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Dec 21, 2009

Exchanging Gifts Cooperatively

The short story The Gift of the Magi by O. Henry (William Sydney Porter) is an ironic, painful, and sweet story of a poor couple who want to give a fine Christmas gift to each other, out of true love. Their gift giving is impractical because it is selfless.

Here is my contribution to the genre, far out at the other end of the subject. (smile)

John:  Let's shop together for something that you would really enjoy. What would you like for Christmas?
Mary:  I would like a nice, snuggly, terry-cloth robe.
So, sweetie, what would you like for Christmas?

John:  [thinks a moment] I would like a nice, snuggly, terry-cloth robe, in your size.
Mary:  [thinks, gasps] Wait a minute. That is like me buying the robe for myself!

John:  What's the problem? I will be giving you what you really want, and you will be giving me what I really want. Sweetie?

Dec 14, 2009

Healthcare Price Controls

Medical Economics 101
12/08/09 - MDOD by 911Doc

911Doc practices Emergency Medicine. He writes about what happens to doctors and patients when a bureaucracy sets prices and rewards. The emergency department became a jungle. He now works for lower pay in an environment where he can be a doctor under reasonable rules.

[edited excerpt] What happens when the government imposes price controls? You can find out for yourself by reading "Basic Economics" by Thomas Sowell. (For purchase at Amazon or free online as PDF -ag)  He is a black conservative with the Hoover Institution, so half of you can quit reading, because you care more about that fact than you do about logic.

Here is what happens in my little branch of the world. When price controls are imposed in medicine, EMTALA is a good example, then particular medical procedures and services lose any meaningful relation to their actual worth. Price and cost cease to have any real relation.

I'm happy with my pay cut and have no plans to go back and use my unique skills in the ER. The ER is a circus of pain and silliness, and the same kind of silliness is being debated right now in Washington. You should pray that it doesn't pass.

I find myself in agreement with what Shrodinger's Cat said a few years ago. They could pay him four times as much, and it would not make it worth working in the ER. Good luck all.

- -
Amy comments:

[edited] A lame piece on PBS pushed government healthcare, highlighting the amazing medical services of several other nations and how cheap they are. They used Japan as an example.

My inlaws have lived in Japan for over 20 years. They have ample experience with the healthcare system in Tokyo. The government sets the cost of everything from an office visit to an aspirin. PBS didn't mention that Japanese health care is based on rationing. It is not overt rationing, but that is exactly what it is.

They depend on Eastern medicine first. No matter what you come in with, they give you a little purple powder to mix up and try first. If it doesn't work, you come back and get a crack at Western medicine. Maybe you get sick and die, too bad. No one under the age of 12 can get an organ transplant. Hospitals do not accept ambulances. If you have a heart attack, you die in the bus. Japanese doctors strongly rely on the wait and see approach, even if current medical literature stresses prompt action.

Healthcare in Japan is 20 years behind the US. Yes, they make those robots for laproscopic surgery, but they don't use them, or they don't know how.

My mother-in-law fell and had a blow-out fracture of the orbit. She had a sagging eyeball and severe double vision. Her Japanese surgeon insisted that she wait a month to see if it got better. If not, they would operate to remove a piece of bone from her hip to plug the hole in her eye socket. This is about 20 years behind what a U.S. surgeon did, two weeks after the accident.

My in-laws can buy the best. The problem is, you just can't buy that in Tokyo thanks to the government.

(There is more.)

ER Medicine and Bureacracy
08/31/08 - MDOD by 911DOC

Medicine becomes more expensive, harder to do, with worse outcomes, as government imposes intrusive regulation and arbitrary quality measures, despite good intentions.

Government Motto: You say you are a caring doctor, so treat the poor for free.

The Medicare Tomato Market
06/24/09 - EasyOpinions quotes The Happy Hospitalist

A readable analogy and explanation of Medicare economics. Say that tomatoes were declared vital to life and made available free through the Medicare National Tomato Bank. The story of the healthcare market is translated to the tomato market.

More on Healthcare

Dec 10, 2009

Congressional Sports Team

Worthwhile Analogy
12/10/09 - ChicagoBoys

Quip:  It is painful to think of Barney Frank coaching pro-basketball, or running U.S. business.

David Foster:

[edited] Imagine that Congressmen Barney Frank, Chris Dodd, Dennis Kucinich, and Robert Byrd managed a professional sports team. Would anyone invest money in that team?

The average Congressman probably knows far more about sports than he knows about business. He watches sports on TV and he may have played in his younger days. Whereas, his knowledge of business is comparable to not understanding the difference between balls and strikes.

Yet, this Congress and an approving Administration is acquiring the power to micromanage every business in the country in excruciating detail.

Entrepreneurs Go on Strike
11/20/09 - American Thinker by C. Edmund Wright

[edited] The big opportunity now is to spend government money: on an $18 million government contract to create an awful Recovery.org website, SEIU union jobs in ObamaCare, bankruptcy lawyers, and the coming carbon credits. There are ACORN-style crony contracts to be had, and all the jobs created by David Axelrod astroturf media escapades.

If you are connected, or if your dream is to enrich yourself by killing the dreams of others, then the field is ripe for you.

Entrepreneurs can sense it. This is not now the country for you if you simply want to build a better mousetrap. This is not just about tax policy, health care, or cap-and-trade (which are all terrible and need to be stopped).

The American dream is dying. This kind of economy cannot work, not until pigs fly, or until Barney Frank dunks on Lebron James.

Dec 7, 2009

Not Just One Rotten Climate Apple

Riddle Me This
12/07/09 - Chicago Boyz by James R. Rummel

ClimateGate is about the emails and practices of the Climate Research Unit (CRU) of East Anglia Univeristy, Britain. It is a large and previously prestigious institution.

Logicians now say that this scandal does not necessarily invalidate the work of the other climate centers. I suppose that this is the difference between fine academic logic and a more realistic view of human bias, politics, and politicized Big Science.

The climate scientists will have to prove their work, as they should have from the beginning. They must reveal their data, theories, methods, and computer codes. There must be no more splicing of different data series to get a graph showing what is politically correct.

[edited] Most climate scientists speaking on news programs or writing op-eds offer a general defense. This scandal might cast doubt on more than 10 years of work at CRU, but they say it does not invalidate research by other scientists supporting catastrophic global warming caused by humans.

This is why it invalidates the work of other scientists:

  • The Hadley CRU boasted the largest and most comprehensive collection of climate data in the entire world.
  • This massive collection of data inspired, if not directly influenced, just about every other climate scientist’s work.
  • The people who wrote the emails are the most prestigious and influential climate scientists in the world. The emails show their dirty tricks, data manipulation, and collusion to hide problems with their research.

Why should anyone take any climate scientist’s word for his own integrity and the soundness of his work? Isn’t the onus on him/her to prove that he isn't a crook and liar, like the big guys are?

A comment by Shannon Love [edited]:

The revelations invalidate the work of other scientists:

  1. They all claimed to have reviewed and reproduced the CRU’s work, and
  2. They defended that work against scrutiny.

(1) causes doubt about their competence, and (2) causes doubt about their integrity.

Fast Facts About Climategate
12/06/09 - Pajamas Media by Charlie Martin
A convenient overview of the emails and issues of ClimateGate.

Government Funds Distort Climate Science
07/22/09 - Science and Technology News

Quip: We don't fund studies critical of our policies.

The Science and Public Policy Institute:

[edited] The US Government has spent $79 billion since 1989 on research and support for climate change studies. Yet, scientific review and criticism is left to unpaid volunteers, who have repeatedly exposed major errors.

Dedicated, uncoordinated scientists around the globe test the integrity of global warming theory. They compete with Government, a lavishly funded, highly organized, centralized purchaser of climate research.

The government pours money into a single, scientifically baseless agenda. It has created a self-fulfilling prophecy, not an unbiased investigation. Sound science cannot easily survive this grip of politics and finance.

Jo Nova Finds the Medieval Warm Period
12/07/09 - What's Up With That by Jo Nova (Via Don Surber)

The sharp upward swing in temperature was due to a single tree in Yamal, Russia.

In 2009, McIntyre analyzed Briffa’s Hockey Stick graph of sudden warming. He waited three years for the data he asked for. It took just three days to expose it too as baseless.

Briffa had concealed for nine years that he only had 12 trees in the sample from 1990 onwards, and that one freakish tree transformed the graph. When McIntyre graphed another 34 trees from the same region of Russia, there was no sudden warming.

Craig Loehle used 18 other proxies. (Proxies are measurements of physical processes that should have been sensitive to temperature. -ag) Temperatures were higher 1000 years ago and cooler 300 years ago. We started warming long before cars and powerstations were invented. There is little correlation with CO2 levels.

Hockey stick observed in NOAA ice core data
09/12/09 - WattsUpWithThat by Anthony Watts

J. Storrs Hall is at the Foresight Institute. He made some interesting graphs from NOAA ice core data:

[edited] Let's look at the temperature record as read from this central Greenland ice core. It gives us about as close as we can come to a direct, experimental measurement of temperature at that one spot for the past 50,000 years. As far as I know, the data are not adjusted according to any fancy computer climate model or anything else like that.

