The Pew Research Center has presented a simple linear chart that places the ideology of the three Presidential contenders and the current President on a left-right scale, along with the median ideology of the voting public. A two-axis chart would be more informative, but this one-dimensional distribution reveals a great deal :

1) The center of gravity of the US public is significantly right of the center, no matter what leftists may say/wish.  McCain, thus, is far closer to the center of gravity than Bush, who in turn is closer than Obama or Clinton. The GOP is far less dependent on centrists to win elections than Democrats are.

2) The notion that McCain is 'not conservative enough' does not stand up to statistical evidence. Those who whine about McCain's support for amnesty of illegals or compromises on judicial appointments forget that even Ronald Reagan did three things that were not purely conservative.

a) Reagan granted amnesty to illegals in 1986

b) Reagan appointed two moderate Supreme Court Justices, Kennedy and O'Connor, and only one conservative, Scalia.

c) Reagan did increase income taxes, after first lowering them

No President will be purely conservative, nor should he/she be.  So I reject the initial conservative hostility to McCain (which seems to have somewhat abated). The job of a political party is to win elections, and the fact that Republicans span a wider ideological spectrum than Democrats should be a source of pride, which brings us to observation #3.

3) The Democratic Party has been enslaved by fringe leftists.  Obama and Clinton are nearly identical in ideology, yet very far to the left of the center of gravity.  The purple oval I have inserted, along with the question mark, represents a vacuum in the moderate left.  A large number of voters clearly reside there, but the Democratic party of today will not nominate someone who resides in the purple zone, leaving these voters as ideological orphans.  Thus, Clinton and Obama have to lie (assisted by a complicit leftist media) to appear more moderate than they are, and hope that the public doesn't figure that out.

Joseph Lieberman, the VP candidate against Bush/Cheney just seven years ago, was run out of the Democratic Party simply for not being opposed to bringing democracy to Iraq.  Bill Clinton's actions of supporting free trade agreements like NAFTA, sending troops to fight proto-Al-Qaeda terrorists in Somalia in 1993, reforming welfare, cutting taxes on capital gains in 1997, attacking Saddam Hussein to remove his WMD programs in 1998, etc. are all actions that the modern Democratic party would not take.

I am a political moderate, in that I care about only three issues.  These are, in order of importance to me :

a) aggresively fighting against terrorists and other enemies of democracy and women's rights,

b) the preservation of free market meritocracy, and the use of market forces to solve problems, and

c) a judicial system that punishes crime, instead of ignoring justice and proceeding to reward the criminal as a poster-child for some perverted cause.

I have a neutral/uninterested position on abortion, gay marriage, gun ownership, prayer in schools, and many other domestic issues.  Yet, I am considered 'right wing' by some extreme leftists, on account of holding the above three positions alone.  Until 2001, it did not even occur to me that only one of the two parties still advocates these three basic principles - I assumed that these were values held by any logical person.  I wish I had a true choice between two parties, but I don't.  In the words of once-Democrat Ronald Reagan, I did not move away from the Democratic Party, it moved away from me.

The moderate left died in 1968, when two of their most promising young leaders were assassinated.  Since then, Democrats have only won three of the last ten elections.  After the disaster of Jimmy Carter, Democrats never again won 50% of the popular vote in SEVEN attempts, while Republicans achieved this feat 4 times over that period (1980, 84, 88, 2004).  This is a truly shambolic performance from the Democrats of the modern era.  Jimmy Carter did more to ensure a generation of GOP dominance than Reagan, Gingrich, Limbaugh, or Rove ever could.

Furthermore, Democrats are not capable of getting a majority of voters who earn over $30,000 a year.  The middle class earning between $50,000 and $75,000 voted just 44% for Democrats.  A party that is soundly rejected by the middle class and upper class is not positioned for long-term success.

2008 is a year where more factors, from a weak economy to an unpopular incumbent, are working against Republicans than at any time since 1976.  Thus, Democrats should be in a position to win by a landslide, but even now are trailing in the polls, and have at best a 50/50 chance of winning the White House in November, with a nominee far more distant from the voting public than John McCain is.  Even if, say, Obama wins, he might repeat the Carter-esqe phenomenon of ensuring another generation of GOP dominance starting from 2012.  If 2008 is 1976, 2012 could be 1980.

Once again, the job of a political party is to attract the votes of 50% of the public, and Democrats can only hope to achieve this by fluke.  If Democrats want to become a national party again, they must move into the purple zone, period.  I sincerely want them to do this, as this will force the GOP to compete to become a better party as well, rather than stagnate into mediocrity with the knowledge that they only have to be better than the most pathetic of opponents.  

