Truck and Barter

Journal Ranking By Google?

A new method for ranking science journals is being proposed. What's it based on? Google, of course.

The most popular index of a journal's status is the ISI Impact Factor (IF), produced by Thomson Scientific. It counts the total number of citations a journal's papers receive, and divides it by the number of papers the journal publishes. But the rise of online journals, coupled with sophisticated search engines that permit rankings of web resources, is triggering a wave of other measures. Last year, for example, physicist Jorge Hirsch of the University of California, San Diego, proposed a metric called the h-index for assessing the quality of researchers' publications (see Nature 436, 900; 2005).

Now Johan Bollen and his colleagues at the Research Library of Los Alamos National Laboratory in New Mexico are focusing on Google's PageRank (PR) algorithm. The algorithm provides a kind of peer assessment of the value of a web page, by counting not just the number of pages linking to it, but also the number of pages pointing to those links, and so on. So a link from a popular page is given a higher weighting than one from an unpopular page.

Only hearing second-hand information about the way tenure review goes for academics, I was under the impression that the relative "importance" of the journals in which one might publish also has a big impact on tenure decisions. Ranking systems then seem to be deeply involved in the way research occurs if it impacts who gets financial support either throught grants or university support.

My question is whether the "PageRank" metric might be highly vulnerable to information cascades and manipulation in much the same way as Google's process for ranking sites.

From the Coffee House to the World Bank - Institutions and Development

Over the weekend I watched a conference series held at Princeton University in honour of Peter Bauer, a pioneer in the field of development economics. His view of development could be characterized as;

I regard the extension of the range of choice, that is, an increase in the range of effective alternatives to the people, as the principal objective and criterion of economic development; and I judge a measure principally by its probable effects on the range of alternatives open to individuals.

(quoted in Amartya Sen, Development as Freedom, p.290)

I liked his critique of the prevailing economic development theories and highlighting the significance of non-economic variables for development. His colleague and friend Basil Yamey explained;

Peter emphasized the importance for economic advance of the attributes, attitudes, and mores of people and groups. He had observed this at first hand in his studies of the multiethnic societies of Malaya and West Africa…

Peter often spoke about a small but telling example. In Malaya he examined the records of the output of individual rubber tappers on a number of plantations. He found reliable records for several estates running over longish periods. He found, consistently, that Chinese tappers produced more tapped latex than their Malay and Indian counterparts. Yet, apart from their ethnic origin, the tappers were otherwise about as identical as one could hope to find for a sort of laboratory experiment in economics. They all used the same simple tools; and the co-operant factors of production were the same. They had virtually no formal education.

In the same context, Peter also sometimes mentioned a rather different example, with the same implications. During the troubles in Malaya, Chinese bandits betrayed their ethnic affiliation when they sacked a village. They were far more thorough and efficient than other bandits when they carried out their work. The difference in performance was visible.

On foreign aid, Peter declared “an excellent method for transferring money from poor people in rich countries to rich people in poor countries.” And he was very critical of population control; worries about population growth reflect a patronising view that the poor are incapable of making sensible choices about having children.

Chris at The Austrian Economists blog who attended the session has some advice for budding Austrian economists;

If the opportunity presents itself, the younger generation of Austrians should observe the way Kirzner carries himself. He is the consummate scholar. Kirzner's ability to articulate Austrian ideas and engage the likes of Amartya Sen on these issues serves as an important example of how to interact with those in the profession who aren't necessarily sympathetic to Austrian insights. I have had the opportunity to see Kirzner on several occasions and have learned important lessons each time from simply observing how he presents his ideas and interacts with others.

Some links to best of the sessions from the conference (requires broadband, 300K);

Basil Yamey: "Peter Bauer and Development Economics"

Chairman: James Buchanan; Speakers: Basil Yamey, Amartya Sen, Israel Kirzner: "SESSION 1: Resources? Institutions? Attitudes? - How Does Development Happen?"

