Posts Tagged featured
April Jobs Report
Posted by TonyLima in Current issues on May 3, 2013
The media are in a kerfuffle over the April jobs report. Lots of jobs created, the unemployment rate fell, what’s not to like?
There’s a reason economics is called the dismal science. Economists have this nasty habit of pointing out the discrepancies between belief and reality. The April report is no exception.
Just for kicks, I’ve dissected the first four months of employment data from BLS. These numbers are all from the current population survey (CPS) so they are consistently sourced. Results are not promising. The reported unemployment rate fell to 7.5% in March. Using just about any other measure that’s reasonable, 7.8% is a better estimate.[1] BUT, if you look at the measure BLS calls “U-6″ things get really bad. What’s U-6? Here’s what BLS says:
Total unemployed, plus all marginally attached workers plus total employed part time for economic reasons, as a percent of all civilian labor force plus all marginally attached workers
Aren’t you happy you asked? For April, 2013, U-6 was 13.9%, up 0.1% from March.
As always, my methods are transparent. Click here to download the Excel workbook that has all the calculations and numbers cited here (and a whole lot more).
[1] OK, since you asked, I did two other calculations. Between January and April 2013, the labor force decreased by 273,000 people. My first calculation added all those folks back in and assumed they would all have been unemployed. You don’t believe that? Frankly, neither do I. So I calculated the net change in those who are not in the labor force but want a job. That’s not the same as “discouraged workers.” If you care about that, e-mail me and I’ll be happy to send you a two-page extract from the BLS “Handbook of Methods” that describes the process in detail.
A Modest Proposal, or How to Break Down the Barriers to Graduation
Posted by TonyLima in Economist "humor", Education issues on April 15, 2013
by Swifty Johnson[*]
It is a melancholy object that has come to our attention; namely, that there are a number of barriers to graduation in the state of California that could easily be eliminated. These barriers are, in ascending order: the obligation to learn to write; the necessity of learning to do sums, the onerous requirement to think analytically, and finally, professors themselves. We have come upon a solution to this nagging problem in public higher education; it will result in a four-year, 100 % graduation rate. It is as follows:
Present the first-year student with a tuition bill for the next four years of his or her university education, said bill becoming due immediately and to be paid through grants, loans, the student’s own accumulated inheritance from recently and timely-deceased grandparents, or the third mortgage his or her parents can negotiate as a lien on the family’s ancestral suburban home. Alternatively, it may be possible to garnish the student’s wages at Starbucks for the next fifty years. Immediately upon the check’s clearing and being deposited in the coffers of the state university, issue the baccalaureate degree to the student in question.
Subsequently, provide the student a PIN number that will allow him or her to gain access to unlimited massive, online training courses which, at his or her discretion, can be pursued for enrichment, skill-building, and virtual laboratory experimentation. Or not.
The outmoded concepts of “seat time” and required courses having been replaced by a completely elective and at-will higher education system will also provide the added benefit of freeing up acres of university buildings and property to be leased, at great profit, to the private businesses that have developed these wondrous online tools for their use in team-building seminars and golf tournaments.
Professors will no longer need to be retained; most professors will have been transformed into holograms. A robust administration, however, is necessary to be kept in place so that the system can be centralized and regularly assessed and so that, on the first day of classes, which will also be the day of commencement celebrations, someone can be present in full academic regalia to distribute the diplomas and to smile for the cameras of proud aunties and uncles while doing so. At all costs, graduation celebrations must proceed as usual in order to mark this singular, significant event in the lives of these proud undergraduates.
Make no mistake: this is as foolproof a plan as solving the Irish famine by telling the populace to devour their own children.
[*] Swifty Johnson is the nom de plume of Prof. Susan Gubernat, Professor of Creative Writing, California State University, East Bay. Prof. Gubernat was kind enough to give me permission to reprint her writing in my blog. If I have inadvertently introduced any mistakes, I apologize (and will correct them asap).
Cyprus
Posted by TonyLima in Current issues on March 30, 2013
Queueing at a Cyprus Bank: Too Late, Suckers
Reports today put the Cyprus haircut at 60% of deposit balances in excess of €100,000. This is startling, as rumors were in the vicinity of 40%. What happened?
In reality, I have no idea. But this is a blog so I’m allowed to speculate. €100,000
“But Prof. Lima,” you say, “we thought Cyprus banks were closed. Where did those deposits vanish? And how did anyone get to them?”
