The Invisible Hand is coming to get you!

The Invisible Hand works as well as it ever did... it was always a thought experiment. Adam Smith postulated that the Invisible Hand would act in a self-regulating market in the presence of three things: perfect information, perfect competition, and perfect mobility.

None of those are possible. However, labeling and fraud regulation bring us closer to perfect information. Anti-trust laws bring us closer to perfect competition. Perfect mobility is harder to accomplish through regulation, but the abolishment of Jim Crow laws, redlining, and other such practices that dictated where people could live and do business helped. More recently, the Internet (developed by the Defense Department and a public university) has done much to bring us closer to perfect mobility.

The Invisible Hand was never thought to prevent market fluctuations, though. In fact, Adam Smith and those who study him acknowledge freely that the efficient free market often *does not* address the needs of people. In a free market, those who can't perform will die. This is where the irrationality studied by behavioral economists comes in... we are social creatures, and so there is some "rational" behavior that gets overridden by our survival instincts. We know that if we always work against each other, we'll die. At first, only the weaker ones, but eventually, we will all die off because we fundamentally need each other.

Where the Invisible Hand seems to be failing, it is actually a failure of the very regulations intended to preserve it. Deregulation destroys a self-regulating market, by moving us further from perfect information (like information about what candidates the company donates money to), perfect competition (next I have to explain to the FCC why they shouldn't let AT&T buy T-Mobile), and perfect mobility (so long as we order on Amazon).

Talk is Cheap.

They say talk is cheap. They're right. There's no cheaper way to share information.

We went to the playground yesterday. D4S1* saw two people on the see-saw and said he wished he could teeter a totter. After noting that one of the people on it was a mom-looking person, I suggested he ask if he could join them, as he'd probably be successful. He did, and us parents followed R8S2 over to the track so he could ride his balance bike. We made visual contact every few minutes, but D4S1 is good at hollering if he doesn't think things are right, so he was pretty much on his own.

After a while, R8S2 asked to go play with his big brother. As we approached the zip line area, a woman who I belatedly figured out was the same one from the see saw came up to me and said "I just have to tell you how much fun my son is having playing with yours!" They'd been sticking together ever since the see saw, and having a ball.

We got to talking. I'll call her "Naomi." Her family was visiting from Springfield, Missouri, but she grew up in Orange County. She noted that she'd been homesick the whole last six years since they relocated, and they'd love to come back. We chatted about kids and their personalities, about home prices and their differences, and so on.

She asked about the Rose Parade... they were thinking of going. I couldn't help but share my fortune; I had two grandstand tickets, GREAT seats, and so D4S2 and I would be going. I was looking forward to seeing the Occupy the Rose Parade float.

Blank look. "You know... Occupy Wall Street? Occupy Los Angeles?" Shakes head.

"No... what is that?"

Now, I don't-- didn't, anyway-- consider myself completely disconnected from mainstream culture. Yeah, I make different choices; we don't have TV (we have a TV, which plays DVDs and console games), I don't read a newspaper... I get most of my news from links my friends post, and from my Google News Saved Search for things relevant to homelessness. But it really just floored me: there are still people who don't know that Zucotti Park on Wall Street in New York was occupied around the clock for nearly two full months; that the lawn around Los Angeles City Hall was similarly occupied for two months (starting and ending a couple of weeks later), and that similar protests have happened in cities across the nation.

So... I talked.

I knew little to nothing about this woman's political inclinations, history, background. I had no idea where here sympathies would lie, how her family earned money, what her gut reaction would be. I kept it simple, which is hard; it's complicated. I started with the what: thousands of people setting up camp in public places, in protest of corporate greed, the illegal actions taken by Wall Street firms that precipitated the financial crisis (with no charges filed), the people whose homes have been foreclosed illegally, the aggregation of wealth and political power with the 1%. I mentioned the pepper-sprayed UC Davis students (and even mimed the cop's casual stroll as he sprayed them), but didn't get into Scott Olsen.

Then I mentioned the evictions, the coordination services provided by the Department of Homeland Security, and the next phase, where some people are occupying foreclosed, bank-owned, vacant homes with families who have lost their homes in the financial crisis.

"Wow, I had no idea about any of that! I really need to start reading a newspaper."

And then I got to the really sad part: the newspaper probably wouldn't help much. Where mainstream media *does* cover Occupy, it tends to do so in a somewhat patronizing manner, focusing on things like littering or the homeless moving in, rather than the issues.

[Said in a perfectly reasonable, not at all self-righteous or dismissive, tone] "Well, maybe then these Occupy folks need to get better with the media..."

