What I’ve been reading, 6/1

Good stuff from the internet.

1) Incarceration as a Labor Market Outcome, John Quiggin.

Rather, I’m saying that, like unemployment, incarceration should be regarded as a (bad) labor market outcome. If you want to evaluate the performance of the labor market, you need to look at both.

There’s nothing radical or leftist about this viewpoint: it’s one that is at least implicit in all economic models of the labor market of which I’m aware, and is most particularly explicit in that of the Chicago School*. Most of the crimes for which people are imprisoned in the US can be understood as reflecting economic choices which in turn are determined primarily by the labor market in which those choices are made. This is obviously true of property crime and drug dealing, and it’s true, directly or indirectly, of lots of violent crime as well. As Gary Becker put it (quoting from memory here) “a burglar is a burglar for the same reasons as I am a professor”. (You don’t have to buy Becker’s assumption that criminality is a “rational” choice, to agree that it is a choice and that choices reflect the attractiveness of the available options).

There’s evidence from sociology, I think Bruce Western among others, that incarceration is connected with globalization more generally.

“Wacquant (1999, 2007) draws an explicit link between welfare retrenchment, neoliberal economic policy, and mass imprisonment: “[I]n all the countries where the ideology of submission to the ‘free market’ has spread, we observe a spectacular rise in the number of people being put behind bars as the state relies increasingly on police and penal institutions to contain the social disorders produced by mass unemployment, the imposition of precarious wage work and the shrinking of social protection” (Wacquant 2001, p. 404; see also Western 2006).
Moral Views of Market Society Marion Fourcade and Kieran Healy

I’ve always wanted to research a macroeconomics paper titled “The War on Drugs as a Keynesian Fiscal Policy”, where I’ll discuss the great Keynesian project of creating millions of jobs of the digging-holes/filling-holes productivity level that pay $0 – ie sitting in a jail cell for buying/selling drugs. If you redo all the macro research with that as part of the government’s actions, what happens?

2) Sotomayor Core Dump, Julian Sanchez. Another person, who has probably seen his fair share of DC nonsense, is caught off guard by how ugly the Sotomayor critique is going. It includes this nugget:

BENNETT: Yeah, well, maybe so. Did she get into Princeton on affirmative action, one wonders.

BARNES: One wonders.

BENNETT: Summa Cum Laude, I don’t think you get on affirmative action. I don’t know what her major was, but Summa Cum Laude’s a pretty big deal.

BARNES: I guess it is, but you know, there’s some schools and maybe Princeton’s not one of them, where if you don’t get Summa Cum Laude then or some kind of Cum Laude, you then, you’re a D+ student.

At first I thought it would be the normal talking heads merry-go-round, and decided not to pay too much attention. But listening further, the assumption that a Puerto Rican woman must have cut a corner somewhere to get to the top that I’m hearing from a large gathering of white men is really ridiculous and insulting.

3) Liberaltarians by Mark Thomas.

Where I part with many libertarians – perhaps due to my background – is in the idea that government is almost always at odds with liberty. In my case, government played a key role in providing me with opportunity – education is one example, without tuition of $100 per semester at a state school, I probably would not have gone to college – but the opportunities government provided me go beyond education (and also see the examples given in the article for women and minorities).

I like the idea of liberaltarians, particularly a marriage of Hayek and Rawls, but I tend to fall more on the liberal side on most issues. Like Thomas, I don’t see a collapse of liberty in making educational opportunities more available. If the in-state tuition at my public college had been double what it was (a rate I fear it is heading too), I probably wouldn’t have gone, instead doing some community college credits and working.

4) The Cost Conundrum, Atul Gawande for the New Yorker. He looks at a town in Texas where the cost of healthcare has exploded, and tries to find out why. The reason he finds? Doctors maximize the volume of high-margin medical services they provide.

“Come on,” the general surgeon finally said. “We all know these arguments are bullshit. There is overutilization here, pure and simple.” Doctors, he said, were racking up charges with extra tests, services, and procedures.
The surgeon came to McAllen in the mid-nineties, and since then, he said, “the way to practice medicine has changed completely. Before, it was about how to do a good job. Now it is about ‘How much will you benefit?’”…
I gave the doctors around the table a scenario. A forty-year-old woman comes in with chest pain after a fight with her husband. An EKG is normal. The chest pain goes away. She has no family history of heart disease. What did McAllen doctors do fifteen years ago?
Send her home, they said. Maybe get a stress test to confirm that there’s no issue, but even that might be overkill.
And today? Today, the cardiologist said, she would get a stress test, an echocardiogram, a mobile Holter monitor, and maybe even a cardiac catheterization.
“Oh, she’s definitely getting a cath,” the internist said, laughing grimly.

