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Talking About Moore's Law, Medicine, and Innovation

My friend Bill Sayre interviewed me today on Common Sense Radio on WDEV. The show is sponsored by the Ethan Allen Institute, where I recently talked about the Economics of Abundance and some of the reasons why Moore's law doesn't apply to every thing.

The show was more a conversation than an interview - more fun that way - and a few listeners joined in as well. (mouse over the player below to see the controls)

 

Bill Sayre and I



 Related post:

Moore’s Law and the Economics of Abundance

Moore’s Law and Medicine: Why We Should Be Spending More

Read Rep. Ryan on His Budget Plan

You don't need a subscription to the Wall Street Journal to read Rep, Paul Ryan's excellent op ed there describing his budget plan. I've quoted some of it below; but, whether you agree or disagree with the thrust of the plan, you should read the whole thing.

Congress is currently embroiled in a funding fight over how much to spend on less than one-fifth of the federal budget for the next six months. Whether we cut $33 billion or $61 billion—that is, whether we shave 2% or 4% off of this year's deficit—is important. It's a sign that the election did in fact change the debate in Washington from how much we should spend to how much spending we should cut.

But this morning the new House Republican majority will introduce a budget that moves the debate from billions in spending cuts to trillions. America is facing a defining moment. The threat posed by our monumental debt will damage our country in profound ways, unless we act…

Our budget, which we call The Path to Prosperity, is very different. For starters, it cuts $6.2 trillion in spending from the president's budget over the next 10 years, reduces the debt as a percentage of the economy, and puts the nation on a path to actually pay off our national debt. Our proposal brings federal spending to below 20% of gross domestic product (GDP), consistent with the postwar average, and reduces deficits by $4.4 trillion.

A study just released by the Heritage Center for Data Analysis projects that The Path to Prosperity will help create nearly one million new private-sector jobs next year, bring the unemployment rate down to 4% by 2015, and result in 2.5 million additional private-sector jobs in the last year of the decade. It spurs economic growth, with $1.5 trillion in additional real GDP over the decade. According to Heritage's analysis, it would result in $1.1 trillion in higher wages and an average of $1,000 in additional family income each year… [nb. I don't believe anyone knows enough to predict the jobs impact of any specific policy]

… This budget proposes to bring spending on domestic government agencies to below 2008 levels, and it freezes this category of spending for five years. The savings proposals are numerous, and include reforming agricultural subsidies, shrinking the federal work force through a sensible attrition policy, and accepting Defense Secretary Robert Gates's plan to target inefficiencies at the Pentagon….

… This budget will build upon the historic welfare reforms of the late 1990s by converting the federal share of Medicaid spending into a block grant that lets states create a range of options and gives Medicaid patients access to better care. It proposes similar reforms to the food-stamp program, ending the flawed incentive structure that rewards states for adding to the rolls…

… Our budget targets corporate welfare, starting by ending the conservatorship of Fannie Mae and Freddie Mac that is costing taxpayers hundreds of billions of dollars. It gets rid of the permanent Wall Street bailout authority that Congress created last year. And it rolls back expensive handouts for uncompetitive sources of energy, calling instead for a free and open marketplace for energy development, innovation and exploration…. [nb. Music to my ears]

… The open-ended, blank-check nature of the Medicare subsidy threatens the solvency of this critical program and creates inexcusable levels of waste. This budget takes action where others have ducked. But because government should not force people to reorganize their lives, its reforms will not affect those in or near retirement in any way.

Starting in 2022, new Medicare beneficiaries will be enrolled in the same kind of health-care program that members of Congress enjoy. Future Medicare recipients will be able to choose a plan that works best for them from a list of guaranteed coverage options…

… This budget would focus on growth by reforming the nation's outdated tax code, consolidating brackets, lowering tax rates, and assuming top individual and corporate rates of 25%. It maintains a revenue-neutral approach by clearing out a burdensome tangle of deductions and loopholes that distort economic activity and leave some corporations paying no income taxes at all….

We can reform government so that people don't have to reorient their lives for less. We can grow our economy, promote opportunity, and encourage upward mobility. This budget is the new House majority's answer to history's call. It is now up to all of us to keep America exceptional.

We needed someone to say it like it is. Rep. Ryan did. Will we in the middle class be willing to give up the quaint notion that we can vote entitlements for ourselves without having to pay a premium to fund those entitlements through taxes and loss of choice. Will Republicans have the nerve to run on this platform? Will Democrats who disagree propose responsible alternatives to solve the looming insolvency, which is the price of doing nothing? Will we all have the wisdom to see past the demagoguery and fear mongering that is sure to be a part of this debate?

Hope so.

Related post:

Rep. Ryan’s Budget: Change You Can Believe In

Rep. Ryan’s Budget: Change You Can Believe In

Any politician who claims federal spending can be brought under control without substantial changes to Medicare, Medicaid, and Social Security is at least ignorant and, if not ignorant, lying; but most Republicans campaigned on a platform of reduced budgets and ignored or denied the need to cut these entitlements. Any politician who thinks that the federal budget can keep growing at the rate forced by the growth in these three programs is doing electoral and not budget math; but most Democrats in Congress have voted for continual expansion of these programs. Politicians know that even people who are for "less spending" don't want programs cut which they think benefit them.

