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