Wednesday, March 31, 2010

Obama can't even improve relations with Indonesia

Obama is nothing but campaign rhetoric and cynicism.  He delivers nothing.  Here's what he said during the campaign.

Instead of retreating from the world, I will personally lead a new chapter of American engagement. It is time to offer the world a message of hope to counter the prophets of hate. My experience has brought me to the hopeless places. As a boy, I lived in Indonesia and played barefoot with children who could not dream the same dreams that I did.

 And here's what he's delivered.

Washington Post headline: Anti-U.S. Views Rise in Indonesia

Obama - Post Racial no more

Commentary has the story.  Cynicism is the ESSENCE of Obamaism.

The Obama administration has asked a federal appeals court to uphold a race-conscious admissions system at the University of Texas at Austin, aiming to stymie a lawsuit that conservatives hope will spur the Supreme Court to limit affirmative action at public colleges.
The Texas case tests a 2003 Supreme Court decision that upheld a race-conscious admissions system at the University of Michigan Law School. That ruling in Grutter v. Bollinger said the law school had “a compelling interest in attaining a diverse student body.” By a 5-4 vote, the court prohibited “outright racial balancing,” but said race could be a “plus” factor to build a “critical mass” of minority students.

Fox News has best quarter in history: Q1 2010

Obama has been wonderful for Fox News.  Devastating for the media establishment, though.  6 more years of this and they'll be completely wiped out.  Nice consolation for years of Obamagony.

Joel Kotkin on the Cities of the Future

As Obama's Chicago sinks into irrelevance the dominant cities of America in the 21st century are in (gasp!) Texas.  Joel Kotkin has the story.

"Smart" Diplomacy done stupidly

And I thought that W was supposed to be the boorish rube:  Walter Russell Mead on trading places with Canada.

I don’t blame any American diplomat for seizing the opportunity to criticize Canada for its lack of sensitivity and inclusiveness; they do it to us all the time and I don’t see why the Canadians should have all the fun. Let’s criticize them for riding roughshod over the rights of small countries and native peoples now and then just to let them know how pointless and infuriating that kind of self-righteous and empty posturing can be. Even so, lecturing one day and begging in vain on the morrow isn’t the most dignified diplomatic posture an American secretary of state can assume. And the pattern of poor relations with close allies is disturbing. Currently embroiled in a quarrel with Israel over Jewish housing construction in East Jerusalem, the administration recently angered the EU by refusing to attend a summit in Madrid, embarrassed Britain by seeming to side with Argentina over negotiations over the Falklands Islands, canceled an invitation to Afghanistan’s President Karzai, and cheesed off Brazil when President Obama made his last minute, ill-fated dash to Copenhagen to snatch the 2016 Olympics from Rio. And where the administration hasn’t figured out a way to insult an old ally, Congress steps in — this time by passing another version of the Armenian genocide resolution through a key House committee.

The Flynn Effect

According to researchers the average child born in 1932 would have had an IQ of 80 versus 100 for someone born today.  This is the Flynn Effect which notes that IQs have risen over time.  It's a fascinating concept that has been supported  by recent research.  Scientists estimate that 12,000 years ago the average human would have had an IQ of 48 and that the rate of IQ gain has been accelerating since the industrial revolution.

For the record over a 30 year period IQs increase anywhere from 10 to 21 points on a normalized 100 point scale depending upon the sample (Spanish schoolchildren, Dutch conscripts).  The increases are almost all limited to the bottom half of the intelligence distribution.

It turns out that our parents really were dopes.  And that our kids are right about us as well.

University of Florida has 150 women for every 100 men this year

See here.  The rest of the young men are in prison or on probation.  Our insane drug laws have criminalized an entire generation of men.  This will have profoundly negative implications for families and our children's futures.

Our government has become incredibly cruel and destructive.  It has completely lost the consent of the governed.  It will not be long before it loses our cooperation as well.

This is the reason that we've been able to support more and more expensive and intrusive government

Technology has enabled productivity increases.  Most of the gains haven't gone to the people but to the tax eaters.  But at least we haven't gone backwards.  Carpe Diem has a full report on how much  information technology has fallen in price here.

One reason recovery is going to be slow - Canada kicks our rear

US Corporate tax rates are way out of line.

TORONTO GLOBE AND MAIL -- "Canada's relatively low corporate taxes have helped to make this country one of the best places in the world for companies to set up shop. Canada ranks second among 10 key countries as a cost-effective place to do business, and relatively low taxes are one of the main factors, consultantsKPMG said in a report released yesterday.

Hat tip Carpe Diem.

Gallup: Majority believe Dem healthcare tactics were an abuse of power.

Ya think?  What happens in America to political parties that abuse their power?  Here's the skinny.

Important Information - 10 rules for dealing with the police

Sadly, the police have become the sharp end of the spear for an increasingly intrusive and cruel state.  The Cato institute  has prepared a video explaining to people how to deal with this increasingly dangerous group.

It's a Great Depression for black Americans

The unemployment gap between blacks and whites has expanded since Obama's triumphal entry.  Not surprising since we've seen massive increases in the minimum wage.  

Of course it would be a lot higher were it not for all the black men in jail for the same crimes BHO, GWB and WJC committed hundreds and hundreds of times.

But with Obamacare radically increasing the wedge between wages paid to workers and the cost of those workers, there's going to be a whole lot more poor and working class minorities on the dole soon.

Hope!  Change!  Justice!

Aw snap 5

ANOTHER "Unexpected" Private employment drop. “Private payrolls unexpectedly fell in March, according to data released Wednesday. Private-sector jobs in the U.S. dropped by 23,000 this month, according to a national employment report published Wednesday by payroll giant Automatic Data Processing Inc. and consultancy firm Macroeconomic Advisers.”

Like in the Great Depression, the Capital Strike goes on and on....

Hat tip, Instapundit.

Understanding Obama - Obama vs. W with the troops

LA Times with the comparative photos.  While a picture is not dispositive, the fact that the LAT noticed the disparity is indicative of the difference in affection and respect the two leaders inspire.

How Do You Know what you know 8: The Nasa Data is worse than the Climategate data

When serious problems with the University of East Anglia climate series came out, the experts said 'not to worry', there are 3 other data series that say the same things.  Well it turns out that two of the three other series relied on the East Anglia series.  Today comes an admission that one of them, the Nasa series, is more badly compromised than the original data.  As Gomer Pyle would say:  Surprise X 4.

I'm betting the last 'independent' data series is even worse.

Hat tip Instapundit.

Tuesday, March 30, 2010

Our government out of control ad infinitum

Government forfeiture for fun and profit from the institute for Justice.  Hat Trick Instapundit.

Crescat Scienta Vita Graffitatur - U of C Graffiti is geeked to the max

Geekiest graffiti on the planet.

Sad story about the popular culture's fear of faith

Andrew Klavan has a personal story about how the culture can't stand faith and how it distorts reality.  The avatars of our culture are pathetic intellectual pygmies.

Total system failure

The system is failing across the board and the Leader rants on about "programs" and "policies" and other nonesuch.  Lets review:

We are running trillion dollar deficits and on a path to double our national debt in 8 years.

