Half Sigma

Why healthcare is so expensive

A lot of blogging is about repeating what you’ve previously written about. I think, at one time or another, I’ve pointed out the various reasons for why healthcare costs so much. So here is a summary:

(1) No free market competition. Doctors have their fees set by insurance companies and Medicare, so they can’t advertise low prices. Nor can they advertise higher prices but better service. Liberals love this situation because it’s the only area of society that’s completely egalitarian. Rich people have to wait in the same waiting room from as poor people, and receive the same lousy healthcare from the same doctor.

Because abortions are the only procedure not covered by insurance, it’s the only part of healthcare that responds to free market forces. Consequently, we observe that abortions cost a fraction of the price of other types of medical procedures.

(2) Bureaucratic medical billing. Each doctor has to hire people to submit his bills to the insurance companies, who have their own people who look for reasons to reject the claims. All this extra labor costs lots of money.

(3) Malpractice insurance. Some doctors have to pay more than $100,000/year for malpractice insurance, and I’ve heard that obstetricians in litigious states are paying for then $200,000/year. These costs are passed on to consumers.

Fear of malpractice suits is also believed to cause doctors to order unnecessary tests a practice known as defensive medicine.

(4) Drug company advertising. I estimated from examining Pfizer’s public financial statements that twice as much money is spent on advertising and on commissions paid to salespeople than is spent on actual drug research.

Doctors are brainwashed by the drug companies into prescribing expensive drugs when generics are just as good. No one complains because neither the doctor nor the patient (if he has insurance) is paying for the drugs.

As with doctors, there is no free market competition. If people had to pay for their own drugs, and they could choose themselves between the $100 drug and the slightly inferior $10 drug, most people would buy the $10 drug, unless they were rich.

Drug companies, under the current scheme have no incentive to lower prices. The best way for them to maximize profits is high prices combined with very expensive marketing campaigns.

(5) The Emergency Medical Treatment and Active Labor Act of 1986. This is one of the most evil laws ever passed by Congress. All medical facilities are required, under severe penalty for noncompliance, to provide emergency care regardless of ability to pay. However, it’s an unfunded mandate. The government requires medical facilities to give away free services, but doesn’t reimburse them for the free services. Instead, they pass on the costs to paying customers. Because poor people show up at the emergency room without the ability to pay, the hospitals jack up the price for emergency room care to cover the costs. This causes people with the ability to pay to avoid emergency rooms if at all possible, which means costs have to be jacked up even higher because there are fewer paying customers.

Part of the reason why hospital visits, and health insurance which covers the costs of hospital visits, costs so much is because you are subsidizing the emergency medical care of people who can’t pay.

This law has also ruined the quality of hospital emergency rooms. Without this law, hospital emergency rooms could be a decent place to get affordable healthcare because they are run pretty efficiently and the doctors are salaried and don’t get paid as much as doctors in private practice.

It has also created a rather dangerous situation for the unemployed with the ability to pay. For poor people with no assets, the hospital emergency room is the equivalent of free universal healthcare. For people with money but no health insurance, they face a very tough choice. Let’s say a person doesn’t feel right—maybe it’s a heart attack, maybe it’s not. Erring on the side of caution and visiting the emergency room without insurance might mean a medical bill that’s a huge amount of money relative to their income and assets. Call me a bleeding heart, but I don’t think it’s fair that people are forced to make that choice.

(6) No triage. If a poor person has a kid with a cough, I don’t see any reason why a nurse with a bachelor’s degree can’t handle this simple problem, without requiring a much more highly paid doctor to get involved. Liberals, of course, hate the idea that poor people get less healthcare than rich people.

(7) Heroic and expensive medical efforts spent during the last months of life. The American ethic is that no expense be spared in an attempt to preserve life. But someone needs to make some harsh utilitarian judgments. $200,000 spent on a futile operation on an octogenarian could provide healthcare for a large number of young people.

* * *

So that’s my healthcare summary post. As I’ve pointed out many times, there is no free market in healthcare. We have a socialized healthcare system already. Although the healthcare workers are not direct government employees, the healthcare system is so highly regulated and there are so few free market forces at work, for all practical purposes you should consider it a socialized system. This means that a genuine socialized system might be better than the current system, because it could be designed from the ground up with fewer inefficiencies.

The primary beneficiaries of the current system are the medical insurance companies. They profit from the status quo and have no desire for any reform, although they are delighted with any suggestion that the government fund the healthcare insurance for the uninsured.

I must study politics and war ...

In a May 12, 1780 letter to his wife Abigail, John Adams wrote a little about the beauty of France, but then explained that he didn’t have time to pursue them as he wished:

I must study Politicks and War that my sons may have liberty to study Painting and Poetry Mathematicks and Philosophy. My sons ought to study Mathematicks and Philosophy, Geography, natural History, Naval Architecture, navigation, Commerce and Agriculture, in order to give their Children a right to study Painting, Poetry, Musick, Architecture, Statuary, Tapestry and Porcelaine.

First of all, I should point out that just because our second President wrote this, doesn’t mean his point is correct, assuming we can figure out his point at all. Nevertheless, I think it’s a pretty interesting two sentences.

The surface meaning is quite obvious. Adams must work hard in France in order to secure free and peaceful existence for the independent American colonies. This is a sacrifice he makes, not only for his own sons, but for all sons of America.