Watts comments on graphs of the temperature record from this single ice core, going back 500 1,200 4,000 10,000 12,000 and 40,000 years. Other data shows temperature for the past 400,000 years.

The 500 year record shows a wiggling, slow decline in temperature, then rising steadily by .7 degrees F in the 80 years from 1840-1920. That +.7 F is the total increase, not yearly. Watts says with humor: "a hockey stick".

True understanding comes from looking at temperature over longer time scales going into the distant and geologically distant past. On that scale, our current temperature fluctuations are nothing special. The Earth has been much colder for most of the last 400,000 years, and somewhat warmer for part of that time.

We don't need CO2 by humans to explain changing global temperature. The Earth has had large fluctuations all by itself. We should be glad it is warm for us now.

Galilean Peer Review
12/06/09 - Throckmorton's Other Signs

A doctor teaches his residents how to read published, peer-reviewed papers in medical journals.

[edited] In our journal club, we all take recent papers in our field and present them to the group. This is a great exercise for the residents. First, you look at what question the research is hoping to answer. You then see how they are getting the data and if analysis of the data will lead to an answer. You then check the statistics on the data. Only then can you say if the research is of merit.

I stress that the comments and discussion are just that, or better expressed as an editorial. It is amazing how many of the papers don't support the conclusions.

I can't help but feel this way about Climategate. This seems to be a classic example of researchers having an opinion and then trying to backtrack to make the research support that opinion.

Nov 30, 2009

Sarah Palin

Sarah Palin's Governing Philosophy Emerges In "Going Rogue"
11/30/09 - Riehl World View

Palin in Wasilla - Resistance to insider assimilation
11/29/09 - Op-ed at the Appeal-Democrat

[edited] It seems Palin resisted influence peddling, even when this opposed her early political mentors. Her governing approach showed itself as mayor of Wasilla and stayed with her as Governor.
[edited] Palin showed her political independence to her patron Carney. Palin opposed Carney's plan to have residents pay for neighborhood trash pickup. Most hauled their garbage to the dump themselves, as Palin says she still does. This was important to Carney because he owned the local garbage truck company.
It seems that Palin is not anti-government, but wants government to provide critical services and programs while trimming out the fat.
[edited] Palin consistently opposed heavy-handed community planning initiatives and burdensome taxes during her terms on the council. She explains: I focused on what I believed to be the key functions of government: infrastructure development, fiscal responsibility, and simply being on the side of the people.

Palin haters spread the canard that she is an airhead, and clearly not capable of dealing with the intricacies of government. This chapter demonstrates the opposite.

Palin has a keen grasp of the details of governing and budgeting, and also understands the political difficulties making government responsive. Many of her antagonists at the national level scoffed at her experience in Wasilla. Quite the contrary, local government is where a public official has direct impact on the electorate. It is where you really have to understand what you're doing.

Peer Review is Not What You Think

Scientific Peer-Review is a Lightweight Process
11/30/09 - ChicagoBoyz by Shannon Love

[edited] "Peer Review" says nothing about conclusions. It is the fate of most scientific papers to be proven completely wrong.

Peer review protects a journal’s reputation. The journal hires experts to check for basic errors in math or methodology, along with grammar and spelling. It offloads responsibility for publishing bad papers onto anonymous scientists. It is a form of blame-passing that everyone would like to use. It does not confirm or refute experimental or theoretical conclusions.

The anonymous and secret peer review process is not part of actual science. Science demands that that all observers of a phenomenon can agree they see the same thing. Ruthless transparency is critical. Secrecy hinders the functioning of science, and peer review is a secret process. Science is not settled by the secret complaints of the anonymous.

Some people will say that a scientific result is true because it appears in a peer reviewed journal. That is the weakest defense possible. It means only that some editor and his reviewers found it to meet their minimum quality standards for publishing. It meets no standards if the editors and peer reviewers are corrupt.

When people see "peer review", they usually think of "scientific review", which is the detailed investigation of data and the replication of results by independent scientists. Scientific review gives some confidence that the claimed results are correct. Even then, conclusions about what the results "mean" can be wrong.

- -
ClimateGate: The Fix is In
11/24/09 - Real Clear Politics By Robert Tracinski
Via SmallDeadAnimals

[edited] Global warming "skeptics" had unearthed evidence that scientists at the Hadley Climatic Research Unit (CRU) at Britain's University of East Anglia had cherry-picked data to manufacture a "hockey stick" graph. This graph showed a dramatic, but illusory, runaway warming trend in the late 20th century.

Much broader evidence has emerged that will break that scandal wide open. Pundits have named it "Climategate." Thousands of e-mails and data from the CRU are now available on the Web.

The following stood out for me. There is extensive evidence of the hijacking of the "peer review" process to enforce global warming dogma. Peer review is the practice of subjecting scientific papers to review by other scientists with relevant expertise before they can be published in professional journals. The idea is to weed out research with obvious flaws or weak arguments, but there is a clear danger that such a process will simply reinforce groupthink.

Peer review has been corrupted, becoming a mechanism for an entrenched establishment to exclude legitimate challenges by simply refusing to give critics a hearing.

The noted climate researcher Michael Mann emailed about pressuring the journal Climate Research, which published a paper critical of global warming.

I think we have to stop considering "Climate Research" as a legitimate peer-reviewed journal. Perhaps we should encourage our colleagues in the climate research community to no longer submit to, or cite papers in, this journal.

This is the scandal of the century. It needs to be thoroughly investigated, and the culprits need to be brought to justice.

Read more at the link:

  • The emails involve numerous leading British and American climate scientists outside of the CRU.
  • Private admissions of doubt or scientific weakness in the global warming theory.
  • A prominent global warming alarmist admits to using a statistical "trick" to "hide the decline" in temperatures.
  • Cherry-picked data
  • Evasion of legal requests for data, under the Freedom of Information Act.

The Intergovernmental Panel on Climate Change (IPCC) is a project of the United Nations. Its reports are taken as gospel by governments and scientists pushing for global control of industry, to avoid catastrophic global warming.

Many of the scientists contributing to the IPCC, especially at the Hadley CRU, were committed to avoiding scientific review. Despicably, they used their powers of peer review to exclude criticism of their papers, and they refused to release underlying data to any independent scientific review. Fortunately, a few scientific bloggers were able to make many of the faults public.

Amazingly, the IPCC didn't even restrict itself to peer reviewed results. The IPCC is a political institution, not a scientific one. Being half a scientist is like being half a truth.

1/3rd of IPCC claims were not peer-reviewed
04/20/10 - by Don Surber

Citizens Audit of the UN's Climate Report
04/07/10 - by Noconsensus.Org

- -
The IPCC is Political, Not Scientific
04/20/10 - PrisonPlanet by economist Richard Tol

Working Groups 2 and 3 of the AR4 (Assessment Report 4) violated all IPCC procedures. The conclusions are scientifically unfounded in part, and some are even copied from the environmental movement. Valid comments were ignored. AR4 contains crude errors as a result, only some known publicly.

- -
Galilean Peer Review
12/06/09 - Throckmorton's Other Signs

A doctor teaches his residents how to read published, peer-reviewed papers in medical journals. They must carefully examine the evidence and methodology. Most of the papers are not convincing after a hard look.

Think about that, the next time a newspaper breathlessly reports a finding in a newly published scientific paper.

- -
An array of errors
09/10/11 - The Economist

Summary:  Researchers Anil Potti and Joseph Nevins at Duke University published that they could predict the course of lung cancer using expression arrays, colorful activity patterns of thousands of genes in a tissue sample. The research was sloppy and wrong, despite initial peer review and repeated publication in respected medical journals. Those journals refused most critical comment.

AMG:  This is similar to the controversy surrounding the data, statistics, and computer code used to construct climate models. Prominent climate scientists have refused to release this supporting information for independent confirmation. The climate journals seem to be a much tighter and more defensive group than the medical journals.

When researchers refuse to supply their source data and methods, they are not scientists. A researcher earns our trust through open disclosure. He does not deserve any trust from calling himself a scientist or from working for a prestigious institution.

[edited]:  Investigations into alleged scientific misconduct have revealed numerous holes in the oversight of science and scientific publishing.

Bio-statisticians Keith Baggerly and Kevin Coombes work at the MD Anderson Cancer Centre in Houston. They found serious flaws in the work at Duke.

Dr. Baggerly noted that he did not have full access to the computer code and consistent raw data on which the work was based.

Journals that had readily published Dr. Potti’s papers were reluctant to publish Dr. Baggerly's criticism of Potti's work. Nature Medicine published one critical letter, and a rebuttal from the team at Duke, but rejected further comments as more problems arose. Other journals behaved similarly.

Eventually, Baggerly and Coombes resorted to publishing their criticisms in a statistical journal, unlikely to reach the same audience as a medical journal.

Dr. Califf is vice-chancellor in charge of clinical research at Duke University. He and other senior administrators acknowledged they gave too much weight to Dr. Nevins's judgment. That led them to withhold Dr. Baggerly’s criticisms from the external-review committee in 2009. The internal committees responsible for overseeing clinical trials lacked the expertise to review the complex statistical methods used in experiments on gene expression.

