Friday, 18 December 2009
Wednesday, 28 October 2009
Tuesday, 27 October 2009
Monday, 26 October 2009
Tuesday, 20 October 2009
Friday, 9 October 2009
I have always been sceptical of people who support increased government power explaining why this or that further incursion is “for my own good,” or prop up the action by offering that opposition to it must necessarily be due to lack of clarity, or worse, because of propaganda that has obscured. Now that the Democrats appear to be on the verge of passing some sort of health care bill (really, calling a piece of legislation that is physically larger than the Manhattan yellow pages is a stretch), and Speaker Pelosi has said that it *will* include some sort of ‘public option,’ I’ve decided to set aside my worries about Big Government and embrace the creeping socialism.
Before I get into any further detail, I’d like to start with a few clarifications ahead of time.
I think the Republican Party has contributed in a large way to the mess we are in. I voted for President Obama. I do not believe he is a crypto-Moslem plant, nor was he born in
But I do believe that the “public option,” as is being discussed by the Democrat House leadership, is a kind of soft socialism. Using monies taken by taxation from one group of people to redistribute in the form of services to others who have not paid for those services is almost the definition of socialism.
Accept it, and move on.
So, in that spirit, here is what I propose as a sort of sugar (Splenda, perhaps?) to help the socialism go down.
Let’s have a public option. But let’s make it a real option, not something delivered at the point of a tax policeman’s gun.
Let the federal government set up a true insurance scheme, run and administered by government experts. Put whatever rules into the plan that they think will make it ‘work’ (i.e., it must cover this that or the other procedures, cannot charge higher premiums according to actuarial data, cannot refuse care for pre-existing conditions, etc.). Allow it to negotiate fees, prices, and co-pay rates. Give people the option of buying into this system or opting out. The profit motive presumably would be removed, and the only goal of such a scheme would be the health of its participants.
That is what proponents such as Dennis Kucinich and Bernard Sanders argue is the fundamental problem with private insurance, and hence the motive of pushing a public option.
But this public option must be subject to the same rules as other choices. Doctors and other health care providers can freely look at re-imbursement and other factors, and choose not to take patients who use the public option.
And, most important of all, require that this public option be self-sustaining. Put simply, it cannot use tax money for funding, and must be sustained by the premiums paid in by its participants. The bottom line here is, the word “option” implies that one has choices, and that participation is voluntary, not compulsory. I like the current health insurance I have, and I do not want to see my quality of care go down (which it would with the sort of single payer scheme seen in Canada or the UK) and my costs go up (which I suspect they would given what Speaker Pelosi is pushing – expanding “coverage” to 45 million additional people).
The maths simply do not work – you cannot provide the same level of care to a larger group of people without an increase in total cost. And presumably, since these additional 45 million (or whatever number you choose) currently do not participate in the current system because they cannot afford to, they would use resources without contributing a proportional amount of money.
Put simply, health care reform, with a public option, must not be yet another means by which federal kommisars rob Peter to pay Paul.
I propose we go forward with this reform, inclusive of such a public option, and after a period of years, see how it has worked out.
Thursday, 8 October 2009
Friday, 25 September 2009
Friday, 11 September 2009
Thursday, 10 September 2009
Tuesday, 19 May 2009
The Democrats are very, very fond of talking about "shared responsibility," and people paying "their fair share." (nota bene the use of the word "share" in each talking point.) What, exactly, do they mean:
Yep; as with the housing melt-down, and the spending of tax money like Frank Sinatra on shore leave, those of us who now are foolish enough to actually use our credit cards responsibly - who apparently have been "getting a free ride" - will further subsidise those who don't. Our fees will go up; our interest rates will rise. All so that those who do NOT use credit properly can be cushioned from their own sloth, cupidity, and downright foolishness.
I ask Mr Obama and Ms Pelosi: At what point are you going to stop telling me how much "responsibility" for others I need to share, and start asking those who are getting us into this mess need to share some responsibility for themselves?
After all, when I was in kindergarten, "sharing" involved more than one person.
Wednesday, 15 April 2009
On page 214 of the book is a discussion of autism and, in layman's terms, describes its impact on the ability to read faces. One of the studies mentioned is by a professor at Cambridge University in England called Simon Baron-Cohen, who is a pre-eminent researcher into autism spectrum disorder.
Now, most people who come across that name would pass over it without a second thought, but if I mentioned another name, Sacha Baron-Cohen, some eyebrows might go up. If I said "Ali-G," a few more would have a glimmer of recognition. But if I said "Borat," virtually everyone in the US between the ages of 18 and 40 would immediately have an a-ha moment.
