"The more I find out, the less I know."

Obama Fat Cats

Saturday - June 21, 2008 10:51 AM

I've been supporting Obama for President for several months now, and now that he's decided to give up public funding for his campaign he's going to need a lot of help from the "fat cats," big donors with deep pockets willing to give lots of money.
Who are these "fat cats," and how can we identify them?

For the Obama campaign, the average donation is in the neighborhood of $150. Given that, I think anyone who gives $250 or more to the Obama campaign qualifies as a "fat cat."

In order to identify these people I'm going to give an "Obama Fat Cat" car magnet to anyone who has given over $250 to the Obama campaign. Why? Because it's important to get out the message that this is a campaign with tens of thousands of "fat cats," not just the usual bunch of highly connected donors.

I don't have a design yet, but I was thinking of something cute and cartoony (suggestions are welcome--leave them in the comments).

If you've given $250 to Obama's campaign, send me an e-mail with your name and address to obamafatcat@frozennorth.org, and I'll mail you a magnet when I have them ready (I reserve the right to verify your fat cat status against one of the Internet databases of campaign donors).

This is something I'm doing totally on my own, and I don't have any connection to the Obama campaign other than some of my own dollars going to their coffers.

Please pass this around. The more fat cats the better!

Posted at 10:51 AM | Permalink |

Inscribed on Charlton Heston's Tombstone

Monday - April 07, 2008 02:10 PM

"Okay, you can take my gun now."

Posted at 02:10 PM | Permalink |

Aviation Denial of Service Attack

Wednesday - November 07, 2007 01:09 PM

You may have heard about the Swedish guy who told the FBI his son-in-law was a terrorist in order to prevent a business trip to the Untied States. A blog entry at Discourse.net raises an interesting point: we've now become so paranoid about air travel and border crossings that anyone (and I mean anyone) can have someone arrested, hassled, and denied entry or deported. It doesn't matter how credible the threat is, our security apparatus has determined that any threat has to be treated as true.
This effectively gives Those Who Wish To Do Others Harm a powerful weapon, effectively a simple denial-of-service attack against air travel (and probably train and bus travel, for that matter). Even better, this attack can be carried out anonymously, even from the safety of a village in a third-world country.

But I don't think Michael at Discourse thought this through entirely. It's easy to see that this could become a crippling attack against our entire aviation infrastructure. If an enemy's goal is to disrupt rather than actually kill, it can be extremely effective, cost nothing, and present little or no risk to the attackers' lives or even liberty.

Consider these attack scenarios:

1) An e-mail is sent to the TSA claiming that a terrorist will be checking a suitcase packed with 50 lbs of high explosive onto a flight departing LaGuardia airport at 10 AM on a specified date. The bomb is set to detonate in or near the baggage screening area, killing people and severely damaging part of the terminal building. The threat contains enough details to be considered credible, but not enough to pin it to an exact passenger or flight. The threat might even contain previously unknown but confirmable details about some terrorist organization (to better establish the legitimacy of the sender).

Likely impact: Some or all of LaGuardia airport is shut down for several hours, canceling hundreds of flights and delaying hundreds more, causing airlines, the TSA, and passengers substantial financial losses. Since delays at LaGuardia tend to ripple across the entire flight schedule of several airlines, many flights are canceled or delayed which go nowhere near New York.

2) Now suppose that the threat claims that this will be a coordinated attack on several of the largest hub airports in the U.S.: LaGuardia, Logan, O'Hare, Minneapolis, Denver, San Francisco, Los Angeles, etc. Since a coordinated exploding suitcase attack is well within the means of even a small terrorist organization, this doesn't diminish the credibility of the threat much.

Likely Impact: Total disruption of the national air system for most (possibly all) of the day. Depending on how credible the terrorists make the threat, a one-day grounding of all commercial flights isn't out of the question.

