Saturday, September 03, 2005

How “Horizon” theory ties into present tragedies...

HORIZONS OF INCLUSION- Part II: 

Does the betrayal of New Orleans mean that government is incapable of coping?


An interlocutor on another list has contended that the market place would have done a vastly better job of preparing and handling an emergency like this. His reasoning:  We would have all these stockpiles and emergency teams in place through private endeavors -- if the emergency entrepreneurs could be assured that when needed they could sell their services/goods at whatever price they could get for them….Without worrying about being prosecuted for “price gouging”.

With all due respect, this is just plain wrong. Yes, I agree that government policies can affect the "horizon" behavior of private companies etc. An example that is galling to us authors is the Thor Power Tools case, in which publishers wound up taxed for books kept in warehouses, hence they put books out of print much earlier than they would otherwise. (And notice how - by citing “horizons” - I have tied this in to our present topic!)

And yet, it is downright silly to credit most types of business with longer horizons than government, when it does its job. Companies have a responsibility to justify spending vs likely return on investment (ROI) that seldom extends beyond 3-5 years. Indeed, in recent decades, ROI horizons have shrunk considerably, as CEOs have found their personal self interest coinciding with one year or at best 2-year ROI.

Exceptions do exist. Tree farms and toll roads, for example, where farsighted investors plan to recoup generous rewards across a span of one or two decades.. Tuning public incentives, taxes and other policies to encourage longer range ROI across more industries should be a high priority. Exactly the kind of tuning that Julian Simon and the other cornucopians and market mystics dismiss as unnecessary, as they point to surging economic indicators that (alas) rely upon exploitation of fast-depleting resources and do not reflect un-sustainable practices.

Governments are inherently capable of longer horizons, in part because that is one of their essential functions.(When they are managed by sincere and smart people.) They can stockpile, create vast infrastructure. Buy during recessions, when commodities and other things are cheap and everyone else has stopped spending. Example, the US govt owns some of the best real estate in Paris, especially magnificent apartments which it picked up for diplomats at a song, in 1945, paying no taxes on them, forever.

One of the many sins of the insipid left-right axis (other than the fact that it is French), is its implicit refusal to take a calm look at which tasks government is good at and which it does badly. We all have lots of OPINIONS about this, but very little calm research.

And yet, we HAVE learned a lot. For example, besides providing basic security, justice and enforcement of contracts, govt also does pretty well at tackling certain types of infrastructure, emergency preparedness (when public officials do their jobs) and handling ACUTE EMERGENCIES. (Kill Hitler, feed THESE children right now, go to the moon.) Acute needs are often driven by consensus desires that are simply not measurable in terms of ROI.

Govt tends to do much worse when taking on CHRONIC PROBLEMS. (e.g. constantly improving our refrigerators or entertainments in response to public taste, providing longlasting and productive jobs, making poverty vanish, creating an ongoing profitable human presence in space.) These are far better handled by a market... perhaps with fine-tuning to ensure that it really is profitably attractive for private capital to step in and address long term needs.

Indeed, such incentives are needed to help make it natural and profitable for the private sector to do more of the heavy lifting in emergency preparedness. Especially insurance companies. My interlocutor protests that we have done the opposite:

But we know the politicians would immediately cry "gouging", and "profiteering" and proceed to criminal indictments and confiscations. We would not even need the Strategic Petroleum Reserve if property rights could be protected -- as thousands of entrepreneurs around the nation would build their own little fuel reserves.  I might add that insurance markets are highly regulated making innovation  difficult.

Yes, but whose fault is that! I am so tired of hearing people holler at "government" in general, while paying no attention to the fact that "government" is a set of tools. The real question is "whose hands are operating those tools, and to what end?"

The notion that "labor unions" control the US Government is getting so tired, so absurd, so absolutely loony, that even most conservatives are starting to shuffle their feet and look embarrassed when guys like Limbaugh shriek this old chestnut. Today, when more Pork is flowing to the frat boys' pals in any one year than any FOUR under Clinton, maybe it's time to accept a basic fact...

... that government is tweaked by those in power to favor their friends. And for a long time those with the power to tweak the rules have been... the CEO class. Using government to create regulatory regimes within which innovation and inventiveness and hard work and competitiveness are not the winning traits... but rather, the greatest flows go to those with best connections and passive collection of capital rents. Above all, we see relentless insertion of regulations that ask taxpayers to absorb costs (e.g. R&D and pollution abatement and infrastructure and resource depletion) while profits are privatized.

(Have you any idea how far we would be in space, if NASA had been allowed to collect royalties from communications and weather satellites?)

Let's take insurance, since my friend raised it.

