Kevin Drum - April 2010

Reading Books on the iPad

| Mon Apr. 12, 2010 10:45 AM EDT

If I were to buy an iPad — and I have enough barely used electronic doodads around to suggest that I just might — I'd buy it primarily as an ebook reader that I could do other stuff with. So then: how is it as a reader? Where can you get books? How many books are available? Are pages rendered as actual pages, complete with charts/picture/tables/etc. in their correct places? Are books searchable? Etc. I already have a Kindle, but I found it very frustrating with nonfiction books, and my reading these days is something like 90% nonfiction. So I don't use it much. Should I get an iPad instead?

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Samuelson's Book

| Sun Apr. 11, 2010 9:39 PM EDT

Paul Krugman says he learned something new at yesterday's MIT memorial service for Paul Samuelson:

I had no idea that the MIT economics visiting committee tried to force Samuelson to call off the publication of his 1948 textbook, on the grounds that Keynesian economics was too left-wing.

As it happens, I just finished reading Yves Smith's Econned, and she talks about this episode early in her book. As a public service, here's her synopsis:

A Canadian student of Keynes, Lorie Tarshis, published an economics textbook in 1947, The Elements of Economics, which included his interpretation of Keynes. It also suggested that markets required government support to attain full employment. It was engaging and well written, and sold well initially, but fell off quickly, the victim of an organized campaign by conservative groups to have the textbook removed. The book, and by implication Keynes, was inaccurately charged with calling for government ownership of enterprise.

Any taint of Communist leanings would damage the career of a budding academic. So aside from his refusal to accept some fundamental elements of Keynes's construct, Samuelson had another reason to distance himself from the General Theory. Samuelson said he was well aware of the "virulence of the attack on Tarshis" and penned his text "carefully and lawyer like" to deflect similar attacks.

More about Tarshis and Samuelson here. It includes the phrase "that bastard Buckley" just to spice things up a bit.

Supreme Court Handicapping

| Sun Apr. 11, 2010 6:40 PM EDT

There seems to be a remarkable consensus that Obama's shortlist for the Supreme Court consists of just three people: Elena Kagan, Diane Wood, and Merrick Garland. What's more, the conventional wisdom seems to be slowly congealing that Kagan is the favorite because she's a bit more centrist than the others and Obama doesn't really need a big fight in the Senate this summer.

But is that really true? To the extent that he takes politics into account with his choice, it seems to me that Wood is the best choice. The tea party fringe is going to find some reason to go ballistic over anyone Obama picks, so choosing a centrist doesn't really help him there. All three are well enough qualified that they're almost certain to be confirmed, so a centrist doesn't really help him there either. But what could help him is building on the progress he made in closing the "enthusiasm gap" by passing healthcare reform last month. The liberal base is starting to get a little more excited about things these days, and nominating a liberal justice — which shows that Obama is willing to nominate a liberal justice — could (a) get lefty juices flowing, (b) potentially cause conservatives to score an own goal if some of their number go overboard on the attacks, and (c) do it all without really affecting the independent vote since Wood is, after all, perfectly well qualified.

Plus she got her law degree from the University of Texas! I still haven't forgiven UT for this — and I probably never will — but at least it's west of the Mississippi. Fight the league, President Obama!

Quote of the Day: Undermining Security

| Sun Apr. 11, 2010 12:47 PM EDT

From Rep. John Fleming (R–La.), calmly discussing his national security differences with the commander-in-chief:

Simply put, President Obama is disadvantaging the United States one step at a time and undermining this country's national defense on purpose.

Italics his. Steve Benen calls this a "casual accusation of treason." Gotta disagree, though. There doesn't seem anything casual about it.

So How's the Economy Doing, Anyway?

| Sun Apr. 11, 2010 12:29 PM EDT

Business Week's Mike Dorning thinks the economy is on the mend:

While no one would claim that all the pain is past or the danger gone, the economy is growing again, jumping to a 5.6% annualized growth rate in the fourth quarter of 2009 as businesses finally restocked their inventories. The consensus view now calls for 3% growth this year, significantly higher than the 2.1 % estimate for 2010 that economists surveyed by Bloomberg News saw coming when Obama first moved into the Oval Office. The U.S. manufacturing sector has expanded for eight straight months, the Business Roundtable's measure of CEO optimism reached its highest level since early 2006, and in March the economy added 162,000 jobs — more than it had during any month in the past three years. 

Floyd Norris of the New York Times agrees that a lot of people are being too pessimistic:

“Go back and read what people were saying in 1982 or 1975,” said Robert Barbera, the chief economist of ITG. “Nobody was saying, ‘Deep recession, big recovery.’ It is quite normal to expect an abnormally weak recovery. It is also normal for that expectation to be wrong.”

