“No Man’s life liberty or property is safe while the legislature is in session”.

- attributed to NY State Judge Gideon Tucker

Friday, October 30, 2009

Glenn Beck's Flawed Argument

Earlier this week, I believe on Wednesday evening, Glenn Beck went through a fairly complex explanation of how the US unwisely intertwined federal housing policy, low interest rates and excessive spending to arrive at our current debacle.

He then, understandably, discussed the folly of depreciating the US dollar in order to repay creditors with cheaper currency. Again, understandably, he cited the failed German Wiemar Republic.

But then he veered into dangerous and, unfortunately, intellectually wrong territory. Beck began to suggest that, like the Germans in the 1920s and '30s, the US might issue land-backed debt, because so many mortgages are held by Freddie Mac, Fannie Mae and, though he didn't mention it them by name, the FHA and VA mortgage programs.

In a rare misstep, Glenn said that the government "owns" these mortgages, and implied that, therefore, the feds can just claim them as assets, against which to issue dollar-denominated debt.

But that's not true. Not by a long shot.

Here's how things would have to work for that to be true. Mortgages backing a specific Fannie or Freddie debt issue would have to default. Upon default, it's possible that the owners of the GSE-issued securities might choose to take possession of the properties. But the details here are very important.

GSE's (Fannie, Freddie, as well as non-publicly owned VA and FHA programs) buy mortgages from originating institutions. To do that, they issue debt, with the implied backing of the US Treasury. Then they package the mortgages into pools and sell bonds backed by the income from the pools of mortgages.

The money they receive for these bonds goes to buy more mortgages. When the GSEs wish to expand, they issue more debt.

But they don't "own" a vast collection of mortgaged homes. They typically only "own," which is to say, hold, home mortgages for seasoning and packaging into bonds.

And, to reiterate, Fannie or Freddie wouldn't even "own" the homes connected to those mortgages securing their bonds if the borrowers defaulted. The bondholders would, or could, own them.

It's a nuanced point to many, but I think important. What Beck went on to contend, on the back of assuming the federal government simply "owns" the homes bought by mortgages which may eventually have secured Fannie or Freddie bonds, would simply be unrealistic.

Because this sort of misunderstanding of the actual mechanics by which all of these mortgages could be held, and the underlying homes and land owned by the federal government, and used to back other bonds, could materially damage Beck's credibility.

Thursday, October 29, 2009

HarryCare's Surprises

Surprise, surprise!

Harry Reid has managed to stuff the public option back into his HarryCare Senate bill. I erred in my prior post when I stated that a House-Senate conference was underway. In fact, it was simply the numerous Senate committees' Democrats caucusing to stitch together their Frankenstein of a health care bill- HarryCare.

Under Nevada Democrat Harry Reid's mis-leadership, the Democratic gang in the Senate have concocted a concept- because, to date, there is still no available written version of this- called a 'modified public option opt-out.'

Apparently this is Reid's attempt to have his health care cake and eat it, too. He's allowed for a public option, but states can choose not to avail themselves of it. Thus, if he has to surgically remove it, he can say he tried, placating his liberal colleagues.

If it passes, he'll probably claim that there's no need for added CBO scoring, since states can 'opt out.' And he'll use that, in all likelihood, to claim to other Senators that it isn't really a public option.

You know, like a fully-federalized, hobnail-booted mandate.

Trouble is, Harry has already lost at least two Senate Democrats and Joe Lieberman. Lieberman is so adamantly against the public option, in any form, that he promised to side with the GOP Senators to filibuster the bill.

Meanwhile, Olympia Snowe delivered on her promise and backed off of any support, and was joined by Nebraska's Blanche Lincoln.

Funny thing about the health care mess. When Democrats, as Reid did this week, continually claim Republicans would not 'work' with them, but, in fact, keep ignoring GOP calls for interstate health insurance purchasing, tort reform, and the dropping of mandates, they look silly and lacking in credibility.

Instead of trying the simplest measures, maybe in several states, then waiting a few years to see the results, these Congressional morons insist on ignoring these sane, simplifying ideas, and going for a total redesign of the US health care system.

Nobody with a brain thinks this will work, or save anyone any money.

How is it Democrats can't understand that? Or do they just not want to understand it?

