If they're not 'truly well off', who is?

The Clintons crying poor. [Link]

FATCAT CRONY INSIDERS — THEY’RE JUST LIKE US! Hillary Clinton Says She Isn’t ‘Truly Well Off.’ “Because we pay ordinary income tax, unlike a lot of people who are truly well off, not to name names; and we’ve done it through dint of hard work.”

At one percent of the Clintons’ net worth, most Americans would consider themselves well off. But here’s how they’re struggling:

Clinton earned an $8 million advance for her 2003 book “Living History” and her publisher is rumored to have paid “significantly more” for “Hard Choices.” Additionally, Clinton reportedly earns $200,000 in speaking fees each time she makes a speech. Bill Clinton has reportedly made over $100 million in speaking fees since leaving office.
Earlier this month, Clinton caused controversy when she said she and her husband, former President Bill Clinton, were “dead broke” when he left the White House in 2000 and subsequently “struggled” to buy homes and pay for their daughter, Chelsea’s, education. Chelsea Clinton’s wealth also made headlines earlier this month after Politico reported she earned a $600,000 salary as a “special correspondent” for NBC News, a sum Business Insider noted seems to amount to $26,724 for each minute she was on air.

Government Efficiency

Wow. [Link]

“The main thing is that the data entry side does not have hardly any work to do. They’re told to sit at their computers and hit the refresh button every ten minutes. No more than every ten minutes. They’re monitored. To hopefully look for an application. They’re [sic] goals are set to process two applications per month and some people are not even able to do that.”

Two. Applications. Per. Month.

At. Most.

Did you catch the best part? Not only are your tax dollars going toward paying somebody not to work too hard, but you’re also paying somebody to monitor that those employees don’t work too hard.

And that’s how Big Government works, America. Please enjoy the rest of your lives.

Social Security to stop shaking down children for their parent's debts

With enough bad press, even the government can make the right decision sometimes. [Link]

The Social Security Administration announced Monday that it will immediately cease efforts to collect on taxpayers’ debts to the government that are more than 10 years old.
The action comes after The Washington Post reported that the government was seizing state and federal tax refunds that were on their way to about 400,000 Americans who had relatives who owed money to the Social Security agency. In many cases, the people whose refunds were intercepted had never heard of any debt, and the debts dated as far back as the middle of the past century.
“I have directed an immediate halt to further referrals under the Treasury Offset Program to recover debts owed to the agency that are 10 years old and older pending a thorough review of our responsibility and discretion under the current law,” the acting Social Security commissioner, Carolyn Colvin, said in a statement.
Colvin said anyone who has received Social Security or Supplemental Security Income benefits and “believes they have been incorrectly assessed with an overpayment” should contact the agency and “seek options to resolve the overpayment.”
The effort to collect on old debts began with a single line in the 2008 farm bill that lifted the statute of limitations on debts to the government that are more than 10 years old. The Treasury Department then set up rules that allowed the government to settle such debts by intercepting taxpayers’ refunds. The department has collected about $2 billion in intercepted tax refunds this year, $75 million of that on debts delinquent for more than 10 years.
Mary Grice, a federal worker who lives in Takoma Park, Md., never got the refunds she was expecting to see in her mailbox this year. The government seized her checks because of a $2,996 debt that was supposedly incurred under her father’s Social Security number. Her father died in 1960, when she was 4, and her mother received survivors’ benefits thereafter.
But 37 years passed between when the Social Security agency says it overpaid someone in the Grice family and when Mary Grice’s refund was taken. She was unable to find out from the agency exactly who received the overpayment — her mother or perhaps her father’s first wife, both of whom are no longer living.
The suspension of the collection effort is “the right thing to do,” said Grice’s attorney, Robert Vogel. “It’s a first step. The next thing they have to do is stop collecting debts from children under any circumstances.”
Vogel filed suit in federal court in Greenbelt, Md., last week, alleging that the government denied Grice due process by failing to give her notice of the debt and by taking the money from her, even though she was not receiving government benefits at the time the debt was incurred.
Vogel and several members of Congress argued that the government should not be holding children accountable for the financial acts of their parents. The Federal Trade Commission,on its Web site, advises Americans that “family members typically are not obligated to pay the debts of a deceased relative from their own assets.”
After The Post’s article was published late last week, many hundreds of taxpayers whose refunds had been intercepted came forward and complained to members of Congress that they had been given no notice of the debts and that the government had not explained why they were being held responsible for debts that their deceased parents may have incurred.
In a note Social Security officials sent to several members of Congress on Monday, the agency said, “We will be reexamining our responsibilities under current law for such referrals and will be notifying you of our conclusions upon completion of the thorough review.”
In a letter to Treasury Secretary Jack Lew on Monday, Sen. Charles E. Grassley (R-Iowa) said that government agencies were apparently “not properly notifying individuals or allowing them to inspect records of the debt they supposedly owe, which are violations of the law.”

Detroit to raise parking meter fines

The reason: it costs more to process the fine than the money collected from it. This could be one of those things that keeps them bankrupt. [Link]

The recommendations, which would bump the current parking fines of $20, $30 and $100 per ticket to a two-tiered structure of $45 and $150, are among the revenue-generating strategies recommended by Detroit’s restructuring consultants.