If there are enterprising young reporters that read this, I’ve heard horror stories from friends in the medical industry of clinics in the central midwest that operate as stomach-stapling factories. Stomach-stapling is supposed to have a really good margin on it, and it is the definite surgical fix with huge-side effects that takes the place of more long-term life changes that are difficult to implement. I can’t tell if it is friends bitching about their internships (and what a terrible internship!), but it may be worth a look.

At the turn of the last century, around 1900, police officers used to work for commission. What a great way to align incentives! Except for that part where the more police ‘find’ crimes that may not have happened, or arrest people when there isn’t any evidence, the more they get paid. In retrospect, it is obvious that this lead to corruption, but at the time it seemed like a perfect way to compensate someone. I imagine in 100 years we will laugh at the same way this is in effect for doctors.

5) Hopefully you are already familiar with the internet meme Auto-Tune the News.

Auto-Tune the News #4 is out of control. The Angry Gorilla has an angry breakdown during regulatory debate! Check out the dance they get Scarborough to do. And what they are capable of doing with Katie Couric has gone past 11 on the dial. I’d recommending watching parts 2 and 3 first if you haven’t seen them.

I recommending watching those auto-tune the news for a long time, and then listen to T-Pain Featuring Yung Joc – Buy U A Drank (Shawty Snappin’), and feel a real sense of vertigo. “Why are these guys trying to sound so much like Auto-Tune the News?”

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7 Responses to What I’ve been reading, 6/1

  1. Matt H. says:

    “Why are these guys trying to sound so much like Auto-Tune the News?”

    Ah the weak analytical abilities of the liberal mind. Mike, wake up. Auto-Tune the News is trying to sound like T-Pain, not the other way around!

  2. financeguy says:

    The New Yorker article was great. Deep down, I think there are some parallels with this financial crisis. I think there’s a larger sense in which, as a society, we’ve lost our moral bearings somewhat and our larger sense of civic responsibility and duty (Krugman did an interesting blog entry once on this phenomenon). Gordon Gekko’s “greed is good” idea has lost its capacity to shock. We’ve taken it for granted that as Americans we should be out there maximizing our self-interest. To me the most revelatory line in the New Yorker article was the following:

    Even in Grand Junction, Michael Pramenko told me, “some of the doctors are beginning to complain about ‘leaving money on the table.’ ”

  3. Matt Frost says:

    The above comment by the subtlety-impaired Matt H. is a real keeper.

  4. Mike says:

    Financeguy – never leave money on the table!

    I should mention the New Yorker article is probably the most important piece up there. When we emphasize commission as a compensation package, we set ourselves up to maximize volume. And if Doctors get a stake in total profits, we set ourselves up to maximize margins. There’s a reasons Doctors professionalized themselves during the 20th century, because selling a lot of high-margin crap we don’t necessarily need was a huge problem for them. Taking that off the table is good for the industry and better for us. Or so I read it.

    I should have written this seperately but the interplay of the finance industry also plays out. I know a lot of Doctors who jumped ship to be ‘health consultants’ for consulting firms. Replace “Do No Harm” with “How can we make it seem like we aren’t cutting health benefits, when we are cutting them.” That’s incredibly lucrative and not as stressful – and also makes other Doctor’s normal handsome salary seem lame in comparison.

    Matt H. – who is being more arch? I can’t even tell. If you watch that video, at the end of it youtube will say “here are two other videos you might want to watch?” both of which with T-Pain. This continues and continues, and soon you have chased T-Pain down a 4 hour auto-tuned rabbit hole. I just got lunch, and was shocked that the Quizno’s lady did not start snapping her fingers.

    That is all.

  5. Unsympathetic says:

    You could easily cut down the procedures docs are forced to order.. if you are also willing to reduce the liability of those doctors to lawsuits.

    Every single MD buddy I have says the following : “It may be more expensive, but it’s my license on the line with every single patient.”

    Also, the treatment costs in hospitals are high because health care insurers are allowed to simply not pay for 7 out of every 10 patients they are billed for. Why? No regulator exists to force health care insurers to pay.

  6. financeguy says:

    For health care I think, as a country, we need to grow up and just guarantee a basic level of health insurance for every man, woman and child. This may be anathema to conservatives, but surprise: everybody does have health care if they really need it. It’s just the poorer and uninsured exercise their right at the most inefficient point in the system, at the doors of the emergency room, because they couldn’t afford preventive visits, tests etc. because we have such a ridiculous system. There’s a basic underlying difference between the right to health care and the right to say a Mercedes-Benz: we all acknowledge that no one has the right to show up at the doors of a Mercedes dealership and say they need a Mercedes and get a set of keys handed to them. But if they show up at the emergency room and say they have a dire medical problem, we all accept that they should be treated. Unless we think it’s better to let these people die in the streets (no insurance, no treatment, no exceptions), let’s just cut all the crap and get to the real argument: what should a system that covers everyone look like in substance.

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