3) A terrorist network uses a communication channel which they know is compromised to implicate targeted individuals (for example, prominent businessmen, key opponents) as part of a sleeper cell or other plot. This kind of disinformation campaign was actually used in WWII very successfully against the axis countries, and can be extremely effective if the covert listener doesn't know that the enemy knows about its listening. (Disinformation in a compromised channel can also be used to deliver the threats for attacks #1 or #2.)

Likely impact: Targeted individuals will find it difficult or impossible to travel to/within the United States, and may even be arrested (and possibly tortured these days).

4) Simultaneously in several airports around the country, someone rushes past security screening. This usually causes the airport to shut down for a time until the individual is arrested (and with simultaneous incidents it may trigger a more thorough security sweep and further disruption). This is not zero-risk for the attackers, since they are likely to be arrested and tried, and there's an outside chance of being shot, but it's still a lot better odds than a suicide attack.

Likely impact: Major disruption of the national air system for several hours at least. The coordinated attack could lead to a complete shutdown until the authorities decide there's no larger plot.

The bottom line is that it's now very easy for anyone to create major headaches for anyone else trying to travel in the U.S., and the authorities seem to care little that their overzealousness can cause big problems for a few people here and there. Worse, a highly credible threat could lead to a service disruption which might be more expensive and deadly(*) than an actual terrorist attack.

(*) Disrupting air service might actually be deadly when you consider things like (1) people who decide to drive instead of fly, since driving is something like ten times as dangerous per mile; (2) disruption in life-saving medical treatments, like patients traveling to a distant hospital and organs traveling to distant patients; and (3) the combination of paranoid security personnel with angry mobs of passengers possibly leading to someone accidentally getting shot.

Posted at 01:09 PM | Permalink |

Ron Paul: The Ultimate alt.conspiracy Troll?

Thursday - November 01, 2007 04:48 PM

Back in my college days, long enough ago that if you were on the Internet then you were either at a university or technology company, I used to occasionally read the Usenet newsgroup alt.conspiracy for entertainment.
Back then (and maybe still today), alt.conspiracy was a wonderful hodgepodge of fringe beliefs, clinically paranoid rants, sincere debunkers, and the occasional troll.

The trolls were often the most entertaining: they would invent absurd conspiracies out of whole cloth, in a deliberate effort to see who might take their absurdities seriously. The game was to see how crazy you could make your conspiracy theory and still have someone think you were serious or (even better) believe you.

I was reminded of this by an article today about how Ron Paul's presidential campaign seems to have a knack for attracting the lunatic fringe.

By the way, when I say "lunatic fringe," I don't mean folks who hold somewhat mainstream but silly beliefs like supply-side economics. I mean folks who, in a literal sense, need to check the dosage of their medications. Black helicopters, the United Nations is coming to take your guns, Bill Clinton molested young boys in a secret ritual with the Pope, etc.

So far it does not seem that Paul himself is quite so far gone, but he hasn't done much to discourage his crazier supporters either.

So what I'm wondering is: Does Ron Paul believe the same theories as his supporters, or is he just doing a very effective job of drawing them out.

In other words, is he nuts, or just the ultimate alt.conspiracy troll?

Posted at 04:48 PM | Permalink |

Absolut Power. Absolut Secrecy

Tuesday - October 23, 2007 02:52 PM

Mildly inspired by a turn of phrase in this article, I took out my Photoshop skills on an old stock photo of Dear Leader and his Main Henchman.

Posted at 02:52 PM | Permalink |

The Law of Unintended Consequences

Wednesday - October 10, 2007 01:57 PM

We're only three short months from the beginning of the primary season (have we really been in full-bore campaign mode for almost a year already?). The calendar is still unclear, mostly because different states keep trying to move to the front of the line in order to gain the perceived advantage of holding their primaries first.
The result looks like it's going to be a highly compressed series of primaries, with most of the delegates being chosen within the space of less than a month. Supposedly this will reduce the problem where states with late primaries voted after one candidate had already locked up the nomination. It's also supposed to extend the time the nominee has to campaign for president ahead of the convention.