The proposed reforms come as Emergency Manager Kevyn Orr awaits an analysis of the city’s parking assets and contemplates spinning off Municipal Parking, a department that generally breaks even or fails to bring in enough revenue to cover its expenses.

The city is paying $32 to issue and process a $30 parking violation, and it hasn’t adjusted rates since 2001. On top of that, about half of Detroit’s 3,404 parking meters are not operating properly at any given time, says Orr’s spokesman, Bill Nowling.

“It’s another example of the old, antiquated system and processes the city has that creates impediments for anyone trying to do their job,” Nowling said.

Detroit Chief Operating Officer Gary Brown is advocating for the changes, which he says would bring in an additional $6 million per year and $60 million over the 10-year plan of adjustment Orr is proposing for the bankrupt city.

“That’s real money,” Brown said. “If the asset is truly an asset and making money, no one is going to want to do anything with it.”

Brown said the ticket increases would not unduly burden Detroit residents, since 70 percent of the fines are written to nonresident offenders. The city also expects to offer a one-time amnesty program that’s commensurate with any increase.

Brown said it’s unclear how much is currently owed to the city in unpaid parking fines. Some fines are more than 10 years old, he said, surpassing the statute of limitations and “should be written off.”

China makes Reader's Digest censor book

The price of liberty is $30,000. [Link]

The notion that the formerly mighty American publisher Reader's Digestwould allow the Chinese Communist party to censor its novels would once have appeared so outrageous as to be unimaginable. In the globalised world, what was once unimaginable is becoming commonplace, however. The Australian novelist LA (Louisa) Larkin has learned the hard way that old certainties no longer apply as the globalisation of trade leads to the globalisation of authoritarian power.

The fate of her book is more than a lesson in modern cynicism. It is the most resonant example of collaboration between the old enemies of communism and capitalism I have encountered.

Larkin published Thirst in 2012. She set her thriller in an Antarctic research station, where mercenaries besiege a team of scientists.

Larkin was delighted when Reader's Digest said it would take her work for one of its anthologies of condensed novels. Thirst would reach a global audience and – who knows? – take off. Reader's Digest promised "to ensure that neither the purpose nor the opinion of the author is distorted or misrepresented", and all seemed well.

One of Larkin's characters trapped in the station is Wendy Woo, a Chinese-Australian. Woo fled to Australia because the Chinese authorities arrested her mother for being a member of the banned religious group Falun Gong. Larkin has her saying that she had not "learned until much later of the horrific torture her mother had endured because she refused to recant".

State oppression in China is not a major theme of a novel set in Antarctica. But Larkin needed to provide a back story for Woo and a link between her and the villains of her drama. In any case, she was a free author living in a free country and was free to express her abhorrence of torture and the denial of freedom of conscience. Or so she thought, until she discovered last week that she was not as free as she thought.

The cost of printing makes up the largest part of the price of book production. Publishers have outsourced manufacturing to China, like so many other industries have done. The printing firm noticed the heretical passages in Larkin's novel. All references to Falun Gong had to go, it said, as did all references to agents of the Chinese state engaging in torture.

They demanded censorship, even though the book was a Reader's Digest "worldwide English edition" for the Indian subcontinent, Australia, New Zealand, Malaysia and Singapore – not, you will note, for China.

Phil Patterson from Larkin's London agents, Marjacq Scripts, tried to explain the basics for a free society to Reader's Digest. To allow China to engage in "extraterritorial censorship" of an Australian novelist writing for an American publisher would set a "very dangerous precedent", he told its editors. Larkin told me she would have found it unconscionable to change her book to please a dictatorship.

When she made the same point to Reader's Digest, it replied that if it insisted on defending freedom of publication, it would have to move the printing from China to Hong Kong at a cost of US$30,000.

People ask: "What price liberty?" Reader's Digest has an answer that is precise to the last cent: the price of liberty is US$30,000. The publisher, from the home of Jefferson, Madison and the first amendment, decided last week to accept the ban and scrap the book.

3D Printed Lego

Lego thinks about letting customers print their own blocks. [Link]

With the toy industry stagnating due to competition from digital games, Lego is among the companies looking at 3D printing as a potential fix. The Danish plastic brick manufacturer told The Financial Times that it is considering “what potential opportunities there are for consumers.” Legos are very easy to print on home 3D printers (in fact, some people are already printing them). 3D printing also opens up the opportunity for highly customized shapes, which could expand what people are able to make. But Lego isn’t considering 3D printing bricks itself; it’s more about printing them efficiently, and currently prints about 2,000 bricks a second.

Who could possibly have seen this coming?

Almost everyone who was paying attention. [Link]

If you want less of something, you tax it. Thanks to the – I almost said “Byzantine,” but your average Byzantine Empire bureaucrat would be insulted at the slight to his competence, and for good reason – thanks to the insanely complicated nature of Obamacare, it pretty much acts as a tax on generating full-time jobs.

Guess what happened?

No, go on. Guess.

In Illinois, three employment sectors fall into both the lowest-paid and lowest work hours categories: retail trade, food and beverage, and general merchandise. They comprise about one-fifth of the state’s total employment. Of these three sectors, all three have average work hours of less than 30 hours per week. The law’s threshold for full-time is 30 hours.

Between 2011 and 2013, Illinois has lost the equivalent of about 63,000 jobs in these sectors through reduced work hours. That is close to the total number of jobs added in all sectors in the state during the past year.

