Tag: KVNU FTP

Posts to cross-post at KVNU’s For The People blog.

Your Employer: Competitor or Collaborator?

Post author By David
Post date December 15, 2009
3 Comments on Your Employer: Competitor or Collaborator?

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photo credit: Trypode

This question is framed in terms of employer sponsored health care benefits, but it really applies to any employer/employee interaction. Are you working with your employer, or are you competing with your employer? To put it another way, is your employer working with you, or simply working you?

I ask this because in the health care debate there are two groups of people who have opposing views on this. One group argues that employer sponsored health care as the dominant source of health insurance coverage is destructive because it distorts the health insurance market by locking people into few if any options for insurance and locks them out of the economic decisions about what plans they want. They also argue that everything your employer spends sponsoring health care coverage is money out of the employees paycheck. The other group argues that employer sponsored health care is a good thing because that is the only way most people can afford coverage and if the employer were to drop coverage the money they save would not go back into paychecks, but would simply pad their bottom line.

The second group obviously views the employer and employee as competitors. These are the people who favor unions because the employee’s need to band together in order to stand up to their employers. This adversarial relationship dampens production and hampers progress. Before anyone gets too upset with this analysis let me just say that there have been situations where unions were necessary but they are no panacea.

Let me explain why I think the first perspective is more accurate based on my own experience.

Tags economics, Elevated, health care, KVNU FTP, thoughts, work

General

The Health Care Issue as a Catalyst for Debate

Post author By David
Post date December 10, 2009
13 Comments on The Health Care Issue as a Catalyst for Debate

photo credit: the queen of subtle

When I saw that Jim DeMint had written an article titled Our Health Care Mess Is a Symptom of a Much Bigger Problem my interest was piqued partly because I like DeMint as a senator and partly because I had just been saying the same thing in a series of comments with a reader from New York. It was exactly as DeMint predicted in his final paragraph:

The current debate over health care reform is a symptom of a bigger problem in Washington. But it can be the catalyst for a wider debate about the proper role of government in our lives.

The comments I was receiving demonstrated exactly what DeMint was talking about when he said:

All of these things have happened because we’ve stopped asking, “Should government attempt to solve this problem?” Instead, we start by asking, “How should government fix the problem?” It’s now considered a sign of admirable restraint to occasionally ask, “How much should we spend?” And somehow we started thinking that anything less than a trillion dollars is a bargain. (emphasis mine)

We can’t expect to come up with the right answer when we start by asking the wrong question. For too long we have been asking only how the government should fix our problems and not if the government has any business fixing those problems. Obviously there are some problems that the government should fix, but there are many that it should not address.

Because er have been asking ourselves the wrong question we find ourselves as a nation in this situation:

There’s not a word in the Constitution about the government deciding what medical tests private health insurers should pay for. Nothing about the government deciding how much executives on Wall Street should earn, or what kind of light bulbs and cars we should buy. There’s nothing about the thousands of parochial earmarks that fund local bridges to nowhere, golf courses, bike paths, sewer plants, and tea pot museums.

There’s nothing about these or many other things in the Constitution because they have nothing to do with the proper role of a federal government in a free society. But these are exactly the kinds of things our government spends its time and money on, and we don’t even question anymore why that is.

As the length of that list indicates we have had many opportunities to ask the right question. Hopefully health care will be the issue where we finally step back and ask the right question. Once we ask the right question we will begin to understand the truth that:

It matters because every time we give a job to the government, we take away some control that people have over their lives, and we take away a little bit more of their freedom. In return for letting government try its hand at solving a problem, we as citizens cede our ability to try for ourselves to find a better way.

It’s awkward to admit it, but my colleagues in Congress have led this country into the woods despite our oath of office. We swore to protect and defend the Constitution of the United States and to bear true faith and allegiance to it. The Constitution prescribes a very limited role for the federal government. There is not a word in our oath, or in the Constitution, about most of what we do. As we’ve wandered off the path of liberty, there are few crumbs left of the Constitution in the halls of Congress to lead us out of the woods. (emphasis mine)

If we honestly ask the right question we will undoubtedly reach some uncomfortable conclusions such as the fact that the government has already overstepped its bounds with things we would rather not alter, like Social Security and Medicaid/Medicare, but if we continue to shut our eyes to that primary question there will be no way to reverse our downward spiral, the best we could ever manage to do is quit digging the hole deeper.

Tags civic participation, comments, connections, discourse, government, health care, Jim DeMint, KVNU FTP

General

Too Rich to Go Bankrupt

photo credit: Stowe Boyd

By “too rich to go bankrupt” I don’t mean someone so rich that they never will go bankrupt. What I mean by that is someone so rich that them going bankrupt would destabilize our economy and thus they deserve a bailout if bankruptcy ever threatens them. (Think Bill Gates plus Warren Buffett plus everyone who gets a paycheck from Google.) More on that later . . .

