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May 27, 2010

Social Security Grandchildren

Retirement Policy
05/26/10 - EconLog by David Henderson

[edited]  A friend of mine retired at 65 and went to register at the Social Security office.

Clerk:  Do you have any children under age 18?
Friend:  One. Why do you ask?

Clerk:  You will get an extra monthly payment until the child turns 18.
Friend:  This must be pretty rare. In my case, I couldn't get pregnant, and so we adopted when I was in my late forties.

Clerk:  It's not at all rare. Many grandparents in this area adopt their grandchildren.

Are you 20 to 45 years old? Then, you are paying 12.4% of your real salary into Social Security to support current benefits being paid out. I hope you don't mind losing that money, because the above Social Security policy puts little value on it. Your politicians will not adjust the rules to eliminate the above gaming of the system.

You probably will never see a return on these taxes you have paid or will pay. The "Social Security surplus" is a piece of paper at the Treasury that totals up the amount of Social Security taxes collected but not yet spent on Social Security. But, that money has already been spent on other things.

That money has been spent each year out of the general Treasury fund. It isn't there. There is no gold, stocks, or anything of value there. There is only an IOU, a promise from the government to repay to itself the money owed to future retirees. Only higher deficits or much higher taxes on your children can supply that value.

Amazingly, this is like an insane person saving up for his children's college education. He puts $100 each Friday into his savings account. Each Monday he takes out that $100 and spends it on food and entertainment, but he carefully records what he has borrowed from the "college fund".

When his kids are 18, he tells them that he saved $50,000 over the years. He only has to pay back what he took out, or borrow the money in the name of the children. Are they happy at that result?

This has been justified over the years with the slogan "we owe the money to ourselves, so why not spend it now?" OK. Now, in your retirement, pay yourselves back.

Ponzy Schemes Like Social Security
01/01/09 - Easy Opinions

There is nothing real in the "trust fund". There is only a political promise to find the money somewhere that has already been spent. This is 300 times bigger than the Bernie Madoff fraud of $50 billion. It is a gigantic Ponzi scheme pretending to be a sensible government program.

May 23, 2010

Cass Sunstein Nudges the Discussion

Does Cass Sunstein Link to Richard Epstein?
05/20/10 - Cafe Hayek by Don Boudreaux

[edited]  [Czar] Cass Sunstein is head of the White House Office of Information and Regulatory Affairs.

This radio interview reveals he would discard the letter and the spirit of our First Amendment rights, our rights to freedom of speech and freedom of the press.

Sunstein wants political websites to ‘voluntarily’ supply access to sites offering views from ‘the other side’. If they didn't, then Congress could force them to do it.

+ + +
Future news:

The "Fair Access to Opposing Views on the Internet and Elsewhere" law has produced some interesting references on the Web, often called "Sunstein Links". For example:

- See also   The idiotic, unconfirmed fantasies of delusional idiots.
- See also   Another Opinion (Warning: May contain pornography).
- For the opposing view see   Cass Sunstein is an effing %!@&#.

One development is the creation of "Interview Links". The offered link goes to an intermediate page asking three questions. A correct response transfers to the end link. One of the questions is often "Social Security Number".

Other services provide a "Variety Link" for a long list of topics. These links are completed by transfering to one of thousands of web pages classified by topic and political view, such as Republican, Democrat, Independent, Undecided, Che Guevara, ChiCom, Born Again, Pet Lover, Vegetarian, and Eastern Anarchist.

Congress is now debating whether this is fair, what the definition of a "link" is, and what "opposing view" means in law.

May 22, 2010

Wall Street Reform Bill

Financial "Reform" - Pablum, Confusion, Dishonesty
05/21/10 - Clean Government Now
Via Power Line

  • The bill is only tangentially related to the financial crisis.
  • This large, confusing, and ill-considered bill favors only one constituency: those rich enough to afford the legal team needed to craft a compliance regime.
  • The bill does nothing to address bi-partisan criticisms of the last "reform" attempted by Sarbanes, Oxley, and Spitzer. Prior "reforms" all but ruined the market for small company stock and the venture investment business that depended upon it.

This bill takes another step toward a European regime of political cronies in control of national investments (think Greece).

This bill regurgitates the nausea-inducing political spin, that the financial crisis was the result of "wild speculation" and "exotic instruments" on Wall Street. In fact, the crisis resulted from losing $2 trillion worth of fake AAA mortgage securities. $2 trillion is 14% of total US production for one year, or about 2 months income for everyone in the US. The crisis was supported by

  • Shaky insurance from a politically connected AIG,
  • Financial ratings granted by a few government-favored companies filled with "experts" of the kind this new bill relies on, and
  • Government-sponsored Fannie Mae and Freddie Mac buying up shaky mortgages [convincing most participants that they were safe].

This bill responds to every ill (perceived or real) by creating another sclerotic, disconnected, and flat-footed federal agency, filled with turf-meisters having too much authority and too little experience.

We could recognize the power of free markets, empower the native interests and intelligence that drive the vast majority of American business leaders, and enable true enforcement of the rules of the road.