The fiscal year 2012 budget proposal prepared mainly by House Budget Committee Chair Paul Ryan (R-WI) is a welcome act of political bravery: it addresses all three of these entitlements and reduces the anticipated federal deficit over the next decade by $4 trillion (which, incidentally, doesn't eliminate the deficit). It also proposes fixing the very broken tax system which results in some paying punitive rates while others (can you spell GE?) paying nothing.

The full plan is slated for release later this week, but, according to details in a Wall Street Journal article based on a Fox News Sunday interview with Rep, Ryan, Medicare (health care for the elderly) as we know it today would be replaced by an insurance premium subsidy program with higher payments to those in greatest health or financial need. Geezers (like me) who are already on Medicare or will be on Medicare in the next ten years would be able to stay with the current program if we want to; those who are currently under 55 won't have this choice. Even though Ryan developed the Medicare proposal together with Democrat Alice Rivlin of the Brookings Institute, this part of the budget plan is certainly to be the lightning rod for political attacks. There is nothing as easy to be a demagogue on as the fear of us seniors of being left without adequate medical care unless it is the fear of potential heirs that we'll spend all "their" money keeping ourselves alive.

Medicaid (health care for the poor), under the proposal, would be converted to block grants to the states. Today the states get federal matching funds to implement Medicaid but struggle under federal rules and mandates and compliance reviews which drive up costs while making the programs less effective than they could be. Opponents will fear, with some justification, that states will now race to cut their Medicaid expense to no more than whatever the feds pay; states are taking more control over their own budgets anyway now that the flood of stimulus dollars is gone. However, states go through elaborate machinations to make as many expenses as possible qualify for Medicaid reimbursement in order to attract more federal money; the more a state spends (with limitations), the more it gets from the feds. The result has been a fast ratchet upward of Medicaid expenditures. With full control over Medicaid, states will be able to coordinate it with other aid programs to the same population.

So far we don't know the specifics of the plan to bring Social Security costs down. Of the three entitlements, it is the one with the least immediate problems.

As draconian as this all sounds, the result is just to bring federal spending down to roughly 20% of gross national product – exactly where it has been for decades and was in 2008 (although GNP was bubbling in 2008). Keep that in mind when you hear the howls of protest.

According to the WSJ, part of the full proposal is likely to be eliminating loopholes and deductions in the tax code and bringing the top rates down. Like reigning in entitlements, these are changes that need to happen for the sake of fairness and the economy. Like reigning in entitlements, this proposal will generate a chorus of "but you can't eliminate MY loophole." These complaints will come from those whose campaign contributions bought the loopholes and tax expenditures (credits) in the first place. It will take great political courage to stand up for a fair and simple tax code, which doesn't have anywhere for GE to hide – but also makes it less expensive, on the whole, to pay one's fair share.

Rep. Ryan has done us all a huge favor by bringing the important issues out of the closet. We owe it to ourselves to have a real debate which goes beyond pandering, fear mongering, slogans, and sound bites.

Related posts:

Post Stimulus, States Are Where the Action Is

The Deficit Reduction Draft Proposal is the Stimulus Program We Need!

Cutting the Deficit – Just Do It!

Game Changers for the Next Five Years

Change is a fractal; its results are chaotic. Small effects can have huge consequences; a black swan may or may not matter. The rate of change – especially the propagation rate – has accelerated in a time of easy and cheap global travel and communication. Ten year planning is an academic exercise of almost no practical consequence; even five year planning is presumptuous. Nevertheless, here is a list of things which may or may not happen in the next five years; some are mutually exclusive. It's at least fun to think what'll happen to the best-laid plans and the most learned prophesies if they do.

  • A third party replaces the Democrat or Republican Party in the US
  • China splinters into several countries along ethnic lines
  • China annexes sub-Saharan Africa
  • The Saudi monarchy is kaput
  • Deflation rather than inflation becomes the current monetary norm
  • Hyper-inflation destroys the dollar
  • The price of energy resumes its historical downward trend (adjusted for inflation or deflation as the case may be)
  • Concern over global warming evaporates
  • Concern over global warming becomes immediate and compelling (UN-sponsored meetings don't count as evidence)
  • The Euro is abandoned
  • The Euro-zone becomes a single nation
  • The UN is kaput
  • At least marijuana is legalized in the US
  • A major natural or unnatural calamity strikes a heavily populated area
  • There is a pandemic with a high fatality rate
  • The Internet has to be abandoned because of…(pick your cyber-threat)
  • Widespread implantation of connectivity chips in human brains

Although each of the above is unlikely, it is likely IMHO that one or more of them will occur in the next five years. Almost certain is that some things not on the list will occur by 2016 and have more effect than any of the above.

If you suspect that this list is actually the work plan for my blogging, you're right. But all subject to change.

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hackoff.com: An historic murder mystery set in the Internet bubble and rubble

CEO Tom Evslin's insider account of the Internet bubble and its aftermath. "This novel is a surveillance video of the seeds of the current economic collapse."

The Interpreter's Tale

Hacker Dom Montain is in Barcelona in Evslin's Kindle-edition long short story. Why? and why are the pickpockets stealing mobile phones?

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