Monthly Archives: March 2009

Turning an Opportunity into a Problem

mccarthy_complexshitThe storm must have seemed perfect. An issue that had matured since Nixon first introduced it in 1974. An overwhelming Democratic majority in the house. An almost filibuster-proof Democratic majority in the Senate. A Democrat in the White House with 60%+ approval ratings. And polls showing an overwhelming majority of the American people, Republicans and Democrat alike, in favor. Decades of horrific cost increases. A terrible economy. New pressures on business to be globally competitive. A new “transparency” sure to limit the influence of lobbyists. The health insurance industry must have been preparing for the worst. Not a chance.

The health insurance industry wants to turn their problem into an opportunity by turning our opportunity into a problem. The recipe is all too simple.

▪ Provide a dash of spin to the party of no that re-defines “universal healthcare” into a requirement for all Americans to buy private health insurance.
▪ Add equal amounts of cost-fear to business and decreased-benefits-fear to the wealthy, pensioners and the unions.
▪ Mix in gracious amounts of campaign money to incumbents.
▪ Chop up some populist talking heads on cable news and discard.
▪ Mix finely grated experts with talk radio.
▪ Let the mixture sit in a dark, smoke-filled room until the odor rises and forces opponents to run for cover holding their noses.
▪ Season to taste with government subsidies to states to provide their legislature’s version of coverage for their uninsured and the uninsurable.
▪ Heat and serve.
▪ Creates servings for some (the biggest portions to shareholders of the health insurance industry), but far from all. Does, however, ensure that the health insurance industry will live a long, happy and profitable life, safe from single payer universal healthcare for Americans, unlike like the short, miserable, and destitute lives of those who will never be able to afford it.

More reading on the issues involved from Wikipedia (where you can also view supporting links and citations):

The following is a listing of universal health care pros and cons as argued by supporters and opponents.

Common arguments forwarded by supporters of universal health care systems include:

▪ Universal health care systems, in an effort to control costs by gaining or enforcing monopsony power, sometimes outlaw medical care paid for by private, individual funds.

▪ Health care is a basic human right or entitlement.

▪ Ensuring the health of all citizens benefits a nation economically.

▪ About 59% of the U.S. health care system is already publicly financed with federal and state taxes, property taxes, and tax subsidies – a universal health care system would merely replace private/employer spending with taxes. Total spending would go down for individuals and employers.

▪ A single payer system could save $286 billion a year in overhead and paperwork. Administrative costs in the U.S. health care system are substantially higher than those in other countries and than in the public sector in the US: one estimate put the total administrative costs at 24 percent of U.S. health care spending.

▪ Several studies have shown a majority of taxpayers and citizens across the political divide would prefer a universal health care system over the current U.S. system.

▪ Universal health care would provide for uninsured adults who may forgo treatment needed for chronic health conditions.

▪ Wastefulness and inefficiency in the delivery of health care would be reduced.

▪ America spends a far higher percentage of GDP on health care than any other country but has worse ratings on such criteria as quality of care, efficiency of care, access to care, safe care, equity, and wait times, according to the Commonwealth Fund.

▪ A universal system would align incentives for investment in long term health-care productivity, preventive care, and better management of chronic conditions.

▪ Universal health care could act as a subsidy to business, at no cost thereto. (Indeed, the Big Three of U.S. car manufacturers cite health-care provision as a reason for their ongoing financial travails. The cost of health insurance to U.S. car manufacturers adds between USD 900 and USD 1,400 to each car made in the U.S.A.)

▪ The profit motive adversely affects the cost and quality of health care. If managed care programs and their concomitant provider networks are abolished, then doctors would no longer be guaranteed patients solely on the basis of their membership in a provider group and regardless of the quality of care they provide. Theoretically, quality of care would increase as true competition for patients is restored.

▪ A 2008 opinion poll of 2,000 US doctors found support for a universal health care plan at 59%-32%, which is up from the 49%-40% opinion of physicians in 2002. These numbers include 83% of psychiatrists, 69% of emergency medicine specialists, 65% of pediatricians, 64% of internists, 60% of family physicians and 55% of general surgeons. The reasons given are an inability of doctors to decide patient care and patients who are unable to afford care.