The process of peer review relies (as it always has) on the goodwill of workers in the field, who have jobs of their own and frequently cannot spend the time needed to check other people’s papers in a thorough manner. (amg: Despite the fact that they have agreed to peer review those papers.)

Dr. McShane estimates she spent about 350 hours reviewing the Duke work. Drs. Baggerly and Coombes estimate they spent nearly 2,000 hours. The methods sections of papers are supposed to provide enough information for others to replicate the work, but often do not.

Dodgy work will be revealed eventually, as it is found not to fit in with other, more reliable discoveries. But that all takes time and money.

Nov 25, 2009

Biased Reporting

The Media has Always Been Biased
11/25/09 - ChicagoBoyz by Shannon Love

Shannon Love excerpts one of his favorite Bloom County comic strips:

Milo:  Senator? This is Milo Bloom at the Beacon. Will you confirm that you sunk Jimmy Hoffa in your backyard pond?

Sen. Bedfellow:  What? Of course not!

Milo:  Fine, I’ll go with ‘Sen. Bedfellow Denies That Pond Is Where He Sunk Hoffa.’

Sen. Bedfellow:  That’s not true!

Milo:  Okay. ‘Bedfellow Did Sink Hoffa in Pond.’

Sen. Bedfellow:  I don’t know where Hoffa is!!

Milo:  ‘I Lost The Body’ Says Bedfellow.

Anti-Capitalist Policies Are Anti-Job

Anti-Capitalist Policies Are Anti-Job
11/25/09 - BigGovernment by Thomas Del Beccaro

[edited]  There is no secret to capitalism.
  • Some people save money for investment.
  • They start or grow businesses.
  • Businesses employ people.
  • Employed people have purchasing power to buy things.
  • Trade distributes value to buyers and profits to sellers.
  • Profits are partly saved for investment ...

The Left’s political policies destroy that simple and effective economic process. They impose taxes to reduce class differences and to raise revenue. Ironically, the opposite occurs in both areas.

Say it takes $500,000 from two partners to start a restaurant. High taxes take money from them and spread it to tens of thousands of people through government programs. The recipients don’t start businesses, and jobs are not created. Businesses that don't exist or grow also don't pay taxes or don't pay more taxes.

Increasing regulation has a similar effect, raising the cost of starting or expanding a business, reducing business activity, and killing jobs.

There are many other anti-capitalist policies of the Left, including Cap & Trade, the proposed Wall Street regulations, and skyrocketing deficits. All result in fewer businesses, jobs, and purchasing power, killing economic recovery.

Quip: Communist theorist Karl Marx revealed that business owners are leeches on society, draining away the wealth that rightfully belongs to the workers. At least, the ones who have jobs.

The Real Tax Burden
Jan 2009 - EasyOpinions by Andrew Garland

The real tax burden is what government spends, not just the deficit.

Public Tax Meeting
Sep 2008 - EasyOpinions by Andrew Garland

It isn't common knowledge just how much tax wealthy people already pay, and how much is wasted by increased government spending. Ironically, raising taxes on anyone will lower the production of the US, and so will lower the number of jobs.

An excerpt:

John JJ Richman was making breakfast when he heard the crowd outside. They seemed just shy of hostile. He opened his door to see about 65 townspeople, out of a town of 100. Two spokesmen were standing on the porch.

John: Good morning. Why are you all here?

Rob: There are things that need changing, and you are the one to help us.

Nov 8, 2009

Top Ten Political Statements

Statements 1-9 are political messages from no particular source, as satire. Statement 10 is quoted from early remarks by President Obama about the mass murder at Fort Hood, TX.


1   There is nothing strange about my policies. The incompetent former occupant of this office did many of the same things I have, but for selfish and stupid reasons.

2   I would not say that we lied. Sophisticated people know that politicians must find compromise between groups. This is much easier when those groups don't understand the details. So, we don't lie; we just aren't detailed. And, sometimes those details differ in suprising ways from our general statements.

3   Critics claim that I have changed my policy. In fact, my views have been quite consistent. If my policies seem different now, it is only because the facts have changed. I am smart to change my policy to incorporate different facts. You ask, "What were the facts in the past?". Well, they were different.

4   I know the public is concerned about deficit spending. Our deficits may be bigger, but the other guys started it. We inherited huge problems, so we have to quickly spend huge money. We haven't spent most of it yet, but we will. Give us time. We are being thoughtful about this.

Deficits are not a problem. Thousands of deserving people have government jobs exactly because we are spending the money that causes deficits. I can say with certainty that there would be no unemployment if the government hired everyone. We are working on it.

5   Our plans are carefully researched to provide more services with less money. If they don't work out that way, we will fix them, no matter how long it takes or how much it costs.

6   We predicted 8% unemployment if we did nothing, and now unemployment is 10% after enacting a $787 billion (with a "b") stimulus package. My opponents blame us for not meeting our earlier estimates. But, if we really knew, we wouldn't call them estimates. Estimates of the future are the most difficult because we don't have the data yet. We estimate that unemployment would now be 18.35% if we had done nothing. So, we are celebrating.

7   Our policies for spending, taxing, deficits, and reviving the economy were based on sophisticated, tested, econometric models, constructed and refined by the best minds in government. Despite this, we have been surprised by the underperformance of the economy. We are not worried. There are plenty of econometric models out there, and we are switching to better ones right now.   (Stimulus jobs) [edited] Congressional Democrats are disgusted with the phony accounting of jobs created by the stimulus plan.
  David Obey is the House Appropriations Committee Chairman. He lambasted the government's flawed data "showing" that $160 billion in stimulus spending has created or saved at least 640,000 jobs.
  The administration has been forced to delete 60,000 jobs from its list, and had claimed 30 jobs in a non-existent congressional district.
  David Obey: [edited] "The inaccuracies are outrageous and the administration owes itself, the Congress and every American a commitment to correct the ludicrous mistakes. Whether the numbers are good news or bad news, I want the honest numbers, and I want them now."

8   The stimulus package we put in place is working just fine. Thousands of government jobs have been created, or stabilized with higher salaries. This assures that government workers will be loyal and at their desks through any economic difficulties to come.

9   Our policies of stimulus and bank bailouts have led to a rising stock market, for which we are proud. Remember that employment is a lagging indicator. Overall employment will increase after fat-cat stockholders have been made rich enough. Of course, we will tax away most of their ill-gotten capital gains.

10   President Obama spoke on 11/05/09 at the Tribal Nations Conference of Native American Leaders, organized by the Department of the Interior. President Obama or his speechwriters are better at satire than I am.

1 Let me, first of all, just thank Ken and the entire Department of the Interior staff for organizing just an extraordinary conference. I want to thank my cabinet members and senior administration officials who participated today.

I hear that Dr. Joe Medicine Crow was around, and so I want to give a shout out to that Congressional Medal of Honor winner. Good to see you!

My understanding is that you had an extremely productive conference. I want to thank all of you for coming, and for your efforts, and I want to give you my solemn guarantee that this is not the end of a process, but a beginning of a process, and that we are going to follow up. Every single member of my team understands that this is a top priority for us.

I want you to know that, as I said this morning, this is not something that we just give lip service to. And, we are going to keep on working with you to make sure that the first Americans get the best possible chances in life, in a way that's consistent with your extraordinary traditions, and culture, and values.

Now, I have to say, though, that beyond that, I had planned to make some broader remarks about the challenges that lay ahead for Native Americans as well as collaboration with our administration.

2 But, as some of you might have heard, there has been a tragic shooting at the Fort Hood Army Base in Texas.

We don’t yet know all the details at this moment. We will share them as we get them. What we do know is that a number of American soldiers have been killed and even more have been wounded in a horrific outburst of violence.

My immediate thoughts and prayers are with the wounded, and with the families of the fallen, and those who live and serve at Ft. Hood.

These are men and women who have made the selfless and courageous decision to risk, and at times give their lives to protect the rest of us on a daily basis. It’s difficult enough when we lose these brave Americans in battles overseas. It is horrifying that they should come under fire at an army base on American soil.

[further remarks omitted]

1 President speaks about Fort Hood shootings
11/05/09 - youtube - Video from Fox News
My transcription of the beginning of Obama's speech.

2 President Obama Speaks About Fort Hood Tragedy
11/05/09 - blogs.abcnews.com by Jake Tapper and Sunlen Miller
Continuation of Obama's speech as reported here, slightly edited.

Jumping to Conclusions
11/06/09 - Powerline Blog by John Hinderaker
About President Obama's understanding of the Fort Hood mass murder.

A Political Speech: Troubling Times
Easy Opinions (satire)

My fellow Americans. May I first say that all of you are the most intelligent, beautiful, clear thinking, generous, patriotic, and deserving people that I have met, along with all of the other great people of your town, city, and state.

I am sorry to bring you bad news, and I hope you don't shoot the messenger (smiles). We live in troubling and difficult times.

A Political Speech: Coming Together
Easy Opinions (satire)

My administration will reach across the aisle to both parties, and especially to the opposing and obstinate party, to gain agreement and smooth the operation of government. We will smile rather than argue.

