There is a fight between State and wealthy people, and the outcome depends on the threshold of the cost-benefit of tax evasion. The Panama papers show that by now this threshold is quite low, benefits are higher than costs. My impression is that lobbys are successful in their effort to suggest rules that allow hiding money with a relatively low cost. After reading the book you'll be convinced about that. Therefore, it's a success of wealthy and a failure of the State. Is there are any alternative?
The more than 2.6 terabytes of data from the servers of the Panamanian law firm Mossack Fonseca provide an insight into the offshore world that is more detailed, immediate and up to date than anyone could have previously imagined. Over the course of many months we have seen with our own eyes how Mossack Fonseca has a tailor-made solution for virtually anyone with something to hide. The right loophole can always be found in one or other of the tax havens: if the company in the Seychelles can’t do it, then the Panamanian trust or the foundation in Bermuda probably can – or alternatively a combination of two, three or four of these elements. In our globalized world it seems there is hardly a single law that cannot be circumvented or have its impact lessened with the help of a few shell companies.
My impression is that Panama papers have increased the tax evading cost, but I'm not sure that this will be enough in our neo-feudal world of concentrated wealth.
Classical Bayesians will both seek out the most informative evidenceand process it in an unbiased way. However, motivated bayesians gather and process information before and during the decision-making process and they tend to do so in a way that is predictably biased toward helping them to feel
that their behavior is moral, honest, or fair, while still pursuing their self-interest. This is the definition in an interesting article in JEP, and this is the summary:
First, we argue that people often form self-serving judgments of what, exactly, constitutes fair or moral behavior or outcomes. When there is some flexibility in interpreting what is “right” and “wrong” or “moral” or “immoral,” people’s judgments of the morality of an act are often biased in the direction of what best suits their interests. Second, we argue that a similar but distinct phenomenon occurs when people actually alter their judgments of objective qualities—such as their own abilities or the quality of competing options—as a way of making egoistic behavior appear more moral. Finally, we argue that motivated Bayesian reasoning in moral decision making has important implications for many behaviors relevant for economics and policy. In domains including
charitable giving, corruption and bribery, and discrimination in labor markets, the ability of people to pursue egoistic objectives while maintaining a belief in their own morality has important consequences for their behavior.
We argue that an underexplored element in much of this research is the frequent tendency of decision makers to engage in motivated information processing—acting as motivated Bayesians—thereby resolving the apparent tension between acting egoistically and acting morally. Individuals’ flexibility and creativity in how they acquire, attend to, and process information may allow them to reach the desirable conclusion that they can be both moral and egoistic at the same time.
The article is full of examples and you can add more evidence with this case nowadays in the press. At the end of the article, ask yourself if you are a motivated or classical bayesian, or maybe both according to context...
Mckinsey has released a short article that allows to understand recent profitability of healthcare in US financial markets. These exhibits speak by themselves: (Exhibit 1)
Exhibit (2)
and (Exhibit 3).
Take a breath and think twice about what's going on.
“Although many health services definitely improve health, in other cases even the best known techniques may have no effect.”
Now this statement may seem obvious, though it requires close attention. In the late 1970's Alain Enthoven coined the expression: the-flat-of-the-curve medicine to describe the point where there is no marginal returns on health outcomes while additional resources are being spent. Some years ago, you may find a post on this in the blog.
Now OECD has released the Health at a Glance report and I would like to highlight a short comment:
Between 2010 and 2014, there have been virtually no gains in healthy life years for men and women in many EU countries. This suggests that greater efforts may be needed to prevent illness and disability and to improve the management of these conditions to reduce their disabling effects.
If this is so, then we are extending unhealthy life years, and somebody should check precisely what's going on (p.57).
Nowadays populism is on the rise, unfortunately. Politicians embrace such option because we are in the post-truth society. As far as truth or facts are not relevant, populists may create false frames without any scruples. A worrying trend, and this is the reason why some people disconnect from public affairs, since it is so difficult to accept such exposure to ficticious reality. In my country, the health minister created a false frame (and he succeded on that, at least up to now). He said that he would "deprivatise" hospitals while hospital privatisation had not occurred formerly, only exceptional contracting out was necessary in certain situations with unattended demand. You can't undo what you have not done before.
Anyway, if you want to know the basis of populist strategists you should read this book :
Populism's core is a rejection of pluralism. Populists will always claim
that they and they alone represent the people and their true interests.
Müller also shows that, contrary to conventional wisdom, populists can
govern on the basis of their claim to exclusive moral representation of
the people: if populists have enough power, they will end up creating an
authoritarian state that excludes all those not considered part of the
proper "people." The book proposes a number of concrete strategies for
how liberal democrats should best deal with populists and, in
particular, how to counter their claims to speak exclusively for "the
silent majority" or "the real people."
