Economics – Page 40 – artdiamondblog.com

Wisconsin Hospitals Increasingly Sue Patients

(p. A8) Hospitals in Wisconsin have sued patients over medical debt at a rate that amounts to one out of every 1,000 residents a year, especially people in low-income areas and who are Black, a new study found.

The study, published Monday [Dec. 6, 2021] in the health-policy journal Health Affairs, found some hospitals were more likely than others to take patients to court and low-income and Black patients were disproportionately sued.

The findings highlight how the financial and legal jeopardy that patients face depends on which hospital they go to. The findings also add to mounting research on the consequences of medical debt, a problem that research shows is more acute among people who are uninsured.

Medical-bill lawsuits “are not a fait accompli,” said Zack Cooper, an economist with the Yale University School of Public Health and an author of the new lawsuit analysis. “This is very much a choice that these hospitals are making.”

. . .

Hospitals were suing people more for unpaid bills, the study also found. The rate increased to 1.53 lawsuits for every 1,000 residents in 2018, up from 1.12 lawsuits per 1,000 residents in 2001.

. . .

Dr. Cooper called for more data to better understand potential factors driving the disproportionate number of lawsuits among Black patients.

“First, Black patients could have a higher burden of unpaid medical bills, which leads them to get sued more on a per-capita basis,” he said. “Second, Black patients could have a similar amount of debt, but were more likely targeted by hospitals.”

For the full story, see:

Melanie Evans and Tom McGinty. “Hospital Debt-Collection Practices Vary.” The Wall Street Journal (Tuesday, Dec. 07, 2021): A8.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the story was updated December 6, 2021, and has the title “Hospitals in Wisconsin Pursued Medical Debt Collection Widely but Unevenly, Study Finds.” The online version says that the title of the New York print version is “Hospitals Faulted on Medical-Debt Suits.” The title of my National edition of the print version is “Hospital Debt-Collection Practices Vary.”)

The article co-authored by Cooper, and discussed above, is:

Cooper, Zack, James Han, and Neale Mahoney. “Hospital Lawsuits over Unpaid Bills Increased by 37 Percent in Wisconsin from 2001 to 2018.” Health Affairs 40, no. 12 (Dec. 2021): 1830-35.

“Overwhelmed” Volunteers Struggle to Fix Log4j Bug in Open Source Software

In Openness to Creative Destruction, I argue that open source software has severe drawbacks, compared to a system where firms receive higher profits for selling better software. The severe Log4j bug, discussed in the quoted passages below, is an example that strongly supports my argument. Blog entries posted on Dec. 17 and on Dec. 25 also discussed the Log4j bug.

(p. B6) Gary Gregory, a volunteer for the Apache Software Foundation, is spending time off from his day job glued to his computer, striving to help contain the harm from a security flaw in the Log4j tool underpinning much of the digital economy.

. . .

Mr. Gregory, who works from the dining-room table in his Ocala, Fla., home, fueled by black coffee and accompanied by his hound-pit-bull mix, Bella, said he is overwhelmed with hundreds of requests for help from businesses. While Apache is trying to assist companies in updating their systems, he said, the nonprofit’s resources are limited.

“This puts to the forefront the whole issue with open-source [software] and commercial users,” said Mr. Gregory, who is on the Apache Logging Services Project Management Committee of 16 elected members who vote on changes to the software. “The expectations are somewhat out of whack.”

. . .

Many developers rely on the free Log4j framework to help record data such as users’ behavior and applications’ activity in software built with the Java programming language. Cybersecurity experts say the inclusion of the open-source logging tool within so much interconnected software—often embedded without developers’ knowledge—yields a threat that spans economic sectors and national borders.

. . .

Cybersecurity firm Mandiant Inc. said it has observed Chinese government hackers trying to exploit the flaw.

After Apache released its planned patch on Friday, Mr. Gregory said he worked through the weekend on a new update along with other volunteer software developers in Japan, New Zealand, Virginia and Arizona. Unveiled Monday, the new version disabled a problematic software module by default and removed a message-lookup feature that could be used to exploit the flaw.

The Apache volunteers are designing another update to Log4j for users who rely on an older version of the Java programming language, meaning more work for Mr. Gregory while he is on vacation from his day job.

“That translates to me getting five hours of sleep last night,” he said of his time off. “Some of the other guys got two or three.”

For the full story, see:

David Uberti. “Fight Against Bug Relies on Volunteers.” The Wall Street Journal (Thursday, December 16, 2021): B6.

(Note: ellipses added.)

