All of the great ones make sacrifices

I'm planning to come back and connect this to some larger points, but for now I decided to get a quick post in to beat the Gizmodo rush.

From CNBC [emphasis added]:

In fact, a crucial decision Elon Musk was forced to make in 2010 when, by his own account, the billionaire was broke, is one of the reasons Musk has been able to cash in on Tesla's rapid share rise this year: Musk held on to shares at the very moment when a sale to raise cash would have made financial sense.

Musk, who had $200 million in cash at one point, invested "his last cent in his businesses" and said in a 2010 divorce proceeding, "About four months ago, I ran out of cash." Musk told the New York Times' DealBook at that time, "I could have either done a rushed private stock sale or borrowed money from friends."

It's a dilemma that many entrepreneurs face, but there is a big difference between the options available to Musk and the options available to most business owners. Musk was able to live on $200,000 a month in loans from billionaire friends — while still flying in a private jet — rather than sell any of his Tesla stake. Though the root of the problem is the same: intangible assets or, in other words, a business owner who is "asset rich" and "cash poor." And it can lead business owners to the most difficult decision of all: having to sell a piece or even all of their company.

Singapore Health Care Costs

This is Joseph

Ezra Klein has a very good Vox article on US versus Singaporean health care systems in terms of health care cost control.  The real crux of the issue is here:

According to the World Bank, in 2014 Singapore spent $2,752 per person on health care. America spent $9,403. Given this, it’s worth asking a few questions about what Singapore’s model really has to teach the US.
Are Singaporeans really more exposed to health costs than Americans? The basic argument for the Singaporean system is that Singaporeans, through Medisave and the deductibles in Medishield, pay more of the cost of their care, and so hold costs down. Americans, by contrast, have their care paid for by insurers and employers and the government, and so they have little incentive to act like shoppers and push back on prices. But is that actually true?
I doubt it. The chasm in total spending is the first problem. Health care prices are so much lower in Singapore that Singaporeans would have to pay for three times more of their care to feel as much total expense as Americans do. Given the growing size of deductibles and copays in the US, I doubt that’s true now, if it ever was. (It’s worth noting that, on average, Singaporeans are richer than Americans, so the issue here is not that we have more money to blow on health care.)
According to Singapore’s data, in 2008 cash and Medisave financed a bit less than half of the system’s total costs. Let’s say, generously, that’s $1,200 in annual spending. According to the Kaiser Family Foundation, the average deductible in employer health plans is now $1,478 — and that’s to say nothing of premiums, copays, etc. And of course, average deductibles outside the employer market are much, much higher.

The key issue that Mr. Klein's article rests on is that people in Singapore are wealthier than Americans.  So you can make some pretty good inferences about their health care costs being translated to the United States, as it avoids the issue of whether or not we spend more on health care because we have more to spend.  Americans spend 3.4 times as much on health care as Singapore which means the funding instruments that Singapore uses would need to be scaled up.

So Medisave (between 7 and 9.5% of income) would translate to 24 to 32% of income (maybe more as Americans are poorer so there would still likely be shortfall), and then you would have to pay Medishield premiums (hard to imagine these are less than 10% if they also have to be 3.4 times as large). This is before payroll taxes (say 15%), income taxes and sales taxes, in terms of the total government mandated spending and taxation.  This seems very high and would immediately make the United States a very high tax country (remember Medisave is a government mandate).

The other amazing point in the passage above is that deductibles in the US now exceed total costs in Singapore (by a fair bit).  This gives absolutely no evidence that increasing the amount of  "skin in the game" is going to accomplish anything like a transition to a lower cost system (if the cost to consumers is what matters we already exceed what Singapore spends, and our costs do not appear to be rapidly declining).  We have talked before about how the health care system resists patients bargain shopping (or even identifying real costs in advance) and has a monopoly on many services (like pharmaceutical medications).

If we want to reduce costs then we really need new ideas (government regulation?).  Because just passing costs to the consumer isn't doing much to reduce total costs, relative to other health care systems.  This is not to say that there is nothing to be done, but that increasing costs to consumers increases suffering and is having little effect.  Perhaps the redesign of the ACA (AHCA), as it continues to undergo revision, should grapple with creative ways to improve the affordability of health care in the United States.