Chairman: Amartya Sen; Speakers: Speakers: James Buchanan, Douglass North, John McGinnis; Discussant: Mary O'Grady: "SESSION 3: From the Coffee House to the World Bank - Institutions and Development"

Chairman: Herbert London; Speakers: Allan Meltzer, Enrique Ghersi, Razeen Sally; Discussant: William Niskanen: "SESSION 2: 'Seek Ye First the Political Kingdom' - Democracy, Equality and Development"

Milton Friedman and Thomas Sowell: "Peter Bauer and his Ideas"

Related Links; A Tribute to Peter Bauer at Institute of Economics Affairs, Pioneers of Development, Frontiers of Development Economics, An interview with Peter Bauer and Israel Kirzner.

Quote of the Day, but not in a good way

Or, contra a regular MR feature, the worst paragraph I've read today:

So in an axiomatic system (first devised by the ancient Greeks, in particular Euclid), we begin with a few (the fewer the better) axioms, which are supposed to be intuitively obvious, and then proceed onward to prove whatever follows from these axioms. (The fewer the better, because we want to keep our appeals to intuition to a minimum to maximize certainty.) In place of a libertarian policy of "let's-just-depend-on-the-good-intentions- (intuitions)-of-citizens-(mathematicians)-to-do-the-right-thing," the axiomatic system imposes some strict governmental controls. In place of random appeas to intuitions, there is to be general consensus on what is directly given, the bedrock, with everything else subjected to systematic rule-regulation. You can think of axiomatization as sort of "big government mathematics." [Emphasis mine.] From Incompleteness: The Proof and Paradox of Kurt Gödel, Rebecca Goldstein, p. 128.

Proving, I suppose, that some things just cannot be repeated often enough. Perhaps if it read "It is not from the benevolence of the mathematician, the logician, or the philosopher..." And as for the appelation of "libertarian" in this at all, well, Mr. Montoya sums up my response quite nicely.

This does not really detract, however, from a generally compelling book on Gödel's life and work. I've recently read a number of the "Great Discovery" series and find that I enjoy them quite a bit. The writers Norton has tapped for the books do an admirable job of blending a popularization of sometimes very difficult concepts, a good deal of biographical content to flavor the work with some humanity, and situating the discoveries in a (granted, brief) historical foundation. So far, however, David Foster Wallace's Everything and More has been the most engaging. Unfortunately, The Man Who Knew Too Much was largely disappointing.

Modeling and Economics

Interesting post up at Simulation: The Weblog. David Upton notes an article from the Mises Institute that does a rather usual (for the MI) routine on the limitations of data and econometrics.

Upton notes:

The problem is that sometimes the assumptions do work. Mathematical models and simulations can be used with amazing effectiveness to predict reality, to help us modify or improve it, and so on. At the moment, this is mostly in fields like engineering where the 'physical laws' are well known and the effects can be readily quantified.

Of course, it's the uncertainty around just those "physical laws" that makes a good deal of assumptions about economic activity so...well, fuzzy. But if I understand Upton's point, I think I side with him. My version is much shorter: "The reliance on data and math is bad compared to what?" I'm not convinced that the vast majority of economics education is laboring under a false idea of the usefulness of mathematics. By contrast, it doesn't sound like the Austrian School is winning converts based on the obvious superiority of their approach either.

The rest of Upton's post is also interesting as it talks about the iterative process of refining modeling techniques. Though I will say it reads like a shorthand version of Kuhn. As the theory keeps requiring more and more special exceptions the model that used to fit reality pretty well loses applicability, making room for the next step forward.

The Message is Finally Revealed

Sebastian Mallaby’s latest column talks about Mr. Wolfowitz finally finding his organizing theme at the World Bank; the new boss is going to be tough on corruption, and he's going to push this campaign beyond the confines of the Bank. Mallaby notes several examples of Mr. Wolfowitz walking the talk on corruption.

- held up $800 million in lending to Indian health projects
- frozen lending to Chad, whose government had reneged on a promise to spend its oil revenue on poverty reduction.
- canceled 14 road contracts in Bangladesh because of corrupt bidding.
- frozen five loans to Kenya because of corruption
- interrupted a project in Argentina that topped up the wages of poor workers
- postponed debt relief for Congo

The Bank with some 10,000 employees and over 1,200 PhD’s, including 31 vice presidents who earn the equivalent of more than $225,000 after taxes, won’t be an easy place to run;

When Paul Wolfowitz returned to the World Bank from a trip to Africa in June, he made a presentation to his staff. "I made the mistake of calling on the first questioner, somebody who was obviously even older than I am," recalls the 61-year-old but freshly minted World Bank president in an interview. "And he said, 'I've been around since 1972 and we've heard all this stuff before.'" ….

