Maxine Udall (girl economist)

Financial Win-Win or Financial Debacle (continued)

The NY Times provides additional information on the government program aimed at goading banks into modifying mortgages rather than foreclosing. It appears to be challenging for the banks and progress has been slow. Only about one fourth of the originally projected 4 million modifications are likely to occur at the present rate. It's an interesting contrast with the behavior of investment funds who appear to be able to modify the loans efficiently. What is it with the banks?  Is it guvmint red tape? Is it the hope of another bailout? Is it a learning curve? Is it those pesky borrowers who can't seem to fill out paperwork or document income in a timely fashion? Is it misaligned financial incentives? Or are the banks too big to be efficient or competent at learning a new and necessary skill quickly AND too big to fail? Is it rocket science to retool and retrain your workforce with new skills? Isn't that one of the beauties of capitalism: that it makes firms quicker to respond to market changes? Too big to fail and too big to change seems like a bad combination for a large financial institution. Did we bail out the General Motors of banks? If so, maybe they are the ones that should be "modified?"

Just sayin'...

Debacle, not win-win?

Financial Win-Win or Financial Debacle-in-the-Making: What Is Wall Street Up to Now?

A recent article in the New York Times describes how investment funds are buying “billions of dollars worth of home loans, discounted from the loans’ original value.” The investment funds are helping home owners refinance the loans working with lenders that work with the Federal Housing Administration (FHA) and other Federal agencies. The advantage for homeowners is that because the loans were purchased at a discount, the funds can afford to refinance by reducing the loan amount below the amount of the homeowner's original loan.

The funds make money by selling the refinanced and now taxpayer-insured loans to another Federal agency, the Government National Mortgage Association (GNMA) or Ginnie Mae which in turn bundles them into mortgage-backed securities (MBS) that are sold to other investors.  As long as the refinanced amounts in aggregate exceed the value originally paid by the investment fund for the discounted block of loans, the funds make money.

Homeowners benefit because as of last June roughly 30% of outstanding mortgages were under water. By reducing the value of the loan, homeowners enjoy lower monthly payments, a loan amount that is closer to the home’s true market value, and increased incentives to continue to make payments on the loan. All of this contrives to elevate the probability that they will continue to make mortgage payments (barring job loss) and taxpayers won’t be called upon to pay off the loans when homeowners default.

Is this the beginning of another sub-prime mortgage mess with US taxpayers underwriting investment fund profits or is this an example of the beauty and power of financial markets to “fix” some of the problems created by many of the same players in those markets using  similar securitized instruments?

Maxine doesn’t know. She knows that homeowners are more likely to keep making payments on a mortgage that reflects the true value of the house it secures and they’re more likely to keep making payments when the payments are a smaller share of their income. She knows that investors holding MBS that have fallen in value can either hold or sell at a loss. Maxine thinks some of them deserve to take a loss and if that loss can be turned into a win for homeowners, it’s not a bad thing.

Because she’s an economist, Maxine probably isn’t as exercised as some might be by the same wonderful players who nearly bankrupted us now making a profit by refinancing loans. She’s enough of a realist to know that fairness is elusive and markets often don’t even approximate it.

But Maxine also wonders about the loan insurance that taxpayers are being asked to underwrite along with all the other risk and potential liabilities we’ve assumed over the last year or so.  If the economic recovery doesn’t include a rebound in consumption and increasing employment, the refinanced loans may be underwater again or in default with US taxpayers obligated to pay investors holding Ginnie Mae MBS.

This is either the best example of the market producing a financial win-win that Maxine has ever witnessed or it is the beginning of a national disaster. She can’t tell which. The best solution would be transparency in these markets. It would greatly reduce the likelihood that Gyges is lurking, obscured behind complex financial instruments, syphoning off capital while US taxpayers are left holding the risk and the obligation to compensate investors holding Ginnie Maes.

Let the sunshine in.

What's the big deal about the new breast and cervical cancer screening recommendations?

New guidelines for cervical cancer screening coming close on the heels of recommendations by the US Preventive Services Task Force that routine mammographies be delayed until age 50 and then repeated every 2 years have created dicussion and apparent controversy about screening. Disclosure: Maxine knows a little about cancer because she had it seven years ago and is mercifully disease free today. For this reason, she feels she may be able to weigh in on this controversy as both a (girl) economist and as a cancer survivor.

