Startups in America: Beware of Geeks Bearing Gifts

Authors note: This blog, for the most part, is focused on Healthcare and related topics. Perhaps I am stretching the concept of related topics a bit with this post because so much of the Silicon Valley startup industry has rapidly migrated to healthcare.  I now get numerous calls, or Linked-In requests, every week to look at some healthcare or health-tech startup. I have been interested in writing a paper on the state of the startup industry for a long time and this has provided a good excuse to put my ideas down in pixels.

StartupPaperCover

Click the image above to download this paper for free

I have spent many years in the fabled Silicon Valley, working with startups and investors to develop new businesses in many different industries. Along the way I have seen a lot, some good and some not so good. I have seen good entrepreneurs and investors, and I have lived through a few really bad ones as well.

While much has changed, much has not. Some things have gotten better and others much worse. What has stayed the same is that it is still very difficult to conceptualize, finance and build a business to maturity in a way that is good for founders, employees and investors.

To a great extent I think that the system today is simply stacked against all of us.

I have come to the conclusion it could be much easier and much more effective if we simply did a few things a bit differently. This paper is a little of what I think! Click the graphic above to download your free copy.

America has long been a land of invention and innovation. Having lived through the entire PC revolution, I can see that we have been blessed with massive change to the U.S. and the world due to both technological innovation and a business climate that supported risk capital investment. For the past 30 years or so, this engine of change has been based on the startup business industry. In more recent history the engine has showed signs that it no longer may be what it seems. Some have said as early as 2012 that it is fundamentally and forever broken. Yet, from the pace of young entrepreneurs out trying to start businesses to again change the world, one would never know there is a problem. You’d never know, that is, unless you actually looked a little below the surface.

Entrepreneurs trying to raise money in order to start a business are faced with numerous pitfalls, posers, crooks, charlatans and RPRTrs (Right Place Right Timers) all scattered along what is, for many, little more than a boulevard of broken dreams. We have a cast of characters in both the good, and not so good meaning of the word. We have entrepreneurs, serial entrepreneurs, venture capitalists, angel investors, angel investment groups, super angels, crowd funding, facilitators, “consultants,” deal syndicators, incubators, accelerators and many others. All of these entities want the entrepreneur, or the investor, to think they are “The Answer.”  Some of them may be — many more end up being their worst nightmare.

In this paper I try to give an overview of where these characters came from, what benefits they can bring and the kind of harm they can render if we are not careful. I also try to track come of the changes and show how they have built the current dynamic environment. I also ask some questions for you, the reader to think about.

In my opinion, from the entrepreneur’s perspective, the access to smart money has never been easy. More importantly, from the investor’s perspective, it has not been hard enough. We believe a lot of things about the value of the hi-tech, biotech and Internet industries. We also believe that startups are key to our economic future.  I am not sure that all we believe is correct. I do think there are some fundamental questions we should answer.

First and foremost, if we are going to have a robust startup business industry, we need to understand not only why startups fail, but how to help them not fail and to bring them longer term viability. You will find, if you read this paper, that there are some things we can do to improve how we develop startup businesses that I thank can have significant long term effects and are relatively simple to do.

This paper reflects on my historical perspective working with startups and investors, what I have observed that worked, and what I have learned that does not.  I have condensed a number of very good research papers as to both the evolution and current state of capital access from VCs, angel investors and other sources as well as some excellent reports on why startups succeed and why they fail.

Overall, my conclusion is there are a number of things we should do differently if we want to continue to have a robust startup industry in the years to come. I make a few suggestions at the end.

I hope you will either click the link above or the title and download your free copy.  I only ask one thing!  If you feel this has merit, forward to people you know and let them read it also.  As I said this paper is free and I hope it will circulate and open up some needed discussions.

Startups in America – Beware of Geeks Bearing Gifts (revised)

And as always, I appreciate you reading my blog and hope you find things of value here.

— Tom

To David Brooks: Its not just leaders its their point of origin

The Leadership Revival By David Brooks Article

The Leadership Revival
By David Brooks Article (click to read the original article)

I like David Brooks! He is one of the pre-eminent writers in this era and along with Charles Krauthammer one I try to read on a regular basis. Always thoughtful and cogent, his observations typically are well worth reading, educational and stimulating. Continue reading

Headlines Scream PC Sales Flop due to MS Windows 8: Really?

