Author Archive

The Supreme Court will rule on the constitutionality of Obamacare this year. The arguments and the issue which got the most publicity was the individual mandate. I don’t actually care much about this although it may well violate the Constitution. There are far worse things in the legislation and they should be emphatically rejected by the Supreme Court. The worst of the issues is discussed in detail here. This is a really frightening piece of legislation and I cannot imagine that the Court will let it stand. Of course, given the absence of argument, the Court will have to find this hidden provision itself.

Perhaps nothing in the Obamacare legislation embodies the top-down, command-and-control nature of Progressive healthcare more than the Independent Payment Advisory Board (IPAB), a 15-member panel of “experts” to be appointed by the President. There are three particular features of the IPAB that illustrate this fact: The IPAB will control all healthcare spending, public and private. The IPAB has been awarded near-dictatorial power. And the IPAB is designed to be a nearly immutable entity.

How is this accomplished ?

Specifically, Section 10320 (in the Managers’ Amendments portion of the legislation) grants the IPAB, beginning in 2015, the authority to limit all healthcare expenditures, that is, all healthcare expenditures, and not just expenditures by Medicare or government-run programs.

To emphasize this expanded authority, Section 10320 changes the name of the “Independent Medicare Advisory Board” to the “Independent Payment Advisory Board.” It directs the IPAB, at least every two years, to “submit to Congress and the President recommendations to slow the growth in national health expenditures” for private healthcare programs. Furthermore, it designates that these “recommendations” may be implemented by the Secretary of HHS or other Federal agencies “administratively” (that is, without any action by Congress).

Thus the federal government can control, under penalty of criminal prosecution of doctors, private health care spending ! This goes well beyond Medicare and Medicaid. It will prevent, unless stopped, people from spending their own money on health care.

That is not the worst of it. The IPAB cannot be changed or repealed by Congress. This is unprecedented in US law. Even the ill-advised Prohibition Amendment, promoted as another moral obligation by progressives after World War I, could be repealed by another constitutional amendment.

A quick reading of Section 3403 might leave one with the impression that the IPAB is a sort of Mr. Rogers of healthcare – a mild-mannered, friendly, always-helpful, but ultimately undemanding agent for good. This is the impression imparted by the first few paragraphs of the Section, which paint the new entity as an “advisory” board, whose main task is to develop “proposals” and “advisory reports,” which “proposals” and “advisory reports” would solely consist of various “recommendations,” that ought to be “considered” for the purpose of cost reduction.

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I recently expressed my opinion about the shameful treatment of John Derbyshire by National Review, his former employer, which dropped him as a writer because of a piece he wrote in another online magazine. One of his statements which seemed to be the most objectionable to NRO was “(9) A small cohort of blacks—in my experience, around five percent—is ferociously hostile to whites and will go to great lengths to inconvenience or harm us. A much larger cohort of blacks—around half—will go along passively if the five percent take leadership in some event. They will do this out of racial solidarity, the natural willingness of most human beings to be led, and a vague feeling that whites have it coming.

(10) Thus, while always attentive to the particular qualities of individuals, on the many occasions where you have nothing to guide you but knowledge of those mean differences, use statistical common sense:

(10a) Avoid concentrations of blacks not all known to you personally.

(10b) Stay out of heavily black neighborhoods.

Two weeks ago, an incident in Virginia validated a couple of Derbyshire’s bits of advice to his kids (the premise of the piece).

There’s outrage in Norfolk, Va., today after a white couple was attacked by dozens of black teenagers, and the local newspaper did not report on the incident for two weeks, despite the victims being reporters for the paper.

“Wave after wave of young men surged forward to take turns punching and kicking their victim,” Washington wrote, describing the onslaught that began when Dave Forster and Marjon Rostami stopped at a traffic light while driving home from a show on a Saturday night. A crowd of at least 100 black young people was on the sidewalk at the time.”

Tonight, Bill O’Reilly played tape made at the scene. There were several young black men interviewed who had not participated in the attack. What they said was “If you go into a neighborhood you don’t know (and are white), you had better be careful.”

Apparently the young man driving the car got out of the car after a rock was thrown at it. He said, “That was a big mistake.” He and the young woman in the car were attacked by about 20 to 40 men from the crowd on the sidewalk. One of the young black men interviewed on O’Reilly’s program mentioned the Trayvon Martin case. Their injuries were not life threatening but kept them from work for a week.

