More than three decades ago, I read a book by an English doctor, who described his positive experiences during the cultural Revolution. Just today, I got around to the New York Times science section from last week in which nursing homes are starting to adopt slightly similar practices in which they distribute responsibility to all levels of caregivers. The basic difference, of course, is that in the Chinese case all the caregivers were given authority as well as responsibility, while something much different occurs in nursing homes.
What follows is my brief notation from the British doctor's book and some extracts from the article.
Horn, Joshua S. 1971. Away with All Pests: An English Surgeon in People's China, 1954-1969 (New York: Monthly Review Press).
Joshua Horn, a British doctor, depicted the changes that occurred in his hospital at the time. He described how nurses, orderlies, patients, and even patients' friends became active in the decision-making process. Although the typical orderly had no formal medical training, she or he would spend far more time with the patient than the doctor, who might have only a few minutes to spend with the patient. As a result, the orderly might have a great deal to offer in deciding what course of treatment to follow.
Schaffer, Amanda. 2008. "Fighting Bedsores With a Team Approach." New York Times (19 February).
"Experts estimate that two million Americans suffer from pressure ulcers each year, usually through some combination of immobility, poor nutrition, dehydration and incontinence. The Centers for Disease Control and Prevention does not keep statistics on fatalities, but one prominent victim was the actor Christopher Reeve, who died of a bedsore infection in 2004 in the middle of a heroic battle against paralysis. New research is suggesting that the battle against bedsores requires a team approach, enlisting everyone from nurses and nursing assistants to laundry workers, nutritionists, maintenance workers and even in-house beauticians."
"At the Lutheran Home in Fort Wayne, Ind., for instance, “the laundry workers helped us see that some clothes weren’t fitting the residents properly and were restricting their skin,” said Jeanie Langschied, a registered nurse there. The kitchen staff began putting protein powders in cookies to boost nutrition. They added buffet dining, so residents would not remain in one position for so long, compressing fragile skin. Even the beauty shop “realized that wait times needed to decrease,” Ms. Langschied said, and residents should be repositioned while getting their hair done. “It was all departments looking at everything, and it was just amazing the information that flowed through."
Sunday, February 24, 2008
Friday, February 22, 2008
Really Bad Economics in Defense of Savings
The zombie that Keynes couldn’t kill still stalks the landscape. In a New York Times op-ed today, Conley tells us that the reason we are sliding into a recession is that we save too little, and that only more savings can pull us out.
A few remarks, with Conley in italics:
The recent slowdown in gross domestic product growth is only a symptom of recession, not the cause. While there are many things to blame for the current crisis — most notably the subprime mortgage mess — one factor that has received little attention is America’s low savings rate.
Um, what is the transmission mechanism here? Weren’t people buying subprimes saving too much or in the wrong way relative to their income? This seems to be an argument based on moralism, not economics: we have been bad these past years, spending beyond our means, and now the recession will be our punishment. In the middle ages our sins were punished by earthquakes and plagues, now it’s recessions. At least it’s an ordered universe.
The simplest approach would be to seed universal mutual fund accounts for low-income Americans. The best way to do this would be through a so-called refundable tax credit deposited directly into a special investment account for each taxpayer. In future years, the government could contribute an additional 50 cents for every dollar the taxpayer deposited into this account. Think of it as a universal 401(k), but one that could be used not only for retirement but also for things like a down payment on a house, college expenses or unexpected health costs.
Well this is dandy: in a time of recession we should create new incentives for individuals to salt away more money. Less consumer demand, that’s the ticket. And behind this proposal is the error of thinking that savings creates investment. If the economy is in a nosedive, and businesses are going bust everywhere, who will want to invest?
As I’ve written in this august blog before, our savings shortfall is the consequence of the massive and ongoing trade deficit: we have to borrow to make up the difference between what we earn and what we spend. The problem with the stimulus package, at least one of them, is that it does nothing for expenditure switching.
A few remarks, with Conley in italics:
The recent slowdown in gross domestic product growth is only a symptom of recession, not the cause. While there are many things to blame for the current crisis — most notably the subprime mortgage mess — one factor that has received little attention is America’s low savings rate.
