House of Cards: A review

"House of Cards" by William D. Cohan has a very captive non-linear format. Cohan starts with the ten day crisis that faced Bear Stearns during the financial crisis. I remember when I started reading the book and I was telling my friends, "This book is intense! It starts off with Bear Stearns saying one day 'We have billions and billions of dollars' to ten days later 'We're gone.'" You get sucked in quickly with that initial story, but after that initial story the book slows down considerably.

The second part of the book is the Golden Age of Bear Stearns, and it tells the story of the three biggest players in Bear: Cy Lewis, Ace Greenberg, and Jimmy Cayne. One gets a feel as to how Bear was run and what the culture was like inside of it. Furthermore I found it amusing how Bear was able to have such a successful organization for so many years with the three above personalities under the same roof.

The third part is where the cracks in the dam start to show for Bear beginning with its hedge funds and eventually leading up to the ten day crisis. Again it is slow here but it puts into context the first part of the book, and anyone who wants to know how Bear collapsed should read this. The final part is an afterwords of sorts with a quick explanation of the Lehman Brothers, another investment bank sometimes called "a larger Bear Stearns," collapse and what happened to most of the Bear executives.

If there is one reason to read this book it is to learn from history. One of my favorite quotes is, "If there is one thing we learn from history it is that we learn nothing from history." "House of Cards" is full of lessons that one can take away from history so as to not repeat the same mistakes (Although I would argue they are going to happen again regardless of how much we know). Lessons such as, know your investments (a Warren Buffet rule), watch out for hubris (Shakespeare is big on this one), and be careful when you are playing with other people's money (OPM).

On a final note I am coming away with Ace Greenberg definition from this book: Poor, Smart, and Desire to be rich or PSD. Only reason I'll remember this is because I consider myself one of them; hey maybe I will start an investment bank! Mortgages look good, right?

Links from the weekend and today

Finally had some spare time this weekend between playoff hockey games (Go Sabres!) to finish "House of Cards" by William D. Cohan. Opinion above.

• Tax Relief, Obama Style

• Denying Shakespeare

• The public choice economics of spending cuts (Tyler Cohen about Canada)

• Can the Elites Save the United States (Arnold Kling rebuttal of Tyler Cohen)

• Canada's Road to Balanced Budgets (David Henderson's two cents on Mr. Cohen and Kling)

• 5 reasons why the Tea Partiers are right on taxes

• The perils of the value-added tax (George F. Will)

• Drunk-Driving Deaths Are Way Down, But... (Another article that proves my point that life is not priceless)

• Americans Are More Skeptical of Washington Than Ever

• Congress vs. Honduran Democrats (It is just silly that we cannot get this one right)

• Back to a Better Normal: Unemployment and Growth in the Wake of the Great Recession (Christina Romer)

• Christina Romer vrs. the bloggers (Arnold Kling's response to Christina Romer)

• Is current unemployment all about aggregate demand? (Tyler Cohen's two cents on Ms. Romer and Mr. Kling.)
  

My Side Project: Self-Consolidating Concrete

Now most of my posts have something to do with either economics or politics, but I have mentioned many times that I am studying to be a civil engineer. As a matter of fact I am graduating in three weeks. However the road to graduation had one pitfall: I was short one professional elective. I did not catch my screw up until half-way through the semester, and I began trying to rush to find and add a course. Thankfully Spencer Thew allowed me to do some research on Self-Consolidating Concrete for him. Also as I have mentioned before I turned that project in last week, but I feel as though the project is incomplete.

I feel as if I have not given Self-Consolidating Concrete the justice it deserves. The project for Spence had a limited length so I could not just keep compiling information upon information for him. Blogs on the other hand can be as long or as short as I want them to be. So I am creating another blog much similar to this one only all about Self-Consolidating Concrete. I will try to regularly post links of what I am reading about SCC and post my project and update my project as needed. So please if you have time visit: Joe Bushey's SCC.

PS-I will try to write for those who are not Civies, but apologize if I assume you know civil stuff you do not.

