American Elephants


Why is Why is the Left So Suddenly Rapturous About Income Inequality? by The Elephant's Child

Inequality is currently a big deal because 1). Barack Obama wants to use it in his campaign for keeping the Senate in the fall elections 2). the lapdog media is obediently cooperating in emphasizing Obama’s theme of the moment and 3). A new book by French economist Thomas Piketty which is focused on inequality, wealth redistribution, capitalist wealth, and the horrors of capitalism. Karl Marx is revisited for the 21st century.

From Cato’s Michael Tanner:

Capital in the Twenty-First Century provides a serious critique of inequality in modern capitalist economies and warns that market economies “are potentially threatening to democratic societies and to the values of social justice on which they are based.” To remedy this, he argues for a globally imposed wealth tax and a U.S. tax rate of 80 percent on incomes over $500,000 per year.

The Left has been rapturous. In the last two months, Piketty’s book has been cited more than a half-dozen times by the New York Times, something that has happened with no other book in recent memory. Paul Krugman hails it as “the most important economics book of the year.

From Daniel Suchman in the Wall Street Journal:

Thomas Piketty likes capitalism because it efficiently allocates resources. But he does not like how it allocates income. There is, he thinks, a moral illegitimacy to virtually any accumulation of wealth, and it is a matter of justice that such inequality be eradicated in our economy. The way to do this is to eliminate high incomes and to reduce existing wealth through taxation. …

Soaring pay for corporate “supermanagers” has been the largest source of increased inequality, according to Mr. Piketty, and these executives can only have attained their rewards through luck or flaws in corporate governance. It requires only an occasional glance at this newspaper to confirm that this can be the case. But the author believes that no CEO could ever justify his or her pay based on performance. He doesn’t say whether any occupation—athletes? physicians? economics professors who sell zero-marginal-cost e-books for $21.99 a copy?—is entitled to higher earnings because he does not wish to “indulge in constructing a moral hierarchy of wealth.”…

He assumes that the economy is static and zero-sum; if the income of one population group increases, another one must necessarily have been impoverished. He views equality of outcome as the ultimate end and solely for its own sake. Alternative objectives—such as maximizing the overall wealth of society or increasing economic liberty or seeking the greatest possible equality of opportunity or even, as in the philosophy of John Rawls, ensuring that the welfare of the least well-off is maximized—are scarcely mentioned.

Michael Tanner had the most obvious answer to the problem of the inequality of the lower classes, or the less fortunate: “Instead of attacking capital and capitalism, why not expand the number of people who participate in the benefits of having capital? In other words, let’s make more capitalists.”

It should not be surprising then that “the Left is unremittingly hostile to exactly those policies that would give workers more access to capital.” They want to abolish 401(k) plans, replace them with social insurance, limit tax breaks for wealthier participants, and expand (the broke) Social Security instead.



Another Stunning Example of Political Opportunism. by The Elephant's Child

 

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The U.S. State Department has cleared the Keystone XL Pipeline twice, so far, but now they are going to have to pass it again, after an extension of the public comment period which will, coincidentally, last until after the election. Part of the pipeline’s planned path has been changed to suit protesters. It is not a coincidence that the news of the ‘decision’ was released on the convergence of Good Friday and Passover. News that they’d rather cover up is always released late on a Friday. The cover story is that a further delay in the five-year saga of the Keystone couldn’t be avoided because of ‘unresolved legal issues’ over land seizures in Nebraska. Of course.

Let’s see what is involved:

TransCanada has provided a detailed job breakdown for the pipeline. They say it will create 13,000 union construction jobs, 7,000 jobs for Americans in manufacturing. It is estimated that there are up to 250,000 jobs over the life of the pipeline. That boom in employment would have spin-off jobs in the local economies that support each segment of the pipeline.

The Canadians are mightily annoyed. The United States imports eight to nine million barrels of oil every day. A stable, secure supply of oil from Canada makes better sense. Obama has orated about “our dependence on”foreign oil” often enough when it suits what he wants his audience to think.

Terry O’Sullivan, president of the Laborers’ International Union of North America said “Once again, the administration is making a political calculation instead of doing what is right for the country. It’s clear the administration needs to grow a set of antlers, or perhaps take a lesson from Popeye and eat some spinach.”

Pushing the Keystone XL through would send an important message to Vladimir Putin that America is willing to develop our energy. And allowing the export of liquified natural gas would put a thorn in the side of Putin’s ability to blackmail Europe because of their need for natural gas. But we don’t actually want to annoy Mr. Putin, do we?

On the other side you have:

Leftist billionaire Tom Steyer has promised to spend $50 million of his own money and raise another $50 million for the Democrats in this election if they support the cause of global warming. He really “hates” the Keystone XL pipeline. Steyer has made much of his money at Farallon Capital by investing in fossil fuel producers.