Notice how Adams originally wrote “Painting and Poetry,” but then he crossed it out because he had a better thought. Originally, he just thought to say that his sons would be able to do fun stuff. But then he probably came to his senses and realized that, even in France, only the rich got to enjoy all of the culture. In fact, his sons have to study subjects with practical commercial value so that his grandchildren have the freedom to indulge in luxury activities such as the study of painting and poetry. (Philosophy is, apparently, considered a practical subject.)

Even back in the 1700s, we see that study of art was considered a more fun thing to study than mathematics or commerce. Have times really changed all that much? I think what has changed is that Adams assumed that his grandchildren would study painting and poetry as a hobby and not because they expected to earn money doing that. Adams considered the study of painting and poetry to be a luxury, and not a way to prepare the student for employment. And that is where things are different today. There is a great sense of entitlement among our nation’s most intelligent youth. They expect to study fun stuff, and then they expect that someone will give them a job because they studied fun stuff.

I got the idea for this blog post from a recent NY Times article about how “in tough times, the humanities must justify their worth.” Someone quoted Adams in the article’s reader comments.

The comments are a very annoying to read. The majority of them are written by typical over-educated NY Times readers outraged that employers don’t value a degree in the humanities.

A lot of pro-humanities people have some notion that humanities develop “critical thinking skills,” but there is no evidence that this is so. Wouldn’t it be wonderful if someone could develop a test for “critical thinking skills,” and then employers could give this test to people and hire those with the highest scores? I bet the same liberals touting “critical thinking skills” would be outraged by this testing idea, for the usual reasons which liberals hate objective testing.

I'm still enjoying being right about Obama

Today’s front page Wall Street Journal article begins:

President Barack Obama signaled a historic shift in the ideological direction of U.S. economic policy Thursday with a budget that proposed to expand government activism, raise taxes on affluent families and draw a line under "an era of profound irresponsibility."

The $3.6 trillion budget for the fiscal year beginning Oct. 1 marks a significant change in nearly 30 years of governing philosophy. The Obama administration is seeking to reorder the federal government to provide national health care, steer energy use away from oil and gas and boost the federal role in education.

On June 20,2008, commenter slwerner wrote

Only time will tell, but I think your worst fears will not play out as you see them. When Bill Clinton took office, he had the Congress behind him, and yet, in two years time, and with a booming economy, he could not ram Hillary-Care down our throats. Even his own party members quickly realized the folly and bailed. Do you really think Obama has more charisma that did Clinton?

Tires of Smoke Rings wrote :

McCain and Obama are differ on Iraq and Iran. Most other policy positions are functionally interchangable.

Thus, on Junew 21,2008, I responded to these comments, explaining how Obama will be the next Lyndon B Johnson:

The conclusion is that Obama is to the left of Clinton and even to the left of Carter, and he will have more support from Congress than either of those two presidents had. If he becomes president, he will do the most damage to the nation since Lyndon B. Johnson. History shows that any big spending initiative and new government programs created during the Obama administration will live on in perpetuity. Any money saved by pulling out of Iraq a few years earlier will be spent many times over in the long run.

It turns out that I was right, and the commenters who criticized me were wrong. Ahead of us we see massive government spending on liberal-programs like “climate change” and funding for the left-wing educational industrial complex, more money thrown at healthcare without any attempt to figure out why it costs so much.

This is why I held my nose and voted for McCain, despite his moron vice presidential nominee and despite his RINO positions on immigration and global warming.

* * *

Talking about immigration, with more Americans unemployed than ever in the history of the nation, why isn't anyone talking about at the very least, a short-term halt to new immigration?

Rich to get the tax increase they voted for

Quoting from a Wall Street Journal article:

In last November's voting, exit polls showed, Mr. Obama actually won a majority of the votes from Americans in families making $200,000 or more annually. He got 52% of their votes, compared with 46% for Republican John McCain.

Thus there’s no reason to complain about the unfairness of raising taxes on people who make more money than me. Good for them.

I’m just peeved that Obama is going to waste the revenue windfall on standard left-wing pork. It should be distributed to the people in the form of an equal amount of money given to every citizen.

Toilet paper: bad for the planet

Now, SWPLs can feel guilty about toilet paper.

I fondly remember Mr. Whipple from my TV-watching days of youth.

Bobby Jindal

More interesting than anything said in any speech last night is whom the Republicans chose to respond to Obama: Bobby Jindal, the Governor of Louisiana, a guy who is obviously not white.

This comes only shortly after the Republicans chose a black guy, Michael Steele, to be the chairman of the Republican National Committee.

The Republicans have bought into the idea that it’s racist for a white guy to criticize Obama, and they are desperately seeking any non-white Republican they can find to be spokespeople for the party. Unfortunately, this Republican pandering to conventional liberal bias only gives the liberals more power.

Although I am glad that Jindal is a smart Ivy-League-educated guy and not a moron like Sarah Palin, the Republican party is still going down the wrong path here, selecting party leaders based on a check-the-box mentality (minority, check, pro-life and religious, check) rather than someone who can actually lead the electorate. It’s also clear to me that the dumb religious white people who seem to control who wins the nomination for Republican presidential candidate will reject Jindal for being Catholic and a former Hindu, despite being religious and pro-life. Remember what happened to Mitt Romney? These people know who the real Christians are: Huckabee and Palin (one doesn't have to be smart to be a real Christian).

Death penalty

It’s counter-intuitive that it costs three times as much money to execute a person than it does to pay to keep them in prison for life, but that’s the point of a NY Times article.

The liberal bias of the article is evidenced by the failure to suggest legal reform to cut down the cost of capital trials and shorten the time from sentence to execution.