That's when I explained that they have a lot of people who are pretty good with media... but that there's no way to package this. I pointed out that it's leaderless; that you can't state in succinct, media-friendly soundbites what "the 99%" want. That it's a conglomeration of different ideas and goals and priorities. That it's about being heard, being represented; it's not about picking someone to be in charge and package the message. It's complex, and it has to stay that way, or it stops being what it is.

The boys stopped playing ball with a random family and got on the swings. As we pushed them (these swings are specially designed to be accessible; they're too big and heavy for the kids to swing themselves... which I suspect is why they like them so much), she asked me what I do, and I told her (grant writer for a homeless services agency). She asked me about feeding the homeless, and what I thought about whether it did any good (as a one-time thing). I told her I thought that, if done right, it could serve an important purpose in humanizing people who have felt dehumanized by their day-to-day experience. But on the other hand, hunger sometimes motivates people to connect to services, so isolating feeding people may prolong the time they spend on the street... so it could go either way.

As we headed back over toward the zip line behind our sons, I touched on NDAA and SOPA. She asked what I thought of Obama, and I told her. She confided that she finds herself consciously hiding her political beliefs; she fears what her community's reaction would be if they found out she voted for him. She mentioned religion in a positive light; I recommended The Christian Left, but she wondered what would happen if her neighbors saw she had "liked" it. I gave her some tips on double-talk for those situations ("Oh, I know, but they have some really good Christian messages...") and also mentioned that I have two Facebook accounts: one for work, and one for the rest of my life.

I was so uplifted by our conversation, the ability to share important information about the world with another person, the progress made in that hour... and dismayed by how isolated a person can be thanks to an intolerant community.

So I've decided: I need to talk more. I need to talk about what's going on. I don't need to lecture or advocate or evangelize... I just need to say "This is happening." Then people, like Naomi, at least have an opportunity to make up their own minds about it.

* For the sake of anonymity, I'm not using my children's actual names. I decided to give them codes, like they're Star Wars droids. The first letter is their first initial; the second is the last digit of their birth year; the third is their gender (S for son... it's the same for both, but would be D for any daughters I had in another universe) and the final digit is birth order.

The case for progressive taxation

I commonly hear people talk about how it's unfair when taxes are used to "redistribute" wealth.

I might agree with them, except, it's NOT redistribution. It's creating the infrastructure and resources that enable people to succeed, both modestly and wildly.

Say you have a great idea and some real business talent. You start a company. You get a bank loan; the bank can lend you that money because of the deposits of its other customers, many of whom are individuals saving for college, retirement, or a rainy day. They can save because they make more than they spend... they're middle class.

You hire people. The people you hire are literate and numerate. They know how to operate a computer and how to follow written and verbal instructions. They know how to communicate with their boss and their colleagues clearly and productively.

You buy equipment, much of it expensive. You get a fire/life/safety alarm system that automatically rings the police department or fire department if anything goes wrong.

You contact distributors via phone and email to get them to stock your products.

You manufacture your goods and ship them, via rail, roads, air, or sea. Shipping costs figure into your prices.

You are successful, and you become rich. But you ONLY were able to do it because of public services and infrastructure, including police, fire, schools, roads, rails, airports, sea ports, and everything that provides stability to the middle and working class so that money keeps flowing in the economy.

"Your fair share" of the costs of operating those things is GREATER, because you got MORE benefit out of them. Rather than benefiting just from sending your own kids to public school, you benefited from all the parents of all your employees being able to educate their children for free. You own more capital, so the expenses we have that ensure your capital is secure (fire and police) disproportionately benefit you. You're making heavier use of the transportation infrastructure, and most of that use doesn't include user fees intended to pay the full costs of building or maintaining that infrastructure.

Sad thing is... the elites who succeeded wildly in business used to understand this. When did we forget that stability, infrastructure, and education are requirements for a successful first-world economy?

Octopi Wall Street

Credit goes to my husband for the title.

So first of all, there's this thing going around like a bad cold:

https://fbcdn-sphotos-a.akamaihd.net/hphotos-ak-ash4/300992_2121412038332_1336751787_32024846_450161612_n.jpg

Don't get me wrong: I'm firmly on the side of the 99%. Things are, to put it simply, [bleep]ed, and we need to un[bleep] it pronto.

But here's what I posted to one friend in response to the above:

Item #1 means that people who aren't independently wealthy can't afford to run for Congress. They'd be giving up retirement plans in the private sector to do so.

