The decision last week by United Healthcare to drop out of Obamacare got a lot of attention, but the truth is that UH was a pretty small player in the exchanges. What’s more important—but hasn’t gotten much attention—is the fact that more and more Obamacare insurers are getting close to profitability. Richard Mayhew comments:

2014 was a year where there were only guesses about both the Exchange population, the market structure, and federal policy structure (specifically the risk corridor revenue neutrality restrictions. 2015 had a bit more clarity on who was coming into the market, what was working and what was not working, and what federal policy on risk corridors would actually be. 2016 is the first year where the policies are priced on functionally decent real information and some of the amazingly dumb strategic decisions have been unwound through either course changes or through exiting the market.

As a simple reminder, competitive markets should see some companies make money and some companies that offer more expensive and less attractive products lose money. I would be extremely worried if everyone was making money after three years, just like I would be extremely worried that everyone was losing money after three years of increasingly better data.

Obamacare critics have spent a lot of energy trying to pretend that premiums on the exchanges have skyrocketed, but that’s never been true. What is true is that premiums started below projections and have since risen moderately as insurers get a better grasp on their customer base. This is how competitive markets work: players enter the market with prices designed to attract market share; customers pick winners and losers; prices adjust over time; and some companies are successful while others drop out. Eventually you reach a rough equilibrium, which we’re getting close to with Obamacare.

It’s ironic (or something) that the problems conservatives are making such a fuss about are the result of precisely what they say they want: competitive insurance markets. Apparently Obamacare has produced a little more competition than they’re comfortable with.

While we wait for polls to close on Super Tuesday 4 (seriously), I’ve been catching up on news in the tech biz. And I need your help. Which of these is the greatest paragraph of the day? You have three choices.

The first one, from Michael Hiltzik of the LA Times, is part of an interview with Michael Ferro, chairman of the company that owns the LA Times, about how they plan to supercharge the LA Times:

The strategic plan also includes a “content monetization engine” that will use artificial intelligence to redistribute Tribune Publishing content to multiple destinations and market the content in a way “we think will revolutionize our content strategy,” Ferro said. “We think it’ll be a rock-star business” that can “create more revenue … than you’ve ever seen.” That module will also be unveiled May 4, he said.

A content monetization engine! That is so awesome. And it will create more revenue “than you’ve ever seen.” I’ve heard plenty of hyperbole from tech evangelists before, but nothing quite like that. Next up is Twitter:

The increase in users, which reversed a decline in the previous quarter, was a rare positive for the ailing company….The company reported 310 million monthly active users, up from 305 million the previous quarter….For the first three months of the year, the company reported $595 million in revenue, missing the $608 million Wall Street had expected….Overall, Twitter said it saw a net loss of $80 million, or 12 cents a share, which was a bit better than analysts had forecast.

This is not an awesome paragraph per se, especially since it’s only a paragraph in the first place by virtue of my ellipses. But think about this. Twitter has 310 million users. 310 million! It generates revenues of about $2 billion per year. And yet, it’s an “ailing” company that’s still losing a ton of money. How tough is the social networking market when 310 million users isn’t enough to turn a profit? And how does a company that basically runs a server farm manage to rack up more than $2 billion in operating costs annually? Beats me.

Finally, we have this contender from a piece about Apple’s first revenue decline in 13 years:

Analysts do expect that iPhone sales will recover after the company introduces this year’s expected model of the iPhone….Reports based on apparent weak links in Apple’s supply chain indicate that the new phone could have a new kind of headphone port, be dust-proof and waterproof and may even sport a totally redesigned home button.

OMG. A totally redesigned home button! What will the geniuses at Apple think of next? A totally redesigned on/off button? A totally redesigned microphone? A totally redesigned headphone port? Oh wait….

Anyway, those are your choices. My heart is with #1, which is truly as awesome a paragraph as I’ve read lately. I can’t wait for May 4th.

I’m having some trouble coming up with political or even quasi-political topics to write about this morning, so instead let’s watch Chris Hayes risk his hard-won career in a single tweet:

Ok, I’m probably gonna regret this honest (perhaps naive question): is it possible the lyrics in Lemonade about infidelity are just lyrics?

— Christopher Hayes (@chrislhayes) April 26, 2016

A few tweets later Hayes is careful to assure us that he hasn’t gone completely around the bend: “In conclusion: @Beyonce is legitimately a genius and we’re lucky to have her in our shared cultural life.” Whew. Even in the polysyncretic, multicultural stewpot that defines modern America, there are still a few norms of required behavior left, and unqualified praise of Beyoncé is high on that list. I was relieved to see that Hayes was questioning only the meaning of Beyonce’s lyrics, not her unparalleled genius.

