Hiding money in a neo-feudal world of concentrated wealth

The Panama Papers: Breaking the Story of How the Rich and Powerful Hide Their Money

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.

Motivated bayesians or classical bayesians

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...

PS. Must read post on private and public health in India.

Duchamp exhibition in Barcelona, until January.

Healthcare and financial markets

The next act in healthcare private equity

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.

Are we reaching the flat-of-the-curve medicine?

Health at a Glance: Europe 2016

Fifty years ago, Victor Fuchs wrote:

“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).

Populist health politics, the ultimate nightmare in the post-truth society

What is populism?

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.

PS. In London Review of Books, Jan-Werner Müller says:

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.

Genome editing: a major breakthrough in life sciences

Redesigning Life: How genome editing will transform the world

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.

Taxing the rich to feed the leviathan (2)

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.