Results for “from the comments” 1664 found
From the comments (Dan Hanson on ACA)
Dan writes:
The front end technology is not the problem here. It would be nice if it was the problem, because web page scaling issues are known problems and relatively easy to solve.
The real problems are with the back end of the software. When you try to get a quote for health insurance, the system has to connect to computers at the IRS, the VA, Medicaid/CHIP, various state agencies, Treasury, and HHS. They also have to connect to all the health plan carriers to get pre-subsidy pricing. All of these queries receive data that is then fed into the online calculator to give you a price. If any of these queries fails, the whole transaction fails.
Most of these systems are old legacy systems with their own unique data formats. Some have been around since the 1960′s, and the people who wrote the code that runs on them are long gone. If one of these old crappy systems takes too long to respond, the transaction times out.
Amazingly, none of this was tested until a week or two before the rollout, and the tests failed. They released the web site to the public anyway – an act which would border on criminal negligence if it was done in the private sector and someone was harmed. Their load tests crashed the system with only 200 simultaneous transactions – a load that even the worst-written front-end software could easily handle.
When you even contemplate bringing an old legacy system into a large-scale web project, you should do load testing on that system as part of the feasibility process before you ever write a line of production code, because if those old servers can’t handle the load, your whole project is dead in the water if you are forced to rely on them. There are no easy fixes for the fact that a 30 year old mainframe can not handle thousands of simultaneous queries. And upgrading all the back-end systems is a bigger job than the web site itself. Some of those systems are still there because attempts to upgrade them failed in the past. Too much legacy software, too many other co-reliant systems, etc. So if they aren’t going to handle the job, you need a completely different design for your public portal.
A lot of focus has been on the front-end code, because that’s the code that we can inspect, and it’s the code that lots of amateur web programmers are familiar with, so everyone’s got an opinion. And sure, it’s horribly written in many places. But in systems like this the problems that keep you up at night are almost always in the back-end integration.
The root problem was horrific management. The end result is a system built incorrectly and shipped without doing the kind of testing that sound engineering practices call for. These aren’t ‘mistakes’, they are the result of gross negligence, ignorance, and the violation of engineering best practices at just about every step of the way..
…“No way would Apple, Amazon, UPS, FedEx outsource their computer systems and software development, or their IT operations, to anyone else.”
You have to be kidding. How do you think SAP makes a living? Or Oracle? Or PeopleSoft? Or IBM, which has become little more than an IT service provider to other companies?
Everyone outsources large portions of their IT, and they should. It’s called specialization and division of labor. If FedEx’s core competence is not in IT, they should outsource their IT to people who know what they are doing.
In fact, the failure of Obamacare’s web portal can be more reasonably blamed on the government’s unwillingness to outsource the key piece of the project – the integration lead. Rather than hiring an outside integration lead and giving them responsibility for delivering on time, for some inexplicable reason the administration decided to make the Center for Medicare and Medicaid services the integration lead for a massive IT project despite the fact that CMS has no experience managing large IT projects.
Failure isn’t rare for government IT projects – it’s the norm. Over 90% of them fail to deliver on time and on budget. But more frighteningly, over 40% of them fail absolutely and are never delivered. This is because the core requirements for a successful project – solid up-front analysis and requirements, tight control over requirements changes, and clear coordination of responsibility with accountability, are all things that government tends to be very poor at,
The mystery is why we keep letting them try.
From the comments, on the economics of food stamps
In response to my earlier food stamps post, here is Brian Donahue:
Context:
http://www.fns.usda.gov/pd/34snapmonthly.htm
Economic conditions have been improving, grudingly, for three years now. But between October 2010 and October 2013, the cost of the program has risen 25%. I understand the concept of ‘countercyclical stabilizers’. This is something else. The idea of a 10% cut in this context…ok.
Food stamps aren’t being singled out here. Just because entitlement reform is paralyzingly hard, it doesn’t mean we don’t keep moving on the other stuff. Summing up 2013: fiscal cliff tax increases on rich, medicare investment tax on the rich, ending payroll tax holiday, sequester (half defense.) Republicans are playing ball – at some point along the way, food stamps get a look. If a 10% cut here is a sacred cow, we’re not close to having the stomach for the real fights to come.
