RichardH’s Posts

Only 46% of REPUBLICANS Support Extending Bush Tax Cuts for the Rich

On 3 December 2010, ThinkProgress reports  CBS Poll Finds Only 46 Percent of Republicans Support GOP’s Stand on Extending Bush Tax Cuts for the Rich.

A CBS News poll released last night finds that 53 percent of Americans want the Bush-era tax cuts “extended only for households earning less than $250,000 per year,” a position that was advanced by a House vote yesterday. Another 14 percent want to expire all of the Bush tax cuts. Taken together, two-thirds of Americans (67 percent) want to end the Bush tax cuts for the rich. One interesting statistic from the survey indicates that the GOP’s push for giving the richest 2 percent an additional tax cut is not even supported by its own base:

‘Only ten percent of Democrats and one in four independents back the GOP proposal to extend the tax cuts for all. Even among Republicans, support for extending all the cuts is less than half at 46 percent.’

Nevertheless, the White House is indicating to the GOP leadership in private negotiations that it is willing to acquiesce on its views and temporarily extend the tax cuts for the rich.

I, personally, would like to see ALL of the Bush tax cuts expire, and have the freed-up funds spent on extending unemployment benefits, shoring up Medicare, extending funds to the states, and investing in future growth by funding education, infrastructure, and research.


Bill Sharpe ( of CAPM fame) on ‘The Wrong Financial Advisor’

In the 1960’s, four economists (Jack Treynor, William Sharpe, John Lintner, and Jan Mossin) independently developed a theoretical model (the Capital Asset Pricing Model [CAPM]) for determining an asset’s appropriate expected rate of return as a function of its non-diversifiable risk. In 1990, William F. Sharpe, along with Harry Markowitz and Merton Miller, were awarded the Nobel Memorial Prize in Economic Sciences for their contributions to the analysis of financial risk.

Yesterday (23 November 2010), ‘wfsharpe34’ posted an animation to YouTube called, The Wrong Financial Advisor. You might find it amusing.

I have no reason to believe that ‘wfsharpe34’ is not THE Bill Sharpe.

In case you are interested, here is a photo of Bill Sharpe and here is his Nobel Lecture.

I thank my friend, Nalin, for forwarding an email, purporting to be from Bill Sharpe, which points to this video.


Martha S. Samuelson on Mentoring and Leadership

In the 7 November 2010 issue of the NY Times is an interview with Martha Samuelson, Ask Your Mentor for Help, Not for Brownie Points. Samuelson is the president and CEO of Analysis Group, an economics consulting firm.

I think this short interview should be read by all managers (and subordinates) interested in leadership and mentoring.

Thanks to JCC Jr for directing me to this article.


When a Safety Net Is Yanked Away [Long-Term Care Insurance] – (Lieber)

In the 13 November 2010 NY Times, Ron Lieber writes When a Safety Net Is Yanked Away.

Citing well-known challenges to the long-term care insurance industry (but without really saying what they were), MetLife said that it would stop underwriting new long-term care policies for individuals after Dec. 30. The company will also cease new enrollments to group and other plans, say, through an employer.

The company added that it would continue paying claims on existing policies as long as customers continued paying premiums. Many of them may not, however, since MetLife recently asked state insurance regulators for permission to raise premiums on many policies by as much as 44 percent.

It wasn’t the only company not charging enough for its policies. The two leading players in the industry are trying to raise prices, too. Genworth Financial is seeking an 18 percent increase on older policies held by about 25 percent of its customers. And John Hancock has filed for permission to raise premiums for about 80 percent of its customers by an average of 40 percent. It has also temporarily stopped offering new long-term care insurance plans through employers while it tries to figure out what to charge.

State regulators may not bless these requests. But it suggests how far off the companies were in pricing their products.

In Lieber’s 5 November 2010 NY Times article, Ignore Long-Term Care Planning at Your Peril, he quotes a MetLife spokeswoman, Karen Eldred,

“Assumptions used to initially price many long-term care insurance products have changed. Evolving assumptions and their impact on pricing is a challenge the industry is facing over all. The primary assumptions that have changed since the initial pricing of these products include: interest rates, persistency, morbidity and mortality experience, which have not materialized as expected.”