Wednesday, October 28, 2009

Why Is Glenn Beck So Popular?

I have had a few discussions recently with a colleague about Glenn Beck's sudden popularity. Since coming to Fox News, Beck has vaulted into the number one position at 5pm, at least among all cable programs, if not network, as well.

Last year, before changing networks, I believe Beck was on CNN. I'd see him occasionally while channel surfing. To me, he was this guy with a crew cut and an old-style radio microphone sitting at a desk. Usually proclaiming loudly and in a surprised voice.

Now, Glenn Beck has a much different approach. An approach my colleague, a well-educated, very intelligent businessman finds off-putting. To him, Beck is too high-voltage, simplistic and animated.

However, as I contended in a recent conversation with my friend, that is precisely why Glenn Beck is now so popular.

Simply put, Glenn Beck knows how to appeal to a large audience, on television, about fundamental political and philosophical topics. He takes dry topics and animates them in a disarmingly simple fashion.

A few years ago, I was a guest on Bill O'Reilly's Fox News program. During a break in taping, due to an equipment malfunction, O'Reilly began to critique the comments and responses to his questions that we had just taped. He found my approach to be a bit too esoteric for his audience.

To paraphrase O'Reilly, he said something like,

'Listen, I'm not Neil Cavuto, and you're not on his show. My audience is different. The folks want things simple and direct. Keep it simple and clear.'

My subsequent, simpler answers and comments were just what O'Reilly wanted.

I think that, like Bill O'Reilly, Glenn Beck knows exactly who his audience is. Most of the people who watch him aren't like my colleague.

They aren't as well-read, deliberative or educated. Whereas my friend would like to see the old-style Beck, engaging in deep discussions with a series of guests, the new Beck is much more lively and engaging.

What Glenn Beck has done, really, is move to an all-visual presentation style that appeals to his audience. Watch his show and look at his props.

The whiteboard on which he frequently scrawls his points. Or uses with magnetic-backed pictures of people to fill in points on some diagram of Wonderboy's administration.

He frequently plays videos again, and again, and again. Especially key clips from Wonderboy's campaign speeches. Like the one telling you to judge him by his advisers. Then Beck will play an embarrassing, revealing video of an Obama adviser over, and over, and over again.

Repetition is what makes such an impact on children. I saw my own children watch Barney or SpongeBob reruns more times than I could literally count.

Beck also uses a large video screen to project pictures topical to his comments.

The other day, as he was chiding South Carolina Republican Senator Lindsay Graham, as a reply to Graham's dismissive remarks about Beck a few weeks ago, Beck pointedly had a large, clear, incredibly unflattering picture of Graham's face in a weird smirk, with one eye closed, left on his immense screen for about 3 minutes.

It was a priceless visual burning into viewers' brains that Graham is a goof-ball. Nothing like a silly picture to leave an image.

The other thing Glenn Beck takes to heart is that we learn best when offered multi-media inputs. Beck will talk while either working at his whiteboard, pointing to pictures, or running videos. There are almost always at least two media streams coming at you.

And, lastly, Glenn Beck is an entertainer. He has learned to entertain as he preaches and teaches. His shows are vibrant, and, in Marshall McCluhan's vernacular, very "hot."

Add it all up, and Glenn Beck behaves more like your favorite high school or college teacher than a dry television program anchor.

He's just as deep as the latter and, actually, deeper than most nowadays. But because he wraps everything in high-energy video, movement and dynamic action, even dry topics like the Constitution, Woodrow Wilson's Progressivism, and our Founding Fathers, come alive.

And that is why Glenn Beck is the most popular guy on television at 5pm.

Tuesday, October 27, 2009

Edolphus "Ed" Towns' Hand Is Forced On Countrywide Investigation

Last week I wrote this post concerning Edolphus "Ed" Towns (D-NY) shameful squelching of his committee's members' push to investigate the so-called "Friends of Angelo" VIP mortgage progam.

Yesterday's Wall Street Journal reported that Democratic Representatives Mike Quigley, of Illinois, and Paul Hodes, of New Hampshire, broke party ranks and joined California Republican Darrell Issa to force Towns to issue the relevant subpoenas to Bank of America for the Countrywide records.

