I think we’re just going to have to accept that living in Texas would be a sort of hell to many New Yorkers and vice versa. Why can’t they just leave each other alone?

While we’re on the subject of healthcare, before it slipped my mind again I wanted to mention a thought I’d had. As of this year we’re beginning an intriguing real-life experiment. For years it has been said that if we cut the fees that physicians are paid by this government program or that they will stop accepting patients from the program that has lowered it fees.

Consistent with the PPACA’s schedule, Medicaid fees are now on the chopping block. If neither the Administration nor the Congress blinks and the cuts are allowed to stand and, starting this year and over the next several years, if physicians start refusing to accept Medicaid patients (not if they already decline to accept them—the change is important), it will support the view that has been put forward for so long.

However, if the number of physicians that accept Medicaid patients declines not at all or only marginally, it will provide some support that maybe Medicare reimbursement rates should be reduced as well.

I would not have elected to carry on such an experiment in this way but it wasn’t my call. Whatever its causes the experiment is now in progress.

After reading Malcolm Gladwell’s stream of consciousness review of Steven Brill’s book on the making of the PPACA, I was left with three thoughts:

1. Monoculture as they were, the people in the Obama Administration couldn’t agree among themselves on what “healthcare reform” should consist in and the finished law reflects that. I think that casts at least a little doubt on the view that the PPACA was the best bill that could actually be enacted into law. Rather, it may have been a compromise among a number of arrogant, opinionated personalities with conflicting views.
2. Nobody could figure out how to pay for it.
3. The Administration wasn’t interested in the details.

You’re welcome to read the whole thing but I’m not sure you’ll learn much more by doing so. There’s a lengthy digression on the nature of non-fiction accounts, contrasting the highly-successful modern point-of-view approach mastered by the author of Moneyball, Michael Lewis, with the “encyclopedia” approach epitomized by Bob Woodward.

An enormous amount of column space is devoted to the credentials of the various participants which I gather repeats what’s in the book being reviewed. My reaction to that is two-fold. First, I read them as I do all resumes: don’t just tell me where you went to school, tell me what you’ve done. Apparently, the answer is not much. And then there’s the old wisecrack: you can always tell a Harvard man but you can’t tell him much. It sounds to me as though the Obama Administration needs about a tenth as many Harvard grads in its policy team and a heckuva lot more from Purdue.

Kevin Drum has a series of long-term predictions. I agree with some of them (“online retail will continue to grow”) but I’m very skeptical about others (“solar panels will be getting cheaper”). I think his post is worth reading, thinking about, and discussing but I also think that it reflects the views of somebody who has a great respect for technology without having any interest in actually doing it himself or coming to understand its limitations.

Just as something to chew on, I think I’d say that the issues in a “tipping point” for medicine, driverless cars, and the surveillance state are all political and social rather than technological and that all of them could go either way.

As to why I’m skeptical about the cost of solar panels dropping, there I think the issue is technological. There is no Moore’s Law governing solar panels. For the last decade or so the decrease in their cost has largely been due to state subsidies, particularly on the part of China. Right now I think that the signs point to a decrease in these subsidies for what is being recognized as a niche technology.

Every week the Watcher’s Council of which I am the oldest member has a forum in which members reflect on a single question. This week the question was “What is the greatest strategic threat the U. S. faces today?” I doubt my answer will please most of my fellow Watchers but it was lengthy enough that I thought I’d give it a post of its own.

The short answer to the question is that we don’t have one. Let’s consider that with a little more rigor.

To be a geopolitical challenge a country, group of countries, organization, or institution must have at least three attributes. It must be expansionary, it must have the capacity to reach us, and it must be attractive.

Nazi Germany, Imperial Japan, and Soviet Russia were all geopolitical challenges, each with all of those attributes. That’s something too frequently forgotten after their defeat. The Third Reich, the Greater East Asia Co-Prosperity Sphere, and the Soviet Union each had substantial support outside of Germany, Japan, or Russia.

In contrast, nobody wants what China’s rulers want outside of a few of the world’s worst autocrats. China isn’t expansionary. It claims Taiwan and a few rocks in the waters adjacent to China but it’s been claiming those for the better part of a century. It’s not marching its armies into Burma, Southeast Asia, or India, at least not for the foreseeable future. And, finally, China doesn’t have the capacity to reach us, other than with nuclear weapons, something we have in orders of magnitude more abundance than they.

Similarly with Russia. Putin’s Russia is nationalist and irredentist but not expansionary and it has been spectacularly unsuccessful in attracting anyone to their banner. Like China, Russia is unable to reach us other than with nuclear weapons. Its nuclear arsenal is what makes the Russia-U. S. relationship the most important bilateral relationship in the world, something we are mismanaging tragically.

I don’t see any group of countries challenging us, either.

Radical Islamism continues to attract people to its banner and it’s obviously expansionary but it doesn’t have the ability to reach us and it never will have due to its own internal contradictions. In the 21st century it’s impossible to pose a military challenge when you’re as nostalgic for the 6th century as militant radical Islamism is. You can only be a parasite. That’s why they utilize terrorist attacks, the strategy of the poor and weak.

China, Russia, and radical Islamism all pose challenges to our clients rather than to us. However, that’s entirely because our clients allow them to pose challenges. We have pretty lousy clients and IMO they need us a lot more than we need them. Whether they will come to that realization is unclear to me.

The closest thing we have to a geopolitical challenge is internal. Basically, Schumpeter was right. What we have to fear is our own professional, intellectual, and political classes, all of which are busily undermining the very economy, society, and politics on which they depend for their survival.