Medicare is in the red, with the deficits mounting exponentially.

Social security has gone red nine years early.

Our programs embed within them well over 100 trillion in unfunded, unpayable liabilities.

Interest rates are at historic lows and signalling a massive rise, meaning interest expense will go through the roof.  To be paid by printing more IOUs.

A new, unsustainable, unfunded entitlement has been passed drenched in accounting and other fraud that upon implementation will immediately go red.

The housing market has been wrecked by government manipulation and subsidies, the President announcing a new subsidy and manipulation program this week which will lead to more wreckage down the line. Which will lead to more manipulation, more subsidies, which will lead to more wreckage.....

"Tax Eaters" (government employees) proliferate with the Feds making twice and state and local making 40 percent more than actual wealth producers.  The "Leader" says they're important, after all they run everything.

The cost of school and college continue to rise at two to three times inflation, all paid for by a government that is broke.

The Federal government owns most of the domestic auto industry which is being run on behalf of its unions, they increasingly dominate the financial services sector with ever more intrusive and pointless laws.

The same people who've brought us educational, healthcare and financial chaos are working diligently to bring the energy markets under complete fascist suzerainty, actually seeking as a stated goal to double the price of energy.

The deep blue states:  California, Illinois, Michigan, New Jersey, New York are functionally bankrupt and with the exception of New Jersey, flailing deeper into bankruptcy with each passing day.

And now the dollar is starting to falter - blue chips are getting rates better than the Federal government, the auctions are ever more sparsely attended.  Nobody seems to be interested in holding dollars anymore.  The Euro's collapse has hidden its weakness but not for much longer.

Whole countries are sliding into bankruptcy.  First Greece, then Portugal, Spain, Italy.

Our "Leaders" are piling theft upon theft, chaos upon chaos, stupidity upon stupidity until the entire rotten stinking edifice collapses in total system failure.

People always think they have more time than they do.  One day, sooner than we think, the end will come 'as in the twinkling of an eye' and the wails will be pitiful to behold.  And when the hegemon goes bankrupt the world explodes in chaos.

And the "Leader" drones on and on and on.  We turn to each other:  "what did he say?".  And we make a note:  "Don't hire, don't invest, don't take least until this clown is gone".

Monday, March 29, 2010

A window into the Obami worldview 2

Heather MacDonald looks into BHO's experience as a community organizer and sees a man blinded by ideology.  A black man abandoned by his black father goes to organize a black community abandoned by its black fathers and decides that the problem is that there hasn't been enough government activism.

Self delusion is the most dangerous form of deception.  Particularly in a President.

T Dare explains state funded services

Their purpose is to ensure the government gets reelected. The waste is a deliberate investment toward that end. Mr. Darymple uses the British NHS to explain.

The No vote was bipartisan

Political Math points out that the "no" vote was bipartisan. The political left took its very temporary excess of power and jammed legislation down the throats of the moderate and conservative wings of our country.

Obamacare may not be 'repealed' but it's going to bleed to death from a thousand cuts.

The Obami have achieved nothing except to seal their own doom.

The Liberal Dilemma

Ramesh Ponnoru of National Review has an insightful article on why the very achievements of liberals stop them from governing as Liberals. Essentially the seeds of Liberalism's destruction lie within itself. "Must read internet".

Great leaders promote optimism

Poor leaders don't. "Only 27 percent of public believes the US can remain greatest country"

Well this is certainly "change".


According to the Trustees SS and Medicare unfunded liabilities now exceed $100 Trillion. Medicaid unfunded mandates add $10s of trillions more. Obamacare....well let's just say that it isn't going to be in the black.

Obama = "Boom".

Doesn't stand a whelk's chance in a supernova

Robert Samuelson, everyone's favorite "uber-moderate" economist agrees with healthcare economists across the ideological spectrum that Obamacare doesn't stand a whelk's chance in a supernova of surviving. His words: "Planting the Seeds of Disaster".

They told us that we'd get change if we voted for a new Messiah. The salvation must come after the economic Armageddon.

This must be what the cognoscenti mean when they talk of the coming Obama "Boom".

Aw snap 4

Obamacare drives down demand at Treasury Auction.

Aw snap 3

Alan Greenspan describes higher yields for Treasuries than blue chips "A canary in the mine".

Which countries are thriving? Gallup Poll

Fascinating global poll with cool graphics here.

Sunday, March 28, 2010

Frank Rich of NYT: Anger is rooted in racism, not healthcare

One of the real blessings of being a conservative libertarian is realizing that a large proportion of your political adversaries are mentally unhinged. To wit: Broadway Frank's latest jerimiad. Of course calling it that is an insult to Jeremiah.

Cheapest family plans to be $12,000 per year

My family has a $6,000 individual health plan. According to the CBO, the cheapest plan under Obamacare will be twice that. And of course the CBO was directed by Congressional assumptions to lowball - my guess: $15,000 for the cheapest for starters and rapidly rising from there. I guess I really won't be allowed to keep my insurance after all. Not that I'm surprised by an Obamalie, I've heard so many of them in the past two years.

Yuval Levin has the information in a longish article. The first two pages explain in a balanced way why neither conservative nor liberal reformers thinks that Obamacare stands a whelk's chance in a supernova of lasting more than a couple of years.

Some "reform".

Carbs, not fat increase arteriosclerosis - say experts

From slate, a survey of the latest conclusions on diet and health. It turns out the things that the experts said were good for us are now bad for us and vice versa. This says less about the science than about the process of science in service to lecturing nannies. The reality is that science knows very little and what they know is tempered by caveats. By contrast the fascists who rule our society have nothing but certainty - they'll take whatever 'facts' that are at hand to justify their pronouncements and mandates.

The key for the fascists is state action - being perceived by the people as 'saving' them. The real, tentative scientific facts don't really matter to them. Indeed regardless of where the science goes, the fascists are happy - the key is power, not truth.

I recommend ignoring all experts and politicians telling you how to live - trust the tried and true that has come down through history. It's hard to tell who's the bigger fool: experts giving this advice or the people that take it.

The rich get richer

Government pay, already higher has risen faster:

And the gap is growing. According to the U.S. Bureau of Labor Statistics (BLS), from 1998 to 2008 public employee compensation grew by 28.6%, compared with 19.3% for private workers.

And the premium on government pay at the state and local level is the primary driver of their budget crises. The WSJ has the story:

There’s more: “What if government workers earned the average of what private workers earn? States and localities would save $339 billion a year from their more than $2.1 trillion budgets. These savings are larger than the combined estimated deficits for 2010 and 2011 of every state in America. In a separate survey, the federal Bureau of Economic Analysis compares the compensation of public versus private workers in each of the 50 states. Perhaps not coincidentally, the pay gap is widest in states that have the biggest budget deficits, such as New Jersey, Nevada and Hawaii. Of the 40 states that have a budget deficit so far this year, 28 would have a balanced budget were it not for the windfall to government workers.”

That was then this is now department

“CONSTITUTIONAL GIMMICK:” New York Times condemns recess appointments. Er, well, in 2006.

Hat Trick Instapundit.