And here is PLW:
Explaining the Rs food stamp focus is a little more complicated. First of all, labeling the House nutrition title of the Farm Bill as “going after” the program seems unfair. The House food stamp proposals include uncoupling categorical eligibility for food stamps with receipt of a trivial non-cash TANF benefit (a technique used by many states to waive all asset requirements for food stamps and raise the net income test to twice the poverty line), getting rid of a loophole (i.e., “LIHEAP loophole”) that a small number of states in the (primarily in the Northeast) use to artificially reduce the net income of food stamp beneficiaries in order to raise their level of benefits, and taking away the Secretary of USDA’s work requirement waiver authority for non-disabled adults without dependents.
Second (and this is where it gets complicated), many of the policies that the Rs are pushing in the context of the Farm Bill are going after policies that were put in place as direct result or an unintended consequence of other R policies. For instance, the coupling of categorical eligibility to non-TANF cash benefits is the result of the 1996 welfare reforms which ended AFDC (how one used to become categorically eligible for food stamps) in replace of a much less clear TANF benefit (rather than cash linked to AFDC, one might receive a service in the form of a 1-800 hotline for pregnancy prevention linked to TANF), but continued to bestow eligibility for food stamps to the recipients of AFDC’s successor. At the same time, the 2002 Farm Bill streamlined eligibility by creating a number of state options for food stamps with the intention of pacifying the states who were getting penalized for having high food stamp error rates (those same error rates the USDA now brags about) as the result of having more food stamp participants with earned income as the result of the 1996 welfare reforms (i.e., administratively, it’s more difficult to assign benefits to people with earned income rather than unearned income… especially if those low-income people are in and out of work through the course of a month).
From the comments — why are the ACA exchanges behind schedule?
The primary issues are political and legal barriers to properly build a workable solution.
The first is that the ACA gives states the right to build and run their own exchanges. However, even if they rake the money HHS is still required to step in and fill the gap if they fail. So many states took the money (who wouldn’t) but the program is left to implement a system of unknown size. Just that would doom most IT implementations. In addition there weren’t any IT firms interested in helping to tackle the Federal system, instead they went to the bigger states where they don’t have to navigate the crazy laws that govern IT projects at the federal level. This also allowed them to integrate smaller less complex systems outside the gaze of an IG department who publishes reports that get national attention in their zeal to protect public money.
Second is that funding is discretionary and even though they mapped out the required headcount they Didn’t have the budget appropriated to hire even half what was needed (as defined by outside consultants like MITRE) which left them severely understaffed. My wife’s ‘team’ of 5 was actually 2. There is no chance that Congress would appropriate more money to fix this. It also isn’t like these people are all that great at their jobs. No person really good at their job in the private sector is going to take a big pay cut to work for HHS. These jobs aren’t a bunch of overpaid airport security people but are jobs that pay much much better in the private sector. This means promoting the inexperienced from within and there is no institutional experience to implement a complex system.
Next there is the political decision to fold the exchanges into CMS (Centers for Medicaid and Medicare Services). The congressional Republicans were using every power they could to harass the executives so HHS tried to shield them behind Medicare. However, it wan’t like CMS was any good at this type of implementation and it was now not the only priority for the contract shops to worry over.
The other problem on a technical level was the near impossible task of verifying eligibility of users for subsidies. All the data has to be verified to avoid fraud, this include income. That data is segregated at the IRS and they are prevented by law from sharing ANY of that information with other parts of the government. Thank Johnson and Nixon for their abuse of IRS info. So there is no easy way to automate the approval process based on tax returns. The only sensible way is to have the IRS do it, but that would require funding and no contract manager is going to go to jail to solve a problem without a new budget appropriated for them.
Last is just the factor that any large IT system like this has a horrible failure rate. Supposedly the success rate in the private sector is now above 50% but there aren’t many major news stories when private companies waste a billion dollars on a system that never does anything. The Government is even worse because of the hundreds of pages of regulations meant to ensure money isn’t “wasted”. Sure, the Federal Government generally gets the best pricing there is on products, but the massive overhead eats all of that up and delays the process by months. I think there is a reason that private companies don’t have the complex rules you see in the government. They also don’t have to worry about going to jail if they do break the rules.