Simon Baron-Cohen, a world-renowned researcher into autism, is the cousin of Sacha Baron-Cohen, an actor and comedian who created the character Borat.
Thursday, 19 March 2009
The piece was written by a man called James Stewart, which is itself rather a bit of an inside-joke, given that James Stewart the actor often starred in films that glorified the little guy in his fight against the plutocrat. This incarnation would seem to favour Lionel Barrymore.
Mr Stewart - the writer, not the actor - raises what I am sure he thinks is something of a defence of the so-called rich, and deploys as his foot-soldiers various numerical arguments. The fulcrums (fulcra?) on which this rests are the suppositions that the "rich" are not necessarily so rich, have suffered more than the general population in the current economic downturn, shoulder a larger tax burden, and are largely not criminals.
Now, most people who have more than the intellectual discipline of a housefly understand that the final point is a straw-man. Of course most of the rich are law-abiding, his plaintive comment: "Yet, as hard as it may be to believe, the overwhelming majority of people earning six-figure incomes aren’t criminals or spendthrifts" notwithstanding. Mr Madoff is a criminal, but the guys over at AIG who approved "retention" bonuses are only criminally stupid, which itself is not yet illegal. We are still waiting on the California Supreme Court to rule on that one.
But looking through the rest of Mr Stewart's opus, there are three essential points.
One, those who are high earners (six figures) have suffered greater losses than the typical man on the street.
Now, the first problem with this argument is practical. There are not actual data to show exactly how the losses have skewed; Mr Stewart instead says "it's fair to say" that because the decline is largely driven by stock losses, that stock ownership skews to the wealthy, and therefore, losses are "steeper" for them.
The Federal Reserve released statistics last week that showed Americans collectively lost $5.1 trillion of their net worth during the last three months of 2008 and $11.2 trillion for the full year. The numbers don’t break that down by income level, but I think it's fair to say that much of the drop came from the steep decline in stock prices, and stocks are owned disproportionately by high-income people. Indeed, stock ownership is so skewed to upper-income households that the percentage declines are probably much steeper for them, more likely in the 30% to 40% range.
That means anyone who was a millionaire at the beginning of 2008, and had a million dollars invested in stocks, has lost about $300,000 to $400,000, which is in line with what I’ve been hearing anecdotally. And the losses have only multiplied this year as the market continues its descent.
I'd like to see the numbers before I agree what is fair, and more important, what is accurate.
It's true that the average guy is less likely to own stock, but he likely does have a pension and/or 401-k, which is intrinsically linked to stock performance. I know my own 401-k is off by about 35 per cent, and my son's college fund has lost about 40 per cent.
Second, he fails to make the distinction between "a millionaire" and those who have "a million dollars invested in stocks." Americans to a large degree are disgracefully innumerate, and do not understand the differences along a scale of someone whose net worth is $100,000; $1 million, and $10 million. The differences are, to say the least, enormous. And when he conflates someone with an income between $200,000 and $300,000 (which comes later) with the jet-set who have a million dollars worth of stock, he is directly playing on this ignorance.
And this ignores the existential issue that the "losses" in this case are largely paper losses. If your stock portfolio drops 30 per cent, you only "lose" that money IF YOU SELL when it is down. So while it is true that Warren Buffet's net worth has declined, he in actuality has not "lost" anything in this regard. In fact, to use Mr Stewart's own implied argument, "I think it's fair to say" that, given the current low stock prices, many of the super wealthy are quietly acquiring stocks at bargain prices that their other assets allow them to acquire, and when the market turns up, they will have grabbed an even larger share of the wealth pie than they had before. To extend the Stewart/Barrymore metaphor, as George Bailey said of Mr Potter, he's not selling, he's buying. In five years, we'll see the endgame of the current situation.
Second, Mr Stewart raises the issue that the rich are taxed at disproportionately higher rates:
This group also pays a disproportionate share of income taxes, even before Obama's proposed tax increases. The top 1% of earners are expected to pay 25% of all personal income taxes this year, and the top 5% to pay 40%, according to Tax Policy Center's latest figures. It's no wonder that the people I know who earn $200,000 to $300,000 are incredulous to be branded as “rich.” They certainly don’t feel that way.
By contrast, let’s take a look at the top 400 earners, who in 2006 (the most recent year for which data are available) earned an average of $263.3 million. Now that’s what I call rich. These 400 people paid on average $45.2 million each, and collectively paid a remarkable 1.77% of all personal income taxes that year, the highest percentage since the IRS has been keeping records. They also paid an average rate of just 17%, the lowest ever, largely because of their massive capital gains, which are taxed at a low rate. Presumably those gains will seem a distant memory by the time the 2008 data are compiled. But imagine if they were paying at the top rate of 35%. That would roughly double their taxes paid in 2006, to $90 million each, or a total of roughly $36 billion. And that’s only 400 peopleWhat a fair distribution of the *income* tax burden ought to be is subjective - I am certainly no communist who thinks that the tax burden ought to be borne exclusively by the wealthy, and think that the Obama plan (like the "fix" passed last month in Sacramento) represents if not socialism galloping at full speed, is at least of the creeping sort.
