The Philosopher's Stone

Chrysler to file for Bankruptcy

All I can say is thank god they're going this route rather than becoming a branch of Uncle Sam Motors.

US Preparing Chrysler for Bankruptcy

And it could come as soon as next week.

About bloody time.

An Interesting Graph of Job Gains and Losses

Slate today has an animated chart showing job losses and gains over roughly the past 2 years. I clicked through out of a kind of perverse curiosity, but found it to be far more informative than I expected. As the old saying goes, a picture is worth a thousand words, and this is no exception.

On the chart, blue areas represent net job growth and red areas represent net job losses. Watching those changes over time reveals (or to some, confirms) some very interesting patterns and trends.

The biggest thing is that this chart clearly shows a typical business cycle of gains and losses for most of 2007 and even the early part of 2008. Toward the end of 2008, however, jobs take a clear nosedive - and by November 2008, the job loss is clearly a nationwide problem.

I'm not sure it's meaningful, but I find it interesting that the worst job losses occurred after the government bailout programs were approved.

Medical Marijuana Requests Climb

Dispensers say that more people are requesting medical marijuana. I can't help but wonder if doctors are accepting "depression due to unemployment" as a medical conditioning warranting its prescription now. Maybe Greenspan could track this statistic instead of the men's underwear index.

Happy Tax Day

Yeah, right. ;)

To all the last minute procrastinators, good luck. Too all those who are already done, good job. I finished mine up on Sunday, so no last minute rush for me this year. :)

Another US Ship Evades Pirates

The Liberty Sun successfully avoided a Somali pirate attack today with a skillful use of evasive maneuvers. This marks the second failed attack against a US flagged ship this month. Once more, I'm extremely proud of how our fellow citizens fared during this attack.

The successful defense against these two attacks prove two things. First, defense training works. Speaking as a martial arts instructor who has taught self defense courses before (and likely will again), whether it's pirate defense or self defense for yourself, training can save your life. If you currently are or expect to be in a situation that might require it, please do yourself a favor and get some training. Even a brief session could be enough to make the difference. I am not qualified to teach anti-piracy tactics - but evidently the father of the Maersk Alabama's first mate teaches it, and that's a pretty ringing endorsemen to me.

Second, whether we arm them or not (a complicated discussion), training the crews of merchant vessels in anti-piracy tactics should be our first line of defense. As has been pointed out many times, the ocean is vast and patrolling it is difficult. But training merchant crews can stop these attacks, at least some of the time. This is obviously not the whole solution, but it needs to be a part of it.

We've been lucky so far. This is about to escalate, however, and we can't be lucky forever. Sooner or later, the pirates are going to have a successful attack against US citizens. We need to be prepared to deal with it.

Systems Designed for Posterity

In discussing the role of the an independent Federal Bank in relation to the current economic issues, Megan McArdle today hits on a topic that is very near and dear to my heart:

"I've been thinking a lot lately about the political theory of an independent central bank.  A lot of the libertarians I know have deep issues with the activities of the Fed, which have been largely unaccountable to elected officials.

That's a valid critique.  But here's the problem:  the Fed has performed vastly better on any metric except "being elected" than the Congress.  There's little doubt in my mind that if we had not had an independent central bank, unemployment would be many percentage points higher, GDP would have contracted much more strongly, and we wouldn't now be making optimistic noises about the thing bottoming out."

I highly recommend reading the whole thing, as my small excerpts don't really do it justice at all.

The dilemma that Ms. McArdle is getting at, although she doesn't phrase it in these terms, is that the system that gives us better results now might, in fact, give us poor results over the long term.

The framers of the US Constitution were well aware of this fact, and debated about it at great length. They had lived under a constitutional monarchy in its early days when the monarch still held quite a bit of actual power. Many of them were also quite well educated and had studied quite a bit of history, especially of the classics. They were familiar with the history of monarchs, tyrants, oligarchies and republics all - and knew the shortcomings of each.

In engineering a system is considered stable if it will return to a functional state after a great disturbance in the system. In effect, our founding fathers were attempting to engineer a stable government in the engineering sense, not in the political sense. This is the basis for the checks and balances we see in our government.