Furthermore, the article suggests that the death penalty is valueless because it doesn’t reduce crime. This is also liberal bias, because some people think that there are those who deserve death, and shying away from giving people their just punishment is cowardice on the part of liberals.

Personally, I fail to see how a death sentence is a worse punishment than life in prison with human animals. Look what happened to Jeffrey Dahmer. It would have been a lot kinder to execute him.

Thoughts on over-leverage

In the original 1934 edition of Security Analysis, Benjamin Graham wrote about how leverage results in increased corporate profits. (Of course, he also warned that leverage results in an increased chance of bankruptcy, which will be discussed later in this article.)

But what happens when every company follows this advice and levers up? Let’s imagine two economies. Both economies have full employment. In economy U, the unlevered economy, companies produce X amount of goods and services and generate Y amount of profit. In economy L, the levered economy, companies produces the same X amount of goods and services (remember, there is full employment in both economies), but because of the leverage, there is 2Y amount of profit.

The extra profit in the L economy has to be illusory if both economies generate the same amount of goods and services. One would predict that economy L would have a great amount of inflation.

Our economy for the past two decades has been economy L, the levered economy. The government has been telling us that we have had low inflation. The government was obviously wrong. The government was wrong because it focused too much on manufactured items that could be imported, and because of the way it accounted for technological advancements. A big-screen LCD TV costs $500 today but $5000 a few years ago. Stuff like that is factored into the Consumer Price Index.

The second problem with figuring out inflation is that our economy is porous to foreign influences. We may have full employment in the United States, but there are 2.3 billion people in India and China and they don’t have full employment over there. Thus, anything that can be manufactured or outsourced to foreign economies will be resistant to the inflationary effect of too much profit caused by the over-leveraged economy. What will primarily go up in price is stuff that that exists in fixed quantity and can’t be easily supplied from overseas. Such as real estate and stock in U.S. companies. Employee salaries will be most inflated in winner-take-all industries. These are industries where, by definition, there are a limited quantity of top earners. Take baseball for example. There is only a need for 720 professional baseball players (I think there are 30 teams with 24 players each, but I might be wrong), so salaries of baseball players will become inflated. Let’s contrast this to IT workers. There is a big supply of IT workers in India, so the salaries of IT workers will not become inflated.

You will also see inflation in luxury goods—these are good in which manufacturers intentionally keep the supply limited in order to create rarity and thus increase profits.

Private college education is both a luxury good, as well as something with fixed quantity if you are talking about the best schools. There are only 8 Ivy League schools, only one Stanford, only one MIT. Thus we see college education inflation.

Now let’s return to the second problem of leverage, which is that it increase the chance of bankruptcy. Today we are seeing many companies filing for bankruptcy now that the business cycle has taken a downward path. The problem of bankruptcy is bigger than just the company going bankrupt. The company’s employees are now out of work, the company’s suppliers have lost a customer, the company’s creditors have lost their money and now have to cut back elsewhere. The danger for the economy is that a chain reaction of bankruptcies lead to another Great Depression. Thus we see that operating an over-levered company imposes negative externalities on society.

Our government has failed us in curbing the problem of over-leverage. As I mentioned in a recent post, the tax code favors debt financing over equity financing. Furthermore, the Federal Reserve is supposed to tighten the money supply and raise interest rates when the economy is over-levered, but the Fed ignored the signs of over-leverage, ignoring the inflated prices of stocks and houses and winner-take-all salaries and luxury goods. The Fed just kept giving us loose money until everything just crashed.

Response to comments on nationalized banking

As I anticipated, my previous post on nationalized banking received a lot of kneejerk conservative responses. “OMG!!! Nationalized banking b SOCIALIST!!!”

The primary arguments in the comments against nationalized banking can all be easily refuted.

“Do you want Nancy Pelosi deciding who gets to borrow money?” No, of course I don’t. But members of Congress don’t run executive agencies. I presume that the nationalized bank would be run similarly to the Federal Reserve bank, which seems to do a pretty honest job.

“Some piss-poor third world country has nationalized banks and they are corrupt.” Well the United States is an honest country, and I don’t see why credit analysts working for the nationalized bank can’t be just as honest as credit analysts working for a private bank. I mean, it’s the same person. Do people magically become evil when Uncle Sam gives them their paycheck instead of a corporation. Liberals have the exact opposite belief, that people magically become more honest when Uncle Sam gives them their paycheck instead of a corporation.

“Nationalized banks won’t efficiently allocate capital.” Is our current system of capital allocation efficient? Ha ha, very funny.

First of all, bankers making bank loans don’t make allocation of capital decisions. They evaluate the creditworthiness of the borrower based on existing assets and income. Thus bank lending reflects capital already allocated by other investors and by companies' operating success. A bank loan gives a company some extra leverage based on the capital it already has.

In traditional banking, the profit motive causes banks to make bad decisions. For example, when a banker sees that other banks are making big profits with no-money-down mortgages, it’s painful for a the banker to act conservatively and forgo those profits. The desire to make short-term numbers causes blindness to the long-term riskiness of loans.

Now, let’s talk about investment banking. The current system is corrupt. Investment bankers make hundreds of millions of dollars in profit. This is larger than any bribe that any public official in the United States has ever been found guilty of. Governor Blagovech was only trying to get his wife a lousy $150,000 a year job in exchange for the Senate seat. This is small time stuff.

Investment banking can be fixed. The SEC should set up a clearinghouse and quotation/bidding system for all primary offerings, thus bypassing the investment banking system. Companies save money by not having to pay outrageous fees to investment bankers, investors win by being able to bid on offerings without having to know the right people.

