the high cost of high-quality healthcare

February 22nd, 2018

The UK is unusual in that nearly all its spending on heathcare is done by government, through the National Health Service (NHS). It is unusual also in that its government spending (7.7% of GDP) and total spending (9.7% of GDP) on healthcare is near the bottom of the G7 high-income countries. Only Italy ranks lower. Read the rest of this entry »

tips for personal investors

February 19th, 2018

It is best to ignore short-term fluctuations in financial markets. “Staggering amounts of time and intellectual energy,” writes Miles Johnson, Capital Markets Editor of the FT, “are expended by market watchers who treat the latest leg up or down in US Treasuries or stock markets as imbued with meaning, only to reverse their view the following week.”

Benjamin Graham (1894-1976), a British-born American economist and investor, would agree. A prudent investor should either buy-and-hold, when prices are steady, or purchase assets when the price is low, and sell when they are high. Most investors do the opposite. Graham’s seminal text on investing, The Intelligent Investor, was first published in 1949, and reprinted many times during and after his death. It is still relevant today, and continues to be ignored by most investors.

Ben Graham, the famed father of value investing, used the analogy of the market as a business partner so mentally unstable he would on some days offer to sell you his share for a rock bottom price, and on better days would ask for a stratospheric valuation. This character, Mr Graham noted, would be a fantastic person to do business with.

“Price fluctuations have only one significant meaning for the true investor,” he wrote. “They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal. At other times he will do better if he forgets about the stock market.”

Miles Johnson, “Beware the all-knowing macro forecasting genius“, Financial Times, 19 February 2018 (gated paywall).


debating universal basic income

February 15th, 2018

Universal Basic Income (UBI) seems like an idea whose time has come, given the widespread fear of workers that their jobs are threatened by automation (robots). Nonetheless, there are many who oppose the UBI, often on grounds that giving people “money for nothing” will discourage work. I never found this argument to be convincing. Means-tested (targeted) benefits almost always require an able-bodied person to be unemployed to receive benefits. In short, government pays citizens for not working. The unemployed who find jobs lose their benefits. A UBI, in contrast, does not require recipients to be unemployed, so does not discourage work. Read the rest of this entry »

addition to my cv

February 11th, 2018

Today I completed my facebook cv by adding the high school diploma I received in 1962. It is from Lincoln High School in Lincoln, Nebraska. Although it is a modest public school, its wiki page contains a list of notable alumni. I did not make the cut. I recognize only three names of those listed: Dick Cavett, Ted Sorensen and Charles Starkweather. Read the rest of this entry »

the American way of healthcare

February 7th, 2018

The US approach to healthcare is without doubt the worst in the developed world. It is even worse than that of many low-income countries. Much has been written on this, but FT columnist Rana Foroohar manages to add to the discussion. She even writes about her own experience at a National Health Service (NHS) hospital in the UK, where she gave birth to two children. She reports that she was pleased to have all her needs “from basic check-ups to specialist visits — provided quickly and efficiently in the same place”. Read the rest of this entry »

what is wrong with macroeconomics?

February 1st, 2018

The Oxford Review of Economic Policy has devoted an entire double issue to the topic “Rebuilding macroeconomic theory”, and offers free, ungated access to all the articles, but only until February 7th.

Here is the abstract of the first, introductory article: Read the rest of this entry »

Why is the US dollar falling?

January 27th, 2018

No one knows. Last Thursday, the day before Trump’s scheduled arrival for the World Economic Forum’s annual meeting at Davos, Treasury Secretary Steven Mnuchin endorsed the dollar’s decline and said that its short term value was of no concern. Read the rest of this entry »

the economics of happiness

January 26th, 2018

Economists continue to study happiness, and new research appears frequently. FT undercover economist Tim Harford faces this question head-on, asking whether the pursuit of wellbeing should guide government policy and, if so, how should we measure wellbeing. Typically, happiness surveys ask respondents how satisfied they are with life, on a scale of one to ten. Is moving from 3 to 4 the same as moving from 7 to 8 on the scale? And, what does a score of one, five or ten really mean? Read the rest of this entry »

Davos Man and liberal economics

January 23rd, 2018

FT columnist Martin Wolf has written an outstanding essay on the demise of liberal international economics. Here is a brief excerpt from his column.

Many Americans feel they have both less reason and less ability to be generous to erstwhile partners. Among domestic changes, many in high-income countries feel that the liberal global order to which their countries have been committed has done little for them. It is generating, instead, the sense of lost opportunities, incomes and respect. It may have brought vast gains to the sorts of people who frequent Davos, but far less to everybody else. Especially, after the shock of the financial crisis, the tide does not seem to be rising and, if it is, it is certainly not lifting all boats.
Read the rest of this entry »

the genius of Donald Trump

January 22nd, 2018

I keep promising myself that I will ignore Donald Trump, but am unable to keep my promise. If Mr Trump were just a businessman and reality TV star, I would ignore him and his tweets. But he is the leader of the most powerful nation in the world. What he says and tweets has consequences.

Anyway, FT columnist Gideon Rachman has some thoughts on the intelligence of Mr Trump that I found interesting. Mr Trump is clearly not stupid. He is very bright, but in a political sort of way. He has an uncanny ability to sense that a majority of white Americans are worried that they are becoming a minority in their own country. Moreover, he knows that they have suffered the humility of enduring a black President who was elected by popular vote. In a democracy, with the percentage of white voters falling, it is realistic for them to expect and to fear the emergence of more black and brown rulers in the future. Read the rest of this entry »