In some ways, this is similar to the controversy that arose when the Women's Health Initiative (WHI) released their report indicating hormone replacement therapy (HRT) in post-menopausal women elevated risk of cardiovascular disease, including stroke, and breast cancer. Elevated risk of mortality among women taking estrogen plus progestin persisted three years after the study was halted although the causes of the death changed. In addition, women taking estrogen plus progestin were at increased risk of stroke and diminshed cogntive function.  The findings produced considerable controversy. An article about the controversy (co-authored by several of Maxine’s friends) docments the many interest groups that contributed to and benefited from the controversy, not least of which were the drugs manufacturers for whom HRT represented significant revenues. Wyeth, manufacturer of Premarin® saw revenues plummet from $2.5 billion per year to around $260 million per year after WHI released the first study results.

Physicians entered the fray on several fronts. Some acted as patient advocates because women were reluctant to return to a life of hot flushes and because they (falsely) believed that HRT represented a sort of “fountain of youth.” However, many who weighed in publicly had financial ties to drugs manufacturers (see the Institute of Medicine report on Conflict of Interest in Medical Research, Education, and Practice, particularly here). In an interesting example of collusion between physicians and drugs manufacturers, Wyeth had arranged for and paid physicians and others to ghostwrite many articles published in medical and scientific journals that reported benefits, but few harms, for HRT. The physicians whose names appeared on the articles did not disclose their financial relationship with Wyeth.

Now we have a Federal task force recommending fewer screenings that should be performed later in life than had originally been recommended and controversy has erupted. As with HRT, it helps to think about the interest groups involved. Radiologists and oncologists benefit financially from early and excessive screening as do medical laboratories.  Even when there is little or no benefit for women, these groups will benefit by the reimbursed amount for each test or procedure (net of the marginal cost of each test or procedure). Hospitals and surgeons benefit from unnecessary biopsies as long as reimbursed amount exceeds marginal cost. Drugs companies benefit from the revenues associated with sales of chemotherapeutic agents, breast implants, antibiotics, and other drugs associated with cancer treatment. Presumably, the revenues from chemotherapeutic agents, etc, renders a very real benefit in lives saved, but the uncertainty of cure or remission makes this trade off less straightforward. And women benefit when cancer is detected early because they (presumably) have a better chance of treatment leading to remission or cure. The argument that early detection improves survival is difficult to prove because we have no counterfactual (i.e., a group of women who are detected early but not treated) with whom to compare early detected, treated women.

In evaluating “controversies” from recommendations based on research findings, the first question Maxine always asks is: who benefits financially? She is especially skeptical when more of something is recommended. In the present case, less is being recommended and this alters her perspective somewhat. Clearly the usual suspects do not benefit financially from the recommendation. The nation as a whole may benefit if reductions in unnecessary screening and tests slows the rate of growth of medical expenditures. (There’s no guarantee it will do this if providers simply increase other services to offset losses from this change in policy, but it is a step in the right direction).

The new recommendations place the focus squarely on women’s welfare. They are the ones most likely to be harmed by a reduction in screening. Or are they? The point of the task force is that statistically speaking, a woman’s individual risk of having an undetected cancer is quite low if the new screening policy is adopted. It should be noted that the new policies still recommend screening for high-risk women, those with a family history of breast cancer, for example.

It is the uncertainty about benefits and harms in combination with the statistical probabilities of detection and death (which also derive from uncertainty) that make recommendations of this sort difficult to formulate and evaluate. Added to this is an attitude about consumer sovereignty that is unique to the US.  If a woman fears cancer (no matter how irrationally) and wishes to be screened, she should be able to do it and have her insurance company pay for it. Perhaps fortunately, the medical marketplace doesn’t work like this. Docs are gatekeepers. Insurance companies raise financial impediments. Consumers are largely uninformed as the complexity of their disease and treatment increase.

The groups that have made the new recommendations for breast and cervical cancer screening represent the best science at this time interpreted by individuals who are trained in scientific methods. Group members’ conflicts of interest appear to be transparent.

The tension in medicine whether delivered or financed publicly or privately will always be between individual autonomy to demand screening at any age, scientific evidence that screening of low-risk women under 50 yields little benefit either to the woman or society, and societal resouce constraints in which unnecessary screening and associated costs translate into lost opportunities for investment in other socially and individually beneficial resources like education, expanded health access, and improved infrastructure to name a few. Resolving these tensions intelligently is the "big deal" in health and public policy.

 

Maxine's Health Links for November 10 2009

NYT: Heavier Americans push back on health care debate

 On Capitol Hill, the association asked legislators for a public option from which fat people could not be excluded because of weight and for coverage that did not consider excess weight a pre-existing condition.