Covering any federal and state officials, plus those at Freddie Mac and Fannie Mae, the subpoenaed records should finally cast light on the truth of denials by Democratic Senators Kent Conrad and Chris Dodd that they never knew they received special treatment.

Of course, Towns' foot-dragging might save Dodd, who is in the fight of his life to retain his Senate seat.

But, having heard and seen both Dodd's and Conrad's sanctimonious denials, it's going to be fascinating to see what evidence emerges from the Countrywide files, phone and email records.

Oh, and let's not forget Ed Towns, either. Remember, he, too, denied receiving any special treatment on his Countrywide mortgages.

I suppose it's way too much to hope that Quigley's and Hodes' votes presage a wholesale return to Congressional members voting and acting for the public good. But maybe it's a small start.

Monday, October 26, 2009

About That 37th Place US Ranking In Health Care From WHO

When the initial proposition or premise of an argument over a major decision is found to be false, it's usually time to stop the debate and revisit the entire context of the debate.

Such a situation has now been revealed to be true for the US health care debate. Specifically, Wonderboy and his party's members have made a point of claiming to exhaustion that the US health care systems is ranked "37th in the world." This, we are told, is the reason for redesigning the whole mess. When, that is, the administration isn't claiming that excessive health care costs as a burden on business is the leading reason to redesign the health care system.

Last Wednesday's Wall Street Journal carried a fascinating piece by Carl Bialik in his column, The Numbers Guy, entitled "Ill-Conceived Ranking Makes for Unhealthy Debate."

It should be required reading for every Congressional and administration member, as well as any voter interested in the health care debate. Because Mr. Bialik's piece is so important and, being the WSJ, it won't be searchable by non-paying readers, I've reposted substantial portions of his column, in order to accurately present the big picture of the WHO data.

Before launching into Mr. Bialik's piece, let me provide a general orientation to the topic. Having been a quantitative type from my early years in undergraduate business school, I am fairly well-versed in both doing and critiquing the work of others. Just because someone cites a study, that doesn't mean the study has any bearing on the topic at hand.

Research methodology, as composed of definitions of terms, measurement approaches, and analytical techniques, to name a few components, has many dimensions which may be evaluated for either error, or context for interpretation of results and conclusions.

Mr. Bialik very capably reveals many aspects of the WHO report which mitigate its use as the Democrats and liberals have been applying it in the current health care debate.

Mr. Bialik begins his article,

"During the health-care debate, one damning statistic keeps popping up in newspaper columns and letters, on cable television and in politicians' statements: The U.S. ranks 37th in the world in health care.

The trouble is, the ranking is dated and flawed, and has contributed to misconceptions about the quality of the U.S. medical system.

Among all the numbers bandied about in the health-care debate, this ranking stands out as particularly misleading. It is based on a report released nearly a decade ago by the World Health Organization and relies on statistics that are even older and incomplete.

Few people who cite the ranking are aware that some public-health officials were skeptical of the report from the outset. The ranking was faulted because it judges health-care systems for problems -- cultural, behavioral, economic -- that aren't controlled by health care."

So we learn at the outset that even those in the medical field don't take the vaunted WHO report at its face value.

"It's a very notorious ranking," says Mark Pearson, head of health for the Organization for Economic Cooperation and Development, the 30-member, Paris-based organization of the world's largest economies. "Health analysts don't like to talk about it in polite company. It's one of those things that we wish would go away."

More recent efforts to rank national health systems have been inconclusive. On measures such as child mortality and life expectancy, the U.S. has slipped since the 2000 rankings. But some researchers say that factors beyond the control of the health-care system are to blame, such as dietary habits. Studies that have attempted to exclude these factors from the equation don't agree on whether the U.S. system looks better or worse."

Here we see a failing on the very first element of research design. One of my graduate school mentors, Wharton Marketing Professor Jerry Wind, taught me that if I could not construct the data analysis plan and tables prior to going into the field with my research instrument (questionnaire), then I wasn't ready to field the instrument. A good researcher already has the data analysis plan detailed, with each individual analysis specified, just from knowing what the questions and form of the responses will be.

Foremost among these are the so-called objective variables, i.e., the outcome measures for which causal or related variables are being sought and which effects are being measured.

