Which countries face a medical cost crunch?

China, in short:

…health costs will rise more rapidly as a percentage of national income among Third World nations that are now entering into modern economic growth than has been the case in OECD countries…

The supply of chronic conditions that require treatment is much greater at middle and late ages in China than the supply that currently exists in OECD nations…a [previous] low life expectancy and such a high infant death rate mean that those who survived to middle ages experienced severe biomedical and socioeconomic insults in utero, in infancy, and in later developmental stages…Despite the rapid advances in public health and strong economic growth, the negative conditions that influenced physiological development remained severe into the early 1960s…such early-life insults reduce the waiting time to the onset of chronic diseases at later ages and increase their severity.

Consequently, individuals who are age 50 and older in China today will have far higher prevalence rates of chronic diseases than is the case in OECD nations.

That is all from Robert Fogel’s short but excellent The Escape from Hunger and Premature Death, 1700-2100.

It is estimated that the number of chronic diseases per person could be triple than currently experienced in the United States; the level in China would be comparable to that of the U.S. in about 1900. At that time the average American male suffered from six chronic medical conditions, and it was very likely that at least one of those six was debilitating, meaning the person could not work.

The bottom line: Expect China to experience some serious demographic problems in the coming decades.

Insurance markets in everything

These legs have just been assessed as worth $1.96 million.

Here is a more general history of celebrity insurance of body parts. Heidi Klum should in fact feel slighted; other body parts have been appraised at higher sums and when the value of the dollar was higher. In reality this difference may reflect the growing role of market competition and the inability of any single star to achieve a “winner take all” position. In relative terms Betty Grable was a bigger deal than is Heidi Klum today.

And how about this one?

Stranger [insurance] policies have included virgins taking out policies against having a baby by immaculate conception in anticipation of the second coming in 2000.

Using products as advertisements

Why not name your product after your company phone number?

1 800 BEST DDS [is] a product that blurs – if not outright erases – the line between merchandise and marketing tool.

The name of the product is also the number of a referral service for dentists who specialize in cosmetic procedures, like fixing crooked smiles and bleaching yellowed canines.

Here is the full story, from The New York Times.

China fact of the day

China is stepping up its hard line against internet pornography by threatening life imprisonment for anyone caught peddling porn.

Ne’er-do-wells involved in the production and distribution of online adult content – including “phone sex” – face a range of punishments including compulsory surveillance and imprisonment. Those behind sites that generate more than 250,000 hits will be treated as “very severe” and could face life imprisonment.

Linking the jail sentence to the number of hits, now that is a saddening use of optimal punishment theory. Here is the full story.

We Will Rock You

The answer is Queen’s Greatest Hits, and Freddie Mercury is the lead singer. The accompanying booklet “tells Queen fans that Bohemian Rhapsody is about a young man who has accidentally killed someone and, like Faust, sold his soul to the devil. On the night before his execution he calls God in Arabic, “Bismillah”, and so regains his soul from Satan.”

Here is the full story. It is reported that the album, shorn of a few love songs, is selling well.

We will not rock you

Virginia and 39 other states sued eight music distributors and retailers accusing them of price-fixing and all I got was a lousy Michael Bolton CD. Well, not me personally, but that is what lots of libraries and public schools in Virginia and across the nation are getting as their share of the $75 million non-cash part of the settlement. Other CDs distributed as part of the deal include teen band Hanson’s “Snowed In” and, get this, Martha Stewart’s “Spooky, Scary, Sounds for Halloween.” Not every CD is a dud but it’s fair to say that the value of the CDs is substantially less than $75 million. If you were a member of the class and signed up you could also get a check for almost $13, $67 million in total.

According to the judge, pure transaction costs were $6-8 million and the lawyers got just over 14 million so depending on how you evaluate the free CDs (I think $35 million is generous) total transaction costs might eat 20-30 percent of the settlement – not bad as far as these things go. Note, however, that the plaintiff’s claim was that consumers were being overcharged by 23 cents a CD. Personally, I’d be happy to pay the extra 23 cents to be free of class-action lawsuits like this. But then again I don’t buy as many CDs as Tyler.

Museums designed by Economists

Argentina is slated to open the Museum of Foreign Debt this coming January. The country had its first default in 1827; its 2001 default of $141 billion was the largest by any nation. A Google search for “Argentina public debt” yields about 395,000 entries.

