This was one of my favorites of the year.

Related posts:

1. TED Talk: Chris Abani
2. My Favorite TED Talks of 2009

I don’t know exactly what Cameron said because I can’t find a public video archive. This Guardian account indicates that he mostly hung platitudes on the scaffolding of giving people more choice and transparency.  Choice is a big part of small government, but I thought it would be worth outlining what I think is the non-politician’s version of the libertarian small government ideology. It’s far from ivory tower.  More like back alley.

It’s based on two observations: (1) local knowledge is important to good decision making and (2) concentration of power leads to abuses. I think few  students of  political history and organizational behavior would argue against these points, so I won’t detail them here.  However, if anyone honestly thinks they are in doubt, I’d be happy to cover them in a subsequent post.

So, any time society assigns a role to government, it incurs the costs of (1) and (2).  These costs tend to increase over time and as a situation departs from the ideal future path. So the expected net present value of these costs can be substantial. Libertarians therefore conclude that  the benefits that the government brings to a role should, as a general rule, be quite large before we even consider it as an option. Notice that this does not imply no government at all. Rather, it implies we should use government sparingly.

The repeated pattern observed by libertarians goes like this. A problem arises. Everyone (even libertarians) agree that it is problem. Progressives push through a government program to address it. Initially, the program somewhat ameliorates the problem. However, the problem turns out to be trickier than first believed, so the benefits are usually not as great as expected. Over time, the problem evolves and adapts, further eroding program benefits. The government program evolves and adapts too, but more to promulgate its own survival than address the problem.

So we are left with much lower benefits than forecast and significant unforeseen costs (in the form of an everliving, mostly useless program). Libertarians conclude that in many cases the “cure” is worse than the disease.  Not that it doesn’t suck having the disease. The irony of course is that the progressives then identify the results of an old government program as a new problem that requires… another government program (cough, cough, government intervention in financial markets, cough, cough).

Of course, some illnesses are actually bad enough that the (painful) cure is better than the disease.  In those cases, bring on the government program. But let’s be realistic about the long term benefits and costs.

Related posts:

1. Financial Crisis Act I: Government Meddling
2. U.S. Government is Open for Questions
3. Switching Government Service Providers

Now we find out that some of the more sensational claims about potential consequences contained in the IPCC AR4 report are not actually backed up by peer-reviewed research. Instead, they come from assertions made by advocacy groups such as the WWF and Greenpeace. Then there’s the dependence on anecdotal newspaper and magazine reports.  Oh, and an amusing reference to a boot cleaning manual from an Antarctic tour operator.

It all started with the infamous, “Himalayan glaciers will be gone by 2035,” claim, which was substantiated solely by a WWF report. Not cool because IPCC rules state they should only reference peer-reviewed research from respectable journals.

Things get worse.  Bear with me here.  The story is a bit involved, but it reveals how feckless the guys at the top of the AGW food chain can be. India’s environmental minister tried to call BS by referring to, you know, actual measurements of glacial retreat.  But the chairman of the IPCC called this “voodo science.” Of course, the scientist who lead the development of that section of IPCC AR4, eventually admitted that the claim about glaciers disappearing by 2035 was not supported by peer-reviewed research. And it turns out that the chairman of the IPCC was actually informed about the problem months earlier.

Now for the cherry on top of this crap sundae. The chairman of the IPCC runs an institute that received a ton of money based on… wait for it… the claim that Himalayan glaciers would be gone by 2035.

I realize that people want to defer to the leading scientists in an area.  It’s perfectly rational. In fact it was what I did before I started looking into AGW myself.  But there should be some evidence that will cause you to update this position. I think we’ve reached that point.

Related posts:

1. Will The Real AGW Skeptic Please Stand Up?
2. Why You Should Be A Skeptic
3. Peer-Review vs. Info Prizes and Markets

The table below shows the salient aspects of each plan.  To compare apples to apples, I had to estimate the 2010 premiums for the previous plan. I used a 9% increase over 2009, which is what a PricewaterhouseCoopers survey says will be the average for employer sponsored plans. Note that this is less than the 10.8% actual increase my company saw from 2008 to 2009 on this plan.