I see a different situation possibly evolving, however.

Part of the reason the early primary states have such influence over the nominating process is that they help weed out the weaker candidates. Think Howard Dean in 2004: even though he seemed to have a lot of momentum and fund raising ability going into the Iowa caucus, that didn't translate into strength among the voters, and he dropped out of the race not too long after his poor showing.

Even candidates who don't formally withdraw after losing badly in Iowa or New Hampshire will find their fundraising drying up, and are effectively forced to stop campaigning.

The net effect is to narrow the field to just a couple of frontrunners in each party for the next round of primaries, and this smaller field makes it possible for one candidate to win the necessary delegates before the convention.

This year, though, with the compressed schedule and wide open races in both parties (though I think the Republicans are having more trouble than the Democrats finding a suitable candidate), there may not be enough time for this weeding-out process to take place before the bulk of the delegates are selected. With only a few weeks of primaries, the weaker candidates may be tempted to tough it out, hoping for some good fortune (or a more friendly state) to turn their campaign around.

It's much harder to win a majority of the delegates in a four-way race than when there's only two viable candidates, and this could lead to the first contested nominating convention in decades, where no candidate has enough delegates to lock up the nomination.

The eventual nominee would then be chosen based on deals and politicking at the convention itself. We might not know the lineup of major candidates until September 2008--only two months before the national election.

That's because of a quirk in the federal election financing rules which encourage the parties to wait as long as possible to formally name their nominees, since spending before the nomination is counted separately from spending after the nomination. Of course, when the parties scheduled their conventions they assumed that there would be a de-facto nominee long before the convention itself, giving the candidate more time to campaign on the "pre-nomination" budget.

Instead, we could have a long confusing summer with multiple viable candidates and no clear nominee from one party or the other, followed by a short, hot campaign once the final candidates are chosen.

It could be a very interesting year.

Posted at 01:57 PM | Permalink |

Scary Statistic

Tuesday - July 31, 2007 11:50 AM

Here's a shocking and scary statistic from a quick back-of-the-envelope calculation:
The money spent so far on the war in Iraq (about $500 billion) would have been enough to install enough photovoltaic panels to supply about 5% of the electricity the United States consumes (at today's retail prices for installed PV systems).

Spending the money on solar cells would have improved our energy security. The war in Iraq? Not so much.

Committing half a trillion dollars to solar power implies something akin to a Manhattan Project for renewable energy. If we can afford to pour half a trillion dollars down a rathole in the Middle East, we sure should be able to afford to get serious about weaning ourselves from fossil fuels.

So what's wrong with this picture?

Posted at 11:50 AM | Permalink |

Bush administration stonewalling to backfire for Republicans in 2008?

Friday - July 20, 2007 12:51 PM

The big political news this week is that the Bush administration has not only invoked Executive Privilege for a number of congressional subpoenas, but asserted that (in effect) when the President invokes Executive Privilege there's nothing anyone can do.
This sets up an almost inevitable court showdown, and it's probably just a matter of time before the Supreme Court weighs in on the matter.

As near as I can tell, the strategy on the part of the Bush Administration seems to be to run out the clock: with only 18 months or so left before the next President is sworn in, Bush and Cheney are betting that these congressional investigations will be rendered moot by the political process before they have to give anything up to Congress.

I think they're risking a terrible miscalculation, though, since these congressional investigations will only increase in intensity over the next six months. As the wheels of the process grind on, this sets up the possibility of a very high profile Supreme Court hearing right in the middle of the primary season.

Even if the Supreme Court rules in favor of the President, this will be a huge distraction for all the Republican candidates, and an unbeatable rhetorical foil for the Democrats--all coming right when the public's attention to the political process is peaking.

The problem for the Republicans is that even if the Executive Privilege claim proves valid, it looks and smells bad. Like taking the Fifth on national TV, it makes it look like the President has something to hide. This will put every Republican up for election in the uncomfortable position of having to choose between abandoning the President and looking like he's enabling a cover-up.

