Monthly Archives: March 2013

Unexpectedly!

To borrow a phrase from Glenn Reynolds to explain the reactions among liberals, leftists, and the mainstream media to various reports showing that things are not as rosy as the public were meant to believe, I bring you today’s post: CNN asks if Americans were “misled” regarding the true price of ObamaCare.  (Hat tip.)

Let’s review.  The Congressional Budget Office is only allowed to score bills for the next ten years and they are required to use almost all of the assumptions of the bill’s authors.  Obama and Pelosi used this to manipulate the “budget-neutral” score with a few different mechanisms, none of which had anything to do with the long-term viability of the plan.  The most important one was to use ten years of revenue and six years of costs.  If you’re asking, “Wait, can they do that?” the answer is, “Yes, because they are the government.”  A private company that pulled that stunt would find the CEO, CFO, Board of Directors, and perhaps a few higher-ups in prison.  (The only time when you can do that is if there are only six years of expenditures, i.e. six years to pay off a capital loan but ten years of use from the equipment.)  Otherwise, it’s ridiculously unethical, and Year 11 onwards would show that the programme would haemorrhage money (for every $10 spent, $6 would come in).

We warned you. We said, “Six years of spending and ten years of revenue for a budget-neutral bill certainly means that costs will exceed revenue.”  We were called a bunch of ignorant rubes.

The ObamaCare crew also said that the plan would not create any moral hazards, i.e. companies and young, healthy people preferring to pay the penalty rather than get health care.  Nor did they assume that companies would throw their workers onto the exchanges.  Those who understand human nature and budgets knew this would happen; people said we were fear-mongering or that we wanted people to die in the streets.

One of the other big assumptions behind the ‘budget-neutral’ claim was that preventative medicine would reduce premiums.  As I keep pointing out, insurance companies are staffed with rapacious bastards who employ an entire army of actuaries and health experts, so if “free” birth control, “free” physician’s visits, or “free” preventative care actually saved money, the greediest insurance companies would have offered it long ago.  (Same premiums, i.e. revenue, less cost, and you trick the fools into thinking they’ve gotten a great deal!  Win-win-win!)  Other people remarked that you are merely building the costs of such “free” things into the premiums and then adding processing costs.  Either way, a government cannot mandate more services and expect premiums to decrease.

We told you so, and you didn’t listen.

So were the American people “misled”?  Let me ask you this: if you went out on a few dates with a guy, and your friends told you he was no good, your father wanted to use him as gator chum, and his boss just fired him, but he’s so hot and he takes you out to nice dinners, would you be “misled” if it turned out he was cheating on you?

Advertisements

Leave a comment

Filed under Economics, ObamaCare

Two more explanations of “where the $14 went”

Elizabeth Warren recently posited that the little guy is getting gypped because his wages have not kept up with his productivity.

“If we started in 1960, and we said [that] as productivity goes up … then the minimum wage was going to go up the same … if that were the case, the minimum wage today would be about $22 an hour,” the senator said, at a recent Education, Labor and Pensions Committee hearing on “Keeping up with a Changing Economy: Indexing the Minimum Wage.”

I pointed out that the productivity comes to people in the form of lower prices: it’s easier to make a tablet now than it is to make a huge computer with a tiny fraction of the processing power in 1960, so tablets are cheaper. Warren’s alternative would saddle us with $2 million iPads.

Legal Insurrection has two other economic responses, namely, that low-skilled productivity does not increase the same way that productivity in high-skilled labour has, and that the makers of the new productivity-enhancing technology, not the users of it, are the ones who (justly) got wealthy off this.  It would be rather strange to give the operator of a fancy new cash register the benefit of the use of that register, rather than giving that to the inventors of and investors in such technology.

Leave a comment

Filed under Economics

The virtues of free market boob jobs

Maybe it’s heavy-handed to use “virtue” in contradistinction to Josie Cunningham, the unwed mother who ditched her kids and her dog after getting a taxpayer-funded boob job (36DD, for those wondering).

Josie will leave Harley, five, and two-year-old Frankie — her children from a previous relationship — with her parents while she chases her Jordan modelling dream. [….]

Yet she said: “I don’t earn much, but I think I will get used to living the high life very easily.

“I already have showbiz connections as my friend’s boyfriend was a contestant on the Apprentice and I’ve been to clubs like Trader Vic’s and to the Dorchester Hotel.