It is important to note that, before ObamaCare was passed, the average work hours remained steady for these sectors in Illinois, even in the aftermath of the financial crisis. In fact, average work hours increased slightly in two of these sectors between 2008 and 2010. But all three sectors saw dramatic reductions in average work hours after ObamaCare was enacted.

Gee, who would have thunk it? – yes, yes, half of the political blogosphere.  But we don’t count to the folks running the executive branch at the moment, because we’re not the Right Sort Of People.  God save the Republic from all technocrats.

DoD wants to scrap the A-10 to keep the F-35

This seems like a bad idea. [Link]

Known for its survivability, the A-10 is capable of flying with half a wing, one tail fin, one elevator, and one engine torn off. It’s also cheaper to fly and can fly more frequent missions than the aircraft that the Air Force proposes to replace it with: the F-35. But because of its low glamor and low-tech nature, the A-10 is assigned largely to Air National Guard squadrons these days. So with the Department of Defense now planning to re-shuffle the roles of reserve and Guard units in a shrinking fighting force, the A-10s are an easy target for the budget knife. The Air Force announced in January that it would eliminate a third of the existing A-10s in its inventory—102 aircraft—with the remainder to go when the F-35 finally arrives for service. The new plan will retire the entire A-10 fleet.

The A-10 was originally built in the early 1970s, and it was designed to combat Soviet tank columns with its enormous seven-barrel 30-millimeter Gatling-gun cannon. Known for its pugnacious looks as the “Warthog,” the A-10 could also carry a variety of guided and unguided weapons, and it proved its usefulness against a wide range of enemies while flying close air support for troops in the wars in Iraq and Afghanistan. The Air Force reported that the 60 A-10s that flew in Iraq had an 86 percent mission success rate.

Today, there are two arguments for cutting the A-10. The first argument from the Air Force is that in an era of shrinking budgets and pared-down ambitions, the military needs a more flexible, multi-role aircraft to do more jobs—not an airplane that's perfect for a smaller number of them. But considering the troubles that the F-35 has faced and the fact that not a single squadron of any of the variants of the F-35 has yet to be fielded, the wisdom of the Pentagon’s aircraft calculus is open to debate.

The F-35 is being built in three variants—one for the Air Force, one for the Navy, and a "jump jet" version for the Marine Corps. It has had a litany of woes in testing. A high-tech helmet that replaces nearly all the aircraft's instrumentation had problems with "jitter" on its display, which forced an investment in a backup plan that was eventually discarded. More recently, discoveries of cracks in a significant number of parts in the F-35s currently being tested led to the grounding of all the aircraft. A report by J. Michael Gilmore, the DOD's director of Operational Test and Evaluation, stated that the F-35 is not ready for combat. The aircraft's “overall suitability performance continues to be immature and relies heavily on contractor support and workarounds unacceptable for combat operations,” Gilmore wrote.

The Air Force has never liked the A-10. It's not glamorous enough, but they also don't want to cede their monopoly on aircraft to the Army.

A Lost War

The War on Poverty. [Link]

Now here is something you may not know. Early on ? in the first decade of our 50-year experiment with an expanded welfare state ? carefully controlled experiments funded by the federal government established without question that welfare changes behavior. It leads to the very behavioral changes that keep people in a state of poverty and dependency. Think about that. Any serious social science debate about the effects of welfare on the behavior of the recipients was resolved four decades ago!

We now know a lot about how behavior affects poverty. In fact, if you do these four things, it’s almost impossible to remain poor:

1. Finish high school,

2. Get a job,

3. Get married, and

4. Don’t have children until you get married.

So how does welfare affect behavior? In the late 1960s the federal government sought to find that out in what Charles Murray calls “the most ambitious social science experiment in history.”

The experiments were all conducted by social scientists who believed in the welfare state and had no doubt about its capacity to be successful. In other words, they were confident of the answers before the experiments ever began. Their goal was to prove that popular wisdom was all wrong ? that welfare would not cause people to reduce their work effort, to get married less often, divorce more quickly or engage in other dysfunctional behavior.

The experiments were all controlled. Randomly selected people were assigned to a “control group” and an “experimental group.” The latter received a guaranteed income, and the program even used Milton Friedman’s term for it: a negative income tax. The largest, longest and best-evaluated of these experiments was SIME/DIME (Seattle Income Maintenance Experiment/Denver Income Maintenance Experiment) in Seattle and Denver. And the results were not pretty. To the dismay of the researchers, they largely confirmed what conventional wisdom had thought all along. As I reported in “Privatizing the Welfare State”:

• The number of hours worked dropped 9% for husbands and 20% for wives, relative to the control group. For young male adults it dropped 43% more.
• The length of unemployment increased 27% among husbands and 42% for wives, relative to the control group. For single female heads of households it increased 60% more.
• Divorce increased 36% more among whites and 42% more among blacks. (In a New Jersey experiment, the divorce rate was 84% higher among Hispanics.)

BTW, these results have been studied and studied over and over again and there is a large literature on them ? almost all of it written by researchers who detested the outcomes. Good summaries are provided byCharles Murray and Martin Anderson.

Both authors point out that the results are even worse than they at first appear. For one thing, the “control group” had access to conventional welfare available in the 60s and 70s. So this was by no means a pure (welfare free) control group. Also the enrollees were given different instructions about how long they could expect their guaranteed income to last. It turns out that the longer the guarantee, the worse the negative effects.

