The Affordable Care Act creates a new health insurance marketplace (the exchange). But because of the great uncertainty about what buyers will enter the market and who will buy what product, the law creates three vehicles to reduce insurance company risk.
Politicians and bureaucrats are notorious for manufacturing euphemisms -- clever but deceptive substitutes for what they really mean but don’t want to admit. That’s how the phrase “revenue enhancement” entered the vocabulary. Some of our courageous friends in government couldn’t bring themselves to say “tax hike.”
It’s easy to be negative about the U.S. economy these days. Find a glint of silver, and folks come running to point out all of the dark clouds looming about. This, of course, is what we got last week when the monthly jobs report was released from the U.S. Department of Labor (DOL). Folks pooh-poohed the number of jobs and whining that they’re not enough or that it’s less than a bunch of economists thought that it might be. But you know what? Stuff ’em.
Facts are easy. You can check facts. What supporters of the Affordable Care Act are doing, on the other hand, transcends factual bungling. It’s far more advanced: a warping of reality so debauched it looks like something out of a tale by H.P. Lovecraft.
The east coast and parts of the southern U.S. were to varying degrees paralyzed by blizzards a few weeks ago. The snow as expected rendered the roads treacherous, and in anticipation of slick streets, shoppers flocked to the grocery stores in advance.The rush into grocery stores, and its aftermath, offers worthwhile lessons in economics.First up, […]
The highest form of charity, argued the 12th-century Jewish philosopher Maimonides, is when the help given enables the receiver to become self-sufficient.But our systems of state charity — aka welfare — have too frequently had the opposite effect: They have actually created dependency. It is time to rethink the way we help people.I’m going to […]
Last year was quite the year for Bitcoin. We’ve seen exponential growth in Bitcoin’s exchange rate and extensive coverage in the media. Another phenomenon we have witnessed is the proliferation of alternative cryptocurrencies, five of which we’ve provided below.What all of these cryptocurrencies have in common is that they rely on a decentralized network to […]
President Obama crowed in his State of the Union speech about the economy, even mentioning “a rebounding housing market.” Maybe he was referring to friends in high places, like the seller of Penthouse One in New York, which just closed for $50.9 million, all cash. Millions of mere-mortal homeowners likely wanted to throw something at […]
The nonpartisan Congressional Budget Office is acting in a bipartisan way to cover up the biggest single threat to the bipartisan political alliance that is stripping America of its wealth: the United States Congress.There is no question that the following policy is bipartisan. Democrats and Republicans in Congress are completely agreed that the following information […]
Recent difficulties with implementing the Affordable Care Act have increased opposition to the program. A majority of Americans now oppose it. Problems with the HealthCare.gov website are in all likelihood temporary. However, there are serious long-term problems, particularly considering long-term finance and labor supply issues. Given the mounting difficulties with and growing concerns about the […]
The faces of the Detroit bankruptcy are the thousands of pensioners whose promised benefits are suddenly part of the restructure negotiation. When Motown filed for Chapter 9 last July, the city had $11.5 billion in unsecured liabilities. The vast majority of this was pension and health care benefits owed to retired city employees.The images of […]
“Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.”As the inequality gap grows, there is an ideological battle unfolding in the West.On the one hand, there are those who think government can fix things. It must do more, tax more, […]
On Feb. 7 the United States will once again reach its statutory debt limit, meaning it cannot legally borrow any more money. Since the obvious option of cutting spending to match the amount of revenue that the government collects is off the table for some inexplicable reason, Congress will have to pass a new, higher […]
The New York Times published an interminable article on health care recently. Plenty of facts — how scrupulous are these journalists! — but the article displayed absolutely no comprehension of the basics of cause and effect. I was left wondering about the whole point.The article details how the health care system rewards specialists to an […]
The Largest Company in History:“The United States Corporation of Government (USCOG)”I follow global social and commercial networks, looking for entrepreneurial opportunities.Innovation surges when industry and government models change. Buggy whips. Landline phones. Railroads. The Soviet Union. Apartheid South Africa. All marked social and commercial innovation, both bad and good.We are witnessing a new form of […]
We’d like to give the banks in Australia some credit. They’ve finally gone and done it. They have caught up with 1960s technology. They’ve figured out how to use PIN numbers.How to only use PIN numbers, that is. They’re considering scrapping signatures on credit cards to cut down on fraud. Apparently, having to verify your […]
We put in a good-citizen call to the SEC the other day.“There’s a massive scheme to manipulate stock prices,” we told the friendly agent.“I have to tell you that your call is being monitored so that we can better serve the public,” he replied.“Oh, don’t worry about that. The NSA is tapping our call anyway.”“Are […]
