Jerry Monaco's List: economics

• For some, the benign inflation outcome of 1996  might be considered surprising, as resource utilization  rates--particularly of labor--were in the neighborhood  of those that historically have been associated with  building inflation pressures. To be sure, an  acceleration in nominal labor compensation, especially  its wage component, became evident over the past year.  But the rate of pay increase still was markedly less  than historical relationships with labor market  conditions would have predicted.
• Atypical restraint on  compensation increases has been evident for a few years  now and appears to be mainly the consequence of greater  worker insecurity.

• The idea that there is a competitive “private sector” in America is appealing, but generally false. No one hates competition more than the managers of corporations. Competition does not enhance shareholder value, and smart managers know they must forsake whatever personal beliefs they may hold about the redemptive power of creative destruction for the more immediate balm of government intervention. This wisdom is expressed most precisely in an underutilized phrase from economics: regulatory capture.
• Further, the older such a commission gets to be, the more inclined it will be found to take the business and railroad view of things. It thus becomes a sort of barrier between the railroad corporations and the people and a sort of protection against hasty and crude legislation hostile to railroad interests.”
• whether it is the agricultural combinations creating an impenetrable system of subsidies, or television and radio broadcasters monopolizing public airwaves for private profit, or the entire financial sector conjuring perilous fortunes from the legislative void. The real battle in Washington is seldom between conservatives and liberals or the right and the left or “red America” and “blue America.” It is nearly always a more local contest, over which politicians will enjoy the privilege of representing the interests of the rich.
• The debate in Washington this fall ought to have been about why the United States has the worst health-care system in the developed world, why Americans pay twice the Western average to maintain that system, and what fundamental changes are needed to make the system better serve us.
• also the companies that receive some part of the more than $2 trillion Americans spend every year on health care and that can expect to continue receiving their share when the current round of legislation has come to an end.
• The health-care industry has captured the regulatory process, and it has used that capture to eliminate any real competition, whether from the government, in the form of a single-payer system, or from new and more efficient competitors in the private sector who might have the audacity to offer a better product at a better price.
• The contemporary form of moderation, however, simply assumes government growth (i.e., intervention), which occurs under both parties, and instead concerns itself with balancing the regulatory interests of various campaign contributors. The interests of the insurance companies are moderated by the interests of the drug manufacturers, which in turn are moderated by the interests of the trial lawyers and perhaps even by the interests of organized labor, and in this way the locus of competition is transported from the marketplace to the legislature. The result is that mediocre trusts secure the blessing of government sanction even as they avoid any obligation to serve the public good.
• Since health care represents one-sixth of our economy, I believe it makes more sense to build on what works and fix what doesn’t, rather than try to build an entirely new system from scratch.”
• With such soothing words, the Democrats have easily surpassed the Republicans in fund-raising from the health-care industry and are even pulling ahead in the overall insurance sector, where Republicans once had a two-to-one fund-raising advantage.
• The deal Obama presented last year, the deal he was elected on, and the deal that likely will pass in the end is a deal the insurance companies like, because it will save their industry from the scrap heap even as it satisfies the “popular clamor for a government supervision.”
• The private insurance industry, as currently constituted, would collapse if the government allowed real competition. The companies offer no real value and so instead must create a regulatory system that virtually mandates their existence and will soon actually do so.
• A study by the McKinsey Global Institute found that health insurance cost the United States $145 billion in 2006, which was $91 billion more than what would be expected in a comparably wealthy country. This very large disparity may be explained by another study, by the American Medical Association, which shows that the vast majority of U.S. health-insurance markets are dominated by one or two health insurers. In California, the most competitive state, the top two insurance companies shared 58 percent of the market. In Hawaii, the top two companies shared the entire market. In some individual towns there was even less competition—Wellmark, for instance, owns 96 percent of the market in Decatur, Alabama. “Meanwhile, there has been year-to-year growth in the largest health insurers’ profitability,”
• Chief among those barriers, it should be noted, is an actual congressional exemption from antitrust laws, in the form of the McCarran–Ferguson Act of 1945
• Insurance is an information business, and as technology makes information-management cheaper, technological barriers to entry will fall, and competition will increase.
• the very idea of assessing health risk is beginning to be understood as undemocratic,
• Which perhaps is one reason why the insurers themselves have always favored the central elements of the Democratic plan
• “only way you preserve the private health-insurance industry. It’s plain-out enlightened self–interest.” The deal collapsed nonetheless, in part because Congress wanted to introduce a “community rating” system that would have put an end to underwriting by making insurers sell insurance to everybody in a given community for the same price. Insurers wanted to maintain the profitable ability to charge different prices to different people.
• Last December, though, AHIP said it would support community rating as well, and since then the real negotiation has been all about details. The insurance companies would agree to sell their undifferentiated commodity to all people, no matter how sick, if the government agreed to require all people, no matter how healthy, to buy their undifferentiated commodity.
• The Democratic plan looks to be a huge windfall for the insurance companies. How big is not known,
• “The bottom line is that health reform would lead to increased revenues and profits.”
• It also happens to be the case that some of those ideas will significantly benefit the corporations that at one time or another have paid Democrats a lot of money.
• The framework for reform, for instance, was authored not by Max Baucus, the Democratic senator who chairs the Finance Committee, but by his senior aide, Liz Fowler, who also directs the committee’s health-care staff. She worked for Baucus from 2001 to 2005 but then left for the private sector. In 2008, reports the Washington gossip paper Politico, “sensing that a Democratic-controlled Congress would make progress on overhauling the health care system,” she returned to Baucus’s side. Where had she retreated to recover from her Washington labors? Politico does not say. In fact, she had become the vice president for public policy and external affairs at WellPoint, one of the nation’s largest health-insurance corporations.
• retty much everyone involved in health-care reform has been on the payroll of one health-care firm or another.
• the strange journey of Billy Tauzin. He spent his first fifteen years in Congress as a “conservative” Democrat, struggling mightily to make his fellow party members more amenable to the needs of the health-care industry. In 1994 he founded the “moderate” Blue Dog coalition, whose members continue to deliver the most reliably pro–business vote in the Democratic caucus. But the Blue Dogs of 1994 did not go far enough for Tauzin, so in 1995 he became a Republican, and by 2003 he finally had mastered the system to the degree that he could personally craft one of the largest corporate giveaways in American history: Medicare Part D. After that bill was made into law, he took the natural next step—he became president of the Pharmaceutical Research and Manufacturers of America, the lobbying arm of the drug industry.
• all Obama has to do is agree to Tauzin’s demands—which he has. The Democratic deal for the drug companies is, if anything, even sweeter than the Democratic deal for the insurance companies.
• But of course “the people that the providers have hired”—having actually already written the legislation—are quite familiar with the details. The only hope for Republicans right now is if the insurers themselves decide they can get an even better deal by turning on the Democrats, which no doubt they eventually will.
• no longer the favored party of corporate America,

