Links 9/10/10

Sorry for thin links. Big car accident on drive from airport, greatly increased transit time.

‘Five-minute brain scan’ for kids BBC

Health Insurer PacifiCare Faces Up To $9.9 Billion In Fines For Nearly A Million Alleged Health Care Violations Huffington Post (hat tip reader Francois T)

Obama mired in surreal US politics Edward Luce, Financial Times

What Can Goolsbee’s Early Academic Work Tell Us About the R&D Tax Credit? Mike Konczal (hat tip reader EGA)

China Posts $20 Billion Trade Surplus as U.S. Seeks Yuan Gains Bloomberg

The authority to justify fiscal austerity is lapsing billy blog

America’s public servants are now its masters Mort Zuckerman, Financial Times. More politics of hate your neighbor to shift the focus from the fact that the real rent extraction is taking place by those in the top 1% in incomes and rents. Also engages in apples and oranges comparisons. You’d expect Federal civilian workers to be better paid; the educational requirements are higher than for American workers as a whole. But he fligs what ought to be the real interpretation of the data: government workers are not making out like bandits; it’s that the private sector has gotten better and better at putting the screws on its workers.

Antidote du jour (hat tip reader Tlee):
A family living in Colorado Springs wondered why their water barrel was almost empty some days. They set up a camera and caught a bear bathing. Here is their email:

“Well, he’s back.

“Big Al came for his weekly bath again this week. He really looks like he enjoys the experience. He needs a bigger tub, we’ll think about that for next year:








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  1. DownSouth

    Mort Zuckerman said:

    For nine years in a row, they [public-sector workers] have been awarded bigger average pay and benefit increases than private-sector workers. In 2008, the average wage for 1.9m federal civilian workers was more than $79,000, against an average of about $50,000 for the nation’s 108m private-sector workers, measured in full-time equivalents. Ninety per cent of government employees receive lifetime pension benefits versus 18 per cent of private employees. Public service employees continue to gain annual salary increases; they retire earlier with instant, guaranteed benefits paid for with the taxes of those very same private-sector workers.

    This is a birds-eye view of what the world looks like through the prism of the extreme right-wing neoliberal. Workers who share in the nation’s productivity increases are condemned, as well as those who still participate in defined-benefit pensions, while management and ponzi scheme operators are judged to be doing God’s work.

    Needless to say, Zuckerman and I attend very different churches. His is the Christianity of the Romans and the European aristocrisy, and mine is the Christianity of the early Christian church.

    1. Bates

      I don’t understand your response to; ‘The authority to justify fiscal austerity is lapsing’…

      Please explain what you would do if you were suddenly placed in charge of the Fed/treasury regarding austerity/non austerity. Thank you.

    2. Svend

      1) I don’t think Zuckerman attends church.

      2) We can’t afford the compensation packages government gave to government.

    3. bob

      Exactly what would they have to pay Mr. Zuckerman to go to work for the bloated, red tape heavy politician that the idiots in america elect to fill the top spots of the bureaucracy?

      I’m guessing he would not work cheap.

    4. LeeAnne


      Having watched Mort (I ‘m sure he would prefer that we think of him as kind of a chum) often on the Sunday morning McCloughlin report TV talk show, his thinking always reminded of someone who, since he owned the news, didn’t have to know it in any depth to have an opinion.

      Thank you for putting his remarks into the proper and necessary context.

    5. craazyman

      If the govermint would hire baristas, lobby greeters and private prison guards like the private sector we could even this wage thing right out.

      Geez. Some people just have to make this sooooo complicated.

      1. Doug Terpstra

        Right. And the simplest route to the gutter of lowest common demoninator is to get rid of that pesky requirement that public sector jobs go exclusively to US citizens. Tycoon Mort is really whining to open up all public sector jobs to the H1-B visa program. Why should we coddle the imperial peasants.

        1. sgt_doom

          Exactly, which is why it is no coincidence (although plenty of coincidence theorists will complain otherwise) that Jeffrey Starr,formerly of Goldman Sachs’ Business Intel Group, has moved on to G4S (for a short time known as G4S Wackenhut), the second largest private employer in existence, the largest private security services firm, to work towards the privatization of court systems.