Regarding his staff skeptic, Mr. Wolfowitz says he replied, "I don't think so. I don't think you ever really heard African leaders talking about the essential need to combat corruption. I don't think you've seen African leaders, the way the president of Nigeria recently did, jailing the inspector general of police on corruption. I don't think you've seen things like the president of South Africa dismissing the deputy president because his financial adviser took a bribe, by the way, from a company from a developed country."

The problem seems to be as a veteran bank economist Mr. Lant Prichet explained; its highly trained, well-meaning professionals too often think they know the solutions. "They have too little doubt,'' he said.

Mr. Wolfowitz jokes, "I remember George Shultz was once asked how he would compare management in the private sector, public sector, and academics. In the private sector you better be careful what you ask for because people are going to go out and do it. . .. The government, you don't have to worry about that. You tell people do something and you check back two months later and nothing's happened. But in the academic world, you tell people to do something and they look at you strangely and they say, 'Who the heck do you think you are giving us orders?

Good luck to Mr. Wolfowitz. The aid community needs some one to walk the talk about corruption, an ‘industry’ worth $1 trillion a year.

TiVo no match for the profit incentive

There's apparently been some worry on the part of advertisers that innovations like TiVo will make it easier for people to skip commercials. The push to advertise on every other surface imaginable bothers some folks as well, as companies look for alternative outlets.

Why not hit people where they live? If they're fast-forwarding, given them a message that can only be read during slow motion, and then give them free stuff for doing so.

Of course, you have to want the free sandwhich from KFC, which strikes me as a too-binding constraint on this little gimmick.

‘Fearful Pig’ is resigning as the President

Paul Krugman once noted the late economist Dornbusch classified economists, depending on their research style; "Goldsmiths" were careful, meticulous workers - which Rudi admired. "Pigs" just sort of jumped into an issue and wallowed around. But that was OK too, if it was done with sufficient vigor and originality. Rudi described Larry Summers as a "fearful pig" - and it was a compliment.

Now in a letter to the Harvard community Summers has declared his intention to resign as the President of the Harvard University. It will be a great loss for the university.

In an interesting profile of Summers in the NYT, James Traub wrote;
“Summers may well have the densest collection of economist genes of any man alive.. Both of his parents are economists. And Paul Samuelson, his father's brother, and Kenneth Arrow, his mother's brother, each won a Nobel Prize for economics…Summers does not find his own background a terribly interesting subject, and the question struck him as overly deterministic, but he did recall that if the family -- he has two brothers -- was stuck in traffic, one of his parents might ask, ''If there was one more lane, would that eliminate the traffic jam or simply increase the number of drivers who used the road?'' One of the Summers-haters told me he had heard that the family rated sunsets, but Summers said that that was a game his father played with Summers's children (no doubt fostering a third generation of economists).”

He became notorious among the NGOs during his tenure as the Chief Economist at World Bank for one his memos that was leaked; ''I've always thought that underpopulated countries in Africa are vastly underpolluted,'' Summers wrote. He suggested that the World Bank encourage ''more migration of the dirty industries'' to less developed nations. (Note the link is not to a World Bank site).

Later in 2001, Summers attacked the World Bank’s rhetoric of ‘empowerment’, referring that greater participation doesn’t necessarily lead to improve decision making. The best route to successful development lay in rigorous analysis, not participatory waffle. The Bank should promote environmental standards when hardheaded cost-benefit analysis suggested this made sense; it should not pursue environmentalism in the blanket, NGO-appeasing way laid down by the safeguards. Striving to be politically correct would only strengthen the forces of political correction. (Sebastian Mallaby, The World’s Banker, p.297).

Here is link to a video lecture of Summers talking about development lessons from his experience- a must see for any student of economic development.

“Everybody’s Friend, Nobody’s Friend”- Self Help from Thomas Sowell

At work place and in life you meet all sorts of people. A recent incidence at the work place of a colleague taught me how difficult it is to gauge a true friend. The person closest to you could betray you when his interests are at stake for the pettiest of things.

