The 6 Pack Economist

Can’t someone at the whitehouse muzzle this guy.

If the stimulus is working better than they thought I would hate to see what the worst case scenario was.  Losing 500 thousand or more jobs for like the past 6 months but I guess they saved 14 million right.

 I am guess that the worst case scenario was just cut and pasted out of the last book of the bible.

Apparently no body sent Jon Voight the memo about speaking out against Obama in hollywood.   Although some of the things Obama has been doing are not my favorite, most of it is politics as usual.  What will cause the civil war is this crap my Representative Eric Massa. “I will vote for it even if my constituents are against it”

I know that many politicians feel that the people that vote for them are ignorant morons but it is very rare and rather refreshing, if being hit the face with bucket shit is refreshing, for them to actually state it to their constituents faces.  As Massa states so clearly “I will vote adamantly against the interests of my district if I actually think what I am doing is going to be helpful.”  If we were talking about funding for a bridge that would be great for the district but wasteful, then he has a point.  But we are talking about riping the whole health-care industry apart and starting a new government entitlement program during a severe recession and increasing debt.

One last thing, Jon I will miss seeing you in movies and biting the occasional TV star.

p.s.  Jon Voight has not annouced his retirement as far as I know.  It is just satire.

The debate on health insurance reform has been pretty heated lately.  Much of it has been centered on a public option or no public option.  I don’t like the public option.  If this is not your first time reading my blog this should be no surprise.  But I do believe that government has a role in the nation’s health insurance or health care. 

In the following blog post I hope to address what is good about the current system. Explain what is bad about the current system. Finally I will explain my plan to change it without resorting to a public option.

In the United States if you have a good health insurance plan you get the best care in the world. If you need to see your personal doctor you can generally walk in that day.  Perhaps you need to see a specialist well maybe that will take a week. Perhaps you need a MRI, which takes a week at the most.  In comparison all of these tasks in many of the socialized medicine world would take much longer.  Statistics are readily available on the web from Canada’s and Britain’s own healthcare websites.

Canada: http://www.hc-sc.gc.ca/hcs-sss/qual/acces/wait-attente/index-eng.php

Some more: http://www.hrsrh.on.ca/PortalEn/tabid/859/Default.aspx

Britain: http://www.performance.doh.gov.uk/rtt/index.htm

and in english: http://www.guardian.co.uk/uk/2007/jun/07/politics.health

And England meets its goal: http://news.bbc.co.uk/2/hi/health/7966404.stm

So in the United States when you have good Health Insurance you are taken care of pretty well.  But the problems come in those who don’t have health insurance or those people that are impossible to insure.  The costs associated with these individuals are the problem.  It is not the profits that the insurance companies make that are causing the rising cost of insurance.  Even if the profits were paid back to the individuals most would be minimal reductions in premiums at best. 

Now let us talk about one solution to this problem.  We should take what works and keep that.  This is the traditional private insurance model, where premiums are pooled and costs taken from these pools.  Next we try to address the two primary reasons why the market is broken.  Those without insurance not paying for care and those that have such horrible health problems they are impossible to insure for premium that those individuals can afford. 

This is the point that government can step in.  The government can begin a plan as the catastrophic insurer, essentially taking over the costs of those who are too expensive to insure.  They would not do this directly but indirectly through the first party insurance company.  This is done on an individual basis, where the premiums paid by the individuals have been less than one third the cost of treatment over the past five years.  In other words, if an individual pays $3000 in premiums but their treatment is costing $10000 the government would pick up $1000(The numbers I chose are for simplicity and should be adjusted in any real world situation).  This solves a major problem which is the person who uses far more health resources then they have paid. They are still costing the insurance company more money then the premiums, but because it will only take two other people’s premiums to break even on this, rates will not have to be increased.

The second point at which the government can step in is regulating that all people in the country must purchase health insurance.  Those without health insurance will be penalized much like those without car insurance are today.  If you don’t have health insurance you will be reported to the proper authorities.  Maybe some type of subsidy can be provided but the market should be allowed to function.  And much like car insurance was very expensive it too will come down in price once competition and cost savings are implemented.