Um, what is the transmission mechanism here? Weren’t people buying subprimes saving too much or in the wrong way relative to their income? This seems to be an argument based on moralism, not economics: we have been bad these past years, spending beyond our means, and now the recession will be our punishment. In the middle ages our sins were punished by earthquakes and plagues, now it’s recessions. At least it’s an ordered universe.
The simplest approach would be to seed universal mutual fund accounts for low-income Americans. The best way to do this would be through a so-called refundable tax credit deposited directly into a special investment account for each taxpayer. In future years, the government could contribute an additional 50 cents for every dollar the taxpayer deposited into this account. Think of it as a universal 401(k), but one that could be used not only for retirement but also for things like a down payment on a house, college expenses or unexpected health costs.
Well this is dandy: in a time of recession we should create new incentives for individuals to salt away more money. Less consumer demand, that’s the ticket. And behind this proposal is the error of thinking that savings creates investment. If the economy is in a nosedive, and businesses are going bust everywhere, who will want to invest?
As I’ve written in this august blog before, our savings shortfall is the consequence of the massive and ongoing trade deficit: we have to borrow to make up the difference between what we earn and what we spend. The problem with the stimulus package, at least one of them, is that it does nothing for expenditure switching.
Thursday, February 21, 2008
MORE PEAK FOOD
by the Sandwichman
In the comments on Peak Food, Juan shared his observations of activity in the grain markets.
"Led by trade on the Minnesota Grain Exchange (MGEX), there were sequential limit up days that effectively froze the market, part of a short squeeze, unmet margin calls, rumours that the Canadian Wheat Board was stressed, elevator and/or bank failures."
The chart below shows MGEX front month wheat contracts (click on the chart to enlarge):
"From 8 Feb, the big three grain exchanges, with CFTC approval, all raising margin requirements while loosening trading limits, which at least in theory should attenuate or stop the rise.
"There is some real fundamental basis for the price rise but what began a few weeks ago went beyond this and has begun to really hit smaller bakeries as well."
The following commentary is from Karen Ballhagen & Scott Davis's 'Sorting It Out' column at AgWeb from February 8:
"An enormous amount of money continues to change hands in the multiple wheat pits -- primarily linked to the Minneapolis exchange. The focus of supply and demand may have run its course, leaving money as the major player. I say this in part due to the companies which are being squeezed now on the other side of this run-away market. Grain elevators and large grain companies across the U.S. and Canada are facing critical junctures in managing uncomfortable lending situations due to margin calls. Banks have become more prudent with lending in recent months due to the U.S. real estate debacle. If you look closer at the Minneapolis market, you will not only see prices have spiked to above $15/bushel on the futures, but even more serious is the potential for that to go higher yet. The daily price limit on wheat is about to jump another ten cents to 40 cents per day. At this price tag, where does that leave the end users to financially defend hedge positions? It would speak volumes to agriculture if solid grain companies start to fold under pressure due to this money squeeze.
"I can hear it now: the old timer 30 years from now in 2038 will be telling his grandson about the wild and wooly wheat market of '08 when prices defied gravity. But the second half of this tale has yet to be written. Margin calls and forced liquidation are now the primary driver of wheat price action as the "squeeze" in Minneapolis wheat has moved past the point where true fundamentals have much meaning."
In the comments on Peak Food, Juan shared his observations of activity in the grain markets.
"Led by trade on the Minnesota Grain Exchange (MGEX), there were sequential limit up days that effectively froze the market, part of a short squeeze, unmet margin calls, rumours that the Canadian Wheat Board was stressed, elevator and/or bank failures."
The chart below shows MGEX front month wheat contracts (click on the chart to enlarge):
"From 8 Feb, the big three grain exchanges, with CFTC approval, all raising margin requirements while loosening trading limits, which at least in theory should attenuate or stop the rise.
"There is some real fundamental basis for the price rise but what began a few weeks ago went beyond this and has begun to really hit smaller bakeries as well."
