The oil and gas industry is synonymous with Houston, but many folks do not know that health care and the Port of Houston are huge economic drivers in the local economy, too. Check out this time lapse video by Lou Vest on a ship leaving the Port of Houston along the Houston Ship Channel. Here is a similar video that Vest did last year during the daytime. Enjoy.
Former Cardinals and Pirates outfielder Andy Van Slyke from this recent interview ($) in Baseball Prospectus:
"Well, [former Astros pitcher] Mike Scott, to me, is the best pitcher to ever pitch in the big leagues. I went 1-for-38 against him. . . . Mike Scott, when he was at the apex of his career, was actually cheating very well. When he threw that forkball, and he scuffed it all up… he threw 97-98 mph, and then he’d throw a forkball that was in the 90s and I just couldn’t hit him."
Q: Were there a lot of guys "cheating very well" in your era?
"I think there was more of it going on back then than there is today. You don’t really see guys scuffing balls—you don’t see guys with sandpaper—but it was very prevalent when I came to the big leagues. The guys… everybody knew who was doing it. It was just hard to catch them."
Arnold Kling on an upcoming debate that he will be having with Robert Kuttner regarding health care finance:
The debate should be about how the cost-benefit trade-offs and rationing will take place. I will argue that most health care spending should be paid for out of pocket, with insurance reimbursement only for very large expenses over a multi-year period. With consumers paying out of pocket, they will take price into account in making their choices, and they will self-ration. The alternative is to have government officials make the choices about what treatments people are to obtain. I do not think that this is a one-sided debate, in which one position is clearly better than the other. But I hope that Kuttner and I can have this debate, rather than go off into red herrings like drug company profits.
The Financial Times’ Clive Cook chimes in on America’s intractable but nonsensical drug prohibition policy ($) (other posts on drug prohibition are here):
How much misery can a policy cause before it is acknowledged as a failure and reversed?
The US “war on drugs” suggests there is no upper limit. The country’s implacable blend of prohibition and punitive criminal justice is wrong-headed in every way: immoral in principle, since it prosecutes victimless crimes, and in practice a disaster of remarkable proportions. Yet for a US politician to suggest wholesale reform of this brainless regime is still seen as an act of reckless self-harm. [. . .]
Strict enforcement, . . . has reduced drug use only modestly – supposing for the moment that this is even a legitimate objective. The collateral damage is of a different order altogether. Violence related to drug crimes has surged in Mexico and in US cities close to the border, giving rise to renewed interest in the topic. . . . [. . .]
Few policies manage to fail so comprehensively, and what makes it all the odder is that the US has seen it all before. Everybody understands that alcohol prohibition in the 1920s suffered from many of the same pathologies – albeit on a smaller scale – and was eventually abandoned. [. . .]
Is an outbreak of common sense on this subject likely? Unfortunately, no. Only the most daring politicians seem willing to think about it seriously. . . . [. . .]
Somebody in the White House should take a look. This national calamity is no laughing matter.
And finally, Mark Steyn notes the insidious nature of encroaching government regulation over citizens:
The proper response of free men to the trivial but degrading impositions of the state is to answer as [gun owner] Pierre Lemieux did. But it requires a kind of 24/7 tenacity few can muster – and the machinery of bureaucracy barely pauses to scoff: In an age of mass communication and computer records, the screen blips for the merest nano-second, and your gun rights disappear. The remorseless, incremental annexation of "individual existence" by technologically all-pervasive micro-regulation is a profound threat to free peoples. But do we have the will to resist it?
Clear Thinkers favorite Virginia Postrel (previous posts here) is well-known in health care finance circles for her authorship of a reasoned critique of one-payor, centralized health care plans back in the 1990’s. She now writes for The Atlantic.
Over the past year or so, Virginia has been experiencing serious health care issues, so she has recently penned two extraordinary articles in The Atlantic (here and here) chronicling her personal experience with America’s Byzantine health care finance system. Both articles are must-reads for anyone interested in these important issues, but here are a couple of snippets from the second article that are representative of the wisdom that Virginia provides:
Mr. Daily [a critic] shares a common belief, expressed less dramatically in other letters, that there is somewhere a pot of money dedicated to “health care” which “society” divides between winners and losers. In the United States, at least, there is no health care pot, any more than there is a pot for housing or education or magazine subscriptions. There is simply an economy, which includes health care among other goods, and the amount we spend on health care grows out of the largely decentralized decisions made by individuals and organizations. As productivity increases and prices drop in some areas—food, clothes, entertainment—we can afford to spend more on health care (even without overall economic growth or increased health-care efficiency). [. . .]