This reminded me of an incident noted by Thomas Sowell in his biography A Personal Odyssey. When Sowell was at the Marine Corps he was once charged with being A.W.O.L . (absent without leave) and a pre planned court martial was scheduled for him. He approached one of the sergeants for help whom everyone thought was someone you could trust because of his friendly and genial character. But at the end of day it was another Sergeant whom they called ‘little Caesar’ who came forward to tell the truth about the incident. According to Sowell the incident, “…taught me something painful but valuable, not only about Sergeant Gordon, but also about other people who are everybody’s friend- which usually means that they are nobody’s friend.”

Definitions

T&S still gets a pretty decent amount of traffic from searches on "accounting definitions". In a prior response, Kevin put up a note on this post.

I wanted to point to another page that may be of help as well. Reuters has just started a Financial Glossary wiki. Maybe this will prove a help to those people looking up definitions.

Let a Thousand Blogs Bloom

Reporters Without Borders has released a handbook for helping startup blogs on how to stay anonymous and avoid government censorship. On protecting your emails the handbook says;

"Most governments now have the means to spy on electronic messages. The “cyberpolice” in repressive countries use it to spot and arrest political opponents and many Internet users have been thrown in prison for sending or even just forwarding an e-mail. A political dissident in the Maldives was given a 15- year jail sentence in 2002 for corresponding by e-mail with Amnesty International. An Internet user in Syria has been in prison since February 2003 for forwarding an e-mail newsletter."

I learned about it via DeadParrots and RConversation.

Airbus to Give Billions in Fuel Rebates?

Last month, Enplaned was all over the plan by Airbus to offer its customers a fuel rebate so that the operating cost of the A340 will match that of the more fuel efficient Boeing 777. Says Customer COO of Airbus:

“I can agree a figure with a customer that reflects the fuel burn delta and run that out over 12 years and pay it to them,” he adds. “But if the 777’s fuel burn advantage was to give it greater range, then we’d have to look at [improving the A340].”

Enplaned makes some respectable back-of-the-envelope calculations:

Well, OK, it's probably wrong maybe it's $15mm, maybe it's $30mm, we just want to get an order of magnitude estimate. But it's big. Maybe it's smaller for the A340-600 vs the 777-300ER than the A340-500 vs 777-200LR, who knows.

Even on an aircraft with a list price of $200-250mm that's a lot to spot your competitor. Leahy has just offered this to the world. Every customer from now on is going to be insulted if bargaining on the A340-500/600 doesn't start from a similar premise. Not to mention those who already have the airplane knocking on Airbus's door asking for some money back. If Airbus is planning to sell, say, another 200 of the A340-500/600 we're talking $25mm times 200 = $5bn. Big bickies, as they say downunder.

Airbus is willing to spend billions on rebates instead of billions more on a redesign of its current A340. Enplaned notes the preferences many European people and company boards have for limiting environmenal impact:

So very seriously environmentally-concerned Lufthansa is polluting the earth something like 10-20% more than it needs to by running A340-600s? How will that look to the deep green German public? Sure, you can make up the cost of the kerosene with money from Airbus, but what about the damage to the earth? Who's going to pay for that? At the very least, Airbus ought to plant a few trees to make amends.

It's basically impossible to forbid Airbus from giving cash back to repeat customers, but if it were, would that intervention be the closest anybody has ever come to calculating a Pigovian tax?

H/T: Randy's Journal. The Randy being Randy Baseler-- Vice President of marketing for Boeing Commercial Airplanes in Seattle.

Bizarre Google Results

Looking for information on this military aircraft led me to this website about unicycling. The world is indeed full of wonderful and bizarre subcultures.

Globalization's Impact on China?

Dinner last night was a fabulous meal of cashew chicken and scallops at Peking Gourmet Inn. As is expected at US chinese food establishments, the bill was delivered with two fortune cookies. The text of my Chinese Fortune:

German Proverb: No trees touch the sky.