The following commentary is from Karen Ballhagen & Scott Davis's 'Sorting It Out' column at AgWeb from February 8:
"An enormous amount of money continues to change hands in the multiple wheat pits -- primarily linked to the Minneapolis exchange. The focus of supply and demand may have run its course, leaving money as the major player. I say this in part due to the companies which are being squeezed now on the other side of this run-away market. Grain elevators and large grain companies across the U.S. and Canada are facing critical junctures in managing uncomfortable lending situations due to margin calls. Banks have become more prudent with lending in recent months due to the U.S. real estate debacle. If you look closer at the Minneapolis market, you will not only see prices have spiked to above $15/bushel on the futures, but even more serious is the potential for that to go higher yet. The daily price limit on wheat is about to jump another ten cents to 40 cents per day. At this price tag, where does that leave the end users to financially defend hedge positions? It would speak volumes to agriculture if solid grain companies start to fold under pressure due to this money squeeze.
"I can hear it now: the old timer 30 years from now in 2038 will be telling his grandson about the wild and wooly wheat market of '08 when prices defied gravity. But the second half of this tale has yet to be written. Margin calls and forced liquidation are now the primary driver of wheat price action as the "squeeze" in Minneapolis wheat has moved past the point where true fundamentals have much meaning."
Wednesday, February 20, 2008
Robert J. Samuelson Goes Imbecilic Over Obama
In today's WaPo, Robert J. Samuelson attacks "the Obama delusion," complaining that he is a new kid on the block whom RJS is uncomfortable with in contrast with Hillary and McCain. He starts with the usual whine about Obama's speeches being too good but lacking substance. Then he admits that Obama presented a 12-point economic plan at the Janesville, WI GM plant, only now the problem is that it is just "the usual political goodies," and looks too much like Hillary's plan. Oh. But I thought Hillary's plan was OK. I think RJS is steamed that he has not been schmoozed enough by Obama and his circle.
Of course RJS makes a serious fool of himself by ranting about entitlements, he being one of these people who thinks social security and medicare are one and the same. So, Obama is castigated for not resolving entitlement spending. His call to lift the income cap on FICA taxes is simply dismissed, although it is something specific. That Hillary is calling for a vague commission with no specifics, and McCain has said nothing at all that I know of about any of this, and has confessed that he does not know much about economics, does not seem to bother RJS in his lather at all.
Of course RJS makes a serious fool of himself by ranting about entitlements, he being one of these people who thinks social security and medicare are one and the same. So, Obama is castigated for not resolving entitlement spending. His call to lift the income cap on FICA taxes is simply dismissed, although it is something specific. That Hillary is calling for a vague commission with no specifics, and McCain has said nothing at all that I know of about any of this, and has confessed that he does not know much about economics, does not seem to bother RJS in his lather at all.
Sunstein and Obama
Peter noted the connection between Obama and Sunstein's minimalism already. It occurs to me that some of his earlier work is germane as well. He was a leading light of the revival of "Civic Republicanism" in legal theory. A key idea is that politics can be more than bargaining on the basis of given preferences, that democratic deliberation can sometimes, at its best, be a locus for the transformation of preferences.
Some of our greatest political leaders, or so it seems to me, have been people who challenged us to transform ourselves. Think Lincoln, King, FDR. Some of us who are impressed by Obama see him as potentially cut from the same cloth. We'll see.
Some of our greatest political leaders, or so it seems to me, have been people who challenged us to transform ourselves. Think Lincoln, King, FDR. Some of us who are impressed by Obama see him as potentially cut from the same cloth. We'll see.
Are Child Laborers Exploited?
Don’t jump to conclusions. Children who work for pay usually make less than adults, but they are usually less productive too. It is far from obvious whether their employers take in more profits, or whether child labor undercuts jobs and wages for adults. You can speculate on this all you want, but now, for the first time, there is empirical evidence.
My study, “Child Labor Wages and Productivity” has just been published by the International Labor Organization (ILO). Working with teams in four countries, we surveyed children and their employers in two sectors per country, gathering data on the division of labor between adults and children, relative wages and productivity, firm-level factors, employer motivation, and the social context. You can read about children who fish off the coast of Ghana, repair cars and motor scooters in India and fold fireworks in the Philippines. The analysis is not particularly high-tech, but you can find basic wage regressions and estimates of production functions with child and adult labor inputs. There is also a ton of descriptive material.
