Complete Khoisan and Bantu genomes sequenced

Four Khoisan genomes and one ethnic Bantu genome from Southern Africa have been completely sequenced (original paper here and earlier mtDNA study of the same population also discussing African pygmies is found here). Archbishop Desmond Tutu provided the genetic Bantu sample. The men were the oldest members of their respective ethnic communities and came from three different Khoisan language groups.

Ethnic Khoisans (also sometimes called San, !Kung, or Bushmen, terms that heavily overlap but do not mean quite the same thing), are associated one of the main hunter-gatherer societies of Africa from the most ancient times (ethnic Pygmies are associated with the other main hunter-gatherer society of Africa from the most ancient times). This theory is supported by their genetic diversity:

Analyses of the men’s genomes confirm that the Bushmen, also known as San or Khoisan, are among the most genetically diverse people in the world. Two Bushmen who live within walking distance of each other might have more genetic differences between them than a European and an Asian.

Genetic diversity as a sign of a historically ancient gene pool is the flip side of the "founder effect" that leads small groups that broke away from a larger population and then expanded in population to have low genetic diversity.

The Khoisan's level of genetic diversity suggests that diverged from their fellow modern humans who migrated out of Africa around 100,000 years ago, and are likewise relatively distant relatives of other African populations (based on incomplete genome typing done to date). Khoisan populations are as distinct from Africans of Niger-Congo ethnicity (which includes Congo) as they are from Europeans.

Genetic evidence clearly puts Khoisan's in a distinct genetic cluster from Bantu and Yoruba populations (which are also clearly distinct from each other), and each of the African populations have much more genetic diversity than the people of Europe do.

The Bantu ethnicity is associated with the West African civilization that was the first in Africa to develop agriculture than then rapidly expand across a large swath of the continent (in the time period from about 1500 BC to 1000 AD), mostly by replacing or displacing prior populations. This expansion was relatively recent in historic terms when it reached its furthest extent in Southern Africa at the time that Europeans first arrived on the contingent. Linguistic evidence (the great similarity between Bantu languages) corroborates this link and helps fix the suspected point of origin for the Bantus to a very specific geographic location. Comparable expansions in Europe and China took place many millenia earlier.

Prior to Bantu expansion, the Khoisans are believed to have been the predominant ethnic group in Southern Africa and up into parts of East Africa. Linguistically, Khoisan languages are distinguished by their use of clicks as phonemes. Now, Khoisans are a small minority in Southern Africa which is predominant mostly in and around the Kalahari desert.

According to the earlier mtDNA study cited above, estimates that a common point of origin of "all African mtDNAs, of 125,500–165,500 years before the present, a date that is concordant with all previous estimates derived from mtDNA and other genetic data, for the time of origin of modern humans in Africa."

A couple other footnotes to the research are worth noting:

Until now, only one African genome – the genetic makeup of a person from the [predominantly Nigerian] Yoruba ethnic group – had been completed. . . .

The new research also reveals evidence of mixture between hunter-gatherer Bushmen and agricultural Bantu people. Tutu has a female heritage marker usually found only in Bushmen, indicating that the archbishop had a female Bushman ancestor. And one of the Bushmen has a type of Y chromosome often found in Bantu men, indicating a Bantu male ancestor.

One of the reasons it was scientifically important to secure Khoisan genomes now is that there is a good chance that there will be very "pure blooded" or near "pure blooded" Khoisan's in a few generations because they are such a small minority population in Africa and hunter-gatherer societies do not have a good track record in modern times. Without this information, one side of the arguably oldest split in the modern human genetic heritage might be lost forever.

Curiosity Saved The Cat

Curiosity has an undeservedly bad reputation. A West Denver cat escaped death when the cat's home exploded today, because the cat left the house to explore the neighbor's yard. No one was killed and the damage beyond the house was minimal. One worker suffered a minor injury. Somebody's insurance company (possibly multiple somebodies) is likely to make a large payout to address the damage to the house and its contents soon.

Happiness and Economic Progress

The map showing the least happy 20% of Congressional districts heavily overlaps those in the bottom 20% of 2005-2006 income growth and stalled life expectency gains (neither of which follow neat red state, blue state lines). The main difference is that places with agriculture centered economies are happy now, despite poor past income change and life expectency improvement.

The least happy places are mostly either dealing with a housing bubble collapse (parts of California, Arizona, Nevada and Florida), or declines in the manufacturing economy (both the New Rust Belt in the South, and the Old Rust Belt in the North), or both.

Why Do People Go Bankrupt?

Many people who could file for bankruptcy don't. What drives those that do?

In a nutshell:

Most consumers who file chapter 7 are driven to it by credit card collectors. Chapter 13s of course are driven by foreclosure sales. . . .

Generally, apart from foreclosure-related filings, the emergency bankruptcy filing is largely a myth. Creditor collection activity does not force people into an immediate bankruptcy. On the contrary, it wears them down slowly but ineluctably, like water dripping on a stone. Second, the primary factor that affects the date on which people actually file is their ability to save up the money to pay their attorneys and filing fees. Thus, among other things, we see an annual peak shortly after families receive their tax refunds, and a semi-monthly peak related to the receipt of paychecks.

The authors of the referenced study suggest reforms:

First, we argue that the existing collection process is flawed by a prisoner’s dilemma that leads to excessive and wasteful “dunning” by creditors. Because each creditor has an incentive to be first in line to collect, and because the creditors can dun their debtors at little or no cost to themselves, creditors as a group naturally engage in dunning activities that debtors find intolerable – a level of activities from which a rational single creditor would refrain.

We recommend a variety of solutions to strengthen the FDCPA. Some are at the level of detail (extending it to in-house collection, increasing the statutory damages, and the like). But the most important is a “do-not-call” rule modeled on the do-not-call list for telemarketers. Specifically, we recommend a low-transaction-cost mechanism (activated by telephone call or Internet site) that would automatically and immediately stop all creditor collection activity.

Second, corollary to our argument that excessive collection causes inappropriate filings, we also believe that the excessive filing costs deter socially valuable filings. . . . we argue that low-income low-asset filers should have access to a simplified administrative process that provides prompt relief without the costs and delay of judicial process.

The observation that it would be socially valuable for many people who don't go bankrupt to do so is an important observation.

More proposed bankruptcy reforms (some of which I agree with, and some of which I don't) are found here.

Female Soldiers Often Divorced

"Enlisted women are three times more likely to be divorced, and thus more likely to be a single parent [than enlisted men]."

From here.

Some of this is probably due to the fact that the military is the only employer that compensates soldiers with more children living with them more that those with fewer children living with them. It may also have something to do with gender role expectations.

Is A Universal Public Defender A Good Idea?

The right to a lawyer at public expense in a criminal case is a means tested right. Should it be? A "Universal Public Defender" available to everyone charged with a crime, regardless of means, would be an alternative approach.

This wouldn't necessarily cost the public much more than the current system.

A very high proportion (ca. 80%-90%) of criminal defendants are already represented by a public defender. Public defenders have lower salaries than prosecutors, and higher caseloads. And, it would eliminate the time devoted to indigency hearings on the part of prosecutors, public defenders, and the judicial branch, reducing the expenses of each of these branchs of the criminal justice system. It would also reduce the expenses associated with dealing with the procedural misteps of pro se criminal defendants who are not indigent but don't want to spend money on a lawyer.

Defendants would retain the right to hire private counsel if they wish, and empirical evidence tends to show that even legally indigent people often do so with assistance from friends and family, when they have strong cases. Presumably, the truly non-indigent would opt out more often than other criminal defendants. So, the percentage of new cases in the public defender's case load might be a significantly smaller number than those where private criminal defense counsel is present today.

The public defender line item isn't a big share of state and local government budgets now, and a one time increase of perhaps 10-20% in this line item, would not crush their finances. Viewed as a percentge of the criminal justice system's cost including law enforcement, prosecutors, the judiciary and public defendants, it would be a smaller still one time percentage increase.

Universal systems also tend to be more politically popular than means tested ones, because a much larger share of the voting public would receive what amounts to insurance protection from an expensive eventuality. The expanded coverage of the right to criminal defense counsel might make that line item in the budget more politically popular.

What about middle ground? The right could be limited to felonies only, since it is a statutory rather than constitutional right, and could come with a duty to reimburse the state in cases where a conviction results.