I don’t think that the government should run bank branches. Government is really bad at providing good customer service. Private companies should run the bank branches, and collect a fee for the services rendered.

We should also reform the tax code to stop favoring debt over equity. Dividend payments should be taxed exactly the same as interest payments. Corporate America is too leveraged, and that’s what’s causing this recession to be so severe. Unleveraged companies don’t go bankrupt.

The case against Gary Condit

This blog post/article from 2001 explains the case against Gary Condit. Unexplained absences in his schedule and other suspicious behavior the week Chandra Levy was murdered, with no satisfactory explanations for any of it (what was he doing in Luray, Virginia?). Association with criminals and biker gangs. Perverted sexual appetites. Cheating on his wife with multiple sexual partners. Condit had a motive to kill (to keep his sexual behavior secret so he could get reelected), the sleaziness to make you think he might to such a horrible thing, and the association with criminals that would enable him to hire a hit man.

For these reasons, I’m not entirely convinced by the alleged confession of the Salvadoran illegal immigrant Ingmar Guandique to another prison inmate. Such jailhouse confessions are notoriously unreliable. (And part of the confession was that Gary Condit paid him $25,000 to kill her.)

It doesn’t seem likely to me that nineteen-year-old Guandique would go on a crime spree immediately after killing Chandra. Usually, after a first murder, the murderer gets scared and lays low for a while. But we are told that six days after the murder, Guandique burglarized his neighbor’s apartment, and seven days after that he assaulted another woman in Rock Creek Park. (See Washington Post article for timeline.)

What's wrong with nationalized banks?

There has been talk in the news the past two days about the possibility of banks being nationalized. The typical kneejerk reaction from the right is “OMG!!! Nationalized banks b SOCIALIST!!!!”

But one needs to step back from emotionally charged language, and honestly evaluation the benefit of privately operated banks. For the most part, banking is not a value creation industry, but rather a value transference industry. When banks make a profit, it’s not because they are adding value to the economy, but rather transferring value created by everyone else. (See my classic post on value creation vs. value transference.)

Government run industries tend not to be very innovative, but the only useful innovation to come out of the banking industry in the last century is the ATM machine. Otherwise, when banks innovate, that’s when it’s time to hold on tight to your wallet. Bank innovation tends to fall into two categories: (1) sneakier ways to trick people into getting into more credit card debt and pay more outrageous credit card fees; and (2) complicated financial products like mortgaged backed securities and derivatives which have led to the recent financial collapse which not only ruined that banking industry but took down the whole economy with it.

Conclusion: we’d be much better off without bank innovation.

One of the benefits of government run industries is that the salaries are a lot lower. I don’t see why we need to encourage the best and brightest to go into value transference industries. It would be much better if they went into industries that actually created something. If no one in the banking industry made more than Supreme Court justices, we’d all be a lot better off.

I read one editorial this week where the author argued that a trader who works for a bank and makes ten million dollars for the bank deserves to be rewarded with a very high salary. I say that the trader is not adding any value to the economy. The millions of dollars he made for the bank somehow came from screwing regular investors and businesses engaging in more legitimate value-creation transactions. Honest people working in value-creation industries would be better off without these traders screwing around with the financial markets.

People will argue, correctly, that government bureaucracy is extremely inefficient and wasteful. But the bureaucracy of huge corporations is also extremely inefficient and wasteful. I believe that huge corporations exist, despite their value-creation diseconomies of scale, because of the benefit of marketing economies of scale. Given how ridiculously high the current banking salaries are, the government could run banks a little bit less efficiently, with more employees, but actually have a lower payroll because the employees would all be making reasonable salaries.

Chandra Levy was killed by an illegal immigrant?

Supposedly there’s going to be an arrest in the Chandra Levy murder case.

Law enforcement officials said an arrest warrant will be issued for Ingmar Guandique, who is currently in prison in California.

Officials said Guandique will be served papers there and likely then flown to Washington, D.C., to hear the charges against him.

Guandique is reportedly in jail for assaulting two women in Rock Creek Park, the same park where Levy's remains were found a year after she vanished, according to WRC-TV in Washington.

Another inmate told investigators that Guandique confessed to Levy's murder, according to the station. But Guandique changed his story when speaking to investigators. He allegedly told police that he saw Levy several times in the park, but played no part in her death.

Gary Condit wasn’t involved? Just a random killing by a local bad guy?

You can read much detail about Guandique in this Washington Post article. What jumps out at me is that he’s an illegal Salvadoran immigrant. We need to put a stop to illegal immigration.

S&P 500, 12-year low

The S&P 500 index closed today at 770.05, which is where it was at the beginning of 1997.

I guess stocks aren't always the best long-term investment unless your time horizon is greater than 20 years.

Another Half Sigma prediction comes true

In my famous post comparing Obama to Lyndon B. Johnson, I predicted that people who went against Obama, after he became president, would be called racist.

An anonymous commenter alerted me to the following AP article:

The highest-ranking black congressman said Thursday that opposition to the federal stimulus package by southern GOP governors is "a slap in the face of African-Americans."

Racism is clearly implied. Another Half Sigma prediction comes through.

Bristol Palin, pro-choice?

I watched the Greta van Susteran interview of Bristol Palin.

It’s deliciously ironic that Bristol seems to be the poster child for standard liberal views on sex, birth control, and even abortion.

Regarding abstinence, she says that it’s not realistic:

VAN SUSTEREN: I don't want to pry to personally, but I mean, actually, contraception is an issue here. Is that something that you were just lazy about or not interested, or do you have a philosophical or religious opposition to it or...