More on the possible WGA strike

[Thanks to the scheduling function, my posts can be out of date before they even show up.]

Ken Levine has another interesting and somewhat counterintuitive piece on the possible upcoming writers strike.

One of the strange dynamics of labor politics in general and of this story in particular is the asymmetry of organization and homogeneity. As Levine has noted previously, when we say "producers," we are not talking about the names you see at the end of your favorite TV series. We are mainly talking about the major studios. That means on the management side you have a handful of similar players with similar interests.

On the other side you have a large and remarkably diverse group of writers. In terms of career and economic interests, they range from well-established names at the top of the heap to journeymen who work semi-regularly and support themselves to part-timers (often hyphenated actors, writers and producers) and newbies who are just breaking in. As a result, the impact of a strike varies greatly from segment to segment.

Of course, in labor negotiations, the reality of solidarity is often less important than the perception...

I know it sounds strange, but the best way for WGA members to AVOID a strike is to vote YES to authorize it.

Huh? you may be saying.

Here's why:  Management is just waiting to see how committed the WGA is to strike.   If the Guild sends a resounding message that it is solidly behind our negotiating committee the producers will be way more willing to hammer out a deal and be done with it.   They don't really want a strike either.  They're making $51 billion in profit a year -- why throw a monkey wrench into that?

If however, the Guild does not give Strike Authorization, or even tepid support, then the producers will let us go on strike, let us suffer, and then give us nothing -- knowing the membership is apt to cave.    The worst of both worlds.

A duopoly never provides “sufficient competition”

As follow-up to our earlier post on the inability of market forces to fix airlines, Gizmodo's Libby Watson opens up her evisceration of the current head of the FCC with a great example of someone who doesn't understand how competition and free markets work.

The Federal Communications Commission voted today to eliminate price caps on broadband services for businesses, schools, libraries, and hospitals, known as Business Data Services (BDS). The argument advanced by FCC Commissioner Ajit Pai, and the big telecoms who wanted this rule repealed, was that there is already “sufficient competition” in this market, and these price caps were getting in the way of the beautiful free market doing its thing. (As Motherboard noted, the Obama-era FCC pointed to research showing that 97 percent of BDS locations are served by just two providers, which doesn’t sound a lot like sufficient competition.) Without price caps and competition, incumbent providers can charge as much as they want to schools and libraries, who of course have been getting a free ride on providing internet to children for too long. Even freedom-loving Republicans like Sen. Tom Cotton asked the FCC to slow their roll on this proposal.

I love this helicopter

Michael Ballaban writing for the Gawker remnant Jalopnik:

The K-Max actually went through an initial production run from 1991 to 2003, and the main reason for the weird rotor configuration is that there’s no need for a tail rotor, which saps power that could instead be used for generating vertical lift. Having two main rotors which spin in opposite directions cancels out the need for a tail rotor to push against the torque of one big main rotor, much like you’d see on another heavy-lifting helicopter, the CH-47 Chinook.

But the Chinook isn’t designed specifically as a heavy lifting machine. It’s a huge, multi-purpose helicopter designed for a variety of missions, which helps explain its fore-and aft rotor layout. The K-Max, on the other hand, is designed specifically to carry loads slung underneath it via a long cable, and that necessitates it being small, narrow, and, well, weird,

"Southwest, where we beat the competition, not the customers."

[Part of a flight attendant's closing announcement Thursday]

Just to review:

On Sunday, a man was forcibly dragged off a United flight headed from Chicago to Louisville after he refused to give up his seat to a United employee who “needed to be in Louisville” for a flight the following day, The Courier-Journal reports.

Passenger Audra Bridges, who uploaded a video of the incident to Facebook, told the newspaper that United initially offered customers $400 and a hotel room if they offered to take a flight the next day at 3pm. Nobody chose to give up the seat that they paid for, so United upped the ante to $800 after passengers boarded, announcing that the flight would not leave until four stand-by United employees had seats. After there were still no takers, a manager allegedly told passengers that a computer would select four passengers to be kicked off the flight.

As many people have pointed out, United could easily have avoided all this if they hadn't arbitrarily capped their offer at $800, a fairly low ceiling given the potential inconvenience for the travelers. We often hear libertarian pundits and freshwater economists arguing that we could take care of all of air travels problems with less regulation and more airports, but when an industry reaches the point where it avoids obvious market-based solutions, expecting that industry to be fixed by more market-based solutions is naïve bordering on delusional.

