Tag Archives: policy

Some Cynical Investing in Washington

One of the problems that we have in the United States is policing some of the more self-interest driven actions made by our politicians. The average congressional member arrives in Washington rich, and leaves richer, and the climate in the nations capital and the laws governing politicians help that process. There are several reasons for this – money in campaign politics, lobbying, and others, but a key one is the investments that our representatives are able to make while knowing more about the workings of the world than the rest of us.

I recently read an article that analyzed a few investments of Congressional members in the context of their committee memberships, specifically around telecom. In many of today’s contemporary issues, including net neutrality, telecom mergers, and other major technology induced policy debates raging across the country, there will be clear winners and losers. Whether that is Facebook, Twitter, Google, Verizon, or Comcast, policy decisions made in Washington by Congress and the FCC will be worth big dollars to big companies. It seems incredibly corrupt for politicians to own investments in the areas that they will craft policy in such a direct manner.

In 2012, in the wake of the financial crisis (when it was possible for someone in Congress to sell Lehman Brothers before the rest of the world knew that it was imploding), Congress passed the Stop Trading on Congressional Knowledge (STOCK, how cheeky) Act in order to loudly and publically declare that Congress would no longer be able to insider trade on information that was available to them. An online database of disclosures, as the thinking went, would help citizens to monitor their representatives and prevent abuses and conflicts of interest. Of course, this only works if the information is easily accessible, which a later amendment “fixed” to make it much harder for the public to analyze the transactions of members. Call me cynical, but this is crony politics at its best, built from a bare desire to profit from their positions. Reminds me of some of the contracts-for-free-mansions deals circling around the Mexican Presidency right now…

In the private sector, there are restrictions and rules governing similar behavior. I cannot own a company’s stock, and have them as a client to which I render professional services. In accounting, consulting, and (likely?) law, there are significant barriers in place to stop financial transactions made with non-public information and importantly, effort is made to avoid conflicts of interest or even apparent conflicts of interest. It is important to have no financial asset that impairs objectivity or gives the sense that one has skin in the outcome of a project going a certain way. We have also had the scandals (e.g. Enron, Galleon) that have shown why these rules are important.

Why not the same for Congress, and members of the Executive and Judiciary that implement and adjudicate matters of law and regulation? If members of the FCC and the committees that govern it have stake in the major telecom companies, how can we have any faith that they will act in an unbiased matter for the good of all?

Our government is supposed to act in our collective interest, not for individual sectors or slices of our nation. Let us create a financial climate that incentivises the right actions. If high ranking members of our government were only allowed to own USD and Treasury bills, or some kind of pre-made basket of securities indexing the market as a whole (basically prohibiting picking individual stocks and investments), I’d bet you’d see them acting more in the public interest. Let’s bar them from holding assets with which they have incentives to support policies that enrich themselves.

What other more neutral investment options could we give Congress? Potentially a shared management endowment / money held in escrow and managed like some of our major universities? What could remove their perverse incentives most effectively? Narrowing their investment options so strongly, while probably the most enlightened option, is not likely to get into law anytime soon, so it would help to think of other similar schemes that might be used instead.

Net Neutrality

http://gizmodo.com/what-happens-to-music-after-net-neutrality-1503676551?utm_campaign=socialflow_gizmodo_twitter&utm_source=gizmodo_twitter&utm_medium=socialflow

Wanted to pass along this interesting piece that breaks down what the recent net neutrality decision might mean for music services.

The decision is quite disappointing, and I hope the FCC is able to fight against the headwinds to reassert control over the internet. Categorizing the internet as anything other than common carriage makes no sense.

This article has a number of great points, including that competition doesn’t exist for ISPs (there’s a reason that they are among the !most hated companies…), so the market won’t be able to reflect consumer preferences for an internet that treats content equally. Smaller internet companies will suffer as they cannot compete on tolling arrangements with ISPs, leading to less innovation, worse choices for consumers, and higher prices (if the ISP gets to print a nickel, where do you think it comes from?).

Really disheartening decision. Pretty good example of lobbying dollars used yo increase rents to normal folks on the internet. Hopefully the internet will soon be recategorized as a utility, which it surely is.

Will write more later.

