Author Archive

Daytime Television and Medicare

Posted: August 29, 2011 in Public Opinion

I came across this quote in the testimony from of the National Board Members of Third Millnium at the National Bipartisan Commission on the Future of Medicare’s hearings in 1998:

As you probably know, Third Millennium is famous for its 1994 national survey that found more young adults believe UFOs exist than believe Social Security will exist by the time they retire. Well, you may not know that we commissioned another survey in September 1996 and asked our peers about Medicare. What did we find? A majority of them, 53% of Americans ages 18 to 34, think the TV soap opera “General Hospital” will outlast the Medicare system! In fact, a majority of Americans up to age 55 believe this.

Some things never change…apparently General Hospital is still going strong!  A battle of the ages.

A post by Matt Levine too good to paraphrase, so here it is in full length.  Follow-up and commentary coming soon.

Some fairly unobjectionable premises:

1. The U.S. Treasury’s IR girl was in Asia this week telling our Chinese overlords that we’re probably not going to default on our debt but if we do it’s democracy in action and they should actually be impressed, not pissed.

2. When our government is not busy blowing itself up, it usually spends most of its time with the overlords asking them to let their currency appreciate, which should increase U.S. exports to China and create jobs here (not everyone agrees)

3. There is an ongoing debate in the econoblogosphere about whether a default on U.S. debt would actually have expansionary effects (Krugman: no, Cowen: maybe, DeLong: probably a wash).

4. There are some people who think that focusing on deficit-cutting rather than Keynesian expansion when 10-year rates are below 3% and unemployment is close to 10% is kind of foolish.

So …

Not a macroeconomist, but…got to thinking about a simple political/macro model for what could happen with the debt ceiling endgame:

1. The U.S. defaults and/or does whatever else it takes to convince people that we are not going to get our shit together any time soon.

2. China loses faith in U.S. Treasuries as its main store of foreign reserves (not happening yet).

3. China dumps USTs and has nowhere else to put its money since UST is by far the largest and most liquid place for anyone to put foreign currency reserves.

4. With nowhere to put its savings China is forced to reduce foreign currency reserves and spend on internal consumption.

5. The yuan appreciates versus the dollar (see CHF, JPY) and likely versus other currencies.

6. American export and wage competitiveness improves versus China (though consumers get hosed by rising prices of imports).

7. This creates jobs in the U.S., reducing unemployment and helping all the incumbents get re-elected in 2012.

And so we achieve what politicians should actually want (jobs) without anyone articulating reasons for it / voting for it / doing anything about it except screaming about the debt ceiling. Problem solved! Or, a problem solved. Or something.

There are only three potential flaws in this plan:

1. Global financial catastrophe

2. USTs remain extremely well bid and some think would be better bid on a default on mindless-flight-to-safety grounds, meaning that the Chinese might see no reason to play along

3. Aerial and/or nuclear warfare

Health care drives federal spending.

For all of the discussion regarding the expected, astronomical growth of government in the coming decades, America’s fiscal outlook is predicated mostly upon one aspect of the budget: health care.  The above graph (originally found here) indicates that by 2050, federal health programs will cost more than every other function of the federal government (other than paying off our debt!) combined.  As Yuval Levin puts it, “The federal government will basically be a health insurer with some unusual side ventures like an army and a navy.”

Admittedly the graph is somewhat misleading on first glance.  Federal spending as a percentage of GDP is sky high right now, its present total surpassed only during World War II when we were busy killing Nazis and saving the world from real Fascists, not “fascists.”  Thus the mild decrease in non-health federal spending as a portion of our economy doesn’t keep the enormous size of current federal spending in perspective.

Presenting the net growth (in this case, the growth is negative) of all non-health federal spending in relation to the economy’s size masks the fact that some specific programs are projected to grow substantially beyond their current share of our economy.  At the same time, other programs, such as counter-cyclical “safety net” programs, will decrease in relative cost when the economy grows and employment increases.  However, the graph allows the naive individual to claim that everything besides health care as a share of our economy is shrinking.  But it’s not.  Some programs will grow, some programs will shrink.

Matt Yglesias presents our options (in quite biased terms) in light of the expected growth of health care costs:

1. Higher taxes.
2. Systematic change to the cost structure of American health care.
3. Abandonment of the government’s commitment to provide health care to the poor and the elderly.

The graph in discussion only shows how significantly America’s public health insurance programs promote deficits, debt, and federal spending.  Both parties can reasonably agree to shrinking health care spending, if only to a slight extent according to some, but the real problems are of public choice and ideology, not facts.

Linking You Up

Posted: July 23, 2011 in Uncategorized

More on numeracy and effectively conveying the size of our national debt

Should law schools turn down voluntary consumers for ethical reasons?

Fund-raising through parking meters

25 sports records that won’t fall

Skit by the Standup Economist

Social Security politics: moving debt around

How to Make Numbers Count

Posted: July 21, 2011 in Education
Tags: ,

Ask the average American how many soldiers died in the Iraq war.  Rarely do they guess in the ballpark of the correct answer: 4,500.

Ask the average American what percentage of federal spending goes towards development assistance.  I bet they don’t know the answer is less than 1%.

Ask a person how much the first twenty B-2 bombers in the American fleet each cost.  They probably couldn’t tell you whether each cost $600 million, $1.3 billion, or $2.2 billion.

