links for 2008-06-26

• The convenience yield - Interfluidity
• Science envy? - Stumbling and Mumbling
• Is the Fed living in a fairy-tale world? - Michael Mandel
• A New Report Card on Iraq - New York Times Blog
• Remembering Exxon Valdez - Robert Reich
• Reader Mailbag - Economists for Obama
• A Deadline on Malaria - Jeff Sachs - Scientific American
• Two goals, one instrument: Central banks and financial crises - Vox EU
• The Puzzle of Quantum Spacetime - Slideshow (2nd slide) - Scientific American
• Using Causality to Solve the Puzzle of Quantum Spacetime - Scientific American
• Data Deluge Makes the Scientific Method Obsolete? - AndrewGelman
• The cost of central bank transparency: Closed doors, open minds? - Vox EU

Comments

[Vox Article Comment]

"The greater problem, then and now, was how to avoid excessive commercial bank expansion during good times."

Money creation is too blunt of an instrument to use to stabilize the output gap. Our nation should go with a single mandate for our central bank, like all other advanced nations have done. Stabilizing the output gap should be made the responsibility of some other agency.

[anne]

http://www.nytimes.com/2008/06/25/opinion/25friedman.html?ref=opinion&pagewanted=print

June 25, 2008

Taking Ownership of Iraq?
By THOMAS L. FRIEDMAN

When someone else has to liberate you in your own home, that is humiliating — and humiliation, I believe, is the single-most underestimated force in international relations, especially in the Middle East....

[anne]

http://www.nytimes.com/2008/06/26/world/middleeast/26baghdad.html?hp&pagewanted=print

June 26, 2008

8 Civilians Killed in 2 Disputed Attacks, Iraq Says
By RICHARD A. OPPEL Jr. and RIYADH MUHAMMAD

BAGHDAD — American soldiers fatally shot three Iraqi bank employees Wednesday as their car passed a convoy near Baghdad International Airport, according to an Interior Ministry official and Yarmouk Hospital, where the bodies were brought.

The attack was one of two bloody episodes on Wednesday in which the American military and Iraqi officials offered sharply different accounts of what had happened.

Iraqi authorities said at least eight civilians had been killed by American soldiers. American military officials said that in each case they opened fire after coming under attack, and that they were unaware of any civilian deaths.

The military also reported on Wednesday that four American soldiers had died in unrelated events. They brought the death toll of American service members this month to 26.

In the shooting near the Baghdad Airport, one of the most tightly guarded locations in Iraq, the American military said "three criminals" fired at soldiers about 8:40 a.m. while their convoy was stopped on the side of the road.

"The soldiers returned fire, which resulted in the vehicle running off the road and striking a wall," the military said in a written statement. "The vehicle then exploded." The attack left bullet holes in two of the convoy vehicles, the military said, and a weapon was found in the car, though the statement did not say whether the holes matched the caliber of that weapon.

Officials at the hospital identified the charred bodies of the dead as those of Hafed Abdul Mahdi, director of the bank at the airport, and Surur Shadid Ahmed and Maha Adnan Yunis, women who worked at the bank.

Hours earlier, an American helicopter fired missiles into a home near Tikrit, killing a family of five, local officials and a relative said.

The episode began when Afar Ahmed Zidan thought he heard thieves prowling near his home in the darkness, a cousin, Hussain al-Azawi, said. Mr. Zidan went outside and fired at them, Mr. Azawi said.

But the men in the darkness turned out to be American infantrymen conducting a search, Mr. Azawi said. They returned fire, wounding Mr. Zidan, who rushed inside and frantically called his cousin to alert him to what had happened, Mr. Azawi said. Then the Americans called in an airstrike that killed Mr. Zidan, his wife and three children, all under 10 years old, Mr. Azawi said.

"The Americans shot two rockets into the house," he said. The rocket strike also wounded three of Mr. Zidan's neighbors, who were taken to a hospital, he said.

Officials from the local council in Tikrit, about 100 miles north of Baghdad, said Wednesday that they believed five people had been killed in the American airstrike, and that they had sent a representative to attend the funerals.