Two comments:
"Populism is not just antiliberal, it is antidemocratic—the permanent
shadow of representative politics. That's Jan-Werner Müller's argument
in this brilliant book. There is no better guide to the populist
passions of the present."—Ivan Krastev, International New York Times
"No
one has written more insightfully and knowledgeably about Europe's
recent democratic decay than Jan-Werner Müller. Here Müller confronts
head on the key questions raised by the resurgence of populism globally.
How is it different from other kinds of politics, why is it so
dangerous, and how can it be overcome? Müller's depiction of populism as
democracy's antipluralist, moralistic shadow is masterful."—Dani
Rodrik, Harvard University
Sadly, populism is on the right and on the left, they adopt the same strategies and they finally will undermine democracy. Now is the moment to keep away from populism, to fight against populism.
PS. In the last chapter you'll find the right strategy to fight populism, 10 actions:
6. Populists should be criticized for what they are—a real danger to democracy (and not just to “liberalism”). But that does not mean that one should not engage them in political debate. Talking with populists is not the same as talking like populists. One can take the problems they raise seriously without accepting the ways in which they frame these problems.
Populists aren’t just fantasy politicians; what they say and do can be in
response to real grievances, and can have very real consequences. But
it is important to appreciate that they aren’t just like other
politicians, with a bit more rabble-rousing rhetoric thrown in. They
define an alternative political reality in which their monopoly on the
representation of the ‘real people’ is all that matters: in Trump’s
case, an alt-reality under the auspices of the alt-right. At best,
populists will waste years for their countries, as Berlusconi did in
Italy. In the US, this will probably mean a free hand for K Street
lobbyists and all-out crony capitalism (or, in the case of Trump, maybe
capitalism in one family); continual attempts to undermine checks and
balances (including assaults on judges as enemies of the people when
they rule against what real citizens want; and life being made extremely
difficult for the media); and government as a kind of reality TV show
with plenty of bread and circuses. And the worst case? Regime change in
the United States of America.
While in a previous post I claimed that genome editing could be a "weapon of mass destruction", today I would like to suggest a close look at this new book. Specifically, chapter 4, The Gene Scissors is a must read to understand the scientific revolution that's going on in life sciences.
In contrast to such limitations of traditional genetic engineering approaches the power of genome editing lies inf four key features. First, the technique can be applied to practically any cell type from any plant or animal species, ranging from bacteria to humans. Second, it can precisely target any región of genome. (...) . Third, the efficiency of gene targeting is extremely high, so no complicated drug selection to identify a one in a million event is required. Fourth, this type of genetic engineering leaves no trace of foreign DNA in the genome that is being targeted.
The tools for the newest type of genome editing are simple to prepare, being well within the power of any scientist with basic molecular biology skills, reagents and equipment.
The complexity of this new approach is explained in clear and understandable language. John Parrington has made a good job, as he did in his previous book: "The deeper genome".
PS. If you want to know the latest on the topic, check Nature: The dark side of human genome
PS. If you want to know a snake-oil seller on genome, check this. The regulator is still on vacation.
Once upon a time there was a country that 2% of the population (143.092 citizens) earned 25% of total income of the country and paid 36%% of total income tax collected by the government. More than one third of government funding coming from income tax depends on 2% of population. Do you think is this fair?. Right now some populist and comunist parties consider that the amount collected from this 2% of population (those that earn more than 60.000€) is not enough and should be increased. Well, this is only an option. I mean, the option to increase is only one, the consequence according to Hirschman may be voting with their feed, the exit, to leave the country.
If you are really concerned about inequality, now is the time to forget any income tax increase and read Branko Milanovic or this previous post.You'll reach exactly the right conclusion, far from nowadays populism and comunism.
Your country may have decided that publicly funded health coverage is mandatory for all citizens. Therefore, there is no opt-out posible. Your taxes or contributions will fund the system. What happens if you are not satisfied with the access or quality of services? You may complain, but unfortunately its impact will be negligible most of the times. This is the voice option in Hirschman terms. Voice is really a political and confrontational perspective, while Exit is the alternative option.
While both exit and voice can be used to measure a decline in an organization, voice is by nature more informative in that it also provides reasons for the decline. Exit, taken alone, only provides the warning sign of decline. Exit and voice also interact in unique and sometimes unexpected ways; by providing greater opportunity for feedback and criticism, exit can be reduced; conversely, stifling of dissent leads to increased pressure for members of the organization to use the only other means available to express discontent, departure. The general principle, therefore, is that the greater the availability of exit, the less likely voice will be used.
