Thursday, August 29, 2019

Non-Economics Special Report: On the Ground in a Hong Kong Under Siege

Click here to read the original Cautious Optimism Facebook post with comments

7 MIN READ-The Cautious Optimism Correspondent for Economic Affairs and Other Egghead Stuff has thus far limited his writing strictly to economics, but vacationing in Hong Kong he’s learned of developments "on the ground" that oblige him to briefly veer into international politics.... with compelling video.

Vacationing in Hong Kong I’ve been lucky to not yet see one demonstration, riot, or protest up close and personal (evidently the largest riots are a weekend-only excursion).

The extent of the dangers I’ve encountered is eating too much dim sum and enduring the sweltering summer heat and humidity... and being slightly ripped off by a Mong Kok street vendor who could tell I was too hot to bother bargaining. However there is a lot of anti-China and anti-government (Hong Kong) graffiti spray painted on buildings and highway dividers, and I’ve also walked down a breezeway where hundreds of protest posters and fliers adorn the walls with provocative slogans that would never be seen in mainland China.

However my own family members who have lived in Hong Kong nearly their entire lives (multiple aunts and uncles and cousins) have had plenty of opinions to share with me regarding the standoff between the government and the demonstrators.

Note first that the COCEA’s Chinese family fled China in 1949 just as Mao's communist army conquered the country. They have no love for the CCP and they are familiar with the underhanded tricks, tactics, and propaganda ploys that communists routinely play. They are not naïve about the nature of Beijing and they oppose both the controversial extradition bill as well as the multiple incursions the communist government has imposed on the freedoms of Hong Kongers since the 1997 handover.

The developments I convey here are from their observations and from the local news. I have confirmed most but not all of it. With the exception of one major television station the Hong Kong media are mostly free and not owned or influenced by mainland investors or the mainland government, and as evidence the local news coverage has been largely pro-demonstrator and anti-government.


-Many Chinese tourists visiting Hong Kong have been fascinated witnessing the marches, riots, graffiti, and anti-government posters and recorded the images with their smartphone cameras. However, when they return to the mainland—via Shenzhen or by air into multiple Chinese cities—customs authorities are inspecting all incoming smartphones for images or videos of civil unrest. If found, they delete them and subject the tourist to a lengthy interrogation. Beijing clearly doesn’t want any images of Hong Kong rebellion entering China for fear it will inspire its own citizens, many of whom don’t like the Communist Party either, to do the same.

-Cathay Pacific Airlines, which is minority owned by Beijing-based Air China, has been ordered to fire a handful of pilots and flight attendants for posting pro-demonstrator comments on their personal social media accounts. The Chinese government threatened Cathay Pacific that if they didn’t fire the workers and provide identification of crews working all flights into China then their flights would not be allowed to enter Chinese airspace. With China providing over 40% of Cathay Pacific's revenue noncompliance would bankrupt the airline.

-Cathay Pacific flights landing in China are now randomly being subjected to crew inspections by mainland customs authorities. The pilot and flight attendant ID’s are being double-checked to make sure none of them are on Beijing’s blacklist of troublemakers. The crew’s smartphones are also being searched to remove any images of civil unrest in Hong Kong. It’s not clear what punishment they’re subject to if the communist government identifies them as a subversive.

-Just yesterday Cathay Pacific, likely bowing to pressure for Beijing again, enacted a policy urging its employees to report coworkers who express anti-government sentiments. The policy echoes of the Stalinist Soviet or Eastern European Bloc days when millions of citizens were acting a secret police informers.

-The Hong Kong police have admitted to using some plainclothes officers dressed in black to blend into crowds of demonstrators and help the authorities weed out the biggest troublemakers.

-Taiwanese political advisor to Pingtung township Morrison Lee visited Hong Kong on August 18th and is now missing. The Taiwanese government is pressing Beijing on his whereabouts.

-Hong Kong residents visiting mainland China are now subject to greater scrutiny and interrogation than visiting Americans despite Hong Kong officially being “part of China.”