We see something very interesting here. The annual premium on the new plan is $9,833 less than the estimated annual premium on the old plan. Now, we all get checkups each year.  Also, my wife and son have monthly medications they take for allergies.  Adding in the copays for those yields extra $500 on the old plan, pushing us to $10,333 more guaranteed expenditures on the old plan than the new plan. Obviously, this excess is more than the new plan’s deductible.

So there’s no way I can loose on the new plan.  If we stay healthy, I get to pocket $10,333 minus the cost of routine visits and medications.  If something bad happens and someone has a major medical issue, I save at least $8,333 due to the deductible and coinsurance on the old plan. Probably much more due to co-pays for additional office visits and prescriptions, which are not limited by the out-of-pocket maximum.  I actually ran the scenarios and there’s no way I don’t save at least $5,000 per year.

Moreover, the new plan is much better at insuring against catastrophic loss.  The lifetime maximum is 2.5 times as high.  That’s a real selling point for me. I don’t want the plug pulled on my ventilator because my insurance ran out.

How can this be? Why do we even have PPO plans? You may think the tax deductibility of employer-paid premiums is the reason.  But this doesn’t explain why employees wouldn’t choose an employer-sponsored version of the high deductible plan. Those are paid with the same pre-tax dollars.  (It also doesn’t affect me because I’m technically self-employed and deduct my premiums anyway). It certainly explains why the CEO of Whole Foods is absolutely right to offer his employee’s a high deductible plus HSA plan.  It saves everyone money. The math speaks for itself.

The only explanation that makes sense is that people want to spend more on health care when it doesn’t come out of their own pockets. A combination of moral hazard and mental accounting. On the moral hazard front, they go to the doctor more often than they otherwise would because the marginal cost to them is so low. On the mental accounting front, the automatic monthly deduction from their pay is less painful than personally writing checks to pay doctors. But it’s irrational.

Perhaps some marketing wizards should figure out how to pitch high-deductible plus HSA plans in a way that the average person would find attractive.  How about an infomercial that promises to save you thousands of dollars every year with a proven system and throws in a set of handy dandy steak knives if you act now?

Related posts:

1. Quest for Insurance Part I: The Search
2. Fixing Health Care I: The Uninsured
3. Fixing Health Care III: Hospitals

1. “It is not the case that the largest banks are the same as other banks, just bigger“
2. “The largest banks are different is that they have something close to monopoly power”
3. “They are not open to outside competition because there are huge barriers to entry”
4. “They promote a noncompetitive industrial organization… by, among other things, creating informational asymmetries.  The innovative products they promote — both derivatives and consumer products — give them an informational edge over their customers. The trading operations they run do the same.”
5. “So if we want to curb the risk taking, too-big-to-fail conflicts, opacity, and the creation of informational asymmetries and complexity, we need to move them down to the scope and scale of the smaller banks. We need to break them up.”

 I hope Rick has a way of converting his personal views into those of the SEC and its staff.  It may have been catastrophic to let the banks fail in the midst of a panic (fall of 2008 – early 2009), because wealth destruction through leverage could have brought the whole fiat money system to a halt.  But if we have learned anything from this crisis, it is that we need to break up JPM and BOA sooner rather than later. 

 Let’s not stop with banks though.  We can extend the information asymmetry analogy to politics.  Profit/money/wealth that was accumulated in the past always tries to control the future by creating barriers to entry (information asymmetry).  It may be as indirect as placing former industry experts on boards of the FDA, RIAA, and don’t forget the Fed.  It all boils down to the battle for copyright of ideas.  It may seem like it has to do with music, but that’s just where the battle front is for now.  Music and culture always build (remix) the past music and culture.  If we are allowed to recursively rearrange Shakespeare’s ideas into books, plays, and movies, then there’s something to be said for balance of the ability to create and copy in all facets of life. 

