I will try to keep this short because it could be long and complicated.
The WSJ today correctly acknowledges that tax receipts went down because the economy went into recession. They go on as they always do to say that the only way to get the economy growing is to cut taxes and limit spending so that incentives to save and invest are maximized.
However, they overlook the fact that personal tax rates are lower then they were in the booming 1990's when we had a balanced budget. They overlook the fact that housing/financial crisis always take 5 to 7 years to come out of and a lack of fiscal stimulus will generally extend that.
They assert that the government is trying to raise taxes at the expense of growth, but at the same time, they want to balance the budget as fast as possible by cutting spending. Anyone who played with the NYTimes "on line balance the budget game" knows that the spending cuts necessary to balance the budget without any revenue increases will have poor people going without medical care and/or a defense budget that must have all the troops brought home and/or a host of other changes in government operations.
I don't normally comment on WSJ editorials because they are so partisan to the Republicans and since most of my readers already know that there is no new information. However, today got under my skin so I had to comment. The WSJ is a prisoner to positions that don't make sense in reality. Case in point, while they want Ronald Reagan supply side economics they overlook the fact that Bush I's tax increases are the only way the budget was eventually balanced in the 1990's. They criticize the deficit but never called for tax increases to pay for the war's in Iraq and Afghanistan that they supported. I honestly think they don't want any government except a security apparatus and a court system. Wonder how they would treat the poor people begging under their feet at the World Financial Center.
Thursday, June 30, 2011
ProPublica Does Not Rely on Facts in Investigative Banking Journalism
The New York Times today (re?) published an article from ProPublica stating that the U.S. shelters and subsidizes the banking industry. They imply rather strongly that banks are able to become big because the deposits are guaranteed by the FDIC, the Federal Reserve lowers interest rates when the banking system is stressed and they allow the banks to hold assets at book value rather then mark them to market. For good measure they throw in the fact the residential mortgages can be sold to the GSE’s, and what really gets under my skin, believes that the only reason the OTC derivatives market is as big as it is, is deposit insurance.
This is propaganda masked as investigative journalism at its worst. Investigative journalism should hold itself to facts and theories that have some support in mainstream economics.
Let me address these one by one. Banks became big because diverse banks were successful at attracting capital while some less diverse smaller banks were unable to attract capital or failed. Banks became big because customers like to deal with bigger banks. For those customers who want a smaller bank, these too continue to exist and have carved out their market niche with prudent policies. All size banks have deposits of a certain size guaranteed and pay the FDIC a fee for that guarantee. The guarantee cannot make a bank big alone. The guarantee is not a subsidy since a fee is paid for it.
The Fed raises and lowers interest rates in response to economic growth and management of inflation pressures. While safety and soundness of the banking system is a primary responsibility of central banks, the ability for banks to profit from steep yield curves is a by-product of inflation management and certainly not a subsidy from the Federal Reserve to the banking system as there is no flow of funds from these actions.
As for book accounting, banking is both a systemic risk and a victim of systemic influences. If banks and insurance companies had to mark every asset to market, there would be little ability to efficiently leverage capital and the industry would attract little capital unless the price of credit were to high. Those who desire a system where everyone marks every thing to market should think long and hard about how the economy would look when the subsequent deleveraging took place. Book accounting institutions have a long track record of managing the booking of credit losses and most investors are comfortable with this. A bank fails when they do not do this properly.
Finally, J.P. Morgan does not have a $79 billion derivatives portfolio because of deposit insurance or any too big to fail policy. JPM is not AIG. They agree to mark-to-market the derivatives book every night and both they and the counterparties have to exchange cash to maintain any unsecured exposure below a predetermined threshold. The book is that big because counterparties over time have found that JPM has had the best execution. From a risk management perspective, the issue is how is JPM comfortable with such a large exposure and the answer is cash collateral exchange to maintain mark-to-market exposures. It has nothing to do with deposit insurance or too big to fail.
Tuesday, June 28, 2011
What Does Tim Pawlenty Have to Trash Obama's Leadership in the War on Terro
I just saw a NewsHour "Recap of the Day's News" and Tim Pawlenty was properly calling out the Republicans who are calling for a complete retreat from the War on Terror. In the process of doing so, he trashed Obama for failing to lead the War on Terror?
Wait a minute!! Who was in charge when we got Osama bin Ladan? Who has expanded the use of Drone's which seem to be the most effective way to get Terrorists? The bad guys are still in Guantanamo, although I personally wish they were in American prisons if guilty. The troops are coming home from Iraq after their success there. Hopefully the same will happen in Afghanistan.
