Patting the wrists, rolling the eyes.

[Mmmm, Burger (C.J.)]

Originally posted by ltl/fb
TSP is only one fund? Or fed employees have only indexed options?

5 options:

Cash/gov't securities
Bond fund
S&P 500 index
Small-cap fund (wishire 4500)
International (EAFE)

They're adding some lifecycle funds soon. But I believe those aren't true funds but rather preset ratios in the existing funds that change the ratios as you/they age.

The pathetic thing about TSP is that something like 48% of assets are in cash.

ETA: oops, not as pathetic as I thought. 39%, with 42% in the 500 fund.

[ltl/fb]

Originally posted by Mmmm, Burger (C.J.)
5 options:

Cash
Bond fund
S&P 500 index
Small-cap fund (wishire 4500)
International (EAFE)

They're adding some lifecycle funds soon. But I believe those aren't true funds but rather preset ratios in the existing funds that change the ratios as you/they age.

The pathetic thing about TSP is that something like 48% of assets are in cash.

So almost certainly less than 25% of your whatever billion is actually in an indexed fund. ETA oh fine, go on and edit away my thought. It's probably good that so much is in the index fund, eh?

Cash is probably the default -- it frequently is. Some companies are trying to use other things, but it's problematic. I personally really like the lifestyle-type funds, or when they will rebalance for you.

[taxwonk]

Originally posted by sgtclub
But if you put a private company in charge of that, I guarantee it would do a better job.

Define a better job. Do you mean the private company would be more economically efficient in terms of managing costs by passing them along to veterans or by reducing services? Or do you mean that a private company would be moreeconomically efficient by adding an additional cost layer (the need to generate profit) without reducing services or passing costs along to someone else?

If you mean the latter, how would the private provider accomplish it? If you mean the former, what exactly makes it better?

[taxwonk]

Originally posted by Shape Shifter
Is my sarcasm alarm not working?

No, it's working fine. You have to remember that Club is the one who has the knee-jerk reactionh that anything done by the public sector is automatically bad and anything done by the private sector is automatically good. He manages to hold this opinion and not have his head explode by simply assuming away externalities and equating efficiency with the sole metric of reducing costs.

[taxwonk]

Originally posted by Not Bob
The NYSE sure did a bang-up job in the 1920s, didn't it? Google "Richard Whitney" or "Pecora Hearings." The reason that self-regulation works well now is not that the NYSE and NASD are "private entities." Heck, I'd even argue that they aren't even private anymore, given that their rules were approved by the SEC. No, the reason that self-regulation works is because the muscle of the SEC sits behind the NASD and NYSE. Kind of like how the muscle of the Roman legions backed up King Herod.

Even with the SEC sitting behind them, I would imagine many former stockholders of Enron, Worldcom, AIG, Shell, Adelphia, Tyco, and other recent companies in the news would tend to agree that they still ain't worth much as regulators.

[Hank Chinaski]

Originally posted by taxwonk
Even with the SEC sitting behind them, I would imagine many former stockholders of Enron, Worldcom, AIG, Shell, Adelphia, Tyco, and other recent companies in the news would tend to agree that they still ain't worth much as regulators.

The thing I don't get with Worldcom or Enron or all them is that it seems the wrong people got blamed for the losses. We should expect CEOs to be greedy, we should expect outside accountants and lawyers to bend to greed and let the CEOs wreck the companies, but those companies all had big in house accounting and legal departments- those people had a duty to the shareholders to watch and protect and prevent- anybody know if the inhouse guys are in prison?

[Gattigap]

Originally posted by Hank Chinaski
The thing I don't get with Worldcom or Enron or all them is that it seems the wrong people got blamed for the losses. We should expect CEOs to be greedy, we should expect outside accountants and lawyers to bend to greed and let the CEOs wreck the companies, but those companies all had big in house accounting and legal departments- those people had a duty to the shareholders to watch and protect and prevent- anybody know if the inhouse guys are in prison?

Circulate this to your clients, will you?

[Mmmm, Burger (C.J.)]

Originally posted by Gattigap
Circulate this to your clients, will you?

he circulated it last week.

[Tyrone Slothrop]

Club never bothered to answer my post observing that private companies generated the cost overruns on the Bay Bridge, which is too bad. Presumably he would say that the problem is that the state is the buyer, and lets the contractor get away with shit. To which I would point out that there was only one contractor with the capacity to make a bid, which probably explains why the market isn't quite working efficiently. No buyer, public or private, would have much leverage. And then there's the rise in the price of steel, which would have affected any project.

[Tyrone Slothrop]

Originally posted by Hank Chinaski
The thing I don't get with Worldcom or Enron or all them is that it seems the wrong people got blamed for the losses. We should expect CEOs to be greedy, we should expect outside accountants and lawyers to bend to greed and let the CEOs wreck the companies, but those companies all had big in house accounting and legal departments- those people had a duty to the shareholders to watch and protect and prevent- anybody know if the inhouse guys are in prison?