Colleges encourage students to go on Food Stamps

Because it's not like they should have to help their students or anything. Colleges and universities are the most predatory institution in our nation's history, and that includes piracy. At least the pirates fought with us in time of war.

Now this is sweet 2

The lack of enforcement mechanisms offers a path forward for the Tea Party and Republicans.

1. Make sure that teeth do not get added to the bill. This should be rather easy because no Democrat will want to reopen the debate and after November, they won't have the power.

2. Make sure all Americans understand what will happen in 2014. Make sure that all Tea Party and Republican stalwarts cancel their policies the day Obamacare goes live.

3. This will lead to a one third to one half decline in insurance company revenues, they will not be able to pay their claims without massive 50 percent increases in rates on the remaining insured. This will lead to another 20 percent of the population to ditch their insurance, leading to the collapse of the insurance companies.

4. Now this is what the Obami want - they know that their policy programs massive rate increases in due to moral hazard, but they want things to play out over five years so that the natural American aversion to state corporations can be destroyed and the path for a million employee national health insurance system laid.

5. If the system collapses in one quarter, then the most likely outcome would be immediate repeal along with a major cut back in the applicability of insurance - yielding a national catastrophic insurance risk pool and consumer driven health care.

I hope we are able to turn this around before this drastic action must be taken, but if it comes to that, we know how to kill Obamacare in an afternoon. And I have no doubt that we will.

Saturday, March 27, 2010

Now this is sweet

According to a report by Congress's Joint Committee on Taxation, the individual mandate in Obamacare lacks any real enforcement mechanism:

The penalty applies to any period the individual does not maintain minimum essential coverage and is determined monthly. The penalty is assessed through the Code and accounted for as an additional amount of Federal tax owed.However, it is not subject to the enforcement provisions of subtitle F of the Code. The use of liens and seizures otherwise authorized for collection of taxes does not apply to the collection of this penalty. Non-compliance with the personal responsibility requirement to have health coverage is not subject to criminal or civil penalties under the Code and interest does not accrue for failure to pay such assessments in a timely manner.

This means that the system will collapse almost immediately upon launch due to total universal system failure as anyone with half a brain will immediately cancel their health insurance.

All I can say is W.O.W.

As the Pelosiraptor said: "You have to pass the bill to find out what's in it"

Hope! Change! And really stupid people.


I thought Andy McCarthy's post in NRO's The Corner significant enough to post in it's entirety:

Thugocracy Whipsaws Capitalism [Andy McCarthy]

The notion that the pain of Obamacare would not really be felt for a few years has always been silly. It won't be fully felt, but he economy is dynamic. Corporations have to plan today for the conditions of tomorrow. More to the point, public corporations with disclosure obligations under the securities laws have to disclose today when developments change their outlook for tomorrow. Hence, AT&T's announcement that Obamacare will force it to take a $1 billion dollar charge — the most alarming (but entirely predictable) bad news in a parade that, the Wall Street Journal's editors note, "includes Deere & Co., $150 million; Caterpillar, $100 million; AK Steel, $31 million; 3M, $90 million; and Valero Energy, up to $20 million."

But here is the most frightful news yet about our new reality: People's Commissar Henry Waxman is now planning to haul the companies before his committee because their disclosures fail to play along with the our Leftist rulers' script that Obamacare "will expand coverage and bring down costs."

As the Journal's editors observe:

Black-letter financial accounting rules require that corporations immediately restate their earnings to reflect the present value of their long-term health liabilities, including a higher tax burden. Should these companies have played chicken with the Securities and Exchange Commission to avoid this politically inconvenient reality? Democrats don't like what their bill is doing in the real world, so they now want to intimidate CEOs into keeping quiet.

Let me echo that. I worked for many years in the U.S. Attorney's Office in whose backyard was Wall Street. If a company like AT&T failed to make a legally mandated restatement of its financial position while continuing to participate in the capital markets, it would be investigated and the responsible management officials would likely find themselves prosecuted while the SEC, concurrently, went after the company and its officiallys in civil enforcement suits. There are prosecutors and investigators who would salivate at the prospect of doing such a career-making case.

If we are now under a system where disclosure gets you a public whipping and other threats by the Powers That Be while nondisclosure promises the ruinous expenses of defending against criminal investigations and civil enforcement, this is no longer anything but a thugocracy.

Equality Shoes

From Idiot Pictures.

Greenspan, NYT pretend SS Trust Fund exists

In this article, the NYT notices that SS is now 'drawing down' its "Trust Fund", about 9 years ahead of schedule. Of course the "Trust Fund" is just an enormous pile of IOUs from one part of the Federal government to another part. Despite this the NYT and Greenspan talk about SS as if it won't run out of money until 2037. This is a vicious and cynical lie. SS runs out of money as soon as the United States can no longer persuade the rubes to buy their bankrupt paper.

And that will happen long before 2037. Barack Obama is here to make sure of it.

Why can't our establishment leaders tell the truth? Ever?

The difference between nerd, dork, geek and dweeb in Venn

All these years I thought I was a Dweeb and it turns out that I'm just a Dork. Explains a lot.
Nerd Dork Geek Venn Diagram

A window into the Obami worldview

There is only one major national retailer willing to invest in the south side of Chicago. That would be Walmart, of course. A coalition of black ministers and community leaders have been petitioning the Chicago city government to let Walmart build stores. Chicago is one of the big, deep blue cities in America that surprisingly have rejected all Walmart stores on political grounds for decades. The result has been much higher prices paid by the poor and working classes for food, clothing and other necessities.

Barack Obama lived and was a community leader on the South Side of Chicago during the decades when Walmart attempted to provide much needed competition to local retailers. Yet he didn't lift a finger to promote the entry of this boon for the poor.

All in all a very telling insight into what our President's true values and priorities are.

Friday, March 26, 2010

Takin' the rubes for a ride - student loans

Federally subsidized college loans are one the 'wonders' of our nation - we help students finance their education so that they call pull themselves up by their bootstraps. Right?


Student loans are debt given to young, inexperienced teens who are betting that they will be able to complete college and that the skills that they obtain therein will enable them to pay back the loans and still have something left over that exceeds what they would have earned without going to college. What could possibly be wrong with that?

A lot, really.

First, student loans are given to anyone who has gained admission to an accredited institution. And since the college isn't making the loan, but gets the proceeds, it has a strong incentive to admit the student and encourage their indebtedness even if the student's prospects of graduating and earning back the debt are slim to none.

Second, being compassion filled charities, colleges don't have to share consumer information with their prospective customers. Information like: "Students with your credentials graduated 21% of the time, those who did not graduated were left with on average $45,000 in debt. On average those who did graduate made $3,000 more than they would have if they hadn't which only covers 1/3 of the payments for their debt".

Third, the easy availability of subsidized loans that defer all payments until graduation have allowed colleges to increase their prices by a whopping 400% in real terms over the last 40 years. For essentially the same service.

Fourth, federally subsidized student loans are not like that other, abominated form of debt offered to college students: credit cards. Credit card debt can be eliminated through bankruptcy. Federal student loans cannot.

Finally, the easy availability of student loans from the feds, means that colleges don't have to worry about the creditworthiness of their borrowers. If the Feds had loaned the money to the colleges and held them accountable for paying back the proceeds, then the colleges would be forced to be honest with students. In many cases the colleges would decline to loan students money because they would know that their prospects of success were minimal.

