November 2012 – artdiamondblog.com

DaVita Threw Out Medicine and Billed Taxpayer: Huge Medicare Fraud

I saw this clip broadcast on Wolf Blitzer’s “Situation Room” broadcast on 11/29/12 (if memory serves–it might have been the day before).
The clip shows the magnitude of the fraud, but also emphasizes that there were significant incentives for those who knew about the fraud to keep their mouths shut.
This is one huge case of over-billing, but over-billing happens all the time. Taxpayers could have used that money for other purposes. The opportunity cost is huge.

A link to the clip posted on CNN, is:
http://ac360.blogs.cnn.com/2012/11/29/company-accused-of-giant-medicare-fraud/?iref=allsearch
(Note: I believe the November 29, 2012 date in the image above is the date that Drew Griffin posted the clip to the CNN blog, not necessarily the date of the broadcast.)

Personal DNA Data, Smart Phones, and the Social Network Can Democratize Medicine

(p. 236) With the personal montage of your DNA, your cell phone, your social network—aggregated with your lifelong health information and physiological and anatomic data—you are positioned to reboot the future of medicine. Who could possibly be more interested and more vested in your data? For the first time, the medical world is getting democratized. Think of the priests before the Gutenberg printing press. Now, nearly six hundred years later, think of physicians and the creative destruction of medicine.

Source:
Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.

Rajan Hired to Open India to Entrepreneurship

“Raghuram G. Rajan criticized Indian policy makers during a speech in April at the Indian School of Business. In August, the Indian government offered him a job.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B3) NEW DELHI — In April, the economist Raghuram G. Rajan gave a speech to a group of graduating Indian students in which he criticized the country’s policy makers for “repeating failed experiment after failed experiment,” rather than learning from the experiences of other countries. A week later, he assailed the government again, this time in a speech attended by Prime Minister Manmohan Singh.

But instead of drawing a rebuke from India’s often thin-skinned leaders, he got a job offer. In August, Mr. Singh, who has frequently sought Mr. Rajan’s advice, called and asked him to take a leave from his job as a professor at the University of Chicago to return to India, where he was born, to help revive the country’s flagging economy. Within weeks, he was at work as the chief economic adviser in the Finance Ministry.
Analysts say the appointment of an outspoken academic like Mr. Rajan, along with the recent push by New Delhi to reduce energy subsidies and open up retailing, insurance and aviation to foreign investment, signal that India’s policy makers appear to be serious about tackling the nation’s economic problems.
. . .
Mr. Rajan said he would like to focus his efforts on three big themes: liberalizing India’s financial system; making it easier to do business, particularly for entrepreneurs and manufacturers; and fixing India’s dysfunctional food distribution system, which wastes a lot of food even as many of the country’s poor are malnourished.

For the full story, see:
VIKAS BAJA. “As Its Economy Sags, India Asks a Critic to Come Home and Help Out.” The New York Times (Sat., October 6, 2012): B3.
(Note: ellipsis added.)
(Note: the online version of the article was dated October 5, 2012.)

Entrepreneurial Capitalism Offers the Best Chance “for a Life of Engagement and Personal Growth”

(p. 228) Edmund S. Phelps explores “Refounding Capitalism.” “One has to conclude that ‘generation of wealth’ is not special to capitalism. Corporatist economies are quite good at that. . . . A merit of a well-functioning capitalism (again: I do not mean free-market policy: low tax rates, etc.) is the economic freedoms it offers entrepreneurs, managers, employees and consumers–freedoms that socialist, corporatist and statist systems do not provide. . . . Ordinary people, if they are to find intellectual growth and an engaging life, have to look outside the home: these (p. 229) things can be found only at work, if anywhere. And for these rewards to be available for large numbers of people, the economy must be modern. And as a practical matter, that requires that it be based predominantly on a well-functioning capitalist system. Thanks to the grassroots, bottom-up processes of innovation, capitalism at its best can deliver–far more broadly than Soviet communism, eastern European socialism, and western European corporatism can–chances for the mental stimulation, problem-solving, exploration and discovery required for a life of engagement and personal growth.”

Nobel-Prize winner Edmund Phelps as quoted in:
Taylor, Timothy. “Recommendations for Further Reading.” Journal of Economic Perspectives 24, no. 2 (Spring 2010): 227-34.
(Note: ellipses in original.)