Steyer now claims that stopping Keystone will somehow prevent Canada’s oil sands from being developed. That’s hogwash. The oil is now being carried by rail. In 2008, there were less than 10,000 carloads of crude oil moved by rail. Last year it was more than 400,000 carloads. Rail transportation is far less safe than a pipeline, and the network of pipelines across the country is already extensive, and safe.

Steyer will profit from any delay of the Keystone because he is, or was until recently, a major investor in Kinder Morgan which is building a competitor to the Keystone pipeline. He is, today, a bitter opponent of fossil fuels, especially coal. Banning coal-fired power plants will boost the value of his solar projects. He owes his fortune in large part to the fact that he has been one of the world’s largest financiers of coal projects in Australia and Asia.  He has led recent campaigns with climate nut Bill McKibben to encourage university endowments to divest coal equities. John Hinderaker at Powerline has assembled a remarkable list of Steyer interests. The Hypocrisy is breathtaking.

The most notable takeaway is that, for Barack Obama political money for the upcoming election trumps jobs for unemployed American construction workers, unemployed American manufacturing workers, and for the taxpayer money going to import all that “foreign oil. Everything, for Barack Obama, is about politics. All that talk about jobs, jobs, jobs is just talk.



Growing Inequality Isn’t What Matters. What Matters is Good Jobs for the Jobless. by The Elephant's Child

In an attempt to turn the American conversation away from the botched rollout of ObamaCare and the horror stories from new enrollees, President Obama has begun emphasizing income inequality. Envy is always a popular ploy among Democrats that plays well at the polls. Ron Bailey summed it up well at Reason:

Are the rich getting richer? Yes. Are the poor getting poorer? No. Over the past 35 years most Americans got richer. Has income inequality increased in the United States? Yes. Does it matter? President Barack Obama declared in a December speech at the Center for American Progress that “a dangerous and growing inequality and lack of upward mobility” is “the defining challenge of our time.” Is that true? No.

The financial arm of the federal government uses the census and statistics from the IRS to divide the American people into quintiles. In December 2013, the Congressional Budget Office (CBO) examined the after-tax income trends for each quintile of American households since 1979, including not just wages but also benefits and transfer payments. The bottom fifth’s after-tax income in constant dollars rose by 49 percent. The incomes of the middle three quintiles increased by 37 percent, 36 percent and 45 percent respectively.

Gary Burtless, an economist at the Brookings Institution examined CBO data from 1979 to 2010 (the last year for which data are available), and divided the top quintile into four groups: those in the 90th percentile and below, those in the 91st through 95th percentiles and the top 1 percent. During those years, incomes for those fortunate households increased by 54 percent, 67 percent, 79 percent and 202 percent. The rich got richer too, but they got richer faster. Is this when “the one percent” became an ‘important’  buzz word?

What is missing in these statistics is the fact that the people in these quintiles are not the same people over time. Forbes magazine’s annual listings of the richest Americans and world’s richest are manna for the Occupy crowd and the faculty lounge. University professors have always found it enraging that corporate CEOs make huge salaries with enormous benefit packages when they, with their PhDs, are clearly smarter. Envy. But where else do you find so many who disapprove of capitalism?

Economist Alan Reynolds points out that “those who obsess over income shares should welcome stock market crashes and deep recessions because  such calamities invariably reduce ‘inequality.’ Of course, the same recessions also increase poverty  and unemployment.” If you follow Forbes listings, you will notice that some drop off the list and new names appear. But these are not normal times we are living through, as we have an administration determined to fix inequality, but consistently doing the wrong thing about it.

In his December speech, the president suggested that rising inequality is limiting income mobility, leaving poor Americans increasingly stuck and struggling on the lower rungs. The data do not support this claim.

We have had an astounding period of growth that has produced enormous wealth because of internet technology. I don’t know that we have ever before had a technological innovation that meant that every household and every office had to have at least one computer and probably one for each and every  person. Not only that, but the industry is so busy creating and updating and innovating that everyone has to replace everything constantly, and they do so without much complaint, and there are no signs that it ever diminish.

The great defining economic challenge of our time is not putting an end to inequality. The challenge is the persistent joblessness and sluggish economic growth perpetuated by Obama administration policies. A growing economy  will produce more economic mobility. Trying to make the poor stop being poor by redistributing the wealth of the rich has never worked, though often tried.

Intellectuals fretting about income disparity are far too focused on the wealthy, while ignoring the elephant in the room. The strongest statistical correlate of inequality in the United States is the rise of single-parent families during the past 5o years. In 1960, more than 76% of African-Americans and nearly 97% of white were born to married couples. Today the percentage is 30% for blacks and 70% for whites.