“I’ve even started to collect Louis Vuitton handbags and have ordered a chihuahua puppy. The sky’s the limit now I’ve got my new boobs — and I can’t thank the NHS enough for giving them to me.”

Josie was rather flat-chested and wants to be a model.  She cried at the doctor’s office and got someone to sign off on her taxpayer-funded breast augmentation.  Now, she’s ditched her family and is convinced that fame and fortune are hers (provided she purchases enough designer handbags, of course).

It’s not like the NHS is rolling in money; this is the “free” medical system that will only pay for surgery in one ear for those with hearing problems, will require patients to be blind in one eye before paying for macular degeneration surgery, and has a “death pathway” for the elderly.

The private sector is excellent at determining if a woman’s modelling career is worth a pair of fake breasts: any agency that sees that surgery is the only thing stopping a young woman will happily pay for that surgery. (It’s sort of like how some companies will pay for a master’s degree.) Six or seven thousand dollars is a small price to invest in the next Kate Upton, but taxpayers will go broke paying six or seven thousand dollars to outfit every delusional twenty-something with enormous fake breasts.

Private insurance companies seldom waste their time on this nonsense; they care more about ensuring that they have enough money to pay for chemotherapy.  (Government-run medicine: the hellacious insurance company that your liberal friends warned you about.) If you want health insurance that will pay for emotionally-distressed wanna-be models to have huge bags of saline put into their chests, you can buy that insurance, but you do not have to.

If there are scores of young women out there, forever scarred by their 32A chests, then a private charity can be set up to give them surgery.  (In fact, there are such things on the Web already, with crowd-sourced funding.)

There are many options outside of the NHS for young Josie to seek her fame.  Taxpayers, however, do not have any other options than to fork over money for ridiculous schemes that have nothing to do with ensuring that people aren’t dying in the streets.  For the record, I have nothing against reconstructive surgery, nor any particular grievance against laws that require insurance companies to pay for it.  Given my own medical history, I am irate at people who cannot distinguish between putting someone back together after a surgery or an accident, and plain cosmetic/vanity surgery.

Leave a comment

Filed under Economics, Miscellanea, NHS

Groundhog in rose petal sauce

A recipe for these freezing days in late March:

12 roses
12 chestnuts
2 tsp. butter
2 tsp. cornstarch
2 drops attar of roses
2 Tbsp. anise
2 Tbsp. honey
2 cloves garlic
1 groundhog, preferably from Pennsylvania
1 pitaya

Brown the groundhog in butter.

Remove the petals carefully from the roses. Ground the petals with anise in a mortar. Remove the peels from the chestnuts.  Brown then in a pan, and then cook them in water.  Puree. Mince the garlic and brown slightly in butter; when it is transparent, add it to the chestnut puree along with the honey, the ground pitaya and the rose petals, and salt.

To thicken the sauce slightly, you may add two tablespoons of cornstarch.

Strain through a fine sieve and add no more than 2 drops of attar of roses. As soon as the seasonings have been added, remove sauce from heat.  Place groundhog on a platter, then cover with the rose sauce.

(Adapted from Like Water for Chocolate.)

Okay, I’m not suggesting that anyone actually cook the furball – he’s a furball, not a meteorologist – but brrrr, it’s cold.

Leave a comment

Filed under Miscellanea

The sun rises in the east, the Pope is Catholic, and the private sector beats the pants off the public sector

Via Instapundit:

HOW MUCH DOES AN OBAMACARE STATE INSURANCE EXCHANGE COST?:   In California, a whopping $910 million– and counting!  Funded by you and me.  By contrast, online insurance giant esurance cost about $40 million to get up and running, facilitating the comparison and purchase  of all types of insurance, not just health insurance.  Ah, the efficiencies of government!

There are ways to reduce the cost of health care and to reduce overhead.  ObamaCare does the exact opposite of those things, which is why small businesses, young people, and individuals are going to see a huge premium spike.

Because really, only in government would a 61-page health insurance application be part of a Paperwork Reduction Act. (I will add that private insurance companies, even those that discriminate based on preexisting conditions, are able to get you to sign up with a much more straightforward application.  One only wonders how many social workers will be permanent government employees, whose sole purpose is to shepherd people through the ginormous application.)

Leave a comment

Filed under Economics, ObamaCare

Overheard in Boston

Man: “I’m the world champion of parking tickets.”

Woman: “Have you paid any of them?”

Man: “Eh.”

Woman: “I think we’re going to have to break up.  I can’t afford any  more parking tickets.”