So far as I can tell there was no marriage penalty in these experiments ? certainly nothing like we have today ? and little or no penalty for earning a higher income. With the passage of time all these incentives have become increasingly more perverse. For example, over the past 50 years we have added one marriage penalty after another to welfare benefits. There is a very strong marriage penalty in ObamaCare, for example. And even Paul Krugman concedes that the marginal tax rate faced by low-income families is in excess of 80% today. (It actually goes above 100% in many cases.) And ObamaCare will make the penalty for working and earning even higher.

So here is the important public policy question: If it is well established that self-sufficiency is closely related to working and being married why are we “fighting poverty” by doing things that social scientists have known for decades lead to less work and fewer marriages?

Unemployment Is Freedom Under Obamacare

Arguments over semantics are awesome! [Link]

If you believe this report—and I'm not sure why we pay this much attention to CBO projections—you can then believe that Obamacare discourages work, pushes people out of the labor market and, consequently, leads to fewer people having jobs. Certainly, it is well within the parameters of political rhetoric for the opposition to assert that the CBO has found that Obamacare is "costing" or "killing" American jobs. It is no more a "lie" to say so than it is to claim that Mitt Romney was "shipping jobs overseas" or for an administration to assert that it "created jobs"—or to use any of the other countless shorthand terms we use for economic consequences in political debate.

But the only way to blunt the negative force of the CBO findings was to deflect from the numbers and gin up a controversy over semantics. And the synchronicity and speed in which left-wing punditry accomplished this task was pretty extraordinary: No, absolutely false, the term "killing jobs" implies that the problem is on the labor demand side, but the CBO, as any honest person can see, is talking about the labor supply side. So really, "jobs" aren't being lost; people just don't want to work.

"Obamacare is inducing labor demand to shrink!" doesn't have quite the same punch as "Obamacare is costing us jobs!"—though both are accurate. Yet all of a sudden, a precise elucidation on every underlying economic reason for what's happening must be offered with each and every mention of the CBO report. Otherwise, "lies."

Well, unless you spin the projection as good news. Council of Economic Advisers Chairman Jason Furman told reporters that Obamacare allows greater "choice" not to work. White House press secretary Jay Carney followed. And soon, left-wing media followed. The Washington Post's Glenn Kessler prepared a bizarre fact-checking piece that was helpfully titled "No, CBO did not say Obamacare will kill two million jobs." "First, this is not about jobs offered by employers. It's about workers—and the choices they make," wrote Kessler. Yes, the choice not to work at a job. Using Kessler's logic, each time some clueless reporter mentions the word "jobs" in any story about the labor force participation rate—or the unemployment rate, for that matter—he or she may be lying to the public.

Magically, liberals argue it is a good thing that Americans will drop out of the labor market and a "lie" to claim that Obamacare is the impetus for impeding job growth.

Yes, for an estimated $1.2 trillion over the next decade, we can subsidize your freedom. In ordinary times, if a projection found particular legislation to be the impetus for more than two million people dropping out of the labor force during serious economic stagnation, newspapers might have reported it in a negative light. And maybe that was their initial intent here. But within a few hours, many were changing headlines. Here are a few, according to the Post's Erik Wemple:

Politico at first: "CBO: Lower enrollment, bigger job losses with Obamacare."

Politico now: "Report reignites debate over Obamacare and jobs."

UPI at first: "CBO: Obamacare to cost 2.3 million jobs over 10 years."

UPI now: "WH disputes media claims on CBO Obamacare study."

What was once a story about Obamacare's discouraging work and impeding job creation is now a dispute about semantics. Mission accomplished.

Guaranteed Basic Income

I think this may be a good idea. [Link]

Activists in Europe, most notably in Switzerland, have succeeded at injecting the idea into mainstream political debate. A recent poll showed that it has the support of nearly half of Canadians. The president of Cyprus says he’ll launch a limited version of the scheme this summer. Brazil has been giving direct cash transfers to poor families ever since passing a basic income law in 2004; pilot programs have in recent years been carried out in India and Namibia.

In the United States, the idea of handing out unconditional government allowances is seen, understandably, as a nonstarter, despite enjoying some recent buzz among policy wonks. If nothing else, in today’s political environment, it just sounds too much like a socialist fantasy. But the idea has a deep legacy in the United States that almost uniquely stitches together figures on the left and right: Its prominent supporters have included Martin Luther King Jr. and John Kenneth Galbraith, and a version initially suggested by free-market economist Milton Friedman nearly became law under President Nixon. Recently, conservatives like Veronique de Rugy, a senior research fellow at George Mason University’s Mercatus Center, and Charles Murray, author of “The Bell Curve” and a scholar at the American Enterprise Institute, have stepped forward to support the idea; it’s also been embraced by the “Occupy”-affiliated academic David Graeber.

“You usually don’t have people from different ends of the political spectrum getting on board with the same sort of program,” said Brian Steensland, an associate professor of sociology at Indiana University and the author of the book “The Failed Welfare Revolution,” about how basic income went from being a marginal academic idea to a congressional bill and back again. “There’s just something in there that’s really appealing for people from a whole range of intellectual, philosophical, and economic perspectives.”