I am of the opinion that the relatively recent boom in emerging countries has a lot to do with a phase shift in the ability to rip-off ideas.  Last I checked we sometimes call that learning.  Of course the standard counterargument is that one needs incentives to be creative and productive.  No one is denying that, but only to a degree.  The only argument I have is that IF the ability to copy an idea has become cheaper, then the copyright needs to shrink proportionately (but not exceeding the ability to create), whether we’re talking about cultures, ideas, wants or needs.  But scaricity is a very squishy concept.

If I invent the HIV vaccine, how much should I get paid?  How long should my copyright/patent last?  There is not enough information to answer these questions, because you first have to define what economic and political system I exist in as well as the cumulative benefits from an HIV cure and how much R&D is required.  The current state of the US system is moving towards that that of privatized gains and socialized losses.  You tell me what emerges from that!  France, Russia, China, Brazil all benefit from globalization by getting access to good ideas without having to invest as much in R&D.  That is the ecosystem that we exist in.  IF all the countries were one, what would the optimal (most balanced) system be?

But how do we quantify the value of removing scarcity (in this example – the abudnance of HIV)?  What if instead of fighting HIV, I choose to fight computer viruses and to create scarcity, I go out and hire people to create viruses for me to fight or at the very least prevent extermination of virus creators.  The RIP: Remix Manifesto refers to this as “Culture Jamming”.   Scarcity can be created artificially.  Yes, Beatles have a legendary standing.  So do the Rolling Stones, U2, and even Brittany at the very least if we look at their earnings.  They have all built empires remixing older music.  You tell me how much a musician ought to make.  If we can’t figure out music, we won’t make any progress with more important patents.

The whole movie is revolutionary, but these parts are critical:
RIP: Remix Manifesto – Part 7
RIP: Remix Manifesto – Part 9

If you want to jump ahead and become the teacher instead of the student, this is where the peanut butter to my current culture jam is:
The Incommensurability of Scientific Theories

Related posts:

1. Balance the past with Zeitgeist
2. Gene-culture Co-evolution
3. Last.fm Meet Research Networks

I started by going to eHealthInsurance and hitting up the big three companies: Aetna, Anthem (BlueShield/BlueCross), and HealthNet. My first disappointment came when I discovered that there is no universal application. You have to type in roughly the same information in substantially different formats for each company. What value exactly is eHealthInsurance adding here?

My second disappointment came when they all rejected the applications for different reasons. There are four people in our family. One of them was rejected by two companies, two of them were rejected by one company, one of them was not rejected at all. The reasons were allergy shots, acne, possible acne, and being underweight. The first two are minor ongoing issues.  Considering we were applying for $10K deductible plans with no office visit or prescription coverage, it’s hard to see what the problem is. The second one was unconfirmed by the first doctor, totally minor, and subsequently excluded by a second doctor. The last one is the only one that should have been of any concerned and a check with that person’s doctor would have eliminated the concern.

My working hypothesis is that these companies don’t actually want to offer individual health coverage. For regulatory or political reasons, they have to appear to offer such coverage. But unless an individual is so low risk as to be obscenely profitable, why go to the effort? It’s so much easier to focus on selling group coverage to employers.  This is a side effect of the tax deductibility of premiums for most companies but not most individuals.

Luckily, there are niche providers that pursue opportunities that are not attractive to the largest players. One of them is Assurant Health. After filling out the online application at their Web site, I received a call from their underwriting department within two days. They wanted to review the medical records for the two family members receiving allergy shots to make sure these were not indicative of larger issues. No problem, we had signed a release and I had no objection to paying a premium based on actual risk.

Now, the story takes a funny turn. Apparently, HIPAA has made doctors so paranoid about penalties for breaching patient privacy, that they don’t want to give out your medical records to anyone. Despite the general release we signed, two medical clinics wanted us to sign special releases. It took a month to actually get these special releases so we could sign them. Even then, one of the clinics also required us to call them on the phone and give them verbal permission as well. Government intervention strikes again! If the government had clearly specified the mechanism for releasing medical records, there wouldn’t have been a problem. Even better, if the government hadn’t distorted the market for insurance toward employer-sponsored coverage, this transaction would be so routine that the free market would have solved the problem

The story has a happy ending.  In Part II, I will analyze the excellent coverage we got from Assurant in the context of my previous recommendations.