No. The restriction must apply to all insurers. Otherwise, all the high risks get dumped on the US taxpayers...like the system we have now.

 NYT: Evidence-based medicine at Intermountain Health

 For most of human history, James explained, doctors have done more harm than good.

Maxine is a little worried that with all the conflicts of interest and the co-opting of medical research by PHRMA, the above is more recently true than we know.

 Atul Gawande's New Yorker article on differences in medical practice patterns in two Texas towns

 McAllen has another distinction, too: it is one of the most expensive health-care markets in the country. Only Miami—which has much higher labor and living costs—spends more per person on health care. In 2006, Medicare spent fifteen thousand dollars per enrollee here, almost twice the national average. The income per capita is twelve thousand dollars. In other words, Medicare spends three thousand dollars more per person here than the average person earns.

That would be OUR tax dollars at work.

 WSJ: A different viewpoint on evidence-based medicine

 State pay-for-performance programs also provide disturbing data on the unintended consequences of coercive regulation. Another report in the most recent Health Affairs evaluating some 35,000 physicians caring for 6.2 million patients in California revealed that doctors dropped noncompliant patients, or refused to treat people with complicated illnesses involving many organs, since their outcomes would make their statistics look bad. And research by the Brigham and Women's Hospital published last month in the Journal of the American College of Cardiology indicates that report cards may be pushing Massachusetts cardiologists to deny lifesaving procedures on very sick heart patients out of fear of receiving a low grade if the outcome is poor.

 Medicare's web-based hospital comparison tool

 In case you’re interested...

 NYT: Economist Robert Frank_A New Day for Physicians' Pay

 Elsewhere, most doctors are salaried. But under most American health plans, including Medicare and Medicaid, doctors are reimbursed according to how many tests and procedures they perform.

There is evidence that when medicine was less adversarial than it is now, American doctors were both happier and more respected, even though their incomes were much lower. Doctors elsewhere also remain satisfied and respected, though they are paid less than their American counterparts. In time, medical schools will be able to attract plenty of talented people willing to accept positions under the Mayo model, where they would spend more time healing patients and less time fighting insurers. Any of the current health reform bills would help start this transition.

It’s like CEO pay in many ways, yes?

 NYT: Watch the Walk & Prevent the Fall

More than one-third of people ages 65 or older fall each year. About one fall in 10 results in a serious injury, like a hip fracture. Roughly 20 percent of older people who suffer a hip fracture die within a year. The estimated economic cost of falls ranges widely, up to $75 billion a year in the United States, if fall-related home care and assisted-living costs are added to medical expenses.

NYT Obit: Jeremy Morris proved excercise is heart healthy, dies at 99.5 years

 In a follow-up study, Dr. Morris found that a lower incidence of heart attack among people doing physical work was not, for the most part, related to other factors, like body type. Transport for London, the city’s transportation agency, provided him with the sizes of the trousers it supplied to its workers. His data indicated that the conductors’ waistbands were smaller, but that their protection against heart attack could not be explained by their relative leanness. They had a lower risk of heart attack whether they were slim, average size or portly.

 Support for the first article above. Nothing’s ever simple is it?

 NYT: MBAs guide socially concerned entrepreneurs

“Getting vaccines approved through the U.S. regulatory process takes years. I thought to myself, if we could just clean the water, we could eliminate many diseases all at once,” she said. Following up that logic, Ms. Ryan founded Waltham Technologies, a water purification company in Boston of which she is the chief executive. Waltham uses bioengineered blue-green algae and sunlight to clean wastewater and generate biofuels.

WSJ: Cigna says net rose 92%, New York Regulators say Cigna lied to them

The New York State Insurance Department is looking into allegations that Cigna Corp. failed to accurately account for $5 billion in health-care premiums in its disclosures to regulators.The Department sent a letter to the Philadelphia-based insurer Thursday requesting more information on the discrepancy, which was unearthed during an investigation by the Senate Committee on Commerce, Science and Transportation into the percentage of premiums insurers spend on medical care. That percentage is known in the industry as "the medical-loss ratio."The committee, headed by Sen. John D. Rockefeller IV (D., W.Va.), contends that Cigna mislabeled $5 billion worth of insurance it sells to small and large companies by calling it "other" business in its annual regulatory filings to states. Mislabeling the claims could violate state laws designed to ensure small businesses are not overcharged by health insurers, the committee alleges.