Universal democratic rule was deliberately not the goal of our founding fathers. They knew, from their history, that over time a pure democracy would devolve into a chaotic mob rule. Or, as Ms. McArdle phrased it:

"Still, the longer I think about it, the longer my thoughts linger on Mencken's famous quote about democracy:  'the theory that the common people know what they want, and deserve to get it good and hard.' "

Exactly so, which is why the US Government isn't a democracy. Instead, our government was deliberatey designed to foster elements of each of the systems outlined above: democracy (the House of Representatives), oligarchy (the Senate), tyrants, emporers or monarchs (a strong President). As part of this system, certain parts of government were deliberately chosen to remain as appointed positions rather than pushing them for popular election - or even election by the legislature.

The Federal Reserve is in a somewhat extra-constitutional role. The constitution does not explicitly provide for a national bank, and the debate over whether we should have one or not was quite intense in the early decades of our nation. As we see in Ms. McArdle's post, some of those debates continue today.

As we see in many of the examples she brings, however, many of the solutions we propose to deal with current problems have serious long term concerns. To quote her once again:

"Of course, libertarians and liberals and conservatives all mostly abandon this committment to Democracy when there's a principle they care about at stake; democracy is, of course, good and wonderful, but that shouldn't let the majority dictate their opinion on the position of homosexuality in the public sphere . . "

Exactly. Ms. McArdle ends by extolling the necessity of Democratic oversight of these ideals. My own opinion is less specific: I'm fond of democracy, but I don't think it holds any special status as being the best way to solve every problem. However, in the case of government, every powerful group should have some form of check upon its power - even if that check reduces its effectiveness or efficiency. A 90% solution that is stable and can last for 100 years is better than a 100% solution that will degenerate in a generation - and I don't believe it's possible to have both.

This, again, gets to the heart of my recent arguments regarding the balance of power between our three branches of government. Our system was founded with a strong eye toward posterity and the long term stability of these systems. Since then, however, all parts of the system have been operating with a strong eye toward solving immediate problems. The fact that the system is still so stable is a strong testament to its genius.

But when we make changes, even small changes, to the system it is well worth considering how these changes will work once the people in control are no longer from our favored political party - because inevitably this will happen. Systemic changes must be made with an eye toward the long term and how they will work a generation from now if we are to preserve this great nation for another 200 years.

Why Does Health Care Cost So Damn Much?

Over on The Atlantic, Megan McArdle takes a stab at answering that question.

The post is particularly timely for me, as I was just discussing this very problem with my wife last night. As I see it, the problem with health care in this country isn't that people are uninsured or underinsured: it's that health care costs so much that you need insurance or you can't get the care you need - and the costs are going up at an insane rate.

Ms. McArdle takes a valiant stab at the problem, and I think she accounts for some of the extra costs. But I also think there's more to the story, because I just can't make the numbers add up in my head. Specifically, her article covers a lot of points about aggregate costs. But I still wonder why individual procedures often cost so much.

For example, why does getting an MRI cost so much? My wife recently had to have one done, and Blue Cross was kind enough to supply us with a "before insurance" cost of the procedure (read: they wanted us to know just how much money we'd cost them). The MRI examination was $17,000!

I understand that an MRI machine is an expensive piece of equipment. After looking it up, I understand that it's an even more expensive piece of equipment than I appreciated. Still, even at the 2 million dollar pricetag that Wikipedia gives as an upper end, this doesn't justify the price. Assume an MRI facility operating at full capacity: say, 4 MRI's a day to be generous (the one for my knee took approximately one hour). Allow 5 days a week of operation, and 4 weeks a year of vacation time and holidays (again, being generous: individual employee vacations could be scheduled in such a way to keep the facility operating regardless). By my estimates, that's $16.3 million per year in revenue.

Even when you include the cost of specialists (radiologists to study the results aren't cheap: their salaries are very high, as is the cost of their schooling), staff, overhead, etc, malpractice insurance, and even the fact that this MRI facility in particular was probably on the extreme end of costs for various reasons... somebody's making out like a bandit here.