This approach would protect rights systemically as well.

It would also hue closer to the notion that a criminal defendant doesn't have to disclose anything to the state in the context of a criminal defense - one must make a representation under oath as involved as a tax return in order to be declared indigent.

And, if acquitted defendants were not required to reimburse the state for their defense, then it would reduce the incentive of non-indigent defendants to plea guilty simply to reduce their out of pocket legal fees, and it would mitigate the harm suffered from being charged with crimes that the prosecution fails to prove beyond a reasonable doubt at trial.

Critics worry about putting an even larger share of the criminal defense bar on the public payroll.

Meanwhile, in another money and justice intersection, jurors in Los Angeles are getting surly about the fact that they are paid only a far below minimum wage $15 dollars a day and can't afford it. Jurors are probably more resigned in Colorado, but are also ill paid.

Cool Praise For New Denver Court House and Jail

The design of the soon to open new Denver Justice Center, with a court house and jail, received an overall positive architectural assessment from the Denver Post, tainted with wistful wondering about what it could have been in the hands of the world class architect originally hired to do the job who left amidst budget cutting on the project.

Six Months For Manga Possesion

A forty year old man with no prior criminal record who pleaded guilty in federal court in Iowa when charged with possesion of child pornography in the form of a sexually explicit graphic novel (manga) with cartoons of children having sex, imported from Japan as part of a larger manga collecting hobby, has been sentenced to six months in prison. He faced up to fifteen years in prison.

The six months will probably be served in community corrections and followed by three years of supervised release on the child pornography charge and also followed by a concurrrent five year probation sentence will be in place on a mailing obscenity charge. A fine of $200 was also imposed. Once the three years of supervised release are complete, sentence for the more serious child pornography charge will be served, leaving any probation violation in the last two years limited to the lesser mailing obscenity charge.

The charges have already cost him a job he held for twelve years as a computer programmer. It appears that he will not have to register as a sex offender. Links to more source documents can be found here.

This is a case where none of the justifications for long child pornography sentences didn't exist, and the government's case was weak (this certainly would not have been considered child pornography in Japan and it isn't clear that it was ordered with an intent to purchase child pornography). But, the risk of a catastrophicly harsh sentence allowed the government to secure a conviction in an otherwise weak case. According to someone relying on what are believed to be direct communications from the defendant to a blogger:

[I]t seems that Handley pled guilty in hopes of getting little or no prison time, but the prosecutor is going for 71-90 months and Handley is now regretting the plea—but can’t withdraw it.

Handley's guilty plea apparently had the intended result. The judge's sentence was far below the sentence apparently sought by the prosecutors, and at the low end of the three to twenty-four month range apparently sought by the defense attorney. It also appears that the three year's of supervised release may have been mandatory.

This case involves a serious lapse in prosecutorial discretion by Assistant U.S. Attorney Craig Peyton Gaumer and Elizabeth M. Yusi of the Criminal Division’s Child Exploitation and Obscenity Section who brought the case. Gaumer also has apparently published a number of academic articles and litigated cases in a variety of areas and is a JAG lawyer in the National Guard or Army Reserves. Yusi's public sector work for the Justice Department, after a stint of big law work at Patton Boggs after her 2002 law school graduation, appears to be centered on child pornography cases.

The Fed's Evolving Role

Econbrowser neatly summarizes shifts in the investments made by the Federal Reserve during and after the financial crisis.

The Fed before, during and after has always had a steady base of federal government debt, currently about $800 billion, that took a modest dip during the financial crisis. This is essentially risk free.

The Fed did a vast amount of short term lending to the banking sector and commercial paper markets ($1,600 billion at the peak), most of which has now been paid back, during the financial crisis, in the period from January 2008 to January 2010. This is now under $100 billion and falling. This was moderately risky at the time, but worked out without major losses.

The Fed has added, for the indefinite future, bailouts of AIG and Bear Sterns. AIG is the bigger of the two. But, both combined aren't that big a share of the whole (combined, about 5%, which is perhaps $120 billion). This is problematic and likely to produce losses.

Mortgage backed securities and related agency debt has ballooned into a major component of the Fed's balance sheet, from zero or near zero at the start of 2009. This now exceeds $1,100 billion. This has come close to reaching the peak of its planned amount. It isn't entirely clear how safe these investments are now. They are safer than the AIG and Bear Sterns bailout involvements. They riskier than Treasuries. Even a fairly modest percentage loss on these investments would be a big loss. Like the AIG and Bear Sterns holdings, these appear to be long term investments, with Econobrowser surmising from the newly reappointed Fed chairman's comments that "it sounds like the Fed basically intends to hold those MBS to maturity." Mortgage backed securities often have thirty year terms that match the underlying mortgage assets, but the average mortgage is paid off (often though a sale or refinancing) in ten years, and presumably these securities would tend to follow similar trends.

Pre-financial crisis, we would have assumed that mortgage backed securities and agency debt were very safe. Now, with default rates continuing to remain high on mortgages, it is hard to know how safe these will be. Loan losses are lagging indicators. The falling property values and weaknesses in the economy that made mortgages produce loan losses are precede the losses themselves.

It also continues to be unclear to what extent these losses represent a harm to American taxpayers, and to what extent these losses represent a harm to the shareholders of the privately owned federal reserve member banks. Many of the important financial assets held by the Fed also involve big financial institutions and government agencies that also have skin in the same investments in complicated ways. For example, Freddie Mac, Fannie Mae and the FDIC backstop in different ways, some of the assets on the Federal Reserve's balance sheet. Residual private owners in Freddie Mac, Fannie Mae and AIG have taken huge losses, but aren't entirely out of the entities they used to control. Essentially all of the new lending/asset purchases by the Federal Reserve Banks has been financed with loans from the Federal government itself.

Econbrowser's post points out that despite a lack of admitted linkage in the decisions, "it seems not coincidental that, when you look at the total of all the assets the Fed is holding, the expansion of MBS purchases exactly offsets the declines from phasing out the short-term lending facilities. As a result of the MBS and agency purchases, the total assets of the Federal Reserve today exceed the total reached at the peak level of activity for the lending facilities in December 2008."

With new MBS lending winding down and the bailout crisis of the financial crisis apparently over, it isn't clear that the Federal Reserve has any dramatic moves ahead of it in the foreseeable future.

American Political Party Coalitions

A comment at Square State in early January claimed "[t]he problem with US politics is that there are three major constituencies (christian nationalists, business, and labor) but only two parties." Predicably, I think that the coalitions behind the two major political parties in the United States are quite a bit more complicated. But, what are those coalitions?

For the Democrats, there are probably at least four major components: (1) labor (including non-union economic populists), (2) social liberals (including big business professionals, trial lawyers, professors, teachers, liberal clergy, government employees, the urban middle class and the secular left), (3) ethnic minorities, and (4) residual Dixiecrats (particularly long serving, pre-realignment elected office holders).

For the Republicans, the components include: (1) Conservative Christians and xenophobes, (2) big business senior management and the rich, (3) small business owners and farmers, and (4) neo-conservatives.

Of course, components of each coalition have overlap with each other. This is why they form coalitions with each other in the party that they are in, rather than the other party. There are notable exceptions: law enforcement unions often lean GOP as do minority members who are Cuban; organic farmers who run small businesses and Northeastern suburbanites lean towards the Democrats.

Conservative Christians and labor bring the ability to mobilize warm bodies willing to work to their respective parties. Big business and social liberals, respectively, bring money to their respective parties. Ethnic minorities and small businesses bring loyalty and commitment to their issues. Residual Dixiecrats and neo-conservatives bring a willingness to exercise political power.

This model of two political parties with four parallel factions each is also oversimplified, but it better explains intra-party politics than a three faction, two party model.

Caucus 2010

Colorado's March 16 precinct caucus details are now available for Democrats and Republicans in Denver.

In ordinary years (i.e. years other than 2008), attendance is usually around 1% of registered political party members. The caucuses play a pivotal role in determining who will be nominated from the major political parties. About nineteen of twenty partisan elected officials make it onto the ballot that way (the remain petition their way onto a partisan primary election ballot). These biannual events are also the gateway to positions within each of the two major political parties.

Payday Lending Tracks Ethnicity

Payday lenders in Colorado are heavily concentrated in Latino and African-American communities. This is hardly surprising, but the strength of the relationship is stronger than one might expect.

