The College Backlash Is Going Too Far

Americans are losing their faith in higher education. In a recent Wall Street Journal poll, more than half of respondents said that a bachelor’s degree isn’t worth the cost. Young people were the most skeptical. As a recent New York Times Magazine cover story put it, “For most people, the new economics of higher ed make going to college a risky bet.” The article drew heavily on research from the Federal Reserve Bank of St. Louis, which found that rising student-loan burdens have lowered the value proposition of a four-year degree.

American higher education certainly has its problems. But the bad vibes around college threaten to obscure an important economic reality: Most young people are still far better off with a four-year college degree than without one.

Historically, analysis of higher education’s value tends to focus on the so-called college wage premium. That premium has always been massive—college graduates earn much more than people without a degree, on average—but it doesn’t take into account the cost of getting a degree. So the St. Louis Fed researchers devised a new metric, the college wealth premium, to try to get a more complete picture. They compared the wealth premium of people born in the 1980s with that enjoyed by earlier cohorts. Because those earlier generations have been alive longer and thus have had more time to build wealth, the researchers projected out the future earnings of the younger cohort. They found that the lifetime wealth premium will be lower for people born in the 1980s than for any previous generation.

That analysis, however, suffers from a key oversight. In estimating the lifetime earnings for people who are now in their 30s and early 40s, the researchers assumed that the college wage premium will stay constant throughout their life. In fact, it almost surely will not. For Baby Boomers, Gen Xers, and older Millennials, the college wage premium has more than doubled between the ages of 25 and 50, from less than 40 percent to nearly 80 percent. Likewise, the college wealth premium for past generations was initially very small but grew rapidly after age 40. History tells us that the best is yet to come for today’s recent graduates.

Wages grow faster for more-educated workers because college is a gateway to professional occupations, such as business and engineering, in which workers learn new skills, get promoted, and gain managerial experience. Most noncollege workers, in contrast, end up in personal services and blue-collar occupations, for which wages tend to stagnate over time.

For example, truck drivers in the U.S. earn an average annual salary of about $48,700, according to my analysis of data from the American Community Survey. (Full-time unionized drivers can make much more, but they’re in the minority.) That’s close to the average annual income for four-year college graduates working full-time at age 24. It’s easy to see why some young people might look at those numbers and opt against borrowing money to attend a four-year college. Yet the math will be very different a decade later. For example, average earnings in business occupations, where almost everyone has a four-year degree, are about $50,000 at age 24, but double to $100,000 by age 50. Average earnings for truck drivers grow from about $36,000 to only about $51,000 over the same period. The earnings advantage for college graduates increases steadily with work experience, until eventually they are earning nearly twice as much as workers with only a high-school degree.

The debt timeline is basically the reverse. Most federal student loans have a repayment period of only 10 years, which begins shortly after graduation. (The exception is income-based and income-driven repayment loans, which charge a share of borrowers’ discretionary income for 20 to 25 years. These are about a quarter of all loans today and were less common several years ago. Private loans vary in term length, but most are about 10 years.) This means that the typical college graduate must completely repay their loans by their mid-30s. In other words, the earnings premium from a bachelor’s degree is smallest in the years when graduates are also paying down their debts. We are effectively asking a 17-year-old high-school student to delay gratification until age 35 or later—longer than they have been alive. But the rewards are worth it. (...)

Negative public sentiment might dissuade some people from going to college when it is in their long-run interest to do so. The potential harm is greatest for low- and middle-income students, for whom college costs are most salient. Wealthy families will continue to send their kids to four-year colleges, footing the bill and setting their children up for long-term success.

Indeed, highly educated elites in journalism, business, and academia are among those most likely to question the value of a four-year degree, even if their life choices don’t reflect that skepticism. In a recent New America poll, only 38 percent of respondents with household incomes greater than $100,000 said a bachelor’s degree was necessary for adults in the U.S to be financially secure. When asked about their own family members, however, that number jumped to 58 percent. 

by David Deming, The Atlantic |  Read more:

Image: Getty/The Atlantic

[ed. And, of course, the benefits of being surrounded by people who, like you, are all experiencing a critical time in their transition to adulthood with different life strategies and perspectives.]

What Was In It For Them?

John Kelly, the longest-serving White House chief of staff for Donald Trump, offered his harshest criticism yet of the former president in an exclusive statement to CNN.

Kelly set the record straight with on-the-record confirmation of a number of damning stories about statements Trump made behind closed doors attacking US service members and veterans, listing a number of objectionable comments Kelly witnessed Trump make firsthand.

“What can I add that has not already been said?” Kelly said, when asked if he wanted to weigh in on his former boss in light of recent comments made by other former Trump officials. “A person that thinks those who defend their country in uniform, or are shot down or seriously wounded in combat, or spend years being tortured as POWs are all ‘suckers’ because ‘there is nothing in it for them.’ A person that did not want to be seen in the presence of military amputees because ‘it doesn’t look good for me.’ A person who demonstrated open contempt for a Gold Star family – for all Gold Star families – on TV during the 2016 campaign, and rants that our most precious heroes who gave their lives in America’s defense are ‘losers’ and wouldn’t visit their graves in France.

“A person who is not truthful regarding his position on the protection of unborn life, on women, on minorities, on evangelical Christians, on Jews, on working men and women,” Kelly continued. “A person that has no idea what America stands for and has no idea what America is all about. A person who cavalierly suggests that a selfless warrior who has served his country for 40 years in peacetime and war should lose his life for treason – in expectation that someone will take action. A person who admires autocrats and murderous dictators. A person that has nothing but contempt for our democratic institutions, our Constitution, and the rule of law.

“There is nothing more that can be said,” Kelly concluded. “God help us.”

In the statement, Kelly is confirming, on the record, a number of details in a 2020 story in The Atlantic by editor-in-chief Jeffrey Goldberg, including Trump turning to Kelly on Memorial Day 2017, as they stood among those killed in Afghanistan and Iraq in Section 60 at Arlington National Cemetery, and saying, “I don’t get it. What was in it for them?”

Those details also include Trump’s inability to understand why the American public respects former prisoners of war and those shot down in combat. Then-candidate Trump of course said in front of a crowd in 2015 that former Vietnam POW Sen. John McCain, an Arizona Republican, was “not a war hero. He was a war hero because he was captured. I like people who weren’t captured.” But behind closed doors, sources told Goldberg, this lack of understanding went on to cause Trump to repeatedly call McCain a “loser” and to refer to former President George H. W. Bush, who was also shot down as a Navy pilot in World War II, as a “loser.”

CNN reached out to the Trump campaign Monday afternoon, telling officials there that a former administration official had confirmed, on the record, a number of details about the 2020 Atlantic story, without naming Kelly, and seeking comment. The Trump campaign responded by insulting the character and credibility of retired Joint Chiefs of Staff Chairman General Mark Milley, who had nothing to do with this story. An updated statement from a Trump campaign spokesperson on Tuesday said, “John Kelly has totally clowned himself with these debunked stories he’s made up because he didn’t serve his president well while working as chief of staff.”

The Atlantic article also described Trump’s 2018 visit to France for the centennial anniversary of the end of World War I, where, according to several senior staff members, Trump said he did not want to visit the graves of American soldiers buried in the Aisne-Marne American Cemetery near Paris because, “Why should I go to that cemetery? It’s filled with losers.” During that same trip to France, the article reported, Trump said the 1,800 US Marines killed in the Belleau Wood were “suckers” for getting killed.