The bottom line is, sometimes, under some conditions. When normal people talk about child labor they often assume that children are a gold mine for unscrupulous employers. This can be true, but it’s not the whole story. Meanwhile, when economists study child labor they usually assume the opposite, that the law of one price equalizes unit labor costs across all age levels. This is even less likely to be the case. If you care about child labor and want evidence instead of arbitrary assumptions, I think you’ll find the study up your alley.
It’s a free download at http://www.ilo.org/ipecinfo/product/viewProduct.do?productId=7065.
My study, “Child Labor Wages and Productivity” has just been published by the International Labor Organization (ILO). Working with teams in four countries, we surveyed children and their employers in two sectors per country, gathering data on the division of labor between adults and children, relative wages and productivity, firm-level factors, employer motivation, and the social context. You can read about children who fish off the coast of Ghana, repair cars and motor scooters in India and fold fireworks in the Philippines. The analysis is not particularly high-tech, but you can find basic wage regressions and estimates of production functions with child and adult labor inputs. There is also a ton of descriptive material.
The bottom line is, sometimes, under some conditions. When normal people talk about child labor they often assume that children are a gold mine for unscrupulous employers. This can be true, but it’s not the whole story. Meanwhile, when economists study child labor they usually assume the opposite, that the law of one price equalizes unit labor costs across all age levels. This is even less likely to be the case. If you care about child labor and want evidence instead of arbitrary assumptions, I think you’ll find the study up your alley.
It’s a free download at http://www.ilo.org/ipecinfo/product/viewProduct.do?productId=7065.
Tuesday, February 19, 2008
Showdown in Wisconsin Too Close to Call
Hillary's last chance in Wisconsin has her slightly ahead in last poll last night. Too close to call. Here is my take. Northwestern part goes to Obama, old Progressive territory like Minnesota. Northeast, including Green Bay (she was in its suburb, De Pere last night) goes to Hillary, old Joe McCarthy stomping ground. Rural parts of the southern part of the state tossup. Madison and Dane County (around Mad City) for Obama. Racine slightly to Obama because of Af-Am pop, Kenosha slightly to Hillary. Milwaukee split, northside to Obama, southside to Hillary. Which leaves what I have said all along is the key: Waukesha County, third largest in the state, suburbs to the west of Milwaukee, inner part more working class with income rising as one goes west and getting more suburban. Tossup, but as it goes, so will the state and Hillary's chances.
Monday, February 18, 2008
Why the McCain Line on Iraq is Wrong
John McCain will be pushing the line that the "surge has worked," based on declines in attacks on US troops and declines in violence in Baghdad and al-Anbar Province, even as violence is again on the increase in some other parts of Iraq, and basic political and economic settlements remain unachieved. The problem is that neither of these declines in violence has had very much to do with an increase in the presence of US troops, although the case is stronger for Baghdad than for al-Anbar. In Baghdad the decline in violence would ultimately have happened because the main source of it was ethnic cleansing and the rise of sectarian segregation. This is now basically complete, with few integrated neighborhoods left and with many Sunnis fleeing both Baghdad and Iraq. A city that was 2/3 Shi'i, is now about 3/4 Shi'i, with the US effectively aiding this outcome.
The turning of tribal sheikhs against al-Qaeda in Iraq in al-Anbar Province has had nothing to do with increased US troops (although providing arms probably helped) and everything to do with al-Qaeda in Iraq stupidly killing sons of some of those sheikhs. Ironically, one of the biggest neocon hawks, Charles Krauthammer, has effectively admitted this. He criticized Dems in Congress for saying the 2006 election changed things by pointing out that this change of attitude had happened prior to the election, even as McCain and crew are claiming it came later in 2007 with the US troop surge. Not so. Bottom line is that the violence situation has been naturally self-stabilizing, making it much easier to engage in large-scale withdrawals of US troops without destabilizing Iraq beyond what it is anyway.