If insurance companies actually competed, they would make their living by working hard to ensure that their clients live longer! Your insurer would take active steps to make sure your faucet and work station weren't killing or crippling you. Want lower premiums? Then let Allstate look in your medicine cabinet and give you advice. Don’t like their advice? Choose another company.

Logically, it is the right-handed alternative to so many acronymed agencies, like the FDA and OSHA. So why has this approach to consumer protection never taken hold?

The brilliant and lamented Barry Goldwater (whose spinning body now provides half of the power used by the State of Arizona) asked this question once. He soon realized that laws had been carefully erected, largely by his own party, to foster conditions under which insurance companies can rake profits simply on the basis of actuarial betting -- with plenty of mutual back-scratching, collusion and government tax credit support -- without lifting more than a finger to actually earn those profits. Only a few remnants of the old activist approach to insurance - like Underwriters' Labs -- still exist, wherein companies invest time and effort to win by making their clients live longer.

One major exception? Industrial fire prevention. Insurance companies still vigorously inspect and supervise every client who wants to insure a major commercial building. They demand all sorts of precautions from fire extinguishers to safety procedures that exceed local code. It’s competitive. It works. And guess what? OSHA and the feds regulate this particular area LESS because insurance is doing what it should. The state has withered back in direct proportion to the degree that private enterprise has tried. (Another major example: FedEx/UPS have virtually taken over parcel post, a withering away that no cynic ever expected and that proves incrementalism can work.)

When he realized what had happened to the insurance industry, Goldwater suggested removing the corporate-welfare props, thus forcing insurance companies into a truly competitive market where their profits would arise mainly from active efforts to increase their customers' well-being... leading hopefully to an eventual withering away of FDA, OSHA, FTC, the CPSC and a whole alphabet soup of paternalistic agencies that were set up to protect us, and that serve as bogeymen of the right. Goldwater’s plan looked good in theory. Instead of simply bitching endlessly about government - (a smugly satisfying but pathetically impotent pastime) - why not offer real “right-handed” alternatives to solve what the people see as real problems.

"Nothing doing!" said the rest of the GOP, at the behest of their lords in corporate boardrooms. Goldwater’s idea never even made it to committee.

Again, let me remind you all of a weird historical quirk... of all the industries that have been DE-regulated in the last few decades, it has been democrats who did the most, and the most successfully. Trucking, banking telecommunications, airlines, parcel post, and so on....

The GOP has been the main backer of a few major deregulatory actions. Savings and Loans, the accounting industry, and energy. Ah, contemplate those wondrous stimulations of industry and market-generated wealth for all. Well, for a few.

No, my friends. Bringing this all back to “horizons” and who does better at solving problems, do not expect “business” to behave any better than "government" so long as CEOs can make more money by manipulating government than by providing competitive goods and services.

If you want the state to wither away, try competing with its services FIRST. Instead of demanding that it dismatle and trusting some mythical market to step in later.

==Continue to Part III  or return to Part I

25 comments:

daveawayfromhome said...

That corporations have become so short-sighted is one of the Great Mysteries to me. I'm no business person, so maybe I just dont get it, but I remember as a kid, Robert Heinlien praising corporations as a mechanism for long-term thinking because they lasted beyond their members. I guess those days are mostly over, huh?

As for private vs. government, I can only shake my head in amazement most times anymore as someone suggests yet another privatization scheme for "more efficient" governance. Most times, all I see is a private company getting a sure-thing level of income (sometimes with an increased budget, as is too often shown with privatization within public schools), with which it pays less money and benefits to their now-private-sector workers while adding an expensive layer of management and profit-takers.

We would have all these stockpiles and emergency teams in place through private endeavors if the emergency entrepreneurs could be assured that when needed they could sell their services/goods at whatever price they could get for them. Without worrying about being prosecuted for “price gouging”.

Is this guy kidding?! Or does he really think anyone with half a brain would fall for this idea? Just because no one would prosecute for price gouging doesnt mean it isnt. And without price-gouging as an incentive, who's going to make an investment in both "assets" and the means to get them where they are needed? Especially on the scale we've seen this last week?
And if they cant, or dont, guess who will end up doing the job anyway? That's right, the gov't. After paying the inflated prices on the goods that these private companies were able to provide.

Jalf said...

Just a quick note on the privatization thing.
A month or two ago, some US researchers made a big study of cost and effectiveness of health care all over the world.
The US, with its largely privatized health care was, as far as I remember, roughly twice as expensive as typical European ones, *while being no more efficient*. Health care is on par between European countries and the US, but the US (and privatized) one is vastly more expensive.

Kryten42 said...

The curious thing for me regarding the current disaster is when you compare the response from this Administration now to their response when hurricanes hit Florida last year.