For pragmatists on the left, cash payments to all would be the fastest way to eradicate poverty, by making sure everyone, no matter their circumstances, has enough money to live on. For the utopian-minded, it holds the promise of a liberation from work—a way to make sure that the next John Lennon doesn’t have to waste all his time lifting boxes in a warehouse. For conservatives, it is a tool for rebuilding the bonds of civil society, putting people’s fortunes back in their own hands, and wiping out the messy, piecemeal, nanny-state safety net in one swoop.

At the moment, the idea is widely seen as too radical a departure from the status quo. Working out the mechanics would be a nightmare, and even that 8-year-old might suspect—rightly—that some people would just give up working. But even if the idea isn’t politically feasible in the short term, its proponents see it as the kind of deep-seated rethinking that may soon be needed to face a problem that doesn’t have an easy solution in our current system: that as technology, outsourcing, and other structural shifts transform our economy, it’s becoming increasingly clear that national prosperity does not necessarily mean there are enough good jobs for everyone who needs one.

In that light, the viability of a solution like the guaranteed basic income—and whether it can be made palatable to Americans for whom work ethic is a prized national value—ends up coming down less to politics than to the fundamental question of how we see the role of work both in the lives of individuals and in society as a whole.

The Economics of Star Trek

This is the first time I've believed that it might be able to work. [Link]

I promise this is about Star Trek. Sort of. Bear with me a moment.

I’ve been reading a lot about robots lately. When I read about robots, and the future, I can’t help but think about it in economic terms. And that inevitably turns my mind to the branch of economics called post scarcity economics. Traditional economics, of course, deals with the efficient allocation of inherently scarce materials. Post scarcity economics deals with the economics of economies that are no longer constrained by scarcity of materials — food, energy, shelter, etc.

The thing that never sits quite right with post scarcity economics, though, at least the very little that I’ve read, is that it’s always sort of an all or nothing affair: you either don’t have enough of anything or you have enough of everything. Thinking of this as a mental exercise is kind of fun, I think, but in reality it seems to me that getting from point A — a scarcity economy — to point B — post scarcity — is going to be a long, complicated journey as some things become more abundant in someplaces, while other things are still scarce.

What is needed is some sort of interim-, or proto-post scarcity economics.

Healthcare.gov Payment System Not Even Built Yet

I knew it wasn't working, but I thought they had at least finished the main parts. If this is true, then there have actually been NO enrollments by the criteria of the insurance industry which counts enrollment as when payment has occurred. [Link]

This . . . can’t be right. Can it?

Another day, another big, bad black eye for HealthCare.gov.
A crucial system for making payments to insurers from people who enroll in that federal Obamacare marketplace has yet to be built, a senior government IT official admitted Tuesday.
The official, Henry Chao, visibly stunned Rep. Cory Gardner (R-Colo.) when he said under questioning before a House subcommittee that a significant fraction of HealthCare.gov—30 to 40 percent of it—has yet to be constructed.
“We still need to build the payments system to make the payments [to insurance companies] in January,” testified Chao, deputy chief information officer of the Centers for Medicare and Medicaid Services, the federal agency that operates HealthCare.gov.

Star Trek Economics

Interesting, and part of why it always rang false for me. I buy Babylon 5's view of us as more realistic where people are still people. To achieve a working Star Trek world requires the same thing Communism would require to work: beings who may look like people but do not react like people. [Link]

The notion that eliminating material scarcity will lead people to live lives of self-improvement is psychological, not economic. Even back in the 1960s, people were familiar with Maslow’s famous “hierarchy of needs”: the theory that people have different “levels” of needs, and that a person must fulfil one level of needs before he or she can move on to addressing the next level.

According to the hierarchy of needs, a person must first deal with meeting physiological needs, such as hunger, thirst, and sleep. Once those are met, the next most pressing set of needs are safety needs: shelter, health, family, and property. Once those are met, a person can move on to love, self-esteem and finally “self-actualisation”: the enriching of the self.

Maslow’s hierarchy has long been a favorite of pop-psychologists and has been used and abused in both fiction and journalism since the 1940s. But it is fairly clear, even just from the language that he uses, that Roddenberry is inspired by conceptual framework of the hierarchy. If human endeavours are seen as advancing up this noble ladder of advancement, then any society where all of the basic low-level needs are bet would obviously be left to while away their time exclusively on love, self-esteem, and self-actualisation.

We can even speculate about how this might have happened. From the very beginning, the Star Trek universe had the “transporter”: a machine that could turn any physical object into energy, and transmit that energy (or at least information about the original pattern) across space so that energy could then be converted into that same physical form at the destination.

A natural extension of this technology is the “replicator”, which essentially is nothing more than the receiving end of a transporter. This object simply has patterns for different types of physical objects stored in memory, and can create, on demand, any physical object from energy based on these patterns.

If you can make anything you want out of energy, and you have all of the energy in the universe at your disposal, then presumably you can have any physical thing that you want.

There are details, of course. Manual labor hasn’t been eliminated, because presumably someone has to operate the replicators, and move their products from place to place. One can only assume that large objects would have to be created in parts, and then human labor would be needed to assemble those parts.

We can also assume that these people would not need to be paid to perform this labour, because they already are having all of their physical needs met. Why do they perform this labour, then? Clearly they are motivated to assemble the large object – whatever it is – out of their sense of duty and their desire to improve humanity.

It’s all very tidy. But is that how people really work?