And Kelly’s statement adds context to a story in the book “The Divider: Trump in the White House, 2017-2021,” by Susan Glasser and Peter Baker, in which Trump, after a separate trip to France in 2017, tells Kelly he wants no wounded veterans in a military parade he’s trying to have planned in his honor. Inspired by the Bastille Day parade, except for the section of the parade featuring wounded French veterans in wheelchairs, Trump tells Kelly, “Look, I don’t want any wounded guys in the parade.”

“Those are the heroes,” Kelly said. “In our society, there’s only one group of people who are more heroic than they are – and they are buried over in Arlington.”

“I don’t want them,” Trump said. “It doesn’t look good for me.”

by Jake Tapper, CNN |  Read more:

Image: Aaron P. Bernstein /Getty/ via People

[ed. The title of this essay could be addressed to anyone who went to work in the Trump administration. Kelly was an enabler who hardly covered himself in glory while working there (even while listening to all this). Too late now. But hey Trump "patriots" (ha!), always nice to know what your leader is 'thinking' (yeah... fake news).]

Inside the Cult of Buc-ee’s

How a Texas gas station became the people’s pump.

A trip to the gas station usually warrants more of a hurried waddle to the bathroom than a commemorative TikTok. But most gas stations are not Buc-ee’s.

The Texas-based (and Texas-supersized) gas and convenience store chain offers much more than a place to fuel up and grab a bag of chips. Its devoted fans make regular pilgrimages, sometimes driving hundreds of miles, to stock up on Beaver Nuggets and brisket and merch with its bucktoothed mascot’s smiling face. Even its restrooms are award-winning.

Dylan and Shelby Reese, a husband-and-wife TikTok team, have been loyal Buc-ee’s customers since the chain first arrived in Alabama in 2019, opening its first location outside of Texas. In a June video that’s been viewed more than 6.7 million times, Shelby filmed her delighted husband nearly skipping into Buc-ee’s, fawning over its famous brisket — “meat for days!” — and a beaver-branded leopard print swimsuit while juggling coffee and sandwiches in both hands.

“Florida has Disney World — we have Buc-ee’s,” Dylan said, with deep conviction, in the video. (Florida also has two Buc-ee’s locations.)

Less than 24 hours after their filmed visit, they returned to do it all over again.

There are other regional convenience chains that inspire similar fervor among fans: Wawa has its hoagie enthusiasts, Maverik its Western-inspired architecture and in-house restaurant. But Buc-ee’s is the biggest of them all — world-record-breakingly big — and it’s regularly named one of the cleanest, tastiest and overall best places to stop for gas in the country. And now, its fanbase is surging among non-Texans and young people who’ve discovered the spot on TikTok and document their first visits for hundreds of millions of viewers.

How does a gas station cultivate such a devoted following? Buc-ee’s spokesman and general counsel Jeff Nadalo said the brand keeps it simple: “Buc-ee’s has remained committed to providing award-winning clean restrooms, freshly prepared food, cheap gas, and outstanding customer service.”

It’s a simple-enough recipe for success, and yet Buc-ee’s is still one-of-a-kind among competitors. Here’s what experts, some of whom are Buc-ee’s regulars themselves, say sets the Texas chain apart and turned it into a phenomenon.

Buc-ee’s turns a necessity into an adventure

Buc-ee’s turns what would be a quick trip anywhere else into mid-road trip adventure, said Jeff Lenard, spokesperson for the National Association of Convenience Stores (NACS).

Buc-ee’s provides those necessities — food, fuel, restrooms — in such overwhelming quantities that a trip might extend a drive by 30 minutes to an hour, Lenard said. Its biggest store in Sevierville, Tennessee, is also the world’s largest convenience store at 74,707 square feet — almost 30 times the size of the industry average of 2,500 square feet, per NACS. It advertises its pristine bathrooms for hundreds of miles along interstates and delivers, too — Buc-ee’s bathrooms have won awards for their otherworldly cleanliness. And its food selection is more comparable to a Trader Joe’s than a vending machine, with a bakery, an entire wall of bagged jerky of varying flavors and a brisket station manned by employees in straw hats who holler every time a new hot slab of beef is ready for chopping.

“That’s the great innovation of Buc-ee’s,” said Eric Benson, a journalist and Texas transplant who wrote about Buc-ee’s path to “world domination” for Texas Monthly in 2019. “It took this thing people have to do, which is stop on these 200-mile car trips between cities, and make it into just a little bit of an experience.”

The evolution of Buc-ee’s into a Texas-sized gas station superstore with a cult following started off slowly, Benson wrote. Arch “Beaver” Aplin opened the first Buc-ee’s in 1982, in the small town of Lake Jackson, Texas. That first store was only 3,000 square feet and offered a few gas pumps and a modest selection of snacks, though it was built with brass ceiling fans and cedar wall accents for a slightly more upscale feel on the inside, wrote Benson. It wasn’t until 2012, when Aplin opened a 56,000-square-foot Buc-ee’s in Bastrop, a small city 30-plus miles outside of Austin, that the chain became known for its massive highway stops.

And in the 11 years since, as it’s expanded beyond the largest state in the lower 48, Buc-ee’s has become a must-stop, one-stop-shop for road trippers who want to do their business and grab a meal with the promise of quality.

“Buc-ee’s is a place where you get to see a real cross-section of society,” Benson told CNN. “Everyone drives. And everyone who’s driving has to stop somewhere to fill up their gas, go to the bathroom and get something to eat. Buc-ee’s is kind of the best place to do it.”

Don’t underestimate the power of a clean bathroom

Convenience stores across the country may tout their toilets’ cleanliness on billboards. But most of them don’t have dozens of stalls like Buc-ee’s does, nor do they advertise their facilities as “world famous.”

But the bathrooms at Buc-ee’s are the real deal, fans say. The Reeses told CNN that from the outside, it’s easy to assume based on the line of dozens of cars waiting for their chance to explore Buc-ee’s, one might expect the wait for a bathroom stall to be interminable. But one would be wrong, they said — “there are almost more stalls than gas pumps!”

Bathrooms are the “most important” component of the convenience store experience to nail if a business wants repeat customers, Lenard said. They’re often a customer’s first stop, and if the restroom is filthy, that customer is more likely to run back to the comfort of their car than wander the store for a few minutes afterwards. But if they’re pristine, like Buc-ee’s claims its bathrooms are, then that impressed patron’s curiosity is piqued, and they might spend more time perusing.

“They are so clean you could eat a sliced brisket sandwich off of them,” the Reeses told CNN, though they wouldn’t exactly recommend noshing on brisket in the bathroom.

At the biggest Buc-ee’s stores, there are countless aisles for customers to get lost in. There’s seasonal merchandise that dresses the Buc-ee’s beaver in a Santa costume or throws his gaping maw on a tie-dye T-shirt, along with far more expensive fare — Lenard said he’s spotted a gas grill worth more than $1,400 on sale at Buc-ee’s.