▪ According to an estimate by Dr. Marcia Angell roughly 50% of health care dollars are spent on health care, the rest go to various middlepersons and intermediaries. A streamlined, non-profit, universal system would increase the efficiency with which money is spent on health care.

▪ In countries in Western Europe with public universal health care, private health care is also available, and one may choose to use it if desired. Most of the advantages of private health care continue to be present, see also two-tier health care.

▪ Universal health care and public doctors would protect the right to privacy between insurance companies and patients.

▪ Public health care system can be used as independent third party in disputes between employer and employee.

▪ Libertarians and conservatives can favor universal health care, because in countries with universal health care, the government spends less tax money per person on health care than the U.S. For example, in France, the government spends $569 less per person on health care than in the United States. This would allow the U.S. to adopt universal health care, while simultaneously cutting government spending and cutting taxes.

Common arguments forwarded by opponents of universal health care systems include:

▪ Health care is not a right. As such, it is not the responsibility of government to provide health care.

▪ Universal health care would result in increased wait times, which could result in unnecessary deaths.

▪ Unequal access and health disparities still exist in universal health care systems.

▪ The performance of administrative duties by doctors results from medical centralization and over-regulation, and may reduce charitable provision of medical services by doctors.

▪ Many problems that universal health insurance is meant to solve are presumed caused by limitations on the free market. As such, free market solutions have greater potential to improve care and coverage.

▪ The widely quoted health care system ranking by the World Health Organization, in which the US system ranked below other countries’ universal health care systems, used biased criteria, giving a false sense of those systems’ superiority.

▪ Empirical evidence on the Medicare single payer-insurance program demonstrates that the cost exceeds the expectations of advocates. As an open-ended entitlement, Medicare does not weigh the benefits of technologies against their costs. Paying physicians on a fee-for-service basis also leads to spending increases. As a result, it is difficult to predict or control Medicare’s spending. Large market-based public program such as the Federal Employees Health Benefits Program and CalPERS can provide better coverage than Medicare while still controlling costs as well.

 

In the Public Trust

Great Depression

Debates rage in Congress, State Houses and on Cable News over government intrusion on business. Talk of bailouts, nationalizing banks, regulating hedge funds, limiting power companies’ pollution, charging fair grazing fees and mining rights on public lands, direct loans to corporations, pseudo-government corporate ownership, government-sponsored investment funds, companies too-big-to-fail, corporate campaign contributions, limiting offshore tax havens, unfair government competition with cable and telephone suppliers over opening up the broadcast spectrum to free wireless internet to everyone, and unfair government competition with private insurers over universal medical coverage (to name more than a few), has brought labels of socialism, big government and anti-business back to the forefront of popular Google searches. So, what is the role of business vis-a-vis government?

Before there were corporations, there was government. Before government, there were people. Corporations are allowed to exist only because government gives them the standing. Likewise, at least in the US, government is only allowed to exist because of a special pact – a contract, if you will, with the people. We refer to it most often as the Constitution. It is the people, who have inalienable rights. Not government. And certainly not business.

While individuals have the right to “life, liberty, and the pursuit of happiness,” corporations do not. For much of US history, to create what we now call a corporation, required an act of a state legislature and those charters were closely regulated to protect the public interest (the federal government can only create corporate entities from the powers derived from the Constitution – for instance, Federal Banks). Things changed dramatically in late 20th century as states wishing to attract more “bizness,” loosened regulations (Delaware and Nevada are the most notorious for lack of regulation and where the largest corporations who have not yet gone offshore to escape almost any regulation or taxes, are most likely chartered).