The American military confirmed an airstrike had taken place, but said an "Al Qaeda terrorist" had fired at the service members. Soldiers surrounded the building where the man was hiding and called for him to come out, the military said, but after perceiving "hostile intent," they called in the airstrike.

American soldiers and Iraqi police determined that the man had been killed but did not find other victims, the military said. Four women in a neighboring building "sustained only minor injuries," the military said.

The disputed killings followed a bloody day for American troops elsewhere in Iraq....

[Elvis]

Completely off topic here, sorry. Just saw The Daily show work it's magic on campaign ads. Wiping eyes as I type.
Obama's was less than inspiring. Tooo many words. He just needs just 2.

Not Bush.

Leave it to the viewer to imagine what not being Bush implies--mostly nice thoughts.

In fact I'm going to begin each day meditating on my not being Bush.

Ooummmmm not being bush...... Oooummmm not being bush.....

Then have follow up person on the street ads:
A. Who will you vote for?
B. Oh, the 'not bush' guy, definitely.

Not Bush, not bad.

[hari]

Why is it that what Dr Thompson (Focus on the family) says about Barack is not relevant for discussion by academics?
Dobson is challenging BO's vision of Christianity - old and new testament - as if he was a *high priest* of American Constitution! The bugger is a M.D. for southern calif.

[anne]

Remember, what is really important about electing a President is to have no understanding of the policies to be proposed and implemented by the President. What is important through the rest of the campaign, now that there is no Democratic Party competition, is to pay no attention to positions of the Democratic candidate.

[anne]

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.27.4.w318

June 24, 2008

Public And Private Health Insurance: Stacking Up The Costs
By Leighton Ku and Matthew Broaddus

Abstract

Some proposals to expand health insurance coverage for people with low incomes are based on expansions of public programs, such as Medicaid or the State Children's Health Insurance Program (SCHIP), while others rely on the use of tax subsidies for individuals to purchase private insurance. Analyses of data from the 2005 Medical Expenditure Panel Survey indicate that total medical spending is much lower when coverage is provided by Medicaid or SCHIP than it is when coverage is provided by private insurance. Public insurance is particularly advantageous from the consumer's perspective because associated out-of-pocket spending is far lower.

[anne]

Carefully notice the construction of this remarkable article:

http://www.nytimes.com/2008/06/26/world/middleeast/26baghdad.html?hp&pagewanted=print

June 26, 2008

8 Civilians Killed in 2 Disputed Attacks, Iraq Says
By RICHARD A. OPPEL Jr. and RIYADH MUHAMMAD

BAGHDAD — American soldiers fatally shot three Iraqi bank employees Wednesday as their car passed a convoy near Baghdad International Airport, according to an Interior Ministry official and Yarmouk Hospital, where the bodies were brought.

The attack was one of two bloody episodes on Wednesday in which the American military and Iraqi officials offered sharply different accounts of what had happened.

Iraqi authorities said at least eight civilians had been killed by American soldiers. American military officials said that in each case they opened fire after coming under attack, and that they were unaware of any civilian deaths....

In the shooting near the Baghdad Airport, one of the most tightly guarded locations in Iraq, the American military said "three criminals" fired at soldiers about 8:40 a.m. while their convoy was stopped on the side of the road.

"The soldiers returned fire, which resulted in the vehicle running off the road and striking a wall," the military said in a written statement. "The vehicle then exploded." The attack left bullet holes in two of the convoy vehicles, the military said, and a weapon was found in the car, though the statement did not say whether the holes matched the caliber of that weapon.

Officials at the hospital identified the charred bodies of the dead as those of Hafed Abdul Mahdi, director of the bank at the airport, and Surur Shadid Ahmed and Maha Adnan Yunis, women who worked at the bank.

Hours earlier, an American helicopter fired missiles into a home near Tikrit, killing a family of five, local officials and a relative said.

The episode began when Afar Ahmed Zidan thought he heard thieves prowling near his home in the darkness, a cousin, Hussain al-Azawi, said. Mr. Zidan went outside and fired at them, Mr. Azawi said.

But the men in the darkness turned out to be American infantrymen conducting a search, Mr. Azawi said. They returned fire, wounding Mr. Zidan, who rushed inside and frantically called his cousin to alert him to what had happened, Mr. Azawi said. Then the Americans called in an airstrike that killed Mr. Zidan, his wife and three children, all under 10 years old, Mr. Azawi said.

