportant change, or the possibility of unpredictable change.

A forecast of "no-change" can be hard to beat in many circumstances. No-change can be appropriate even when a great deal of change is possible, but the direction, extent, or duration is uncertain.

Earth's temperature has gone up and down irregularly over periods from one year to thousands of years. Moreover, science has not been able to tell us why. There is much uncertainty about past climate changes and about the strength and even direction of causal relationships.

Do warming temperatures result in more carbon dioxide in the atmosphere, or is it the other way around, or a bit of both? Does warming of the atmosphere result in negative or positive feedback from clouds? There are many more such questions without answers. All this strongly suggests that a no-change forecast is the appropriate long-term forecast.

We compared the IPCC projection of 0.03 C temperature increase per year with what actually happened from 1850 to 2007. The errors from the IPCC prediction were 12 times larger than the errors of the no-change prediction.

The forecasts from the MIT modellers and from the IPCC are merely the opinions of some scientists and computer modellers. These are not truly scientific forecasts.

Dr. Kesten C. Green is a senior research fellow of the Business and Economic Forecasting Unit at Monash University, Australia.

Dr. J. Scott Armstrong is Professor of Marketing at The Wharton School, University of Pennsylvania.

They are co-directors of the public service Web site Forecasting Principles sponsored by the International Institute of Forecasters.

Dispelling the Global Warming Myth
There is a very close match between global temperature and solar output. See the graph. That even seems reasonable in its own way. (smile)

AGW Scientists Can't Predict
Academic degrees mean nothing if you can't say what is going to happen. Watch out for global warming scientists who can't predict the details. And watch out for "economists" who fiddle some equation as a reason to take your money to improve your life.

Jun 28, 2009

Better Bank Robbery

Future News:

An upsurge in bank robberies and muggings is sweeping the nation. The government is calling this phenomenon "Suggested Resource Reallocation".

There is an eerily consistent pattern. The robber approaches the bank or victim and says "Please give me your money. It is for the environment and Global Warming". People then hand over their money without protest, and actually report a warm and happy feeling. No robber has yet been caught. In some cases, people refuse to identify the person who robbed them, or have destroyed surveillance tapes.

One victim reported: "It was for the environment. How could I refuse?"

Psychologists blame a pervasave desire to "be good", rooted in early pre-school instruction. Even when informed of the scam, many respond that "the poor robber probably needed the money".

Police departments are at a loss for what message will protect the public. A government spokesman presented the dilemma. "Of course we want them to give their money for the environment, but it should be to the right people."

Global Warming Caused by Humans is a Scam
The famous Hockey Stick graph showing global warming is based on bad data, political motivation, and an overt attempt to exclude a detailed review and alternate explanations.

EPA Supresses Climate Study

Obama's EPA Quashes Climate Change Science
06/28/09 - Powerline Blog by John Hinderaker

Science is about open debate and analysis of published data. A scientist wants his results to stand as a guide to future generations, as a truth on which to build. Emotionally, he may not enjoy criticism, but no one can devote energy and insight into criticising his own work. So, real science welcomes review and criticism. It is an ethical standard.

A politician wants his program to be approved along with lots of pretty money. The truth is secondary to getting the bill passed.

It seems that the EPA made a political mistake. It hired real scientists to evaluate the data, and they wouldn't suppress the results.

When tobacco companies hid the results of their own studies, they were tagged as monsters. How dare they suppress the best data about smoking? How dare the EPA suppress the best data about the environment, when the lives and prosperity of hundreds of millions of people are at stake?

[edited] The EPA (US Environmental Protecion Agency) has suppressed its own study which concludes that carbon dioxide is not a significant cause of climate change.

The report by Carlin and Davidson reveals that the EPA has not done its own evaluation of global warming. Rather, it has relied on analyses by others, mostly the U.N.'s IPCC report (Intergovernmental Panel on Climate Change).

The IPCC report was a political, not a scientific document. The U.N. ordered that no recent research be considered, knowing that recent research disproves the anthropogenic (man-made) global warming theory, This is a scandal. As science, the U.N. report is a bad joke.

Carlin and Davidson recite and summarize the scientific work that shows rather clearly that human activity is at most a minor factor in climate change.

EPA Emails obtained by CEI are revealing. Carlin's and Davidson's superior declines to make their report public because "the administration has decided to move forward on endangerment". A second email orders them not to communicate to the public their conclusion that the global warming theory is bunk. (See the emails at Powerline)

Dispelling the Global Warming Myth
There is a very close correlation between global temperature and solar output. See the graph. That even seems reasonable in its own way. (smile)

Jun 27, 2009

"Do The Right Thing" Bill

Future News

An ashamed Congress has debated the "Do The Right Thing" bill for a week, and it is expected to pass today. Senate approval should follow in short order.

A leading Congressman spoke anonymously to avoid "electoral difficulties":

None of us has read any of the bills this year before voting for them. Or, for that matter, after voting for them. Even the sponsors don't know the contents; this is left to the staff and lobbyists.

We certainly are ashamed. It is clear to all of us that we cannot go on this way. The average bill is now 1,500 pages, and the details of government have gotten out of hand.

'Do The Right Thing' will give us open, consistent, dynamic government. It grants President Michele Obama (now in her 3rd successful term in office) all principles and powers to consider all matters and then "Do the right thing". The Congress retains the important function of advising on the President's actions should she desire this.

The Congress is now free to do what it does best, arrange for hospital admissions, allocate liquor licenses, and grant carbohydrate waivers to restaurants.

A congressional colleague added:

We are being unfairly blamed for our YES votes. The opposition is just as bad for not reading or understanding the bill before voting NO. They are monuments to an ignorant opposition to anything new that they don't understand.

-- --

Inspired by Not Reading Is Fundamental, 06/27/09 by Ed Driscol

The Political Manual
The "Bible of Politics" has come to light. (smile)

Jun 26, 2009

The Present Tells Us About the Depression

The Smoot-Hawley tariff of 1930 imposed tariffs (taxes) on the import of goods. Other countries imposed similar taxes in retaliation. This started a "trade war", a frenzy of higher taxes on trade that increased the problems of the Depression.

People worldwide were thrown out of work for the simple fact that they traded their production to people in other countries. Everyone became poorer as the world economy tried to adjust to this self-imposed restriction and cost.

How could they have been so stupid? Because taxes raise money for politicians, and taxes on certain imports raise profits for political supporters who make those goods locally. Politicians did not care that the imposed costs put other people out of work.

Read more ...

Level the Playing Field and Bring Down the Economy
06/25/09 - Open Market by Fran Smith

[edited] Beware of any proposal that attempts to “level the playing field.” Usually, this hobbles competition with restrictive regulations and raises costs for consumers.

The House Ways and Means committee proposes carbon taxes on imports from countries that don't control greenhouse gas emissions. This can have broad, disastrous consequences

The huge and complex Waxman-Markey energy bill will be voted on Friday. Environmental groups are eager to suppress energy use. It sets up a “cap and trade” system by setting a limit on carbon emissions and issuing tradable allowances.

Some carbon-intensive industries with high energy use understand the high costs they will have to pay and pass on to their customers. They are worried about “leakage”. Companies in other, less burdened countries would be able to offer lower prices, and those countries would be a better place to locate businesses and jobs. The solution is to also hit those imports with a hefty tax. Congress is figuring out a way to do that.

People usually think that looking at 1930 and the great depression can give us an insight into what we should do now.

Actually, it is the reverse. Our government is giving us an insight into what happened in 1930. There isn't any real care about economics or recovery. There isn't any fear of making a bad situation worse, or of taking a 2 year recession and making it a 10 year misery.

The fact then and now is captured by Rahm Emanuel, Obama's chief of staff. He said that no crisis should be wasted as a political (money acquiring) opportunity. What we have/had is an explosion of political class self-interest and a grab for money and power. The economic crisis (caused by these same politicians) is merely the excuse to enact wild theories and hand out favors during the turmoil.