Now let us move on to what the private health insurance companies will have to give up.  Health Insurance companies must cover all non-cosmetic procedures, either pre-existing or not.  All people must be able to be covered and the difference between the highest premium and the lowest premium may not exceed a certain amount (or some other price capping mechanism, although the government stepping in as the catastrophic coverer should help with this).  This will eliminate those that can not buy insurance and everyone will be able to afford some type of insurance.  It may hurt for some but they will be able to purchase the insurance needed.

Some other miscellaneous things I would like to add to the debate. 

• Some form of tort reform is needed.  Loser pays is a nice option.  Also a cap on non-gross-negligence problems.  Nicking a blood vessel while doing all that is humanly possible, although tragic for those involved, should not award an ownership stake in the hospital, but cutting off the wrong leg should result in a hefty cash settlement.
• Keep the “health saving accounts” alive.  Allow people to put away a certain amount of money tax free that could go to health care related expenses.
• Move some medical school interns out of the hospital and into the doctor’s office.  These students could be cheaper alternatives for the run of the mill doctors visits.  A real doctor must be present in the office but let’s be honest how many times did the visit to the doctor’s office result in a prescription for an anti-biotic and some bed rest.  These could also be nurses with some additional training.  Or think of it as Doctor-Lite.
• Allow for both employer and self employed to purchase plans with pre-tax dollars. 
• Allow for people to form groups that can purchase insurance as a block and not as individuals
• Remove the State Restrictions from insurance sales.  Even this means the implementation of Federal Minimum Standards.  States could still come in to offer non-binding approvals.
• Finally an easy to read rating system would be very helpful.  Much of the problem of health insurance purchase it that there is too much lawyer speak and not enough easy to understand language. 

I want to end with one more observation.  The reason that such strides have been made in health care in the recent decades have been made is because of the money that can be made in the field. From the creation of the next Jack-Pot drug to a new surgical technique that revolutionizes the industry, most of these advances came about from people working long hours to become the leader in a particular market to make lots of money. 

As most of you know I am not a fan of government run healthcare.  The reasons of course are numerous.  Most of my reasons for opposing this have to do with the incompetence and corruption that government ventures bring like flies to shit. 

Simply being opposed to something is usually not enough for an argument.  Unless of course you believe the current situation is perfect.  I do not think the current situation is perfect but the alternative of increased government intervention will result in a worse situation.  Although a few additional people will have health insurance the vast majority will see their current coverage slowly die.  The reasons for this are multiple but most of the reasons have to do with the government run plan being subsidized by the tax revenue more and more till the private insurance companies cannot compete.

If we assume that the current plan is similar to a government run health insurance provider, similar to Aetna or United Healthcare.  The difference would be that, instead of being run for profit it would be run for the good of the people.  Those familiar with the term “good of the people” know that it means it will be thousands of jobs for the campaign workers of the winning party.  The most important difference although is not in how the theory of how the company is to be run, but by the sources of funding for the company.  While a private health insurance company is paid primarily by premiums paid by the policy holders, the public plan will be paid by a combination of “affordable premiums” and government taxes.

So far we outlined the future of the system under the current plan but what makes the current system so broken it needs such radical fixes?  There are a few pieces of the current system that are broken.  The first is the current price of insurance premiums.  Many people cannot buy health insurance because it is priced too high.  The reason for this is primarily that the person is trying to buy a policy just for their family.  While businesses have bulk policy leverage to bring the price down the individual does not.  The second problem with the current system is paying for coverage and not getting coverage.  This can range from “preexisting condition” to “uncovered procedure” problems.

