The key sentence in Kevin Warsh And Stanley Druckenmiller’s Wall Street Journal op-ed on our “asset rich income poor economy” is this:

Higher asset prices are not translating into meaningful increases in capital expenditures, and the weak growth in business investment is proving to be an opportunity-killer for workers.

I do think there’s one word missing from that sentence. Here. Higher asset prices are not translating into meaningful increases in capital expenditures here. Over the last half dozen years large, cash-rich companies have expanded operations, manufacturing, and development but they haven’t done so here. They done it in China, India, and any number of other countries around the world.

For me the singular test that should be applied to any proposed policy is does it increase capital investment here? Want to increase personal income taxes on the highest income earners? Does it increase capital investment here? Want to end a payroll tax holiday? Does it increase capital investment here? More infrastructure spending, wind farms, solar energy, tighter restrictions on coal? You get the picture.

The frustrating thing is that measures that could actually be expected to increase capital investment here don’t seem to be able to make it into the national discussion.

Compare and contrast. Fareed Zakaria:

Can Iraq hold together? It’s worth examining what is happening in that country through a broader prism. If you had looked at the Middle East 15 years ago, you would have seen a string of strikingly similar regimes — from Libya and Tunisia in the west to Syria and Iraq in the east. They were all dictatorships. They were all secular, in the sense that they did not derive their legitimacy from religious identity. Historically, they had all been supported by outside powers — first the British and French, then the superpowers — which meant that these rulers worried more about pleasing patrons abroad than currying favor at home. And they had secure borders.

Today, across the region, from Libya to Syria, that structure of authority has collapsed and people are reaching for their older identities — Sunni, Shiite, Kurd. Sectarian groups, often Islamist, have filled the power vacuum, spilling over borders and spreading violence. In Iraq and elsewhere, no amount of U.S. military power can put Humpty Dumpty back together.

Middle East specialist Mansoor Moaddel:

Several nationally representative surveys carried out in Iraq between 2004 and 2013 provide important facts about Iraqi orientations toward secular politics, basis of identity, Americans, and Iranians. These facts have serious implications for the territorial integrity of Iraq, support for an Islamic government, and the U.S. policy toward the country. These surveys have shown evidence of:

(1) Support for Secular Politics: A much higher percentage of the Sunnis, even higher than the Kurds in some years, believe that Iraq would be a better place if religion and politics were separated. This support has increased from 60% in 2004 to more than 81% in 2013. By contrast, support for secular politics among the Shia has an inverted U-shape between 2004 and 2013. It went up from 44% in 2004 to 63% in 2011, and then dropped to 34% in 2013.

From the standpoint of public opinion, this evidence implies that the cooperation between the Sunni tribes/groups with ISIL (Islamic State of Iraq and the Levant) may not indicate mass conversion to religious extremism. Rather, it is driven by a common hatred of the Shia sectarian government ruling the country.

(2) Recognition of Iraq (and not religion) as the basis for identity: The Sunnis and Shia converge in defining selves as Iraqi, rather than Muslim or Arab, above all. This support rose from 22% in 2004 to 80% in 2008, and then dropped to 60% among the Sunnis. Among the Shia, it was 28% in 2004, increased to 72% in 2007, and then dropped to 62% in 2013. There is not much support for Iraqi identity among the Kurds. Among the Kurds, on the other hand, there has been a shift from predominantly Kurdish identity to religion.

I think the problems in Iraq are not what Mr. Zakaria imagines them to be. The Iraqis overwhelmingly want to remain Iraqis.

When I read the results of this poll on the relationship between obesity and long-term unemployment (high blood pressure and high cholesterol are also positively correlated with long-term unemployment) my immediate reaction was to wonder whether obesity was not in fact a proxy for race. Consider this finding about those who are among the long-term unemployed from the Urban Institute:

…we see that blacks, relative to other groups, are disproportionately represented among long-term unemployed and discouraged workers. They make up 22.6 percent of the long-term unemployed, 10.5 percent of the employed, 25.9 percent of discouraged workers, and 15.0 percent of newly unemployed workers. Hispanics make up a somewhat smaller share of the long-term unemployed (19.0 percent), the employed (15.7 percent), and the discouraged (20.2 percent) than of the newly unemployed (23.1 percent).