....In 1982, Democrats scoffed at a surging stock market and thought a severe recession would last for a very long time....Change a few words (Reagan to Obama, Democrats to Republicans, 1984 to 2012) and you have an accurate description of the current political climate. Could the Republicans be as wrong now as the Democrats were then?

There's a lot to this. But just off the top of my head, here are the things that gnaw at me when I hear stuff like this:

  1. This is a balance sheet recession, not a Fed-induced recession. Paul Volcker caused the 1981 recession by jacking up interest rates and he ended it by lowering them. That's not going to happen this time.
  2. In fact, there won't be any further stimulus from lower interest rates. They're already at zero, and Ben Bernanke has made it clear that he doesn't plan to effectively lower them further by setting a higher inflation target.
  3. Consumer debt is still way too high. There's more deleveraging on the horizon, and that's going to make consumer-led growth difficult.
  4. The financial sector remains fragile and there could still be another serious shock somewhere in the world.
  5. There are strong political pressures to reduce the budget deficit. That makes further fiscal stimulus unlikely.
  6. Housing prices are still too high. They're bound to fall further, especially given rising interest rates combined with the end of government support programs.
  7. Our current account balance remains pretty far out of whack. Fixing this in the short term will hinder growth, while leaving it to the long term just kicks the can down the road.
  8. The Fed still has to unwind its balance sheet. That has the potential to stall growth.
  9. Oil prices are rising. This not only causes problems of its own, but also makes #7 worse.
  10. Unemployment and long-term unemployment continue to look terrible. Yes, these are lagging indicators, but still.

I don't expect all of this stuff to be as dire as it sounds, and overall I suspect that we are indeed going to see steady if unspectacular growth over the next few years. But I'm not entirely sure of that, and these are the reasons why. Just thought I'd share.

Fight the League!

| Sun Apr. 11, 2010 11:55 AM EDT

Orin Kerr snarks about the diverse background of Barack Obama's shortlist of picks to succeed John Paul Stevens on the Supreme Court:

No matter who he chooses, Obama will continue to break new ground, or at least help bolster some of the low numbers of people of certain arguably underrepresented backgrounds on the current Court. For example, Elena Kagan would become only the second former Harvard professor presently on the Court (joining Justice Breyer). Either Kagan or Wood would be only the second Chicago professor (joining Justice Scalia).

....Elena Kagan would also bring notable educational diversity to the Court. Kagan would be the very first Justice ever to have attended Princeton and then Harvard Law. Obviously, that would be a major break after two consecutive nominees who had attended Princeton and then Yale Law (Justices Alito and Sotomayor). Whoever Obama picks, I think it’s clear that Obama faces a major choice and that his selection will be a historic occasion.

Stevens aside, every single justice on the Supreme Court attended an Ivy League law school (Harvard, Yale, or Columbia). It's an East Coast conspiracy. Where are the candidates from Stanford? Cal? Michigan? Vanderbilt? Or one of those other states west of — well, everywhere. West of Delaware, anyway.

Some years ago, when I was blogging for the Washington Monthly, I remember having a conversation with its editor, Paul Glastris, about the interns they were planning to hire that summer. Basically, to a man and woman, all the good candidates were from East Coast schools. How about Ezra Klein? I said. He's a good guy and he goes to UCLA. Strike a blow against the Ivy League mafia! And thus history was made.1

Sure, Obama went to Columbia and Harvard Law. But he's a Hawaii guy at heart, and that's as West Coast as it gets. So fight the power, O. Be true to your roots. Hope and change means someone from outside the Ivy League.

1Or, um, something like that. Maybe I'm overstating my role a wee bit. But who wouldn't?

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Quote of the Day: Banana Peels

| Sat Apr. 10, 2010 10:47 PM EDT

From Simon Johnson and James Kwak, on whether the financial meltdown of 2008 was basically a gigantic accident caused by mistaken models and excess optimism:

It was as if the government first repealed the laws against littering, eliminated all public sanitation services, and subsidized the consumption of bananas . . . and then the global economy slipped on a banana peel.

I remember trying once to come up with a similar analogy that started off with repealing all the speed limit laws and getting rid of the highway patrol, but I never quite finished thinking it through. In the meantime, this one works.

Blogging on the iPad

| Sat Apr. 10, 2010 7:02 PM EDT

When I blog, I switch back and forth between browser tabs all the time in order to cut-and-paste excerpts and grab links to related posts. I also switch over to Photoshop/Excel/PowerPoint a fair amount in order to futz around with images and graphs. But the iPad doesn't support multitasking and its browser doesn't have tabs. So how do you blog on the thing? Any early adopters out there who can weigh in on this?