I personally believe that when someone buys health insurance it should pay for all non-cosmetic issues a person should encounter.  How much of it the insurance covers can vary, but everything should be covered.  The counter to this is that a company simply cannot cover certain illnesses and still be in business.  So how do we fix this issue?  In this case I think the government can help.  I just don’t see any other way to solve this problem besides including the government. The government would simply have a catastrophic fund.  A person and the insurance company could register a person’s illness, be it cancer or another very expensive illness, at which point all treatments for this illness can be subsidized.  Other rules would of course be needed but the primary purpose of handling high risk cases would be handled.

 The other problem is of course with pricing.  The price of an individual family getting health insurance can be daunting.  The local corporation does not pay that price for its employee’s coverage.  Why? Because it is buying so much that it has leverage to bring the price down.  John and Jane Doe can’t do this.  To solve this problem, coops are the answer.  These coops would be non-profit and run by a small group of individuals.  The coops would charge a nominal membership fee that would be pay for the people negotiating the rates. 

The last problem is very simple to fix.  Although not outlined as a problem earlier it seems the simplest to fix.  All health insurance should be income tax deductible, both for the guy working for the corporation and the guy running a three person landscaping company.

The alternative to all this is a government insurance system that when it is run poorly it will simply ask for more funding from the tax base.  The private companies without this access to taxpayer’s piggy bank will slowly disappear.  Each one that disappears will put more pressure on the government system and more pressure on the tax base.  Because let us not forget that billions of tax income come from the people in the insurance industry.  Each one of the insurance companies that goes out of business means thousands of call center reps, secretaries, IT workers, and managers.  The great majority of these people are not different then me or you.  Although some executive loses his job and multi-million dollar salary, many more Joe Six-Packs are standing next to him at the unemployment line.

On June 2^nd 2009 a U.S. court of appeals stated that Chicago’s ban on handguns was constitutional because the United States Constitution does not apply to laws enacted by the states and municipalities.  You can read the whole unconstitutional story here.  But let us look at the key paragraph in the story.

“The unanimous three-judge panel ruled today that a U.S. Supreme Court decision last year, which recognized an individual right to bear arms under the U.S. Constitution’s Second Amendment, didn’t apply to states and municipalities.”

I can only ask what the hell these jerks were smoking when they came up with this rational.  This above statement, and precedent this sets, can now be applied to the rest of the bill of rights.  Whichever side of the gun debate you come down on you must understand that the rational for upholding Chicago’s ban on hand-guns to be at best just damn scary.  This statement essentially says that states and smaller municipalities can disregard the United State’s constitution and the bill of rights.  What is stopping your po-dunk little town from restricting free speech?  According to this ruling nothing is stopping them.

I believe that the founding fathers really thought they had some very specific rights that shall not be infringed upon.  Well they outlined with the bill of rights.  Each one had a specific purpose that was to ensure that no matter what happens, the people will always have the government of their liking or at the very least one they do not want to throw off a cliff.

Let us go through the bill of rights and do a quick scan of what each can mean.

The 1^st amendment

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

Ok this amendment is to ensure that people can still bitch and moan about the crappy government they have.  It also ensures that they can go to whatever church they want or not to go at all.  In other words six days out of the week we can bitch about all the jerks in the government and on the seventh day we get to have someone tell us how we are big jerks

The 2^nd amendment

A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed

This amendment was actually intended for two things.  Ironically neither is the primary reason it is defended today.  The most obvious reading is to protect the people from an outside threat.  But upon closer reading it is actually the constitutional reset button.  Nothing keeps a room full of people honest like knowing everyone is armed.

The 3^rd amendment

No Soldier shall, in time of peace be quartered in any house, without the consent of the Owner, nor in time of war, but in a manner to be prescribed by law.

The idea behind this amendment has more to do with the time period then almost anything else.  But upon closer inspection an additional purpose could be derived from it.  I would imagine that exercising your free speech rights would be a little dicey sitting across the table from someone with an M-16.

The 4^th amendment

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

This amendment was most notably under scrutiny during the Bush years for the unwarranted wire-taps.  The primary reason behind this amendment was to make sure that the government could not go on fishing expeditions in your house looking for anything to charge you with.  After all I think everyone has something in their closets that could at the very least get them a fine.