How does this differ from what Derbyshire warned about ?

Another issue is the delay in reporting the attack by the local paper.

It happened four blocks from where they work, here at the Virginian-Pilot.”

The Virginia Pilot did not mention the attack on its own employees for two weeks. Why ?

Could this be related ?

That is the Pilot’s publisher and he was just confirmed as Obama’s new Deputy HUD Secretary.

The U.S. Senate on Thursday approved the appointment of Maurice Jones, publisher of The Virginian-Pilot, to be deputy secretary of the U.S. Department of Housing and Urban Development.

No, it couldn’t be related.

I thought that, since I described my daughter as beautiful, I should provide some evidence.

Here she is with her mother.

That’s Arizona behind them.

Lest I slight my other daughter, here is Claire with the Rosetta stone a few years ago.

I have one more but no recent photo. She’s the FBI agent and doesn’t like photos. She has been trying to recruit Claire, who speaks Arabic, for years.

There is a huge story going on in China right now. A very high official in the Politburo, named Bo Xilai has been purged, and his wife has been arrested. The story as reported is not the real one.

Here is John Burns’ opinions of What is going on.

First the official version.

CBS News) BEIJING – We are getting a rare look at the inner workings of China’s Communist power structure thanks to a scandal that erupted there this spring. CBS News correspondent Barry Petersen tells us about the man at the center of it.

His glamorous wife Gu Kailai has been arrested for the murder of Nick Heywood, a British man found dead in a hotel room last November. At the time, Chinese police said he died of alcohol poisoning — although his family said he didn’t drink.

The background story is:

Well, of course what we see here is something that none of us really wanted to see at all, and I’m not talking about the murder. That, of course, we would all regret. What we’re seeing is a new upheaval in the Chinese political leadership, the most important political purge in Bo Xilai, the former Chongquing party chief, candidate for the inner sanctum of power in the politburo. And this is very disturbing to those who had hoped, believed, perhaps, that China, this is a new China, the post-Mao China, which was heading toward a period of political stability, the rule of law, in other words, had really put the Mao era, the Cultural Revolution, the chaos, the great leap forward, and all the rest of it, behind it. What we’re seeing now in this very sordid tale is something much more like what we saw of Chinese leadership in what we, and indeed, I think most Chinese would describe as the bad old days of Mao Tse Tung, a politics that is much more personal, that is much more brutal. Let’s not forget that in the Cultural Revolution in China under Mao, millions, I think the Chinese officially concluded ten million people, died. Now it’s not to suggest that China’s heading for that. The present Chinese leadership who purged Bo are saying, in fact, that it’s to prevent that kind of…return to that kind of politics, that they’ve purged him. But then you have the question of the alleged murder. the story begins in mid to late November when, and at that time, the world knew nothing about it. Neil Heywood, a 41 year old private school educated Englishman of some personal charm, went to Chongqing, the capitol city of Sichuan Province in Southwest China, source of the wonderful hot food that we all like in Chinese restaurants, and on some sort of a business trip. He had for some years, we now know, had a very unusual personal relationship with the family of Bo Xilai, the Communist Party chief in Chongqing, and that relationship seemed to be centered very much on Bo Xilai’s wife, Gu Kailai, a 53 year old rather handsome woman from her photographs, daughter of a retired, probably now dead, revolutionary general under Mao Tse Tung. This was Communist royalty. Long story short, Neil Heywood ends up dead in his hotel room in Chongqing. The Chinese report to his family that he died of over consumption of alcohol. They report that they’ve cremated him without autopsy. The family, the Heywood family, appears to have accepted this, and that includes Mr. Neil Heywood’s Chinese wife and two children living in Beijing. The next stage was that the police chief of Sichuan Province, the closest personal aide, if you will, to Mr. Bo, the party chief, having reported so it is now said, to Bo Xilai, that Heywood didn’t die of over consumption of alcohol. He died of poisoning, and that the poisoner, or at least the one who organized the poisoning, was none other than Bo’s own wife, Gu Kailai.

So what we have is a tremendous turn in the politics of China, and it seems to center, this scandal’s center on the death of this Englishman. And it’s left to people like myself to now go in pursuit of what the real story behind all of this was.