Assessing the Exchanges

Assessing what has gone wrong. [Link]

What has happened, at least so far, presents itself in several layers. One key problem, which to date has been the most prominent in public, has to do with a late-in-the-game decision to require users to go through a complex account-creation process before even reaching any coverage options. Administration officials apparently went back and forth several times on this question, and the ultimate decision required the creation of a series of patches over an already developed site in a very short time. Most of the problems people have faced so far are a function of that decision, and have had to do with creating user accounts and so getting through the very first steps involved in purchasing coverage. Some journalists and analysts have speculated that this decision was made in order to prevent people from seeing premium costs before they could also see any subsidies they might be eligible for, so that the shock of higher prices could be contained and so that simply curious observers and journalists couldn’t get a picture of premium costs in the various states. This explanation strikes me as plausible, and it struck several of the people I spoke with as plausible, but none of them could confirm it. It may be true, but it’s surely not the only possible explanation. Whatever the cause, that decision has created crippling problems that are still largely unresolved.

Many of these problems were reported in an October 12 New York Times story that detailed some serious dysfunction in the development process. The people I spoke with all confirmed that nearly all of the details in the story were correct, though several of them did strenuously deny one claim—that CGI Federal, the biggest contractor involved in building the site, was not provided with the information it needed to start writing code for the site until the spring of this year. This detail in the story aroused some shock and surprise among outside web developers, and these CMS officials say it’s just not true.

The people I spoke with did all confirm the importance of one other detail in the Times story: that CMS did not hire a general contractor to manage the exchange project but handled that overall technical management task itself. None of the people I spoke with wanted to get into how this decision was made or at what level, but all of them agreed that it was a very bad idea and was at the core of the disaster they have so far experienced.

The problems people are now facing with the basic interface have taken up most of the time that CMS and its contractors have devoted to troubleshooting so far, and although things have improved a little on this front quite serious problems remain. But there are very serious problems beyond that, which are more like the sorts of problems people were predicting before the launch: database problems at the nexus of several federal and industry data sources. The federal data hub itself is so far doing reasonably well at its basic tasks, and that has come as a relief to CMS. But some of the site functions that rely on the hub, both in the federal exchanges and a number of the state exchanges, remain highly problematic. The calculation of subsidies continues to fail tests, and it’s pretty clear that some actual consumers have made actual purchases with bad information, which will become apparent to them when they get their first bills. If the interface problems are addressed and the volume of purchases increases, this calculation problem could become a huge concern.

Meanwhile, the back-end communication between the exchanges and the insurers has been terrible, as is increasingly being reported. The extent of these problems has also been a surprise to CMS, and here too an increase in volume if the user interface issues are solved could lead to huge problems that would be very difficult to correct. CMS officials and the large insurers thought at first that the garbled data being automatically sent to insurers must be a function of some very simple problems of format incompatibility between the government and insurer systems, but that now seems not to be the case, and the problem appears to be deeper and harder to resolve. It is a very high priority problem, because the system will not be able to function if the insurers cannot have some confidence about the data they receive. At this point, insurers are trying to work through the data manually, because the volume of enrollments is very, very low. But again, if that changes, this could quickly become impossible.

In a couple of ways, then, the severe user-interface problems at the front end of the federal exchange has actually had some advantages from CMS’s point of view, because by keeping enrollment volume low it has kept some other huge problems from becoming instantly uncontrollable.

But that low volume is mostly a very bad thing for Obamacare, of course, since the viability of the exchanges depends on a certain size and demographic mix which cannot be attained unless these problems are resolved very quickly. I couldn’t get enrollment numbers from any of the people I spoke with, but I was told that the uptake model that HHS built (using CBO projections) to predict how the exchanges would work made a low-end estimate that just under half a million people would enroll nationwide by October 31st, and that enrollment would then accelerate dramatically between November 15 and December 30th. The October 31 target, which was thought to be modest, now looks essentially impossible to reach, but their bigger worry is that period in November and December. 

If the problems now plaguing the system are not resolved by mid-November and the flow of enrollments at that point looks like it does now, the prospects for the first year of the exchanges will be in very grave jeopardy. Some large advertising and outreach campaigns are also geared to that crucial six-week period around Thanksgiving and Christmas, so if the sites are not functional, all of that might not happen—or else might be wasted. If that’s what the late fall looks like, the administration might need to consider what one of the people I spoke with described as “unthinkable options” regarding the first year of the exchanges.

All of the CMS people I spoke with thought the state-run exchanges are in far better shape than the federal system under their purview. But the insurers do not seem that much happier with many of those state exchanges. Back-end data issues seem to be a problem everywhere, and some of the early enrollment figures being released by the states are not matching up with insurance company data about enrollments in those states, which suggests a breakdown in communication that is only beginning to be understood. The insurers believe that only Nevada, Colorado, Washington state, and Kentucky have what could reasonably be described as working systems at this point. Still, there is no question that on the whole the states with state-run exchanges are in better shape than those with federal ones.

The tone of the CMS officials who spoke with me was a kind of restrained panic. Among the insurance company officials (who, I should stress again, work in the Washington offices of some large insurers, and so are basically policy people and lobbyists), there was much less restraint. The insurers are very, very worried about the viability of the exchange system—especially but not exclusively at the federal level.

