Healthcare: Coming to an Insurance Plan near You: The $32,000 Premium

The Kaiser Family Foundation and Health Research & Education Trust say so far ...

And next ...

For more, see Coming to an Insurance Plan near You: The $32,000 Premium by Sarah Kliff, September 27, 2011 at Ezra Klein.

Taxes: Why the Rich Pay 40% of Taxes

We are often reminded these days that the top 1% of earners in America pay about 40% of the nations federal income taxes—nearly double the share they paid in 1980.

Between 1987 and 2008, the share of income controlled by the top 1% grew to 20% from 12%. That signals a total share growth of 67%. During the same period, their share of taxes went to 28% from 24%, suggesting share growth of 17%.

For more, see Why the Rich Pay 40% of Taxes by Robert Frank, September 26, 2011 at The Wall Street Journal.

Economics: A Texas Model for Fixing Social Security

To highlight the problems facing Social Security, Texas Gov. and Republican presidential hopeful Rick Perry is pointing to three Texas counties that decades ago opted out of Social Security by creating personal retirement accounts. Now, 30 years on, county workers in those three jurisdictions retire with more money and have better death and disability supplemental benefits. And those three counties—unlike almost all others in the United States—face no long-term unfunded pension liabilities.

For more, see Perry Is Right: There Is a Texas Model for Fixing Social Security by Merrill Matthews, September 24, 2011 at WSJ.com.

Diversion: What If Scientists Had the Same Standards as Pundits?

From What If Scientists Had the Same Standards as Pundits? by Zach Weiner, August 7, 2011 at SMBC.

Drugs: The Dutch Can Handle Their Pot

Since the 1970s, the Dutch have been famous among backpacking tourists, public health officials and drug-use researchers for their unusual national stance toward marijuana. Technically, the drug is illegal in the Netherlands. But the country has an official policy of non-enforcement, and you can buy the stuff — no more than 5 grams at a time — in hundreds of cannabis coffee shops.

This approach — somewhere in between all-out prohibition and free-market legalization — is like no other policy in Western Europe, or in the United States for that matter. But research reveals a surprising fact about Dutch tokers: The country's drug policy may be remarkable, but very little about its users is.

If you looked at all the data points in this paper, you wouldn't be able to tell which ones were the Dutch, said Robert MacCoun, a professor of public policy and law at the University of California, Berkeley, who has reported new findings in the journal Addiction. The Dutch data are right in the middle of the distribution. There's just nothing particularly distinctive about drug use in the Netherlands, which is interesting simply because many people assume that Dutch drug use must be out of control. And it's not.

Not only is it not out of control, but people who smoke pot in the Netherlands are less likely to escalate their use — into a heavier habit or harder drugs — than they are in the U.S., and they tend to mature out of marijuana faster than American users do.

Since 1997, officials have been stricter in shutting down shops that violate basic requirements. They can't allow in children under 18, they can't sell any other drugs, and they can't advertise marijuana.

For more, see The Dutch Can Handle Their Pot by Emily Badger, September 16, 2011 at Miller-McCune.

Economics: Lower Taxes on Wealth; Higher Taxes on Work

Detailed estimates from the Congressional Budget Office — which only go up to 2005, but the basic picture surely hasn't changed — show that between 1979 and 2005 the inflation-adjusted income of families in the middle of the income distribution rose 21%. That's growth, but it's slow, especially compared with the 100% rise in median income over a generation after World War II.

Meanwhile, over the same period, the income of the very rich, the top 100th of 1% of the income distribution, rose by 480%. No, that isn't a misprint. In 2005 dollars, the average annual income of that group rose from $4.2 million to $24.3 million.

... there has been a major shift of taxation away from wealth and toward work: tax rates on corporate profits, capital gains and dividends have all fallen, while the payroll tax — the main tax paid by most workers — has gone up.

And another wealth tax that has been reduced or eliminated is the estate tax.

For more, see The Social Contract by Paul Krugman, September 22, 2011 at NYTimes.com.

Taxes: 7,000 Millionaires Paid No Income Taxes in 2011

For more, see Buffett Rule Rorschach: 7,000 Millionaires Paid No Income Taxes in 2011 by Derek Thompson, September 21, 2011 at The Atlantic.

Health: Among Antibiotics, Resistance Knows No Bounds

Antibiotics are less profitable than treatments for chronic conditions ...

Antibiotic treatments for infection are usually inexpensive and quick, completed in most cases within seven to 10 days. By contrast, Handelsman says, when drug companies develop a drug to lower blood pressure or cholesterol, for example, patients usually take it for the rest of their lives. Such repeat use — requiring repeat purchases — is much more attractive in determining what gets research and development funding within the pharmaceutical industry, especially since bringing a new antibiotic to market can cost from $100 million to $1 billion.