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A favorite writer, usually seen at National Review but widely published, has created a firestorm of political correctness by an article he wrote for another magazine. John Derbyshire is a mathematician and curmudgeon of the satiric variety. I think I have read all of his books, several of which are not an easy read. His We Are Doomed had me laughing so hard I cried. My review is here.

His current outrage is to have said “There is a talk that nonblack Americans have with their kids, too. My own kids, now 19 and 16, have had it in bits and pieces as subtopics have arisen. If I were to assemble it into a single talk, it would look something like the following.

(3) Your own ancestry is mixed north-European and northeast-Asian, but blacks will take you to be white.

Derbyshire’s wife is Chinese and his kids are mixed race Chinese-Caucasion

(4) The default principle in everyday personal encounters is, that as a fellow citizen, with the same rights and obligations as yourself, any individual black is entitled to the same courtesies you would extend to a nonblack citizen. That is basic good manners and good citizenship. In some unusual circumstances, however—e.g., paragraph (10h) below—this default principle should be overridden by considerations of personal safety.

So far, despite the outrage, this seems pretty benign to me. (Probably evidence of my own racism)

Here comes trouble:

(7) Of most importance to your personal safety are the very different means for antisocial behavior, which you will see reflected in, for instance, school disciplinary measures, political corruption, and criminal convictions.

He is writing about means but few readers made that distinction and many may have no idea what a “mean “is.
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In Barak Obama’s resume was a statement that he taught constitutional law as an “adjunct professor” at U of Chicago Law School. I have never considered this to be a major achievement since adjunct professors are not paid and the subject he taught was more related to his other interests. Constitutional law was not one of them.

At the school, Mr. Obama taught three courses, ascending to senior lecturer, a title otherwise carried only by a few federal judges. His most traditional course was in the due process and equal protection areas of constitutional law. His voting rights class traced the evolution of election law, from the disenfranchisement of blacks to contemporary debates over districting and campaign finance. Mr. Obama was so interested in the subject that he helped Richard Pildes, a professor at New York University, develop a leading casebook in the field.

Mr. Obama was especially eager for his charges to understand the horrors of the past, students say. He assigned a 1919 catalog of lynching victims, including some who were first raped or stripped of their ears and fingers, others who were pregnant or lynched with their children, and some whose charred bodies were sold off, bone fragment by bone fragment, to gawkers…

Should we be surprised at his knowledge, or lack of it, on the basics of constitutional law ? Even his attempt to correct his clueless comments about judicial review are incoherent

Apparently unaware of the most basic principles of constitutional law, going back to Marbury v. Madison in 1803, he said:

And I — I’d just remind conservative commentators that for years what we’ve heard is the biggest problem on the bench was judicial activism or a lack of judicial restraint; that, uhhh, an unelected, uhhh, group of — of people would somehow overturn, uhhh, a duly constituted and — and passed, uh, law. Uh, well, uh, uh, is a good example. Uhh, and I’m pretty confident that this, — this court will recognize that, uh, and not take that step.

The 5th Circuit Court of Appeals responded

Overturning a law of course would not be unprecedented — since the Supreme Court since 1803 has asserted the power to strike down laws it interprets as unconstitutional. The three-judge appellate court appears to be asking the administration to admit that basic premise — despite the president’s remarks that implied the contrary. The panel ordered the Justice Department to submit a three-page, single-spaced letter by noon Thursday addressing whether the Executive Branch believes courts have such power, the lawyer said.

Marbury vs Madison is one of the oldest and most basic cases that would be studied by a law student interested in Constitutional Law. The fact that our president does not know this ranks with his comments on speaking “Austrian” in Austria and his estimation of the number of US states.

Is he really this dim ? Did Harvard turn out this affirmative action dullard and inflict him on the country ?

This should be a welcome change from the political news.

That looks like great fun except that I would want my hot shower.

Those guys are going about 30 knots. Day after day.

Here is a photo that all Palestinians and their supporters should see and remember,

The caption is worthwhile, too.

Sudeten Germans make their way to the railway station in Liberec, in former Czechoslovakia, to be transferred to Germany in this July, 1946 photo. After the end of the war, millions of German nationals and ethnic Germans were forcibly expelled from both territory Germany had annexed, and formerly German lands that were transferred to Poland and the Soviet Union. The estimated numbers of Germans involved ranges from 12 to 14 million, with a further estimate of between 500,000 and 2 million dying during the expulsion.