Related posts:

1. Quest for Insurance Part II: The Coverage
2. Fixing Health Care II: Doctor’s Visits
3. Fixing Health Care I: The Uninsured

Kafka gave us The Metamorphosis.  We have the power to realize our own humility.  Being wrong is irrelevant if you learn from your mistakes and prevent systemic risk from such errors.  How can we be so content with our wisdom if we continually ignore this vital lesson.  As Wikipedia suggests, some people mistakenly dismiss The Zeitgeist Movement of being similar to Socialism, which could not be more wrong.  Emergent systems are the building block of The Zeitgest Movement, while socialism tends to ignore incentives between the group and the individual.  Most “losers” of history tend to argue that their system of beliefs wasn’t implemented correctly.  But they are right!  Thomas Sowell suggests that WHO is making the decision is the most important aspect of any system.  I urge you to skim this excellent summary of the book.

Zeitgest Movement is a school of thought that grounds itself in its humility and focuses on learning and technology to achieve a kind of Truthocracy I’ve been posting about.  The Zeitgesters are working to create a system for continual improvement where the incentives of the individual are aligned with those of the group.  Where the decision maker is in a continual iterative effort to harvest every drop of wisdom from the group prior to making the decision.  Let’s not be naive though – we have to be honest and humble in this pursuit and continually strive to improve the knowledge gathering algorithms.  We must also beware of students bluffing their way to teaching.

“The Internet was not the first technology to disrupt a few business models. From the printing press to the player piano, one generation is always calling the next a pirate”.  The aim of copyright law was to aid in learning by BALANCING the rights of the authors and readers (teachers and students).    Balance between the copyright and copyleft is the key.  Removing the obstacles for a balanced use of the rational and creative sides of the brain is the trick to achieving flow:
“Alice Flaherty argues that creativity is due to a balance of frontal and temporal lobe activity. In other words the trick is not, in fact, to get out of your “left brain” and into your right, but to increase activity in the right hemisphere (or reduce activity in the left) so it matches the activity on the other side.” Source

Awareness  vs “Bewareness” is the eternal and internal battle of the present imagination and past “experience”.  Our goal then must be to reduce obstacles to balance to create flow in all systems.

Rafe was here more than 2 years ago:
“- Cooperators and defectors co-exist
- “Cooperators survive in clusters”
- “Cooperators can invade defectors when starting from a small cluster”
- One interesting dynamic occurs when two self-sustaining “walker” sub-populations collide into a “big bang” of cooperation which largely takes over the population.”"

So it is very reasonable that I would have never learned this or learned it years from now if i didn’t start Googling my hypotheses.  Ultimately the resource focus of Zeitgest will revolve around the speed of learning, which resides within you – your own willingness to learn, teach, and stay humble.

Please watch the Zeitgeist Addendum, and RIP: Remix Manifesto

Then facebook and twitter it (buy a copyleft t-shirt to spread the word and create more balance).  You can’t have big bang without them.

Related posts:

1. Notes from TED
2. Decision Education Foundation
3. Peanut Butter and “Culture Jamming” Sandwich

Second, the email correspondence is pretty damning. It won’t affect my position much because I was already fairly sure these types of shenanigans were going on. But if you put your faith in the “consensus”, you should consider updating your position. There are numerous instances of three types of egregious behavior from senior scientists:

• Coordinated efforts to portray all results as supporting the conclusion that anthropogenic global warming (AGW) is a serious threat. Such efforts included the spinning of results, application of statistical “tricks”, and selective use of data.
• Coordinated efforts to suppress professional dissent. Such efforts included going after editors of journals that published articles supporting a skeptical view and lobbying university administrations to pressure researches who didn’t toe the line.
• Coordinated efforts to evade Freedom of Information Act requests and destroy data that might support the skeptical position if disclosed.