“It starts with the bathroom,” Lenard said. “Stellar bathrooms can sell an awful lot of product.”

by Scottie Andrew, CNN |  Read more:

Image: Buc-ee's

[ed. For my Texas friend Jerry, who loves Buc-ee's. See also: Buc-ee’s: The Path to World Domination (Texas Monthly):]

"Buc-ee’s pays its employees well above market rate; cashiers start at $14 per hour in most locations and get three weeks’ paid vacation and a 401(k) plan, in an industry where it’s common for cashiers to make minimum wage, about half as much. Aplin expects smiles and attentive service in exchange. There’s no sitting on the job and no using cellphones. Like cast members in an elaborate theatrical production, employees also must adhere to certain wardrobe and grooming standards. They are not allowed to display visible tattoos or body piercings. Men are prohibited from having long hair; nobody can have unnaturally colored hair. There are no open-toed shoes, no torn or faded clothing.

Buc-ee’s employees who buy into this don’t just love their jobs, they tend to become evangelists. (...)

Still, Buc-ee’s has a tiny footprint in the national convenience-store landscape. The industry leader, 7-Eleven, has more than 9,000 locations nationwide. Circle K, running a close second, has nearly 8,500. Buc-ee’s has 34 stores total.

But Buc-ee’s has a reputation far greater than its store count. It has become the rare brand—like Apple and Costco—that inspires loyalty that goes well beyond rational consumer calculations. People love Buc-ee’s, and they like to talk about how much they love Buc-ee’s."

Rex Brandt, Night Fishing 1959

via:

The Illegal French Delicacy: Ortolan

If you saw a group of people with napkins on their head at the dinner table, what might you think? You’d be forgiven to think it was some strange Hollywood ritual. But the real reason is, they’re eating a french delicacy called Ortolan.

Hannibal, Billions, Succession, American Dad — all feature this absurd, and illegal practice. I shared a video about this on my TikTok account and this practice clearly struck a nerve, garnering close to 400K views. One of the most common comments I got was, “I saw this on American Dad — but thought this was a joke?”

No my friends, consuming Ortolan is not a joke — in fact the practice is said to date back to ancient Romans living in the South of France who would breed calling birds to attract and bait unsuspecting wild Ortolan into their traps.

In modern preperations, the small bird is caught at night in nets during their migratory period as they head south towards Africa. They’re then kept in covered cages. The dark encourages them to gorge themselves, fattening them up on grains like Hansel and Gretel until they’re nice and plump (nearly two times their size!) Once they’re sitting fat and pretty, they are thrown into a container of Armagnac liquor where they drowned and marinate.

The birds are roasted for eight minutes until they quote “sing” and are plucked before service. The diner places the napkin over their head and eats the bird whole, feet first, tiny bones and all.

Crunch Crunch.

The bigger bones are removed and placed neatly on the plate.

Chef (and personal hero) Anthony Bourdain had a secret night of dining with other chefs where he partook in this ritual. In his book, Medium Raw, he writes:

“I bring my molars down and through my bird’s rib cage with a wet crunch and am rewarded with a scalding hot rush of burning fat and guts down my throat. Rarely have pain and delight combined so well. I’m giddily uncomfortable, breathing in short, controlled gasps as I continue slowly — ever so slowly — to chew. With every bite, as the thin bones and layers of fat, meat, skin, and organs compact in on themselves, there are sublime dribbles of varied and wondrous ancient flavors: figs, Armagnac, dark flesh slightly infused with the salty taste of my own blood as my mouth is pricked by the sharp bones. As I swallow, I draw in the head and beak, which, until now, have been hanging from my lips, and blithely crush the skull.”

Like a kid who has been told legendary tales of a unicorn his whole life and the mystical creature finally appears — his reaction is giddy at the opportunity and rarity of the moment, but also feels a tinge of guilt.

There is another famous reference to ortolan in the HBO show Succession. Where the ritual serves as a way for the wealthy 1%ers to set themselves apart from the rest of the world. Sure, maybe there’s some good flavor with the Ortolan but can crunching bones and spurting juices really be better than say some smoked brisket, a nice burger, or steak? Or is it really about the rarity and privilege of the opportunity? The social capital that comes with being of means to obtain the forbidden fruit? (...)

Okay, but why the napkin over the head? There are several possibilities a diner might choose to do this.

The first is shame.

Historically they would put the napkin over their head to protect their sins from god, with the napkin on, they believed god couldn’t witness their sin.

The second is sensory.

By putting the napkin over the diner’s head, they are able to trap and continually inhale the rich aromas.

Lastly, is decorum (if you can call it such).

With all of the crunching of bones and beak, spurting, and removal of the larger bones — the scene can be quite unsavory and appetite suppressing.

Today, eating of Ortolan is now outlawed — it was so widely consumed at one point its population dropped by an estimated 40% and in 1999 France put a stop to its consumption and again in 2007 with even stronger legal measures.

But where there’s demand, there’s supply — and the practice still continues underground with each bird fetching nearly 200 euros. It’s estimated some 30,000 birds are still eaten annually.

by Austin Miller, Medium |  Read more:

Images: uncredited/MaxPPP/Roger Tidman/Corbis/Guardian
[ed. What a world. See also: Why French chefs want us to eat this bird – head, bones, beak and all. (Telegraph); and, A French delicacy being eaten to death (Cosmos).]

AI Images

Spirals in Nature

Images with hidden text (eg. "New York" above)

via:

DIY Geoengineering: The Whitepaper

This past summer didn’t just break temperature records in the US and Europe, it was an unprecedented increase from previous years. Climate change explains why temperatures are going up in general, but not why the rate of change increased so much this summer in particular, or why it was centered on the North Atlantic. The explanation there might be a ban on sulfur emissions from container ships. Although sulfur has various bad environmental effects, it also blocks sunlight and cools the ocean; removing that effect caused a one-time large temperature increase. So should we start emitting sulfur again? Do more deliberate geoengineering?

It hit 96 degrees when I started writing this post (that’s about 35.5C for the rest of you)—in the DC area, in September—so let’s talk geoengineering (the how more than the why). This post is intended as something of a sequel to/commentary on Casey Handmer’s post We should not let the Earth overheat! from a couple months ago, and/or a summary/crystallization of some Twitter discussion from a few weeks ago. If you haven’t read Casey’s post, it’s strongly recommended.

Why should we geoengineer?

Because I don’t like the idea of dying in a 120-degree heat wave and degrowth means the worst depression in the history of industrial civilization. Next question?

I don’t think we have enough data to know that this is safe.

Nobody seemed to care very much about the potential consequences when we suddenly phased out sulfur emissions in shipping. Here’s what we’ve seen since then:

Crisscrossing clouds known as ship tracks can be seen off the coast of Spain in this 2003 satellite image

Were “stakeholders” consulted? No, we just went ahead and did it.

So we shouldn’t have phased out sulfur emissions in shipping?

I’m saying that tradeoffs exist for any policy action taken, and pausing/reversing global warming is no exception. Geoengineering will have side effects. Institutional paralysis (i.e., hand-wringing about the potential side effects of geoengineering until we’re at 2C above preindustrial levels and have no choice) will have worse side effects.

(There are, of course, reasonable concerns about the correct approach that we’ll look at later in this white paper. My point is that I’m not interested in engaging with people whose answer to every problem is to drown potential solutions in paperwork and “community input” meetings.)

This doesn’t abolish capitalism.

And thank goodness.