"The Americans shot two rockets into the house," he said. The rocket strike also wounded three of Mr. Zidan's neighbors, who were taken to a hospital, he said.

Officials from the local council in Tikrit, about 100 miles north of Baghdad, said Wednesday that they believed five people had been killed in the American airstrike, and that they had sent a representative to attend the funerals.

The American military confirmed an airstrike had taken place, but said an "Al Qaeda terrorist" had fired at the service members. Soldiers surrounded the building where the man was hiding and called for him to come out, the military said, but after perceiving "hostile intent," they called in the airstrike.

American soldiers and Iraqi police determined that the man had been killed but did not find other victims, the military said. Four women in a neighboring building "sustained only minor injuries," the military said....

[anne]

http://www.cbpp.org/6-26-08health.htm

June 26, 2008

Expanding Medicaid a Less costly Way to Cover More Low-Income Uninsured Than expanding Private Insurance
By Edwin Park

Average medical expenditures[1] per person are lower under public programs like Medicaid or the State Children's Health Insurance Program (SCHIP) than under private insurance, according to new research published by Health Affairs.[2]

The new research, by Leighton Ku of George Washington University and Matthew Broaddus of the Center on Budget and Policy Priorities, is consistent with previous work by researchers at the Urban Institute.[3] It suggests that enrolling uninsured low-income people in Medicaid should cost less than enrolling them in private insurance — and that expanding public programs like Medicaid would likely be a more cost-effective way to cover uninsured people with low or moderate incomes.

There are two main reasons why overall medical expenditures per person are lower under Medicaid and SCHIP than under private insurance. First, the average cost that insurers (i.e. the public program or private insurance plan) pay per beneficiary is lower under public programs than under private insurance, probably because these programs reimburse health care providers at lower rates and have lower administrative costs. Second, the average out-of-pocket costs that individuals incur are substantially lower under public programs than private insurance because Medicaid and SCHIP limit cost-sharing for low-income beneficiaries.[4]

Key findings of the analysis, available on the Health Affairs website, include:

* Adults enrolled in Medicaid tend to be in poorer health — and thus to require more health care — than low-income adults who are in private coverage. In 2005, more than one-fourth of low-income adult Medicaid enrollees reported being in fair or poor health, compared to one-eighth of low-income adults enrolled in private insurance. Adult Medicaid enrollees also were more likely to have limitations in completing daily tasks or to suffer from a chronic disease.[5]

* Adults enrolled in Medicaid are more likely than low-income adults with private coverage to be female, minority, and poor — three groups with higher medical costs. In 2005, nearly three-fourths of adult Medicaid enrollees were women, compared to slightly more than half of low-income adults enrolled in private coverage. In addition, roughly half of adult Medicaid enrollees were African American or Hispanic, compared to slightly less than one-third of low-income adults with private coverage. Finally, adult Medicaid enrollees were three times as likely to have incomes below the poverty line as their privately insured low-income counterparts. ("Low income" is defined in the study as having household income below 200 percent of the poverty line.) All three of these demographic characteristics are associated with higher medical expenditures.

* If one fails to adjust for these health and demographic differences, medical expenditures are higher for Medicaid beneficiaries than for those in private insurance. Average medical expenditures in 2005 for non-elderly, low-income adults in Medicaid were $4,684 per individual, compared to $3,669 for the privately insured, and $1,124 for the uninsured. The privately insured cost less than the Medicaid population primarily because they are healthier and thus use less health care; the uninsured cost the least largely because they receive much less health care than the other groups.

* After controlling for these health and demographic factors, medical expenditures are substantially higher under private insurance than under Medicaid. The study finds that, based on the relative average costs of Medicaid and private insurance, total medical expenditures for an adult Medicaid enrollee would be 26 percent, or $1,456, higher, on average, if the individual were enrolled in private coverage rather than Medicaid. Likewise, medical expenditures for a low-income child enrolled in Medicaid would be 37 percent, or $339, higher if the child were enrolled instead in private coverage.