Why can't Republicans acknowledge that the Democrats do something right? Please my conservative friends either defend that or agree that it is wrong and vaguely unpatriotic.
Wait a minute!! Who was in charge when we got Osama bin Ladan? Who has expanded the use of Drone's which seem to be the most effective way to get Terrorists? The bad guys are still in Guantanamo, although I personally wish they were in American prisons if guilty. The troops are coming home from Iraq after their success there. Hopefully the same will happen in Afghanistan.
Why can't Republicans acknowledge that the Democrats do something right? Please my conservative friends either defend that or agree that it is wrong and vaguely unpatriotic.
Friday, June 24, 2011
Labor Economics 101: Why Health Care Costs Need to be Controlled and Why Tax Revenue is Needed to Pay for the Last 10 Years of War
Although it is almost 40 years since I studied Labor Economics, it was basically another version of supply and demand which I have thought about consistently throughout my career. A treasured follower of this blog forwarded me an article published by the Economic Policy Institute entitled "The Sad But True Story of Wages in America". The article highlights the fact that while U.S. Productivity grew 62% over the last 20 years, real wages in both the private and public sector grew only 12% over that same time frame. It goes on to urge policymakers to try and find policies that promote greater linkage between productivity improvements and wages.
Accomplishing what the authors desire is far more complicated than what the authors (or any workers) might think. The reason is the last 20 years data reflect the complete integration of the global economy using the now ubiquitous internet. Workers everywhere who do the same thing now compete with one another with the only independent factors influencing what companies need to pay being differences in productivity, the cost of transportation and the ease of communication. The steady flow of production facilities to emerging markets has reduced the demand for factory workers in the G10. Those workers had to flow to other occupations increasing the supply of workers in those fields. Now add in the fact that a younger person with 5 years of experience may be as competent as the worker who has 20 years of experience and it is not surprising that workers in almost all professions now find their compensation plateauing in their 40's. Until wages adjusted for productivity and transportation in the emerging markets rise to a level that makes U.S. workers competitive, this flow will not be stopped. The good news is that workers in the coastal provinces of China now earn @$12,000 per year and that is going up fairly fast.
A classic trade protectionist at this stage would say erect trade barriers. However, most of the high earners and prospering businesses in the U.S. are successfully competing in the global economy and a trade war would harm them and reduce their contribution to the economy. Trade wars reduce the overall pie, free trade increases it. Not to mention the fact that the facilities to produce these things in the U.S. may not even exist anymore.
One other major reason for the stagnant wages is the fact that the cost of health insurance has been increasing dramatically over the last 10 years (I will not dwell on the coinciding two major recessions, the last of which we have not and will not recover from for at least another 2 - 3 years). Workers cannot be paid more if their productivity improvement is going to buy them health insurance. If health insurance and employment were separate, then the workers would see their income rising, and also their insurance costs increasing. Once again we are at the familiar spot of controlling the increase in health care costs, which for private sector employees was completely in the hands of the private sector and where there has been little success. Why the Republicans cannot see the benefit of a single payer plan is beyond me.
Now onto the public sector wage stagnation. Unfortunately, the public sector is not in the global economy. Public revenues can only grow if the private sector is growing. When you have massive recessions (which party was in charge from 2000 to 2008??), public revenue is not going to increase. Add in the fact that public sector health care costs are growing enormously and what you have is a classic squeeze on the ability to pay public sector workers. Decreased revenues and higher fixed costs (medical), means that Public Leaders need to figure out how to reduce workers (costs) and increase productivity so that maybe down the road when revenues increase, they can be paid for their productivity.
Once again I have gone on, but I have one last point. Successful people have to support the government that provides for societal needs. High wage earners in the U.S. are generally successful in the global economy and benefit from everything living in the U.S. has to offer. Some of these high earners only pay a 15% flat tax on their income because it is (perhaps fraudulently) characterized as capital gains. Others pay the 35% top rate. Given the pressures placed on the Federal Government's cost structure by the War on Terror, why is it too much to ask of them to pay 39%? Why is it too much to ask of corporations that receive targeted tax breaks to give some of that up to help balance the budget. I understand negotiation but just saying no is disrespectful of the other side's position. That is why I am no longer a Republican. My belief that middle of the road policies are best get no respect in Republican arenas.
