Miscellaneous M (mostly referendum news)

United States Tax System Woes - A Good Summary

Dr. Stiglitz provided a good summary of the current issues in the United States tax system. low tax rates for top tax income earners increases "rent seeking," not investment. That is why I proposed that meaningful investment should be free of taxation, sortition jury approved investments one can put one's income before taxation. These could be exploring for natural resources, biomedical research or investment in the next big thing.

He argues that someone who "earns income from financial innovations " should pay the same taxation percentage as those who do "research to create real innovations that transform our economy and society." I would feel, and perhaps Americans in sortition juries, that the latter should pay less taxes.

Referendum news

(gathered from Google news)

Israeli/Palestinian Peace Agreement

Two cabinet officials say tht the Israeli people should vote on any proposed peace agreement. But Tipi Livni says that "'That is what the national elected us to do--to make courageous choices."

But a better idea is to have both the Palestinians and the Israeli's vote. And they should choose from a large selection of peace arrangements. The maximin proposal wins. (That is the proposal whose minimum percentage from both Palestinian citizens and Israeli Citizins is the highest.)

Princeton University

The Princeton student population voted on changing a penalty for an honors violation and required the Honors Committe to publish statics. http://www.dailyprincetonian.com/2013/04/26/33399/ The issue was a relatively technical issue ( was a student who wrote over the time limit on the exam treated with the same penalty as other violations) The penalty changed to probation to a "standard penalty" of one-year suspension. A 3/4 majority was required on the referendum. http://www.dailyprincetonian.com/2013/04/22/33277/

Taiwanese Nuclear Power Plant

The Tawanese legislature has multiple readings for proposed referendum. This referendum is about whether a fourth nuclear power plant construction should be stopped midstream.

But there is an interesting issue. The vote is to stop construction. In Taiwan, referndum needs a 50% turn out. Thus, by having a positive vote to stop construction, those who don't bother to show up are making it more likely that construction will proceed. That is, counted in favor of this nuclear power plant.

President Chen spoke at the Conference on Comparative Studies of Referendum that this requirement makes the referendum law a "'birdcage'" referendum process. He was elected with less votes than the peace referendum received. Yet the latter did not pass because of lack of turn out.

I like the statement by KMT caucus whip Lin Hung-chuh:

"'Now that we haven't been able to settle in the legislature the issue which has already confounded the country for more than 20 years, it's time for the public to make a decision'"

"Lin said the proposal was as neutral as it could be to make a referendum on the issue possible.

"'Whether you support the plant's continued construction or not, you should all vote in favor of the proposal'"

The Democratic Progressive Party (DPP) Legislator said the referendum process is "structurally flawed"

Also, the NIMBY issue is prevalent here. TSU Legislator Lin Shih-chia said the referendum should also be decided by those living within 50 kilometers of the nuclear power plant.

Taiwan passed its referendum law in 2003.

Croatia tourism development

Croatia's third referendum is a local one. Dubrovnik will vote on whether to allow a huge golf-focussed resort. Those in favor point to the additional jobs in the tourism industry. Those against it say that the development is inappropriate for the image of the town which has many historic streets and buildings. IN fact all of the areas previous referendum were on issues such as splitting from Yugoslavia or joining EU or NATO, what one would consider major sovereignty issues. This is the first 'everyday' referendum.

Iceland

I wrote about Iceland's referendum on whether to repay bail out of its banks.

Paul Krugman and Joseph Stiglitz liked the idea tht Iceland lets its banks fail and its currency dropped. But apparently many ordinary Icelanders are unhappy. They have seen some economic growth. The comparison is with Ireland which handled the bank bail out differently. It is not clear what approach was better.

Iceland also decided to write down any loan that is ten percent under water. Of course, people in such underwater homes don't want to pay their mortgages, as it will just get written down any way. The solution, of course, is to make mortgages a percentge of wages or income.

Miscellaneous KL

Medicare reimbursement rates.

The Central Management Services office of the Federal government is supposed to set national rates for procedures and tests. Unfortunately, they have declined to do this for medical diagnostics used to "effectively customize treaatment" (molecular tests). These tests look at specific regions of DNA or protein sequences, typically in cancer cells. In some cases they do it by looking at each discrete step, but without looking at the value of the test. However, since the Central management services has not done what it should do, the "contractors" that cover each region of the country have the option of how much to pay each provider of diagnostic services. Some of them have not set rates and are not paying at all.