A Political Speech: My Policies
Easy Opinions (satire)

I want you to know where I stand on the issues. I believe in Prosperity, and I always will.

Nov 3, 2009

We Can't Stop Government Growth

Can the Rampaging Leviathan Be Stopped or Slowed?
11/02/09 - Independent.org by Robert Higgs
  Senior Fellow in Political Economy, and
  Editor of The Independent Review at The Independent Institute.

[edited] There are critical difficulties restraining the growth of government. Even when restraints on government are enacted into law, the government does not obey. So, constitutional amendments are worthless. The Constitution already contains the NinthThe enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people. and TenthThe powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people. Amendments. With those amendments and four bucks you can get a latte at Starbucks.

"Solutions to the ongoing growth of government are a dime a dozen and utterly worthless in themselves. Every genuine solution must be implemented by enough people and money. Marshalling people and money will require ideological conversions on a substantial scale. These conversations themselves will require many people and much money, if such conversions are possible at all.

The troubling fact remains, that if any truly effective measures are approved to limit the government, the rulers would likely resort to whatever legal or illegal violence proved necessary to prevent those measures from taking effect.

If Ron PaulCongressman from Texas, noted for wanting a much smaller and limited government were miraculously elected president, he would not live to take office. Opponents of the government's ongoing growth must bear in mind that we are dealing with violent, heavily armed, utterly unscrupulous people who, if pushed to the brink, will stop at nothing to retain their power and privileges.

We who abhor the continued growth of government cannot stop or slow it in the near term. But, we can take heartNot much of a comfort -ag from the knowledge that ultimately this criminal enterprise will attain such bloated size and scope that it will implode, as the Soviet Union and other overreaching systems have imploded.

Governments that grow without other limits find that their predation becomes greater than their prey can support. Thus, the government in this country and many others contain the seeds of their own destruction.

Leading the People
08/2008 - EasyOpinions by Andrew Garland

My personal experience with radicals in college was scary. They don't mind threatening others, regardless of the academic setting or discussion.

[excerpt] He argued that only a radical change in government would bring about a better society. I disagreed. He said that I should join the demonstrations against the University to end the Vietnam war. I thought a sit-in demonstration against the University was misdirected. I suggested the he should demonstrate against the government; the University was not at war.

He said that his movement would become stronger, and eventually I would agree with him. I asked, what if I didn't agree with him, even later? He flashed anger and told me that if I didn't agree on my own, he would make me agree. I saw that as the end of the discussion.

We Must Spend or We Are Going to DIE!
04/2009 - EasyOpinions by Andrew Garland   (satire, excerpt)

From: Ruling Class
To : Public
Re : We must tax and spend now, or we are all going to DIE!

We don't want to tax and spend (cough), but we must react to the crisis that we have identified. We are going to borrow, spend, and tax reluctantly to support our actions. The alternative is DEATH. No one wants that.

So what if you are poor in the future? At least you will be alive, and we will continue to guide you through supportive government to help you out of poverty. We will create and assign the jobs of the 21st century. Your children will pay most of the taxes, and we are training our children to have the public spirit that will allow them to rule wisely.

Oct 27, 2009

The Stimulus Resort Town

Politicians like the idea of stimulus spending because it justifies taxing, borrowing, and spending. Spending is always pleasant and gains friends and support. They claim that stimulus spending will make us prosperous because it multiplies wealth in the economy.

The Obama team claimsEasyOpinions: Let's counterfeit our way to wealth that each $100 of government spending creates $150 in new wealth, so everyone wins, and it doesn't matter on what it is spent.

Craig C's comment at Mises.org gives an analogy commonly used to illustrate how stimulus loans or spending multiplies production and trade. I repeat it here, revised.

People start in gridlock. A stimulus loan breaks the gridlock. They resume working and trading, and end up happy. The money involved is a true stimulus; it unlocks the local economy and is paid back. This is a vivid and amazing example. But, it is contrived and unreal, like finding five dominoes ready to fall by pushing just the first one.

Stimulus Story

It is rainy and quiet in a small resort town. It is a tough time. Everyone is in debt and lives on credit.

A government official enters a restaurant, lays a $100 bill on the counter, and tells the owner Frank that it is a stimulus loan.

  • Frank takes the $100 and runs to pay his debt to the butcher.
  • The butcher pays his debt to the farmer.
  • The farmer pays his debt to the supply store.
  • The supply store pays its debt for newspaper advertising.
  • The newspaper pays its debt to Frank at the restaurant.
  • Frank lays the $100 bill back on the counter.

The official smiles at all of the good he has done. He remarks that this is the Keynesian Multiplier in action; $100 in new money promoted $500 in production and trade. He takes back his $100 and leaves town. The town is now without debt and looks optimistically to the future.

That is supposedly how the Stimulus Plan works.


I like that story because it sets up a beautiful situation, just so. The government provides a "stimulus", the money flows around, everyone is happy, and it didn't cost anything, like a fairytale.

I like another version even more. Frank writes a bad check for $100. The check goes around the town and comes back to Frank, who tears it up. The check is illegal, but the government stimulus isn't needed. This version supports counterfeiting.

The less amazing, more realistic version of the story goes like this.

Restaurant owner Frank, impractical and desperate, owes everyone in town. He spent his last borrowed dollar rather than sell the restaurant to someone who could run it at a profit. He waits behind the counter for his creditors to call. He doesn't have $100 in the bank to pay the butcher.

Meanwhile, the butcher takes $100 out of his bank account to pay the farmer, and that $100 goes around the town. The newspaper pays Frank $100, and he pays the butcher.

We don't know why the butcher would extend credit to a restaurant with no money in the bank. Soon, Frank declares bankruptcy and sells the restaurant.

The Stimulus Story proposes a group of businesses all doing useful work for each other. They have already produced things and have traded among themselves. They only need to pay their bills. Any one of them can take $100 from his bank account to settle the chain of obligations. Usually, they all take $100 from their accounts to pay their bills.

In reality, a whole town is not caught in the trap of having no cash to exchange while selling to others on credit. A stimulus loan has little or no effect on current business transactions.

The flurry of payments settles $500 in past transactions, which makes it seem like the $100 has multiplied 5 times. It is a distraction from what the stimulus loan actually accomplishes.

The Real Stimulus Effect

The true value of a $100 loan is just the value given to restaurant owner Frank. Frank can buy an extra $100 of goods, pay debts, or save. (Paying debts or saving isn't so bad.)Click/Return to see below why this is not a burden on the economy.

If Frank is going bankrupt, he probably spends his loan, hoping for a miracle. If Frank is not desperate, he pays down his debts or saves the money. He is not going to risk the loan by expanding his business in a poor economy.

Say the money is a grant instead of a loan. Frank is even happier, but this doesn't lead to risky investment. It is his money now, and he doesn't want to lose it.

Government Spending

In a bad economy, people have debt and jobs are uncertain. It is natural for them to pay off their debts. What can a government do to "pump" money into the economy to buy goods for consumption? The government spends the money. (Note) If you must ruin an economy by artificially increasing spending on consumer goods, then government spending is about the only way to do it.
 Government claims this helps the economy. Instead, it pays politicians and supporters, and builds voting support. The claim of helping the economy is a cover story.
 The government must collect more tax from productive people to support these schemes.

It is true that a specific $100 in production may occur from an extra $100 in government spending. But, for every Frank who gets extra business, there is a Jim who has the money taxed from him. Jim buys $100 less of something, removing $100 of production which would have happened anyway.

The total effect of the stimulus spending is that Frank gets $100 more business, and Jim buys or saves $100 less. That fails to "jumpstart" an economy, no matter how big the amount which is taxed and spent by the government.

Government Borrowing

The government can borrow the $100 that it spends at Frank's restaurant. Frank is happy, and Jim doesn't seem to be affected, at first glance.

Frank is happy with the extra business. But, this is not a sustained flow of money, and Frank does not install more tables. He hires only temporarily or part-time, if he hires at all.

Business owners read the newsEconomists Surprised That People Read the Paper
06/08/09 - Easy Opinions
  Leftist economists don't consider that people react to policy. People see the coming wave of taxes, regulation, and inflation, and they alter their behavior immediately. They stop investing and prepare for hard times.
. They know the government is temporarily increasing purchases. They can't know what part of their sales is from stimulus and what part is from an improving economy, so they delay expanding and hiring. Worse, they don't know how increased taxes will affect sales in the future.

Business owners are being rational. It is better to miss some business by expanding later, than to expand early and risk bigger losses if sales drop. Ironically, the stimulus interferes with the sales signals and market stability that would encourage businesses to expand. This slows expansion and reduces employment.

The current stimulus is being distributed over a period of years, so it will interfere with business decisions for years.

•  Jim prepares to pay

Jim knows that he will soon have to pay higher taxes to pay off what the government is borrowing. So, he lowers his spending and saves for that future expense. He overestimates; it is better to spend too little than too much. The government creates uncertainty by proposing many, confusing, new and increased taxes.

The result is that Frank gets an extra $100 in business. Jiim reduces his consumption spending by $100 or more, and instead buys safe investments. This does not improve the overall economy, but it does produce a different demand for goods, helping some businesses and hurting others. Unemployment rises as people must change jobs between businesses, and people must take jobs at lower salaries while they learn new skills.

