Iransom Deal

Our feckless leader is up to shady things with Iran.  Everybody knows that but did he make a reasonable deal with Iran?  The deal seems to be repaying $400 the Shah sent us with $1.3 billion in interest.  Without knowledge of the miracle of compound interest we might think that the interest is a tad high.  Even without technology we can use the rule of 72 to get about four percent because 72/4 = 18 so money doubles in 18 and quadruples in 36.  So $400 million becomes $1.6 billion in 36 years and a little more in 37 years.   Technology assures us that the interest rate is extremely close to four percent per year.

So four percent seems like a reasonable deal.  There is, however, one other parameter because this is an international exchange.  That is the exchange rate between US dollars (USD) and Iranian Rials (IRR).  Given the turmoil in Iran it is not a surprise that the USD has been the stronger currency over the past 37 years.  So when it is stated in millions of USD we say that we received $400 and paid $1,700 37 years later.  But when we put it in IRR, we say that we received 28 billion IRR (an exchange rate of about 71 to the dollar) and repaid 52,904 billion IRR (an exchange rate of 31,120 to the dollar).

Sidebar: 1979 was a turbulent year for IRR.  See, for example.  Using 71 is pretty conservative.  Other reports at other times during the year could put it as low as 15.  Exact dates could lead to a much worse deal for the US.  An exchange rate of 15 would mean receiving six billion IRR instead of 28.  The current exchange rate will also change daily but the percentages will be smaller so we are very close there.   End sidebar.

If we keep the deal in IRR then we pay just under 23 percent in annual interest.  Use your time value of money calculator or spreadsheet to confirm.  What has happened is that the USA has assumed the currency risk for Iran at a time when they are a bad risk.  The exchange rate risk suggests there should have been room to negotiate.


Holman Jenkins at his best in the WSJ:

Sadly, the media have proved unable to explain the finer points of pharmaceutical pricing. Not that we blame the media: health-care pricing is complicated and subject to Reporter Complexity Refusal Syndrome.

And yet the essential matter is not complicated. It can be explained in a sentence: Six hundred dollars is the price we want insurers to pay.

You should read the whole thing but it is that simple.  We love Reporter Complexity Refusal Syndrome (RCRS).  Now when you are reading something that is avoiding the obvious you can think, “Ah, RCRS.”  We only have one edit:

So if you don’t like how much your EpiPen costs, elect different politicians (except for dad [and Ron Johnson]).

We added the last three words in [].  Ron is a market oriented guy whereas his opponent, Russ (we got rid of him in 2010), is not.  Moving further away from a market system has caused more problems.  Moving back will reduce them.

Mistakes And Learning

Neo-neocon asks a great question: do we learn from our mistakes in the electoral/political sense?  We think it applies more widely: do we learn from our mistakes in rational undertakings?  That is, we are excluding love in this discussion.  We know that there can be an element of love in politics, business, and so on but there  is a rationale if not rational thought going on.

We are convinced that we learn our mistakes and try not to replicate them.  We do it individually and collectively.  We do not learn from our mistakes.  Thus, McCain, Romney, Trump makes sense.  Romney solved the electability problem.  Trump solved the niceness problem.  Neither one of them solved the real problem.

Business folk and political folk have their moments but the rarely endure.  Winston Churchill was the guy to fight Hitler but probably not the peacetime guy although the socialists, were, as everywhere and always, a disaster in the post-war UK.  Howard Head made great skis but his company outgrew him.

Jim Geraghty makes the point in the Morning Jolt that:

it’s best if a leader has clear, well-known, well-established principles and a thought-out philosophy.

Jim is in part right to recognize that stuff happens so the way to predict the future is to know the candidate and his philosophy.  The idea is that philosophy meets events and predictable decisions are made.  In Jim’s example, because Trump has no philosophy, there are wild swings in the direction of his public statements.  It is certainly true that we elected two presidents, Clinton and Obama, that we did not know much about.  Was Bill the leftist of 92-94 or the man closer to the center after the Republican Revolution?  Or was he just somebody that would do anything to get elected?

We have seen possible examples of presidents learning from their mistakes.  Clinton moved to the center.  W. won the war in Iraq.  There are not many other examples.

But it is only partly right that philosophy leads to decisions.  Philosophy can help with consistency but it doesn’t lead to decisions.  There are going to be conflicts and priorities matter (as Jim recognizes).  Philosophy, character, courage, and decision making skills are all important skills.

Sidebar: it would seem that our two current major candidates would fail all four.  Many folks think they know Hillary’s philosophy but given her mendacity we don’t think that it is possible to know.  End sidebar.

We are of the belief that, at best, we learn our mistakes were mistakes.  We, like our political leaders, rarely have insight to figure an improved decision.  Churchill is our hero.  He was right about Hitler when so many others were wrong but he made enough mistakes to keep us humble.  Courage is great when you are right.


Regulation And Economic Expansion

Robert Samuelson and Ronald Bailey have recognized :

A great mystery of our time — one that should frame the campaign debate — is why the economic recovery has been so sluggish.

The latter has the answer: excessive regulation.  If you are eligible to vote in Wisconsin you can choose between Ron, the author the bill to reduce regulation or, Russ, the guy that wants to regulate most everything.  It should be an easy choice.