Of course, the other approach is to allocate a certain amount of money to molecular diagnostics or diagnostics in general. Each company then does the best job it can providing useful tests. They are reimbursed based upon how well their tests actually lead to better case. As judged by panels of sortition juries aided by the appropriate biomedical experts.

REferences

1. http://www.forbes.com/sites/scottgottlieb/2013/03/27/medicare-has-stopped-paying-bills-for-medical-diagnostic-tests-patients-will-feel-the-effects/
2. Jill Dombraukas, Ph.D. "What is Molecular Diagnostics?" ehow.com facts 5615341
3. National Cancer Inststitute, Slide four, Molecular Diagnostics, http://www.cancer.gov/cancertopics/understandingcancer/moleculardiagnostics/page4

Medicare reimbursement

Medicare pays more for the same service when a doctor is an employee of the hospital than when they have their own practice. For example, it pays a hospital $400.00 for an echocardiogram as compared to $150.00 if the same thing is done by a private pysician. Predictably, physicians are selling their practices to hospitals and becoming employees.

"The High Price of Nickel-And-Diming Doctors, Bloomberg Business Week November 25 to December 2 2012, page 39 and 40.

Craft Brewers want a cut in excise taxA

They are lobbying to decrease the excise tax rate per gallon of bear and 116 members of a caucus introduced legislation to do just that. The badness tax I proposed in the first few weeks of this blog. would handle this problem and allow the taxpayers to give a discount to small brewers and other businesses that are truly investing in good things.

http://www.nytimes.com/2013/03/29/business/riding-wave-of-popularity-craft-brewers-ask-congress-for-a-tax-cut.html?pagewanted=all&_r=0

Referendum Voting Age

An Taiwan online survey showed that 90 percent favored lowering the referendum voting age from 20 to 18. Half of the respondents showed that the schools should discuss nuclear energy. However as the survey was conducted by the Taiwan Alliance for the Advancement of Youth Rights and Welfare--I wonder about the quality of the survey.

http://www.taipeitimes.com/News/taiwan/archives/2013/03/29/2003558278 Tapei Times, "Group Urges Lowering Referndum Voting Age" Hsieh Wen-hua and Jason Pan.

Participatory budgeting

Relates experiments with participatory budgeting in New York City to the United States.

"http://www.salon.com/2013/03/27/lets_decide_the_budget_ourselves_partner/Next New Deal" The Blog of the Roosevelt Institute.

The Cynic Kids

The new generation, those in College now, in response to the financial crisis and the problems after entering Iraq and Afghanistan:

"'don't like the system == however, they are wary of other alternatives as well as dismissive of their ability the desired modifications....Broadly speaking, Cynic Kids distrust the link between action and result.'

"the Occupy movement, 'launched more traffic jams than legislation'"

And the Arab Spring has not given the desired results.

Perhaps, noteworthy, that there is a desire for experimental and empirical evidence. We are unable to appraise multiple options, so we stick with the known evil. Perhaps, experiments with the online Constitution construction Kit and other techniques can give some empirical evidence that participatory democracy could work.

the New York Times

Paulson, an example of the Hedge function going crazy

John Paulson's Very Bad Year by Sheelah Kolhatkar,

John Paulson, no relation to Hank Paulson, former Secretary of the Treasury, earned four billion dollars as a hedge fund operator. Howe ha made his money:

1. merger arbitrage, after a merger is announced, short the acquirer, buy the target company's share and pocket the difference whent he merger goes through. However, there is a big risk of large losses if the merger falls apart (e. g. because of regulatory snafu).
2. But his real venture was, in 203 to 2007. Before the housing bust, shorting housing. He did this with the famous "credit default swaps" betting that the mortgage bunds would go bust.
3. Buying debt of financial companies in 2008, in other words betting on the bailout.
4. Goldman Sach marked a collaterized debt obligsgtion called Abacus. Mr. Paulson put these together as designed to decline and that he would make a profit if they did. Goldman Sach did not tell the purchasers of the bond fund that was what Paulson was doing.

But Paulson made some big plays in 2011 that screwed up:

1. A Chinese forest company product stock where the company was accused of fraud
2. buying bank stocks
3. buying high-yield and distreswed bonds
4. a gold mining stock called AngloGold Ashanti

Although Paulson's hedge fund lost 13.2 billion dollars, however, over its life time, gain was the third highest in history. And Mr. Paulson's net worth declined from sixteen billion to twelve billion.