          As in police and any other work which has yet to be privatized.

    6. traderjoe

      Yes, the financiers and rentiers are helping to bleed our country/middle class dry. But so is the bureaucrat class. [Partly they are in bed together.]

      First, riddle me how any of this is sustainable? Illinois has $5 billion in UNPAID bills. Just isn’t paying them. California will issue IOU’s soon. Feds spend $1 in borrowed money for every $1 received in taxes.

      Take a look at the unfunded pension liabilities at the muni level. They explode in 5-10 years in parabolic moves.

      You can’t just raise taxes to solve this. I would hope that even the MMT’ers would agree that you can’t issue credit/currency at 50% over tax revenues for years on end. It would be simply inflationary re-distribution. And the first person that receives a new MMT dollar benefits more than all of those next in line.

      It has to be a grand reset. Unfortunately, I think it will only come from a crisis.

      Also, why do governments even have unions? Well, the answer is to benefit the union bosses and organizations as they skim from the top. And the politicians gain guaranteed votes.

      I wish I had a government job. My friends that do talk about how little they work, their nice job security, and plush benefits. That’s a small sample, but that sort of stability should bring lower pay than private sector work, adjusting for education.

      1. wunsacon

        >> You can’t just raise taxes to solve this

        I agree with the word “just”. Let’s raise taxes on the top 1% (progressively up to 90% taxes on the Walmart heirs’ income) and cut public workers’/contractors’ salaries/bennies. Do a little of each until we got a balanced budget.

    7. Francois T

      My reply to VoldeMort:

      “Income inequality is not evil; just, on average, a reflection of different levels of skill, effort, and incentives.”

      Yeah right! Explain to us why the US has seen an ever widening gap between the wealthy and the rest of the population while the rest of the developed world didn’t witness the same phenomenon. Are you gong to argue that the wealthy outside the US are less talented and lazier than in the US?

      The level on income inequality in the US is a direct function of politics.

      As for the gist of Mr. Zuckerman article, it is a steaming pile of grade-AAA enzyme-free bovine fazoo. Public sector workers earn more on average because 48% of them have a required college education, compared to 23% in the private sector. Mr. Zuckerman also conveniently forget to mention that the salaries of the public sector has not risen that much; it is just that the salaries (as well as pensions and benefits) in the PRIVATE sector have been mercilessly squeezed to the benefit of the executives.
      As for the public sector pensions, Mr. Zuckerman replaces data with cherry-picked anecdotes. Can he explain to his readers why Kansas has a huge public pension problem while its neighbor Nebraska is doing just peachy-dandy thank you very much?

      The short answer is deceptively simple: it’s called good management v bad management. Nebraska’s actuaries present to lawmakers a bill at the beginning of every legislative year. This bill is the amount needed to meet pension obligations at 15 year vista. BY LAW, this gets paid first, no ifs, buts and maybes. Rinse and repeat year in year out, and you’re talking surplus. Plus, they have a balanced mix of 401k AND defined benefits, managers who are evaluated on a long term basis and paid a REASONABLE compensation. Is it any wonder they don’t have troubles?

      Alas, as Mr. Zuckerman sure knows, good management is rare, be it public or private. However, and his seems to be a very widespread American neurosis, BTW) when it comes to public sector, it seems much more convenient to hit on on the head of the workers instead of kicking the derrieres of the managers.

    8. sglover

      “the average wage for 1.9m federal civilian workers was more than $79,000, against an average of about $50,000 for the nation’s 108m private-sector workers”

      It says something about 1) American innumeracy or 2) American corporate media that Zuckerman’s blatant statistical horseshit gets anything other than laughs (helps if you own the presses, I guess). I’m pretty sure that “average wages” for, say, physicians or even middle managers exceed those of, well, pretty much everybody. Plainly this apples-to-beer-steins comparison demands that we DO SOMETHING!!