Meanwhile, say industry analysts, a drug approval process that mandates exhaustive testing and can span a decade has left some manufacturers disillusioned about antibiotic research.

Handelsman cites a recent pullback at Pfizer from antibiotic research and development, leaving just four major companies worldwide, carrying the entire antibiotic industry, and in most cases they don't have a massive effort going on either.

Because of this lack of profitability we've lost this vast amount of research that used to go on in the private sector.

It's a very frightening time because we have all the resistance developing to the antibiotics we're using. The probability that an infection can be treated with one of the known antibiotics is going down daily, and we don't have the replacements coming down the pipeline.

For much more, see Among Antibiotics, Resistance Knows No Bounds by David Richardson, September 15, 2011 at Miller-McCune.

Energy: New Fields May Propel Americas to Top of Oil Companies' Lists

For the first time in decades, the emerging prize of global energy may be the Americas, where Western oil companies are refocusing their gaze in a rush to explore clusters of coveted oil fields.

The hemisphere's oil boom is all the more remarkable given that two of its traditional energy powerhouses, Venezuela and Mexico, have largely been left out, held in check by entrenched resource nationalism. Venezuela is now considered to have bigger oil reserves than Saudi Arabia, putting it at the top of OPEC's rankings.

The United States already produces about half of its own oil needs ....

For more, see New Fields May Propel Americas to Top of Oil Companies' Lists by Simon Romero, September 19, 2011 at NYTimes.com.

Mind: Reading Fiction Impacts Aggressive Behavior

Not just violent video games ...

Reading aggression in literature can influence subsequent aggressive behavior, which tends to be specific to the type of aggression contained in the story, a Brigham Young University research team led by Sarah M. Coyne writes in the British Journal of Social Psychology.

For more, see Reading Fiction Impacts Aggressive Behavior by Tom Jacobs, September 7, 2011 at Miller-McCune.

Healthcare: Report Finds Improved Performance by Hospitals

In the latest advance for health care accountability, the country's leading hospital accreditation board, the Joint Commission, released a list on Tuesday of 405 medical centers that have been the most diligent in following protocols to treat conditions like heart attack and pneumonia.

Finally ...

Assessing more than 12 million treatment actions, like whether heart attack patients are given aspirin upon admission or surgical patients receive antibiotics within an hour, the commission found that hospitals followed standards 97% of the time. That is up from 82% in 2002.

In addition, more than nine in 10 hospitals had composite compliance scores of at least 90%, more than four times the figure of nine years ago.

“Reputation and performance on important measures of quality do not always correlate,” said Dr. Mark R. Chassin, the Joint Commission's president.

As an example, none of the 17 medical centers listed by U.S. News & World Report on its “Best Hospitals Honor Roll” this year are on the Joint Commission's list of 405 hospitals that received at least a 95% composite score for compliance with treatment standards. About one-third of a hospital's score in the U.S. News methodology is based on its reputation as gauged by a survey of physicians.

For more, see Report Finds Improved Performance by Hospitals by Kevin Sack, September 14, 2011 at NYTimes.com.

Politics: How Will Voters React to Obama's Jobs Plan?

For more, see How Will Voters React to Obama's Jobs Plan? by Suzy Khimm, September 9, 2011 at Ezra Klein.

Economics: You Get What You Pay for

Standard & Poor's downgrade of United States government debt last month has been much debated, but not enough attention has been devoted to the fact, reported last week by Bloomberg News, that it continues to rate securities based on subprime mortgages as AAA.

In short, S.&P. is suggesting that these mortgages are more creditworthy than the United States government — a striking proposition.

For more, see You Get What You Pay for by Simon Johnson, September 8, 2011 at Economix.

Diversion: Deep Coverdiversion, politics

From Deep Cover by Tim Eagan, August 18, 2011 at GoComics.

Mind: Why Average IQ Is Higher in Some Places

So far, the evidence suggests that infectious disease is a primary cause of the global variation in human intelligence.

For more, see Global Smarts: Why Average IQ Is Higher in Some Places by Christopher Eppig, September 6, 2011 at LiveScience.

International: Before Austerity, Sizable Social Benefits

For more, see Before Austerity, Sizable Social Benefits by Organization for Economic Cooperation and Development, April 24, 2011 at The Washington Post.

Politics: Perry vs. Paul

In a campaign ad this week, Ron Paul points out that he supported Ronald Reagan when others called him "extremist," and he takes shots at Rick Perry:

Ron Paul was one of only four Congressmen to endorse Ronald Reagan's campaign for president,... After Reagan, Senator Al Gore ran for President, pledging to raise taxes and increase spending, pushing his liberal values. And Al Gore found a cheerleader in Texas named Rick Perry.