Aside


Sometimes I get to thinking that there are a lot of relatively young arrogant tech writers, which spend a lot of time floating agenda based premises in order to try to show some company that they need to get these writers permission before they try to succeed with anything.

But then I am not a conspiracy theorist.  But I can see how people jump to that conclusion.  There are no less than 10 articles today with basically the same headline that Microsoft and Windows 8 is a flop because it did not stop the erosion of PC sales and PC and Laptop sales are slowing as mobile devices Continue reading

A short note on MS Surface Win 8RT: Real Life Test

Aside

A week or so, at the request of some long time friends and readers, I wrote a review of Windows 8.  I wrote the review not only because they had asked my opinion but also because I was disgusted by the lack of real work in using and understanding the system by the many so-called reviewers I had read.

I briefly spoke of the MS Surface RT.  While I have been using the RT since it first came out, having given my Apple iPad to my 14 year old son, and I have not looked back, this week I had to go to Boston for the week for work.  It portended to be a fairly complicated endeavor, one that in the past I would have brought my fairly Continue reading

David Brook’s Take on the Progressive Era is Right On

Teddy Roosevelt(R) the Progressive Candidate

David Brooks wrote a great article comparing today’s America with that of the progressive era called, “Midlife Crisis Economics“.  In it, Mr. Brooks provides a very cogent analysis of the fallacy in comparing initiatives from the progressive era with those of today.  He notes that the current administration, long enamored with comparisons to the New Deal era, has now realized that this period comparison has led to many false paths and much political baggage and is now promulgating  comparison to the Progressive Era.  Mr. Brooks very capably points out why these analogies are also in error.  I will not rewrite Mr. Brooks article as I encourage you to click the title above and read his more than capable work. However, I would like to discuss this seemingly current trend in a much broader context. While the current administration may have taken the historical analogy as justification for current actions to a new and perhaps much more dangerous level; this is more likely the culmination of a long term trend in seeking justification for a continually failing set of policies.  While it is very easy to bash democrats for this at this point in time because they are the party of the current occupant of the White House, this is in no way just a one party problem.  Both sides of our professional political class have tried to capture the glory days of their bygone eras as rhetoric to stir the masses to their cause in this current period. The main problem, as Mr. Brooks points out so well in his article, is the times have changed and along with the times; the character of our country, underlying economy, and issues that we are solving for have also changed.  Further, the entirety of our government has morphed into that of a professional political class.

I don’t know about you but I am sick to death of the phrase, “the greatest financial crisis since the great depression!”