Hirschman provides light to what is going on in our health system. Right now one fourth (24,9%, p.29) of the population has decided to "exit" the publicly funded health system. Well, really they can't exit, they pay twice, and this is the reason why it is said they have duplicate health insurance, the same services covered twice. Hirschman says that loyalty could reduce exit, however current health policy trends are exactly producing the opposite, reducing loyalty to the public system. And this could be the reason why every year there is an increase of departures. Well, really there are communication vessels and people switch between the systems according the services needed.
This is exactly what's going on, and somebody should ask: is this efficient in social terms?. My answer is absolutely not, you'll never pay twice if you want to buy a loaf of bread, why should be this the case for health insurance for 66% of Sarria district citizens, one third (37,5%) of Barcelona citizens or one fourth of catalan citizens?.
Beware of the warning sign of decline while health policy is encouraging hospital nationalization.
PS. Just to be clear, I'm not arguing for a formal opt-out system. It is unacceptable and outdated. I'm just asking for an efficient system that members engage in long-term loyalty relationships.
These are tough days for voters. Specially for those that believe in the folk theory of democracy -people vote according to their preferences, and governments act according to their ideological foundations. It's a good moment to retrieve the rationale for voting and I pick three statements from a book:
In the conventional view, democracy begins with the voters. Ordinary people have preferences about what their government should do. They choose leaders who will do those things, or they enact their preferences directly in referendums. In either case, what the majority wants becomes government policy— a highly attractive prospect in light of most human experience with governments. Democracy makes the people the rulers, and legitimacy derives from their consent.
Unfortunately, while the folk theory of democracy has flourished as an ideal, its credibility has been severely undercut by a growing body of scientific evidence presenting a different and considerably darker view of democratic politics. That evidence demonstrates that the great majority of citizens pay little attention to politics. At election time, they are swayed by how they feel about “the nature of the times,” especially the current state of the economy, and by political loyalties typically acquired in childhood.
We will argue that voters, even the most informed voters, typically make choices not on the basis of policy preferences or ideology, but on the basis of who they are— their social identities. In turn, those social identities shape how they think, what they think, and where they belong in the party system. But if voting behavior primarily reflects and reinforces voters’ social loyalties, it is a mistake to suppose that elections result in popular control of public policy. Thus, our approach makes a sharp break with conventional thinking. The result may not be very comfortable or comforting. Nonetheless, we believe that a democratic theory worthy of serious social influence must engage with the findings of modern social science.
I agree absolutely with this view. A highly-recommendable book.
Let's imagine you are the owner of a hospital. Basically you provide private care (85%) and you have a specific contract with the public sector that represents the remaining 15% of the income. One day, you wake up in the morning, turn on the radio and you hear the health minister that wants to buy the whole hospital for a price that is half the annual income. At a first glance you may think it is a joke, but what happens if it is not? Let's wait for what's going on the next days.
This signaling strategy is the most inappropriate to send if you really want a goal. The first message is: nationalization is a possible idea that a politician may set in the agenda again. The second is: a low price could induce the hospital owners to say no -the natural answer- and the minister would be happy because the responsibility of failure -ironically- wouldn't be his. The distraction manoeuvre would have ended. In such situations, strategically the best reply by the owner is just to say the hospital is not on sale.
In summary, a complete strategic mess in its goals and its means. An outdated nationalization trend could be back at least in the discourse. I hope will not succeed. Meanwhile nobody has explained the efficiency according to ownership -another signal that ideology is what counts, not efficiency. This is a greatest deception to citizens and at the same time undermines the system and its institutions. Unfortunately, the times are changing back. Something radically different should be done to improve citizen's health.
Chris Cornell "The Times They Are A-Changin' BACK"
Come gather 'round people from far & wide
Keep for yourselves while the river's run dry
And you find that your tears are getting harder to cry
There's a thirst in your soul that's invading
Start digging your wells, & fall dead in your tracks
'Cause the times, they are a changin' back
Here come bards and the bloggers, who are losing your heads
Only write by repeating what others have said
Now the ones and the zeros, they don't know how to lie
If it's written then it must be a fact
Now winners & losers are equally lost,
And the times they are a changin' back
Come presidents blue, and congressmen red
We do what's been undone and undo it again
As we carry the load for the 1%, who bought you your seat at the table
Well the wine pours red and the hearts turn black, And the times they are a changin' back
Come all you media, women and men
24 hours a day scare the shit out of them
If fear is your business then business is grand
There's always someone somewhere dying
And I know if it gets slow you'll take up the slack
Cause the times they are a changin' back
Come pass the baton in the relay of time
Where death is the only true finish line
And we look to the past or the future is blind
Are we sure that we're equal to the task
Cause I can't help but see the writing on the wall
It reads: the times they are a changin' back
PS. Bob Dylan's message to Nobel Committee after being found by Quim Monzó and Pere Gimferrer in this video:
Deirdre McCloskey presenting "How the World Grew Rich: The Liberal Idea, Not Accumulation or Exploitation" at Nobel Conference, Sept 29, 2016
PS. Quote of the day:_
What is crucial is our ability to engage in continuous conversation, testing one another, discovering our hidden presuppositions, changing our minds because we have listened to the voices of our fellows. Lunatics also change their minds, but their minds change with the tides of the moon and not because they have listened, really listened, to their friends' questions and objections.