My two previous main post series, on Anki use and hydrogen generation, started from the basics and worked their way up to the solution. The results were pretty long-winded, so I'm going to do the reverse for this white paper by presenting a solution and then dissecting it. The solution is this:

Global warming, though not ocean acidification, is quickly and cheaply reversed by ejecting calcite nanoparticles (with an average radius in the ~90nm range) into the stratosphere, using a propeller-based system to prevent particle clumping. The particles should be carried up by hydrogen balloons, and very preferably released over the tropics. The total amount needed will be on the order of several hundred kilotons yearly, and the total cost should be somewhere between $1B and $5B yearly.

Let's go through this piece by piece.

Global warming is quickly and cheaply reversed by ejecting calcite nanoparticles into the stratosphere.

This is an approach known as stratospheric aerososol injection, or SAI. Essentially, the Earth is absorbing too much electromagnetic radiation from the sun due to increased concentrations of carbon dioxide and other gases (which you knew). One way to fix this (which we'll need to do long-term) is to sequester atmospheric CO₂ somewhere other than the air (I wrote a long article for Works in Progress on my preferred approach, which involves grinding and milling silicate rocks into silt and dumping them in ocean water). But sequestering enough CO₂ to make a serious dent in the amount we've added since 1750 is an expensive, long-term project (on the order of trillions, over several decades), and until we can get that up and running, we'll need to keep a lid on global temperature rise.

So in the immediate term, rather than drawing down carbon to decrease the amount of energy absorbed, we'll need to decrease the amount of energy that hits the atmosphere in the first place. That's where SAI comes in: use particles of a highly reflective substance to bounce light back into space.

Why calcite, and why an average radius of 90 nanometers?

Calcite is the most common form of calcium carbonate (CaCO₃), which you may recognize from the white cliffs of Dover or a pack of sidewalk chalk.

by Nephew Jonathan |  Read more:

Images and sources: NOAA; Acques Descloitres/Modis Land Rapid Response Team; Mark Gray/Modus; Astral Codex Ten

[ed. So, I guess this goes on... forever? Then what, something else? Will AI eventually come up with better predictive modeling for mitigating unanticipated collateral impacts? IBG/YBG. See also: ‘We’re changing the clouds.’ An unintended test of geoengineering is fueling record ocean warmth (Science).]

Hyundai E-Corner: Parallel Parking Revolution

via: Hyundai/YouTube

The Least Bad Choice

I have been watching various sentiment polls and Right/Wrong Track questionnaires with detached bemusement. Bemused because they are so silly, and detached because I know I can’t change human nature. What I can do is share a few modest insights; hopefully, these will allow you to gain a fresh perspective you might not have otherwise considered or perhaps even garner a better understanding of what is happening right here and now.

As we have discussed, in ordinary times, sentiment polls tend to be problematic: But these do not seem to be ordinary times. We are in a post-pandemic, popular-uprising environment. I wouldn’t call these issues unprecedented, but they are somewhat unusual.

People are unaware of what they believe, they have no idea what is going to happen in the future. Their expectations as to what will make them happy or satisfied in life are often misguided. This is why asking people what they will do, think, or feel in the future, or how they might behave is a nearly impossible task.

Since the worst of the pandemic began to wind down last year, we have been wrestling with two key issues: 1) Inflation, or the rate at which prices are rising; and 2) Costs, meaning the absolute level of prices.

Even as inflation peaked in June of 2022 and fell from 9% to 3%, people remained angry. The rate of change may have fallen, but everything remains more expensive. Absolute price levels are now 10-20% higher on everything from cars to houses to energy to rent. No wonder people whose wages rose a fraction of that are pissed off.

Now for the shocker: As bad as that sounds, the alternatives were much worse.

The nuanced, counterintuitive truth is that the pandemic presented policymakers with a series of terrible options. To their credit, they made the least bad choice. Those choices are still resonating today, impacting stock markets, bonds, inflation, and as we saw at the GOP debate last night, politics. The public wants someone (anyone!) to blame, but I want to suggest that the 2021-22 Inflation surge and resulting higher prices were the cost of avoiding a different fate. Had policymakers chosen differently, the net result would have been much, much worse.

~~~

Recall the situation 42 or so months ago. Covid-19 was running amuck, and nobody had the slightest clue what was going on. We were washing our grocery deliveries to stop the spread of a respiratory disease. Flying blind, with things about to get much worse, the government responses were: 1) Operation Warp Speed, a commitment to getting a COVID vaccine ready; 2) CARES Act 1, a $2.2 trillion fiscal stimulus putting cash into the bank accounts of 100 million families; 3) CARES Act II & III, another $1.8 trillion in spending, plus a focus on testing and vaccination, eviction halts.

Let’s consider a few potential counterfactuals.

• Scenario 1: Do nothing: Don’t snicker, there were people who suggested that as an option. The claim was the free market would sort out personal protective equipment (PPE) andother supply chain issues. No state authorized lockdowns, just allow the virus to “burn itself out” after it infected 80% of the population. “Herd Immunity” was the watchword.

• Scenario 2: Go small: Extend unemployment benefits for 3 or 6 months. Support vaccinations but don’t mandate them or masks or state lockdowns. Revisit to see if we need to repeat.

• Scenario 3: CARES Act 1 but not 2 or 3: Do a big initial fiscal spend to get the problem down to a manageable size, then let the private sector do what it does best.

The problem with all of the above is that the results would have been devastating: Many more deaths, lots of people without money for food, rent, medicines, and mortgage payments. Millions of defaulted mortgages, 10s of millions of evictions — complete social chaos.

Without funding for vaccines, treatments, or tests, COVID-19 would have spread like wildfire, with no way to stop it. And without those government-ordered mitigation measures, cases and deaths would have surged uncontrollably. The entire overwhelmed healthcare system would have collapsed, making the debacle even worse. Total US death count: 10 or 20 million.

Oh, and the economy would have hurtled into the worst depression since the Great Depression of 1929. Recall that the Atlanta Fed’s GDP Now in June 2020 showed the economy had been cut in half, down -52.8%. Major industries – Travel & Hospitality, Retail, Entertainment, and Services – would have completely broken down. Companies would disappear, and the bankruptcy courts would have spent the next decade unraveling up the mess.

Had the government done appreciably less, the results would have been disproportionately worse. It would have been a blood bath…

~~~

You don’t need to do a thought experiment to see what happens when the government elects to skip fiscal stimulus during or after a financial crisis. Look no further than the response to the Great Financial Crisis — nearly all monetary and almost no fiscal stimulus. [ed. fiscal stimulus = help for general public vs. monetary stimulus = help for banks.]

The Fed began its policy of ZIRP and QE while Congress put forth a puny extension of unemployment insurance and a modest temporary tax cut. A tiny infrastructure build was also included. Net result: more than 90% of the stimulus was monetary and appreciably less than 10% was fiscal.

The result of this emphasis on low rates helped capital owners; anything priced in dollars and credit soared, while those that did not have portfolios filled with stocks, bonds, real estate or businesses (e.g., middle and lower classes) struggled. Job creation was soft, wage gains nonexistent, consumer spending was punk, durable goods sales far below average.