I wonder... if Jeb Bush had been Governor of Louisiana, perhaps things might have been quite different.

It also is interesting when you compare it to Galveston, 105 years ago.

Francis said...

David, there is an old (and often forgotten) rule for statisticians: Measure what you value or you end up valuing what you measure.

That is one reason I'd be in favour of near-complete stock-market overhaul if I could see a way (most obvious solutions would just send the Futures markets spiralling out of control) - most CEOs are measured on stock price, which is acutely sensitive to short-term influences, whereas honesty pays in the long term, and often damages in the short term.

Re: healthcare, I haven't seen that study. On the ohter hand, I do know that although in certain operations, the British National Health Service is inferior to the American system, average life expectancy in Britain is more than a year greater than in the US - and the entire spending on healthcare (government and private combined) per capita comes to less than the US Government spending on healthcare per capita - and that's before you take private medical care into account. (See the WHO annual report for the exact figures). And you certainly can't criticise the inventors of MRI and Hip Replacements for lack of innovation.

And people assume that the private sector is always more efficient... (I'd also take the BBC over any other mainstream private (or state for that matter) news and programming service).

(Yes, we (the British) do have plenty of homegrown examples of how not to do state industry as well - sand don't get me started on Private Finance Initiatives.)

Finally, from what I've seen from New Orleans, I question your notion of a "Diamond Society" - a lot of what is being demonstrated there seems to be very good evidence that you don't have a diamond society so much as an hour-glass society (hell, the proliferation of Payday Loan companies should be strong evidence for that). There are whole groups of people trapped into living from paycheck to paycheck - hardly a symptom of a diamond society. There are people who's education has been bad enough that they are never going to get a degree - and this gap appears to be even harder to close in America than Britain. I've seen the statistic (although not from a reliable source) that a quarter of the families of New Orleans were living on less than $10,000 per year. How the hell are you meant to get out of that situation? You certainly can't stop working to study. One of the side effects of the hurricane appears to be ripping the surface off America and exposing more of the inner workings than is comfortable. It appears to resemble a diamond rather less than an hour-glass (and I'm certainly not the person to have come up with that - have a quick google).

Rob Perkins said...

Good points, all.

But you've got to be kidding me if you think that either telecom or airlines are truly deregulated. Have you *seen* 14 CFR? The one I was required to study, just for a private pilot certificate, had almost a thousand pages of regulation.

And, honestly, if there's any *good* example of the sort of thing you talk about when discussing public-financed infrastructure coupled with private profit taking, the *telecom* companies, together with factions ruling the FCC over the last three presidential administrations and the last *five* Congresses, ought to be perfect examples!

Yeah, long distance is deeply competitive, and mobile phones are partially competitive, but the incumbent *wireline* companies, who even in the face of pseudo competition from companies like Comcast for their business, can't seem to stop slopping at the trough to actually complete upgrades to their networks which they promised would begin *nine years ago*, when the '96 Telecom Act was signed by Our Hero Bill.

Instead, smaller ILECS like Cincinnati Bell and ALLTEL carved out exceptions to the laws for themselves, while the really big ILECS proceeded merely to buy and sell one another, and to keep collecting the money.

(Cincinnati Bell probably doesn't deserve this kind of thing as much as other ILECS and larger ILEC's. It's by far one of the very best telephone companies in the United States. But it remains that during at least the first five years after '96, they didn't seek to compete anywhere with anyone.)

And in the meantime, the Cable companies still charge more for basic phone service, and *far* more for their broadband data service, than it actually costs them.

(Perhaps I shouldn't really complain about that latter; I remember paying $125/month for a 2B+D ISDN line. Even so, when I see an entity with an infrastructure monopoly charging more than twice what it costs to provide a service, including financing the network build-out, I get a bit riled. Especially when they're slow to build out that network.)

Rob Perkins said...

I've begun to wonder about health care in the U.S. a bit, myself.

I think it dovetails a bit with David's IGUS idea: Doctors in the United States *are* a quasi-military organization, complete with government-imposed standards and regulations, the taking of an oath, the requirement for years of relatively intense training (ask a surgical resident what her hours are, sometime), and including the use of a uniform.

I note that it hasn't prevented the presence of quacks and charlatans *within* the cadre.

But there's no doubt that the *system*, as it stands, is very expensive. Tort law and scarcity keep doctors from actually proposing the alternate forms of treatment, or explaining the consequences of not undergoing treatment. For the first, they could be sued completely out of business, and the second keeps them from having the time to actually talk.