There are no limits, because they can take the money now and let the accounts settle themselves later. They don't have to care what happens to the "little people" when they look out in the future from their hilltop homes. They will have gotten theirs.

What Caused Unemployment in the Great Depression?
The government caused uncertainty that delayed reinvestment, just like today.

We Guarantee It
The government is guaranteeing us into poverty. The story of the housing and economic crisis. Politicians discovered a loophole in government finances. They could borrow as much as they wanted, off budget and without debate, by granting guarantees.

Supposedly private businesses like Fannie Mae and Freddie Mac borrowed as much money as the entire national debt at the time, $5.4 trillion ($5.4 million million). The guarantees go on today. The politicians crying the loudest about the free market and lack of regulation were the ones who directed this disaster and refused restraints.

The Political Manual: Adequate Compensation
"This is not a new problem, and you owe much to prior politicians. They have worked tirelessly on methods to receive adequate compensation. You stand on the shoulders of giants. You can create any amount of mischief spending vast amounts of public funds, provided it is from the heart and not for personal gain. You are a servant of the people. Any benefit you may receive personally is coincidental."

Jun 25, 2009

Windmill Jobs are Expensive

Tilting at Green Windmills
06/25/09 - Washington Post by George F. Will (via Cafe Hayek)

[edited] Gabriel Calzada is a professor of economics at Universidad Rey Juan Carlos, Spain. He has produced a report that is inconvenient for Obama's green agenda and for budget assumptions that are dependent upon it.

Spain is the leading country in aggressively supporting production of electricity from renewable sources. Calzada says Spain's huge spending on wind farms and other forms of alternative energy has indeed created jobs. But his report concludes that they are often temporary and have cost $752,000 to $800,000 each in subsidies, and $1.4 million each in the wind industry. Each such new job also destroys 2.2 other jobs in other industries because of the inefficient political allocation of capital.

European media regularly report "eco-corruption" leaving a "footprint of sleaze", such as gaming the subsidy systems and profiteering from land sales for wind farms. Calzada says the creation of jobs in alternative energy has subtracted about 110,000 jobs elsewhere in Spain's economy.

Robert Gibbs is the president's press secretary. It is weird that he dismisses this report as false witout reading it. He can't believe that some American importers are cashing in on the U.S. government's promotion of wind power, despite this being an economically unproductive project.

Calzada has come to conclusions that he, as a libertarian, finds ideologically congenial. And his study was supported by a like-minded U.S. think tank, The Institute for Energy Research, for which this columnist has given a paid speech. Many Spanish critics have impugned his patriotism because he faulted something in Spain which Obama has praised. But, they have not tried to refute the content of his report.

Jun 24, 2009

The Medicare Tomato Market

Medicare Tomatoes
06/21/09 - The Happy Hospitalist

Say that tomatoes were declared vital to life and made available free through the Medicare National Tomato Bank. This translates the story of the healthcare market to the tomato market. A long, readable, and informative post. This is only an excerpt.

[edited]  The government took over. A midnight Congressional mandate ended the free market in tomatoes, and replaced it with the Medicare National Tomato Bank (MNTB).

The demand for tomatoes took off. Grocery stores everywhere were selling out. Nobody could keep tomatoes in stock. The grocers were ecstatic. They sold their tomatoes and sent the bill to Uncle Sam, who then sent them a check for the market price. The people were happy. They were getting free tomatoes. Entitled Tomato Eaters (ETEs) everywhere loved Congress.

Unfortunately, the MNTB was not happy. They were paying the bill. That $200 billion tomato bill was rising quickly, faster and faster, 10% a year, year after year. The MNTB could not afford to continue paying for free tomatoes for everyone. Congress did something completely anti-American in an effort to control the costs of the MNTB. They took capitalism out of the tomato market.

In their stroke of genius, they tried something that had never been tried before under capitalism. They would lower the cost to the MNTB, not by cutting the demand (political suicide), but by paying only 80% of the market price.

The ETEs remained happy with free tomatoes. The grocers were not so happy.

(skip to near the end)

Access to free tomatoes was dwindling. No longer could the ETEs walk to the grocer down the street. They had to drive miles to get the government mandated access to the tomato market. Known as the emergency tomato grocer (ETG), the MNTB created rules and regulations that forced this group of grocers to stay open at all costs. No matter what. And to accept the price paid by the MNTB.

Grocer after grocer was bogged down by incredible regulatory costs associated with receiving 20, 30, or 40 cents on the dollar for their tomatoes. One by one, they all left the entitled tomato market. No longer could you walk into any grocer, grab a bag of your favorite guaranteed tomato, and expect someone else to pay for it.


The Medicare Tomato is the reality of health care delivery today. It is the backwards approach to the rationing of a service that is finite. Health care is not an unlimited resource, and the policies of rationing will always best be determined by the personal financial stake that everyone has in their health care.

This doesn't mean cash only, insurance only, free care for all, or universal access. It is a rational approach to control demand, whether that be means tested or income dependent. Whether that means balance billing or high deductable policies. Whether that means shopping for service and quality through price transparency. Whether that means strictly catastrophic insurance coverage. Whether that means tort reform to reign in defensive medicine. Whether that means judicious use of a gate keeper Medical Home model. Whatever it means.

- -
Grocery School
04/24/11 - Cafe Hayek by economist Donald Boudreaux

Suppose our system for K-12 education were applied to shopping for groceries. This puts the usual arguments for the delivery of education in a new perspective.

The comments are interesting, in particular:

  • Homeschooling Mama:  Why my children will never darken the door of a school.
  • Ravi:  A government supermarket is not far fetched. In India, I had to shop in these supermarkets, called Ration shops.
  • Bill:  Why would anyone operate in a poverty area? They certainly don’t open up grocery stores in those areas.
  • Donna Gordon: I shop at food stores for different purposes. Why can't I have choice in education?

- -
Health Insurance is Not Health Care
High health insurance premiums result from high health care costs. If health care were not expensive, health insurance would not be expensive.

- -
How To Make Child Care As Horrible As Health Care
11/29/11 - Reason by A. Barton Hinkle

[edited]  Nancy Pelosi once had trouble finding a babysitter. She wants a comprehensive solution to "do for child care what we did for health care reform". It is at the top of her agenda.

Hinkle explains how our healthcare system has been legislated into its current state, by describing how these same rules would apply to babysitting. You may think that babysitting is expensive and hard to get now. Just wait.

Military Healthcare is Not a Shining Example

Fix Military Healthcare First
06/24/09 - ChicagoBoyz by Shannon Love

We should test ideas and promises at a scale smaller than "everyone".

[edited] Megan McArdle asks (Via Instapundit): Why isn’t military healthcare a shining example, if socialized, politically managed healthcare is so great,? In fact, care sucks for both service personnel and their dependents.

My son-in-law in the Army injured his knee in a minor training accident. The Army hospital botched his treatment and almost cost him his career. Almost everyone in the military can tell a similar first- or second-hand story of poor treatment.

Pediatrician appointments must be arranged three days in advance. If my granddaughter develops a fever, my daughter must decide to tough it out or take her to the emergency room. The rules make care hard to get and increases costs by relying on emergency room visits.

The military system has all the advantages claimed for politically managed healthcare.

  • It is huge and can buy medicines and technology at bulk discounts.
  • Their personnel work for far less than the market
  • They are under military discipline that no civil system can match.
  • They have an integrated, computerized records system.
  • The military standardizes treatments according to measured effectiveness.

All of these nominal advantages fail because the military healthcare system is a giant, politically managed system.

  • The shear size of it makes it difficult for those at the top to know what is going on in the system. Small scale, bottom-up innovation is difficult.
  • The system pays for the training of its personnel (just as Obamacare plans to), so managers have a disincentive to remove the careless or the incompetent. [A manager must spend money to train any replacements.]
  • Patients have no other choices, so the system faces no market pressure. [It is a pre-paid service.]
  • Politicians are more interested in cost control than in quality of care.

Leftists seem befuddled when asked to demonstrate that their ideas work on a small scale before imposing them on everyone. They believe that articulation and logic is enough and see no need to experiment.