The turning of tribal sheikhs against al-Qaeda in Iraq in al-Anbar Province has had nothing to do with increased US troops (although providing arms probably helped) and everything to do with al-Qaeda in Iraq stupidly killing sons of some of those sheikhs. Ironically, one of the biggest neocon hawks, Charles Krauthammer, has effectively admitted this. He criticized Dems in Congress for saying the 2006 election changed things by pointing out that this change of attitude had happened prior to the election, even as McCain and crew are claiming it came later in 2007 with the US troop surge. Not so. Bottom line is that the violence situation has been naturally self-stabilizing, making it much easier to engage in large-scale withdrawals of US troops without destabilizing Iraq beyond what it is anyway.
More on Labor Markets vs. Family Values
Following up my last post that suggested family stability inhibits labor flexibility, I might mention that in our own recent hiring experience at Chico State, an inordinate number of good candidates proved unemployable because of the need to accommodate a spouse.
In a similar vein, Andrew Oswald showed that home ownership is the most reasonable explanation for differences in unemployment rates between countries. His scatter graph has a very impressive fit, presumably because people with homes are less likely to pick up and leave for a new job.
Oswald, Andrew J. 1999. "The Housing Market and Europe's Unemployment: A Non-Technical Paper."
http://www2.warwick.ac.uk/fac/soc/economics/staff/faculty/oswald/homesnt.pdf
In a similar vein, Andrew Oswald showed that home ownership is the most reasonable explanation for differences in unemployment rates between countries. His scatter graph has a very impressive fit, presumably because people with homes are less likely to pick up and leave for a new job.
Oswald, Andrew J. 1999. "The Housing Market and Europe's Unemployment: A Non-Technical Paper."
http://www2.warwick.ac.uk/fac/soc/economics/staff/faculty/oswald/homesnt.pdf
PEAK FOOD
by the Sandwichman
A guy came into the food co-op today to pick up the four 25-pound sacks of wheat he special ordered. He told me to "pick up a couple of sacks of wheat for yourself and store them in your basement." So I took a look at recent news stories on agricultural commodity prices. Prices are soaring. Every kind of planted crop has increased in price by 30% to 50% over the past few months. This will have a huge impact on food prices.
Things are going to get very interesting.
A guy came into the food co-op today to pick up the four 25-pound sacks of wheat he special ordered. He told me to "pick up a couple of sacks of wheat for yourself and store them in your basement." So I took a look at recent news stories on agricultural commodity prices. Prices are soaring. Every kind of planted crop has increased in price by 30% to 50% over the past few months. This will have a huge impact on food prices.
Things are going to get very interesting.
Sunday, February 17, 2008
Economists vs Family (Human) Values?
Betsey Stevenson and Justin Wolfers proposed an analogy between the supposed rigidity of European labor markets and the stability of European families:
"The U.S. labor market, like its marriage markets, differs from Europe in having substantially greater "churn"; in any given month in the United States, workers are more likely to be fired than are their European counterparts and those without a match are more likely to be hired. There is an emerging consensus that restrictions on churning in European labor markets yield inefficient labor markets with "too few" job separations. We do not mean to suggest by analogy that Europe is afflicted with too few divorces."
Stevenson, Betsey and Justin Wolfers. 2007. "Marriage and Divorce: Changes and their Driving Forces." Journal of Economic Perspectives, 21: 2 (Spring): pp. 27-52, p. 50.
Although they downplay the seriousness of their analogy, they may actually be on to something. Economists also know that home ownership, which might also contribute to family stability, represents a barrier to labor mobility. In effect, the ideal members labor force would be people without any attachments. Even better, these workers sprout like mushrooms already formed, like an 18-years old, age and expire on the day of retirement.
"The U.S. labor market, like its marriage markets, differs from Europe in having substantially greater "churn"; in any given month in the United States, workers are more likely to be fired than are their European counterparts and those without a match are more likely to be hired. There is an emerging consensus that restrictions on churning in European labor markets yield inefficient labor markets with "too few" job separations. We do not mean to suggest by analogy that Europe is afflicted with too few divorces."