This trend, accompanied by high divorce rates means that roughly 25% of all American children now live in single-parent homes, twice the percentage in Europe. Roughly a third of American children live apart from their fathers. It matters. Two parents work better than one.  Even rich kids don’t do as well in single parent families.



A Little Advice for New Graduates, Old Graduates, the Unemployed and the Rest of Us. by The Elephant's Child

From Mike Rowe, the Dirty Jobs guy, a little advice about work:

Stop looking for the “right career,” and start looking for a job. Forget about what you like. Focus on what’s available. Get yourself hired. Show up early. Stay late. Volunteer for the scut work. Become indispensable. You can always quit later, and be no worse off than you are today. But don’t waste another year looking for a career that doesn’t exist. And most of all, stop worrying about your happiness. Happiness does not come from a job. It comes from knowing what you truly value, and behaving in a way that’s consistent with those beliefs.



Why is Business Not Hiring? The Gibson Guitar Raid Revisited. by The Elephant's Child

Les Paul Is Remembered In New York City
It was August of 2011, when armed federal agents raided Gibson Guitar’s Nashville headquarters, seizing wood, instruments and creating a national outcry over the high-profile  persecution. Agents were supposedly working from a tip that Gibson had broken laws in India and Madagascar, two countries that supply Gibson with ebony and other scarce woods for its guitar frets.

Both India and Madagascar say that Gibson has done nothing wrong, and has complied with all their laws. Federal agents seized more then $1 million of Gibson’s property. The Department of Justice alleged that Gibson imported wood for its guitar frets in violation of the Lacey Act — a federal law that makes it a crime to import flora or fauna in violation of a foreign nation’s laws.

August 7, 2012: the Department of Justice announced yesterday that the Gibson Guitar Corporation had accepted a deferred prosecution agreement regarding the Department of Justice’s allegation that Gibson violated the Lacey Act.  As a result, the Department of Justice will not charge Gibson with a crime (except for maybe a tax offense, left open) for “illegally importing ebony from Madagascar and ebony and rosewood from India” through a German intermediary from June 2008 through September 2009.”  Gibson, in return, must pay a $300,000 fine, make a community service payment of $50,000 to the National Fish and Wildlife Foundation” bulk up its internal procedures, and generally grovel whenever the government asks it to do anything related to this matter.

Heritage points out several features of the agreement worth mentioning:

First: The government acknowledges in the agreement that “certain questions and inconsistencies now exist regarding the tariff classification of ebony and rosewood fingerboard blanks pursuant to the Indian government’s Foreign Trade Policy.” In other words, the government acknowledges that the relevant law—not just our law, but a foreign nation’s law—is unclear. Ordinarily, that conclusion should lead the government to drop any charge that Gibson violated the law, especially the law of a foreign nation.

Second: The government’s case is no better regarding Madagascar. The agreement cites (1) “Madagascar Interministerial Order 16.030/2006,” and (2) some other equally well-known “laws”—all of which may have been written in a foreign language. The agreement alleges that Gibson received a translation (from whom is not stated) of the first whatever-it-is saying that “‘fingerboards’ are considered ‘finished’ under Madagascar law” and therefore may be exported. But, according to the government, “trip organizers”—who, for all we know, could have been Gibson’s trip companions “Greenpeace and other non-profit environmental groups”; the agreement does not say—informed Gibson that “under the organizers’ interpretation of [Madagascar’s] 2006 Interministerial Order, the harvest of ebony was illegal and that instrument part ‘blanks’ would be considered ‘unfinished’ and, therefore, considered illegal to export.” Put aside the obvious problems with government’s reliance on the opinion by the trip’s “organizers” of a foreign order written in a foreign tongue—Gibson was given conflicting views of the law. That should have ended the matter entirely. Remember: Gibson imported wood, not heroin.

Third: The press release is full of all of the chest-puffing that we are accustomed to see the federal government display: The government has enforced the law, prosecuted the wicked, protected the environment, cured the common cold, etc. But the government has made a federal case out of “fretboards” or “fingerboards.” …

Fourth: Gibson must pay the National Fish and Wildlife Foundation $50,000 for its (or its designee’s) use for the environment. Really? Fines paid to the government go into the U.S. Treasury and belong to the public; the NFWF is a private organization. In essence, the taxpayers are subsidizing the NFWF.

Why does it matter that Congress is out of town?  Why, because there are currently two bills before Congress that would have the result of repealing criminal provisions of the Lacey Act.

On the part of Gibson, they made a dollars-and-cents decision. An imperial administration can pretty much beat any poor sucker who gets in their crosshairs into submission.