R.A. Fisher on Significance

Apropos Kevin's previous post about Hoover and Siegler, I thought I'd just offer a couple of quick quotes from R.A. Fisher on significance testing:

It is a common practice to judge a result significant, if it is of such a magnitude that it would have been produced by chance not more frequently than once in twenty trials. This is an arbitrary, but convenient, level of significance for the practical investigator, but it does not mean that he allows himself to be deceived one in every twenty experiments. The test of significance only tells him what to ignore, namely all experiments in which significant results are not obtained. He should only claim that a phenomenon is experimentally demonstrable when he knows how to design an experiment so that it will rarely fail to give a significant result. Consequently, isolated significant results which he does not know how to reproduce are left in suspense pending further investigation." [Emphasis added.] In the Proceedings of the Society for Physical Research, 1929.

And this:

For the logical fallacy of believing that a hypothesis test has been proved to be true, merely because it is not contradicted by available facts, has no more right to insinuate itself in statistical than in other kinds of scientific reasoning.... It would, therefore, add greatly to the clarity with which the tests of significance are regarded if it were generally understood that tests of significance, when used accurately, are capable of rejecting or invalidating hypotheses, in so far as they are contradicted by the data: but they are never capable of establishing them as certainly true..."

[Note: Quotes taken from the text provided in The Lady Tasting Tea, by David Salsburg, pp. 99-108.]

Of course, statistical significance doesn't start or end with Fisher. Just wanted to provide the quotes for something to chew on.

The U.S. Retail Sector Since the Mid-1970's

much of the information needed to understand the competitive dynamics of local retail markets simply does not exist in a form usable by researchers.

That's from Ronald S. Jarmin, Shawn D. Klimek, and Javier Miranda of the U.S. Bureau of the Census, who in "The Role of Retail Chains: National, Regional, and Industry Results", use the Longitudinal Business Database -- individual retail location level data -- to assess the composition and structure of the retail industry since 1976. They're talking about the lack of product and price information, but note that the LBD does contain establishment payroll and employment, though not revenues or profits. Still, the data they analyze yield interesting conclusions:

Thus, we see that large metropolitan retail markets are characterized by fewer competitors per capita than rural and micropolitan county markets, but that competition in metropolitan markets is marked by higher firm turnover, and that this higher turnover is more pronounced among chain store retailers.

[Emphasis added]

Even more interesting is a presentation they gave in 2004 summarizing the paper. I liked slide 19 -- "Absolute Drop in Number of “Local” Stores" -- best. It notes that "The absolute number of single unit (SU) establishments has gone down. Between 1976 and 2000 the number of SUs has dropped by 2.53%." However, "Marked differences [exist] across CBSAs. Metro areas increased by 1.62% but Micropolitan and Rural areas experienced a drop of 12.40% and 17.65% respectively."

Mixed Emotions on Cancer Death Numbers

Ok, so I accept from the outset that I may be engaging in a morbid train of thought. But I can't help wondering if there is something more to be said regarding the decline in cancer deaths in 2003. Specifically: is it really a good thing?

As recognized in the article, and detailed in this data from the American Cancer Society, and as would seem to be common sense, older people are more prone to get cancer. Which means that more old people than young are treated for cancer. Which, of course, means that the improvements in treatment mentioned in the article are more heavliy distributed among care for the elderly.

We've certainly not cured cancer. The improvements are in treatment, making variants of the disease more of a chronic condition than the outright killer it once was. The issue, however, is that this increased longevity in the face of a formerly fatal disease means a greater expenditure for end-of-life care -- an expenditure that thrives in the oddly-constructed health insurance system we currently have. From Andrew Samwick:

The third mistake is to force young workers to subsidize older workers in group health-insurance markets. Insurance is supposed to transfer resources from those who have unpredictably low expenses to those who have unpredictably high expenses. But the differences in average expenses by age are predictable. Under the current system, young workers with lower average incomes subsidize older workers with higher average incomes -- the opposite of what we would expect. Lowering premiums for younger workers would draw them into the insured sector and hopefully keep them there.

Put bluntly, medical improvements in treatment often mean more spending at the end, rather than the beginning, of life. Given the distortions such as tax incentives that entrench employer-sponsored coverage, public funds like R&D spending focus on those for whom the return on the investment is lowest (to be crass, who would society get more from: 10,000 healthy kids, or 10,000 ill but "comfortable" retirees?).

While I'm thrilled at medical improvements (hey, I have grandparents too), there's something about this "success" in the war on cancer that strikes me as representative of bigger problems.