Accomplishing what the authors desire is far more complicated than what the authors (or any workers) might think. The reason is the last 20 years data reflect the complete integration of the global economy using the now ubiquitous internet. Workers everywhere who do the same thing now compete with one another with the only independent factors influencing what companies need to pay being differences in productivity, the cost of transportation and the ease of communication. The steady flow of production facilities to emerging markets has reduced the demand for factory workers in the G10. Those workers had to flow to other occupations increasing the supply of workers in those fields. Now add in the fact that a younger person with 5 years of experience may be as competent as the worker who has 20 years of experience and it is not surprising that workers in almost all professions now find their compensation plateauing in their 40's. Until wages adjusted for productivity and transportation in the emerging markets rise to a level that makes U.S. workers competitive, this flow will not be stopped. The good news is that workers in the coastal provinces of China now earn @$12,000 per year and that is going up fairly fast.
A classic trade protectionist at this stage would say erect trade barriers. However, most of the high earners and prospering businesses in the U.S. are successfully competing in the global economy and a trade war would harm them and reduce their contribution to the economy. Trade wars reduce the overall pie, free trade increases it. Not to mention the fact that the facilities to produce these things in the U.S. may not even exist anymore.
One other major reason for the stagnant wages is the fact that the cost of health insurance has been increasing dramatically over the last 10 years (I will not dwell on the coinciding two major recessions, the last of which we have not and will not recover from for at least another 2 - 3 years). Workers cannot be paid more if their productivity improvement is going to buy them health insurance. If health insurance and employment were separate, then the workers would see their income rising, and also their insurance costs increasing. Once again we are at the familiar spot of controlling the increase in health care costs, which for private sector employees was completely in the hands of the private sector and where there has been little success. Why the Republicans cannot see the benefit of a single payer plan is beyond me.
Now onto the public sector wage stagnation. Unfortunately, the public sector is not in the global economy. Public revenues can only grow if the private sector is growing. When you have massive recessions (which party was in charge from 2000 to 2008??), public revenue is not going to increase. Add in the fact that public sector health care costs are growing enormously and what you have is a classic squeeze on the ability to pay public sector workers. Decreased revenues and higher fixed costs (medical), means that Public Leaders need to figure out how to reduce workers (costs) and increase productivity so that maybe down the road when revenues increase, they can be paid for their productivity.
Once again I have gone on, but I have one last point. Successful people have to support the government that provides for societal needs. High wage earners in the U.S. are generally successful in the global economy and benefit from everything living in the U.S. has to offer. Some of these high earners only pay a 15% flat tax on their income because it is (perhaps fraudulently) characterized as capital gains. Others pay the 35% top rate. Given the pressures placed on the Federal Government's cost structure by the War on Terror, why is it too much to ask of them to pay 39%? Why is it too much to ask of corporations that receive targeted tax breaks to give some of that up to help balance the budget. I understand negotiation but just saying no is disrespectful of the other side's position. That is why I am no longer a Republican. My belief that middle of the road policies are best get no respect in Republican arenas.
Thursday, June 23, 2011
Dumb and Dumber: This is a comment on Governments and Banks
Last night I caught up with the Economist that I had not finished reading on Sunday. There was a cogent discussion of the problems that a Greece Default would have on the Greek Banks. Background, most government debt is risk free for BIS II capital calculations if the country meets certain standards, which I think Greece used to. Now we have a lot of history in Emerging Markets; when a country defaults on its debt, it's banking system goes into deep distress and the drying up of credit makes it all the more difficult for the country to get out of its hole. That is why many EM countries, with the assistance of the IMF, worked to shield the banks from loss or recapitalized the domestic banks. When I read the article last night, I said I will try to think of some wise words to put down on the foolishness of calling government debt risk free and not recognizing that haircuts of 10% to 20% on any government debt is possible. Think what a haircut would do to fix any number of over leveraged problems.
Then this morning, I see that the European governments, which just went through their own TARP programs in 2009, are asking their private sector financial institutions to help out with the latest Greece financial rescue plan. Some of these institutions already have a lot of Greek debt. Some of them were wise enough to avoid it in the first place or got rid of it when they could at a reasonable price for their situation. Now their "Regulator" wants them to add high risk of default debt just so the government can say they had private sector participation. What happens when Greece defaults as it almost certainly must? Do these governments buy the debt back from the banks or do they extract another pound of flesh for the taxpayer for providing liquidity and capital to their banks. Either way, the shareholders of these banks get hosed. The taxpayers may get hosed as well since a good case can be made that Ireland would not be in the shape it is if it had followed the Iceland lead of letting the banks default.
So here are my candidates for Dumb and Dumber: The governments for proposing this, the regulators for allowing it, the managements for accepting it (they haven't yet, so there is hope), and the shareholders for hanging around and letting this happen to their investments.