When will Democrats purge the leftists and move to the center?

Energy and Financials are both large sectoral components of the S&P500.  Yet the two have diverged immensely over the last 2 years.  Not since the technology bust at the start of the decade have any two sectors diverged so much from each other, and from the composite S&P500 index. 

XLE is an exchanged-traded fund for the Energy sector, while XLF is the equivalent for the Financial sector.  First, let us view a two-year chart : 

Energy has outperformed the S&P500 by an equal margin that Financials have lagged the S&P500 by.  Next, we can view a five-year chart :

While Financials only began to fall away in 2007, Energy has gone so high above the composite market that it reminds one of the technology bubble of the late 1990s. 

It seems quite obvious here that while it is impossible to identify the exact top of the Energy run, or the exact bottom of the Financials correction, it would be very prudent to sell any existing holdings in Energy (or even short Energy if you have the appetite) and rotate the proceeds into Financials.  The gap could widen in the short term, but rarely do two sectors reach such extreme disparities that make a profitable trade so obvious. 

(crossposted on TechSector).

The Futurist, above all else, is devoted to bringing original ideas, observations, and analyses to the blogosphere.  The Jeremiah Wright controversy has been heavily analyzed from a mind-boggling array of angles.  Yet one noteworthy detail just has not emerged in the discussion.  Maybe, as an Indian-American, I am truly a third party, and what was utterly invisible to the two races involved in the discussion, was somehow the very first question that entered my mind. 

What immediately struck me is that Barack Obama, who is half Kenyan and half white, still has a darker skin tone than Jeremiah Wright.  Indeed, in Africa, Barack Obama himself would be considered white.  Could it be that less than half of Mr. Wright's ancestors are black? 

To be fair, one must examine additional datapoints.  Fortunately, this research exercise required no additional effort beyond what I was about to do anyway.  I proceeded to search for photographs of Halle Berry, known to have had one white parent, in order to assess her skin tone.  She, too, appears to be of a similar hue as Barack Obama, but distinctly darker than Wright.  Here is more video footage of Wright.  There just is not enough evidence to believe that even 50% of Mr. Wright's DNA originated from sub-Saharan Africa.  Clearly, more than 50% of his ancestry is white. 

Reverend Wright has built a career out of being a leader to a community from which less than 50% of his ancestry comes from, while condemning a race that apparently more than 50% of his ancestry comes from.  He could just as easily have been a pastor in a white community, where the average skin tone would be closer to his own.  White Americans have become so post-racial that it has entirely escaped their notice that the man can scarcely be considered black.  His defenders claim that his anger is a byproduct of the racism he experienced in the Jim Crow era, yet he is actively applying the one-drop rule to himself. 

It is curious that a man who refers to this country as the "U.S. of KKK-A", managed to attend the University of Chicago, and will soon reside in a 10,340 square foot mansion that his church has provided to him.  Most white people are not fortunate enough to live in homes of that size.  Indeed, most Harvard graduates don't manage to acquire such an impressive residence.  Far from shame America, he has demonstrated how generous, to the illogical extreme, this country is.  Nowhere else can someone with light skin pretend to be black, then condemn whites who are closer to his own skin color, and in the process achieve wealth from a nation while simultaneously condemning the same nation through the worst possible insults. 

It appears that Reverend Wright identified a profitable niche, positioned his career accordingly, and reaped a rich bounty.  As appalled as I am as an American, I am just as impressed as an entrepreneur. 

Only in America......

We shall close with a poll.  Choose multiple answers if desired (poll closed 4/21/08).

At The Oil Drum, a detailed article by 'Gail the Actuary' speculates on how declining production of oil combined with rising demand will cause an economic catastrophe, leading to the global economy contracting so severely, that by 2040 it is much smaller than it is today.  The author actually believes that in 2040, most people will no longer be able to afford cars, electricity will be unreliable, and goods and services will be fewer and rarer than today. 

Another article submitted by an different contributor on The Oil Drum arrives at the same pessimistic conclusion, stating that 'economic growth will end one way or another'.  Most of the commenters on both articles are in a groupthink state of agreement that can best be described as a Maoist-Malthusian cult. 

I would normally not bother to rebut something like this, except that this particular essay is so stunningly wrong and annoyingly pessimistic, despite the seemingly meticulous research the author has conducted, that I am compelled to disect how insulated groupthink can spiral into a zone where even the most extreme conclusions are accepted. 