It is a mystery to me (not really) why the Palestinians and their supporters do not make the connection between the Arabs who left Israel in 1948 and the Germans who were forced out at the end of the war. How many terrorist Sudetan Germans have you heard of ?

There was a shooting in Florida this week that has now accumulated all the “usual suspects” for a racial extravaganza. The bare details are that a Florida neighborhood had had a high number of burglaries in the previous year. The neighbors had instituted a “neighborhood watch.” The watch member on duty saw a black teenager in a “hoodie” sweatshirt acting in a way that he thought was suspicious. He called 911. The 911 call was recorded but the record may not be clear. A new eyewitness has said that the shooting victim was attacking the shooter and was on top of him as the shooter called for help. The shooter was not arrested and now the local police chief has removed himself from the case. The shooter is in hiding, afraid for his life. Was this a terrible mistake ? Surely the shooting was not done in malice. The shooter is Hispanic and a local resident. Local neighborhood watches are common in Florida, which has a “stand your ground” law. Self defense does not require retreat but this was on a public street, not the shooter’s home. I suspect neighborhood watches are about to be disarmed in Florida.

The usual suspects have all appeared, including Barack Obama, who seems to insert himself into every racial incident. Of course, Al Sharpton (MSNBC commentator) is heavily involved. Hopefully, the body count will not reach previous levels in Sharpton’s activities. Sharpton did manage to convince some suckers (sorry, supporters) to pay his debts in the Tawana Brawley hoax I guess that means he can go back to New York for his MSNBC gig.

This may be the substitute for the failed contraception ploy the Democrats attempted. Maybe there really was a crime committed by an excited neighborhood watch member. If so, the magnitude would be voluntary manslaughter, hardly a reason for the attempted lynching now going on in Florida and Washington. It is ironic that the group, which suffered 100 years ago from lynching, now seems to promote it. I think the Republicans would do well to stay away from this case with the exception of the usual sympathy for the victim. It is getting ugly and the facts are far from established.

When I was a medical school junior, we had a rotation on the Neurology service at LA County Hospital. One of my classmates was planning a career in neurology but the reason it was so popular with the students like me who were interested in surgery was that we got to do tracheostomies. A number of patients with severe neurological lesions would require respirators or had trouble with airway secretions requiring a tracheostomy. This was our one chance to do surgery, even a minor procedure as things go. It was good practice and I later did a lot of tracheostomies, some quite difficult and rushed.

Our resident was a very interesting guy named Dick Boggs. He was tall and looked a lot like Orson Welles did when he was young and making “The Third Man.” Boggs was quiet and aloof but let us do trachs and work up any patient we wanted to. I had some very interesting cases. One was a woman who showed all the signs of alcoholic neuropathy, which is very similar to diabetic neuropathey. It was a popular rotation for juniors. Boggs was popular among the residents and was elected the president of the Interns’ and Residents’ Association, which under his leadership took on some of the characteristics of a union.

At the time, intern and resident pay was very low and, aside from a new dormitory that was built for single house staff, we were on our own. I was married with one child, born in March 1965, so I was really on my own. My wife quit her job as a teacher in January 1965 and I was working after hours doing histories and physicals at private hospitals for $7 per hour. Fortunately, my tuition was covered by scholarship but living expenses were tight. We lived on $200/month contributed by our parents, $100 from my father and the same from Irene’s parents. Half of that went for the rent of our two bedroom house in Eagle Rock, near Pasadena. I’m spending some time on details to emphasize what Boggs accomplished for us all.

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Ann Althouse has a good post today. I can’t get through her Captcha system so I thought I would post a few comments here. This NY Times op-ed piece is the source for her observations. It is behind the Times’ idiotic payment wall so go to her blog for the link.

TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.

To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.

That certainly states the issue clearly. What does he complain about ?

I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.

I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work.

What specifically is the problem ?

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I couldn’t figure out how to post these in comments so here are a couple of photos of my family in Athens. We loved it and would like to go back. I envy Sgt Mom her experience.

Here is is one view of the Plaka and the tourists- Cindy and Annie (at age 14.)