If you expect the CEO to blew off his duty to the shareholders in the name of greed, why would you expect his inside lawyers to stand up to him?

[Shape Shifter]

Originally posted by Tyrone Slothrop
Club never bothered to answer my post observing that private companies generated the cost overruns on the Bay Bridge, which is too bad. Presumably he would say that the problem is that the state is the buyer, and lets the contractor get away with shit. To which I would point out that there was only one contractor with the capacity to make a bid, which probably explains why the market isn't quite working efficiently. No buyer, public or private, would have much leverage. And then there's the rise in the price of steel, which would have affected any project.

You can talk all this pie-in-the-sky Ivory Tower stuff all you want, but at the end of the day, you're stuck with that piece of shit government-sponsered bridge.

[taxwonk]

Originally posted by Mmmm, Burger (C.J.)
The railroads. And even the Erie canal. But what government employee built the interstates? They were built by private contractors with federal money.

And what you're getting at, more generally, is identifying a market failure that gov't action could cure. No one has an incentive to create a comprehensive network of roads, so they didn't. But plenty of private toll roads have been (and continue to be) built, without government intervention. So all you're really saying is that the government did its job in solving a market failure. Not that government does a better job than the market where there is no market failure.

So, in designing health care, you have to identify a market failure that calls for a government-operated solution. The only market failure is not that, but a moral belief that everyone is entitled to "free" healthcare. That's fine, and worth voting on, but it doesn't mean that government needs to be involved in the solution any more than to move money from a rich pocket to apoor one.

The health care industry is one huge case of market failure. The providers have limited incentive to hold costs down in some areas, because they know the insurers will pay the freight. Consumers are always willing to undergo tests or procedures that are margianl, because their out of pocket costs are essentially fixed. The insurance segment keeps raising rates to pay for increased delivery costs, because major employers and unions will pay the higher premiums in order to attract good labor.

Nobody really has to bear any risk except the consumers who are uninsured or underinsured, and the health care industry dumps most heavily on them becasue they are the only ones without sufficient clout to bargain.

In short, there is not a single patiicipant in the market for health care who actually deals at arm's length in a risk-reward setting.

[ltl/fb]

"The Support Antiterrorism by Fostering Effective Technologies (SAFETY) Act was intended to spur development by limiting companies' liability against lawsuits related to antiterrorism products' use."
http://www.govexec.com/dailyfed/0505/050205gsn1.htm

Anyway. No need to get into an extended discussion of "how can weapons be safe" blah blah blah.

[taxwonk]

Originally posted by Hank Chinaski
The thing I don't get with Worldcom or Enron or all them is that it seems the wrong people got blamed for the losses. We should expect CEOs to be greedy, we should expect outside accountants and lawyers to bend to greed and let the CEOs wreck the companies, but those companies all had big in house accounting and legal departments- those people had a duty to the shareholders to watch and protect and prevent- anybody know if the inhouse guys are in prison?

Shame on you, Hank. Posting reruns.

The fact is, most of the in-house guys didn't see the deals that got Enron and Tyco and AIG in trouble (I'm not as familiar with the others). They were looked at wholly outside and at the highest levels in the company. Furthermore, the in-house lawyers are actually the least likely to spill. They can be fired and disbarred for revealing client confidences, and they can't sue their employers if they get fired for whistle-blowing. This was in the courts a few years back and the in-house lawyers lost.

On the other hand, the public acounting firms doing the deals had a public duty, at least with respect to their audit clients, to the shareholders and the markets. Outside counsel had an ethical duty under the Model Rules to not assist their clients in perpetrating fraud. The guys in the most trouble are the ones that should be.

[Mmmm, Burger (C.J.)]

Originally posted by taxwonk
The health care industry is one huge case of market failure. The providers have limited incentive to hold costs down in some areas, because they know the insurers will pay the freight. Consumers are always willing to undergo tests or procedures that are margianl, because their out of pocket costs are essentially fixed. The insurance segment keeps raising rates to pay for increased delivery costs, because major employers and unions will pay the higher premiums in order to attract good labor.

That's not really market failure, that's non-market/regulatory failure. That's been created by a belief that health care should not operate within a normal market. Instead, people should get health care through employers, free or at low cost, and should not bear much or any of the actual costs they impose on the system.

Yes, the health care system is fucked up for a variety of reasons, but you can't claim it's market failure when the current structure is far from any kind of "market" as we usually understand the term.

The moral question is the fundamental one--should health care be allocated in a way other than the market. If so, how do you design a regulatory regime to implement best whatever allocation you want, while also minimizing waste and unfairness. But the justification for doing that is not because the "market" failed--it's because you don't "like" the result the market would reach.* To the contrary, the US has the best health care because it has, to the greatest degree of any developed country, actually let a true market remain to a fair degree.


*contrast, e.g., a market failure like pollution--there there is not a market in the cost of pollution, and there's a collective action problem in limiting it, so one can say it's market failure that we need to cure, not merely impose a moral view of how much pollution should be permitted.