This article by contrast basically takes the position that the coalition is dead, and that the Republicans are no more ideologically coherent than the Democrats. I don’t understand how Reagan managed to unify those factions (I am too young). The article is about Mitt Romney’s inability to pull off a similar feat. A brief excerpt:

Of all the strategic errors that all of the campaigns have made this cycle, Romney’s effort to appeal to all the individual factions of the GOP may have been the biggest. Even successfully checking all those boxes wasn’t enough for victory last night.

Now I am curious to read more about Reagan: how was he able to unify disparate wings of the Republican party, what exactly did he do, and why do Republicans still idolize him? And why did/does the “Reagan coalition” make more sense than any other selection of interests that will get a candidate to 51% of the electorate?

Substantially all of our revenues and operating expenses are denominated in Renminbi, while a portion of our capital expenditures and indebtedness are denominated in U.S. dollars and other foreign currencies. The Renminbi is currently freely convertible under the current account, which includes dividends, trade and service-related foreign currency transactions, but not under the capital account, which includes foreign direct investment, unless the prior approval of the State Administration of Foreign Exchange is obtained.

I have previously heard about the capital controls on the Chinese economy; for instance, foreigners like me can’t trade Shanghai A Shares. As of the publication of this article (Feb ’05–so not that recent!), Chinese insurance firms and I would assume other institutional investors were not able to invest in foreign stocks.

These facts raise two questions in my head:

• Are Chinese firms now able to invest abroad?
• How are the different regulations on “capital” and “current” account flows actually enforced? It seems it would be very difficult to look at financial transactions between two parties and determine how to categorize each transaction (without significant contextual information, which I doubt is easily available to or usable by a financial regulator).

To answer the first, less interesting, question, I found this article. That article basically (from May ’07) discusses raising the %age of funds which insurers may invest overseas. Here is another article which discusses the (on ice) plans for individuals in China to be able to invest in the HK stock market–the so-called “through train”. I guess the takeaway is that China is not moving very quickly on allowing their firms or citizens to invest abroad. This raises the question of “why”? I think their primary goal with these capital controls is to maintain control over the Yuan’s value.

I’ll follow up on the second question later. It seems much more involved and more interesting!

Bush recently raised the spectre of genocide, in a speech suggesting that a withdrawal from Iraq could lead to killing on the level of Cambodia after the Vietnam War. Many Democrats were skeptical. On the campaign trail, Barack Obama said, “If that’s the criteria by which we are making decisions on the deployment of U.S. forces, then by that argument you would have the hundred thousand troops in the Congo right now–where millions have been slaughtered as a consequence of ethnic strife–which we haven’t done. We would be deploying unilaterally and occupying the Sudan, which we haven’t done.” The argument is shallow: by Obama’s reasoning, America doesn’t have an obligation to prevent large-scale massacres in a country it invaded and occupied, but it does have an obligation not to be hypocritical about it.

A few comments. Packer’s commentary is reasonable, given what literally came out of Obama’s mouth. But Obama is obviously not saying that we should allow a genocide inside Iraq simply to maintain consistency with our policy in Sudan, the Congo, or elsewhere. Packer I’m sure realizes this.

I agree with Packer, but I think his point is irrelevant. What I would assume Obama meant was the following: “Even though a genocide in Iraq would be a tragedy, we simply cannot deploy 100k+ American troops unless there are American strategic interests at stake.” Now I didn’t really word that in a way that would make anyone vote me into the American Presidency, but I think any wording directly conveying that idea would be less punchy and effective than Obama’s original response–even if it is, under very close examination, “shallow.”

So in the meantime I will list some code examples which I hope to put up here in the future:

• Fast poker hand scoring in F#, as inspired by Cactus Kev’s C Poker Hand Evaluator
• Perfect-hashing (used in poker hand ranking)
• Segmenting Chinese text into individual words
• Spidering Yahoo! Finance in F#
• Generating Sudoku Puzzles (and then showing them in Excel so Kejia can play them at work!)
• Determining when people are voting strategically (inspired by The Art of Political Manipulation by William Riker).

There are certainly reasons to buy health-insurance in large groups, but I don’t think they work unless you force everyone in the group to buy health-insurance. As I understand it, the benefit of buying insurance in a large group is that individuals in that group who become expensively ill don’t suffer a massive upward shock on their health-insurance premium. For instance, say I buy a year of health-insurance on my own. During that year, I get cancer and cost the company $500k. They are going to jack up my premiums tremendously at their next opportunity. If I’m in a company of 100 people, the insurer will still jack up the premium for the company, but it will be spread across all of the employees–and all of the other employees are forced to pay this new premium, because you can’t tell the company “I want to be paid $500 extra per month instead of having health insurance.” The practice of spreading the premium across all members of a group is called “group rating” or “community rating”, and it crucially depends on the fact that everyone in the group is required to have insurance–no opting out. If people can opt not to purchase, then you run into the problem of adverse selection, where healthy people don’t insure, so it’s only the ill buying insurance–and their premiums go way up. In effect, community rating means that healthy people subsidize the care of the ill; whether or not this is desirable is a question of ethics, not economics.

One upshot of this is that you, I, and our 1000 closest friends could opt into a lifetihme contract where we all say, “We are going to buy health insurance as a group, and no one can ever opt out.” Now, wouldn’t really trust that contract unless I really trusted the other people involved, or if there were some penalty for leaving the group. A possible incentive would be that you are in debt to the group for $20k at zero-interest with payable in full when you leave the group. Note that no money actually changes hands and a member isn’t actually given $20k on joining; the debt just serves as a disincentive to leave.

I guess joining a group like this would be mutually beneficial for you and me. We would have more negotiating power when buying insurance, and we would have some statistical guarantee that our premiums are going to be less volatile than if we were each buying insurance individually.

So what do the groups look like? Is it desirable to have people all of similar ages & similar social class in a buying group? Or is it desirable to have a mix? For young people, it seems desirable to be with other young people, so that we aren’t subsidizing old people. It’s also desirable for us to group with other people who don’t smoke, exercise enough, won’t get fat & depressed, etc. There is a subtlety here, however. Even in a group/community rating system, it is okay to base premiums upon a number of factors as long as they are observable at the beginning and predictable as to their evolution over time ( e.g. age, sex, possibly even preexisting conditions). The goal of community rating is to decrease the variability of premiums–not to be communist and have everyone pay the exact same amount regardless of age, etc. This way, members have better insight into their future health expenditures, and are less exposed to catastrophic premium increases. And of course, there is a viable continuum between group rating and community rating; i.e. I pay 10% of the total increase in the entire group’s premium due to me. This could mitigate problems of moral hazard.

That is how I could imagine something like this working. I don’t really know how to organize health-insurance buyers groups using facebook, because it seems like joining such a group would involve a level of trust above that implied by linking someone as a facebook friend. Another problem is taxes: currently the US tax code favors health insurance provided by employers, because that type of compensation is not subject to income tax. Basically all economists agree that is really dumb, and that employer-purchased health insurance should be taxed the same way as individual-purchased health insurance. There is plenty of talk among the ’08 presidential contenders of doing exactly that, but for the moment, the tax-issue is a huge problem.

Don’t expect too many personal confessions or soul-searching, though. I intend to remain as inscrutable as ever!