(Note: the online version of the story was updated Dec. 15, 2021, and has the title “Global Fight Against Log4j Vulnerability Relies on Apache Volunteers.”)

My book, mentioned above, is:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, 2019.

High Inflation Most Hurts the Poor

(p. B2) Inflation has become central to the American zeitgeist in 2021 in a way that it hadn’t been for decades. Google searches are up. Supply chain issues feature into popular Instagram posts. The satire website The Onion warned in a recent headline that “higher prices may force Americans to eat reasonable portions on Thanksgiving.”

Even as inflation hits its highest level since 1982 and inserts itself as a topic of popular discussion, trying to understand it can be a mind-bending task.

. . .

High or unpredictable inflation that isn’t outmatched by wage gains can be especially hard to shoulder for poor people, simply because they have less wiggle room.

Poor households spend a bigger chunk of their budgets on necessities — food, housing and especially gas, which is often a contributor to bouts of high inflation — and less on discretionary expenditures. If rich households face high inflation and their wages do not keep up, they may have to cut back on vacations or dining out. A poor family may be forced to cut back on essentials, like food.

“For lower income households, price increases eat up more of their budget,” said Laura Rosner-Warburton, a senior economist at MacroPolicy Perspectives, pointing out that some research suggests that poor people may even end up paying comparatively more for the same products. That may be partly because they lack the free cash to take advantage of temporary discounts.

Around the world, poor people historically have reported greater concern around inflation, and that is also the case in the United States in the current episode.

For the full story, see:

Jeanna Smialek. “Inflation 101: Stark Facts And Nuance.” The New York Times (Saturday, December 25, 2021): B1-B2.

(Note: ellipsis added.)

(Note: the online version of the story has the date Dec. 24, 2021, and has the title “Inflation Has Arrived. Here’s What You Need to Know.”)

No Clear Evidence That Tornadoes Are More Frequent or Intense Than 40 to 60 Years Ago

Damage from tornadoes depends on the strength of buildings, which depends on broad economic growth. To reduce harm, the level of economic growth matters as much or more than the frequency and intensity of tornadoes.

(p. A12) Some studies have concluded that as global warming advances, driven by the burning of fossil fuels, favorable conditions for severe storms in the United States will increase this century.

. . .

It remains less certain as to whether those increasingly severe storms might lead to more tornadoes. These complex events are harder to model, and so far there doesn’t appear to be clear evidence that, for instance, tornadoes have changed in frequency or intensity over the past 40 to 60 years.

. . .

“We might not know exactly how climate change is going to affect tornadoes going forward, but we do know that there are lot of things we can do to protect people today,” said Stephen Strader, a disaster scientist at Villanova University.

. . .

“There are always two sides of the coin when it comes to disasters,” Dr. Strader said. “There’s the climate itself, but there’s also society vulnerability. We can work to address climate change, but we shouldn’t lose focus on what we can do today to improve survivability against these extreme events.”

For the full story, see:

Brad Plumer, Winston Choi-Schagrin and Hiroko Tabuchi. “As World Warms, Bracing for More Extreme Weather.” The New York Times (Saturday, December 18, 2021): A12.

(Note: ellipses added.)

(Note: the online version of the story has the date Dec. 17, 2021, and has the title “Examining the Role of Climate Change in a Week of Wild Weather.”)

Hackers from China Seek to Exploit the Open Source Log4j Software Bug

In Openness to Creative Destruction, I argue that open source software has severe drawbacks, compared to a system where firms receive higher profits for selling better software. The severe Log4j bug, discussed in the quoted passages below, is an example that strongly supports my argument. A blog entry posted on Dec. 17 also discussed the Log4j bug.

(p. B1) Hackers linked to China and other governments are among a growing assortment of cyberattackers seeking to exploit a widespread and severe vulnerability in computer server software, according to cybersecurity firms and Microsoft Corp.

The involvement of hackers whom analysts have linked to nation-states underscored the increasing gravity of the flaw in Log4j software, a free bit of code that logs activity in computer networks and applications.

Cybersecurity researchers say it is one of the most dire cybersecurity threats to emerge in years and could enable devastating attacks, including ransomware, in both the immediate and distant future. Government-sponsored hackers are often among the best-resourced and most capable, analysts say.

“The effects of this vulnerability will reverberate for months to come—maybe even years—as we try to close these doors and try to hunt down all the actors who made their way in,” said John Hultquist, vice president of intelligence analysis at the U.S.-based cybersecurity firm Mandiant Inc.

. . .