Indeed one wonders why colleges need federal student loan money at all. After all, if the college is good at picking students who will benefit and giving them marketable skills, then it should be able to go to the financial markets and borrow the money to fund their education. It's a great investment. If on the other hand, they do a lousy job of educating the students that they admit, no one will lend them money and they'll go out of business.

But instead, these "charities" have structured the market so that they get to maximize their revenues and leave the poor inexperienced rubes who trusted them with debts that NEVER GO AWAY.

You see colleges and universities are stalwarts of the "Party of the State" coalition. And it's more important for the Party of the State to reward them than to protect young, vulnerable teens with limited academic skills and prospects.

Oh, and if our private credit card companies did this sort of thing: their execs would all be in prison.

Hope! Change! And really huge debts.

Trash your friends sup with your enemies

This is how Barack Obama treats our closest ally:

After failing to extract a written promise of concessions on Jewish settlements, Mr Obama walked out of his meeting with Mr Netanyahu but invited him to stay at the White House, consult with advisors and “let me know if there is anything new”, a US congressman who spoke to the Prime Minister said today.

“It was awful,” the congressman said. One Israeli newspaper called the meeting “a hazing in stages”, poisoned by such mistrust that the Israeli delegation eventually left rather than risk being eavesdropped on a White House phone line. Another said that the Prime Minister had received “the treatment reserved for the President of Equatorial Guinea”.

America doesn't have many true friends. We need to take care of the ones we do have. Over the weekend Mr. Obama vandalized our constitutional order. With this meeting he vandalized our reputation as a true and permanent friend. He is a remarkably petulant, immature and destructive man.

Obami put environmental obsessions over the desperately poor

Roy and Niger Innis of Core write about the reality of Obami 'compassion' - it can be censored by rich environmental fundamentalists:

“I see Africa as a . . . partner with America on behalf of the future we want for all of our children,” President Obama declared in Ghana last July.

However, three months later, the President signed an executive order requiring that the Overseas Private Investment Corporation and other federal agencies reduce greenhouse gas emissions associated with their projects by 30% over the next ten years. The order undermines the ability of Sub-Saharan African nations to achieve energy, economic and human rights progress.

Ghana is trying to build a 130-MW gas-fired power plant, to bring electricity’s blessings to more of its people, schools, hospitals and businesses. Today, almost half of Ghanaians never have access to electricity, or get it only a few hours a week, leaving their futures bleak.

Most people in Ghana are forced to cook and heat with wood, crop wastes or dung, says Franklin Cudjoe, director of the Imani (Hope) Center for Policy and Education, in Accra. The indoor air pollution from these fires causes blindness, asthma and severe lung infections that kill a million women and young children every year. Countless more Africans die from intestinal diseases caused by eating unrefrigerated, spoiled food.

But when Ghana turned to its United States “partner” and asked OPIC to support the $185-million project, OPIC refused to finance even part of it – thus adding as much as 20% to its financing cost. Repeated across Africa, these extra costs for meeting “climate change prevention” policies will threaten numerous projects, and prolong poverty and disease for millions.

Who's going to bail the US out?

Today comes news that the EU and IMF have organized a fund to backstop Greece (and by implication Italy, Spain and Portugal) should it go belly up.

Question for international finance mavens: who will bail out the bailers? In other words, when the US can't pay its bills, where will the 'help' come from?

Obamacare this era's Kansas-Nebraska Act

Tony Blankley says that Obamacare is the straw that breaks the camel's back for socialism, just like Kansas-Nebraska was for slavery. Free people were roused when they realized that slavery could spread anywhere through politics. They are now roused when they realize that with the poodle press, radicalized intelligentsia led by a political party who will do anything for gain, our Constitution no longer provides any protection against uncontrolled Federal power.

And as in bloody Kansas the people will not give up their liberties without a fight.

Death Threats everywhere

Gee, once a Democrat gets a death threat, it becomes big news. Remember when there were no death threats? I mean when Democrats weren't getting them?

You be the judge

Megan McArdle Says:

Every time I write anything about Social Security, I get at least one person arguing that everything is fine because after all, the trust fund is not going to run out until 2036 or so.

I want to assume good faith, but I have a hard time believing that anyone takes this argument seriously. Today, because social security payments exceeded revenue, we’re going to either have to raise taxes, or borrow more money, in order to cover the benefits.

How would this be different if we didn’t have the trust fund?

So when they say such utter drivel are they ignorant? Or part of the scam?

Heard on instapundit

“Stupak 11″ request billions in earmarks.

Healthcare Bastiat 1

Large employers like Deere, Verizon and Caterpillar are announcing major revisions downward in their earnings forecasts to reflect Obamacare taxes.

Medical device makers like Medronic and Zoll are talking about offshoring manufacturing because of Obamacare excise taxes will harm their international competitiveness.

Bastiat, the God of unintended consequences, is not mocked.

Wednesday, March 24, 2010

So who's going to tell the rubes?

European social democracies have unemployment rates that run 3-4 percentage points above what the US has historically experienced. These unemployed are largely unskilled, low wage workers who can't find a job in the European economy. Economists attribute this largely to the wage 'wedge' or the size of the difference between what a worker gets paid and what the employer must pay to employ that worker.

Historically the US has had the smallest wedge and the lowest unemployment. But with Obamacare passing and mandates going out to businesses to provide health insurance to their workers and with the price of that insurance set to grow at double digit rates per year due to no preexisting conditions, the "Wedge" for American workers is set to grow dramatically. The 'Wedge' is biggest for low wage, low skill workers - mandatory benefits constitute a much large percentage of their pay. As a result of our movement to social democracy, the expanded wedge is going to lead to a multi point rise in the 'full employment' unemployment rate. The people who will be left without a chair when the music stops will be the most vulnerable, least skilled workers from the poorest parts of America.

You can see this in Europe - there are many personal service businesses in the US that hardly exist in Europe, the cost to employ lots of low skill workers is just too high.

So these vulnerable, working class workers are going to lose their job or just not get one when businesses that would have been formed decide not to or not to grow. And almost all of these people voted for hope 'n change.

So. Who's gonna tell these millions of unemployed rubes that the 'Change' they got isn't the one that they "Hoped" for? BHO won't.

Tuesday, March 23, 2010

So why did they do it?

Independent analysts estimate that Obamacare will increase healthcare spending from 17 to 21 percent of GDP by 2015. According to the UN’s WHO, Singapore has the 7th best healthcare system in the world that costs a mere 3.5% of the affluent city-state’s GDP.

Now if you were a consumer and were offered the 37th best healthcare for 21% of income or the 7th best for 3.5% of income what would you choose?

So clearly our fearless leaders didn’t make the ‘consumer friendly choice’. Why?

Two possibilities present:

1. Many of the Democrats were educated by those crackerjack inner city public schools, maybe their math skills are a bit rusty. This could be a possibility, but BHO was educated at the tony Punaho Academy, Columbia and Harvard and we know that the Ivy leaguers are geniuses, so I assume BHO would have told the rest of the Dems that they could give the people better healthcare for one sixth the cost even if he did have to explain the concept of fractions to them.