Note that I happen to be someone who actually does believe in Peak Oil theory, but that such a condition generates long-term positives that outweigh short-term negatives. 

The assumptions that the 'Peak Oil' doomsday scenario makes are :

1) That rising oil prices do not cause a long-term downward adjustment in demand.  Oil demand may be inelastic in the short-term, but in the long term, people will buy more efficient cars, carpool, ride bicycles, reduce discretionary trips, conduct more commerce online, etc.  To assume otherwise is to ignore the most basic law of economics.  This is before even accounting for the indirect benefits of declining oil demand such as a drop in traffic fatalities (which cost $2 million apiece to the economy), less wear and tear on roads and tires, less pollution, less real estate consumed by gas stations, less competition for parking spaces, etc. 

2) That rising grain prices will not move consumption away from increasingly expensive meat towards affordable grains, fruits, and vegetables, thereby reducing grain and water demand.  This, too, is economic illiteracy.  If the price of beef triples while the price of rice and potatoes does not, consumption patterns shift.   

3) That there will be very little technological innovation in alternative energy, automobile efficiency, batteries, or information technology from this point on.  In fact, there is innovation in all of those areas, so we have multiple layers of protection against the doomsday scenario, as detailed by these articles :

A Future Timeline for Energy

A Future Timeline for Automobiles

Batteries Set to Advance, Finally

Solar Energy Cost Curve

Terrorism, Oil, Globalization, and the Impact of Computing

4) That most economic growth is now in knowledge-based industries, which consume far less energy per dollar of output.  The US economy today produces twice the financial output per unit of oil consumption as it did in 1975, with information technology rising as a portion of total economic output. 

5) That a major economic downturn, featuring skyrocketing food prices for people in poorer countries, will somehow not translate to a lower birth rate that inhibits population growth and hence curbs demand, and that population projections will somehow not change. 

6) That there will be no humans living beyond the Earth (whether in orbit or on the Moon) by 2040.  The reason this point is relevant is because a society cannot advance in space travel without simultaneous advances in energy technology.  I say that advances in photovoltaic efficiency make Lunar colonies closer to viability by that time. 

7) That we are going to have over 30 years of negative growth in World GDP, despite not having had a single year of negative growth since 1973, and despite the trendline of growth solidly registering at 4.5% a year even today.  I happen to think that by 2040, the world economy will be 4 times larger than it is today.  Even the Great Depression was only 5 years of negative growth, followed by a recovery that elevated prosperity to levels higher than they were in 1929, at a time when World GDP was only at a trendline of 2% annual growth, or less than half the level of today.  Yet Gail the Actuary thinks car ownership will no longer be affordable to most people by 2040. 

Peak oil may be on the horizon, but the US economy has already adapted to oil at sustained prices of $70 or $80/barrel (which is the biggest story that no one is noticing yet), and will soon adapt to $100/barrel.  I want oil to hit a sustained $120/barrel by 2010 to start a virtuous cycle of technological and geopolitical chain reactions that make the world a better place in the long term.  If oil hits $200/barrel, that will cause a deep recession that could last several years, but after that point, we will have adapted out of the oil burden almost entirely, and World GDP growth will resume at 5% a year. 

Could I be wrong and they be right?  Well, let us first see if oil rises substantially above $120/barrel, and if that year has negative World GDP. 

Does anyone feel like defending the doomsday prediction from The Oil Drum?

Every now and then, an obscure concept is so brilliantly encapsulated in a compact yet sublime term that it leaves the audience inspired enough to evangelize it. 

I have felt that way ever since I heard the words 'Actuarial Escape Velocity'.

For some background, please refer to an older article from early 2006, 'Are You Prepared to Live to 100?".  Notice the historical uptrend in human life expectancy, and the accelerating rate of increases.  For more, do also read the article "Are You Acceleration Aware?".

In analyzing the rate at which life expectancy is increasing in the wealthiest nations, we see that US life expectancy is now increasing by 0.2 years, every year.  Notably, the death rates from heart disease and cancer have been dropping by a rapid 2-4% each year, and these two leading causes of death are quickly falling off, despite rising obesity and a worsening American diet over the same period.  Just a few decades ago, the rate on increase in life expectancy was slower than 0.2 years per year.  In the 19th century, even the wealthiest societies were adding well under 0.1 years per year.  But how quickly can the rate of increase continue to rise, and does it eventually saturate as each unit of gain becomes increasingly harder to achieve?