Kids, if I knew the answer to that I’d be either retired or in jail. For sure I wouldn’t be writing this blog. But here’s a guess. Cypriot banks have, according to rumors, quite a bit of experience with various methods of moving funds around. And you can be sure that the Cypriot bankers were far more afraid of the Russian mafia than the European Central Bank. I’ll go out on a limb and speculate that the Russians will not be getting much of the haircut. A whole bunch of their deposit balances are no longer there. Leaving the suckers …, er, strike that, the regular customers holding the bag.
Which leads me to remind you of a simple fact. If there’s going to be a run on a bank, it’s best to be near the beginning of the line. Or have a high-speed internet connection directly into the bank’s computers.
If you’d like actual information, the New York Times has a pretty good article.
Betting Against the Obama Administration’s Economic Policies
Posted by TonyLima in Current issues, Economic policy on March 15, 2013
Two Market Indices
The other day I mentioned to an acquaintance — let’s call him Mr. X — that I had earned about 10 percent per year betting against the Obama administration’s economic policies. I’ll reveal my not-so-secret method shortly. But first I wanted to deal with the reply from Mr. X: if I had put my wealth into the stock market at the beginning of 2012 I would have made a killing.
This is, of course, tantamount to waving a red flag at an angry bull. Today I finally had a few minutes to pull some data together. Before looking at the data, however, I’ll point to an obvious flaw in my acquaintance’s logic: forecasting the past is always easy. Did he put his wealth into the stock market at the beginning of 2012? I doubt it very much.
But I did get curious, so I grabbed Mr. Excel and headed over to the St. Louis Fed’s FRED database to get the S&P 500 and Dow-Jones Industrial indexes. Here are the results. (I have not included dividends because I’m lazy.). Since January 1, 2000 the annual rate of return on the S&P has been 0.45% and the return on the Dow 1.62%.
But, of course, that wasn’t the question. What have the same returns been since January 1, 2012? Considerably better. The S&P is up 14% and the Dow 9.91%.
But we all know the real question: how has the market been doing since January, 2008 when President Obama took office? The S&P has averaged 1.82% per year and the Dow slightly better at 2.13%. Neither of those numbers look real inviting.
As always my methodology is transparent. You can download my Excel workbook by clicking here. But a warning: I’m using the FRED Excel plugin for Excel for the Mac 2011. Those using Excel for Windows are advised to proceed with caution.
So what’s my secret? A TIPS fund. TIPS are Treasury Inflation Protected Securities. They are issued by the U.S. government and are fully indexed for inflation. Once I saw the drastic actions the Fed was taking with its balance sheet and the monetary base, I became very frightened. Heck, I still am. I shifted a big chunk of our retirement accounts to a TIPS fund managed by TIAA-CREF. Since I got scared before most other people, I am enjoying the large capital gains on this fund. Here’s the bad news: it’s probably too late for others to take advantage of this opportunity. Sorry folks.
Devaluing the Bachelor’s Degree Fast Track Edition
Posted by TonyLima in California Economy, Current issues, Education issues on March 13, 2013
In a way, the legislation has a head start: Last year, in an effort to bring down textbook costs, Mr. Steinberg won passage of a law requiring free online textbooks for the 50 most popular introductory college courses, and in the process created a faculty panel — three members each from the University of California, California State University and the community college system — to choose materials.
The new legislation would use that panel to determine which 50 introductory courses were most oversubscribed and which online versions of those courses should be eligible for credit. Those decisions would be based on factors like whether the courses included proctored tests, used open-source texts — those available free online — and had been recommended by the American Council on Education. A student could get credit from a third-party course only if the course was full at the student’s home institution, and if that institution did not offer it online.
Today’s New York Times includes an article about a potentially disastrous bill wending its way through the California state legislature. I’ve written about devaluing the bachelor’s degree before. If this bill passes, that will become devaluing the bachelor’s degree, fast track edition. My lovely wife has made numerous insightful comments about this. Unfortunately I’m very busy this week (and probably next week, too) on a project with a tight deadline. For now you’ll have to settle for this brief note.
