Malian drug runners

Does the normal criminal justice system work for terrorism defendants? A case in the Manhattan US District court might be a good test. Three Malians, according to the NY Times, are accused of conspiracy to commit drug trafficking and support terrorism. Oumar Issa, Harouna Toure' and Idriss Abelrahman arranged to transport columbian cocaine through west Africa to spain and claimed to be tightly connected with the local Al Qaeda.

Moral Foundations

Watch Jonathan Haidt's TED talk on moral roots of liberals and conservatives. He claims that there are 5 innate moral values and liberals and conservatives (on social issues) differ in their appreciation for them.

1. Harm/care, related to our long evolution as mammals with attachment systems and an ability to feel (and dislike) the pain of others. This foundation underlies virtues of kindness, gentleness, and nurturance.
2. Fairness/reciprocity, related to the evolutionary process of reciprocal altruism. This foundation generates ideas of justice, rights, and autonomy.
3. Ingroup/loyalty, related to our long history as tribal creatures able to form shifting coalitions. This foundation underlies virtues of patriotism and self-sacrifice for the group. It is active anytime people feel that it's "one for all, and all for one."
4. Authority/respect, shaped by our long primate history of hierarchical social interactions. This foundation underlies virtues of leadership and followership, including deference to legitimate authority and respect for traditions.
5. Purity/sanctity, shaped by the psychology of disgust and contamination. This foundation underlies religious notions of striving to live in an elevated, less carnal, more noble way. It underlies the widespread idea that the body is a temple which can be desecrated by immoral activities and contaminants (an idea not unique to religious traditions).

Get ready for a weak-dollar world

We must get ready for a weak-dollar world
By Jeffrey Garten
Published: November 29 2009, The Financial Times

The two most significant structural consequences of the recent financial debacle are the massive deficits and debts of the US and the shift of economic power from west to east. There is only one effective way for governments to address the combined impact of both: press for a sea change in currency relationships, especially a permanently and greatly weakened dollar.

The Coming Collapse of the Middle Class

The video lecture The Coming Collapse of the Middle Class: Higher Risks, Lower Rewards, and a Shrinking Safety Net by Elizabeth Warren (wikipedia) came to me by way of The Big Picture.

First Aired: 6/11/2007, 57 minutes

Distinguished law scholar Elizabeth Warren teaches contract law, bankruptcy, and commercial law at Harvard Law School. She is an outspoken critic of America's credit economy, which she has linked to the continuing rise in bankruptcy among the middle-class.

The huge economic shift that brought the median family in America from being a 1 income household in 1970 to a 2 income household in 2005, a single generation. Income for fully employed males has been flat to slightly negative over this period. Savings went from 11% of disposable income to nothing. Revolving debt as a percentage of annual income went from 1.4% to 15%.

Surprisingly, typical 2-kid family spending has dropped on several staple items. Clothes have gone down by 32%. Food has dropped by 18%. Appliances down 52%. Per-car cost has dropped 24% because people keep cars longer and spend less on repairs. Imports are cheap. Retail works on thin margins.

But spending on mortgages has popped up by 76%. This is magnified for houses in decent school districts. Health insurance is up 74%. Most people have 2 cars. Childcare is a new expense not present in 1970. The tax rate has gone up by about 25% for this family.

The income of this typical family has gone from 32k to 73k, but after the big-ticket fixed expenses, the two-income family has less money than their one-income parents. The two-income family is much more precarious because they have less slack (no spare worker), income is more volatile, health care expenses have gone up.

While volatility has increased, the safety net has eroded. Risk on healthcare has increased, we've shifted from defined benefit retirement to defined contribution. The educational bar is higher and college is paid for by the family rather than government. (As is preschool.)

Families with children filed for bankrupcy at a rate of 15 per thousand in the early 2000's often due to illness, job loss, or divorce. People hide bankrupcy. We're moving from a three class society to a two class society. The solid american middle class drives our economy and gives us a stable democracy. She paints a picture a weakened insecure middle class, where, if you don't get sick, divorced, or fired you do OK, but any of those events will push you over the edge of a cliff into the underclass.