There are all sorts of factors that are in reality proxies for race which confound findings of this sort. Zip code can be a proxy for race. Level of educational attainment can be a proxy for race.

There’s one question that James Taranto’s column on Hillary Clinton brought to my mind. Will Sec. Clinton face serious opposition from the left flank and/or populist wing of her own party?

That’s a question. I don’t know the answer and I’d like your opinions.

Update

Every man a king! Is there a prospective Huey Long out there somewhere? I don’t see it but I’m really not attuned to what’s going on in states other than my own. And I don’t just mean Illinois, if you know what I mean.

Rather than going through Rupert Murdoch’s paean to comprehensive immigration reform in a point-by-point refutation, I’ll just make a few quick points. Not every immigrant is Rupert Murcdoch. While it might be true that 28% of businesses are started by immigrants, that doesn’t mean that 28% of immigrants start new businesses. The actual number is very, very small.

Google, eBay, Pfizer, and Home Depot aren’t headquartered in Eastern Europe or China because of our robust system of civil law and ambitious patent regime. I note that Mr. Murdoch doesn’t mention the many companies that were crowded out of the market by the companies he lists. I wonder who founded them? How many businesses have been shuttered because of News Corp.?

I agree with Mr. Murdoch that the H-1B visa program needs reform. I firmly support the idea that American businesses should have the workers they need. I’m just more skeptical than he that the workers aren’t already here and that the push for more H-1B visas are more a device for keeping wages low than for getting workers with necessary skills. That’s why I support a central clearing house for advertising jobs to be offered under H-1B programs and bounties paid whistle-blowers on paying sub-market wages.

Finally, there is one form of immigration reform that is vitally necessary. We need to mend our relationship with Mexico. It’s been nearly twenty years since I’ve heard much about serious bilateral negotiations with our neighbor to the south.

My dad wore two shirts a day. White, starched, cotton and linen blend shirts. My dad, at best rumpled-looking, felt it was essential to maintaining a professional appearance.

When I was very small my mother spent a lot of her time ironing my dad’s shirts (I don’t ever recall our household help doing any ironing). Later when we had a bit more money, my mom sent my dad’s shirt to the laundry. But that still meant trips to the laundry several times a week if not on a daily basis. On net it probably reduced my mom’s workload but just as importantly it changed the nature of the workload.

When permanent press became widely available and affordable in the mid-1950s, it changed her life.

I suspect that this is something that will debated for decades. This study, of 3,137 of the 3,144 U. S. counties, certainly seems to have found that healthcare insurance premiums have risen sharply under the PPACA:

There are hundreds of aspects of Obamacare that people argue over. But there’s one question that matters above all others: does the Affordable Care Act live up to its name? Does it make health insurance less expensive? Last November, our team at the Manhattan Institute published a study indicating that Obamacare had increased the underlying cost of individually-purchased health insurance in the average state by 41 percent in 2014, relative to 2013.

[…]

Across the country, for men overall, individual-market premiums went up in 91 percent of all counties: 2,844 out of 3,137. For 27-year-old men, the average county faced 91 percent increases; for 40-year-old men, 60 percent; for 64-year-old men, 32 percent.

Women fared slightly better; their premiums “only” went up in 82 percent of all counties: 2,562 out of 3,137. That’s because Obamacare bars insurers from charging different rates to men and women; prior to Obamacare, only 11 states did so. Because women tend to consume more health care than men, the end result of the Obamacare regulation is that men fare somewhat worse.

I think there are several possible retorts to this study. You could take the position that it’s still early days and that at some point the PPACA will result in lower healthcare premiums. This might be thought of as “the Pony Hypothesis”. The trends for that don’t look particularly good. You could also point out that the study merely determines that healthcare insurance premiums have risen not that the PPACA caused insurance premiums to rise. It might be that premiums increased despite the PPACA rather than because of it.

It could also be maintained that since the study doesn’t not appear to be weighted by population but is strictly geographic that although prices increased for most areas they didn’t increase (or increased at a lower rate) for most policies. You can’t conclude that from the study but it might be the case. That will be the food for a different study, presumably one carried out by the legislation’s defenders.

The study does cast the number of insurers getting into the healthcare market in a different light. We may be seeing a gold rush incentivized by rising premiums and the mitigation of risk in the form of federal subsidies.

Whatever the case, it’s becoming increasingly difficult to claim that the PPACA is achieving one of its stated objectives, to reduce healthcare premium prices.

The equation that forms the title of this post just says that “healthcare spending is composed from the spending of individuals plus spending by governments”, something obvious stated in mathematicalese. Democrats have focused their attentions on the “I” component, the shrewd political strategy. If you reduce what people pay out of pocket by increasing government subsidies, from an experiential standpoint healthcare will cost less. Republicans on the other hand have tended to focus on the “G” component. That was the essence of the Ryan plan. It did nothing to reduce “H” (unless you assume that patient-induced over-consumption is the most significant driver of healthcare spending, something for which there is little evidence) while driving “G” down which inevitably meant that “I” would increase.

I have focused unfailingly on “H”. Healthcare insurance premiums are proportional to the cost of the underlying risk. As long as spending is increasing in real terms, healthcare insurance premiums will increase in real terms, too. Changing who writes the checks won’t change that.

I have long thought, particularly when stuck in traffic, that the Federal Highway Act of 1956 AKA the Interstate Highway Defense Act might have been counter-productive. As it turns out, I may have been right:

As a kid, I used to ask my parents why they couldn’t just build more lanes on the freeway. Maybe transform them all into double-decker highways with cars zooming on the upper and lower levels. Except, as it turns out, that wouldn’t work. Because if there’s anything that traffic engineers have discovered in the last few decades it’s that you can’t build your way out of congestion. It’s the roads themselves that cause traffic.

The concept is called induced demand, which is economist-speak for when increasing the supply of something (like roads) makes people want that thing even more. Though some traffic engineers made note of this phenomenon at least as early as the 1960s, it is only in recent years that social scientists have collected enough data to show how this happens pretty much every time we build new roads. These findings imply that the ways we traditionally go about trying to mitigate jams are essentially fruitless, and that we’d all be spending a lot less time in traffic if we could just be a little more rational.

The point seems to be that marginal increases in the number and size of roads, slowly and over time, changes habits and preferences in such a way as to produce more traffic. The alternatives suggested include enormous over-capacity (a “100 lane highway”) or some sort of disincentive scheme like congestion pricing or raising parking fees.

Victoria Toensing makes an interesting point about Hillary Clinton’s assertions of innocence:

In her interview with ABC’s Diane Sawyer last week, Hillary Clinton said “I was not making security decisions” about Benghazi, claiming “it would be a mistake” for “a secretary of state” to “go through all 270 posts” and “decide what should be done.” And at a January 2013 Senate hearing, Mrs. Clinton said that security requests “did not come to me. I did not approve them. I did not deny them.”

Does the former secretary of state not know the law? By statute, she was required to make specific security decisions for defenseless consulates like Benghazi, and was not permitted to delegate them to anyone else.

I think that the Secretary was ignorant of the law is plausible. Keep in mind that just because she was a lawyer it doesn’t mean that she was a good lawyer. When she took the DC bar she was the only Ivy League grad to fail the first time around.

In her defense I suspect she was not ignorant of the law. I suspect she thought it didn’t apply to her.