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31 January 2010

Tax Cuts and Recovery

Robert Reich writes on Alternet.com today that instead of corporate tax cuts fiscal stimulus through public spending programs, particularly with transfers to State governments and Locales, is the way to maintain the momentum of the American recovery from its recession. He says that is one of the lessons we should have learned from John Maynard Keynes.

Something that has changed since Keynes is the importance of corporate profits to the wealth of consumers. This is a result of the growth of retirement and 401K plans. Therefore, reducing large corporations' taxes will affect the spending behavior of consumers in our economy and create increased demand. In our consumer economy, this is perhaps even more determinative of recovery than government spending.

29 January 2010

Guantanamo Vs. Drones

Why are we concerned about the detention of suspected international terrorists at Guantanamo when we kill a hundred-plus civilians in Pakistan with drones in pursuit of each supposed Al Qaeda operative? Which is a greater violation of human rights?

28 January 2010

Let Obama Know

President Obama asked to let him know about better ideas for reducing premiums on health insurance. The best way to do that will be to reduce the cost of health care: tort reform, elimination of doctor investments in diagnostic and imaging enterprises, replacement of our nation's infatuation with technology as the solution to medical problems with reliance on the dedicated professionalism of our health care providers.

26 January 2010

Congresswoman Lowey's Misdirected Health Insurance Reform Measures

I must say that it aggravates me that none of the measures that Congresswoman Nita Lowey is working to implement will fairly reduce the cost of healthcare in our country.

1) Price fixing and monopolies are only names for rational behavior by insurance companies in highly state-government regulated environments. The benefits of regulation, as we have learned from the financial crisis, are worth paying for.

2) Reducing higher premiums for women will require raising premiums for men. I don't object, but it doesn't lower costs overall.

3) Insurance company profit and overhead requirements are determined by shareholder expectations relative to capital investment and not by the number of insured. Therefore, requiring that 85% of premiums be used to pay for insured medical expenses will increase the size of premiums by grossing them up to reduce the portion of those premiums that is needed to meet shareholder expectations.

4) Can out-of-pocket expenses for healthcare (co-pays?) be reduced without increasing premiums?

The most important reasons for the high cost of healthcare in the U.S. are (a) our infatuation with high-technology diagnostics and solutions for our illnesses, (b) the financial interests of many of our caregivers in the latest high capital-cost specialized imaging, diagnostics and treatment suppliers, and (c) our reliance on tort lawyers to control the performance of our caregivers rather than on dedicated professionalism.

We ought to realize that the American style of life is very expensive--living long unhealthy lives is not cheap. Our Congress and Administration must lead us out of this morass and not cater to the vocal constituencies who re-elect them (pursuant to campaigns financed by the commercial beneficiaries of this unhealthy lifestyle) because they ignore the tough choices we as a nation should be making in order to enjoy the technological and cultural advances that history has allowed us to make.

22 January 2010

Private Soft Power

As illustrated by the dead-end Washington’s attempt to reform health care has reached, it will be foolhardy to rely on the government to launch and manage a soft power solution in Iran. That is an enterprise that the private sector (and not only in the U.S.) ought to undertake.

Individuals, corporations and foundations have adequate financial means and superior technical capability to accomplish all four of the tasks that Messrs. Glassman and Doran outline in their OpEd in the January 21, 2010 Wall Street Journal. A special purpose organization can be formed, like the Red Cross, to collect funds, hire professional skills, acquire and distribute equipment and materials, mount boycotts, enrich communications, counter propaganda, and otherwise undermine the Iranian regime’s tools of oppression and its freedom to pursue uncivil policies on the world stage.

Humanitarian causes have inspired the creation of effective private cross-border action associations in the past—disaster relief, racial and gender equality, worker rights, to name a few. Governments are not the best vehicle for supporting other nations’ citizens’ political rights. Our government has proven itself to be ill-suited to providing for our own welfare. It is the responsibility of private citizens to seize the initiative and adopt the measures that will provide the support that citizens of another nation like Iran need in order to gain control of their society and instill civility in its international behavior.

01 January 2010

Doubting the Jobless Rate

The “Ahead of the Tape” column in the December 31, 2009, Wall Street Journal highlights a perennial mystery of the Department of Labor’s unemployment rate statistics. As I interpret Mark Gongloff’s explanation, the rate is calculated as the fraction of the country’s active work force that is drawing regular or extended and emergency unemployment benefits. When a worker stops drawing benefits, he is dropped from both the numerator and denominator of that fraction. The result is a reduction in the nation’s unemployment rate without adding to the number of the nation’s wage-earners.

In most cases, when the economy recovers, workers who have been dropped from the active work force compete again for jobs. As they return to work, their number is added to the active work force, increasing the denominator of the unemployment rate fraction while leaving its numerator untouched. The result is also to reduce the nation’s unemployment rate although not as remarkably (i.e. with a lower delta) as if the previous unemployment rate had not already been reduced when the worker’s benefits had run out.

The mystery is that for some reason (politically motivated statistical manipulation?) unemployment is measured so as to moderate the desperate appearance of economic slowdowns, even though the effect is to obfuscate the speed of economic recoveries. Is this just a case of saving the public from its own tendency to panic? Or is this Department of Labor statistical methodology kept in place for the benefit incumbent federal administrations regardless of political party?

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