Oh how it tickles to shop for private health insurance. Nationalize me, will you?! What I’m finding is that: comprehensive health coverage is very affordable for young expats. Most of the plans I’ve examined feature no co-pay at all for outpatient or emergency procedures, and even cover acupuncture and moxibustion at elite Chinese medicine clinics. These are available through most major multinational insurers and allow one to go to international-level hospitals anywhere in the world (outside of the US), and run about USD1,300-1,800 per year, which is certainly less than 17% of income. If the plan includes US coverage, it goes up by about 60%. These plans do not provide coverage for procedures relating to pre-existing conditions for a 24-month moratorium.

Americans are a rather unhealthy people, which might be one of the reasons why we spend 17% of income on healthcare. Yet here I am, an unhealthy American, outside of the US, and actuarial giants such as AXA, AIG, and Ping’an are telling me (through a price mechanism) that I’m going to pay much less purely by the fact that I’m not in the US.

This is probably some part of a wider argument on healthcare policy in general. It does seem that if moratoriums on pre-existing conditions were illegal, insurers would need to raise prices significantly across the board. Effectively they would need to assume everyone is slightly less healthy than previous actuarial models suggested. This is because healthy people will generally know their health condition (or the converse, marginally unhealthy people will probably have better access to that information than a potential insurer), the optimal course of action would be to have a very inexpensive, emergency only plan to begin with. If something that is considered a pre-existing condition emerges, immediately switch to a higher priced, more inclusive plan. If insurers are prevented from price discriminating on the basis of (already limited) actuarial information, they will inevitably be forced to raise prices on all participants in the scheme to make the system solvent. Whether there is some efficiency loss between the two regimes is an empirical question, one which I’m not remotely qualified to address. If no efficiency loss: nationalize everyone. Even better, cover everyone in the world, since the best rates would be possible by covering as large a population as possible (and you get better data). If there is an efficiency loss, then the (socially equitable) course would be to have healthy people pay a tax to subsidize the difference in cost to provide coverage for the unhealthy people. Doing so would, it seems, maintain actuarial standards and provide better pricing across the board.

All theory anyway, and entirely unfeasible given path dependence. If one is young and healthy and American: leave North America and get health care elsewhere. Chances are you won’t need bypass surgery. Foreigners do most other health procedures rather well. In the meantime ancillary factors (walking everywhere) will probably make one happier and healthier. Return home *after* smog induced lung cancer develops.

A friend sent me a link to a Tianya forum post about plans for Shanghai’s 2020 metro system:

Shanghai already has a very nice metro system (it’s supposed to handle 3 million daily); and is the third largest in the world in terms of length of track. Anyone who rides it in the morning will tell you that the major lines are far from ideal, though sardine style people packing probably provides a measure of safety [I cheat and live absurdly close to work.]

The map uses Shanghainese romanizations for several place names (Lohkatsy, Zaanhai, Phuton) rather than a standard Mandarin Pinyin. Linguistic regionalism is supported by design firms? Some might respond that an expanded metro system is wishful thinking. Nonsense – more stimulus!

For much of the 20th century, Hong Kong’s success was predicated on the failure of mainland China and the city owes less to free institutions than it does to historical circumstance. The contrary argument, where Hong Kong is held up as a paragon of laissez-faire utopia typically glosses over these circumstances. This risks trivializing the challenges involved with creating sound and scalable legal and economic institutions (in some sense, historical circumstances made it much easier for Hong Kong leaders to do just that). Proponents of laissez-faire policies point to HK as an example which proves that all a nation needs to do is adopt free market policies in order to grow its wealth. After all, HK has no natural resources to speak of (aside from a deep water port).

While I’m all for laissez-faire utopias,* there’s a certain amount of qualification necessary when discussing Hong Kong’s success. Rapid growth in Singapore, Hong Kong and Taiwan occurred after 1949, when a lot of the formerly mainland bourgeoisie fled throughout the greater Chinese diaspora, taking with them their money,** and much more importantly, their skills. Today, people often hold up Hong Kong and Shanghai as rival cities, since the latter is attempting to become a regional/global financial hub. Many in Shanghai feel this would be the case already were it not for the half-decade of non-participation in the world economy that the mainland experienced after 1949; the fact that people went to Hong Kong was “because they couldn’t go to Shanghai.”

Examining average incomes in both cities, it becomes clear that the largest gaps existed during the height of the mainland’s various socialist experiments. Now that the mainland has stopped the crazy train, some of those who left after the revolution are heading back. Just as significantly, the mainland is able to tap into an (up until 1990) unrealized pool of talent and skill. This isn’t to suggest that all of Hong Kong’s success in the last fifty years has been due to the fact that it benefited from the lucky few who were able to escape the revolution (who were largely those with the wealth/network resources to do so), though it’s certainly a very important source of HK’s success (combined with the fact that, for the same period, it was the only route into China for limited trade).