At the height of the progressive era, a republican, Teddy Roosevelt, was the spur in the rump of the American Horse.  The ideals of progressive-ism were targeting specific sets of problems and solutions using a specific and timely set of tools and actions. If you look forward to the period of “the Great Depression” you find the same thing. The methods that were chosen to try to solve the problems under F. D. Roosevelt’s reign were also specific and timely.  One of the biggest laughs I get out of discussions about the current economic or health care crisis is when modernists begin to espouse what F.D.R.’s position would be.  Since I have spent quite a bit of time on the issues of healthcare I will point to one example. Over the past couple of years, as the debate for “universal healthcare” centered on a national governmental healthcare system, so called “single-payer” system, one pundit after another, and in some cases supposedly well respected congressmen and women, have said this is what F.D.R wanted.  Well that is just so much–what was it the ‘Stormin’ Norman Schwarzkopf called it?  Oh Yeah, Bovine Scatology!  Franklin D. Roosevelt was fully and distinctly anti socialist and anti communist.  While he proposed many programs that historically we now see in some kind of socialist light, in almost every case what he was advocating for and what we have now are not comparable.  Some of the recognizable  stalwarts, like Social Security, he advocated for but as  temporary solutions. In the area of healthcare, the distinctions are even more stark.  Roosevelt was not solving for the problems we have today.  In fact, it is likely that from his historical perspective he would marvel at how well our current system has improved over the problems he faced in the provision of healthcare to the country.  During this period, the big problems were access to care, and the quality of the care being provided.  While cities could economically support hospitals and therefore provided good places for doctors to congregate, conduct research and solve the needs of the populace, rural areas could not. The profession of physician and doctor had merged into one, hospitals had become vitally necessary for most of them to practice comprehensive quality care and they were expensive to build and maintain. During Teddy Roosevelt’s era physicians could finally charge for services rendered at hospitals. Rural hospitals were few and far between and the few that did exist were often staffed with the substandard physicians who could not get hired in the cities or in other more egregious cases–outright charlatans.    Compounding the problem was that cash and money payment in rural communities was still not a wide spread practice. Both as a result of custom, and the depression, cash was not a favored form of transaction in rural communities. Many people simply did not have cash or ready access to it. Many still bartered for goods and services.  It was nearly impossible to construct a hospital, fund its expenses, and attract good physicians to an economy where cash played an often secondary role. F.D.R. was solving for access to quality healthcare in rural communities. He failed to get his proposed solutions through congress in his second New Deal legislation before his death.  It was Harry Trueman who finally got the Hill Burton Act passed that stimulated the construction of rural hospitals and helped increase the quality and availability of care in these under-served areas.  It is very easy to say, as Michael Jackson did in his song, “They Don’t Really Care About Us” ‘that if Roosevelt was livin’ he wouldn’t let this be, No No No….’ But it is probably just not true.  In the song, Jackson is referring to racism, but even in this area, historians point out that Roosevelt was not quite the staunch humanist we now perceive him to be; and in fact contemporaneously was repeatedly accused of being racist. In the end, it is never a good idea to believe that historical figures would immediately support any of the solutions we propose today. Often, they would marvel at what we have achieved and find ridiculous some of the ideas our politicians now choose to rail about. From racism to healthcare, from the economy to poverty, historical figures would probably strongly suggest we appreciate a bit more of what we have.  They would be lost in a world where political correctness gets parsed to which words are used to reference a problem.  They would be horrified at the areas we are allocating so much of our money–spending huge amounts to support politically correct causes while allowing many other real problems to get under-funded or unfunded. None of these historical progressives believed in debt, nor in the deference to those who lack personal responsibility.  While our historical figures were long on helping the downtrodden and the helpless, they had no patience for the avaricious nor the clueless.

“Don’t pee on my leg and tell me its raining!”

We should look to history to review the things that were tried and whether or not they succeeded. But the blanket application of those historical fixes and the dishonest misrepresentation of the issues and the solutions from then to today are dangerous and duplicitous.  We need more than this kind of behavior from all of our politicians today.  Perhaps, we need to get rid of the professional political class we know have and go back to the very same type of citizen politician who they now wish us to say they emulate. We need leaders that can propose solutions!  We need leaders that have learned the lessons from history and can apply those lessons to the problems we face today and help us come to the hard realizations we need to make in order to pull ourselves back to a viable path.  We need those who can both tell us the truth and apply the learning not just rehash the historical solution because as both Mr. Brooks and Bob Dylan said,

“The times they are a changin”

What we all need to focus our attention on is eliminating (please pardon the crude analogy–but I think it applies) any political party or professional politician, who simply “pees on our leg and tell us its raining!”

Heaven on our Minds: Politics as usual.

The following is written with all respect to Andrew Lloyd Webber….

I would suggest you read as you listen and then perhaps listen again as you read the lyrics below.  That way you may get a better flavor of the utter absurdity.

Today I went for one of my periodical walks. Something my wife constantly advocates for and something I typically find very low on the priority list much to her justifiable chagrin. But being a student of the esteemed barrister, Horace Rumpole, who practiced his art in the ‘Old Bailey’ and recited the humorous and often very insightful words penned by his creator John Mortimer, I learned a long time ago it is best to be mindful of our wives as “She, who must be obeyed”. So, with that in mind, and when I feel the real need to clear my mind, on occasions I will take a walk.

During my walk today I decided to listen to songs from my iPhone. This is also something that is very rare as I am finding more and more as I get older, there are certain habits that I am just not assimilating. Listening to music in some sonic cocoon as I move through my day is not an activity where I have found comfort. In fact I was about to turn the music off when one of the random songs—isn’t shuffle a wonderful thing?—played that I have not heard in quite a while.

Years ago a friend of mine named John Colleary and I were scheduled to take two beautiful women to see the premier of Jesus Christ Superstar at the newly opened Kennedy Center in Washington DC. Being in high school, and growing up in St. Mary’s County, we were of the opinion that to go to the theater required high fashion. We were to rent tuxes and the girls were to wear their finest long dresses to attend this Saturday afternoon matinée.
Providence, being what it is, my friend John driving home from a party the weekend before decided he was a herpetologist and as such was capable of picking up a snake off the highway at 11:30 at night. I am sure he was not drinking and alcohol played no part because we were law abiding respectful youths at this period of our life and of course as such would not drink!