2008 is going to be a tough year to be a Republican (barring a political earthquake between now and then), but this continued digging in by the President is only going to make things worse.

Posted at 12:51 PM | Permalink |

War Funding

Thursday - March 22, 2007 09:28 PM

Aside from the little kerfuffle at the Department of Justice right now, the most substantive issue in national politics at the moment is the supplemental spending bill for the war in Iraq.
I am amazed at the corner Bush painted himself into on this one. Under the U.S. Constitution, not a penny can be spent without authorization from Congress--and what's more, Congress can't authorize more than two years' of money for the army at a time (this is a holdover from the suspicion our founding fathers had of a standing army).

In an apparent attempt to mask the true cost of the war, the President didn't include Iraq funding in his regular budget request, which means he needs Congress to pass a separate law to fund the war effort.

When Republicans were the majority, this wasn't an issue. But now that the Democrats control the agenda, it creates a huge opening for all sorts of political mischief.

The bill which looks likely to pass right now has a provision attached setting a hard deadline for bringing the troops home. This is a provision which may be somewhat unwise, but plays very well to the overwhelming unpopularity of the war. Bush says he'll veto the bill if it comes with strings.

The problem is that Bush needs the money. Sooner or later, he must sign a spending bill to fund the war--otherwise, the military can't buy munitions, feed the troops in Iraq (or pay them), or do much of anything else in Iraq. Sure, there are games which can be played by shifting spending authority from other places, but the war is just too expensive to fund for long with accounting maneuvers.

So when Bush vetoes this spending bill, he still needs Congress to pass another one.

And what assurance is there that the next spending bill won't come with other conditions, perhaps more onerous than the one he vetoed?

As long as the President insists on plowing ahead with the war no matter what, and vetoing any spending bill which comes with strings attached, he's just inviting the Democrats to see what they can pin on him.

Veto a timetable to withdraw from Iraq? That's in the bag.

How about getting the President to veto a law requiring all soldiers to have 12 months at home between deployments?

Or a law forbidding the deployment of units which don't have a minimum level of equipment and training?

These are all common sense ideas which most Americans support, but Bush is setting himself--and the Republican party--up as the guys eager to fight the war, but not take care of the soldiers. The 2008 Republican presidential candidate will likely wind up defending why his party opposed all these measures.

I have to applaud the Democrats, since as political gamesmanship this is brilliant. As for the Republicans, this is utter insanity. They should never have allowed themselves to be maneuvered into this position.

Posted at 09:28 PM | Permalink |

Security, Flying, and Terrorism

Thursday - February 22, 2007 11:07 PM

I'm traveling on business this week, which means one of my least-favorite activities: dealing with airport security.
I was going to write a whole rant about the pointlessness of the entire process, the arbitrary and meaningless restrictions, and the obnoxiousness of not knowing what it's going to take this week to get to the gate on time.

But then Bruce Schneier wrote the article for me, and better than I could have: CYA Security.

Go read it, and pretend it was my idea.

Posted at 11:07 PM | Permalink |

Hillary Clinton in 2008?

Saturday - December 09, 2006 10:23 PM

A lot of people are talking about Hillary Clinton running for president in 2008.
I'm not surprised. Right now it looks like she's the only person who can save the Republican party.

Posted at 10:23 PM | Permalink |

Election Reaction

Thursday - November 09, 2006 09:18 PM

This was a very satisfying outcome.
Not so much because the Democrats won big (but that's part of it), but because the right Republicans won, too.

Recall that I cast my vote in favor of divided government, since I think recent events prove that it can be dangerous to have one party controlling everything.

The Democrats taking over the U.S. Congress restores divided government on the national level, and we're already seeing change for the better with Donald Rumsfeld's ejection as secretary of defense.