By themselves, these actions should be alarming because they obfuscate the real answer to the question of how serious a threat AGW presents .

But the real take home point is the tone of many emails. These are leading scientists in the field. Yet they clearly hold bitter contempt for colleagues who don’t agree with them. This isn’t business.  This is personal.  To paraphrase, Robin Hanson, climate science isn’t about the science of climate. It’s about social status. The AGW proponents see themselves as an “in group” and AGW skeptics as an “out group”. They are more concerned about destroying the out group than actually figuring out what’s going on with the climate.

Given this attitude, it’s hard to have any confidence that we’ll get a rational, scientific answer any time in the near future.

Related posts:

1. Even More Reason to Be a Skeptic
2. Will The Real AGW Skeptic Please Stand Up?
3. Climate Change and Human Nature

Michael Martin of Broken Symmetry with two incredibly insightful posts on Soros’ theory of reflexivity, distinction between social and physical sciences, and the ability of markets to regulate us as well as themselves.

1. “Are markets flawed? Or is it competition?“.  Martin’s response to Soros’ criticism of markets’ ability to self-regulate:
“Individuals spontaneously order into firms. What benefit is there to such integration if markets put less constraints on the same individuals? The function of markets is to synchronize buyers and sellers who cannot otherwise integrate their needs within a firm. Soros has it exactly backwards. It’s not that markets are suitable only for individual choices; it’s that individual choices are suitable only for markets.

In this context, Soros would do well to consider some of the New Institutional Economics and Organizational Theory literature, which provides theory on how and when institutional culture develops. I don’t disagree with his point that institutional rules are needed. Just his point that government institutions are necessary or sufficient to meet those needs.”

 The optimist in me believes that “artifical inteligence” akin to google type algorithms could be created to simulate our political choices/decisions to help squeeze out the middleman of politician and create a market/forum of political ideas.  Change.org is a start.  Does anyone know of any other examples?

2. “Reflexivity Goes Deeper than Soros Himself Seems to Realize“:
“The cycle is manifest in the activities of people. The mathematical world is revealed, step by step, through consensus among living and dead mathematicians. The mental world represents the model everybody has, including mathematicians, of what exists. Both of these are embedded in a physical world along with a Noah’s ark of other animals and a Garden of Eden of other living things.

We exercise control over our existence by formulating theories about what exists. There are plenty of things that exist that no person imagined to exist until a theory was developed that permitted for experiments, which in turn were consistent with other experiments, and so on. Nobody doubts anymore that we are made of atoms, quarks, and leptons. Yet none of us has seen any of these things. And if we were to stop looking for them, there is no doubt in my mind that we would eventually forget about them — leaving their existence as ghostly as it was a hundred years ago.

There is no dichotomy between social and natural science. Rather, social science should embrace these constraints that have been on all science for as long as we’ve been doing experiments.”

Related posts:

1. Peer-Review vs. Info Prizes and Markets
2. Stray Thought About the Singularity
3. Hive Mindstein

What if you wanted to start your own sovereign nation in a tucked away corner of earth somewhere?  Problem is, every piece of land more than a few feet above sea level is already claimed by governments, private individuals or commercial interests.  Enter, the high seas.  Turns out there’s nothing stopping you from going out to international waters, building a platform, giant boat or floating something-or-other and starting over with government, completely from first principles.  Patri and Seastesd.org are committed to helping you do just that.  And before you go assuming that the best form for your utopian flotilla must be some form of democracy (social or otherwise), consider all the unsolvable problems that face even your very favorite “government service provider” today.

So with that in mind, I’ve invented a new form of government that I’m putting in the public domain for any would-be seasteaders, guerilla factions or velvet revolutionaries to use as they see fit.  Don’t thank me now, just send postcards from time to time.

•

Valuestan

“Having a nice life… Wish you were here!”