Links from yesterday (again)

Computer problems are slowing me down incredibly these past couple of days. However here is what I was reading yesterday

• How to Save the Catholic Church

• Too Big Not to Get Right

• The Greens' Ground Zero

• The Case Against Gene Patents (Joseph Stiglitz and John Sulston quite the duo, and for a follow up listen to Michael Heller on EconTalk discuss the tragedy of the anti-commons)

• Don't Blame High Unemployment on the Unemployed (Letter to the Editor from Larry Summers)

• Summers on Demand (The WSJ response to Larry Summer's letter)

• The Donner Party's Wikipedia (They were in the news so I figure I should brush up on the story)

• A Guest Post by John Galt (on Greg Mankiw's Blog)

Finally I want to present this link to a video that shows a how big our budgets are and how little savings we are getting from the current administration. (I wish I could embed, but I cannot so the link should suffice)

GO SABRES!

Links from yesterday

I went to post these links yesterday and I started to play some Lady Gaga. I noticed my computer's sound was all sorts of messed up; so naively I tried to fix it. Four hours later and multiple curse words later it still was not fixed. So now I am rocking out to "Fear the Boom and Bust" on my Zune.

• Europe's VAT Lessons

• Why Republicans Are Winning the Tax Issue

• How to End America's Addiction to Oil

• George W. Bush's 2010 Tax Miracle

• We're Number 61!

• The Looming Entitlement Fiscal Burden-Becker

Links the past couple of days

I have been spending most of time working on my Self-Consolidating Concrete Independent Study so I have not been able to post what I am reading, so here is a sample from the past couple days:

• Greece's Debt Lessons (New York is headed down the same path)

• Did FDR End the Depression?

• The Jobs Picture Still Looks Bleak (I read this just for its rosy optimism)

• Fewer Students, More Teachers

• How Free Were American Women in the Gilded Age?

• Only a brave few acknowledge an entitlement crisis

• Incentives Not to Work

• Reaganism, New Jersey Style
  

• Women, Liberty, and the Gilded Age: A Reply to My Critics

• Postcard from the Gilded Age

• Why smoking should be regulated, but not by the government.

Finally I must acknowledge a video that I was introduced to by one of the bloggers I follow (I apologize, I cannot remember who). It is a Youtube video on the IRS by a student at William and Mary. Now I am not going to comment on her arguments about the tax system; I am going to save that for a later blog. However I will admit if she taught Economics or anything for that matter at my college I would gladly attend every class and ask for extra help on every homework regardless of whether I needed it or not. I wonder if anyone can figure out why:

Not for profits are crazy

Received an e-mail from my senior class president asking for donations from the graduating senior class. Thankfully it got caught by the university's spam blocker even though it was coming from a university address (ironic) because I consider it spam anyways. For craps and giggles I decided to have it delivered and read it, and here are some entertaining excerpts:

The Senior Class Gift is a final opportunity to leave your mark and impact the future of our great institution.......The 2010 Senior Class gift is a fire pit that will be located outside of the new student center. The fire pit and its surrounding area will provide the campus community with a place to relax, mingle with friends and keep warm during the frigid winter months.......we want at least 30% of our class to participate and help us reach our goal of $30,000.

$30,000 for a fire pit?! Hell I would do it for $29,000, and I am sure that is not the market price. Actually I could use more beer money right now just pay me minimum wage and I will go dig a fire pit for you! I am a young strapping lad so it probably would only take me a good day's work. That would be 8 hours at $7.50 an hour for a grand total of 60 bucks which is equal to about 2.5 thirty packs of my favorite hometown beer, Genny Light. Assuming I consume 10 beers per night and I only drink 3 times a week. That would last me 2.5 weeks not including my current stock of Genny and suitable replacements like cheap tequila and vodka.

I should have seen this crazy logic coming after the parking space e-mail. My incredibly rational university decided it needed more parking spots for its employees. That is cool, but how they went about it made me tilt my head say "What the hell?"

During the upcoming Spring Break, a parking change will take place in Cheel upper parking lot #9. To accommodate more staff moving from Downtown Old Snell Hall into Graham Hall, additional parking spaces will be required. The staff parking area adjacent to the roadway and Price Hall will be extended to take up the entire first row giving an additional 20 spaces. To make up for these lost spaces primarily used by students, for the remainder of the spring semester, we will remove the "No Parking 2am- 6am" signs on the north side of Cheel Lot along the woods to accommodate student parking. This will give an additional 25 spaces for that use.