So in his non-inebriated state, John the newly anointed herpetologist tried to pick up a copperhead in the black of night off of the black road bed. Needless to say, the copperhead got the better of the situation as his eyes were not clouded by the dark or the presence of alcohol—excuse me no alcohol, that John may have—excuse me HAD NOT, imbibed.
This action inured to my benefit. By the time the long awaited trip to see JCSS came John was still in the hospital trying not to lose his finger from the swelling and threatening gangrene. In the best redneck tradition, I did what any good friend would! I took his girlfriend and mine to the theater.

Picture this, a pimply faced, redneck kid from St. Mary’s County, dressed in a rented tuxedo, waking up the steps to the John F. Kennedy Center for the Performing Arts with two strikingly beautiful women in evening gowns, one on each of his arms—for a Saturday matinée. Yep!!! We were the only people dressed up. Despite this momentary fit of panic and embarrassment I quickly took note that those around us were trying to figure out who this kid could be with the two gorgeous companions. I rapidly regained my composure and we strutted in to see the performance. Needless to say, I enjoyed the experience immensely and it is one of the fonder memories of my youth.

So why is this important? What does it have to do with my walk? Well I’ll tell you…. The song that made its random appearance was “Heaven on Their Minds,” by the writer of Jesus Christ Superstar, Andrew Lloyd Webber. This was one of my favorite songs from the play, and I always have felt it was one of Barron Weber’s better efforts (he was knighted by the queen I think).

It immediately struck me that these lyrics were particularly apropos in this current political season. You see you can take the name of Jesus out of the song and replace it with any of the presidential contenders and you get a very appropriate story. It works for the current occupant of the casa blanca, as the Spanish call the White House. So with apologies to Sir Webber I have rewritten his lyrics. I chose to use the current president and some of the republican contenders just to show you how prescient it may be and how ludicrous our current system has become.

Click the player above and read the altered lyrics below along with the song. Make up your own if you want. Perhaps if we try to find some humor in the situation a solution will reveal itself. We can only hope.

My mind is clearer now
At last
All too well
I can see
Where we all
Soon will be
If you strip away
The myth
From the man
You will see
Where we all
Soon will be

Obama!
You’ve started to believe
The things they say of you
You really do believe
This talk of God is true

And all the good you’ve done
Will soon be swept away
You’ve begun to matter more
Than the things you say

Listen Gingritch
I don’t like what I see
All I ask is that you listen to me
And remember
You’ve been your right hand man all along
You have set them all on fire
They think they’ve found the new Messiah
And they’ll hurt you when they find they’re wrong

I remember when this Cain thing began
No talk of God then, we called him a man
And believe me
Our admiration for him hasn’t died
But every word he said that day
Got twisted ’round some other way
And they dumped him cause’ they think he lied

Romney our most famous son
Seems to-have have stayed a great unknown
Like his father making cars
He’d have made good
Rambler, Nash and AMC
Would have suited Mitt the best
He’d have caused nobody harm
No one alarm

Listen Bachmann, do you care for your race?
Don’t you see we must keep in our place?
We are occupied
Have you forgotten — one percent we are…?
I am frightened by the crowds
For they are getting much too loud
And they’ll crush us if we go too far
If we go too far

Listen Perry to the warning I give
Please remember that I want us to live
But it’s sad to see your chances weakening with ev’ry hour
All your followers are blind
Too much Ron Paul on their minds
It was beautiful, but now it’s sour
Yes it’s all gone sour
Ah — ah ah ah — ah
God with Obama, it’s all gone sour

Listen People to the warning I give
Please remember that I want us to live
So come on, come on, listen to us.
Ah — ah
Come on, listen, listen to us.
Come on and listen to us.
Ah — ah

Do you think the Andrew Lloyd Webber was having a vision of our destruction in the 60’s? Perhaps that is why the Queen knighted him in 1992. Maybe this is all a British plot to get back the colonies? Maybe Barak Obama is the Manchurian candidate after all—Maybe Ron Paul is the love child of Twiggy and Prince Charles. That could explain the slim physique, different viewpoint and ears!
Nahhhhh. Even England would not want us back at this point. They have enough problems of their own!