Deluge Explained?

Sometime around 160,000 years ago, modern humans evolved. The most recent ice age lasted from about 110,000 years ago to 10,000 years ago (the last global maximum of the ice shelf was about 18,000 years ago). Sometime around 100,000 years ago, modern humans had left Africa and reached the Mediterranean coast in the Levant. But, the ancestors of all modern Eurasians and Native Americans were confined to the Near East until about 60,000 years ago. From 100,000 to 60,000 years ago, there were no modern humans in India, Indonesia, Australia, China, the Americas, or Europe. They were confined to Africa and the Near East.

Evidence from radioisotope dating of mineral crusts in cases on the Mediterranean coast in Spain indicates that sea level fluctuated in an unexpected way in that time period (citing Dorale, J.A., et al. 2010. Sea-level highstand 81,000 years ago in Mallorca. Science 327(Feb. 12): 860).

Before the most recent ice age, sea level was about eight and a half feet higher than it is now. About 85,000 years ago, ice caps had trapped water lowering the sea level to about 67 feet below current levels (about 75 feet below their peak).

Then, for reasons that have no real explanation right now, sometime 80,000 to 82,000 years ago, sea levels rose about 72 feet to levels about 5 feet higher than they are now.

By 79,000 years ago, this anomaly had largely ended, and sea levels were 50 feet lower than they are now (a 55 foot drop).

The evidence doesn't tell us how fast this surge came and went, but evidence from the floods the filled the Mediterranean, four or five million years ago, and evidence from the flood that inundated the English Channel, suggest that these kinds of evidence happen more quickly than the accuracy of our dating techniques allow us to establish.

The search for major floods that really happened in the pre-historic human era, is driven in part by the deluge myth. A large number of Eurasian, Australian and American cultures that were isolated for millenia share a myth of a great flood that covered the world, killing all but a handful of survivors and then receding. The myth of Noah and the flood is most familiar version of the story to Westerners, but there are dozens (perhaps hundreds or thousands) of other versions of the story.

The geological evidence makes clear that there was never a flood that covered all of our mountaintops. It didn't happen. There isn't enough water in the world to do that and never has been.

So, where did this common myth come from?

There have been major sea level changes and floods in human history. Indeed, after volcanic activity, floods are among the most deadly disasters in human history. But, not all sea level changes and floods in geologic history are a good fit for these myths. Floods before humans evolved wouldn't have made their way into myth (in the same vein, the dinosaur extinction event 65 million years ago didn't make it into human myths).

But, a flood that is so universal in myths across the world would either have to have had a broad global scope and reached even people living thousands of feet above sea level, like the Inca, or have been a composite of multiple floods that were individually devastating and common, or have occurred before their ancestors diverged from each other.

If the ancestors of almost everyone who shares the deluge myth lived in some flood prone area, like a coast or a river's flood plain, it would have seemed like the whole world was affected.

The myth appears in the earliest written myths, found in Sumeria, and were shrouded in the legendary past at the time those myths were recorded, around 5000 years ago. So, if the myths all record a single event, they have to have happened before then.

Not all the myths are independent. For example, the story of Noah is very likely to have its roots in the Sumerian version of the story. But, many of the cultures that share the myth diverged in pre-Neolithic times (i.e. around the time of the end of the last ice age). (Note that since Nilo-Saharan people may have also lived on the North African coast in that time period, and migrated South from there as the Sahara dried up, so it wouldn't be inconsistent for people of those cultures to share the myth even though they don't live there now, although I'm not aware that these people do have a deluge myth.)

The flood that the mineral deposits point to about 80,000-82,000 years ago is the only known flood of epic scale that happened between 100,000 and 60,000 years ago in a place inhabited by modern humans, the time period and place where all the cultures that share the myth had a common ancestor. So, it is plausible that this single, geographically confined event that could have spawned all of the deluge myths.

This is hardly definitive proof. The physical evidence that such a flood even happened about 82,000 years ago deserves skepticism as it is thin for such a remarkable claim, when there isn't any obvious mechanism to make it happen. But, the physical evidence of its apparent timing and scale make it a plausible candidate for a source of such a pervasive myth. Clearly, this deserves more study, both for its climatological importance, and its anthropological importance.

UPDATED: Copy edits made February 16, 2010 in response to comments and for a general cleanup. A summary of African flood myths can be found here. An effort to group these African stories by languages produces the following:

◦Nilo-Saharan
Cameroon, Masai, Komililo Nandi, Kwaya (Lake Victoria), Pygmy
◦Niger-Congo
■Beunu-Congo
Southwest Tanzania, Ababua, Kikuyu (Kenya), Bakongo (west Zaire), Bachokwe (southern Zaire), Lower Congo, Basonge, Bena-Lulua (Congo River, southeast Zaire)
■Kwa
Yoruba (southwest Nigeria), Efik-Ibibio (Nigeria), Ekoi (Nigeria)
■Mande
Mandingo (Ivory Coast)

A Mediterranean flood, thus, would require some story transfer to neighboring cultures from Nilo-Saharan people, and/or for people to have lost their language to Niger-Congo based farming peoples while retaining their stories. But, the lack of close match stories in Southern Africa is somewhat supportive of a common Mediterranean origin for the myth. Some of the Africa flood stories that are known are only dim matches to the deluge myth and could be independent, while others like the Masai version, are quite similar to Eurasian versions.

A flood around 81,000 years ago in the Mediterranean that caused mass death, could also cause a population bottleneck in that time period. See also here.

The deepening of the ice age caused by the Toba Volcano eruption (of about 75,000 to 70,000 years ago) is another theory. See also here. (Note, links illustrative of basic ideas of the theory only and not intended authority for their correctness.)

While it requires an early estimate for the Toba eurruption and an early date for the sea level rise following a high point 80,000 years ago, one theory that would make sense to explain the sea level change discussed would be rising sea levels caused by the end of an ice age that otherwise would have run from about 100,000 years ago to 80,000 years ago, which was reversed by sudden global cooling in the wake of the Toba Volcano eruption, that in turn lowered sea levels again.

The Chinese Discovered America

Pre-Columbian maps from China secured by Marco Polo and brought to Venice indicate that the Chinese had sailed on the West Coast of North America and the Caribbean decades before Columbus reached the Americas.

Cres Island's Facinating Genetic History

One of the most genetically interesting places in Europe is Cres Island, off the coast of Croatia. They are profoundly different genetically from their neighbors in Croatia or anywhere else in Europe, despite living in a place that has been near a major path of European trade and commerce since before agriculture was invented.

In my view, these are not like European genetic outlier populations such as the Finns and the Basque, and African Pygmies and Khoisan people of Africa, who may be relict populations of their respective continents that survived later waves of farmer expansion (including Indo-European expansion in Europe and Bantu expansion in Africa). Instead, they have more in common with Jewish and Romani populations in Europe, and the people of Madgascar in Africa, as recent recolonizers from the East who have remained genetically distinct.

Another study have found significant examples of halotype F, usually associated with Southeast and East Asia, on a Croatian island, but that population was otherwise typical of the European norm. There are a variety of possiblities, only some of which were addressed in the paper that could explain this discovery. The paper fails, for example, to note how common sea trade with Asia was in this area in the 15th century. Cres Island, however, is different. The population is too distinct from the European norm to be easily explained with founder effects in local populations, or isolated instances of admixture. The genetic evidence from Cres Island points to a wholesale population replacement.

High Caste Indo-Aryan Speakers From South India, or relict Central Europeans?

The abstract of a new academic paper on their Mitochondrial DNA heritage is reprinted at Dienekes' Anthropology blog, and in five comments to that post, I spin out a plausible, but unproven story, to explain how this group of people, who show a strong genetic linkage to the Indo-European language speaking Havid Brahmins of South India, could have wound up on a Balkan Island.

I also briefly discuss reasons why it is less plausible, given the genetic evidence, that they have direct roots in Europe's early Neolithic Central European Linear Pottery Culture. The South Asian N1a halotype common on Cres Island is not the same as the version found in Central Europe. It is the smoking gun as it is found only among the Havid Brahmins of South India.