I suppose it comes as no surprise that I don’t care one way or the other about Beyoncé. I’ve read snatches of the lyrics from Lemonade, and they strike me about the same way most popular music lyrics strike me. “Middle fingers up, put them hands high. Wave it in his face, tell him, boy, bye. Tell him, boy, bye, middle fingers up. I ain’t thinking ‘bout you.” That really doesn’t do much for me, but de gustibus. I could name lots of stuff that’s meaningful to me but strikes most other people as puerile or just plain dumb.

Still, it really is kind of weird that Hayes is so obviously reticent about asking his question. For those of you who just returned from a trip to Mt. Everest, Lemonade is Beyoncé’s latest album, and the lyrics are all about the pain she felt when her husband, music mogul Jay-Z, cheated on her. Or so it’s universally assumed. It is very definitely not assumed that Beyoncé is capable of writing searing lyrics that have nothing to do with her own personal life. Odd, isn’t it? That’s almost the definition of a genius. Why couldn’t she do that?

For what it’s worth, I’d also point out a couple of other things. First, Beyoncé is famous for her almost fanatical control of her image. Second, as many people have pointed out, Lemonade is available for streaming only on Tidal, which is Jay-Z’s company. So that means Beyoncé is helping Jay make a lot of money off his alleged infidelity—and shoring up his faltering streaming service at the same time.

So then. Take your pick:

• Jay-Z cheated on Beyoncé. She’s pissed off about it and wrote an album to exorcise her pain.
• Nothing happened. It’s just an album on the subject of infidelity and other things, which Beyoncé captures with astonishing virtuosity. Geniuses can do that sort of thing.
• It’s all part of Beyoncé’s endless pseudo-narrative, which she controls with about the same subtlety that Stalin used to control the Red Army. Art in the service of art may have a long and rich history, but art in the service of great riches does too.

And with that, I’m off to lunch while everyone tears me apart. Have fun!

Today brings a new academic entry in the angry voter sweepstakes. A quartet of high-powered economists took a look at congressional districts and divided them up by how much they were exposed to trade with China. Some districts showed lots of job losses due to trade while others showed very little. How did voters react?

Districts with lots of job losses were somewhat more likely to vote out incumbents, but not by a lot. Nor were they more likely to switch parties. However, they were likely to become more extreme, electing very conservative Republicans and very liberal Democrats:

The point estimates suggest that about three quarters of the movement away from the political center induced by trade is the result of increasing conservativeness among elected legislators, while one quarter is due to increasing liberalness.

….Districts subject to larger increases in import competition from China are substantially less likely to elect a moderate legislator….Comparing more and less trade-exposed districts, the more-exposed district would become 18.5 percentage points less likely to have a centrist in power between 2002 and 2010. To put this magnitude in context, over the 2002 to 2010 time period, the fraction of “moderates” in the House declines to 37.1% from a baseline of 56.8%.

The authors believe that import competition from China following their accession to the WTO has played a big role in the polarization of American politics:

China bashing is now a popular pastime as much among liberal Democrats as among Tea Party Republicans. Our contribution in this paper is to show that this political showmanship is indicative of deeper truths. Growing import competition from China has contributed to the disappearance of moderate legislators in Congress, a shift in congressional voting toward ideological extremes, and net gains in the number of conservative Republican representatives, including those affiliated with the Tea Party movement.

Why did this benefit conservatives more than liberals? At a guess, it’s because they were better able to tap into voter anger. Both sides could make similar economic arguments, but conservatives could add a healthy dose of nationalism to the mix, something that liberals are a lot less comfortable with. That made their attacks on China more resonant.

Ironically, voters on both sides were basically getting scammed. Big talk aside, neither conservatives nor liberals did much to reduce trade with China. In fact, it’s not clear there was much they could have done. Short of abandoning the WTO and starting a trade war, there really weren’t a lot of options on the table. The net result, then, was lots of windy rhetoric and a more polarized Congress, and eventually the Donald Trump campaign. But Trump, like all the rest of the China bashers, has nothing more than windy rhetoric too.

At this point, the game is almost fully played out anyway. China’s impact on American jobs is a done deal, with little more to come as China itself moves to a less manufacturing-oriented economy and finds itself in competition with countries like Vietnam and Indonesia. But if the authors of this paper are right, the American political scene will continue to pay a price for decades to come.

If America is no longer great, when was it great?

When asked to select America’s greatest year, Trump supporters offered a wide range of answers, with no distinct pattern. The most popular choice was the year 2000. But 1955, 1960, 1970 and 1985 were also popular. More than 2 percent of Trump’s supporters picked 2015, when Mr. Trump’s campaign began.

Hmmm. Trump supporters seem to have a fondness for nice, even years. Not just Trump supporters, though: the year 2000 was the single biggest winner among both Democrats and Republicans. I suppose that makes sense. The economy was booming, 9/11 was still in our future, China hadn’t joined the WTO, and nobody knew that our upcoming election would be decided by the Supreme Court instead of the voters. But let’s return to Republicans:

In March, Pew asked people whether life was better for people like them 50 years ago — and a majority of Republicans answered yes. Trump supporters were the most emphatic, with 75 percent saying things were better in the mid-1960s.

….There were partisan patterns in views of America’s greatness. Republicans, over all, recall the late 1950s and the mid-1980s most fondly. Sample explanations: “Reagan.” “Economy was booming.” “No wars!” “Life was simpler.” “Strong family values.” The distribution of Trump supporters’ greatest years is somewhat similar to the Republican trend, but more widely dispersed over the last 70 years.

No surprises here. Old white folks pine for the days when other old white folks ruled the country. Democrats, by contrast, who are a lot less white, are considerably less enthusiastic about those days.

Here are the final Pollster aggregates for the Democratic primaries in Pennsylvania and Maryland, the two big states up for grabs tomorrow. If this is how things turn out, there’s really no case left to be made that Bernie Sanders has a chance to win the nomination. A few minutes ago I was watching his town hall with Chris Hayes, and it seemed like he knew it. He struck me as more subdued than usual, pumping out his standard answers sort of mechanically, rather than with any passion. He may have said “revolution” several times, but his eyes didn’t seem to agree. We’ll see.

On the Republican side, Donald Trump is way out front everywhere. If Cruz and Kasich are able to prevent him from getting to 1,237 before the convention, it’s going to be by a hair. It’s still sort of hard to believe, but Trump is only getting stronger as the primary season continues.

According to the latest Harvard IOP poll, young folks are becoming increasingly liberal:

Polling director John Della Volpe thinks this is all due to the Bernie Sanders effect:

“He’s not moving a party to the left. He’s moving a generation to the left,” Della Volpe said of the senator from Vermont. “Whether or not he’s winning or losing, it’s really that he’s impacting the way in which a generation — the largest generation in the history of America — thinks about politics.”

….It’s rare, Della Volpe said, for young people’s attitudes to change much from year to year in Harvard’s polling, and even more remarkable for so many of these measures to shift in the same direction at the same time.

Maybe! But young voters have been trending more liberal and more Democratic ever since the Bush presidency. It may be rare for Harvard to see young voters turn more liberal on so many issues at once in a single year, but I’ll bet it’s also rare for their poll to be done right smack in the middle of a presidential campaign focused on precisely these issues. Bottom line: I know I’m an innately cautious guy, but even so I’d hold off on the “moving a generation to the left” cheerleading until we get at least a few years of steady progress in these numbers.

In other Harvard IOP news, young voters prefer Hillary Clinton to Donald Trump by a huge margin. I don’t think anyone is going to argue about that.

Over the years, conservatives have invented a spectacular set of grievances against President Obama—teleprompters, whitey tapes, Bill Ayers, birth certificates, etc.—but in the category of just plain strange, none of them surpass the tale of the missing Churchill bust. Early in his presidency, someone noticed that a bust of Churchill that had adorned the Oval Office during W’s presidency was gone, and this became a cause célèbre, one that continues to this day. Why does Obama hate Churchill? Is it because of his Kenyan background? Because he hates anyone who showed toughness during a time of war? Because he wanted to snub the British?

The correct answer is, “Who cares?” Still, it’s true that the White House offered up something of a whirligig of responses when this first hit the fan, and that’s a little odd too. Why were they so sensitive about it?

That’s still a mystery. However, a few days ago Boris Johnson—basically the Donald Trump of London—brought up the Churchill bust yet again, and this time Obama decided to explain personally what happened:

It was, Mr. Obama said, his decision to return that Churchill to his native land, because he wanted to replace it with a bust of the Rev. Dr. Martin Luther King Jr.

“There are only so many tables where you can put busts. Otherwise, it starts looking a little cluttered,” the president explained. “And I thought it was appropriate, and I suspect most people here in the United Kingdom might agree, that as the first African-American president, it might be appropriate to have a bust of Dr. Martin Luther King in my office.”