I had no idea Perry was once a Gore supporter. I hope he'll come on my show (like other GOP candidates have) to let me ask him about that.

Today Rick Perry hit back at Ron Paul by showing this letter Paul wrote upon resigning from the GOP in 1987:

Ronald Reagan and the Republican Party have given us skyrocketing deficits, and astoundingly a doubled national debt. How is it that the party of balanced budgets, with control of the White House and Senate, accumulated red ink greater than all previous administrations put together?

... There is no credibility left for the Republican Party as a force to reduce the size of government. That is the message of the Reagan years.

For more, see Perry vs. Paul by John Stossel, September 7, 2011 at Fox News.

Economics: Krugman Takes on Bitcoin

... if you measure prices in Bitcoins, they have plunged; the Bitcoin economy has in effect experienced massive deflation.

And because of that, there has been an incentive to hoard the virtual currency rather than spending it. The actual value of transactions in Bitcoins has fallen rather than rising. In effect, real gross Bitcoin product has fallen sharply.

So to the extent that the experiment tells us anything about monetary regimes, it reinforces the case against anything like a new gold standard - because it shows just how vulnerable such a standard would be to money-hoarding, deflation, and depression.

For more, see Krugman Takes on Bitcoin by Joshua Keating, September 8, 2011 at Foreign Policy.

Economics: America, Your Paycheck Is Shrinking

For more, see America, Your Paycheck Is Shrinking by Suzy Khimm, September 2, 2011 at Ezra Klein.

Mind: Motivated Skepticism

Psychologists and political scientists talk often of a phenomenon known as motivated skepticism. The idea, basically, is that we believe the evidence and arguments we want to believe, and reject ideas and information that undercut our preferences.

My favorite study in this space was by Yale's Geoffrey Cohen. He had a control group of liberals and conservatives look at a generous welfare reform proposal and a harsh welfare reform proposal. As expected, liberals preferred the generous plan and conservatives favored the more stringent option. Then he had another group of liberals and conservatives look at the same plans, but this time, the plans were associated with parties.

Both liberals and conservatives followed their parties, even when their parties disagreed with their preferences. So when Democrats were said to favor the stringent welfare reform, for example, liberals went right along. Three scary sentences from the piece: When reference group information was available, participants gave no weight to objective policy content, and instead assumed the position of their group as their own. This effect was as strong among people who were knowledgeable about welfare as it was among people who were not. Finally, participants persisted in the belief that they had formed their attitude autonomously even in the two group information conditions where they had not.

For more, see Why Does the GOP Oppose Stimulus? Ask a Psychologist. by Ezra Klein, September 5, 2011 at The Washington Post.

Economics: In Euro Zone, Banking Fear Feeds on Itself

As Europe struggles to contain its government debt crisis, the greatest fear is that one of the Continent's major banks may fail, setting off a financial panic like the one sparked by Lehman's bankruptcy in September 2008.

This crisis has the potential to be a lot worse than Lehman Brothers, said George Soros, the hedge fund investor, citing the lack of an authoritative pan-European body to handle a banking crisis of this severity. That is why the problem is so serious. You need a crisis to create the political will for Europe to create such an authority, but there is still no understanding as to what the authority will do.

American institutions remain vulnerable to problems their French counterparts might encounter. At the end of the second quarter, JPMorgan Chase reported total cross-border exposure of $49 billion to France, while Citigroup had $44 billion and Bank of America had $20 billion.

Still, the huge stockpile of euros that banks have stashed away at the European Central Bank at rock-bottom interest rates — last night it hit a recent high of 166 billion euros — suggests that no bank is close to a Lehman-like failure.

For more, see In Euro Zone, Banking Fear Feeds on Itself by Landon Thomas Jr. and Nelson D. Schwartz, September 6, 2011 at NYTimes.com.

Diversion: Beauty

From Beauty by Randall Munroe, March 26, 2011 at XKCD.com.

Society: Many in U.S. Slip from Middle Class, Study Finds

Nearly one in three Americans who grew up middle-class has slipped down the income ladder as an adult, according to a new report by the Pew Charitable Trusts.

Downward mobility is most common among middle-class people who are divorced or separated from their spouses, did not attend college, scored poorly on standardized tests, or used hard drugs, the report says.

It defines people as middle-class if they fall between the 30th and 70th percentiles in income distribution, which for a family of four is between $32,900 and $64,000 a year in 2010 dollars.

The racial gap in mobility has perplexed researchers at Pew since a 2007 report that said nearly half of African Americans born to middle-income parents in the late 1960s plunged into poverty or near-poverty as adults. That report underscored the feeble grip many African Americans had on middle-class life, prompting researchers to probe deeper, said Erin Currier, project manager of Pew's Economic Mobility Project.

