30 January 2011

Walk Like an Egyptian

I haven't read enough from reputable sources (Times, PBS, BBC) to even know what inflamed the rioting.  My bad.  As a general proposition, Middle East countries (and I include the off limits Israel) just don't do democracy.  None of those societies has ever been based on land rich with natural resources.

Having abundant natural resources is what makes democracy possible, nothing else.  The USofA had them, and a modicum of democracy, up through the end of the 19th century.  The motivation was simple:  if life got really bad, you just headed for Indian Territory, stole some land, let the US Cavalry protect you from the disenfranchised and displaced, and got on with life.  The Tea Baggers are rooted in the notion that such a continent still exists.

The Middle East is based on rigid hierarchical (filial, tribal) control of extremely limited sustenance.  The discovery of oil was just grafted onto this society.  The same is seen in African oil, and to a lesser extent South American.  It all comes back to natural resources.  With them, democracy can exist.  Without them, it's autocracy by whatever name.

Thus, the notion that Egypt or any of these other areas (the country boundaries are arbitrary European fictions) can sprout democracy in a sterile petri dish is foolish.  Ain't gonna happen.  For those that say, "but Israel did it", not exactly.  First, the original inhabitants were tossed out by migrants from Europe, just as they did in North America.  Second, Israel is on the Mediterranean, which makes it much better than inland areas.  And third, it got, and still gets, lots of funds foreignly to pay for its development.

In all, Egypt can't be much different from what it has been for millennia.

29 January 2011

Robbing Peter to Pay Paul, Once Again

Get ready for a nuclear version of robbing Peter to pay Paul.  This story in today's Times details the effort to blame, and punish, the victims.  (By the bye, have a read of the story on the Commission, also in today's Times, which lays the blame just about exactly as this endeavor.)

Let's look at this action, from the point of view of macroeconomics.  Who wins, who loses?  The winners, not surprisingly, will be the highest earners in the states, who would otherwise have to pony up a few dollars more in taxes.  They've been paying alarmingly lower taxes each year, overall, as the last three decades have passed.  The rich have gotten richer thanks to the Right Wingnuts, and will get richer.

The losers, directly, will be those worthless poor people who don't deserve to keep living.  Or as Alan Grayson put it: "die quickly".  Why the so called Liberal media hung him up by his gonads is a puzzle.  Oh, wait, they ain't no Liberal Media, now is there, because what Grayson said is dead on true.

But there will be other losers, the economy of the states that go through with this.  Fact Number One:  the single largest growth industry in the country is health care, in all of its guises.  So, by cutting off their noses, these Stupid (mostly Republican, and therefore dedicated to making life easy for the 1%-ers) Governors will end up spiting their faces; slashing a substantial part of their tax base.  They will also put a substantial portion of the lower-middle class out of work.  Health care is mostly not about doctors and surgeons, it's mostly about nurses, nurses aides, orderlies, and pharma.  Big Pharma is just stupid enough to be in favor of this tack.  They will rue the day.

What the Right Wingnuts don't get is that doing this will inevitably, and quickly, raise the cost of health care for those who still have some form of health insurance.  Yup.  Basically, by reducing the number of "buyers", you raise the unit cost for the remaining "buyers", especially for capital intensive activities.

Here's an illustrative example; I'll make up some numbers along the way for emphasis.  The Right Wingnut governor of South Shitkicker imposes a 40% cut in Medicaid, across the board.  Before this action, there were 10 MRI centers in South Shitkicker, doing 100 scans in each center each month.  The billed cost was $100/scan.  Each MRI center had revenue of $10,000/month, and were "profitable".  Of those 100 scans, 25 were Medicaid.  So, now the centers have revenue of $7,500.  They no like dat.  They need the $10,000 to cover the mortgage, the tech who does the scans, and the note on the scanner (they go for at least $1,000,000).  What to do, what to do??  Raise the price of scans, and add a bit, just in case.  So, now the centers charge $200/scan.  The insurance companies decide they don't want to reduce their profits, so they say "No".  The remaining covered now get to pay twice as much, or more.  Ain't gummint spending just wasted money?

The Right Wingnuts yap about "wasting" GDP on health care, but are fine and dandy with enabling the financial services sector to siphon off billions.  And now they're doing their best to scuttle what little reform has been passed.  Financial services (banking, as it's known to civilians) just moves money around from one hand in one pocket to another hand in another pocket.  No value is created through this exercise.  None.  Those billions "earned" by banksters and their bank corporations aren't actually earned, in the same way that a new factory or machine tool earns through providing extra output.  The only way that the banksters get their billions is to skim it off the top (or bottom, depending on your view of the charade).

Zealots always end up dead.  They key is to avoid being collateral damage.  In this case, the damage will be 1937 all over again.  Obambi clearly has drunk the Flavor Aid, too.  I'm not surprised by that, given how quickly he spun around after inauguration (flashes of "The Exorcist" come to mind).

P.S.  The Obambi epithet just popped into my skull, but I decided I go look and see whether it's original; two years in, doesn't seem likely.  It appears that Maureen Dowd gets credit.  Company I'd sure want to keep.

28 January 2011

Dee Feat is in Dee Flation, Part 10 [UPDATE]

Once again, into the fray.  Some economic data is out today, among them the Price Deflator.  Here's how Briefing.com (a market tracker) describes the data:

The chain deflator increased 0.3% in the fourth quarter; it had been widely expected to increase 1.5%.