For the rest of us, ideas need testing.


VA Medical System in Shambles
06/24/09 - Fox News by Joseph Abrams (via Instapundit)

So, a healthcare agency administered by government, for say 60 years, for veterans, isn't yet managed properly? Who would have thought that? (smile) Where is the internal oversight, dialogue, and search for excellence? More importantly, who are you going to sue?

[edited] Veterans Affairs hospitals botched radiation treatments to nearly 100 vets and exposed 10,000 to HIV and hepatitis viruses. Veterans advocates and lawmakers say the VA health system is in dire need of proper oversight and funding.

Veterans groups and lawmakers say VA hospitals have permitted these violations because federal regulations allow doctors to work with little outside scrutiny. They say the VA health system, with its under-funded hospitals and overworked doctors, is showing signs of an "institutional breakdown," in the words of one congressman.

"Lack of inspections, lack of transparency" were likely to blame, said Joe Wilson, deputy director of the Veterans Affairs and Rehabilitation Commission for the American Legion, who testified before Congress this month on transparency problems in a budgeting arm of the VA.


Canada's Healthcare Has Hidden Costs
"Access to a waiting list is not the same thing as access to health care"

Jun 21, 2009

No Progress on Nuclear Energy

Nuclear Energy Update
06/20/09 - ChicagoBoyz by Carl from Chicago

[edited] Nuclear energy provides a significant portion of the world’s base load power capacity, along with coal power, gas, and hydro-electricity. [Base Load is the power that is available all the time without interruption. -ag] While “renewable” energy and conservation receive the lion’s share of the media coverage, they make up a minuscule proportion of our total generation.

The United States has invested little in new base-load energy capacity, other than natural gas. Our existing plants are aging. New plants have a long lead-time. If no new plants are started soon, we will have retirements and no reasonably priced options to replace them. This will drive up the total cost of energy [electric rates] and make our economy less competitive.

I see two common views.

  • The "Greens" view nuclear plants as a possible solution for greenhouse emissions and a substitute for "dirty" coal.
  • The "Engineers" talk about new, efficient plant designs and how technology can help us resolve this situation. The technology in current nuclear and coal plants comes from the 60’s and early 70’s.

I will call my viewpoint “bitter realist”. I have decades of experience with the utility industry, primarily on the financing side, which also requires a fair dose of regulatory experience.

Carl talks about some recent government decisions that are not helpful.

  • Obama decided not to fund the Yucca Mountain storage facility in the 2010 budget. This was intended to store spent nuclear fuel after use in electricity generation. It is almost finished after $9 billion spent ($9,000 million).
  • The US Government recently selected four companies for Federal loan guarantees for new nuclear plant construction. Why just four, and why these four? Hard to tell. Further, the loan guarantees are small compared to the regulatory demands and future risks.
There is continuing legislative heavy handedness (NRC decommissioning) and ineptitude (Yucca Mountain) which would make any rational investor think twice before investing.

I am a fan of nuclear power and believe that it is a great way to make our country more competitive. Done correctly, it is far cheaper to run in the long term, and reliable under all conditions.

As a “bitter realist”, however, it isn’t going to happen.

A blog recommended by Carl: Life in the Great Midwest
50+ posts on the energy industry in the US

Jun 18, 2009

Medicaid and Its Children

Medical Insurance 'Public Option' is Son of Medicaid
06/17/09 - WSJ by Daniel Henninger

Lard atop lard that only a politician could love

Medicaid is 44 years old, the first attempt to provide a healthcare safety net for the poor. Its scope has expanded and its costs are bankrupting the states. Obama's plan is a further expansion. Will a bankrupt country make good on its promises?

[edited] In 1965 Congress erected the nation's first two monuments to health-care "reform", Medicaid and Medicare. Medicaid was described as a modest solution to the problem of health care for the poor. It would be run by the states and "monitored" by the federal government.

Medicaid is worth our attention now because Mr. Obama is more or less demanding that the nation accept another reform, his "optional" federalized health insurance program.

Whatever Medicaid's merits, more than any other factor, it has put California and New York on the brink of fiscal catastrophe. I'd even call it scary.

Spending on health and welfare, largely under Medicaid, makes up one-third of California's budget of some $100 billion. Governor David Paterson notes in his budget message that "New York spends more per capita ($2,283) on Medicaid than any other state in the country."

I believe that $2,283 is the average cost per state resident to pay for the benefits that are delivered to only the medicaid recipients.

Medicaid has crushed state budgets. Over the years, Congress has loaded up more coverage, shifting about 43% of the ever-upward cost onto someone else, mainly the states. A 1988 congressional mandate requires local schools to pay for schooling and related services for disabled children. Because Congress underfunds its mandates, the states pay the rest through Medicaid.

The list of add-ons is endless, and little is thoughtful. Obama's "Public Option", like Medicare and Medicaid, will become an impossible fog for patients to navigate. The administrative complexity will provide work for bureaucrats, Members of Congress, their staffs, lobbyist spouses, and the "health-care" establishment of foundations and economists.

This is a public program inviting congressional meddling and litigation. Over time, the Sotomayors of the federal bench will make it bigger. For example, one piece of California's incredible budget mess flows from a federal judge's 2006 decision. He seized control of the state's prison-health system and made the state pay additional billions for new health benefits.

In his speech, Mr. Obama said the cost of the Public Option won't add to the deficit: "I've set down a rule for my staff, and I've said this to Congress. Healthcare reform must be, and will be, deficit-neutral in the next decade."

If we are honest, that means tax increases are inevitable. Sounds scary to me.

Jun 12, 2009

Lack of Competition in Health Care Insurance

Health care reform: The real problem is lack of competition
06/11/09 - St. Louis Post-Dispatch by David C. Rose

[edited] The Obama Administration is moving ahead on health care reform. Obama's plan will push nearly all Americans into government-provided health insurance. That is not a good thing. The problem with American health care is too little competition.

There is justifiable concern about the uninsured. Most Americans end up getting health care when they need it, but the current approach produces incredible anxiety and is ridiculously inefficient.

There is rising frustration with the increasingly shabby way insurance companies treat patients. Patients can't do what restaurant patrons do when they receive poor service, which is to go elsewhere. Most health insurance is tied to a job, so most patients are stuck with their insurance company. And it shows.

The Obama administration's plan will produce less competition. But, the solution is more competition.

Why is the health insurance market so uncompetitive, unlike other insurance markets? During World War II, a tax break was granted to non-wage benefits such as employer-paid health insurance premiums. Over time, this cost saving tied most American health insurance to employment. This forces patients to fire their employer before they can fire their insurance company. So, we get poor treatment from insurance companies.

For true competition in health care, it must be possible for individuals to fire their insurance company. This requires extending the tax break on employer-provided health insurance to all health insurance, including privately purchased policies.

Medicare is a good deal partly because the government drives a hard bargain with health care providers by offering artificially low payments. In a competitive market of many insurers, no one insurer could do this.

Artificially low payments don't cover the full cost of procedures, so health care providers shift costs to everyone else. In other words, the lack of competition in today's market leads to higher insurance costs for people who aren't old enough to qualify for Medicare. Extending Medicare-like insurance to everyone won't work, because no one will remain to pay the shifted costs.

[ The same applies to emergency room (hospital emergency department) prices. The law EMTALA forces ER's to treat all patients equally regardless of ability to pay. They must shift these costs onto those who can pay. This produces the amazing $10 ER aspirin. -ag ]

In a competitive market, driving such hard bargains is impossible, so prices reflect actual costs. The Obama administration plan will give us the worst of both worlds.

  • Artificially low premiums will drive most private insurance out of business.
  • There will be no place to shift costs.
  • Shortly, we will have no reduction in cost from cost shifting.
  • We will have substantially less competition.
  • Less competition will result in higher actual costs.

This has been the experience in countries with nationalized health care. Many have an even worse looming entitlement problem than the United States.

