unsettling economics

Infinite Regress In Insurance Coverage

mperelman — Tue, 15 Jul 2008 01:49:39 +0000

Sclafane, Susanne. 2008. “New Product Covers Legal Costs If Buyers Decide to Challenge Claim Denial.” National Underwriters Property and Casualty.”

http://www.propertyandcasualtyinsurancenews.com/cms/nupc/Weekly%20Issues/issues/2008/26/News/P26CLAIMSDISPUTE

“The risk that a claim won’t be paid — a potential downside that every buyer of insurance faces — was an uninsured exposure until recently, according to the developers of a new policy to provide coverage so that risk managers can contest such rejections.”
“The new coverage, available to businesses of all sizes, will pay up to $250,000 in legal expenses associated with contesting the denial of an insurance claim under a commercial policy.

“We know that wrongful coverage denials occur in our industry. There’s a reason coverage attorneys exist today,” Mr. White [Jason White, a managing director for Professional Services Group of Swett & Crawford, in the Los Angeles office of the Atlanta-based wholesale brokerage] said, explaining the impetus for the product launch. In fact, he noted, the idea came from a coverage law firm—Surdyk & Baker in Chicago.”

Andrei Shleifer, Billionaire?

mperelman — Mon, 14 Jul 2008 16:52:52 +0000

David Warsh has done some interesting investigative pieces about Shleifer, but he may underestimate Shleifer’s wealth by quite a bit.. The link in the article below gives his update of Shleifer.

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http://www.economicprincipals.com/issues/2008.06.01/320.html

The article linked here suggests the wealth of Shleifer may be immense. To his credit, Shleifer still does activeeconomics work, but still ….

http://www.portfolio.com/views/blogs/market-movers/2008/06/02/andrei-shleifer-billionaire?rss=true

A Brief History of Privatization: Fannie Mae and Ginny Mae as Exemplars?

mperelman — Mon, 14 Jul 2008 01:35:15 +0000

I am writing this to provoke a conversation rather than as a demonstration of my expertise. Here was one of the first New Deal agencies go under. What was the interest in privatizing Fannie Mae during the Johnson administration? Was it the Democrats close ties with the savings and loan industry?

Because these two agencies had apparent (but nonexistent) government guarantees, they apparently had an advantage over banking interests. For a long time, well before anyone fretted about housing crises, there was a great deal of antagonism toward these agencies. During that period, I was wondering what the elimination of these two agencies would mean for housing. Now that they are in trouble, the government stands ready to rescue the investors — another instance of the Bear Stearns syndrome. But barely anything to help the poor souls who were victimized.

On a personal note, my daughter was wanting to buy a home about a couple years ago. Her friends sent her to stay broker to explain how she could fudge her nonexistent income and get a home. She was told she could create a good credit score, even as she had no credit.

Okay, here is my central question: has there ever been a privatization that has worked to the benefit of society?

Life in an Alternative Universe

mperelman — Fri, 11 Jul 2008 18:15:53 +0000

The panel last night was very interesting. The hall was very, very big and quite full. I am guessing 600 people or more, which two large screens with projections of the speaker’s image (or his power points). During my talk, I mostly focused on a couple people in the front row who were squirming and scowling with everything that David Himmelstein and I said.

We must’ve done quite well because the number of people sympathetic to single-payer rose by 400% after the talk — from two to eight. Many people came up to congratulate David (who did an extraordinary job) and me. What I think they meant was that we did not sound like the caricatures that they would expect after having been immersed in Fox TV.

Seemingly thoughtful libertarians would come up and tell me horrendous things that the government is doing. My favorite was that California is imprisoning families for homeschooling because they refuse to submit to state indoctrination. These people seem quite intelligent, but live in an alternative universe in which there ideas go unchallenged.

The next debate will be a bit different since my “partner” will not be someone like David Himmelstein, but someone selected because is a black woman who works in the ghetto in New Orleans. She is also a Republican Party operative in a state.

A Stranger an a Nearby Land

mperelman — Thu, 10 Jul 2008 17:52:35 +0000

We just returned from Mexico, but Las Vegas seems much more foreign to me. The airport with a casino with loud and glaring videos advertising the main casinos in town. The lobby of the hotel is a casino. I see people sitting on top of their slot machines putting money in, but nobody looks very happy. Many of the other casinos look like a larger version of something that parents would set up for a children’s birthday party — gaudy and patently phony. I have a hard time imagining what the attraction would be.