The U2e halotype is not the U halotype associated with early Neolithic Europeans like the Basque, although it is found in both Europe and India, and in particular among with upper caste Indo-European language speaking people from India. Central Europeans have a high frequency of halotype J (associated with the Near East), but only one person out of 119 mtDNA types on Cres Island had that halotype. And, halogroup W is not inconsistent with a high caste Indo-European speaking South Asian source for this population. Halotype U2, which is common in this population, is also found in Mongolia, but for a variety of other reasons, the genetic makeup of this population bears little similarity to the genetic makeup of the people of Cres Island, Croatia.

The history of the Havid Brahmins in South India, which had a thirty-two man population bottleneck around 300 AD, also provides a reason for there to be only a small number of lineages (probably just five lineages account for more than half of the Cres Island population). There is also a plausible, although dim link between Cres Island mythology and the mythology of the Havid Brahmins.

Finally, there is some genetic evidence (I read it recently and don't have a cite) that colonizing populations typically remain distinct from the locals for about a thousand years. If, as I suggest, the Cres Island people arrived at Cres Island in the 800s, this seems plausible. If, instead, they are a relict population from the earliest European Central European farmers, however, the Cres Islanders would have to have remained endogamous for five thousand to seven thousand years, which is less plausible.

Any genetic links between Cres Islanders and the Central European are probably remote. Early Central European farmers (who came out of Anatolia), probably speaking a proto-Indo-European language, are probably closely related genetically to nomadic pastrolists (i.e. herders) in Southern Russia North of the Caucus Mountains. These herders, in turn, were probably the source population for the Indo-Aryan a.k.a. Vedic civilization that conquered North India's earlier Dravidian language speaking people (possibly descended from pre-Semetic Mesopotamians via the Harappan Indus River Valley Civilization), and imposed themselves and their language and religion on the farming people they conquered as a ruling caste. They probably won, in significant part, because they had horses and knew how to use them in war. At this point, the Hindu religion came into being from synthesis with local religious ideas, and the various languages descended from Sanskrit, which is close to being a proto-Indo-Aryan language emerged. The Havid caste in South India claims, plausibly in light of their well studied genetic makeup, religious practices, language, and some sparse ancient written inscriptions, to have come from an area in North India in the foothills of the Himalayan mountains. There is also evidence that the caste system in India has maintained genetic isolation of groups living near each other must longer than any other place in the world.

Thus, the Havids of South India probably are remote descendants of early Central European farmers, but are sufficient remote that they can be distinguished pretty definitively through population genetics.

How Did They Get There? The Story I Propose.

Suppose that the Cres Islanders come from South India. How did they get from South India to Croatia?

I propose that they migrated to a city near modern day Baghdad when it was ruled by a curious and tolerant king at a time when it was the largest city in the world via the India Ocean along trade routes which we know from historical evidence existed at the time in the early 400s. Indeed, there is historical evidence that representatives of the early Christian church in South India (associated with Saint Thomas) attended the Council of Nicea in 325 AD.

I propose that this tight knit community then migrated to Antaolia in the Eastern Roman Empire, with whom they would have had contacts from a church conference held near the city in 410 AD, up the Tigris River, when a contemporary adversary of Attilla the Hun who ruled the empire based in this city two kings later, went on a harsh campaign to suppress minority religions.

Not long after that, the Byzantine Empire split from the Western Roman Empire. A couple of hundred years after that, there were hundreds of years of war between the rising Islamic Empire and the Orthodox Christian Byzantine Empire.

In the early 800s, Cres Island was sacked by Islamic forces, but the invaders weren't able to hold the territory for long. This happened at the peak of their first expansion into Europe a little beyond the furthest extent that they controlled on a sustained basis in Italy, Spain and the Balkans. At around the same time, the Byzantine army has a policy of forcibly seizing religious minority communities (often from Muslim controlled areas) and resettling them as farmers in areas that they controlled.

Somewhere along the way between the 400s and the 800s, this community probably adopted its own distinct version of Orthodox Christianity. The may have been South Asian Christians who came to the Near East for this reason, or they may have converted once they arrived. We know that the Romani people made as similar conversion to Christianity in their recolonization of Europe from India.

I propose that the descendants of the Havid people from India, still functioning as a tight knit community of agriculturalists, were brought in to repopulate Cres Island and came to become the predominant local population. This wouldn't have taken much. The island has an are of only about 160 square miles and a current population of 3,238 with all the benefits of modern technology. One expects that the island was more sparsely populated in the 800s when agriculture was less efficient, particularly in the wake of having its biggest city burned and raided during the Byzantine-Arab war when large scale taking of prisoners was common (more than 16,000 prisoners were taken by the Arabs over a few years at one point in the war).

The Cres Islanders then came under the rule of the Republic of Venice, from 1000 to 1358, then under the Croatian-Hungarian kings, and then from 1409 to 1797 until the 18th century.

The Venetians Republic was built on the trade of its merchant princes, rather than its military superiority, so they may have left the new Cres Islanders more or less alone in a way that other principalities of the Middle Age would not (perhaps explaining why similar communities aren't found elsehwere in Europe). Equally important, Venice was from the start at its founding in 421 AD, a Western Christian city, not an Orthodox Christian one.

The Cres Islanders may have been culturally divided and hence able to remain endogamous as an Orthodox Christian minority outpost in Western Christian Republic. Osor, a town on the island, served as an archdiocese of the Orthodox Christian church from the 500s, and in my theory, was resettled with the Cres Islanders by an Orthodox Christian Byzantine empire.

Osor led a Roman Catholic diocese until 1838. The Roman Catholic Pope (Innocent IV) gave churches in the area permission to use the Old Croatian language, unlike the rest of the Roman Catholic Church, in 1248, so the transition from being under the authority of the Eastern Church to the Western Church probably took place around then. The fact that Cres Island conducted its religious services in Old Croatian rather than Latin, like the rest of the Roman Catholic Church, probably helped it maintain its cultural isolation that led to its genetic isolation, even after it joined the Western church.

The power of religious and cultural differences to maintain the endogamy needed to sustain a distinct genetic identity is well attested in the same time period by the Jews, who would have co-existed in the Near East and in many less geographically isolated villages in Central Europe in the same time period, there were also largely endogamous Jewish ghettos in Venice at the same time that Cres Island was ruled from Venice.

The fact that the Cres Islanders are now Christians also has precedent in the experiences of the Romani people and a large share of Iberia's Jews during the reconquest.

Is this a true story?

This is historical fiction. It is a story that is consistent with the historical facts that we know that could have happened. It is a plausible theory that can explain a highly improbable fact, that the people of an island off the coast of Croatia appear to be descended genetically from a specific group of people in South India, in a way that involves a sensible chain of cause and effect.

Other ways that this could have happened seem less plausible. Archeological evidence and even reference to the island in the Illiad, make it clear that Cres Island was inhabited long before the Havid people of South India existed.

The sack of Osro in 841 is the most notable historical event since the Havid people came to exist that could have depopulated the island sufficiently to allow its population to be replaced almost entirely by migrants descendant from South India. The pronounced genetic distinctness of the Cres Island people despite robust contact with the outside world for thousands of years supports their relatively recent origins. Mechanisms for them to remain distinct in that time period since 841 exist.

There were precedents for this kind of mass relocation of members of minority religious sects at the time, as in the case of the Maronite Church (an Eastern rite church affiliated with the Western Church's Pope):

Following the death of Maron in 410, his disciples built a monastery in his memory and formed the nucleus of the Maronite Church.

The Maronites held fast to the beliefs of the Council of Chalcedon in 451. When 350 monks were slain by the Monophysites of Antioch, the Maronites sought refuge in the mountains of Lebanon. Correspondence concerning the event brought papal and orthodox recognition of the Maronites which was solidified by Pope Hormisdas (514-523) on February 10, 518. A monastery was built around the the shrine of St. Maro after the Council of Chalcedon. . .

In 687 the Emperor Justinian II agreed to evacuate many thousands of Maronites from Lebanon and settle them elsewhere. The chaos and utter depression which followed led the Maronites to elect their first Patriarch, John Maroun, in 687. This however was seen as a usurpation by the Orthodox churches. Thus, at a time when Islam was rising on the borders of the Byzantine Empire and a united front was necessary to keep out the Islamic infiltration, the Maronites were focused on a struggle to retain their independence against imperial power. This situation was mirrored in other Christian communities in the Byzantine Empire and helped facilitate the Muslim conquest of the most of Eastern Christendom by the end of the century.