Dr. William C. Padgett is a retired optometrist who has been trying to bring an elderly care facility to Beaufort County, North Carolina, for over a decade.“Our senior citizens,” he laments, “are finding that it is difficult and in many cases impossible to find an appropriate long-term care facility locally.” Though he has received several […]
If you don’t have the angst out of your system concerning Wall Street banksters, Government Sachs, and the Affordable Care Act, settle in with Matt Taibbi’s Griftopia to make your blood boil one more time.Investors should be reminded of 2008 as they shrug their shoulders and put their money back in the stock market. The […]
What do 8 of the 10 wealthiest people in the U.S. have in common?Aside from being able to fly in private jets, the common thread is that each of them has made their fortune thanks to a start-up.Let me explain…From tech titans like Bill Gates and Larry Ellison (founders of Microsoft and Oracle, respectively), to […]
“Inequality is the defining challenge of our time,” according to President Obama. It’s certainly the topic of the day for Paul Krugman, Joe Stiglitz and a whole raft of liberal pundits.But have you noticed that hardly anyone else is talking about it? When is the last time you heard a shoeshine person or a taxi […]
In December of last year, I left my career to travel the world for one year.My plan was to visit as many countries as possible on my Star Alliance Around-the-World ticket in the first nine months, then, for the remaining three months, return back to the country that most caught my eye and my curiosity.Nine […]
Economic history is primed to repeat in the nastiest of ways unless the government stops distorting the price of something we use every day.Every product, good, or service has a price, which is essential to rational decision-making. We use prices every day as vital data that guide us. Without true prices, prices not distorted by […]
A new survey from Harvard University found a large majority of young Americans do not believe the law will save them money, do not believe it will improve their health, and do not intend to sign up for insurance through the new exchanges.
Uh-oh!The new pope, Francis from the Pampas, has just warned us to beware the “tyranny” of capitalism.Each man worships his own gods. Some worship at the altar of Jesus of Nazareth. Some at the altar of the Almighty Dollar. The capitalists don’t bad-mouth Francis’ god. You’d think he would cut them the same slack.Bad-mouthing Catholicism […]
The market has selected different things as money throughout history. Some of these items have served as money in isolated places for specific periods of time — for instance, cigarettes in prisoner-of-war camps. Cigarettes continue to be a currency in prisons if allowed, but if not, according to Wikipedia, “postage stamps have become a more […]
A president stands disgraced. Congress is scattering. Bureaucrats are baffled. Pundits are reaching. Industry is scared. Politicians are scrambling to do something, anything, to make it better. One political party is in meltdown and the other loving every minute of it, hoping to ride the calamity to electoral gains.The so-called Patient Protection and Affordable Care […]
The enormous tragedy for young people today is that so many are sealed off by law from any involvement in the commercial marketplace… until it is too late. This means that they know not the heartbeat of civilization itself. This terrible condition persists until their young adulthood.
It is their luxury — for the first time in world history! — to sit at desks for a full decade after they are old enough to be working. Instead of skills and experience, they mostly learn little how to be bored for extended periods.
When that time is up, they are thrown out into a world they can’t possibly navigate or even comprehend and told: “Get a job, pay your debts, and be a success.”
Great system? Not so great.
In fact, this isn’t working. This whole trend has turned out precisely the opposite of what the dreamers imagined in the interwar period. People were once thrilled that kids would be liberated from the demands of work so they could be in school and better themselves. The literature and philosophy they would learn!
Their whole presumption got out of hand. In the 1930s, the government banned kids from the workplace to help with the problem of persistent unemployment. Then the government boosted the numbers attending college after World War II. Further, the government created vast numbers of colleges and subsidized others and, finally, gave loans to everyone to partake in this machinery.
It turns out, however, that school might be the worst possible teacher. The workplace is probably better. The old system in which kids worked from an early age alongside adults better prepares them for the practical arts of life itself. It is not the military but commerce that permits us to be all that we can be, engaging reality in ways that draw on our highest ideals and potentials as human beings.
As a result of the bad system governments set up, kids get their first taste of real life at the age of 22 and are then shocked to discover that nobody wants to reward them for having played by the rules all those years. They are expected to actually contribute something to this world, about which they know nothing. When it doesn’t work out as expected, they blame the markets, capitalism, commerce, and the 1% and otherwise languish in a sense of being victimized. More and more, they just drop out.
How to address the problem? Let me suggest a small way that parents and grandparents can help raise the consciousnesses of teens toward commerce and the market economy. Instead of giving a gift for the holidays or giving them money they can spend, a better path is to open an online trading account in their name with you as the overall administrator, populating it with some seed money. Let the young person become his or her own broker. This one action could be a turning point.