In brief, this law would force public colleges and universities in California to accept transfer credit for online courses. The courses would be approved by an already-existing panel →→→→→→
Yes, you read that correctly. Nine — nine — faculty members get to make this decision for the rest of us. If anyone can take the time to find out who those nine people are, I would appreciate it. But there’s one more statement made by State Senator Darrell Steinberg:
“We want to be the first state in the nation to make this promise: No college student in California will be denied the right to move through their education because they couldn’t get a seat in the course they needed,” said Darrell Steinberg, the president pro tem of the Senate, who will introduce the bill. “That’s the motivation for this.”
In other words, students deserve a bachelor’s degree. They have a “right to move through their education.” And here I thought the faculty had something to say about who gets a degree and who doesn’t.
Color me nauseous.
Vaccines, Autism, and Low-Information Voters
Posted by TonyLima in Current issues, Politics on March 4, 2013
Flu Vaccine
[Update March 12, 2013: Sarah A. Hoyt has written an autobiographical tale about the damage public schools are doing to children. Highly recommended.]
“Low-information voter” is the term applied to voters who really don’t bother investigating issues in any depth before they vote. I have argued elsewhere that lack of information is only half the problem. The other half is their apparent inability to process information in any meaningful way. They cannot discern the logic that if A causes B and B causes C then A must cause C.
In this article I’ll offer an example of one of these voters. I’ve transcribed about 15 minutes of a Science Friday episode made over two years ago. The complete transcription is at the end of this article, along with a complete citation and a few observations that are not transcribed directly. I have done my best to accurately transcribe the audio, but there may be errors remaining. If you spot any mistakes, please let me know so I can correct them. (As far as I can tell the audio of this segment is not available for downloading and no transcript seems to exist at ScienceFriday.com.) The subject under discussion was vaccines and autism. This article relates vaccines, autism, and low-information voters.
My Summary
One of the guests on Science Friday January 7, 2011 was Dr. Paul Offit, the author of Deadly Choices: How the Anti-Vaccine Movement Threatens Us All.
Leslie opens with a statement that includes this: “… I think he’s cherry-picking when he cites this one study that has been widely discredited when there are literally dozens of studies whose methodologies have been impeccable and have not been discredited.” She is referring to the discredited work by Andrew Wakefield that seemed to show such a relationship. (A summary of Wakefield’s “research” is in the following section.)
Dr. Offit replied by detailing the problems with Wakefield’s work. He then pointed to fourteen separate studies on three different continents, each including hundreds of thousands of children, that unanimously reported that vaccines don’t cause autism.
Ira Flatow then asked Leslie whether there was any amount of research that would change her mind. She replied yes, with disparaging references to “… the yahoos who just don’t look at scientific processes at all and people who blindly trust what clinicians tell them …” adding that there was “something between” the two groups. She then states that “… the vast number of immunizations that you’re requiring at such a young age really is taking a toll on the immune system. I think that’s just logic.”
Dr. Offit patiently replies that the number of immunological components in all 14 vaccines combined was 160. By contrast, each of the 100 trillion bacteria that our bodies host contain somewhere between 2,000 and 6,000 immunological factors. If the human immune system was really that fragile, the human race would have died out millennia ago. (There is additional talk about the mercury in preservatives, but today’s childhood vaccines no longer contain thimerosal, the preservative that includes ethyl mercury.)
Leslie replies, “I can’t accept what you’re saying. It just sounds like pap to me, it sounds like panacea. A two year old cannot accept this kind of chemical onslaught.” But, of course, two-year-olds have the same 100 trillion bacteria on their skin that all of us have. After a few more interruptions, the following exchange ensues:
Ira Flatow: “… Leslie, it doesn’t look like anything he’s going to tell you is going to change your mind.”
Leslie: “Well, I’m not hearing anything that sounds credible to me as an educated adult.”
Got that? Leslie was presented with a mountain of scientific evidence. She simply refused to believe it. It’s not a lack of information. It’s an inability to process information when it’s presented.
A Longer Summary
The guest on Science Friday was Dr. Paul Offit, the author of Deadly Choices: How the Anti-Vaccine Movement Threatens Us All.