Reading further on the case it suggests that the “tip” came from the Environmental Investigation Agency, a private group of activists who have appointed themselves to investigate and report “environmental crimes.”

Corporate CEOs pay attention to events like the Gibson Guitar Corporation raids. (There were actually two). This showed the Justice Department of the federal government going after a private corporation with a SWAT team, armed agents, who seized property and shut the Gibson factories down. Although Gibson was able to show that it was in full compliance with the law, they were nevertheless put out of business for a period of time, forced to pay a fine of $300,000, forfeit claims to about $262,000 worth of wood seized by federal agents and contribute $50,000 to a private foundation to promote conservation of “protected tree species.” Improper, illegal, federal government arrogant overreach because they could.

Everybody wonders why so many corporations are sitting on big chunks of cash and not hiring and expanding. They are streamlining, divesting whole departments, to run more efficiently with fewer people. I would submit that the Obama administration’s treatment of Gibson Guitar Corporation is a prime example of why companies large and small are not taking on more risk; why there are more lobbyists than ever.

Hiring a new worker is a risk. It takes months before they are fully pulling their weight. Expanding is a risk, the economy is not healthy. Introducing a new product is a risk. The Obama administration has made it clear that they don’t particularly like the private sector, they don’t appreciate capitalism, they feel free to sic federal agencies (IRS) (EPA)(BLM) on those who disagree, or give them trouble, or stand in their way. The Obama administration had no compunction about taking over the auto industry— and made a mess of it — which they still celebrate as a great accomplishment. You don’t take big risks when the climate is so uncertain, and that uncertainty can be laid directly in the lap of the Obama administration.



President Obama’s “Pivot” to The Minimum Wage by The Elephant's Child

The United States is sending ground troops to Poland, the Polish defense minister says after meeting with Secretary of Defense Chuck Hagel. But not to worry, this is not a major escalation. Supposedly they are sending a company, about 150 soldiers, for exercises with the Polish military for a short stay, or something like that.

The Ukrainians asked for military aid, we denied them weapons, but sent MREs and military style socks, and reportedly helmets as well. They were trucked into Ukraine as it was thought a military cargo plane might be too provocative.

President Putin, on the other hand has something like 40,000 troops massed on the Ukrainian border, but says they are just there as a precaution since there is so much unrest in the Ukraine. The officers above the rank of Major in the Ukrainian military all came up through the Russian military, and they aren’t going to fight Russians.

The Russian President denies that the militants in the Ukraine have anything to do with Russia, and he is quite helpless to stop them. Although the pro-Russian activists seem to have had military training, their weapons and equipment are all Russian, and their use of tear gas and stun grenades is inconsistent with a spontaneous local militia. Last Thursday Mr. Putin referred to Ukraine as part of “New Russia.” Even when Mr. Putin openly declares his goal, Mr. Obama prefers to ignore it. The Wall Street Journal said:

The larger problem is that Mr. Obama can’t seem to admit that his assumptions about the world are being repudiated by the week. He came to office believing his own campaign rhetoric that the U.S. was unpopular mainly because of President George W. Bush. He would end these misunderstandings through diplomatic engagement, especially with our adversaries, who would respond in kind to our good will and moral example. Nowhere in the world has that happened.

Diplomacy in Geneva has come up with about what one would expect. After seven hours of negotiations they agreed that “all parties including separatists and their Russian backer, would stop violent and provocative acts, and all illegal groups would be disarmed. A joint statement made no presence of what the U.S. has said are 40,000 Russian troops massed on Ukraine’s eastern and southern borders. Kerry said that Russia is “absolutely prepared to begin to respond with respect to troops,” provided the agreement is observed.

The U.S. has sent 12 F-16 fighters and 200 support personnel to Poland. NATO’s secretary-general Anders Fogh Rasmussen said that the alliance would fly more air patrols over the Baltic region and allied ships would deploy to the Baltic.

Polish Defense Minister Tomasz Siemoniak said the United States, having announced a “pivot” to Asia, needs to “re–pivot” to Europe, and European countries that have cut back on defense spending need to reverse the trend.

The idea until recently was that there were no more threats in Europe and no need for a U.S. presence in Europe any more. Events show that what is needed is a re-pivot, and that Europe was safe and secure because America was in Europe.

According to the New York TimesMr. Obama has concluded that he will never have a constructive relationship with Mr. Putin. As a result he will spend his final two and a half years in office trying to minimize the disruption Mr. Putin can cause, and otherwise turn to other foreign policy area where progress remains possible.

The White House is preparing to nominate John Fl Tefft, a career diplomat who previously served as ambassador to Ukraine , Georgia and Lithuania.  Administration officials were leery of sending Mr. Tefft because of concern that his experience in former Soviet republics that have flouted Moscow’s influence would irritate Russia.

