Mr Gupta’s lawyers referenced Ms Webster’s notes from her estate planning meeting with Mr Gupta, which showed he had a net worth of $84m, $38m in a trust and $11.2m in cash.
He also received $700,000 for serving on the Goldman board and made $6m from McKinsey in 2008.

1. Regulatory uncertainty. Prez/Congress are using class warfare rhetoric to argue that every business decision should be disclosed, reported, and scrutinized. It is not clear to anyone just how deep the "crucify them" antagonism goes. So far, no one has seen the bottom. The people the O-bam has appointed are all largely professional activists and cranks, with no conception of what it takes to run a business or create jobs. Businesses are sitting on piles of cash, and the 2008 enthusiasm for Obama has evaporated. He just straight lied about being interested in, or even capable of, bipartisanship.

2. Health care. Republicans in the House and Senate are using class warfare rhetoric to blame poor for needing health care. It doesn't really matter what happens to O-care in the court. In fact, the best thing would be if O-care is found to be unconstitutional. The problem is that real WAGES have stayed flat over the past two decades. But real TOTAL COMPENSATION has skyrocketed, and has stayed the same, basically, as a percentage of GDP. So, workers (the ones who are employed) have no extra income to spend on consumption. But an employer trying to hire (if there were any) has to pay not just the wage, but also that giant wedge of health insurance. So, no new hiring, no new consumption spending.

3. Deficit. Republican in the House and Senate, and the states, and the woodpile, have this amazing ideology that we can't raise taxes. Well, you are DAFT: Deficits are Future Taxes. Conservatism once meant two things: (a) question spending. (b) ensure fiscal responsibility, so that we pay for what we do spend. Sometime around 1980, the Republicans figured out that it worked much better electorally to do THESE two things: (a) question spending (although not really, since spending increases as fast under Republicans as under Democratic administrations) (b) cut taxes. Doesn't matter what the question is, the answer is cut taxes. This is worse than class warfare, this is time machine warfare. We are taking money out of the college funds of children who haven't been born yet. They certainly can't vote. So, while spending is too high, and both the Dems and Repubs share blame for that, taxes are too low, given our level of spending (especially on wars started by Republicans).

There may be an argument for taxing fat; but there is no argument for taxing foods that fat people might eat.

Jewish-Americans have a long history of finding role models who broke barriers, accomplished great things, or engaged in more mundane acts of heroism. Jewish religious schools are full of discussions of athletes like Hank Greenberg and Sandy Koufax, or the legions of Jewish entertainers and scholars, as ways to demonstrate the accomplishments of American Jews.

But in all those stories many of us heard growing up, one set of brave heroes was never mentioned: the Schechter brothers of New York City. The Schechters were kosher butchers operating in the 1930s who stood fast to their commitment to the dietary laws of kashrut in the face of ferocious pressure and prosecution by a powerful government. They eventually took their case to the highest court in the land—and won—defeating one of the most popular and powerful administrations in American history.

One would think this story of Jewish heroism and commitment to Jewish values would be inspirational for generations of young American Jews. But the Schechter brothers were up against Franklin Delano Roosevelt.

You know the drill. They try to board us by groups, but people are smashing on the plane like it's the New Delhi train station. When the plane is half full, the overhead bins fill up. Then people start dragging massive bags all the way upstream for gate checks. On and on it goes, tempers frazzling and  a few hundred million dollars of plane, costly crew, and my not so free time sitting idly on the ground.

So I have long wondered: why in the world do airlines charge $25 for checking bags, and not $25 for bringing huge bags on the plane? 

I finally found out the answer, here

Two years ago, [New York Senator Charles] Schumer got five big airlines to pledge that they wouldn’t charge passengers to stow carry-on bags in overhead bins. The promise came after Spirit Airlines became the first U.S. carrier to levy such a fee.
The article is actually about Sen. Schumer's latest great idea, to force airlines to seat families together even if said families don't want to pay the $25 fee for advance seat selection.

Next time you miss your connection because people took too long to stow their steamer trunks in the bins, you know who to thank.

Of course the larger picture is not the silliness of one individual, but the hubris of the Federal Government to try to regulate such things in the first place. 