Leslie opens with a statement that includes this: “… I think he’s cherry-picking when he cites this one study that has been widely discredited when there are literally dozens of studies whose methodologies have been impeccable and have not been discredited.” She is referring to the discredited work by Andrew Wakefield that seemed to show such a relationship. Wikipedia describes Mr. Wakefield’s “study” thus:
On 28 January 2010, a five-member statutory tribunal of the GMC found three dozen charges proved, including four counts of dishonesty and 12 counts involving the abuse of developmentally challenged children. The panel ruled that Wakefield had “failed in his duties as a responsible consultant”, acted both against the interests of his patients, and “dishonestly and irresponsibly” in his published research. The Lancet immediately and fully retracted his 1998 publication on the basis of the GMC’s findings, noting that elements of the manuscript had been falsified. Wakefield was struck off the Medical Register in May 2010, with a statement identifying dishonest falsification in The Lancet research, and is barred from practising medicine in the UK.
In January 2011, an editorial accompanying an article by Brian Deer in BMJ identified Wakefield’s work as an “elaborate fraud”. In a follow-up article, Deer said that Wakefield had planned to launch a venture on the back of an MMR vaccination scare that would profit from new medical tests and “litigation driven testing”. In November 2011, yet another report in BMJ revealed original raw data indicating that, contrary to Wakefield’s claims in The Lancet, children in his research did not have inflammatory bowel disease.
Wakefield’s study and public recommendations against the use of the combined MMR vaccine were linked to a steep decline in vaccination rates in the United Kingdom and a corresponding rise in measles cases, resulting in serious illness and fatalities. Wakefield has continued to defend his research and conclusions, saying there was no fraud, hoax or profit motive.
Leslie is willing to admit that the Wakefield paper is invalid. But she refers to the “dozens of studies whose methodologies have been impeccable and have not been discredited.” Of course she never gives a citation for any of them.
Dr. Offit replies with an explanation of the many fraudulent aspects of Wakefield’s paper. He then goes on to say that, “… if you want to answer the question, the way you answer that question is that you look at hundreds of thousands of children who did or didn’t get MMR vaccines to see whether the incidence of autism is greater in the vaccinated group. That’s been done by fourteen different groups of investigators on three different continents and the answers have been very clear and consistent and reproducible. So we can say with comfort that MMR vaccine does not cause autism.”
Ira Flatow then asks Leslie whether there is any amount of research that would change her mind. Leslie replies, “”Oh, absolutely. This is what I’m saying is that he’s presenting a false dichotomy. There is something between the yahoos who just don’t look at scientific processes at all and people who blindly trust what clinicians tell them, of which there are a number, many, many people. You know, getting 26 vaccines, in some cases before the age of two, is a devastating thing for a person’s immune system. I’m 49 and …”
Mr. Flatow attempts to interrupt the incessant flow of words without a great deal of success. When he finally gets her attention he asks her for evidence that the 26 treatments (actually 14 vaccines, some have multiple doses) have detrimental effects. She mentions the preservatives that use mercury (which has been removed from all childhood vaccines in the U.S.), then says “…the vast number of immunizations that you’re requiring at such a young age really is taking a toll on the immune system. I think that’s just logic.”
Dr. Offit replies that the critical issue is the number of immunological components in the 14 vaccines. Today there are 160 such components. And we know a lot about the human immune system. Each of us has about 100 trillion bacteria on our body. And each bacterium has between 2,000 and 6,000 immunological components. If our immune systems were really that fragile, human life would have been wiped out millennia ago.
Leslie replies, “I can’t accept what you’re saying. It just sounds like pap to me, it sounds like panacea. A two year old cannot accept this kind of chemical onslaught.” In other words, actual scientific data and facts — information — are irrelevant. Ira Flatow tells Leslie that it doesn’t look like anything Dr. Offit says will change her mind. She replies, “Well, I’m not hearing anything that sounds credible to me as an educated adult.”
Educated, perhaps, but completely unable or unwilling to appreciate science, the scientific method, or logic (despite her statement to the contrary).
Conclusion
It’s not just an information problem. It’s an information processing problem. Until we can figure out a way to get these folks to think, the country will remain in a lot of trouble.
The Justice Department Supports the US Postal Service Monopoly
Posted by TonyLima in Current issues on March 4, 2013
The Justice Department supports the US Postal Service monopoly. That’s my conclusion after reading an editorial in today’s Wall Street Journal. Apparently the Feds are going after FedEx and UPS for — get this — shipping prescription drugs that have been purchased illegally. This is astounding even from this Justice Department featuring Eric Holder, the worst Attorney General since John Mitchell. Somehow, UPS and FedEx are supposed to (a) figure out which packages contain prescription drugs, then (b) determine which were purchased illegally. At best, this is another shakedown by Justice.