. . . We do not currently treat health care as a right. That we don’t is, in fact, what most letter writers are objecting to. Neither do we regard it exactly as a privilege, to be allocated to the worthy few or even to be limited to those who can afford to pay for it, directly or indirectly. Rather, it is a good, produced and purchased in a complex marketplace through a combination of individual, organizational, and political decisions.
Even this formulation is misleading, however. Health care isn’t a single good, nor, like food, is it easily defined in terms of a minimum to sustain life. Studying other countries’ supposedly universal systems only demonstrates how fraught the concept of “health care” is: one bundle of services in British Columbia and a less-generous one in Nova Scotia, one in England and another in Scotland, one in New Zealand before the election and another afterwards. Arguably the U.S. already has universal care, in the sense that everyone can get some care—if only from an emergency room—for some things, and that citizens (a critical word in this context) without money are covered by Medicaid.
The real issue is how you define “health care.” What gets included is a matter not only of medicine and economics but of culture and politics.
What limitations on health care are Americans willing to accept in return for universal coverage? That is one of the core issues that those who are currently crafting health care finance reform are assiduously avoiding. But true reform will never occur without addressing that issue.
As I’ve noted many times, big-time college sports in the U.S. is structured in a corrupt manner, but it’s an entertaining form of corruption that makes reform difficult (how would reform affect my team?).
That reality rears its rather unsavory head each March as the nation looks forward to the NCAA Basketball Tournament, in which predominantly young black males entertain us in return for legally-sanctioned, below-market compensation. Most of the players do not make it into the high-dollar dream world of the less-compensation restricted forms of professional basketball (the NBA and the other professional leagues), and many of the players do not even receive a real college education or graduate. Many end up with little other than a life of dealing with the after-effects of serious injuries.
To make matters even worse, as Andrew Zimbalist notes in this WSJ op-ed, most academic institutions lose their shirt attempting to compete in this entertaining form of corruption:
The annual three-week orgy of basketball, involving the nation’s top 65 college teams, is once again upon us. March Madness they call it, and madness it is. [. . .]
So, a captivated national audience, a massive television deal and dozens of corporations drooling to get a piece of the action must all add up to a financial bonanza, right? Not quite.
There are a few winners. The National Collegiate Athletic Association, for instance, makes out quite well. Last year, Madness brought in $548 million from TV rights and an additional $40 million from ticket sales and sponsorships, together representing an eye-popping 96% of all NCAA revenue.
Amid this cornucopia, the schools themselves are usually the losers. According to the NCAA’s latest Revenues and Expenses report, in 2005-06 the median Division I men’s basketball team generated revenue of $480,000 and had operating costs of $1.33 million, yielding a net operating loss of $850,000. If capital expenses and full university overhead were included, these results would be even more dismal.
The most successful programs, of course, will do better (the top 10 basketball teams had revenues of more than $11 million), but even these programs frequently lose money when the accounting is done properly. Why?
Most of the 300-plus Division I schools aspire to make it to the March tournament. To do so, they have to spend big. Since they can’t go to a free-agent market to hire the best high-school players, they attempt to attract them in other ways. First, they spend lavishly to court the players during the recruitment process.
Next, they attempt to provide state-of-the-art arenas and training facilities, complete with luxury suites, Jumbotron scoreboards and spacious locker rooms. They invest in academic tutoring facilities, costing as much as $15 million, to help the athletes stay eligible for competition. Then they hire well-known coaches with a reputation for sending an occasional player to the NBA.
And the coaches don’t fare too shabbily either. In 2005-06, the head coaches of the 65 Division I teams in Madness had an average maximum compensation of $959,486, with the top paid coach earning a guaranteed salary of $2.1 million and a maximum salary of $3.4 million. These figures exclude extensive perquisites, including free use of cars, housing subsidies, country-club memberships, access to private jets, exceptionally generous severance packages, handsome opportunities for outside income, and more.