There are two other large conventions in the hotel. The National Strength and Conditioning Association and a national pawnbrokers association. I was talking to a fireman from the first convention, or just got back from Chico. Incidentally, the awful picture that was on the main page of the Washington Post was from Paradise, about 12 miles from Chico. Much of the town is under evacuation orders. Driving to the Sacramento Airport, when we got a little closer to the fire, the visibility was not much more than 100 yards.

Last I heard, Freedomfest had 1300 paid participants at almost $500 apiece. The meeting has 120 booths. Some are people making investment pitches, but most are very conservative organizations, such as Cato and Heritage Foundation. Both Ron Paul and Bob Barr have booths as well.

I know almost nobody here. I did spend a couple of afternoons with Milton Friedman’s son, David, when he was younger and less famous. In later years, he showed no sign of recognition when I encountered him.

A number of sessions are devoted to debunking environmentalism. I do not know if the people are offended by the idea of environmental disruption or government programs to supposedly mitigate the problem. Gold and the dollar seem to be of major concern. People like Steve Forbes and Richard Viguerie will be talking about politics.

There is a strange feeling in being immersed in an alternative universe — stranger still in an environment like Las Vegas.

Neoliberal Priorities

mperelman — Tue, 08 Jul 2008 23:09:45 +0000

The air continues to be horrible, filled with ash as well as smoke. Today the fire crew lost control of one of the nearby fires. I assume it will get worse today since the temperatures between 108 and 110.

People are being evacuated. Dormitories are being opened for the evacuees.

I had to go to the dentist about 5 miles away. Even though I wore a mask and peddled slowly, I still felt tired when I came home.

Close to 20,000 people are fighting fires in the state, and the fire season is not yet begun.

A few National Guard people have been assigned to the fires, but we know where many of the rest are.

The state faces a $15 billion deficit. No stimulus package here. The Republicans have enough votes to block any tax increases and vowed to do so.

The whole tragedy seems to be an experiment in neoliberalism: inadequate public resources to meet unexpected problems, fires here, flooding in the Midwest, inadequate regulation of everything from food to finance. We are in an election year and I have not heard one politician saying anything reasonable.

My Idea of Freedom

mperelman — Mon, 07 Jul 2008 04:14:25 +0000

Here is my contribution for the panel on freedom, which got hammered out today after I cleared my head with an hour and a half of basketball, mostly unsuccessfully trying to keep up with a 20-year-old Vietnamese kid. My goal here was to speak against the idea of individual responsibility.

Mark Skousen, the organizer, told me he thought the panel might be on C-SPAN, but he told me that about the medical panel earlier. In any case, I was overwhelmed by the valuable suggestions that people offered for the health care session. Here is the link:

freedom

Healthcare follies

mperelman — Sat, 05 Jul 2008 21:46:08 +0000

I am getting ready to leave for my final summer trip to Las Vegas, where it will be appearing with a host of conservative luminaries, such as Ron Paul, Bob Barr, Steve Forbes, Christopher Hitchens, and Dinesh D’Souza. I will be in two debates beginning next Thursday. David Himmelstein and I will be debating single-payer with John Mackey, the head of Whole Foods and John Goodman, the man who invented health savings accounts. Here is what I whipped up today. I would very much appreciate any comments.

The second debate will concern the nature of freedom. There, I will be debating John Mackey again and two others whom I do not know. I will call for help again on that one is in his I get something prepared. Here is what I have so far:

health

And the website for the conference.

http://freedomfest.com/

Escaping from the disaster front

mperelman — Thu, 26 Jun 2008 21:31:46 +0000

I am now in Toronto for the History of Economics meetings. Lucky timing. The fires are continuing Chico. The American Red Cross Disaster Response Team is set up in one of the campus buildings. Arnold Schwarzenegger came to town yesterday to see how bad it was.

Fires and floods are becoming commonplace. Our only hope is drilling for oil offshore and Alaska.

News From the Disaster Front

mperelman — Fri, 13 Jun 2008 17:47:39 +0000

Some of you may have seen the news about the huge California wildfires. One of the biggest started just outside of Chico, but has been moving up toward Paradise, about 10 miles away. 5000 homes are at risk and much of the city has been evacuated. It is also very close to the junior college. As of this morning, the fire is only 10% contained. The expected shift in the winds will blow the fire up the canyons causing enormous damage.

Part of the problem is the inadequate rainfall we have had. Maybe we could make a trade with the midwest.

35 miles an hour winds kept much of the smoke away until this morning. Visibility is now very bad. I do not know how many pack-of-cigarettes-equivalents I am getting from breathing the air.

On Sunday morning, I will be on my NAFTA tour, giving a talk in Mexico City and then attending the History of Economic Society meetings in Toronto.