The Maronites may have also provided a precedent for the papal relationship with the Old Croatian churches forged in the 13th century.

It isn't unprecedented for people to travel thousands of miles to colonize an island with a people completely different in ancestry for other people who live nearby. Madagascar tells that story. We also see something similar in Indonesia. An the Andaman islands illustrate the point that two places near each other can be very genetically distinct. We know that something close to that happened in Greenland, although it didn't last, but it came close. The Maronites live in large numbers in Latin America today.

It is hard to imagine any reason that the Croatian King (who ruled for only about 50 years) would have replaced the people of Cres Island would have had a people of South Asian origins (who are not Romani) to place on the island or that he could have done so without attracting prominent historical notice. The Venetians probably did have trade with South India (Marco Polo hailed from a small Italian city state), but there is no reason to think that they would have replaced the local population so completely.

One could image an earlier date for the migration of the ancestors of the Cres Islanders, perhaps in the 500s when the Orthodox archdiocese was established. But, much before that the Havid people wouldn't have been around to migrate to the island, and mass slaughter and prisoner taking seems like a more likely reason to move in to a new island.

One could imagine a different scenario. Maybe the Cres Islander's ancestors were a culturally distinct population that co-existed was indigeneous Cres Islanders for an extended time period. But, perhaps the food supply declined in the Little Ice Age in the Middle Ages, but superior agricultural talents of a people who are known as accomplished agriculturalists in South India, and a strong sense of community, allowed them to survive, while their neighbors gave up and left for Venice, died of starvation, died of disease while weakened by starvation, or died from a disease that the Cres islander's ancestors were immune to or not exposed to on account of different culturally vestigal practices surviving from their Hindu religious concerns about purity. Their island's signature lake myth about a woman who refused to share food with her sister could be evidence of the power of that kind of historical event to shape an earlier ill remembered myth from their ancestors.

The possibility of selection by disease is not merely hypothetical in this case. There is genetic evidence that a 15th century plague had a powerful selective effect in the area that strongly favored people with genes adapted to this disease.

Aim

To assess the frequency of 32 base pair deletion in CCR5 (CCR5Δ32), which has been shown to confer resistance to HIV infection in a homozygous form, in 10 isolated island communities of Dalmatia, Croatia, with different histories of exposure to epidemics during and since the medieval period.

Methods

In 2002, DNA analysis of 100 randomly selected individuals from each of the 10 isolated communities of 5 Croatian islands (Susak, Rab, Vis, Lastovo, and Mljet) showed high levels of 3-generational endogamy, indicating limited gene flow. Five of the communities were decimated by epidemics of unknown cause between 1449-1456, while the other 5 villages remained unaffected. . . .

Results

The frequency of CCR5Δ32 in the 5 villages affected by the epidemic was 6.1-10.0%, and 1.0-3.8% in the 5 unaffected villages. The Δ32 mutation was found in 71 of 916 alleles among the individuals from the affected villages (7.5%), and in 24 of 968 alleles in unaffected villages (2.5%, χ2 = 27.3, P < 10−6). A previous study in 303 random Croatian blood donors showed the frequency of the CCR5 Δ32 of 7.1% in the general population. . . .

Conclusion

Our results and historical evidence, suggest that the mid-15th century epidemic could have acted as a selection pressure for the CCR5Δ32 mutation.

A 17th century plague in an isolated community in Southern Italy known from historical evidence has similarly been shown to have left a clear genetic impact on the surviving population. (The plague is believed to have originated in Central Asia, although the bubonic plague theory for what that disease was now has competition with other candidate diseases.)

I considered that possibility that the Cres Islanders made their way to the island via Attila the Hun, but that seems less likely, given the extent of his conquest, than a Byzantine way point.

The path from South India to the Byztantine empire is particularly fuzzy. They could have come directly, bypassing the empire in between. The Roman empire certainly could have been a draw, perhaps under the reign of Constantine I or in the wake of news from the Council of Nicea.

But, if they had done that, why wouldn't they have ended up in Rome, and why wouldn't they have gone to an island that was part of the Western Roman Empire from the start?

The path that I propose is better motivated, and once they arrive in the Near East follows a path of least resistance. The reason for their group to travel to the Near East is also reasonably well motivated.

My story doesn't have much corroborating evidence from Cres Island itself, just one myth vaguely similar to one from India. DNA evidence is powerful, but I'd like to have more than that and a history book or two to rely upon. The story I've told provides enough probable cause to make it worthwhile to dig deeper and look for those connections in a place nobody know to the wider world ever had any reason to expect or look for connections before the DNA evidence was available.

Perhaps there is some plant grown on Cres Island that is native to South India and found nowhere else in Europe.

Perhaps it would be possible to take DNA samples from continuous used cemetaries to see how far back the current genetic makeup of Cres Island existed. Similar studies are being done now with the Eustrician/Tuscan divide.

Perhaps there are words of South Asian origin found only in Old Croatian out of all of the languages of Europe. Then again, it isn't at all unprecedented for genetically distinct populations, like African Pygmies, to adopt the languages of neighboring people and lose their own languages entirely.

Perhaps that are cultural practices unique to Cres Island that survive, or artifacts from the Middle Ages that show some sort of linkage.

Perhaps someone familiar with Roman, Byzantine, Venetian or Mesopotamian historical records might recognize a passing reference to these people if they knew what to expect. Perhaps other less widely known local myths would provide further connections.

If anyone is willing to pay me a living wages and expenses to do more research, I just might.

Friday Quote

“Give me a place to stand and a lever long enough and I will move the world.”

- Archimedes (280 B.C.E-211 B.C.E.)

Social Security and Medicare Aren't Driving Deficits

Economist Robert J. Samuelson's op-ed in the February 5, 2010 issue of Newsweek offers up some simply facts about the projected federal budget deficit and then reached the wrong conclusion from them.

He notes that:

First, from 2011 to 2020, the administration projects total federal spending of $45.8 trillion against taxes and receipts of $37.3 trillion. The $8.5 trillion deficit is almost a fifth of spending. In the last year (2020), the gap is $1 trillion, again approaching a fifth: spending is $5.7 trillion, taxes $4.7 trillion. All amounts assume a full economic recovery. The message: there's a huge mismatch between Americans' desire for high government services and low taxes.

Second, almost $20 trillion of the $45.8 trillion of spending involves three programs—Social Security, Medicare (health insurance for those 65 and over), and Medicaid (health insurance for the poor).

Samuelson fails to make clear that Social Security and Medicare, which make up about $16 trillion of the spending, have their own dedictated payroll tax funding source. Not only do FICA and self-employment taxes cover the entire cost of Social Security and Medicare (with a combined distributional impact that is mildly progressive), these taxes generate a surplus that is used to fund other governmental programs, in exchange for which the federal government issues Treasury bonds earmarked for future Social Security and Medicare funding.

Looking At The Net Cost of Social Security, Medicare and Medicaid

The source of our budget woes look very different when you consider Social Security, Medicare and Medicaid were have integral funding sources other than federal general revenues attached to them. The net costs of these programs combined (calculated below) is about $3 trillion from 2011-2020. How does this change Samuelson's numbers?

First, from 2011 to 2020, the administration projects total federal spending of $27.8 trillion against taxes and receipts of $19.3 trillion. The $8.5 trillion deficit is almost a third of spending. All amounts assume a full economic recovery. The message: there's a huge mismatch between Americans' desire for high government services and low taxes.

Second, $2 trillion of the $28.8 trillion of spending involves three programs—Social Security, Medicare (health insurance for those 65 and over), and Medicaid (health insurance for the poor).

On a net basis, these big dollar programs represent about one-seventh of federal general fund spending over the next decade.

What Is Driving The Deficit?

How does proposed 2011 federal spending break out on a net of ear marked revenues basis?

Total: $2,276 billion

* Defense: $912 billion (including veteran's benefits and military retirements)
* Interest On The National Debt and Federal Employee Retirement Payments: $459 billion (including Social Security and Medicare Trust Fund interest payments)
* Income Security: $289 billion (e.g. SSI, Food Stamps)
* Net Social Security, Medicare and Medicaid Spending: $151 billion
* Education and Training: $122 billion
* Other Health Spending: $121 billion
* Transportation: $41 billion
* International Affairs: $65 billion
* Administration of Justice: $60 billion
* Other: $56 billion (includes natural resources, energy, agriculture, general science, general government operations, commerce and community development).