These guys are making almost as much as NBA coaches, even though their teams’ revenues generally are below one-tenth those in the senior circuit. The trick, of course, is that the players aren’t allowed to be paid, so the coaches, in essence, get the value produced by their recruits. It doesn’t hurt that college sports benefit from state subsidies and federal tax exemptions, and that they have no stockholders looking for quarterly profits.
Writing in 1951 about popular attitudes toward income inequality in "The Ethics of Redistribution," Bertrand de Jouvenel observed the following (H/T WSJ):
The film-star or the crooner is not grudged the income that is grudged to the oil magnate, because the people appreciate the entertainer’s accomplishment and not the entrepreneur’s, and because the former’s personality is liked and the latter’s is not. They feel that consumption of the entertainer’s income is itself an entertainment, while the capitalist’s is not, and somehow think that what the entertainer enjoys is deliberately given by them while the capitalist’s income is somehow filched from them.
In arguably the best financial blog post to date in 2009, the Epicurean Dealmaker analyzes the skewed dynamics that led to the Merrill Lynch high-level executive bonus pool and observes, among other things:
It would not be outlandish to consider the Merrill executives’ bonus pool as the latest and largest campaign gift toward Mr. [Andrew] Cuomo’s 2010 gubernatorial run.
Meanwhile, Andrew Morris wrote the following in a letter to the WSJ editor (H/T Don Boudreaux):
At first, when I read your headline “States give gambling a closer look” (Mar. 3) I thought you were reporting on yet another “stimulus” or “bailout” bill in which politicians played games of chance with taxpayers’ money. Hardly news — just another “dog bites man” story.
Then I realized it was just a story about allowing ordinary people to risk their own money – now that’s a “man bites dog” story!
Along the same lines, the WSJ’s Notable and Quotable series provided the following excerpt from Friedrich A. Hayek’s "The Constitution of Liberty" (1960) on the illusory nature of progressive taxation and large increases in governmental spending:
Not only is the revenue derived from the high rates levied on large incomes, particularly in the highest brackets, so small compared with the total revenue as to make hardly any difference to the burden borne by the rest; but for a long time . . . it was not the poorest who benefited from it but entirely the better-off working class and the lower strata of the middle class who provided the largest number of voters.
It would probably be true, on the other hand, to say that the illusion that by means of progressive taxation the burden can be shifted substantially onto the shoulders of the wealthy has been the chief reason why taxation has increased as fast as it has done and that, under the influence of this illusion, the masses have come to accept a much heavier load than they would have done otherwise. The only major result of the policy has been the severe limitation of the incomes that could be earned by the most successful and thereby gratification of the envy of the less-well-off.
And Jason Kottke noted the technological irony of the week:
Now you can go to the iTunes Store to buy the Kindle app from Amazon that lets you read ebooks made for the Kindle device on the iPhone.
Finally, legendary Houston trial lawyer Joe Jamail passes along this anecdote about the late, great Houston criminal defense lawyer, Percy Foreman:
In the early 1980s, Jamail represented his courtroom idol, Houston criminal defense attorney Percy Foreman, whose neck was injured when his car was rear-ended by a commercial truck. On direct examination, Foreman testified that he had not experienced any neck problems before the accident, and that he was entitled to $75,000 for lost income due to the injury.
But on cross-examination, the defense revealed that Foreman had been hospitalized nine times for neck problems prior to this accident.
“The jury looked at me, expecting me to give them an answer,” says Jamail. “So I told them that Percy had been a great lawyer throughout his life, but that he was now just an old man and was growing senile.”
At that moment, Foreman jumped up and yelled out across the courtroom, “You goddamned son of a bitch!”
“See what I mean,” Jamail immediately told jurors. “He doesn’t even know where he is right now.”
The jury awarded Foreman the sum of $75,004. Jamail says he never figured out why the extra $4.
In market economies, people who create jobs and wealth often generate great wealth personally. During periods of market unrest, those wealthy folks are often demonized as being greedy.
During a period of economic malaise in1979, the late Milton Friedman counsels Phil Donahue on the vacuity of demonizing greed. Enjoy.
"The market wants Churchill and they keep tossing it Chamberlains."
John Nash (via David Henderson) on his progress out of mental illness in the late 1980’s:
"Then gradually I began to intellectually reject some of the delusionally influenced lines of thinking which had been characteristic of my orientation. This began, most recognizably, with the rejection of politically-oriented thinking as essentially a hopeless waste of intellectual effort."