Corporations, when combined with inexhaustible supplies of capital; limited stockholder representation in management; competition between states who would look the other way on regulation in exchange for the hope of jobs and campaign contributions; an inexhaustible supply of workers – legal or otherwise; new manufacturing and distribution methods; the expansion of the patent laws; the proliferation of lobbyists and their perks; the lack of transparency of what they were doing before it was too late; their unlimited budget for lawyers; and the opportunity for profit, lead quickly, of course, to monopolies, aka: cartels (and predatory pricing, price gouging, manipulation of markets by limiting supplies, collusion, discriminatory trade, tort reform, inability to organize workers, fraud, bribery, dangerous products, pollution, more lobbying, George W. Bush, etc.). Nefarious monopolies were first outlawed around 50BC, and in the US in 1894, but the laws are largely ignored here except during times when the majority of the Supreme Court was appointed by Democrats. There are some exceptions to the monopoly law. Most notable are professional sports and public utilities which are supposed to maintain infrastructure for a public service and be closely regulated, but the power to corrupt will always trump good intentions.

By now, your thoughts must be screaming, “when will you get to the point?” How ‘bout I skip the rest of the civics lesson and offer it now? Our government need not protect an industry or corporation’s ability to profit when it is contrary to the public trust. Government needs to do what’s good for the people. Practical examples:

• We’ve gone to digital television to open up the underutilized television broadcast spectrum. Our so-called public utilities (cable, satellite providers, wired and wireless phone companies and power companies – okay, not all in this list are still public utilities) want to own this spectrum so they can continue to do what they do best: provide as little service as possible while charging us as much as possible. Problem is, this bandwidth (and about a billion dollars or so, some cooperation/mergers and some maintenance) could provide internet access for everyone and the enhanced internet could be used to replace all cell and television service saving the people hundreds of billions every year. What is in the public good?

• US employers need to be more globally competitive, yet the cost of providing employee heath insurance is among their greatest expense. The number of uninsured in the US is about 50 million and rising. As a society, we pay for care anyway through indigent care expenses, lost productive and taxed wages, and early death of the uninsured. The problem is that we have the health insurance industry and they have lobbyists. Ditto the unions. Ditto big-pharma. Now ask yourself, what’s in the public good? Maintaining a vibrant health insurance industry, helping executives and union members have extravagant health plans and allowing the drug companies to overcharge? Or, making business more competitive and everyone more healthy at a lower cost?

• Admittedly, any regulation of hedge funds would make them less competitive with the criminals in other countries and it may mean that some of these imaginary deals will end up being made offshore, but since they do absolutely nothing to positively improve the human condition short of enriching the schemers themselves, is it really in the public good that they should do whatever they want and answer to no one when the result of this practice so far, has led to financial ruin of hundreds of millions? Ask yourself if government would be acting in the public trust to keep this unregulated (which they are now) or even under-regulated, which any lobbyist-inspired Congressional compromise would surely render?

• Admittedly, the financial industry funds more campaign contributions and lobbyists than any other group; likewise, community giving, and we’d miss that for a while. But clearly history has shown us that the FDIC can take over, fix and re-privatize a bank without anyone suffering, other than the executives and shareholders who took the failed risks and should be responsible. What is in the public good of doing otherwise?

• In your wildest dreams, does anyone believe that power companies with investments in dirty coal (Georgia Power comes to mind) will ever reduce their pollution unless forced to or incented to? Yes, it would cost their customers some money through increased rates. Money that companies in states with public regulation have long ago paid. But just to top it off, please note that Georgia Power’s lobbyist just bribed the legislature to pass an increase in rates for a fictitious nuclear reactor they pretend they are going to build 10 years from now even though no reactor has been licensed in the US in more than 20 years. Scandalous, for sure. In the public interest? Not.

Government must be for the people. Not for the corporations.

“We hold these truths to be self-evident, that all men are created equal; that they are endowed by their Creator with inherent and inalienable rights; that among these, are life, liberty, and the pursuit of happiness; that to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed; that whenever any form of government becomes destructive of these ends, it is the right of the people to alter or abolish it, and to institute new government, laying its foundation on such principles, and organizing its powers in such form, as to them shall seem most likely to effect their safety and happiness.” –Declaration of Independence as originally written by Thomas Jefferson, 1776. ME 1:29, Papers 1:315

The Imaginary Fix

Emperor's Clothes

Since computer bits replaced paper which replaced precious metals which replaced labor, our monetary system has been imaginary. Value has always been faith-based. Wealth is the large scale accumulation of imagined value. While the commodity markets trade on imaginary quantities of real things, the stock market makes real trades of real things that have imaginary value. Hedge funds make leveraged deals in imaginary risks of imaginary things. It all worked really great for those who trade on greed and fear until some kid in the crowd yelled out that emperor is naked.