U.S. Attorney General Eric Holder
Former Attorney General John Mitchell
At worst, Mr. Holder and his pals are supporting the U.S. Postal Service’s quasi-monopoly. Or perhaps you didn’t notice that USPS was missing from the list of entities being persecuted. In case you don’t believe USPS ships drugs, I happen to have a rather persuasive example. I am a member of the Kaiser-Permanente health plan. I have the option of having my prescription refills delivered to me. The carrier is USPS.
Yet, somehow, Jon Corzine is still free and looking for his next financial fraud scheme. I have almost lost my ability to be surprised by anything Mr. Holder and his partners in crime dream up.
Some of you may not know about the USPS monopoly. Despite their claims of not being part of the U.S. government, USPS still has one significant monopoly power. Under U.S. law only USPS is allowed to put anything into your mailbox. Or mine. Or anyone else’s.
Health Care Shift to Electronic Medical Records Led to Rent-Seeking
Posted by TonyLima in Economic policy, Politics, The Intersection of Economics and Technology on February 23, 2013
“We called it the Sunny von Bülow bill. These companies that should have been dead were being put on machines and kept alive for another few years,” said Jonathan Bush, co-founder of the cloud-based firm Athenahealth and a first cousin to former President George W. Bush. “The biggest players drew this incredible huddle around the rule-makers and the rules are ridiculously favorable to these companies and ridiculously unfavorable to society.”
Part of the American Recovery and Redevelopment Act (ARRA) was incentives for the health care industry to switch to electronic medical records. A recent New York Times article (Feb. 19, 2013) looked at what went into this $19 billion pie. They concluded that the health care shift to electronics medical records led to rent-seeking behavior by the “big three” suppliers of electronic medical records. The three companies were Cerner Corp., Allscripts and Epic Systems of Verona, Wis. The three lobbied heavily to have the $19 billion included in the bill. And, of course, the requirements for suppliers were oriented toward systems produced by these three. No problem? Oh, wait, these companies are old and produce what should be legacy systems. I’ve written before about Jonathan Bush of Athenahealthcare. Here’s what he has to say about this clause in ARRA →
But if the customers are happy, who cares? Well, it turns out the customers are not all that happy. Again, from the Times article:
The records systems sold by the biggest vendors have their fans, who argue that, among other things, the systems ease prescribing medications electronically. But these systems also have many critics, who contend that they can be difficult to use, cannot share patient information with other systems and are sometimes adding hours to the time physicians spend documenting patient care.
“On a really good day, you might be able to call the system mediocre, but most of the time, it’s lousy,” said Michael Callaham, the chairman of the department of emergency medicine at the University of California, San Francisco Medical Center, which eight months ago turned on its $160 million digital records system from Epic. Michael Blum, the hospital’s chief medical information officer, said a majority of doctors there like the Epic system.
And, naturally, all that rent-seeking paid off:
Four years later, in December 2008, H. Stephen Lieber, chief executive of the group, wrote an open letter to President-elect Obama calling for a minimum government investment of $25 billion to help hospitals and physicians adopt electronic records. The industry ultimately got at least $19 billion in federal and state money.
In the months after that windfall arrived, sales climbed for leading vendors as hospitals and physicians scrambled to buy systems to meet tight timetables to collect the incentive dollars. At Allscripts, Mr. Tullman soon announced what looked like a game-changing deal: the acquisition of another records company, Eclipsys, for $1.3 billion.
“We are at the beginning of what we believe will be the fastest transformation of any industry in U.S. history,” Mr. Tullman said when the deal was announced.
Last spring, some of the Eclipsys board members left after a power struggle; Mr. Tullman left in December. He is now at a company he co-founded that focuses on solar energy — another area that, after Obama administration and Congress expanded government incentives in the 2009 stimulus bill, has been swept by a gold-rush mentality, too.
But Has It Paid Off For the Stockholders?
As a good economist, I believe that corporations should act in the best interests of their owners, the stockholders. And it appears that Cerner has done pretty well. Let’s look at stock prices and financial summaries. It happens, however, that Epic is privately owned. No financials from them. If you’re looking for information about them, their name is just Epic, not Epic Systems as they are called in the Times article. (Those who want the financial statements as Excel workbooks should click here to download a zip file containing three workbooks. Also, data and charts shown in this section are from Yahoo Finance.)
Recent Comments