But let's get real here.
This argument obscures the truth in two ways. First, it focuses exclusively on income tax, ignoring sales, property, and other taxes that all essentially pay. Rich or poor, if you go to purchase a shirt, you pay the same sales tax. And second (and more important), the author focuses on income, not wealth. In this point, the top one per cent of earners are said to pay 25 per cent of all income taxes. Well, what share of the national wealth does this one per cent control?
Third, there is the argument that the wealthy are not, in fact, rich as they are portrayed. Mr Stewart opens with comments about resorts, private jets, and luxury condos, and ends up talking about people earning "six figures" and/or the theoretical target of the Obama "rich guy" tax ladder ($300,000 per annum in income).
The two (three) groups are not the same. A private jet of the sort that Steve Jobs flies around in is tens of millions of dollars. I would suggest that virtually no one earning $250,000 flies frequently in a private jet, or goes to the sort of resort that Jobs or Dick Fuld is able to frequent. To this point, there is a huge problem in homogenising "six figure" incomes - itself an enormous range of 100,000 to 999,9999 - someone earning $300,000, and multi-millionaires.
Mr Stewart again is using the fact that Americans simply do not understand the enormous gulf between 100,000, one million, and ten million as a blunt club.
He turns to a hypothetical individual with an annual income of $200,000, living in Manhattan:
In New York City, for example, $200,000 in income yields roughly $100,000 after all taxes (including the unincorporated business tax, which applies to anyone who’s self-employed). If you're following the prudent rule of thumb that you should spend no more than one-third of your after-tax income on housing, that means $33,000, or less than $3,000 a month, can go toward housing — barely enough for rent on a one-bedroom apartment in Manhattan. As for buying, the collapse in stock prices has wiped out much of what many people invested toward a down payment. New York may be atypically expensive, but many people who earn $200,000 and up have little choice but to live in a high-tax, high-cost location.
Now, it might be pointed out that the guy at $200,000 is, as of now, NOT going to be affected by the Obama tax rise, but that's somewhat akin to Titanic passengers complaining that their food was too cold.
What truly plagues this example are that, a) it is *not* the case that the person must live in Manhattan, and b) the 1/3 rule for after tax really does not scale up linearly.
For (a), the choice to live in Manhattan in the tiny one bedroom apartment is a choice. There is plenty of housing, along train lines, at much lower cost available in Brooklyn or Queens or Northern New Jersey. There are plenty of people who work at much lower salaries than $200,000 for whom Manhattan is simply not even a choice.
For (b), if one thinks about the application of the 1/3 rule for a second, the fallacy arises pretty quickly. Someone with an income of $75,000 who thus has an after-tax income of about $36,000 would have about $3,000 per month - $1000 for housing. THAT is a crunch, and leaves a total of 24,000 for all other expenses ($2000 per month) The guy in the example would similarly have 33,000 for housing, but $67,000 for other expenses, which is 5500 per month. I don't know about you, but 5 grand per month is a *lot* of money for discretionary spending. What he can buy with the difference in discretionary income over the person with the $75,000 income (more than three thousand dollars PER MONTH) is what makes him relatively "rich."
But more to the point, using this same model, someone who is right in the middle of the "six figure" income, $500,000, would pull down about $250,000 after taxes. If we apply the 1/3 rule to this, that's $83,000 for housing, or $6900 per month, leaving $167,000 for discretionary spend, or more than $13,000 per month. He has more than eleven thousand dollars every single month than the guy making $75k to spend on whatever he wants.
That's an awful lot of downloads from iTunes, isn't it?
To be fair to Mr Stewart, the person making $500,000 per year may not "feel rich," to be sure. But my guess is it's because he is looking from his apartment in Greenwich Village at people in his company who live on the upper East Side, or in Westchester County, and not the bridge and tunnel person who works for him.
So all things considered, the rhetorical question asked by Mr Stewart: "Considering taxes, who wants to be a millionaire," I suggest he look at the famous Pink Floyd song for an answer:
But if you ask for a rise, it's no surprise that they're giving none away.
Wednesday, 11 February 2009
Anyone of roughly my chronological age and intellectual maturity will immediately recognise the quote of one David Saint Hubbins (of the fictitious, eponymous band Spinal Tap).