(p. B6) Researchers find the Log4j flaw particularly worrying because the free Java-based software is used in a broad range of products. It can be found in everything from security software to networking tools to videogame servers. The exact number of users of Log4j is impossible to know, but the software has been downloaded millions of times, according to the organization that builds it, the Apache Software Foundation.

The attack works reliably and is trivial to exploit, security researchers say. Although downloadable patches have already been made available, experts and U.S. officials said they expected the flaw to remain a problem for the long haul because some organizations will be slow to update their systems or might neglect to do so entirely.

“It’s a surprise it’s not more widespread,” said Adam Meyers, senior vice president of intelligence with CrowdStrike, a U.S.-based cybersecurity firm, which said they had detected Iranian actors leveraging the Log4j flaw. “The question that everyone is asking is, ‘What aren’t we seeing?’”

For the full story, see:

Robert McMillan and Dustin Volz. “Hackers Leap on Flaw in Log4j Software.” The Wall Street Journal (Thursday, December 16, 2021): B1 & B6.

(Note: ellipsis added.)

(Note: the online version of the story was updated Dec. 15, 2021, and has the title “Hackers Backed by China Seen Exploiting Security Flaw in Internet Software.”)

My book, mentioned above, is:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, 2019.

“People Come to This Country to Build Amazing Businesses”

(p. 1) WASHINGTON — ADW Capital Partners would appear to be the kind of hedge fund that Democrats on the Senate Finance Committee would like to tax more heavily: small but growing fast, with $330 million in assets, an incorporation in Delaware but doing business in Florida, and an offshore “feeder” corporation shielding some of its clients from U.S. taxation.

No wonder, then, that its owner, Adam Wyden, has come out as a vocal and vociferous critic of the tax increases being pushed by the committee’s chairman, Senator Ron Wyden of Oregon — his father.

. . .

(p. 25) “The issue is bigger than my father. I’m not interested in discussing anything personal,” he said in a brief phone call before declining to go further. He said he was “not a Trumper” and “not an Ocasio” — referring to Representative Alexandria Ocasio-Cortez of New York, an icon of the Democratic left. He is a libertarian, he said, raised in Washington, D.C., who moved to Florida “to get away from the food fight.”

But he has gone public with his grievances against his father’s proposals, in an appearance last month on CNBC that he recommended for viewing, and in a tweet responding to the elder Mr. Wyden’s assertion that Elon Musk and other billionaires should not get to decide whether to pay taxes based on a Twitter poll.

“Why does he hate us / the American dream so much?!?!?!?!” Adam Wyden said in the Twitter post last month. “Reality is: most legislators have never built anything … so I guess it’s easier to mindlessly and haphazardly try and tear stuff down.”

. . .

“Thankfully, I think I can compound” investment gains “faster than my dad and his cronies can confiscate it,” Adam Wyden wrote.

Lauded on CNBC’s “Squawk Box,” he elaborated on air. “Amazon, Netflix, Google, Tesla: I mean, we are the envy of the rest of the world,” he said. “People come to this country to build amazing businesses, and I want that to continue.”

Without referring to his son, the elder Mr. Wyden suggested a possible reason for his stance: “Many millionaires perhaps may consider themselves tomorrow’s billionaires.”

For the full story, see:

Jonathan Weisman. “Rift Between Senator and Son Shows Challenge of Taxing the Ultrarich.” The New York Times, First Section (Sunday, December 12, 2021): 1 & 25.

(Note: ellipses added.)

(Note: the online version of the story was updated Dec. 11, 2021, and has the title “Rift Between Senator and Son Shows the Challenge of Taxing the Ultrarich.” The online version says that the article appeared on p. 24 of the New York edition of the print version.)

Federal Covid-19 Stimulus Subsidies Reduced Labor Force Participation

(p. A2) . . ., home prices and stocks have soared, in part because of stimulus from the Fed. From the start of 2020 through Sept. 30 this year, U.S. households’ total assets soared 22% to nearly $163 trillion, Fed data show.

At the same time, the labor-force participation rate fell sharply and has remained stubbornly low. At 61.8% in November [2021], it was 1.5 percentage points below its pre-pandemic level. Many older workers retired early. But even among prime-age workers—those between 25 and 54—participation remains down more than a percentage point.

Some economists believe the extra cash is one reason for this. In part, that is based on research showing declines in wealth seem to have had the opposite effect. Falling housing and stock values from 2006 and 2010 led many who otherwise would have fallen out of the labor force to stay in, according to the Federal Reserve Bank of Chicago. The study found that participation was 0.7 percentage point higher than otherwise as a result.