* Medical costs paid by insurance are higher under private coverage than under Medicaid. Average medical costs paid by an insurer on behalf of an adult Medicaid beneficiary would be 7 percent, or $360, greater on average, if the beneficiary were covered instead by private insurance. Similarly, the average amount paid by an insurer for a child Medicaid beneficiary would be 8 percent, or $66, higher if the child were enrolled in private insurance. While the new research did not specifically examine this issue, average medical costs paid by insurers are lower for people on Medicaid likely because Medicaid has lower provider payment rates and administrative costs than private insurance does.

* Out-of-pocket costs are substantially higher under private coverage than under Medicaid. A low-income adult enrolled in Medicaid would spend over six times, or $1,096, more on an out-of-pocket basis, on average, if he or she were instead enrolled in private insurance coverage. A low-income child enrolled in Medicaid would spend over seven times, or $272, more if he or she were enrolled instead in private coverage. This likely reflects federal Medicaid and SCHIP requirements that significantly limit the deductibles and co-payments that states may charge low-income beneficiaries.

* Covering the uninsured through Medicaid would generally be less costly — in terms of total medical expenditures, costs paid by insurance, and out-of-pocket costs per individual — than covering them through private insurance. Total medical expenditures would have been 26 percent, or $805, more in 2005 — and the amounts paid by insurers would have been nearly 5 percent, or $153, more — if the average uninsured low-income adult had been covered through private insurance than through Medicaid. The adult's out-of-pocket costs would have been more than 600 percent, or $662, more under private insurance than under Medicaid.

Likewise, total medical expenditures would have been 30 percent, or $276, more if an average low-income, uninsured child had been covered under private insurance rather than Medicaid. The medical costs paid by insurance would have been about the same under private coverage and Medicaid, but the child's out-of-pocket costs would have been nearly 750 percent, or $269, more under private coverage....

[anne]

What is happening now is al-Maliki and American forces doing all they can to make sure that the elections are properly controlled. I imagine they will be successful, and the elections will be controlled but to no avail in terms of a real peace. Real peace will not come from insuring a dictatorship, and this will be understood enough to make a full withdrawal of American forces from Iraq most unlikely no matter the coming President.

[anne]

We have a bank director and 2 women bank employees, at the intensely guarded Baghdad airport supposedly shooting up a convoy of American soldiers. "Criminals," reporters are told, criminal bank employees out to shoot up a convoy of American soldiers as though for sport.

Then, we have a frightened man hearing the sounds of soldiers in the night and foolishly firing warning shots thinking them thieves. The man is of course Al-Qaeda, so an airstrike is called for to destroy home and all who might be about the home.

This is George Orwell style fiction, only not fiction.

[anne]

http://theboard.blogs.nytimes.com/2008/06/25/a-new-report-card-on-iraq/

June 25, 2008

A New Report Card on Iraq
By Editorial Board

The improved security situation in Iraq is good news for all Iraqis and Americans. Violence is way down. More Iraqi security forces have been trained to help protect the country. The central government is beginning to assert its authority. Parliament has adopted some vital new laws....

[I am all, like, "hooray."]

[anne]

http://dahrjamailiraq.com/hard_news/archives/iraq/000817.php

June 18, 2008

Home to Too Many Widows
By Ahmed Ali and Dahr Jamail

BAQUBA - Just about everyone in Iraq is a loser as a result of the occupation, but none more than women. One of the more obvious signs of that is the very large number of widows.

The Asharq al-Awsat Arab media channel estimated in late 2007 there were 2.3 million widows in Iraq. These include widows from the 1980-1988 war with Iran in which half a million men were killed, the U.S.-led invasion and occupation of Iraq, and from 'natural' causes. The news outlet cited the Iraqiyat (Iraqi women) group as a source for their figure.

For a widow, all things are the same, dark.

"Being a widow means being dead in Iraq today," a professor from Diyala University, speaking on condition of anonymity, told IPS. "This is because of the tremendous responsibilities cast upon her."

The widows have become victims of the occupation, but also of social codes. Women are not supposed to commit mistakes, and when they do, their mistakes are rarely forgiven. Women are easily accused of doing 'bad things', regardless of proof.