On the protester side a more surprising picture develops. My own family has almost unanimously turned against the radical demonstrators. They are against the communist government too, but I’ve been inundated with stories of protesters wreaking havoc on the city and initiating violence against both the police and innocent citizens. The offenses include:

-Among the 1-2 million largely peaceful protesters, a large minority contingent of blackshirts has routinely blocked major roads and highways. When the Hong Kong police attempted to physically pick them up and remove them they were attacked by the blackshirts. The more radical protesters accuse the Hong Kong police of brutalizing them and said they were only defending themselves from barbaric officers. It has become a he-said, she-said.

-The blackshirts have destroyed traffic signals in busy intersections hoping to create huge traffic jams or even accidents.

-Protesters have placed shopping carts on MTR and Express railroad tracks trying to create accidents.

-The protesters famously occupied the airport several weeks ago and got into a melee with police. Now the airport is closed off to anyone who can’t show an outbound ticket and passport or employee/airline credentials.

-Despite claiming to be peaceful victims at the hands of brutal police, blackshirts are routinely targeting police stations by completely surrounding them, besieging their occupants and then throwing eggs, water balloons, pineapples, and bricks at any police who try to step outside. A few weeks ago it was confirmed the protesters had upgraded to throwing petrol bombs.

-The protesters are now engaging in “hit and run” tactics, attacking a police station on one side of the city, disappearing and then attacking another police station on the other side of the city. The hope is to keep the police running around constantly and stretching the police force too thin to be effective. At dinner my cousin wanted to walk me a few blocks to see the wreckage and damage around the local police station but we ran out of time.

Keep in mind that traditionally the Hong Kong police force has not had a reputation for brutality. In fact Hong Kongers have dismissed their police almost as “rent-a-cops” in contrast to mainland China police who nobody in their right mind messes with. But suddenly in 2019 the police are being accused of barbarism. When this sudden contrast is pointed out protesters argue that the police are now being controlled by Beijing and told to carry out atrocities, but no disillusioned officers have blown the whistle or resigned at the prospect of suddenly being ordered to unilaterally brutalize peaceful citizens.

-A few weeks ago protesters surrounded and attacked the Kowloon Park police station and blocked Nathan Road (the major thoroughfare of Kowloon). Buses couldn’t move in either direction all evening. When the police tried to remove them chaos broke out. This is the night that a female demonstrator was famously hit by a police rubber bullet and lost her eyesight in one eye.

-A few nights ago the protesters attacked the Sham Shui Po police station, also blocking the road. A taxi driver got out of his blocked car and complained they were keeping him from his job and was beaten by the blackshirts. When criticized for attacking taxi drivers the common response has been “We’re risking our lives every day fighting for freedom, so beating up a taxi driver here and there is nothing.”

-Earlier this week the blackshirts had announced their intent to surround and attack Cathay Pacific’s headquarters building near the airport as revenge for firing the handful of pilots and flight attendants but called it off at the last minute, likely due to bad weather.

-Blackshirts have also attacked journalists that they felt weren’t reporting about them favorably enough, and also beat a Global Times journalist at Hong Kong airport that they “suspected” was a Chinese spy, at least one tourist who tried to run their airport gauntlet desperate to catch her flight, and beaten several policeman they have isolated.

Please view these brief videos filmed by bystander smart phones. These do not resemble peaceful demonstrators practicing civil disobedience and being victimized by one-sided police brutality:

Disclosure: the next video by CGTN is funded by the Chinese government, but I don’t see how the video isn’t truthful or relevant. The attacks on cars trying to navigate the blackshirt roadblock is a carbon copy of militant “critical mass” bicyclists attacking cars in San Francisco.

-The protesters have also managed to obtain the personal information records (home addresses, family members) of over 1,000 police officers and posted them online.

-Monday, September 2nd is the first day of the school year both for grade level students as well as many college students. Authorities are already predicting many students will walk out in protest against the government and that out in the open they will become targets for recruitment by the blackshirt protesters. However the police are warning students who are the children of police to avoid blackshirts who they fear may target them as retribution against what they say is police brutality.

-I haven’t been able to confirm this, but my cousin says the goal of the most radical blackshirts is to provoke Beijing into sending the People’s Liberation Army into Hong Kong and producing another Tiananmen Square. The strategy is that the consequences on foreign investment and international business will destroy the Hong Kong economy and the Beijing government will back down. The blackshirts are now no longer demanding just withdrawal of the extradition bill, but also universal suffrage, amnesty for rioters, withdrawal of language describing them as rioters, and a commission of inquiry into police brutality.