At the state level, though, I was concerned that the Democrats would sweep both the legislature and the governorship. But Republican Pawlenty held on to his job (just barely), ensuring at least another two years of divided government at the state level, too.

One other thing: remember two years ago, when I suggested that Pawlenty might make good presidential material in 2008? As one of the few Republican governors left standing in a Democratic state this year, it seems that he's suddenly on everybody's short list.

Just remember that you heard it here first.

Posted at 09:18 PM | Permalink |


Monday - November 06, 2006 04:37 PM

Election day is finally upon us, bringing to an end the ugliest political season I can remember.
I've decided how I'm going to vote: a straight ticket for divided government.

That means Democrats in federal races, but Republicans for several of the state offices (including Governor Pawlenty).

There's only one rational conclusion I think you can draw from the political events of the past four years: the government functions best when there are real and credible checks and balances in place, and one important check is that no one political party controls all the instruments of power.

That's because debate and opposition is good for the country.

Compromise is good for the country.

Political competition is good for the country.

Fresh air and sunlight is good for the country.

Deliberation on important issues is good for the country.

Respect for process, rules, and institutional traditions is good for the country.

But when the political process gets too one-sided, all these things become secondary to political expediency, corruption, greed, and power.

When we get to the point (probably within the next decade) when the Democrats control all the branches of the federal government, I expect to cast my votes, once again, for divided government. Even if, by that point, they haven't succumbed to the inner rot which seems to be infecting today's Republican party structure.

Posted at 04:37 PM | Permalink |

A Politician Does the Right Thing (eventually)

Wednesday - October 04, 2006 02:47 PM

Here's an exchange I had over the weekend with Bill Cullen, the Republican challenger for our local seat in the state legislature; commentary and context at the end:
Subject: You lost my vote
Date: October 1, 2006 8:44:56 AM CDT
To: Bill Cullen


I wanted to let you know that I've decided not to vote for you this year.

I had been considering how to vote, and you made a positive impression on me when you visited our home a couple weeks ago. But in yesterday's mail, we received what I consider a fairly nasty, gratuitous attack mailer against your opponent.

I recognize that your campaign did not send this mailer, and that you have no direct control over it.

On the other hand, had you decided that this is not the kind of campaign you want to conduct, I'm sure the state Republican party would not have sent it. The fact that it was sent speaks volumes to me about your character--and that is not the kind of person I want representing me in St. Paul.

My mother, Peggy Leppik, honorably served 12 years as a Republican state representative in a swing district (Golden Valley), and she never felt the need to resort to distorting her opponent's record or sending negative campaign materials.

I think that if we want to have a meaningful debate about the issues that matter to us, the candidates themselves need to take a stand on the kind of campaign they want to conduct. Clearly you have not done so.

Thank you for taking the time to read this, and I hope you will take my message to heart should you run for office again.

Subject: RE: You lost my vote
Date: October 1, 2006 12:26:30 PM CDT
To: Peter Leppik


If I had seen this piece before it went out, I would have tried to stop it. Unfortunately, campaign finance laws make it so I cannot review material. I see it when you do.

I have told the caucus that I approve talking about Rep Ruud's record -- but I do not approve of personal attacks. This piece is factually correct, but it appears misleading to me. And I see no reason to mislead. I wish the party had shown the difference in our beliefs in a more professional manner.

This year the fight in the state is for control of the House. It appears (to me) that Pawlenty is likely to win and the Senate is unlikely to turn over enough seats either way to change control. So, the battle is in the house.

This seat is one of a few House seats identified as competitive. Therefore, the independent expenditures are coming out fast and furious in this race. It will continue on both sides. The DFL has already done push-polling in this district -- saying clear lies about me. I have also seen photographers at my investment properties -- so it appears they plan on attacking my business (which I think is way out of bounds). I think these tactics are even more blatantly out of line -- agree?

Like I said, I do not approve of this literature piece. I hope you consider the whole candidate and what I have to say, and not base your decision on one literature piece which I had nothing to do with.