The 5^th amendment

No person shall be held to answer for any capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

This amendment is to ensure that people just don’t get thrown into prison.  It is also intended to set up the judicial system in such a way as to ensure that the prosecution must prove guilt. This amendment was also setup so that the government cannot willy-nilly take your private property.  The last part was blasted apart by the Kelo vs City of New London. 

The 6^th amendment

In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district where in the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the Assistance of Counsel for his defense.

This amendment is also to ensure that people cannot be railroaded into prison.  It also ensured great day-time TV during the OJ Simpson trial.

The 7^th amendment

In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any court of the United States, than according to the rules of the common law.

I will honest with you, I have no idea about this one.  I think it has something to do with making sure cases involving large sums of money have a jury look at them.  I also think that it states that a jury decision shall not be overturned.

The 8^th amendment

Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.

If this amendment was actually followed we would not have shows like Dogg the bounty hunter.  But the idea behind this was to ensure that while people were to be tried for a crime they would not have to stay in prison.  Given that anyone can be arrested on the flimsiest of evidence, in theory a person could be held in prison indefinitely by continuous re-arrest.  In addition it was intended to make sure that there was no Tower of Philadelphia, which would obvious have to be just a little taller than the tower of London.

The 9^th amendment

The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people

Even the founding fathers had to write a catch all amendment just in case, during the all day beer drinking feasts they forgot something.  If you are wondering what this really means, then let me explain.  Basically this states that if there is no-law against something and it does not interfere with any of the other amendments you can indulge to your heart’s content.

The 10^th amendment

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people

This amendment has been frequently misused by the federal government.  The original idea of the federal government was that it handled international matters and disagreements between states.  If states did not want to handle everything exactly like every other states then they could do as they please, provided it did not break with constitution.  Which of course the above ruling screws up but who is counting.

Well that was your constitutional lesson for the day.  I am sure that the four of you reading this are happy that this long post is finally done.

I got the constitutional stuff from wikipedia

I know that it makes people feel so much better when they can go after the rich corporate fat cats.  Of course it all turns to tears when they realize the rich fat cat was the one who was paying their salaries.  Even microsoft is threatening to move jobs overseas.

When are people going to learn that if you eat the golden goose it won’t lay any more eggs.  But it makes a bunch of short-sighted people feel better.  Everyone who works for corporations please raise your hand.  Ok that is just about everyone who still has a job.  And everyone who works at a school raise your hands too.  The corporations give educational institutions a lot of money.  So in a way you too work for the corporations.

I believe that corporate income taxes are simply counter productive.  The reason being is simple, when you have corporation the corporation has to employ people.  When people are employed by a private company then the state does not need to pay them to not come after the government with pitchforks. 

Employment for the average person has a lot of advantages both for the person but also for the government.  When a person is working they are less likely commit crime, protest in the street, and in general are just so much less annoying for the government.  After all if someone is home all day watching TV, surfing the internet, or just hanging around they so much more likely to start causing trouble.  This just requires more police, fireman, and morgue employees.

Employment is not just good for the government either it is also good for the person doing the work.  Let us assume the person doing the work at least believes that what they are doing is meaningful to someone (which is one the failures of communism more on this in a later post).  So the person has a job that they believe is doing some type of good, they don’t have wake up in the morning thinking they have the greatest job in the world for this to work either.  Said person has a purpose to their life.  They feel that they have some form of control.  In addition they have a strong separation between free time and work time.  This is very important as someone who either works all the time is burden to themselves, and a person who plays all the time is burden to everyone else.

Now that we have established that employment of people is a good thing we can also establish that we need something to employ them.  Well that is where corporations come into play.  Unlike small businesses (which are just smaller corporations), corporations have to employ a lot of low skilled specialists, in addition the usual skilled specialists.  These types of low skilled specialists must be drawn from the local population.  These are positions like mail room clerks,  janitors, the random copy and printer lady, computer helpdesk people (these are little more skilled), and we can’t forget the random hottie that always ends up at the front desk to greet people.  We all know that she is not going to be climbing the corporate ladder, maybe the corporate pole, but not the ladder.