I have been able to confirm most, but not all, of these developments via the local Hong Kong news. Although I don’t understand Cantonese and my family interprets for me, the images I’m seeing match the stories I’m hearing.

I asked my family if the communists might be planting agent provocateurs into the crowds disguised as blackshirts to orchestrate these attacks. They said it’s always possible, but there’s been no evidence so far because outsiders have a very difficult time speaking the Hong Kong dialect of Cantonese. A native mainland Mandarin speaker is given away as an outsider the moment he opens his mouth, and even a Cantonese speaker from nearby Guangzhou has a difficult time reproducing Hong Kong Cantonese.


Hearing these stories and watching these images, I was personally struck at just how much the radical blackshirt protesters look like Antifa in the United States. In fact, I would not be surprised if they have seen Antifa in action online and are drawing from much of the Antifa playbook to wreak havoc in the city. When I made this observation my relatives had no idea what Antifa is, but either way they are almost unanimously “fed up” (their words) with the radical demonstrators trying to tear the city apart.

I am no longer convinced that the situation in Hong Kong is a clear-cut case of peaceful, flower-carrying demonstrators being beaten up by savage police craving wonton acts of violence. The anti-government movement, which was and remains a just cause, is being hijacked by a sizable group of thugs who are effectively Hong Kong’s Antifa. They now seem to be motivated less by opposition to the extradition bill and more by exacting revenge and even beating up anyone they view as not 100% on their side.

Nevertheless, it’s likely the majority of Hong Kongers are still against the government—proven by the administration’s refusal to conduct public polling on the issue which suggests they know they will lose. The locals still side against the extradition bill and the government, not because they approve of the blackshirt tactics (they don’t and are getting sick of them), but because they hate what the communist mainland government is trying to do even more. Which is sad, because the longer the blackshirts attack and beat taxi drivers, block highways and shut down airports, the more support for the wider movement will falter.

What a shame. The communist government’s tightening grip on Hong Kong is a tragedy that is producing a slow motion death for all the world to see, and Antifa-like blackshirts are hurting the opposition cause.

ps. Most of the protester violence reported by local news is not being widely disseminated by the U.S. media, and images of blackshirts beating taxi drivers and journalists is definitely not getting much airtime in the West. At most the press reports “Police, Demonstrators Clash” or “Violence Erupts” with the same ambiguity they use when Antifa attacks Trump supporters but they don’t want to mention that it was Antifa who attacked first. It’s mindboggling in this age of instant information that the stories and images are being run routinely in Hong Kong but mostly ignored in the USA.

In many ways the reporting mirrors Tiananmen Square coverage in 1989, where western journalists were so in love with the story of unarmed, peaceful students standing up to the Goliath Communist Party machine that it affected their reporting. For example, historians now record that the Tiananmen students attacked the soldiers first, raining down bricks and cement blocks on PLA soldiers from overpasses on the outskirts of Beijing.

While bricks and cement blocks are no justification for PLA soldiers firing indiscriminately into crowds, the western reporting was 100% pro-demonstrator and journalists simply refused to run any story that might indicate the students were committing any wrongs of their own. Years later many journalists admitted they had let their feelings get the better of them and had not reported objectively.

When I contrast the behavior of Hong Kong’s radical blackshirts against the picture the western press paints of emphatic victimhood at the hands of the sadistic Hong Kong police, I believe the media are doing their readers/viewers a disservice. Hong Kong is still a story about a dictatorial communist government trying to subjugate a formerly free and vibrant metropolis, but it’s not about monolithically pacifist pro-democracy activists being wrongly persecuted.

Saturday, August 10, 2019

The Economics of Healthcare in America #1: Where Individuals (not Averages) Live Longer Than Any Country on Earth (Part 2 of 2)

Click here to read the original Cautious Optimism Facebook post with comments

3 MIN READ - A followup healthcare dispatch from the Cautious Economics Correspondent for Economic Affairs and Other Egghead Stuff.