 

Leave a comment

Filed under Miscellanea

It’s “Feel Good and We’re All the Same!” night in Ipswich

From MyFox Boston:

David Fabrizio, principal of Ipswich Middle School, notified parents of his plan to eliminate the school’s Honors Night last week.

“The Honors Night, which can be a great sense of pride for the recipients’ families, can also be devastating to a child who has worked extremely hard in a difficult class but who, despite growth, has not been able to maintain a high grade point average,” Fabrizio penned in his first letter to parents.

Fabrizio also said he decided to make the change because academic success can be influenced by the amount of support a student receives at home and not all students receive the same level of emotional and academic support at home.

I do not have a problem with moving a school assembly, but I do have a problem with pretending that kids are fragile little flowers who will be forever broken and will never blossom, should we dare to hurt their feelings.  (Okay, I wouldn’t be surprised if people were projecting their own issues onto kids, but that’s a different post.)

Last weekend was the Massachusetts Science Olympiad state meet, the entire purpose of which is to rank kids, give them medals, and see how well they fared after six months of practise.  (Disclosure: I’m an SO alumna and was an event supervisor at the middle school division state meet.) It is not “fair” – some teams have coaches for every event, budgets in the range of tens of thousands of dollars, and years of experience.  Other teams can’t even get enough students and funding to compete in all twenty-three events.   Yet almost every kid there had a great time, and some kids even come back to watch the teams compete when they are older.

One kid wrote a grant to his school’s science department to get funding for his device, started working on his event over the summer, and ended up taking home a medal.  Is it fair to that kid to say, “Hey, we’re not going to give you a medal, since it might make other kids feel bad”?  Because that is exactly what Principal Fabrizio is doing to his middle school.  That kid worked his arse off because the possibility of recognition, of getting a medal, of excelling.  Is it fair that his science department had grants to give away when other kids’ science departments don’t?

No, middle school isn’t a competition, but I’m pretty sure that I saw kids thriving and having fun competing, and I saw kids who were justly proud of all the work they did, even if it didn’t net them a medal or a ribbon.  I remember being in middle school, being happy when all the work paid off, and being upset when it didn’t – but when that happened, I worked harder the next time.  Not ranking other people who outperformed me wouldn’t have made me feel any better when my Egg Drop egg rolled of my desk and broke. (The subsequent rule change, enabling students to get a new egg with a 10 cm penalty, would have made me feel better.)

I, for one, would rather have students compete in science competitions, for recognition in school, and in sports, than attempt to construct a hierarchy based on whose clothes are the nicest and who has the most boyfriends.  Unless you want to impose a Madeline L’Engle-esque mind-control sameness on children, they will find ways to differentiate among themselves.  We can’t defy reality by pretending that kids are entitled to compete on a perfectly level playing field or not at all.

Leave a comment

Filed under Academia, Miscellanea

Economic bubbles, including higher education, are self-perpetuating, until they are not

Reason Magazine has several analyses of what is wrong with American higher education, i.e. we need more liberal arts, less liberal arts, to treat it like an investment, to treat it like a consumption good. While higher education has gotten more expensive since the 1970s, it has gotten more expensive, faster, recently.  As Prof. Reynolds said, “At an annual growth rate of 7.45 percent, tuition has vastly outstripped both the consumer price index and health care inflation (see chart). The growth in home prices during the housing bubble looks like a mere bump in the road by comparison.”

Let’s say Fred is a high school senior, looking to matriculate as part of the class of 2017.  Fred is smart, savvy, and wants to determine if college will be worth the investment.  Fred decides to examine, inter alia, the income/debt ratio of graduates of the college he is considering (Podunk), and the default rate of Podunk’s graduates.

The most recent data available on income/debt is from the Class of 2011, who started college in 2007.   At a rate of increase of 7.45% per year, however, Fred’s first year at Podunk will cost 1.5 times as much as freshman paid in the 2007-2008 school year; his sophomore year, 1.5 times what the recent grad paid for sophomore year, etc. For every dollar that his 2011 grad year peer paid, Fred will pay $1.50.  That will render any serious income/debt or cost/income analysis entirely irrelevant, at best.

It gets worse if Fred were to consider default rates.  Students get a nine-month grace period, and then also get a few years of deferment and forbearance.  Podunk’s default rates are from students who graduated around 2009 and earlier.  That most recent crop of students matriculated circa 2005.  Again, using the 7.45% increase number, for every dollar that those 2005-2009 students paid, Fred and his family will pay approximately $1.80.