BRISTOL: No. I don't want to get into detail about that. But I think abstinence is, like -- like, the -- I don't know how to put it -- like, the main -- everyone should be abstinent or whatever, but it's not realistic at all.

VAN SUSTEREN: Why?

BRISTOL: Because -- I don't want to get into details on this.

VAN SUSTEREN: Well, no, I don't mean personally, just big picture, not -- not necessarily about you, but...

BRISTOL: Because it's more and more accepted now.

VAN SUSTEREN: Among your classmates and kids your age?

BRISTOL: Among -- yes, among kids my age.

The clear implication is that birth control most be provided to teenagers because it’s not realistic to expect them to be abstinent. This is in contradiction to her mother’s support for abstinence only education.

Regarding choice:

VAN SUSTEREN: What didn't anybody get? What didn't people understand?

BRISTOL: That -- there's a lot of things. They thought that, like, my mom was going to make me have the baby, and it was my choice to have the baby. And it's just -- that kind of stuff just bothered me.

VAN SUSTEREN: And in terms of your mother making you have the baby, I mean, the whole issue of, I guess, the right -- the right to life and choice and things like that.

BRISTOL: Yes. Yes.

VAN SUSTEREN: But this is your issue. This is your decision.

BRISTOL: Yes. And would have -- doesn't matter what my mom's views are on it. It was my decision, and I wish people would realize that, too.

So Bristol agrees that the decision to have a baby should be the pregnant teenager’s choice. This is clearly the opposite of her mother’s belief that no one should have a choice in this matter at all, and certainly not children under the age of 18.

Now Bristol did choose to give birth, but based on her family circumstances, this is not a choice that’s appropriate for most teenagers. Bristol is lucky that her family is financially well of and supportive. The interview discussed how her parents and extended family watch Tripp while she attends high school. (It has never been made clear to me why Bristol didn’t graduate high school in June, 2008 when she was supposed to.)

What becomes of the more typical teenage mother, whose own mother is unmarried and in no position to provide free childcare while the teenager attends high school?

Bristol gives plenty of reasons why teenagers should choose to have an abortion:

VAN SUSTEREN: Any sort of -- I mean -- and I realize, you know, what joy a child brings to a family. But was there any sort of thinking that maybe -- did you have any sort of sense about, I wish that maybe this would happen a year or two from now, rather than now?

BRISTOL: Yes. Of course. I wished it would have happened in, like, 10 years so I could have a job and an education and be, like, prepared and have my own house and stuff. But he brings so much joy, I don't regret it at all. I just wish it would have happened in 10 years, rather than right now.

And then she repeats this later in the interview:

VAN SUSTEREN: Teen pregnancy -- what's your thought on that?

BRISTOL: I think everyone should just wait 10 years.

VAN SUSTEREN: That's just -- why?

BRISTOL: Just because it's so much easier if you're married and if you have a house and a career and -- it's just so much easier.

* * *

I should add that Bristol’s account of how supportive her family was is disputed by the National Enquirer:

When Sarah found out the teen was pregnant by high schooler Levi Johnston, she was actually banished from the house. As part of the cover-up, Palin quickly transferred Bristol to another high school and made her move in with Sarah’s sister Heather 25 miles away!

I should also point out that, as far as I know, Bristol moved to Anchorage to live with Heather in January 2008, before she could have gotten pregnant with Tripp. So either the National Enquirer has its facts wrong, or Bristol got pregnant twice.

Simian double standard (again)

Racism, pure and evil

Comparing George Bush to a chimpanzee is considered enlightened liberalism, but doing the same thing to Obama is considered racist.

The cartoon is actually a parody of a recent story about a crazed chimp shot by police. Who knows if the NY Post cartoonist knew that you’re not supposed to use chimpanzees in cartoons now that Obama is president? Maybe he wasn’t familiar with the Sock Obama controversy.

Hat tip to commenter "Rain And."

Duh! Who elected this guy?

Liberals trying to ruin public education

This is the reason why I absolutely hate liberals, and why I can never vote for a Democrat so long as they are the party of the liberals. The story is from an Orlando Sentinel article and was mentioned at the Joanne Jacobs blog. And I thank the reader who emailed me the links.

In Florida, the middle schools have a program where advanced children can take high school level courses such as algebra, geometry, and biology. Sounds like a good idea for the children who are smart enough to handle high school level work, doesn’t it?

But the liberals are complaining about it because the program is racist. To quote from the newspaper article:

But the nation's foremost scholars in middle-school education are worried the fast-growing trend is leaving minority children behind. They also question whether the practice is legal because, nationwide, it has tended to result in students being segregated by race.

In Florida, high-school-level classes at middle schools are filled mostly with white kids. That's the case even at some schools where most of the kids are black or Hispanic …

The liberals would rather ruin public education for everyone rather than allow the smart kids learn what they are capable of learning.

To prevent white children from pulling ahead of black and Hispanics, the liberal “scholars” have even invented a bogus theory to explain why they shouldn’t be allowed to learn more:

[S]cholars say offering different levels of math, science and other subjects goes against the very premise of a middle school, which was designed to be more nurturing than a high school.

Whenever public schools endeavor to be as good as private schools, liberals have to come and ruin it in the name of egalitarianism. Yet, I bet that a lot of these liberal “scholars” send their own children to quality private schools.

* * *

Did you know that the Supreme Court held that parents have a constitutional right to send their children to private school? Pierce v. Society of Sisters, 268 U.S. 510 (1925). Unfortunately, only rich parents can afford quality non-Catholic private education.