Obama is less concerned with irritating Russia now, and is reportedly pivoting to the George F. Kennan strategy of containment.

The more hawkish faction in the State and Defense Departments has grown increasingly frustrated, privately worrying that Mr. Obama has come across as weak and unintentionally sent the message that he has written off Crimea after Russia’s annexation. They have pressed for faster and more expansive sanctions, only to wait while memos sit in the White House without action. Mr. Obama has not even imposed sanctions on a list of Russian human rights violators waiting for approval since last winter.

Mr. Obama says that Ukraine is not a major concern for Americans. He has concentrated his public schedule around “important” issues like job training and the minimum wage. Since Mr. Putin is not interested in a partnership, Mr. Obama is not interested in the Ukraine or Russia. But then, he’s not much interested in foreign policy at all—though it’s the major part of his job description.

David P. Goldman, writing as “Spengler” says Americans are playing Monopoly, Russians are playing chess. Ukraine is a basket case with a per capita income a tenth of that of the European Community. They are deeply in debt to the Russians and dependent on Russian energy. Putin will let the West take charge of the Ukrainian disaster until it festers, and then pick and choose what he wants. And what he wants is a “new Russia.”



“Economics Is Organized Common Sense” by The Elephant's Child

Economists Craig Newmark and AEI’s Mark Perry dug up Nobel economist Thomas Sargent’s shortest U.S. graduation speech ever. A simple list of twelve valuable economic lessons. The speech was delivered at his undergraduate alma mater University of California at Berkeley, May 16, 2007.

“I remember how happy I felt when I graduated from Berkeley many years ago. But I thought the graduation speeches were long. I will economize on words.”

“Economics is organized common sense. Here is a short list of valuable lessons that our beautiful subject teaches.”

1. Many things that are desirable are not feasible.

2. Individuals and communities face trade-offs.

3. Other people have more information about their abilities, their efforts, and their preferences than you do.

4. Everyone responds to incentives, including people you want to help. That is why social safety nets don’t always end up working as intended.

5. There are tradeoffs between equality and efficiency.

6. In an equilibrium of a game or an economy, people are satisfied with their choices. That is why it is difficult for well-meaning outsiders to change things for better or worse.

7. In the future, you too will respond to incentives. That is why there are some promises that you’d like to make but can’t. No one will believe those promises because they know that later it will not be in your interest to deliver. The lesson here is this: before you make a promise, think about whether you will want to keep it if and when your circumstances change. This is how you earn a reputation.

8. Governments and voters respond to incentives too. That is why governments sometimes default on loans and other promises that they have made.

9. It is feasible for one generation to shift costs to subsequent ones. That is what national government debts and the U.S. social security system do (but not the social security system of Singapore).

10. When a government spends, its citizens eventually pay, either today or tomorrow, either through explicit taxes or implicit ones like inflation.

11. Most people want other people to pay for public goods and government transfers (especially transfers to themselves).

12. Because market prices aggregate traders’ information, it is difficult to forecast stock prices and interest rates and exchange rates.

That is a remarkably valuable short list. Pin it up beside the mirror in your bathroom so you can read it every morning until you know it by heart.



The Debate Is Not Over Until The People Say So! by The Elephant's Child

The debate over ObamaCare, the president declared, is over, and he won! ObamaCare is here to stay, and the debate is over. He claimed a grand total of 8 million subscribers, diagnosed Republicans as fear-mongering, spiteful, obstinate, petulant and obstructive., and added that he “would much prefer a constructive conversation with the Republicans about how we get some stuff done.”  Which is a bit of an odd position to take since for the most part, ObamaCare hasn’t even really taken effect yet.

A new Fox News poll says that sixty-one percent of respondents in the poll released Thursday said Obama lies at least some of the time on important issues. Only 15 percent believe the president is completely truthful. Only 31 percent of Democrats said the president is always truthful. It seemed a useful poll in this context.

For the first time in the history of our country, one political party has forced the American people to buy a product devised by that party for their own benefit, that the American people have shown no indication that they wanted. The Democrats defied public opinion, rammed ObamaCare into law using the Cornhusker Kickback, Gator Aid, the Louisiana Purchase and all sorts of unseemly gimmicks to force unwilling Democrats to vote to pass it.