Ron, Russ, And Epipen

The latest tempest in a teapot is the price increases in the EpiPen by a “greedy” Democrat, the daughter of West Virginia senator Joe Manchin.  That could be a fun Senate hearing.  Anyways, we have Russ (and Hillary) who voted to tax these medical devices through Obamacare.  We have the same pair that voted to restrict healthcare.  And the same pair that help the FDA make sure there is no competition for EpiPen.

So do you want to send one of the causes of the EpiPen situation back to the Senate?  Or somebody that has an understanding of business?  It is your choice.  It should be an easy one despite what the polls say.

Why Be Dishonest?

On Facebook today:

Wisconsin’s Republican-backed voter ID law was about one thing: disenfranchising minority voters across Wisconsin. Add your name to show your support for the court’s decision that Scott Walker’s efforts to suppress the vote should be thrown out.

Look, if you want illegal votes be honest about it.  We are in a time of power politics.  It seems that might makes right.  We understand the No True Scotsman fallacy but does anybody really believe this?  Probably some people do.

Being Right Is A Defense

Johan Goldberg’s newsletter quotes Bill Bennett as saying:

There’s a lot of people and there are still undecided people. [Trump] does not need to speak to the NeverTrump person — some of my friends, or maybe former friends, who suffer from a terrible case of moral superiority, and put their own vanity and taste above the interest of the country.

Jonah wants an apology:

Now for the personal: Bill should apologize, for two reasons. First, I do not question his patriotism or love of country for so enthusiastically supporting a man who in his personal life and as a politician desecrates so much Bill has stood for over the past 50 years. I just think Bill’s wrong. This kind of rhetoric is beneath him.

It seems to us that Bill is exactly right.  It seems obvious that Jonah knows this by the nasty first reason.  We still love The National Review but think it has damaged its brand by its virulent NeverTrump position.  We know not everyone is on board at The National Review but enough are to cause brand damage.

Obamacare Implosion With R & R

As expected, Obamacare is imploding.  In Wisconsin we are choosing between Ron and Russ for the Senate.  Russ voted for it and we voted him out.  Why on earth would we want him back at this serious point in time.

On the other hand, Ron sees it his way:

Grave damage is being done to our nation’s health care system by this law that President Obama and Democrats in Congress pushed through on a strictly partisan basis. Americans are being harmed now by the law and losing their freedom. Their livelihoods and their economic security are being put in jeopardy and the health insurance plans that they are now required to buy may not even meet the needs of their families. If we continue on this path, the future of our health care system is rationed, lower quality care, increased medical costs and severe limits on medical innovation.

So are you going to go with Russ and proven failure (motto: let’s throw enormous amounts of taxpayer money at the problem to show we are at work) or be serious and go with Ron to work on health care legislation that might really be reform.  It is, as they say, your choice.

Sidebar: The WSJ reports that Democrats like Elizabeth Warren are fighting the Aetna-Humana merger on the basis that:

“The health of the American people should not be used as bargaining chips to force the government to bend to one giant company’s will.”

The WSJ notes the gall on disclosure of information from Aetna but doesn’t really tie that the problems caused by the Democrats necessitate the merger so Aetna can survive Obamacare.  End sidebar

Breaking Windows with Russ and Ron

Kevin Williamson has a nice story at NRO about the Obama Administration breaking windows.  The administration is making trucks more expensive and old ones obsolete by requiring new fuel consumption standards.  Kevin reports:

Brady Dennis of the Washington Post reports that the new fuel-efficiency standards will add about $14,000 to the price of a big rig — or $28 billion, more than a third of the commercial-trucking industry’s annual revenue and many times more than its annual profit.

Sidebar: The broken windows fallacy (or Katrina or the riots in Milwaukee were a good thing) is that non-creative destruction leads to the use of resources to fix them.  See the link for a more detailed explanation.  End Sidebar.

Here in Wisconsin we are locked in the Senate battle with Russ and Ron.  We have not seen either candidate mention this.  What are the odds that Russ wants to drive some truckers out of business and distract the truck manufacturers and Ron wants to leave them to their on devices.  We will give odd.  We hope you will support Ron.  We need people in DC who are not there to enforce their preferences on entire industries.

Strange Lede

The Hill reports:

In a blow to the healthcare law, Aetna — one of the largest health insurers in the country — announced Monday that it will significantly scale back its presence on the ObamaCare marketplaces next year. [emphasis added]

The lede has it exactly wrong.  Aetna is reeling from trying to comply.   The healthcare law, which one is that now, is forcing higher prices and lower profits.  A bit later on:

The mix of ObamaCare enrollees has been smaller and sicker than expected. Some experts say that insurers also set their premiums too low. Premiums are expected to rise more sharply in 2017, which could help insurers address some of the losses.

That is a neat trick.  But Aetna’s decision is not the blow to the healthcare disaster named after our current president.  It is a disaster because it was set up poorly causing decisions by the policy sellers, policy buyers, and regulators to cause this mess.  Aetna did not do it to Obamacare.  Obamacare did it to Aetna and the rest of the country.