100% Employer Paid Health Insurance

Here's an interesting Discussion Paper from the Census' Center for Economic Studies: Contributions to Health Insurance Premiums: When Does the Employer Pay 100 Percent? by Alice Zawacki and Amy Taylor. The abstract:

We identify the characteristics of establishments that paid 100 percent of health insurance premiums and the policies they offered from 1997-2001, despite increased premium costs. Analyzing data from the MEPS-IC, we see little change in the percent of establishments that paid the full cost of premiums for employees. Most of these establishments were young, small, singleunits, with a relatively high paid workforce. Plans that were fully paid generally required referrals to see specialists, did not cover pre-existing conditions or outpatient prescriptions, and had the highest out-of-pocket expense limits. These plans also were more likely than plans not fully paid by employers to have had a fee-for-service or exclusive provider arrangement, had the highest premiums, and were less likely to be self-insured. [Emphasis added]

The dataset provides information on establishments and on the health insurance plans offered by each "The MEPS – IC collects data on premiums for single and family coverage, contributions by employers and employees, provider type, plan enrollment, deductibles, and copayments."

In essence, firms that contribute 100% of premia are more likely to offer higher-priced plans, but these same plans offer some contraints -- more need for referrals, higher out-of-pocket expenses, lower coverage of pre-existing conditions, and lower coverage of outpatient prescriptions. (Granted, the absolute differences don't seem all that large, even where they are statistically significant).

Which leads me to ask, what's going on here? For firms that pay 100%, higher premia appear to be buying plans with -- on average -- slightly smaller benefits. The authors note this is partly due to firm size -- smaller firms are more likely to cover 100% than larger firms. So there might be some scale effects on costs.

But the analysis also notes that 100% employer paid plans have FAR lower self-insured indemnification -- 13% of plans instead of 29% -- meaning that liability for excess medical costs is shifted from employer to health insurer far more frequently when employers are paying 100% of the premium than otherwise. In other words, employers paying 100% less frequently need to buy stop-loss insurance, and more frequently shift the risk of excess coverage to insurance companies within the health insurance contract. I'd say that's what they're paying the extra dough for, but that's just a hunch.

Interesting stuff.

(Alternate copy of the paper here).

Is it Healthier to be Fatter or to Sometimes not Eat Breakfast?

I'm looking for leads here.

Over the past two months, I have frequently gone to work before the rest of the family awakens. To not make noise, I leave without eating breakfast -- usually some cereal, juice, and a bagel or toast, sometimes much more evil foods. By not eating these several hundred calories, I have lost roughly seven pounds over that period (and I'm still overweight). Note that not eating breakfast doesn't effect the size of the lunch or dinner I have... Naturally and thankfully, my wife is concerned that I'm eating too little.

So my questions are, what are the relevant margins here? And what are the costs and benefits at those margins? Am I hurting myself by not eating breakfast more than benefiting myself with lower weight? Can science answer these questions?

UPDATE: I think we can score one for the Healthier to be Fatter team.

How Much To Be You?

Financial Cryptography has found some numbers on what it costs to forge an entire identity.

Most security designs simply assume that collecting the identity of someone grants the holder magical security properties; unfortunately the truth is far less encouraging and the result is that relying on identity collection is probably only reliable for stopping honest people and your poorer class of criminal from defrauding the system.

Is there price discrimination in identity-forging? Of course!

He tells us one passport costs just over £1000, but if we buy more, the price drops to around £800. What made the trade between the eastern European gang and the Sunday Herald’s team of undercover reporters even more disturbing was the fact that the gangsters believed they were dealing with Irish terrorists looking for fake identity papers for members of their paramilitary organisation.

I don't know why, but the idea that there are economies of scale in forgery struck me. Is it all down to a science now, or do purchasers just forego something in quality? Or maybe there are just that many good forgers out there. Personally, I wasn't even able to carry off a good fake parent signature in high school. Guess it's back to my math books then...

How Dare You Offer Healthcare for Profit!

What a lovely editorial in the Toronto Star today:

Let me get this straight. A Vancouver businessman is preparing to open three medical clinics in Ontario where he'd charge patients at least $2,300 a year — before they could even see one of his doctors. Health Minister George Smitherman says, correctly, that this would break provincial law as well as the Canada Health Act governing medicare. But at the same time, Smitherman says he can't do anything until one of these clinics actually opens.