I do appreciate engaged voters such as yourself. Please call me anytime. 952-934-xxxx.

Best regards, Bill Cullen.
Subject: Re: You lost my vote
Date: October 1, 2006 1:22:07 PM CDT
To: Bill Cullen


Thanks for the thoughtful response.

I appreciate the nuances of campaign finance laws, but the fact remains that had you personally decided that this campaign would not be run this way, the mailer--which we both agree was misleading--would not have been sent out. You did not make such a stand, and the mailer went out.

I don't think it helps anybody to engage in a debate about whose dirty tricks are less dirty.

What we need is someone to show the leadership to put a stake in the ground and say "we will have an honest debate about the issues and a clean campaign, and I don't want anyone to do these sleazy campaign tactics for my benefit."

Even though both parties seem to have put short-term gain ahead of what's best for Minnesota, you, as your party's candidate, have a unique chance to take a stand in the opposite direction. Yet you have not done so.

Subject: RE: You lost my vote
Date: October 1, 2006 1:37:26 PM CDT
To: Peter Leppik

Peter, I have decided on a clean campaign and have already sent a complaint to the party for the piece they sent out.

I gave them permission to talk about records, but not mislead the voter. There is a wide difference. This piece does not have my support. It never did.

Best regards, Bill.

Commentary & Context
On Saturday we got an attack ad against the incumbent, Maria Ruud, sent by the state Republican party. The mailer was so over-the-top as to be practically a caricature of itself--for example, it implied that Ruud was anti-school, anti-children, anti-environment, and anti-roads.

It turns out, I learned later, that almost identical mailers targeting at least a half-dozen other Democrats were also sent out. I'm not sure what's more insulting: that a Republican operative apparently thought I would believe such blatant distortion, or that it wasn't even original distortion.

I had been considering how to cast my ballot, and I thought that both Ruud and Cullen were strong candidates. But the instant I saw this attack piece, I was turned off and decided to vote for Ruud. I could not, in good conscience, reward the party behind this with my vote.

Having met Cullen briefly, and feeling that he was fundamentally a decent guy, I decided to let him know the damage his party was doing. I kind of feel for the candidate in this situation: campaign finance laws make it illegal for the candidate to know what the party might be planning to do to benefit his campaign (since they're not allowed to coordinate campaigns paid for out of different pots of money). On the other hand, it is possible for the candidate to preemptively quash this sort of thing by making it very clear in advance that he'll accept none of it.

One candidate I know of actually told the party that she would withdraw from the race if there were any attacks on her opponent. It takes some guts to do this, but it is a potent threat (finding good people willing to go through the wringer of a political campaign is not easy), and it was a clean race.

So that's the context of my first e-mail. I was surprised that the response--polite as it was--basically boiled down to "I didn't like it either, but look at all the nasty stuff the Democrats are doing."

[As an aside, it seems odd that Cullen thinks his workplace should be off-limits. He is, after all, claiming his experience as a business owner as his primary qualification.]

To his credit, Cullen did eventually do what he should have done in the first place--renounce the mailer and complain to the party--but I was dismayed that we had to go through this in the first place. Maybe I'm overly idealistic, but I've always felt that Minnesota is a place where we can have honest debates about the issues.

As for my vote--I'll still be voting for Ruud, and I've put up one of her lawn signs (something I rarely do). I still don't think that the Republicans deserve my vote.

Posted at 02:47 PM | Permalink |

Warning! Stampeding Herd of Elephants!

Wednesday - September 27, 2006 12:56 PM

The GOP is going to have its 2008 national convention in the Twin Cities.
For the locals, the main impact will be several days of even worse traffic than usual.

For the Republicans, this can only lead to disaster, as the last national political convention held here nominated President Harrison (also a Republican) for a second term in 1892, which he lost.