The new report called the performance of blacks on a key standardized test a factor that accounts for virtually the entire mobility gap separating the races. Black males scored much lower than white males on the Armed Forces Qualification Test, which measures reading comprehension, vocabulary and math ability.

Taking into account differences in AFQT scores between middle-class white and black men reduces the gap until it is statistically indistinguishable from zero, the report said.

For more, see Many in U.S. Slip from Middle Class, Study Finds by Michael a. Fletcher, September 6, 2011 at The Washington Post.

Politics: The Real Ronald Reagan May Not Meet Today's GOP Standards

As president, the conservative icon [Ronald Reagan] approved several tax increases to deal with a soaring budget deficit, repeatedly boosted the nation's debt limit, signed into law a bill granting amnesty to millions of illegal immigrants and, despite his anti-Washington rhetoric, oversaw an increase in the size and spending of the federal government. Before that, as California governor, he enacted what at the time was the largest state tax increase in American history. He also signed into law one of the nation's most permissive abortion bills; any Republican who tried that today would be cast out of the party.

The fact that Reagan often took the actions grudgingly speaks to what, by modern Republican standards, may be one of the greatest heresies of all: At bottom, Reagan was a pragmatist, willing, when necessary, to cut a deal and compromise.

"He had a strong set of core values and operated off of those," said Stuart Spencer, a GOP strategist who stood by Reagan's side for virtually his entire political career, starting with his first run for governor. "But when push came to shove, he did various things he didn't like doing, because he knew it was in the best interests of the state or country at the time."

For more, see The Real Ronald Reagan May Not Meet Today's GOP Standards by Mark Z. Barabak, September 6, 2011 at Los Angeles Times.

Great Recession: The Limping Middle Class

The 5% of Americans with the highest incomes now account for 37% of all consumer purchases, according to the latest research from Moody's Analytics.

An economy so dependent on the spending of a few is also prone to great booms and busts. The rich splurge and speculate when their savings are doing well. But when the values of their assets tumble, they pull back.

Look back over the last hundred years and you'll see the pattern. During periods when the very rich took home a much smaller proportion of total income — as in the Great Prosperity between 1947 and 1977 — the nation as a whole grew faster and median wages surged. We created a virtuous cycle in which an ever growing middle class had the ability to consume more goods and services, which created more and better jobs, thereby stoking demand. The rising tide did in fact lift all boats.

During periods when the very rich took home a larger proportion — as between 1918 and 1933, and in the Great Regression from 1981 to the present day — growth slowed, median wages stagnated and we suffered giant downturns. It's no mere coincidence that over the last century the top earners' share of the nation's total income peaked in 1928 and 2007 — the two years just preceding the biggest downturns.

Some say we couldn't have reversed the consequences of globalization and technological change. Yet the experiences of other nations, like Germany, suggest otherwise. Germany has grown faster than the United States for the last 15 years, and the gains have been more widely spread. While Americans' average hourly pay has risen only 6% since 1985, adjusted for inflation, German workers' pay has risen almost 30%. At the same time, the top 1% of German households now take home about 11% of all income — about the same as in 1970. And although in the last months Germany has been hit by the debt crisis of its neighbors, its unemployment is still below where it was when the financial crisis started in 2007.

How has Germany done it? Mainly by focusing like a laser on education (German math scores continue to extend their lead over American), and by maintaining strong labor unions.

The real reason for America's Great Regression was political. As income and wealth became more concentrated in fewer hands, American politics reverted to what Marriner S. Eccles, a former chairman of the Federal Reserve, described in the 1920s, when people with great economic power had an undue influence in making the rules of the economic game. With hefty campaign contributions and platoons of lobbyists and public relations spinners, America's executive class has gained lower tax rates while resisting reforms that would spread the gains from growth.

For more, see The Limping Middle Class by Robert B. Reich, September 3, 2011 at NYTimes.com.

International: Hybrid in a Trade Squeeze

... as G.M. prepares to start selling [the Chevy Volt] here by the end of this year, the Chinese government is putting heavy pressure on the company to share some of the car's core technology.

The Chinese government is refusing to let the Volt qualify for subsidies totaling up to $19,300 a car unless G.M. agrees to transfer the engineering secrets for one of the Volt's three main technologies to a joint venture in China with a Chinese automaker, G.M. officials said. Some international trade experts said China would risk violating World Trade Organization rules if it imposed that requirement.

Chinese automakers may need technology assistance for advanced cars because their research budgets tend to be only a tiny share of sales by international standards.

The three core technologies that China is most interested in acquiring through the subsidy provision are electric motors, complex electronic controls and power storage devices, whether batteries or a fuel cell. At least one of those systems would need to be included in the technology transfer for a vehicle to qualify for the consumer subsidies.