In discussing the role of the federal government in an economic recovery Ronald Hunt and Charles D. brought up the issue of the role of corporations. Charles was good enough to provide links to a 2-part article by Richard Grossman from 1998 (Part 1, Part 2) that did a good job of discussing how corporations have turned into very unwieldy masters over “we the people.” I was amazed when I first realized that these articles, which are so pertinent to our situation of bailing out “too big to fail” institutions was written more than a decade before our massive Bush bailouts.

I especially enjoyed a couple of quotes from the second part of the article:

the Supreme Court of Georgia, in Railroad Co. v. Collins, wrote: “All experience has shown that large accumulations of property in hands likely to keep it intact for a long period are dangerous to the public weal. Having perpetual succession, any kind of corporation has peculiar facilities for such accumulations . . .” (emphasis mine)

And from the end of the first part:

In Richardson v. Buhl, the Nebraska Supreme Court in the late 19th century declared: “Indeed, it is doubtful if free government can long exist in a country where such enormous amounts of money are… accumulated in the vaults of corporations, to be used at discretion in controlling the property and business of the country against the interest of the public and that of the people, for the personal gain and aggrandizement of a few individuals.” (emphasis mine)

Tags bailout, economics, Elevated, government, KVNU FTP

National

A New Federal Role in Economic Recovery

Post author By David
Post date December 4, 2009
15 Comments on A New Federal Role in Economic Recovery

My post on fundamental assumptions generated some good discussion which began waxing economic in flavor. As part of that discussion I had a new idea about a more reasonable approach the federal government could take to soften economic hard times without outright manipulating our expectations of reality as they do now.

I should start by clarifying my perspective on what the federal government does and what is economically realistic. Economic realism insists that we recognize the inevitability of economic downturns. They are going to happen. Unfortunately the assumption at the federal level seems to be that we must strive for perpetual economic growth – we might tolerate one or two quarters of a mild contraction but anything beyond that is unacceptable. As proven by our significant and now two year old recession sometimes the economy needs to undergo a much harsher adjustment – especially after the government has been pumping the supposedly healthy market with perpetual stimulus for years. (I know, they have not called anything they did stimulus until the stimulus bill in early 2008.)

Personally I think a better approach to the federal government smoothing the rough spots out would be to establish a baseline – let’s say 5% unemployment – where any state meeting that baseline would not receive any federal economic assistance to combat unemployment. Then they would look a the spread between the unemployment rate of various states and be allowed to give economic aid to any state with at least 5% higher unemployment than the state with the lowest unemployment. The upper limit of that aid would be equal to 1/3 of the difference in unemployment between the higher of 5% and the unemployment rate of the state with the lowest unemployment with the limitation that government aid cannot help one state leapfrog another. Let’s show what that would mean with current (October 2009) numbers.

The state with the lowest unemployment is North Dakota at 4.2% so any state with more than 9.2% unemployment could get aid from the federal government to help lower their unemployment. For the October 2009 numbers that would mean that only 21 states could get any federal assistance rather than having the federal government trying to jump start the economies of all 50 states. Of those 21 states Arizona, Missouri, and Washington (at 9.3% unemployment) could receive aid equal to 0.3% of their respective economies (they would not be allowed to leapfrog Idaho and new York which have 9% unemployment and cannot receive this federal aid because they are within 5% unemployment of North Dakota’s unemployment rate). In fact, 12 of the 21 states would receive enough aid to bring them equal to the 9% unemployment rate of Idaho and New York because that would be less than 1/3 of the difference between their actual unemployment rates and the magical 5% unemployment. At the other end of the scale Michigan, with the highest unemployment would have their rate cut below 12% from their current 15.1%.

If every state had unemployment rates over 5% the new benchmark would be the lowest unemployment rate of any state. If we imagine that lowest unemployment rate was 6.5% (adjusting all states up to 6.5% and leaving states with higher unemployment where they are) only states with unemployment over 11.5% would receive aid, six states in all, and only Michigan would get the full 1/3 of the difference between their rate and the base rate of 6.5% (leaving them with 12.2% unemployment).

If all states were below 5% unemployment or if they were all clustered between 3.5% and 8.5% unemployment then the federal government would not give unemployment assistance to any of the states. If anyone is curious to see them, I have all my numbers in a spreadsheet that you can download.

The fact is that of the economy of the entire nation is slumping then no government program can provide a solid foundation to real economic growth – all it can do is produce the illusion of economic stability. Real economic growth can only be build on fundamental economic change, not on the illusion of stability provided by printing money and manipulating interest rates. While committed free marketers would likely hate my proposal just like they hate the current government intrusions in the economy and while those who don’t object to socialism will find my suggestions very harsh on downtrodden regions of the nation, I think that my idea is much better at providing a cushion for the hardest hit areas while allowing the economy to shrink or grow towards whatever the realities of our national economy are which the government tries so hard to mask right now as if our perceptions were the only economic reality worth considering.

Tags bailout, economics, government, KVNU FTP, money