Families that win at least $30,000 in the lottery tend to earn less in the next five years, according to a National Bureau of Economic Research working paper released in July by four University of Chicago scholars. The more a person wins, the bigger the effect that the award has on earnings and employment, the paper found. Upper-income winners are more likely to reduce their hours, while lower-income winners are more likely to drop out of the labor market entirely, the paper found.

In Austria, workers who received severance payments worth two months of pay were far less likely to find a job within 20 weeks compared with those who received no such lump sum, according to a 2006 paper released by the NBER. The researchers also found a similar effect among workers whose unemployment benefits were extended from 20 weeks to 30 weeks.

For the full commentary, see:

Josh Mitchell. ” THE OUTLOOK; New Hope for Easing Labor Shortage.” The Wall Street Journal (Monday, Dec. 20, 2021): A2.

(Note: ellipsis, and bracketed year, added.)

(Note: the online version of the commentary has the date December 19, 2021, and has the title ” THE OUTLOOK; Vast Household Wealth Could Be a Factor Behind U.S. Labor Shortage.”)

The July 2021 NBER working paper mentioned above is:

Golosov, Mikhail, Michael Graber, Magne Mogstad, and David Novgorodsky. “How Americans Respond to Idiosyncratic and Exogenous Changes in Household Wealth and Unearned Income.” National Bureau of Economic Research Working Paper #29000, July 2021.

The published version of the 2006 NBER working paper mentioned above is:

Card, David, Raj Chetty, and Andrea Weber. “Cash-on-Hand and Competing Models of Intertemporal Behavior: New Evidence from the Labor Market.” The Quarterly Journal of Economics 122, no. 4 (Nov. 2007): 1511-60.

Bans on Natural Gas for Cooking and Heating Could Most Hurt Low-Income Citizens

(p. A13) This week, New York City moved to ban gas hookups in new buildings, joining cities in blue states like California, Massachusetts and Washington that want to shift homes away from burning natural gas because it releases carbon dioxide, which causes global warming.

Instead, developers in New York City will have to install electric heat pumps and electric kitchen ranges in newly constructed buildings.

. . .

But the gas industry is fighting back and has lobbied in statehouses across the country to slow the shift away from gas. It argues that gas appliances are widely popular and still cost less than electric versions for many consumers. Opponents have also warned that a rush to electrify homes could strain power grids, particularly in the winter when heating needs soar, at a time when states like California and Texas are already struggling to meet demand.

Karen Harbert, president and chief executive of the American Gas Association, an industry group, said efforts to disconnect homes and businesses from the extensive network of gas pipelines would make it difficult to supply those buildings with low-carbon alternatives that might be available in the future, such as hydrogen or biogas.

“Eliminating natural gas and our delivery infrastructure forecloses on current and future innovation opportunities,” she said.

The question of whether to use natural gas in homes has become part of the culture wars, pitting climate activists against industry and other interest groups. Some chefs and restaurant owners have argued that they won’t be able to cook certain dishes as well without gas.

. . .

In a statement, Bill Malcolm, a senior legislative representative at the AARP, said the group had “supported legislative and regulatory initiatives allowing customers to continue to use the fuel of their choice to heat their homes and cook their food.” He added: “Outright bans on certain fuel options would run contrary to that choice.”

. . .

For now, natural gas remains the dominant fuel in much of the country, heating nearly half of American homes. Electric heat pumps, by contrast, satisfy just 5 percent of heating demand nationwide.

. . .

Experts have warned that as more homeowners go electric, gas utilities will still have to pay to maintain their existing network of pipelines, which could mean higher costs for the smaller base of remaining customers, many of whom may be low-income.

For the full story, see:

Brad Plumer and Hiroko Tabuchi. “Gas vs. Electric Stoves Join Partisan Battlefield.” The New York Times (Friday, December 17, 2021): A13.

(Note: ellipses added.)

(Note: the online version of the story has the date Dec. 10, 2021, and has the title “How Politics Are Determining What Stove You Use.” The online version says that the New York print edition had the title “Gas vs. Electric Stoves on a Partisan Battlefield.” My National print edition had the title “Gas vs. Electric Stoves Join Partisan Battlefield.” Where there is a slight difference in wording between the versions, the passages quoted above follow the online version.)