He added that the choice of Dr. King was “to remind me of all the hard work of a lot of people who would somehow allow me to have the privilege of holding this office.”

Bizarrely enough, then, it appears that conservatives were basically right (Obama actively chose to return the bust) and the White House pretty much lied about the whole thing. So score one for the conspiracy theorists.

What a weird affair. Why was the White House so hypersensitive about this? Did Obama really feel that he couldn’t afford to be seen favoring King over Churchill? I didn’t care much about this idiocy before, but now I kind of do. What was behind all the doubletalk?

Greg Sargent thinks that Bernie Sanders has already conceded to the reality that he’s not going to win the Democratic nomination. He’ll continue to go through the motions for a while, but will then start up “serious unity talks” with the Clinton campaign:

At that point, the question of how the Clinton campaign, not just the Sanders campaign, handles the conclusion to this whole process will play a big role in influencing what happens. It’s still unclear whether the Clinton camp will see a need to make any concessions to Sanders in order to win over his supporters and unite the party. But it will be in the interests of Clinton and the Democratic Party to ensure that this process goes as smoothly as possible. They’ll likely conclude that there is greater risk in not making any meaningful gestures towards unity than in making them. What this might look like is the subject of a future post.

Speaking very generally, it’s obviously in Hillary Clinton’s interest to have Bernie on her side. But what kind of concessions can she make, if indeed Bernie demands some? She can’t credibly make any major policy switches, but perhaps she could make some minor ones. She could make concessions on future appointments, but that would have to be done privately, which is always a danger. What else?

My own take is that Hillary probably doesn’t have to do very much. Past candidates haven’t, after all. In theory, the difference this time is that Bernie’s followers are so loyal and committed that they’ll withhold their votes if Bernie even hints at it, but I just don’t buy that. By the time September rolls around, the prospect of a Trump presidency will have every liberal in the country fired up. Hillary’s weaknesses simply won’t seem important anymore. If Bernie seems even slightly less than completely enthusiastic about her campaign, that will reflect back on him, not Hillary.

So…I think there’s less here than meets the eye. Hillary and Bernie will make nice, because that’s what candidates do when primaries are over, and perhaps Hillary will make a few small concessions—either privately or otherwise. Then it will be all hands on deck to defeat Trump. No one who doesn’t want to be drummed out of the liberal movement entirely can afford not to be a part of that. Bernie Sanders, of all people, knows this very well. When the time comes, he’ll be there. He’s much too decent a person to sulk in his tent just because he lost a campaign that he never expected to win in the first place.

Brad DeLong:

It used to be that we collectively paid Wall Street 1% per year of asset value–which was then some 3 years’ worth of GDP–to manage our investment and payments systems. Now we pay it more like 2% per year of asset value, which is now some 4 years’ worth of GDP.

He is responding to a post by Noah Smith that, when I click on it, turns out to be a response to me. My question was simple: finance is a very competitive industry, so how has it stayed so astronomically profitable for so long? Smith suggests that part of the answer is lending to households, but another part is asset management fees:

Asset-management fees are middleman costs that all kinds of players in the finance industry charge to move money around….The amount of wealth in the U.S. economy has soared since 1980 — just think of the rises in the housing and stock markets over that time — meaning that the middlemen in the finance industry have been taking their percentage fees out of a much larger pool of assets.

….But why have profits from these middleman fees stayed so high? Why haven’t asset-management charges gone down amid competition? In a recent post, I suggested one answer: people might just be ignoring them. Percentage fees sound tiny — 1 percent or 2 percent a year. But because that slice is taken off every year, it adds up to truly astronomical amounts. So if people are just ignoring what middlemen skim off the top, because each fee seems small, investors could be handing significant fractions of the country’s GDP to the financial sector out of sheer carelessness. That would certainly keep profits high; if many investors pay no attention to what they’re being charged, more competition can’t push down those fees.

So a combination of rising asset values and unchanging management fees can explain a large part of both finance’s growth and its continued profitability.

James Kwak has more here, basically suggesting that lots of people pay high fees for actively-managed funds deliberately. They figure that the higher price means better performance, just as a higher price usually means better performance in most areas of the consumer economy.

If Smith and Kwak are right, it means the enormous profitability of the financial system is based primarily on products sold to consumers (mutual funds, home loans), not to services offered to the rich or to the rest of the industry. Is this true? To find out, someone would have to break out industry profitability by product line (so to speak) and figure out where most of the money is coming from. Has anyone ever done that?