Markets can be exceptionally powerful and effective tools for aligning incentives and allocating resources, but they are not magic. The people who think that they are should be granted no more respect or attention then is given to people who believed in any other kind of magic.

The auto industry makes a useful point of comparison here. Relative to the airline industry, it is more responsive, innovative, and customer focused. This is because the conditions necessary for having a well functioning and efficient market are much better met.

We have vigorous international competition. True, this is slightly undercut by the way we license dealerships, but the overall result is still far better than the airlines could ever hope to achieve. Furthermore, there are few principal agent problems (unlike the case with business air travel). The pricing is more opaque than it should be, but nothing like the roulette wheel of buying an airline ticket.

And there is one other factor that is extremely important but which seldom gets mentioned: the car buying process is relatively unconstrained. There is usually a great deal of flexibility as to when and where you can buy a car. That ability to walk away shifts considerable power back to the consumer and makes for more informed and rational decisions.

None of this is meant to hold up the automobile industry as a model of perfect capitalism. There is a great deal of room for improvement, but at least it makes sense to talk about automobiles in these econ 101 terms. Airlines aren't even close. With the possible exception of a handful of very large markets such as Los Angeles/Orange, you will never be able to get enough airlines, flights, and airports to achieve the necessary critical mass of options and competition. No one has proposed a level of expansion that would give most Americans a range of choices whenever and where ever they need to go, which means talk of market-based solutions is premature at best.

“Special Ed School Vouchers May Come With Hidden Costs”

With the hiring of Dana Goldstein, the New York Times has definitely upped its game in education coverage.

For many parents with disabled children in public school systems, the lure of the private school voucher is strong.

Vouchers for special needs students have been endorsed by the Trump administration, and they are often heavily promoted by state education departments and by private schools, which rely on them for tuition dollars. So for families that feel as if they are sinking amid academic struggles and behavioral meltdowns, they may seem like a life raft. And often they are.

But there’s a catch. By accepting the vouchers, families may be unknowingly giving up their rights to the very help they were hoping to gain. The government is still footing the bill, but when students use vouchers to get into private school, they lose most of the protections of the federal Individuals With Disabilities Education Act.

Many parents, among them Tamiko Walker, learn this the hard way. Only after her son, who has a speech and language disability, got a scholarship from the John M. McKay voucher program in Florida did she learn that he had forfeited most of his rights.

“Once you take those McKay funds and you go to a private school, you’re no longer covered under IDEA — and I don’t understand why,” Ms. Walker said.

In the meantime, public schools and states are able to transfer out children who put a big drain on their budgets, while some private schools end up with students they are not equipped to handle, sometimes asking them to leave. And none of this is against the rules.

“The private schools are not breaking the law,” said Julie Weatherly, a special-education lawyer who consults for school districts in Florida and other states. “The law provides no accountability measures.”

McKay is the largest of 10 such disability scholarship programs across the country. It serves over 30,000 children who have special needs. At the Senate confirmation hearing for Betsy DeVos, President Trump’s education secretary, she cited research from the conservative Manhattan Institute, saying that “93 percent of the parents utilizing that voucher are very, very pleased with it.”

Legal experts say parents who use the vouchers are largely unaware that by participating in programs like McKay, they are waiving most of their children’s rights under IDEA, the landmark 1975 federal civil rights law. Depending on the voucher program, the rights being waived can include the right to a free education; the right to the same level of special-education services that a child would be eligible for in a public school; the right to a state-certified or college-educated teacher; and the right to a hearing to dispute disciplinary action against a child.

The rise of the secular evangelicalism started a long time ago

The following excerpts from a NYT piece on Alabama by Alan Blinder have gotten quite a bit of coverage:

But others said it had become clear that for conservative Christians, the cultural and political issues that define modern conservative politics mattered at least as much as moral piety. That was why, they suggested, Mr. Bentley was able to cling to his job for nearly 13 months after his reputation as a paragon of probity came under fire.