See all these positions must be filled by the local population of the corporate office.  And when the government makes it very hard to do business and make a profit the corporation will move its offices.  There are plenty of countries in the world who would be more than happy to have these corporations put their shell headquarters in their country. 

Given all the bonuses I have outlined about the employment opportunities of keeping corporations happy why piss them off with higher taxes?  Because some left wing nut bags who can’t see the end result of their own jealously leads them to?

The blatant racism in political satire and comedy is just infuriating.  How dare they treat the countries first African American President like they are.  Does he not disserve the same treatment as all of our past presidents?

The disgusting treatment of our president by late-night TV or Stand-up comedians is dark spot on our republic.  Do we need another civil rights movement?

I have a dream that we as a nation will deride, poke fun at, and generally make fun of a president not based on the color of his skin, but on the “uhs, ums” and general missteps of his non-teleprompted speeches.

I have a dream that we will laugh at the fact our president has the same ability as the local news anchor at reading words on a screen.

I have a dream that youtube will have collections videos of every misstep, dumb remark, and otherwise embarrassing moments of our president all combined together for hours of fun.

I have a dream that the stress of watching people make fun of him on every late night show and stand -up comedy will turn his hair grey.

Does our first African American president not disserve to be treated equally?  We cannot rest till our presidents actions are scrutinized, taken out of context, and edited to make him look like any combination of the following; a buffoon, womanizer, liar, clumsy, naive and just generally stupid.  John Stewart’s Career depends on it.

Obama blessed be his name has decided that he will close the tax shelters used by corporations and individuals.  In other news new tax shelters have been opened in other places.  In thirty years they will clamp down on those shelters too.  Of course the first shelters would have been forgotten about and will be reopened.

Unfortunately for Obama blessed be his name did not get his memo that many of the people who put their money down in the shelters are the same people who put him in office.  Either that or his supporters got the memo a few weeks ago and have since switched to other forms of tax shelters.

I have a memo for them.  People hide their money in off shore accounts because the price to hide the tax is less then the tax to be paid.  A i thing happened to england back in the colonial days.  Although this was a tariff and not an income tax but the principle stands.  The short story is as follows.  The english government in trying to raise revenue for some bridge to nowhere or invasion, decided to increase the import taxes.  The taxes were so high that rich people would pay a smuggler money to avoid the taxes.  To combat the smugglers the english government hired police to watch the shore line for smugglers sneaking ashore.  For those who fell asleep during geography class the british isles have a rather long coast line.  So anyway the English government saw a net lose in tax revenue.  After they lowered the import tax to something reasonable, it no longer paid to avoid the tax.  Smugglers had to find meaningful work as tax collectors and the government saw more tax revenue.

What lesson can be learned from the above story.  Most likly not a goddamn thing, this is the internet after all.  But don’t make is so good to hide money and people won’t do it as often. 

On the bright side some spam engine just had something interesting to read.

Well it seems that there is a report out that the TARP program could be mismanaged and is open to corruption.  In other news water is wet and Lindsey Lohan is unstable. 

Did anyone seriously think that when the 700 billion dollar number came out that is was going to be spent wisely?   I thought it was joke when I first heard it, a bad one but still a joke.  It turned out that it was a joke on us.  To top it off a few months later we get a gigantic stimulus bill that will also have to be paid for.  Then the regular budget of the government will run into numbers unthinkable.  Who the hell is going to pay for all this?  We are.  The rich will pay for it directly while the poor will pay by inflation.

This whole debacle is just another in a long list of examples of government mismanagement of money.  This not just an American problem, all governments have the same problem.  It has to do with a combination of human conditions.  Greed and Sloth are the most prevalent.  Greed in that the various representatives want to get the money to pay back constituents and their own pockets.  Sloth in the bureaucrats and the elected reps in ensuring the money is spent after due diligence.  The reason they can do all of this is that it is not their money, it is ours.

