Government cannot create a single productive job. The sooner we get over this fallacy, the better.

Why the U.S. Needs a New Nuclear-Waste Strategy – TIME.

I didn’t know about the naturally-occurring fissile uranium vein story before. That’s pretty cool.

Perverted Justice – Reason Magazine.

Thoughts on the Macro Paradigm, Arnold Kling | EconLog | Library of Economics and Liberty .

Everything the Fed has been doing over the past fifteen months makes sense if you think of their goal as transferring wealth from taxpayers to banks. If you try to explain it as an attempt to implement an expansionary monetary policy, you won’t even get past my high school students.

Magazine Preview – If Health Care Is Going to Change, Dr. Brent James’s Ideas Will Change It – NYTimes.com.

We have built up medical doctors in this country to be brilliantly intuitive gurus that are constantly making measured decisions. In reality, the result of all this coddling and sky-high spending on treatment is mediocre care. One face-palm quote:

Perhaps the clearest example is the Pronovost checklist. As many as 28,000 people in this country die each year from infections that come from intravenous lines. Several years ago, Peter Pronovost, a Johns Hopkins physician, developed a simple list of five steps that intensive-care doctors should take before inserting an IV line, in order to prevent the introduction of bacteria. The checklist reduced the infection rate to essentially zero at 108 hospitals in Michigan where it was adopted. Pronovost published the results in The New England Journal of Medicine in 2006. But most intensive-care doctors are still not using the checklist. To insert an IV line, they continue to rely on their own judgment.

Compulsory state education is antithetical to libertarian principles. The sooner we move towards separating the school system from the state, the better. That said, plenty of other nations are doing a far better job. It’s not very satisfying to sit around, advocating bombing the schools and starting over. So, what can we start to fix?

• End compulsory attendance. It’s clear that disruptive and apathetic students should be redirected out of the classroom. Send them home, or send them to a practical vocational program where they can at least learn something like fixing cars, pipes or drywall. Those are pretty well-paid occupations, by the way. No one will send their children, you say? Have you considered the extraordinary lengths taken by parents to educate?
• Eliminate external support. In well-off neighborhoods, schools are of course fantastically better due to parental support. Since we believe in equal government, and apparently we want government-based education, how about outlawing all other outside financial support? If you wish to contribute to our education system, you can fill in a blank item on your tax return and pay as much extra to the IRS as you want.
• Raise community college and state university standards. We can’t let the next rung of the system function only for remediation of those who are failed by the high school system. By making it a little more difficult to enter community colleges we raise the value of the high school system.
• Make teaching a viable career. We need to attract real talent into long term careers in the teaching profession. Notice that if we had a free market system, this would be automatically taken care of, as successful schools could pay out the proportion of revenue they see fit. But, failing that, massive government guaranteed benefits set up for those who spend ten or twenty years in education might have an effect.
• We must make firing teachers easy. Right now it is close to impossible in many school systems to fire, even when clear misconduct is cited. Once we pump up their effective salaries to be comparable with other jobs, we need to dial back the job security to match. If you aren’t creating value, or the school’s administration simply doesn’t want or need you around, time to go. There are challenges in dealing with the unions in this matter, but it can be accomplished.

How is it that we trust and encourage our bureaucrats to solve intricate problems like Middle East security, health care restructuring and financial regulation when they can’t deliver a decent education with one of the highest budgets around?

]]> http://www.joefu.net/blog/2009/10/national-report-card/feed/ 0 http://www.joefu.net/blog/2009/10/the-state-of-american-capitalism-in-2009/ http://www.joefu.net/blog/2009/10/the-state-of-american-capitalism-in-2009/#comments Wed, 14 Oct 2009 00:58:03 +0000 joefu http://www.joefu.net/blog/?p=40 Continue reading →]]> As we work on fresh new highs in the markets, it’s worth looking at the headwinds now in place for resuming real, organic economic growth.
• Lending in the critical housing sector is still essentially frozen outside of government support. You are starting to see talk of FHA bailouts, so the critical element of new buyers with limited down payments will be slowed down. (That said, risky lending done by the government is even worse than that done by private institutions. We would be better off with a functioning market for higher LTV loan products with investors taking the risks they want).
• As history teaches us, the government’s attempts to prop up housing with homebuyer tax credits, refinancing of various borrowers, foreclosure moratoriums, or non-economic loan modifications will eventually all fail.
• It is not possible for the government to create economically valuable jobs (see the broken window fallacy). As charismatic as he is, even Obama cannot repeal this one.

Risk taking among private pools of capital and the creation of small business and startups actually are responsible for true job creation. This sector is in a severe crunch. See one of many stories on small business lending, or frozen venture capital fundings.