The Congressional pension operates much like pensions in any other job, where you get credit for the time you were there; it's not a free ride for every Congresscritter ever. It's to ensure that people can afford to leave jobs with decent retirement plans to run for and hold Congressional seats.

Item #2: Congress pays into Social Security just like everyone else (which means that they only pay on their pay up to $106,800/year).

Item #3: Some jobs still have pension plans, but they're evaporating. There's also a lot of concern about the baby boomers, as they reach retirement age, often with inadequate savings for retirement. Also, Congress members DO pay into their pension plan, just like most public-sector employees. Also, there's some serious problems with suddenly going BACK on a system; what would we do to a private company that had a nice pension plan if they suddenly said "Um, we're changing it for EVERYONE from this point forward, no matter what we told you in the past (on which basis you made certain decisions about your financial planning)?

Great summary here: http://urbanlegends.about.com/library/blcongress.htm

Item #4: 3% is too low a cap. 6% is more realistic. During the late 1970s, we had runaway inflation that got into double digits... a few years of that and Congressional pay would lose a ton of value with a 3% cap. Inflation has only dipped below 3% a handful of years in the last three decades.

Item #5: Congress DOES participate in the same health care system as The American People: a system of private insurance tied to employment, where the employer subsidizes the premium (if you're lucky). There is *no* public insurance plan for the general population.

Item #6: I'm perfectly fine with Congress getting parking tickets. Otherwise, not sure which laws they're categorically exempt from. They enjoy the same benefits with respect to law enforcement that ANY affluent white person does.

Item #7: Term limits encourage ambitious people who are always looking at their next campaign, rather than people who really want to do *this* job. They also create huge inefficiencies due to turnover; anyone who's ever been in management knows that you take a hit every time you have to get a new person up to speed on a job.

Now, some of those are fairly cut-and-dried; others are more nuanced, and perhaps simply opinion... but informed opinion. Still, you start right off with this being based on things that simply AREN'T TRUE (I mean, a quick Google of Congress Social Security gets you a Snopes link for crying out loud; are they even TRYING?), and you go to things that probably will have negative effects... hard to take any of it seriously.

And for all I know, that's the point. This was started by some troll who wants to embarrass or distract the progressives. It's working; people are passing this on without a single thought.

But the conversation continued. And I was asked my opinion on how we DO fix it. So I answered:

First: amend the Constitution to more strictly define a "person" as an organism. Corporations aren't people; they can't die, or be imprisoned, or be left destitute... they can be formed and dissolved at need, they can be immortal or ephemeral as their creators determine. They are shells, not people; they need no rights, because the people who created them have rights.

We also need to realize that money isn't speech, but that's secondary to taking personhood away from immortal legal entities. Maybe we need to define rights about how people use money, but equating it to free expression doesn't work.

And we need to remember that WE elected Congress. Not "They," WE THE PEOPLE. We can't divorce ourselves from the constituency we are part of. We need to talk to our friends, our neighbors, our community groups, churches, families... and teach them to really see it through; think about how various policies will affect them, personally, and the world they live in. We need to adopt a habit of long-term, big-picture thinking.

I happen to think that getting free of TV advertising would go a long way to helping with this last part; it affects *everyone* who sees it, even on fast-forward. If you don't believe me, go on a strict no-commercial diet for, say, six months. DVDs (or books and talking to friends ;-) only. You'll be AMAZED at what you thought was normal when you were exposed to it every day.

The advertising bit is something I'm trying to work on in a bigger way. First it was going to be a blog post, then I started realizing the scope was more like an article, and now it's kind of turned into a book. The impact of advertising on politics is its own chapter. But I digress.

I went to the rally on the International Day of Action, October 15th, here locally. It was stupendous. I took my kids; they were impressed (hey, we get to walk in the STREET!). I had intelligent conversations with random strangers all around me. I was amazed at the variety and creativity of the signs people were holding.

And most of all, I'm excited that it seems like we're finally doing something. I can't wait to see where it goes, and hopefully, to be a part of it.

When is my child ready for artificial colors?

There is a great deal of information out there to help parents know when to transition their child to solid foods. We also generally know that baby's first foods should be wholesome, natural, and free of artificial colors.