As I might have expected the latest cinematic portrayal of Moses as an action-adventure hero has induced some consideration of whether there’s any evidence for the Exodus story. The short version is that there isn’t any.

There are no Egyptian inscriptions or documents that mention the Jews and if the Jewish people ever sojourned in Egypt, they left no artifacts or other evidence of it.

However, I think that they’re looking for their evidence in the wrong place and at the wrong time. There is early evidence of Jews in Egypt: the Achaemenid garrison at the first cataract of the Nile was largely manned by Jews, as is evidenced by the documents found there, the earliest non-Biblical descriptions of Jewish religious practices. If Moses actually lived, that’s probably where you’ll find him. Unfortunately, that would have been about a millennium later than most people imagine Moses to have lived.

Another possibility is that the “Egypt” of the Hebrew Bible wasn’t what we think of as Egypt. In classical antiquity countries weren’t distinguished by geographic or ethnic boundaries but by linguistic ones and Egypt was wherever Egyptian was spoken. The Egyptians occupied the land of Canaan several times over the centuries, most notably during the 14th century BC so presumably Egyptian was spoken there and where that was the case it was Egypt.

Mount Sinai, the mountain that Moses ascended to receive the Ten Commandments from the hand of God, at one time or another has been place all over the Middle East not only on the Sinai Peninsula but from Saudi Arabia to Jordan and beyond. There isn’t much evidence for any of these locations.

Alan Blinder proposes a number of approoaches to increasing wages in the U. S. Characteristically, he leads with redistributive strategies:

Impersonal markets may assign wages to particular “low productivity” people that are so meager that they can’t support themselves, let alone their families. More generally, even when abject poverty is not the issue, market wages may lead to levels of inequality that many in society find intolerable.

In such cases, governments may wish to intervene with measures such as minimum wages that are “above market” or so-called tax-and-transfer programs that raise after-tax net wages relative to pre-tax gross wages, such as the Earned Income Tax Credit.

I agree with some of his proposals and disagree with others. For example, I agree with this:

As a nation, we invest shockingly little in vocational training and apprenticeships, two aspects of education that would greatly benefit workers near and below the middle. Apprenticeships in the United States cover just 0.2 percent of the labor force, compared to 2.2 percent in Canada, 2.7 percent in the United Kingdom and 3.7 percent in Australia.

The over-emphasis in U. S. policy on higher education while ignoring vocational training or apprenticeships is, indeed, shocking. The reality is that such a policy throws half the U. S. population, the half that isn’t and won’t be prepared to do college work, under the bus. I don’t think we should take the step taken by many countries of prohibiting people from seeking higher education but we shouldn’t put all of our eggs in the higher education basket as we’re doing now.

He also emphasizes increasing the minimum wage, something about which I have mixed feelings. I think that any move to increasing the national minimum wage should be cautious, measured, and evidence-based. I don’t think Illinois, in particular, should raise its state minimum wage. I think that’s the path of economic disaster for the state.

However, I find it puzzling that Dr. Blinder devotes so little attention to the obvious factors behind the decrease in wage growth among the lowest earners over the last 35 years: immigration and globalization. IMO the single thing that would help American workers stuck in the lowest income tiers the most is a tight labor market at that end of the wage spectrum.

Additionally, I would support imposing duties or fees on imports from countries that do not have the labor, safety, and environmental regulations that we impose on our own businesses. Abusing your own people shouldn’t be a viable business plan for autocratic countries and I don’t understand why we tolerate it.

Still, I applaud Dr. Blinder for at least devoting a bit of consideration to the majority of Americans rather than just writing them off as most pundits do.

A pretty good candidate for redundant headline of the year might be “How the Military Wastes Money”. If you’d like to get your blood boiling for the new year, Matthew Gault’s article at WiB could be a pretty good start. Here are his top military boondoggles of 2014:

1. the F-35
2. the Littoral Combat Ship
3. more M-1 Abrams tanks (to add to the 5,000 we already have in storage)
4. Too many bullets
5. Spare parts for MRAP vehicles that just got thrown away
6. Afghanistan

Fortunately, there’s a lot of money sitting around doing nothing. Oh, there’s not a lot of money sitting around doing nothing? The devil you say. Think of it as fiscal stimulus like a good folk Keynesian.

Tami Luhby explains the next shoe the PPACA will drop:

Obamacare enrollees who received subsidies to help pay for coverage will soon have to reconcile how much they actually earned in 2014 with how much they estimated when they applied many, many months ago.

This will likely lead to some very unhappy Americans. Those who underestimated their income either will receive smaller tax refunds or will owe the IRS money.
That’s because subsidies are actually tax credits and are based on annual income, but folks got their 2014 subsidy before knowing exactly what they’d make in 2014. So you’ll have to reconcile the two with the IRS during the upcoming tax filing season.

[…]

We’re not talking chump change. Those who applied through the federal exchange received an average monthly subsidy of $264, according to the most recent figures reported by the Obama administration. They only had to pay $82 a month, on average, for coverage, Roughly 85% of total enrollees received help with insurance premiums. The administration last month said 2014 enrollment was 6.7 million.
Those who underestimated their earnings could owe thousands of dollars, though there is a $2,500 cap for those who remain eligible for subsidies. The threshold for eligibility is based on income – $45,900 for an individual and $94,200 for a family in 2014.

There will be many more such shoes in the future. That’s the nature of the design. The good news is front-loaded; the bad comes later.