A.O. Rorty, "Experiments in Philosophical Genre: Descartes' Meditations," pp. 545-565 in Critical Inquiry 9: 562
This is the great question that Deirdre Nansen McCloskey tries to answer in her last book of the trilogy. If we want to continue to improve our living standards we should confirm that we are on the right track. And she says:
"an anti-bourgeois rhetoric, specially if combined with the logic of vested interests, has in many ocasions damaged societies"
She focuses specially on how specific places changed their views on those that create value. Part IV explains how a pro-bourgeois rhetoric was formed in England around 1700:
In other words, the attitude of medieval Europe and its church toward the bourgeoisie was nothing like entirely hostile, especially in northern Italy and in some of the ports of Iberia and the Baltic, even if it did not result in the business-dominated civilization of the southern Low Countries after 1400, and more widely Holland after 1568, and England after 1688. Barcelona, for example, was from medieval times an exception to the antibourgeois character of the rest of Spain—as in some ways it still is, and as Basque Bilbao came to be in the nineteenth century
Realizing the potential depended on a bourgeois ideology adopted by whole societies, not merely by the bourgeoisie itself. The ideology had been foreshadowed in the Hanse towns such as Lübeck and Bergen and Danzig, and in some trading towns of southern Germany, and in the prosperous little cities of Flanders and Brabant, in Barcelona, in the Huguenot strongholds of France, and especially in the northern Italian cities such as Venice, Florence, Genoa, and the rest.
In summary, a change in ideas modified deeply wealth creation. I can't summarise 768 pages. My recommendation is to read it if you are interested in economic history. The key questions are answered there and in two previous books. You may agree or not, but persuasive style of Mccloskey is guaranteed. Some parts are repetitive and controversial, but the amount of quotes and knowledge is amazing. You'll enjoy the impressive erudition of Deirdre McCloskey.
PS. Today in the news has started a new anti-bourgeois campaign, the goal is to increase the taxes of the super-rich. It just sounds really as the opposite of what Deirdre says that has allowed us the betterment process of the last three centuries. Our economics minister is professor of economic history. It would be good that somebody gifts him the book and convinces him to read it.
PS. While I was studying my PhD, in rhetorics course, Deirdre came. I will always remember how she argued about the need to change economic methodology. Unfortunately after two decades, the academic profession has taken the opposite direction, a mathematical perspective.
PS. Eduard Bonet, from ESADE, is quoted several times in the book. I would like to acknowledge his guidance on this topic.
Unfortunately the US government has discontinued the Healthcare Horizon Scanning System. It was a framework to detect innovations before entering into the market. One of the last reports was on cost impact of these technologies:
We completed 53 rapid cost analyses on 55 topics over a period of 4 months from July through November 2014. The topics consisted of selected Potential High Impact ntervention reports published in 2013 and 2014. These 55 topics had a designation of oderate or high potential for high impact in those reports. To estimate potential costs of these new and emerging interventions, we sought to identify data on the following: revalence of the disease or condition targeted by each intervention; actual or projected doption of the new intervention; costs of the intervention; costs of a similar intervention; and costs of an alternative intervention used for the disease or condition
It seems that something similar is being proposed in Europe. Let's wait and see. Meanwhile check the canadians.
The topic sould be at the top of health policy agenda (at least as it is in this blog). New evidence confirms the additional safety risks of european bad regulation.
In the European Union, medical devices are approved by private notified bodies if they meet performance criteria and are likely to be safe, but notified bodies generally do not require evidence of effectiveness for most devices. Many high risk devices are approved faster in the EU than in the United States, where the Food and Drug Administration usually requires prospective clinical trials of such devices.
The unadjusted rate of safety alerts and recalls for devices approved first in the EU was 27% (62/232) compared with 14% (11/77) for devices approved first in the US. The adjusted hazard ratio for safety alerts and recalls was 2.9 (95% confidence interval 1.4 to 6.2) for devices approved first in the EU.
This means exactly 2.9-fold greater rate of safety alerts and recalls and a 4.6-fold greater rate of recalls than devices approved first in the US (and if you look at the confidence intervals you'll get more worried). How can we trust the european regulator?. For decades, European Union has leaved its citizens with less safety protection than is required for medical devices. A perfectly designed absurdity to disseminate risk for european citizens that the new proposed regulation is unable to correct.
PS. If you wnat to understand the differences between EU and US regulation, read this NEJM article or Milbank one..