It's like saying you can't deal with someone who openly boasts about his plans to rob a bank until the safe is blown.

I could be wrong, but I gather that even in Canadian culture, robbing a bank is considered slightly more sinister than selling medical services to those willing and able to pay for them. Now, I don't doubt that these clinics violate the spirit and intent of Canadian healthcare legislation, but if there is no cost accounting requirement for these clinics, and they insist on annual fees allegedly for luxury non-medically-related services, they might very well meet the requirements of legislation.

Mr. Copeman's clinic wanted money upfront in addition to an annual fee, but that upset non-clients as well, so he decided to add it to the annual contribution.

BC's Opposition Health Critic David Cubberley sees the Copeman Clinic as "setting a dangerous precedent.”

Exactly so.

“Charging patients a fee for faster and better access to medically insured treatment is something to be worried about,” he said.

That's half right -- but not being allowed to charge such fees is also something to be "worried about".

Of course, the Canadian government is not serious about restricting the options of the rich and impatient, since it is not yet a felony for a Canadian to have medically necessary care performed outside of Canada.

Catastrophic Failure

This is only marginally relevant to the general discussion around here, but it does highlight a point I've raised in the past.

Looks like it's a lot easier to crack the RFID on a passport than one might hope.

Dutch TV programme Nieuwslicht (Newslight) is claiming that the security of the Dutch biometric passport has already been cracked. As the programme reports here, the passport was read remotely and then the security cracked using flaws built into the system, whereupon all of the biometric data could be read.

The crack is attributed to Delft smartcard security specialist Riscure, which here explains that an attack can be executed from around 10 metres and the security broken, revealing date of birth, facial image and fingerprint, in around two hours. Riscure notes that that the speed of the crack is aided by the Dutch passport numbering scheme being sequential.

When the passport is cracked, you lose all that information, as well as an electronic represenation of your fingerprint. A new driver's license you can get, but new fingers? The centralization of personal information in this way makes the subsequent loss that much more traumatic. After the theft of biometric data, how do you prove that you are who you say you are?

A Deeper Look at the VHA

Via MR I saw this post at Brad DeLong's place reprinting the content from a Krugman piece at the NYT (RR, but included for completeness).

The crux of the point, in case you don't feel like backtracking through all of that, is that Krugman is suggesting that the Veteran's Health Administration is a model of efficient, effective health care, provided by the government to boot.

Last year customer satisfaction with the veterans' health system, as measured by an annual survey conducted by the National Quality Research Center, exceeded that for private health care for the sixth year in a row. This high level of quality (which is also verified by objective measures of performance) was achieved without big budget increases. In fact, the veterans' system has managed to avoid much of the huge cost surge that has plagued the rest of U.S. medicine.

To what can we attribute this, you might ask? Why, to the very fact that it's entirely centralized and run by the government!

The secret of its success is the fact that it's a universal, integrated system. Because it covers all veterans, the system doesn't need to employ legions of administrative staff to check patients' coverage and demand payment from their insurance companies. Because it's integrated, providing all forms of medical care, it has been able to take the lead in electronic record-keeping and other innovations that reduce costs, ensure effective treatment and help prevent medical errors. Moreover, the V.H.A., as Phillip Longman put it in The Washington Monthly, "has nearly a lifetime relationship with its patients." As a result, it "actually has an incentive to invest in prevention and more effective disease management. When it does so, it isn't just saving money for somebody else. It's maximizing its own resources. ... In short, it can do what the rest of the health care sector can't seem to, which is to pursue quality systematically without threatening its own financial viability.

Well, I can't claim to have any experience with theh VHA system. But I'm always a little leary about these "just-so" stories, especially when it involves government bureaucracy. So I just have a couple of points to make about the VA.

First, the potential usage pool is highly restricted. Because they treat only veterans, they don't have to deal at nearly the same level as other hospitals with the surges in demand, the heavy use of emergency rooms as just-in-time care for things that could have been treated sooner and far more cheaply. The drastically smaller size in population isn't a trivial factor; some things don't scale up as well as we'd like, especially under pressure from things like HMOs to prevent expensive unused capacity.