It was a weak recovery, made all the worse because Congress elected to skip the textbook Keynesian stimulus such as we saw following 9/11 or the Pandemic. The entire post-GFC economy was poor; no wonder it set up an environment for a populist uprising in the United States.

~~~

The public tends not to do thought exercises like counterfactuals. They like things simple, perhaps even oversimplified to black-and-white options. They point fingers, demand that heads roll. This is how crowds operate, and it is why they can become so dangerous.

The reality is the world is nuanced and complex, and simple answers to complicated questions are usually neither precise nor accurate.

by Barry Ritholtz, The Big Picture |  Read more:

Image: uncredited

[ed. I've been waiting for someone to connect the dots/put it all together in a way that's easily understandable. Finally someone has (with counterfactuals). But notice, it's not by anyone running for political office. Why aren't more politicians using this messaging (especially Democrats)?]

The Big One, Times Two

With the Cascadia Subduction Zone parked off the coast and shallow faults lurking under most major cities, the Puget Sound area already faces a daunting array of seismic scenarios. A new study adds another: the possibility of a one-two earthquake punch.

Using state-of-the-art tree ring and radiocarbon dating methods, researchers found the most recent major earthquake on the Seattle Fault wasn’t a solo act. The Saddle Mountain Fault, which slices across the Olympic Peninsula near Lake Cushman, ruptured at about the same time.

The team also was able to zero in on the date with stunning precision, narrowing it to a six-month window between the fall of 923 A.D. and the spring of the following year — almost exactly 1,100 years ago.

Their results were published Wednesday in the journal Science Advances.

The project, which spanned more than five years and included divers with underwater chain saws to sample trees drowned by the quakes, is a scientific tour de force nearly unprecedented in seismology, said Harold Tobin, director of the Pacific Northwest Seismic Network at the University of Washington. To help nail down the date, the team used a new approach that detects traces of ancient solar storms captured in tree rings.

But the findings add a new worst-case possibility to the seismic threats facing a region that’s home to 4 million people, said Tobin, who did not participate in the study. A seismic double whammy would be much more damaging than any single quake, especially to old brick and concrete buildings, and vulnerable bridges and infrastructure. It’s a scenario that hasn’t been factored into hazard maps, building codes and emergency planning — but it needs to be, Tobin added.

“The chance in any given year is not high, and there’s no reason to freak out because of this study,” Tobin said. “But it underscores that these are things that we need to be prepared for.”

A 2005 analysis estimated a relatively modest magnitude 6.7 quake on the Seattle Fault could kill 1,600 people, destroy nearly 10,000 buildings and cause up to $50 billion in economic losses. If the Seattle and Saddle Mountain faults ruptured simultaneously, the new study estimates, the resulting quake would clock in at magnitude 7.8 — nearly 40 times more powerful — and affect a much bigger area. (...)

Seismologists used to categorize most clustered quakes as aftershocks, and assumed they occurred on the same fault, said John Cassidy, a senior seismologist for Natural Resources Canada who was not involved in the project. But over the past several years, more has been learned about how a slip on one fault can put stress on others. February’s devastation in Turkey was caused by a powerful quake that triggered the rupture of an adjacent fault nine hours later.

Shallow quakes near urban areas can be especially nasty because they are so close to the surface. Shaking would be far more intense than from Washington’s most recent big earthquake — the magnitude 6.8 Nisqually event in 2001, which originated more than 20 miles underground.

“An earthquake on the Seattle Fault is … likely to be much, much more catastrophic,” Tobin said.

Tree rings can yield much more precise dates than radiocarbon, Black explained. But the samples have to be in good condition, with bark and extensive ring sequences.

One of the most daunting tasks was rounding up dozens of cores and wood slices collected over the years by other researchers. Eventually, Black corralled usable samples from 47 Douglas firs at six sites where trees were drowned by the earthquakes. Some of the samples recorded nearly three centuries of history.

The team had to collect new samples from Price Lake, where stumps of the quake-killed Douglas firs remain visible. USGS divers struggled in the murky water to slice usable samples with intact bark from the bases of the trees. “It would take up to an hour to cut a single wedge from a tree, because they were working with almost zero visibility,” said Black, lead author of the study.

To anchor the tree rings in time, he used a reference sequence from 1,300-year-old firs collected on Vancouver Island in the early 1990s — so the date of the outermost ring is known.

Black sanded each sample multiple times, including with micron-level diamond grit sheets called lapping films. “It’s sanded to the point where you can see the individual cells within the wood under a microscope,” he said.

As he lined up his samples and compared them with the reference trees, the answer was unmistakable.

The validity of the date was confirmed through radiocarbon analysis of individual tree rings, looking for evidence of cosmic timestamps called Miyake events. Named for the Japanese physicist who discovered them, the events represent spikes of radiation from solar flares or exploding stars centuries or millennia ago. Luckily for dendrochronology, spikes in cosmic radiation generate spikes in atmospheric levels of carbon-14, the isotope whose slow decay is the clock that anchors radiocarbon dating.

Even luckier for Black and his colleagues, a Miyake event occurred in the year 774 A.D. and showed up in their Douglas fir samples, providing an absolute benchmark from which to count.

“Boom,” he said. “Everything came together, and we saw that these trees all died with the last completely formed ring being the year 923.”

by Sandi Doughton, Seattle Times | Read more:
Images: Stephani Gordon / Oregon Public Broadcasting; ESRI, Brian Black, Univ. of Arizona; Mark Nowlin
[ed. Science.]

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After a Hurricane: Rebuilding Is Only Affordable for the Wealthy

Despite their intent to make coastal communities safer and more resilient, Florida’s building codes can actually complicate resilience efforts in the long term. Buildings constructed with concrete and other stiff materials represent a doubling down on Gulf Coast living as climate change makes Atlantic hurricanes more powerful, and more likely to hit that very coast. And taxpayers, along with the federal, state and local governments, must foot the bill to maintain structures on eroding beaches and flood-prone coasts. (...)

A few bigger hotels, like the Lani Kai, a pastel-colored resort once popular with spring breakers, dotted choice beachfront lots. But as the cleanup efforts finally give way to planning and rebuilding, it looks as if the large, high-end hotels and condos will eventually dominate the beachfront. The new version of local color is best embodied by the 254-room Margaritaville Resort, which broke ground in 2021 and has been built, fittingly, on property that was cleared out by Hurricane Charley in 2004. On the beachfront beyond, the construction of multimillion-dollar homes, condos and tourist lodging will undoubtedly soon rev up. (...)

But upscaling is also a consequence of confronting climate change, especially in the aftermath of a devastating storm like Ian. Stringent building codes and dysfunction in the insurance industry have driven the cost of rebuilding beyond the reach of many current property owners, including small-scale developers. (...)

Building up to code is costly — far more so than building wood-frame beach bungalows. It also requires a tolerance for risk that often only money can buy — when insurance no longer covers full rebuilding costs, mainly those with deep pockets can build on the water. That means existing property owners like those of the Silver Sands, Red Coconut and countless private homes end up cutting their losses and selling. What will go up are apparently second homes and luxury resorts that can turn a profit in a few years before another hurricane hits. (A new hotel typically pays for itself in five to 15 years, obviating the need to think about 30 years down the line, when sea levels will have risen even further.) For well-funded developers, the risk and expense can be worth it, even if it means betting on a potentially doomed parcel of land.