New York state's insurance department has cracked down on health insurers before. Last year, it made Oxford Health Insurance Inc., a subsidiary of UnitedHealth Group Inc., give back $50 million in premium income to its small-business customers after it found that Oxford had not allocated enough of it to medical care.

NYT: Impact of House Health Reform Bill on Medical Industry

“All industries stand to gain from this legislation,” Steven D. Findlay, senior health policy analyst with Consumers Union in Washington, said in an interview. “They’re going to continue to fight their narrow issues and get the best that they can get. But all of them are aware they stand to gain significant new business and new revenue streams as more Americans get health coverage and money flows into the system for them.”

Maxine has said this before: the health care industry is where IBM was in the late 70’s/early 80’s.  It needs serious innovation and a new business plan that melds private and societal interests in a way that improves efficiency and individual and community health outcomes. Successful health reform will alter the medical paradigm. Anything that simply continues the old system with new beneficiaries is unsustainable in the long-run.

Maxine's Links for November 8 2009

WSJ: After errors hospital must put video cameras in OR

Operating on the wrong part of a patient is what health wonks call a “never event” — something that should never happen. So what do you do if a hospital has done five wrong-site surgeries since January, 2007?

 Another good example of the market failing to fix something that most economists (and right-wing ideologues) love to assume it will fix. It’s sort of like the bankers who gambled their banks into bankruptcy. Why were they not self-interestedly prudent?  Maxine thinks in this case it’s a combination of Gyges and short-term private gain that is at odds with social benefits, where both are supported by an antiquated business model that evolved with a near reverence for medicine and medical doctors (M.D. does not stand for Minor Deity) that insulates physicians and hospitals from the negative sequelae of their own bad management and bad behavior.

The Economist's Schumpeter on public funding of entrepreneurial endeavor

Last year Israel, a country of just over 7m people, attracted as much venture capital as France and Germany combined. Israel has more start-ups per head than any other country (a total of 3,850, or one for every 1,844 Israelis), and more companies listed on the NASDAQ exchange, a hub for fledgling technology firms, than China and India combined.

Maxine asks: how can we be sure that a public entity or actor will be able to discern the entrepreneurial activity deserving of public funding? How do we prevent it becoming a siphon for taxpayer money to political cronies?  How do we prevent it becoming ossified into entrenched silos and interests that become barriers to new and innovative ideas that may compete with the “financial interests” of the established silos and interests?

Just asking....

Bloomberg: Roubini says bank mergers may create "bigger monster"

Nouriel Roubini, the New York University professor who predicted the financial crisis in 2006, said mergers between U.S. banks may create institutions that pose too great a risk to financial stability.

Nobody listened to him the last time either....

NYT: Nicholas Kristof provides some sound statistics documenting the myths about US healthcare

“I will never forget standing outside the chemo treatment room knowing that the medication needed to save my life was only a few feet away, but that because I had private insurance it wasn’t available to me,” Linda wrote. “I read a comment from someone saying that they didn’t want a faceless government bureaucrat deciding if they would or would not get treatment. Well, a faceless bureaucrat from my private insurance made the decision that I wouldn’t get treatment and that I wasn’t worth saving.”

Maxine is a cancer survivor who didn’t have to fight too much with her private insurance company during that pesky little interlude (she thinks because her insurer was her employer and she had a good employer), but she has been asking this question for a long time: Remind me again why we are so afraid of the guvmint, but not afraid of a “faceless bureaucrat from my private insurance” company? Maxine really wants to understand this.

 Robert Wood Johnson Foundation report on inter-country comparisons of health outcomes

                Just in case you think Kristof was making it up.

McClatchy News: Recovery? The 10.2% without job might beg to differ

As bad as Friday's jobs report was, showing October's unemployment rate jumping sharply to 10.2 percent, the outlook is likely to worsen for American workers well into next year. Economists expect the jobless rate to keep climbing, perhaps above 11 percent, as employers produce more with fewer workers and shy away from hiring.

And despite the huge transfer of capital from taxpayers to banks, banks still aren’t lending.

Maxine will  say this one more time: if you want a socialist country, you should keep voting for lawmakers who support policies that keep sticking it to the middle and lower classes. We’re a democracy. We can vote. And eventually, we will want our (larger) piece of (even a shrinking) pie back. A more evenhanded bailout with a better safety net for displaced workers, including access to healthcare and extended unemployment benefits, would have been fairer.  And government-funded jobs creation by rebuilding and creating new public infrastructure is an intergenerational win-win. For God’s sake, this is not rocket science (or even mathemetized and therefore incomprehensible economic theory).