Then this morning, I see that the European governments, which just went through their own TARP programs in 2009, are asking their private sector financial institutions to help out with the latest Greece financial rescue plan. Some of these institutions already have a lot of Greek debt. Some of them were wise enough to avoid it in the first place or got rid of it when they could at a reasonable price for their situation. Now their "Regulator" wants them to add high risk of default debt just so the government can say they had private sector participation. What happens when Greece defaults as it almost certainly must? Do these governments buy the debt back from the banks or do they extract another pound of flesh for the taxpayer for providing liquidity and capital to their banks. Either way, the shareholders of these banks get hosed. The taxpayers may get hosed as well since a good case can be made that Ireland would not be in the shape it is if it had followed the Iceland lead of letting the banks default.
So here are my candidates for Dumb and Dumber: The governments for proposing this, the regulators for allowing it, the managements for accepting it (they haven't yet, so there is hope), and the shareholders for hanging around and letting this happen to their investments.
Wednesday, June 22, 2011
Bristol Palin's Autobiography?
OK, I know that Sarah Palin is milking her VP candidacy for all the money she can (and she is a master at doing that - I wish I had the platform and shameless personality to fatten my wallet that way), and it appears she has passed on these skills to her eldest daughter.
But how does a 20 year old single mother have anything worth telling about her life that could fill a 250 page autobiography? She wasn't on the campaign trail because she was pregnant, although the early news is that she is slamming the McCains women. Perhaps, they thought Bristol was a bad advertisement for Republican values on premarital teenage sex. Or perhaps she is going to give teens advice on why they should avoid unprotected sex? Or are we going to find out what it is like to be on Dancing With the Stars for endless pages? Or are we going to get a chance to see what it was like being in kid in Wasilla, Alaska. I suspect it was a lot like being a kid in any other small town in America, only most of those people have the common sense to keep their memories to themselves.
This smells like a publisher pandering to her mother's financial desires and hoping there are enough idiots out there for him/her to breakeven on this waste of time.
I can't believe I got irritated enough by this news to write this, but blogging is a cheap way to advertise personal thoughts, so maybe I am being too harsh on Bristol and am really envious that she can get a big payday for this stuff. As I said, I admire Sarah Palin for her ability to get a big payday from just being herself.
But how does a 20 year old single mother have anything worth telling about her life that could fill a 250 page autobiography? She wasn't on the campaign trail because she was pregnant, although the early news is that she is slamming the McCains women. Perhaps, they thought Bristol was a bad advertisement for Republican values on premarital teenage sex. Or perhaps she is going to give teens advice on why they should avoid unprotected sex? Or are we going to find out what it is like to be on Dancing With the Stars for endless pages? Or are we going to get a chance to see what it was like being in kid in Wasilla, Alaska. I suspect it was a lot like being a kid in any other small town in America, only most of those people have the common sense to keep their memories to themselves.
This smells like a publisher pandering to her mother's financial desires and hoping there are enough idiots out there for him/her to breakeven on this waste of time.
I can't believe I got irritated enough by this news to write this, but blogging is a cheap way to advertise personal thoughts, so maybe I am being too harsh on Bristol and am really envious that she can get a big payday for this stuff. As I said, I admire Sarah Palin for her ability to get a big payday from just being herself.
Saturday, June 18, 2011
The Continuation of Glass-Steagall Would Not Have Prevented The Housing Bubble/Collapse
Sorry, I could not come up with a shorter title.
The NY Times today and yesterday went down the path of bashing the "Too Big To Fail" banks on their Op-Ed page and the bashing came from both the Right (David Brooks) and the Middle (Joe Nocera).
Glass-Steagall ended the division of commercial banking and securities underwriting/trading. The banks that took advantage of that were JPMorgan, Citibank and Bank of America, as well as some of the smaller regionals. The securities firms did open some small banks for certain activities but they were not large deposit takers.
Well who exactly failed due to losses from securities on their balance sheet? Bear Stearns, Lehman Brothers, Merrill Lynch, AIG, Washington Mutual, Countrywide. None of these had big global commercial banking and securities businesses. OK, Citibank might have failed due to its parking too many securities on their balance sheet, but they could have done that without having the securities business.
How would keeping deposit taking and securities business separate have prevented the housing bubble from developing? How would keeping them separate have prevented banks from parking too many AAA correlated securities on balance sheets? The ending of Glass-Steagall had nothing to do with this blow-up and reinstating it would not prevent a financial crisis from happening again.
This housing crisis was caused by a failure to regulate the mortgage market and loan origination within quite a large number of financial firms, including but not limited to the firms listed above, the GSE's and any number of small mortgage origination firms that failed years ago and no one remembers.