•

Principle 1: Values First

• Rather than assert that there are such things as Inalienable Rights (or even Rights at all), recognize that there exist a set of  Shared Values which can be explicitly stated.  It is the Shared Value Statement (SVS) around which the State is organized.
• To be a Citizen you must uphold and abide by the SVS.  You may renounce Citizenship at any time.
• The SVS may be amended (process TBD by founders; process subject to amendment by Citizens).  It is understood that any amendment is likely to turn some Citizens into non-Citizens.
• Any non-Citizen who is visiting or residing in the State is to be treated — and act — AS IF they were a Citizen.

Example values: Empathy; Discipline; Group Harmony; Consensus; Individualism; Personal Freedom; Happiness; Respect; Gratitude; Absolute Truth; Relative Truth; Parsimony; Efficiency; Sustainability; Education; Personal Improvement; Democracy; Meritocracy; Marketocracy; Autocracy; Theocracy; Ends Before Means; Means Before Ends; Aesthetic Beauty; Entertainment; ad infinitum.

It’s clear that Values are soft, not hard like Rights.  And that any particular set of Values will, to a greater or lesser extent, conflict.  The SVS is an unordered finite set.  Relative significance of Values is unspecified by the SVS and can only be known by inference from practical implementation via Principles 2 and 3.

It is up to the Citizenship to determine what values belong in their SVS.  Some sets of values will be inherently more stable than others, and some are simply not viable.  But it is a category error to suggest that some SVSs or states are more moral than others.  Morality is internal to the State and relative to Shared Values.

. . .

Principle 2: Positive Incentives Before Laws

• Where possible, formal positive incentives (economic, social and otherwise) will be used to shape individual action.
• Where such incentives are impractical or undesirable, formal laws may be created.
• Laws trump incentives and should be used sparingly.
• The entire set of formal incentives and laws (i.e. the Formal Code) is meant to embody and prioritize the SVS.

How the FC is arrived at, amended and implemented will vary from state to state, and is to be in accordance with the SVS.  If Democracy is part of the SVS you would presume to see some form of voting mechanism.  If Democracy is not on the SVS but Consensus is, you might expect the FC to be determined by a jury-like process.  And so on.

. . .

Principle 3: Practical Wisdom

It is recognized that Principles 1 and 2 are not enough by themselves to create a good society.  To wit: our loss of moral wisdom.

Therefore, it is the Responsibility…

• …of each Citizen to be a moral exemplar always and embody practical wisdom
• …of the State to celebrate moral heroes and create a culture of moral action

. . .

Principle 4: Non-Human Agents

It is recognized by the State that there are non-human agents that exist in the world, some of which exist in the State, and that they do not necessarily have the same motivations or moral capacity as humans.

Examples of non-human agents include: corporations, governments (the State, other sovereign states, local governmental bodies within the State), military systems, market systems, exogenous non-state actors (e.g. terrorist groups), religions, cults, sociotechnical complexes (e.g. military-industrial complex, academia-medical-regulatory complex, DDoS attacks, crowdsources), technological agents (e.g. software viruses, robots).  New forms of non-human actors are emerging at an accelerating rate, and are largely unpredictable.  So-called “artificial intelligences” are of particular interest and concern.

Non-human agents are good at responding to incentives, but not good at responding to laws or moral intuition.  The proper treatment of non-human agents — including and especially the State itself — is recognized as important, especially as it pertains to the legal system.

The treatment of non-human agents as Citizens in Fact may be a threat to a good society.  For instance:

• Should Corporations be treated as Persons (as they are in the U.S. legal system for many purposes) ?
• Should the State or local governments be party to lawsuits?
• Should there be a para-governmental system designed to protect humans inside the State? the State itself? the SVS? humans not in the State?  humanity as a whole?
• What should be done about non-human agents which threaten the State from (at least partially) inside (e.g. military-industrial complex) ?

. . .

Related posts:

1. Financial Crisis Act I: Government Meddling
2. Notes from TED
3. Crowdsourcing Election Verification