Widowed women have a tough struggle on their hands, beyond the loss they have had to live through. They are not easily allowed to work, or even to carry out normal daily activities.

"When a woman breaks these rules, she loses the respect of others, or might be spoken of badly," a local trader told IPS. "This is because much of rural Iraqi society is primitive and undereducated." Like most others, the trader did not want his name used, for fear of retribution.

"Islam gives respectable freedom to the woman when she loses her husband," a religious cleric told IPS. "But because of their ignorance, people place severe restrictions on the woman."

Millions of lives have been shattered during the occupation. Two groups, Just Foreign Policy in the U.S. and the Opinion Business Research group in Britain estimate the total number of Iraqis who have died due to the occupation to be at least 1.2 million.

This has had devastating knock-on effects. The man is typically the one who earns the living. Death means his wife has to do a double job -- to be responsible for earning a living, and to take care of her children and home as well. And, she has to conduct herself as a widow is expected to.

A woman whose husband was killed told IPS of her "unimaginable" troubles.

"I have five children. The oldest one is 11 years old and the youngest is two," she said. "They are a very big responsibility because I have no job, and there is no salary for my dead husband.

"Life is getting terribly hard, and in addition to the loss of my husband, there is this new suffering; being lonely, and responsible for a big family. The hours of joy are very few in the long years of grief. This occupation has brought a very heavy tax."

Another woman whose husband was killed two years ago at a militia check point in the main street in Baquba (the capital city of Diyala province, 40 km northeast of Baghdad), says her life is hell.

"My husband was all my life. He was a prominent businessman in Baquba. The militants asked for 50,000 dollars to release him. I gave them the money but my husband did not return. I found him in the morgue.

"Now, after the luxurious life we had with my husband, we ask for help from relatives. But no one cares about me or my four children. We're forgotten." ...

[anne]

Hundreds of thousands of Iraqis are dead, millions driven from homes, neighbors walled apart as though streets are only secure as mazes, an environmental desert from what was once a highly productive land. What is the point of reporting on progress, then? Does the progress mean we will soon have no soldiers in Iraq? Barack Obama's advisers are arguing about keeping tens of thousands of soldiers in Iraq for years, while plans for withdrawal are not being made now and remaining in Iraq for another year at least will be provided by by Congress in mere days.

What am I missing, in all the cheer?

[anne]

Having won in Iraq, even leaving in another year having won, what precisely would we have won and what would Iraqis have won? Who knows though, we may even leave though I find no political push anymore to get promises on leaving. Ceding the Democratic nomination, means there is no way to push on Iraq. So, the candidate's advisers can openly debate keeping our troops in Iraq for years with no particular complaint and even little notice.

[piglet]

I just saw the report on corprate profits on Nasdaq.com. After-tax profits fell year-on-year by 3.6% But look at the diagram. Is this really true? Corporate Profits almost tripled during the Bush-years? They increased during the Clinton-years too, but since 2002, while everything else was stagnating, they literally exploded (and now seem to have reached a plateau). Why isn't anybody talking about that?

[anne]

"Corporate Profits almost tripled during the Bush-years?"

Precisely what I have been writing about for years; corporate profits have been at or near record levels since the recovery from the short and shallow recession of 2001. Profits could not have been better these last years, and any intelligent investor has understood just that all this time.

[anne]

The stark difference between the Clinton and Bush years has been that while corporate profits were excellent through both periods, workers gained continually through the Clinton years but lost relatively through the Bush years. Simply understand what I have repeatedly written. Job creation ran at 225,000 a month for the 96 months of the Clinton years, while even the finest 52 months of the Bush years found only 160,000 jobs created monthly.

[anne]

Warren Buffett told us in 2000 that the portion of national income going to corporate revenue was as high as it had ever been and we could only expect a reversal as labor gained in proportion. Buffett was wrong, to my surprise. Corporate revenues have been continually robust as a whole, while gains have contributed to continually increasing income and wealth inequality. Not that inequality is necessarily so bad, but after all not being able to afford or worrying about the cost of proper medical is beyond what should be permissible inequality.