I think kids benefit from travel and especially from prolonged stays in other countries. That doesn’t necessarily qualify them to be president.

During all the argument about global warming that has gone on over the past decade, warming activists have questioned the motives of defenders of traditional energy sources, implying they are all funded by fossil fuel companies. The motives of those warning of the risks of global warming have rarely been questioned, implying they are only worried about the planet and nothing so crass as accepting money for their efforts.

Now, it seems, they had normal acquisitive instincts, as well. And some of them have done quite well, I might add.

NASA records released to resolve litigation filed by the American Tradition Institute reveal that Dr. James E. Hansen, an astronomer, received approximately $1.6 million in outside, direct cash income in the past five years for work related to — and, according to his benefactors, often expressly for — his public service as a global warming activist within NASA.

This does not include six-figure income over that period in travel expenses to fly around the world to receive money from outside interests. As specifically detailed below, Hansen failed to report tens of thousands of dollars in global travel provided to him by outside parties — including to London, Paris, Rome, Oslo, Tokyo, the Austrian Alps, Bilbao, California, Australia and elsewhere, often business or first-class and also often paying for his wife as well — to receive honoraria to speak about the topic of his taxpayer-funded employment, or get cash awards for his activism and even for his past testimony and other work for NASA.

Oh, Oh. Normal instincts after all. This will set the sainthood movement back a few years. We already know about Al Gore, of course.

Mark Twain once said, ” There is no true criminal class in America with the possible exception of Congress.” It’s time to withdraw the qualifier. It is now apparent that, with a few rare exceptions, Congress is a criminal enterprise and the Obama Administration is, as well. Here is the story of part of it.

“To entrench Fannie’s privileged position, Morgenson and Rosner write, Johnson and Raines channeled some of the profits to members of Congress — contributing to campaigns and handing out patronage positions to relatives and former staff members. Fannie paid academics to do research showing the benefits of its activities and playing down the risks, and shrewdly organized bankers, real estate brokers and housing advocacy groups to lobby on its behalf. Essentially, taxpayers were unknowingly handing Fannie billions of dollars a year to finance a campaign of self-promotion and self-­protection. Morgenson and Rosner offer telling details, as when they describe how Lawrence Summers, then a deputy Treasury secretary, buried a department report recommending that Fannie and Freddie be privatized. A few years later, according to Morgenson and Rosner, Fannie hired Kenneth Starr, the former solicitor general and Whitewater investigator, who intimidated a member of Congress who had the temerity to ask how much the company was paying its top executives.”The latter item is just to show that the corruption was bi-partisan. The quoted text above was from a book review written by Robert Reich, the left wing former Clinton Labor Secretary.

Johnson was the man chosen by Obama to vet his possible VP choices. When his history came to the public’s attention, he quickly withdrew. He had no financial background at the time he became the chief of Fannie Mae. He was a pure political animal.

The most telling recent blow is the bankruptcy of MF Global, a commodity trading futures firm run by Jon Corzine, former governor of New Jersey. It appears that he stole $600 million of investor’s money. Another commodity trader has now closed her fund and returned her customer’s money. Here’s why: “The reason for my decision to pull the plug was excruciatingly simple: I could no longer tell my clients that their monies and positions were safe in the futures and options markets – because they are not. And this goes not just for my clients, but for every futures and options account in the United States. The entire system has been utterly destroyed by the MF Global collapse. Given this sad reality, I could not in good conscience take one more step as a commodity broker, soliciting trades that I knew were unsafe or holding funds that I knew to be in jeopardy.

I do not agree with some of her theories, she appears to be a “birther,” for example, but that doesn’t matter. If Obama is a legal citizen, his corruption is just as bad.

“A firm, led by a crony of the Obama regime, stole all of the non-margined cash held by customers of his firm. Let’s not sugar-coat this or make this crime seem “complex” and “abstract” by drowning ourselves in six-dollar words and uber-technical jargon. Jon Corzine STOLE the customer cash at MF Global. Knowing Jon Corzine, and knowing the abject lawlessness and contempt for humanity of the Marxist Obama regime and its cronies, this is not really a surprise. What was a surprise was the reaction of the exchanges and regulators. Their reaction has been to take a bad situation and make it orders of magnitude worse. Specifically, they froze customers out of their accounts WHILE THE MARKETS CONTINUED TO TRADE, refusing to even allow them to liquidate. This is unfathomable. The risk exposure precedent that has been set is completely intolerable and has destroyed the entire industry paradigm. No informed person can continue to engage these markets, and no moral person can continue to broker or facilitate customer engagement in what is now a massive game of Russian Roulette.”