It's incredibly difficult to find out the *price* of treatment. The doctors themselves don't bother with knowing the prices, unless they own the practice. A 45-minute surgery I underwent last month required a team of doctors, including a surgeon, four nurses, an anesthesiologist, a PA, a pathologist, two pharmacists, and a radiologist.

I never met the pathologist or the radiologist, but I have bills from both of them. And the pre-adjustment prices, discovered after the fact from *all* of them, are fundamentally appalling: it actually costs *twice as much* to be a cash patient in an ER around here than it does to be in a health insurance network.

Say what you will about the reasons why that's so; it doesn't prevent it from being a nasty, backwards surprise.

Re labor unions, I think that they have an equal amount of power as the Congress in determining whether or not the Government actually gets work done.

And as far as insurance rackets go, I think one of the biggest ones these days is property transfer insurance, and other insurance policies "required" around a mortgage, such as the PMI/MPI policies many lenders require. Is fraud really so high and so damaging that every residential property transaction requires over $1800 worth of title insurance?

David Brin said...

Sayeth Jalf: “Just a quick note on the privatization thing.
A month or two ago, some US researchers made a big study of cost and effectiveness of health care all over the world.
The US, with its largely privatized health care was, as far as I remember, roughly twice as expensive as typical European ones, *while being no more efficient*. Health care is on par between European countries and the US, but the US (and privatized) one is vastly more expensive.”

ALL sides in the health insurance debate miss an essential point. One reason US health care is so expensive is that here is where nearly ALL innovations take place. All the expensive new procedures and machines and methodologies. When I lived in England, you could not get an MRI over there without a six month needs evaluation. Here is cost a whopping $1,000. Bot were restrictive. But here the result was a market driven continuation of innovation and production and competition... until MRI prices dropped and the whole world got them.

In other words, it is one more case of the world parasitizing on the US... WHILE wagging their fingers at us and sneering that THEY have so much better health care systems. While simply denying the more expensive processes to their own people by fiat, instead of by price-exclusion. Yes, their method is more fair, socially, but it does not propel progress. A proper and fair allocation of resources would be for Britain and Canada to pay fees for procedures they did not invent.

Sayeth Francis: “(Yes, we (the British) do have plenty of homegrown examples of how not to do state industry as well - sand don't get me started on Private Finance Initiatives.)”

Which is my point. The insipid left-right axis is preventing us from doing serious studies of WHICH activities state-vs-private do well, and when. It is obviously much more complicated than present ideology.

New Orleans was diamond shaped. A simple fact. The middle class outnumbered the poor. That’s the definition. And poverty went down a lot in the nineties.

Though, alas, like all America, there is an insidious recent trend. The position of those at the TOP of the diamond has been getting more robust. Their reserves of stored capital have been increasing dramatically, as they absorb GOP tax cuts but do NOT then turn around and invest that capital in risky/useful new plants and equipment and R&D to benefit us all.

Rather, they have taken that largesse (refusing to their share pay for a war, for the first time in US history) and applied it to the simple, old fashioned goal of reinforcing being rich. This was NOT the official goal of those tax cuts. We were promised that resulting economic activity would erase both poverty and the debt, while stimulating the technological boom spoken of by Michael Mandel.

What we are seeing on TV, in New Orleans, was what has happened to the bottom third of the diamond. They have become LESS robust. More fragile. More hand-to-mouth dependent on their weekly paychecks and on continuing stable times. The diamond IS being undermined, hollowed-out.

Important to see this in historical perspective. This is what has always happened in other societies. There is a good side to the fratboys’ shortsighted and instinctive drive to recreate a social pyramid of privilege. After a few years, we’ll see a return of radicalization in the underclass, and a return of resentment of the rich. Yes there are bad aspects to that...

...but remember how that offered great grist for the Marx Brothers? Satirical humor has been stagnant for many years. A class-based society will presumably (and ironically) be a lot more filled with bitterly funny stuff.

Rob, just because deregulation has been partial doesn’t mean that some deregulatory efforts weren’t at least partly successful. Yes, Cable TV is an utter scandal. A “deregulation bill” designed to maximize monopoly. And yes, the wired carriers are similar. (I would have required that they must invade each others’ territory by 1 mile per year. By now the overlap would have become complete.)

daveawayfromhome said...

I can tell you at least one reason that doctor's care and hospitalization cost so much: health insurance.
When I was a kid, I'd go to the doctor, and that office would contain:

-a doctor
-a nurse
-maybe a receptionist/filer

Now go into a doctors office, and who do you see:

-a doctor
-a nurse
-maybe a receptionist/filer
-at least one person to handle insurance paper-work.