  2. Ignim Brites

    What exactly is surreal about the American politics in which Obama is mired? Unemployment is high. Growth is low. Taxes are going up. The party in power is going to be clobbered. Pretty darn straightforward, steak and potatoes. What is surreal is the mentality of those who thought it would be different. That includes most of the commentariat. This is the twilight of the brights and they know it.

    1. NotTimothyGeithner

      Its only surreal because a lot of people including the author are still emotionally invested in Obama’s cult of personality and refuse to believe he’s part of the problem. Now the country faces a party completely run by nuts and a party handicapped by too many voters devoted to the glorification of a President desperate to compromise with and prove himself to the party of nuts, preventing potentially decent voices arising.

  3. Siggy

    We need to create a Big Al fan club. And lets convene a Congressional Committee so that we can present a proposal to the CBO for a Frederal Grant for the enlargement of Big Al’s Water Tub. You just gotta love nature.

  4. CingRed

    Big Al is such a cute and lovable bear. My friend was on a short hike the other day in an area not far from town. She was attacked by a similar cute and lovable bear and if her great dane had not jumped in it would probably have been curtains for her.

    I love bears, but find that people get the wrong idea about them, thinking they are nice animals. Never forget they will eat you. Admire them from a safe distance and don’t think your car or cabin will protect you. They can open them up with surprising ease.

    1. LeeAnne

      Dogs are rightfully forbidden in wooded areas where bears live; its their habitat. Dogs cause danger in those circumstances. If that had been the mama bear with cubs nearby, your friend could be dead meat right now, even if the dog made out alright.

    2. attempter

      I have little doubt the great dane started the whole thing.

      In NJ every incident of a bear “attack” involved an unleashed dog. Meanwhile I’ve encountered bears while hiking plenty of times and never had a problem.

        1. attempter

          Usually all I do is slow down and be watchful. Usually the bear is pretty far off and is moseying away because he heard me coming.

          Just once I had to take evasive action, because I first saw the bear from about 20 yards off. She ran off another 10 yards or so and turned around to look back. Then beyond her I could see a cub. So I figured her stop-and-look-back was where she was drawing a line, that I shouldn’t come any closer.

          I was happy to oblige, and veered off slowly in another direction.

  5. MyLessThanPrimeBeef

    Are the rich those earning in the top 1/2%, 1% or top 2%?

    That tax on the rich is based on earnings over $250K, but in some expensive states around the country, that’s just upper middle class.

    Those making over $1 million, $5 million or $10 million are happy that being rich is thought of as making over $250K. It means shifting some of proposed tax revenue to someone else, in this case, upper middle class.

    If they really want to go after the rich, make the rates 70%, 80% or 90% on earnings over $5, $10 or $15 million.

    1. MyLessThanPrimeBeef

      By the way, interest income below $25K, or some such threshold, should be tax free. A lot of retirees live on those from money they accumulated while working. We are not talking about some greedy captialists here. These retirees are not spending these days because they have nothing to spend due to the zero interest rate policy.

    2. aet

      And make no distinction between income generated as “capital gains” and income earned.
      Dividends also to be taxed as income – that’ll nail some of the bigger guys not paying in proportion to their wealth.

    3. Benton D Struckcheon

      I really hate it when people say this.
      It’s – read this very slowly – two hundred and fifty thousand dollars of – ready for this??????

      ——net, taxable, income———-

      You have to be making well over 250k before even one dollar of what you make will be taxed at even one bp more, if the Prez’s proposed solution to this Dubya-created mess goes through.

  6. Mr.Sparkle

    Ever have one of those moments where a thought pops into your head and you bang it on your desk 2 seconds later because it’s so painfully obvious you should have thought of it about 5 years earlier?

    One of the arguments against progressive tax rates is that it disincentivizes (sp?) a person to collect that income.

    Perhaps instead of arguing that it doesn’t, we should be arguing that it is in fact, JUST FINE, if this occurs. It might even be part of the problem if management knows full well it’s going to keep 75% of the money it grants itself in bonuses. Taxing those ridiculous incomes at 90% might in just result in higher dividends or gasp… higher salaries for rank & file. Even in a scenario where a CEO recommends a buy-back strategy to inflate his stock option value will still have to pay on those capital gains.