In reality, there were quite a few in the parade who were only dressed in our imagination. The Bush weak imaginary dollar allowed consumers to buy inexpensive Chinese goods at Walmart, pay for them with credit (aka: imaginary dollars) that was secured by imaginary home values and faith that income and home values would continue to increase. The credit was offered by banks who used tiny amounts of imaginary capital, as allowed by imaginary regulators, by selling the loans to Freddie and Fannie and others who pretended they were backed by the good faith of our government. These secondary sources used tiny amounts of their capital by packaging giant chunks of loans and selling them to hedge funds who got AIG to guarantee everyone was wearing clothes ($32 trillion in guarantees makes Palin’s wardrobe seem a bargain).

The fashion issue became really important when the Chinese and Saudi’s (who bought large chunks of imaginary value in exchange for cheap goods that weren’t really cheap when one includes unimaginable costs of our government’s imagined guarantee) pointed out that the Wall Street pin-stripe no longer was hiding all their flaccid privates. So the Bushies had to step in to save AIG and others so the parade could go on. Damn that little kid in the crowd.

The 32 trillion dollar question: Can we fix an epic-scale imaginary problem with real solutions funded by more imaginary dollars?

All the king’s men are working on it. The fairy god mother is flailing her wand. The genie’s rubbing like crazy. We’ve thrown a few trillion imaginary dollars to stabilize an economy that has lost 10 or 20 times that. But loans are still not being made on the imagined scale. Real people by the million have lost their jobs, their incomes, their homes, their health insurance, their credit cards and their ability to buy real things they need, or anything of imagined need.

This week, our maligned Treasury Secretary will announce his imagined solution to this real crisis – a program, I kid you not, to guarantee the risk of new hedge funds so they will buy troubled assets (a moniker for the loans on homes whose values are not now imagined to be much) from our banks who have been imagined to be too big fail. I really didn’t make this up. We are going to the very source of most of the expensive missing clothes and are planning to offer them a huge chunk (at least another trillion) of imaginary dollars to be paid back with our imaginary future so that they can start buying and trading in last year’s fashions and we can all live happily ever after.

I have now lost track of how crazy this has become. Layer upon layer of utter insanity. Somebody needs to be embarrassed that they are butt-naked and go get dressed. Hedge funds and the lack of government oversight caused this and bribing hedge funds to hedge our way out of this is worse than asking Jim Jones for something to drink. Hedge funds should be heavily regulated or outlawed except in casinos. At best, they’ll cause it again in a few years and, at worst, is beyond our imagination.

We have a program for fixing this already: bankruptcy (let a Federal judge decide who or if AIG should give bonuses or get them back). For those too big to fail, for god’s sake, make them smaller. We do not need to clean up the banks to make credit flow (it is not flowing because there are too few good loans to make), we need to nationalize them. Fix the regulations and help consumers get to where their real needs are met and they have jobs. Then comes confidence. Then faith. Then consumption. Then values will rise. Until then, there is no imagination, just a lot of ugly naked people.

By the way, this ain’t over. Watch your head. Pretty soon, and to continue the clothing metaphor, more (sic: other) shoes will drop.