2. The Democrat's goal was something other than high quality, affordable healthcare for the people.

So, the question of the hour is: what could that “other” goal be?

Heightening the Contradictions

Some on the right argue that Obamacare is paradoxically good news: by punching the fiscal accelerator the Obami are hastening the day when people won't buy US bonds for love or money. Already the markets are signalling the beginning of the slide: blue chip bond yields are below Treasuries.

If we are going to have this 315 million car pileup, best we have it soon, get rid of the fraudsters and start over with adults.

The reason Obamacare means we are completely screwed

Senator John Cornyn of Texas inadvertently explains why we are all completely screwed by Obamacare:

"There is non-controversial stuff here like the preexisting conditions exclusion and those sorts of things," the Texas Republican said. "Now we are not interested in repealing that. And that is frankly a distraction."

It is precisely the 'no preexisting conditions' exclusion that will bankrupt the plan and lead to total financial chaos by 2020. No PCs means that every rational human being will drop their insurance until they get sick. This is why private individual insurance is all but unheard of in New York and New England - they already have no PC laws and it makes premiums 4 or 5 times more expensive than the rest of the country.

There is no way to repeal such a popular program until the day the country's money is no good anymore.

The critical need for 'republican modesty'

The real tragedy of the healthcare "reform" is the loss of republican modesty (no I’m not talking about Country Clubs banning walking shorts). In a Republic those in office should be circumspect and modest about using their temporary power. The modest republican recognizes that we all live here together and achieving any goal by shoving it down the other side’s throat is counterproductive, tearing at the ties that bind us together and make us civilized.

If you have (temporary) power and abuse it to shove something down your neighbor’s throat, if you cheat to do so, cut corners, bend the rules, lie about the outcome. If you mock your neighbor and call him clever obscene names. Then you are creating a burning resentment, a humiliation in that neighbor. The neighbor begins to think about what he will do when the tables are turned. You abandoned republican modesty so he will too. You humiliated him, he’ll humiliate you. Arrogance begets arrogance, dishonesty begets dishonesty, cruelty begets cruelty.

In a very real sense Barak Obama, the “Constitutional Scholar" is in fact a constitutional vandal, tearing down our institutions and hard won consensus so that he could have his place in the history books.

What happens when you don't respect people

When I was in college one of my professors brought in a friend who was CEO of a pretty big business. He told the story of his first business – a machine shop in Western PA. It was unionized and he hated the union. So during a downturn he used some legal, procedural tricks to get the union decertified. He then proceeded to change a host of work rules and replace long time union employees with non union help.

Then one night a number of his employees broke into the factory after dark and ‘spiked’ every single machine tool. He went bust.

We were horrified, “what criminals” we said.

He nodded his head but pointed out: “I didn’t play fair with them, I had an opportunity to jam something down their throat and I took it. I humiliated my people and made them hate me. You don’t stay in business if you do that. I was wrong.” His experience made him a much more effective leader and led to significant business success.

Barack Obama is still in his first business. You know, the one that goes bust.

Sunday, March 21, 2010

Do the Obami have an Israel Policy?

The Wapo asks the question:

“Experts question whether U.S. has a real Israel strategy or ‘talking points’”

And to ask it is to answer it: No. Obama is simply (how do I put this?) Carteresque.

Pat Caddell puts a fine point on it

Jimmy Carter's pollster (!), Pat Caddell says of the healthcare push:

"Look, the people who are opposing this are holding tea parties. The Democrats are holding a Kool-Aid party. This is political Jonestown."

It'll be a hot time in the country this election season

Watching all the protests around the country. People who never have been interested in politics are at 212F. Drove to the next town, 500 people spilling into the street around Russ Carnahan’s congressional office – “Pelosi’s Puppet, Rubberstamp Russ” billboards all over town – In Dick Gephardt’s old district, usually 60-40 Dem – he’s toast.

Quick quiz: How do you tell a lefty protest from a righty one? Answer: One is flying flags, the other is burning them.

The Democrats are lost in the 'Fog of War'

Mike Flynn makes the obvious point to anyone not trapped in 'progressive' Washington's echo chamber:

The Democrats and the White House are lost in a legislative “fog of war” right now. They are focused on twisting enough arms, offering jobs and negotiating specific “deals” (bribes) to get them to 216 votes. Their attention and energy is focused exclusively on a final vote in the House tonight. No one is looking even one minute beyond that horizon. They are like a general who pours all his reserves into taking a symbolic bridge, never realizing that his lines have already collapsed and his flanks have been turned. They may take the bridge and get to 216 votes. (I’ve learned to never bet against Congressional leadership and an Administration united for a single legislative victory. ) But, they have already lost the war. They have deluded themselves that if they can…just…get…this…bill…passed, the public’s anger and attention will subside, they can put health care ‘behind them’ and they can focus on other ‘popular’ measures that will shore up their election prospects in November.

What they don’t realize is that today’s vote isn’t the end, but just a new beginning in the debate over health care. Buckle up, because if they manage to cobble together enough votes to pass the Senate Health Bill today, we’re set for weeks and perhaps months of a constitutional and political crisis the likes of which we haven’t seen in our lifetimes. . . . A representative democracy cannot long endure a political class that is so out of touch with the populace. In some respects, what happens tonight is almost beside the point. The politics are set. Some Democrats are deluding themselves that they can put this behind them and somehow survive in November. They are most assuredly wrong.

Lasik Surgery - How consumer driven healthcare delivers more for less

Sometimes people have a hard time taking Singapore seriously as an example of how healthcare could be far cheaper and better than in the United States. For those who suffer from parochialism I offer a US based example: Lasik Surgery. In 1998 the average price of Lasik per eye in the US was $2,200. By 2004 this had fallen to $1,350. Today, you can get Lasik in St. Louis for as little as $699 per eye


  1. Lasik is not a third party paid procedure – the people who get the benefit pay for it and as a consequence shop around.
  2. This means that the sellers of Lasik have incentives to drive down the cost – lower prices at a given standard of care deliver more patients
  3. Knowing this, the equipment makers had strong incentives to reengineer their solutions to deliver the two things that deliver lower costs:
    Automation, reducing the amount of skilled labor in the assessment, procedure and follow up and,
    b. Minimizing complications – more automation, more process control, means fewer problems and less cost in follow up
  4. Lasik is a ‘bundled’ price – the Lasik provider is accountable for ALL the costs of the procedure and for delivering it at a FIXED price. Therefore they manage it as a system.
  5. The Lasik market has rapidly shaken out with a number of specialty providers dominating each market. By specializing they get better at delivering the results in 3.

Note that virtually everything described as a reason why Lasik prices are falling is exactly the opposite of the way mainstream ‘third party paid’ healthcare is done in America. And with the opposite result.

Friday, March 19, 2010

The Wal Mart Effect

Spending on clothing and shoes falls below 3% of income for the first time. The primary beneficiary of capitalist competition is the consumer. And the consumers that benefit the most are lower income. That must be why Democrats seek to restrict capitalist competition with regulation, zoning and taxes at every turn. It's THEIR job to help the poor and they don't appreciate Wal Mart horning in.

