The Toilet Paper Roll Challenge: What It’s Really Testing

A recent meme has been to settle, once and for all, which way to hang a toilet paper roll. Is it correct to hang it outside (feed away from wall) or inside (feed closest to wall)?

In my opinion, this is what it really tests: If you think there is a right answer, you have a Type A personality. If you think either way is fine, you have a Type B personality.

Low Cost Private School

Great video about a libertarian business man, Bob Luddy, who also runs a private school chain, Thales Academy (thanks to Marginal Revolution for the pointer):

 

Notable moments:

0:25:  He introduces an important concept: Voice or Exit. That’s worth a listen.

1:40: “…even charters [schools] are controlled by the state, which constrains innovation.”

3:12: Luddy: “If you look at a modern day public school, you see the tennis courts and the sports fields. To me they look more like a sports complex and, by the way, we also build a school at the back of the lot. All we need are classrooms, some facility for recreation and play, and that’s it.” Absolutely, right.

5:23: Adding to the cons with charter schools, here’s Luddy: “I always view charters as a transitional idea. So, they’re far better than the public school system because they have private management, they can be put out of business, there’s less regulation. However, there’s still regulation and what happens over time, the bureaucrats are going to continue to load more regulation on charters.”

This last concept is important. Charters are, by and large, expected to deliver the one-size-fits-all education of public schools.

That’s like if all restaurants could only serve what the government decided. Restaurants would be reduced to school cafeterias and the variety, innovation and evolution of the restaurant industry to satisfy various customers’ tastes and preferences would disappear. The restaurant owners would be accountable to government, not to customers.

Exactly

From Glenn Harlan Reynolds (aka Instapundit) in USA Today:

…if Americans increasingly find it intolerable that their political opponents control the government, that’s because government controls too much.

The ‘Annual Performance Review’ Bias

Over the course of a year, an employee does some things well and some things not so well.

When the annual performance review time rolls around, none of this matters as much as how well your boss likes the employee.

If the boss likes the employee, the things done well will be highlighted and mistakes will be downplayed. If not, mistakes will be highlighted and successes will be downplayed.

We all do this.

Think of your favorite politician and your least favorite politician. For your favorite politician, you focus on what he or she does well and you downplay their negatives.

You do the opposite for the politicians you don’t like.

 

Before the election, Trump said he’d have to wait-and-see if he’d accept the election results. Many on the left made this a negative for Trump, saying he doesn’t respect the tradition of peaceful transfer of power.

After the election, many of the same people who made this a negative for Trump adopted the very position that they criticized when election didn’t go their way.

Why do we do this? Confirmation bias. We make up our minds about someone (and some things) and then look for the reasons to confirm it and ignore reasons that go against what we think.

Having to ‘wait-and-see’ on election results was just another in a list of reasons that confirmed biases against Trump.

What’s unfortunate is that these reasons will often conflict from what we think of one person to the next and we spend little time and energy trying to reconcile the contradiction.

What’s worse is that often the reasons we come up with to confirm our likes or dislikes are wholly fictional.

Trump’s ‘wait-and-see’ comment was quickly spun up to imply that he might even threaten the election results with violence, even though he never said anything of the sort.

 

What’s the plan to replace Obamacare?

I hope one answer to this question will be to eliminate the tax advantage employers have over individuals in buying health insurance.

This government-policy induced distortion is a root cause to many problems that subsequent government-policy induced distortions have been aimed at fixing.

For example, this distortion caused much of the problem of pre-existing conditions that was meant to be solved first by maximum pre-existing condition exclusion periods at the state level and then by Obamacare.

How did this government distortion contribute to the pre-existing condition problem?

It causes individuals to change insurance carriers much more than they would if they purchased insurance privately.

How many times have you switched auto and home insurers? The answer for me is zero times.

How many times have you switched insurance companies? The answer for me over a dozen times. Sometimes the switch came because I switched jobs and more often it was caused by my company changing insurance providers.

My guess is that most people have switched health insurance companies more frequently than auto and home insurance.

If we bought health insurance individually, like auto and home insurance, a great deal of the switching would go away and a good portion of the problem of pre-existing conditions would, too.

But, instead of going after the root cause, we put in more government-policy induced distortions.

What’s the predictable effect of forcing insurance companies to cover pre-existing conditions?

What would you do if you owned a company that you knew at any time you would be forced to take on new customer whose cost to serve would be dramatically higher than other customers? You would likely charge your other customers more to cover that.

So, yes, the predictable result is that prices increase for the people who do not wait to buy insurance until they need it.

 

How exactly would eliminating the tax advantage employers have with purchasing insurance change things?

With much less insurance policy switching and insurance companies being forced to take on people with expensive pre-existing conditions, insurance will be cheaper, so more people with buy it, which also makes it cheaper — a double price reducing strategy.

Will the problem of pre-existing conditions continue to exist? Of course. But, it would be smaller and more manageable to cover through a more targeted, ‘keyhole’ approach.

By the way, this action was #2 on Planet Money’s podcast No-Brainer Economic Platformwhich received support from their all of their panel of economists representing the full political spectrum, so it’s not just some crazy idea that I have.

Why haven’t politicians done it then?

This distortion has been around since World War II, so why haven’t they addressed it?

I believe there are a couple answers to this. One, is that it took a long-time for the ill effects of this come into being, making it harder to diagnose.

Another reason is that it’s harder for politicians to take credit for solving a problem because explaining how this tax advantage hurts individuals is arduous.

It’s also easy for political opponents to scare voters by saying that eliminating this tax deduction for companies may cause you to lose your employer provided plan and make you have to purchase insurance on your own.

That sounds scary.

But it will be replaced with a more affordable plan and will also result in more cash compensation from your employer.

It’s much easier for politicians get votes by appearing to solve the immediate problem (even if it causes more). I solved the problem of pre-existing conditions by forcing those big, bad, greedy insurance companies to accept your pre-existing conditions. Hooray!

Nobody seems interested in pointing out that the actual way to say the previous statement is, I solved the problem of pre-existing conditions by forcing people who buy health insurance — like you — to pay more for it to cover the people who wait until they need it.

Women’s March on Washington

I can’t remember, was there something like the Women’s March on Washington either time Bill Clinton took office?

As I recall, Clinton had huge support among women. They shrugged off allegations from former . That doesn’t have anything to do with his ability to govern, they said.

Party Change Politics

One reason outgoing Presidents sign so many executive orders in the waning days of their Presidencies when the other party will be taking over is to be able to generate headlines just like the one below on millennial news website Quartz when the new President predictably reverses them:

On his first day as president, Donald Trump charged millions of new homeowners an extra $500 a year

But, read the second paragraph (bold mine):

Among Trump’s first actions as president was sending an emergency order (pdf) to US lenders and real estate agents that increased the amount of money first-time home buyers and low-income borrowers must pay to get a mortgage. The move reverses a decision by the Obama administration earlier this month to cut the cost of federal mortgage insurance by 0.25%, enough to save the average borrower $446 a year.

Trump reversed a decision Obama made earlier THIS month.

By the way, there are simple ways for first time home buyers to reduce, or eliminate, the cost of mortgage insurance: save enough for a down payment and buy an affordable home. They can also choose to rent.

If anyone recalls (millennials may be too young to remember), the 00’s were all about lowering the cost to buy a home to encourage more people to do it, even people who may not be in a financial position to carry the risks involved with owning a home.

That didn’t end well, especially for the very people Obama’s decision was meant to help.