Two of the leading thinkers in the field of life extension, Ray Kurzweil and Aubrey de Grey, believe that by the 2020s, human life expectancy will increase by more than one year every year (in 2002 Kurzweil predicted that this would happen as soon as 2013, but this is just another example of him consistently overestimating the rate of change).  This means that death will approach the average person at a slower rate than the rate of technology-driven lifespan increases.  It does not mean all death suddenly stops, but it does mean than those who are not close to death do have a possibility of indefinite lifespan after AEV is reached.  David Gobel, founder of the Methuselah Foundation, has termed this as Actuarial Escape Velocity (AEV), essentially comparing the rate of lifespan extension to the speed at which a spacecraft can surpass the gravitiational pull of the planet it launches from, breaking free of the gravitational force.  Thus, life expectancy is currently, as of 2007 data, rising at 20% of Actuarial Escape Velocity.

I remain unconvinced that such improvements will be reached as soon as Ray Kurzeil and Aubrey de Grey predict.  I will be convinced after we clearly achieve 50% of AEV in developed countries, where six months are added to life expectancy every year.  It is possible that the interval between 50% and 100% of AEV comprises less than a decade, but I'll re-evaluate my assumptions when 50% is achieved. 

Serious research efforts are underway.  The Methuselah Mouse Prize will award a large grant to researchers that can demonstrate substantial increases in the lifespan of a mouse (more from The Economist).  Once credible gains can be demonstrated, funding for the research will increase by orders of magnitude. 

The enormous market demand for lifespan extension technologies is not in dispute.  There are currently 95,000 individuals in the world with a net worth greater than $30 million, including 1125 billionaires.  Accelerating Economic Growth is already growing the ranks of the ultrawealthy at a scorching pace.  If only some percentage of these individuals are willing to pay a large portion of their wealth in order to receive a decade or two more of healthy life, particularly since money can be earned back in the new lease on life, then such treatment already has a market opportunity in the hundreds of billions of dollars.  The reduction in the economic costs of disease, funerals, etc. are an added bonus.  Market demand, however, cannot always supercede the will of nature. 

This is only the second article on life extension that I have written on The Futurist, out of 154 total articles written to date.  While I certainly think aging will be slowed down to the extent that many of us will surpass the century mark, it will take much more for me to join the ranks of those who believe aging can be truly reversed.  To track progress in this field, keep one eye on the rate of decline in cancer and heart disease deaths, and another eye on the Methuselah Mouse Prize.  That such metrics are even advancing on a yearly basis is already remarkable, but monitoring anything more than these two measures, at this time, would be premature. 

So let's find out what the group prediction is, with a poll.  Keep in mind that most people are biased towards believing this date will fall within their own lifetimes :

Studying what lies beneath the surface of market forces can be fascinating.

BusinessWeek has a slideshow depicting major centers for medical tourism, as well as the cost savings of various procedures in relation to the US.  This got me thinking about several dimensions of this concept, particularly since healthcare is 15% of the US economy, yet is also the sector of the US economy, outside of government, where wastage and ineffeciencies are the greatest. 

Many procedures that cost $100,000 or more in the US can be done with equal competence for $10,000 in Thailand or India.  Normally, if something of comparable quality is available for just a tenth of the cost, demand migrates to the cheaper alternative in a huge torrent.  Even after accounting for travel costs, the gulf is immense.  Yet it appears that only a small percentage of US patients for cardiovascular surgery, joint replacements, etc. are going overseas for their operations.  Medical tourism will still only earn a miniscule $4 Billion in 2008 for India, Thailand, and Singapore combined, of which only one-third is from American patients.  Thus, only a fraction of a percent of the US, European, and Japanese healthcare sectors have been dented. 

This, of course, can be due to two reasons :

a) Fears about quality/safety, either real or perceived.

b) Net out-of-pocket cost to the patient still being lower in the US, due to insurance. 

Regarding quality, many of these surgeons are certified by US boards or even educated in US colleges, and accidents do not appear to happen at any greater rate than in the US.  At the same time, it is not possible to pursue malpractice suits against facilities in India or Thailand, which, while certainly an element of risk, itself is part of the reason for their lower price relative to the US.  It is inevitable that some mishap befalls an American patient in Asia, and the media latches onto the story for a week or more, reversing the market demand for medical tourism for years, even if the incidence of such tragedies may be no more than in US hospitals.  In fact, I am surprised it has not happened already. 