Once again, dee feat is in dee house.  The inflation whores will make up some apocalyptic excuse.  They have no shame, or brains.

So, another inflation measure is out today, known as PCE (personal consumption expenditures) which boil down to descretionary spending.  The money we spend on stuff we like but don't absolutely have to have, but we have the cash to splurge.  0.0% increase.  Close enough to deeeeeeeeeflation for me.  So, shut up you right wingnuts.  You're just lying to the stupid.  Saaaaaaaaaaarah????????  Where arrrrrrrre you???

13 January 2011

Dee Feat is in Dee Flation, Part 9 [UPDATE]

The PPI came out today, and no inflation was to be seen ("Excluding food and energy, producer prices increased 0.2%, as had been expected. That follows a 0.3% increase in core producer prices in the month before.").  What caught me eye, however, was another story.  Seems that the Indians are having a problem feeding themselves.  Give it a read.  To my shock and surprise, the author actually gets it; or, at least, talks to folks who get it:

Monetary policy is generally seen as ineffective in tackling supply-led inflation in food. However, the Reserve Bank of India is widely expected to tighten policy in its Jan. 25 review as food inflation has spilt over to the broader economy.

So, the powers that be will suck up to the moneterists, as usual.  And this is supposed to be a millenias long advanced society.  Yeah, right.

Well, yeah.  No consumer inflation, other than food and gas, which are cost-push these days:
"Excluding food and energy, consumer prices made a 0.1% monthly increase, as had been expected."

06 January 2011

Water, Water Nowhere and Never a Drop to Drink

I spend more time than I should following Mr. Market.  One source of news is Briefing.com; a free precis' version one can get from Yahoo! and a paid version (which I don't have).  Keeping up with the news is helpful.

Here's a piece that came out this evening:
5:35PM American Water: New Mexico American Water's exploratory deep well in Clovis finds little water (AWK) 25.23 -0.30 : Extensive testing of New Mexico American Water's exploratory well into the Lower Dockum Formation has revealed a water source of insufficient quality and quantity to provide a supplemental source to the Ogallala Aquifer. The exploratory well was drilled to determine if the Lower Dockum Formation, which lies below the Ogallala Aquifer, could serve as an additional source of water for Clovis. As the Ogallala declines it becomes more challenging and more expensive to supply water to customers in Clovis. In the past 10 years, New Mexico American Water has gone from 28 wells to 61 wells and is producing 20% less water.

I know nothing about New Mexico American Water, or even heard of it before I saw this item.  On the other hand, I have spent the last couple of decades making fun of folks who move to deserts.  The human body is about 98% water; we sort of need it.  What the item doesn't say is that the Ogallala is drying up.  The level of stupidity of 'Muricans remains astounding; and these idiots now run our House.  God help us.

04 January 2011

Secretary's Spread

The Rednecks are on an emotional Viagra high (don't you just love mixed metaphors?  or are they petit fours?) now that they own the House.  They're determined to kill Health Care.  What they're too stupid to figure out is that they'll be killing Health Care for their own 1% selves along the way.  "No Child Left Behind" happened too late for these knuckleheads.  A bit of elementary arithmetic.

The Rednecks want to make Health Care available only to Rich Folks, those 1% folks.  What would you guess is the main reason a Rolls-Royce cost more than an Escort?  Yes, some of the materials are better in the Rolls.  But, the main reason is economies of scale in making Escorts.  The fixed costs (buildings and management and the like) get spread thinly across all those millions of Escorts.  For the Rolls, not so much. 

The same is true of Health Care, or any form of insurance.  As an economist, defrocked, I'll remind that "insurance" is a term of art in economics and means "shared risk".  We all pay a small amount of money in order to be protected from Bad Things, which are assumed to be rare, or at least not common, and random amongst ourselves.  The larger the pool of "us", the smaller the amount each of "us" has to pay.  Yes, as "us" goes up by 1 unit, the probability of a Bad Thing happening to any one of "us" does go up, but not by much.

Capitalists like to engage in market segmentation.  In other words, charging the maximum fee to discrete sub-groups in the pool of customers.  In a Free Market Economy, so beloved by Rednecks, capitalists can't do that.  In the Real World, they do it all the time; just ask anyone whose first teenager's got a license.  The Rednecks want to allow the insurers to segment the market and remove Poor Folks by simply imposing punitive prices.  They'll only end up shooting themselves in the head (aim well, it's a small target).

The Rednecks want to allow health insurers to segment unfettered (they do it today, but not nearly as much as they'd like).  What the Rednecks are too stupid to figure out is that all that fancy Health Care they don't want poor folks to have will get real expensive for Rednecks, not cheaper.  An MRI scan, for example, is cheap if the machine is in constant use.  Use it just once a week or once a month now that all those Poor Folks are removed from Health Care, and not even the remaining Rednecks will be able to afford one. 

And so it will go for the rest of Health Care.  Henry Ford figured this out a century ago.  That was one of the reasons he boosted his workers' wages.  He knew that he'd sell more cars at a lower price with the higher volume.  The same applies to Health Care.  The unit cost goes down as volume goes up.  Total cost can even go down.  How can that be?  If the Rednecks reduce the pool of insured enough, cheap high volume methods cease to exist, and only a few hand crafted ones for the .5% (the 1% won't even be able to afford Health Care) will be around.  Total cost will be sky high.

The effects of automation on production are well known.  They apply just as much to Health Care; the high cost stuff is high cost just because it is lightly used.