Posted at 12:56 PM | Permalink |

Canadian Parliament Accidentally Passes Budget by Unanimous Consent

Wednesday - June 14, 2006 03:31 PM

I don't know if a parliamentary system is better or worse than the three-branch system we have in the U.S.
But one thing is for sure: Canada's parliament is a lot more entertaining than Congress. Today's Exhibit A: Parliament accidentally passed the Canadian federal budget by unanimous consent.

(Just to be clear: the mistake was the "unanimous consent," and the budget would have passed anyway. But two of the opposition parties which intended to vote against the budget managed to screw up and not object to the bill in time, so the budget passed without any opposition.)

Posted at 03:31 PM | Permalink |

2006 Hurricane Season

Monday - June 12, 2006 03:32 PM

We're off to a bang with Alberto.
Here's a suggestion: in honor of last year's record-breaking hurricane season, I humbly propose that hurricanes this year be named after members of the Bush administration. Alberto is a start. Next up: Brown (or Brownie, if you prefer), Cheney, Donald, etc.

And the 23rd named storm of the season can be simply called "W".

Posted at 03:32 PM | Permalink |

Suicide as an Act of War?

Sunday - June 11, 2006 08:10 AM

Three inmates at the Guantanamo prison camp hung themselves yesterday. That fact alone is tragic and does not speak well for the way the camp is being run.
This quote from the base commander really takes the cake, though: "They have no regard for life, either ours or their own. I believe this was not an act of desperation, but an act of asymmetrical warfare waged against us."

What an astonishing notion! Killing oneself (in a way that harms nobody else) is an act of war! We should be so fortunate if all religious extremists were to wage war in this fashion!

The commander is right to be worried about this: three suicides will inevitably refocus world (and U.S.) attention on the poor conditions and hopeless plight of the people housed at Guantanamo. That can only have negative repercussions for the prison camp--but not because of any act of aggression, but because of the disinfecting power of shining sunlight on what goes on there.

Posted at 08:10 AM | Permalink |

Strategic Energy

Wednesday - May 03, 2006 10:31 AM

Despite the hype, the world is in no immediate danger of running out of fossil fuels. Oil--the most transportable and most usable fossil fuel--is becoming more expensive, and natural gas--less transportable than oil--has been subject to some localized shortages. What is happening is that the easy oil and gas (that is, the oil which is cheap to extract, and the natural gas close to the markets which consume it) is becoming scarcer. As a result, prices are going up, making it more economical to extract and transport the more expensive reserves and enriching those countries which still have easy oil and gas.
Another consequence has been more overlooked: the reemergence of fossil fuel reserves as a strategic asset. A couple days ago, Bolivia nationalized its natural gas industry, and Russia has effectively nationalized its natural gas industry over the past couple years through political maneuvering.

Neither country is one which can be trusted (under current leadership) to refrain from trying to leverage this control into political advantage.

And that fact should scare anyone living in Brazil or Europe. In fact, I would lay odds that the people whose job it is to be scared of things like energy shortages are busy being very scared right now. Bolivia exports most of its natural gas to Brazil; and many European countries depend mostly or completely on Russia for their natural gas (several former soviet-block countries get 100% of their natural gas from Russia).

The unintended side-effect of this state of affairs is likely going to be a dramatic acceleration in the development of alternative energy sources in some countries.

If you're Poland, and you get 100% of your natural gas from Russia, a country with recent memories of former imperial glory and a political system structured very much like the Sicilian Mafia, you're going to be doing two things right now. On the one hand, you're going to be very very careful to not annoy your neighbor to the East. And on the other hand, you're going to be scrambling like mad to find something to replace Russian gas in order to remove that particular claw from the bear.

I don't know what those alternatives might be, but I suspect some combination of new gas pipelines to other countries and investment in alternative energy sources. Even if alternative energy is significantly more expensive than the fossil fuel sources, it will be worth it for them to remove the political and strategic risk.