So let me get this straight, the university permanently took away 20 parking spots from the students, and gave them 25 parking spots during the hours 2 AM to 6 AM? Now in perfect SNAFU fashion the parking spots in the 2 AM to 6 AM are no where close to any residential building. Actually the parking spots closest to the residential buildings are the 20 that are reserved for employees now. Wonderful! I had to forward this e-mail to my father just to show him the crazy logic and his response had an even better idea:

Why doesn't someone suggest that staff walk from Old Birnam Woods to High Dunsinane. That will give an additional 20 spaces plus the additional 25!

After four years of this I must agree with, Byran Caplan not for profits are crazy.

Links of What I am Readng

• Goldman Tells Its Side of '09

• GM Reports $4.3 Billion Loss (When I read the article anytime I read GM, I said "Government Motors")

• The Dodd Bill: Bailouts Forever

• Presidential Interns

• War on Interns

• Against Libertarian Nostalgia

• How to Cut Government Pay (This reminds me, some of the best ideas are the short and sweet ones)
  

On a much more personal note, I have been exchanging emails with a family member about autism and repercussions of autism in the world. Hence I have been reading lots and lots about it so I suggest anyone if they have the time read up on autism do so. It is more common then one thinks, and who knows when it might affect you. (I hope to have the exchange of e-mails posted someday)

Unpaid Interns

President Obama and his administration are concerned that unpaid internships are a violation of the minimum wage laws. I can understand their argument, but let me be frank and personal about this and leave my libertarian views on the sidelines. In today's economy, I will gladly take an unpaid internship! I am in an unfortunate position where I am about to graduate as a civil engineer and I have never done any real world work in civil engineering. I was not able to get an internship or co-op in my four years at this school so my experience is essentially zero. So that makes me a less valuable candidate for every job I am applying for. Furthermore since firms have been letting people go there is a new supply of more experienced smarter civies out there. Increased supply and decreased demand is putting a downward drive on the price of our services.

I figure why not offer my services for free? It would look great on my resume, and it would be hugely cost effective. However the employer would run the risk, and I would readily admit I would be up front about this, that I am going to leave the instant I got a paying offer. The employer would have to hedge his or her bets that I would be there for a long enough period of time to justify bringing me in free of charge to do some work.

So for all you civil engineering firms out there, one free intern right here at your own risk.

What I read before my Transpo Test

• The White House and Writedowns

• The Cost of Government

• The Immorality of Protectionism

• US Court Rules Against FCC on 'Net Neutrality'

• Elton John Backs Lady Gaga To Sing Next James Bond Theme
  

People need to read

Thanks to Don Boudreaux at Cafe Hayek I have been blessed with the ability to read a passionate debate between a free trader and a protectionalist. I will admit I have some bias here; I am really into the whole free trade thing. I found one mistake that the protectionalist made that made me sick.

In the third blog, Scott Lincicome (free trader) wrote:

"inalienable," rights (as expressed in the Declaration of Independence)

Notice he mentioned the Founders idea of inalienable rights and where to find it (Declaration of Independence). One would think this is really easy to find now, but Ian Fletcher (protectionalist) replied:

I see no mention in the Constitution of the "inalienable rights" to which you refer.

Really? Well that is surprising. I should examine this phenomenon. I find no mention of Hamlet in Macbeth. Nor do I find any mention of Count Dracula in Frankenstein. Wait there is no mention of the starship Enterprise in any of the Star Wars movies. What is wrong with all this?

Oh yeah I am looking for something in the wrong place. Maybe you should look for those in alienable rights in...I don't know...maybe THE DECLARATION OF INDEPENDENCE where he said it was! Let me quote the Declaration of Independence:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights,

I could be wrong though maybe Mr. Fletcher was being facetious because the Founders used "unalienable" instead of "inalienable." I do not believe he was, but the moral of the story is read what is sent to you fully!