This may not be true in all offices, but it's true in many. Worst-case scenario makes a 33% cost increase (assuming the doctor makes twice what the others do).

daveawayfromhome said...

me again,
DB (commenting at the same time I was) provided me with a term I've been searching for: "reserves of stored capital". As a member of the "lower" middle class, I can display all of the stuff that says I live The Good Life. But were I or, moreso, my wife (a teacher and the bigger breadwinner here) to loose one of our jobs, all this would quickly disappear. Considering the level of consumer debt in this country, how many people is that true of. How many of the middle class people in this country have reserves of stored capital to get them through a crisis, and how many just have a stack of credit cards? And without these reserves, are you really a member of the middle class, or just a peasant with a lot of stuff?

-dcc-

Anonymous said...

"a peasant with a lot of stuff?"

You're tempting me to rant about a right-wing trope that absolutely infuriates me:

The notion that people below the poverty line "aren't really poor" because they have VCRs and cars and are often really fat.

What total, dismissive, pig-ignorance!

Stefan

TC said...

Right or left, private sector or government, it all comes down to the People. We either keep on top of things or we let things slide.

I’ll give you an example from my work in the financial services industry. Our government regulator requires us to do a full disaster recovery test every year. However, because of the difficulty and cost, they’ve compromised and have allowed most institutions to run recovery simulations. In other words, government adopted a short term view and so did business.

But, my boss isn’t so short sighted. Even before 9/11, he understood the risks, and he insisted that we conduct a real live test every year. We had to redesign our applications and re-architect our infrastructure, but now we can withstand a complete loss of our primary facility with only 15 minutes’ of data loss. Plus, we have detailed procedures that we test quarterly so that the survivors (or contractors, depending on why the primary site is off line!) can bring the hot site on line on behalf of our board of directors.

To my knowledge, we’re the only institution in our class to do a full live test.

Why’s this important? It emphasizes that we can’t shift blame. Each one of us – government or private, right or left, blue or red or whatever divisive adjective we want to use – are ultimately responsible for the success or failure in our country. My boss took a stand to say that compromise was short-sighted and dangerous. We showed our industry that compliance was possible and prudent. And we’re working with the regulators to help them adopt stricter standards. Our customers deserve to have their funds available even in the event of a catastrophic event.

A note to daveawayfromhome: See! Not all business are so short sighted!

New Orleans is under water because our entire system of government failed them – local to state to federal. And we, the People, allowed it to fail.

A couple side notes. I think Anonymous’ question “are you really a member of the middle class, or just a peasant with a lot of stuff?” was insightful. I’m barely middle class, and my friends like to ridicule me for driving a Saturn SL1 (it gets 32 MPG, thank you very much). But, I don’t think accumulating debt good idea.

Mr. Brin, your insight about the fragility of the lower part of the diamond is sobering. Too many of those folks were completely unprepared financially, mentally, materially, or in any other way for the scope of this disaster. I don’t know what the answer is, but I do know that this hurricane (and the others that will certainly follow), the pending peak oil, and the threat of terrorism are all challenging us in the US to come together to solve these problems. Our best hope? The tools of modernity. So far, it’s not happening as quickly as I like, but I still have hope. But it all starts with us as individuals taking responsibility. We have to say, “No more shenanigans!” And we have to make it stick.

Yeah, I know it’s too ambitious. But aiming high helps, and so do forums like this.

David Brin said...

Re the fragility of the diamond. The scariest thing recently was the new Bankruptcy Bill.

Mind you, SOME reform was needed. But the bill that passed looks an awful lot likt our rulers expect a LOT of failures sometime ahead. They do not want the bottom of the new pyramid shucking their debt-serfdom.

Some links recently relevant:

Living Paycheck to Paycheck Made Leaving Impossible
http://www.truthout.org/docs_2005/090405A.shtml
To those who wonder why so many stayed behind when push came to water's
mighty shove here, those who were trapped have a simple explanation:
Their nickels and dimes and dollar bills simply didn't add up to stage a
quick evacuation mission.


Despite Warnings, Washington Failed to Fund Levee Projects
http://www.truthout.org/docs_2005/090405B.shtml
For years, Washington had been warned that doom lurked just beyond the
levees. And for years, the White House and Congress had dickered over
how much money to put into shoring up century-old dikes and carrying out
newer flood control projects to protect the city of New Orleans.

Francis said...

When I lived in England, you could not get an MRI over there without a six month needs evaluation. Here is cost a whopping $1,000. Bot were restrictive. But here the result was a market driven continuation of innovation and production and competition... until MRI prices dropped and the whole world got them.

In other words, it is one more case of the world parasitizing on the US... WHILE wagging their fingers at us and sneering that THEY have so much better health care systems.


