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Showing posts from March, 2010

The cost of Security

When is too much security a bad thing?  One often hears politicians saying "one death is too many", but how does that translate in the real world.

Taking a real world example:  The U.S. government expanded its sky marshal service following the catastrophe of 9/11; today more than 4,000 sky marshals ply the "friendly skies".  Between the end of December 2001 (when the program was first implemented) and December 31, 2009 total arrest by sky marshals was 4, (not per marshal -- in total).  Cost of each arrest was therefore $200 million.

The question is was that an appropriate resource allocation for the government.  But consider this, a number of American shun the airline industry after 9/11 (both fear and additional check-in procedures), the result has been estimated that an additional 3,000 road deaths occurred because of the switch by many Americans away from aircraft (very safe) to their cars (not so safe).

One could say that a percentage of the additional road d…

Manufacturing in China -- Not tested on Animals

I just finished reading Poorly made in China by Paul Midler, a short 241 page book that takes a look at manufacturing in China since 2000.  It is very much an anecdotal look at the country, but it also reveals certain aspect of the behavior of the Chinese people.

My favorite bit is halfway through the book, where the American buyer has changed the information at the back of the bottles of shampoo to indicate that the shampoo was not testes on animals.   I can see many people who would find this an admirable situation for a company to commit not to test its products on animals.  The problem is that the product was not tested at all (excluding consumers)!  In a nutshell, the manufacture was continually  changing the formula without consultation with the American buyer (or for that matter telling anyone) without anyone testing the product to see if it was dangerous when exposed to users.

The more serious aspect of desintermediation is here further illustrated; in the financial sector (i…

American Governmental contribution to GDP growth in Q4/2009 was negative

One of my favorit economic blog: Worthwhile Canadian Initiative published a comparison between Canadian and American GDP growth for the Q4/2009 period, comparing Canada's 5.0% GDP growth to America's 5.9%.  Stephen published the table below which compared the source of growth in the two economies:
The third column of the graph has serious implications; underlining the different impact that government spending are having in both jurisdictions.  Whereas the source of GDP growth in Canada was consumption, government spending and investments, in America GDP growth was caused by inventory, consumption and investments.  It appears that  the massive federal government capital injection into the American economy was completely negated by the cuts in expenses by state and local governments.  The overall GDP growth contribution by all levels of government was negative -- the implication of the ending of federal stimulus will therefore become a serious drag on the economy.  A fun fact is…

More proof of Canada's two solitudes

This morning while reading the papers I discovered that Canada has two different and distinct national anthems.  One in French and one in English.  This is not about the difference in terminology, the two anthems (sung at hockey game every Wednesday night) actually have very different thematic.

The French version is a poem written by a guy called Adolphe-Basile Routhier in 1880.  It remains today largely unchanged from its original text.  The English version is "regularly revised" by the Federal parliament.  What is truly amusing is that as a bi-lingual Canadian I never eve noticed the different texts.  Of course nobody ever talks about this, the only reason its a topic of conversation is that last week in the "Throne Speech" the governor general (Queens representative to the Canadian Government) mentioned that the government was thinking of modifying the English version to remove "Sons" and add something more inclusive and less gender specific.

Nothing …

The challenges of health care

Yesterday I read a fascinating article written by Atul Gawande, an American surgeon who wrote in the New Yorker magazine on cost control in the U.S. medical system.  His premise is that independently of provider (Government, HMO, other) the issue is about the type of incentive given to the medical establishment. 
His layman analogy was that instead of paying a contractor to build your house you paid the trades; plumbers and electricians on the number of faucets and outlets in your house – the outcome is obvious, too many faucets and electrical outlets.
Gawanda focused on what the most expensive and most cost cautious providers were doing.  His finding (as the above analogy indicates) that the compensation system in Medicare is skewed towards quantity and not quality.  What makes his analysis interesting is that in Texas the cost difference per participants in two regions was dramatically different:  $7k for El Paso and $15 for McAllen.  It is noteworthy that we are talking Medicare here…