Articles on Health Reform

Thought I would put together a quick post of some of the articles I have seen on health reform recently, as it has been in the news constantly due to the hc.gov rollout, individual market changes, and other miscellaneous happenings.

http://www.propublica.org/article/why-health-insurance-cancellations-shouldnt-be-a-surprise/

This interview goes through many of the recent issues that have been brought up by the ACA and some relatively intuitive explanations of each. Specifically, I wanted to comment on two areas.

One is the debacle on messaging that the law has faced especially in the individual market. Is this part of the “you must pass this bill to find out what’s in it” ethos? How did so much misinformation, on both sides, come out of this bill? Its contents prohibit many of the ‘features’ that these lower cost plans used to offer (high deductible and lifetime maximums and other gimmicks that kept sticker price down), so no wonder that they had to be eliminated and canceled. It is poor politicking that the political talking points that became such important campaign messages (you will be able to keep your plan if you like it) when they were so blatantly false. Looking back on Master of the Senate, the health care bill seems like the perfect candidate for a bill that required the time in debate to actually learn what was inside it and educate the public on the finer points of the law. Of course, given how information has spread on it since its passage, this might not have helped us get to the truth at all.

Secondly, the implementation of ACA is a narrative in governments efficacy. It’s truly amazing how many resources were used to put together healthcare.gov – for the creation of a website – and how badly it has failed. Granted, it’s a complex website, but the government manages a lot of complex projects. It showcases the lack of proper talent available to solve these new digital problems, and a lack of ability to manage scale. Government is good at some things, but not at others. We should have a frank discussion about what it can and cannot do, which we often avoid.

http://www.dailydot.com/politics/healthcare-obamacare-healthsherpa/

Healthsherpa is a website build by 3 developers in a few weeks, and it manages to fulfill similar functionality of hc.gov. Perhaps government should figure out a way to harness the latent talent out there to solve problems (gamify it and offer a reward?). In recent years, the MTA in New York has opened contests for folks to build apps relating to the subway system. I’ll have to look into how much it has accomplished, but it is a potential model for use at the Federal level. Of course…

http://www.theatlantic.com/technology/archive/2013/11/healthcaregov-and-the-inevitably-digital-future-of-american-governance/281097/

This article takes a more cynical view than I would, but I do agree that we need to make changes in how we deliver new laws especially as they become even more digital. Why not figure out a way to harness development outside of government bureaucracy? I think it can be done, and should be done. A slow and lumbering Federal government is I’ll equipped to deal with today’s issues; we are also seeing this with large corporations versus smaller, newer, and less rigid companies. Smaller companies have largely out-innovated their larger cousins, and are driving a lot of the new ideas and problem solving we are seeing.

http://www.propublica.org/article/loyal-obama-supporters-canceled-by-obamacare/

Another example of how much people do not understand about the law. This particular couple had their plan canceled and replace with a worse one even though it met the minimum requirements of the law.

PPACA is, in part, a leveling exercise. Whereas previously health care insurers could segment the population much more narrowly, now they must rely on larger actuarial groups and charge the same amount for broader numbers of people (and can only alter pricing for a small number of variables). This leads some to subsidize others in a closer relationship than before. This couple may have been very healthy and ticked all of the boxes for a cheap plan, but now they are thrown in a pool with those that do not, and insurers are legally prohibited from discriminating positively or negatively to groups such as this couple. It’s one of the central purposes of the law; health insurance is a zero sum game, and to give health insurance to those that could not afford it (through subsidies from the Feds, which we pay for in taxes, or benefit gains like coverage for preexisting conditions, which is very expensive) the rest of us were always going to pay more, in aggregate.

Is this right? Probably. Health care has always struck me as one of the “economic goods” that has a most moral character, and is poorly ethically rationed by price. However, the messaging has not included the fact that we are supporting our fellow Americans in this endevour. The messaging was all gains and no acknowledgement of where the costs would lie. It should be no surprise that there is widespread sticker shock as people become aware of those costs.

I’ve always disagreed with the factors that allow differing prices: family size, age, geography, and smoking status only. I think that consumers should pay more for their health choices, much like how I would pay more for car insurance if I get into more accidents. This is made more difficult by the fact that many health conditions are not preventable, but this doesn’t mean we should completely avoid the thought. While we are at it…

http://www.realclearpolicy.com/blog/2013/11/08/differing_definitions_of_discrimination_724.html

What should those factors be? This quick article brings up some interesting points on what is actuarial discrimination and what is not. In health care, should we charge women more because of these factors? If we should not, why should men pay more for car and life insurance? How deeply should we regulate actuarial tables and outcomes?