Using 1437 samples of Ciprofloxacin from 18 low-to-middle-income countries, we aim to understand the role that regulation and distribution channel have played in signaling and ensuring drug safety. According to the World Health Organization, some poor quality drugs are deliberately and fraudulently mislabeled with respect to identity or source while others can have incorrect quantities of active ingredient as a result of manufacturing error or poor storage. Given the difficulty to prove “intent to deceive”, we classify poor quality drugs as counterfeit if they fail a visual check or contain zero correct active ingredient, and as substandard if they pass the visual check and contain some but less than 80% of the correct active ingredient.
Following the Global Pharma Health Fund e.V. Minilab® protocol, we find 9.88% of samples are poor quality and 41.5% of the failures are counterfeits. Both product registration and chain affiliation if retailers are strong indicators of higher probability to pass in the Minilab test and higher retail price. Conditional on quality failures, chain affiliation is more likely to indicate substandard while product registration with local government is more likely to indicate counterfeit. In other words, registered products are more likely to be targeted by counterfeiters. Furthermore, substandard drugs are priced much lower than comparable generics in the same city but counterfeits offer almost no discount from the targeted genuine version. These findings have important implications for both consumers and policy makers.

As Gabriel Kolko (one of the few historians who did understand regulatory economics) wrote in The Triumph of Conservatism, every major regulatory agency established in the Progressive era was established at the request of the regulated industry. There were consumer complaints of course. But the design and thrust of regulation primarily served the interests of the producers, not the consumers. This was also generally true of the whole slew of regulatory agencies created during the New Deal.

Another member of that social and investment circle could play an important role at Mr. Gupta's criminal trial for securities fraud and conspiracy, scheduled to begin May 21. Ravi Trehan, a likely witness, could buttress Mr. Gupta's argument that he had fallen out with Mr. Rajaratnam before at least four alleged inside tips that are at the crux of the prosecution, according to people familiar with the matter.

Mr. Trehan—whose potential role at Mr. Gupta's trial hasn't previously been disclosed—could testify about conflicts he and Mr. Gupta both had with Mr. Rajaratnam related to Voyager Capital Partners, the fund the three men launched together in 2005, people familiar with the case say.

In addition, Mr. Trehan, a principal at New York investment firm Broadstreet Group, could testify about a call he received from Mr. Gupta at an auspicious time. The call came in 2008 right after Mr. Gupta allegedly disclosed Goldman secrets to Mr. Rajaratnam. Mr. Trehan's lawyer says he didn't receive any information about Goldman around the time of the alleged tip and didn't trade in Goldman stock then.

"At that time he told me that Mr. Gupta had sort of confronted him with saying that he should have paid more attention—he, Mr. Rajaratnam, should have paid more attention to what was happening with Voyager and that he was very upset," Mr. Kumar said. "Mr. Gupta was very upset…he had $10 million in that Voyager that had all gone to zero."

Voyager, which Messrs. Gupta and Rajaratnam created in 2005 with Mr. Gupta's friend Ravi Trehan, was one of a number of investment ventures they entered together. Mr. Rajaratnam put in $40 million, and Messrs. Gupta and Trehan each put in $5 million. Mr. Trehan pulled out in 2006 amid conflicts with Mr. Rajaratnam.

Mr. Gupta took over Mr. Trehan's stake with a loan from Mr. Rajaratnam, bringing his investment to $10 million, according to Mr. Kumar's testimony. Mr. Trehan's lawyer declined to comment.

Mr. Gupta's conflict with Mr. Rajaratnam came much later. How much later, in the eyes of jurors, may be a key to his fate.

Of the personnel moves, the promotion of Mr Zames is widely seen as the most significant. An alumnus of Long-Term Capital Management, the hedge fund that blew up in 1998, who now advises the US Treasury on its debt issuance, Mr Zames is widely seen as a future contender to be chief executive.

We are left with the question of why, if regulations are usually a legitimate response to mischievous games played by some parties in the private sector, these regulations are often so inchoate, if not outright silly.

Lack of competence among the rule writers — especially unfamiliarity with the operations of those they seek to regulate – may be part of the answer, but probably not a large part.

More important, in my view, is the gantlet that legislation and rule-making must run under our system of governance.

Before an original bill passes Congress, it has been worked over (“marked up”), in each of the two chambers, by sundry committee fiefs whose members may be beholden to a variety of moneyed interest groups, each eager to steer the legislators’ hands.

The specific regulations called for in a bill, once passed, must also survive the scrutiny and influence of special interest groups, which typically work through members of Congress or the upper levels of the executive branch, whose affection they have acquired.

Even the best-written original bill cannot emerge from that process in the form of a coherent set of rules. Many a rule may appear puzzling to straight-thinking people, and some even silly. Chances are they make sense to some interest group that had purchased it, so to speak.

The recent paper, by economists at Harvard and George Washington University, compared more than 2,650 programs within for-profit schools in three states over multiple years and found that the schools receiving federal grants and loans set their tuition roughly 75 percent higher than those institutions that go without government support.

