Things to Read on the Afternoon of January 9, 2014

Must-Reads:

1. Noah Smith: Heroes of NoahSmithian Weblogging: Cory Doctorow: “Besides being one of my favorite science fiction authors, the founder of BoingBoing… has shaped the blogosphere. In his novels, Doctorow is unrivaled in his ability to portray accurately the culture of modern geeks and nerds, and his blog is basically set up to cater to that segment… cool new technologies, science fiction, weird news, and social commentary. Geek culture itself wouldn’t be what it is without Cory Doctorow (who, by all accounts, blogs from a balloon wearing a red cape and goggles)…. esides being the Alpha Geek of the North American information age… his libertarianism is… ‘pure’, unsullied by any connection with moneyed interests or the ghost of the Confederate States of America. Doctorow’s idea of freedom is all about what makes individual human beings feel free, not about what Robert Nozick or Ayn Rand arbitrarily defined as ‘liberty’ in order to support an anti-leftist agenda. And Doctorow fights passionately for his idea of liberty…. His book Little Brother was the most inspiring treatise I’ve read about the insanity of America’s post-9/11 curbs on civil liberties. To think that it came from a Canadian!”

2. Robert Reich: Why The Republican’s Old Divide-and-Conquer Strategy–Setting Working Class Against the Poor–Is Backfiring: “For almost forty years Republicans have pursued a divide-and-conquer strategy intended to convince working-class whites that the poor were their enemies. The big news is it’s starting to backfire. Republicans told the working class that its hard-earned tax dollars were being siphoned off…. The poor were ‘them’–lazy, dependent on government handouts, and overwhelmingly black–in sharp contrast to ‘us’, who were working ever harder, proudly independent…. The strategy also served to distract attention from the real cause of the working class’s shrinking paychecks–corporations that were busily busting unions, outsourcing abroad, and replacing jobs with automated equipment and, subsequently, computers and robotics. But the divide-and-conquer strategy is no longer convincing because the dividing line between poor and middle class has all but disappeared…. Poverty is now a condition that almost anyone can fall into…. Fifty years ago, when Lyndon Johnson declared a ‘war on poverty’, most of the nation’s chronically poor had little or no connection to the labor force, while most working-class Americans had full-time jobs…. Economic insecurity is endemic. Working-class whites who used to be cushioned against the vagaries of the market are now fully exposed…. This new face of poverty–a face that’s both poor, near-poor, and precarious working middle, and that’s simultaneously black, Latino, and white–renders the old Republican divide-and-conquer strategy obsolete…”

3. Adrianna Macintyre: Sometimes health policy can’t be about about health care: “Toward the end of the month, a household’s resources—income, SNAP, Social Security, and/or other benefits—can become exhausted, ostensibly changing food consumption patterns…. This chart drives the point home. Low-income individuals are at higher risk of hypoglycemia—and that risk changes over the course of a month…. Their high-income counterparts exhibit no significant trend. Appendicitis findings are offered as a ‘control’…. According to the authors, ‘hypoglycemia is one of the most common adverse drug events leading to visits to the emergency department’, and it’s been estimated that episodes of care for hypoglycemia have an average cost of $1,186. But it’s not the only condition that constrained food budgets might impact: ‘It is reasonable to postulate that the exhaustion of food budgets late in the month might also influence admission patterns for other diet-sensitive diseases, such as congestive heart failure.’… Policy wonks have a terrible habit of focusing on insurance and health system design (and here I count myself, because health care financing is the research I find most interesting, so it’s what I write about). This gives short shrift to the ‘social determinants’ of health—upstream factors related to lifestyle, environment, and socioeconomic status—that cannot be corrected by medical interventions. We’re fond of highlighting how much more the United States spends on health services, but an idiosyncrasy that receives less attention is how much less we spend on other social services…”

4. Ryan Avent: Inequality: On important but irrelevant facts: “WRITING on Thomas Piketty’s new book, Nicolas Goetzmann notes: ‘I think that Piketty missed something which might be important: Capital is mobile, workers are not, and at the end we have this: Gini is reducing on a worldwide basis since 2005.’ Scott Sumner adds: ‘I also like Goetzmann’s comment about global Gini coefficients. Liberals should care about global welfare. Are they closet nationalists?’ These sorts of remarks are common responses to those pointing out that inequality is soaring across the rich world, and they strike me as very problematic…. It implies, without ever making an actual argument, that efforts to reduce income inequality within rich economies must necessarily slow reductions in global inequality. Why bring up the global statistic unless you are worried that expressions of concern about national inequality are likely to undermine the global trend?…. I’m not sure why someone would want to stake out the position that subsidised pre-school for disadvantaged children is unnecessary, for example, because global inequality is falling…. [Moreover,] inequality is growing within emerging markets…. One of the most important points in Mr Piketty’s book is that the conventional wisdom that development naturally increases and then reduces inequalities is wrong…. So yes, global inequality has been falling. That is no reason for people of any ideological persuasion to ignore very worrying trends in national distributions of income and wealth.”