While most of my commentary here has been rather anti-implementation of the law, I wanted to end with an op-ed penned a few months ago in the Guardian…

http://www.theguardian.com/commentisfree/2013/sep/30/single-payer-cure-healthcare-reform

I start my approach to healthcare from two very basic premises. First, healthcare must be recognized as a right, not a privilege. Every man, woman and child in our country should be able to access the healthcare they need regardless of their income. Second, we must create a national healthcare system that provides quality healthcare for all in the most cost-effective way possible.

I’m not going to spend a lot of time going into the later parts of his argument on the benefits of single payer (everyone seems to like Medicare…), but I want to agree with his two premises. Income and economics are not a just way to ration and access health care; it just isn’t fundamentally right for a service that can separate death from life. How to do this cost effectively is a problem that only a small army of people is trying to solve today.

Local Governments Fight for Businesses

http://www.buffalonews.com/business/delaware-north-says-tax-breaks-needed-for-new-headquarters-in-buffalo-20131028

I wanted to quickly post this article from my hometown of Buffalo, as an example of some of the dealings that smaller cities and municipalities are often pushed to make.

It’s somewhat of an arms race – local governments are pressured to make sure that they are doing something for the local economy, so are often in the position of offering incentives to businesses to expand, grow, or relocate into a particular city’s limits. Tax rebates, grants, and other financial incentives have become very common for cities or counties to offer businesses. And why wouldn’t they? Take a rust belt city government such as Buffalo, fighting not only for every marginal job and bit of economic growth but also for an identity and a sense that things are improving. It only makes sense that they do everything they can to encourage expansion.

However, given that cities do this, businesses have their pick. After doing the analysis of what they need, what market is best, and what they can afford, a business can threaten and cajole to get as much out of those governments as possible and sell their expansion to the highest bidder, while pocketing as much as they can along the way.

It’s more than sad that this manifests itself as Delaware North basically threatening to leave Buffalo unless they can get as much money out of the taxpayer as possible. That cannot lead to good or optimal economic decision making or allocation of resources – someone has to lose. “Revenue dollars won’t justify construction of the building” – so don’t build it. A parking ramp won’t bring in enough revenue, then likewise. “Being based in a hub city” or a better talent pool would improve the company – great. Sadly, Boston may be a better home for Delaware North. However, what should we be willing to give up to see them stay?

A city does not build a competitive or sustainable advantage one financing deal at a time. It does nothing to tackle the actual problems that prevent a city such as Buffalo from growing organically.

This phenomenon is also common with sports stadiums, which often “need” gigantic financing packages from governments, despite the fact that sports franchises (and organizations like the NFL) make quite a lot of money themselves.

This is a cursory muse on the topic, but just wanted to cite the very blatant example.

Gerrymandering

http://www.realclearpolitics.com/articles/2013/10/11/gerrymandering_isnt_to_blame_for_dc_impasse_120300.html

I saw this article recently and it definitely gave me pause.

It is now common knowledge that polarization is at some of its highest levels in recent decades. Each party has largely been scrubbed of those that do not tow the overall party line, which has led to more homogenous parties. Naturally, this has also pushed the parties more to the extremes. Primaries do not help – as all candidates have to pass through a trial by fire from a narrower political spectrum compared to the past. (For a great visual of this, see XKCD – GREAT.) There seems to a natural ebb and flow to polarization, but we are at an extreme.

I have to admit that I was surprised. I do not think I had ever really encountered an article that took a data centric view at whether gerrymandering has actually changed elections. It is oddly reassuring to have that point asserted.

Gerrymandering is one of those points that is so infuriating no matter what side of the political spectrum one falls on. Districts such as Louise Slaughters’ “earmuffs” between Buffalo and Rochester are case in point. Who would come to the conclusion that this makes sense to represent a certain population effectively? District lines are arbitrary, and when the power to make them is given to individuals, especially state legislatures, the tendency to use that power for self-benefit is overwhelming. Incumbents love to have their seats manipulated to be more safe.