“The idea that moral hypocrisy hurts you among evangelical voters is not true, if you’re sound on all of the fundamentals,” said Wayne Flynt, an ordained Baptist minister and one of Alabama’s pre-eminent historians. “Being sound on the fundamentals depends on what the evangelical community has decided the fundamentals have become. At this time, what is fundamental is hating liberals, hating Obama, hating abortion and hating same-sex marriage.”

…

Even before Mr. Bentley’s resignation, there was a budding movement among religious conservatives here to combat malfeasance in state government that has extended well beyond the governor’s office. Mr. Bentley’s departure could strengthen that effort, Mr. Flynt said, even as he noted that he was startled by the long-muted response of evangelicals to the governor’s troubles.

“Secular culture is eroding evangelicalism to the point where it takes us one full year to get rid of the governor because of all of these conflicting pressures,” he said. “He would have been out the door in an hour in the 1940s.”

As far as I have seen, though, none of the people posting and commenting on the story have bothered to dig into Flynt's writings, which is a shame, because the context here is important, particularly with respect to his ideas about the corrupting influence of social reactionaries on the evangelical movement.

The segregationists' argument was almost wholly cultural, and not religious at all. Tallahassee's First Baptist Church made a political case, since it was the major church for the political establishment in the state's capital. A lot of really overt racism in that church was political. Older church members who were inactive showed up to cast ballots in the 1964 church vote on integration. They showed up that night and voted, and we didn't recognize many of them.
...

At that same time I was working a lot on labor history. I wrote a paper on the 1908 transit strike in Pensacola. And I actually did research for a full-scale book on labor in Florida. One of the things I ran across was the fact that so many of these labor leaders were coming from Nazarene churches. They were also members of working-class Baptist churches. Labor in the South absorbed this extraordinarily powerful reform ethos of evangelical religion. Labor leaders in the West Virginia Coal Mine Strike of 1920, or the Birmingham Strike of 1919-1921 quoted the 25th chapter of Matthew, the Sermon on the Mount, and referred to the life of Christ. All those strikes were informed by the ethos of the Gospel. This was not Marxism. If they were socialists, they were Christian socialists, but their radicalism was a radicalism born of the church and the very literal teachings of Jesus. You could argue that they were fundamentalists�in terms of their believing that every word of the Bible was literally true�but when they quoted Jesus they picked passages that didn't make polite society feel good.

Trying to get a handle on the plagiarism discussion

I believe I'm on the record as not having much taste for the topic. This is especially true in the case of Neil Gorsuch  (I'm still focused on the ability to combine Evangelical extremism with a stunningly unchristian deference to wealth and power), but it's a debate we seem to be stuck with and I've been meaning to take a little time to clean up my stand on things for a long while now. The current discussion is all too often muddled, illogical, hypocritical, and just plain silly. In order to have a productive conversation, there are some lines we need to lay out and some issues we need to address.


The disparity between severity and punishment:
As we have been over many times before, bad journalism exacts a disturbing cost. It can distort markets, undermine scientific and technological progress, and corrupt democracy. If you start to list the journalistic sins that have caused the greatest damage, plagiarism will almost never break the top five. Despite this, it is perhaps the one sin that is the most readily and heavily punished.


The twin crimes of plagiarism:
We generally say that plagiarism is wrong because it entails theft and misrepresentation. In one of the many contradictions of the debate, misrepresentation is, in most cases, only disapproved of if it comes with theft (theft without misrepresentation of authorship is piracy and is definitely frowned upon). Big name writers frequently have assistants do most of their actual work (or ghosts who do all of it). PR agents often send press puff pieces to friendly reporters who add nothing but their bylines. Co-authors often contribute nothing to academic papers. All of these practices are designed to mislead the reader, but compared to plagiarism, they get almost no criticism, at least partially because of …


The victimology of plagiarism:
It’s useful at this point to think in somewhat simplified terms of three major stakeholders, journalists, subjects and readers/viewers. If you look at the evolution of journalistic standards over the past few decades, you’ll notice a trend favoring the interests of the first and dismissing the interests of the third.  Laziness and inaccuracy are primarily crimes against the reader and therefore have little consequences (which explains the career of Alessandra Stanley). Plagiarism is mainly a crime against other journalists.


The comically narrow definition of plagiarism:
Outside of academia (where the rules are somewhat different), when you hear about someone getting in trouble for plagiarism, you can be almost certain that it is for a very specific kind.