Politicians arrange photo-opportunities with businesses that have government contracts. They don't advertise the many businesses that shrink or close because their sales have declined in a disrupted economy.

Politicians point to improved businesses and call for increased stimulus spending to stop layoffs at other businesses. This is clueless.

Creating Money

The government can "create the moneyClick/Return for detail below. All money is created by the Federal Reserve Bank. The government usually gets to spend it first." and seem to take value magically out of the air. The government first raises taxes and borrows, but that doesn't satisfy its desire to spend.

Creating more money causes all money to lose some value through "inflation". Prices go up as store owners notice they are selling all of their goods on hand. They raise prices following price increases by their suppliers. They wonder where the extra demand (money) is coming from, and why supplies do not increase to meet that demand. The answer is that government is increasing demand without producing much to increase available supplies.

This steals value silently from everyone with a job or a bank account, and it falls more heavily on the lower and middle classes. Their wages fall behind inflation and their savings are more in cash, bank certificates of deposit, and bonds, which lose value as prices go up.

So, Frank happily spends or saves an extra $100, and $100 is silently skimmed from the value of all money. The transfer of value is like a tax, but the result is more negative due to business uncertainties and dislocations.

Some business owners see increasing sales, and wonder if they are from a better economy (more production all around) or from inflation. Other businesses suffer as their customers buy different goods. Some people save more as they see prices going up, or possibly spend more to beat future price increases. Business becomes less predictable.

Notice that the government properly considers counterfeiting to be a serious crime. But, politicians call it "fiscal policy" when they create money out of thin air and spend it to promote projects for their supporters.


People are productive because they have knowledge and tools, personally or through their employer. A person needs a hammer to build a house, and a power-nailer builds faster and at lower cost. A small shop can make a few hammers. It takes a large factory to make many hammers and power-nailers, and much effort to work out ways to make them better, safer, more durable, and cost less over time.

There is a big risk in building a factory, and many lose money. Sometimes, the owners become rich through knowledge, planning, management, and some luck. It is fascinating that these people become despised as "the rich", when their wealth comes mostly from practical achievements that help others to a productive and comfortable life.

Progressive tax rates04/2009 - Easy Opinions
  A comparison of the 2006 tax rates and total tax contributions by adjusted gross income.
take more money from high earners as a percentage of their income. The idea of a stimulus extends the idea that the rich should pay more of their lazy money to others who will spend it and create a growing economy.

Here is the problem. The rich are the major investors in companies, and so in factories. Money taken from them does not get to those investments. Instead, it goes to Frank, who buys more consumer goods or invests more conservatively in bank accounts. Investment that would create jobs is drained away to create some overtime for current workers.

"Soak the rich" is bad policy.

  • High productivity produces most high incomes. There is no moral basis for taking a higher percentage of that money from the people who have earned it; they aren't bank robbers. The government is acting like a bank robber, taking money from those who have it, as pure politics and power.
  • Taking that money removes it from the people who have the most judgment and ability to bear the risk of building new companies. The government is much worse at this.
  • "Soak the rich" puts the non-rich out of work or reduces their incomes. That isn't a good tradeoff.

Large Incomes, Skill, and Luck

You may think the rich are partly lucky, so they shouldn't keep all of their money. Do you also think that lottery winners should split their winnings? They are 100% lucky, and do much less to produce a productive society.

Successful actors and athletes are admired because their abilities are on direct display. We like watching them, and we understand the basis for their incomes, even if there is some luck involved. We don't yell at them to take less money, because we understand that they are worth it. They would not have put in long years of training and sacrifice if they didn't have a chance to make it big.

The skills of successful businessmen/women are not directly on display. But, we can see that they produce products and they create jobs to make those products. Products and jobs provide for better lives. Yet, people are easily angered by the large incomes of some businessmen. We should understand that, like athletes, they are worth it. They would not have put in long years of training and personal risk if they didn't have a chance to make it big.


Spending, Paying Debts, and Saving

We hear that 70% of the economy is consumer spending. The quick reaction is to 03/2009 - EasyOpinions: Cargo Cult Economics
 Government sees that people spend more during prosperous times, and wrongly concludes that higher spending causes prosperity
 I get it. People use umbrellas when it rains, so using umbrellas causes it to rain.
do something, anything, to increase this spending
. Government tells us that spending is good and saving is bad.

This has now moved to the strange idea that if the public won't spend enough, then the government will do it for them. This is the idea that the government can spend its way to our prosperity, taxing along the way.

Actually, paying debts, saving, and investing are all types of spending.

  • Paying debts is the completion of past spending. If spending is good for the economy, the debtor has already done his part. Paying off the debt prepares for future spending. Not paying the debt would cause economic disruption.
  • Saving lends money to a bank, which supports spending by other people. Credit card debt supports consumer spending. Housing and car loans support buying those durable goods. Loans to businesses help them produce more.
  • Investing is a high-powered use of resources at a higher risk. Investing directly supports new businesses, major business expansion, and the creation of jobs.

The amount spent on each of these is a personal decision. The "economy" is there to serve the individual, not the reverse. People should acquire the goods, savings, and investments that they understand and can support with their earnings.

Would it help the "economy" if the government forced you to take 10% of your savings and spend it on something? Only in the sense that "consumer spending" would go up. It would hurt you personally because it would disrupt your plans.

If you are saving money rather than buying a new car or a vacation trip, it is because you want the option of buying something more important in the future, maybe food and rent.

Go back

Creating Money

Is Money Worth Anything?

All U.S. dollars are printed or electronically distributed by the Fed, the United States Federal Reserve Banks. The Fed runs the U.S. Mint to print currency and stamp coins. It creates electronic money by sending authorizations to its member banks. Paper dollars are Federal Reserve Notes, literally small obligations of the Fed.

Each dollar is an obligation of the Fed to pay you a dollar. You are allowed to laugh at this. What does it mean to present a dollar to the government and be paid back that same dollar bill? Before 1935, the government would give you a definite amount of gold or silver, if you presented the dollar bill for payment. Since then, there is no obligation of the Government to give you anything for your dollar.

All dollars are created out of thin air, so why do they have any value?

  • There is an established market and price for trillions of dollars of real goods and services.
  • Dollars are defined by law as "legal tender". Any transaction can be valued in dollars for disposition by a court or for the collection of taxes.
  • The Federal Government levies taxes and you can use dollars to pay taxes.
  • The Federal Reserve has assets that are supposedly worth the dollars created.

There are trillions of dollars in private loans secured by tangible things, such as commodities, automobiles, and buildings. Some loans are secured only by future income, like credit card balances. All loans are obligations between people, and the supply of money represents these obligations, giving value to the money.


The Federal Reserve Banks can abuse their power to create money, so that all money loses some value.

Inflation results when the Fed loans money to the US Treasury, creating money, which the government spends, without a resulting increase in tax revenues that can pay back these loans. Inflation is the loss of value in the money supply from bad loans made to the US Treasury.

The longer explanation of inflation requires knowing how a good bank can create trustworthy, electronic or paper money. This will wait for another post.

Go back


The Federal Reserve
An overview of the structure and duties of the Federal Reserve.

Money Created Out of Thin Air
07/30/04 - Richard Benson, President Specialty Finance Group

[edited] Money is created in two ways. First, money creation comes from borrowing it and spending it. Second, it is simply printed up "out of thin air" by a central bank and used to buy something.

The Record of the Federal Reserve
07/24/09 - LewRockwell.com by Erik Voorhees

[edited] The Federal Reserve System is fraudulent. Its effective purpose is to create a mechanism of deficit spending by politicians, through invisible taxation by monetary inflation. The Government buys services for its voters with created money at current prices. The voter's money buys less the following year, as the new money raises prices, and they are none the wiser.

From 1776 to 1912 (136 years):

  • A dollar would buy 11% more consumer goods in 1912 than in 1776.
  • $1,110 in 1776 bought the same bundle of consumer goods as did $1,000 in 1912, for comparable goods.
  • The dollar was a stable and slightly increasing store of value. You gained a little if you put it under your mattress.

The United States Federal Reserve (the Fed) was created in 1913 to "conduct the nation's monetary policy in pursuit of full employment and stable prices". "Stable prices" means that a dollar should buy about the same amount of consumer goods over time.

From 1913 to 2008 (95 years):

  • A dollar would buy 95% less consumer goods in 2008 than in 1913.
  • $50 in 1913 bought the same bundle of consumer goods as $1,000 in 2008, for comparable goods.
  • The dollar slowly sank in value. You retained only 5% of its value if you put dollars under your mattress during that time.

Americans should feel outrage about this. Yet, they are not very upset, and the vast majority has no clue. Americans are educated in Government schools, which barely teach basic accounting, let alone monetary theory. In public school, I was forced to memorize the names of every African country. There was no discussion of the nature of money or the economic principles which caused political turmoil in Africa.

Keynes, Upside Down
02/02/09 - Richard Benson, President Specialty Finance Group

[edited] Too much borrowed money has left the private sector riddled with bankruptcy. Far too many loans were made on the probability of being refinanced, not on the ability to be repaid!