Lieber goes on to translate what Eldred said, and you can read that in his articles.

But, at its core, the insurers made “guesstimates” which turned out to be off the mark, and now they want the various state insurance commissioners to retroactively shift the risk back onto past policyholders, who bought their insurance policies in good faith.

Let’s hope the state governors and insurance commissioners don’t knuckle under. If you agree, write to your governor.

You might also be interested in Lieber’s 12 November 2010 blog post, The Trouble with Long-Term care Insurance. See, especially, the comments to his post.

By the way, Lieber makes reference to two academics, Amy Finklestein (MIT) and Jeffrey Brown (U of Illinois at Urbana-Champaign) who have written on the long-term care insurance market. If any of you wish to delve deeper, here is one place to start: The Private Market for Long-Term Care Insurance-Review of the Evidence (2008).

I consider all of this one more argument for national health insurance.


Diversion: Is it “2-D is really 3-D” or “3-D is really 2-D”? 2

In his 24 Oct 2010 post, SteveG points us to a Popular Science article, Fermilab is Building a ‘Holometer’ to Determine Once and For All Whether Reality is Just an Illusion. SteveG quotes, “More specifically, they are trying to either prove or disprove the somewhat mind-bending notion that the third dimension doesn’t exist at all, and that the 3-D universe we think we live in is nothing more than a hologram.” SteveG also points to a 45-page (FORTY-FIVE!) proposal for the experiment and, over the phone, he chastises me for not having sufficient scientific curiosity to read either his post or that 45-page proposal.

To which I say, “Blah, blah, BLAH!”

I already KNOW that the boundary between 2-D and 3-D is porous and you will, too, if you watch Brusspup’s video, Incredible Stereo Illusion.


Lorrie Moore reviews ‘The Wire’

I was late to David Simon’s ‘The Wire.’  I don’t have cable TV.  However, I am hooked on this gritty TV (and now DVD) series about life, death, crime, honor, and corruption in Baltimore. My wife and I have now seen four out of the five seasons of the show. We borrow the DVDs for a season from our public library and then watch all of the episodes over a one-week period. Exhausting and exhilarating.

In the 14 October 2010 issue of the New York Review of Books, Lorrie Moore writes In the Life of ‘The Wire’.

Read the article and then borrow the first season from your local library or from NetFlix.

Note: After a certain (or uncertain) length of time, NYRB articles disappear behind a subscriber pay-wall.


Chernow on ‘The Founding Fathers Versus the Tea Party’ 1

In the 24 September 2010 NY Times, historian Ron Chernow addresses The Founding Fathers Versus the Tea Party. The Tea Party claims that its views mirror those of the Founding Fathers. Chernow claims that the Founders were certainly NOT “a like-minded group of theorists.”

The truth is that the disputatious founders — who were revolutionaries, not choir boys — seldom agreed about anything. Never has the country produced a more brilliantly argumentative, individualistic or opinionated group of politicians. Far from being a soft-spoken epoch of genteel sages, the founding period was noisy and clamorous, rife with vitriolic polemics and partisan backbiting. Instead of bequeathing to posterity a set of universally shared opinions, engraved in marble, the founders shaped a series of fiercely fought debates that reverberate down to the present day. Right along with the rest of America, the Tea Party has inherited these open-ended feuds, which are profoundly embedded in our political culture.

As a general rule, the founders favored limited government, reserving a special wariness for executive power, but they clashed sharply over those limits.

The Constitution’s framers dedicated Article I to the legislature in the hope that, as the branch nearest the people, it would prove pre-eminent. But Washington, as our first president, quickly despaired of a large, diffuse Congress ever exercising coherent leadership. The first time he visited the Senate to heed its “advice and consent,” about a treaty with the Creek Indians, he was appalled by the disorder. “This defeats every purpose of my coming here,” he grumbled, then departed with what one senator branded an air of “sullen dignity.” Washington went back one more time before dispensing with the Senate’s advice altogether, henceforth seeking only its consent.