The links to the blogs: Part 1, Part 2, Part 3

Funny How Economics Works

In an effort to get people to fill out the census forms on campus the resident advisers organized a two hour event involving free beer and filling out census forms. Now of course I will be the first to admit I had ZERO intention of participating in this census. Actually I was incredibly frustrated with the advertising campaign Uncle Sam had launched to guilt me into participating. I was telling my friends, in less then polite vocabulary, how it was all a ruse by the government; it does not determine where the money goes or how political districts and such are measured. I would tell my buddies that the census has no control over these things, but your local politician does. This creates its own perverse and crazy incentives by itself, but that is for another blog.

Even with all my opposition to helping out the Census Bureau the offer of a free beer made my intention of participating 100%. I obviously understand that there is no such thing as a free beer, and the opportunity cost of me spending ten minutes to run to an academic building to do it and then having to redeem the beer at the local school sponsored bar and blah blah blah. IT WAS A BEER that did not cost me my most valuable resource, money, but instead cost me something I have plenty of as a college student, time.

However I will admit if it was not for they checks and balances that the resident advisers had in place, i.e. checking my name and ID, I would have filled out 10 census forms. The census bureau would be trying to figure out for years why there are 20 Joe Busheys all living on the campus in the same year!

All in all I must applaud the RAs for proving once again how incentives change people's behavior. Oh yeah and thanks for the beers....I mean beer.

Monday Morning Links

• Glenn Harlan Reynolds: "We're governed not just by people who do screw up constantly, but by people who can't help but screw up constantly."

• The Common-Sense Case for Pacifism

• Thoughts on Market Socialism

• Mary Anastasia O'Grady: Curb Your Enthusiasm for Brazil

• Electronic Underpants Sends Text Message When Wearer Wets Himself

• MPAA, RIAA receive Condoms from Vector torrent site
  

Assorted links I have not posted because I have been outside

• Daniel Henninger: Would the Founders Love ObamaCare

• The Permanent Mortgage Crisis

• Drilling Bits

• Spend Your Own Money for a Change

• Why are economists More prominent than historians

• Tribeca Festival Adds "Freakonomics" Film to Lineup

• The Woman Who Just Might Save the Planet and Our Pocketbooks: An Interview with Nobel Laurette Elinor Ostrom

• Brosnan Couldn't Compete With Damon In Spy Stakes

• College Grads' Outlook Grim

• The 2010 Recovery
  

Assorted Links

• Obama to Propose More Oil Drilling in Gulf (Purely political move, but I don't care about the ulterior motives! DRILL!)

• Holman Jenkins Jr: China Convicts Itself

• Taxes per Person (Simple Math)

• Gary Becker on the Health Care Bill

• Georgia and Price Gouging

Another great video I watched today:

On a side note about the engineering field

Boy did we get screwed! By we I mean civil engineering majors (civies). When we decided to major in civil engineering the economy was rolling full steam ahead in the housing boom; buildings were being constructed. The government was gearing up to put more money towards infrastructure. I remember telling my father, "We are going to need new infrastructure! Engineers are always in demand!"

Holy s**t was I wrong! Civies are not in demand like they used to be! I did not realize at the time that there would be a huge drop in private construction and those who could not find private contracts would flood the public infrastructure market. So much so one recruiter told me that "you now have 20 companies bidding for one [public contract] where you would only have 5." Which of course means lower prices, and lower profit margins for the firms. Which of course leads to belt tightening; which means either layoffs or no hiring. Damn!

As I write this though I must admit as depressing as the job market is for civies my friends and I seem to be taking it in stride. We laugh about our naiviety of thinking we were always going to be guaranteed (pronounced gar-run-teed if you have had a Spence class) a job after graduation, and some of us are even going to graduate school. I guess that goes back to the good ol' fashioned American optimism!

Why Do Women Leave?

In the Freakonomics blog yesterday was a post about a paper by Jennifer Hunt about why women are leaving the science and engineering fields. Her conclusion is that women have either family issues or are dissatisfied with promotional opportunities. I am not going to disagree with her point since I am neither in the field or a woman, but I am a civil engineer and I would like to point out something that I have noticed at an engineering school.