Bad loans could be refinanced into bigger bad loans while liquidity (willingness to lend) was flowing. Now, the refinancing has stopped. Millions of Americans and business owners are suffering and can't face the music.

Too many loans (liquidity) were made to people who could not pay them back. This caused mass insolvency. How can more loans and public borrowing be sold as the cure? It is government double talk. They are calling this insolvency a "liquidity trap" so they can print fresh money without guilt.

Recipe for Economic Stagnation
07/21/09 - American Thinker by Andrew Foy and Brenton Stransky

[edited] John Maynard Keynes recommended government intervention. Milton Friedman recommended free markets and a predictable, boring economic policy.

The government followed Keynesian principles in response to the Great Depression. It created 15 agencies, increased spending by 220%, increased taxes by 68%, and increased the deficit to $24 billion.

Friedman proposed that government intervention prolonged the depression. His view has been validated over time. "Far from the depression being a failure of the free-enterprise system, it was a tragic failure of the government."

Cargo Cult Economics
03/2009 - EasyOpinions

Government economists see that people spend more during prosperous times, and wrongly conclude that higher spending causes prosperity.

I get it. People use umbrellas when it rains, so using umbrellas causes it to rain.

Let's Counterfeit Our Way to Wealth
02/2009 - EasyOpinions

The Obama team follows Keynesian economic principles. They claim that every dollar in government "stimulus" spending creates $1.50 in wealth.

The 1.5 wealth multiplier is part of the Keynesian myth that distributing money promotes a recovery. But, every dollar spent by government has to be collected as tax, sooner or later. Any money borrowed now takes resources now from some other, valuable use.

If the multiplier were true, then the government could license counterfeiting and we would all become rich. Actually, the government attitude toward printing money is very close to counterfeiting.

Banks Create Money
08/09/09 - Ingri Mayne - CyberEconomics

[edited] For several centuries now most money has been in the form of bank debt. A checking account is merely money that the bank owes you, and paper money represents something that the Federal Reserve System owes you. (Try to collect this debt from the Federal Reserve, though, and see what you get.)

The creation and destruction of money is the creation and destruction of bank debt.

Federal Reserve Ready To Buy Assets
07/29/09 - Telegraph Co UK - by James Quinn

[edited] The Fed may buy back U.S. Treasuries, support lending to small businesses, and support credit card and car loans. The Fed continues to buy large amounts of government-backed mortgage securities.

The Fed creates more money by buying assets. Usually, it limits itself to buying government debt, Treasury bonds. It is now directly buying other debt, such as bonds representing bundles of home loans (Mortgage Backed Securities).

If these debts are paid off, then the money created will not cause inflation. If not paid off, the losses show up as inflation, the decreased value of all money.

Google Search: Money Creation Inflation

Oct 22, 2009

TV Commercial For Healthcare Reform

Healthcare reform is available now for the very affordable price of an $81 billion reduction in the U.S. debt! 1

Think of all the free healthcare you will get in the future.2 Support us now, and you will get your second and third medical tests FREE.

Your order has been entered, and there is no need to pay us now. We already have your credit card number.3  We always like to hear from you. Compliments only, please.

Delivery guaranteed in 30 days or double your money back.4

You have our unconditional guarantee.5

1 Reform will cost a very affordable $829 billion, for which we will charge you only $710 billion, plus $200 billion shipping and $1,000 billion handling. The numbers may seem confusing. Don't think about them; they are going to change.

2 Subject to the participation and availability of doctors, hospitals, clinics, and midwives. Some copayments and bribes may be required.

3 Members of Congress, current and former federal employees, preferred union members, and Designated Important People (DIPs) are excluded from this offer, because they get all of these benefits and additional benefits FREE.

4 Shipped in 30 days, or up to 3 years, whichever happens.

5 All promises, representations, estimates, and deadlines are subject to increase, decrease, alteration, and/or revocation for any reason, contradictory reasons, or no reason whatsoever. Send any complaints to the U.S. Congress. We'll get back to you.


The Hypocrites Are Trying To Pass a Doozy
10/15/09 - PJTV Video 3 min
Dr. Peter Weiss talks about the bad impact of the Baucus senate healthcare bill.

More Healthcare Spending - More Taxes
10/10/09 - EasyOpinions

Quip: Reduced deficit. Yay!   By increasing taxes. Boo!   And $829 billion more spending. Bummer!

The Senate healthcare bill promises to reduce the deficit by $81 billion while spending $829 billion more. How? By raising taxes and fees by $910 billion.

Obamacare Bails Out Medicare
09/2009 - EasyOpinions
"Healthcare Reform" is a huge tax hike plus rationed medical services.

ObamaCare and the Doctor
08/08/09 - EasyOpinions

Dr. Zane F. Pollard tells about the frightening current reality of Medicaid, and by extension the future ObamaCare.

Medicaid pays for medical services to the poor, and in this case to poor children who face vision impairment or blindness. Regardless, Medicaid denies and delays their care.

Consider that Medicare/caid are intentionally underpaying for the medical care that they mandate.

The government is proud of how they are negotiating lower prices for Medicare/caid, but these are still going bankrupt due to exploding costs.

Hospitals are caught in the middle. They survive by raising prices on the insured sick, who can pay. Then, the government blames the insurance companies for raising premiums to cover the increasing prices for insured hospital care. Doctors are forced to refuse treating Medicare patients because they actually lose money on each patient while becoming subject to bureaucratic control for receiving Medicare payments.

Boston Medical Center Sues Massachussetts Medicaid
07/16/09 - The Boston Channel

Boston Medical Center says the state is underfunding the hospital by $181 million annually by failing to cover the cost of care for Medicaid, Commonwealth Care, and uninsured patients.

Boston Medical Center CEO Elaine Ullian: "This institution was and remains an enthusiastic supporter of the state's health care reform law. But it should not and cannot be financed on the backs of the poor. We hope our suit serves as a cautionary tale to federal policymakers as they take up national health care reform."

Health-Care Reform: A Better Plan
08/7/09 - Washington Post by Charles Krauthammer

Krauthammer proposes a practical approach to reforming healthcare regulation.

[edited] Our healthcare system is extremely high-quality, but inefficient, and therefore expensive. Today's ruling Democrats propose to fix it with 1,000 pages of complexity.

They promise that this massive concoction will lower costs. Their solution is mandates on employers, individuals, and insurance companies; allocation formulas; political payoffs; and myriad regulations and interventions. It creates a Rube GoldbergFrom the link: Rube Goldberg (1883-1970) was a Pulitzer Prize winning cartoonist, sculptor, and author. He is famous for his cartoon contraptions using an elaborate set of arms, wheels, gears, handles, cups, and rods, put in motion by balls, pails, boots, bathtubs, paddles, and animals. These contraptions do a simple task through an extraordinarily complicated sequence of interactions. system that multiplies current inefficiencies and arbitrary rules. This will produce staggering deficits, less choice, and lower-quality care. That's why the administration can't sell Obamacare.

My plan. Strip away current inefficiencies before remaking one-sixth of the U.S. economy. There are just two parts: radical tort reform, and severing the link between health insurance and employment.

I disagree that U.S. healthcare is inefficient. High costs are the result of:

  • Too much testing due to the legal liability lottery.
  • Cost-shifting onto the insured to pay for those who won't or can't pay. The government won't fully pay for its health mandates, forcing up costs and insurance rates for everyone.

Oct 14, 2009

Blunting the Costs of Healthcare Reform

States of Personal Privilege
10/09/09 - WSJ Opinion by by Kimberley A. Strassel

Quip: This bill is vital to our country and will save a lot of money. We just don't want to depend on it.


Powerful senators have avoided the most costly provisions of healthcare reform for their own states. They want "reform" for the nation, so long as it doesn't disadvantage the people who support or vote for them.

  • The Baucus bill vastly expands state Medicaid programs, requiring the states to pay an additional $37 billion.

    Senate Majority Leader Harry Reid of Nevada is worried about losing his seat next year. He has arranged for the federal government to pay Nevada's increased Medicaid expenses for the next five years. This applies to only three other states: Oregon, Rhode Island, and Michigan, because they "are suffering more than most."

  • The Baucus bill would tax expensive insurance plans at 40%, so that those with "luxury" health insurance help to pay for the poor. But states like New York and Massachusetts have a lot of those plans, having a lot of union members with great benefits, and high-cost insurance mandated by state regulations.

    New York Sen. Chuck Schumer didn't want angry, overtaxed voters, so he and other similarly situated Democrats carved out a deal to reduce the tax on 17 states, mostly with Democratic politics.

  • The Baucus bill taxes pharmaceutical companies, on the principle that they are filthy rich and involved in health care.

    But, New Jersey boasts it is the "global epicenter" of the drug industry, where "15 of the world's 20 largest pharmaceutical companies have major facilities." Its Sen. Menendez has a deal for a $1 billion tax credit for companies investing in drug R&D.

  • Many Dems assure us that the Baucus bill will "bend down" the health-care cost curve. Michigan Sen. Debbie Stabenow and Massachusetts Sen. John Kerry aren't counting on it. They included $5 billion in the bill to reduce costs for union members.