For more, see Hybrid in a Trade Squeeze by Keith Bradsher, September 5, 2011 at NYTimes.com.

Security: U.S. Pulls Back from Lead Role in Conflicts: IISS

A war-weary United States will increasingly look for regional solutions to regional problems, playing a secondary "enabling" role in conflicts similar to the one it played in Libya, an influential think-tank said on Tuesday. Reuters

The International Institute for Strategic Studies (IISS) said U.S. leadership was giving way to a world where "rotating coalitions of the willing and available," sometimes without the United States, would address international crises.

"There is a sense that the West is suffering from strategic arthritis and exhaustion (and) the rising powers of the East from strategic growth pains and indecision," Chipman said.

"The room for mavericks and rogues to maneuver for their own gain is thus expanded," he said without naming any.

For more, see U.S. Pulls Back from Lead Role in Conflicts: Iiss by Reuters, September 6, 2011 at NYTimes.com.

Health: Saffron Takes on Cancer

Harvested from the Crocus sativus flower (shown), saffron stifles liver cancer's growth in rats and even inhibits the proliferation of human liver cancer cells, a new study finds.

Past studies have hinted it has benefits against depression, inflammation, memory loss and as an antioxidant.

For more, see Saffron Takes on Cancer by Nathan Seppa, August 30, 2011 at ScienceNews.

California: Education vs. Prisons: Shifting Priorities

The budget for the California Department of Corrections and Rehabilitation increased from about 3% of the state's general fund in 1980 to 11.2% for this fiscal year, according to figures prepared at the request of The Bay Citizen by the state Department of Finance. Meanwhile, funding for UC and CSU dropped from 10% of the state's general fund 30 years ago to about 6.6% this fiscal year.

"The growth in spending for pay and benefits for prison guards, prison health care mandated by various lawsuits, and the extraordinary amounts of money we are paying prison doctors" all contribute [to mounting prison costs], he said. "California is clearly the worst in the U.S. for what we get and what we spend. California has the largest prison system in the U.S., it is the most expensive per capita rate in the U.S. and the state has some of the highest recidivism rates of any state in the nation."

For more, see Education vs. Prisons: Shifting Priorities by Jennifer Gollan, Sydney Lupkin, August 30, 2011 at The Bay Citizen.

Mind: The Good Judgment Project

Prediction markets can harness the "wisdom of crowds" to solve problems, develop products, and make forecasts. These systems typically treat collective intelligence as a commodity to be mined, not a resource that can be grown and improved. That's about to change.?Starting in mid-2011, five teams will compete in a U.S.-government-sponsored forecasting tournament. Each team will develop its own tools for harnessing and improving collective intelligence and will be judged on how well its forecasters predict major trends and events around the world over the next four years.?The Good Judgment Team, based in the University of Pennsylvania and the University of California Berkeley, will be one of the five teams competing — and we'd like you to consider joining our team as a forecaster. If you're willing to experiment with ways to improve your forecasting ability and if being part of cutting-edge scientific research appeals to you, then we want your help.

In spite of the following, I was able to volunteer on September 4 and was accepted (so maybe you can, too).

As of August 22, 2011, we are recruiting "reservists" only. Those who pre-register now will be placed on a waiting list. When additional forecasters are needed, we will contact waiting-list pre-registrants in the order of sign up to fill the ranks of our forecasters.

For more, see The Good Judgment Project, September 7, 2011 at The Good Judgment Project.

Society: Welfare Rates Almost Unchanged During Recession

Not surprisingly, participation in government support programs like food stamps and unemployment insurance has soared in the United States during the recession. Those services kicked in, as the very concept of a social safety net implies, just when people have needed them the most.

But there is one odd exception to this trend: Caseloads for Temporary Assistance for Needy Families — the program created by the signing of welfare reform 15 years ago this week — have barely crept up nationwide since 2007. In 13 states, caseloads have dropped even as local unemployment as much as doubled.

Now we're learning for the first time how welfare reform looks in a severe recession. And it turns out that a system dramatically reformed to emphasize employment doesn't support the poor well when there are no jobs to be had.

In 1996, more than 80% of families eligible for the program enrolled in it. By 2005, that figure had fallen to 40%. In some states, the caseload decline during the recession has simply been an extension of that trend. The data have varied dramatically by state, as welfare reform's new block grant formula gave individual states much greater control over how they operate the program. In 2009, 80% of poor families in California participated. In Texas, 8% did.

For more, see Welfare Rates Almost Unchanged During Recession by Emily Badger, August 23, 2011 at Miller-McCune.

Economics: The Bush Tax Cuts and the Deficit

That chart comes from the Congressional Budget Office's latest report, released Wednesday, on the budget and the economic outlook.

For more, see The Bush Tax Cuts and the Deficit by Catherine Rampell, August 25, 2011 at Economix.