I find it a miracle that there is ANY chance that the exchanges might actually be working in time. However, I think it would be wrong to say that it is some inherently governmental problem that couldn’t be solved with smart reform of the laws and congressional support to fix things. One party is invested in always excusing governmental problems and the other is opposed to the idea of trying to fix problems because they are invested in highlighting government failure for the simple purpose of killing it.
From the comments
This is from Ted Craig:
Another way to look at the effect of mechanization is to look at how it affected the other living employees of farmers. The U.S. horse population peaked at 26.5 million in 1915. It declined rapidly after that, hitting a low of just over 3 million in 1960. While it is about 9 million now, that’s because of increased ownership as pets.
I’m not saying humans will be destroyed like horses, but it raises some questions about the ease of transition.
From the comments, on high frequency trading
This is from a high frequency trader, in response to my link to this paper (pdf), favoring batch auctions:
The author’s purported cure is far worse than the disease. Positional externalities from shaving latency are indeed real, but they’re not really that large relative to market size. A good way to estimate their magnitude is by how much money has been spent on cutting down the Chicago-NYC messaging latency, the two most liquid and hence profitable trading centers. The cost recently spent on this infrastructure (largely microwave relay networks) is about $500 million. Assume that the infrastructure depreciates in about a year and generously assume that the spending on intra-market latency is about the same.
That’s a total cost of about $1 billion/yr in market costs imposed by latency based positional externalities. American equity markets trade $24 quadrillion in value a year (and that’s only counting shares, not derivatives). Which means the cost to the typical investor of the latency externalities comes out to an upper bound of $4.5e-05 per dollar traded, or for example to trade one share of MSFT: $0.0016. That’s the upper bound of cost savings by perfectly eliminating latency externalities. The cost certainly isn’t trivial, but it is much lower than the forced imposition of $0.005 in bid-ask trading costs because the SEC refuses to decrease the minimum $0.01 tick size. With an economical tick size the average bid-ask spread would easily go in half. (Plus it would reduce the latency externalities since market makers could price improve rather than rushing to jump first in line the order book queue). My point being is that if we’re that worried about reducing costs to investors there’s an alternative that we’re already ignoring that both has a larger impact and poses much less risk than completely tearing up the foundations of the market structure.
Finally the authors assume that batch auctions don’t come with any of there own structural costs. Not only do they indeed have substantial defects themselves, but they don’t even eliminate the latency externalities. The market already uses batch auctions at market open and close. As any trader will tell you these are far more manipulated than continuous trading. During a batch auction an indicative price is published prior to crossing based on the currently resting buy and sell orders. A trader can easily change this indicative price or imbalance by entering a large order and canceling it before auction. Analogous strategies aren’t impossible, but are much harder in continuous trading because a resting order can be crossed at any time, and hence poses real economic risks to the trader. To paraphrase Alex continuous trading acts as a tax on bullshit.
The flip side of a pre-cross indicative price is that traders will wait for as long as possible before the cross to enter their orders. No trader using proprietary signals is going to want other market participants to see his order for any longer than is absolutely necessary. The counter-strategy being shaving down your latency even further so you get to see others’ orders first. Then modify yours accordingly by trading even closer to the cross time using your lower latency. So what frequently happens in opening and closing batch auctions is that the order book and indicative price is pretty much garbage until a few milliseconds before the cross, at which point the real price formation occurs. When I worked in a much larger HFT firm I was a continuous guy, but sat next to the batch auction guys. We certainly cared about our latency, but generally we focused much more on our signals and execution algorithms. The auction guys in contrast were always obsessed with their latency.
Switching to batch auctions will not reduce the cost of latency positional externalities, and is pretty likely to increase them. On top of all that it will give us a much lower-quality and less efficient market structure. There are certainly better ways to tackle the latency externality costs. But it’s important to recognize the perfect’s the enemy of the good here, I doubt we can ever fully eliminate them under any sane structure. It’s better to think of moderate improvements that work on the margin, rather than centrally planned grand sweeping re-designs of the entire market structure.