One key worry is based on the fact that what they’re facing is not a situation where it is impossible to buy coverage but one where it is possible but very difficult to buy coverage. That’s much worse from their point of view, because it means that only highly motivated consumers are getting coverage. People who are highly motivated to get coverage in a community-rated insurance system are very likely to be in bad health. The healthy young man who sees an ad for his state exchange during a baseball game and loads up the site to get coverage—the dream consumer so essential to the design of the exchange system—will not keep trying 25 times over a week if the site is not working. The person with high health costs and no insurance will. The exchange system is designed to enable that sick person to get coverage, of course, but it can only do that if the healthy person does too. The insurers don’t yet have a clear overall sense of the risk profile of the people who are signing up, but the circumstantial evidence they have is very distressing to them. The danger of a rapid adverse selection spiral is much more serious than they believed possible this summer. They would love it if the administration could shut down the exchange system, at least the federal one, until the interface problems can be addressed. But they know this is impossible.

And they believe, as the CMS officials I spoke with do, that all of these problems will not be addressed immediately. No one wants to say how long it might take, and no one would share with me what estimates they might be getting from their contractors (whom they no longer trust anyway), but there has so far been relatively little progress and it seems like everyone involved is preparing for a process that will take months, not weeks. An extension of the enrollment period for coverage, now set to end on March 31, seems to be almost taken for granted. A delay of the individual mandate penalty—which effectively begins in the middle of February—is not thought to be a crazy idea (though the people I spoke with said they have not seen internal preparations for such a move at this point). 

The nightmare scenarios, the “unthinkable options,” involve larger moves than that—like putting enrollment on hold or re-starting the exchange system from scratch at some point. No one seems to know how this could work or what it would mean, but everyone involved is contending with a far worse set of circumstances than they were prepared for. This is a major disaster from their point of view, not a set of glitches, and they simply do not know how long it will take to fix. They dearly want to see progress day by day, but they are generally not seeing it. 

The fate of these sites is the fate of Obamacare, for reasons that may not be immediately obvious. Health insurance is highly sensitive to the integrity and robustness of the market in which it is sold: though we don’t often think of it this way, health insurance is a financial service, a protection against risk, so the nature and structure of a given insurance plan is highly responsive to the scope and the character of the demand for it at any given time. It is in this sense rather different from most consumer products. This means it is not possible to think of the exchange websites as just sites where products are sold, and to believe that the product is fine but the site has some glitches. If the site doesn’t work, the product cannot work, and the insurance market created by the law cannot be sustained. So a great deal is at stake here, and it now seems a great deal is at risk. 

Who are the obstructionists?

Who keeps trying to reach out and find accomodation? [Link]

1. Roll Call 478 on H.J. Res. 59 (September 20, 2013)

Earlier in September, House Republicans voted to fund the government at current spending levels while strengthening our economy and protecting millions of American families by defunding ObamaCare.

Senate Democrats killed the bill, and President Obama threatened to veto it.

2. Roll Call 497/498 on H.J. Res 59 (September 28, 2013)

With hours left until the government ran out of funding, House Republicans voted to keep the government open at current spending levels while protecting our economy by delayingthe glitch-filled ObamaCare for one year and repealing the tax on medical devices like pacemakers and children’s hearing aides.

Senate Democrats killed the bill, and President Obama threatened to veto it, causing the government shutdown.

3. Roll Call 504 on H.J. Res 59 (September 30, 2013)On September 30, the House GOP again voted to fund the government at current spending levels, while ensuring that Congress doesn’t receive special treatment under ObamaCare, and delaying ObamaCare’s individual mandate.

Again, Senate Democrats killed the measure in the Senate, and President Obama threatened to veto.

4. Roll Call 505 on H.J. Res 59 (September 30, 2013) 

That same night, Republicans in the House voted to request a formal House-Senate conference, so Democrats and Republicans could sit down at the table and negotiate to resolve their differences.

Senate Democrats defeated that resolution, and President Obama threatened to veto it.

5. Voice Vote on Provide Local Funding for the District of Columbia Act (October 2, 2013)To help reopen parts of the government while Democrats refused to negotiate, House Republicans passed H.J. Res. 71 by voice vote, which would have restored funding for the government of the District of Columbia.

Senate Democrats blocked the bill, and President Obama threatened to veto it.

6. Roll Call 513 on Open Our Nation’s Parks and Museums Act (October 2, 2013)

To help reopen parts of the government while Democrats refused to come to the table and work out differences, the House GOP voted to restore funding for the nation’s parks and museums – including the World War Two Memorial in Washington that has been closed to visiting veterans.

Senate Democrats killed the bill, and President Obama threatened to veto it.

7. Roll Call 514 on Research for Lifesaving Cures Act (October 2, 2013)To help restore funding for vital cancer research and other lifesaving innovations, the House GOP voted to reopen the National Institute of Health.

Senate Democrats blocked the bill (see Harry Reid ask a reporter “why would we want to do that?” when asked if he would vote to resume funding for children’s cancer treatment), and President Obama threatened to veto it.

8. Roll Call 516 on Pay Our Guard and Reserve Act (October 3, 2013)

In order to make sure that the government shutdown doesn’t get in the way of paying our National Guard and Reserve, the House GOP voted for the Pay Our Guard and Reserve Act.

Senate Democrats blocked the bill, and President Obama threatened to veto it.

ise to America’s Veterans Act (October 3, 2013)The House GOP voted to provide immediate funding for vital veterans benefits and services during the government shutdown.