Economics: Why Do Companies Hire?

Based on my interviews with CEOs, I've concluded the obvious — companies hire only when not hiring means they can't satisfy customer demand. Put another way, companies hire when the profits missed from not hiring exceed the cost of adding a new worker.

Companies are not hiring now because in general, they have slack in their productive capacity. More specifically, in July 2011, their capacity utilization — a measure that compares demand for their products to their ability to produce them — stood at 77.5% — short of the long-term average of 80.4%.

For more, see Why Do Companies Hire? by Peter Cohan, September 3, 2011 at Forbes.com.

Regulation: Saving Gas via Underpowered Death Traps

After the Obama Administration unveiled new fuel-economy standards last week for cars, light trucks and SUVs — setting an average goal of 54.5 miles per gallon by 2025 — perennial critics of the policy pounced on one of its feared side effects.

This will take away consumer choice, warned Sterling Burnett, a senior fellow with the free-market think thank National Center for Policy Analysis, and force all but the wealthiest drivers into small, underpowered death traps.

Yes, it's true that the fuel-economy standards the U.S. has been using cost lives. Economist Mark Jacobsen has estimated that for every mile-per-gallon we raise the standards, 149 traffic fatalities occur per year. That would mean 1,490 deaths if the standards were raised from, say, 30 miles-per-gallon to 40. But this doesn't have to be the case. It's possible, Jacobsen has concluded, to increase fuel efficiency without also decreasing safety.

The fuel economy standards we've been using actually make [large differences in the sizes of vehicles] worse. The government deploys a separate, higher standard for cars than for light trucks and SUVs. And this essentially encourages carmakers to make small cars even smaller — without doing the same to trucks and SUVs and without providing any incentive for drivers to downsize from an SUV into a car.

Jacobsen's solution: one average fuel economy standard for all light vehicles (which is how the EPA now regulates auto emissions). Combining what engineers have learned about vehicle safety with what economists have studied about the auto arms race, Jacobsen's model produces a startling result. Separate standards for cars and trucks lead to deadly accidents; a single standard for all vehicles would lead to almost none.

For more, see Saving Gas via Underpowered Death Traps by Emily Badger, August 5, 2011 at Miller-McCune.

Budget: Budget Hawks, Enviro Doves Offer Budget Cuts

The Heartland Institute and Friends of the Earth don't agree on much of anything. Heartland, based in Chicago, is a free-market think tank widely viewed with suspicion by environmentalists. Friends, as its name suggests, is a progressive environmental advocacy group that's fought for action on climate change. Neither of them, though, can stand the federal government's flood insurance program.

Uncle Sam's ledger is in fact full of similar initiatives that sit within the overlapping crosshairs of organizations that would otherwise never be caught on the same conference call — green groups, tax hawks and free-market hard-liners. Friends of the Earth, along with Taxpayers for Common Sense, has been compiling a list of such programs for 16 years. Their regular manifesto is called the Green Scissors report.

Wednesday, they released the latest version, produced with the added buy-in of the Heartland Institute and left-leaning consumer advocacy group Public Citizen. And this year, the report carries new significance. Think of it, said Ryan Alexander, president of Taxpayers for Common Sense, as a memo to the congressional super-committee.

The groups have identified $380 billion in savings over five years that could come from eliminating subsidies they say are both fiscally and environmentally irresponsible.

Among the subsidies that could be eliminated, many of which require taxpayers to pay the bill for pollution and assume the risk for failure: royalty-free oil and gas leases in federal waters ($53 billion), the corn ethanol tax credit ($6 billion), loan guarantees for nuclear power plant construction ($18.5 billion) and crop insurance ($30 billion).

For more, see Budget Hawks, Enviro Doves Offer Budget Cuts by Emily Badger, August 24, 2011 at Miller-McCune.

Science: How a Hurricane Works

At its peak, a hurricane can dump 5 cubic miles of rain per day and unleash thermal power (freed by condensation of that water) at a rate of 6 x 1014 watts—equal to 200 times the amount of electricity generated by humans worldwide. Only about 0.25% of this power is converted to wind.

For more, see How a Hurricane Works by Douglas Fox, August 25, 2011 at Popular Mechanics.

Economics: Zero Job Growth Latest Bleak Sign for U.S. Economy

We have virtually the same number of jobs as we did in January 2000, said Patrick J. O'Keefe, the director of economic research at J. H. Cohn, an accounting firm. Were jobs to continue to grow at the 2011 monthly average, it would take more than four years to return to the prerecession employment level.

Governments continued to cut jobs, the Labor Department reported. Small gains at the state level were attributed in part to the return of workers from the government shutdown in Minnesota. Local governments lost 20,000 jobs as they continued to struggle with budget shortfalls and the disappearance of federal stimulus money.