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• The years surrounding the Second World War represented a time of great fear, which gave way to great hope. Karl Polanyi’s book The Great Transformation , written in the context of this fear and hope, signified the accumulation of the author’s beliefs on the economy and society. The goal of this paper is to examine the ideas within Polanyi’s book, with a critical eye. The author’s views concerning the market, society, and liberalism will be examined. How ideology is expressed in the book is also an issue to be examined, as the tone of the book sheds light on its purpose.

• On May 17, 1910, Donald C. MacPherson purchased a Buick runabout from the Close Brothers dealership of Schenectady, New York.1 The new rig sported a "four cylinder, twenty-two and a half horse power" engine, allowing it to reach a speed of fifty miles per hour. Its body had been painted "French gray" and a similar gray color coated the wooden wheels. The runabout accommodated two passengers in the front seat and one in the rumble seat. Though smaller and slower than other cars on the market in 1910, the Buick served MacPherson's purposes. During the summer and fall, he drove the machine to various places in the vicinity of Saratoga Springs for his business as a stone cutter who specialized in making grave stones. Like many motorists in this early market, he stored his runabout in a barn that winter and put it back into service the following May. The auto gave him no serious trouble until July 25. While traveling at a moderate speed along a road leading into Saratoga Springs, the car's left rear wheel collapsed; the machine overturned and trapped MacPherson beneath the rear axle.2 He later testified that his "eye (right eye) [had] torn apart entirely, [and] laid down from the eye brow," and that his right arm "had broken at the wrist." He suffered such great pain in his right wrist that for many months he could not perform his work as a stone cutter as he lacked the strength to grip his tools. His eyes deteriorated: First his right eye and then his left eye began failing, making it difficult for him to identify clients and friends.3 1

• Abstract:  This Article offers a theory of nuisance law based on information costs. Like trespass, much of the law of nuisance relies on a strategy of exclusion in which rights are defined using low-cost signals like boundary crossings that are only indirectly tied to particular uses. Nuisance law also supplements and fine-tunes this Blackstonian package of entitlements by means of a governance strategy, which relies on signals more directly tailored to particular uses. The information-cost advantage of strategies close to the exclusion end of the spectrum helps explain why, despite repeated calls for more balancing, nuisance law focuses on who caused invasions of whose land. Also consistent with an exclusion strategy are the staying power of traditional nonreciprocal notions of causation and the virtual nonexistence in nuisance of Rule 4 liability rules, under which plaintiffs would be permitted to invoke the law to force the polluter either to abate or shut down upon payment of the polluter's damages. Applying Hohfeldian analysis, the Article shows that the common law gives polluters at most a privilege to pollute and that Rule 4 does not refine the basic exclusion regime but rather undermines it. The general question becomes when to soften exclusion with governance and the Article concludes by arguing that, in situations such as oil and gas fields and Boomer-style pollution cases with numerous victims, only small judicial governance-style safety valves are necessary, especially if legislative and administrative solutions are forthcoming. More generally, the information-cost theory of nuisance brings the utilitarian and corrective justice approaches to nuisance closer together. Nuisance law is not a mess or mystery but does contain within it the inflection point between exclusion and governance.