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Sat Jun 13, 2009 at 10:33 AM PDT

Rational Health Care Choices

by robertdfeinman

Several blogs have picked up on a posting by libertarian economist Alex Tabarrok (on his blog Marginal Revolution) about his experiences trying to buy an HDMI cable to connect his new DVD player to his TV. He found that all the local stores only sold high priced versions and wondered where the competition was. This is the relevant part for my purposes:

"My best guess is that this is an unusually strong version of the hidden fee model of Laibson and Gabaix.  In that model, firms overprice one aspect of service--such as a hotel charging exorbitant rates for telephone service--as an idiot tax.  Crucially, the idiot tax is matched by an IQ-subsidy; the price of the hotel room is lower than it would be without the idiot tax--so the idiots don't know to shop elsewhere and the high-IQ types are, in fact, drawn to stores with an idiot tax."

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Wed Apr 15, 2009 at 06:31 AM PDT

Tax Resentment - Why?

by robertdfeinman

An explanation of tax resentment. Understanding it is necessary if you are going to counter it effectively.

One of the issues that seems to resonate with voters is that of
taxes. Nearly everyone feels that their taxes are too high. Even
those who have had the largest tax cuts in the past few years
still wish to see their taxes lowered.

Well, paying less taxes always sounds like a good idea, so why

is it so much a US issue and not such a hot button in other
industrialized countries? In countries like Sweden taxes can be
as high as 50% yet there is not the same type of anti-tax
resentment. The neo-con policies of Milton Friedman and followers
of Ayn Rand do not figure in main stream economic discussions in
Europe the way they do in the US. What is different? My answer
below:

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Sat Feb 28, 2009 at 07:30 AM PST

Ethical Economics

by robertdfeinman

There is much talk about how best to get the world out of the current economic downturn. One of the bits of arcana has to do with whether tax cuts or spending will provide the most bang for the buck. The measure of this is called the "multiplier". Discussions about multipliers are what happens when economic policy is viewed as a mathematical exercise rather than as the physical manifestation of ethical principles.

All economic and policy recommendations are based upon (unacknowledged) ethical foundations. I discuss these below.

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Thu Feb 05, 2009 at 08:38 AM PST

What is the Goal of the Bailout?

by robertdfeinman

I claim it is to save capitalism and the investor class that funds both political parties. One of the frequent comments these days is that FDR saved capitalism by creating various government structures to keep it from self destruction.  

So what are the two sides fighting about?

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Sat Jan 31, 2009 at 08:03 AM PST

Obama being held captive?

by robertdfeinman

In most countries there are four (or five) centers of power:

  1. The executive
  1. The legislature
  1. The judiciary
  1. The military
  1. The church

In the US the church has always wielded indirect power, although in the past four decades there has been an unusually close alliance between certain religious sectors and the Republican part. This is atypical for the US.

What I want to focus on is branch that we are taught in civics class doesn't exist: the military. The idea is that the US doesn't have such a fourth branch of government because the military is under "civilian" control. This is a convenient fiction, 99% of the military structure remains in place from one administration to the next. It is the largest recipient of discretionary federal funds, now at 54% of the budget. To ignore its influence is to make a big mistake.

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I got three pieces of mail yesterday each of which contained a deceptive offer. At the risk of boring the reader with the details:

  1. An offer by a local law firm calling itself "The Tax Adjustment Agency" to file an appeal on my behalf over the amount of my property assessment. In return for filling out a bit of paper which contains little more than my name, address and lot number (which I can do myself for free) they will take 50% of any reduction in taxes I might get in the first year.
  1. An offer by the local phone company for a combined rate for phone and internet use, but only for six months and with no indication of what the rate becomes afterwards.
  1. A note from my credit card company stating that as they have been taken over by a new bank in the future any standard payment arrangements I may half to pay off an outstanding balance will be replaced by one in which they just deduct the minimum. Furthermore the order of which loans will be paid will be to their benefit, namely lowest interest loans first.
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For awhile people have been trying to name the Reagan-Bushes era by analogy to the Gilded Age, the Jazz Age, etc. Well recent events which have brought it to an abrupt end have revealed what it actually was: the Ponzi Age.

The real Ponzi Scheme now in the news is just a small example of the underlying story, which is based upon government encouraged private actions.

Here's a quick outline.

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Fri Dec 05, 2008 at 05:28 AM PST

Dancing in the Streets

by robertdfeinman

The employment situation in the US is getting dire and even people like Paul Krugman are getting worried. To wit:

http://krugman.blogs.nytimes.com/...

He wonders what projects could be ramped up quickly to provide a counter to the drop in economic activity.

Here's my suggestion: more dancing in the streets.

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I wrote a few weeks ago about why capitalism is becoming "obsolete": Capitalism must die!

I see that my projections were a bit premature. What is happening right now is the development of a post capitalist system. We are still groping for a name for this new arrangement: socialist capitalism, corporatism, etc.

The essence is that governments now actively promote the creations of monopolies or oligopolies, rather than opposing them. In addition the government has made explicit its promise that these monopolies will be protected from failure. Even when firms are "nationalized" this is just a step on the way to their being relaunched as for-profit firms once again. These are pseudo-private firms. The profits go to the select few while the losses are absorbed by the public.

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There are many who are saying that this collapse "proves" that the US capitalist model is obsolete, or based upon false ideas.

I claim that it is just the reverse. What the US has had since the 1870's is syndicalism - a partnership between big business and government. In an earlier time people weren't afraid to call it what it is.

"The business of America is business."   --  Calvin Coolidge  

"...because for years I thought what was good for the country was good for General Motors and vice versa". -- Charles Erwin Wilson, GM president (1953)

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Thu Sep 25, 2008 at 07:12 AM PDT

The Crisis Explained - Really

by robertdfeinman

Analogies are never perfect, but here's one using horse racing. Don't expect a perfect correspondence to the banking situation, but I think it is close enough for government work.

Joe goes to the track and bets $2 on a horse.

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Polls show that many voters would be disinclined to vote for an "atheist" for president. The most common explanation being that someone who isn't afraid of divine retribution can't be moral.

Most of these people would probably be surprised to know that they have elected many non-believers in the past. This is a guess about who these might have been in the recent past.

For most of the 19th and early 20th Century most white protestants (WASPs) practiced a type of conventional religion. They attended services regularly and professed all the standard responses about Christianity. There is only slight evidence as to how much this adherence to formal practice affected their day-to-day actions. The idea that a supernatural being doesn't exist was not something that arose in conversation very often.

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