The bankruptcy petition may have been responsible for freezing the accounts but criminal law should deal with this. Corzine should spend years in prison. Here is a depressing comment: “If Obama doesn’t win next year, watch for a January 19, 2013 pardon.”

I was quite concerned today to see this story on Powerline. The country is in serious straits because we have spent and are spending too much on public employees. My first wife went back to teaching a few years ago when she got laid off in a bank merger. She had a lifetime certificate in elementary education and has worked as a mortgage banker after our divorce in 1978. After that, she worked for the FSLIC, closing and liquidating insolvent S&Ls and currently. at the age of 72, she works for the FDIC doing the same thing. Her brief experience as a third grade teacher about 20 years ago, appalled her. She was always a public school advocate. After the divorce, the kids all went to private school. Now she says she would home school them.

Herman Cain won my support when he was asked what role the teacher’s unions played in out current school mess. He said that, as far as he was concerned, teachers’ unions were responsible for the school troubles. Would Romney say that ? He would be dreaming if he concluded that going easy on teacher’s unions would earn him any votes. Ditto for public employee unions.

Why then would he disclaim supports for a budget bill that affects public employee unions?

Why is he such a squish ?

The science community is now closing in on an example of scientific fraud at Duke University. The story sounds awfully familiar.

ANIL POTTI, Joseph Nevins and their colleagues at Duke University in Durham, North Carolina, garnered widespread attention in 2006. They reported in the New England Journal of Medicine that they could predict the course of a patient’s lung cancer using devices called expression arrays, which log the activity patterns of thousands of genes in a sample of tissue as a colourful picture. A few months later, they wrote in Nature Medicine that they had developed a similar technique which used gene expression in laboratory cultures of cancer cells, known as cell lines, to predict which chemotherapy would be most effective for an individual patient suffering from lung, breast or ovarian cancer.
 
At the time, this work looked like a tremendous advance for personalised medicine—the idea that understanding the molecular specifics of an individual’s illness will lead to a tailored treatment.

This would be an incredible step forward in chemotherapy. Sensitivity to anti-tumor drugs is the holy grail of chemotherapy.

Unbeknown to most people in the field, however, within a few weeks of the publication of the Nature Medicine paper a group of biostatisticians at the MD Anderson Cancer Centre in Houston, led by Keith Baggerly and Kevin Coombes, had begun to find serious flaws in the work.
 
Dr Baggerly and Dr Coombes had been trying to reproduce Dr Potti’s results at the request of clinical researchers at the Anderson centre who wished to use the new technique. When they first encountered problems, they followed normal procedures by asking Dr Potti, who had been in charge of the day-to-day research, and Dr Nevins, who was Dr Potti’s supervisor, for the raw data on which the published analysis was based—and also for further details about the team’s methods, so that they could try to replicate the original findings.

The raw data is always the place that any analysis of another’s work must begin.

Dr Potti and Dr Nevins answered the queries and publicly corrected several errors, but Dr Baggerly and Dr Coombes still found the methods’ predictions were little better than chance. Furthermore, the list of problems they uncovered continued to grow. For example, they saw that in one of their papers Dr Potti and his colleagues had mislabelled the cell lines they used to derive their chemotherapy prediction model, describing those that were sensitive as resistant, and vice versa. This meant that even if the predictive method the team at Duke were describing did work, which Dr Baggerly and Dr Coombes now seriously doubted, patients whose doctors relied on this paper would end up being given a drug they were less likely to benefit from instead of more likely.

In other words, the raw data was a mess. The results had to be random.

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John Maynard Keynes, in addition to being the brother of the author of the first book on blood transfusion, was a famous economist whose policy recommendations have been widely abused by politicians for 50 years. His first widely known book was on “The Economic Consequences of the Peace.” It predicted that the harsh Versailles peace treaty would ruin Europe, a prediction that came true in 1929.