On that topic, controlling for things which may affect, but aren't strictly part of the study, is critical. In the area of medical system effectiveness, common sense dictates that you need to control for the incoming patients' uncontrollable initial conditions. This would include things like lifestyle variables- diet, exercise, even genetics. Apparently, none of this was done in the WHO study.

"The WHO ranking was ambitious in its scope, grading each nation's health care on five factors. Two of these were relatively uncontroversial: health level, which is roughly the average healthy lifespan of a nation's residents; and responsiveness, which is a sort of customer-service rating encompassing factors such as the system's speed, choice and quality of amenities. The other three measure inequality in health-care outcomes; responsiveness; and individual spending.

These last three measures struck some analysts as problematic, because a country with unhealthy people could rank above a healthier one where there was a bigger gap between healthy and unhealthy people. It is certainly possible that spreading health care as evenly as possible makes a society healthier, but the rankings struck some health-care researchers as assuming that, rather than demonstrating it."

Here, we see the problems arising from what I just mentioned. Health-care outcomes seems a reasonable topic, but "individual spending?" This latter item would absolutely be conditioned upon the initial health situation of individuals. Thus, without some control across populations measured, this measure will be meaningless.

Yet health care spending is one of the two major clubs with which liberals beat the US health care system as poorly performing.

"An even bigger problem was shared by all five of these factors: The underlying data about each nation generally weren't available. So WHO researchers calculated the relationship between those factors and other, available numbers, such as literacy rates and income inequality. Such measures, they argued, were linked closely to health in those countries where fuller health data were available. Even though there was no way to be sure that link held in other countries, they used these literacy and income data to estimate health performance.

Philip Musgrove, the editor-in-chief of the WHO report that accompanied the rankings, calls the figures that resulted from this step "so many made-up numbers," and the result a "nonsense ranking." Dr. Musgrove, an economist who is now deputy editor of the journal Health Affairs, says he was hired to edit the report's text but didn't fully understand the methodology until after the report was released. After he left the WHO, he wrote an article in 2003 for the medical journal Lancet criticizing the rankings as "meaningless."

The objects of his criticism, including Christopher Murray, who oversaw the ranking for the WHO, responded in a letter to the Lancet arguing that WHO "has an obligation to provide the best available evidence in a timely manner to Member States and the scientific community." It also credited the report with achieving its "original intent" of stimulating debate and focus on health systems."

This is stunning! First, we learn that many of the desired data items were simply absent. So rather than either reduce the scope of the study, or redesign it to use available data, the researchers simply grabbed at some presumed correlated measures in some countries, then applied those correlative associations to completely different societies and economies. This technique basically assumes the result, since one uses assumed relationships to churn out "results," which are, of course, as expected, because, well, you created them from an a priori formula.

The results are truly useless, as Dr. Musgrove contends. Further, as Mr. Murray states, the study was only supposed to stimulate "debate and focus on health systems." This would mean it wasn't intended to be conclusive, or used as conclusive evidence about anything actionable. Only to spur debate.

In effect, the WHO designed a flawed study which was only meant, anyway, to provide some rough directional findings for debate. Not to conclude that this or that country was demonstrably better or worse on health care system performance. Precisely what US liberals wishing to nationalize health care are now doing.

"Prof. Murray, now director of the Institute for Health Metrics and Evaluation at the University of Washington, Seattle, says that "the biggest problem was just data" -- or the lack thereof, in many cases. He says the rankings are now "very old," and acknowledges they contained a lot of uncertainty. His institute is seeking to produce its own rankings in the next three years. The data limitations hampering earlier work "are why groups like ours are so focused on trying to get rankings better."

A WHO spokesman says the organization has no plans to update the rankings, and adds, "We would not consider it current."

Here, we have the WHO contending that a study which is 10 years old is still current in its implications. Does anyone else seriously believe this?

More importantly, do you rip up and redesign one of the world's more complex and effective health care systems, some 15% of the US economy, on the unreliable conclusions of a decade-old study not even intended to provide firm conclusions for any actions?

"And yet many people apparently do. The 37th place ranking is often cited in today's overhaul debate, even though, in some ways, the U.S. actually ranked a lot higher. Specifically, it placed 15th overall, based on its performance in the five criteria. But for the most widely publicized form of its rankings, the WHO took the additional step of adjusting for national health expenditures per capita, to calculate each country's health-care bang for its bucks. Because the U.S. ranked first in spending, that adjustment pushed its ranking down to 37th. Dominica, Costa Rica and Morocco ranked 42nd, 45th and 94th before adjusting for spending levels, compared to the U.S.'s No. 15 ranking. After adjustment, all three countries ranked higher than the U.S.