So, health-care "reform" is good, smart, and necessary, so long as it isn't fully applied to the states of the senators who are pushing it.

Most senators are saving up their special demands for the Senate floor. Then, we'll know how much change Democrats truly believe in.

Baucus Bill Bull: The Hypocrites In DC Are Trying To Pass a Doozy
10/14/09 - PJTV: Medically Incorrect (video 3 minutes)

A video opinion of the Baucus bill by Dr. Peter Weiss.

Dr. Weiss is an OB/GYN at Cedars Sinai Medical Center in Los Angeles, the Medical Director of Rodeo Drive Women's Health Center and Rodeo Drive Dermatology and Aesthetics, and an Assistant Clinical Professor at the UCLA School of Medicine.

Obamacare Bails Out Medicare
09/12/09 - Easy Opinions by Andrew Garland
"Healthcare Reform" is a huge tax hike plus rationed medical services.

Oct 10, 2009

More Healthcare Spending - More Taxes

CBO report: New taxes will pay for Senate health care bill
10/08/09 - OpenMarket by Fran Smith

[edited] The Congressional Budget Office reports that the Baucus healthcare bill in the Senate would reduce federal budget deficits by $81 billion during 2010-2019. Supporters were ecstatic.

The government and most news reports emphasize deficits. But, it is the SPENDING that matters. This healthcare bill gigantically increases spending. It reduces the deficit by increasing taxes and fees by more than the increased spending. Further, past healthcare programs have been 5 to 10 times more expensive than estimated at the time they were enacted.

A clearer statement would be:
"Healthcare legislation will raise government spending by at least $829 billion. But don't worry, it will raise taxes and fees by $910 billion, providing an extra $81 billion to the Treasury."

The major problem for the Baucus healthcare bill has been to hide the massive tax increases on people. It pretends these taxes are on businesses and insurers. But, all of these "business taxes" will be passed on to the people, at all levels of income.

The savings included in the bill are unrealistic. They are there only to get a good score from the Congressional Budget Office. The CBO must assume that those savings will be there, because the bill says they will be there.

Businesses organize work. They aren't a magic piggy bank. Taxes on private health insurance companies must be paid by charging more for insurance. So, the company writes the check, but the customers pay those taxes.

Taxes on employement must be paid out of the total productivity of the employees. Employee salaries are what is left over. The government wants to charge companies 8% of salaries to support government health insurance. That 8% actually would be paid by employees as a reduction in salaries.

The truth about the Baucus bill - Part Two
10/12/09 - Washington Examiner Editorial

[edited excerpts] The Baucus bill generates revenue or shifts costs in many ways:
  • Cuts to Medicare and Medicare Advantage - $426 billion
  • Fines imposed on those who do not purchase insurance - $4 billion
  • Levies on health insurance companies providing high-end health insurance plans - $201 billion
  • New taxes on medical devices and drugs - $180 billion
  • New income taxes on individuals - $83 billion
  • New taxes on employers - $25 billion
  • Reductions in Medicare reimbursements to hospitals, which will require more cost shifting from such facilities to their patients

Price Waterhouse Coopers has released a study done for the health insurance industry.

  • Average family health insurance is now $12,300.
    This will be $18,400 by 2016 doing nothing.
    Baucus will make it $21,300.
  • Individuals average $4,600.
    This will be $6,900 by 2016 doing nothing.
    Baucus will make it $7,900.
  • Obamacare advocates say that higher costs will be largely offset by tax credits for lower-income families. But, tax credits only shift the burden of payment from Peter to Paul [from the middle class to the poor].

Memo - Health Plan Deficit Reduction
09/2008 - EasyOpinions Outlink

A (fictional) memo has surfaced revealing the thought guiding healthcare policy.

Excerpt: "The estimated deficit for our health reorganization plan is causing us trouble in the press. President Obama has promised not to raise taxes on the middle class, and not to increase the deficit. Unfortunately, we have to live with this until the plan passes Congress."

The Real Tax Burden
01/2009 - EasyOpinions

The real tax burden is current government spending. Government borrowing and delayed taxes are merely finance. It won't be just "the other guy" who will pay. The middle class and rich will pay in dollars. Poorer citizens will lose employment.

Company Paid Health Insurance is Part of Your Salary
12/2008 - EasyOpinions

You generate all of the wealth that pays your salary and the taxes associated with your employment. The employer writes the check, but you earned that money, and it would be part of your take-home pay if the burden did not exist on the employer. Competition for skills would arrange that outcome.

In the same way, when a company pays for your health insurance, it is merely writing the check with part of your earnings, earnings that you never see, but could control yourself.

Oct 3, 2009

Better Through Creative Statistics

Reagan's Unemployment Numbers
10/03/09 - DonSurber's blog - Comment by John D.


John D:  I am a little confused when I see unemployment numbers from the Reagan years compared to unemployment since 1993.

I believe that the Clinton Administration changed the formula for figuring unemployment to make the numbers smaller. They stopped counting the long term unemployed and those that had quit looking for employment.

Are the Reagan numbers being compared to numbers using the new method, or have the Reagan numbers been recalculated?

Surber:  They are not recalculated. Good point.

Don't believe government statistics and historical comparisons.

The Democratic President Clinton changed the unemployment computation to make his administration look better compared to Reagan and Bush the father. Bush the son didn't change it back; doing so would have made him look worse.

So, now we have unemployment statistics that specifically leave out the long term unemployed and those not looking regularly for work. People who are in part-time jobs are naturally left out, even if they consider this a fallback from former full-time employment.

This is fine for government, which claims that things are just as good as 20 years ago. This supposed progress is a result of manipulating the numbers.

This distortion builds over time as the definitions change to make things look better. The numbers become more unreal, leaving us ignorant about how effective our policies are.

USA Healthcare is First - Infant Mortality is Low
01/08/09 - Easy Opinions by Andrew Garland

Health statistics are intentionally misrepresented to argue for socialized medicine. The major argument is that the US spends more than Europe, but lags behind in health outcomes. So, US healthcare is both expensive and inefficient. Actually, government administration hides much of the socialized cost, and the USA has better health.

Consumer Price Index -
Things You've Suspected But Were Afraid to Ask

10/01/06 - Shadow Stats by Walter J. Williams (John Williams)
Via 11/05/08 - Alpha Dominance

[edited] Inflation, as reported by the Consumer Price Index (CPI) is understated by roughly 7% per year, due to recent redefinitions of the numbers and flawed methods, particularly adjusting prices for changes in quality.

The CPI was designed to help everyone adjust their financial planning to the impact of inflation. Since the early 1980's, these statistics have changed to meet demands from miscreant politicians. Politicians were and are intent upon stealing income from social security recipients, without public discussion or Congressional approval.

The Clinton Administration changed the CPI to significantly understate inflation, along with changes in the late-Carter and early Reagan Administrations. This has reduced current social security payments by roughly half from where they would have been otherwise.

Anyone who receives payments adjusted by the CPI has been similarly damaged. On the other side, the government makes out like a bandit making payments adjusted by this lowered CPI.

Sep 17, 2009

Memo - Health Plan Deficit Reduction

From:   Chairman [redacted] of the [redacted] Committee
To:        Healthcare Reform Drafting Group II
Re:        Finessing the Health Plan Deficit

( This is a Class I rice-paper memo. )

The estimated deficit for our health reorganization plan is causing us trouble in the press. President Obama has promised not to raise taxes on the middle class, and not to increase the deficit. Unfortunately, we have to live with this until the plan passes Congress.

After passage, we will spend what it takes, just like the last times.

Please hold off on more complexity. I asked for enough boards, committees, commissions, and regulators to confuse things and distract our opponents. You went overboard, but that is not a big problem. Just don't add more.

(Jim, that advisory commission on do-it-yourself birthing is out. I know it would save money, but it is out for now.)

Here is how we will handle the cost. Pick a big cost to convince people that we are serious. Too small looks like we might be hiding things. (If they only knew.) Keep it under $1 trillion over 10 years. That seems to be the right psychological price point for the public.

Now, this is how we will "pay for it". Assign whatever fees (not taxes!) you want against insurance companies, big businesses, and "private" doctors. Make the fees big enough to cover the entire added cost of the plan. Yes, even if you think we can't raise that much money from those fees.

The Congressional Budget Office will score the plan based on the fees we say we will raise. They will find that the plan is covered, and that is all we care about. We have convinced the public that only deficits matter, not the actual cost.

Our opponents will express doubt that we can collect all of the money we say we will. But, that is just their opinion, and the CBO will go along with us.

So, we will have a plan that does not increase the deficit, and there are no taxes on the middle class, only fees on evil companies and rich doctors.

To Fred: Yes, the fees will be passed through, and effectively would be a tax on employees and patients. I appreciate your insight. Forget about it. We will be rearranging everything in any event, after the bill is in effect for a while.

Good work everyone. Just a few more all-nighters, and we will get this thing passed. Remember that there are enough boards, committees, commissions, and regulators to provide plum assignments for all of you.

This is a rice-paper memo, distributed on edible paper and written in edible ink (raspberry). Please eat this memo after reading.