Of course, what David entirely fails to mention is that MRI scanners are an invention of the British NHS. And he complains about other countries parasitising on the US - how about the US not trying to steal the credit for that one?

When I looked into pharmaceutical research, it transpired that we put the same per capita sums in as the US - with roughly three times the efficiency in terms of new drugs. Do you really want to talk about parasitising?

(OK, so the anomaly here may well be Britain - the rest of the world combined didn't have a much bigger share of drug research than Britain).

New Orleans was diamond shaped. A simple fact. The middle class outnumbered the poor. That’s the definition. And poverty went down a lot in the nineties.

New Orleans

INCOME IN 1999
Households Pop %
Less than $15,000 57,608 30.6
$15,000 to $24,999 29,760 15.8
$25,000 to $34,999 25,460 13.5
$35,000 to $49,999 26,399 14.0
$50,000 to $74,999 23,724 12.6
$75,000 to $99,999 10,802 5.7
$100,000 to $149,999 7,920 4.2
$150,000 to $199,999 2,620 1.4
$200,000 or more 4,072 2.2

That looks pretty pyramidal to me. (Source: 2000 Census)

Of course, the real killer is:

New Orleans Median household income $27,133
USA Median household income $41,994

In other words, the median household income in New Orleans is 2/3 the national average.

Diamond or hourglass?

(It's a pity you don't use the Socio-Economic Group codes in your census either we or the EU does (the EU one is ours with an addition for farmers, who aren't numerous enough in Britain to merit a class))

daveawayfromhome said...

Stefan sez: "You're tempting me to rant about a right-wing trope that absolutely infuriates me:

The notion that people below the poverty line "aren't really poor" because they have VCRs and cars and are often really fat.

What total, dismissive, pig-ignorance!"


Well, I'll agree that people who think that because you have TVs and cars you cant be poor are ignorant, but that wasnt my point. My point tied in more with DB's idea of fragility in the Diamond. I'm middle class, but not very solidly, basically living paycheck to paycheck . Foreclosures have been at a record level recently, so how solidly middle class were those people? Again, if you dont have enough Capital Reserve (either from foolishness or necessity) to weather even one month of unemployment, are you really middle class in anything but lifestyle; or is that all being middle class is?

Francis said...

Hmm... the Family incomes for New Orleans make a much better demonstration of the hourglass than the household incomes.

Family income Pop %
Less than $15,000 28,238 24.9
$15,000 to $24,999 17,236 15.1
$25,000 to $34,999 14,715 12.9
$35,000 to $49,999 17,147 15.0
$50,000 to $74,999 16,904 14.8
$75,000 to $99,999 8,148 7.2
$100,000 to $149,999 6,168 5.4
150,000 to $199,999 2,020 1.8
$200,000 or more 3,327 2.9

Spot the bottleneck in the $25,000 to $34,999 range - which would fit well with an hourglass, especially as the median family income lies squarely within that range.

Francis said...

@ daveawayfromhome:
My point tied in more with DB's idea of fragility in the Diamond. I'm middle class, but not very solidly, basically living paycheck to paycheck . Foreclosures have been at a record level recently, so how solidly middle class were those people? Again, if you dont have enough Capital Reserve (either from foolishness or necessity) to weather even one month of unemployment, are you really middle class in anything but lifestyle; or is that all being middle class is?

I would have said that the hallmark of the middle class (if the term has any meaning other than cosmetics) is that you do have enough capital to weather a few months of unemployment (or other minor-medium disaster), and the hallmark of the lower class is that you can not earn enough to weather a few months of employment (or small scale disasters). The other (and related) hallmark of the middle classes is deferred gratification - they have enough that they can do deferred gratification and not so much they don't have to bother.

The hallmark of the upper class, of course, is that they can weather such disasters without more than a mild inconvenience. Beyond that, it's all a matter of security.

David Brin said...

Francis! Excellent CITOKATE!

I stand corrected about British invention of MRI... while standing by the real meaning of my point. Invention is one thing. Taking a system through all of the phases from an expensive research tool to a routine and cheap clinical tool is quite another. And there is no question that THAT is the process financed by the inequitable US health care system.

Your second CITOKATE was to show that New Orleans was pear shaped... neither pyramidal nor diamondlike. But though your point is valid, there is an answer -- that too is deceptive, since the official boundaries of most US cities do not include the vast majority of people who consider themselves members of the urban community.

Urban centers have eithere renewed themselves or else become the dumping grounds of much of the hard-luch bottom tip of the overall social diamond. After all, will members of that tip live in surburban houses?

Do not get me wrong. I perceive serious efforts at feudal re-pyramidalization, at a time when we should have felt ongoing guilt over even the shape of the diamond left us by Clinton!

