Detailed Abstractions

Infinite Monkey Theorems

Things worth reading…   

or at least pondering and forgetting quickly… 

So… how good is China’s new stealth fighter?  Not sure, but I’d start by asking this guy(here via MSNBC): 

HONOLULU — A former B-2 stealth bomber engineer was sentenced to 32 years in prison Monday for selling military secrets to China in the latest of several high-profile cases of Chinese espionage in the U.S.

US economics…

Businesses have not yet started hiring as UE claims are up.  Some of it is due to delays due to weather were people who would’ve claimed last week didn’t, but still not a good sign (here via BizTimes.com):

New applications for U.S. jobless benefits jumped by 51,000 to 454,000 last week, the U.S. Labor Department reported today, up from 403,000 during the previous week….

The four-week average of new claims, climbed 15,750 to 428,750, the highest level in two months, the Labor Department said. 

Additionally, the CBO reported this week, what all politicians have known for decades, but have consistently ignored…. social security is a looming and ever-growing problem (here via EpochTimes): 

In its Budget and Economic Outlook report for fiscal years 2011 to 2021, the CBO anticipates that the Social Security program will run a $45 billion deficit for 2011, and will be in the red for at least the next ten years. 

And…

According to the Associated Press, if present Social Security spending and funding levels are sustained and adjusted for the coming influx of Baby Boomers applying for and collecting Social Security checks, the program’s trust fund could be emptied by about 2037.

President Obama’s thoughts about this re: State of the union speech… no problems at all… full remarks here:

Starting in 2011, we are prepared to freeze government spending for three years.  (Applause.)  Spending related to our national security, Medicare, Medicaid, and Social Security will not be affected.

Not “affected’?  I guess that doesn’t discount it from affecting us…. but why worry about that when we can spend more money on things we don’t need (speech cont’d):

Next, we can put Americans to work today building the infrastructure of tomorrow.  From the first railroads to the Interstate Highway System, our nation has always been built to compete.  There’s no reason Europe or China should have the fastest trains, or the new factories that manufacture clean energy products.

Tomorrow, I’ll visit Tampa, Florida, where workers will soon break ground on a new high-speed railroad funded by the Recovery Act.

That’s some vision there; to ignore the looming crisis and instead deflect to a new boondoggle.  & not just a boondoggle, but it seems this is the answer to so many of life’s troubles… the environment, traffic congestion, sprawl…. yes, this magical elixir that is so incredibly great, that it can’t possibly survive without federal government to operate.

But wait… it will create jobs!  (speech cont’d):

There are projects like that all across this country that will create jobs and help move our nation’s goods, services, and information. 

Of course if it’s a “jobs’ program” and not a new transportation program (look over here – shiny stuff)… well, let’s let Milton Friedman discuss jobs’ programs (here):

Milton recalled traveling to an Asian country in the 1960s and visiting a worksite where a new canal was being built. He was shocked to see that, instead of modern tractors and earth movers, the workers had shovels. He asked why there were so few machines. The government bureaucrat explained: ‘You don’t understand. This is a jobs program.’ To which Milton replied: ‘Oh, I thought you were trying to build a canal. If it’s jobs you want, then you should give these workers spoons, not shovels.’

Either way, here is a good response to the State of the Union from Cato.

Lastly, more great stuff from the Economist.  This time an Ideas Arena

As business leaders, politicians and journalists meet at the World Economic Forum’s annual summit in Davos to discuss the year ahead, The Economist will be inviting readers and guests to participate in a series of online debates questioning the future of global leadership. From now until February 18th, we’ll be examining the rapid emergence of a single global elite whose decisions, and opinions, affect us all.

Writing in the NY Times, an MIT Professor for the Sloan School of Management, Simon Johnson explains how bad budget deficits will be if we allow the Bush tax cuts to continue.  Basically he tells us, if we fail, it will only be due to the fact that taxes aren’t high enough and we’re not spending enough money on the right things. (here):

According to the Congressional Budget Office, extending all the Bush tax cuts would add $2.3 trillion to the total 2018 debt. The single biggest step our government could take this year to address the structural deficit would be to let the tax cuts expire. Such a credible commitment to long-term fiscal sustainability should reduce interest rates today, helping to stimulate the economy….

According to Mr. Johnson, even though critics say letting the tax cuts expire would retard growth, that money could be used more effectively (he continues):

…If the goal is to boost growth and employment immediately, it would be better to let the tax cuts expire and dedicate some of the increased revenue to real stimulus programs…

You mean, stimulus programs like “Cash for Clunkers” (NBER working paper here)?

…Our empirical strategy exploits variation across U.S. cities in ex-ante exposure to the program as measured by the number of “clunkers” in the city as of the summer of 2008. We find that the program induced the purchase of an additional 360,000 cars in July and August of 2009. However, almost all of the additional purchases under the program were pulled forward from the very near future; the effect of the program on auto purchases is almost completely reversed by as early as March 2010 – only seven months after the program ended….

Or how about the stimulus plan we were told would keep unemployment rates to 8% (DA Post here), while they currently hover around 10% (here):

…in August, and the unemployment rate was about unchanged at 9.6 percent, the U.S. Bureau of Labor Statistics reported today.

Or…maybe the government takeover/purchase of GM (post here):

…in reality, the US Treasury through pressure by the Obama administration spent $50 billion dollars to own 61% of the shares.  With roughly 500 million shares available, this means the US government current owns 305 million shares.  At the current stock price today of .375 dollars, their 50 billion dollar investment is worth roughly 115 million dollars….