Stevenson, Betsey and Justin Wolfers. 2007. "Marriage and Divorce: Changes and their Driving Forces." Journal of Economic Perspectives, 21: 2 (Spring): pp. 27-52, p. 50.
Although they downplay the seriousness of their analogy, they may actually be on to something. Economists also know that home ownership, which might also contribute to family stability, represents a barrier to labor mobility. In effect, the ideal members labor force would be people without any attachments. Even better, these workers sprout like mushrooms already formed, like an 18-years old, age and expire on the day of retirement.
Saturday, February 16, 2008
Departures from Conservatism and Republican Presidents
Jeff Frankel has made his only third blog post and it’s a gem. Let’s start with his criteria for departures from conservatism:
Hard to argue with this list of economics departures from conservative principles and hard to argue that George W. Bush has not violated the first two and the last two. Ronald Reagan does not fare well based on these criteria either and #3 seems to be directed towards Nixon. As Jeff notes:
Jeff also offers a link to a 2003 paper that he wrote on this topic.
(1) Growth in the size of the government, as measured by employment and spending.
(2) Lack of fiscal discipline, as measured by budget deficits.
(3) Lack of commitment to price stability, as measured by pressure on the Fed for easier monetary policy when politically advantageous.
(4) Departures from free trade.
(5) Use of government powers to protect and subsidize favored special interests (such as the oil and gas sector, among many others).
Hard to argue with this list of economics departures from conservative principles and hard to argue that George W. Bush has not violated the first two and the last two. Ronald Reagan does not fare well based on these criteria either and #3 seems to be directed towards Nixon. As Jeff notes:
I would contend that, not just George W. Bush, but also Richard Nixon, Ronald Reagan and (to a lesser extent) George H.W. Bush, all - in sharp distinction from their conservative rhetoric - in practice have been interventionist. They have all wandered, far from the principles of good neoclassical economics, and far from from the principles of small government and laissez faire. How far? Farther than did, for example, Jimmy Carter and Bill Clinton … Documentation that Republican presidents have since 1971 indulged in these five departures from “conservatism” to a greater extent than Democratic presidents can be found in some writings of mine, listed below. The name I would give to this set of economic policies, as well as to the parallel abuses of executive power in the areas of foreign policy and domestic policy, is neither “liberal” nor “conservative” but, rather, “illiberal.”
Jeff also offers a link to a 2003 paper that he wrote on this topic.
Friday, February 15, 2008
subprime primer
David Shemano sent me this nice power point primer on the subprime crisis. I don't know how to upload it to this blog, but here is a URL.
http://michaelperelman.wordpress.com/2008/02/15/a-subprime-primer/
http://michaelperelman.wordpress.com/2008/02/15/a-subprime-primer/
NYC Mayor Joins the Coalition Against the Fiscal Stimulus
OK, the bill has been signed into law and the checks are in the mail, but this did not keep Michael Bloomberg from having his say:
Ouch! But the mayor did have praise for another idea:
Mayor Michael Bloomberg has unleashed another flurry of jabs on Washington, ridiculing the federal government's rebate checks as being "like giving a drink to an alcoholic" on Thursday, and said the presidential candidates are looking for easy solutions to complex economic problems. The billionaire and potential independent presidential candidate also said the nation "has a balance sheet that's starting to look more and more like a third-world country."
Ouch! But the mayor did have praise for another idea:
His tirade against the candidates and the economic stimulus package on Thursday began when he was asked how that experiment is going. In his answer, he praised Democrat Barack Obama for the plan the Illinois senator outlined on Wednesday that would create a National Infrastructure Reinvestment Bank to rebuild highways, bridges, airports and other public projects. Obama projects it could generate nearly 2 million jobs. Last month, Bloomberg and Govs. Arnold Schwarzenegger of California and Ed Rendell of Pennsylvania announced a coalition that would urge more investment in infrastructure. "I don't know whether Senator Obama looked to see what I've been advocating, or not - you'll have to ask him - but he's doing the right thing," Bloomberg said.
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