To Be Blogged Later

Sebasian Mallaby More Money than God: Hedge Funds and the Making of a new Elite

Miscellaneous K

Hospitals and the $963 million question

One percent of Medicare funding (almost a billion dollars) will be based upon a quality index. These include benchmarks such as giving aspirin within twenty four hours to heart attack victims as well as patient satisfaction scores. As often is the case, there is question as to whether this is fair to hospitals treating sicker and poorer patients. (The alternatives are to develop statistical adjustments based upon patient population, or to simply allow a participatory sortition judgment to take this into account.)

An experiment where some hospitals were given bonusses showed no difference with hospitals that were not part of the bonus structure. If there is no change in performance, hospitals will get back of the most payment. There is thus too little downside to incentivize change. Bloomberg Business Week page 35 and 36, September 17 to Sept 23 2012.

White House Petition Site

A federal government web site allows one to post and sign petitions. Here are some of them:

subject	number of signatures
The US should go to the metric system	37089
disclose information that the government has been keeping secret about exraterrestrial visits	1947
FDA should not regulate electronic cigarettes	18503
Legalize online poker	9816
recount 2012 president election--alleges 'blatantly obvious' fraud	69610
recognize American sign languages	32,457

Although, obviously, some of these are ridiculous and the subject of derision by the media. Yet Obama responds to many of them including the petition to deport Piers Morgan, a "CNN talk-show host who supports gun control." Obama's team polled the people signing the Piers Morgan petition. Over half says the Obama answer was helpful and one in four say "they learned something new."

Obama organized a conference call between those who petitioned for immigration reform and the people establishing policy.

With 25000 signatures, the White House used to guarantee a response--now it is 100,000 for a guaranteed response..

Sign Here -- Please", page 34, by Michael Scherrer> Time Volume 181 Number Five, 2013

Porto Allegre - participatory democracy

Each neighborhood has a full town democracy, but they send delgates to a city wide assembly. However, there have benn dramatic improvements:

1. sewer access is now 95% , up from 46%
2. tax evasion fell--presumably because people felt the money was spent wisely.
3. The poorest 12 percent are a third of participants in the assembly
4. One in ten citizen have taken part in at least one of the assemblies.

http://www.guardian.co.uk/world/2012/sep/10/participatory-democracy-in-porto-alegre

Participatory budgeting in Venezuela and in United states Cities

Although this paper emphasizes the progress Venezuela has made in human development--and I suspect many people would disagree with this piece--but that is beyond the scope of this blog. It does talk about 20,000 "community councils" of 200 to 400 families. Some councils have joined to work on larger poblems. Also article talks about Port Allegre participatory democracy, which I do above, and references Mike Fox's democracy "Beyond Elections: Redefining Democracy in the Americas"

And one ward has particpatory democracy spend its alderman's capital budget of 1.3 million dollars with three other alderpersons following. Participatory democracies tend to have more smaller projects than the conventional budgets.

New York City now has eight council persons doing the same thing. Also, see an article in Epoch Times that said that 42 council members still are not using it. Participants identify and debate infrastructure projects at neighborhood assemblies. Then "budget delegates" do the mechanics to get precise costed out proposals. These are voted on by the community--to determine which get funded. People in the area, whether as an employee, resident or business owner can become budget delgates but only residents get to vote in the final decision. Note that this process only does a small sliver of the 9.5 billion that the city spends each year on capital improvents--and the city expense budget is not involved at all.

I had a thoughtful Thursday on Participatory budgeting in May 2010.

http://www.truth-out.org/news/item/14649-the-secret-rise-of-21st-century-democracy

Referendum on pay rates

Switzerland referendum just passed-- share holders have binding say on executive pay. Also bans "golden hellos" and "golden good bye" (golden parachutes). There is controversy whether this will discourage companies from coming to Switzerland, or even if it will attract new investment.

http://www.ft.com/cms/s/0/ca90f1b4-83ff-11e2-b700-00144feabdc0.html#axzz2MVXNQ1Zm
http://online.wsj.com/article/SB10001424127887324678604578338171658493636.html

California in 2010 allows parents to vote 51 percent to take over a school. Apparently, it can be done by petition. In Desert Trails School District, there has been concern that the petitioner organizers told parents that it was simply a "petition to get new computers and clean bathrooms" rather than starting a take over. They claim that the oppositon blocked parents from exiting if they did not sign the "counterpetition." Hollywood made a movie where the parents succeeded. The article questions whether parents have the ability to run a school, whether the process will be coopted by the wealthy, an issue with referenda (see Wikipedia article on Initatives and eEferendums in the United states).

"Parent Coup", by Caroline Winter, page 80 to 84. Bloomberg Business Week, September 17 to September 23 2012