When Lehman failed the financial markets stopped funding all the big financial firms. The experience of this from history is why Central Banks have the Lender of Last Resort function as a core activity. The U.S. government did exactly what it should have by providing funding to the financial system. And the securities business profits have helped these institutions recover faster and pay back the taxpayer with amble profits for the government.
I don't understand why columnists who should be able to understand this fail to even try to educate the populist public. Thankfully, both the Bush and Obama administrations have understood this and we have a basic core financial institution policy that serves the country well.
The NY Times today and yesterday went down the path of bashing the "Too Big To Fail" banks on their Op-Ed page and the bashing came from both the Right (David Brooks) and the Middle (Joe Nocera).
Glass-Steagall ended the division of commercial banking and securities underwriting/trading. The banks that took advantage of that were JPMorgan, Citibank and Bank of America, as well as some of the smaller regionals. The securities firms did open some small banks for certain activities but they were not large deposit takers.
Well who exactly failed due to losses from securities on their balance sheet? Bear Stearns, Lehman Brothers, Merrill Lynch, AIG, Washington Mutual, Countrywide. None of these had big global commercial banking and securities businesses. OK, Citibank might have failed due to its parking too many securities on their balance sheet, but they could have done that without having the securities business.
How would keeping deposit taking and securities business separate have prevented the housing bubble from developing? How would keeping them separate have prevented banks from parking too many AAA correlated securities on balance sheets? The ending of Glass-Steagall had nothing to do with this blow-up and reinstating it would not prevent a financial crisis from happening again.
This housing crisis was caused by a failure to regulate the mortgage market and loan origination within quite a large number of financial firms, including but not limited to the firms listed above, the GSE's and any number of small mortgage origination firms that failed years ago and no one remembers.
When Lehman failed the financial markets stopped funding all the big financial firms. The experience of this from history is why Central Banks have the Lender of Last Resort function as a core activity. The U.S. government did exactly what it should have by providing funding to the financial system. And the securities business profits have helped these institutions recover faster and pay back the taxpayer with amble profits for the government.
I don't understand why columnists who should be able to understand this fail to even try to educate the populist public. Thankfully, both the Bush and Obama administrations have understood this and we have a basic core financial institution policy that serves the country well.
Wednesday, June 15, 2011
Republican Debate Hits New Low in "All Men Are Created Equal" Disbelief
Either the Tea Party's Presidential politicians are complete hypocrites about their belief in "Original Intent" or they do not believe that anyone other then a White Heterosexual Judaic Christian is worthy of protection under the Constitution.
The race to the bottom was fast and furious in the debate as they lined up to not hire Muslims in their vision of government (even though the military and intelligence operations need more Arab speakers) and disavowed any belief that Gay People deserve equal protection.
Reminds me of what happened to the Japanese citizens in WWII even though many of their young men fought bravely for freedom. I would go on but this failure to believe that all humans are created equal is so disgusting to me that I have nothing further to say.
The race to the bottom was fast and furious in the debate as they lined up to not hire Muslims in their vision of government (even though the military and intelligence operations need more Arab speakers) and disavowed any belief that Gay People deserve equal protection.
Reminds me of what happened to the Japanese citizens in WWII even though many of their young men fought bravely for freedom. I would go on but this failure to believe that all humans are created equal is so disgusting to me that I have nothing further to say.
Tuesday, June 14, 2011
David Brooks column today says it better than I ever have
http://www.nytimes.com/2011/06/14/opinion/14brooks.html
Sunday, June 12, 2011
Republican Congressman Asks Iraq to Pay for War
"Rep. Dana Rohrabacher, a Republican from California, suggested during a trip to Baghdad with fellow lawmakers Friday that once Iraq becomes a rich and prosperous country, it could repay the U.S."
I have to admit that I would like this idea except there is no modern precedent for a country to invade another country and then ask for them to pay for it. The last time this was asked of a country was after WWI when Germany was supposed to pay for starting the war and this ended up giving Hitler his chance to lead Germany. So I guess it would go back to the middle age's feudal societies for precedent where the conquerer got all the spoils and turned the locals into serfs. Not likely to happen voluntarily.
Talk about chutzpah! or maybe it was simply a lack of forethought, something other prominent politicians have a problem with.
I have to admit that I would like this idea except there is no modern precedent for a country to invade another country and then ask for them to pay for it. The last time this was asked of a country was after WWI when Germany was supposed to pay for starting the war and this ended up giving Hitler his chance to lead Germany. So I guess it would go back to the middle age's feudal societies for precedent where the conquerer got all the spoils and turned the locals into serfs. Not likely to happen voluntarily.
Talk about chutzpah! or maybe it was simply a lack of forethought, something other prominent politicians have a problem with.