A group of economists conceived of the basic idea, in the hope of educating the Argentine public (note: some of the details in the link are now out of date; up to date information is in the 13 September Business Week, p.14). Buenos Aires University will house the museum.

The museum opening, however, might be delayed again. Why? The city government, one source of funding, is heavily in debt.

What I’ve been listening to

1. Rodrigo, Concerto for Guitar. I used to think this piece was classical radio fluff, short, lightweight, and accessible. I now see it is as a precursor of modern ambient music. So much of the Spanish acoustic guitar tradition makes sense when heard through this perspective.

2. Mahler’s Seventh Symphony. A sprawling mess, to be sure. Hardly anyone is drawn to the melodies here. Is this his worst and least listenable symphony, or the beginning of a new Mahlerian sound world? If you want to hear it swift and severe, try the Boulez recording as well.

3. Beethoven’s Fifth Symphony, and the Piano Concerti. I put these on immediately after returning from Mexico. The slow movement of the Emperor Concerto is one of Beethoven’s most beautiful moments. And could Pierre-Laurent Aimard, who plays on this CD, be the greatest pianist in the world today? Try his Ligeti Etudes or Debussy as well.

4. Late Elliott Carter. Carter remains prolific beyond his ninetieth birthday. His late short pieces, dryly contrapuntal, are usually written for a very small number of instruments. I used to think of Carter is an amazing composer in his early years (e.g., Sonata for Cello and Piano), but who later stagnated. This picture could not be more wrong. Over the last ten years his reputation has skyrocketed, and rightly so.

5. Handel’s Theodora, conducted by William Christie. Much of Handel is too earthy and straightforward for my tastes, but this is the best Handel recording I’ve heard, up there with S. Richter doing the keyboard sonatas. Here is an excellent blog post on why Handel operas and oratorio are less boring than the modern listener might think.

6. William Byrd, Complete Keyboard music, by Davitt Moroney. The scrunchiest parts are the best, and seven CDs are not too much. Byrd has one of the best claims running for “most underrated composer,” try also the vocal music.

And when Yana gets home from visiting her high school friends, I hear a great deal of Beck, arguably the best popular musical artist of the 1990s, with apologies to Kurt Cobain.

Do you know the old saying: “Music is enough for one life, but one life is never enough for music”?

Mexican role models and globalization

I promised to stop blogging about Mexico upon my return, but I found the following intriguing:

In a Latino nation where most consumers are dark-skinned, such as Mexico, the tendency to feature güeros [the light-skinned] in advertising might be considered racist or at least distasteful. But it is pervasive.

“Even Mexico’s biggest chicken company uses white hens in their billboards,” notes advertising analyst Enriqueta Rivera, who teaches at the Monterrey Tech university…

The use of fair-skinned people in ads is not all racism or bias:

There are also more practical reasons for using fair models. According to José Miguel Jaime, of the Mexican advertising agency Precision Marcom, about one-quarter of commercials seen in Mexico are filmed for use throughout Latin America and use neutral images. [TC: Read: Many other Latins are not crazy about Mexican culture.] Another quarter are made for Mexico but filmed abroad to cut costs. For the remainder “you might want different ads to target a higher-end and lower segments but clients don’t want to spend on two versions and so you tend to see ads for the elite crowd”.

Nonetheless foreign products and suppliers are bringing big changes:

Over the past five years, cheap credit from vehicle companies, department stores and credit card companies has put their products suddenly within the reach of the working classes.

Rogelio Ramirez de la O, an economic consultant, estimates that the Mexican market for cars and appliances is 30m, while the market for cell phones could be as high as 70m [TC: that is out of a total population of about 100 million]. He dates the change to the 1994 North American Free Trade Agreement, which lowered tariffs and prices for US goods and encouraged manufacturers to overproduce. Companies started to issue credit, while Wal-Mart brought rigorous pricing policies, enabling it to sell to more Mexicans. “Foreign companies came to sell to all Mexicans, not just the top 10m, and that is a reality that has influenced Mexican companies.”

…”What we look for is that people identify with and believe in the brand,” says Maria Gloria Loaiza, Pampers account manager at Starcom Media Vest Group Mexico, which uses ads made in Venezuela for distribution throughout Latin America. “When the ad is not credible, neither is the product. Our babies have to be in the real world: they look Latino.”

Change is in sight in certain areas. Children of various skin tones regularly appear in promotions. Dark hair seems to be overtaking blonde in commercials. And ads made for the 20m Mexicans living abroad, who have more of a sense of pride in their identity, tend to feature average citizens.