The better solution is to give the same tax-free treatment to both individual-purchase and employer-provided health insurance. That would indirectly reduce the costs for covering the uninsured, which is the other major problem in American health care.

It is now very difficult to purchase insurance if you are not employed or if you work for a very small employer. Once insurance migrates out of large employer pools, sufficiently large pools will become possible with individualized insurance. Customers then would be able to vote with their feet if they are unsatisfied, and those who don't work for large employers no longer would have to pay higher premiums than everyone else.

There still would be some uninsured people. That could be handled directly through insurance vouchers. A voucher program would further eliminate distortions and reduce costs, not just shift costs.

A successful example is food stamps, which have essentially eliminated the problem of hunger in America. Food stamps are vouchers that provide direct payments while preserving competition. Small wonder they work so well.

A society may decide to provide benefits to people. The wrong way is to force the producers of those benefits to raise their prices to cover the extra costs. The right way is to give vouchers to those who are favored. The political problem is that vouchers reveal the value of the benefits, rather than hiding those benefits within the market.


ER Medicine and Bureacracy
08/31/08 - MDOD by 911DOC

Medicine becomes more expensive, harder to do, with worse outcomes, as government imposes intrusive regulation and arbitrary quality measures, despite any good intentions. Government Motto: "You say you are a caring doctor, so treat the poor for free."

Jun 11, 2009

Changing Oil Prices Are Not a Conspiracy

Explaining Oil Prices
06/11/09 - ChicagoBoyz by Shannon Love

A detailed article. Only an incomplete excerpt here.

[edited] Oil prices are headed up even though the world economy is headed down. What gives? Shouldn’t a declining economy lead to decreased demand which keeps down prices?

Well, yes and no. Oil is a strange commodity. It doesn’t change price and availability in the same pattern as other commodities that are based on natural resources. This strangeness arises out of the technology of oil production, distribution, and refining.

(5) Distributors and refiners can’t store oil: This is the most important factor of all. There is no economical means of storing large amounts of oil save pumping it back into the ground. The big oil tanks you see around are just temporary buffer tanks at refineries or the ends of pipelines. Once oil comes out of the ground anywhere in the world it is going to be an end product within a maximum of 120 days.

Most other natural resources can be stored for long periods. Distributors and refiners of those commodities can store up against falling prices or to take advantage of suddenly increasing prices.

Once oil is pumped it is going to move through the system to be sold as an end product, as inexorably as a boulder rolls down a mountain.

Once the extractors pump the oil and hand it off to the distributors, the oil has to be consumed by someone. In principle, it wouldn’t matter if the price dropped to zero. They can’t store oil, so they’d just have to just give it away.

When people suddenly stop driving in response to high prices, an economic downturn, or some unforeseen major event, the supply of oil takes weeks or months to adjust. In the interim, gasoline prices drop like a rock.

The current rise in prices comes from a similar effect. 30 to 120 days ago, extractors believed that future prices would be low so they stopped pumping as much oil. Since they have no central coordination, and since no one knows how much oil is actually pumped at any given time, too many extractors stopped pumping at once.

When the supplies get short, retailers can’t just order up more end products and refiners can’t just make them. They both have to wait for the extractors to decide to pump more oil and for the oil to make its way through the system.

The price is set by gas stations to just sell their supply. A price too high doesn't sell as much. A price too low results in running out, angering customers late in the day. So, supply and demand actually set prices.


No Price Gouging Here
Higher prices in emergencies is not gouging. It actually helps a lot, if it is allowed.

Universal Health Care in Italy

Universal Health Care - Been There, Done That
06/10/09 - InsureBlog by Bob Vineyard

Cristina Folchitto reports her experience.

[edited] As an Italian citizen, I have experienced the “Utopia” of universal health care. It is a noble and ethically good idea, but it simply does not work.

It is not free. Every month a percent of your salary is taken out of your paycheck. You have no control of that money, you have no freedom to choose whether to have health care coverage or not. The more money you make, the more you pay, which is not fair nor directly linked to your health status or habits.

Hospitals are overcrowded, understaffed, mostly old buildings and infrastructure, without enough physicians or resources. You might have to wait several months to get a sonogram or an MRI. For a surgical procedure, you are put on a waiting list. You could be called months later at any time, any day to have the procedure.

If you cannot afford private care, after going through the painful process of public infrastructure, you still pay a co-pay according to the treatment you receive.

Private health care guarantees competition between doctors and medical institutions. The monetary gain stimulates a higher level of care and professionalism. This does not apply to the public system that often cannot afford to pay adequate wages to doctors, lowering the quality of medical service and almost eliminating research projects.

The psychological comfort of having health care “paid by the government” lowers the awareness and responsibility that people have towards their own health. It is easier for them to rely on future care instead of making the best lifestyle choices to stay healthy and in shape.

Having lived under both systems, I appreciate the freedom of choice that is given to me by a private health care system.


They will pretend to pay - We will pretend to Treat

Political control of healthcare promises and payments has a sad history. Delaying payments has the same effect as reducing payments, since the state doesn’t catch up for a long time. The payment delays ensure that providers need to hold a big “rainy day” fund, since their employees want to be paid cash rather than IOU’s.

Medical providers can do little except complain to their local legislators. They can’t sue the State to speed up payments, and if they did, the state wouldn't care. Unlike insurance, which may be popularly perceived as unfair, there are no avenues of appeal if you feel the state is killing your business.

Begging for Medical Care

Natasha Richardson died from a ski accident due to a delay in treatment. Montreal does not have fast transportation to a full-service hospital, even near a ski area. Why not? Patients are a cost to the system.

The bureaucracy sees you as a cost, especially if you have already paid. All people and organizations seek income and avoid costs. Socialized or centralized healthcare is paid up-front and delivers services after the fact.

How hard will a system work to earn the money that they have already been paid? This is something that everyone can understand in their gut. A customer is lost without competition for his dollar.

More on Healthcare

Jun 9, 2009

The Department of Work and Production

We Will Improve Your Work and Lower Costs

(a large waiting room in a giant federal building)

Desk Clerk: Ticket 363. Is ticket 363 here?

Joe: I have number 363.

Desk Clerk: (without looking up) Go to office 26, through the gate, turn right, left down the corridor, on the right.

(Joe easily finds his way. He has been here before. The water fountain still doesn't work.)

Official: (behind desk, seated, remains seated) Please close the door and have a seat.

Joe: (sits down, recognizes the official) Hi, how are you doing?

Official: Do I know you (looks through folder) . . . Joe?

Joe: We've met a few times here. I suppose you see a lot of people.

Official: Do you know why you are here?

Joe: Is it GDP again?

Official: As you can see from the sign on my desk, I am now a case officer for the new Department of Work and Production. The government, your government, has decided to remove the inefficiency from various occupations.

We have had great success with the healthcare system, and we are now applying these techniques to professions that affect national security. We want to improve your knowledge, pay, and working hours. Would you like that?

Joe: That sounds good. (a bit suspicious) Does this really apply to me? I'm an accountant.

Official: Yes, I know you are an accountant. (irritated) I see it in your folder. As an accountant you are an important element in producing trustworthy, accurate, and timely measures of efficiency and production. This is a function vital to the economy.

I think you will enjoy being part of a coordinated team of trained professionals, working together to attain the highest efficiency and accuracy. You will no longer be alone in a fragmented, distant company without standards. You will be part of a national group.

Joe: Will I still work for Acme International?

Official: You will physically work there, or somewhere else where you are most needed, but your work standards and pay will be coordinated through your professional license. All accountants will now be federally licensed, for the security of the country and for efficiency. The high, hidden costs of accounting must be reduced if we are to prosper as a nation. I'm sure you agree.

Joe: Well, I, uh . . .

Official: Good. You will be pleased with the changes in your compensation. First, we are going to raise your salary 20% in the amount that you either save or receive.

Joe: A 20% raise is great. What do you mean by "save or receive"?

Official: We take the smart view that your effective salary is what you take home and don't waste. You may remember our accomplishments a few years ago when government investment saved or created 4 million jobs. This applies the same philosophy.