For more, see Zero Job Growth Latest Bleak Sign for U.S. Economy by Shaila Dewan, September 2, 2011 at NYTimes.com.

Mind: Everybody's an Expert

Old but important ...

It is the somewhat gratifying lesson of Philip Tetlock's new book, Expert Political Judgment: How Good Is It? How Can We Know? (Princeton; $35), that people who make prediction their business—people who appear as experts on television, get quoted in newspaper articles, advise governments and businesses, and participate in punditry roundtables—are no better than the rest of us.

... Tetlock claims that the better known and more frequently quoted [experts] are, the less reliable their guesses about the future are likely to be. The accuracy of an expert's predictions actually has an inverse relationship to his or her self-confidence, renown, and, beyond a certain point, depth of knowledge. People who follow current events by reading the papers and newsmagazines regularly can guess what is likely to happen about as accurately as the specialists whom the papers quote.

He picked two hundred and eighty-four people who made their living commenting or offering advice on political and economic trends ... By the end of the study, in 2003, the experts had made 82,361 forecasts.

Tetlock also found that specialists are not significantly more reliable than non-specialists in guessing what is going to happen in the region they study. Knowing a little might make someone a more reliable forecaster, but Tetlock found that knowing a lot can actually make a person less reliable.

And the more famous the forecaster the more overblown the forecasts. Experts in demand, Tetlock says, were more overconfident than their colleagues who eked out existences far from the limelight.

Expert Political Judgment is just one of more than a hundred studies that have pitted experts against statistical or actuarial formulas, and in almost all of those studies the people either do no better than the formulas or do worse. In one study, college counsellors were given information about a group of high-school students and asked to predict their freshman grades in college. The counsellors had access to test scores, grades, the results of personality and vocational tests, and personal statements from the students, whom they were also permitted to interview. Predictions that were produced by a formula using just test scores and grades were more accurate. There are also many studies showing that expertise and experience do not make someone a better reader of the evidence. In one, data from a test used to diagnose brain damage were given to a group of clinical psychologists and their secretaries. The psychologists' diagnoses were no better than the secretaries'.

Tetlock's experts were also no different from the rest of us when it came to learning from their mistakes. Most people tend to dismiss new information that doesn't fit with what they already believe. Tetlock found that his experts used a double standard: they were much tougher in assessing the validity of information that undercut their theory than they were in crediting information that supported it. The same deficiency leads liberals to read only The Nation and conservatives to read only National Review.

Tetlock found that ... experts routinely misremembered the degree of probability they had assigned to an event after it came to pass. They claimed to have predicted what happened with a higher degree of certainty than, according to the record, they really did. When this was pointed out to them, by Tetlock's researchers, they sometimes became defensive.

Low scorers look like hedgehogs: thinkers who know one big thing, aggressively extend the explanatory reach of that one big thing into new domains, display bristly impatience with those who do not get it, and express considerable confidence that they are already pretty proficient forecasters, at least in the long term. High scorers look like foxes: thinkers who know many small things (tricks of their trade), are skeptical of grand schemes, see explanation and prediction not as deductive exercises but rather as exercises in flexible ad hocery that require stitching together diverse sources of information, and are rather diffident about their own forecasting prowess.

Tetlock did not find, in his sample, any significant correlation between how experts think and what their politics are. His hedgehogs were liberal as well as conservative, and the same with his foxes. (Hedgehogs were, of course, more likely to be extreme politically, whether rightist or leftist.) He also did not find that his foxes scored higher because they were more cautious—that their appreciation of complexity made them less likely to offer firm predictions. Unlike hedgehogs, who actually performed worse in areas in which they specialized, foxes enjoyed a modest benefit from expertise. Hedgehogs routinely over-predicted: twenty per cent of the outcomes that hedgehogs claimed were impossible or nearly impossible came to pass, versus ten per cent for the foxes. More than thirty per cent of the outcomes that hedgehogs thought were sure or near-sure did not, against twenty per cent for foxes.

The upside of being a hedgehog, though, is that when you're right you can be really and spectacularly right. Great scientists, for example, are often hedgehogs. They value parsimony, the simpler solution over the more complex. In world affairs, parsimony may be a liability—but, even there, there can be traps in the kind of highly integrative thinking that is characteristic of foxes.

Tetlock also has an unscientific point to make, which is that we as a society would be better off if participants in policy debates stated their beliefs in testable forms—that is, as probabilities—monitored their forecasting performance, and honored their reputational bets. He thinks that we're suffering from our primitive attraction to deterministic, overconfident hedgehogs. It's true that the only thing the electronic media like better than a hedgehog is two hedgehogs who don't agree. Tetlock notes, sadly, a point that Richard Posner has made about these kinds of public intellectuals, which is that most of them are dealing in solidarity goods, not credence goods. Their analyses and predictions are tailored to make their ideological brethren feel good—more white swans for the white-swan camp. A prediction, in this context, is just an exclamation point added to an analysis.