Today's economic news

Automakers seek another $14 billion. No surprise there. As I previously predicted, the original money has been spent and GM and Chrysler are still losing money.

Robert Allen Stanford, a “Texas financier,” is accused by the SEC of a massiv $8 billion fraud. I wonder how many more of these Ponzi-like frauds are going to surface during the next few years?

Obama wants to give away $75 billion to people who stupidly borrowed more money for their houses than they could afford.

Muslim honor killing in Buffalo

The Muslim honor killing in Buffalo has been talked about a lot in the comments, but I haven’t devoted a blog post to it, until now.

The story is that a Muslim women filed for divorce. Her remains were subsequently found in a park; she was beheaded. Her husband has been arrested and charged with murder.

I think the story is deliciously ironic because the victim “and her husband both worked at Bridges TV, a satellite- distributed news and opinion channel. They launched the station in 2004 in an effort to counter images of Muslim violence and extremism.”

Liberal hypocrisy on freedom of speech and Islam

Geert Wilders is being prosecuted in the Netherlands for hate crimes. His sin was the production of the movie Fitna, which overlays Koranic verses with acts of Islamic terror. It’s the left that’s behind his prosecution.

Bret Stephens writes in the Wall Street Journal:

For liberals, the issue is straightforward. If routine mockery of Christianity and abuse of its symbols, both in the U.S. and Europe, is protected speech, why shouldn't the same standard apply to the mockery of Islam? And if the difference in these cases is that mockery of Islam has the tendency to lead to riots, death threats and murder, should committed Christians now seek a kind of parity with Islamists by resorting to violent tactics to express their sense of religious injury?

Most overpriced helicopter ever

The government is buying 28 presidential transport helicopters for $400 million each.

Yep, those are your tax dollars being wasted. You can buy a regular Bell 430 helicopter for less than $7 million. And that’s Bell’s fastest 9 seat copter, not their cheapest model.

Advanced technology. Uncompromising design. Exceptional ride. The Bell 430 is everything you'd expect in a world-class helicopter. Seats up to nine. Maximum Cruise Speed (wheel gear) 143 kn, 265 km/h.

It was rather hypocritical to criticize business executives for not flying coach when the president spends such an outrageous amount of money on his personal transport.

Experience requried to be Supreme Court justice

All justices on the current Supreme Court served as federal appellate judges.

For the first time in its history, every member of the United States Supreme Court is a former federal appeals court judge. Chief Justice John G. Roberts Jr., in a lively and surprising talk a couple of weeks ago, said that development may be a good thing.

Over the life of the Supreme Court, its members were quite likely to be former governors, legislators, cabinet members, law professors and practicing lawyers. That mix of backgrounds and expertise might strike some as valuable, but the chief justice suggested that it tended to inject policy and politics into an area properly reserved for the law.

As late as 1972, when Chief Justice Roberts’s predecessor, William H. Rehnquist, joined the court as an associate justice, former federal judges were in the minority.

As a consequence, Chief Justice Roberts said, “the practice of constitutional law — how constitutional law was made — was more fluid and wide ranging than it is today, more in the realm of political science.”

Since then, Chief Justice Roberts continued, “the method of analysis and argument shifted to the more solid grounds of legal arguments. What are the texts of the statutes involved? What precedents control?”

That move, he said, has resulted in “a more legal perspective and less of a policy perspective.”

I agree with Roberts. But apparently it makes the writer of the NY Times article uncomfortable, because it flies in the face of the liberal “diversity” mantra.

Levi Johnston rumor

There is an internet rumor that Levi Johnston, Bristol Palin's fiancee, has gotten another girl pregnant. (Hat tip Roissy.)

Meanwhile, the National Enquirer reports:

Gov. Sarah Palin is embroiled in an all-out war with her new grandson’s relatives—blasting them as white trash…

Talk about the pot calling the kettle black.

I will stop blogging about these rednecks from Alaska when either (1) they stop giving me stuff like this to blog about; or (2) everyone in the Republican Party agrees that Sarah Palin has no future in politics.

$10/hr, must have JD

A reader sent me this link, a blog post about a real job advertisement offering $10/hr for someone with a J.D. degree.

This demonstrates why one should only bother with law school if you can get into a top 14 law school.

Obama administration says that Iran is seeking nukes

The Obama administration says that Iran is developing the capability to build nuclear bombs.

I’ve been warning about this for years, but no one has been listening. Maybe people will listen to Obama.

Also, the Obama administration reaches the exact same conclusion that I previously reached. From the LA Times article:

U.S. intelligence officials later said the conclusion was based on evidence that Iran had stopped secret efforts to design a nuclear warhead around the time of the U.S. invasion of Iraq.

Often overlooked in the NIE, officials said, was that Iran had not stopped its work on other crucial fronts, including missile design and uranium enrichment. Many experts contend that these are more difficult than building a bomb.

Yes, this is exactly what I previously wrote on this blog:

Iran has built thousands of centrifuges. Iran has no need for so many centrifuges unless they are trying to get enough enriched uranium to build a gun-type nuclear bomb (the simplest type of nuclear bomb to build).

A gun-type bomb is very easy to build if you have enough uranium. Instructions for assembly can be found at Wikipedia. "With enough highly-enriched uranium (not itself an easy thing to acquire), nations or groups with relatively low levels of technological sophistication could create an inefficient—though still quite powerful—gun-type nuclear weapon." As soon as Iran has enough uranium, it has a bomb.