President Washington’s Treasury secretary, Alexander Hamilton, wasted no time in testing constitutional limits as he launched a burst of government activism. In December 1790, he issued a state paper calling for the first central bank in the country’s history, the forerunner of the Federal Reserve System.

Because the Constitution didn’t include a syllable about such an institution, Hamilton, with his agile legal mind, pounced on Article I, Section 8, which endowed Congress with all powers “necessary and proper” to perform tasks assigned to it in the national charter. Because the Constitution empowered the government to collect taxes and borrow money, Hamilton argued, a central bank might usefully discharge such functions. In this way, he devised a legal doctrine of powers “implied” as well as enumerated in the Constitution.

Aghast at the bank bill, James Madison, then a congressman from Virginia, pored over the Constitution and could not “discover in it the power to incorporate a bank.” Secretary of State Thomas Jefferson was no less horrified by Hamilton’s legal legerdemain. He thought that only measures indispensable to the discharge of enumerated powers should be allowed, not merely those that might prove convenient. He spied how many programs the assertive Hamilton was prepared to drive through the glaring loophole of the “necessary and proper” clause. And he prophesied that for the federal government “to take a single step beyond the boundaries thus specifically drawn … is to take possession of a boundless field of power.”

After reviewing cogent legal arguments presented by Hamilton and Jefferson, President Washington came down squarely on Hamilton’s side, approving the first central bank.

John Marshall, the famed chief justice, traced the rise of the two-party system to that blistering episode, and American politics soon took on a nastily partisan tone. That the outstanding figures of the two main factions, Hamilton and Jefferson, both belonged to Washington’s cabinet attests to the fundamental disagreements within the country. Hamilton and his Federalist Party espoused a strong federal government, led by a powerful executive branch, and endorsed a liberal reading of the Constitution; although he resisted the label at first, Washington clearly belonged to this camp.

Jefferson and his Republicans (not related to today’s Republicans) advocated states’ rights, a weak federal government and strict construction of the Constitution. The Tea Party can claim legitimate descent from Jefferson and Madison, even though they founded what became the Democratic Party. On the other hand, Washington and Hamilton — founders of no mean stature — embraced an expansive view of the Constitution. That would scarcely sit well with Tea Party advocates, many of whom adhere to the judicial doctrine of originalism — i.e., that any interpretation of the Constitution must abide by the intent of those founders who crafted it.

Of course, had it really been the case that those who wrote the charter could best fathom its true meaning, one would have expected considerable agreement about constitutional matters among those former delegates in Philadelphia who participated in the first federal government. But Hamilton and Madison, the principal co-authors of “The Federalist,” sparred savagely over the Constitution’s provisions for years. Much in the manner of Republicans and Democrats today, Jeffersonians and Hamiltonians battled over exorbitant government debt, customs duties and excise taxes, and the federal aid to business recommended by Hamilton.

No single group should ever presume to claim special ownership of the founding fathers or the Constitution they wrought with such skill and ingenuity.


What’s Holding Back Small Businesses? [Biggest problem is NOT taxes or overregulation]

On 14 September 2010, Catherine Rampell blogs at the NY Times, What’s Holding Back Small Businesses?

The biggest single problem facing America’s small businesses isn’t taxes or overregulation. It’s low demand, according to a new report released by the National Federation of Independent Business.

Thirty-one percent of small businesses surveyed by the N.F.I.B. said that “poor sales” are their company’s “single most important problem.” The other options included were competition from large businesses, insurance costs and availability, financing and interest rates, government requirements and red tape, inflation, quality of labor, cost of labor and “other.”

See chart breaking down what percent of small businesses cited each of these problems as their biggest challenge, going back to 1986.

Rampell writes

Much of the debate about how to spur growth and encourage hiring has focused on making the tax picture temporarily more business-friendly. But as you can see, the portion of small businesses citing taxes as their superlative problem has remained about the same — mostly in the 17-22 percent range, say — for about a decade.

Additionally, lending help for small businesses is another key stimulative policy in play, and meanwhile financial and interest rate concerns are a comparably negligible concern.

By contrast, the share of companies saying the poor sales is their main challenge has about doubled since the downturn began.