But the left simply has to become more sophisticated in its guilt sermons. The old simpleminded ones are inaccurate and self-defeating.

As for deferred gratification, wll that ties into the present MACRO TOPIC of horizon theory (which I wish you folks would pay more heed to! ;-)

I will post more about it tonight.

Rob Perkins said...

I'll share a couple of cash prices with you all:

In the Northwestern United States, an MRI bills out at $860. I know; I had one in July over a very small area of my body. That's prettydangclose to $1000, still.

Add the charge for an overseas radiologist to read it and diagnose, and you've got your $1000.

A CT scan uses X-rays to make pretty impressive pictures of your insides. I had two of them, each billed out at $950 apiece. A different radiologist read each of those, bringing the charge to well over $1000 each.

In the United States. I'll post the detailed item bills if you want to see them. (With my private info removed).

(More offensive were the morphine shots: $225 each for a drug that's been generic for over 160 years...)

Now, my insurance company knocked off about 20% of the MRI, and 40% of the CT scan. This obviously means I'm not a member of an underclass of cash patients who can't afford the month to month insurance premium to get preferred prices.

But it remains that they don't actually publish those prices, you see them first when and only when you get the bill. So much for market forces.

Rob Perkins said...

The notion that people below the poverty line "aren't really poor" because they have VCRs and cars and are often really fat.

What total, dismissive, pig-ignorance!


Not really. Compare the poor of the United States to the poor of Central or South America. In Brazil, de facto slavery still pervades, for example. (It's the "company store" sort of slavery, not chattel stuff.) In India, whole castes of people simply live on the sides of the streets.

From that perspective, it's not terribly difficult to see why the U.S. has an illegal immigration "problem". If only our leaders and ourselves had more courage to call that immense and willing workforce an *asset*, rather than a liability.

Re corporations, I've been thinking about this ever since one left me on the street "at will" a number of years ago. It seems to me that decades ago, back when IBM was still leading its employees in songs of unity etc., (I've seen the songbook!) that "Company" meant something almost entirely different than it does today, that is, it included the interests of its employees.

Today, among those regulated by the SEC, "Company" appears to mean only shareholders and officers. "Personnel" have been replaced by "Human Resources", with the attendant distancing from human factors that I think that implies. And since shareholders are too often not more than institutional investors with a single goal, that is, profitability, the "Company" reacts to that imperative with attendant short or shorter-term thinking.

That on-topic enough for ya, David? Or have I missed the point? :-)

Anonymous said...

Rob Perkins: "Today, among those regulated by the SEC, 'Company' appears to mean only shareholders and officers. 'Personnel' have been replaced by 'Human Resources', with the attendant distancing from human factors that I think that implies. And since shareholders are too often not more than institutional investors with a single goal, that is, profitability, the 'Company' reacts to that imperative with attendant short or shorter-term thinking."

Along with that CEO's and HR directors took to intoning the "Our employees are our most valuable asset" mantra, to which a wag is reputed to have replied "So, does that mean we can see the depreciation schedule?"

I have heard the mantra countless times, but never had the guts to personally proffer the rejoinder.

Interesting that when push comes to shove, so many corporations seem so willing to so quickly divest themselves of their most valuable assets.

That was thread drift, I suppose. Back to our regular [diamonds-and-pyramids, enlightenment-and-endarkenment] program.

Anonymous said...

If you want the state to wither away, try competing with its services FIRST.

That's a good trick when almost everything is prohibited by law (if not now as soon as you go into the competing) and price controls.

I know I sure wouldn't bother.

Tony Fisk said...

@Rob
...But it remains that they don't actually publish those prices, you see them first when and only when you get the bill. So much for market forces.

...In Brazil, de facto slavery still pervades, for example. (It's the "company store" sort of slavery, not chattel stuff.)

Not to quibble with your observations, but I find it ironic that Ricardo Semler, a singular gent who clearly groks the diamond with his policies of open management and workplace democracy, is brazilian.

... "Personnel" have been replaced by "Human Resources"

It used to be 'Personnel Officer', then it became 'Human Resources Manager'. I'm in daily expectation of the first references to 'Organic Assets Facilitators' to appear (but that may be just because of the acronym ;-)

I sometimes wonder whether people matter to the economy any more. Which kinda misses the point of a society, doesn't it? This attitude is bad enough in the corporate sector, but when governments get carried away with 'econonomic rationalism'...

Of course, not all companies are fixated on the short term. Apart from Semco, the company I work for was ridiculed for its acquisition, a couple of years ago, of a chemical company whose product matched the needs of a new range of tissue processing instruments we were developing. The shares lost an amount equivalent to the purchase cost (ie shareholders considered it worthless and continued to do so in spite of attempts to educate them).