    While the net in taxes collected might be less, it could still result in a social good.

    1. aet

      A buck is a buck is a buck.
      Tax all income and capital gains at the same marginal rate.
      That’ll stop useless deals structured solely to avoid tax, or to convert income into cap gains to reduce taxes.
      And it should lead to lower overall marginal rates of taxation.

  7. Nately


    I have to just say that you are being very politically-driven here, not objective. It’s not across the board, but there are many places where public employee unions have abused the system to win wildly above market-rate compensation and early retirement packages. Please study the case of California objectively. There are places where you will find a great deal of abuse, everywhere from CCPOA’s antics to CALPERS under-funding.

    Are we really so politically right/left mind-f*cked to believe that public unions can’t corrupt the system for compensation *AND* that the 1% Rentier class is ALSO highly abusive and subsidized. Please — prey tell — why are both thoughts not allowed to go together? Calling this out is no more “HATE YOUR NEIGHBOR” than criticizing the banking/rentier overlord class is “hating anybody” (the class warfare meme that the right tries propagate). Are we really this stupid now — that we have effectively been FOX-MSNBC bifurcated as an electorate. Zuckerman’s article was overly simplistic no doubt, but disappointed in your commentary note on the article.

    By the way, I was just watching Mort on Bloomberg TV — most of his comments were pretty measured. He was in favor of the stimulus as idea (an even bigger package that ARRA), but not the giant political pork pie that resulted in actuality. He also actually said he favored higher rates on $250K+ earners — basically going back to the Clinton regime. He did not seem like a hair on fire neoliberal at all, at least in this particular interview.

    1. liberal

      Are we really so politically right/left mind-f*cked to believe that public unions can’t corrupt the system for compensation *AND* that the 1% Rentier class is ALSO highly abusive and subsidized.

      Point is that public unions are stealing two orders of magnitude less than the rentiers. And I say this as someone who thinks the local police union (if not the police themselves) is corrupt.

      1. Nately

        The thing is this — keep in mind the gross numbers of employees/recipients we are talking about here.

        The orders of magnitude change a lot of when you have an aggregate hundreds of thousands of employees being potentially overpaid and over-pensioned vs. a few thousand or even a few tens of thousands of gov’t-backed financial engineers/rentiers. Even a fairly conservative estimate puts the public current FV employee pension gap at $1 trillion — some are as high as $3 trillion. Although, of course, those numbers are bandied about through a political lens as well.

        Entitlement and favoritism — whether it’s bankers or prison guards — is wrong. One wrong does NOT the make the other right…….

        What happens as the non-favored classes (the non-elite private sector works and non-public sector employees) gets relatively poorer and poorer (even though they are the ultimate sources of the trough for the financial elite and public employees?). Not good things.

        1. Yves Smith Post author

          You need to get a grip on your math, and how overpaid the financial services sector is generally. Start with Simon Johnson’s The Quiet Coup. And read Piketty and Saez on the increased concentration of wealth and income in the top 1%

          And you ignore, per Francois T, that the public sector has a vastly higher proportion of jobs that require a college degree than the private sector.

    2. prostratedragon

      I saw Zuckerman on Bloomberg as I passed through somehere, and found myself wondering why a publisher of large-circulation news dailies and weeklies needed to go on the air to further disseminate his opinions.

  8. Ina Deaver

    That bear is killing me – apparently, he thinks he has his own baby pool. Sweet.

    The brain scan mentioned in the article doesn’t seem to have a whole lot of test subjects behind it yet – but sounds like it will be promising when it does. What I find interesting is that, at present, “autism” is a functional diagnosis that reflects a series of similar deficits of unknown origin. That is, the DSM defines autism as a series of failures to interact with one’s environment in prescribed ways. Those are observable phenomenon, but they could stem from a very wide range of actual neurological differences or defects that might produce similar difficulties with language and social/sensory interactions.