Compensatory ethics and the cognitive 'science' of ideology

This is a really interesting post both on the academic rage to find the 'dysfunction' that makes people conservative and on the finding that being 'better' in one area causes people on average to be less 'good' in other areas aka, the 'brownie point' theory.

A new way to be human

Reihan Salaam talks about why students drop out of school, the shift in work and the failure of the center. He is optimistic, saying:

"The idea that something new is possible is spreading. Most favorably, it is giving rise to a new type: the cultural entrepreneur."

We already know about the truly new way to be human, but the on rush of technology and the recognition that there are alternatives to today's statist, functionally atheist autarky in education and government gives us the greatest opening to change things for the better in centuries.

We'd better not mess it up.

Jackasses to the left of me, jerks to the right.....

This is uncool in the extreme:

CINCINNATI — A Democratic Ohio congressman said a group opposed to health care overhaul went too far by taking out a newspaper ad that included a large photo of him with his two young daughters.

Rep. Steve Driehaus was upset by the advertisement, which appeared Wednesday in The Cincinnati Enquirer, his spokesman said Thursday.

"Rep. Driehaus thought the ad was outrageous," said the spokesman, Tim Mulvey. "He can take more than his fair share of political attacks, but this one crossed the line."

The ad was paid for by the Committee to Rethink Reform, a Washington-based group. Committee spokeswoman Sarah Longwell said showing the children was a mistake and that the group was taking out another ad to apologize. She said the committee already apologized directly to Driehaus.

And here's a wise man explaining where all this coercion comes from

Victor Davis Hanson talking about his roots:

I was brought up on a farm. My father participated in bombing Tokyo in the second World War. He taught me that the United States has never claimed to be perfect. It’s just better than the alternative, and if you don’t believe that it’s better than the alternative, there’s no reason for it to continue, really. That idea — that humans are not perfect and they make mistakes, but of enduring and adjudicating the mistakes, of correcting them, and having some tolerance for human frailty — that idea is very important not only in war, but also in farming and in the human experience itself. This prevalent utopianism that now characterizes our society — it has become a new barbarism in which we insist on perfectionism or else we’re no good.

Of course it's not just Obami that are into coersion

Maggie Gallagher, usually rational, wants to ban certain types of websites because they 'promote adultery'. Why do the Matrons do everything in their power to discourage adultery and pornography except the one thing known to work?

It's an enigma, wrapped in a riddle, clothed in a burqua.

More arrogance, more coersion

IRS to audit citizen health care purchase compliance and confiscate refunds to coerce same. Taxprof has the story.

The more the state coerces, the more brutal our society gets. Already almost 50 million have been defined as 'criminal' by our government. I guess they're going for 9 figures - Soviet Union scale numbers "anti social elements".

What arrogance, what cruelty - I am continually stunned at the ignorant arrogance of our leaders - and of the social elites who bankroll and excuse them.

"Chaos and Incompetence"

Peggy Noonan writes in the WSJ:

Excuse me, but it is embarrassing—really, embarrassing to our country—that the president of the United States has again put off a state visit to Australia and Indonesia because he's having trouble passing a piece of domestic legislation he's been promising for a year will be passed next week. What an air of chaos this signals to the world. And to do this to Australia of all countries, a nation that has always had America's back and been America's friend.

How bush league, how undisciplined, how kid's stuff.

You could see the startled looks on the faces of reporters as Press Secretary Robert Gibbs, who had the grace to look embarrassed, made the announcement on Thursday afternoon. The president "regrets the delay"—the trip is rescheduled for June—but "passage of the health insurance reform is of paramount importance." Indonesia must be glad to know it's not

Why Obama's foreign policy is failing

Great summary in Commentary that explains just why the Obami's foreign misadventures will end in tears. If you don't take care of your friends.....well then you're a fool.

Thursday, March 18, 2010

Superb Example of the Tragedy of the Commons

Great before and after photo. From Marginal Revolution.

Are we going broke?

My pal John Macauley (or among the cognoscenti: Macauley the "Great") is on fire over at Rough Truths with a "Must Read BV" piece on our parlous national financial situation. I recommend you mosey on over and use it to exfoliate your Congressperson's soft, creamy behind.

Theodore Darymple: Contemporary Sanctimony Puts the Victorians to Shame

There's more to prudishness than sex, says T-Dare. Here, here!

When you've lost Howard Stern......

....I don't know what. But it's funny: "I've had it with the Democrats" says Stern.

What is social justice?

My good friend Ben writes of the healthcare debate: "I wish the Republicans would worry more about social justice and the Democrats more about cost". I heartily agree. But the fundamental question is what is social justice? Take Medicare: it attempted to provide 'social justice' by giving seniors heavily subsidized health insurance regardless of their wealth. The results have been anything but 'just'.

First, the subsidies are taken from younger, often less wealthy workers, with the heaviest percentage burden falling on the lowest earners. Not just.

Second, the program is established in a manner that has provoked a roaring healthcare inflation. So Medicare forces all other Americans to pay far more for their healthcare while the Seniors are insulated by subsidies. Not just.

Third, the program is growing uncontrollably and is technically bankrupt. This means that fewer dollars are available for all other legitimate public needs (not just), and that workers paying into the system today will not receive the benefits to which they are entitled (not just).

To achieve social justice one must do more than talk about it. One must devise programs that are affordable, that work over the long run and that don't rob Peter to pay Paul. Medicare fails on all accounts, as do most entitlement programs.

He just doesn't have the knack 2

Robert Kagan has a perceptive column in Wapo. His thesis is that BHO is failing to take care of our key foreign relationships. He argues that relations with our allies and friends are objectively worse than they were during the second GWB term.

Relationships are idiosyncratic, resting upon shared values, goals and demonstrated respect. The President gives off the vibe that he doesn't really value strong ties with our allies and that he is willing to sacrifice them if it gives him leverage with adversaries.

There are very few countries in this world that I would trust to 'get our back' in a knife fight. Above all, we need to keep those guys on our side. BHO is driving them away.

Tuesday, March 16, 2010

This makes so much sense

In Israel if you sign up as a transplant donor you and your family move up the waiting list for any transplant.

I would go even farther: You should only be eligible for an organ transplant if you have agreed to donate your organs before the illness that led you to need the organ was diagnosed. If you'll only give up your eyes, you can only get eyes. Would lead to much higher donation rates. I'd probably sign my card because for the first time I'd get something for the signature other than a prim, self righteous feeling.

The Democrats steal an idea from hackers

One of the key tools of any computer hacker or malware purveyor is the self executing program or 'executable' - click on something innocuous and it invokes a program that takes over your system.

Charles Krauthammer explains how Nancy Pelosi and one Denise Slaughter are designing a House rule that would be 'self executable' so that the House can avoid voting on Obamacare but still have it pass.

This piece of extraconstitutional hacking is the sort of thing that cybercriminals do every day. But it's being done by our 'leaders' with the approval of our President.

If President Obama doesn't denounce this in the strongest possible terms he is selling his soul for a mess of pottage.

