W.C. Varones

American democracy: choosing your rulers based on name recognition and sound bites from the vapid and corrupt news media.

Or, better yet, on red-vs-blue tribalism.

Eight years too late, NPR discovers that Obamacare has explicit incentives for insurers to make procedures cost more:
The Affordable Care Act kept profit margins in check by requiring companies to use at least 80 percent of the premiums for medical care. That's good in theory, but it actually contributes to rising health care costs. If the insurance company has accurately built high costs into the premium, it can make more money. Here's how: Let's say administrative expenses eat up about 17 percent of each premium dollar and around 3 percent is profit. Making a 3 percent profit is better if the company spends more.

It's as if a mom told her son he could have 3 percent of a bowl of ice cream. A clever child would say, "Make it a bigger bowl."

Wonks call this a "perverse incentive." Read the whole thing. It's infuriating.

Politicians, particularly on the left, are complete idiots when it comes to understanding economic incentives. They should neve…

The Fed's Quadruple Mandate:

1) price stability
2) full employment
3) facilitating large deficits by suppressing interest rates and/or monetizing debt
4) supporting asset prices

Despite CalPERS, like most government pension plans, being vastly underfunded, they're actually still paying out more money to beneficiaries than they're taking in as contributions from municipal employees and employers.

CalPERS 2016-17 financial report:


Look at the numbers circled in green. That's what they're putting into investments. The numbers circled in red are what they're taking out each year.

The green numbers were even lower in recent years. CalPERS has been putting far less into the market than it's been taking out every year. They're belatedly starting to increase contributions, and the net contributions (green minus red) should turn positive fairly soon.

To the extent CalPERS is representative of public pensions overall (and it generally is), turning from net seller to net buyer will be a tailwind for stocks. And should stocks decline over a few years, it makes pensions even more underfunded and thus requires them to buy even more. Call it the Cal…

ABC News:
Dart then instituted a program that rewarded "serial masturbators" with pizza if they went 30 days without a sexual assault or masturbating incident, according to the lawsuit.

Since detainees who had never exposed themselves were not eligible to receive pizza as a reward, the program had a reverse effect, leading to an "increase in exposure incidents" since the detainees without prior incidents "were now incentivized to commit indecent exposure and masturbation in order to qualify for a pizza reward," court documents state. HT: Charlie McDanger

The Congressional Budget Office regularly posts 10-year budget outlooks.

Here is the most recent:


It shows a deficit of 3.6% of GDP in 2017, 2.8% of GDP in 2018, and worsening to 5.2% of GDP by 2027. But that projection was from June 2017, long before the Trump tax cuts or the Omnibus which busted the spending caps.

Outside analysts are now projecting deficits well over a trillion dollars in 2019, or more than 5% of GDP. So what does the CBO say? They don't say.

You can see that over the last several years, the CBO has updated its projections 2 or 3 times per year. But now, with the massive tax cuts and budget-busting Omnibus, suddenly the CBO goes radio silent for 9 months!



Is the fiscal trajectory simply too horrifying for publication?

UPDATE: Whoomp! There it is!