And MRI's aren't alone. I've seen a lot of medical procedures done where I just can't figure out why they're so expensive. Like college tuition, it's just plain getting out of hand. All the while, of course, doctors and their staffs are griping that insurance companies won't cover their overly expensive bills.

I would love to spend an afternoon studying the books of a typical medical specialty partnership. Maybe these costs are justified and I'm just blind to it. Or maybe they really are outrageous, if we only knew. But the reality is that right now, I just can't make the numbers add up in any way that makes sense.

Dealing With Piracy

Dave Schuler in OTB today:

"I’m open to other suggestions. Propose your alternatives in the comments. Please limit your suggestions to things that can be done with forces that actually exist."

I think the last portion of that is silly. Nations raise forces specifically to deal with specific threats all the time. This has been done throughout history. A better approach is to limit the suggestions to things that can be done with forces that could plausibly be raised in the near future. Nonetheless, I don't think anything I've outlined here is unreasonable given the forces available to the international community.

The true cost of piracy is much higher than the monetary cost. It isn't simply the price tag that the developed world pays that matters. Piracy instills fear and lawlessness in the people forced to live under it. Furthermore, by allowing pirates (or other brigands) to disrupt our shipping, we give them a kind of power over us. For now, that power may be minuscule, but given time it will only grow.

While it may be expensive to deal with now, if we wait it will only become more expensive. Though I am skeptical of it actually happening (since when has government nipped a problem in the bud instead of waiting for it to become a crisis?), the correct approach to the Somali piracy problem is to deal with it now.

Piracy is a problem that is at one and the same time simple to deal with and yet difficult to deal with. Conceptually, the answer is rather simple, and revolves around a comment made by Admiral Richard Gurnon of the Massachusetts Maritime Academy in various forums:

"They're desperate people who have a business model that works for them.

You know, you buy lottery tickets and you lose most of the time, but you still buy them. You still might have a million-dollar winner."

The analysis is, on the surface, correct. The risks are low and the payoffs are potentially high, so recruits are coming out of the woodwork. The long term solution to Piracy is, as it always is, to alter the fundamental equations so that the "business model" fails.

The lottery ticket analogy is used by many to illustrate the difficulty in altering this model. But in reality, it points us exactly in the direction of our solution. Lottery tickets are cheap and there is no risk involved other than the initial cost of the ticket, so many of us buy them. But suppose for a moment we alter the rules of the lottery. In addition to your one-in-a-million (for the sake of clarity, I'm not bothering to look up actual lottery odds) chance of winning a huge sum of cash, you also have an exactly equal one-in-a-million chance of dying. All of a sudden, you're going to sell a lot less lottery tickets.

Those odds aren't enough to completely deter piracy, of course. But what if we keep raising the odds of dying? What if you keep that one-in-a-million chance of the huge payoff, but your odds of dying are now up to one in a thousand, or even one in a hundred? Now we're looking at a real deterrence - perhaps not enough to eliminate Piracy altogether, but enough to put a serious crimp on it.

At the same time, we need to be focused on that payday. If we reduce the size of the winnings from, say, a million dollars at the start down to $100,000 or even $10,000, we've again dramatically reduced the incentives of players to play the lottery. Combine both approaches together and the lottery becomes worthless: nobody will play.

The question becomes, how do we apply this model to current day Somali pirates?

With a multi-front effort, focused on several areas at once. These approaches need to be divided into two major areas: military and law enforcement. It is a huge mistake to think that either approach alone will solve this problem. Instead, both must work together in a coordinated front.

First, the military components - and there are several. The idea of using convoys has been brought up. This is a good start, and probably one of the easiest to implement right away. Ships who choose to should be allowed to join in scheduled convoys with military vessels. Ideally, this service would be provided by a multi-national naval force, and the costs could be offset by fees charged to the merchant vessels being protected. However, the costs should be kept low enough to avoid imposing any substantial burden on these companies: we want them to join convoys, when they can. For whatever portion of the mariner community that can be protected this way, we have an immediate security boost.