Writing consist of any number of elements that, with one notable exception, you are allowed to steal, and even rewarded for doing so. Style, arguments, conclusions, imagery, language. As long as you hew  closely to the standard narrative and borrow from "the right people," your work will be celebrated with awards, promotions, and sweet gigs on TV news shows. The only kind of plagiarism that get you into trouble is copying the wording of some passage. As long as you sufficiently paraphrase the work you are recycling, you will be fine. If anything, your lack of orthogonality will be appreciated by the rest of the industry.


None of this is meant as a defense of plagiarism. It's sleazy and slothful, but the discussion of it and of journalistic ethics in general have become hopeless, and given the importance of good journalism, that's a huge problem.

Friday video inversions

Bach seems to survive the transformation nicely, but I think this is more interesting with a more familiar tune.

Für Elise is one of those pieces that almost everyone knows but often only as "that really pretty Beethoven piece (that's not Moonlight Sonata )" so you might want to listen to at least a few bars of the original before proceeding (or the whole thing -- you can afford the two and a half minutes).






Now, with  the original fresh in your mind, check out the inversion.

Bialystock's Paradox as explained by Jonathan Chait

For a while now, we've been talking about the parallels between the Producers and the current situation facing the GOP. ("When you win, people expect you to start fulfilling obligations, and when you've been making promises you can't keep...")




We were doing this as an excuse to post old movie clips and avoid writing actual posts, but Jonathan Chait has taken things to the next level and made serious case for the idea that "Before This Is Over, Republicans Are Going to Wish Hillary Clinton Won."

Imagine what the political world would look like for Republicans had Hillary Clinton won the election. Clinton had dragged her dispirited base to the polls by promising a far more liberal domestic agenda than Barack Obama had delivered, but she would have had no means to enact it. As the first president in 28 years to take office without the benefit of a Congress in her own party’s hands, she’d have been staring at a dead-on-arrival legislative agenda, all the low-hanging executive orders having already been picked by her predecessor, and years of scandalmongering hearings already teed up. The morale of the Democratic base, which had barely tolerated the compromises of the Obama era and already fallen into mutual recriminations by 2016, would have disintegrated altogether. The 2018 midterms would be a Republican bloodbath, with a Senate map promising enormous gains to the Republican Party, which would go into the 2020 elections having learned the lessons of Trump’s defeat and staring at full control of government with, potentially, a filibuster-proof Senate majority.

...

The Republican Party recovered from its cratering under the Bush administration by having the good fortune to lose control of the White House at precisely the moment that a global financial crisis began to inflict deep, ruinous pain upon the public. They used that backlash to gain control of Congress and stymie Obama’s agenda, especially any measures to hasten the recovery or patch up Obamacare, frustrating his supporters. A sense of how deeply the GOP’s position depended upon not holding the White House can be seen in public support for Obamacare. The unpopularity of the law has been the bedrock of the Republican strategy for nearly eight years. Republican control of government has made it … popular.

“New Choice!”

Ken Levine, who knows a bit about coming up with new ideas (having worked on MASH, CHEERS, FRASIER, THE SIMPSONS, WINGS, EVERYBODY LOVES RAYMOND, BECKER, DHARMA & GREG ... ) is a big fan of improv classes as a training ground for writers.

There was another great exercise for comedy writers in Andy Goldberg’s improv class recently. This one was called “New Choice!” Two people would do a scene and periodically someone would say something and Andy would interrupt with “New Choice!” The performer then had to devise an alternate line. If Andy wasn’t satisfied he’d again bark “New Choice!” Sometimes it would take two or three lines before the scene was allowed to proceed.

Example:

Me and Fred are in a Costco.

Fred: What are you here to buy?
Me: Cheerios.
Andy: New choice!
Me: 300 rolls of toilet paper.
Andy: New choice!
Me: A case of Trojans and a dozen oysters.

Later in the scene:

Fred: I don’t have cash. Do you take American Express?
Andy: New choice!
Fred: Do you take the Diner’s Club card?
Andy: New choice!
Fred: Do you take second-party Group-ons?

You get the idea.

There's an analogous skill that's essential for anyone who teaches mathematics to the non-mathematical: when students don't get something, you should be able to come up with an alternate explanation that uses completely different words and examples.