At the first link, in the comments, he has several follow-up explanations, all recommended.
From the comments — on dynamism
Responding to this link, Ryan writes:
I think the secular decline in various measures of dynamism is a pretty important topic, largely because we haven’t been able to figure out what’s causing it. We’re seeing it not only in worker flows but also job flows, migration, startup rates, etc.
Industry composition effects make the puzzle even bigger–retail and services are typically more volatile than manufacturing, so the larger employment share they’re seeing means we should expect to see HIGHER rates of churning rather than lower (see http://updatedpriors.blogspot.com/2013/02/job-flows-industry-composition-and.html).
One thing that DOES help explain secular declines in gross flows is firm age stuff. Startup rates and employment shares among young firms are on secular decline (see http://updatedpriors.blogspot.com/2012/12/startups-and-great-recession.html); since dynamism typically declines as you go up through the age classes, lower young-firm activity means we should expect lower flows. But it’s not clear that this is a sufficient explanation; and, more importantly, it’s only explanatory in an accounting sense. We don’t know why entry is declining. And this is a secular trend, so common political explanations may not work.
Whether we should be worried really depends on what is causing all of this. After all, churning is costly. If churning is declining for good reasons, we should applaud it. But that may not be the case.
From the comments
Rahul writes:
Just for the heck of it, I tried an alternative list:
1. Ramp up drastically the training output of new doctors and nurses: More med schools, larger intakes per school, elimination of 4 years of pre-med university etc. More med school student scholarships and subsidies?
2.Massively expand other lower tiers of the medical system: Physicians assistants, Nurse Practitioners etc.
3. Liberalize drug imports both commercial and personal. Allow direct import of any FDA-licensed drug sold in equivalent nations (western EU / Canada etc.). Mostly ignore Big Pharma’s opinions in this context.
4. Fully recognize all medical degrees from similarly developed nations (e.g. Canada / UK / Japan / Australia etc.) to the point that doctors from these nations can register and practice almost instantly in the US. Provide an almost limitless immigration quota for doctors from western nations. Even better, aggressively recruit doctors from abroad. Mostly ignore APA’s opinions in this context.
5. Allow and encourage Medicare / Insurance procedures to be carried out abroad where cheaper locales (Mexico? Canada? Argentina? ) exist. Incentivize recipients using these options. Premium rebates? Encourage private insurers to offer plans that economize on major procedures by treating abroad.
From the comments
This is from Mark A. Sadowski, who makes some other good comments in the same thread:
Marcus Nunes’ post caused me to reread E. Cary Brown’s “Fiscal Policy in the “Thirties: A Reappraisal” (American Economic Review, Vol. 46, No. 5, December 1956, pp. 857–879) and Larry Peppers’ “Full Employment Surplus Analysis and Structural Changes” (Explorations in Economic History, Vol. 10, Winter 1973, pp. 197–210), both of which are mentioned in the Douglas A. Irwin’s paper on gold sterilization and the recession of 1937-38 which Marcus discusses in his excellent post.
Peppers’ paper shows how to calculate cyclically adjusted budget balances from Brown’s paper. By my arithmetic, according to Brown’s data the cyclically adjusted general government balance increased by 3.0% of potential GDP in calendar year 1937. Peppers only looks at the federal budget, and he finds that the cyclically adjusted federal government balance increased by 3.5% of potential GDP in calendar year 1937 and another 0.1% in 1938 for a total of 3.6% of potential GDP.
According to the April 2013 IMF World Economic Outlook (WEO) the U.S. general government structural (cyclically adjusted) balance will increase by 3.9% of potential GDP between calendar years 2010 and 2013. And the March 2013 CBO estimates of the cyclically adjusted federal budget balance show it will rise by 4.6% of potential GDP between fiscal years 2009 and 2013.
So apparently we have repeated the fiscal mistakes of 1937 with approximately a 30% bonus and yet the economy has not plunged into a renewed depression.
We know what Scott Sumner would say. Furthermore he would be right. It’s called “monetary offset.”
Still looking in vain for that darned liquidity trap Krugman keeps talking about!