The original source of the Phelps quotes is:
Phelps, Edmund S. “Refounding Capitalism.” Capitalism and Society 4, no. 3 (2009).

American Innovators Created Synergies and Interchangeable Parts

Source of book image: online version of the WSJ review quoted and cited below.

(p. A13) . . . the post-Civil War industrialization had an important and largely overlooked predecessor in the first decades of the 19th century, when, as Charles Morris writes in “The Dawn of Innovation,” “the American penchant for mechanized, large-scale production spread throughout industry, presaging the world’s first mass-consumption economy.” It is a story well worth telling, and Mr. Morris tells it well.
. . .
Whole industries sprang up as the country’s population boomed and spilled over into the Middle West. The rich agricultural lands there produced huge surpluses of grain and meat, especially pork. The city of Cincinnati–whose population grew to 160,000 in 1860, from 2,500 in 1810–became known as “Porkopolis” because of the number of hogs its slaughterhouses processed annually.
Mr. Morris does a particularly good job of explaining the crucial importance of synergy in economic development, how one development leads to another and to increased growth. The lard (or pig fat) from the slaughterhouses, he notes, served as the basis for the country’s first chemical industry. Lard had always been used for more than pie crust and frying. It was a principal ingredient in soap, which farm wives made themselves, a disagreeable and even dangerous task thanks to the lye used in the process.
But when lard processing was industrialized to make soap, it led to an array of byproducts such as glycerin, used in tanning and in pharmaceuticals. Stearine, another byproduct, made superior candles. Just in the decade from the mid-1840s to the mid-1850s, Cincinnati soap exports increased 20-fold, as did the export of other lard-based products. Procter & Gamble, founded in Cincinnati in 1837 by an Irish soap maker and an English candle maker who had married sisters, grew into a giant company as the fast-rising middle class sought gentility.
Mr. Morris goes into great detail on the development of interchangeable parts–the system of making the components of a manufactured product so nearly identical that they can be easily substituted and replaced.

For the full review, see:
John Steele Gordon. “BOOKSHELF; The Days Of Porkopolis.” The Wall Street Journal (Tues., November 20, 2012): A13.
(Note: ellipses added.)
(Note: the online version of the article was updated November 19, 2012.)

The book under review, is:
Morris, Charles R. The Dawn of Innovation: The First American Industrial Revolution. Philadelphia, PA: PublicAffairs, 2012.

Progress Will Slow If Consumers Wait for Doctors to Creatively Destroy Medicine

(p. 195) . . . it remains unclear whether there is adequate plasticity of a plurality of physicians to embrace the digital world and acknowledge that the era of paternalism is passé. My sense is that young physicians who are digital natives will be likely to assimilate but that it will be quite difficult for the vast majority who are in practice and inculcated with an older idea of how medical care should be rendered. Eventually there will be enough digital native physicians to take charge, but that will take decades to be accomplished. In the meantime, consumers are fully capable of leading the movement and contributing to medicine’s creative destruction. And so they must.

Source:
Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.
(Note: ellipsis added.)

Sweden Prospers from Low Taxes, No Stimulus and Fiscal Discipline

Source of graph: online version of the WSJ article quoted and cited below.

(p. A9) STOCKHOLM–Sweden’s economy, bolstered by solid exports and healthy consumer spending, is picking up considerable steam even as many of its European neighbors gasp for breath amid the struggle to contain the euro-zone debt crisis.

Sweden’s second-quarter economic output data, released Monday, significantly outpaced expectations, further solidifying the Northern European country’s reputation as a haven in a volatile period. The Swedish krona, which recently reached a 12-year peak against the euro, strengthened further after the report.
. . .
. . . , Sweden has built a reputation for fiscal discipline since it suffered a financial crisis in the early 1990s. Successive governments have since stuck to a target to post a surplus of 1% of GDP over any business cycle.
Lawmakers resisted the temptation to borrow to fuel growth during the boom of the early 2000s, which meant Sweden hit the global financial crisis of 2008 and 2009 with strong public finances. The government hasn’t needed to increase taxes in the way Spain has, or to cut spending as in the U.K.

For the full story, see:
CHARLES DUXBURY. “In Crisis, a Rare Swede Spot.” The Wall Street Journal (Tues., July 31, 2012): A9.
(Note: ellipses added.)
(Note: the online version of the article was dated July 30, 2012.)