Should-Reads:

1. Paul Krugman: On Fighting the Last War (On Poverty): “The narrative in the 1970s was that the war on poverty had failed because of social disintegration: government attempts to help the poor were outpaced by the collapse of the family, rising crime, and so on. And… it was often argued that government aid was if anything promoting this social disintegration…. That was always much less true than the elite wanted to believe; as William Julius Wilson showed long ago, the decline of urban employment opportunities actually had a lot do with the social disintegration…. But that was a long time ago…. If progress against poverty has been disappointing over the past half century, the reason is… we’re a much richer nation than we were in 1964, but little if any of that increased wealth has trickled down to workers in the bottom half of the income distribution. The trouble is that the American right is still living in the 1970s, or actually a Reaganite fantasy of the 1970s…. And the idea of helping the poor by actually helping them remains anathema.”

2. Andrew Goodman-Bacon: Public Insurance and Mortality: Evidence from Medicaid Implementation: “Medicaid’s introduction reduced mortality rates among nonwhite infants and children in the 1960s and 1970s…. Before Medicaid, higher- and lower [welfare] eligibility states had similar public insurance use and child mortality rates. At implementation, Medicaid eligibility for nonwhite children ranged across states from 5 to 33 percent and, for white children, from 0.5 to 10 percent…. My estimates suggest that the introduction of Medicaid can account for eight percent of the decline in nonwhite child mortality and fifteen percent of the reduction in the racial gap in child mortality between 1965 and 1980.”

And

• OECD (2013): Health at a Glance: OECD Indicators: http://www.oecd.org/els/health-systems/Health-at-a-Glance-2013.pdf
• Barry Ritholtz: 10 Reasons the Gold Bugs Lost Their Shirts
• Economist: NAFTA at 20: Ready to take off again?
• Mark Thoma: Economist’s View: Looking for (But Not Finding) Shortages of Skilled Labor in the Manufacturing Sector

Should Be Aware of:

1. William M. Sage and David A. Hyman: Let’s Make A Deal: Trading Malpractice Reform For Health Reform: “Physician leadership is required to improve the efficiency and reliability of the US health care system, but many physicians remain lukewarm about the changes needed to attain these goals. Malpractice liability—a sore spot for decades—may exacerbate physician resistance. The politics of malpractice have become so lawyer-centric that recognizing the availability of broader gains from trade in tort reform is an important insight for health policy makers. To obtain relief from malpractice liability, physicians may be willing to accept other policy changes that more directly improve access to care and reduce costs. For example, the American Medical Association might broker an agreement between health reform proponents and physicians to enact federal legislation that limits malpractice liability and simultaneously restructures fee-for-service payment, heightens transparency regarding the quality and cost of health care services, and expands practice privileges for other health professionals. There are also reasons to believe that tort reform can make ongoing health care delivery reforms work better, in addition to buttressing health reform efforts that might otherwise fail politically.”

2. Thoreau: If you smoke pot, you might wind up as dumb as David Brooks: “David Brooks and Ruth Marcus explain that, although they themselves used pot without suffering any legal consequences, pot should nonetheless be illegal.  But they themselves should obviously not face any consequences for what they did.   In other words, it’s a Class Ia drug. Personally, I think they should have the opportunity to experience a prison gang initiation.  After all, they believe that pot use should be a criminal offense, and they have admitted to using pot.   Lock ‘em up!”

3. Eduardo Dávila (Harvard University): Optimal Financial Transaction Taxes: “This paper characterizes the optimal linear financial transaction tax in an equilibrium model of competitive financial markets. When belief disagreement induces excess trading on assets in fixed supply, two main results arise. First, the optimal tax is positive: although a (small) transaction tax discourages all trades equally, the reduction in fundamental trading creates a second-order welfare loss, while the reduction in non-fundamental trading creates a first-order gain. Second, the cross- sectional covariance between investors’ beliefs and investors’ equilibrium portfolio tax sensitivities becomes the relevant sufficient statistic for the optimal tax, which does not depend on the actual payoff distribution. I find additional results. First, in dynamic environments, controlling for the level of static disagreement, the optimal tax is lower when investors alternate between being buyers and sellers over time. Second, when financial markets determine production in a Walrasian sense, as in a q-theory environment, a marginal tax increase creates an additional first-order distortion (positive or negative). Third, when financial markets determine production by diffusing information, a marginal tax increase creates an additional first-order loss, due to a learning externality.”

4. Cory Doctorow: More experts pull out of RSA conference: “On Christmas Day, F-Secure’s Mikko Hypponen pulled out of RSA’s annual security conference in protest over RSA’s collaboration with the NSA (they weakened their own security to make NSA spying easier). He’s not the only one: more security experts cancelled their RSA appearances, including Atredis’s Josh Thomas and Jeffrey Carr, who has called for a boycott of the event.”

And:

Austin Frakt: Social determinants of health and Kenneth Arrow | Adair Turner: Inequality by the Click | Oliver Willis: Conservatives Rewrite History Again, Bill Clinton Edition | Austin Frakt: Some notes on innovation in health care | Paul Waldmann: The Moral Calculus Underlying the Debate Over Unemployment Insurance | Cleveland Fed Directors Partner with Spencer Stuart to Find Next Bank President | Aaron Carroll: Single payer is not sufficient | Justin Fox: What’s That You’re Calling a Bubble? | Dylan Matthews: The U.S. has a $7.25 minimum wage. Australia’s is $16.88 |