High Palladium Prices Incentivize More Mining and Search for Substitutes

(p. B13) Palladium prices are at their highest level in nearly two decades, as investors bet that rising global growth will buoy automobile production and stoke demand for the rare metal.

. . .

Longer term, the auto industry may consider switching to platinum in gasoline engines if the price of palladium continues to climb, some market participants said.

Shree Kargutkar, portfolio manager at Sprott Asset Management, said he thinks platinum provides a better long-term value alternative to palladium given palladium’s sharp rise.

Still, changes in the automotive industry don’t pose an immediate threat to the rally, he said. Those shifts and mining companies’ efforts to bring more areas of supply on line to capitalize on higher prices are likely to take years.

“We’re not at a point where the palladium bulls have something to worry about,” he said.

For the full story, see:

Ira Iosebashvili and Amrith Ramkumar. “Palladium Soars on Hopes for Growth.” The Wall Street Journal (Tuesday, Oct. 24, 2017): B13.

(Note: ellipsis added.)

(Note: the online version of the story has the date Oct. 23, 2017, and the title “Palladium Prices Soar in Sign of Global Growth and Auto Demand.” Where there are minor differences in wording, the passages quoted above follow the online version.)

Fear of Malpractice Suits Increases Useless Medical Care by 5%

(p. B4) Researchers from Duke and M.I.T. . . . offer what is perhaps the most precise estimate of how much defensive medicine matters, at least for care in the hospital. They found that the possibility of a lawsuit increased the intensity of health care that patients received in the hospital by about 5 percent — and that those patients who got the extra care were no better off.

“There is defensive medicine,” said Jonathan Gruber, a health economist at M.I.T. and an author of the paper, which was published in draft form Monday [July 23, 2018] by the National Bureau of Economic Research. “But that defensive medicine is not explaining a large share of what’s driving U.S. health care costs.”

Mr. Gruber and Michael D. Frakes, a Duke economist and lawyer, looked at the health care system for active-duty members of the military. Under longstanding law, such patients get access to a government health care system but are barred from suing government doctors and hospitals for malpractice. Their family members can also use the military hospitals, but they can sue for malpractice if they wish.

Their study looked at what happened to the hospital care that military members received when a base closing forced them to use their benefits in civilian hospitals, where it was possible to sue. Spending on their health care increased, particularly on extra diagnostic tests.

They also found that, even within the military hospitals, family members who could sue tended to get more tests than those who could not.

For the full commentary, see:

Margot Sanger-Katz. “Doctors’ Fear of Lawsuits May Hit Patients in the Wallet, Study Hints.” The New York Times (Tuesday, July 23, 2018): B4.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date July 23, 2018, and has the title “A Fear of Lawsuits Really Does Seem to Result in Extra Medical Tests.”)

The Frakes and Gruber working paper, mentioned above, is:

Frakes, Michael D., and Jonathan Gruber. “Defensive Medicine: Evidence from Military Immunity.” National Bureau of Economic Research, Inc., NBER Working Paper # 24846, July 2018.

Under Chinese Socialized Medicine, Long Waits, Bribes, and Violent Attacks on Physicians Are Common

(p. A1) BEIJING — Well before dawn, nearly a hundred people stood in line outside one of the capital’s top hospitals.

They were hoping to get an appointment with a specialist, a chance for access to the best health care in the country. Scalpers hawked medical visits for a fee, ignoring repeated crackdowns by the government.

. . .

The long lines, a standard feature of hospital visits in China, are a symptom of a health care system in crisis.

. . .

(p. A8) Instead of going to a doctor’s office or a community clinic, people rush to the hospitals to see specialists, even for fevers and headaches. This winter, flu-stricken patients camped out overnight with blankets in the corridors of several Beijing hospitals, according to state media.

Hospitals are understaffed and overwhelmed. Specialists are overworked, seeing as many as 200 patients a day.

And people are frustrated, with some resorting to violence. In China, attacks on doctors are so common that they have a name: “yi nao,” or “medical disturbance.” Continue reading “Under Chinese Socialized Medicine, Long Waits, Bribes, and Violent Attacks on Physicians Are Common”

Finnish Universal Basic Income Did Not Increase Labor Supply

(p. A8) A much-watched experiment in Finland failed to provide evidence that offering people a guaranteed income is the answer to some of the insecurities caused by potentially profound changes in the jobs market.

Early results from a pilot program suggest that providing unemployed people with a minimum income doesn’t encourage them to find work, . . .

. . .

“The Finnish government hoped that UBI would increase labor supply and employment, but it did not,” said Christopher Pissarides, a professor of economics at the London School of Economics and a Nobel Prize winner.

For the full story, see:

Paul Hannon. “Basic Income Experiment Didn’t Boost Employment.” The Wall Street Journal (Saturday, Feb. 9, 2019): A8.

