News — At The Edge — 1/18 – Doc Huston

U.S. government is grossly out of step — monetary policy, healthcare, entitlements, personal data and education — in every area that impacts our lives.


“BIGGEST challenge economists face today is how to deal with downturns…[fearing] central banks will not have enough tools to fight the next recession…[because] short-term interest rates are still close to or below zero and cannot be cut much more, depriving central banks of their main lever….

[Past] experimental measures, such as bond-buying (‘quantitative easing’, or QE) and making promises about future policy (‘forward guidance’)…have been effective economic stimulants, although judging their exact impact is tricky….

[So] central bankers are sounding the alarm…[that] global economy faces a liquidity trap in which monetary policy loses its bite…[so what] might be needed is a one-off blast of spending or of tax cuts….

[While] interest rates have been in long-term decline…[since] 1980s…new research suggests it is a much longer-run phenomenon, and…that time was a historical peculiarity….

Governments and central banks need to redesign their toolbox to deal with a low-rate world…[by] finding ways to bridge the shrinking gap between monetary policy, which is set by technocrats, and fiscal policy, which is set by politicians[and may] require the careful use of…‘helicopter money’ — a handout to the public funded by the printing presses.”


“US spends an average of $2,479 per patient on admin costs, compared with $551 per capita under Canada’s single-payer system primarily the result of bureaucratic hoops US healthcare providers must jump through to fulfill complex billing…[as]fractured private health insurance system…[from]1999 to [2017]… added $100 billion burden each year….

Nearly half of all US health spending is tied to admin management, per a 2018 JAMA report — and the cost…are being passed along to US consumers, making treatment an unmanageable expense…with the average nonelderly US family spending $8,200 per year on healthcare — or 11% of their income….

67% of all US bankruptcies are due to exorbitant healthcare costs…[and] delayed treatment for a serious illness because of the high cost of care….

[Shift to] single-payer Medicare For All system…could be [solution].”


“Americans have equated greater thriftiness with greater worthiness.

Progressives decry the limited saving and wealth accumulation of middle-income families….Conservatives applaud thrift as an aspect of self-reliance….Moderates believe universal social insurance programs…[a.k.a.] entitlements, should be modest or even curtailed out of fiscal prudence.

In the current economic context of extremely low interest rates…these views are [misplaced]…[and] federal government should provide more…social insurance…[for] reduced inequality, a more secure middle class and a stronger economy….

[What] keep middle-class families up at night are retirement, economic dislocation and supporting their children…[in] college and then buy a first home….[Need] well-functioning society in which Social Security meets retirement needs, appropriate unemployment and wage insurance…[to] cushion economic shocks, adequate public funding holds down college costs, and health insurance has generous coverage would greatly reduce the need for most households to save.

It is highly inefficient to rely on individual saving rather than universal public programs to deal with life’s contingencies…[because] individuals saving for retirement or the proverbial rainy day can over a lifetime dissipate as much as 20 percent of their savings in commission payments…[and] self-reliance is an especially implausible way to deal with catastrophes such as disability or the loss of a good-paying job…[so] pooling risk through insurance is the best strategy.

All of this has always been true…[but] this an especially propitious time to expand…government-provided social insurance…[because] the interest rate on safe debt securities is essentially zero….

[So] as long as initiatives are financed at least in substantial part from highly progressive taxes, the result will be to reduce inequality…[but] even if fully paid for by contributions, will raise demand in the economy by reducing households’ need to save…[moving] the economy forward and contribute to financial stability.”


“Today, people fuel the digital economy with…[personal] data but have…no power to demand fair compensation for it…[so] need a new market for pricing data…[that] establish an economic value for data privacy…[and] specifies how data value is assessed, secured and traded….

[A]n effective data marketplace needs a mechanism that accounts for individual users’ privacy sensibilities…[yet] changes dynamically based on one’s life situation and how that bit of data is combined with other data points to yield insights….

[Given] data breaches and…revelations about privacy infringements…we will not reach the next stage of digital growth without greater trust…to ensure their privacy.

Any real economic value of data will require greater user control over data sharing…[with] four structural elements: personalized data management; the assignment of data ownership; a transaction infrastructure; and dynamic data pricing.

  • Personalized data management…requires a fundamental shift in who defines the terms and conditions of such interactions…and at once force and incentivize digital service providers to accept the user’s privacy….
  • [For] data ownership…a brute force approach might be to make data unusable without consent…[or] a transaction infrastructure that detects unacceptable types of quantities of trackers on a site, and then recommends alternative digital service providers (DSPs) that allow for better protections or agree to negotiate the value of data. This would eventually instigate a privacy competition among DSPs….
  • [A] transaction infrastructure that can recognize market trends, aggregate datasets based on those trends, and then create sellable units of data…to issue sales contracts or data-usage licenses…[that] stipulate the terms for use of the data…clarify the exclusivity of a given dataset…[and] establish a base for the market to enforce those conditions….[Together] would require extensive automation of contract and license generation, acceptance, and enforcement….
  • [Finally] dynamic data pricing…[to close] gap between the actual price of data (about $0.0005 per person, on average) and the perceived value that creators attribute to their loss of privacy (about $36)… and do so in as frictionless a way as possible….

[It’s] essential to shift the digital economy away from the one-sided objectification and manipulation that has squandered…trust — toward an equitable…data paradigm…[for] economic and societal growth.”


“[Gas leak] led a lot of schools…to install air filters, and…test scores went up…[and] gains were sustained in the subsequent year…[from] $700 commercially available filters that you could plug into any room in the country….

[A] growing literature on the cognitive impact of air pollution…finds that everyone…suffers deteriorations in performance when the air is more polluted….

[Student] math scores went up by 0.20 standard deviations and English scores by 0.18 standard deviations…[and] comparable in scale to some of the most optimistic studies on the potential benefits of smaller class sizes…[which] costs much more than $700 per classroom….

[Moreover] students benefited from cleaner air for about four months….[So] how much more change we could see if students benefited from…pre-K through high school graduation, of clean air?….

[Oddly] the government has long been aware that indoor air pollution is a potential problem….

The benefits [are]…extremely large at a relatively low cost. And since air pollution is generally worse in lower-income communities, you…[raise] scores nationally…[and make] progress on the big socioeconomic gaps in student achievement that have proven very difficult to remedy.”

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