There are not that many women in the field to begin with. In Reinforced Concrete Design there were about 5 women in a class of 80, and in Senior Design (The Lake Champlain Bridge one) there is 6 women to about 70 students. I do not want to speculate as to why there are not as many women in the engineering field, and I will admit that my observations might be skewed because of my major. However this is has been an issue for a long time; people for years have been complaining that my school, "Has no chicks!" Since the inception of the business school in the early 90s the school has reversed that trend, and people keep telling me that the incoming freshman class is 50/50. I am skeptical though that we are obtaining more female engineers which is unfortunate.

Assorted links of what I am reading this morning

• Mary O'Grady: The U.S. versus Honduran Democracy

• Seeds of Antitrust Destruction

• Trying to Tame the Unknowable

• A Fiscal Trainwreck

• Bret Stephens: Lady Gaga versus Middle East Peace (personal favorite)

• William McGurn: The Tax Police and the Health Care Mandate

• The Rich Can't Pay for ObamaCare

• The Ballad of Sallie Mae
  

Assorted links of what I am reading this morning

• The Canadian Banking Fallacy

• China, the US, and the renminbi: a rejoinder to Krugman

• Don't Call it "Stimulus"

• Less now, more later

• This quote made me laugh:

  "Short of shooting up a Post Office, government workers rarely get fired or laid off."

• I do not generally read the Weekend Interviews of the WSJ, but today I made an exception for Gary Becker the 1992 Nobel Laureate in Economics
  (Thanks to this article I now know he has a blog...AWESOME)

• The Long-Term Unemployed: Consequences and Possible Cures (Gary Becker on his blog)

• Why Women Don't Want Macho Men

• Who needs a space shuttle
  

Student-Loan Shenanigans

Besides the fact that almost anything with the word "shenanigans" in the title is a good, the editorial "Student-Loan Shenanigans" addresses the curious part of the Health Care Reform bill that changes the rules on student loans. I am going to repeat that with some emphasis on the ideas I find important; the editorial "Student-Loan Shenanigans" addresses the curious part of the Heath Care Reform bill that changes the rules on student loans. Not only does it change the rules, but it seems to skew the playing field in favor of ALL Student Loans a company from California. Who sponsored this idea? Representative George Miller from the state of...wait for it...California. It is funny how that happens?

However the bigger issue I want to address is the mistaken notion that making student loans more available makes college cheaper or more affordable to people. Let us examine it from two perspectives, one of relatively poor student named Joe Bushy and the other of the college Mr. Bushy is going to attend Generic University. Joe Bushy is able to attend college because of the availability of Federally sponsored loans. Joe thinks this is a wonderful thing; if it was not for this program he would not have such a great opportunity to attend Generic U. Well Jane Doe thinks it is awesome too; she got the same sort of Federal sponsored loans to go to Generic University. Repeating this scenario over and over again one ends up with thousands of people who can now afford to go Generic University. Many people find this to be a wonderful out come; more people can now get a degree in something and increase their earning power.

Conversely let us now sit in the seat of a college administrator at Generic University. As an administrator you now see an increase of applications and qualified applicants to the school. The school can not take them all due to the simple limits of dorms, class sizes, faculty, etc. With such a limited supply and an increase in demand it would is in the best interest of the University to do one thing. The laws of supply and demand would dictate that the University should increase the tuition payments in the short term. It takes a long time to build dorms, expand faculty, and all other things associated with increasing the quantity supplied of a college. Until it can create the ability to satisfy the new demand in the market the University will raise the cost of attending it.

These ideas are theoretical or "arm chair"....I mean "half couch," but let me provide you a front line experience of what actually happens. I am currently a senior at a university, I will not reveal which, and the way it works in reality has a couple nuances. When I say it takes a long time to create larger supply I am assuming a perfectly working system. Universities and colleges work a tad bit more efficiently than there government counterparts. What I mean by that is what would take the government 20 years, takes colleges and universities 15. Whereas the true private sector something will take less than 2 years because competition is fierce. Government and education have sort of a captive audience. Anyways I digress; in my experience my university expanded the number of people in each class, but did not add any new facilities or allow for more liberal off campus housing options. Hense last year we were over crowded. So much so they changed the rules for off campus housing to make it easier to obtain it and added a floor onto the quad. Of course this was a problem every student sort of saw coming, but the monolith that is the university administration does not react quickly enough as usual.