Aw Snap! #2

Also turns out that the public pension hole is vastly larger than reported. Pension assets for states alone are probably less than half of real liabilities. The reason? Governments use unrealistic valuation formulas that would get a private company exec put in jail.

Finance professors Robert Novy-Marx at the University of Chicago and Joshua Rauh of Northwestern University asserted in a recent paper that the funding gap for state pension plans alone might exceed $3 trillion, in part because state funds are using an unrealistic long-term annual investment return of 8% to compute the present value of future payments to retirees, as is permitted in government standards for pension-fund accounting.

It seems that virtually everything 'public servants' do these days is illegal for us proles.

Party members and proles, we have always been at war with Eastasia.

Monday, March 15, 2010

Aw snap!

Social Security surplus disappears. 9 years ahead of schedule. Our kids are going to hate us soooooo much.

The New Republic of Teabags

This is how the New Republic pictures members of the Tea Party movement. Could a picture be any more pornographic without hitting a firewall?

And the New Republic is the 'responsible, moderate' voice of the left. A phrase that JFK said of RMN comes to mind: "No Class".

Real Public Education Spending

I don't know about your school district but here in Webster Groves the school district pushes for votes to increase school taxes almost every year. They always claim that their per pupil spending is some (very high) number. But the number they always cite is the 'operating fund' which is only a fraction of spending. When you dig, you find out that real spending is vastly higher and that, once again, our 'public servants' are lying to us. Here's a video by Cato explaining how those sweet teachers use accounting fraud to pursue ever higher shares of our income.

Your campaign is crazy, Carly, and I really dig that about you.

Carly Fiorina has explained why I dislike Barbara Boxer so much. It's her big, fat head.

Sunday, March 14, 2010

Classic example of healthcare market failure - PSA

The PSA test for prostate cancer is a health care 'disaster' says its inventor. Over $3 Billion is spent on testing and treatment each year with dubious health benefits. It goes without saying that PSA testing and Prostate treatment are paid for using 'other people's money', therefore lots of men sign up for the test, I mean, why not? Don't cost nuthin'.

The inventor has the quaint (and fascist) notion that simply by telling health care providers not to use the test he can eliminate this bad choice. Unfortunately it's more complex than that: the huge PSA waste is part and parcel of a flawed system. You can't just shout at the providers, you need to put consumers back in charge of both their health care choices and the associated costs. They'll make far better decisions about the utility of the test relative to its cost than anyone else.

It's time we stopped trusting the government and started trusting the people to make good choices.

Wednesday, March 10, 2010

Bright Red vs. Deep Blue

What a difference Left liberal governance makes. Kinda makes you proud - I mean not just anyone could destroy that many jobs, you really need to work at it.

BLS Issues Official National Stats on Public vs. Private Comp

Again: is this what Liberalism was all about: getting more cash to the boys? I thought it was supposed to be about helping the poor, healing the environment, caring for this, that and the other. Boy what rubes we've been.

Hail to the looters.

Is this what liberalism was all about?

Making the functionaries rich? Six of the ten richest counties in America are in the Washington DC area.

As Glenn Reynolds says: “Better Living through Looting”.

Or as Orwell would put it: Proles and Party members. We have always been at war with Eastasia.

Using on line behavior assessments: Ntrinsx

Ntrinsx is a web service that allows rapid, inexpensive enterprise-wide behavioral assessments. Google uses it along with dozens of other major corporations. It's a Portfolio company of my Investment Banking boutique: Openwater Advisors. Check out the story on our Openwater Blog here.

He's Desperate

Jeffery Andersen says that Obama is a desperate man. He's right. Money graf:

The president's increased desperation is evident in his arguments. Knowing that he doesn't currently have enough popular support behind his bill to coax a majority of the House into voting for it, he's resorting to nonsensical arguments he hopes will strike a populist chord. He's blaming insurance companies almost unilaterally for rising health-care costs — even though the combined annual profits of America's ten largest insurers are only $8.3 billion, which is one-seventh of what Medicare loses each year to fraud, and just 0.4 percent of the $2.5 trillion that the United States spends annually on health care. And he's claiming that Obamacare would be the answer to these higher costs — even though the Congressional Budget Office says that Obamacare would raise insurance premiums in the individual market (the part of the market he's talking about) by 10 to 13 percent, and $2,100 per family, by 2016 in relation to current law.

I just love this stuff

Air Force's new robot assassin is nearing production. This is what your wife will activate when you've been out carousing. It will come in Teal, Arc Yellow and Puce to accent any Mom's weapons cache:

Real, fair income comparison

One of my biggest beefs about income and income inequality comparisons between the United States and other countries is they compare apples and oranges. For example, comparing Swedish income distribution to the US ignores the fact that 95% of those in Sweden are ethnic Swedes that were born and raised in that culture speaking Swedish. It stands to reason that Sweden would have a flatter income distribution than a country filled with the detrius from every nation in the world. The only way to honestly compare the productivity and 'fairness' of the US to Sweden is to look at how well those of Swedish descent do in the US vs. in Sweden. Here's the first good data on that that I've seen from Super Economy.

The median is 42% higher for the Americans compared to the Swedes. Overall, the middle 60% of the population earn 46% more in the American Super-Economy versus welfare state Sweden.

Now compare this to the new "poverty measure" being proposed by the Obama Administration - 'relative' rather than 'absolute' poverty will be measured. Robert Rector has the tale.

After reading Super Economy above and Rector, why would anyone pursue the class warfare stupidity that the Obama administration proposes. I mean if they want more peace and prosperity that is?

Note: there is one other way to compare: look at the fate of a given ethnic group immigrating to each country. For example Minneapolis and Sweden both have lots of Somali immigrants (and coincidentally both places are swarming with people of Scandianavian descent). Guess which country the Somali immigrants do better in? Guess which country they achieve 'income equality' faster in?

Tuesday, March 09, 2010

Education for your kids

Winner of the Fraser Institute of Canada's Annual Video Competition

I wonder why this is the case?

VDH points out that there is no furor over BHO missing the Guantanamo date:

Given that there is now almost no leftwing furor over Guantanamo—reminding us that the problem was probably never the detention center per se, but rather the liberal narrative of George Bush as outlaw—there seems to have been an administration decision made not to worry much about reneging on the pledge to have closed it by January 2010.

Gomer Pyle x 4.

Monday, March 08, 2010

The party I'm most proud to be part of: The St. Louis Tea Party

Where did our health care crisis come from?

One of the most important questions that never gets asked is "where did the health care 'crisis' come from?". As a student of George Stigler who won the 1982 Nobel price for economics in part for answering this question, I have a point of view. There was a French economist named Frederic Bastiat who coined the phrase "Things seen and things unseen" - his basic message was that the effects of an economic policy include the intended ones and the many unintended ones and to fully understand the consequences of any economic choice, one must understand all of them. This means that both the intended 'first order' effect and the unintended 'second, third, fourth and so on order effects' need to be taken into consideration before evaluating the efficacy of any policy.