UPDATE: Via comments, I see that Safari for the iPad does support multiple windows, it just doesn't do it via a tabbed interface. (You click an icon and then choose the window you want to bring to the foreground.) So that's one question answered. As for the other, I suppose as long as you're just doing straight text blogging, the other stuff doesn't matter.

The Great Liberaltarian Alliance

| Sat Apr. 10, 2010 4:21 PM EDT

Will Wilkinson hopes that libertarians and liberals will find more common ground in the future:

In particular, I predict Democrats will become somewhat more receptive to arguments that certain less centralized, more market-oriented policies do a better job of achieving liberal goals than do the more heavily centralized, technocratic policies favored by current Democratic opinion elites. This kind of increased openness to fresh thinking is especially likely if there is an organized effort to articulate a moderate libertarian philosophy in terms attractive to liberals, which is precisely what Brink Lindsey and I are in the process of doing.

....I don’t expect liberaltarian arguments to be enthusiastically embraced by those who cannot tell the difference between successful liberal social and economic policy and the preservation and extension of New Deal/Great Society institutions. But I do expect a future Democratic Party less dismissive of policies such as school choice and defined-contribution social insurance schemes — policies that have been successfully implemented in a fair number of countries rather less libertarian in spirit than the U.S.

As a liberal who is — tentatively, cautiously — sympathetic to arguments for both school choice and a role for private accounts in Social Security, I guess I'm the target audience for whatever they're cooking up. So I'll be curious to see what they propose, especially since I've long been skeptical of Lindsey's past efforts in this direction. But if Will and Brink have anything new, I'm all ears.

The Rich Are Getting Richer

| Sat Apr. 10, 2010 3:10 PM EDT

Martha Coakley may have lost her Senate race against Scott Brown last January, but she's still attorney general of Massachussetts. So a couple of weeks ago she released a report about the wide variance in prices for medical services throughout the state, which the chart on the right illustrates in a nutshell. It's for one of the state's major insurers (Harvard Pilgrim) and it shows astonishing variation in payment rates. There's a 4x difference from the lowest paid to the highest paid hospital.

Why is this? We'll get to that, but first let's walk through all the things that don't explain the differences. Here's what the report found:

  1. Wide disparities in price are not explained by differences in quality of care.
  2. Wide disparities in prices and total medical expenses are not explained by the relative sickness of the population being served or the complexity of the care provided.
  3. Wide disparities in prices are not explained by the extent to which a provider cares for a large portion of patients on Medicare or Medicaid.
  4. Wide disparities in prices are not explained by whether a provider is an academic teaching or research facility.
  5. Wide disparities in prices are not explained by differences in hospital costs of delivering similar services at similar facilities.

So this astonishing variation isn't explained by quality of care, older/sicker patients, Medicare rates, or even differences in underlying costs. What could possibly be left?

Answer: leverage. If a hospital group owns most of the hospitals in an area, it's got the whip hand and can demand higher payment rates. Insurers can't afford to be shut out of entire market, so they have to pay up. Conversely, if a single insurer is dominant in an area with lots of providers, it can squeeze the local hospitals, who can't afford to be dropped.

The chart on the right demonstrates the relationship. It's also for Harvard Pilgrim, and it shows payment rates to six similar adult academic medical centers. The small ones get low rates, the big ones get high rates. What's worse, there's a vicious cycle in which high-cost hospitals use their higher rates to fund more expansion, giving them even more leverage:

Higher priced hospitals are gaining market share at the expense of lower priced hospitals, which are losing volume....[Highly paid hopspitals] are able to build new buildings, purchase new equipment and technology, and add to their cost structure. In contrast, hospitals with lower prices are unable to put comparable resources toward building maintenance or equipment acquisition....This results in a loss of volume to better capitalized, more expensive hospitals.

....As patient volume shifts from lower-priced to higher-priced hospitals, overall health care costs increase because those patients are now receiving their care in the higher-priced setting....[Low-cost] providers continue to lose volume to higher-priced hospitals, making it increasingly difficult for them to remain competitive, or sometimes even viable.

This is, obviously, just one study in one state — and just as obviously, it's not the whole story. But it's suggestive of a widespread problem, and one that's not just confined to hospital bargaining power. Coakley's report, for example, showed that a big part of her state's increase in medical costs was due to rising prices, not increased utilization of services. At the same time, a recent study in Health Affairs shows that doctors who own a stake in outpatient surgery centers operate on twice as many patients as non-owners. In both cases — whether it's extracting higher prices or driving up utilization of questionable surgery — it's money that's motivating healthcare choices, not good medicine.

Via Austin Frakt.