Would the refusal to issue government sponsored loans solve this problem? Not entirely, but does it make school more affordable? In my experience and thought, no.

(HAD TO CUT THIS SHORT, FRIENDS WANT TO GO OUT, MORE EDITS TO COME LATER)

My morning readings of the WSJ

• Jobless Claims Decline (woohoo!)

• ObamaCare Day One

• Daniel Henninger: Repeal the Democrats (my favorite WSJ columnist)

• Max Boot: ObamaCare and American Power

• Karl Rove: What Republicans Should Do Now

I am also reading "Student-Loan Shenanigans" but I am not including it in this list because I am going to blog about it later.

What I am reading this afternoon

• JP Morgan Chase takes advantage of stimulus bill and seeks refund of roughly $1.4 billion

• 10 most redundant (I would say annoying) things on a movie poster
  

• Tim Tebow trying to get everyone to say a prayer before the Wonderlic Test and people respectfully declining

• Australian politician Greg Donnelly on Lady Gaga (fun stuff right here):

  "Young boys may start to think that women and young girls are fair game and that they can go to a party on the weekend, get loaded up with grog and that it's their right to ask a young girl for a h*** job or for anal sex or to push a young woman up against a wall and have sex...Some members are grimacing, but that is the reality. This material agitates a mindset in young boys, who grow into men, that women are fair game and that such behavior really doesn't matter; that they can get loaded up with grog or drugs and everything is okay."

Quick read before Construction Materials

Cruising the WSJ I found this. Initial reaction was, "Why the hell would you trust anything proposed by Senator Dodd AND Representative Barney Frank?" Has anyone forgot these are the same guys who said Fannie Mae and Freddie Mac are fine? They claimed this to the end, and even after the United States nationalized them they claimed they were wonderful! Are they missing the idea that Freddie and Fannie caused the whole mortgage bust? Okay I might be exaggerating, Fannie and Freddie did not cause the crisis they just oiled the gears.

Furthermore where is the transparency in this whole process? It seems Sen. Dodd and Rep. Frank have been working on this behind the scenes while America has been up in arms about ObamaCare. Great just what we need another back room decision on America's future. Hope this gets voted down, but I do not hold out much hope.

Reminds me of The Who, "Meet the new boss, same as the old boss."

Assorted links of what I am reading this morning

• Bryan Caplan's opening statement for George Mason's Econ Society's Health Care Debate (wish I could be there)

• Deborah Peel arguing that your medical records are not private if they are electronically recorded (duh!)

• NFL changes their overtime rules for the post season (meh)

• Gene Wojciechowski argues, "What's the point of buying a new car if you can't take it for a spin around the whole block? The NFL is keeping its car in the garage until the playoffs"

• Kim Kardashian is single again (link is in the picture)

Are Health Insurance Companies Now GSEs?

Reading Holeman Jenkins Jr's column on the new health care bill got me thinking about the question, are health insurance companies now government sponsored enterprises?

Certainly they are not like Fannie Mae, Freddie Mac, or Ginnie Mae yet, but what about five, ten, twenty years down the road? The motives behind the creation of Fannie, Freddie, and Ginnie are similar to the reason to motives behind the new health care law, fix a perceived market failure. In the mortgage GSEs it was a lack of liquidity in the mortgage market, and with the insurance market it was a lack of coverage of the poor and middle class.

Now the health insurance companies are not GSEs in the same sense as the mortgage GSEs, i.e. they losses health insurance may take are not backed by the government, but the individual mandate basically is the government saying, "You people need health insurance, and we support the health insurance industry. So we are requiring you to purchase health insurance." If that is not a sponsorship of the health insurance industry then I do not know what is!

However I cannot wait to feel vindicated when the health insurance industry finds out how its new buddy, the government, runs business. It is like seeing a guy/girl at the local club hitting on a woman/man who you know is just there to get drinks out of guys/just sleep with the girls (happens all the time!). It is almost brotherly/sisterly duty to go and tell the guy/girl, "Hey be careful of her/him." Of course the majority of Americans did that, but the insurance industry, probably drunk on the idea of an individual mandate, decided to sleep with the government anyways. I am chomping at the bit to here the first negotiating session between the government and health insurance about the cost of a procedure:

Health insurance: "This new procedure took years of research and to recoup our cost it is going to cost x."