Time for something new: How about WE?

This article could also be titled…. “If the Occupy movement wants an argument that will resonate, and work — this is an idea!”

America has had a kind heart

America historically has had a kind heart.  In the past, when friends and neighbors were in need we have risen as one to help each other.  We are a nation that was founded on the belief that with tolerance for opposing ideas, and being united in a common cause, we could rise from the oppression of our rulers in a foreign land and take control of our own destiny.Thomas Paine was enlisted to help unite the people in this view and he coined the phrase, “an island cannot rule a nation!”. While at the time of the American Revolution there was not 100% unity in the desire for separation—or even universal agreement that separation from England was a good and economically viable idea. In the end, our founding fathers strung together enough of an argument that if we remained true to the ideals established in our Declaration of Independence and if we crafted the proper covenants of governance as later codified in our Constitution of the United States and if we practiced tolerance for each others separate and distinct; needs, wants, desires, and religious beliefs we could not only survive but perhaps thrive; and in so doing become a model for a new method of common governance—a constitutional republic—a very separate and distinct system from a historical democracy.

As a nation, in effect we made a promise to ourselves to believe in our own future, to be vigilant in the preparation of our government for the succeeding generations, and to develop within the constraints of our new found republic rules and regulations to promote various individual freedoms — earned based on our own personal and collective responsibilities. In the era of the citizen politician, this system has worked remarkably well. However, as we are by our nature, human, and as such subject to our own failings, we have made mistakes.  These mistakes, often in the form of ill-conceived and poorly framed decisions to solve the pressing problems of the various historic periods, have often changed our understandings, altered our perspective or removed the need to maintain our own personal responsibility for our life and our own decisions.

In the 1930’s we began a series of what at the time appeared innocuous decisions that fundamentally altered who we are and how we think of ourselves and Americans. It is my belief, that in each case the decisions were made for valid reasons. But in the nature of the deliberations at the time, we were faced with the age old dilemma: the conflict between practical pragmatism and ideological morality.  As we began once again to find some prosperity, we have more and more consistently chosen the moral side of the equation. And who can really argue with such choices?

The rise of the full time professional political class

In the days of the citizen politician, when congressional and executive service to the country was part time, and in the end those that served gained little and gave much, decisions tended to become more tempered with pragmatism because the laws passed more directly and immediately affected our legislators just as they did the rest of the citizenry.  As we moved through the 1930’s and 1940’s short term decisions to extend the period of congressional duty to more of a full time period set us on a path to the development of a full time legislative role and later to the establishment of the professional politician.  As this role changed, not only did we end up with full time politicians, we ended up with what now is a legislature full of professional politicians—a Full Time Professional Political Class.  A new level of American who’s class gives them exemption from many laws but more importantly that by gaining election into this elite class become, by and large, exempt from the pressures of life that affect the rest of the “normal” people. The prize of elected office is now exemption.

As I have discussed in earlier articles, the currency of this class is votes and the goods exchanged are now our own hard won assets, taken by the professional political class to equalize the injustices, both real and perceived of those not of the professional political class.  Whether the flow is from the wealthy few to the “huddled masses” or from the masses back to the wealth few to stimulate programs to fund the huddled masses, in this zero sum game we are continuing to lose economically.

For the last seventy or eighty years these decisions have appeared to work, with little or few consequences.  I have discussed a number of these points in prior articles and will not rehash these decisions here.  I expect my readers are capable of doing their own research and forming their own opinions.  What I will remind you of, is that as the underlying dynamic of our political system changed and this new class rose, often those short term legislative solution, affected to solve the immediate problems of any given period, became permanent sales pitches to sell these often short term programs as now permanent gains for the huddled masses in exchange for votes.

The Political Class is broken

Unfortunately though, today the professional political class, like the people they are supposed to serve, are stuck! Our political system is stalled! As a result, WE are stymied! That’s right, it seems we as a nation are at an impasse, spinning in circles and getting nowhere.  Yes, it seems we are trying to pry open a door that just won’t open.

The evidence of this, of course, shows in the inability of Congress to come to resolution in order to solve things like universal health care crisis, the financial crisis, the economic crisis, the immigration crisis, the jobs crisis, the energy crisis, the stock market crisis—the list can go on and on…. Any solution is long overdue.