Review of a Book Review: Conservatism by O'Hara
This book, written by a British academic who studies Conservative parties and analyzes their philosophy is published by the University of Chicago Press and reviewed in the Economist. The inspiration to blog on it comes from its support of my view that I am a conservative and that Conservatives in the U.S. have lost their traditional philosophical core base in the policies that they advocate today.
What is a traditional successful conservative? What is that core philosophy? O'Hara analysis starts with Adam Smith/Friedrich Hayek and looks at the success of Thatcher and Reagan to answer this.
The essence of conservatism is that change is welcome only for a particular purpose with a healthy dose of skepticism for untested schemes.
That strikes me as an appropriate characterization of my beliefs. So how can I support Universal Health Care and revenue increases to pay for the government?
The answer is there is role for a government and a balanced budget over the course of the business cycle is appropriate economic policy that allows the government to fulfill its basic purpose of defense, support of the economy, and a social safety net. Bush II forgot to pay for the War on Terror and Iraq Regime Change. That must be done with increases in revenues either from reductions in tax shelters (my preference) or tax rate increases. To do otherwise is proceed down a path of an untested scheme.
Now as for Healthcare, the one thing we know is the current system is broken. 50 million uninsured with the cost of their care being borne by those who buy health insurance is one reason insurance costs are so high. Having individuals pay significantly higher rates than those in groups is inherently unfair when group status is strictly determined by employer. Having insured get charged medical fees that are 30% of the uninsured fee is an unrealistic business model for customers and providers. These are all evidence that a fix is needed.
Universal Health Care is not an untested scheme. In the US we have Medicare and the VA system to demonstrate it can be done. There are many examples of it working well in other countries. Proceeding to have Universal Heath Care is not a radical scheme. The issue is how do you control the cost of it and keep it affordable for the economy as a whole. The US is in the radical nonconservative position here because we keep trying to have the private sector manage the insurance side of this with the stated shortcomings continuing. For better or worse, there is no political consensus that we should move to a true Universal Health Care system. However, with Romney/Democratic scheme we have seen moderate Republicans and Democrats try to solve the problems without radically changing the existing healthcare structure. The cost of heath care is breaking the finances of the government and a solution must be found. Repealing the Affordable Healthcare Act of 2010 without proposing a solution to the mandated Insurance Exchanges is not responsible leadership on this essential issue nor is it conservative. Rather I would call it Radical Change and what we have now is a Republican Party that only wants Radical changes that do not fit within the Philosophy of Conservatism. By wanting to starve the government of financing, leave the cost of health care unmanaged except by turning it over to the private sector which has already failed, we have a Republican party that is failing to address identified problems and advocating using untested schemes.
So I am a Conservative in the traditional sense.
What is a traditional successful conservative? What is that core philosophy? O'Hara analysis starts with Adam Smith/Friedrich Hayek and looks at the success of Thatcher and Reagan to answer this.
The essence of conservatism is that change is welcome only for a particular purpose with a healthy dose of skepticism for untested schemes.
That strikes me as an appropriate characterization of my beliefs. So how can I support Universal Health Care and revenue increases to pay for the government?
The answer is there is role for a government and a balanced budget over the course of the business cycle is appropriate economic policy that allows the government to fulfill its basic purpose of defense, support of the economy, and a social safety net. Bush II forgot to pay for the War on Terror and Iraq Regime Change. That must be done with increases in revenues either from reductions in tax shelters (my preference) or tax rate increases. To do otherwise is proceed down a path of an untested scheme.
Now as for Healthcare, the one thing we know is the current system is broken. 50 million uninsured with the cost of their care being borne by those who buy health insurance is one reason insurance costs are so high. Having individuals pay significantly higher rates than those in groups is inherently unfair when group status is strictly determined by employer. Having insured get charged medical fees that are 30% of the uninsured fee is an unrealistic business model for customers and providers. These are all evidence that a fix is needed.
Universal Health Care is not an untested scheme. In the US we have Medicare and the VA system to demonstrate it can be done. There are many examples of it working well in other countries. Proceeding to have Universal Heath Care is not a radical scheme. The issue is how do you control the cost of it and keep it affordable for the economy as a whole. The US is in the radical nonconservative position here because we keep trying to have the private sector manage the insurance side of this with the stated shortcomings continuing. For better or worse, there is no political consensus that we should move to a true Universal Health Care system. However, with Romney/Democratic scheme we have seen moderate Republicans and Democrats try to solve the problems without radically changing the existing healthcare structure. The cost of heath care is breaking the finances of the government and a solution must be found. Repealing the Affordable Healthcare Act of 2010 without proposing a solution to the mandated Insurance Exchanges is not responsible leadership on this essential issue nor is it conservative. Rather I would call it Radical Change and what we have now is a Republican Party that only wants Radical changes that do not fit within the Philosophy of Conservatism. By wanting to starve the government of financing, leave the cost of health care unmanaged except by turning it over to the private sector which has already failed, we have a Republican party that is failing to address identified problems and advocating using untested schemes.