In Part 1 of this installment on life expectancy we explained why America is the best place in the world to be if you want to live a long time, and why headlines and arguments of “America has one of the lowest average life expectancies in the industrialized world” are statistically misleading, flawed, and used to misrepresent the effectiveness of America’s leading (but still overly expensive) medical system.

In short, the melting pot of America has large ethnic populations with shorter lifespans that pull the national average down below many other OECD countries. That is, countries like Sweden and Japan don’t have large African, Western Indian, or Eastern European populations that tend to live shorter lives. Yet life expectancy for Swedish-Americans is higher than the average of Sweden itself, Asian-Americans live longer than the Japanese, and of course Hispanic Americans have far higher life expectancy than any Latin American country including OECD members Chile and Mexico.

The COCEA suggests reading the earlier analysis in detail (link is at the bottom of this article).

However there’s more. Despite life expectancy by ethnicity already being higher in the USA than anywhere in the world, the U.S. average is artificially lowered by other unique factors that either 1) have nothing to do with the health system, or 2) are the product of government policy.

Accounting for those factors, America’s already world-leading life expectancy widens the gap even further from the rest of the world.

Here are a few of them.

I. The U.S. has a far higher incidence of premature deaths due to violence and traffic accidents than other developed countries. Violent deaths usually claim the lives of young men who, by virtue of dying young, disproportionately adjust nationwide life expectancy downwards. Also, since Americans own cars and drive longer distances on a per capita basis than citizens of other developed countries, they die at a higher rate in auto accidents.

For example, the U.S. rate of auto deaths per 100,000 people is over double that of France and Germany (10.4 vs 5.1 and 4.1) and over triple that of Denmark, Switzerland, and the U.K. (10.6 vs 3.4, 3.3, and 2.8).

Since the average driver fatality age tends to be much lower than the average age of those who die naturally, traffic deaths also disproportionately lower average American life expectancy.

Health policy academics Robert L. Ohsfeldt and John E. Schneider (both Univ. of Iowa) recalculated average life expectancy factoring out violent deaths and accidents in all countries and official U.S. adjusted life expectancy—which had previously ranked #19 using the traditional statistical methods—leapfrogged to the top of the list.

II. Also, we all know Americans eat worse and lead more sedentary lifestyles than your average Swede or Japanese. These “bad habits” have nothing to do with the effectiveness of the healthcare system which overwhelmingly treats such patients only after the consequences of their lifestyle choices catch up to them. That Americans can place so well against the rest of the world even when engaged in such unhealthy behavior is actually a tribute to the strength of America’s medical system.

III. America’s statistical methods for calculating infant mortality are far more stringent than other developed nations. The result is far more actual infant deaths are counted in America, imposing a severe downward impact on average life expectancy while countries that statistically ignore those deaths are unaffected.

Another column detailing the wide variances in infant mortality calculations between the United States and other countries will be forthcoming in a future article.

IV. Finally, overall American life expectancy averages include citizens whose medical bills are overwhelmingly paid for by government insurance programs like Medicare, Medicaid, and state-level reimbursements.

According to the Census Bureau, some 118 million of America’s 330 million citizens received Medicare or Medicaid-paid services in 2015. And a little known fact is half of all healthcare spending in the USA is made by government.

It’s common knowledge that Medicare and Medicaid patients receive a lower standard of treatment from providers due to lower government reimbursements and payouts. Doctors, hospitals, and other providers universally spend more time, provide more effective procedures and services, and generally take better care of patients paying with private insurance than with Medicare and Medicaid.

Yet America’s average life expectancy includes the inferior results derived from Medicare and Medicaid patients. So if those programs are factored out and only truly private sector medicine and payments are counted, American life expectancy rises even further.

Which after all is what the underlying debate is about: health outcomes under private medicine compared to those under government-run healthcare. We don’t want to compare the 100% government British system with a 50% private/50% public American system. We want to compare the 100% government British system with the private-only portion of the U.S. system. On that account America wins by an even greater margin.

So even with all the life-shortening behaviors prevalent in America (bad diet, lack of exercise, violent deaths, auto accidents) and the statistical downward pressures applied by Medicare and Medicaid funded care, there is still no place in the world where you will live longer than the USA.

That is once again unless you’re an average—and not an individual.