Instead, this bill brings the vain courtiers and vapid egoists of the political court onto the center of the economic and financial stage. Read Alice in Wonderland as your guide.

The effect of losses in housing wealth is painful, but does not explain the full depth of our current crisis. The loss from bad housing loans is $2 trillion. The effect on housing prices is worse, reducing the market value of US housing by $3.8 trillion. Together, that $5.8 trillion is about 5 months of total national income at $14 trillion per year.

That would be bad enough, requiring many people to change what they are doing (change jobs) to meet the national need to save more, to replace what was lost. Worse, our government has reacted by increasing spending, making it harder to save and produce what people need now. This has deepened and lengthened the pain.

Obama and Democrats are spending money on larger government bureaucracies, higher government salaries, and building roads and bicycle paths. That cannot possibly be the way to create greater wealth for the average person.

Stimulus Does Not Cure a Recession
Jobs change when people change what they want to buy or can afford. It is possible to keep people at their low-value or unneeded jobs for a bit longer, only by wasting the savings that should be financing a real recovery.

Government Management of Doctors

Doctor:  I dreamed of being a doctor, and earned my M.D.
Mike:  I'm puzzled. Why are you managing a government department?
Doctor:  As a doctor, I realized I was mostly managing a government department. This way, I get paid to do it, and I go home at 4:00.

The Trend to Cash Medical Practice
05/21/10 - Chicago Boyz by Michael Kennedy

Medicare has degraded to the point where reimbursements minus imposed costs are not enough to support doctors. The true, awful promise of Obamacare is to make this worse. Medical prices have been grossly distorted along the way, with more distortions to come.

[edited]  I have written about doctors dropping out of Medicare, many quitting all insurance. I met a woman geriatrician who is the only fellowship trained geriatric specialist in central Iowa. Geriatrics as a specialty is a university subsidized field. There is no private geriatric practice because the doctor can’t survive on what Medicare pays. She tried and had to quit.

Quitting Medicare is remarkable when all your patients are of Medicare age. Medicare was harrassing her because she was seeing patients too often. Many were frail elderly living at home. She dropped out and began charging cash. She made a decent living after a year and was happy with her decision.

Another doctor discovered he was able to do very well financially, have high patient satisfaction, and deliver good quality of care, by avoiding the administrative and bureaucratic hassles of Medicare. Surprisingly, most of his patients are not wealthy. Half have no insurance, and another 15% use Medicare for other doctors.

If a doctor accepts any Medicare payments, Medicare requires that he charge their grossly inflated price. Then they pay 10-20% of that price. If Medicare discovers that a doctor has charged less to a cash patient, Medicare reduces his “profile” price to that cash price and pays 20% of that. A doctor simply cannot go to cash medicine and stay enrolled as a Medicare provider.

Newport Beach is one of the wealthiest communities in California. Their busiest hip surgeon has dropped Medicare and charges $1200 cash for a total hip. Patients are surprised, because total hips cost $5000. No, that is the Medicare price. He is charging cash at the same rate he would be paid by Medicare. People don't realize the discounting that goes on because insurance companies have been able to sign doctors to contracts.

- - -
05/21/10 - MDOD by 911Doc

I am dismayed at what our thoughtless political leaders are doing to a vital profession. Literally vital, maintaining life. Citizens, wake up, and don't allow our politicians to continue to screw this up. To borrow a phrase, if you think medical care is expensive now, just wait until it is "free".

[edited]  Over the last fifteen years a quiet coup has taken place in medicine. Decisions about reimbursement, schedule, responsibilities, and the shape of a physician’s practice have been co-opted by all manner of clipboard carrying administrative drones and academicians.

I don’t believe the drones to be evil per se; they are simply doing what we cannot now do. They work to support themselves and their families to the BEST possible extent within their comfort zone. But their ‘normal’ existence and the laws, rules, and regulations which have allowed their rise, has come at the direct expense of physicians and patients.

The expense to physicians is in money lost, and more importantly in confidence. The monetary loss is easy to understand: EMTALA and other government redistribution programs are unfunded, medical care comes at a cost, and someone must pay. Physicians, nurses, and taxpayers pay the most as providers of the services.

This redistribution has given to the poor, both deserving and underserving. It has supported illegal aliens by the hundreds of thousands. It has also paid cash from our pockets to the new drone class in medicine. After all, there has to be a drone class to file the papers and hold meetings about how other people’s resources and money should be distributed. It has to be done with a semblance of “fairness” even though the act is unfair on its face.

Physicians have been quiet as their stuff has been taken, their time at the hospital increased, their power quashed, and their ability severely limited to practice medicine as they had trained. Uncertainty has replaced confidence. A generation of academicians and older physicians have submitted to bullying, or worse, encouraged it.

In the comments, 911Doc advises a doctor in training:

[edited]  Do not look to medicine to provide some deeper meaning, or prestige, or mojo, or whatever. For better or worse, today, it's a job. That's all it is.

Now, you and I probably know differently, because we feel that there is something special about what we do, that we practice a noble and giving profession, and hopefully that counts for something somewhere. But perceptions, while often wrong, carry weight, and the perception now is that what we do is just a job, and that health care is a commodity and not an art. This perception may change, but if it does, it will be decades hence.