Your new salary is set at 80% of your current salary. Here is a copy of "My Salary Savings". This gives you easy, fun ways to stop wasting 40% of your salary. The result is that you will either save or receive 120% of your current salary, which is a 20% raise.

Joe: Wait a minute. (with self control) You are actually cutting my salary 20%.

Official: No, we don't see it that way. We have arranged for you to save or receive 20% more than you are currently making. You would not have a job without these adjustments. Do you want to impair your professional license? You could always do something else other than accounting.

Joe: (thinks quickly) Yes, I see. That is very good. Thanks.

Official: I think you will enjoy your reduced 38 hour work week with Advancement-Plus. A-Plus is a 6 hours/week program that gives you advanced training, interesting additional exercises, and provides time for you to report your efficiency measures to the central database.

Joe: So I will work 44 hours per week?

Official: Are you sure you are an accountant? Your work week is reduced to 38 hours. We don't consider your training for advancement to be work. That is your personal investment in continued employment. We certainly don't regard your efficiency reporting to be part of your accounting job. That is part of your professional self-management.

Joe: (bites tongue) And, my vacation?

Official: Based on a 38 hour work week, of course your vacation is slightly reduced. The details are in this manual "National Work Standards Panel: Accounting Compensation".   (hands Joe the manual)

Joe: (subdued) Thanks.

Official: Ummm.. (looks through folder) ... Joe. You have a good record in accounting. You could work directly for the Government if you work hard and study our new methods and measures.

We have been able to increase pay by 20%, reduce work hours 5%, and maintain vacations and leisure in every profession that we have managed so far, starting with medical care. Improved accounting has been a major factor in our success.

Joe: It is certainly something to think about.

Official: (closes folder, writes on a form, hands form to Joe) Take this to the front desk. The clerk will give you a "brick". That is our informal name for your efficiency milestone reporting module. He or she will arrange to deduct $295 from your pay to cover the cost. The instructions for using it are conveniently online, along with many useful details about your new work requirements and professional responsibilities.

Leave the door open on your way out.


Phony Jobs Claims
6/9/09 at the Wall Street Journal

Obama and his administration claim to be "saving or creating" jobs by spending massive amounts of money as "stimulus". There is no data that could support or verify that jobs have been "saved". If the economy does not improve, and more jobs are lost, Obama can still say that it could have been worse.

The Department of GDP
You can spend, or government will do it for you.
You owe it to us all to increase GDP.

HHS.Gov - Measures/Codes
Government brings welcome rationality and precision to a profession that was severely lacking in measurement codes. (smile) This is current and real. It is not a drill. Don't think of the work to collect this data, think of the cost reductions when enough is collected. Via Dr. Wes.

New! Status Update regarding CPT II Coding Issues for the 2009 PQRI

CMS has identified a technical problem affecting twenty (20) quality-data codes (QDCs) used for reporting thirteen (13) quality measures through the claims-based method for 2009 PQRI. For further information and guidance regarding this issue, please see the "Status Update on CPT II Coding Issue for the 2009 PQRI and Options for Eligible Professionals (EPs)" document in the "Downloads" section below.

2009 PQRI: This page contains information about PQRI quality measures, their specifications and related release notes, an implementation guide for reporting individual measures through claims or registry-based reporting, measures groups specifications and a related guide to implementing measures groups.

2009 PQRI Individual Quality Measures List: This document, which identifies the 153 quality measures selected for the 2009 PQRI, is available in the "Downloads" section below. (continued ...)


To 911DOC -- Thanks for your comment. My hope for this post was to give everyone a sense of what it might be like for the government to manage their profession. Governments look for capital to steal redistribute. Usually it is money, but they also will redistribute the capital represented by years of study, experience, and excellence, as in medicine.

Reasons I'm Leaving Emergency Medicine #2
911DOC explains how government regulation and the EMTALA law is disrupting emergency medicine and bankrupting hospitals.

Phony Jobs Claims

The Media Fall for Phony 'Jobs' Claims
06/09/09 - Online.WSJ by William McGurn

The Obama Numbers Are Pure Fiction.

[edited] "Saved or created" has become Barack Obama's signature phrase. Obama declared yesterday that the stimulus had already saved or created 150,000 American jobs.

He announced faster stimulus spending so he could "save or create" an additional 600,000 jobs this summer. Obama promised earlier that his recovery plan would "save or create three to four million jobs over the next two years."

Tony Fratto was a senior member of the Bush administration communications office. He sees a double standard at play.

We would never have used a formula like "save or create". To begin with, the number is pure fiction. The administration has no way to measure how many jobs are actually being 'saved.' If we had tried to use something this flimsy, the press would never have let us get away with it.

The inability to measure Mr. Obama's jobs formula is part of its attraction. Never mind that no one actually measures "jobs saved". Neither the Labor Department, the Treasury, nor the Bureau of Labor Statistics does it. The New York Times delicately reports that Mr. Obama's jobs claims are "based on macroeconomic estimates, not an actual counting of jobs." Nice work if you can get away with it.

Harvard economist and former Bush economic adviser Greg Mankiw writes:

The expression "save or create" is political genius. You can measure how many jobs are created between two points in time. There is no way to measure how many jobs are saved. Even if things get much worse, the President can say that there would have been 4 million fewer jobs without the stimulus.

Jun 8, 2009

Economists Surprised That People Read the Paper

The Grand Unification Theory of Sucking
06/07/09 - VodkaPundit by Stephen Green

[edited] Big Government Spending Programs are Having an Opposite Effect

The Federal Reserve announced a $1.2 trillion plan three months ago designed to push down mortgage rates and breathe life into the housing market.

But this and other big government spending programs are having the opposite effect. Rates for mortgages and U.S. Treasury debt are now marching higher as nervous bond investors fret about a resurgence of inflation.

Well, duh! Stimulus spending can’t work, because these things happen, and I’d say we will indeed get all three:

1. Extra spending means extra taxes, which means the whole thing is a wash. It is a big, fat lie that Government spending has a “multiplier” effect different from consumer or business spending.

2. Extra spending means extra debt, driving up interest rates and choking growth.

3. Extra spending means printing money. Resulting inflation makes any growth an illusion.

This is a great comment by Shannon Love who posts at ChicagoBoys

[edited] Leftist economists don't understand that people read the paper.

The problem with their stimulus theory starts with their assumption that everyone will behave just as they would have without a stimulus, up to the point that the stimulus spending reaches a critical mass sometime next year.

However, people read the newspaper, see the tsunami of taxes, regulation, and inflation coming their way, and they alter their behavior immediately. Passing the stimulus bill today and planning to raise taxes tomorrow, alters people’s behavior right now. The expectation of paying for the stimulus later drives down economic activity now, long before the stimulus can hope to have any effect.

Obama’s team can’t see this because they have an ivory tower model of the economy. They think people do not make economic decisions until they actually receive money. They can’t seem to grasp that the economy results from the choices of real, live, human beings who can and do make plans based on their predictions of future conditions.

Obama expects people to stand around passively until Obama does something that makes them react. Instead, they’re anticipating him.

+ + + +
Stimulus Does Not Cure a Recession
Jobs change when people change what they want to buy or can afford. This takes time and adjustment. Businesses won't hire because of a short-term boost to their income that is being borrowed from later taxes.

Why Spending Stimulus Plans Fail
Government spending merely transfers jobs and income from one part of the economy to another.

Econ 201: The Myth of the Economic Multiplier
Government spending doesn't multiply anything. It takes resources from taxpayers and applies them to government projects. You get a bridge or some paperwork, that is it.

Jun 6, 2009

The Climate Change That Isn't

Climate Change Reconsidered
06/05/09 - PowerLineBlog by John Hinderaker

The 880 page book Climate Change Reconsidered has been published by the Nongovernmental International Panel on Climate Change (NIPCC). At the highest level, these are the conclusions:

[edited] This is an authoritative and detailed rebuttal of the findings of the United Nations' Intergovernmental Panel on Climate Change (IPCC). The Obama Administration and Democrats in Congress are relying on bad conclusions from the IPCC.