(Note: ellipses added.)

(Note: the online version of the story has the date Feb. 8, 2019, and has the title “Experiment in Finland With Guaranteed Income Creates Less Stress but No Jobs.”)

Absence of For-Profit Hospitals Hurts New York State

(p. A17) House Democrats’ new Medicare for All bill asserts “a moral imperative . . . to eliminate profit from the provision of health care.”
. . .
The Empire State’s hospital industry has been 100% nonprofit or government-owned for more than a decade. It’s a byproduct of longstanding, unusually restrictive ownership laws that squeeze for-profit general hospitals. The last one in the state closed its doors in 2008.
A report last year from the Albany-based Empire Center shows the unhappy results. The state health-care industry’s financial condition is chronically weak, with the second-worst operating margins and highest debt loads in the country. And there’s no evidence that expunging profit has reduced costs. New York’s per capita hospital spending is 18% higher than the national average.
The overall quality of New York’s hospitals, even factoring in Manhattan’s flagship institutions, is poor. Their average score on the federal government’s Hospital Compare report card was 2.18 stars out of five–last out of 50 states. Their collective safety grades from the Leapfrog Group and Consumer Reports magazine have also been dismal.
The state’s nonprofit hospitals also fall short on accessibility for the uninsured. On average they devoted 1.9% of revenues to charity care in 2015, a third less than privately owned hospitals nationwide.
Finally, New York’s antiprofit policy doesn’t even prevent people from getting rich. Seven-figure salaries are common among the state’s hospital executives. If banning profit is an effective way to improve health-care, there’s no evidence to be found in New York.

For the full commentary, see:
.Bill Hammond. “Banishing Profit Is Bad for Your Health; The Medicare for All proposal from House Democrats follows New York state’s bad example.” The Wall Street Journal (Tuesday, March 19, 2019): A17.
(Note: ellipsis internal to first paragraph, in original; ellipsis between paragraphs, added.)
(Note: the online version of the commentary has the date March 18, 2019.)

Small Spanish Firms Less Likely to Hire with Higher Minimum Wage

(p. B1) MADRID — As Spain grapples with a turbulent political crisis, one of Europe’s last Socialist governments may soon fall amid the rise of a new nationalism in the country. But whatever the outcome, Prime Minister Pedro Sánchez is leaving behind a signature legacy: a record increase in the minimum wage.
The 22 percent rise that took effect in January, to 1,050 euros (about $1,200) a month, is the largest in Spain in 40 years. Yet the move has ignited a debate over whether requiring employers to pay more of a living wage is a social watershed, or a risky attempt at economic engineering.
. . .
(p. B4) Over 95 percent of businesses in Spain are small and medium-size firms, many of which operate with thin margins, according to Celia Ferrero, the vice president of the National Federation of Self-Employed Workers.
“You won’t find people disputing that higher wages are needed,” said Ms. Ferrero, whose organization represents many smaller businesses. “The question is whether firms can afford it. Higher wages and social security taxes simply make it more expensive for employers to hire or maintain staffers.”
“It’s not that they don’t want to pay; they literally can’t,” she added.
Lucio Montero, the owner of General Events, which makes booths and backdrops for firms displaying wares at big conventions, employs eight workers on the outskirts of Madrid. He pays each €1,400 a month.
The higher minimum wage and increased social security charges will put upward pressure on his labor bill and already thin margins, he said. It is a cost that he can ill afford.
“I would need to think twice about hiring more people,” said Mr. Montero, walking around his tiny, sawdust-covered factory floor.

For the full story, see:
Liz Alderman. “Spain’s Minimum Wage Has Surged. So Has Debate.” The New York Times (Friday, March 8, 2019): B1 & B4.
(Note: ellipsis added.)
(Note: the online version of the story has the date March 7, 2019, and has the title “Spain’s Minimum Wage Just Jumped. The Debate Is Continuing.”)

Distorted Incentives Can Lead to Short-Termism or to Long-Termism

(p. B1) Capitalism is often accused of fostering short-termism, making companies chase quarterly profit numbers to satisfy shareholders.
A better criticism is that the targets corporate executives aim for are grossly simplified, thanks to the twisting line of responsibility from corner office to fund manager to pension fund and ultimately to the savers who own the company.
These distorted incentives sometimes lead to short-termism; at other times, shareholder enthusiasm pushes executives to focus far too much on the long run, as in the wild mining boom that turned to bust in 2011, or the dot-com bubble.

For the full commentary, see:
James Mackintosh. “STREETWISE; Fixing Capitalism, One Disclosure at a Time.” The Wall Street Journal (Wednesday, Nov. 28, 2018): B1 & B12.
(Note: the online version of the commentary has the date Nov. 27, 2018.)