- - -
A Doctor Describes Government Management of Medical Care
07/03/10 - Big Government by Bret Jacobson  (YouTube video 3:37)

This doctor treated Medicare Patients, and was routinely denied payment. Medicare said: "We can't pay you right now, the computer is down". The computer was down for 18 months when she gave up.

- - -
The Political Distribution of Wheat
01/17/10 - EasyOpinions

A short analogy to what is happening in the market for medical services. What does a market for wheat have to do with healthcare? It is easier to understand.

[excerpt]  A politician sees a warehouse full of wheat. He takes some of it to distribute to poor voters and prospective voters in his district. The warehouse will have to bear the burden. He is applauded for his sensitivity and charity.

The politician is dismayed at the consequence. Maybe the warehouse goes out of business, as people switch to using a warehouse that the politician doesn't see or can't tax. Or, the price of wheat goes up as the warehouse is not completely refilled. The politician ignores the people who paid for the wheat or were expected to buy it.

May 18, 2010

Obamacare At Ground Level

Government:  Whoa! Why are you reacting like this? We are the ones qualified to plan for the future, and it is going to work out fine. We are changing everything, but you should keep on as if nothing has changed.
Business:  We must be unqualified. We see a different future than you do.

Fannie Mae Health Insurance
05/16/10 - Throckmorton's Other Signs

[edited]  The effects of ObamaCare are beginning to hit. New quotes for health insurance are scary for small businesses in our area and in surrounding states. Health insurance rates are going up 27-37% because of increased demands on private insurance companies and the costs imposed on businesses.

Companies are dropping health insurance. Patients can't get Medicaid because it is out of money. So, there are now more people without insurance, and those who have it have giant deductables and are waiting too long to get care.

Medical centers like ours that have an open door to the indigent are getting creamed. Demand from indigent patients is increasing, and demand from the under-insured is skyrocketing. The costs of practicing medicine are increasing exponentially.

This medical model is like Fannie Mae. Give everyone "healthcare" that they can't afford, hide the cost, and stick it to future generations. Then forclose and destroy the whole thing.

- - -
Throckmorton's sign
In case you were wondering. "Throckmorton's sign" is irreverent medical slang. The Throckmorton sign is positive when the patient's penis points to the side of the body showing a problem on a plain X-ray of the Pelvis. Throckmorton's sign is negative if there is no abnormality, or reversed if the problem is on the other side.

It is also called the John Thomas sign, after the common British euphemism for the penis.

- - -
If Obama were a Marxist, what would he believe?
10/17/09 - American Thinker by Kelly O'Connell

[edited]  These are the basic teachings of Karl Marx. Readers may judge for themselves whether these might be at work influencing current administration decisions. In the present chaotic political atmosphere, the phrase "Marxist" is tossed around without explanation. But what exactly does Marxism represent?
. . .
Critics claim Obama's budget is an example of the Cloward-Pivin model of planned economic destruction of a functioning capitalist economy via sabotage. Outlays are so gigantic, and so dreadfully misspent, that our financial infrastructure will soon collapse. A trillion dollar tax increase and spending rising by $10 trillion dollars over the next decade is probable.

If so, government default will occur, only offset by printing money, which will then bankrupt the general populace. The middle class will fall. Chronic inflation will result, causing America to lose its sterling credit rating. Global financial players will dump the dollar as it falls in value. Then, hyperinflation will accelerate, and the era of superpower America will end.

John Maynard Keynes' wrote "The Economic Consequences of the Peace". He commented on Russian dictator Vladimir Lenin's economic insights.

[edited]  Lenin is said to have declared that the best way to destroy the Capitalist System is to devalue the currency. Governments can secretly confiscate an important part of the wealth of their citizens by a continuing process of money inflation. There is no subtler, no surer means of overturning the existing basis of society than to devalue the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

- - -
Rahm Emanuel is Obama's Chief of Staff:

You never let a serious crisis go to waste. And what I mean by that, it's an opportunity to do things you think you could not do before.

If it is moral to politicize a crisis for a good cause, is it moral to create a crisis to bring about a thorough transformation of an imperfect and supposedly unjust society?

May 6, 2010

Stimulus Give and Take

Useless Stimulus and Phoney Green Jobs
05/05/10 - Aguanomics by David Zetland
Via Knowledge Problem

[edited]  A friend mentioned that he had hired an extra guy under the stimulus program.

"Yeah, they are paying 80% of his wages and overhead. It's a win-win for him and me ... but then I fired another guy; he just cost too much compared to the new guy."

So we get +1 job and -1 job = 0 new jobs, more profits for my friend, and more taxes for us.

This happened because my friend was encouraged to use this new program to "get America back to work." I'm guessing that this is happening across the country.

Bottom Line: You can't make jobs where there's no demand, but you can sure waste money pretending that you know what you're doing!

To paraphrase Thomas Jefferson: A government big and intrusive enough to manipulate incentives for your business, is big enough to screw up your business in other ways. Manipulation does not create jobs.