For more, see Everybody's an Expert by Louis Menand, December 5, 2005 at The New Yorker.

Economics: A Call to Arms

From an article Dave S. contributed ...

More capital [for Europe's banks], Ms Lagarde [the new managing director of the IMF] argued, was essential to cutting the chains of contagion in the euro crisis. Without it there could easily be the further spread of economic weakness to core countries, or even a debilitating liquidity crisis.

Echoing a theme raised by Ben Bernanke, the Fed chairman, in his speech the previous day, Ms Lagarde argued that fiscal policy should pivot, putting in place policies to reduce future deficits while supporting growth today. This was not a cop-out, she argued. Growth was necessary for fiscal credibility. After all, who will believe that commitments to cut spending can survive a lengthy stagnation with prolonged high unemployment and social dissatisfaction?

In America that pivot would require credible decisions on future deficit reduction involving both tax increases and spending cuts, coupled with a focus today on making a serious dent in long-term unemployment. In Europe, she argued, this fiscal rebalancing, and the bigger short-term deficits it implied, would mean more official financing for some countries. That ought to include continued support from the ECB.

For more, see A Call to Arms, August 28, 2011 at The Economist.

Diversion: Birth Control

From Calvin and Hobbes by Bill Watterson, August 27, 2011 at GoComics.

Taxes: Tax Me More, Europe's Wealthy Say

Echoing a call by Warren E. Buffett, members of the European wealthy elite are urging their governments to raise their taxes or enact special levies to help reduce growing budget deficits.

For more, see Tax Me More, Europe's Wealthy Say by Julia Werdigier, August 30, 2011 at NYTimes.com.

Politics: Perry's Blunt Views in Books Get New Scrutiny as He Joins Race

Rick Perry, the governor of Texas, believes that climate change is a “contrived, phony mess.” The federal income tax was the “great milestone on the road to serfdom.” And the Boy Scouts of America are under attack by “a radical homosexual movement.”

Mr. Perry also thinks that senators should be chosen by legislatures, not the people. And he says that Social Security, the retirement program for the nation's elderly, is a “failure” enacted during a power grab called the New Deal and is “something we have been forced to accept.”

Those blunt assertions are in two books Mr. Perry wrote while building a deep base of support in Texas among evangelical voters and Tea Party supporters.

For more, see Perry's Blunt Views in Books Get New Scrutiny as He Joins Race by Michael D. Shear, September 2, 2011 at NYTimes.com.

Great Recession: U.S. To Sue Big Banks over Mortgages

The agency that oversees U.S. mortgage markets is preparing to file suit against more than a dozen big banks, accusing them of misrepresenting the quality of mortgages they packaged and sold during the housing bubble, the New York Times reported late Thursday.

The government will argue the banks, which pooled the mortgages and sold them as securities to investors, failed to perform due diligence required under securities law and missed evidence that borrowers' incomes were falsified or inflated, the Times reported. Fannie and Freddie lost more than $30 billion, due partly to their purchases of mortgage-backed securities, when the housing bubble burst in 2008.

For more, see U.S. To Sue Big Banks over Mortgages by Reuters, September 1, 2011 at The Washington Post.

Economics: Budget Office Says Savings Could Be Short-Lived

The Congressional Budget Office, in its annual summer snapshot of the nation's fiscal health, projected annual deficits from fiscal year 2012, which begins Oct. 1, through 2021 totaling $3.5 trillion. That is just over half of the $6.7 trillion shortfall it forecast in March.

About two-thirds of the difference reflected projected savings from the bipartisan deficit deal; the rest was due to technical and economic revisions. The lower deficits would leave the nation's accumulated public debt at $14.5 trillion in 2021, or 61% of the gross domestic product — a level that many economists consider the maximum level of debt that is sustainable in a growing economy.

But such projections understate the budgetary challenges facing the federal government in the coming years, Douglas Elmendorf, director of the budget office, wrote on its Web site.

Annual deficits would be $5 trillion higher for the decade, or a total of $8.5 trillion, assuming the White House and Congress continue several policies as in years past — keeping the lower income-tax rates of 2001 and 2003, which already were extended by two years last December; adjusting the alternative minimum tax annually so it does not hit middle-class taxpayers, and blocking a mandated cut in Medicare payments to doctors. The result would be deficits averaging 4.3% of gross domestic product instead of 1.8%, the budget office said; economists generally say annual deficits should not exceed 3% of gross domestic product.

For more, see Budget Office Says Savings Could Be Short-Lived by Jackie Calmes, August 24, 2011 at NYTimes.com.