I’ll give you a hint on that last one: two B-2 bombers cost more than the entire budget of the World Food Program, the largest relief agency in the world.

We humans tend to have a tough time with numbers.  It’s not that we cannot perform simple arithmetic but rather that we have a hard time (1) fathoming enormous numbers, (2) understanding the importance of relativity in statistics, and (3) seeing how our sensitivity to numbers varies.  For example, people may not fully understand how many people died in the Holocaust until you explain the number of deaths in terms of buses full of school children, airplanes full of people, or number of states’ populations.  Additionally, many people once believed (and many still do) that the same number of soldiers died in the Vietnam War as in the war in Iraq, when the difference is tenfold.

Which brings me to the purpose of this post… for the sake of promoting honest intellectual discourse, providing an accurate depiction of the scale of numerical values, and avoiding factually incorrect statements, Justin Wolfers put up a post on the Freakonomics blog today with four guidelines for writing and thinking about numbers.  Here are the tips:

Don’t use numbers when words will do. The rhetorical point that Stewart was trying to make is simply that there are a lot of murders.  Too many.  You don’t need numbers to say this.

Don’t use numbers that are hard to comprehend.  We have everyday experience in thinking in dozens.  But we’re hopeless when it comes to millions, billions, or at the other extreme, tiny fractions.  For instance, no one ever made the mistake of saying there are 12,000 eggs in a typical carton. But plenty of journalists confused the $700 billion TARP bailout, describing it as a $700 million plan.

Scale matters: Big (and small) numbers only make sense relative to something else.  Is 15,241 murders a lot for a country the size of the U.S.?  Find a scaling that gives this some meaning (and avoids the artificial precision of 5 significant figures).  Perhaps: Last year around 1 in 20,000 people were murdered.  But how can you get your reader to picture 20,000 people?  Easy, it’s roughly the number of people who attend a typical MLB game.To over-simplify: Look around an average NBA basketball stadium.  If the crowd is representative of the streets, someone in this crowd will be killed this year.

The laugh test: When you really think about your number, does it seem plausible, or is it laughably wrong?  My basketball stadium analogy conveys the true extent of the U.S. homicide problem.  If Stewart had followed this advice, he would have seen that his wrong number implied that 1 in 230 people is killed each year.  Straight away he would realize that he isn’t grieving the murder of one of his Facebook friends every year or two.

The rest of the post can be found here.

As a I searched for some data visualization software for work today, I rediscovered Google Ngrams.  For those who don’t know, Google has over 15 million of the supposed 130 million unique books ever written scanned into its Google Books database.  This 130 million books includes works written in languages other than English.  Google Ngrams allows one to search the text of any number of books in this database within any range of dates.  Searching the entire pool of available data (currently one can search books from 1500 to 2008), I crafted the below graph of literary references to the terms liberty, equality, and justice.

It’s interesting to see that justice and liberty have a fairly strong correlation, essentially mirroring each other with the exception of a 50 year “delay” for justice in the second half of the 19th century.  Notice also how equality slowly has increased in popularity to surpass liberty in our literature.

Will Wilkinson writes,

Capt. Matthew Nielson, 27, of Jefferson died June 29, in Badrah, Iraq. He was killed by indirect fire attack while on duty in Iraq, Iowa National Guard officials said in a news release issued Sunday.

Nielson was UNI grad, like me. Like me, he worked in a grocery store as a high-school student. He died in the course of an unjust war that has nothing do with protecting our freedom. Had I been born a decade later, he could have been me. It makes me sick to think about. Would his life have been wasted like this if Americans did not so strenuously insist on lying to one another about what it is our military men and women really do? Who does it help to continue to so effusively thank Matthew Nielson’s luckier comrades for their service and our freedom? Our gratitude is a rain of grenades over the senior high. Bright-eyed American boys and girls stare smiling down the smoking barrel of our thanks, dying to please.

If the wars in Iraq and Afghanistan have been largely unjust, what are we thanking our soldiers for?  Putting their lives on the line to achieve an ambiguous goal that has little to nothing to do with protecting America’s freedom?  Fighting for injustice?

Wilkinson’s posts interests me because he suggests we ask, “Is our thanks detrimental to the lives of the very soldiers we thank?”  Our expressed gratitude “for our soldiers’ service” rather than for specific acts that advance our security encourages military action without an end.  That is, it encourages military action for the sake of military action.  Yet fighting wars is not the job of our soldiers, nor is military action an end in itself.  Soldiers defend liberty.  Soldiers don’t “fight wars.”  Fighting wars which do not defend liberty leads to the unnecessary deaths of our brothers, sisters, parents, and children.  Our gratitude to our soldiers obscufates our opposition to the immensely unjust “duties” of our soldiers.

Wilkinson waxes poetically yet appropriately.  Most people, especially libertarians, would argue that we are not fighting a “just war” in Afghanistan.  By building an aura of honor and justice around our soldiers’ service in Afghanistan, we not only lie to ourselves about the very real injustice of our military policy, but incentivize others to join in our unholy crusade against the rest of the world.  We signal the wrong message to our soldiers: their individual actions are just but the aggregate war is unjust.  How can this possibly be, if wars are composed of individuals acting on a case-by-case basis?  We believe a war’s injustice comes from abstract principles and notions of justice, but fundamentally justice is not a characteristic of an aggregate, of a nation, but rather of individual action and discretion.