From the comments
Hazel Meade wrote:
The banning of catastrophic-only plans infuriates me the most. Those are the only plans that are actually financially sensible for a healthy individual to purchase. Everything else on the market is a perverse by-product of the employer-based insurance system.
Worst case scenario with a catastrophic-only plan is you end up with $10,000 in debt. That’s a debt load many times smaller than what the Federal government thinks students should take out to get a college degree. We’ll let you borrow $100,000 to get a sociology degree but, we think that $10,000 is an unconscionable amount to pay for medical expenses? So unconscionable that we have to FORCE YOU to buy a plan with more extensive coverage?
Of course, we all know the real reason for this. it’s meant to force healthy young people to subsidize healthcare for older sicker people. Just force them to pay more for insurance than they ought to, and force them to buy more extensive coverage than is rational.
Questions that are rarely asked (from the comments)
The fact that the US is running a persistent trade deficit and experiencing significant net capital inflows seems like very strong evidence that we are not in a traditional Keynesian situation, where we have ‘excess saving.’
If we have excess saving, why are we having a capital inflow rather than a capital outflow?
If combined private and public demand were below the economy’s productive capacity, why are we running a trade deficit? Doesn’t the existence of a persistent trade deficit indicate that our demand is in excess of our supply?
Very much not our grandma’s recession.
From the comments
On your 2010 R&R post: Your point about 90% being neither sacred nor stable shows how badly many people misinterpreted the paper.
You also said we don’t know how much higher than 90% we can go. I’m not sure exactly what you meant, but I’ve suggested that the threshold we should be most concerned about is the point beyond which you can be sure you’ll never get back to safe debt levels, because you’ll be faced with the Catch-22 of both austerity and “not-austerity” pushing debt higher for different reasons. This threshold is much lower than the point at which large countries will actually experience a fiscal crisis and probably lower than most people think. A reasonable estimate is only 150% debt-to-GDP, based on the observation that there are no historical episodes of countries recovering from 150%+ that are at all relevant to the U.S. or U.K. today (yes, I used the R&R data among other sources to test this).
The risk that the U.S. sails through such a threshold is becoming very real at current debt levels.
If you (or anyone) are interested, my paper reviewing all historical episodes of debt >150% of GDP (from the R&R database) was posted last month on Seeking Alpha and on http://www.cyniconomics.com and it’s called “Answering the Single Most Important Question in Today’s Economy.” And if the U. Mass. trio are interested, I’ll even offer my calculations.
From the comments, on UID
This is concerning the forthcoming Indian attempt to register individuals through unique eye scans and implement more cash transfers:
The domestic debate in India has largely been around :
1) This is just a sop before elections, a kind of brazen legitimised bribery. 2) The welfare architecture will not simply be migrated, it will be expanded. 3) Is conditionality critical to success? There remains no clear method to establish conditionality. 4) Identification of deserving families remains the problem. Until that is solved, nothing changes. 5) This is basically a turf war between ministeries and the previous operational/financial failures of the UID program are being hidden through the hasty implementation being planned now. 6) Getting in-kind subsidised goods through regular intervals during a month is superior cash flow management for a poor family than a lump-sum cash transfer at the end of the month
All the criticisms could be partially true. But the operational costs of the welfare delivery infrastructure will surely go down. Food and fertilizer have not yet been shifted – too politically sensitive – but amazingly, fuel has been. The biggest no-distortion gain is likely to come from there – the consumption of kerosene will most likely take a massive beating. It reduced by about 90% in a pilot.
The other corollary benefit – of using an Aadhar card as a means of establishing identity and for KYC norms in banks – is also absolutely tremendous.
It is indeed a top 5 most important economic policy issue in the world. But India is generally a low-trust society and in particular this gov’t is distrusted in most policy circles. Hence the rabid skepticism all around. I tend to be a lot more optimistic than that.
The great public choice question is – will they ever manage to bring food under this? For one, the PDS system was showing signs of an organic improvement. Second, the popular imagination has always conceived of the ‘man of the house’ frittering away hard earned money on country liquor if the woman of the house is not given grains directly. Third, giving away PDS distributorships has been an effective method of giving favours to those who the dirty work for national politicans at local levels – it is perhaps the longest running and biggest scam in India.