It has been clear for a while that Iran has given up on the more complicated plutonium bombs, and had determined it's best chance for obtaining nuclear weapons is to build the less sophisticated gun-type bomb which uses enriched uranium. With enough money invested in centrifuges and enough uranium, they can acquire enough enriched uranium to build a few bombs.

I wish people would heed my words more often.

Why we need sterilization for welfare

If there were ever a reason to favor sterilization as a requirement for receiving welfare, it’s the story of the octuplets. “Even before she gave birth to the octuplets Jan. 26, Suleman was receiving $490 in monthly food stamps, and three of her children were receiving federal supplemental security income because they are disabled.”

Now there are eight more kids that the taxpayers have to support, with expensive medical problems.

Because society no longer believes that it's appropriate to let these children die because of the gross irresponsibility of the mother, the only humane way to prevent this sort of stuff from happening again is to require sterilization of anyone who would receive food stamps or other sorts of welfare.

Yes, I know this is old news which I should have blogged about days ago.

Collapse of Dubai and ethanol

There is something enjoyable about reading about the collapse of the Dubai economy and the collapse of the ethanol industry. Probably because neither ever made any economic sense.

Netherlands to UK: your child rearing advice sucks

The UK government says you need to give your children less fat:

Children should be stopped from drinking full-fat milk from the age of two to prevent clogged arteries and heart disease in later life, the Government's Food Standards Agency will say today.

But the very same day, the government of the Netherlands says that children need to eat fat:

Paediatricians are concerned that the continual emphasis on making sure children do not get fat is leading some of them missing out on essential nutrients, the AD reports on Tuesday.

Parents are so worried about their children becoming too heavy that they are feeding them on too many fat-reduced products, says Elise Buiting, who chairs the youth service medical association.

'Children under the age of six need fat. We recommend full-fat yoghurt for example,' she tells the AD. 'Children who are given the same light products as their parents eat do not get enough.'

Psychiatrist Annemarie van Elburg says parents who are obsessed about healthy eating are suffering from an eating disorder known as orthorexia and forget that their children need fats for proper brain development.

I’m with the Netherlands on this one. They have the world’s tallest people, so they must be doing something right.

Follow-up on accounting post

Yesterday, I explained why accounting is the best college major. There were many comments. Some agreed with me, and some disagreed. But none of the disagreeing comments raised any points that I haven’t already considered when recommended the accounting major.

First of all, let’s address salaries. The government statistics for “accountants” includes people who are clerical workers in accounting departments. My advice is for the college student to distinguish himself sufficiently to get hired as an entry-level auditor at B4. The starting salary for this position is $55K in Manhattan, and a little bit less elsewhere in the country, but always at least in the $40s. But remember, this is not a permanent job. Essentially the auditor is being paid to get a prestigious job to put on his resume and get the auditing experience necessary to qualify for a CPA certification.

People have also pointed out that working at B4 sucks. I’m not going to argue with this, but rather point out that it’s something you have to put up with for a while until you can get promoted to a better job at B4 or take the B4 experience and the CPA and find employment elsewhere. People in their twenties have the energy level required to work 60 hour weeks, and still party after work. God bless them. Many other career tracks have similar hazing rituals, many much worse, such as the multi-day shifts required by medical interns.

People have pointed out that it’s wrong to advise people to do something they will really hate. First of all, 18-year-olds don’t have enough experience to know what they hate and what they don’t hate. Accounting isn’t the most boring major for people not interested in it. There is worse. For example, you really have to love math in order to get through an engineering program. An accounting major will probably require a class in calculus and a class in statistics, but many “social sciences” also require those classes, at least if it’s being taught at a real school. The math classes for business majors are generally easier than the math classes for engineering students. At least, that was the way it was at the University of Pennsylvania. The statistics classes at Wharton didn’t require you to use any calculus, unlike the statistics classes for the engineering students.

Once again, I will repeat this warning, you will not get paid to do something that a lot of people think of as fun unless you go to an Ivy League level school. And even then, it’s tough to get into these fun fields. With average grades from a bottom-tier Ivy and no family connections you probably will still wind up with a losing hand. Of all the boring fields, I think that accounting is the most approachable.

Let’s discuss some other suggestions people on this blog commonly make:

Pharmacy. You are essentially a highly paid retail clerk, and you’re limited to two employers: CVS and Walgreen. If you decide you don’t like it, you’re screwed because there’s nowhere else to go. There’s no career advancement and no opportunity for moving up the ranks. CVS just needs you to man the pharmacy area because a government regulation says that you have to be there.

On the positive side, pharmacy jobs have a median salary in the high $90s, which is a really good salary for a safe career. You're pretty much guaranteed that if you get through the program and pass the licensing tests. Pharmacy jobs are located wherever there are people living, so it's great if you want to live in a non-whiterpeople place such as the midwest. There aren't very many tickets to a high $90s job, and this is one of them. And if you don't want to work at a retail store, you can also work at a hospital.

It's clearly a much better career than plumber or auto mechanic. It's higher paying and you don't have to stick your hands into pipes full of sh**.

The only thing I don't understand is why people don't flood into the field, bringing down the salaries? Why are there five times as many law students as there are pharmacy students, when pharmacy seems like a better deal?

Nursing. You have to love sick people in order to handle this job. Or at least tolerate them. It’s a good career for people not smart enough to get high enough grades at a decent enough school to get hired at B4 or to pass the CPA exam. Or not smart enough to get a degree in pharmacy, which sounds to me like a much easier job. You don’t have to be a genius to stick IV tubes into people. You only need a two-year associate degree to become a registered nurse. There’s more of a career path in nursing than there is in pharmacy. You can move up to a higher level position in hospital administration, but not if you only have a two-year degree. Most nurses will just keep on doing the exact same nursing tasks for the rest of their lives. At least your job will never be outsourced, and it's a growth field because the population is aging, but immigration of nurses from foreign countries means that there will be no super-high salaries, just steady employment.