    If they spend a lot of time mapping the connections in the brains of people with “autism,” they may be able to learn more about the different TYPES of autism that we see anecdotally. I’ve come to believe that differentiating the different conditions that lead to similar deficits diagnosed under the umbrella term “autism” is the only way to make progress on the causes of autism and help people build their brains in ways that minimize the stress they experience.

    1. leroguetradeur

      I think that autism is a political condition.

      That is, its a variety of humanity, maybe not altogether comfortable, more often found in males than females, which is not an illness, just a way of being, and associated with different strengths and weaknesses and abilities from, say, being a jock, which is also not an illness. Though it very often looks like one to the autistic.

      What we need to do is stop medicalizing these conditions, and just accept that human nature is more varied than we might like. I think quite a lot of this comes from the feminization of Western culture, in which no news story is ever delivered without someone asking with grave sympathy how that made someone feel, as if for goodness sake that is all we cared about. When at least some of us, probably autistic, would like to know what how the subjects felt, but what the hell happened!

      On the other story about the wickedness of the UK Chancellor George Osborne, get with the facts those guys have to face. They have 20% of households with no paid work going on in them at all. Not for lack of jobs, because people will not take them. Go to any agricultural district of England and you will find harvest being done by Poles and Lithuanians, and the English on welfare rolls. They will not take those jobs, and neither would you if you could sign on for indefinite welfare in preference.

      So what exactly does billyblog think they should do? Get the number up to 25%? 40%? Surely there is no reason why so many people should be simply refusing to work, and getting supported?

      1. Francois T

        I’ll be brief cause I don’t have the time to refute your argument.

        Let’s just say that if autism is a political condition, then, diabetes was brought to Earth by the Holy Spirit who got mad at the Clue Fairy.

      2. anon


        To Ina :
        I’ve come to believe that differentiating the different conditions that lead to similar deficits diagnosed under the umbrella term “autism” is the only way to make progress on the causes of autism and help people build their brains in ways that minimize the stress they experience.

        I agree that defining autism more finely is critical,but to suggest their brains can be rebuilt to mininimize their stress , indicates you really don’t have a clue and should contemplate something else.

        I hope you meant that if the non autistic can understand the autistic brain then we both benefit. We could then reduce our stress and theirs. The fact is they cannot reduce their own stress. And that’s the horror to those that care for them.

        And to leroguetrader, Are you breathing? the Jews/Gays/gypsys were political conditions.

        1. leroguetradeur

          What we currently call autism is a broad spectrum of stuff, most of which is simply ordinary behaviour some of us do not like. This behavior is not found in well adjusted jocks and cheerleaders or the ’emotionally intelligent’, and therefore we do not approve of it. It occurs most often in males who have difficulty relating to ladies, so we do not approve of it. It is also sometimes found associated with outstanding but restricted abilities, and so we do not approve of it.

          It is not a useful term, neither is Aspergers. There are conditions of genuinely serious sorts, which will make the bearer’s life a misery. There’s very little of this, there is much more being classified as autism that we just find maladjusted.

          Attention deficit disorder is another of these. Put some bright energetic kid in a school where the main aim is to make everyone learn at the same snail’s pace the same utterly boring stuff, and you will get behaviour which you then classify as social maladjustment or such.

          Thank God, when I was a kid, the teacher in the local tiny school who was taking the class through some idiotic children’s book one page a day just quietly took me aside early on and said, bring a book and read what you want, this is not for you. There but for him came my own personal hyperactive attention deficit disorder moment, picking up some dumbed down piece of crap and throwing it through the window screaming!

          1. Debra

            Good job, lerogue. YOU have been thinking… (I think)
            In the late nineteenth century Sigmund Freud is reported to have said, on a boat sailing into New York, “they don’t know that we are bringing them the plague”.
            The U.S. of A. fought back really hard against the humanizing influence of psychoanalysis, but American shrinks ended up doing what (almost) everybody does when confronted by an idea that makes them uncomfortable… they perverted it, and stuck their OWN ideological sauce on it to make it palatable for the U.S. population.
            A quick survey of history shows that we have coined INNUMERABLE words to talk about the.. soul ? mind ? brain ? etc, you get my point, and that these days our never flagging BELIEF in progress allows us to continue telling ourselves cute stories about how well WE are doing to put a DEFINITIVE END to human suffering of all sorts.
            A quick read through of how the word “schizophrenia” came about, and the knowledge that the word means so many different things to so many people now that it is technically USELESS, should interest you..
            Personally, as a former shrink, I jump up and down and wave my arms at the idea of implementing “scientific” protocols like this one. Like.. being lead down the primrose path to “Brave New World”…
            Some of the people here who are so incensed about Big Pharma’s profits don’t get particularly disturbed about the ideological construct that allows Big Pharma to MAKE those profits. Bad deal, I say. Not smart.