In terms of cost, that brings us to the elephant in the room, which is the revelation that it is not India or Thailand that are too cheap, but rather that US healthcare is too expensive to begin with.  I am no expert in this field, but it seems obvious that a lack of market forces in the value chain, a lack of regulation of lawsuits, the horrendous dietary habits of most Americans, and the tendency of consumers to not care about how much the insurance company pays are all contributory factors to what is arguably the greatest tragedy in US economic history.  Socializing the healthcare system will worsen it, for reasons too vast to delve into here.  It is true that many Canadians come to the US for urgent procedures that would require a 3-month wait in Canada. 

However, millions of Americans don't have health insurance at all, and while for some this is by choice, for some it is not.  For them, traveling abroad for a $10,000 heart procedure may be the only affordable option.  Even if the most experienced and well-frequented facilities are in India and Thailand, nearby options also exist in Jamaica and Costa Rica.  Over 20 other countries across Eastern Europe, Asia, and Latin America are also vying for a slice of the pie. 

As unintended consequences ripple through, herein lies the path to forcing some degree of reform of the US healthcare system.  As more Americans either choose or are forced to seek low-cost procedures abroad, even if it is only a small percentage American patients, this will compel insurance companies to include medical tourism options to patients.  The insurance company can offer their own version of malpractice insurance to the patient, cover all travel expenses for the patient and spouse, and even throw in a vacation package and cash incentive.  Even after all this, if the cost of the $10,000 procedure in India or Thailand has now risen to $30,000, it still outcompetes the $100,000 US alternative handily.  Some insurance companies are already starting this with enthusiasm, and before long, all insurance companies will effectively have to compete on this level. 

As the number of Americans combining surgeries with a tropical vacation becomes a small but significant percentage of the total patient pool, the US healthcare system will have no choice but to undertake the difficult reforms to bring costs down at a systemic level, thus benefiting even those Americans who refuse to go overseas, and even procedures that are not candidates for offshoring.  If software development can be outsourced to India where it is one fourth the cost, surgeries cannot expect to be perpetually immune to competition that is a tenth or twentieth of the cost.  Through some combination of tort reform, free-market principles, and preventative focus, US costs will gradually be brought down closer to a market rate.  Perhaps the US can comfortably sustain prices that are 3 times that of Thailand, but not 10 times.  This will be the next industry in the US that is forced to adapt. 

To review, the expected sequence of events is :

1) Americans with no insurance are forced to make a life or death decision to get their surguries abroad, where the service meets or exceeds their expectations. 

2) More insurance companies offer medical tourism with liability guarantees and cash/vacation incentives to American patients.  Only a small fraction of patients are adventurous enough to do this, but all insurance companies are compelled to offer these options.

3) Major centers for medical tourism, after a track record of about a decade, develop solid brands that can attract American patients. 

4) When we finally get to the point that 10% of Americans are traveling abroad for a wide array of procedures, the US will be forced to begin to take measures to reduce costs throughout the healthcare system.  Losing 10% of the market is all that it will take to force some positive changes.  This could begin to happen by 2020. 

Such a sequence of events, of course, will boost the US economy greatly.  Of the $2 Trillion mentioned above, as much as half of that, a whopping $1 Trillion or 7% of the US economy, is estimated to be wastage incurred due to a shortage of market forces in healthcare.  Imagine if that $1 Trillion could be redeployed elsewhere.  A person who saves $90,000 on a heart procedure can choose to use that money on emerging innovations in biotechnology that may be available in the 2020s, such as treatments to slow down or halt some aspects of aging. 

This is not going to be a trend that moves as quickly as some of the others discussed here on The Futurist.  But the economics involved are massive enough that it has certainly caught my eye.  Let's see what happens, both before and after the predicted media frenzy over a foreign medical mishap. 

Update (4/3/08) : Businessweek has an article on how technological advances in medical instrumentation are enabling some surgical procedures to be done with far tinier incisions.  Patients who previously would have to stay in the hospital for a week to recover now can leave in under a day. 

The article also mentions how hospitals are opposed to these technological advancements, as they reduce the number of days of revenue a hospital can collect while a patient recovers after surgury.  This anti-productive, entitlement mentality will hasten the downfall of the US healthcare cartel, as shorter recovery times due to smaller incisions will make a trip to a tech-friendly facility in Thailand or India even more compelling.  When the cost is a tenth and the recovery time is a fifth of what it would be in the US, how long before market forces dominate?