Institutions alone aren’t the result of Hong Kong’s success, though it’s certain that without them the city would have languished, regardless of circumstance (a la Macau). Institutions are extremely important for wealth creation and, generally, there are several interrelated factors at work that are important for applying them outside of the very limited geographies in which they seem to work:

1. if legal rules are codified without underlying capacity, they will be unenforceable [i.e.: making a law that everyone in the US should have 6 months of holiday every year for mental health reasons.]
2. certain rules are required for social coordination. The best types of these rules seem to be idiosyncratic [decisions or rules that might not make logical sense but produce a positive outcome approaches that are successful and are replicated.] To some extent these can be imposed; though if an authority oversteps the constraints of item 1 they will find their authority quickly undermined
3. people tend to achieve some basic level of coordination with or without a centralized legal structure. The exact nature of this matters, however, as it seems to be a continuum between mafia-anarchy and despotism. Best to have something a bit more benevolent, from the perspective of the participants.

Hong Kong’s history provides an interplay of all of these factors, since the British authorities were able to replicate rules and laws they knew were generally useful and produced positive outcomes. These were adapted for a local context, and the city simultaneously benefited greatly from geography and a windfall of talent after the Communist revolution. Currently, however, simply pointing at Hong Kong’s policies (which are outcomes of a particular process) and declaring that copying them would create prosperity is wishful thinking at best. A much more interesting project would be to determine the process that creates these policy outcomes, which are probably slightly different if one is dealing with a diverse set of national and cultural contexts.

More generally, the inner contrarian wonders whether democracy should be an explicit goal of aid or internal development policy. Singapore did just fine (for a certain class of people) without serious democratic reforms. The more I learn the more it seems that democracy is the result, and not the cause of, prosperity and free social systems. The success of the Chinese diaspora in places like Singapore and HK should fill China watchers with considerable hope for the future of the mainland, barring an asset price implosion. Beijing planners have explicitly used Singaporean and HK technocracies as a deliberate model, and it will be very interesting to see how extensively these systems can be replicated over a much larger and diverse population.

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Though I’ve never watched it, the premise behind Frontier House is that families try to survive using only technologies and methods available in the 1800s. Similarly, I’ve often wondered what life was like before the internet, I’ve decided to conduct a similar experiment and spend a few weeks without high speed internet access at the new home. This is in response to personal concerns that I spend far too much time absorbing as much information as possible, without time to adequately reflect on what I’m reading (is also a function of being cheap). This phenomenon has only grown worse with new technologies that allow time between publication to approach zero. Utilities like Temptation Blocker, and the success of news aggregation sites seem premised on this situation as well.

Initial results: much removed from the pressure of feeling like something-sort-of-interesting-somewhere is being missed, one is free to pursue slower activities, such as cooking and sleeping. Health benefits are probably balanced: time spent exercising will probably increase though alcohol intake also appears to increase commensurately with boredom. Overall diet will probably improve.

My hope is that the results of this experiment will: 1) shed light on what daily life was like for my parent’s generation, 2) better help manage content filtering and aggregation in the future. I have the luxury of not being tied to a Blackberry at this stage in my career. Learning how to limit information consumption would seem critical for future mental health, if these trends continue.

The SEC recently moved to limit short selling, with some fairly technical rule changes, cutting off robust feedback mechanisms in financial markets and catering to the interests of increasingly ensconced oligarchs.

Meanwhile, Chinese regulators are continuing to liberalize financial markets, and will soon introduce rules to allow large institutional investors to trade index futures. In isolation, this may not make much of a difference for the near future (particularly given limits on participation). As part of a broader trend it is very important: the “China collapse imminent” story is, at present, predicated on a property bubble that will collapse and saddle banks with lots of dead loans. At the same time, the mainland is derided as pursuing policies which solidify global imbalances (or, the process by which Chinese savers are shafted with artificially low rates of return, and Westerners get cheap credit that we proceed to do stupid things with).

Currently, a dearth of options for individual investors is only contributing to these distortions. Currency revaluation alone will not fix global imbalances, and a more efficient financial sector (say, anything with >0% return) would allow Chinese investors to save (incrementally) less, which is the only way trade deficits will actually shift in the long run.

Of the short selling rules change by the SEC, Robin Hanson nails it:

Anyone who believes that stocks which have fallen at least 10% in a day are an unappreciated good buy are free to grab that free money they think is lying on the sidewalk.  Clearly most folks don’t do this, and so don’t believe this, implying that short sales that push stock prices down on average give reliable bad news: this stock is worse than you thought.

Taxing short sales is an attempt to ban this bad news, to trick people into thinking those companies are doing better than they are.  After all, we all know that the financial crisis was not caused by banks making bad loans, it was caused by short sellers telling people that banks had made bad loans — if only we’d killed the messenger, we wouldn’t be in this mess, right?