The scholarship in this book demonstrates overwhelming scientific evidence that

  • The warming of the twentieth century was moderate and not unprecedented.
  • Its impact on human health and wildlife was positive.
  • Carbon dioxide probably is not the driving factor behind climate change.

The authors cite thousands of peer-reviewed research papers and books that were ignored by the IPCC, plus additional scientific research that became available after the IPCC's self-imposed deadline of May 2006.

* The IPCC uses warming data from surface recording stations, yielding a 1905-2005 temperature increase of 0.74° C. But, this temperature record is not corrected for the urban heat island (UHI) effect. [UHI is warming from streets, buildings, and roofs which are the sites for the temperature stations.] The UHI of even small towns dwarfs any greenhouse effect that might be present [making that data useless].

* Highly accurate satellite data, adjusted for orbit drift and other factors, show a much more modest warming trend in 1980-2000 and a dramatic decline in the warming trend in 2000-2009.

* The observed pattern of warming differs from the pattern predicted by global climate models based on CO2 greenhouse effects.

Data from the U.S. Climate Change Science Program (CCSP) is unequivocal. All greenhouse models show an increasing warming trend with altitude in the tropics, peaking around 10 km at roughly twice the surface value. But, the actual temperature data from balloons give the opposite result: no increasing warming, but rather a slight cooling with altitude.

* Temperature records in Greenland and other Arctic areas reveal that temperatures reached a maximum around 1930 and have decreased in recent decades. Longer-term studies show oscillatory cooling since the Climatic Optimum of the mid-Holocene (~9000-5000 years ago), when it was perhaps 2.5° C warmer than it is now.

* The average temperature history of Antarctica provides no evidence of twentieth century warming. The Antarctic peninsula shows recent warming, but several research teams have documented a cooling trend for the interior of the continent since the 1970s.

Jun 5, 2009

A Liberal Judge

I Don’t Know What Liberal Means
06/05/09 - National Review by Ed Whelan
Via PowerLine

Mr. Whelan fills in a weak area in Judge Sontomayor's knowledge, and offers a directory to her statements and opinions. [Quotes are edited.]

Judge Sotomayor gave a speech in January 2001, and provided this account. She explained her problems being confirmed to the Second Circuit court:
Senate Republican leaders believed that I was a potential for the Supreme Court one day. They also believed that I am a liberal, and therefore did not want the nomination to go through. I don’t know what liberal means.
Sotomayor was an assistant district attorney in 1983. Evidently she knew what “liberal” meant when quoted in a New York Times article.
I had more problems during my first year in the office with the low-grade crimes such as shoplifting, prostitution, and minor assault cases. In large measure, in those cases you were dealing with socio-economic crimes, crimes that could be the product of the environment and of poverty.

Once I started doing felonies, it became less hard. No matter how liberal I am, I’m still outraged by crimes of violence. Regardless of whether I can sympathize with the causes that lead these individuals to do these crimes, the effects are outrageous.

Sotomayor's phrase "No matter how liberal I am" is the same as saying "Even though I am very liberal".

Among other things, Sotomayor understood back then that a liberal "sympathizes with the causes that lead these individuals to do these crimes" and is inclined to explain crimes as "the product of the environment and of poverty."

But I think that I can offer Sotomayor even more help on what liberal means, at least in the context of judging.

A liberal judge thinks that it is proper to indulge her own identity in deciding cases.

A liberal judge celebrates "the importance of indefiniteness in the law" and the "unpredictability" that results when a judge "develops a novel approach" that "pushes the law in a new direction."

A liberal judge resorts to shenanigans to bury the claims of white firefighters that they have been discriminated against on the basis of their race.

A liberal judge favors campaign-finance restrictions over the First Amendment.

A liberal judge embraces novel equal-protection theories that would compromise public safety.

A liberal judge publicly cheerleads liberal politicians.

A liberal judge excuses her own acts of discrimination.

A liberal judge thinks that Supreme Court justices are entitled to make policy.

A liberal judge hides her support for racial quotas behind gauzy euphemisms.

A liberal judge commends lawsuits that promote abortion and illegal immigration and that undermine welfare reform.

Jun 3, 2009

My Fantasy Beats Your Reality

Reality Versus Leftist Fantasy
06/03/09 - ChicagoBoyz by Shannon Love

[edited] Leftists claim that every economic crisis shows the failure of the free market, and assume that they would never have economic crises. Leftists have a wildly exaggerated sense of their own understanding of the economy and everything else.

The left doesn’t actually have a developed system of thought regarding the economy. They can’t actually explain why the real world political process will make better decisions than the free-market. Instead, they point to any reversals in the real economy, regardless of cause, and assert that in their imaginations leftist politicians could have done better.

Leftists create elaborate fantasies. Then everyone else must argue for reality against the fantasies. The real-world system always comes out worse.

Alternative-energy advocates feel entitled to paper over any shortcomings of their favored technology by evoking future technological breakthroughs. But, they won’t let you postulate future technological breakthroughs that would make current energy sources even more attractive.

If you point out that wind and solar power is unreliable to the point of near uselessness, proponents will breezily respond that future technological breakthroughs in power storage or distribution will overcome the problem.

However, if you point out that developments in nuclear technology could create power systems that would completely recycle their waste, they respond that we should not plan for nuclear power unless we have absolutely proven that the technology works. And, let’s cut funding for the research that would prove it works.

There are More Ways to Go Wrong Than to Go Right
06/19/09 - ChicagoBoyz by Shannon Love

Many leftists debate in this style: “I have an idea and you don’t, therefore I must have the best plan”.

I see this in debates about energy. Some believe fossil fuels cause global warming and nuclear power is too dangerous, so solar and wind power must be viable technologies. Unfortunately, the fact that one specific technology has problems has nothing to do with whether another unrelated technology will work.

The urge to do something, anything, to solve a problem can backfire badly. People immersed in politics begin to think that because there are only two major divisions in our politics, there must be only two altnerate solutions to any problem.

They begin to think that if the idea of one side is bad, then the idea of the other side must be good. If we think that any idea is better than no idea at all, we are more likely to do more harm than good. There are more ways to go wrong than to go right.

Will universal healthcare control costs?
06/16/09 - The Atlantic by Megan McArdle

There have been promised cost reductions for Medicare in the past. Why haven’t they happened, and what has changed to make them feasible now? When I ask this question, I get angry demands that I put forward my plan for cost control, rather than merely critiquing everyone else’s. This seems rather like demanding that I put forward my design for a perpetual motion machine before I am allowed to point out problems in the US energy market.

- - -
Magic Power
Could the nerds give us cheap power if they wanted to?

Problems With Green Energy
"Honey, please go up on the roof and sweep off the solar panels."

More on Energy choices ...

They Are Profiting From My Needs

Birthday Party

Around 1979, I was asked to leave a birthday party in Cambridge, MA. The party was by and for "Alice" who was a friend of my girlfriend at the time. About 20 of Alice's friends and their dates were there.

Alice bought a birthday cake for her party, for $35 at today's prices. During conversation, Alice complained that the cake was great, but too expensive. She knew the price when she ordered it. She said the bakery had "ripped her off" because they had made a profit selling her the cake. She needed a cake, and they had profited from her need.

I was hooked. I suggested that she could have bought a cheaper cake at a different bakery, or could have made the cake herself. Why did she blame the bakery for selling her a cake that she wanted to buy? I said these things nicely. I really wanted to know why she felt that way.

Alice said that she couldn't make such a nice cake, so she was forced to buy one. She knew that the ingredients cost about $10, so the bakery was adding in a big profit. It was a rip-off.

Read more ...

I said that the bakery had to pay the bakers, and rent the store, and other expenses, and have something left over, so the cake was going to cost much more than the ingredients. Alice replied that she didn't make any profit working for the City of Cambridge, so why should the bakery make a profit from her?

I suggested to Alice that her salary was her own profit, after subtracting her costs such as taking the bus to work. Alice said that she wasn't in business and didn't make a profit. She worked for the City of Cambridge helping residents, and she was paid too little for the hard and good work that she did.