More

• How Procter & Gamble is coping with the collapse of America's middle class

Healthcare pragmatics

The debate on healthcare reform is practically over and the important points haven't even broken the surface of the public debate. Have we dumbed ourselves down to the point where we can no longer publicly talk through an issue? So it seems. Well, here's an attempt to state the obvious, which will put me ahead of most news media and way ahead of both political parties.

• Healthcare costs money. Someone has to pay. Different schemes distribute the cost and benefits slightly differently at the margin. But, under any plan from government run single-payer to pure pay-as-you-go, roughly the same people are going to pay. For all the ideological histrionics, you and I, middle-class america, are going to pay no matter what. We'll get middle-class healthcare for ourselves and subsidize healthcare for the poor. This arrangement won't change much whatever reform happens or doesn't happen. The amount of subsidy coming from the executive class healthcare of the rich varies a bit from one scheme to another. Different segments of the poor or working poor are better off under some plans. But, for the most part the poor have no money and the rich have accountants and lawyers, so the middle class has to pay.
• Healthcare is a public good. For several reasons, I have an interest in your health. For example, if you could refrain from coughing any H1N1 on my lunch, I'd appreciate it. I depend on my coworkers, local businesses, and my community. If those people are out sick, or worse yet, out in public spreading viruses, I suffer. So, am I willing to contribute to your healthcare? A rational person should say, "yes".
• The benefit of insurance comes from pooling risk. Middle-men cost money. In the case of insurance, we accept the cost of the middle-men because they help us by redistributing risk. If we let insurance companies choose to insure only the healthy, we lose this benefit. Likewise, if we let people wait until they're sick to buy insurance. The employer-based insurance system is stable, despite making the work-force less efficient, because it effectively limits how much either side can game the system. Any system that replaces employer-based groups needs to have the same property. In the current setup, insurance also plays a redistributive role in monetary (rather than risk) terms. For example, if I have a baby, the cost of the birth is subsidized by the non-parents in my company. I subsidize the cost of insuring those with less healthy diets than mine. The young subsidize the old. Overall, it's reasonable for us, as the buyers of insurance, to ask how much this service is costing us and what kind of value we're getting.
• People respond to incentives. Distorted incentives are all over healthcare. We're well on our way to making primary care medicine like teaching - a profession that you would do only for love because it pays so little. Already many rural areas have shortages of primary care. Also, if you threaten doctors with law suits, you get expensive (uncomfortable, potentially risky) tests. It's called CYA medicine. And, of course, those spending someone else's money tend to spend too much.
• We're all going to die. Saudi princes with personal physicians, plebeian patients of HMOs, and tin-shack squatters with nothing all share the same fate, in the blink of an eye that is our short lives. Medicine has awesome powers and will gain much more awesome powers in the coming decades. But, the final outcome is not going to change any time soon.
• Healthcare is not a right. Human rights, in general, mean you have the right to do for yourself unmolested by others. You do not have the right to force others to do for you. Your right to life means that nobody has the right to kill you. It does not mean you have the right to force doctors, nurses and drug companies to take care of you. Healthcare is a limited resource and it should be treated that way.
• The current American system is very inefficient. Countries pay for healthcare in different ways. All countries struggle with healthcare, but several countries get better outcomes for a lot less than we spend. ...think we could learn something?

A Scotch Drinker on Debt

When historians look back on the current time period, they will notice many things but I think the main thing they will find interesting and worthy of study is our penchant for debt.

• Econbrowser: Looking for an Exit
• The Fed's Exit Strategy

Niall Ferguson: U.S. Empire in Decline, on Collision Course with China

The U.S. is an empire in decline, according to Niall Ferguson, Harvard professor and author of The Ascent of Money. The loss of empire is not such a bad deal for the average citizen of the empire building country... except for the wars the come along with geopolitical transitions.