Without doing enough research to know precisely what options and policies I would support in this area, I do know that I would support a more rules based approach. On what criteria? I am not sure. Some limit on the ratio of the border length to the area of the district (to prevent massively concave and ridiculous geometry) would be one potential idea. We could easily create an automated system of manipulating districts that would be more fair and less under the control of party bosses. Whether or not we could ever agree on what that system should optimize for is another question all together.

Why do we spend money on the space program?

Oftentimes, I hear arguments against some of the spending we do and whether it really is valuable. Mostly, this is directed at programs which do not have immediate tangible impacts, such as the space program.

8read through a post at Quora with a subject similar to that of this post, and I wanted to reproduce a very interesting and thoughtful reply from someone who was asked this same question. From Wiki: “In 1970, shortly after the first lunar landing, Stuhlinger received a letter from Sister Mary Jucunda in Zambia, Africa, asking how billions of dollars could be spent for space research when many children on the Earth were starving to death. Stuhlinger’s thoughtful response is often cited to justify such expenditures.” I’ve copied the text of the letter below.

May 6, 1970

Dear Sister Mary Jucunda:

Your letter was one of many which are reaching me every day, but it has  touched me more deeply than all the others because it came so much from  the depths of a searching mind and a compassionate heart. I will try to answer your question as best as I possibly can.

First, however, I would like to express my great admiration for you, and for all your many brave sisters, because you are dedicating your lives to the noblest cause of man: help for his fellowmen who are in need.

You asked in your letter how I could suggest the expenditures of billions of dollars for a voyage to Mars, at a time when many children on this Earth are starving to death. I know that you do not expect an answer such as “Oh, I did not know that there are children dying from hunger, but from now on I will desist from any kind of space research until mankind has solved that problem!” In fact, I have known of famined children long before I knew that a voyage to the planet Mars is technically feasible. However, I believe, like many of my friends, that travelling to the Moon and eventually to Mars and to other planets is a venture which we should undertake now, and I even believe that this project, in the long run, will contribute more to the solution of these grave problems we are facing here on Earth than many other potential projects of help which are debated and discussed year after year, and which are so extremely slow in yielding tangible results.

Before trying to describe in more detail how our space program is contributing to the solution of our Earthly problems, I would like to relate briefly a supposedly true story, which may help support the argument. About 400 years ago, there lived a count in a small town in Germany. He was one of the benign counts, and he gave a large part of his income to the poor in his town. This was much appreciated, because poverty was abundant during medieval times, and there were epidemics of the plague which ravaged the country frequently. One day, the count met a strange man. He had a workbench and little laboratory in his house, and he labored hard during the daytime so that he could afford a few hours every evening to work in his laboratory. He ground small lenses from pieces of glass; he mounted the lenses in tubes, and he used these gadgets to look at very small objects. The count was particularly fascinated by the tiny creatures that could be observed with the strong magnification, and which he had never seen before. He invited the man to move with his laboratory to the castle, to become a member of the count’s household, and to devote henceforth all his time to the development and perfection of his optical gadgets as a special employee of the count.

The townspeople, however, became angry when they realized that the count was wasting his money, as they thought, on a stunt without purpose. “We are suffering from this plague,” they said, “while he is paying that man for a useless hobby!” But the count remained firm. “I give you as much as I can afford,” he said, “but I will also support this man and his work, because I know that someday something will come out of it!”

Indeed, something very good came out of this work, and also out of similar work done by others at other places: the microscope. It is well known that the microscope has contributed more than any other invention to the progress of medicine, and that the elimination of the plague and many other contagious diseases from most parts of the world is largely a result of studies which the microscope made possible.

The count, by retaining some of his spending money for research and discovery, contributed far more to the relief of human suffering than he could have contributed by giving all he could possibly spare to his plague-ridden community.

The situation which we are facing today is similar in many respects. The President of the United States is spending about 200 billion dollars in his yearly budget. This money goes to health, education, welfare, urban renewal, highways, transportation, foreign aid, defense, conservation, science, agriculture and many installations inside and outside the country. About 1.6 percent of this national budget was allocated to space exploration this year. The space program includes Project Apollo, and many other smaller projects in space physics, space astronomy, space biology, planetary projects, Earth resources projects, and space engineering. To make this expenditure for the space program possible, the average American taxpayer with 10,000 dollars income per year is paying about 30 tax dollars for space. The rest of his income, 9,970 dollars, remains for his subsistence, his recreation, his savings, his other taxes, and all his other expenditures.