I was thinking of Mr Saint Hubbins two evenings ago as I watched the infomercial that was being masqueraded as a press conference by President Obama. Other than the embarrassingly inappropriate question about Alex Rodriguez, and the bumptious interruption about Joe Biden's latest brilliance - what, exactly, is the confidence interval around his 30 per cent point estimate for the probability of failure - the questions were largely not even softballs, which at the least are moving. The questions were rather more like balls teed up for a six year old. I am curious; who decided, for example, that the Huffington Post is part of the press in any real way, or that, aside from the voices in Patrick Leahy's head, who exactly is clamouring for a "Truth and Reconciliation" commission?
I voted for Mr Obama in November, but I have to say, he is off to a rough start. One of the reasons I did vote for him is that unlike his opponent, he at least had a veneer of change and ran on hope rather than fear. But I'll be damned if he did not sound a lot like George W Bush last night, even if only as a different libretto to the same score of fear and anxiety.
As for change, is there anyone left who honestly believes that things are going to be done differently by a cabinet with more re-treads that the 1989 Yankees? Looking over the cabinet (Hillary Clinton? Wasn't she born in the Watergate Hotel), I am reminded of the old English sit-com "Are You Being Served," which ran when I was much, much younger. There was an episode in which the Ladies department had to share with Gentleman's Ready-Mades during a renovation. After all the hilarity of Mrs Slocombe's bras atop Mr Grainger's trousers, the curtains were revealed to show.... that nothing had changed.
"It's just the same," Mrs Slocombe exclaimed.
Young Mr Grace responded that everything had been outfitted with new wood.
I would offer that the new administration is a lot like Grace Brothers.
The cabinet is in fact, all new wood.
But aside from that, Mrs Slocombe, green hair and all, would recognise that this administration and what it is sellling is just the same.
Monday, 2 February 2009
Now, aside from the fact that this is basically theft, where does State Controller John Chiang get the chutzpah to tell people, whose money this actually is, that they must wait 30 days (or perhaps more) to get their money back?
What do you think the IRS, or in the case of Sacramento, the Franchise Tax Board, would say if, come 15th April, you said: "I know that I owe a few thousand dollars, but I am facing a 'cash shortfall,' and so I am going to hold back my taxes for 30 days?" For some reason, I think interest and penalties at the least would descend on you like the winged monkeys from "The Wizard of Oz."
California's fiscal irresponsibility apparently knows neither bounds nor shame. Some are saying the state is on the edge of a financial abyss. Could all those years of reckless spending finally be coming home to roost? Ah the joys of one-party rule.
Wednesday, 28 January 2009
Some months ago, I posted a comment on this blog
a question about what responsibilities one bears as a citizen of a country. I am reminded of the question today, as the folks in Washington debate just how to get us out of the mess we now find ourselves in due largely to our sloth, greed, and frankly, stupidity.
Put simply, what I see is more and more people being removed from the tax rolls, who, freed from the nuisance of having to pay for the "services" that they receive, will vote to expand their goodie bags at the increasing expense of the few of us who actually have to pay for them.
I once heard a quote that pretty aptly describes liberal compassion:
Compassion is A and B voting what they are going to force C to do to "help" D.
As you consider the so-called "stimulus package," ask yourself if you are a C or a D.
Wednesday, 7 January 2009
It's basically a back-of-the-envelope accounting of where the 50 "Best Places in America" to work are. Now, obviously this sample based on self-reported "satisfaction," carries with it all of the psychometric freight of that word as well as the inherent sampling bias. But setting that aside, a quick review of the list renders the following, most interesting top-line.
- Eight of the 50 firms are in management consulting (e.g., McKinsey, Bain, Boston Consulting). That's almost 20 per cent of the field. Now, given that in the industry I work in, consultants are the modern day equivalent of the biblical publicans - not sure if Jesus Christ himself would sit and have a meal with them - this is strange. And if Scott Adams is to be believed, the view goes beyond just my immediate neighbourhood. I guess these 25 year olds are just good enough, smart enough, and dog gone it, people PAY them.
- 10 of the 50 (20%) firms are new-styled tech (apps, software, services) companies - companies like Google, salesforce-dot-com, Citrix. I guess that there must be something to be said for loving what you do, since these guys are spending the lion's share of there time at the office working and playing ping-pong with their colleagues rather than at home with their families.
- There are several banks (Goldman Sachs is 26th). If this report were adjusted using linearly-weighted moving averages or some other tool for adjusting for the time component and hence implosion of Wall St, what would the outcome be?
- General Mills tops the list. No wonder Jerry Seinfeld always has a box or bowl of cereal in view in every episode of his show. After all, maybe they really are magically delicious.