WSJ: Bank Failures hit 120 as United Commercial Bank Fails

 U.S. regulators closed five more banks on Friday, reaching 120 for the year, as souring loans and the lingering effects of last year's financial crisis continued to weigh on the nation's financial institutions.

Calculated Risk reports that US taxpayers lost $299 million when the preferred stock they received in exchange for TARP funds provided to United Commercial Bank were rendered worthless by the failure which will also cost the FDIC an additional $1.4 billion dollars.

 

Maxine's Links for November 5 2009

Award-winning McClatchy News provides the results of a 5 month investigation of Goldman Sachs

 A five-month McClatchy investigation reveals how Wall Street colossus Goldman Sachs peddled billions of dollars in shaky securities tied to subprime mortgages on unsuspecting pension funds, insurance companies and other investors when it concluded that the housing bubble would burst.

If you read nothing else this week, read this series of articles, please.

McClatchy's State by State breakdown of mortgage defaults and delinquencies

The rate of mortgage delinquencies has skyrocketed since 2004, when only 1 percent of traditional mortgages, known as prime, were 60 days in arrears and just 1.5 percent were in foreclosure. Even mortgages given to risky borrowers, known as sub-prime, had low rates of trouble then — 4.5 percent were 60 days late and 3.82 percent were in foreclosure. By July 2009, those rates were unbelievably high, as the chart below shows.

 Maxine will award points to anyone who can explain to her how this could possibly reflect the efficient allocation of capital.

Goldman Sach's Secret Bets Against Subprime Loan Recipients

 McClatchy's Greg Gordon details how Wall Street colossus Goldman Sachs sold billions of dollars worth of risky bonds, while secretly betting that the housing market would drop and send the values plummeting.

 Maxine is shocked...shocked....oh, wait. No. The business of business is business and if you don’t believe her, read about death futures below.

San Jose couple stands up to Goldman

Meet the Beckers, a California couple who stood up to Wall Street colossus Goldman Sachs in a multi-year battle to save their modest San Jose home.

 Remind Maxine please: why is it that we’re more afraid of the guvmint than we are of big business? Money and power in anyone’s hands, private or public, is a dangerous combination.

Forbes on the Death Futures Market

The market for the buying and selling of life insurance policies for investment purposes had a rational basis in the beginning. Increasingly, though, this market is evolving into transactions where the main purpose is to charge exorbitant fees and commissions. Life insurers are also going after the wealthy elderly, convincing them to rent their high net worths and their lives to become insured for the sole purpose of then selling the life insurance policies.

 Let’s see...these are the same companies who are going to provide sub-prime health insurance in private markets more efficiently than the feds...sure they are.

NYT: Wall Street Pursues Profits in Bundles of Life Insurance

The bankers plan to buy “life settlements,” life insurance policies that ill and elderly people sell for cash — $400,000 for a $1 million policy, say, depending on the life expectancy of the insured person. Then they plan to “securitize” these policies, in Wall Street jargon, by packaging hundreds or thousands together into bonds. They will then resell those bonds to investors, like big pension funds, who will receive the payouts when people with the insurance die. The earlier the policyholder dies, the bigger the return — though if people live longer than expected, investors could get poor returns or even lose money.

Critics of life settlements believe “this defeats the idea of what life insurance is supposed to be,” said Steven Weisbart, senior vice president and chief economist for the Insurance Information Institute, a trade group. “It’s not an investment product, a gambling product.”

Goldman Sachs has developed a tradable index of life settlements, enabling investors to bet on whether people will live longer than expected or die sooner than planned. The index is similar to tradable stock market indices that allow investors to bet on the overall direction of the market without buying stocks.

Let’s hope the investors never learn the names of the people they’ve bet will die early. Maxine has no confidence that they won't find some way to "improve" the odds of an early (and larger) payoff. And let's hope the sub-prime version of this market is stopped before it gets started. Maxine isn't saying that old people shouldn't be able to sell their life insurance policies if they need the cash. She's saying the market needs to be regulated and transparent and the elderly need to be fully informed.

Goldman Sachs.  Maxine will say it again: please remind me why we’re all afraid of the guvmint, but we’re not afraid of big business?  Or, worse,  guvmint married to big business?

Maxine's Links for November 4 2009

FT: Taming markets to make capitalism ethical

 Capitalism has slipped its moral moorings. Since the financial crisis erupted, remedies have focused on capital, equity and structure. These are certainly necessary. But it is even more important that we address the deficiency in moral and human spirit which was the real root of the crisis. We are doomed to repeat our mistakes if we do not restore sound ethics to economic behaviour.