Simultaneously, we must step up naval patrols in the area. My suggestion is to put an aircraft carrier in the area to provide constant aerial surveillance and tracking of nearly every vessel in the vicinity, and also to put as large a patrol as possible (again, hopefully multinational) directly along the Somali coast. Unlike the convoys, the goal of this combined force is not to stop a pirate attack before it happens. As has been pointed out, there is far too much ocean for this. Instead, the goal of this force is to detect a pirate attack as it happens - and intercept the vessel before it reaches the coast.

Just as it did with Captain Phillips, this now puts the initiative back in our hands. If the vessel (and any hostages) are out at sea, they are isolated. They can't receive reinforcements. They can't remove any hostages from the vessel. They are trapped in a stalemate: we can't blow them out of the water or the hostages will die, but they can't kill the hostages or we'll blow them out of the water. The vast majority of the time, such a stalemate works in favor of law enforcement. All we have to do is run out the clock until they get desperate and surrender.

This is where the joint military/law enforcement nature of the response comes into play. Our announced official policy on piracy actions should be that our goal is to bring pirates to justice before a recognized court - either US or multi-national - and that captured pirates face life imprisonment - NOT the death penalty. However, at the same time, it should be policy that any pirates that kill hostages, or provide an immediate lethal threat to hostages, are subject to immediate military action - being shot on the spot, as was done in the Captain Phillips case.

Making this official public policy gives any hostage-taking pirates an incentive to choose surrender over killing hostages. Life in an American prison is probably actually pretty cushy compared to the life they know. Death is.. well, it's death. This becomes our bargaining tool in negotiations, when the need to occur.

Trained law enforcement must also interject itself into any negotiations, just as we do in domestic kidnappings or hostage situations. Again, the Captain Phillips case provides an excellent example of exactly how useful these personnel can be. They have a lot of experience at this kind of job. The ground rules may be a tad different. As an example, unlike most kidnappings, in most Somali piracy cases so far, the hostages are being freed upon receipt of payment. However, the fundamentals are the same, and the differences can be trained and learned. Coordinated negotiation gives us the chance to a) reduce overall payments (and hence reduce the "pot" available to our lottery players) and b) gather intelligence for future military or law enforcement actions.

At the same time, adding to the law enforcement side, we need to use all the tools at our disposal - including the tools we've recently enhanced to combat terrorism. The financial assets of pirates can be tracked and frozen exactly the same way as Al Qaeda's assets. And just as we've done against organized criminals within the US, we can trace those assets back to the source and identify "Pirate Lords" associated with them. These people can then become the targets of law enforcement actions - if they can be apprehended and extradited.

If not, we retain the option to employ the military solution again - either by capturing them for trial (as we have done before, and retain the capacity to do) or assaulting and killing them and their organizations (as we have also done before, and also retain the capacity to do.

It is important to note that NONE of these policies, on their own, will end this problem. The problem is too multi-faceted for that. Still, this isn't exactly rocket science. The individual policies here are rather clear - it's just going to require some time, patience, money, and probably a little bit of blood to deal with the problem.

In a perfect world, the US would take the lead on this action, joined by a large and willing international coalition. The war on terror has taught us that this perfect world may not exist. However, this case is a bit different. The international community has just as a strong an incentive as we do to end this - perhaps stronger, given that they've so far been hit harder. I think getting international cooperation on this is feasible, but we should be prepared to go it alone if we have to. Despite the fact that other nations are currently bearing the brunt of this, the US has compelling interests in putting a stop to it.

Edit: To be perfectly clear, I understand just fine the history of how we got here and the fact that Somali piracy exists because of the power vacuum in domestic Somali governance. I just think it's irrelvent to the solution. Cries of, "oh, it would go away if we had a functioning Somali government" are meaningless. Given the recent history of the nation it's quite clear that this isn't going to happen in the near term future (a la Dave Schuler's admonition, I consider this a "force we don't have" and also a "force we can't conceivably raise in the near future").

Whitewater Rafting

Spent Saturday afternoon whitewater rafting on the Ocoee River in southern Tennessee. Rafting in 58 degree water when the air outside is around 55 degrees is... an experience. We had a complete and total blast, but unanimously decided that next time we want to go, we'll wait until summer!