Reparations were set at a level that Keynes perceived would ruin Europe, Woodrow Wilson refused to countenance forgiveness of war debts and would not even let the US Treasury officials discuss the credit program. While Keynes’ proposals were far sighted, few others at the Versailles Conference understood their importance and Keynes’ proposals would have been controversial in nations such as France, Britain and the US.

Keynes’ book had a major effect on the US Congress’ refusal to ratify the League of Nations treaty.

Another critical insight was his prediction of the consequences of inflation.

Keynes outlined the causes of high inflation and economic stagnation in post-WWI Europe in The Economic Consequences of the Peace.
 
“Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some… Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
 
Keynes explicitly pointed out the relationship between governments printing money and inflation.
 
“The inflationism of the currency systems of Europe has proceeded to extraordinary lengths. The various belligerent Governments, unable, or too timid or too short-sighted to secure from loans or taxes the resources they required, have printed notes for the balance.”

It is significant that the US has debased its currency the past 40 years far more than the average citizen realizes. The present dollar is worth about 40 cents in 1970 dollars. Using the methodology at this site, which uses US Department of Labor data, a $100. item in 1970 would cost $582.60 in 2011 dollars. That uses a cumulative inflation rate of 482.6%. Using that calculation, the present dollar is worth 20 cents in 1970 currency.

The most common attribution to Keynes is the “pump priming” role of running budget deficits. However, his theory was the “countercyclical” principle of government budgets. That supposes that the government runs surpluses in good economic times, then deficits in bad economic times. Keynes assumed that these two phases of government action would cancel each other out. His work was based on his theories of how the Great Depression occurred. His apologists have used the Second World War as an example of Keynesian economics. They do not mention that the high deficits that were run during WWII were funded by US citizens who bought war bonds. Inflation was limited by price controls and consumption was limited by rationing. The excess income that was generated in war industries was invested in the national debt. We were not borrowing from another country and, after the war, the budget rapidly paid off the war debt. The national debt was small before the war.

US National Debt

What we have today is very different. Here is a useful explanation of why Keynes is not the author of present national policy. There is more explanation here.

If Keynes were alive today, what would he think of President Obama’s fiscal policies?
 
He would roll over in his grave if he could see the things being done in his name. Keynes was opposed to large structural deficits. He thought that they chilled rather than stimulated the economy. It’s true that we’re stuck with large deficits now. The goal should be to reduce them, not to take on new spending that makes them worse.
 
Today, deficits are getting bigger and bigger with no plan to significantly lower them. Keynes understood what the current administration doesn’t understand that the proper policy in a democracy recognizes that today’s increase in debt must be paid in the future.

Read the rest.

Obama has announced his new appointment for economic adviser. It is a Princeton economist named Alan Kreuger. I am not an economist or an expert on economists but that name rang a faint bell. Then I saw that someone else had remembered him, too.

In a 1994 paper published in the American Economic Review, economists David Card and Alan Krueger (appointed today to chair Obama’s Council of Economic Advisers) made an amazing economic discovery: Demand curves for unskilled workers actually slope upward! Here’s a summary of their findings (emphasis added):
 
“On April 1, 1992 New Jersey’s minimum wage increased from $4.25 to $5.05 per hour. To evaluate the impact of the law we surveyed 410 fast food restaurants in New Jersey and Pennsylvania before and after the rise in the minimum. Comparisons of the changes in wages, employment, and prices at stores in New Jersey relative to stores in Pennsylvania (where the minimum wage remained fixed at $4.25 per hour) yield simple estimates of the effect of the higher minimum wage. Our empirical findings challenge the prediction that a rise in the minimum reduces employment. Relative to stores in Pennsylvania, fast food restaurants in New Jersey increased employment by 13 percent.”

This was tremendous news, especially for Democrats. Raising the minimum wage did not increase unemployment as classical economics had said since the issue first arose.

Unfortunately, their study was soon ripped apart by other economists who used more objective methodology.

It was only a short time before the fantastic Card-Krueger findings were challenged and debunked by several subsequent studies:
 
1. In 1995 (and updated in 1996) The Employment Policies Institute released “The Crippling Flaws in the New Jersey Fast Food Study”and concluded that “The database used in the New Jersey fast food study is so bad that no credible conclusions can be drawn from the report.”
 
