American Elephants


The Total Absurdity of ObamaCare, Explained. by The Elephant's Child

Another comment on changing times: In 2012 and in 2013, roughly $34 billion went into venture capital deals in the United States. The cities were what you would expect, Silicon Valley, Boston, Austin, Seattle, New York and Los Angeles. Innovation is fast and varied.

One sector that is seeing a rapid drop in investment is in healthcare and devices. ObamaCare has a big medical device tax buried in it, and money has pulled back from taking a risk in healthcare while ObamaCare gets sorted out. Once again, it is all about incentives. When you tax something, you will get less of it. What Obama is taxing is not “devices” — but innovation.

What this appears to relate to is a vague idea that insurance companies are greedy rip-offs, doctors get paid way too much and hospitals charge outrageous amounts for an aspirin — which seems to be the impetus behind ObamaCare. That is, a bunch of people, with no qualifications for the job, have devised regulations — the impact of which they do not understand — for a business, the workings of which they do not understand in the slightest.

Next time you are in a doctor’s office or in the hospital, assuming it’s routine, look around and count up the “devices,” from the stethoscope around the doctor’s neck, to the examination table, the sink, the thermometer and blood pressure monitor to the $1 million CT scanner or the $4 million radiation machine. Take a serious look at one of the Stryker hospital beds.

Consider the absurdity of developing a new government-run health care plan — because health care costs too much, (a health care plan that actually increases cost and decreases care), that increases the cost of everything used by the medical profession with a tax on each item — and then expects costs to go down in the future because of medical innovation.

Hospitals across the country are engaged in cutting costs wherever they can. This will have the inevitable effect of gradually diminishing quality and care. The incentives for the medical establishment become how to get adequately paid for their services. The incentive for the government is reducing costs in a system in which they have guaranteed a rising spiral of expense.



Gibson Guitar Company Fights Back With Mockery. by The Elephant's Child

The Gibson guitar company in Nashville Tennessee was raided by the Feds in February 2012, with a SWAT-team who shut the whole company down, allegedly for possessing illegally imported wood. I wrote about it at the time because it was so absurd. A federal agency flexing its muscles — because they could. The agency experienced no restraint from the executive, who made it clear that war on the right was the mode of the day.

They confiscated stocks of tonewoods from the factory on dubious grounds, and Gibson eventually settled for a $300,000 fine, a “community service” payment of $50,000 to the National Fish and Wildlife Foundation (?), not to mention lost business from being shut down, and legal fees. Do read the article on the settlement to see just how absurd the federal actions were. Gangster government indeed.

This is another reason why the economy has not recovered. Business does not know what the federal government might do next. What new regulations? Every agency seems to have their own SWAT team. Who is next, and on what grounds? Uncertainty.

The Feds have returned their wood, the case is resolved, and Gibson is celebrating the end of the investigation with the introduction of a striking new guitar: The Government Series II Les Paul.

From its solid mahogany body with modern weight relief for enhance resonance and playing comfort, to its carved maple top, the Government Series II Les Paul follows the tradition of the great Les Paul Standards—but also makes a superb statement with its unique appointments. A distinctive vintage-gloss Government Tan finish, complemented by black-chrome hardware and black plastics and trim, is topped by a pickguard that’s hot-stamped in gold with the Government Series graphic—a bald eagle hoisting a Gibson guitar neck. Each Government Series II Les Paul also includes a genuine piece of Gibson USA history in its solid rosewood fingerboard, which is made from wood returned to Gibson by the US government after the resolution.

I love the “distinctive vintage-gloss Government Tan finish.” A nice drab bureaucratic style. (click to enlarge)

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The Facts About The Minimum Wage That Obama Forgot to Mention by The Elephant's Child

At The Federalist, 11 Facts About the Minimum Wage That President Obama Forgot to Mention.” Excellent summary.

Most interesting: A full-time minimum wage worker in 2014 will make 24 percent more than the federal poverty limit. A single individual who earns the current federal minimum wage and works full-time will earn $14,500 in a year (50 weeks per  year x 40 hours pe week x $7.25 per hour. The federal poverty limit for 2014 for a one-person household is $11,670.

One third of minimum wage workers either dropped out of or never attended high school. Educational attainment is clearly a significant factor in determining a worker’s hourly wage. According to BLS, over 36 percent of minimum wage earners — 568,000 our of more than 1.5 million — lack a high school diploma. Do read the whole thing.

In The Wall Street Journal: “The Employee of the Month Has a Battery: Minimum wage hikes are accelerating the trend toward automation — and fewer workers — in services.” (pay wall)

Ten years ago it might have seemed far-fetched that a customer could order food in a restaurant without speaking to anyone. But it’s a reality now as service employers across the country—including Chili’s, Chevys Fresh Mex and California Pizza Kitchen—introduce tabletop ordering devices. A few clicks on an iPad-like device and the food is on its way.

Technology has made these changes possible, but that’s not what’s driving their implementation. Steady federal and state increases to the minimum wage have forced employers in retail and service industries to rely on technology as the government makes entry-level labor more expensive. Now Democrats are pushing to raise the federal minimum wage to $10.10 from $7.25 at the behest of President Obama, who argued in his State of the Union address that the increase would “help families.” Lawmakers should consider the technology trend a warning.