You think?

 FT: Video on John Ruskin and executive pay (requires subscription)

 There is no wealth but life. –John Ruskin

 It’s about time...

NYT, Paul Krugman: A picture is worth a thousand words

             No words necessary...

 FT: Economists’ blog_How Mistaken Ideas Brought Down the Economy

 The efficient market hypothesis, which has had a dominant role in financial economics, proposes that all relevant information is in the price. Prices will then move only in response to news. The movement of the market will be a “random walk”. Mr Smithers shows that this conclusion is empirically false: stock markets exhibit “negative serial correlation”.

 Another nail in the EMH coffin.

 Brookings Institution: Five Myths about Our Land of Opportunity

Americans have always believed that their country is unique in providing the opportunity to get ahead. Just combine hard work with a bit of talent and you'll climb the ladder—or so we've told ourselves for generations. But rising unemployment and financial turmoil are puncturing that self-image. The reality of this "land of opportunity" is considerably more complex than the myths would suggest.

It’s a great country, but it could be greater and fairer.

Maxine's Links for November 2 2009

FT: McDonalds Pulls out of Iceland

 The loss of the Golden Arches highlights the extent of Iceland’s economic demise since the pre-crisis boom years when its “Viking Raider” entrepreneurs turned Reykjavik into an international finance centre and launched a buying spree of high-profile European assets.

Market forces are a bitch....

 Kaiser Health News: Fight Erupts Over Health Insurance Rates For Businesses with More Women

 The Pennsylvania home health care company Linda Bettinazzi runs is charged about $6,800 per worker for health insurance – $2,000 more than the national average for single coverage. One reason: nearly every one of her 175 employees is a woman. ... Insurers say women under the age of 55 cost more to cover because they use more health services, and not just for maternal and infant care. But Bettinazzi, the president and CEO of Visiting Nurse Association of Indiana County, believes there's something inherently wrong in charging her company more because it hires a lot of women.  ... Studies cite, among other costs, maternity and reproductive care that requires mammograms, Pap smears and regular doctor visits. Women also use more prescription drugs and may have to contend at younger ages with cervical cancer and breast cancer.

 Is Maxine the only one who has noticed that there’s usually some male involvement in producing the conditions that require “maternity and reproductive care?”  Are the prescription drugs oral contraceptives? There’s certainly a causal link between sexual behavior and cervical cancer. Maxine is reminded of the good old days, when young women pregnant out of wedlock got to have the baby and raise it themselves while the fathers went on to college and marriage (to someone else). Surely the men in the risk pool would not expect the women they are consorting with to bear the full costs of contraception, maternity, and other reproductive care? That wouldn’t be fair, would it? Just asking...

 NYT: New Regs for Toys Hurt Small US Manufacturers

 Maxine thinks this article provides good insight into both the up side and the down side of regulation. She also is struck once again at how advantageous regulation is to large firms. The costs alone assure that smaller competitors will be forced out of the market. So small businessmen oppose all regulation, thereby helping their larger competition AND hurting consumers. Surely, there’s a way to protect consumers and small businesses?

 Youtube: Economist questions on Jeopardy

Maxine found herself wondering what proportion of Econ Bachelor degrees, Master degrees, and doctoral degrees could answer all of these. History of economic thought has not been a top priority in most graduate econ programs in the US. See here also. Maxine has had conversations with card-carrying PhD economists who appear to have little or no knowledge of the writings of, say, Adam Smith. They know Milton Friedman, but do not seem to have read Capitalism and Freedom (for example). She hasn’t met a math nerd yet who knows about the Cowles Commission and how it gave him/her a major boost. So Jeremy Bentham???? Just saying...

 WSJ: Tighter Belts Mean Thicker Waists

 Maxine still can’t figure out why whole foods with fewer additives cost more to produce than “processed”  foods. Maxine wonders if some of this is simply market segmentation and price discrimination by food manufacturers. Would there be economies of scale that would reduce the prices of whole foods if, say, regulation required less processing, better quality control, and fewer additives universally? Wouldn’t firms then compete to produce whole foods more competitively thereby driving down prices? Shouldn’t the “default” be healthy food with high nutritional content? Then people who “prefer” empty calories can exercise their god-given right to be fat and unhealthy and the rest of us can enjoy the benefits of lower grocery bills, good health, and lower health insurance premiums. Just asking...