College tuition wasn’t always a national crisis. As recently as the 1970s, the price of tuition actually declined 17 percent at public universities and 13 percent at private ones, according to data from the American Council on Education, a leading higher-ed lobby.

By the 1980s, things had changed. The price of tuition started to climb: By the end of the decade, it was up 47 percent at public universities and 54 percent at private schools, according to the council. What was different?… the Middle Income Student Assistance Act, which had the effect of offering federally subsidized student loans to anyone who qualified for college, regardless of income. During the Carter and Reagan administrations, the government further expanded federal aid, including Pell grants and Perkins loans for needy students. From 1978 to 1981, total available aid grew 70 percent, to a total of $14.7 billion, according to the Congressional Budget Office.

For while the Germans are often portrayed as knuckleheaded advocates of endless austerity, their real message is more sophisticated and convincing. It is that the drive to balance budgets within Europe must be combined with reforms that will encourage private-sector job creation.
The scope for such reforms is enormous. Taxes on labour in France are very high. To his credit, Mr Hollande is promising tax breaks for employers who hire young people. But it would be better simply to cut charges on labour across the board. This is one tax cut that really might pay for itself, by creating jobs.
European businesses are also hobbled by red tape. My favourite recent example was a story in the New York Times of a Greek entrepreneur, whose efforts to start an internet business involved an odyssey of form-filling, culminating in an official demand for a stool sample. High rates of youth unemployment in countries such as Spain and Italy are closely connected to the excessive protections and benefits for workers on full-time contracts – which make employers wary of taking on new hires. As one Spanish businessman recently complained: “In this country, it is easier to divorce your wife than to sack an employee.”
Pushing through labour market reforms is tough and even dangerous. In Italy, in recent years, two economists advising the government on labour-market reforms have been assassinated. But such reforms are the only long-term route to stronger job creation.
By contrast, calls for Europe to spend its way out of debt are an illusion. There is, of course, scope for argument about the pace of deficit reduction. But in a highly-taxed, highly-regulated, highly-indebted continent like Europe, more state-funded public works would simply build another road to nowhere.

Cheating is becoming an increasing problem in sports events for athletes with disabilities. Rigorous inspections are supposed to root out those who are only faking a handicap, but some imposters get through -- like the supposedly blind athlete who cheered when she saw her result on the board.

A Massachusetts Institute of Technology professor and his son have agreed to pay $4.8 million and to securities industry bans to settle allegations that they lied to investors in their hedge fund about, well, just about everything.

A popular view is that the unprecedented surge in the spot price of oil during 2003–08 cannot be explained by changes in economic fundamentals, but was driven by the increased financialisation of oil futures markets.1 It is well documented that, starting in 2003, there was an influx of financial investors such as index funds into oil futures markets. At about the same time, both spot and futures prices of crude oil began to surge, soon reaching unprecedented levels and peaking at a record high in mid-2008. A popular view among pundits and policymakers is that this sustained oil price increase was facilitated by the financialisation of oil futures markets. Non-academics such as Michael Masters and George Soros testified before the US Congress that financial investors were taking speculative positions that resulted in rising oil futures prices, which in turn were responsible for a surge in the spot price of oil. The accuracy of this view is not obvious at all and much of the academic debate centres on the evidence, if any, supporting this hypothesis. 

Reason Magazine
India's Misguided Push for Food Security
Posted by Baylen Linnekin on Saturday Apr 21st at 12:00pm
Earlier this month a country that’s home to millions of poor and hungry people tested a missile capable of striking deep into distant continents. North Korea may come to mind, but the country whose missile proved it’s actually capable of targeting (rather than merely intended to target) foreign lands is India.
While spending dearly (something on the order of $500 million) to test launch the Agni-V missile and flex its military muscle, India is also poised to introduce a law that the country hopes will guarantee an end to hunger. A “right to food” movement has built momentum in India over the last decade thanks to a Supreme Court case there. The Food Security Bill now under consideration would “offer nearly two-thirds of India’s population a legal entitlement to foodgrain.”