By coincidence, the current health care crisis derives from a Bastiat unintended consequenc of another progressive policy innovation from the Great Depression: income tax 'reform'. In the twenties, the Federal income tax was 15% of only the highest earners' incomes. When the Great Depression hit, Hoover inexplicably raised it to 60% of a much broader group of earners. Not to be outdone in perversity by that Republican piker, FDR raised it to 70% and then even 79% for a time. Aside from pure vindictiveness it is hard to see what FDR sought to accomplish by this. Indeed the 'first order' effect of this policy was to contribute mightily to the 'capital strike' which defined the Depression, ensuring that almost 20% unemployment persisted right up to WW2.

But there was a second order effect. With high marginal rates, 'progressive' politicians had a 'product' to sell. Any industry or business who could get a deduction or exemption written into the tax code for what they were selling could make a fortune. And they would share that largesse with the politicians and parties who made it happen. One of these industries was health insurance/health care. They persuaded the New Dealers to make health insurance premiums paid for by companies on behalf of employees exempt from personal income tax. As a result, company provided health insurance exploded. It's not hard to see why: pay me an incremental $1 I pay most of it to the government. Pay my health insurance and I keep all the benefits.

The second order effect of the employee benefits exemption led to a third order effect. Historically 'health insurance' had been sold only to individuals and only as a catastrophic policy. The great majority of health care expenses were paid out of pocket by consumers or financed by providers. But now, given confiscatory rates, it made tax sense to provide employees not with insurance but with 'prepaid health care' to sweep as much of the costs into the tax exempt bucket. So almost all healthcare expenses became "third party" expenses.

And this led to a fourth order effect: a radical change in consumer behavior. Bear with me for a minute while I provide an analogy of what happened using a commodity that we are all familiar with:

What if your company gave you 'first dollar' Food and Drink insurance? In other words, your food and beverages are part of your compensation. When you're hungry, you whip out your insurance card and for free or a de minimis charge at the point of delivery, you can order whatever you want. How would your behavior change? Three ways:

First, you would consume more food. After all, taking a second loaf of bread to make sure we don't run out doesn't cost anything. Some of it will be wasted, yes, but that would be no skin off of your nose. Can't decide between the triple chocolate tort and the blueberry ice cream? Order 'em both.

Second, you'd 'class up', replacing Two Buck Chuck with Ten Buck Charles. I mean why starve yourself of the finer things in life? Particularly when someone else is picking up the tab?

Third, you would no longer waste time on all that 'good consumer' activity: price comparing, looking for 'deals', stocking up, clipping coupons, going to mega discount chains, bagging your own groceries. Essentially we would become a nation of Bluto Blutarskys of Animal House fame: "Want a beer? Don't cost nuthin"

And the food retailing industry would quickly get the message. You want a lot? We'll give you bigger package sizes. You want class? We'll cut the discount stuff and line the shelves with 'super premium' product. You don't care about price? We'll raise it through the roof. They'll also pour money into facilities and amenities that can be tied to food. WalMart will cover its floors in terrazo and will win an award for the best complimentary valet parking service in food retailing. Just like hospitals do today. And the per capita cost of food will explode. So long as the company is willing to pay more each year, that is.

Get the picture?

This is what happened to healthcare starting in the '30s and accelerating in the 40s and 50s. In many respects it was a golden age because you had great health coverage. If you had employer provided health insurance, that is. For the poor and the elderly it was a dark time. Up until then, healthcare had largely been an out of pocket consumer purchase. As a result it wasn't that expensive to go to the doctor or pay for a whole range of procedures. And all the panoply of price shopping and competition was in full flower. But with the Blutarskys driving the healthcare Lincoln (the fourth order effect) and the healthcare industry rapidly restructuring itself to a third party payor model (the third order effect), they found themselves increasingly priced out of the market. The elderly in particular were hit. Because they use the most and the most expensive healthcare, they suffered first. They were the canary in the coal mine and by 1965 they were tweeting to their representatives at top volume.

So the best and brightest were pulled together. Flights from Boston were packed with brainy looking characters, their briefcases bulging with scholarly papers and 'therapeutic' visions. They all got together and said: you know what? Our policy of vindictively high tax rates coupled with an exemption for health insurance has provoked a roaring inflation that is sinking the elderly. Lets reverse course and relink healthcare price and value - deemphasizing third party payment. Lets put the people back in the driver's seat, not the large corporate interests. That makes sense, doesn't it? I mean we're the party of the People aren't we?

Well sadly, that scenario only happens in my dreams. In fact they used their impressive credentials and swollen crania to take the clearly bad existing third party driven system and made it infinitely worse. Old system provided tax subsidies? We'll provide massive cash subsidies. Old system stuck it to private companies? We'll make it a tax and stick to to our kids and grand-kids. Old system incented the insured to overconsume? We'll do that for a group that has a virtually unlimited demand for end stage healthcare exotica.

Washington is not completely bereft of people with brains that are loaded with logic software and some of them, most notably that right winger, The Monster Barry Goldwater asked some hard questions. Questions like: "so how much is all this hope and change gonna cost?" (they didn't actually say H&C, but they thought it). The boffins of the CBO, the OMB, the Accounting Firms, the Actuaries and half the faculty of Harvard dutifully trooped in and divided one number by a bunch of other numbers, carried the remainders, summed whole columns of historical numbers congealed from other numbers with out making a single arithmetical error and announced portentiously: "The Great Society has created a balm for the elderly everywhere. This program shall not cost 10.7 billion over 24 years, neither will it cost 14.098 Billion over 32 years. But verily we say unto you it will cost precisely 12 Billion shekels over 25 years." And Henry Wallace looking down from heaven pronounced it 'Progressive' and there were signs and wonders throughout the land: Watts, Detroit, Harlem were burned to the ground by a righteous God - wait, no, wrong testament.

And now we come to my point. George Stigler was a young economist at Chicago fascinated by 'hope and change' projects. He took a look at the precise cost estimates provided by the Wise Men of Washington and Boston and wrote a brief little paper. He told me later that he almost didn't even put any numbers or equations in the paper, so simple was the concept, but he was sending it to an economics journal and they like gobbledy gook, so he threw some in. Essentially what he said was this: "My Momma taught me that when you git somethin' you don't pay for, you waste it. This program will cost at least ten times what the experts say it will." And it did and in 1982 little Georgie Stigler won the Nobel Prize for Economics in part for channeling his Momma.

You see all the actuaries and newspaper editors and university professors and accountants and assorted analysts failed to recognize that the implementation of the Medicare "reform" would radically change the behavior of consumers and providers in ways that would make nonsense of all of their carefully tabulated numbers. Because of course, all of their equations and relationships and models were based on historical consumer and economic logic. Change the logic and all bets are off. They failed to realize this despite the fact that the reason they had passed this 'reform' was to cope with the previous mess that had been caused by the same policies that they were now implementing again in more extreme form. Thus the most brilliant experts in the field that the world had ever seen boldly marched into the Slough of Intellectual Despond and sank without a trace.

And now fast forward to Hope 'n Change 2010. The same portentous progressive experts are proposing the same sorts of radical changes to economic arrangements and the same "wise men" are providing precise estimates based on an old reality that the new policy sweeps away. One wonders why they don't just wheel out the 1965 numbers and add a zero.

And Bastiat's long stupid arm of past policy blunders reaches its bony hand towards us motioning as if to say: I have only just begun to screw with you.