Saturday, March 31, 2012

Sacramento as the tip of the Iceberg

More details on Stockton's looming bankruptcy. I think it's a testament to the sad state of our culture and electorate that a politician can openly and seemingly unabashedly state: "We didn't have projections into the future what the costs might be," she told the Record, a Stockton newspaper, earlier this month. She added, "I learned that you don't make decisions without looking into the future."

Wednesday, March 21, 2012

Caveat Emptor vs. "Consumer Protection"

So-called consumer protection laws are often incredibly unjust; putting every burden on producers and meting out heavy-handed punishment if anything happens to go wrong (by which I'm deliberating excluding conscious fraud). The effect is to drive some producers out of the market, to raise prices for everyone, and often to have no effect on overall fraud as those who wilfully engage in deceit aren't phased by a few more regulations.

This tragic case of an insurance broker losing everything for selling an annuity to an elderly woman is a case in point, and will certainly make it harder for the elderly to purchase annuities in the future. Notice also that much of the motivation comes from keeping businessmen in check, in this case there wasn't even a loss involved:
After months of delays and a failed dismissal motion, trial was set for Sept. 21. During the trial, two out-of-town defense witnesses were brought in early and testified out of turn during the prosecution’s portion. One was Dick Duff, noted author on annuities, who said an Allianz MasterDex 10 is complicated but has “many more benefits than there are negatives,” according to the Record-Bee. “Not everyone wants liquidity.”

The MasterDex 10 had a five-year deferral and 10-year payout. After the five years, the owner can annuitize and get a guaranteed monthly income for 10 years. During the period, the owner can take out 10 percent annually or 20 percent if the owner is in a nursing home. The owner starts with 87.5 percent of value, is credited 1.5 percent annually and would be able to “break even” after seven years if the owner surrendered the product.

Duff said that he himself receives money from annuities and would, in fact, be happy to buy Schuber’s annuity for at least $180,000—$5,000 more than she paid for it. Duff knows a good deal when he sees one because, at that moment, the annuity had $217,000 of annuitization value.


Other jurors said they should make an example of Neasham: “Some jurors made the statement that, in essence, meant we should send a message to insurance companies to be careful when selling annuities to 83-year-olds. The jurors also felt they should send a message to insurance agents that they should be careful who they sell to.”
My opinion is that most transactions should simply be governed by caveat emptor, with the government only intervening in cases of fraud (and courts being available to rule on breach of contract actions).

Tuesday, March 20, 2012

Radiation Hormesis

Petr Beckmann used to argue that the linear hypothesis regarding radiation wasn't just off, its sign was often wrong as low level radiation could actually be beneficial. (He used the term hormesis to describe the more general phenomenon.) An article in the WSJ cites more evidence for this view:
In the early 1980s, a Taiwan steel company accidentally mixed some highly radioactive cobalt-60 into a batch of steel rebar. The radioactive rods were then used in the construction of 1,700 apartments. As a result, people living in these buildings were subject to radiation up to 30 times the normal amount received from the natural background.

When dismayed officials discovered this enormous error 15 years later, they surveyed past and present apartment dwellers expecting to find an epidemic of cancer. Normal incidence would have predicted 160 cancers among the 10,000 residents. To their astonishment, the researchers discovered only five cases of cancer—97% lower than the anticipated amount. Birth defects were also 94% below the anticipated rate. These findings were published in the Journal of American Physicians and Surgeons in 2004. As one researcher phrased it, exposure to high levels of background radiation had apparently bestowed upon residents "an effective immunity from cancer."
The article also does a good job of showing why the linear hypothesis doesn't gibe with our more general experience:
The real problem, however, may be in the public's overestimation of the danger posed by small exposures to radiation. In order to avoid any possible charge of negligence, regulatory bodies around the world have adopted what is called a "linear-no-threshold" or "no safe dose" standard for radiation safety.

This says, quite simply, that because huge doses of radiation—the kind you might get from standing in the same room with a spent fuel rod—can cause illness or cancer, we must assume that even the smallest doses will have the same effect on a smaller scale. It's exactly the same as saying that because jumping off a 10-story building will break every bone in your body, stepping off a one-foot curb will also cause some minor damage.
I hope that someday soon science will prevail over fear mongering in the energy arena...

Friday, March 16, 2012

Creating a Culture

Amazing statistics regarding California's decline highlighted in this WSJ article.
California's rising standards of living and outstanding public schools and universities once attracted millions seeking upward economic mobility. But then something went radically wrong as California legislatures and governors built a welfare state on high tax rates, liberal entitlement benefits, and excessive regulation. The results, though predictable, are nonetheless striking. From the mid-1980s to 2005, California's population grew by 10 million, while Medicaid recipients soared by seven million; tax filers paying income taxes rose by just 150,000; and the prison population swelled by 115,000.

California's economy, which used to outperform the rest of the country, now substantially underperforms. The unemployment rate, at 10.9%, is higher than every other state except Nevada and Rhode Island. With 12% of America's population, California has one third of the nation's welfare recipients.
The statistics about net paying tax filers should give pause to those who argue that tax rates are relatively unimportant in people's decisions on where to live.

Sunday, March 11, 2012

A Plan to Balance the Federal Budget

This seems like a step in the right direction, as I think it's much better to cut rights-infringing functions of the government (e.g. the departments of energy and education) than it is to simply cut budgets across the board a la Gary Johnson (with the implication that all current spending is equally justifiable).