Senate Democrats blocked the bill, and President Obama threatened to veto it.

10. Roll Call 522 on National Emergency and Disaster Recovery Act (October 4, 2013)The House GOP voted to provide immediate funding for the Federal Emergency Management Agency (FEMA) to ensure Americans have access to emergency responders in the case of a disaster.

Senate Democrats blocked the bill, and President Obama threatened to veto it.

11. Roll Call 524 on Nutrition Assistance for Low-Income Women and Children Act (October 4, 2013) The House GOP voted to provide immediate funding for nutritional assistance for nearly 9 low-income million mothers and children.

Senate Democrats blocked the bill, and President Obama threatened to veto it.

So why do the Democrats hate sick people, children and soldiers? An unfair question, of course, but it is refreshing to see it turned around for once.

Let's keep people poor

Don't make too much money or your mandatory health insurance will be too expensive. [Link]

People whose 2014 income will be a little too high to get subsidized health insurance from Covered California next year should start thinking now about ways to lower it to increase their odds of getting the valuable tax subsidy.

"If they can adjust (their income), they should," says Karen Pollitz, a senior fellow with the Kaiser Family Foundation. "It's not cheating, it's allowed."

Under the Affordable Care Act, if your 2014 income is between 138 and 400 percent of poverty level for your household size, you can purchase health insurance on a state-run exchange (such as Covered California) and receive a federal tax subsidy to offset all or part of your premium.

If your income falls below 138 percent of poverty, you qualify for Medicaid, which provides no-cost health care to low-income people. In California, it's called Medi-Cal.

If your income is higher than 400 percent of poverty, you can purchase a policy on or off the exchange, but in either case, you won't get a subsidy and the policy must provide certain essential benefits that many low-cost individual policies lack today, such as maternity care.

For older people, getting below the 400 percent poverty limit could save many thousands of dollars per year.

Take, for example, Jacqueline Proctor of San Francisco. She and her husband are in their early 60s. They have been paying $7,200 a year for a bare-bones Kaiser Permanentehealth plan with a $5,000 per person annual deductible. "Kaiser told us the plan does not comply with Obamacare and the substitute will cost more than twice as much," about $15,000 per year, she says.

This new plan, Kaiser's cheapest offering for 2014, would consume about 25 percent of their after-tax income. The new plan still has a $5,000 deductible but provides coverage for things her current policy does not, such as maternity care, healthy child visits and coverage for dependents up to age 26. Proctor has no use for such coverage, since her son is 30.

Was this the outcome intended?

Time Capsule Town

Kitsault, BC [Link]

On the north coast of British Columbia in Canada, where the Alaskan border is closer than the nearest town, lies a mysterious hidden place, accessible only by a long arduous gravel road behind a locked gate. Ninety-four homes, two hundred apartments, a hospital, shopping mall, Town & Country restaurant, movie theatre, sports centre, a Royal Bank; all the amenities you could possibly need in this remote part of the world await behind the towering mountains. The only thing missing are the people. Welcome to Kitsault, BC.

$546 for Six Liters of Saltwater

Tracing the path of saline from manufacture, where it is around a dollar, to where it is charged to a patient with a minimum of a hundred fold markup. [Link]

Luckily for anyone who has ever needed an IV bag to replenish lost fluids or to receive medication, it is also one of the least expensive. The average manufacturer’s price, according to government data, has fluctuated in recent years from 44 cents to $1.

Yet there is nothing either cheap or simple about its ultimate cost, as I learned when I tried to trace the commercial path of IV bags from the factory to the veins of more than 100 patients struck by a May 2012 outbreak of food poisoning in upstate New York.

Some of the patients’ bills would later include markups of 100 to 200 times the manufacturer’s price, not counting separate charges for “IV administration.” And on other bills, a bundled charge for “IV therapy” was almost 1,000 times the official cost of the solution.

It is no secret that medical care in the United States is overpriced. But as the tale of the humble IV bag shows all too clearly, it is secrecy that helps keep prices high: hidden in the underbrush of transactions among multiple buyers and sellers, and in the hieroglyphics of hospital bills.

At every step from manufacturer to patient, there are confidential deals among the major players, including drug companies, purchasing organizations and distributors, and insurers. These deals so obscure prices and profits that even participants cannot say what the simplest component of care actually costs, let alone what it should cost.

And that leaves taxpayers and patients alike with an inflated bottom line and little or no way to challenge it.

How can we reduce costs if we can't know what anything costs?

A paywall comes down. Again.

Newspapers continue to act as if their commodity product is a scarce good. There are only a couple of news organizations that can do a paywall and the SF Chronicle is not one of them. [Link]

After less than four months, the San Francisco Chronicle has torn down its paywall, saying little about what led to the decision. I presume that the signup numbers were very very low, and that the drop in ad-views was sufficiently alarming that it made management reconsider.

Staffers were informed of the move during a meeting Monday afternoon at the newspaper's downtown San Francisco office, according to the SFWeekly. Oddly, SFChronicle.com subscribers will still have the option of paying for access to the premium-content Web site even though it will all now be freely available at SFGate.com, the free weekly alternative newspaper reported. 

Chronicle representatives declined to comment on whether it had dismantled the paywall, saying that it was now publishing San Francisco Chronicle content to both Web sites.