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 longer the recession goes on, the more people are catching on to incredible fictions we’ve been told for five years. The political class and its allies said that they could make all things better if they created more debt, spent more money, printed trillions in phony money, made credit as cheap as possible, and rescued failing institutions.
How was this to happen, really? The theories were pretty far-flung, but in the end, it came down to the claim that if the public would sacrifice to save the well-connected elites, the elites would repay the favor by making economic recovery happen.
All these years later, the grind continues and grows more intense. The middle class is ramping down its living standards year by year, growing ever more financially and personally insecure. The evidence is all around us.
The other day, I became distracted by an online quiz (I should know better), the subject of which was to discover whether you are a nerd. It came to the question of what you do when you get out of college. It was multiple choice.
One of the answers was not “take a high-paying job in a field for which you have been trained.” The only options (from memory) were move back with Mom and Dad, take a minimum wage job, re-enroll in school to avoid student loans, or go on a long trip at your parents’ expense.
The structure of the question was not ironic. It was not seeking to make a point. It was just realistic. This is what new graduates face. It has gotten worse each year since the recession began and “ended.”
The unemployment data, as bad as they are, completely disguise the far-grimmer reality underneath. Despite living amidst an amazing techno-revolution that should be spreading new levels of prosperity far and wide, people are suffering terribly.
The new jobs people do find tend to pay less than the ones before. And new people coming on the market are taking positions that have no relationship to their life plans.
As Money News (source) summarizes: “Only 56% of Americans laid off from January 2009-December 2011 had found jobs by the start of this year, the Labor Department said Friday. More than half of them took jobs with lower pay. One-third took pay cuts of 20% or more.”
And check out the results of a new study from Pew (source). It combines several sources of data to decisively declare a lost decade:
- Median income data for the middle class shows a drop over 10 years from $72,956 in 2001 to $69,487 in 2010, the first time in the postwar years when income ended a 10-year period lower than when it started
- Median wealth, which means assets minus debt, fell 28% in the same time frame.
- A broad poll shows that 84% of people say it is more difficult than 10 years ago just to maintain the previous standard of living.
The bleak summary: “Since 2000, the middle class has shrunk in size, fallen backward in income and wealth, and shed some — but by no means all — of its characteristic faith in the future.”
Meanwhile, Sentier Research, headed by former U.S. Census Officials, has come out with its own awful report of living standards. The Washington Post (source) summarizes: “Median income is 7.2% below its December 2007 level and 8.1% below where it stood in January 2000, when it was $55,470, according to the report.”
Catch that? Income has fallen more since the “end” of recession than it did during the recession. Has there ever been a more-devastating indictment of official data? It turns out that in general, life is better in recession than in recovery. In fact, recovery is the new name for recession.
If you can stand more, another report from a partisan group called Generation Opportunity, which uses reputable polling firms and techniques, paints a grim picture for young people (source):
- “89% of young people ages 18-29 say the current state of the economy is impacting their day-to-day lives (Accepted multiple responses) (Randomized):
- 51% reduced their entertainment budget
- 43% reduced their grocery/food budget
- 43% cut back on gifts for friends and family
- 40% skipped a vacation
- 38% driven less
- 36% taken active steps to reduce home energy costs
- 32% tried to find an additional job
- 27% sold personal items or property (cars, electronic appliances, or other possessions)
- 26% changed their living situation (moved in with family, taken extra roommates, downgraded apartment or home)
- 17% skipped a wedding, family reunion, or other significant social event.”
Now, someone might respond by pulling out their violins in mock sympathy for what people call these “first-world problems.” Even given all this, this generation with its smartphones and endless opportunities for entertainment indulgence is the luckiest in human history. But keep in mind that what matters here is not the actual living standards, but the direction of change.
The human mind is profoundly affected by that essential question: Is life getting better or worse? The answer for most of American history, save war and depression, has been very clear: It’s getting better. We are headed toward the light. Generation by generation. The trend now is clearly the opposite: We are headed away from light toward dark. The upcoming generation of workers is sure of it.
There are profound cultural consequences of this shift. Pessimism produces a drearier life. Nonessentials are cut back as people stop giving less to the local church and symphony just to pay the bills. The pool of wealth shrinks and people become more grasping and desperate to get theirs. The sense that we were lied to for years — you mean government can’t actually make recovery happen as if by magic? — contributes to growing cynicism.
To the extent that anyone in the mainstream media is seriously discussing the lost decade and the grim prospects ahead, it is usually in the political context. Will this help or hurt the GOP or the Democrats? This is a concern that speaks to the great American pastime of watching the political horse race, but it has little or nothing to do with fixing the problem.
There are politics and there is reality, and they are increasingly disconnected from each other. The policies that drive us to this grim fate were imposed by both parties and combine with political cruft dating back decades and even more than a century. Neither party has a serious interest in repealing the problem, or even talking much about it.
What changes would make a difference? There are too many to list, and it is impossible to prioritize. Here are a few ideas. Reduce employment costs, but by untying health care from employment, as John Goodman has called for. The dollar needs to be bound to gold to break the moral hazard of the financial system and reign in government expansion. People need to be free to innovate new currencies. The regulatory state that gums up the market process needs to be gutted.
That would be a beginning. The fastest-growing economies in the world today are the ones pulling themselves out of poverty through free enterprise, deregulation, and open innovation. The stagnating economies like the U.S. are going the opposite way, and the results are on display.
Folks, it’s brutal out there and getting worse, and it will continue this way until we see that the present path is not working. Clarification: It is working for the powerful, but not for the rest of us.
But to be hopeless and victimized is not an option for any civilized person. Economic corrections and hard times can provide the best opportunity for self-education, the forming of networks and communities, and the building of liberty-loving social infrastructure. This is the idea behind the Laissez Faire Club: not to give in or give up, but to show determination even in hard times.