Nutrition Label: Fat 0g   Protein 0g   Carbohydrate 4g
Dietary Fiber 1g.  Free of gluten and tree nuts.

US Printing Office G5-034 236 Washington D.C.

The Real Tax Burden
The amount of tax that a government imposes is the amount it spends. The timing and amount of tax collections is merely finance.

Econ 201: The Myth of the Economic Multiplier
Government spending doesn't multiply anything. It takes resources from taxpayers and applies them to government projects. You get a bridge or some paperwork, that is it.

Sep 14, 2009

Obamacare Bails Out Medicare

Obamacare is really the Medicare bailout
09/12/09 - Daily Mail by Don Surber

Medicare Is No Model for Health Reform
Many doctors refuse Medicare patients because payments are so low.
09/11/09 - WSJournal
  by Grace-Marie Turner and Joseph R. Antos

Medicare And Social Security Unfunded Liabilities
03/24/04 - Parapundit by Randall Parker


I agree with Don Surber that "Democrats need the trillion-dollar [taxation and spending of] Obamacare to mask the truth that Medicare is a failure."

The rush for "healthcare reform" is driven by the fact that Medicare and Medicaid are broke. Democratic politicians are trying to scurry for political cover to avoid blame. They have promised benefits for 30 years that they can't deliver to the current population of baby-boom retirees.

Medicare Fact List

Turner and Antos [edited]:

  • Medicare is going bankrupt, with unfunded promises of $38 trillion (38,000 billion).
  • Private payers are subsidizing Medicare. The average family in a private plan pays $1,788 a year to compensate for Medicare/Medicaid underpayments. This is a hidden tax of $89 billion per year on the insured.
  • Expansion of entitlement programs threatens our economic security.
  • Low administrative costs are a myth. Medicare's administrative expenses would be twice as high if costs for revenue collection, personnel, and enforcement were properly included. Plus, private insurers provide many services that Medicare does not.
  • Medicare is rife with fraud. 3-10% of all medicare spending is wasted.
  • Medicare does not provide comprehensive coverage. It covers only 50% of senior's health costs, and most pay for supplemental "medigap" insurance.
  • The Medicare model is obsolete, frozen in bureaucratic rules set in 1965.
  • Many physicians do not accept new Medicare patients because payment rates are so low. Medicare almost always imposes price-controls to lower costs, rather than promoting innovation and efficiency.
  • Medical decisions are made in Washington. Medicare has cut funding for the cancer drug EPO, implantable cardiac defibrillators, and virtual colonoscopies. Providers battle with politicians, while patients and doctors can only watch from the sidelines.
  • No one is running the show. The Obama administration has not yet nominated an administrator for the Centers for Medicare and Medicaid Services.
  • Medicare does guarantee health coverage, even if not as good as advertised. But, it will not be able to pay all the hospital bills that will come due in eight years.

Going Broke

"Going broke" means that current medicare taxes of 2.9% on wages are not enough to pay for Medicare. The shortfall for Medicare alone is about $61.6 trillion ($61,600 billion). Not a typo. Medicaid is mostly a mandate on the states with federal matching funds from general taxes, also going broke.

The total production of the U.S. in 2008 was about $14.25 trillion ($14,250 billion). Total tax payments by "the rich" are currently about $1 trillion ($1,000 billion).

The total picture is even worse, as reported by NCPA Senior Fellow and Social Security/Medicare Trustee Thomas R. Saving (via Parapundit Mar 2004):

  • Social Security's unfunded liability is $10.4 trillion ($10,400 billion).
  • Medicare's unfunded liability is $61.6 trillion ($61,600 billion). [An estimate above is $38 trillion].
  • The prescription drug benefit is underfunded by $16.6 trillion ($16,600 billion).
  • By 2020, the combined deficits in these programs will consume more than 1/4 of all federal income taxes.
  • 2030 is about the midpoint of baby boomer retirement. Combined deficits will consume more than 1/2 of all federal incomes taxes.
  • Today's college students will reach retirement age in 2050. Combined deficits will consume more than 3/4 of all federal incomes taxes, just to pay benefits currently promised.

The unfunded liabilities above add to $88.6 trillion. The total 2008 production of the U.S. was $14.25 trillion, about 1/6 th of those unfunded promises.

For comparison, an income of $50,000 would require that you pay about $300,000 toward these unfunded promises. Is that going to happen?

Economic Reality

I think politicians know that they can't raise taxes enough to fund the Medicare/Medicaid promises, and want a way to hide their responsibility for the coming denial of services.

One way is to put everyone into the medical care pot. We then all get equal amounts of services at whatever high tax rate the government can levy. The young must be coerced into this system, to extract as much money as possible to serve the old.

Of course medical services will be meager under "health reform", with rationing and slow delivery for everyone. The government has promised $88.6 trillion in unfunded services. Politicians now find that just $1 trillion in increased cost during the next 10 years is politically unacceptable. That is the center of the healthcare debate. So, $88 trillion in promised services are not going to be delivered in the next 75 years, more than $1 trillion per year. This would also kill any progress in medical care, as we all stew in the rationed system that covers over the fraud of the mostly Democratic politicians.

The alternative is more fair but also ghastly. The government made promises to the now-old that it can't keep, and the now-old did not pay enough for their own care or retirement, relying on the wishful-thinking or lies of the government.


The moral question: Are the now-old responsible for the choices of the politicians who provided wishful-thinking or lied to them? I think that they mostly are. Everyone who supported and voted for these government programs deserves a lot of the problems that they are going to have.

The government is supposed to be a wise planner, arranging for a future that is beyond the calculation of most people. Instead, it has acted selfishly and wastefully, taking the money (resources) that the now-old could have used more wisely, and squandering it so that it is not now available.

The younger portion of the population should watch out. They fancy themselves to be caring people. The government is going to hold them to that vision by extracting very high taxes, or trying to. It will be interesting to see if that caring attitude holds up against 30-40% taxation.

Real Tax Rates

Above, I said that the medicare tax rate on wages is 2.9%. But, the government says that the rate on the worker is only 1.45%, with the employer paying an equal amount. The same claim is made for Social Security taxes of $6.2% on your gross wages, up to a wage limit of $106,800 in 2009. The employer pays a matching amount, sending a total tax collection of 12.4% to Social Security.

Wake up. You generate all of the wealth that pays your salary and all of the taxes associated with your employment. The employer writes a 1.45% + 6.2% check, but you produced that value, and it would be part of your take-home pay if the burden did not exist on the employer. Competition for skills would arrange that outcome.

In the same way, when a company pays for your health insurance, it is merely writing the check with part of your production. That value doesn't show on your pay stub, but you could receive that value in salary if the employer did not pay that expense on your behalf.

You may object that your employer is not now providing health insurance to you. In this case, your productivity does not support that expense for the employer. If the government decides to force the employer to provide health insurance, that cost will either come out of your current pay (the employer will offer less salary to you), or you will be fired.

Government-Run Health Care Works So Well! All that recordkeeping. Who would have thought that we needed even more.
12/25/09 - Advice Goddess Blog by Amy Alkon
Amy Alkon has my thanks for linking to my post. That is probably why you are reading this. (amg)

[edited] "New York's Medicaid system, the state's largest single expense, lost at least $92 million to improper payments, billing errors, and poor recordkeeping during the last five years."

20-Somethings Will Pay for Big Government Pay up. Your elders know better what to do with your money.
09/16/09 - Cato@Liberty by Daniel Griswold

Younger workers are healthier than the general population, and many choose rationally not to buy comprehensive health insurance. Drafting young adults into health-care reform is crucial to pay for it. They would subsidize older, sicker people by paying premiums much larger than needed to cover themselves.

Six Ways the U.S. Won't Escape Its National Debt
08/25/09 - Scrivener.net

[edited] The US national debt plus unfunded promises for Medicare, Medicaid, Social Security, and federal employee/military pensions, is staggeringly, unsustainably large at $69 trillion by the end of 2009.

The seven possibilities discussed by Arnold Kling are: Muddle through, Technology to the rescue, Policy changes, Inflation, Hyperinflation, Wealth tax, and Default.

In fact, the ONLY solution for financing these promises is increasing taxes or cutting the amount actually paid, or both. It must happen. The numbers make nothing else possible, so it will happen.

USA Healthcare is First - Infant Mortality is Low

Health statistics are intentionally misrepresented to argue for socialized medicine. The major argument is that the US spends more than Europe, but lags behind in health outcomes. So, US healthcare is both expensive and inefficient. Actually, the USA has better health.

Company Paid Health Insurance is Part of Your Salary We'll tell them that we are taxing the employer. They won't figure it out.

Your productivity supports all taxes and expenses that your employer sees as part of employing you. If those expenses become too great, then the employer cannot offer that job to you.

Medicare Myth: Low Administrative Cost We have millions of administrators in government, with more on the way

Medicare claims 3% administrative overhead, compared to 12% for private insurance. But, Medicare doesn't count all of its expenses, and private insurance is burdened with taxes that are part of its "overhead". Medicare overhead per patient is actually 25% more than for private insurance.

Healthcare Posts