Via Dingel, a paper from NBER regarding immigrant contributions as entrepreneurs, that relates to earlier musings regarding specialization motivated by language-dependent opportunities:

Higher H-1B admissions increase immigrant science and engineering (SE) employment and patenting by investors with Indian and Chinese names in cities and firms dependent upon the program relative to their peers. Most specifications find limited effects for native SE employment or patenting. We are able to rule out displacement effects and small crowding-in effects may exist. Total SE employment and invention increases with higher admissions primarily through direct contributions of immigrants.

[Crowding in would mean that Indian and Chinese entrepreneurs enable even more entrepreneurial activity than would occur in their absence, which I suppose would manifest itself as: Chinese friend takes lots of money from his parents, uses his super-programming skills and creates mega-algorithm. I help him by making phone calls to people I know. At the very least, the paper presents convincing evidence that there is no 'opportunity stealing' that occurs from immigrant entrepreneurs. In other words, it's a generate wealth and opportunities for free card.]

This research dovetails nicely with this incredibly good idea for a Startup Visa, propagated by a number of entrepreneur advocates, where immigrants would be eligible for H-1B status given certain types of self employment. At present, the H-1B is sort of a 21st century version of skilled indentured servitude, whereby US firms that have the legal apparatus to sponsor international hires can enjoy the benefits of cheaper (skilled) labor, since they have very limited exit opportunities (unless they flee home, which more and more are doing).

The ability to rapidly integrate immigrant labor (skilled and unskilled) is a feature almost entirely unique to the U.S. (and Canada). This factor alone assures much better long-term prospects than anywhere else in the world, including China. The extent to which deliberate policy helps or (as of late) harms this situation will be a major factor in determining Americans’ future wellbeing.

Having visited home after my research grant, and arriving back in Shanghai on a Friday night, scheduled to start work on Monday, I had only 36 hours to find an apartment. I decided to take the first place that met a very broad set of requirements, rather than live in a hotel for a week. This time around I had more time to conduct a proper search. Having become familiar with the process of apartment hunting in China (in Wuhan and Shanghai at this point), I thought I’d document the steps for future reference.

90% of the time, if you’re looking on your own for an apartment (or property) in China, you will do so through a real estate agent (中介, zhongjie) company. They have lists of properties they manage, acting as middlemen. For residential rental, their normal fee is 30% of one month’s rent. It’s a good idea to check out online property listings first, Google Lifestyle (谷歌生活搜素) or Soufun (搜房). Most of the listings on these sites are also from agents, so it’s an easy way to get contact information (call, tell them where you’re looking/what price range, and they can arrange to show you a several properties).

Personally, I’ve had good luck just wandering around neighborhoods until I found a real estate company (usually something-something-房地产). Indicate that you’re looking in the neighborhood, price range, and when you want to move in. No one has really tried to take advantage of me, and white-person-premium seems to be 100-200Y per month at most. Going through a real estate agent also has the benefit that they provide contracts for you, and keep copies of them. Again, never had any problems in this regard but it seems wise to have another layer of involvement should something go wrong with the landlord.

Always get the landlord/agent to write out receipts anytime you pay for anything (handwritten notes, if signed, are legally enforceable in China) and any agreements you have about ‘if something breaks, party X is responsible.’

Timeframes: one of the major differences between apartment hunting in the US and in China are the timeframes involved. It’s normal to look for a place, and be moving in within 48 hours (this often seems to happen). There is little advantage of trying to plan a month in advance, unless you have the luxury of waiting over the entire period to find something that is ideal. Using simultaneous real estate agents is a good strategy, at least to be sure that you get a good range of prices.

In general, most apartments will come ‘furnished.’ Don’t expect heating, aside from a reverse air conditioner (it’s possible to find central heating, though it will be more expensive). Insulation is universally bad. In general, there’s a strong correlation with appearance and price, not necessarily quality and price. If the place is in a tall building, expect it to be even more expensive (not quite sure why, as the newer properties tend to have terrible sound insulation). It’s always possible to find international standards, though you’re likely to pay even a slight international premium. In Shanghai, 1 bedroom 1 bathroom 1 living room apartments seem to run 1500-3000, with the lower end being extremely far away from transport. In cities like Wuhan, 2000 will nab you a many-room palace.

My personal preference is for 2nd/3rd story places in older (1980s/90s), decaying, Blade Runner-ish buildings that are located near pedestrian markets. Since most properties here don’t have fire escapes/alarms/sprinklers, being located near the ground seems ideal from a jumping standpoint. Ground floors often have rodent problems. If you’re high up you also less safe from petty thievery (the professional lockpicks I’ve spoken with here say they always go for places on upper floors since there’s less foot traffic. I don’t really think this is a big problem, so it’s probably not very relevant).