"In reality, no one spends someone else’s money better than they spend their own. The charade of the current stimulus package, chockablock with earmarks to favored pet constituencies and virtually devoid of national policy considerations, is the logical consequence of Keynesianism in action. It is about politics and power, not sound economics, and I believe that the American people will reject it."
While this post from earlier in the week highlighted the historical backdrop to the United States’ failed drug prohibition policy, this Telegraph.co.uk article passes along an unintended consequence of that policy that should put to rest any concerns about reconsidering it:
The Home Office has admitted that the street price of both cocaine and heroin has fallen by nearly half in the last ten years, making the most dangerous illegal drugs cheaper than they have ever been.
That means a line of cocaine can cost as little as £1, with an average price per line of between £2 and £4.
The average price of a pint of lager is around £2.75, although some pub chains have reacted to the credit crunch by cutting the price of a pint as low as 99p. A glass of wine typically costs £3.50. . . .
Cato Unbound points us to a couple of articles that provide insightful observations on two of the crises that are swirling around us these days.
First, William Niskanen cautions us regarding the fear-mongering that supporters of the Obama Administration’s fiscal stimulus plan are using to justify emergency passage of the plan:
This is the fifth time in my adult life that the president has asked for or asserted unprecedented authority on an expedited basis with little or no congressional review. Each of the prior occasions turned out to be a disaster. [. . .]
The only coherence in this plan is political, not whether it is an effective or efficient method to stimulate the economy. . . . Again, as in the four prior episodes, there is every reason not to rush to approve a program of such magnitude.
The primary reason for the current financial crisis is that many banks cannot evaluate their own solvency or that of their current or potential counter-parties, primarily because of the difficulty of valuing mortgage-backed securities and other complex derivatives, and neither TARP nor the fiscal stimulus plan addresses this problem.
Our political system, unfortunately, is strongly biased to try to protect people against the effects of a crisis without addressing the causes of the crisis. To Congress: Slow down. Make sure you understand the causes of the financial crisis and the potential solutions before you burden your children and your grandchildren with another trillion dollars of federal debt.
Your present course is best described as fiscal child abuse.
Meanwhile, as Texans continue to watch nervously to the south as the Mexican government teeters on the brink of losing control of large sectors of the country to drug kingpins, Dale Gieringer reminds us that the main cause of this crisis — U.S. drug prohibition — is the result of dubious public policy:
This week marks the centennial of a fateful landmark in U.S. history, the nation’s first drug prohibition law. On February 9, 1909, Congress passed the Opium Exclusion Act, barring the importation of opium for smoking as of April 1. Thus began a hundred-year crusade that has unleashed unprecedented crime, violence and corruption around the world —a war with no victory in sight.
Long accustomed to federal drug control, most Americans are unaware that there was once a time when people were free to buy any drug, including opium, cocaine, and cannabis, at the pharmacy. In that bygone era, drug-related crime and violence were largely unknown, and drug use was not a major public concern. [. . .]
Early 20th-century Americans would be astounded to see what a problem drugs have become since the establishment of drug prohibition. Every year, two million Americans are arrested and 400,000 imprisoned for drug offenses that did not exist in their time. Drug laws are now the number-one source of crime in the U.S., with one-half of the entire adult population having violated them.
Long gone are the days when Americans were free to keep opium in their closet; today, even gravely suffering patients are denied pain-killing narcotics by their doctors out of fear of federal prosecution. While smoking opium has faded from the scene, the country is now rife with more potent and lethal narcotics, which are widely sold on the illegal market.
Seen in retrospect, drug prohibition ranks as one of the great man-made disasters of the 20th century. . . .
So, less than two months after this previous post noted that chapter 11 reorganizations with possible government financing of reorganization plans were the best tools to shake out the current financial crisis, even the NY Times (here and here) is promoting that approach for restructuring the Big Three automobile companies.
I guess that’s a sign of real progress.
Funny how the way we typically handle such things in the civil justice system usually is the most efficient solution to the problems.
It sure beats having this bunch fumble around looking for an alternative solution.
By the way, I’ve mentioned this before, but it merits passing along again. One of the best ways to keep up on developments in regard to the current financial crisis is to check in frequently on the following sites: Clusterstock, Dealbreaker, and Felix Salmon.
The blogosphere rules!