In a recent piece in The Wall Street Journal, New Delhi-based researcher Ashwin Parulkar endorsed the measure. “Discounted food,” he wrote, “should be a universal entitlement.”
But the staggering cost of ensuring a right to food for all Indians—estimated at $22 billion, or the cost of more than 40 Agni-V rockets per year—is just one problem with a government guarantee of food for all.
The larger question is whether any government can make good on a guaranteed right to food. If the Indian government’s recent food-policy failures are any indication, establishing a right to food will be a grand subcontinental experiment in wasting food, money, and lives.
After all, malnutrition in India (a leading cause of death) is often the result of inept government micromanagement of the food economy and other counterproductive policies. And even before it’s enacted, the pressure of ensuring a right to food has already played a role in wasting food and hurting farmers. In 2007, for example, India banned wheat exports entirely after the country’s leaders claimed they needed time “to judge its wheat availability in the light of the proposed Food Security Bill.”
These policies led to a domestic wheat glut, which happened to coincide with a global surplus.
When the Indian government finally did open exports again more than four years later, many farmers found it was months too late for them to sell on the world market.
India’s government itself was unready for the excess of grain its own policies created, since government capacity to store grain was far less than its ability to bolster domestic grain production by decree. Hence, today the government “does not know where to store the bumper grains to be harvested for the third year in a row,” leading to the likelihood “that the grains would be out in the open, rot and be eaten by rodents even as millions go hungry in the country which is planning to enact a right to food law.”
Is there a way to feed the poor without top-down government food policies? Yes, and economic growth is the key. From the big business tech boom to small entrepreneurs benefiting from microfinance to some government recognition of economist Hernando de Soto’s arguments about reducing barriers to starting businesses, India has been a success story. According to the World Bank and other sources, for example, poverty in India is receding greatly as the country’s economy expands. “India’s poverty declined by 19% between 1990 and 2005,” according to World Bank estimates.
There’s also no shortage of charitable, non-governmental organizations working to feed India’s most impoverished people. Reforming the country’s charitable-giving laws is one necessary fix that could boost this output even further. For example, India currently taxes charitable organizations on what in the United States would be tax-free earnings.
And there’s also this: The poor are very often capable of providing for themselves if left to their own devices.
The startling thing about a recent attack by some radical Hindus on a group of Dalits (members of India’s lower caste) who were eating beef (which is verboten to many Hindus) at an outdoor festival is not the vile attack itself. No, the surprising fact is that Dalits—two-thirds of whom are among India’s poorest—gathered in numbers greater than a thousand to share a meal of beef (a food of the wealthy in most any country).
"Everyone should have the freedom to eat the food of their choice,” said event organizer B Sudarshan.
Of course he's right. And when such a choice is available to even the poor, then the need to codify a right to food seems inapt. Add to this India's recent failures at centrally planning its food supply and the country's ability to ensure a right to food seems downright implausible.
Instead of India’s government trying (and failing) to provide its hungriest with food, India should create a legal and policy climate that lets those Indians who can provide for themselves do so, and encourages domestic and foreign charitable giving to fill the gaps as needed.
Baylen J. Linnekin, a lawyer, is executive director of Keep Food Legal, a Washington, D.C. nonprofit that advocates in favor of culinary freedom.


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As noted above, the U.S. has the highest Gini coefficient of these eight comparison countries if measured after taxes and transfers (second column), but not if measured before taxes and transfers (first column). However, a hint as to why this arises can be found in the last four columns, which break down the Gini coefficients by the working age population and the over-65 population.

When it comes to the working age population, before taxes and transfers, the U.S. level of inequality is third-highest, but virtually tied for first with the United Kingdom and Italy. After taxes and transfers, the U.S. level of inequality among the working age population clearly the highest.

When it comes to the over-65 population, before taxes and transfers, the U.S. has a far more equal distribution of income than France, Germany, and Italy. I haven't dug down into the data here, but I suspect that these numbers are reflecting that a much larger share of over-65 workers are still in the labor force in the U.S. economy--which makes the distribution more equal before taxes and transfers.

Taxes and transfers make the over-65 distribution of income far more equal in all eight countries, but the U.S. stands out as by far the least equal, followed by Japan, with both well behind the other six countries.

These patterns are consistent with a finding from an OECD report published last fall called  Divided We Stand: Why Inequality Keeps Rising.  I blogged about it on December 16, 2012, in "Government Redistribution : International Comparisons." One theme of the report is that the extent of government redistribution across populations is driven much more by the widespread provision of government benefits than by the progressivity of taxation. As the OECD report stated: "Benefits had a much stronger impact on inequality than the other main instruments of cash distribution -- social contributions or taxes. ... The most important benefit-related determining factor in overall distribution, however, was not benefit levels but the number of people entitled to transfers."

This is a distressingly common problem. Governments find it easy to implement regulations but tedious to maintain existing ones—politicians gain little political benefit from updating old laws, only from introducing new laws.

And regulated entities tend to comply with the specifics of the regulations, not with the goal of the regulations themselves. All too often, once government takes over, what was private risk management becomes regulatory compliance.