Friday, August 2, 2019

The Economics of Healthcare in America #1: Where Individuals (not Averages) Live Longer Than Any Country on Earth (Part 1 of 2)

Click here to read the original Cautious Optimism Facebook post with comments

5 MIN READ - The Cautious Optimism Correspondent for Economic Affairs and Other Egghead Stuff begins a new series of articles on the economics of healthcare in the United States.

Explaining the drivers behind runaway price inflation in U.S. medicine and how to fix it will come in future columns, but first the COCEA debunks those deceptively framed statistics used by socialized medicine proponents to claim American healthcare produces inferior results to other developed countries.

Have you ever read a news headline that American life expectancy lags behind the rest of the developed world? Or a socialized medicine proponent claiming "we pay more than any country for healthcare but get the worst results?"

If you aren’t Rip Van Winkle then the answer has to be “all the time.” The semi-private U.S. medical system, which is under constant attack by politicians and their allies in the press, is accused on a near daily basis of failing Americans due to its high cost and relatively low life expectancy compared to other developed countries. The collection of examples is practically infinite, but here are just a few headlines that convey the point. Do any of these sound familiar?

“State of U.S. Health Care: Lower Life Expectancy, More Uninsured Kids”

(New Yorker Magazine, 2018)

“Republican healthcare policies are pushing America closer to Third World life-expectancy levels”

(L.A. Times, 2018)

“Americans Die Younger Despite Spending the Most on Health Care”

(Bloomberg, 2017)

“U.S. health spending twice other countries' with worse results… The U.S. spends about twice what other high-income nations do on health care but has the lowest life expectancy.”

(Reuters, 2018)

Now it is true that U.S. healthcare spending, at 17% of GDP, is exorbitantly expensive. And in a future column I will explain how artificially high cost is the product of decades of strangling government controls and regulations that have dismantled the normal pricing disciplines that market forces were once allowed to impose on the industry.

But the argument that American life expectancy lags the rest of the world and therefore indicts the U.S. health system is essentially false. As is often the case, it presents statistics in the most useful way to achieve a desired policy conclusion (government-run healthcare)—because the statistics use national averages to stack one very large, ethnically diverse nation up against small homogeneous ones instead of comparing apples to apples.

Let’s explain. The standard statist argument goes something like this: Average life expectancy in the United States is lower than in most other industrialized nations (true), therefore our semi-private health system has failed. Just look at how much longer the citizens of Japan and Sweden and Great Britain live than Americans. Their medical systems are far more socialized than America’s, therefore socialized medicine must be better, right?

While it’s true that average life expectancy in those countries is higher than in the USA, the studies don’t account for like ethnicities which is a critical distinction when one of the countries is large with a highly diverse population. For example Sweden and Japan are lauded for their high average life expectancies, yet Swedes in the U.S. live longer than Sweden’s average lifespan, and Japanese in the U.S. live longer than Japanese in Japan.

The same is true for Latinos, African Americans, Chinese, etc. You name it. Across the board they virtually all live longer in the USA than in their home countries.

Yet on the whole U.S. life expectancy still ranks lower than most developed nations (for the purpose of this discussion we’ll consider OECD member states as “developed countries” since OECD status is the most frequently referenced criterion). So why the disconnect?

Because—and this is key—the average for the entire United States is lowered by larger numbers of ethnicities with traditionally lower lifespans such as African-Americans, Native Americans, and Eastern European Caucasians, groups who don’t live in large numbers in most OECD nations. How large are the African and Native Indian populations of Norway, Ireland, Germany, Switzerland, and Japan?

Our status as a melting pot nation combined with the legacy of African slavery and the most generous immigration on the planet leads to a lowering of average lifespans that doesn’t affect more homogeneous OECD (particularly western European and developed Asian) societies.

Nevertheless if you’re Japanese-American odds are you’ll live longer than most citizens in Japan. If you’re Swedish-American you’ll live longer than the citizens of Sweden. If you’re a Polish-American you’ll definitely live longer than the citizens of Poland. It’s just that Sweden is full of venerable Swedes and doesn’t have shorter-living African-American or Native American populations to lower the Swedish national average.

OK, so this sounds like an interesting theory, but let’s be real. Is it really true? Are there any statistics to back this notion up?