Still, people often claim that the 37th-place ranking refers to quality or outcomes. High spending rates pushed the ranking down but didn't degrade the quality of care. Among those who have recently failed to make that distinction in published comments are Colorado Rep. Diana DeGette; Iowa Democratic Sen. Tom Harkin; and Margaret E. O'Kane, president of the National Committee for Quality Assurance, an advocacy group.

Representatives for Ms. DeGette and Mr. Harkin didn't respond to requests for comment. A spokeswoman for the National Committee for Quality Assurance said, "WHO is a respected organization. ...We have no reason to believe it is inaccurate, and we would never knowingly misrepresent or misuse another organization's data."

Here we see that many US politicians don't even know the details of the WHO study they cite. This is, as I noted in my earlier comments, perhaps the worst way in which research studies are used. Yet that is precisely what liberal US Congressional members are doing with this flawed WHO study of a decade ago.

"The flawed WHO report shouldn't obscure that the U.S. is lagging its peers in some major barometers of public health. For instance, the U.S. slipped from 18th to 24th in male life expectancy from 2000 to 2009, according to the United Nations, and from 28th to 35th in female life expectancy. Its rankings in preventing male and female under-5 mortality also fell, and placed in the 30s.

But even such analyses, more limited in scope than the WHO's effort, face similar problems: How to differentiate between the quality of the medical system and other factors, such as diet, exercise and violent-crime rates.

Some think that if the U.S. health-care system isn't responsible for troubling outcomes, trying to fix it doesn't provide the best return on investment.

"We might get more bang for the buck by setting aside some of our health-care money to support novel approaches to improve nutrition, education, exercise or public safety," says Alan Garber, an economist and professor of medicine at Stanford University. "Not every health problem has a medical solution."Nor can everything be ranked -- especially health-care systems. "I think it's a fool's errand," says Dr. Musgrove."

And here we have the "Sunday punch," as it were, from misusing the WHO study's report.

Let's take the two negative health trends in US male and female life expectancy cited above.

Any sensible person would first ask,

"Which countries moved up in the rankings, which are above the US, and what is different in those societies and countries from the US?"

You wouldn't just assume the difference was due to the countries' health care systems. Diet, lifestyles, genetics, or other cultural differences could all figure more prominently than health care systems.

There is so much detailed commentary one could make on the WHO study's flaws that it's really impossible to do so from the outside. But it's a pretty good bet that to study the various aspects of comparative health care systems' effectiveness's, a lot of smaller studies focused on specific topics in more controlled situations would have produced much more valuable, credible and actionable findings.

From what I read in Mr. Bialik's excellent piece, I have no confidence in any part of the WHO report on health data from a decade ago. It should scare you, as it does me, that our politicians are taking this report at all seriously.

Sunday, October 25, 2009

The Return of the Public Option?

With the conference of the House and Senate Democrats over the several versions of health care that they have now passed, at least in committees, the so-called "public option," or government-run health care, is now back on the table.

Of course, no Republicans are included in these deliberations, as the Democrats apparently believe the American voters won't punish them for not even trying for bi-partisanship on this issue.

Will the CBO rescore any resulting bill containing the vaunted public option?
Will the resulting bill be posted online for at least 72 hours, as Wonderboy promised during his campaign for all major legislation?

We aren't getting C-Span coverage of the debates over this legislation, as promised in his campaign. Rather than the transparency he promised, we're getting the old one-party stiff-arm.

Of all the bad ideas being written into legislation, though, the public option is the worst. No matter how it is conditioned or couched, it represents the looming, eventual move by the federal government to eliminate the private health insurance industry.

This will not end well.

Perhaps enough Democrats are still not so liberal as to believe they will survive their next election after the passage of such legislation.

In a way, it may almost be better to watch these liberals pass this bill, in hopes it will return the House and perhaps the Senate, at a stroke, back to the Republicans. And maybe, as a libertarian friend of mine remarked, the GOP will remember to behave like the party of smaller government.

We can only hope.