Wednesday assorted links

1. “…the slowdown in TFP during and after the great recession is due to the decline in the speed of adoption of new technologies in response to the credit disruptions that shocked the US economy since the end of 2007 and that have affected the cost and availability of funds for companies until the end of 2013.”  Short paper here (pdf).

2. This piece takes too long to get going, it is nonetheless an interesting take on how tourism is transforming Iceland.

3. Aetna’s retreat from Obamacare.

4. A mathematical history of taffy pullers.

5. Myths about Sunnis and Shias.  Good piece, useful corrective.

Comments

5. It's always fascinating to read a correction of a false narrative that is itself false. "Similarly, these same voices describe the Syrian government as an “Alawite regime” that rules and oppresses Sunnis. However, Sunnis are heavily represented at all levels of leadership in Assad’s government. The territory it controls at this point in the war and at all points past is majority Sunni. And the Syrian armed forces are still majority Sunni. Alawites may be overrepresented in the security forces, but all that means is that they get to die more than others. It if it is an “Alawite regime,” isn’t it odd that includes and benefits so many non-Alawites?" Alawites (Shiites) constitute less than 15% of Syrian Muslims, Sunnis over 85%. Simple math compels participation by Sunnis. As for Sunnis in the Syrian army, they are conscripts, not volunteers. By contrast, Assad's elite Republican Guard is almost entirely Alawite. Why didn't the Sunni conscripts in the army defect after the start of the civil war? In large part because the economy was in shambles as a result of the conflict, making the Sunni conscripts and their families dependent on army pay, a situation exacerbated by the embargo imposed on Syria by the west. Then as atrocities multiplied, the Sunni insurgents promoted the narrative that Assad's army (i.e., Sunnis) were the perpetrators, a narrative that the west obligingly adopted. By then, the possibility of large defections among Sunni conscripts was impossible, as they would face the same certain death as the Alawites once the Assad regime was defeated. Americans prefer a narrative, whether at the Olympics or in war. And like most narratives, it's mostly fiction.

"elite Republican Guard"

I am sure it is as "elite" as the Iraq version.

You really should take that article with a huge grain of salt.

Especially remember that the initial rebellion against Assad wasn't just Sunnis and wasn't particularly Salafi.

Assad is a brutal dictator who kills the opposition. His power base is ethnic, even if the regime is open to allowing other to join. Remember, Saddam Hussein had Jewish Iraqi officers and Christian foreign ministers. It doesn't mean they are nice regimes or don't ethnically cleanse. Oh, this Stalinist regime is color-blind, and isn't racist, so I guess they are good guys!

Over time, during a civil war, moderate factions often lose out. So the moderate voices in the initial uprising either were killed, co-opted, or fled the country.

There is also always going to be a pro-government bias. Its the devil you know. Most average people will flee to the government areas in a rebellion.

If multiculturalism doesn't work in Syria I don't see why it's expected to work here.

Syria is a multicultural nation? That's like saying an ice cream shop has a diverse range of food because they have 50 different flavors of ice cream.

Alawites, Shia, Sunni, Antiochian Orthodox Christian, Syriac Orthodox Christian, Melkite Christian, Druze, Kurd.

Any creed that persists long enough eventually becomes an ethnicity.

Yes, but look at Iran, Libya. If history has taught us anything, it's that the Arab respects strength and despises weakness. When Lawrence of Arabia and his Arabs slaughtered Ottoman Turks, instead of enmity (legend goes), the Turks praised him for being a tough guy. That's the mentality of the Arab. Like the Russian, they like strength and will pick on weakness. It's also a Balkan trait. For example, an old tale says there was a strongman who wanted to steal sheep from one of three groups: a rival who he hated, and had many sheep, a weaker opponent who had some sheep, and an old woman who had just one sheep she used for sustenance. Who did he steal from? Of course the old woman. It's apocryphal but telling. Steve Sailor can elucidate more.

Turks and Persians are not Arabs, first of all.

Also, Lawrence of Arabia was raped by the Turks.

I'm not sure that's a sign of respect.

"Larry, Larry, I promise to respect you in the morning..."

"Arab respects strength and despises weakness"

In contrast to the group that despises strength and respects weakness? That would be?

Roman Empire?
Imperial China?
The Soviet Bloc?
British Empire?
Ancient Egyptians?

cough *metrosexuals* cough

America. Western Europe.

Assad doesn't lure foreigners into his country to slaughter innocents just for the sake of producing youtube-clickbait. So yeah, I'll take a thousand Assads for the fascist jihadists.

"Saddam Hussein had Jewish Iraqi officers and Christian foreign ministers. It doesn’t mean they are nice regimes or don’t ethnically cleanse. Oh, this Stalinist regime is color-blind, and isn’t racist, so I guess they are good guys!"

Not sure whether this makes them good or not, but it is a relevant point I think. I can't imagine there are many Jews or Sunnis in the Iranian military for example. Or non-Sunnis in Saudia Arabia. (correct me if I'm wrong). There's something going on here that differentiates Syria and Iraq under Saddam from at least some of their surrounding countries and it's worth noting.

People should look for MEMRI TV on YouTube, it's MENA tv translated and gives you a good perspective of their positions about politics and religion.

+1

And let's not forget about the relatively large number of high-profile defections, most of them Sunni: https://en.wikipedia.org/wiki/List_of_Syrian_defectors#Syrian_civil_war

1. Why the collapse in investment in productive capital in the U.S. when the world is drowning in savings? For one thing, the rate of return has been falling for decades. For another, the China option draws much of that investment. And finally, the potential returns (and favorable tax treatment) from speculation in asset prices now draw the bulk of "investment", from real estate to stocks and bonds to currencies to entire companies. When was the last IPO, or secondary offering for that matter, of any consequence. It's conceivable that the "public company" might just disappear. When that happens, what justifies the financial sector?

Did you read the article? It's because the USA failed to adopt technology after the Great Recession, due to lack of credit (and lack of will to adopt), and during 2001-2004 (coming out of the dot-com collapse) it failed to invent new technologies. Blame our poor patent laws, which should give more incentive to invent for the latter.

Did I read the article? Can you refrain from insults? Everyone knows you are a jackass, passing off insults as thoughtful comments. And not only on this blog. Countries don't "adopt" technology, owners of capital "invest" in technology. The question is why they don't when the world is awash with capital. I have given an explanation. You may not like it, but at least it's an explanation. Better than the usual refrain - because government.

#3 - another boring Obamacare article, but I liked this sentence: " Companies in heavily regulated industries -- and health care is now probably our most heavily regulated sector outside of nuclear power plants -- spend a lot of time engaging in n-dimensional chess games with the various government entities that have jurisdiction over their operations. " - can you guess why?

3. Aetna threatened to pull back from Obamacare if the government refused to allow Aetna to merge with Humana, what most people would call extortion. http://nymag.com/daily/intelligencer/2016/08/aetna-to-feds-give-us-our-merger-or-obamacare-gets-it.html Providing government subsidized health insurance through private insurance companies may not be good policy.

So, explaining basic economics to the government is now classified as extortion?

Aetna, told the government that they couldn't be profitable on the exchanges given their current market share. If the US allowed the merger, they might become profitable. If the US denied the merger, there would be no way to become profitable. So they would then drop out of the exchanges in at least 5 states to prevent further loses. The merger was denied, they are now dropping out of the Exchanges.

You'll note, that no one is disputing that they are losing money on the Exchanges.

You are correct.

How will OBAMACARE evolve over the next 10 years, in your view?

Why is it impossible for Aetna to sell insurance and be profitable but it is possible for Humana to do so and it would be possible for a Aetna+Humana merged company to do so?

When dealing with airlines or auto manufacturers I could see an argument about large fixed costs and economies of scale allowing costs to come down enough to make an industry profitable without causing a monopoly for consumers to contend with.

Insurance doesn't seem to have these types of massive economies of scale and fixed costs...at least not if you already have a pool of millions of customers already.

Health insurance has massive economies of scale. It's their bargaining power with healthcare servers. The bigger they get the more of a monopsony they are.

@Boontoon

..not enough 'healthy' young people are buying Obamacare to pay the claims of the many 'unhealthy' people who did sign up, according to Aetna.
Plus, the many new coverage items mandated by Obamacare sharply hike insurer' costs.

Humana is having the same problem, but the intricate web of Federal subsidies causes uneven effects on Obamacare insurers.

Obamacare was an actuarial impossibility from the getgo.

It is not an honest "insurance" program and can not possibly work as one. The only way it can continue is with large taxpayer subsides to the private insurers and/or excessive, coerced premiums from medically low-risk members of the insurance pool.

....and Humana pulled out of Virginia and Alabama a few months ago.

Obamacare is sinking; text Janet Yellen and have her ink up those printing presses.

Yea that's always the 'problem' too many sick people and not enough healthy ones. Doesn't really say much of anything....like a bar owner telling you the problem is not enough people who want to drink.

Yet insurers are allowed to let premiums increase for age and smoking status (not something employer provided plans are allowed to do). Plans easily run $500+ per month (the person I helped with it made $30K per year and found a plan for $550 with a $400 subsidy). This does not seem to me an impossible combination to provide coverage.

IMO there appear to be two very different markets in the ACA exchanges. On one hand you have the working poor. These are people who are working low wage jobs that either don't offer health coverage or don't offer decent coverage. These people are above the Medicaid threshold, however.

On the other hand you have higher end 'gig workers'. Contractors, consultants, independent people who work with people who get employer provided coverage but don't get it themselves because they are not tied to a single client as a full time employee.

Neither population should be exceptionally unhealthy nor are the 'mandated coverages' really all that extreme (at $600+ a month there is no problem with 'mandates' IMO...esp. when plans can set higher deductibles and copays).

One problem I do see is that this population is probably not that stable. Gig workers drop out of this market all the time whenever they get full time jobs or get coverage from their spouses. No matter what any plan they get will feel crappy to them since the people they work with will have plans that are being partially paid for by employers. The working poor may fall down into the Medicaid market but I suspect they will actually do pretty well with exchange plans since the subsidies make many such plans reasonably affordable.

I think the real instability comes from not so much from regulation and 'nth degree chess' but from 'nth degree musical chairs'. Insurers win when they get a pool of healthier people than the competition. A low priced plan will attract a lot of healthy people who shop by price alone. Over time a decent low price plan will start getting sicker people who seek out stuff they need covered. Insurance companies will then reshuffle the deck by killing off the existing plan and starting new ones that rejigger around copays, deductibles, networks and so on.

IMO insurance competition is problematic. It becomes a game where people try to get one over on the insurance company by getting expensive stuff covered when they need it and insurance companies try to not cover stuff that's needed. Before and after the ACA the small private plan market is therefore a chaotic mess where plans never last and things are constantly changed and moved around.

Apparently even using exit is now an improper use of force.

It could also be argued that the government plays the same "extortion" game with using regulatory threats to get what they want, even if what they want isn't the goal of the regulations, per se.

Apparently, some folks dispute that they are losing money in all the states they are pulling out of.

Here's what Kevin Drum says,

"in 2015 they made $13.6 million in the individual market in Pennsylvania. That's a very healthy 19 percent of premium revenue. But one of the states they're pulling back from is...Pennsylvania. Nice, profitable, Democratic-leaning Pennsylvania. It's very peculiar, isn't it?"

http://www.motherjones.com/kevin-drum/2016/08/why-aetna-pulling-out-nice-profitable-pennsylvania

So explaining basic extortion techniques to JWatts is now classified as off limits!

So, they are projecting profitably next year in 1 of the 10 states they are dropping. That's what you are hinging your 'extortion' narrative on?

LOL, sure go with that.

They may dispute it only because they don't understand the facts.

19% profit as a percent of revenue on individual healthcare business is literally impossible. The minimum legally required loss ratio is 80%. You then have to add on state taxes and the ACA insurer fee. We are around the mid-eighties now. So even a company with no operating expenses (you have to pay claims, manage networks, collect premium, fight fraud), wouldn't have a profit this high.

Keep in mind the 19% figure (which is already inflated for reasons below) is likely from the Pennsylvania stat filings, which includes exchange and off-exchange business. They can pull out of the Pennsylvania exchange without pulling out of Pennsylvania.

So if the exchange plans are not profitable because sicker people are gathering in that pool that would imply non-exchange plans have a healthier pool, hence more profitable. So what's the problem again? If 19% is overall profitability then it seems they are doing fine if you view the entire pool as both on and off exchange plans.

I should probably read the article instead of commenting, but this is the internet and reading articles is clearly not a requirement. When I visited Iceland about five years ago, I was struck by the large number of non-Islandic tourism workers. The hotel in Geyser was entirely staffed by Roumanians. I encountered multiple German waitresses and even one worker from Argentina. Since English is spoken by everyone, it took me a while to get around to asking peoples' nationality. The only exception to someone speaking English with an American accent I encountered was a guy speaking English with a Brit accent; he was Swedish. The only person I met who was not totally fluent in English was a fellow tourist from France.
I liked my visit. I hope to go back. I hope to encounter some actual Icelanders next time.

3. Insurers prefer insuring healthy people, not sick people. But if an insurer limited coverage to only well people, nobody would buy their insurance. Hence, Insurers cover some sick people, but only just enough so they don't risk losing all of their healthy insureds. It's like the "going rate" employers pay employees: it's just enough to keep the employees from going. Of course, not every group is equally healthy. For example, people who haven't had health insurance (because they were sick and couldn't get insurance or couldn't work and pay the premiums for insurance) are likely less healthy than people who work and are covered by group insurance. Insurers would prefer not to cover them. At least not unless the government subsidizes the coverage. Aetna likes the subsidies but prefers to limit its coverage to people who aren't sick. That's a dilemma. Now one can ask: is a company, such as Aetna, really a health insurance company if it's business model is designed to avoid covering people who are sick. It works as a business model because people are irrational and believe they will never get sick so Aetna will never deny coverage for them.

"But if an insurer limited coverage to only well people, nobody would buy their insurance"--that's just not true. Perhaps, at current prices few healthy people would be insured, but if insurance companies only insured healthy people prices would be much lower. Fire insurance isn't purchased by homeowners whose house is on fire

Fire's are difficult to predict for both buyer and seller of insurance. As a result fire insurance is essentially very efficient. The insurance company adds up the total cost from unexpected fires, subtracts the costs they can prevent (uncovering fraud promptly, getting people to take safety precautions etc) and then divides by the base to get the premium. If it became easier to predict whose house would burn, the insurance market would become much more difficult. Those who think their houses will burn will rush to buy comprehensive coverage, insurance companies would try to max. its sales to those who are unsure their houses will burn while trying to scare away those who do think they will burn.

4: arXiv.org is not peer-reviewed. It is easier to publish an article there than in the National Enquirer (but I am not criticizing either publication).

#5 Was it ever assumed that more that 10% of Sunnies were committed to war?

Yes it was. We've had several years of news coverage framing the Syrian civil war in crude sectarian terms as a Sunni majoritarian uprising against an Alawite regime.

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