She said that things would cost a lot less if businesses weren't taking those profits from her. I said that the bakery would not stay in business if it could not earn a profit. She said that it was fine with her if they went out of business, but that they shouldn't overcharge her as long as they were in business.

You may have guessed that there was increasing tension in this conversation.

I said that she was missing the central point. She said that I was being a pain. Cambridge is a liberal town in a liberal state. Many of Alice's friends also worked for Cambridge, and no one was helping to explain my view. After a few quiet whispers from her friends, my girlfriend suggested that everyone would be happier if we left. I didn't get a slice of the cake.

Yes, now I'm more resigned about these attitudes, and I won't do it again.

Non-Profit vs Profit

Profit is a dirty word to some people all of the time, and to most people some of the time. An "AntiProfit" thinks that profits are evil. According to an AntiProfit:

  • Non-profit is associated with hospitals and charities. Idealistic people work for non-profit organizations and governments, which are supported by contributions or taxes to do good works.

    If a non-profit collects fees for some services, those services are delivered below cost, so this activity is still pure and helpful. If a service is delivered above cost, for example registering cars, the "additional revenue" supports the organization, so it is good.

    Motto: "We're here to help"

  • Profit is associated with deal-making and pressure to buy. They have stuff that you want, and they make you pay for it. They try to sell products above cost and for the most profit. This profit could have stayed in their customer's pockets. Most of the employees are good people, but management is grasping for outsized salaries and money making schemes.

    Motto: "We charge as much as possible".

Understanding Profits

I don't hate profits, and I don't see profits as being the result of greed. I feel this way because I understand how businesses operate and where the profits come from.

The short answer is that "profit" is only a special name for what the owners and investors are paid. Profit is not "extra", "excess charges", or "anything we can squeeze from the customer".

The long answer is that profit becomes clear when you understand some detail about how a business operates. You probably won't hate profit after seeing where it comes from. We will look at Jim The Waiter, a service business; Busy Eats restaurant combining investment with service; and a pure Investor.

When you see a business as being a group of the managers, employees, service providers, and owners all together, then profit is the portion of business income paid to the owners, with the rest of business income paid to the other participants and suppliers. Business income is divided among the people who contribute to the business, including the owners.

Jim The Waiter

Jim earns about $50 in wages and $60 in tips each workday. He tips the busboys $4, spends $5 on commuting, and sets aside $1 for cleaning his work clothes. He has $100 remaining on average (net income before taxes).

We can regard Jim as the sole-proprietor of a service business. He sells a service to the restaurant and its customers and makes a profit before taxes of $100 per day.

Jim wants the highest income he can get from his work. AntiProfits don't object if Jim as a worker asks for $5/day more in wages. He has a right to sell his services for anything he wants. Jim can ask for a raise, and his employer can agree or not. Either side can end Jim's employment. Then Jim can find another job, maybe at a higher wage, and his employer may hire the services of someone else.

Jim earns extra income (more profit) by delivering better and faster service. He serves four more tables each shift than he did when he was less experienced. Jim's customers are not hurt by Jim's extra profit. Rather, they enjoy the better service and pay more 20% tips.

Busy Eats Restaurant

The Busy Eats restaurant employs Jim, other waiters, busboys, cooks, and a manager. It rents its building and buys accounting, advertising, electricity, and security monitoring. It uses tables, dishes, cooking ranges, and refrigerators. It buys, stores, and prepares food. It pays taxes on its own income and withholds taxes for its employees. The owners have spent money setting this up or buying an operating business, and they manage the business or hire managers.

It is convenient to say "Busy Eats" when it is really the owners and managers who have the risk and responsibility for delivering a service. The manager's salary and bonus comes from attracting customers by offering good food, service, and atmosphere. The customers can easily refuse this offer.

Any cash remaining after expenses belongs to the owners as their share (profit). Making money from the business is the reason the owners paid money (invested) to start or buy the restaurant, and took the risk of loss. The owners and managers must create and sell a service that will pay their salaries and profit, or the managers will lose their jobs and the owners will lose their money. The owners probably have restaurant experience that increases their chance of success.

Losing money operating Busy Eats would be as painful as putting $10,000 into a mutual fund and getting only $5,000 back, or nothing back, or even having to lose $2,000 more in addition.

  Break Even

Each meal served gives Busy Eats a little extra cash, the bill minus the cost of the food and cleanup. The cook and the waiter are on an 8 hour shift and need to serve many meals to pay their salaries and make tips. Busy Eats pays monthly rent on its building which must be paid from serving many meals. And so on.

"Break even" for Busy Eats is the sales needed to pay all of the expenses. That may require being 60% full for six hours each day. This level of success is unhappy for the owners, who couldn't sell the business for much. It isn't making any money for the owners (no profit), so it is no good being an owner.

Things are OK at 70% full. The cash from the extra customers pays the owners and a bonus to the managers. If Busy Eats cost $200,000 to set up, and it makes $20,000 in profit each year, the owners get about a 10% yearly return on their investment. Busy Eats could be sold for about what it cost to set up.

  Doing Well

Busy Eats might operate at 95% full, if they serve great food and people love the place. They would be happy making a profit of $70,000 on their investment of $200,000, giving them a 35% return. They could sell Busy Eats to new owners for about $700,000. The new owners would be getting a 10% return at that price on a successful business. The original owners would receive a "capital gain" of $500,000 above their investment of $200,000.

Where did all of this value come from? The owners created something that delivers value to their customers. They organized the services of their employees and managers, and they invested in the building, interior design, and equipment to convert groceries into great meals in a nice atmosphere.

The owners are using resources efficiently. They serve 95 people using the same physical resources that would have served only 70 people at 70% full. The owners employ 30% more cooks and waiters than they would have at 70% full. Jim the Waiter is happy to be earning a reliable salary and tips from a busy dining room.


The price of a meal did not change; it is the efficiency of operating at 95% full that is earning the owners their large profit. The profit doesn't make the food and service great; it is the food and service that make the profit great. So, a customer usually gets a better meal at a profitable restaurant than at a less profitable one.

Where does AntiProfit go to lunch? He likes the restaurant Quiet Time down the street, operating at 60% full and making no profit. He appreciates that they aren't making any money off of him above their costs. The food is passable and it isn't crowded, while it stays in business.

AntiProfit dislikes the restaurant Busy Eats, operating at 95% full and making a big profit. AntiProfit thinks they are charging too much, although their meal price is about the same as Quiet Time. The food is great. He is offended by the crowded atmosphere and the large volume of dirty dishes, at least 25% more than at Quiet Time. He feels sorry for his waiter Jim, who is busy serving many tables.

  Waiting Lines

Some time later, Busy Eats finds that it is operating 100% full at a profit of $80,000 per year. They often have a 20 minute waiting line. Their first choice would be to expand the restaurant, but that would require closing for six months, a big loss of revenue. While they plan a bigger restaurant nearby, they raise the price of meals 3%. This pushes 6% of their business away, the line disappears, and they operate at 98% capacity with a profit of $90,700 per year. The customers who continue at Busy Eats are willing to pay more for the great food and atmosphere but may not eat there quite as often.

Busy Eats raised prices only 3% because they wanted to keep as many customers as possible. Their customers are sensitive to price, even for great food.

Most customers appreciate the shorter lines more than they dislike the higher prices. Before, they lost time waiting or they stayed away; now they pay more. Jim the waiter gets an automatic 1.5% raise based on the higher meal price and tips; his excellent skills are worth more in a busy restaurant. The "market" was telling Busy Eats to raise its price.

The supply of meals at Busy Eats was less than its customers (the market) wanted. It can charge more and deliver its service with short lines and more profit, instead of rationing its meals by having long lines. Its high profits at this location helps the owners to get investments for their next location.