They’re also banking on the infinite desirability of the beachfront, as are the state authorities responsible for the building codes that allow redevelopment after hurricanes and floods. And when these homes have to be fortified against beach erosion and sea level rise, taxpayers and governments are stuck with the bill.

by Sarah Stodola, NY Times | Read more:
Image: Damon Winter
[ed. Imagining Lahaina and other coastal communities. Definitely an issue we'll see replayed many times in the future. Also..."a new hotel typically pays for itself in five to 15 years"? Wow.]

FTC Sues Amazon for Illegally Maintaining Monopoly Power

The Federal Trade Commission and 17 state attorneys general today sued Amazon.com, Inc. alleging that the online retail and technology company is a monopolist that uses a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power. The FTC and its state partners say Amazon’s actions allow it to stop rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers, stifle innovation, and prevent rivals from fairly competing against Amazon.

The complaint alleges that Amazon violates the law not because it is big, but because it engages in a course of exclusionary conduct that prevents current competitors from growing and new competitors from emerging. By stifling competition on price, product selection, quality, and by preventing its current or future rivals from attracting a critical mass of shoppers and sellers, Amazon ensures that no current or future rival can threaten its dominance. Amazon’s far-reaching schemes impact hundreds of billions of dollars in retail sales every year, touch hundreds of thousands of products sold by businesses big and small and affect over a hundred million shoppers.

 

“Our complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies,” said FTC Chair Lina M. Khan. “The complaint sets forth detailed allegations noting how Amazon is now exploiting its monopoly power to enrich itself while raising prices and degrading service for the tens of millions of American families who shop on its platform and the hundreds of thousands of businesses that rely on Amazon to reach them. Today’s lawsuit seeks to hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition.”

“We’re bringing this case because Amazon’s illegal conduct has stifled competition across a huge swath of the online economy. Amazon is a monopolist that uses its power to hike prices on American shoppers and charge sky-high fees on hundreds of thousands of online sellers,” said John Newman, Deputy Director of the FTC’s Bureau of Competition. “Seldom in the history of U.S. antitrust law has one case had the potential to do so much good for so many people.”

The FTC and states allege Amazon’s anticompetitive conduct occurs in two markets—the online superstore market that serves shoppers and the market for online marketplace services purchased by sellers. These tactics include:

• Anti-discounting measures that punish sellers and deter other online retailers from offering prices lower than Amazon, keeping prices higher for products across the internet. For example, if Amazon discovers that a seller is offering lower-priced goods elsewhere, Amazon can bury discounting sellers so far down in Amazon’s search results that they become effectively invisible.

• Conditioning sellers’ ability to obtain “Prime” eligibility for their products—a virtual necessity for doing business on Amazon—on sellers using Amazon’s costly fulfillment service, which has made it substantially more expensive for sellers on Amazon to also offer their products on other platforms. This unlawful coercion has in turn limited competitors’ ability to effectively compete against Amazon.

Amazon’s illegal, exclusionary conduct makes it impossible for competitors to gain a foothold. With its amassed power across both the online superstore market and online marketplace services market, Amazon extracts enormous monopoly rents from everyone within its reach. This includes:

• Degrading the customer experience by replacing relevant, organic search results with paid advertisements—and deliberately increasing junk ads that worsen search quality and frustrate both shoppers seeking products and sellers who are promised a return on their advertising purchase.

• Biasing Amazon’s search results to preference Amazon’s own products over ones that Amazon knows are of better quality.

• Charging costly fees on the hundreds of thousands of sellers that currently have no choice but to rely on Amazon to stay in business. These fees range from a monthly fee sellers must pay for each item sold, to advertising fees that have become virtually necessary for sellers to do business. Combined, all of these fees force many sellers to pay close to 50% of their total revenues to Amazon. These fees harm not only sellers but also shoppers, who pay increased prices for thousands of products sold on or off Amazon.

The FTC, along with its state partners, are seeking a permanent injunction in federal court that would prohibit Amazon from engaging in its unlawful conduct and pry loose Amazon’s monopolistic control to restore competition.

Connecticut, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Hampshire, New Mexico, Nevada, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, and Wisconsin joined the Commission’s lawsuit. The Commission vote to authorize staff to file for a permanent injunction and other equitable relief in the U.S. District Court for the Western District of Washington was 3-0.

by Victoria Graham (media contact), FTC |  Read more:

Image: Lina Khan, FTC

[ed. The spectacular Lina Khan at the FTC. This, the Google antitrust lawsuit, and the following post show how government oversight and accountability should actually work. Finally. A watershed moment. Monopolies are killing competitive business practices, pricing and innovation just so the rich and powerful can get a little (a lot!) more rich and... powerfuller.  She'd better work fast though, because... well, we all know why. See also: Lina Khan vs. Jeff Bezos: This Is Big Tech’s Real Cage Match (NYT):

"Jeff Bezos made his fortune with one truly big idea: What if a retailer did everything possible to make customers happy?

His forcefully nurtured creation, Amazon, sold as many items as possible as cheaply as possible and delivered them as quickly as possible. The result is that $40 out of every $100 spent online in the United States goes to Amazon and Mr. Bezos is worth $150 billion.

Lina Khan made her reputation with a very different idea: What if pleasing the customer was not enough?

Low prices, she argued in a 95-page examination of Amazon in the Yale Law Journal, can mask behavior that stifles competition and undermines society. Published in 2017 while she was still a law student, it is already one of the most consequential academic papers of modern times.

These two very different philosophies, each pushed by an outsider unafraid of taking risks, at last have their much-anticipated confrontation."

***

and, FTC Adds Senior Executives Who Played Key Roles in Prime Enrollment Scheme to Case Against Amazon (FTC):]

"The Federal Trade Commission has named three senior Amazon executives in an amended complaint in its case against the company for its years-long effort to enroll consumers into its Prime program without their consent while knowingly making it difficult for consumers to cancel their Prime subscriptions.

Named in the amended complaint are Neil Lindsay, who served as senior vice president overseeing Prime and now serves on the company’s overall leadership team; Russell Grandinetti, who also serves as a senior vice president overseeing Prime; and Jamil Ghani, a company vice president who oversees the Prime subscription program. (...)

The unredacted complaint’s allegations also revealed:

• Excerpts from an Amazon document that uses the term “misdirection” to refer to the company’s practice of forcing consumers to find a small blue text link to make a purchase without joining Prime, while using a far more prominent button saying “Get FREE Two-Day Shipping” that actually enrolls consumers in Prime.

• Information about tactics used by the company to force consumers into the complex Iliad cancellation flow, such as a company policy that required Amazon customer service employees to direct consumers who called to cancel Prime to the Iliad flow online, even though customer service agents had the ability to process the cancellation.

• Findings highlighted in a company newsletter that said, “The issue of accidental Prime-sign ups is well documented” and acknowledging that Prime customers “sign[] up accidentally and/or [don't] see auto-renewal terms.”

• Statements from Amazon employees acknowledging the company’s use of user flows “designed to mislead or trick users to make them do something they don’t want to do, like signing up for a recurring bill.” Amazon employees began raising this issue for company leaders, who refused to take action, as early as 2016.

• Details about Amazon’s attempts to delay and hinder the FTC’s investigation of these issues, including attempting to apply legal privilege to documents that were not privileged and concealing the existence of other relevant, damaging documents."