Engineering. As I mentioned before, you have to love math to handle this. I’m talking hardcore math like advanced differential equations and linear algebra. David Alexander, who frequently comments here, is an example of someone who attended engineering school even though he didn’t love math. Very few girls love math enough to handle an engineering program. In my career in Visual Basic and .NET programming, I encountered many people with engineering degrees. Apparently, there are more people with engineering degrees than there are real engineering jobs, so they wind up going into computer programming instead. Because of the competition for the best engineering jobs, you need to get into a top engineering school such as MIT. I also recommend the engineering programs at any of the Ivy League schools, because they will look good on your resume if you wish to move into management. Otherwise, you may as well just get a degree in computer science in the first place because that’s where you will be working. So reread my blog post on why a career in computer programming sucks.

If you’re smart enough to get an engineering degree from MIT, you’re also smart enough to get a degree in financial mathematics from MIT and get into a higher paying hedge fund job.

Actuary. There are a lot fewer jobs here than there are in accounting. You will need to major in math and statistics. So as with engineering, you have to love math to consider this as an option.

Accounting: the best college major

Jennifer writes:

It's not just parents who look at the prestige of the college and disregard community college or other less elite options. My kid will probably have a nervous breakdown if she doesn't get into one of her top choice schools or if I can't pay for it. She wants to go into a field that demands a degree that is not available at our local cheap 4-year school (or even most large state universities). And to top it all off, it's a field with very poor employment prospects. I love her and I really believe in her abilities, but at what point do you say to a kid, get real and major in something where you can actually get a job? In other words, do I work myself to death to put her through a great program and let the world deliver the reality check, or do I shatter her dreams myself? If you have kids, you know the answer to that. (BTW, I went to community college and finished up at the very same local 4-year cheap university she could attend. Then again, I had very different goals.)

The question is, what should Jennifer’s daughter major in?

If she can get into the Holy trinity of HavardPrincetonYale, then she should major in whatever she wants, because no doubt with a such an elite degree and decent looks and personality, a young woman can find gainful employment in a good career track .

However, as a college student attends schools with less prestige, it becomes ever more important to select a practical major. The History major from Harvard can get recruited to work in investment banking, but the History major from a directional university is out of luck.

In my famous blog post on why a career in computer programming sucks, I recommended accounting. So let me explain this recommendation in greater detail.

Accounting is a great general purpose business major that can lead to all sorts of business jobs. When employers encounter an undergraduate majoring in some other business major, such as marketing, business administration, or even finance, they assume that they couldn’t cut the mustard in accounting. Accounting is at the core of all business. If you’re at a good enough of a school such that investment banks will consider you, the accounting major will look great to them. They want to hire people who can read and understand financial statements. Unless you intend to get a job as a “quant jock” at a hedge fund (and good luck with that if you can’t get into a top 5 school), the accounting degree will open a lot more doors in finance than a degree in finance.

The best thing about a degree in accounting is that it uniquely qualifies you to get hired as an auditor with a Big Four accounting firm. Unlike many other career tracks, you don’t need to go to an elite school to get an entry level auditing job. The Big Four needs to hire a lot of auditors, and most of the Ivy League schools don’t even offer accounting degrees. Havard is so snobby, it doesn’t even offer a single accounting class.

Accounting jobs are unlikely to be outsourced. Companies don’t trust their financial secrets to an outsourcing firm in India. The traditional auditing function performed by public accounting firms have to be performed onsite. The partners at the Big Four are the ones in charge of setting the rules for their profession, so naturally they stack the deck to favor themselves. Like BIGLAW and investment banking, public accounting firms act primarily for the benefit of their own employees rather than for outside stockholders.

Just hanging around the B4 firm for the rest of one’s life is a pretty decent and safe career track. B4 partners don’t make as much as BIGLAW partners, but they can still make as much as half a million a year if based in Manhattan, which is almost enough money to afford the American Dream of a three bedroom condo and private school for two children.

However, with a few years of B4 on your resume, plus a CPA designation, you can jump ship and find a manager-level accounting position in corporate America. You can go back to school to get an MBA. Business schools may claim they like diversity among their students, but people who worked at B4 are not really discriminated against in the admissions process, and it looks many times better than working as a waiter.

The 18-year-old student to whom this advice is given may protest, “but I’m not good at math.” Accounting doesn’t really require much in the way of advanced math, just arithmetic. Your program might insist that you take a calculus class, but you’ll never use it for anything outside of the calculus class.

The 18-year-old may also protest, “but accounting is boring.” The sad truth is that there are only a tiny number of fun and interesting jobs available to recent college graduates, and because they are so highly desired and so few in number, you are shut out of them unless you have an Ivy League degree, preferably from HarvardPrincetonYale. Rich parents with important connections also helps. Otherwise, the job you get will be boring. You might as well do something boring that has a decent future ahead of it.

* * *

To answer a question raised in the comments, B4 entry level salary in New York City is said to be $55K. A little bit less in other major metropolitan areas. This is not such a bad salary for a FIRST job. Maybe you, initially, might make more money as an engineer, but engineering quickly plateaus, then you get fired and replaced by younger engineers who know the latest technology.

* * *

Read my follow-up post.