  9. Glen

    Mort’s such a grand distraction. If anything, the mere fact that government jobs now look good is because everybody else has been massively screwed.

    Thirty years ago government jobs were low pay but the security and the benefits were suppose to make up for it. Private jobs paid better and most even had better benefits too.

    Well, we’ve managed to flatline pay for private workers so now it’s time to go after those “overpaid” non-productive government jobs. But never, ever talk about what private “productivity improvements” would look like if we figured in the huge cost of bailing out so called “productive” private enterprise companies:

    It isn’t excessive government spending that’s breaking us, it’s that crony capitalism “I’m doing God’s work” monkey on everybody’s back.

  10. Sundog

    This via Bruce Stirling (@bruces) who comments, “Startling to see the dinosaurish FORBES waxing so #atemporal”

    Not to get too metaphysical about it, the world has changed but we haven’t produced a unified field theory, a new ideology, to encompass the changes. We had Socialism, we had untramelled free markets, we had Keynesian macro-economics, we had open borders, we had multi-culturalism, we had post-9/11 shopping, we had internet Valhalla and we had globalization – inter alia. Nothing has worked. The process left behind little core groups of true believers who keep thinking, “if we just get back to,,,” That insular, pre-lapsarian urge, by the way, explains the ‘wincing’ effect mentioned above, in which the onlooker twitches with horror and thinks “whoa, what decade are they living in?” Take a look at Wall Street. Do you feel that it has taken a giant leap forward? What about Congress?

    The world has grown infinitely more complex than is dreamt of in our philosophy. There are still people, in this and other journals, fixating on more or less regulation, taxation, productivity and consumer confidence. How many of them foresaw the collapse of financial markets? No. Enough with the exhausted nostrums.

    Melik Kaylan, “What Decade Are They Living In?”

  11. Sundog

    Having paid some attention during to Iraq, Afghanistan, Pakistan and Mexico, upon finishing Sorkin’s “To Big To Fail” I turn to John Robb.

    The REAL market-state, the form of governance that that has truly embraced the global market system, is hollow. In effect, a state that doesn’t place any barriers between itself and the global marketplace. As a result, the only real opportunities created by the emergence of the market-state are opportunities to steal extreme wealth.


    1. Sundog

      For those unfamiliar with John Robb’s thinking, check his take on one person waging war against a billion or so of his fellows.

      The “Koran Burning” event is a interesting example of some global guerrilla themes.

      An unexpected global event occurs. What caused it? The event was produced by an individual, relatively powerless by traditional standards. However, since this is the 21st Century, this individual is able to use unfettered access to a global super-network to leverage and amplify his actions. The event he creates disrupts established global social networks and puts them into turmoil. That turmoil creates the opportunity and sustenance needed to activate dozens of small subnetworks/groups. As these groups interact, a new dynamic is formed.

      John Robb, “Koran Burning”

  12. Elliot

    Maybe we can run Al for president. He knows what’s important in life, and his schedule would appeal to the religious.

    One of Al’s cousins used to bathe similarly, tho’ daily, on my Mom’s pool cover… and I’ve chased one out of my yard (had foolishly used kelp meal in some pots and left them outside the fence overnight…….he unpotted them all… I repotted, and had most of them (over 200) moved when he came back)–I just lost it and ran hollering at him, waving my arms, and he booked! As he ran thru yard I saw he was an adult, not a juvenile as Al here is. Not my brightest move, a 115# unarmed woman vs those claws…but I was really peeved.

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