Wednesday, May 18, 2011

CATO Institute Believes Freedom Comes In The Form Of Government Vouchers

This video from the CATO Institute supports Paul Ryan's Medicare voucher contraption.

It claims it will solve "both of the big problems created by Medicare", namely:
  1. it would protect taxpayers by putting a [GDP-growth constrained] limit on budgetary costs
  2. by giving beneficiaries control over their healthcare choices by "reducing" the destructive impact of third-party payer outcomes on the healthcare system
Is this supposed to be a joke?

The voucher system, being chained to GDP growth (+1%!), ensures that so long as the economy isn't officially in a recession (facing quarters of decline in GDP), spending on Medicare will increase over time, not decrease. What's more, because government spending is a component of GDP, and Medicare spending is a component of government spending, increasing Medicare spending over the years actually creates a positive feedback loop by "juicing" the GDP growth stat and ensuring that Medicare spending grows a little bit faster still.

Additionally, the voucher system does absolutely nothing to fix the agency problem inherent in a third-party payer system like Medicare. Whether a government bureaucrat makes the decision about what to spend money on and how much of it is to be spent, or the actual individual receiving the service, the economy of the choice being made is irrelevant when it is Other People's Money (OPM) that is being spent. The voucher system is a taxpayer-funded scheme, meaning the money being spent was never earned by the person spending it so they have no reason to be thrifty as it costs them nothing to spend it.

In fact, it's worse than that-- a voucher system is a "use it or lose it" system. You don't get to save the value of your voucher payments if you don't spend them, thus encouraging voucher users to spend wisely and only when necessary. If you don't spend the full value of your voucher, the excess value is gone. This is a strong incentive to maximize the amount spent per transaction.

This voucher proposal is a horrible scheme which will do absolutely nothing to solve the economic problems related to government intervention in the healthcare market. And that is without taking time to address the fact that this is a proposal which ultimately maintains the political system's control over the healthcare system and the voters' lives who are concerned about it. Like every "reform" proposal, this is a not-so-clever way of rearranging the way the government controls this aspect of the economy, not any kind of deregulation or gradualist plan for getting the government out entirely.

The only solution to the government healthcare debacle is complete and total withdrawal. If you want to discuss the merits of different political strategies for getting to that point they should all revolve around how soon you end further participation in such systems by current and future generations and what kind of payouts existing participants should expect to receive along the way.

Quit hacking at the branches. The CATO Institute demonstrates, yet again, why it is a complete disgrace and a nefarious libertarian doppelganger.

Tuesday, May 17, 2011

What Did Kids Think Of Bin Laden's Reported Death?

Basically the same range of opinions exhibited by various "adults," which is somewhat frightening in and of itself.

Wednesday, May 11, 2011

China Leads The Way In Promoting Physical Fitness Amongst Its Citizens

I just found this disclosure in the most recent 20-F filing for Chinese MMORPG game-maker Perfect World (PWRD):
Under the anti-fatigue system, three hours or less of continuous play is defined as
“healthy,” three to five hours is defined as “fatiguing,” and five hours or more is defined as “unhealthy.” Game operators are required to reduce the value of game benefits for minor game players by half when those game players reach the “fatigue” level, and to zero when they reach the “unhealthy” level. In addition, online game players in China are now required to register their identity card numbers before they can play an online game.
Aside from the fact that I find it rather comical that a government which maintains a master-slave relationship with its citizens would see no irony in being nominally concerned with their health and fatigue levels, I'm surprised, really, that none of the Great Leaders in America thought to implement a system like this, first.

China leads the way!

Friday, May 6, 2011

Why There Will Be More Flash Crashes

Because traders have suffered "post-traumatic stress disorder" from previous episodes and the trauma of these incidents creates a feeling of personal insecurity and emotional vulnerability which can results in a psychological negative feedback loop.

Via the WSJ:
A year after the "flash crash," some Wall Street traders are still suffering from a type of post-traumatic stress that one psychologist calls "the flash-crash flashback."

"Your heart pounds, you sweat," said Ross Greenspan, a 25-year-old trader on the floor of the Chicago Mercantile Exchange. "You can get sort of a tunnel vision…you're looking at the screen, and you can't see anything in your periphery."
The young Mr. Greenspan is, of course, putting the cart before the horse, because it is the inability of most traders and market participants to utilize any kind of peripheral vision in the first place which affords them an opportunity to recklessly and single-mindedly take risks they aren't aware they are taking.
The feelings of panic that surfaced after the flash crash caused Mr. Greenspan to temporarily walk away from trading stock futures. He felt rattled during big stock-market gyrations, like the volatility seen following the Japanese earthquake in mid-March. It reminded him of May 6, 2010, when the Dow Jones Industrial Average plunged nearly 1,000 points and wiped out nearly $1 trillion of stock-market value in just minutes.
The strategic thinking of most market participants is diseased. Few have any sound, logical theory for engaging in the trades and investments they involve themselves with on a daily basis. They're so obsessed with the false idol of "empiricism" that they're convinced everything that has happened in the past will undoubtedly occur again in the future. In some instances they're correct, as their anxiety warps their decision-making and causes them to make their own fateful bed and then lie in it, such as with flash crashes.

The reality is, markets don't crash because history repeats itself-- history repeats itself because most people are ignorant of its lessons and choose the intellectually lazy way through life, playing the greater fool game and chasing momentum rather than doing the hard work of thinking critically about an investment thesis and digging through security filings and related data to find real value.
"Every little tick that goes against them feels like a personal assault on them and their ego…every little tick in their favor gives them a sense of hope and relief," Mr. Menaker said. "If you're experiencing a trade tick by tick, there's a lot of emotional volatility."
No real understanding of value, no real confidence in one's decision-making. This mindset guarantees volatility and upsets because your decision is only as good as the market says it is, second-by-second. Contrast that with an individual who has done his homework and identified $1 selling for fifty or sixty cents-- his margin of safety allows him some breathing room and he's consequently a lot less worried about how "popular" his decision is on a daily basis.

Searching out real value in the market is akin to cultivating authentic self-esteem via introspection and self-knowing.
"It's about dealing with the stress, dealing with the frustration, dealing with the fear," Ms. Shull said. "The fallacy of Wall Street is that we do it all quantitatively. Research shows you have to have emotions to make a decision."
Ms. Shull, an anxiety therapist hired by Wall Street, is obviously not in a position to be of much help. Emotions are the psychological reactions to the choices we make reflected against the values we hold. They don't help us make decisions, they come about in response to the decisions we've made.

What we've got here is a group of self-doubting, anxious, rudderless "empiricist" market participants being cared for by psychologists who have theory, but their theory is totally flawed and therefore unhelpful to the point of being harmful.

Essentially, it's like the guy responsible for hitting the "LAUNCH NUCLEAR WAR" button, standing over it, sweating, his stomach swirling while his psychologist friend says, "Well, do you feel like pushing the button?" Are you kidding? Of course he feels like pushing that button! Doing so would be the only way to achieve a definitive moment and relieve himself of his pent-up anxiety about all the close calls with nuclear war in the past.