2. Also in 1995, economists David Neumark and David Wascher used actual payroll records (instead of survey data used by Card and Krueger) and published their results in an NBER paper with an amazing finding: Demand curves for unskilled labor really do slope downward, confirming 200 years of economic theory and mountains of empirical evidence (emphasis below added):

I would suggest reading the entire post which demolishes the study by Kreuger and Card. This is the new Chairman of the Council of Economic Advisers. More academics with no real world experience and this one is incompetent even as an academic. Spengler has a few words on the matter, as well.

Last week Rick Perry made a comment that got wide attention in mainstream media.

Mr. Perry brought the Fed directly into the campaign debate Monday night by saying it would be “almost … treasonous” for the central bank to play politics by expanding the money supply.

“If this guy prints more money between now and the election,” Mr. Perry said in Cedar Rapids Monday night, without naming Mr. Bernanke, “I don’t know what y’all would do to him in Iowa, but we—we would treat him pretty ugly down in Texas.”

Today, on Meet the Press, Peggy Noonan showed that she is completely clueless on this subject by going off on a riff about how a president has to appear “nice.” She never did address the subject.

Others, who appear to know more about monetary policy had a somewhat different take.

Thomas Gallagher, a principal and economic policy analyst at the Scowcroft Group in Washington who advises Wall Street firms, said Mr. Perry’s comments will be the first thing many investors learn about his candidacy. And the comments are “drawing a fair bit of attention.”

“Voters may not care as much, but investors, like the chattering class, expect a candidate to know what he’s talking about when he talks about the Fed,” he said. “It’s one thing to oppose what the Fed is doing, but it’s another to call it almost treasonous.”

I don’t know that treason was the right word to use but the point is that the Fed is feeding inflation which is far more apparent to those of us who buy our own groceries than most politicians. Ron Paul has been railing at the Fed for years and he is gaining allies.

Libertarian Rep. Ron Paul, who fell 152 votes short of winning the Iowa GOP’s straw poll on Saturday, has been railing against the Fed for years, and former House Speaker Newt Gingrich has joined in with an “Audit the Fed” petition. Other conservatives complain that the Fed’s policy of using monetary policy to stimulate the economy, which it indicated last week it might renew, could be sowing the seeds of inflation.

I would say we are past the “seeds” stage.

The US Treasury has been the largest buyer of new Treasury bonds. How can this be ? The Federal Reserve is printing more money that is then used to buy the debt. Is this an example of the elusive perpetual motion machine ?

• Turning government bonds into circulating money is called monetizing the national debt.

• The way it’s supposed to work is that the Fed buys securities in the open market, paying with a government “check.” (That’s how the money is created.) The sellers deposit those checks into their banks. The banks redeploy those deposits as loans to consumers and business. The money supply expands and, in turn, so does the economy.

What effect will this have on the dollar ? The economy hasn’t exactly expanded while this has been going on.

One factor may be saving us the worst of the effects of this reckless policy. Troubles in Europe and elsewhere in the middle east have caused many investors to engage in a “flight to quality,” although I wouldn’t call the dollar “quality” right now. The Euro, however, seems to be in even worse trouble.

We’ll see what effect Perry’s comment has on his candidacy.

I watch the Sunday talk shows, usually flipping back and forth between them. I was struck today by a comment made by Cokie Roberts on ABC’s This Week. In the discussion of the downgrade of US Treasury bonds, she was arguing with a tea party affiliated Congressman from Utah named Chaffetz and she made the following statement: (The comment begins at 8:55)

The reason why they (S&P) like France and England is because they have parliamentary government,  because the majority gets what it wants. There is no divided government where both parties have to agree.

I thought that an astonishing but revealing statement. First, Britain and France have not been exemplars of fiscal probity the past 50 years, with the exception of Margaret Thatcher’s era. She even mentioned that England now has an austerity program. Also, she didn’t mention that Obama had undivided government for two years and spending increased 24%. In fact, there has been no national budget for two years, probably because the Democrats did not want to expose their plans prior to the 2010 election.

Her second comment was also revealing:

The problem is with the US Constitution.

There, in a nutshell, is the Democrats’ complaint. The Constitution restricts the ability of one political party to spend at will without regard of the consequences. God knows we have had excessive spending since 1965 in this country under both parties and with the Constitution intact. But, for Democrats, that has not been enough. I don’t think I have seen a more revealing comment.