Or maybe controlling healthcare costs by passing a bill no one understands…. which has already started failing as insurers have already started raising rates more than goverment predictions (post here):

…The economics and logic of these required rate increases are undeniable.  If someone, in this case the government through force of law, tells a private business that they must increase their spending, under force of law, some, if not all, of those new expenditures will be passed on to consumers…

So to sum up Mr. Johnson, even though evidence, extremely recent evidence, demonstrates what economic thinkers have told us for centuries:  government can not create jobs – the problem doesn’t lie with government spending, but instead in allowing people to keep their own money.

I don’t know when we start understanding what Albert Einstein expressed so eloquently so many years ago, “The definition of insanity is doing the same thing over and over again and expecting different results.” but let’s hope it’s soon.

For more, excellent Cato article The Stimulus: The Government Job Creation Myth

I wrote last week about Mr. Obama’s decision to forgo plans to put ballistic missile defense systems in Poland.  At that time, I considered the Republican talking points to be more than excessive.

Sound bites about  appeasing Russia and abandoning our allies was disingenuous considering all the known facts.

As seems typical with this President however, is that each time I agree, he does something so stupid as to defy rational thought:

WASHINGTON — President Barack Obama sharply dismisses criticism that Russian opposition influenced his decision to scrap a European missile defense system, calling it merely a bonus if the leaders of Russia end up “a little less paranoid” about the U.S.

“My task here was not to negotiate with the Russians,” Obama told CBS’ “Face the Nation” in an interview for broadcast Sunday. “The Russians don’t make determinations about what our defense posture is.”…

This seems extremely hard to believe and if you analyze the situation while taking the President’s words at face value, you’re only left with one looming question, “If not for Russia, then why?”

Mr. Obama’s current position:

…In its place will be a different missile-defense plan relying on a network of sensors and interceptor missiles based at sea, on land and in the air. Obama says that adapts to the most pressing threat from Iran to U.S. troops and allies in Europe, potential attacks by short- and medium-range missiles….

Which, according to the CBO, will be more expensive and make us less safe overall.  From the report:

• Defense of Europe. All of the alternatives CBO considered would provide defense of most of Europe roughly equivalent to the defense provided by MDA’s proposal against most types of ballistic missiles that Iran is thought to have developed or could develop in the future. Because the alternatives CBO considered would locate interceptors closer to Iran than MDA’s planned system, they would generally provide more extensive defense of southeastern Europe than would MDA’s proposal. Moreover, because they would be composed of mobile or transportable components, deploying the alternative systems would not require building permanent facilities—including missile silos—at European sites.

• Extended defense of the United States. A second goal of MDA’s proposed European system is to give the United States an extra layer of defense against potential Iranian intercontinental ballistic missiles. CBO’s analysis indicates that by 2012 systems already in place at two bases in the United States would protect more than 99 percent of the U.S. population from this threat. MDA’s proposed European system would extend defensive coverage to the other 1 percent of the U.S. population. It would also provide redundant defense from a third interceptor site for all of the continental United States, giving system operators more flexibility by creating an opportunity to launch a second interceptor from the United States, if necessary. None of the alternatives considered by CBO provide as much additional defense of the United States.

• Costs. For roughly the same cost as MDA’s European system—a total of about $9 billion to $14 billion over 20 years—the United States could deploy either of the ground-based alternatives. The ship-based alternative would cost almost twice as much as MDA’s proposal—a total of about $18 billion to $26 billion over 20 years—largely because CBO assumed that the Navy would need to buy additional ships to operate it.

• Availability. The alternatives that CBO examined might not be available as early as MDA’s proposed European system.

So again Mr. President – if this wasn’t to sooth relations with Russia and the alternative path you’ve chosen is both more expensive and makes us less safe – then why?

First – a disclaimer – I have a feeling that some of you who might agree with me normally, might feel uncomfortable about this discussion.  However, if we truly want an open and honest debate, tough questions will need to be asked and answered.

According to a recent Harvard Medical School study via Rueters:

WASHINGTON (Reuters) – Nearly 45,000 people die in the United States each year — one every 12 minutes — in large part because they lack health insurance and can not get good care, Harvard Medical School researchers found in an analysis released on Thursday.

“We’re losing more Americans every day because of inaction … than drunk driving and homicide combined,” Dr. David Himmelstein, a co-author of the study and an associate professor of medicine at Harvard, said in an interview with Reuters.

To begin, we should take note of the wording itself as the 45K number is logically very tough to substantiate.  The report itself states these people died “in large part” due to lack of insurance, noting in the wording the difficulty of the definition.  Not only would you need to find people who might have lived with insurance, but I think you should also remove those people who could afford it but chose not to (usually younger professionals with a belief that they don’t need it).

Having said that, even if we assume the 45K number is accurate, it is true that it’s higher than both homicide and drunk driving rates combined at around about 30K deaths a year.

Using the 45K & the “ideal” $200 billion a year (CBO reports government health care spending with the new bill will be 1 trillion in new spending over the next ten years), we would be spending about 4.5 million for each life saved.  This assumes that the government projections are correct, which we know history shows us it’s likely to cost much, much more.  & it assumes that giving them insurance would truly save lives.

The difference in the analogy therefore is that no one in congress is currently setting up a bill where will spend an additional 4.5 million dollars per homicide & drunk driving deaths in order to save those lives.

I recognize for some, cost/benefit analysis is by definition wrong since human life is sacred, but we have to recognize that spending 4.5 million on say cancer or heart disease research is likely to save many, many more lives than spending it on the current health care plan.

Globally, spending this much money on portable water, malaria drugs, childhood vaccinations, and other fairly cheap solutions would save literally tens of millions of people each year.

I know – cold-blooded, heartless, etc – but given my current income level, I wouldn’t even force my own family to come up with 4.5 million to save me, much less think it’s my neighbor’s responsibility to pony up part of the cash through the force of law to do so.