When you stop and think about it, mechanization has been creeping along without our really noticing. First there were vending machines for candy and pop, eliminating a clerk, and then vending machines started offering all sorts of different things — ice machines, coin exchanges, maps and books. Cash machines, gas stations ( I can remember when gas stations had helpful young men who washed  your windshield, checked the oil, filled your gas tank and checked your tires). Now grocery stores and Home Depot stores have automated check out lines.

Tablet-based ordering is coming into vogue at U.S. restaurants: Chefs polled by the National Restaurant Association recently ranked computerized menus as the top tech trend for 2014. Airports in locations like New York City and Minneapolis now feature “restaurants” that are waitstaff-free. In 2011, McDonald’s announced it was replacing human cashiers with touch-screen alternatives at more than 7,000 European locations.

>Customers may find the new technology convenient, but the thousands of young adults who used to earn money filling these roles won’t. The data suggest employers are acting from economic necessity rather than spite. Profit margins in restaurants range from 3%-6%. They are even more modest at grocery stores, at 1%-2%.

Where this is all going, I don’t know. People are increasingly more reluctant  to have interaction with other real people. They are absorbed in their smart phones. Now we have Google glass. Surgery is increasingly done by robot. But that is done to increase precision. Jeff Bezos is talking about delivering your packages from Amazon to your doorstep by drones.

Companies must choose between increasing their prices or reducing costs to maintain limited profit margins.  It’s a Brave New World. Prepare for the burger-flipping robots from Momentum Machines that replace three full-time kitchen staff, make no wage demands and stage no walkouts.



Why Hasn’t The Economy Recovered? Here Are Answers. by The Elephant's Child

When a business wants to hire someone, they would prefer someone who has done the same job previously and successfully. Someone who wants to step up to your  company. They would be charming, have an excellent resume, excellent academic record with good grades in an applicable field, and a stunning list of notable accomplishments.  Good luck with that.

There is a cost to a bad hiring decision. According to a study by the Society for Human Resources Management, it could cost up to five times a bad hire’s annual salary. The higher the person’s position and the longer they remain in that position, the more it will cost to replace him or her. Recruiters say that if you make a mistake in hiring and recognize the mistake within six months, the cost of replacing that employee is still going to cost two and one-half times the person’s salary.

For every two students that U.S. colleges graduate with STEM degrees (Science, Technology, Engineering and Math) only one is hired into a STEM job. Half of all graduates are not hired into STEM positions. Thirty-two percent say it is because IT jobs are unavailable, 53 percent say they found better job opportunities outside of IT occupations. These responses suggest that the supply is larger than the demand for them in industry. The annual inflow of guestworkers amounts to one-third to one-half the number of all new IT job holders, in spite of stagnant or declining wages.

The immigration debate is complicated and polarizing, but the implications of the data for enacting high-skill guestworker policy are clear: Immigration policies that facilitate large flows of guestworkers will supply labor at wages that are too low to induce significant increases in supply from the domestic workforce.

Only about of a third of the IT workforce has an IT-related degree. 36 percent of IT workers do not hold a college degree at all. Only 24 percent of IT workers have a four-year computer science or math degree. But then, Bill Gates was famously a college dropout. I searched for “hiring tests for high tech jobs,” and the variety of tests — aptitude, skill, social, drugs, personality — and some companies have devised their own tests of intelligence and thinking to weed out the unsuitable.

Meantime, the government is stepping in to promote “fairness.” The Equal Employment Opportunity Commission has said it will crack down on employers who use the criminal histories of job applicants to discriminate against them illegally. The EEOC’s new guidance requires companies to establish procedures to show they are not using criminal records to discriminate by race or national origin. There’s some leeway for criminal convictions that are “job-related for the position in question and consistent with business necessity.”

President Obama on Friday formally announced a deal with some of the nation’s largest companies to institute new hiring practices that do not “disadvantage” those who have been jobless for several months or longer.

Companies such as AT&T, Apple, Wal-Mart, Ford and others have agreed to the president’s initiative which will also extend to the federal government and its interview process.

They just need that chance, somebody who will look past that stretch of unemployment, put in context of the fact that we went through the worst financial and economic crisis in our lifetime which created a group of folks who were unemployed longer than normal,” Mr. Obama. “All they need is a fair shot … giving up on the unemployed will create a drag on our economy we cannot tolerate.

The agreement means that companies will not favor one prospective employee over another based solely on the length of time each has been unemployed. On Tuesday Mr. Obama used executive power to hike the minimum wage from $7.25 to $10.10 for all federal contractors.

President Obama’s closest adviser and liaison with corporate America is Valerie Jarrett, although she has no knowledge or experience to help her understand the concerns of those with whom she is dealing.  Financial sector insiders and corporate executives reportedly stopped having meetings with the White House because any such meetings were pointless. They found that Ms. Jarrett was interested only in pushing the administration’s agenda, rather than engaging in any kind of dialogue about how to foster better economic  growth. But the White House does not want input, nor do they want to work with business. They want obedience.

If you want to know why the recession has dragged on so long, why the economy has not come roaring back, the answers are all to be found here. Everything is best fixed by a government policy emanating from the White House. They know better, and don’t have to listen to the people.




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