  Profitable Changes

Quiet Time is looking for ways to make a profit. It lowers its prices and changes the menu. It gets some of the customers who would have eaten at Busy Eats. It manages to be 70% full with lower prices and lower costs, making $20,000 in profit each year. That saves the restaurant and restores its value to the owners. The owners then have some time to try other things that would be more appealing to customers.

The supply of meals at Quiet Time was more than the market wanted. This told Quiet Time to make its meals less expensive and/or more desirable.

AntiProfit complains that Busy Eats is making too much profit after raising its price. He would prefer that it serve the community and himself better by lowering prices so that he could eat there more often. AntiProfit says Quiet Time is a good member of the community, offering solid food at a newly lowered price, and it is a quieter place to eat.

AntiProfit has things backwards. The price at Busy Eats is higher because of higher demand for its meals. The value of its service produces the higher prices and profit. It charges more because it wants to make higher salaries and returns on its investment. It deserves a raise for its good management.

Busy Eats couldn't serve many more customers even if it charged less. It hopes to serve many more customers at a second location, where it can make even more profit at the original, lower price.

The price at Quiet Time is lower because people aren't as happy with its offerings. Quiet Time is not full and could serve more meals, so raising prices would be a mistake. It makes a smaller profit because it is inefficient, not because it is a better member of the community. It employs fewer waiters and cooks than it would if it were more successful delivering what people want.

  The Cost of Profit

How much could a Busy Eats customer save if Busy Eats "gave back" its profit?

Busy Eats is just worth the owner's investment at 70% full, making $20,000 profit per year. That is the level where the owners don't lose the money they spent to set up the restaurant. Let's give them that.

Compare this to the $80,000 profit per year when Busy Eats is 100% full serving $500,000 in meals per year. The extra $60,000 profit is 12% of the meal price. So, Busy Eats could "give back" that profit by lowering the price of a $15 meal by $1.80, down to $13.20.

         Full     Sales   Profit   Extra  Extra
                                   Profit   Pct
Just OK   70%  $350,000  $20,000  $     0    0%
Full     100%  $500,000  $80,000  $60,000   12%
Pricey    98%  $504,700  $90,700  $70,700   14%

The Busy Eats customer is not paying much toward profits to eat at a great restaurant. Jim The Waiter actually makes more money in 15% tips on each meal than the restaurant makes toward the extra $60,000 profit.

As noted before, Busy Eats and its customers are all better off when the $15 meal price is raised 3% to $15.45. The waiting line disappears, the profit goes up to $90,700 at 98% full, and the owners want to open more restaurants, hire more staff, and serve more people.

Restaurant Financial Model

Below is the financial model for the Busy Eats and Quiet Time restaurants. I am not a restaurant expert. These figures may be different for an actual restaurant, but they are consistent about profit and expenses.

As Busy Eats sells more meals, it spends more on groceries, waiters, cooks, waste disposal, dishwashing, and bonuses, yielding 40% profit on meals served. Busy Eats has to pay fixed expenses like rent, electricity, bookkeeping, and advertising. Anything left over is the owner's share, the overall net profit.

I estimated the total business value of Busy Eats at 10 times yearly profits. A real value would depend on other risks and benefits, and might be between 5 and 15 times yearly profits.

See the Excel Spreadsheet for these figures

(Money in 1,000's)  Break                
                     Even           OK      Success
                    -----           --      -------
Maximum Sales        $500         $500         $500
How Full?       60%   300    70%   350    95%   475
Meals Expense   60%  -180    60%  -210    60%  -285
Meals Profit    40%   120    40%   140    40%   190
Price Increase          0            0            0
Fixed Expense        -120         -120         -120
Net Profit              0           20           70
                     Full         Pricey       
                     ----         ------
Maximum Sales        $500         $500
How Full?      100%   500    98%   490
Meals Expense   60%  -300    60%  -294
Meals Profit    40%   200    40%   196
Price Increase          0     3%    14.7
Fixed Expense        -120         -120
Net Profit             80           90.7

An Owner/Operator

Busy Eats illustrates a typical business that combines investments with operations. The owner buys the equipment, rents the building, and organizes the business. Up-front payments (investments) are necessary.

A promise to pay suppliers after everthing is running is not enough. The owner or a trusted manager supplies the plan for Busy Eats, hires the staff, and starts things working. Any profits from Busy Eats pays the owner for running and creating the business. He risks losing his setup money, or more, if Busy Eats fails.

The owner of Busy Eats combines his investment with his intelligence, experience, work, and the work of employees to deliver a service to customers. Any profit is what the owner is paid for his current work and for supplying the investment that created the restaurant.

Jim The Waiter combines his abilities and a small investment in work clothes to deliver a service to Busy Eats and to customers. Busy Eats pays him an hourly wage and his customers pay him in tips for his effort. His profit from working is what remains after some expenses.

Profit is not being stolen from employees or customers. It is the name for the useable part of each person's pay for the services and investment he provides, after subtracting work related expenses.

An Investor

An Investor buys stocks, bonds, commodities (like soybeans, copper, or oil), or all or part of businesses, with the intent to be paid, to make a profit. We could just as well talk about a group of people or a business buying these things.

AntiProfit sees an Investor as the pure evil of Capitalism. The investor wants to make a profit, to be paid for doing absolutely nothing, just by buying something and owning it for a while.

Actually, buying business equipment and structure supports making things. Making things is what gives us tools, houses, appliances, cars, and everything manufactured. Natural resources are also manufactured. Coal, concrete, iron ore, and wood must be mined, processed, and shaped to be useful.

Manufacturing, transportation, and accounting require tools, buildings, desks, and the entire infrastructure of business. Somebody has to provide the intelligence and resources (capital) to organize and build the infrastructure to do these things.

Busy Eats was designed and constructed before it could serve meals. It had to operate while losing money during the time that it was building a base of customers.

The owners supplied the investment. They made money for themselves if they did it right, or lost money if they did it wrong. They had to have knowledge and faith in themselves. They needed the possibility of a big profit to risk their money on something that might go wrong. There are many examples, such as Quiet Times where things did go wrong, and the owners invested their money only to lose it or barely get it back.

AntiProfit is mistaken that investing is "doing nothing" and getting paid for it. The investor must do useful things to earn money, then save those earnings, then invest that money at risk. The investor gets his money back if everything goes OK. He is paid for his foresight and risk If things go well. He loses some or all of his money if something goes wrong.

Safe and Risky Investing

Some investments seem safe. Why should investors be paid for buying and holding a sure thing?

The investors in Busy Eats have a steady business after 3 years. They spent $200,000 to start it, and it is now worth $850,000. That is based on a profit of between $80,000 to $90,000 each year. New investors are willing to spend that much to earn a 10% return on an investment that increases with inflation.

The new investors are not "parasites" on the value produced by the employees of Busy Eats. The employees have always been paid for their work. The new investors are buying the profits that are due to the original owners for starting and establishing Busy Eats. The original owners organized and provided jobs; they are not "stealing profits" from the employees.

The new investors are voluntarily paying $850,000 for a business that cost $200,000 to start. They do not feel robbed. They are happy to buy a business that earns 10% plus inflation. But, there is always some risk, and they will pay attention to keep good management and adapt to their customer's preferences.

The original owners have made $650,000 above their investment of $200,000. After a bottle of wine and smiles all around, they are likely to use this "capital" to start more restaurants.

This shows a pattern in investing and life. Entrepreneurs (high risk/reward investor/operators) start businesses and establish them as being stable. They often sell these businesses to managing investors (lower risk/reward investors) who are content with managing businesses for profit.

Entrepreneurs do something new using their own money and money from people who trust them personally. Managing investors use money from banks and stockholders who trust mostly in the documented performance of proven businesses. Each type of investor is matching risk against return. All investment is done at risk.

To commentor Ted S.: Thanks for adding your experience.

Free Markets, Businesses, and Crony Capitalism
03/23/10 - The Common Room by Headmistress, Zookeeper

This post kindly links here, and provides an anecdote about a woman who felt used books are improperly sold at market value, rather than what she imagined as a reasonable price.

Headmistress points out "There is nothing inherently immoral about profiting from needs".