Due to the power of compound interest, and the fact that budgets can only be stretched so far, it is more than 1.8 times as hard to pay $180,000 as it is to pay $100,000. Yet diligent, risk-averse Fred, using the most recent data – entirely accurate data! – would be nevertheless using outdated  data – data that was obsolete before it was even published.  Exponentially-increasing costs cannot be analysed with data that is from a different part of the growth curve; however, due to the time delay between matriculation and loan payment, outdated data is the most current data that colleges have.

Continue reading

Leave a comment

Filed under Academia, Economics

It’s Furball Day at Fog of Law

Pope Francis blessed the guide dog of a vision-impaired journalist who visited the Vatican.

Asia [yellow lab guide puppy] walked by Forlani’s side and approached pope Francis, giving his white robe a brief sniff and then patiently waited while Forlani spoke with the pope. Forlani asked the pope for a blessing for his wife and daughter. The pope wanted to make sure Asia also got a blessing,“ He said, ‘and a special blessing for your dog too,’” Recalled Forlani. The pope reached down and stroked the yellow Lab. The pope’s attention and affection toward Asia is fitting for the name he took as St. Francis is the patron saint of animals.

Awwww.

A U.S. Tax Court ruling indicates that the costs associated with fostering an animal are now tax-deductible.  (WSJ article.)  The basic theory is that people who foster animals are rendering services to a 501(c)(3) and incurring expenses in the process.  (This assumes that the animal shelter is a 501(c)(3).)  Note the various legal stipulations – the shelter needs to provide acknowledgement for expenses in excess of $250, for example – but good news for the furball-loving among us.

Leave a comment

Filed under Law, Miscellanea

Don’t give them any ideas!

After President Obama spoke about raising the minimum wage, economists and pundits dryly asked why we wouldn’t raise the minimum wage to $20 or $100 per hour.

Now Elizabeth Warren has taken this to heart and suggests raising the minimum wage to $22 per hour.  (For the record, that would mean that people would make more flipping burgers than I made as an engineering intern.)   Warren explains her madness here:

“If we started in 1960, and we said [that] as productivity goes up … then the minimum wage was going to go up the same … if that were the case, the minimum wage today would be about $22 an hour,” the senator said, at a recent Education, Labor and Pensions Committee hearing on “Keeping up with a Changing Economy: Indexing the Minimum Wage.”

Option 1: increases in productivity mean higher wages for the worker.  Option 2: increases in productivity mean lower prices for consumers.  Option 3: some hybrid version, perhaps half of each.  NOT an option: giving workers 100% of the benefits of increased productivity, and also giving consumers 100% of the benefits.

The current minimum wage is $7.25 per hour. Ms. Warren wondered, in a YouTube video of the hearing posted by her staff: “What happened to the other $14.75?”

She answered her own question: “It sure didn’t go to the worker.”

It did go to the worker – in the form of lower prices.  Once upon a time, almost all banks charged fees; the increases in technology enabled them to give banking services away for free.  Increases in production technology enables people to pay less for better cars.  Everyone who is reading this is benefiting from the increases in computer technology that enable them to buy a WiFi enabled tablet for about a tenth of the price of a late 1980s Apple IIE. As Thomas Sowell repeatedly points out, more houses were connected to the internet at the end of the twentieth century than were connected to running water at the beginning. But if we were legally required to pay inflation-adjusted salaries to plumbers to install water pipes into our house, to account for the increased ease of doing so, it’s likely that fewer people would have running water, let alone internet.

We, as “workers,” may not be getting the dollar value of our increased productivity, but we can purchase people’s more productive time at the same price as their less productive time.  To use an example that may be familiar to Senator Warren, lawyers used to keep a team of secretaries for each attorney.  Now, each attorney needs a smaller, albeit much more productive, support staff.  The one lone remaining secretary isn’t making four times as much money, but the clients are no longer paying for four secretaries, so their bills are lower.  Likewise, the secretary can now go out and buy a refrigerator for less money than she would have paid back in the ’60s, because it takes fewer people to build it, and she can open up a free checking account, since the bank is passing on cost savings to her.  Ultimately, she gets more for her salary, just like everyone else does – which is far better than getting more salary to buy the same amount of stuff (i.e. the Warren plan).

Delivering the same, or a better, product at a lower cost is not a corporate conspiracy; it’s how society provides a higher standard of living to people at a lower cost.

1 Comment

Filed under Economics