Ads for the American Latino market have indeed gone especially far in a populist direction:

…advertising aimed at the $450bn (£251bn) Hispanic market in the US uses Latin faces and often Mexican themes, since two-thirds of the target group are of Mexican descent. At $3bn per year, the budget for advertising to 35m US Hispanics is greater than the $2.5bn spent on 100m Mexicans, notes Enrique Gibert, founder of the Mexican advertising agency Gibert Quattro [emphasis added].

As is so often the case, freer trade breaks down previous class distinctions for the better; the desire of mass media to find a “least common denominator” has a silver lining. And the Latins in the United States arguably have become the culturally most important Latin “country.” Here is the full story.

Secrets and Lies

I argued earlier that good intelligence requires more dissemination of information. But the CIA and other agencies are classifying more documents than in the past. The purpose it seems is often to cover up for mistakes or even to censor things that the authorites simply don’t like rather than to hinder terrorists.

Remember those aluminium tubes supposedly intended for use in Iraq’s secret weapons program? A Senate report on prewar intelligence quoted the CIA as saying “their willingness to pay such costs suggests the tubes are intended for a special project of national interest.” The CIA, however, classified how much the Iraqi’s paid as secret, deleting the number. How much did the Iraqi’s actually pay? About $17.50 a piece.

A possible solution to this problem is to create an independent board. Surprise, we have one already! According to J. William Leonard, director of the National Archives’ Information Security Oversight Office, “a 2000 law created a public interest declassification board to recommend release of secrets in important cases, but the president and Congress never appointed members.”

The Crying Bar

One of the hottest bars in the Chinese city of Nanjing sports only a sofa, a few tables, and tissue paper – a lot of tissue paper. The AFP news service reports that the city’s first “cry bar,” where customers can sit and cry for $6 per hour, is growing in popularity. Owner Luo Jun says he opened the bar when clients of his last business said they often wanted to cry but didn’t know when or where it would be appropriate to do so.

My source is Eric Rasmusen, the well-known economist and also conservative Christian. Note that Eric has split his previous blog into two parts, Current Affairs and Everything Else, much of which is microeconomic in nature.

Our Presidential candidates

…conservatism as we have known it is now over. People like me who became conservatives because of the appeal of smaller government and more domestic freedom are now marginalized in a big-government party, bent on using the power of the state to direct people’s lives, give them meaning and protect them from all dangers. Just remember all that Bush promised last night: an astonishingly expensive bid to spend much more money to help people in ways that conservatives once abjured. He pledged to provide record levels of education funding, colleges and healthcare centers in poor towns, more Pell grants, seven million more affordable homes, expensive new HSAs, and a phenomenally expensive bid to reform the social security system. I look forward to someone adding it all up, but it’s easily in the trillions. And Bush’s astonishing achievement is to make the case for all this new spending, at a time of chronic debt (created in large part by his profligate party), while pegging his opponent as the “tax-and-spend” candidate. The chutzpah is amazing. At this point, however, it isn’t just chutzpah. It’s deception. To propose all this knowing full well that we cannot even begin to afford it is irresponsible in the deepest degree. I’ve said it before and I’ll say it again: the only difference between Republicans and Democrats now is that the Bush Republicans believe in Big Insolvent Government and the Kerry Democrats believe in Big Solvent Government. By any measure, that makes Kerry – especially as he has endorsed the critical pay-as-you-go rule on domestic spending – easily the choice for fiscal conservatives. It was also jaw-dropping to hear this president speak about tax reform. Bush? He has done more to lard up the tax code with special breaks and new loopholes than any recent president. On this issue – on which I couldn’t agree more – I have to say I don’t believe him. Tax reform goes against the grain of everything this president has done so far. Why would he change now?

That’s Andrew Sullivan, and I think I am headed out to The Crying Bar.

Courses (markets) in everything

How about a $10,000 class for teaching top executives how to cope with prison? Students are taught the following:

1. Learn meditation and physical exercise routines.

2. Get used to the fact that nothing changes and everything is outside your control.

3. Discard your addictions and vices.

4. Bring a cheap watch.

5. Never make eye contact with anyone; no one is your friend.

6. “If you are going to hurt somebody, drag them into your cell, because then you have an excuse that they invaded your privacy.”

Here is the full story. The entrepreneurs claim they have had twelve clients a year for the last two years.