Gov't: "No, that is too expensive we are not paying for that procedure unless you lower the price to x-y."

Health insurance: "At that price we will not recoup our cost! We cannot do that!"

Gov't: "Well if you cannot do that price then we will not allow this new procedure on the government health insurance, and we are going to have you testify before Congress as to why you would hold back such procedure because we think you are price gouging."

Am I the only one who sees such a scenario playing out?

Michael F. Cannon discusses health care reform in a NMA forum

Now this is over a year and a half old, but extremely poignant given what just happen in health care. Michael Cannon, an economist from George Mason University, bets Karen Davenport, a master of public administration that he can convince her of these two claims regarding universal health insurance coverage:

1. Supporting an individual mandate is an act of personal irresponsibility
2. Supporting universal coverage means you are willing to let people die unnecessarily

It is obvious he won, but I feel it is a trick question. Especially on the first point where Mr. Cannon states that it is irresponsible to give up any bit of freedom. So by agreeing that the government should force people have health insurance is personally irresponsible because it denies people the freedom to choose whether or not to have health insurance. I agree with Mr. Cannon on the principle, but I feel those who support the individual mandate believe that the benefit of having everyone possess some sort of insurance is more valuable than the restraint on freedom it imposes. I find this to be a sort of principled argument that no one really considers when debating policy, but it makes for an interesting economic thought game when one is bored.

The second point is a little bit different than I expected. I did not expect Mr. Cannon to use the erroneous "death panel" argument that the Republican party used unsuccessfully, but he did not even touch upon the concept of price at all. Instead he argued that academics have proven that the concept of health insurance may not be the best alternative to staying healthy, and that by expanding this concept to everyone is essentially expanding a theory that has not be tested against other possible maybe even better solutions. The other solutions possibly might save more lives.

Regardless of what he argues, he is right and it goes back to the basic concept of economics: there are infinite wants and finite resources. This is especially true when it comes to the concept of information. Everybody wants to know everything, but there are limits. Without perfect information there are going to be unnecessary deaths, but obtaining anything close to perfect information is more expensive than we can imagine, and as I would argue impossible.

Both the claims Mr. Cannon makes are true, and Ms. Davenport owes him $40.

What do you think?

HT: Bryan Caplan for posting it on his blog

The Name and Motive

This blog is a spawn of my two passions: reading articles and essays when I should be studying and sharing those articles and my thoughts with the rest of the world. Before this blog was created I was happily and enthusiastically posting all the articles I read or had an opinion on my Facebook. However I started to realize that maybe Facebook was not the best medium to communicate these ideas. Facebook gives you an area to comment on what you are sharing but I always felt this area was formatted more like a Twitter account then a blog so I would try to limit myself to three or four sentences.

For those that know me, three to four sentences is not my style. If I am going to take the three minutes to read an article I fully expect to be able to have at a minimum a ten minute conversation or three paragraph essay stating my opinion of the article. So in an effort to get my fix of procrastinating and opinion sharing I created this blog which will serve as a substitute to my Facebook article sharing and notes.

Now the name of the blog was my first challenge, and I safely came to the conclusion that Half Couch Observations was fitting. This name stems from a story and a term. First the story, once not too long ago my family had an extra couch, and I wanted to move it to the attic where I had a sort of "man cave" if you will. Well the couch would not fit up the stairs so I looked at my friend Andrew who was helping me and said, "We are going to saw the f*****g couch in half!" The next day we sawed the couch in half and took it upstairs. Now the second part of the name comes from the term, "armchair economist." An armchair economist is an economist who sits back in an armchair and just thinks about situations; basically one who does not do much "get your hands dirty" research. What better to describe what I do, sit in a chair, read articles, think about them, and comment. I am not an economist though and I do not have an armchair so this name was not fitting. I do have a half couch though and I generally enjoy using the term observe. Additionally the chances of "Half Couch Observations" being used on this blogging site were slim.

So it fit perfectly, and is now my main method of communicating what I am reading and thinking to the world. Hope the readers learn something and enjoy what I plan to be a regularly updating blog.