At our 'state of nation' addresses, the CEO had great fun plotting the year's share price against the strange and bizarre things we did.

'No news...shares rose. Bought X... shares plummeted. No news...shares rose. Roadshow to explain X...shares plummetted. CEO distracted by getting married...shares rose, sharply."

Which probably highlights part of DBs points about what drives company focus. It is shareholder's 'get rich quick' expectations. (BTW, Semco is a proprietary company so isn't driven by this, and Semler, in his books, discusses the inadvisability of floating the company, not because he would lose control, but because the staff would lose control)

But, sharehlders have always been around. What has changed recently to make the short term emphasis that much stronger? Off the top of my head, I suspect it has to do with the economic rationalism (Thatcherism etc.) which took hold in the eighties and nineties, and which called on all 'mums and dads' to become shareholders. While I'm not saying that M&D can't take a long term view of things, I suspect that preliminary dabbles in the stock market are regarded as a bit of a lottery.

Nate said...

@rob perkins

""Personnel" have been replaced by "Human Resources", with the attendant distancing from human factors that I think that implies."

Oh, "human resources" is one of my pet peeves I have ranted about numerous times. That and several other wording changes which are subtle methods of treating people as things, rather than people. Like when government reports refer to citizens as "consumers." WTF?

Health care in the US is pretty bad if you don't have insurance, speaking from personal experience. Especially when the economy is not so hot when it comes to jobs, and most available jobs are service related that deliberately schedule people for 39.5 hours to keep them part time and not have to give them benefits.

Which is part of why health care in the US is so expensive. When you don't have health insurance, you're much more likely to skip random checkups that'll usually run at least $50-$70 at least. You won't go to the doctor unless it's an emergency. By the time it's an emergency, it's a much bigger and more expensive problem. And most of the time people without insurance end up going to the emergency room, because emergency rooms can't turn people away and are open 24 hours a day. (Another tie to the service jobs, because it can be hard to schedule doctor's appointments during office hours.) So because there's little to no preventative care, it ends up costing more, both for the uninsured, and everybody else. We end up picking up a good bit of the tab through taxes which pay for hospital funding and so on.

Another problem, I think, comes from the fact that health insurance companies are for-profit and in competition with each other. They try to lure in the cheapest and healthiest people, while excluding the ones that'd be expensive, who need insurance the most. Their primary concern is making a profit, rather than taking care of their customers. And many of the basic preventative care measures aren't covered under some insurance plans. After all, why should the insurance company pay to prevent something that might happen, when you could switch to a new company tomorrow, and that company would be the one benefiting from your better health?

And both of these examples tie into the short horizons we've been talking about.

Francis said...

Invention is one thing. Taking a system through all of the phases from an expensive research tool to a routine and cheap clinical tool is quite another. And there is no question that THAT is the process financed by the inequitable US health care system.

And most other healthcare systems. You certainly should be able to do it better than we can - the US has five times the population of Britain and spends more than twelve times as much on medical care.

Tangenting back to one of your previous ideas, the NHS is run (assuming our stupid government doesn't produce some of its proposed reforms...) as you would want a good insurance system that took everyone to run - first you have the GPs (General Practicioner - a type of doctor specialising in diagnosis) to triage and to point out the right specialist (insurance companies should be running these directly - they vastly cut down costs (especially as they see half a dozen patients in an hour and probably fix over half those complaints) and are paid a salary rather than contract). Then you only see one specialist at the hospital if necessary to get a firm diagnosis, and the hospitals and GPs are given money to keep the population healthy rather than for each operation. This last point results in far fewer operations and an almost complete lack of "Drill 'em and fill 'em dentists" (although we are short of dentists, period) and the equivalent in doctors.

As for the shape of New Orleans structure, the Hourglass model would indicate that there are two separate structures - a diamond leaning against a pyramid, with precious little movement between the groups. To get the aristocracy high, this is a good start - the eventual goal is to end up looking like the "default state" in Tom Lehrer's National Brotherhood Week - and then to use the dissention between the small diamonds and pyramids to keep them distracted while all are pushed down, while co-opting any talent in any of the groups to support them. (This works - it's how a few million Brits managed to rule India for so long).

Incidently, I've seen mention of the hourglass economy in America in our (sane) right-wing press - to wit the Financial Times. (And mention of such in Britain as well).

Anonymous said...

David, you wrote: "A proper and fair allocation of resources would be for Britain and Canada to pay fees for procedures they did not invent."

If you want to be fair, you also have to factor in the training costs of the medicos who move the the US after they get their qualifications -- not an insignificant sum!