This break down also nets out unemployment insurance expenditures against earmarked FUTA payroll tax revenues, and nets out transportation spending against excise taxes ear marked for transportation.

In very round numbers, 40% of net spending is attributable to national defense, about 20% is attributable to past overspending, about 18% goes to help the poor and prepare people for employment, about 12% goes towards health care, and about 10% goes towards everything else.

Since we are stuck with past spending, the roughly one-third this spending that is driving the deficit comes entirely from the other 80%.

Basically, we have taxed ourself less lightly the necessary to pay for spending which is going towards, in roughly equal parts, spending on national defense and on spending to help the needy secure the necessities of life, education and health care. Medicare Parts B, C and D, and Medicaid are important parts of the second component. Social Security and Medicare Part A are not a drain on the budget at all.

The obvious solution does not include any major tinkering with Social Security or Medicare Part A. Instead, the obvious solution is some combination of tax increases, reduced defense spending, and cuts to programs to help the needy secure the necessities of life, education and health care.

Defense spending related to active wars is obviously problematic to cut, but a very large part of the defense budget has nothing to do with pending military action.

Given these options, increased taxes on those with an ability to pay is clearly more just than big cuts to programs to help the needy secure the necessities of life, education and health care. The only place were it seems plausible that there might be savings important enough to matter in the scheme of the larger budget is in efforts to control the rising costs of health care.

So, there you have it. My recommendations on how to deal with the deficit:

1. Increase tax revenue by about $740 billion a year, less the amount of any cuts that can be made in items two and three. As explained below, this probably boils down to about $640 billion a year in new tax revenue.

2. Cut defense spending in areas unrelated to pending wars. I would suggest that a $75 billion cut would be a reasonable starting point to attempt to secure.

3. Control federal health care costs. Total federal spending on health care (including Medicare Part A spending) is about $500 billion. I would suggest that a $25 billion cut would be a reasonable starting point to attempt to secure.

I also don't think it is important to close the deficit in a single year. A realistic plan to do so over three years might involve (with cuts and increases in each year relative to the baseline year, not cumulative):

Year One: Increase Revenue $220 billion, cut defense spending by $25 billion, cut federal health care cost by $5 billion.

Year Two: Increase Revenue By $440 billion, cut defense spending by $50 billion, cut federal health care costs by $15 billion.

Year Three: Increase Revenue By $640 billion, cut defense spending by $75 billion, cut federal health care costs by $25 billion.

Selective cuts elsewhere (e.g. farm subsidies) could reduce the need to raise more revenue.

Revenue Details

Where would the increased revenues come from? Mostly from cutting items described as "Tax Expenditures" (Table 19-1). Some big items, with their 2011 budget year dollar estimates include:

* Deferral of income from controlled foreign corporations: $34 billion
* Deferral taxes for financial firms on certain income earned overseas: $6 billion
* Inventory property sales source rules exception: $3 billion
* Graduated corporate income tax rates: $3 billion
* Capital gains tax rate preferences: $25 billion
* Step-up basis of capital gains at death: $25 billion
* Exclusion of interest on life insurance savings: $27 billion
* Tax free interest on housing and mortgage bonds: $2 billion
* Exception to the passive loss rule for rental losses: $10 billion
* Accelerated depreciation on rental housing: $14 billion
* New technology energy credit: $1 billion
* U.S. production activity deduction (Section 199): $18 billion
* 50% expensing of liquid fuels refinery equipment: $1 billion
* Excess of percentage over cost depletion: $2 billion
* Special Blue Cross/Blue Shield Deduction: $1 billion
* Additional deductions for the elderly and blind: $3 billion
* Energy production and investment credits: $1 billion

These would collectively raise $173 billion of 2011 year revenues.

Other tax revenue raising changes I would propose (not specically scored for cost):

Investment Income
* End the qualified small business stock capital gains tax rate preference.
* End preferrential tax rates for "qualified dividends."
* End graduated tax rates for the income taxed to trusts and estates.
* Lower the maximum amount that may be considered for pension contributions through employer plans, 401(k) plans, Keogh plans to include only income subject to full FICA taxation (or the self-employment tax equivalent), and further limiting this contribution to $10,000 per year (adjusted for inflation) for the benefit of any given employee.
* Cap combined contributions to employer plans, 401(k) plans, Keogh plans, IRAs, Roth IRAs, Education savings accounts, pre-paid tuition plans, medical savings accounts, HSAs and similar tax preferenced saving options to $15,000 per year (adjusted for inflation).
* End 1031 exchanges of real estate.
* Include otherwise tax exempt municipal bond income in excess of $250,000 a year in income.
* Reduce the charitable deduction allowed by the amount of any tax exempt municipal bond income of the person making the charitable deduction.
* Tax the passive investment income of otherwise tax exempt organizations in the same manner as Section 527 political organizations (i.e. reduced by connected expenses at the corporate tax rate in excess of a $100 exclusion), except where the sole purpose of the organization is to invest on behalf of others who can be taxed upon receipt of the income.

Personal Expenses
* Ending the mortgage interest deduction for second homes.
* Limit the mortgage interest deduction for first homes to $75,000 per year (adjusted for inflation).
* End the deduction for business meals and entertainment.
* Limit the deduction for first class travel expenses to 50%, or the documented cost of business class travel, whichever is greater.
* Limit the deduction for business lodging to $250 per person per day (adjusted for infliation).
* End the "parsonage allowance" exclusion from income
* Repeal the special hobby loss rule for horse racing.

Business Property Deductions
* Limit the cumulative depreciation/Section 197 deduction on property that is subject to a loan secured by a security interest to no more than the purchase price of the property less the outstanding principal balance on the loan at the end of the tax year in question.
* End depreciation of real estate.
* End inventory valuation on a LIFO basis for tax purposes.

Information Reporting
* Require payments to a non-corporate person, which would have to be reported on an information return such as Form 1099, to be reported on the same form if made to a corporation.
* Disallow business expenses of $600 or more not supported by a 1099.
* Require information reporting of all distributions (however characterized) to business owners or their spouses, and to lenders (in amounts more than $600 per year) from closely held entities.
* Disallow rental expenses for real property for which a complete address is not provided.
* Include on every individual income tax form: "Did you pay residential rent at any time during the year? If so, provide each address where you lived and paid rent for a month or more, during [year], if any." Index this information with Schedule E returns. Provide a $500 reward (per property, split if there are multiple reporting tenants, but in no case less than $50 per taxpayer) if this disclosure results in an increase in a landlord's income after an audit.

Non-Income Taxes
* Reinstate the estate tax at 2009 levels.
* Increase federal gasoline taxes to 40 cent per gallon from the current 18.4 cents per gallon to eliminate or nearly eliminate general fund expenditures for roads and bridges.

Calculating The Net Cost Of Social Security, Medicare and Medicaid

The Net Cost of Social Security

In 2008, the Social Security portion of payroll taxes (the Old-Age and Survivors and Disability components) exceeded disbursements by about $55 billion, before considering income of $18 billion from taxing Social Security benefits and $114 billion from interest on an accumulated $2,366 billion in the Social Security Trust fund. Social Security has drawn less than the taxes allocated in all but a few years since it was established. In 1980, one of the worst years in its history, it collected $3.5 billion less in taxes than it disbursed, and even in that year it was owed $2.4 billion in interest on the Treasury bonds held in its trust fund, for a net deficit.

Benefits from Social Security are paid to about 51.8 million people (as of May 2009). About 36.2 million of the beneficiaries are aged sixty-five or older. About 3 million are retired workers between the ages of sixty-two and sixty-five who received benefits early in exchange for a smaller monthly benefit payment. About 7.3 million beneficiaries are disabled. About 5.4 million are survivors or dependents of beneficiaries who are under the age of sixty-five (mostly spouses of retirees, disabled widows or widowers, spouses and children of disabled workers, and orphans).

On average, beneficiaries receive a positive, but low return on their payroll tax investment in the system. The return on investment is higher for lower income people, and lower for higher income people. The people least likely to receive a positive return on investment on their payroll tax investment are people with high incomes who never marry.

No other government program lifts more people out of poverty.