If they actually conclude that the greater ease for a poor family will convert into more votes than the losses they might take on the previous three fronts, it would be absolutely amazing. My sense is, like most great policy decisions, this will go through simply because it’s an idea whose ‘time has come’, and we will invent post-facto justifications of how it was politically rational to go through with this.
That is from Ritwik, who started off his comment with this sentence:
Privacy is actually a non-issue for most Indians.
From the comments
From Tom, a good pick and a good point:
Prolly you’ve all seen it … the most underrated invention — The Pallet. More underrated even than the shipping container, but just about as needed. http://www.slate.com/articles/business/transport/2012/08/pallets_the_single_most_important_object_in_the_global_economy_.html
Hoisted from the Comments
Here is John Thacker in a comment on my post Slow Speed Rail and the Infrastructure Deficit:
…consider the Southeast High Speed Rail Corridor. That’s mostly an upgrade of existing lines, combined with acquiring an abandoned line and rebuilding it. The environmental and planning work along has taken decades. The corridor was designated in 1992. The Tier I Environmental Impact Statement (EIS) was begun in 1999. That was completed in 2002, and received a Record of Decision. That cleared the way for the Tier II EIS, which began in 2003. The Draft Tier II EIS was finished in 2010 and signed then. That cleared the way for the Final Tier II EIS, which is expected to be finished by the states by the end of 2012, and then a Record of Decision from the FRA by the Fall of 2013.
From the comments, on downturns, fiscal policy, and multiple equilibria
We were less wealthy than we thought we were.
Call me an AD-denier, but I still think the basic issue here is that you can’t consume more than you produce. Production exists to satisfy demand, but at the same time demand is limited by production. We had a long boom built on the notion we could boost demand and thus supply and thus demand again in a virtuous cycle, and now we are seeing the cycle work in reverse as demand/supply seek their natural levels.
One way to justify this model is in terms of multiple equilibria, and that we have been walking (bouncing our heads?) back down the escalator. Arguably for the United States this downward bouncing is over. Along the way we are sending signals about the quality of our institutions and thus shaping the course of the future.
In this model there is still a useful role for fiscal policy. For one thing, fiscal policy can smooth that ride down the escalator, by spreading the losses out over time, at the cost of future debt of course. This may be needed if only to make the political economy of decline less bitter; see Spain and Greece. Nonetheless fiscal policy cannot make up for the output losses at will. We are not standing in an IS-LM diagram where the difference between “what we have” and “what we could have” is thwarted only by some supposed Austerians who won’t shift the proper curve and yet somehow have taken over some of the biggest spending social democratic, insider-leaning governments in world history. The IS-LM approach fits in nicely with the view that policy improvement is all about yakking about the obstructionists. Instead, policy is also about rebuilding trust, not just maintaining ngdp on a decent keel.
There is another possible role for fiscal policy, as there usually is in models of multiple equilibria. If you ran some super-duper fiscal policy, and invented the flying car, a cure for cancer, and other marvels, the market might suddenly latch its expectations on to a much more positive scenario. There could be a significant upward bounce to a much higher equilibrium of output and employment. In any case, the quality of fiscal policy matters, and Keynesian ditch digging probably doesn’t do much for inferences about institutional quality and for the selection of multiple equilibria. “Spend the money, anywhere” is in my view a deeply pernicious attitude, somewhat akin to thinking you can create a good NBA team, with a strong ethic for quality and work, by tanking for better draft picks at the end of every season. But no, the internal ethic matters and cannot be first destroyed and then recreated at will. Good teams don’t usually work that way, and neither do good fiscal policies.
Right now we Americans are building back up to better equilibria, slowly, by showing that our economic institutions are not totally crummy. This process can take a good while, but in fact our recovery is going better than many people believe. The eurozone is far — very far — from being on that kind of rebuilding track.
There is plenty of talk about various commentators don’t understand the lessons of Econ 101. There is a reason why we teach classes beyond 101, and why we spend so much time studying institutions and the theory and empirics of public choice.