So how do you know when your child is ready to take the next step, to artificially-colored food? Here's a few guiding principles that can help you identify artificial coloring readiness:

• Has your child begun refusing all foods that aren't screaming red, neon green, or electric blue? If so, it may be time to make the switch to foods that are colors never found in nature.
• If your child is excessively calm or lethargic, the stimulant effect that artificial colors have on many children may be just the pick-me-up they need.
• Is your child the victim of taunting or bullying from other kids because they won't drink the Kool-Aid? Introducing them to artificial colors may help their social life.
• Talk to your doctor about whether your child is getting enough petroleum products in their diet. Added colorings may boost their intake of fossil fuels.
• If your child needs to take medicine, they may accept it better if it is bright pink or blood red.
• Once artificial flavors have been introduced, colors may be necessary to distinguish "the green flavor" from "the purple flavor."
  

Adding artificial colors doesn't have to be difficult. You can find them in many mundane products, from marshmallows to hummus. There are thousands of artificially colored products readily available in your neighborhood supermarket, and many of them are targeted directly at children.

If you're reading from the European Union, you may find it more difficult to get your child their daily dose of artificial colors. Try ordering groceries from US-based companies online, or ask friends to stock up on artificially colored foods when on vacation in the States.

[mandatory "this is satire" disclaimer for those who need it. I do not actually think any child ever needs artificial colors in their diet.]

Standardized testing isn't the answer, but...

The conundrum becomes, how do we ensure that teachers are doing something? Standardized testing scales well. It allows you to create quantitative measures for an enormous number of students and their teachers quickly and at relatively low cost. The time investment is reasonable. It's where the light is good*... that's why we keep looking at it.

But it's not where we're losing our keys, so we need to look there, even though it's harder. But, what do we do? Increase the administration load, when it's already crushing our schools in some cases, so that teachers can have better supervision? And then what do we do about the inherently subjective nature of such evaluations? What if the teacher and supervisor get along well, because they're the same gender and race, live in the same neighborhood, and have kids the same age? Can we trust that they will see the teacher's work objectively, without coloring it more rosily due to their affinity with that teacher?

Ultimately, I think we need to involve a LOT more voices in the process. Students and their families should be submitting teacher evaluations each semester, just as colleges collect professorial evaluations. Teachers should do peer evaluations, possibly trading with other schools. And it should be done in a cooperative, not adversarial, manner... teachers who are having problems should be offered training, support, etc. to identify the causes of those problems and address them, so that they don't have huge incentive to try to cover their tracks.

But all that is a lot of work, real work. People have to read comments, correlate information, control for various factors. We do need to look at whether a black teacher in a predominantly white district (or a white teacher in a predominantly black district, or an Asian teacher in a predominantly Latino district, or whatever) is consistently receiving lower scores, but without "backup," i.e. no one seems to be able to describe the problem... so maybe the only problem is implicit bias.

I don't think we can give up standardized testing completely. I think it's part of the equation. But people usually are teachers for long careers... and we have the technology to track outcomes for their students over a longer time horizon. If you've been a Kindergarten teacher for 12 years, and it turns out that 70% of your students are going on to college in a district where the typical rate is 40%, you can actually find out if there's a statistically significant correlation there and if maybe you're doing something right. You don't have to wait for college, though... you can look at how students are doing in terms of discipline, grade level of achievement, awards and recognition, and so on starting from the year after they leave you. I think that, with the right approach to data-mining, we could really illuminate some success stories -- and failures -- in our educational system.

Ultimately, though, when you observe that failure is more common than success across a school, you must look higher than the teachers. To have keep good employees, you need good management. Administration needs to be held accountable for their performance in a major way. Heck, if the front office staff is rude and lazy, it will impact performance negatively, because parents will feel disconnected, teachers will have trouble getting the resources they need, etc.

Every time the organization I work for submits a large grant proposal, we have to provide (several things, but among them) our 990 tax form and an evaluation plan. The 990 tells people what our overhead ratio is... how much are we spending on management and support staff like finance and human resources compared to how much we're spending providing direct services? And, how will we be able to tell if what we're doing works? Could we hold schools to that standard? What do you suppose the overhead ratio is for your school?

* For those who aren't familiar with the joke...
A police officer happens upon a drunk, searching for something on the sidewalk and in the gutter under a streetlight. He asks the guy if he needs help.
"Yeah, I lost my keys! Can't find them anywhere!"
The cop helps the guy search for a few minutes, but finds nothing. He asks, "Are you sure you dropped them here?"
"Aw, nah, I dropped them about 20 yards down that way."
"But... why are you looking here?" the cop asked.
"The light's better!"

Health Care is a Market Failure, Part I: Shopping for a Doctor

I call this "Part I" because I'm sure I'll return to the topic. There are a LOT of ways in which health care is a market failure.