The Net Cost of Medicare (HI)

Medicare (Hospital Insurance) a.k.a. Medicare Part A, pays for a large portion of a few months of hospital care and post-hospital care. The beneficiary group overlaps neatly (but not quite precisely) with Social Security beneficiaries. The biggest difference is the Social Security early (i.e. pre-age sixty-five) retirees aren't entitled to Medicare.

The Medicare system (Hospital Insurance), is a bit more complicated in its financing than Social Security. It has both payroll tax funding, and premiums that are charged to participants, as well as interest on its trust fund that amounted to $17 billion on a trust fund balance of $319 billion in 2008, and earns money from the taxation of benefits to the tune of $12 billion in 2008.

There was a Medicare surplus, even excluding trust fund interest, that was invested in Treasury bonds and used to pay general fund obligations of the United States, every year from 1999-2007. In 2008, Medicare program revenues exclusive of interest and money from the taxation of benefits fell short of disbursements by about $29 billion, although after the interest payments and taxation of benefits, it was due on its trust fund Treasury bonds, the Medicare program's deficit was just $0.5 billion.

The Net Cost of Social Security and Medicare (HI)

Taken together, Social Security and Medicare Hospital Insurance programs generated $42 billion more in revenues than they disbursed in 2008, exclusive of trust fund interest and $30 billion of taxes on benefits. The combined Social Security and Medicare trust funds amount to $2,685 billion of Treasury bonds that generate an additional $131 billion in revenue.

The combined Social Security and Medicare program has generated more in revenues than they disbursed, exclusive of trust fund interest and taxation of benefits, in every year from 1990 to the present. In 1980, the combined system cost $4.4 billion exclusive of trust fund interest and taxes on benefits, and just $0.6 billion paid for with trust fund withdrawals after accounting for interest payments on trust fund balances earned, and this was promptly repaid to the trust funds for the system.

The Social Security portion of the system has in a quite stable track. It will start to need its trust fund interest to pay its expenses only starting in 2017 (i.e. not at all for the first seven years of the period Samuelson reviews), will not draw on Social Security Trust Fund prinicipal until 2025 (well after the period that Samuelson reviews) and will not exhaust the Social Security Trust Fund principal until some time in the 2042-2052 time period, depending upon the long term economic and actuarial assumptions used. Of course, even tweaks in benefits or payroll taxation could significantly extend these numbers.

Medicare Parts B and C

Medicare Part B is medical insurance, and Medicare Part C is a program in which people eligible for Medicare Part B get similar benefits provided through an HMO.

In 2008, the total premium revenue for Medicare Parts B and C was about $50 billion. Interest on the Medicare Part B and C Trust fund was about $3.5 billion in 2008, and had a balance of about $59 billion at year end. Benefits and administrative expenses for Medicare Parts B and C cost $183.3 billion in 2008.

The general fund expenditure cost of Medicare Part B and C benefits and administration exclusive of interest income was about $133.3 billion in 2008.

Medicare Parts B and C combined had 41.7 million beneficiaries in 2008 (3.2 million Medicare Part A beneficiaries did not participate in Medicare Parts B and C). The average benefit per beneficiary in 2008 was $4,322.

Medicare Part D

Medicare Part D, which started to operate in 2006, is a benefit that provides part of the cost of prescription drugs for participating Medicare beneficiaries, who pay a premium that averages $338 per year, depending upon the provider chosen. Medicare Part D provides an average benefit of $1,517 per beneficiary. There were 32.3 million Medicare Part D beneficiaries in 2008.

In 2008, the total benefit cost including costs of adminstration for Medicare Part D was $49.3 billion. This was funded with $5 billion in premiums, $7.1 billion in transfers from state governments, and $37.3 billion of federal general fund revenues. The state government contribution to Medicare Part D approximates a part of the Medicaid expenses that the states were relieved of by the Medicare Part D program.

SSI

The Supplemental Security Income program is a means tested federal welfare program funded out of the general fund budget for the "needy aged, blind and disabled." This program has about 7.6 million beneficiaries, mostly low income Social Security beneficiaries, at a cost of $49 billion dollars a year. The cost of the SSI program is less than the pre-interest/pre-benefit taxation amount of the Social Security program's surplus.

Samuelson's Social Security number doesn't include SSI, so we won't either, but it is linked to the Social Security program so I include it for completeness.

Medicaid

Medicaid accounts for about 17% of the combined expenditures for Social Security, SSI, Medicare and Medicaid. In the 2011 budget, that is about $149 billion of federal spending. The federal and state governments contribute roughly equal shares to the cost of the program.

Bottom Line

The bottom line breaks down roughly as follows:

Social Security and Medicare Part A:
* Net Federal Revenue $42 billion
* Taxes On Benefits Revenue $30 billion
* Trust Fund Interest Income $131

Medicare Parts B and C:
* Net Federal Revenue ($133.3 billion)
* Trust Fund Interest Income $3.5 billion

Medicare Part D
* Net Federal Revenue ($37.3 billion)

SSI (Not included in total, for informational purposes only).
* Net Federal Revenue ($49 billion)

Medicaid
* Net Federal Revenue ($149 billion)

Total Net Federal Cost (After Considering Trust Fund Interets Income And Taxes On Benefits, From Social Security, Medicare and Medicaid): $155.1 billion

The Total Net Revenue is about 10% of proposed total spending for 2011 on these programs. If one were to take 10% of the $20 trillion figure offered by Samuelson, you'd get $2 trillion.

Tag Hygiene

While mostly invisible, I completed another major round of reviewing tags on posts, eliminating early irregular tags in favor of my current tagging categories. Proper nouns have been mostly retained even if there is only one post in the category, on the theory that it is relevant to search engines and for tracking particular notable people who may come up regularly.

Assurant Health Has A Policy Of Cheating Insureds

Assurant Health, a.k.a. Time Insurance, is one of the leading providers of health insurance to people who don't receive health insurance through their employers. It has been rebuked by the President, Congress and courts for the way it conducts business.

In Congressional testimony, its CEO told Representatives that its application forms "are written in simple, easy-to-understand, straight forward language," then admitted that he didn't know what many of the terms on his company's own forms meant. He also told Congress that he would not commit to rescinding people's policy's only in cases of "intentional fraud."

Latham v. Time Insurance

Alan Prendergast nailed the fact that make it clear that Assurant Health has earned its bad reputation in a story in this week's Westword. The story discussed a $37 million judgment entered against the company in a bad faith case by a Boulder jury. In the case, Assaurant Health refused to pay her bills and retroactively rescinded the five months old health insurance policy of a woman badly injured in a car accident.

The investigation Assurant Health did wasn't begun until the accident claims started to arrive. Assurant Health didn't follow its own rules or Colorado insurance division rules in the process it used. The insurance company made the decision in about 68 seconds. The insurance agent who sold the policy pretty clearly lied about the process by which the insurance application with pre-existing condition data was gathered in open court. Testimony of the top manager at Assurant Health in charge of the decision makes clear that Assurant Health also lied to the woman injured about what it was doing to handle her case in its written communications with her.

The companies lawyers, led by Robert Walker and Walter Wilson, from a law firm based in the state of Mississippi, where reprimanded by federal judge Richard Matsch was abuses in the litigation.

Of the three items allegedly misrepresented by the woman injured on her insurance application, one involved an alleged pre-existing condition that wasn't covered anyway. Another involved an incorrect interpretation of a medical record that was alleged to say that a particular drug was used and that the woman was diagnosed with a particular problem, when in fact the medical record said that the drug in question was not used and that the woman was told that she didn't have the problem she had feared that she might have. None of the alleged misrepresentations had anything to do with the accident claims that Assurant Health was asked to pay.

The case is in the post-trial review phase now and I assure you that every actively litigated $37 million plus trial court loss is appealed. It is a good example of one of important unwritten rules of trial practice. A clear wrong is punished much more seriously than ambiguous but economicaly more serious wrongs. Clarity and doubt drive damages, even though theoretically, they shouldn't.

I would be surprised if the verdict was reduced on appeal, but would be surprised if some aspect of the damages award (which went well beyond what the attorney for the woman injured asked for in the case) were not adjusted in post-trial motions or on appeal. The lawyer asked for $2 million in economic damages and $5 million in punitive damages. The jury awarded $183,551 for medical expenses incurred an not paid (even though an automobile insurer for the party at fault ultimately did pay those), $2,000,000 in economic damages on the theory that the woman and her children might never be able to get health insurance again because of Assurant Health's wrongly determination that the woman lied on her health insurance application, $7.3 million for emotional distress, and the balance, about $27.8 million, in punitive damages.