Elon Musk Likes Government the Referee, Not Government the Subsidizer

Here are some especially important passages from the Wall Street Journal transcript of the Elon Musk interview:

Joanna Stern

Well, I want to come back to autonomous vehicles, but wanted to just stay a little bit more on the role of government. You said at this conference, actually, a year ago, that you think the government should really just be hands off when it comes to innovation. Though with this bill, there is a lot of support for EVs and it could be the biggest change that we’ve seen throughout the country in terms of the infrastructure of EVs. And it helps Tesla. What do you think the role of government should be?

Elon Musk

I think the role of government should be that of, like, a referee. But not a player on the field. So generally, government should just try to get out of the way and not impede progress. I think there’s a general problem, not just in the U.S., but in most countries, where the rules and regulations keep increasing every year.

Rules and regulations are immortal. They don’t die. Occasionally you see a law with a sunset provision, but really, otherwise, the vast majority of rules and regulations live forever. And so if more rules and regulations are applied every year and it just keeps growing and growing, eventually it just takes longer and longer and it’s harder to do things.

And there’s not really an effective garbage collection system for removing rules and regulations. And so gradually this hardens the arteries of civilization, where you’re able to do less and less over time. So I think governments should be really trying hard to get rid of rules and regulations that perhaps had some merit at some point but don’t have merit currently. But there’s very little effort in this direction. This is a big problem. Continue reading “Elon Musk Likes Government the Referee, Not Government the Subsidizer”

Open Source Log4j Software Bug “Poses a Severe Risk”

(p. B1) The Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency issued an urgent alert about the vulnerability and urged companies to take action. CISA Director Jen Easterly said on Saturday, “To be clear, this vulnerability poses a severe risk.” . . . Germany’s cybersecurity organization over the weekend issued a “red alert” about the bug. Australia called the issue “critical.”

Security experts warned that it could take weeks or more to assess the extent of the damage and that hackers exploiting the vulnerability could access sensitive data on networks and install back doors they could use to maintain access to servers even after the flawed software has been patched.

“It is one of the most significant vulnerabilities that I’ve seen in a long time,” said Aaron Portnoy, principal scientist with the security firm Randori.

. . .

(p. B2) The software flaw was reported late last month to the Log4j development team, a group of volunteer coders who distribute their software free-of-charge as part of the Apache Software Foundation, according to Ralph Goers, a volunteer with the project. The foundation, a nonprofit group that helps oversee the development of many open-source programs, alerted its user community about the vulnerability on Dec. 9 [2021].

“It’s a very critical issue,” Mr. Goers said. “People need to upgrade to get the fix,” he said. Log4j is used on servers to keep records of users’ activities so they can be reviewed later on by security or software development teams.

Because Log4j is distributed free, it is unclear how many servers are affected by the bug, but the logging software has been downloaded millions of times, Mr. Goers said.

For the full story, see:

Robert McMillan. “Software Flaw Spurs Race to Patch Bug.” The Wall Street Journal (Monday, December 13, 2021): B1-B2.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the story was updated Dec. 12, 2021, and has the title “Software Flaw Sparks Global Race to Patch Bug.”)

My book, mentioned above, is:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, 2019.

“Americans Think the Economy Is in Rough Shape Because the Economy Is in Rough Shape”

(p. A12) Offices remain eerily empty. Airlines have canceled thousands of flights. Subways and buses are running less often. Schools sometimes call off entire days of class. Consumers waste time waiting in store lines. Annual inflation has reached its highest level in three decades.

Does this sound like a healthy economy to you?

In recent weeks, economists and pundits have been asking why Americans feel grouchy about the economy when many indicators — like G.D.P. growth, stock prices and the unemployment rate — look strong.

But I think the answer to this supposed paradox is that it’s not really a paradox: Americans think the economy is in rough shape because the economy is in rough shape.

Sure, some major statistics look good, and they reflect true economic strengths, including the state of families’ finances. But the economy is more than a household balance sheet; it is the combined experience of working, shopping and interacting in society. Americans evidently understand the distinction: In an Associated Press poll, 64 percent describe their personal finances as good — and only 35 percent describe the national economy as good.

There are plenty of reasons. Many services don’t function as well as they used to, largely because of supply-chain problems and labor shortages. Rising prices are cutting into paychecks, especially for working-class households. People spend less time socializing. The unending nature of the pandemic — the masks, Covid tests, Zoom meetings and anxiety-producing runny noses — is wearying.

For the full commentary, see:

David Leonhardt. “The Economy Looks Healthy, but Americans Know It’s Rough Out There.” The New York Times (Saturday, December 11, 2021): A12.

(Note: the online version of the commentary has the date Dec. 10, 2021, and has the title “Covid Malaise.”)