I really thought I had more to write on this, but so much of it is too obvious.

The current financial crisis is a big example of how nature will always equalize a system.  When the consequences of an action are eliminated the rate of the action will increase.  Eliminate the hangovers and people will drink more.  I would at least.

All things in nature will eventually equalize themselves, because a system imbalance cannot exist for long.  For instance if you eliminate the wolves; the deer will eventually over populate the area and start committing suicide by jumping in front of your car.  I think they miss the wolves too much.  So the system self equalizes. 

Another example of risk and reward system we should all me familiar with is our sex lives.   What do you think would happen if a bunch of 20 something’s were kept on college campus but were told that pregnancy could not happen and STDs could not be caught?   In three months half the campus would be pregnant and the other half would be scratching themselves wondering what is wrong with their pubes.  I am not condemning them.  I would have taken part in such an experiment too (I would have been a whore but nobody wanted to be a whore with me).  So much for memories, either way you should have gotten my point.

The current crisis can be tracked to who ever let Fannie Mae and Freddie Mac to buy very crappy mortgages.  The rest of the funny financials like collateralized debt securities and derivatives were simply the mold that grew from the cesspool of Fannie and Freddie taking risks no one in their right mind would take.   Normally when a private corporation would take unneeded risk it would burn out and die or outside investors would refuse to underwrite the endeavor.  What made Fannie and Freddie different was that they were tacitly guaranteed by the government.  This means that the underwriters had less risk of failure because if worst came to worst the government would take care of everything.  These underwriters, investors or gamblers saw rewards that were better than the risks of underwriting the companies. 

For period of time the imbalance of the system was balanced periodically without crashing the system because the gains and leverage were not great enough to cause the system to collapse.  Housing prices went up and went down for all of eternity.  What made this different was the timing.  Stocks were tanking after the dot bomb debacle (another example people not using their heads) and the Fed was trying to get the economy moving again.  The Fed lowered interest rates making money very cheap.  In any boom and bust cycle there are still winners.  These winners began investing in real-estate. 

Shortly before this time Herb Moses an executive a Fannie Mae was playing hide the salami with Barney Frank.  Barney Frank at this time was in charge of making sure Fannie Mae was doing good business.  He opposed the transferring of Fannie and Freddie oversight from the Department of Urban and Housing development to the Treasury Department.  Granted either one is still a government run.  It seems that a government department whose job is to get people into housing would have a conflict of interest with a company who provides financing for homes.  So if said company will provide additional financing for the department’s projects they would overlook the horrible risks they were taking.  I have no proof that this is what happened.  But it is not too much of stretch to think this is what was going on.  Especially since the ramifications became so clear a few years later. 

Without anyone to watch over Fannie and Freddie and many investors willing to take extra risks because the government would back any risks these organizations ran rampant.  The CEO’s of the companies and the attendant executives began writing bonus rules that had nothing to do with long term viability of the organization.  So the bonuses that were given were for the amount of assets in management (or mortgages owned).  There bonus had nothing to do with the quality of the assets.  Who here can see what is about to happen next?  Raise your hand.

Fannie began taking all the mortgages they could get from the private companies in the market.  These were sold as all kinds of securities and what not.  Investors not knowing what fannie was doing but believing the government would come to the rescue were willing to write checks to fannie.  The private companies realized that they would not hold the mortgage more than a few months to a year would sell the mortgages to Fannie.  The risk was off the private company but they still had the reward of the first year’s mortgage payments and other service fees. 

The price of homes began to sky rocket.  Soon few people could afford a home with traditional methods.  But the private company could make up crazy mortgages that started off with smaller payments.  The buyer could afford these teaser rates in the beginning but by the time the real rates came the mortgage would be owned by another company (usually Fannie or Freddie).  These artificial buyers could only maintain this growth for so long.  Soon the market collapsed. 

In this game of hot potato Fannie and Freddie were left holding the potato.  Which means that the we the American tax payer was actually holding the hot potato.