Juries can award whatever they want in damages, but Colorado has a dollar cap on damages for emotional distress. In practice, in a case like this one, the cap on non-economic damages is about $2.8 million at most ($936,030 each for mother and each of the two children with a judicial finding of justification with clear and convincing evidence) and there is some argument for limiting non-economic damages in the case to a lower amount. Thus, non-economic damages are likely to be reduced by at least $4.5 million.

Thus, total non-punitive damages in the case are likely to be reduced to about $5 million.

Colorado has limited punitive damages to the total amount of non-punitive damages awarded, unless there a judge finds that the conduct is ongoing (a plausible possibility in this case) in which case punitive damages up to three times the economic damage award (i.e. $15 million) could be imposed.

Normally, interest at 8% per year from the time of the wrongful act on the non-punitive part of the award (probably close to 50% which is about $2.5 million by the time that post-trial motions are over and the judgment is finalized), and out of pocket costs incurred in connection with the lawsuit other than attorneys' fees (almost certainly no more than a few hundred thousand dollars). There are also frequently attorneys' fees awards in bad faith cases, usually based upon a hypothetical hourly rate and the number of hours worked. My guess is that an award for attorneys' fees would probably be less than $700,000 in a case like this one.

Thus, the $37.3 million verdict is likely to be reduced to $23.5 million or less depending upon the legal decisions made by the judge. This is still substantial, of course, and if the insurance company wants to appeal it will have to post a bond in that amount (more or less) which will make collecting the judgment easy (collecting from insurance companies is never very hard because they are required to maintain cash reserves under insurance regulations so they always have cash on hand to pay).

The case could also hurt Assurant Health in other cases by binding it to factual findings made in this case in other similar cases brought against it, and through the evidence of general applicability that the trial transcript could make available in other cases, making copycat bad faith cases cheaper to litigate.

If there is an appeal and a bond is posted, neither the woman nor her lawyer will see any of that money until the appeal is finally resolved, although interest will continue to accrue.

The lawyer will get a significant contingency fee (a third is the rule of thumb but there is considerable variation in actual agreements based upon whethere cases go to trial or appeal and sometimes with tiers with different percentages based upon the amount of the recovery). And, some portion of the damages may go to taxes (the tax implications of an award like this one for both the plaintiff and the defendant would take a post all its own).

A Policy And Practice That Is A Menance To Consumers

It was clear from the case that this was not simply a mistake. It was a direct consequence of a policy and practice of the firm. It rescinds about one in two hundred insurance policies. This may not sound like many, but an insurance company can only rescind a policy in the first year or two it is in force (the time period varies from state to state), and Assurant Health has a policy of investigating the accuracy of insurance applications only after big claims are submitted. Big claims in the first year or two of a policy are made by only a small percentage of an insurance company's outstanding insureds.

An analysis done here calculates that the percentage of insureds with big claims whose policies are rescinded by Assurant Health is on the order of 10%-50%, probably around one in six, with rescission becoming increasingly likely as the amount claimed rises.

You buy health insurance for just these kind of catastrophes and Assurant Health makes it its policy to lie and cheat in an effort to take advantage of you, at a time when you have suffered a very severe health problem, in these cases.

Companies like Assurant Health deserve to be wiped out by big jury awards and no consumer interested in having the promises in their insurance contract honored should consider doing business with them.

Is It Racketeering? Should It Be?

The only hard question, in my mind, is whether the company and a good share of its senior executives should be prosecuted for racketeering. It wouldn't take much beyond the Westword story and the transcript of the trial it discusses to show probable cause to bring criminal charges against the company and its executives. The U.S. Supreme Court permitted civil RICO class action lawsuits against health insurance companies alleging mail and wire fraud as a predicate act in a unanimous 1999 decion, so presumably a pattern and practice of mail and wire fraud could also be a basis for a criminal RICO prosecution.

Assurant Health is a good example of a case where there is considerable evidence of a business organization carrying out intentional fraud towards vulnerable people in a collective and coordinated manner, and also a good example of a case where bad acts are systemically underpunished which suggests that harsh punishments in selective cases that are tried would not be unjustified. This company is the health insurance equivalent of the pervasive but small time economic crimes like loan sharking and con schemes that made the mob profitable and inspired Congress to adopt RICO in 1970. Indeed, a RICO case based on its practices would be well within the heartland of the white collar cases most commonly prosecuted both civilly and criminally, under the statute today.

This said, I have no great love of the RICO statute. Like most laws with harsh penalties, its heaviest use has come from the most marginal of the kinds of cases it covers, cases that miss a critical element of that drove its harsh penalties.

What makes the mob the mob? It isn't just that the mob and drug gangs and other criminal enterprises engaged in a pattern of organized, profitable criminal activity, although all of that is part of what makes the mob the mob. But, what distinguishes the organized crime that we are really afraid of, and the organized crime that is usually prosecuted in civil and criminal RICO cases is violence and the threat of violence as a component of the criminal enteprise's activity.

I am a believer in private civil remedies against individuals enterprises that engage in organized non-violent economic crime. I am a believer in aggressive enforcement of criminal laws against individuals and entities that engage in organized non-violent economic crime. The problem is not that the conduct at the fringe of the kind of activity that spawned RICO should not be subject to serious civil and criminal sanctions.

The problem is that these fringe cases involve conduct that doesn't justify sanctions that were calculated to cover violent organized crime, not merely organized economic crime.

Under RICO, a person who is a member of an enterprise that has committed any two of 35 crimes—27 federal crimes and 8 state crimes—within a 10-year period can be charged with racketeering. Those found guilty of racketeering can be fined up to $250,000 and/or sentenced to 20 years in prison per racketeering count. In addition, the racketeer must forfeit all ill-gotten gains and interest in any business gained through a pattern of "racketeering activity." RICO also permits a private individual harmed by the actions of such an enterprise to file a civil suit; if successful, the individual can collect treble damages.

Still, it is less disproportionate than many other criminal statutes and certainly isn't at the top of my list of criminal sentencing regimes that need to be reformed. The United States Sentencing guidelines and jury discretion in civil case also mitigate some of the excesses that might otherwise be possible in these cases.

Full disclosure: I do no business with Assurant Health personally, and never have (although I once priced but did not buy a policy from them) and have no financial interest whatsoever in any person with a business or insurance relationship with them. I have never represented anyone in a dispute with Assurant Health. I know none of the parties or lawyers involved in the Westword story. I have no ax to grind them them personally, either directly or indirectly. I have litigated cases both as an insurance defense lawyer and a plaintiff's personal injury lawyer, and I am not currently either an insurance defense lawyer, or a personal injury lawyer. I have represented parties in bad faith cases not involving health insurance, and I have provide legal advice to insurance companies concerning bad faith issues that do not involve health insurance. Assurant Health owes me nothing and I am not asking anything of them, and I owe nothing to Assurant Health. I have no influence other than this blog (if any) with either state or federal prosecutors.

Investors Chase Junk Bonds

Rates on risk free investments, like Treasury bonds, remain dismally low.

Offerings of investment grade bonds (unsecured first priority debt issued by big businesses that aren't financially distressed) are also way down. Companies that issue investment grade bonds are asking for 90% less funds they than the average so far this year. This is despite the fact that the rate of return on investment grade corporate bonds is a dismally low 1.39%, which comes close to a negative return after adjusting for inflation.

With good investment options looking unattractive, investors are starting to look at risker investments, junk bonds, which are between ordinary debt and stockholders in priority in most cases, or are ordinary debt in companies at high risk of failing. Junk bonds are defined as those rated below Baa3 by Moody’s Investors Service and below BBB- by Standard & Poor’s.

Interest rates on junk bonds are rising as a result. Higher interest rates are making more junk bond funds available to companies that need funds, but are also making it harder for companies in trouble to be able to afford to borrow money.

Put another way, the bond market is tell us that: (1) business is slow for healthy companies who can't find productive uses for cheap credit and so aren't asking for new investments, and (2) the likelihood that marginal companies will fail is increasing.

Normally, higher interest rates on junk bonds also cause stock market prices, at least for junk bond issuers, to fall.