You might start with $1,000. The account can go to anyone 12 or older or so. It’s a big attention-getting gift. The rules attached to the gift are simple. If the teen loses the money, there is no obligation to pay it back. This is a gift. But if he or she makes money, it is his or hers to keep and reinvest.
Most likely, the teen won’t have any idea what he or she has been given. That gives you an opportunity to explain how the financial markets work. They will be amazed to discover that they can be part-owners in their favorite companies. You can explain how these institutions developed and what they are for.
This alone will make quite the impression. Crucially, to be an owner of stocks changes a person’s perception of their own interest. Instead of joining the culture of hate, the owner might start to cheer on the success of business and enterprise.
If they own McDonald’s stock, eating a Big Mac takes on all-new significance.
[Editor's Note: A fantastic book that embodies this idea is Justin Ford's Seeds of Wealth. It is beautifully written, accurate, and great for teaching kids how to save, invest and build real wealth. It could be the beginning of a new life or a change that could launch them into a productive career. It's an excellent start.
Click here to get more details on the book and claim a 50% discount.]
They will become curious about what makes a firm succeed or fail. They will be interested to discover just how tricky it is to interpret price signals. They will discover what it means to find bargains and avoid overpriced stocks. They’ll get interested in what the buy and sell signals are.
One teen I know first attempted to buy stock that had a history of going up, but as soon as he bought it, it turned south. Learning his lesson, he started to buy stock that had a history of going down, except that after purchasing that one it went down further. Crucial lesson: The future is unknown, and entrepreneurial judgment is an inescapable fact of life.
This tutorial period alone will open up a whole new world. And unlike knowledge obtained solely from books, the mind is more focused when we are talking about real resources and the opportunity to actually do something with them.
Maybe they will start using their smartphones for market research, rather than just texting and Facebooking.
These days, too, there are so many research materials online. Every chart is a click away. Online accounts provide access to vast data. But what do these charts mean? The teen will find that opinions on particular stocks are all over the place and that no one in this world knows anything for sure. Yet you still have to decide, still need to commit. And the teen will also find that there are times when it is best to sit out and stay in safe places without committing.
There is a low probability that the teen will make money this way, and that’s OK. He or she will learn from this experience just how hard money is to come by. Maybe that doesn’t sound like a revelation, but it truly is for many young people today who have never worked, never experienced that relationship between labor and wages, and never had to make economizing decisions.
It is good, too, not to manage their accounts in every detail. They should be permitted to make some judgments in a real sense. You can suggest that the teen put half in relatively safe places, just to be somewhat protected from the downside. But with the other half, they can take some risks. Penny stocks are a blast. And they can buy into their favorite companies, like Facebook or Nike, or a restaurant chain or two — stocks that tap directly into their experiences as consumers. Maybe gold stocks are a good idea — and here is an opening to talk about the relationship between precious metals and hard economic times.
Instead of just being consumers, they will begin to think of themselves as being on the producers’ side. They will begin to appreciate just what an awesome responsibility it is to be the CEO of a company who’s trying to deal with a huge consumer base on one hand and a massive number of stock owners who can bail or buy at the slightest whim on the other.
To become part of this is a mind-opening experience. One thing a teen will discover quickly: This is not the easy path to riches. In fact, chances are the teen will lose money within the first weeks and then become risk averse, wanting to move entirely into cash. This is not a good path, however, because, as you can explain, you lose all potential for upside. If they hold a stock that has been creamed but then recovers, they will see with their own eyes the advantages that come from outsmarting the mob, being contrarian, and thinking more critically and outside the box.
What if, after a year or two of account management, the teen ends up losing most of the money? Well, there is a lesson there. Maybe as a society we should show a bit more respect for successful investors and capitalists? What if it is a struggle to keep the account in the black and it never really takes off? No problem. But if the account balance goes up, there will be clear reasons for it. Some stocks and funds did well, and those are balanced out against those that did badly. Just discovering the reasons is an education in itself.
Consider the gift of education you have given. Parents spend such amounts all the time on private lessons, trips, tutorials, clothes, etc. This is an expenditure that deals in some measure with the great problem that faces the new generation, their near total isolation from the real world that they will soon have to engage in fierce competition.
This one gift could be a turning point in their lives, lifting them out from the rabble that drifts by year after year without giving them a clue about what is going on in the world. It might be the beginning of a brilliant capitalist career and the foundation for serious success in life. It’s a risk, but so is everything with payoffs. They will learn that lesson too.
To manage real money provides a kind of education you can’t get sitting at a desk and listening to someone else’s view of what you should know. To manage real resources is the beginning of a great process of discovering what makes the world work.