Econometrician Leamer Argues for Methodological Pluralism

(p. 44) Ignorance is a formidable foe, and to have hope of even modest victories, we economists need to use every resource and every weapon we can muster, including thought experiments (theory), and the analysis of data from nonexperiments, accidental experiments, and designed experiments. We should be celebrating the small genuine victories of the economists who use their tools most effectively, and we should dial back our adoration of those who can carry the biggest and brightest and least-understood weapons. We would benefit from some serious humility, and from burning our “Mission Accomplished” banners. It’s never gonna happen.

Source:
Leamer, Edward E. “Tantalus on the Road to Asymptopia.” Journal of Economic Perspectives 24, no. 2 (Spring 2010): 31-46.

“Highly Leveraged Economies, . . . , Seldom Survive”

Source of book image: http://si.wsj.net/public/resources/images/ED-AK313_book10_DV_20091008170122.jpg

(p. 762) Every once in a while, a work comes along whose key points ought to be part of the information set of every literate economist. Carmen M. Reinhart and Kenneth S. Rogoff’s This Time is Different: Eight Centuries of Financial Folly is such a work. It describes and analyzes a long international history of several types of financial crises.
. . .
The authors resist giving too much structural interpretation to their analysis. Most would agree with their conclusion that ” . . . highly leveraged economies, particularly those in which continual rollover of short-term debt is sustained only by confidence in relatively illiquid underlying assets, seldom survive” (p. 292).

For the full review, see:
Boskin, Michael J. “Review of: This Time Is Different: Eight Centuries of Financial Folly.” Journal of Economic Literature 48, no. 3 (September 2010): 762-66.
(Note: ellipsis internal to the final quotation, and the italics, are in the original; ellipsis between paragraphs is added.)
(Note: the “p. 292” refers to a page in the book, and not a page of the review.)(

The book being reviewed, is:
Reinhart, Carmen M., and Kenneth Rogoff. This Time Is Different: Eight Centuries of Financial Folly. Princeton, NJ: Princeton University Press, 2009.

Sclerotic Doctors Resist Change

(p. 177) Atherosclerosis, referring to a progressive and degenerative process of artery walls, is typically translated for a lay audience as “hardening of the arteries.” We’ve never needed a similar word to describe the medical community. It came with sclerosis built in. Of all the professions represented on the planet, perhaps none is more resistant to change than physicians. If there were ever a group defined by lacking plasticity, it would first apply to doctors.
(p. 178) The inherent “hardness” of physicians and the medical community suggests they will have a difficult time adapting to the digital world. Before the emergence of the Internet, physicians were high priests, holding all the knowledge and expertise, not to be challenged or questioned by the lowly consumer patient. “Doctor knows best” was the pervasive sentiment, shared by patients and especially physicians.

Source:
Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.

71,000 Years Ago “These People Were Like You & I”

“Scientists at the Pinnacle Point excavation.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A3) A trove of sophisticated stone tools recently dug up from a South African cliff suggests early modern humans developed complex cognitive ability anywhere from 6,000 to 10,000 years earlier than many scientists believe.

In a study published in the journal Nature, researchers said they had unearthed a large number of small stone blades going back some 71,000 years. The heat-treated blades appear to have been designed for tipping spears or arrows that could be used for hunting game.
Crucially, the discovery indicates that these ancestors had the cognitive ability to manipulate complex tools. In addition, they were able to pass on their inventions to future generations. That, in turn, suggests the use of sophisticated language.
“What it’s showing us is that these people were like you and I,” said Curtis Marean, a paleoanthropologist at Arizona State University in Tempe, Ariz., co-author of the study, and leader of the South Africa project. “They were smart people.”
. . .
Dr. Marean and his colleagues unearthed the microliths at a site known as Pinnacle Point on the southern shore of South Africa. They began the dig in 2005.
Some 72,000 years ago, the earth was wrapped in a glacial chill that lasted about 12,000 years. The African interior was dry and many early modern humans would have moved to more hospitable locations, such as the southern coast.

For the full story, see:
GAUTAM NAIK. “U.S. NEWS (sic); Tool Clue to Early Man’s Mind.” The Wall Street Journal (Thur., November 8, 2012): A3.
(Note: ellipsis added.)
(Note: the online version of the article was updated August 22, 2012 and had the title “WORLD NEWS; Tools Hint at Earlier Start for Human Smarts.)

“Microlith blades.” Source of caption and photo: online version of the WSJ article quoted and cited above.