[anne]

Since "the improved security situation in Iraq is good news for all Iraqis and Americans," I would really like to hear a mention politically of Somalia, any mention, since conditions in Somalia since the American supported Ethiopian invasion and occupation of Somalia in December 2006 has led to dire problems. United Nations reports are just grim, but who would know?

[anne]

http://www.nytimes.com/2008/06/27/world/middleeast/27iraq.html?hp&pagewanted=print

June 27, 2008

Bombers Kill at Least 30 in Two Iraq Attacks
By ALISSA J. RUBIN

A series of attacks on pro-American targets in recent days are clearly intended to kill local Iraqi leaders.

[Since "the improved security situation in Iraq is good news for all Iraqis and Americans...."]

[gordon]

Further to Piglet's comment - at the same time as US corporate profits were rising, corporate taxes were falling. From this post of 2006 "How Progressive is the US Federal Tax System?" (a Piketty and Saez production): "These large reductions in tax progressivity since the 1960s took place primarily during two periods: the Reagan presidency in the 1980s and the Bush administration in the early 2000s. The only significant increase in tax progressivity since 1960 took place in the early 1990s during the first Clinton administration".

[anne]

http://www.epi.org/printer.cfm?id=2947&content_type=1&nice_name=webfeatures_snapshots_20080409

April 9, 2008

Corporate Tax Declines and U.S. Inequality
By John Irons

Over the last 60 years, the U.S. tax code has dramatically shifted away from corporate taxes and toward taxes on individuals, especially through the payroll tax, the financing backbone of Social Security and Medicare. In the 1950s, the corporate income tax brought in, on average, one of every four dollars in federal tax revenues. By the 2000s, however, it raised just one of every 10 tax dollars.

The shrinking share of corporate taxes was made up by an increase in payroll taxes to fund social insurance and retirement programs. Excise and other taxes—such as fuel taxes, phone taxes, etc.—shrank as well over the last 60 years, while the individual federal income tax rose slightly, from an average of 43% of total federal revenue in the 1950s to 46% in the 2000s.

This shift is important because of who pays these different taxes. The corporate income tax is significantly more progressive than other taxes. Those with incomes in the top 20% of the income distribution (those making more than about $86,000 a year in 2007) pay four times the average tax rate on corporate income than the middle 20% (those making between $27,000 and $48,000); while, for the payroll tax, those in the top 20% actually pay less than those in the middle as a share of their income. 1

This shift has been one of the factors leading to the drop in average federal tax rates for the very highest earners. Between 1960 and 2004, the average tax rate has fallen by about 14 percentage points (from 44.4% to 30.4%) for the top 1% of earners (those making more than $435,000 in 2007), while it has increased slightly (from 15.9% to 16.1%) for those in the middle 20%. 2

Without offsets, further erosion of corporate tax revenues—either through lower statutory tax rates or through special preferences—would expand the already wide and growing income inequality in the United States.

Notes

1. See Tax Policy Center, Table T06-0308, "Current-Law Distribution of Federal Taxes By Cash Income Percentiles, 2007," November 30, 2006.

2. See Thomas Piketty and Emmanuel Saez, "How progressive is the U.S. federal tax system? A historical and international perspective." Journal of Economic Perspectives, Winter 2007; data at http://elsa.berkeley.edu/~saez/jep-results-standalone.xls.

[Richard H. Serlin]

With regard to Steve Waldman's writing above, "Also, the futures-spot price differential is affected by interest rates and changes in the fudge factor known as "convenience yield.", and with regard to just the general treating of the convenience yield as some "fudge factor" that you can take wide liberties in assigning values to. This is a bad way to think of it. It's a specific benefit, not some error tolerance that we can make as wide as we like.

And, it's not that hard to estimate with reasonable precision. I would think there's a lot of literature on what it is empirically, and that it would show that it's usually not that large.

In the case of arbitrage when the futures price gets significantly higher than the spot (as discussed in detail in my June 25th post at: http://richardhserlin.blogspot.com/2008/06/dont-mess-with-krughan.html), an arbitrageur has zero convenience yield if he wants to keep it at true arbitrage, which means payoff with no risk, because he can't do anything with the oil while he waits. He has no options if he's engaging in true arbitrage (no risk at all). He just has to keep the oil in the tanks so he has it to fulfill his futures contract.