Two Views of the Great Depression

Over the hills.GG

Yesterday, I drove 150 miles over the hills and through the woods to my grandmother’s house. “GG.” She’s 103. Lives independent, because all the men she knows are “just too old” and she’s “not planning on any more children.” There’s always a sparkle in her eyes when she looks at you. While her short term memory betrays her more often than the last year or so, her wit never does. Always listening and wanting to make you feel special. To laugh. To smile back into hers eyes. To say as she does that, “she’s lucky,” is an exaggerated understatement. Every day of her life she has been able to say, “I feel great.” She never worried for money and the only job she ever had was “making up my brother’s bed for a nickel a week.” Survived two exceptional husbands – one who laughed to 78, and the second who was gracefully internet active and drove himself to the hospital where he died at 99. Adored by two children, now in their eighties, seven grandchildren, sixteen great-grandchilren and ten great-great-grandchilren. And is almost mythical to spouses, extended family and friends. She renewed her driver’s license last year and State Farm reduced her insurance rate for being a safe driver – though she no longer drives on the interstates because she’s “too polite to merge.” She doesn’t wear glasses and devours paperbacks by the box – the bawdy ones, too. Plays bridge. Pays her bills. Manages her investments. Remembers and writes birthday cards – though friends are now all second and third generation. Clearly, we are lucky, too.

A year ago, I would have also visited my “younger” grandmother who we knew as “Papa’s Mama.” At 98, she finally got her wish of the last few years and died. She had occupied a Medicaid bed in a nursing home for seven years – too healthy to die, too infirmed to live the purposeful life which was all she had heretofore known. I never knew her when she was healthy, and seldom when she was happy. Papa's MamaShe was walking to the drug store diner on her lunch hour one random day in the early 60’s, when the brakes of a parked car gave way and pinned her between another car. Her legs were crushed and, in that moment, so was her joy. Six months in the hospital. Numerous surgeries. With torturous rehab, she regained her ability to walk, but she never fully recovered from the pain. Late in her life, Papa’s Mama finally revealed her long dormant sweet side to those of us who had only known the other. It was after she’d buried her second husband of 50 years, her only son – he called her “Pal,” her humble devoted brother, and her favorite and always misunderstood, or at least she felt was misunderstood, grandchild – all within just a few years of each other – that she seemed to give up feeling sorry for herself and lovingly reached out to those of us who had always hoped it was there for us, too, but had never known it. Papa’s Mama’s life had been hard.

GG was 24 in October of 1929, married and pregnant with my mother. Her father was in real estate, owned some rental homes and the building that housed the local department store – the stock market crash hurt them, but years later their worthless stock certificates turned back into modest wealth. GG’s husband was an engineer and kept his job, while his parents owned a grocery store that prospered even during those terrible times, and in a few years, was acquired by a chain for stock that merged with a national chain for more stock. Their view of the great depression was mostly from the inside of a chauffeured car and of the gratitude of those less fortunate that they both helped and profited on.

Papa’s Mama was 19, married and the mother of my six-month old father in October of 1929. Her family was country poor. Her father was a farmer. Her mother, the meanest, nastiest-spirited woman I have ever known, took them in and reminded my grandfather every day that he was a miserable failure. Family folklore has it that during one of her nightly beratings at dinner, she placed a bottle of rat poison in front of him and dared him to drink it. He did. Papa’s Mama was a homeless widow at 22. The only societal safety net then was family, church and a soup kitchen. At a time when few women worked, she got a job working in the office of a hotel. She didn’t have a car and couldn’t afford the street car. Six days every week for the next 10 years, whether it was 90 degrees and sunny, or 33 degrees and raining, she walked the five miles from her rented room to her work and she kept working most all of her life.

What does that say about our great depression?

Those that have some wealth, some property or stocks, a dependable job, they’ll do okay. The percentage won’t change much for them – they’ll still have more than most, even with less. Wait it out. Hold onto to those investments, they’ll come back.

Those without wealth will have it very hard. Lives will be lost. Families will be broken. There will be hunger. They’ll have to do without. There won’t be much joy. Some, with luck and hard work, will make it. It may take a decade, but the next generation can have it better. Others, won’t be so lucky.

Southern Videos

Here’s some Southern fried video. Please comment and share your ideas for future postings.

 

http://www.youtube.com/watch?v=W89zz-9kGuM

Beach Music Medley

 

Small Town Southern Man

 

http://www.youtube.com/watch?v=QoXZ-KNIs-M

Southern Girls

 

Cooking Southern Fried Chicken

 

http://www.youtube.com/watch?v=TKPDrPp9fv8

Southern University Marching Band