You will probably ask now: “Why don’t you take 5 or 3 or 1 dollar out of the 30 space dollars which the average American taxpayer is paying, and send these dollars to the hungry children?” To answer this question, I have to explain briefly how the economy of this country works. The situation is very similar in other countries. The government consists of a number of departments (Interior, Justice, Health, Education and Welfare, Transportation, Defense, and others) and the bureaus (National Science Foundation, National Aeronautics and Space Administration, and others). All of them prepare their yearly budgets according to their assigned missions, and each of them must defend its budget against extremely severe screening by congressional committees, and against heavy pressure for economy from the Bureau of the Budget and the President. When the funds are finally appropriated by Congress, they can be spent only for the line items specified and approved in the budget.

The budget of the National Aeronautics and Space Administration, naturally, can contain only items directly related to aeronautics and space. If this budget were not approved by Congress, the funds proposed for it would not be available for something else; they would simply not be levied from the taxpayer, unless one of the other budgets had obtained approval for a specific increase which would then absorb the funds not spent for space. You realize from this brief discourse that support for hungry children, or rather a support in addition to what the United States is already contributing to this very worthy cause in the form of foreign aid, can be obtained only if the appropriate department submits a budget line item for this purpose, and if this line item is then approved by Congress.

You may ask now whether I personally would be in favor of such a move by our government. My answer is an emphatic yes. Indeed, I would not mind at all if my annual taxes were increased by a number of dollars for the purpose of feeding hungry children, wherever they may live.

I know that all of my friends feel the same way. However, we could not bring such a program to life merely by desisting from making plans for voyages to Mars. On the contrary, I even believe that by working for the space program I can make some contribution to the relief and eventual solution of such grave problems as poverty and hunger on Earth. Basic to the hunger problem are two functions: the production of food and the distribution of food. Food production by agriculture, cattle ranching, ocean fishing and other large-scale operations is efficient in some parts of the world, but drastically deficient in many others. For example, large areas of land could be utilized far better if efficient methods of watershed control, fertilizer use, weather forecasting, fertility assessment, plantation programming, field selection, planting habits, and timing of cultivation, crop survey and harvest planning were applied.

The best tool for the improvement of all these functions, undoubtedly, is the artificial Earth satellite. Circling the globe at a high altitude, it can screen wide areas of land within a short time; it can observe and measure a large variety of factors indicating the status and condition of crops, soil, droughts, rainfall, snow cover, etc., and it can radio this information to ground stations for appropriate use. It  has been estimated that even a modest system of Earth satellites  equipped with Earth resources, sensors, working within a program for  worldwide agricultural improvements, will increase the yearly crops by  an equivalent of many billions of dollars.

The distribution of the food to the needy is a completely different problem. The question is not so much one of shipping volume; it is one of international cooperation. The ruler of a small nation may feel very uneasy about the prospect of having large quantities of food shipped into his country by a large nation, simply because he fears that along with the food there may also be an import of influence and foreign power. Efficient relief from hunger, I am afraid, will not come before the boundaries between nations have become less divisive than they are today. I do not believe that space flight will accomplish this miracle over night. However, the space program is certainly among the most promising and powerful agents working in this direction.

Let me only remind you of the recent near-tragedy of Apollo 13. When the time of the crucial reentry of the astronauts approached, the Soviet Union discontinued all Russian radio transmissions in the frequency bands used by the Apollo Project in order to avoid any possible interference, and Russian ships stationed themselves in the Pacific and the Atlantic Oceans in case an emergency rescue would become necessary.  Had the astronaut capsule touched down near a Russian ship, the Russians would undoubtedly have expended as much care and effort in their rescue as if Russian cosmonauts had returned from a space trip. If Russian space travelers should ever be in a similar emergency situation, Americans would do the same without any doubt.

Higher food production through survey and assessment from orbit, and better food distribution through improved international relations, are only two examples of how profoundly the space program will impact life on Earth. I would like to quote two other examples: stimulation of technological development, and generation of scientific knowledge.

The requirements for high precision and for extreme reliability which must be imposed upon the components of a moon-travelling spacecraft are entirely unprecedented in the history of engineering. The development of systems which meet these severe requirements has provided us a unique opportunity to find new material and methods, to invent better technical systems, to manufacturing procedures, to lengthen the lifetimes of instruments, and even to discover new laws of nature.

All this newly acquired technical knowledge is also available for application to Earth-bound technologies. Every year, about a thousand  technical innovations generated in the space program find their ways  into our Earthly technology where they lead to better kitchen appliances  and farm equipment, better sewing machines and radios, better ships and  airplanes, better weather forecasting and storm warning, better  communications, better medical instruments, better utensils and tools  for everyday life. Presumably, you will ask now why we must develop first a life support system for our moon-travelling astronauts, before we can build a remote-reading sensor system for heart patients. The answer is simple: significant progress in the solutions of technical problems is frequently made not by a direct approach, but by first setting a goal of high challenge which offers a strong motivation for innovative work, which fires the imagination and spurs men to expend their best efforts, and which acts as a catalyst by including chains of other reactions.

Spaceflight without any doubt is playing exactly this role. The voyage to Mars will certainly not be a direct source of food for the hungry.  However, it will lead to so many new technologies and capabilities that the spin-offs from this project alone will be worth many times the cost of its implementation.

Besides the need for new technologies, there is a continuing great need for new basic knowledge in the sciences if we wish to improve the conditions of human life on Earth. We need more knowledge in physics and chemistry, in biology and physiology, and very particularly in medicine to cope with all these problems which threaten man’s life: hunger, disease, contamination of food and water, pollution of the environment.

We need more young men and women who choose science as a career and we need better support for those scientists who have the talent and the determination to engage in fruitful research work. Challenging research objectives must be available, and sufficient support for research projects must be provided. Again, the space program with its wonderful opportunities to engage in truly magnificent research studies of moons and planets, of physics and astronomy, of biology and medicine is an almost ideal catalyst which induces the reactionbetween the motivation for scientific work, opportunities to observe exciting phenomena of nature, and material support needed to carry out the research effort.

Among all the activities which are directed, controlled, and funded by the American government, the space program is certainly the most visible and probably the most debated activity, although it consumes only 1.6 percent of the total national budget, and 3 per mille (less than one-third of 1 percent) of the gross national product. As a stimulant and catalyst for the development of new technologies, and for research in the basic sciences, it is unparalleled by any other activity. In this respect, we may even say that the space program is taking over a function which for three or four thousand years has been the sad prerogative of wars.

How much human suffering can be avoided if nations, instead of competing with their bomb-dropping fleets of airplanes and rockets, compete with their moon-travelling space ships! This competition is full of promise for brilliant victories, but it leaves no room for the bitter fate of the vanquished, which breeds nothing but revenge and new wars.

Although our space program seems to lead us away from our Earth and out toward the moon, the sun, the planets, and the stars, I believe that none of these celestial objects will find as much attention and study by space scientists as our Earth. It will become a better Earth, not only because of all the new technological and scientific knowledge which we will apply to the betterment of life, but also because we are developing a far deeper appreciation of our Earth, of life, and of man.

The photograph which I enclose with this letter shows a view of our Earth as seen from Apollo 8 when it orbited the moon at Christmas, 1968.  Of all the many wonderful results of the space program so far, this picture may be the most important one. It opened our eyes to the fact that our Earth is a beautiful and most precious island in an unlimited void, and that there is no other place for us to live but the thin surface layer of our planet, bordered by the bleak nothingness of space.  Never before did so many people recognize how limited our Earth really is, and how perilous it would be to tamper with its ecological balance.  Ever since this picture was first published, voices have become louder and louder warning of the grave problems that confront man in our times:  pollution, hunger, poverty, urban living, food production, water control, overpopulation. It is certainly not by accident that we begin to see the tremendous tasks waiting for us at a time when the young space age has provided us the first good look at our own planet.

Very fortunately though, the space age not only holds out a mirror in  which we can see ourselves, it also provides us with the technologies,  the challenge, the motivation, and even with the optimism to attack  these tasks with confidence. What we learn in our space program, I believe, is fully supporting what Albert Schweitzer had in mind when he said: “I am looking at the future with concern, but with good hope.”

My very best wishes will always be with you, and with your children.

Very sincerely yours,

Ernst Stuhlinger

Associate Director for Science