Why yes. Let’s take the most famous example of Japan where that country’s citizens have enjoyed the world’s highest national life expectancy for decades. According to the World Health Organization in 2015, average life expectancy in Japan was an impressive 83.7 years (sources in links below).

But in the United States, average life expectancy for Asians is an even more impressive 86.7 years, fully three years longer than Japan’s homogeneous national average. And that’s *all* American Asians, not just the longest-living nationality (Japanese) but also shorter-lived Chinese, Koreans, Vietnamese, etc…

That’s right, if you’re the average Asian living in the United States you will likely outlive the average Japanese by three years.

(note: The Asian-American figure of 86.7 years comes from a 2014 CDC study by way of a “TheBalance” article on life expectancy. Since then lifespans have fallen slightly due to suicides and particularly opiods, a phenomenon being witnessed in Canada and several European countries as well).

And of course an Asian in the U.S. not only outlives the average Japanese, but lives even longer than the citizens of other Asian countries such as South Korea (OECD member, 82.3 years), Taiwan (79.3, source: United Nations), China (76.2), and Singapore (83.1).

It’s the same story for African-Americans. Their shorter life expectancy of 75.5 years lowers the U.S. nationwide average considerably, but African Americans live far longer than Africans do in Africa. The highest life expectancy for a non-Arab African country is the tiny nation of São Tomé and Príncipe at 67.5 years. This says nothing about the other African countries like Rwanda (66.1), Kenya (63.4), Nigeria (54.5), or even the relatively wealthy (for the time being) South Africa (62.9).

And how about Latinos? Hispanic Americans live to 82.9 while the highest life expectancy in Latin America is Chile (OECD member) at 80.5. Looking at the rest of the region life expectancy is of course lower in Mexico (OECD member, 76.7 years), Brazil (75.0), Colombia (OECD applicant, 74.8), and even Argentina (76.3). We exclude Cuba’s “official” life expectancy of 79.1 which comes from the communist regime’s government records and is widely dismissed as false (just as every communist government was revealed to have published false statistics after losing power post-Cold War).

Native and Alaskan First Americans in the United States have a shorter life expectancy of 75.0 which also pulls down America’s national average. Unfortunately there are no dominantly Western Indian countries to compare lifespans against, but if there were the national average would almost certainly be lower than 75.0. One revealing example is Canada’s small native Inuit population that lives to only 68, seven years less than American Indians. And the larger point is proportional numbers of Native Americans suddenly transported to Japan or Britain or Sweden, along with African Americans and Eastern European, would lower their average national life expectancies significantly.

The one exception is American whites overall. With an average life expectancy of 79.1 the U.S. places right in the average for the European continent, or among the bottom of Western European nations while atop Eastern European nations including OECD members Poland, Hungary, Estonia, Latvia, Lithuania, Turkey, Slovakia, and the Czech Republic.

However the U.S. also has a much higher percentage of whites of Eastern European descent—the legacy of mass immigration during the early 20th century—than western European countries like Norway, France, or Spain. So in the case of whites the U.S. places pretty much in line with Europe as a whole instead of far better.

The U.S. also counts deaths of infants—each of which, being a death just hours, days, or months after birth, weighs more heavily on the average than old-age deaths—using infant mortality statistics that other developed countries do not. More detail will come in a future column, but most developed countries exclude infant deaths if babies are born premature, or stillborn, or under a certain minimum weight or length.

The USA counts them all.

An infant dying at a only a few days or a few weeks has an enormous impact on the U.S. average, but that impact is simply stricken from the record in many OECD countries.

Presumably health reporters in the U.S. media and definitely fulltime researchers and policymakers are aware of all this since it's their job to closely study such metrics. Yet their silence regarding demographic differences between the ethnically diverse U.S. and other more homogeneous OECD nations is deafening, even as they continue to relentlessly condemn the American medical system based on straight national average life expectancies to rationalize single government payer, or worse: a compete government takeover of healthcare.

So far from being the country the media describes where you’ll die early due to an allegedly failing healthcare system, there’s really no place better to live than the USA if you want to live a really long time.

That is so long as you’re an individual, not an average.

Raw data is available at the following links: