It is apparently Wishful Thinking Day today at The Glittering Eye. My posts today all seem to involve wishful thinking in one way or another. So, for example, the scales have finally fallen from the eyes of the editors of the Washington Post and now they wish that something could be done about Saudi Crown Prince Mohammed Bin Salman:

As a military partner in pushing back against Iranian aggression, Saudi Arabia has been worse than useless. It has no significant presence in Syria, where Tehran is making its strongest military push. The intervention in Yemen launched by Mohammed bin Salman produced a humanitarian catastrophe while strengthening Iran’s position. Tehran smiled when the prince rashly launched a blockade against neighboring Qatar, site of the largest U.S. air base in the Middle East; it cheered when he abducted the pro-American prime minister of Lebanon.

Mohammed bin Salman has been good at charming Westerners with talk of religious reform and economic modernization, but in practice he has done enormous damage to those causes. He has imprisoned scores of liberal Saudis who support reform, including the women who pushed for the right to drive. In overseeing the murder of Mr. Khashoggi, he silenced an influential journalist who endorsed his goals while criticizing his methods. He has backed away from several major economic reforms.

which are precisely the things I was complaining about while the editors were blissfully hailing MBS as a reformer, distracted by the bright, shiny object of letting women drive.

I guess my own wishful thinking is that both the editors and the Trump Administration would recognize that the Saudis are not our allies; they are our enemies. They financed Osama Bin Laden; they financed Al Qaeda’s attack against us; the Saudis have continued to support Al Qaeda in Syria.

There is an old proverb that covers our relationship with the Kingdom of Saudi Arabia pretty well: he who sups with the devil should use a long spoon. Ultimately, U. S. and Saudi interests cannot be reconciled. The best we can do is manage them and so far we have refused to do that.

More wishful thinking? That any alternative to MBS would be better than he.

I’m not sure that Josh Rudolph appreciates the full implications of a major slowdown of China’s economy, discussed here in his piece at the New Atlanticist/i>. He lists the challenges as

1. Slow deleveraging: While credit growth has moderated to come in line with economic growth, debt-to-gross domestic product (GDP) ratios remain high and steady.

2. Persistent financial risk: Financial regulatory overhaul continues, but new shadowy corners pop up as soon as old ones get regulated, while property prices remain elevated.

3. Monetary/external imbalance: The strategy of using monetary liquidity to support the financial system amid regulatory tightening is running headlong into Federal Reserve tightening, weakening the renminbi and retesting capital controls.

4. Geopolitics: Even before the Trump presidency, China and the United States were poised to become competitors as China climbs the value chain and offers an alternative model. For a country as large as China, the middle-income trap is harder because it also leads to a Thucydides Trap (the pattern of established powers fearing rising powers, historically leading to conflict three-quarters of the time and likely to strain China’s integration with Western economies).

5. Social contract: Convincing people to accept lower growth and higher default risk will be difficult.

6. Attracting foreign investors: Convincing international investors to use the renminbi and invest in China requires a credible commitment to avoid capital controls.

7. Sectoral restructuring: It will take decades to rebalance the economy toward domestic consumption, services, and advanced manufacturing, reform state-owned enterprises, and deepen capital markets.

I want to focus on just one of them—what he rather blandly refers to as “social contract”. Over the period of the last 25 years, earned or unearned China’s leadership has gotten something of a reputation for competence, particularly among the members of the Western process, cf. Tom Friedman. That has not always been the case. China had several runs of inflation in the late 1980s and early 1990s, indeed until the yuan was pegged to the dollar.

But a very large proportion of China’s working age population has never experienced anything else from the Chinese leadership than carefully managed growth. IMO if that growth does not continue there is a risk of a loss of confidence in the leadership, something that could snowball.

What could happen with a critical loss of confidence? Just about anything.

This article at the Economist was music to my ears. Many American sectors have been consolidating at a rapid pace:

Since 1997 market concentration has risen in two-thirds of American industries. A tenth of the economy is made up of industries in which four firms control more than two-thirds of the market. In a healthy economy you would expect profits to be competed down, but the free cashflow of companies is 76% above its 50-year average, relative to gdp. In Europe the trend is similar, if less extreme. The average market share of the biggest four firms in each industry has risen by three percentage points since 2000. On both continents, dominant firms have become harder to dislodge.

Incumbents scoff at the idea that they have it easy. However consolidated markets become domestically, they argue, globalisation keeps heating the furnace of competition. But in industries that are less exposed to trade, firms are making huge returns. We calculate the global pool of abnormal profits to be $660bn, more than two-thirds of which is made in America, one-third of that in technology firms (see Special report).

and this consolidation has costs:

Not all these rents are obvious. Google and Facebook provide popular services at no cost to consumers. But through their grip on advertising, they subtly push up the costs of other firms. Several old-economy industries with high prices and fat profits lurk beneath the surface of commerce: credit cards, pharmaceutical distribution and credit-checking.

During the California Gold Rush relatively few great fortunes were made panning for gold but several were made in selling tools and other supplies to prospectors. The same is true in the retail gold rush. Jeff Bezos isn’t making money in retail. He’s making it selling retailers the tools to help them go online.

I like the Economist’s prescriptions, too:

Market power should be attacked in three ways. First, data and intellectual-property regimes should be used to fuel innovation, not protect incumbents. That means liberating individual users of tech services to take their information elsewhere. It also entails requiring big platforms to license anonymised bulk data to rivals. Patents should be rarer, shorter and easier to challenge in court.

Second, governments should tear down barriers to entry, such as non-compete clauses, occupational licensing requirements and complex regulations written by industry lobbyists. More than 20% of American workers must hold licences in order to do their jobs, up from just 5% in 1950.

Third, antitrust laws must be made fit for the 21st century. There is nothing wrong with trustbusters’ remit to promote consumer welfare. But regulators need to pay more attention to the overall competitive health of markets and to returns on capital. America’s regulators should have more powers, as Britain’s do, to investigate markets that are becoming dysfunctional. Big tech firms should find it much harder to neutralise potential long-term rivals, as Facebook did when it acquired Instagram in 2012 and WhatsApp in 2014.

If like me you’ve been wondering why wombat feces were cubic, this article explains it:

To solve the puzzle, the team examined the digestive tracts of wombats that had to be euthanized following vehicle collisions in Tasmania, Australia.

The wombat takes about two weeks to digest its food and researchers found that as faeces move into the final 8% of the intestine, it changes from a liquid-like state into solid matter. At that stage the dung takes on the shape of separated cubes measuring about two centimeters in length.

By inflating the intestine with a long balloon, the researchers found that the wombats’ intestine walls stretch unevenly, allowing for the formation of the cube shapes.

“The local strain varies from 20% at the cube’s corners to 75% at its edges,” the team said. “Thus, the intestine stretches preferentially at the walls to facilitate cube formation.”

or, in other words, unless your intestine wals stretch unevenly, you probably won’t be able to manage this feat yourself. Although I can imagine contests among college students.

What do Pride of the Yankees, the Leslie Caron motion picture Lili, the Disney picture The Three Lives of Thomasina, and The Poseidon Adventure have in common? Other than being movies, of course. Don’t Google it.

All were based on books by New York Daily News sports writer Paul Gallico. There is a magical, mythical quality to all of his books and stories.

I do not think it is possible to make a decent adaptation of any of his books or stories any more. They all have a religious core which is deeply distasteful to modern moviemakers.

Does anybody? I rarely read John Stossel’s pieces because he is just too much of an anarcho-capitalist for my taste. He promotes the operation of the market but with peculiar blinders which I’ll expand on later in this piece. However, his assessment of single-payer health care in this piece is correct:

“In Germany, employers provide most of the health care … just as they do in the United States,” he says. France and Switzerland also offer multiple options, public and private, and most people buy private health insurance. Some of the Swiss government subsidies are similar to those of Obamacare.

But Canada, England, Norway, Cuba and a few other countries do have genuine single-payer. I’m constantly told that it works well — people get good care and never have to worry about a bill. They spend less on health care and live longer.

Pope says that claim is naive.

They do live longer in many of those countries, but it’s not because they get superior health care; it’s because fewer of them are fat; fewer crash cars; and they shoot each other less often. “Take out (obesity), car accidents and gun violence, the difference in life expectancy disappears entirely,” Pope says.

up to a point. That point is his prescription. He thinks that competition among hospitals and among insurance companies would make health care affordable. There are several problems with that. The most serious is that to the best of my knowledge that is supported by no studies. When Americans have responsibility for paying for their own care they do economize but they do not necessarily economize in an informed manner which will actually result in savings.

The second problem is that he considering only one side of the subsidy equation. For the U. S. actually to have a market-based system we would need to eliminate professional licensing, patents, royalties, and mandates (like requiring hospitals to provide care regardless of ability to pay, something that has only been the case for the last 35 years). Additionally, we’d need to stop determining the relative value of procedures bureaucratically as is the case now. The problems with our health care system did not start in 1965. They started in 1906.

What would such a system look like? The well-to-do, about 3% of the population, would continue to receive whatever health care they wanted because they could pay for it. Those who had the knowledge and prudence to manage their own health care (those able to “advocate for themselves” in the common parlance) would receive health care that was more affordable than at present. Those two groups, which have substantial overlap, account for about 10% of the population all told. The rest would receive substandard health care or be swindled by huckstsers. The poor would not receive health care at all.

I think that very few want that sort of health care system.

Who wants single-payer?

Arguendo, let’s assume that the form that a single-payer system would take would be along the lines submitted as legislation by Democrats in the House in the last Congress. Private health care insurance would become illegal (that’s one of the ways in which they intend to pay for their system). Additional money required would either be obtained through a payroll tax, a tax on work which would reduce the number of jobs and increase unemployment, or through the general fund which means that the entirety of health care in the U. S. would be paid for by the highest quintile of income earners. I don’t think the numbers add up. If from the general fund, it would mean an additional $1 trillion in taxes levied on families earning $100,000 or more. Those families presently account for about 50% of all income or $6.5 trillion, i.e. additional income taxes of about 15 percentage points on those families would be required.

Since money is fungible, that would mean $1 trillion less spent on houses, cars, clothing, food, and other consumer goods. It would not merely mean moving money from one pocket to another as is claimed by some. It would be a major redistribution of income from to pharmaceutical companies, hospitals, health care providers, and other people working in health care from the other people in the top 20% of income earners.

Additionally, care that is not deemed worthy by federal bureaucrats would need to be paid for out of pocket. So much for not getting between patients and their doctors. Or physician autonomy.

I don’t think that’s what most of its advocates think of when they imagine a single-payer system. I think they mostly think of health care that is more affordable and, if that occurs after implementing such a system, it would be a coincidence.

We cannot make health care more affordable without reducing the wages of people in the health care sector, rationing care, or both.

I think I’m going to wrap this post up there. All I have to add is that the idea that there is a right to health care is the moral equivalent of saying that there is a right to Hennessy Ellipse. It’s a slogan—easy to say but impossible to deliver.

According to the California Department of Insurance the total premium written for homeowners insurance in the state was around $7.8 billion in 2017.

The estimated cost of the homes destroyed by the fires in Northern and Southern California is around $5 billion so far. Homes valued at another $10 billion are at high or extreme risk.

I’m a bit late with this but yesterday was my mom’s birthday. I don’t know exactly when the picture above was taken. I would guess that my mom was in her early to mid-20s so it would have been taken around 1944 or 1945.

I’m not sure what I can write about her that I haven’t written about before. She was on the vaudeville stage since before she could walk. As a teenager and adult she had a lovely, trained soprano voice.

By her own account she “raised herself”. Her parents had been separated from when she was quite young and she was shuffled back and forth among her parents and various relatives. She told us she never knew from day to day where she would be sleeping.

She was the first person in her family to graduate from grade school. She went on to graduate from high school and then from college. She became a remedial reading teacher—what we would now call a teacher of special needs children. Her first teaching assignment was teaching the poorest of poor kids in St. Louis. She returned to that same school 20 years later when she went back to teaching in the 1960s. The kids there were still the poorest of the poor but the racial and ethnic mix had changed.

In her late 40s she went back to school and got a masters degree in education administration. She then went to work for the city in an incredibly thankless position—in charge of what was euphemistically called “staff balancing”, trying to allocate teachers to schools by race. After doing that for a few years she went back to teaching and taught until she retired in the 1980s.

Even in retirement she kept her hand in, volunteering in teaching former prostitutes to read.

As I read this article at CNBC on where the wealthiest people are putting their money, it occurred to me to mention something. The really rich don’t gamble. Most of them are rich because they don’t gamble. They only bet on sure things.

They’re the house, not the marks. The house always wins because it’s not gambling.