In addition, many of the vets treated by the VA are often covered by other forms of health care. Here are some statistics on coverage by alternative health care regimes for vets. Vets with alternate forms of coverage are clearly opting to alter between them when they see a better deal or better treatment. Non-vets don't have this option. With a unversal payer system, no one would have this option.

On those achievements "without big budget increases": we should account for the fact that the number of vets in the US is both aging decreasing. So as the population treated is going down, the cost of treating them is going up. (Link to 2005 CBO Report: "The Potential Cost of Meeting Demand for Veteran's Health Care.)

More from the CBO report (it's a long excerpt, but eliding too much would be misleading):

VA has had difficulties coping with the large influx of new users seeking pharmaceuticals and outpatient care. Although VA has substantial excess inpatient bed capacity in many facilities, the influx of new enrollees seeking pharmaceuticals and outpatient care has exacerbated waiting times for all veterans wanting to see a VA provider. By the end of 2002, about 300,000 enrolled veterans were on waiting lists for VA medical appointments.

Waiting times have been a long-standing problem for the department. In 1993, the General Accounting Office (GAO, now known as the Government Accountability Office) found that veterans frequently waited eight to nine weeks to obtain appointments at some specialty clinics.(8) In 1996, lawmakers enacted legislation requiring VA to serve veterans in a timely manner.(9) In response, the department initiated a number of actions to address waiting times and waiting lists, including better tracking, better scheduling, and use of a primary care model--that is, coordinated health care delivery through interdisciplinary teams.

Accompanying the rise in the number of veterans seeking care at VA facilities were substantial increases in the annual budget for VHA. Although VA medical budgets were relatively flat in real terms in the mid-1990s, they grew by an inflation-adjusted 4 percent to 10 percent each year from 2000 to 2004. Those budget increases were appropriated by the Congress to fund the rapidly increasing demand for VA health care that followed the change in eligibility rules after 1996.(10)

In part because of the long waiting lists and influx of new patients that VHA could not accommodate in a timely manner, in January 2003 then-Secretary of Veterans Affairs Anthony Principi decided to cut off enrollment of new P8 veterans--those without service-connected disabilities who have income above $25,842 per year (for a single veteran) and above a geographically adjusted means test. Veterans in that priority group who had already enrolled in the system were "grandfathered," however, and could continue to seek care from VA. According to the department, "Until the waiting time for medical appointments can be reduced to an acceptable standard, it would not be in the best interest of those most in need of care for VA to enroll additional priority group 8 veterans."(11)

So, there is some contradiction to Krugman's assertion that this success (of which there does appear to be some) without "big" budget increases. Of course, one Budget Office's "substantial" may not be another man's "big."

More importantly, however, a good deal of the success seems to have come at the cost of restricting access to care. The system was not working well with its current demand, so it was pared down to keep future demand limited. The flexibility to respond to changing demands required shifting care away from specific people. If a single-payer system becomes inefficient and ineffective much like how the commenters on DeLong's site all agree the VHA was a few years ago, would it be able to deny care to subsets of the population while it takes time to retool? Maybe a series of "rolling blackouts'" while the health care network tried to figure out how to expand capacity in time with soaring demand?

I don't dispute that there have been significant, benficial changes at the VHA. What strikes me as less clear, however, is that it has been an unmitigated success of policy. The only cost in restructuring the system hasn't been a "small" budgetary increase for the same or better level of care. And the increasing demand that has put strains on this system before isn't going to be exacerbated much (if at all) by returning vets from Iraq since, as the CBO points out, inpatient care is actually underutilized right now. It's the aging current vet population -- the population whose ailments are among the most expensive to treat in large part because they persist for quite a while -- that is going to test whether or not "one of the best-kept secrets in the American policy debate" is a stunning success or not.

Quote of the Day

David Warsh, zeroing in on why the NYT, WaPo, and FT ignored the Harvard-Russia-Project scandal:

Instead, the informal economy of capitalism is one of deference and respect, of favors today and the implicit promise of favors later, of jobs and dinner invitations and admissions to exclusive kindergartens. Its texture is extremely uneven: dense around, say, academic medical centers and aerospace contractors; sparse where incentives are weak; and, at least in democracies, full of relatively empty seams in the appropriate places, between countervailing sectors. Anyone who doubts that this informal economy extends to newspapers knows nothing about how newspapers work.