It's easy to weave the Titanic disaster into a seductive tale of hubris, social stratification and capitalist excess. But the Titanic's chroniclers tend to put their moral narrative ahead of their historical one.

At the accident's core is this reality: British regulators assumed responsibility for lifeboat numbers and then botched that responsibility. With a close reading of the evidence, it is hard not to see the Titanic disaster as a tragic example of government failure.

Mr. Berg is a fellow at the Institute of Public Affairs in Melbourne, Australia. This op-ed originally appeared on the Australian Broadcasting Corporation's website The Drum (www.abc.net.au) on April 11.

Richard Burkhauser of Cornell University talks with EconTalk host Russ Roberts about the state of the middle class. Drawing on recently published papers, Burkhauser shows that changes in the standard of living of the middle class and other parts of the income distribution are extremely sensitive to various assumptions about how income is defined as well as whether you look at tax units or households. He shows that under one set of assumptions, there has been no change in median income, but under a different and equally reasonable set of assumptions, median income has grown 36%. Burkhauser explains how different assumptions can lead to such different results and argues that the assumptions that lead to the larger growth figure are more appropriate for capturing what has happened over the last 40 years than those that suggest stagnation.

Writing about test scores in the November 1993 issue of The Atlantic Monthly, Duke University professor, Stanley Fish, renowned for scholarship in both law and literature, asserted: "Statistical studies have suggested that test scores reflect income and socioeconomic status. It has been demonstrated again and again that scores vary in relation to cultural background; the test's questions assume a certain uniformity in educational experience and lifestyle and penalize those who, for whatever reason, have had a different experience and lived different kinds of lives. In short, what is being measured by the SAT is not absolutes like native ability and merit but accidents like birth, social position, access to libraries, and the opportunity to take vacations or to take SAT prep courses."

   Lani Guinier, Professor of Law at Harvard University, writing in the New York Times of June 24, 1997, argues, "But within every racial and ethnic group, test scores go up with family income. One explanation for this may be that students who come from better-off families can afford coaching for the test. Students from wealthier families also have other advantages. They are more likely to have been exposed to books and travel."
   We know that test scores go up with family income. They also improve with socioeconomic status. Both trends are observed within all ethnic and racial groups. But before you blame income and socioeconomic status for the test score gaps, consider this:

Black children from the wealthiest families have mean SAT scores lower than white children from families below the poverty line.

   Figure 3 shows how math SAT scores increase with family income for both whites and blacks, confirming Professor Guinier. However, black students from families earning more than $70,000 (1995 dollars) score lower than white students whose families earned less than $10,000. Figure 4 shows more of the same for the verbal SAT. Here too, the wealthiest blacks score below the poorest whites. (Complete data can be found in Appendix B.)

By 2004, more than 50 percent of staph infections were caused by methicillin-resistant Staphylococcus aureus (MRSA), up from 2 percent in 1987; some are also resistant to vancomycin, a common backup antibiotic. Other disease organisms show similar patterns: pneumococcus, E. coli, and, yes, M. tuberculosis now come in multidrug-resistant or extremely drug-resistant varieties. In 2001, the Food and Drug Administration warned:

Unless antibiotic resistance problems are detected as they emerge, and actions are taken to contain them, the world could be faced with previously treatable diseases that have again become untreatable, as in the days before antibiotics were developed.

The hole in the pension plans of US labour unions now stands at $369bn Credit Suisse has calculated with the aid of new reporting standards. This raises the prospect of higher pension contributions for employers and deteriorating industrial relations.
Multi-employer pension schemes, managed by trade unions on behalf of members working for many different employers, are now just 52 per cent funded, the bank calculates with m ost of the burden to close this gap likely to fall on small and midsize companies.

A tragedy of the commons

A big part of the trouble is that the gains from the overuse of antibiotics are private, whereas the losses are public. Problems such as these are rarely soluble without outside intervention. Ramanan Laxminarayan of Princeton University, who has been thinking for many years about how to deal with the question of resistance, suggests the answer is a mixture of incentives and scourges. Prize funds, or guaranteed-purchase arrangements for new drugs and the rapid-diagnostics systems that would allow them to be deployed appropriately, would help overcome the financial problem of antibiotics being cures, rather than just treatments. Stricter dispensing guidelines for doctors and pharmacists might help deal with the moral hazard of overtreatment.

A bit of realism would be good, too. Derrick Crook, a consultant microbiologist at Oxford, where Florey and Chain once worked, observes, “It is hard to massively restrict the use of antimicrobials when they are doing good. It is possible that the enormous use in Asia is a good thing for a short time in a given country.” That, combined with ignorance about precisely how much the unnecessary use of antibiotics contributes to increasing resistance, makes restriction highly controversial.

