Econo-optimism has stepped up: Daniel Gross and Business Week are both proselytizing for the good news. As with before, I concede the possibility. But there are many reasons to think why not…apropos of this, consider this article on second mortgages.
A comprehensive account of the fall of AIG.
Private Equity, a boom and bust business.
Cellphones overseas are a source of innovation:
Not for the first time, America and much of the world are moving in different ways. America’s innovators, building for an ever-expanding bandwidth network, are spiraling toward fancier, costlier, more network-hungry and status-giving devices; meanwhile, their counterparts in developing nations are innovating to find ever more uses for cheap, basic cellphones.
Great slideshow of Henri Cartier-Bresson’s photography.
On deficit-closing from Ryan Avent:
The bottom line is this: we can no longer afford to not tax important negative externalities. We can no longer afford to not do the stuff we really ought to have been doing in the first place. The options we have are to ratchet up current taxes with bad incentive effects and diminishing returns, or to cut spending on important priorities, or both. But cutting back on education spending and infrastructure investment while increasing taxes on income will squeeze growth, making the task of closing these financial holes harder.
Or we can bite the bullet, suck it up, and start charging an appropriate amount for valuable public infrastructure. We can stop giving away space on roads and parking spots for free, costing everyone a lot of wasted time. We can stop letting companies foul the air and slow-cook the earth with no negative impact to their bottom line. And then we just might have enough dough to keep critical infrastructure running. We might even be able to invest in a new and better infrastructure capacity.
I get that these policies aren’t popular. If they were popular, they’d have been adopted already. But they’re the best available policies. If we refuse to use them, things will just get crappier. And we ought to have the courage and the sense to quit whining and go for it.
Why NFL teams comprehensively screw up the draft.
Another health care oddity: in Massachusetts, big hospitals get four times more in payment rates than smaller hospitals. The reason for this is that in areas with a big hospital chain and many insurers, the big hospital’s negotiating power wins: it can leverage its size and charge higher rates, knowing that the insurers can’t sidestep the hospital. The hospital can then feed on that, using those higher rates to expand and become even bigger and…you see where this is going. Anyway, there’s no obvious reason why this should only apply to Massachusetts, which got me to thinking about systematic implications: I think everyone is underestimating the amount of turmoil we’ll be in for if health care reform is successful.
Let’s say health care reform is minimally successful and succeeds at holding the line at health care costs as a percentage of GDP. That’s not so bad for companies, but presumably many of their plans are predicated on expansion: of costs, of prices paid for pharmaceuticals, medical devices, of salaries to specialists, of beds in hospitals, and so on...Presumably investors in the stocks of these companies would be impatient and demand changes…That however would probably not be so big a problem. But let’s suppose health care reform ends up delivering the kinds of cost-control changes we hope for and the percentage of GDP devoted to health care declines. Well then that might very well be a disaster for health care as an industry: the costs of medical devices, of pharmaceuticals, of salaries paid particularly to specialists…suddenly the money that was spent on expanding that hospital is unjustified…we know that pharmaceutical companies have been merging recently because of a lack of new super-profitable drugs coming through the pipeline…suddenly specialists accustomed to big fee-for-service-driven salaries find themselves on a bundled payment and hence getting less money (in real terms, most likely), combined with the medical schools providing an even greater supply of cardiologists, neurologists, dermatologists, etc…meanwhile nurses might well become the basic unit of general health care, doing a lot of the basics…in essence, then, you’d see an industry radically changing with very uncertain ultimate results.