***

Finally, see also: Amazon Is the Apex Predator of Our Platform Era (NYT):

"In its early years, Amazon was good to its users. It sold products affordably, and shipped them swiftly and reliably. It attended closely to the authenticity of the reviews that appeared on its site and operated an “honest search” that populated results pages with the best matches for each query.

Then Amazon started locking everyone in. Through Prime, it presold customers a year’s worth of shipping. With its digital publishing ventures, it nudged customers toward subscriptions, building a captive base of readers and deploying technology and expansive readings of obscure copyright laws to stop them from moving their books to other platforms. It opened Prime shipping at a low rate to its suppliers, relieving businesses of messy fulfillment logistics.

Meanwhile, its heavy subsidies, made possible by its investors’ appetite for backing an incipient monopoly, made it increasingly difficult for rival retail sites to gain traction, because Amazon’s seemingly bottomless coffers meant that it could sell goods below cost and extinguish any upstart that dared to compete with it. This created another form of lock-in for Amazon: It became progressively harder not to shop there.

The more locked in we were, the less Amazon needed to offer us. The customer-friendly, honest search degraded as the company began to allow retailers to buy their way to the top of listings, and by 2021, ads generated $31 billion in revenue. As sellers became increasingly reliant upon Amazon to display and deliver their goods, the company was free to drain money from them, too, piling fee upon fee and reportedly copying best-selling products.

Now we are at the final stage of monopolistic decay. The nation’s dominant online retail marketplace not only claws away much of its sellers’ revenues but also now penalizes them if they sell their products for lower prices at other retail outlets (including at its archrivals Target and Walmart). Amazon gets the American consumer coming and going, providing worse goods at higher prices while receiving vast sums in subsidies from state and local governments.

Speaking for his landmark antitrust bill of 1890, Senator John Sherman said: “If we will not endure a king as a political power, we should not endure a king over the production, transportation and sale of any of the necessaries of life. If we would not submit to an emperor we should not submit to an autocrat of trade.”

This suspicion of corporate power died in the Reagan era, when regulators adopted a new posture grounded in the idea that monopolies were evidence of efficiency and should be nurtured, and that “consumer welfare” in the form of low prices was an absolute good of antitrust law. Amazon is surely the king of our time. Our antitrust laws were fashioned specifically to guard against this overwhelming corporate power — both its accumulation and its abuse."

[ed. Actually, one more Final note: does anyone actually get two-day Prime shipping anymore? I know I don't.]

"Cha-Ching!"

Lina Khan attacks private equity and monopolization in health care [ed. and finally goes after real people with their hands in the till.]

That’s the phrase that an executive at private equity-owned financial firm U.S. Anesthesia Partners (USAP) used after acquiring yet another Texas anesthesiology practice, with the intent of hiking prices on Texas patients. And “Cha-ching!” was the right way to put it, since the excess profits amounted to tens, or even hundreds of millions of dollars, in just one medical specialty, in just one state.

But the new quote should be ‘uh oh.’ Because today, the Federal Trade Commission, led by Chair Lina Khan, filed suit against USAP for monopolization, as well as its owner, New York City-based private equity firm Welsh Carson, which from its offices on Park Avenue engineered the entire strategy of gouging patients in Texas. It’s an important suit, for reasons I’ll go into, and it also reflects a more aggressive antitrust enforcement regime, and skepticism of private equity in health care.

It’s the Prices, Stupid

America spends at least twice as much on health care per capita as nearly every other wealthy country, and gets much less for it in terms of doctor visits, hospital capacity, and life expectancy. Why? Where is all the money going?

As one medical journal article put it years ago, “it’s the prices, stupid.” In every area of health care - hospitals, pharmaceutical distribution, ambulances, emergency physician services, insurance - there has been massive consolidation, which increases prices and lowers the amount of care delivered. Private equity, a financial model focused on ruthless extraction, came into health care in a big way after the financial crisis of 2008, and it super-sized this trend. PE funds look specifically for areas where they can acquire pricing power, and then they squeeze.

As the New York Times noted:

A recent study from researchers at the Petris Center at the University of California, Berkeley, and the Washington Center for Equitable Growth, a progressive think tank in Washington, found that private equity-funded consolidation had led to price increases in gastroenterology, dermatology and other medical specialties.

What Welsh Carson did is ripped from that playbook. And the FTC’s suit against it, similarly, calls out that playbook as wholly illegal. The complaint is good reading, chock full of incriminating emails.

The story starts in 2012, when an anesthesiologist executive named John Rizzo emailed a Welsh Carson partner, D. Scott Mackesy, observing that the market for such services in Texas was fragmented, with firms competing against each other for hospital and insurance business based on lower prices and better quality.

A competitive and healthy market, to Rizzo, was bad. And so he proposed a monopolization strategy where the PE firm would buy up a whole bunch of clinics in specific cities, like Dallas and Houston. The idea was, as Welsh Carson partner Brian Regan put it, to “consolidate practices with high market share in a few key markets,” and then use “leverage with commercial payors” to raise prices for anesthesia care.

“Spoil the Entire Market.”

And that’s what they did, hiring Dean and Company, a consulting firm, to identify anesthesia practices throughout the state they could purchase. Rizzo and Regan brought in the CEO of an existing Welsh Carson roll-up, Kirsten Bratberg of Pediatrix, to run the new venture. Bratburg had spent eight years at Pediatrix rolling up over 100 neonatology practices, which was similar to anesthesiology, because it’s a medical practice that sells to hospitals. Though Rizzo and Bratburg would likely argue otherwise, they are specialists, not in medicine, but in the financialization of medicine.

The FTC noted what happened next.

Since its creation, USAP has acquired more than a dozen anesthesiology practices in Texas. As it bought each one, the FTC says, USAP raised the acquired group’s rates to USAP’s higher rates—resulting in a substantial mark-up for the same doctors as before. This roll-up strategy has made it the dominant provider of anesthesia services in Texas and in many of the state’s metropolitan areas, including Houston and Dallas. USAP’s size and prices now dwarf those of its rivals.

Their scheme began buying up practices in Houston, where Welsh Carson acquired Greater Houston Anesthesiology, which billed itself as “20 times the size of the second largest local competitor.” The doctors weren’t innocent here, as Welsh Carson explicitly pitched them on the roll-up strategy. After securing the purchase, the private equity firm renamed the company U.S. Anesthesia Partners, and crafted a strategic plan in 2013 explaining that USAP would “Roll Up Houston” through a series of “tuck-in acquisitions.” For the next four years, USAP bought several practices, and raised prices after each purchase.

In 2017, USAP bought MetroWest, a significant rival with relationships at Memorial Hermann Katy Hospital and Memorial City Hospital. The two practices had been in competition, but that changed after the acquisition, and reimbursement rates went significantly higher. Blue Cross noted that the the firm “[a]ccounted for . . . 69% of cases and 83% of cost in Houston” and that it “leverag[ed] market share” into getting double what others Houston anesthesiologists got.

But this acquisition was about more than just price hikes, as a potential competitor was thinking about buying MetroWest and entering the industry in Houston. A USAP executive told the CEO that large player entering into Houston would “spoil the entire market,” so USAP encouraged MetroWest to sell out and “preserve the protected market” both enjoyed.

Welsh Carson and USAP engaged in the same monopolization scheme throughout Texas, but they tacked on two additional tactics, both of which are variants of price-fixing. First, they cut deals with independent anesthesia groups at key hospitals in Houston and Dallas to work together to charge higher prices. Second, according to the FTC, they “secured a promise from another large anesthesia services provider to stay out of USAP’s territory,” which is illegal market allocation.