Tim Peto, a colleague of Dr Crook’s at Oxford, though sceptical of the idea that resistance might bring about a catastrophe, also notes that much of modern surgery relies on the risk of infection remaining low. At the moment, it is close to zero. If resistant strains raise it to even 5%, let alone 10%, a lot of orthopaedic surgery, cataract replacements and other discretionary but life-enhancing procedures would simply stop. That would not be the end of the world, but it would be a step backwards. And it would be a shame if it had been caused by a failure to take proper notice of a warning, all those years ago, sounded by one of the men whose legacy would thus be squandered.

The article , written by Mariana Baabar delves into how Hindus in Sindh, especially girls, are forced into Islam. Some excerpts :

Hindus constitute about 2.5 per cent, or 26 lakh, of Pakistan’s population.
Though sprinkled all over Pakistan, 95 per cent of Hindus are in Sindh.
Only Tharparkar district in Sindh has Hindus in majority: 51 per cent.

Paul Krugman on last week’s Supreme Court arguments:

I was struck, in particular, by the argument over whether requiring that state governments participate in an expansion of Medicaid … constituted unacceptable “coercion.” One would have thought that this claim was self-evidently absurd. After all, states are free to opt out of Medicaid if they choose; Medicaid’s “coercive” power comes only from the fact that the federal government provides aid to states that are willing to follow the program’s guidelines. If you offer to give me a lot of money, but only if I perform certain tasks, is that servitude?

Wrong question. The right question is:

If you take a lot of money from me and then offer to give it back, but only if I perform certain tasks, is that servitude?

Because, you see, the federal government is not handing out its own money to state governments — it’s handing out money that it takes from the citizens of those very states for the purpose of (conditionally) handing it back. (Of course “handing it back” isn’t exactly right either, because the payments go not to taxpayers but to their state governments — but it’s a lot closer to right than Krugman’s formulation.)

The SEC should ignore the quid pro quos among institutions, exchanges, and retail flow, because for decades exchanges and brokers screwed consumers via their coalition on the commissions and spreads, which was encouraged via the regulators. Why trust them now? As if the current most prominent regulator, Barney Frank, won't be an effective crony capitalist in 9 months, setting an example for all the other current regulator big-wigs. The key for them to be valuable is creating barriers to entry, as there's no big institution that's going to hire someone good at lowering costs to consumers. Of course, that's all hidden behind some pretext about protecting against fraud, and helping the stability of the exchanges, and fairness, and lots of other platitudes. Just think about whatever the SEC wrote in the 60's and 70's and know they were shills for the brokerages and exchanges who colluded to steal investors blind via spreads and commissions that never would have survived a competitive market (thank you regulators!).

Why is individual health insurance "unaffordable?" Because both Federal and State regulators have salted it up with mandated coverage that people wouldn't buy on their own. Young, healthy, uninsured need simple catastrophic coverage, or even just a contract that allows them to buy insurance later if they need it. They can't buy it because it's regulated out of existence.

Those same people could pay cash for their non-catastrophic expenses.  In a functioning market, like car repair, or vet services for your dog, you can pay cash and receive services. Lack of insurance is only a problem for a small sliver of people who don't have enough money for an unexpectedly large  needed service. But it's essentially impossible to just pay for health care. As Solicitor General Virilli pointed out
The Affordable Care Act addresses a fundamental and enduring problem in our health care system and our economy.  Insurance has become the predominant means of paying for health care in this country.
But whose fault is that? Isn't the answer to deregulate the cash market so it functions again, and remove payments for regular predictable expenses -- and the huge moral hazard that such payment engenders -- from legally mandated "insurance?"

I noticed two other curiosities in the economic part of the Supreme Court discussion.

First, nobody mentioned the fact the mandate is unworkable. The penalty for not buying health insurance is much less than the cost of buying insurance. Moreover, consider the stereotype uninsured person: making say $50,000 a year when employed, but perhaps unemployed right now, with health problems that make getting insurance or employment hard, maybe facing financial pressures. This might be the typical person that the Administration is trying to shower with mortgage forgiveness. We're really going to make a person like that pay a substantial fine for not having health insurance? Right.  

Second, the central argument for the mandate in the Supreme Court is the cost of emergency room care for uninsured people. This argument is correct as a matter of economics, but it is trivial in magnitude. Yes, if you are a charitable society that won't let people die in the gutter, then there is moral hazard that people will take advantage of charity and not protect themselves.

But emergency room and charity care for the uninsured is a trivial part of our bloated health-care expenses. The real expense problem is over-use (moral hazard) by people who have insurance, and by their doctors. (Honest doctors have a strong incentive to practice defensive medicine, for fear of being sued; and a few less-honest doctors have an incentive to pad the bill. After all, insurance is paying.) This  is what's driving the cost of insurance so high that people choose not to buy it, and the reason they have to be forced to do so. We could easily pay for charity care for the small number of indigent uninsured in an otherwise functioning market. 

The uninsured and preexsiting conditions are a real economic problem. The health law's answer is to force insurers to sell everyone insurance at the same price, and to force "insurance" to cover every imaginable expense. If you do that, the price is very high, so you have to force healthy people to join. Given "guaranteed issue" the mandate is needed. Yes, that makes the elements inseparable, so if the court strikes down the mandate, it has to strike down guaranteed issue as well. But that also means opponents need a clear alternative to a genuine problem.

In every year since 1989, new companies have created more net jobs than the economy as a whole, which means that older companies are, on average, destroying more jobs than they create. In 2009, the latest year for which we have data, new businesses created 2.33 million jobs, while older businesses destroyed, on net, more than 7 million jobs. The share of Americans working in startups has fallen to 2 percent in 2009 from 3.8 percent in 1979.

thereby blurring the key distinction between a pecuniary and a non-pecuniary externality.

The point is that Mr. Clement’s decision not to buy a car (and therefore to drive down the price) is bad for Detroit auto workers only to the extent that it’s good for other car buyers. It is therefore in no sense a net burden on the rest of society. Contrast that with the clear burden imposed by the uninsured fellow who wants you to pick up his hospital tab.

From a blogger who is ordinarily thoughtful. This is Matt Yglesias at Slate:

A lot of people, including former White House spokesman Reid Cherlin, seem to think it’s extremely difficult to explain and defend the core elements of the Affordable Care Act to people….

It’s true that the law covers a lot of ground and that if you want to explain each and every provision you’re in for a long afternoon. But as a journalist who writes a lot about public policy, I don’t think that the main element of it is nearly as complicated as the Obama administration has convinced itself it is.

The issue is that they wanted to ban insurance companies from discriminating against people on the basis of their health status…

So what’s wrong with that? Answer below the fold.

Three things:

More than 90% of people who have private health insurance are already in a health plan that could not deny them admission or charge a higher premium because of health status.
Of the remaining 10% (those in the individual market), only 3% to 4% ever have a problem.
The interim reform for these people is to let them by into federal risk pool insurance for the same premium healthy people pay and only 49,000 have signed up!!!
Does anyone seriously believe that we are creating 159 new regulatory agencies, spending a trillion dollars and nationalizing the entire health care system to take care of 49,000 people?

Sorry, Matt. That explanation of ObamaCare won’t fly.

President Barack Obama's appointment -- during a congressional recess -- of Dr. Donald Berwick to head the Centers for Medicare and Medicaid Services is focusing new attention on Berwick's record and beliefs. Berwick, who had been the president of the Institute for Healthcare Improvement, has enthusiastic support for his new post from a broad array of medical, business and consumer groups, but key Republicans had raised objections to his nomination. They often point to a speech Berwick delivered on July 1, 2008, when Britain's National Health Service celebrated its 60th anniversary. The NHS posted excerpts of the speech; here is a transcript with ellipses where the NHS edited the video.

“India’s university system is in a deep crisis,” said Devesh Kapur, director of the Center for the Advanced Study of India at the University of Pennsylvania, who has written extensively on the subject. “There are so many regulatory barriers to setting up a college or university that it deters honest groups but encourages those who are willing to pay bribes. Millions of young Indians will have high expectations, paper credentials, but will be poorly educated. We can be absolutely sure that it is not going to be pretty.”

This difference is exacerbated by regulation: U.S. banks continue to be regulated under Basel I, which limits the size of bank balance sheets relative to their equity. But European banks, on the other hand, have been regulated under Basel II, which jettisoned the total leverage ratio in favor of carefully calibrated risk weights for every exposure. As a result, The result was that U.S. banks have been incentivized to load up on risky assets that offered the highest returns at the lowest leverage, while European banks were incentivized to load up on less risky assets with low regulatory capital requirements, enabling them to maximize leverage. "That's why European banks love mortgages and U.S. banks like leveraged loans, why European banks like Triple-A and U.S. banks like Double-B," says Mr. Samuels.