So I am a Conservative in the traditional sense.
Sunday, June 5, 2011
Musings
It has taken me over two hours today to process the Sunday NYT. It was rich in many ways, but the article that caused me to start here was Nicholas Kristof's well laid out comparison that the country that currently best practices many Republican goals is Pakistan. He acknowledges that the U.S. will not end up there, but income inequality and a lack of wealth transfer to maintain the institutions that support economic class mobility across generations will lead us down that path.
I also spent a fair bit of time on the Sarah Palin articles. In verbal discussions with my friend RedStateVT, he stated that he is upset that the "left" thinks that she is dumb when she has been a governor and went on to cite past statements that Bush II and Reagan were dumb. I don't really think characterizations about intelligence are respectful to the need for political debate. In fact, they get in the way of sound debate over whether this country is going to find the revenues to pay for the wars and a strong national defense and support education and health care for all so that economic mobility remains a defining characteristic of American life. That more then anything else defines my politics. A viably financed government that supports its basic roles.
As for Sarah Palin, I have decided that she is ditzy, not a characteristic that is exactly presidential, but neither one that is defining of intelligence. I hope she runs so that my SNL Tina Fey opportunities for comedy are increased.
As for the Democrat's chances in 2012, I am beginning to consider the possibility that they should consider backing down from pushing back on abortion restraints. While this flies in the face of my libertarian leanings, it gets in the way of having a debate on basic economic issues with a substantial slice of the Republican base that has more in common with Democratic economic policies. The Economist found a survey that only 24% of 18-29 year olds support abortion rights under any circumstance. Of course they followed that with an article about the decline in crime rates and cited the statistically supported sequencing that the increase in the availability of abortion in the 1970's reduced the number of unwanted children born to teenagers & unwed poor mothers who are precisely the part of the population that has a higher % of going to prison. Social policy is very complicated politically and we need to simplify the political debate so there can be a clear mandate for providing the government the revenue it needs to pay its bills while supporting education (I must be clear, not everyone needs to go to college, but they need skills) and health care for all.
I also spent a fair bit of time on the Sarah Palin articles. In verbal discussions with my friend RedStateVT, he stated that he is upset that the "left" thinks that she is dumb when she has been a governor and went on to cite past statements that Bush II and Reagan were dumb. I don't really think characterizations about intelligence are respectful to the need for political debate. In fact, they get in the way of sound debate over whether this country is going to find the revenues to pay for the wars and a strong national defense and support education and health care for all so that economic mobility remains a defining characteristic of American life. That more then anything else defines my politics. A viably financed government that supports its basic roles.
As for Sarah Palin, I have decided that she is ditzy, not a characteristic that is exactly presidential, but neither one that is defining of intelligence. I hope she runs so that my SNL Tina Fey opportunities for comedy are increased.
As for the Democrat's chances in 2012, I am beginning to consider the possibility that they should consider backing down from pushing back on abortion restraints. While this flies in the face of my libertarian leanings, it gets in the way of having a debate on basic economic issues with a substantial slice of the Republican base that has more in common with Democratic economic policies. The Economist found a survey that only 24% of 18-29 year olds support abortion rights under any circumstance. Of course they followed that with an article about the decline in crime rates and cited the statistically supported sequencing that the increase in the availability of abortion in the 1970's reduced the number of unwanted children born to teenagers & unwed poor mothers who are precisely the part of the population that has a higher % of going to prison. Social policy is very complicated politically and we need to simplify the political debate so there can be a clear mandate for providing the government the revenue it needs to pay its bills while supporting education (I must be clear, not everyone needs to go to college, but they need skills) and health care for all.
Thursday, June 2, 2011
What Good Are Complicated Passwords?
If the Chinese can hack into Google and steal your password no matter how complicated it is, I might as well just go back to my simple set of numbers that are easy to remember. Everyone in for 1234?
Wednesday, June 1, 2011
How America Medicine is Destroying Itself
This article in The New Republic is well worth reading, unfortunately you need to be a subscriber to read the entire article so it might make more sense to buy the June 9, 2011 edition which is on news stands currently.
http://www.tnr.com/article/economy/magazine/88631/american-medicine-health-care-costs
The authors are 80 something years old and have practiced or observed the medical architecture of the country for a long time. They have perspective and details that I only have had in my gut.