First of all, background:

• A "market failure" is a good or service that cannot be efficiently distributed by a free market. These items usually have to be regulated heavily in order to be distributed in an efficient manner.
• Adam Smith postulated a free market that could be completely regulated by the "Invisible Hand" as having three characteristics: Perfect Information, Perfect Competition, and Perfect Mobility. None of these is possible... but market regulation is generally about compensating for particular shortcomings in one of those categories.

So now the question: how do you shop for a doctor? Maybe we can start by looking at how you shop for other things...

If you want to know what brand of jeans to buy, you go to some stores, look for the size, cut, and color you're interested in, and try them on. Then you buy the ones that have the best combination of comfort and looking good (or at least not bad) on you.

If you want to figure out which TV to buy, you look at the features and specifications of each model, read reviews online, and go to a store to look at them. You don't know until you get it home how it's going to really look in your house, but you can usually choose something satisfactory by looking at the available information.

If you are trying to figure out which multivitamin works for you, you look at what quantities of each nutrient it has, what the fillers are, and so forth, then you buy a small bottle to try out. If you buy it at the right store, you can return it if it upsets your stomach or you have trouble swallowing it or something.

So what's the problem with doctor-shopping? First of all, there's practically NO information available about how a particular doctor practices. My health insurer lists for me where the doctor graduated, what year, and what hospitals they're affiliated with. These factors may influence my decision, but what I really care about is: will this doctor respect my observations and experience? Does s/he keep up with the latest research? Is his/her philosophy of care more focused on preventive, natural health, or on pharmaceutical or surgical interventions? If I come in with a complaint, how will the doctor proceed after ruling out the obvious and most dangerous stuff?

I'm very fortunate that, with my health care, I can basically make an appointment with any in-network doctor, pay the co-pay, and see them. I don't have to have a primary care physician or stay in a particular group. But this is still unsatisfactory: I go through a HUGE amount of paperwork and effort to go to an appointment that is intended as a doctor's visit, when all I want is to find out whether I like this doctor.

It's obvious why doctors don't schedule prospective patient interviews: there's no ICD9 code for them. They can't bill insurance for them, so they won't get paid. Few patients are willing to spend several hundred dollars out-of-pocket interviewing a handful of doctors. There's no trial size or satisfaction guarantee, much less the ability to try one on. And perhaps most important, we have absolutely no conception of how price compares between doctors. They're all going to charge "reasonable and customary" rates, because that's what they can get, no matter who the patient is.

What this means is, doctors do not have to compete with each other for patients. People pick a doctor based on whether they are in-network and convenient, and may switch from a doctor that has atrocious front-office staff or ridiculous wait times for appointments, but in general, we don't shop for a doctor we like. Instead, we put up with a doctor we're not deeply unsatisfied with.

Without competition, doctors have no incentive to differentiate their service, or even improve it. They will keep up their continuing education to the bare minimum to maintain licensure, they will schedule their patients as tightly together as they can without causing a riot, and they will give up on figuring out what's wrong after they've determined that you're not likely to die. They won't charge more for better service, or charge less for no-frills service, so everyone gets about the same mediocre attitude from the front office. They won't figure out how to reduce the paperwork burden on their patients. They won't invest in technology unless it improves their bottom line, because they're not in the habit of advertising that they have an EHR or that you can get lab results via email.

Now, yes, there are doctors who are different. They truly care about their patients and strive to create a healthy environment in their offices. They create brochures and websites to educate prospective patients about their services. They are rare, and they also often don't take insurance... because enough people know of them and love them that they don't have to, and because they simply can't take as many patients and keep up quality, so there has to be a throttle somewhere. (This also dramatically reduces their overhead, because they don't have to hire a bevy of medical billers to keep up with all the different insurance companies' claim forms and procedures... they just send you, the patient, an invoice.)

As much as I want single-payer health care, that model doesn't really address this particular problem. It may help a bit, by dramatically simplifying medical billing infrastructure (maybe we could finally get on ICD10!), but it won't change the competition. In fact, it may worsen the situation... one of the reasons why doctors don't bother promoting their services is because everyone needs a doctor, and there really aren't enough of them. As medical students continue to choose residencies in specialties over the primary care disciplines, this is becoming a bigger choke point, and single-payer health care would increase the market for primary care without increasing the pool of doctors.

I don't have a pat solution for this one. Require doctors to schedule five-minute interviews with prospective patients? Create a standard questionnaire for all doctors to fill out, so their answers can be posted somewhere? Clearly, part of the solution is that we need more primary care doctors, and the methods to make that happen are still fairly muddy (money is a big factor). Still, this is one compelling example of why the current health care system cannot efficiently distribute services, and needs overhaul.