Mr Buffett, whose father was a four-term Republican congressman who decried crony capitalism and the passage of the federal income tax law, is hardly alone among today’s American super-rich in appearing to navigate his business and public policy interests awkwardly. This should be considered par for the course. The burden is surely on the White House, for the sake of maintaining the integrity of the market and the policy-making process, to keep its distance.

“Things that qualify as tier III [hard to value] assets or that can’t be re-lent in the secured market are likely to become more expensive to finance across the market,” said Barry Bausano, head of equities for the Americas at Deutsche Bank.
According to the global head of one top-five prime brokerage, the new rules may “kill” some markets altogether.
Trading in mortgage-backed securities, for example, will become much more difficult for hedge funds to engage in, causing concern for some that liquidity in the market, which is only just beginning to recover and is seen as crucial for a recovery in property prices, could evaporate.

And liberal economists are already laying the intellectual groundwork for an Obama Revolution of tax hikes that would completely reverse the Reagan Revolution of tax cuts.

– Thomas Piketty and Emmanuel Saez, two superstar liberal economists who focus on income inequality issues, contend their research suggests “the top tax rate could be as high as 83 percent without harming economic growth.”

– Peter Diamond, a failed Obama nominee to the Federal Reserve, recently put out a paper — highly recommended by New York Times columnist Paul Krugman — with Saez that concludes the optimal top rate is “73 percent, substantially higher than the current 42.5 percent top U.S. marginal tax rate (combining all taxes).”

– Former White House economic adviser Christina Romer says her new research finds that “the incentive effects of marginal rates are small” and that raising “marginal rates on the wealthy is a straightforward, effective way to counter [rising income inequality], while helping to solve our looming deficit problem.”

Remember, Bob Rubin didn't even know Citi owned a $300B+ in mortgages, and he was getting paid $115MM to mind the store, so it's not obvious to anyone what's going on in these $1 Trillion behemoths, but we all know the Treasury will be there if they collapse.

And attractive as the German model is now, across decades American jobless rates are tough to match. The Anglo-Saxon preference for little or no employment protection may be the most effective at herding workers from declining industries to growing ones, driving job creation and innovation. Dyspeptic bond markets are now pushing Spain and others towards reforms that make it easier and cheaper to lay off workers again. Not before time.

Assunta Linza, a bright-eyed 33-year-old with a college degree in psychology, has been unemployed since June, after losing a temporary job as a call-center operator. Her father, who is 60 and has a fifth-grade education, took early retirement with full benefits at age 42 from a job as a workman at the Italian state railway company.

As Kip Viscusi wrote in "Job Safety" in The Concise Encyclopedia of Economics:
Other evidence that the safety market works comes from the decrease in the riskiness of jobs throughout the century. One would predict that, as workers become wealthier, they will be less desperate to earn money and will therefore demand more safety. The historical data show that this is what employees have done and that employers have responded by providing more safety. As per capita disposable income per year rose from $1,085 (in 1970 prices) in 1933 to $3,376 in 1970, death rates on the job dropped from 37 per 100,000 workers to 18 per 100,000.

Why did he choose 1970? Trivia question: when did OSHA begin?

Christopher Conover at AEI discusses his new book American Health Economy Illustrated.

Myth: Relative to other countries, the U.S. spends “too much” on health care.

Differences in income explain 85% of variations in health spending.

The U.S. is spending what it should in GDP per capita, while France spends 1/5 too much, and Canada and the U.K. spend too little. Blue states are spending too much due to overregulation (Massachusetts, New York, New Jersey). After RomneyCare Massachusetts has the highest level of health care spending.

Myth: The U.S. has an abysmal infant mortality rate.

It does rate 43rd, but there is no standard for reporting infant mortality. The U.S. is one of eight countries that count extremely premature infants as live births despite low chances of survival. If we categorize births by length of gestations the U.S. ranks 2nd, 3rd, or 4th (depending on type of rank) to European countries.

Myth: The U.S. lags behind its competitors in life expectancy.

The U.S. ranks 39th, but this is misleading. This distortion is due to a high rate of deaths resulting from violence. When adjusted for deaths related to violence and suicide the U.S. ranks first in OECD countries.

Myth: The U.S. has worse health outcomes than its peers.

Cancer is the second leading cause of death in the U.S., but cancer patients live longer in the U.S.; cancer survival rates are better. The U.S. has far higher screening rates.

Conclusion: The U.S. health system has many problems, but other countries do not offer a magic bullet.

If you assume that stimulus works, it must have worked. This circularity doesn’t bother PolitiFact, a group that seeks to elevate the tone of our political debates but usually lowers it.