They point out that an enormous amount of our medical expenditures go to extending life for a limited amount of time: a matter of months to a year or two. They focus on the medical cultural goal of extending the average life expectancy of Americans. But the easy success for this has already been gained and what are the expenses involved (or the quality of life) for adding a few months or a year or two to a terminal person whose body is failing.
I quote them: "Can we conceptualize something better? Can we imagine a medicine that is more affordable?....Can we imagine a system that is less ambitious but also more humane - that better handles the inevitable downward spiral of old age?" "The answer is yes, but it will require....a conversion experience on the part of physicians, researchers, industry and our nation as a whole."
This article outlines this conversion plan that would focus medical expenditures on (1) Public Health promotion and disease prevention; (2) Primary medical and emergency Care; and (lastly) high tech care for the chronically ill. "The highest priority for $ would be children, the next highest productive adults, and the lowest would be those over 80". Right now these priorities are reversed with the result that the extension in longevity has caused the cost of an additional year of life to rise from $46,800 in the 1970's to $145,000 in the 1990's. These are averages and of course the actual number for a significant number of elderly is much higher. My mother's end of life care was $100,000 a month and added 4 worthless months of unconscious life in an intensive care unit in 1999. $400,000 of unnecessary expense because the Dr. would not counsel my father that there was no hope when it was obvious to me that there was no hope for a meaningful recovery. A life without a mind is not a worthwhile life.
It is so unfortunate that the Republicans seized on the one aspect of the Affordable Health Care Act of 2010 that would have started to address this. Counseling of end of life care became Death Panels when that might have been the single most effective cost control. All "medical care is personal", but as the Republicans say, an educated consumer is better then a blind accepting consumer that any additional time is better. But even educated consumers cannot have a Dr. Assisted End of Life except in Oregon because the Republicans will not allow it to pass in the other states. The issue between the parties is not the concept of education but how you create that education for the whole population while not making good health care affordable by income class alone. The real benefit for society would be healthy children and adults who understand extra pounds and smoking shorten life spans. Then we can afford to pay for good cancer and HIV care for productive people and reasonable procedures/pharmaceuticals for the elderly.
I have probably not done the article justice and urge you to find a way to read it yourself.
http://www.tnr.com/article/economy/magazine/88631/american-medicine-health-care-costs
The authors are 80 something years old and have practiced or observed the medical architecture of the country for a long time. They have perspective and details that I only have had in my gut.
They point out that an enormous amount of our medical expenditures go to extending life for a limited amount of time: a matter of months to a year or two. They focus on the medical cultural goal of extending the average life expectancy of Americans. But the easy success for this has already been gained and what are the expenses involved (or the quality of life) for adding a few months or a year or two to a terminal person whose body is failing.
I quote them: "Can we conceptualize something better? Can we imagine a medicine that is more affordable?....Can we imagine a system that is less ambitious but also more humane - that better handles the inevitable downward spiral of old age?" "The answer is yes, but it will require....a conversion experience on the part of physicians, researchers, industry and our nation as a whole."
This article outlines this conversion plan that would focus medical expenditures on (1) Public Health promotion and disease prevention; (2) Primary medical and emergency Care; and (lastly) high tech care for the chronically ill. "The highest priority for $ would be children, the next highest productive adults, and the lowest would be those over 80". Right now these priorities are reversed with the result that the extension in longevity has caused the cost of an additional year of life to rise from $46,800 in the 1970's to $145,000 in the 1990's. These are averages and of course the actual number for a significant number of elderly is much higher. My mother's end of life care was $100,000 a month and added 4 worthless months of unconscious life in an intensive care unit in 1999. $400,000 of unnecessary expense because the Dr. would not counsel my father that there was no hope when it was obvious to me that there was no hope for a meaningful recovery. A life without a mind is not a worthwhile life.
It is so unfortunate that the Republicans seized on the one aspect of the Affordable Health Care Act of 2010 that would have started to address this. Counseling of end of life care became Death Panels when that might have been the single most effective cost control. All "medical care is personal", but as the Republicans say, an educated consumer is better then a blind accepting consumer that any additional time is better. But even educated consumers cannot have a Dr. Assisted End of Life except in Oregon because the Republicans will not allow it to pass in the other states. The issue between the parties is not the concept of education but how you create that education for the whole population while not making good health care affordable by income class alone. The real benefit for society would be healthy children and adults who understand extra pounds and smoking shorten life spans. Then we can afford to pay for good cancer and HIV care for productive people and reasonable procedures/pharmaceuticals for the elderly.
I have probably not done the article justice and urge you to find a way to read it yourself.
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