Posted at 10:31 AM | Permalink |

Health Coverage

Sunday - January 29, 2006 01:11 AM

I'm not an expert in health insurance, but noise about the topic has grown almost unbearable as we approach the President's State of the Union. Speculation is that he will heavily promote Health Savings Accounts as a better way to pay for medical care in the United States.
I'm not sure if there is a political middle ground on the topic of health care finance. On the one hand, you have free-market types who believe that the way to improve health coverage is to move to a more market-driven system. That means that people will have to make their own health care decisions, and live with the results (good or bad). On the other side, you have people who believe that it is a moral imperative to ensure that everyone gets basic medical care, regardless of income, intelligence, or luck.

The two positions are mutually exclusive. If you want to have a market-driven health system, then you have to let people make mistakes. That's inherent in a market. And you can't bail out people who (through bad luck or ignorance) happen to make a bad decision, since to do otherwise removes the incentive to make the right decision.

A health savings account system is promoted as a sort of middle ground, with a high-deductible insurance plan combined with a tax-advantaged savings account to cover medical expenses up to the deductible on the insurance. The devil, though, is always in the details.

I've spent a lot of time looking at HSAs as an alternative to the traditional medical coverage I provide my employees. As currently designed, there are a number of drawbacks:

1) I have an employee with chronic health problems. Unless the company subsidizes everyone's out-of-pocket expenses to a substantial degree, his out-of-pocket expenses under an HSA will be substantially higher than they are today. In my mind this violates the fairness test: there's nothing he can do about his chronic condition, he can't afford the extra cost, so it isn't fair to penalize him. If we were to subsidize the medical expenses enough to make this employee whole, then we would spend substantially more on health care than we do today.

As an aside, you will note that nearly everyone promoting the use of HSAs is young, rich, and/or healthy enough that they are likely to come out ahead under this scheme.

2) The fundamental premise of HSAs is that people who have to pay for their own medical expenses will make better decisions. But it is almost impossible for a consumer to find out how much health care costs before going to the doctor. In fact, the doctor might not even know. Our crazy system uses an intricate web of negotiated rates, and the price you pay will depend on which doctor you see and which health coverage you have. Until it is easy for consumers to get meaningful cost information, it is impossible to make informed decisions.

3) Much of the cost of providing health care in the U.S. does not go to optional treatments. I heard a statistic recently that 80% of medical dollars go to treat chronic and/or catastrophic illness. I don't know if this is the right number, but it is certainly a high proportion, and you can't significantly cut the cost of our medical system without addressing this point.

4) From what I've heard, the paperwork of actually using an HSA can be nightmarish. Some plans are better than others, and this is generally getting better, but if someone in your family is hit with a sudden illness, the last thing you want is to be worrying about filling out the right forms. And just as with any other kind of insurance, the insurance company has an incentive to deny claims whenever possible--and an overwhelming paperwork burden is one mechanism that works to the insurance company's advantage.

I think that HSAs are an intriguing experiment, but I am skeptical that they are a "magic bullet" for reducing health care costs in this country. The fundamental problem is that health care doesn't respond to market forces in the same way as, say, laundry detergent or copper futures. In the U.S., we have one of the most market-driven health care systems in the developed world (most developed countries have some sort of national health care system), yet we spend about 15% of GDP on health care as compared to about 10% in most developed countries. That doesn't speak well to the ability of market forces to control health care spending overall.

So how do other countries control spending? They negotiate big discounts on drugs (essentially free-riding on the higher prices U.S. consumers pay), they limit access to doctors and expensive treatments, and they don't offer the latest and greatest technology. Every society has to ration healthcare somehow, since it would crush any economy to provide every possible treatment to everyone who wanted or needed it. In the U.S. we ration based on your employer's willingness to pick up the tab. Elsewhere they ration based on how old or sick you are, or how willing to wait in line (without dying first).

HSAs don't fundamentally change the way we in the U.S. provide healthcare, they just shift the burden around a little.

Posted at 01:11 AM | Permalink |

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