With all due respect to the demands of rigor and correct terminology, if you can't find different ways of explaining a problem or mathematical concept, you either lack fundamental communication skills or you don't understand what you're talking about.

They just want to help their children overcome the disadvantages of being rich in 21st Century America

Those Title I kids get all the breaks.

From Dana Goldstein:

Craig Foster, a school board member from Malibu who favors separation, said parents voluntarily giving money wanted to see the fruits of their donations.

An ideal PTA system gives a parent “the opportunity to put your money where your heart is,” said Mr. Foster, a former managing director at Morgan Stanley and Credit Suisse. “It has to be an emotional appeal, and it has to be for the benefit of the donor.”

Indeed, the powerful appeal of helping one’s own child has turned the apple-pie PTA into a mirror of society’s larger stratification. According to a new report by the Center for American Progress, a liberal advocacy group, schools that serve just one-tenth of 1 percent of American students collect 10 percent of the estimated $425 million that PTAs raise nationwide each year.

And those schools, not surprisingly, are some of the least needy, according to the study, which analyzed PTA tax returns from 2013 and student demographics. The richest PTA in the nation, with $2 million in revenue, was at Highland Park High School in a suburb of Dallas, where no one qualified for free or discounted lunch. (Nationwide, about half of public school students are eligible.)

Only 9 percent qualified at the second-richest, Public School 87 on Manhattan’s Upper West Side, where the PTA’s revenue exceeded $1.5 million. The money was used to pay for dance, yoga, chess, and math and literacy coaching.
…

Leaders at several overachieving PTAs also said their generosity addressed another kind of inequality: Their schools did not benefit from Title I, the federal taxpayer-funded program for schools that serve large numbers of poor children.

Is allowing a strike in the middle of a bubble ever a good idea?

Sitcom veteran Ken Levine has an excellent (if not unbiased) post on the possible upcoming writer's strike. You should read the whole thing, but there's one particular aspect I want to focus on here.

As we have been saying for years, there is an increasingly obvious content bubble in scripted television programs. Streaming services like Netflix, Amazon and the stunningly mismanaged Hulu get most of the attention (largely because they spend ungodly amounts of money on marketing and PR to garner that coverage), but the old-style cable channels may well be a bigger factor. Now everyone from MTV to the History Channel insist on getting in on the act regardless of how badly scripted shows might fit in with their format and programming strategy.

Even taking into account the growth in overseas markets, it is next to impossible to come up with a scenario where the audience size can continue to support the explosive growth in production costs. If content has already expanded past the point where the market can support it, we have a bubble, which would imply that the smart strategy is to extract as much money as quickly as possible. With that in mind, the studios may be playing a very dangerous game.

The AMPTP (producers) completely control the situation. If they feel it’s inconvenient or too costly for a strike they negotiate a fair contract and move on. If they feel there’s something they don’t wish to give up or they want to be punitive and it’s worth the disruption they’ll push us to a strike. So don’t kid yourself --

THEY orchestrate the strike not the WGA.

Likewise, during a strike, when they feel it’s gone on long enough they settle and everybody goes back to work. Usually, it’s not a table of twenty negotiators that hammer things out; it’s a back room with four people. For years, Lew Wasserman, the head of Universal was that guy.

…

Writers have less leverage than other guilds. That's a fact.  When actors or directors go on strike the industry immediately stops dead. When writers go on strike stockpiled scripts can still be shot.

Since we don’t have as much leverage we generally do get screwed more often. That too is just a fact.

…

The AMPTP has a lot to lose with a strike. They’re making $51 billion in profits these days. Way up from past years. That’s a pretty nice incentive to keep things going as is.

We haven't talked about the content bubble for a while...

Don't get me wrong, as a viewer, I'm pleased with all the choices, but from a business standpoint, this got silly quite a while back..




Like so much of our economy, the content bubble is largely driven by hype and CEO dick-measuring. At least in the US, the market is beyond saturated and  the present levels, let alone growth curve is unsustainable.

In other words, enjoy it while it lasts.

P.S. After scheduling this, I heard a public radio segment about Emmy season. It turns out that the people who have to watch all of these shows can't find the time to watch all of these shows.