It funnels unprecedented amounts of power and money to Washington D.C. and out of the pockets of everyday Americans. It incentivises employers to refrain from hiring people and to cut hours for millions of their employees. It bans millions of people’s health insurance policies because they don’t conform to the rules designed in the backrooms of Congress. Obama crows over insurance policies, but doctors are so disgusted with the program that they are leaving medicine in droves. Since July 4, 2009, according to Real Clear Politics, 458 polls have been taken on ObamaCare. Twenty have shown Americans liking it, five have shown ties, and 433 (95%) have shown them disliking it. The five most recent polls have shown Americans opposing ObamaCare by double digits. And it hasn’t really started yet!

The president proclaims the debate is over and ObamaCare is here to stay.

Charles Blahous, the director of spending and budget initiative at the Mercatus Center at George Mason University, and a public trustee for Social Security and Medicare, said :

It is quite possible that the ACA is shaping up as the greatest act of fiscal irresponsibility ever committed by federal legislators. Nothing immediately comes to mind as comparable to it. Certainly no tax legislation is, because tax rates rise and fall frequently, such that one Congress’s tax cut can be (and often is) undone by a later tax increase. The same is true for legislation affecting appropriated spending programs. But the ACA is a commitment to permanently subsidize comprehensive health insurance for millions who could not otherwise afford it, which the federal government has no viable plan to finance. Moreover, experience shows that it is very difficult to scale back such spending once large numbers of Americans have been made dependent on it.

This is an expansion of spending commitments that is comparable to enacting Social Security, Medicare or Medicaid. Our biggest financial problems today come from Medicare, Medicaid and Social Security costs rising well beyond original projections. Nobody planned on the Baby Boom generation. The Congressional  Budget Office now estimates that the gross costs of the ACA’s coverage expansion will be $92 billion in FY2015, or about 0.5% of our total GDP of roughly $18 trillion. This far exceeds  the initial costs associated with the entirety of Social Security and Medicaid and is comparable to the startup costs for all original parts of Medicare combined. Only five years after enactment, the ACA will absorb more of our total economic output than Social Security did fully sixteen years after it was enacted. And government programs always, always,  cost more than the estimates.

The ACA was enacted when legislators knew, or should have known, that they were living in a fiscal environment in which such extravagance was unaffordable. Deficits and Debt are far higher today than when other major entitlement programs were created. Baby Boomers are just beginning to turn 65, and their numbers swell exponentially until 2029. The sheer irresponsibility is breathtaking.

The ACA’s “CLASS” long-term care provisions were originally projected to generate $37 billion in net premiums through 2015. CLASS was suspended due to its long-term financial unworkability. That money is not coming in.

The employer/individual mandate penalties were expected to have brought in $12 billion through 2015, $101 billion over the first ten years. Obama has delayed enforcement repeatedly, and they haven’t brought in much of anything. Some ACA advocates are suggesting ditching those mandates altogether, though they were essential to the financing scheme.

The ACA was supposed to be financed in part by cuts to Medicare Advantage, the extremely popular program for seniors. This is typical of government programs. Establish the program, get everybody signed up, then start taking funding out of it to support something else. That was supposed to be $31 billion through FY2015, $128 billion over the first ten years. The White House recently announced that planned cuts will not go into effect after all —probably not till after the election.

We still have the “cost-saving” decisions of the Independent Payment Advisory Board— the 15 unelected bureaucrats who will decide what Medicare will pay for, and what it won’t. The ObamaCare people have always pointed out that most of the costs of health care come in the final years of seniors’ lives, and old people just don’t need such expensive treatment when they have so little time left.  And they are sure that they can reduce costs by just paying providers less—which means good luck finding a doctor.

The great goal of getting those who can’t afford insurance signed up for Medicaid is confronted by recent studies showing that people who do without insurance actually do better than those who are insured by Medicaid.

Charles Blahouse concludes:

When new enrollment figures were released last week, the national discussion focused on whether the ACA is fulfilling its coverage expansion goals. The largely unwritten and more important story, however, is that the ACA is rapidly becoming a colossal fiscal disaster as enrollment proceeds heedless of the concurrent collapse of the law’s financing structure.



A Conservative Guide to Liberal Thought: by The Elephant's Child

The common conservative response to a liberal pronouncement is “You’ve got to be kidding!” Can they possibly believe what they are saying? The real divisions between liberals and conservatives are deep and wide, but Andrew Klavan takes a shot at explaining what it is that liberals believe, and how liberals think. It may be helpful, but —It’s not pretty!



When Democrat Policies Fail, They Switch to Race-Baiting. by The Elephant's Child

It’s not just the EEOC. Obama’s new credit watchdog agency The Consumer Financial Protection Bureau (CFPB), is criminalizing debt collections by arguing they have a “disparate impact” on black Americans.

CFPB chief Robert Cordray says he’s coming up with new rules to crack down on creditors and third-party debt collectors who “hound” black borrowers more frequently than white ones.  “We will not tolerate companies harassing consumers in the debt collection market,” Cordray warned. He promised black church leaders that he would seek “economic justice” for blacks who have fallen into debt and come under the thumb of bill collectors and other “financial predators..”