• As I’ve mentioned before, the US healthcare system is grossly inefficient and unproductive, and may be headed for a crisis.
• We are allowing our currency to fall. This might be good if we had meaningful exports or other activity, but as it is we need to attract foreign capital that is comfortable with our rock-bottom interest rates…

While this is still the most innovative economy in the world, and we will recover, the answer for our government is to allow new and existing corporations room to build and operate new businesses. Those are shocking words today, where most Americans still derive their livelihood from big corporations while decrying every minor misstep, cost cut or outsourced activity they engage in. Here is my politically infeasible recovery proposal:

• End government supported mortgage lending and all incentives for home purchasing. Replace it with a partial guarantee program for private label mortgage backed securities with significant limits. If you think this can’t be done, consider the massive liquidity that was willing to purchase all sorts of these mortgages with no safety net just 2 years ago.
• End all corporate taxes. Large, connected firms aren’t paying a major share of these taxes, and when they do it is simply passed on to all of us. Banks won’t pay them for a good while (due to credit loss offsets and mergers).
• Massively reform the personal tax code. Almost anything would be better.
• Take steps to end our foreign military involvement. Set up a temporary work program for all the displaced diplomats and soldiers if you have to (repairing broken windows? or making solar panels? )
• Offer buyouts and early forced retirement to 2 million Federal government employees. That’s only a small fraction.
• Work with investors and trade agencies to jump start asset securitization. This has got to happen, and the assets must be held outside traditional deposit-taking banks as much as possible. Create major tax incentives for private investors to hold business loans, consumer receivables, startup equity, etc.

I have a few more ideas, but that’s a start.

]]> http://www.joefu.net/blog/2009/10/the-state-of-american-capitalism-in-2009/feed/ 0 http://www.joefu.net/blog/2009/10/a-few-billion-here-and-there/ http://www.joefu.net/blog/2009/10/a-few-billion-here-and-there/#comments Thu, 01 Oct 2009 23:33:51 +0000 joefu http://www.joefu.net/blog/?p=34 Billion Dollar Gram: putting all the crazy numbers you read and hear into perspective!
]]> http://www.joefu.net/blog/2009/10/a-few-billion-here-and-there/feed/ 0 http://www.joefu.net/blog/2009/09/cool-financial-blog/ http://www.joefu.net/blog/2009/09/cool-financial-blog/#comments Tue, 29 Sep 2009 22:43:41 +0000 joefu http://www.joefu.net/blog/2009/09/cool-financial-blog/ For those of you into finance, this blog is well worth reading through the past couple months’ posts:

Accrued Interest

Google Reader found it for me somehow. Best of all, it includes bonus Star Wars references!

]]> http://www.joefu.net/blog/2009/09/cool-financial-blog/feed/ 0 http://www.joefu.net/blog/2009/09/could-we-see-the-us-healthcare-system-collapse/ http://www.joefu.net/blog/2009/09/could-we-see-the-us-healthcare-system-collapse/#comments Wed, 16 Sep 2009 05:30:19 +0000 joefu http://www.joefu.net/blog/?p=12 Continue reading →]]> Those who began their careers in the dot-com mania, like myself, have now been through two booms and busts. It becomes natural to look for a third one in our future. At this point, we know the only private sector expansion is taking place in the out-of-control healthcare sector, so that is the natural place to look.

Actually, you could find some arguments for a collapse of the vast US government itself, but I am of the opinion that a future administration will be forced to make dramatic cutbacks in certain spending areas and that such an outcome can be avoided. It’s possible that this could include the large medical subsidies and entitlements already in place, so that brings us back to the healthcare system.

Here, without solutions, are a few things that are way out of whack about our system:

• The vast payee, insurer, and processor structure needed because there are so many private and public entities involved. Similar to alcoholic beverage distributors, a lot of this system is mandated to exist by outmoded policy only.
• Along similar lines, a lot of the productivity improvements made possible by the IT revolution have largely passed the healthcare system by. A lot of recordkeeping is still paper-based, despite the promises ten years ago that we would all have our complete histories at the touch of a physician’s PDA.
• The large proportion of jobs, productivity and output that healthcare now represents is reminiscent of the real estate bubble communities such as Las Vegas, here in LA, and Florida, where the majority of new residents coming in were in the construction and real estate industries themselves (or closely tied to it), which created something of a vicious cycle.
• As a culture we have a long way to go to accept true rationing, which seems completely unavoidable (barring the creation of Emergency Medical Holograms). We demand to have all possible measures taken, by expertly trained doctors, immediately. (In nationalization scenarios we can provide all reasonable care, but there are usually significant waits involved.)
• The medical education and licensing world creates an artificial scarcity of doctors. This is perhaps most easily fixed, although we must inject more semi-competent doctors into the system to help out.

A combination of inflation induced by Fed unwinding (a contentious argument but a possibility) and US government cutbacks in the name of solvency could create a wasteland of empty clinics where a simple physical is $5000 (and unaffordable by all but those absurdly rich among us) and emergency patients are kicked out onto the street.

For further reading I am digging into this blog by Bob Laszewski:
Health Care Policy and Marketplace Review
In particular, he has a March guest piece discussing the potential system failure idea.

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