The scheme cost Texans tens of millions of dollars, if not much more. Welsh Carson got $350 million of dividends between 2012 and 2020, and physicians who sold their practices likely reaped significant profits as well. Indeed, one insurance executive noted the goal of USAP’s acquisition strategy was to take its massively inflated prices - far higher than anyone else in the industry - “and then peanut butter spread that across the entire state of Texas.”

Consolidation is Contagious

So that’s the story. USAP violated every single antitrust law out there - monopolization, conspiracy to monopolize, lessening competition, tend to create a monopoly, agreements in restraints of trade, unfair methods of competition. The emails are pretty damning, and the complaint is persuasive. But what I found most interesting, and important, is that the consolidation of health care, even within a single PE firm, is contagious.

As I mentioned above, to run the scheme, Welsh Carson hired the CEO of Pediatrix, who had experience consolidating neonatology practices. And then, in the middle of this roll-up, Welsh Carson “entered the emergency medicine market and engaged in a similar roll-up strategy to the one it deployed with USAP.” In 2017, it entered yet another market in radiology, noting that “[G]iven our success to date with USAP and [in emergency medicine], we would like to . . . deploy[] a similar strategy to consolidate the market . . . .”

As the FTC continued, “U.S. Radiology Specialists, which describes itself as ‘founded jointly’ by Welsh Carson and ‘one of the nation’s largest’ radiology groups, covers over 80 hospitals in more than a dozen states. Two of its directors are affiliated with Welsh Carson, and one of them is Brian Regan—the same partner who led Welsh Carson’s investment and involvement in USAP.”

The importance of this suit is not lost on anyone in private equity, or in the enforcement world. The language used by Welsh Carson is used in every single McKinsey deck, every single investment bank pitch deck, in every private equity roll-up from 2012-2021, as enforcers looked the other way, or even blessed the deals overtly. (...)

Unhinged Rage

At this point, despite her rational approach to policy, or rather because of it, Khan is absolutely loathed on Wall Street. And actions like this - systemic work to change market-shaping incentives instead of performative talk tough but act weak bullshit - are why. For instance, earlier this week, the FTC unveiled charges against specific Amazon executives - Neil Lindsay, Russell Grandinetti, and Jamil Ghani - who orchestrated deceptive practices surrounding Amazon Prime. The penalties against individuals can be significant; these men can be fined, or thrown out of the industry, if they are found guilty of willfully making decisions to deceive customers.

Going after large firms is unusual, but going after the actual decision-makers is, well, simply not done. The FTC has, or I should say had, an unwritten rule not to enforce laws against individuals unless they are powerless diet supplement scammers. Big powerful Amazon executives, they must be treated with respect, especially since they are often represented by former FTC officials now in private practice. Khan broke the unwritten rule, in which enforcers are not supposed to go after the powerful by name for breaking the law.

The same dynamic is at work in this private equity case. If this suit is successful, it means the party is over for doing roll-ups and raising prices, which is easy money for a lot of Yale graduates like Brian Regan. And so the response - the FTC are a bunch of losers and radicals - isn’t a surprise. Indeed, given the whole ecosystem of deal-makers that thrive on these kinds of deals, it would be weird if Khan were anything but despised.

by Matt Stollar, BIG |  Read more:

Image: Lina Khan, FTC
[ed. For more antitrust news (or lack thereof), see also: How to Hide a $2 Trillion Antitrust Trial (BIG); and, Meet the Law Geeks Exposing Google’s Secretive Antitrust Trial (Wired).]

We’re Teaching Music to Kids All Wrong

Each fall, as school starts up again, music educators witness a familiar ritual: Eager first-time students squeak on a clarinet, suppress giggles at the noises coming from the tubas and zealously hit a bass drum a little too hard. It’s a moment characterized by excitement, enthusiasm and the anticipation of new beginnings — which is why it’s so disheartening to know that many of those kids will eventually quit their instruments.

The fact that many children don’t stick with music is bad news not only for the state of self-expression and joy but also for education. Studies show that students who play an instrument do better in science, English and math and are more likely to want to attend college. They also may have less anxiety and be more conscientious — they are the kids you want your kids to be friends with. I have never met an adult who is expressly thankful to have quit music as a child, but I’ve met many who have regrets. So why haven’t we, as parents and educators, been better able to encourage our own kids to continue?

In my 15 years as a musical educator, talking to countless teachers, I’ve learned one thing: There is no magical fix. Making music education more successful doesn’t need to involve expensive digital accessories or fancy educational platforms (and I say that as someone who developed an online educational platform). There’s no technological or financial program that will convert children into lifelong music lovers.

Instead, we need to start by rethinking how we teach music from the ground up, both at home and in the classroom. The onus is on parents and educators to raise the next generation of lifelong musicians — not just for music’s sake, but to build richer, more vibrant inner personal lives for our children and a more beautiful and expressive world. (...)

Educators lament that, as with other courses, band can frequently fall prey to “teaching to the test” — in this case, teaching to the holiday concert. A class that by definition is meant to be a creative endeavor winds up emphasizing rigid reading and rote memorization, in service of a single performance. We need to abandon that approach and bring play back into the classroom by instructing students how to hear a melody on the radio and learn to play it back by ear, and encouraging students to write their own simple songs using a few chords. (The dirty secret of pop music, as Ed Sheeran has explained, is that most chart-topping songs can be played by using only four chords: G, C, D and E minor.) So start with just one chord, a funky beat and let it rip — and, voilà, you’re making music.

It’s often been repeated that “music is a language,” yet we’re reluctant to teach it that way. When we learn a language, we don’t simply memorize phrases or spend all day reading — we practice the language together, sharing, speaking, stumbling but ultimately finding ways to connect. This should happen in music class, too. Music should be a common pursuit: Ask any dad rock weekend band or church ensemble how it experiences music, and the performers are likely to tell you it’s not a chore but a way of building community.

Most important, we need to let kids be terrible. In fact, we should encourage it. They’ll be plenty terrible on their own — at first. But too often kids associate music in school with a difficult undertaking they can’t hope to master, which leads them to give up. Music does not have to be, and in fact, shouldn’t be, about the pursuit of perfection. And the great musicians have plenty of lessons to teach students about the usefulness of failure.

Miles Davis couldn’t hit the high notes his hero Dizzy Gillespie did, so what did he do? He found a new mellow, cool way to speak the language of jazz. Billie Holiday’s range was just over one octave — very limited for a professional singer — but that didn’t stop her from creating the definitive versions of so many American classics. Tell students these stories and watch them get excited to fail. We should let them do that, over and over again. That’s the only way they’ll learn what sounds awful but also what goes well together, what they like and what kind of music they want to make.

We also teach language through immersion, so let’s focus on creating an immersive experience in the language of music. Kids learn best when they’re part of communities filled with people of all skill levels for them to play along with, listen to music with, mess up with and just be silly with. Parents, this means you. Don’t let instrument instruction simply be something you nag your kids to endure. Music was never meant to be a lonely vigil. Play together. Make noise together. Find joy together. Take out an instrument and learn a song that you and your child both love.

by Sammy Miller, NY Times |  Read more:

Image: uncredited via