The agency solicited more than 30,000 complaints that allegedly prove that creditors are abusing debtors. But they just took borrowers’ word that they don’t owe what they owe. A recent federal study shows more than 96% of such complaints are “frivolous.”

The Federal Trade Commission’s 2013 study found that only 3.2% of consumer debt is legitimately disputed. In the meantime, the agency is helping deadbeats to get out of paying their debts by posting samples of letter they can send to creditors to tell them to bug off.

Redistributing wealth by letting debtors and deadbeats off the hook for their debts is not helpful for the economy, for blacks, or for the national polity.

The biracial Barack Obama presented himself in 2008 as the presidential candidate who would show us the way to national unity. No more red America and no blue America. He was going to fix it. Seemed like a good idea at the time, but like everything else, he didn’t mean it. Now Democratic control of the Senate is threatened, and it’s time to revert to the tried and true tactic of race-baiting.  Only politicians act as if the whole world is centered on race, class and sex. Class envy and racial demagoguery.

When Democrat policies fall, Democrats fall back on race as the issue. They have such a miserable history with race, but it does get annoying when they try to claim that Republicans —Republicans! are segregationists. Excuse me. Despite Democratic myth-making, Lincoln was a Republican. The slave holders in the South were Democrats, the KKK was a Democratic organization. The Dixiecrats were Democrats. Bull Connor was a Democrat. The Republicans were abolitionists. The Republican Party was founded as a party of abolition, and has remained so.



Attempting to Regulate Our Way Out of Recession by The Elephant's Child

Capitol Building

President Obama has liked to emphasize the depth and general awfulness of what he calls “the Great Recession”— a term that pleases him because it associates his recession with Franklin Roosevelt’s Great Depression. Roosevelt cheerfully tried to tackle the Great Depression with constant experimentation. Obama has confronted his recession with regulation without end, in the unfortunate delusion that more control would fix things.

Washington set a new record in 2013 by issuing final rules taking up 26,417 pages in the Federal Register. The rules came from various agencies, but Obama remains at the helm and leadership matters. By sheer numbers, President Obama stands at the pinnacle for numbers of rules. The federal Register contained 3,659 “final” rules (which mean you have to obey them), and 2,594 proposed rules on their way to join the others.

Neither politicians nor the media regard this effort to control as anything out of the ordinary, nor important. Yet if you wonder why the recovery has been so far below average —there it is. The bulk of this year’s regulation comes from ObamaCare—a 2,700 page law that has metastasized into a 7 foot tall stack of documents, and Dodd-Frank. Things don’t get done because nobody has the authority to make them happen.

I wrote about the pressing need to protect and update our electrical grid, vital and essential to all life in America, but there is no active plan to rebuild the grid, because the government cannot make the decisions needed to approve it. The average length of environmental review for highway projects, according to a study by the Regional Plan Association, is over eight years. Eight years!

The results and costs of the legal system are not just monetary, everything is too complicated. There are rules in the workplace, rights in the classroom, and government is bogged down in bureaucracy. Responsible people do not feel free to make sensible decisions. We are pushed around by lawsuits, and unable to move for fear of punishment for barely understood regulation.

The point of regulation is to try to make things run smoothly, make sure things work in a crowded society, but rules have consequences, and not always those intended. We now have a court system where even referendums voted on by the public have been taken over by the court system in which judges now feel free to decide these matters. The objections to “judicial activism” are richly deserved, and now even judges are mistrusted.

Consider the case of a fictional Pasquale’s Pizza chain. The typical restaurant has their pizza menu on a large lighted sign behind the counter where you place your order. The federal government has decided that nutritional values for each ingredient must be listed on the menu. Impossible on the customary lighted sign. What to do? How much will it cost? The profit margin is already slim. Pizza chains have dozens of ingredients, and changing featured recipes to entice customers. ObamaCare requires a restaurant to provide health insurance for full-time workers. The cost of policies has gone up sharply. Cut back all employees to 30 hours? Female employees and male employees must work the same number of hours for the same wage.

The requirement for ethanol in gasoline has raised the cost of pizza ingredients. It has also raised the cost of transporting supplies. Requiring a portion of power to come from wind and solar has raised the cost of electricity. Fuel-efficiency regulations have raised the cost of trucking. And all that is before regulations and taxes at the local, state and national levels.

You end up with schools that make fools of themselves over zero-tolerance regulations that do nothing to prevent violence, school lunches that kids won’t eat. You have armed federal agents raiding the Gibson Guitar Company and confiscating their guitars and their materials ostensibly because the wood used for guitar frets violated and environmental law. The wood was legally imported, meeting all the standards of the country of origin, but the costs to Gibson were huge. You not only cannot fight city hall, but you must surrender even though you are in the right, just to avoid further financial damage. There is case after case of people subjected to an armed SWAT raid, accused of violating a regulation they’ve never heard of, and ruined financially.

What business is going to take a big risk, invest a lot of money in a new venture, expanding, hiring new workers in such a climate? There is risk in everything we do. Trying to legislate risk out of our lives just leaves us with rules that keep people hunkered down, trying to avoid bureaucratic attention. In this climate, politicians cannot even get the big things done, let alone attempting to undo the web of regulation that is crippling society.



Other Than That, ObamaCare is Doing Fine… by The Elephant's Child

When the Democrats started digging old plans out of dusty drawers, they decided, since they controlled both houses of Congress and the presidency, to go for government sponsored health care; they were absolutely sure that the American people were going to love it. Big mistake.

The cost of American health care had been climbing significantly, and Democrats were sure that they could significantly cut the costs of medicine by making the medical profession more efficient and insisting that they learn from the best practices of industry stars. Another mistake.

Democrats believed that the uninsured were a huge problem because people with no insurance were flooding emergency rooms and driving up costs. Turned out that most of those who used emergency rooms had insurance, they just couldn’t make appointments with their doctor for immediate help. Turned out that a large percentage of the uninsured did not have insurance because they could not afford it, but because they didn’t want to pay for insurance. They were healthy and unconcerned. Oops!

Democrats believed that if they added some nice benefits that people had never had before on their insurance like therapeutic massage, birth control and pediatric dentistry, the government insurance would be even more popular. They would just spread the costs of the new benefits across the board so the expense would not be noticed. They didn’t have an insurance actuary figure out the costs of including those benefits on a policy for 55 and 60 year-old folks who had no need for birth control or pediatric dentistry.

The CBO has issued a report that appears to show that ObamaCare will cost less and cover more people than expected. But their projections seldom turn out. There are just too many variables. The latest report says that ObamaCare will cost $104 billion less over the next 10 years than it thought just two months ago. The numbers rest on the CBO belief that premiums will be flat next year, but the industry has already warned of double-digit rate increases— a sharp rise that will drive costs up far beyond the CBO’s estimates.

Out of the blue, the Census Bureau has changed how it counts health insurance, just at the moment when ObamaCare is roiling the insurance markets. The effect will muddy comparisons between pre-ObamaCare and post-ObamaCare numbers. A lot of things we would like to know, like how many people gained or lost insurance under ObamaCare? Did government crowd out individual insurance? It will apparently take several years before we have answers to those questions.

The one thing that is increasing dramatically is unhappiness among physicians. Nine out of ten doctors discourage others from entering the profession. 300 doctors commit suicide every year. Depression among doctors is not new, but the level of unhappiness is on the rise. Being a doctor has become a miserable and humiliating undertaking, and many doctors feel that America has declared war on physicians and doctors and patients are the losers.

Many doctors just want out. More are running for Congress. Medical students opt for high-paying specialties so they can retire as soon as  possible. MBA plans for physicians are flourishing,  they promise doctors a way into management. The website called the Drop-Out-Club hooks doctors up with jobs at hedge funds and venture capital firms.

Some, including President Obama, seem to believe that doctors are paid way too much and if the government needs to save costs, they can just pay doctors less. This is the mindset that reduced Medicaid to such a point that those who go without health care may do better than Medicaid patients. Same goes for Medicare and the other government controlled health care systems.

More doctors refuse to accept health insurance. Some have gone into concierge medicine, where for an annual fee, the doctor is at your service for the year. The federal government is hoping to go after that escape from ObamaCare, and they are still intending to end Medicare Advantage plans.

Just processing insurance forms costs $58 for each patient encounter, according to Dr. Stephen Schimpff, an internist and CEO of the University of Maryland Medical Center.  Physicians have had to increase the number of patients they see. The end result is that the average face-to-face clinic visit lasts about 12 minutes, in which the doctor probably spends most of the time interacting with his computer.

Under ObamaCare the incentives are all wrong. The government adds ill-considered benefits to insurance policies in the hope of getting people signed up. This makes the insurance too costly for most people. The push from the government will be a constant effort to cut costs. Hospitals will push for doctors to see more patients in less time, so they can be adequately reimbursed. Doctors will be encouraged to pay less attention to the Hippocratic Oath and more effort to try to get adequately paid, or to get out of the profession—which will encourage the best and brightest to aim for other careers. Watch for a push for increased immigration of physicians from third world countries. Other than that…

 




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