Though it can often appear that the powers-that-be in Washington are making an attempt to provide such solutions, the historical record of real fixes and real reform is just not there. That’s right, if WE read and listen to the daily news, WE realize that what Washington has on the table ultimately will not, and cannot, work.

Washington has had many opportunities for the past 80 years to design and pass legislation that would fix our problem, they just can’t get the job done.  They can’t because we are asking them to fix something that is simply not in their purview to fix.  WE seem to keep asking them to fix the problems created by our own lack of personal responsibility and accountability.  We want the government to make it so that no matter what we do they must take care of us—make it all better.

I asked you a couple of paragraphs ago, “Who can really argue with such choices?”.  From a moralistic standpoint who really wants to argue against providing care for all who need it?  Or, who wants to argue in support of not helping people about to become homeless?  No one, in either the huddled masses (both the 99% and the 1%) class or the professional political class (all the rest) wants to make these arguments!  Despite the truth that no one is out to harm a fellow human being, isn’t it nice that we constantly beat this drum about how so-and-so wants to harm the other guy? In our hearts we know this is true but we allow these surrogates of others to beat this drum until some of us start to believe it. Who was it that said, “If you tell a lie big enough and keep repeating it, people will eventually come to believe it!”? Oh yea, it was attributed to Joseph Goebbels, although it is more likely a misquote of Adolf Hitler’s big lie passage in Mein Kampf.  One of the big issues today is that our Professional Political Class will not, in fact they can not, make such an argument.  The checks and balances that govern their existence prohibit them from making this argument. Their livelihoods are predicated on them NOT making such arguments. We have built a political system where they get compensated, quite handsomely, for promising to give us stuff for nothing-in effect lying to us.

Two minds but one heart

While I believe we all truly have one caring heart. I would submit, with no real evidence, that we as a species are of two sociological, perhaps genetic, minds on this issue.  About one half of the species sides on the moral and the other half sides on the pragmatic.  One side sees the argument as moral and cannot fathom any decision that would go along with sustaining the emotional pain of watching a neighbor fail.  The other side sees the problem as a survival issue, economic or otherwise.

Today, no one disputes there are millions in need in America, and more so in the world as a whole.  Seeing our governments inability to solve America’s problems is downright frustrating when you consider we are a nation that can mobilize in an instant to help people all over the world—like in Haiti or Sri Lanka—or how about the help we’ve given to various villages and communities in Bosnia, Bangladesh—or the impoverished countries in Africa. If we can do that then why can’t we take care of our own? Why can’t we help those who need, and most certainly deserve, to be treated with consideration and priority when it comes to physical and mental health and well being? While we should try to help the world, I for one would like to concentrate first on our own neighbors; as their suffering has a much more direct bearing on our own needs, wants and responsibilities.  I also subscribe to the belief that if I give someone in need $1.00 they get $1.00.  If I give it to the government the needy net about $0.35.  These are not my numbers but the governments in various forms.

We need an Answer

We need an answer. But to get one, we need momentum. And, to create momentum, I believe that if each one of us did a part—if we mobilize, all of us, pushed in our own individual way—we might very well force the door to solutions open, even if we do so only a little at a time.

I guess you could say that my philosophy toward solving the healthcare issue, and most of the other issues we face as a nation, can best be summed up in the words of that ever-popular Michael Jackson hit, Man in the Mirror, in which he and his co-writers Siedah Garrett and Glen Ballard, stated, “…I’m starting with the man in the mirror, I’m asking him to change his ways/no message could have been any clearer/ if you want to make the world a better place/take a look at yourself/and then make a change…”  In other words, it starts with each of us taking responsibility for both ourselves and our neighbors and a closer look at what every one of us can do to effect change.

While I was at Ramsell, I started a non-profit called the WE Movement.  In creating the WE Movement I believed that we could all do something, each of us to help Washington get the job done. While I was working on healthcare reform in Washington I learned a few things  about how our professional political class try to make sausage.  Having grown up in St. Mary’s County, Maryland, I know a thing or two about making sausage and Washington DC knows nothing about making sausage.  I would submit to you that we would be much better of in the long run if we went back to the days of part time citizen politicians, many of whom could be real sausage makers and we would find that our government would be much improved. If not improved, at least our daily diet of bad news would taste a bit better!

Let’s talk about health care for a minute.

We have learned that we in the United States are a generous people—all of us, whether we are Republican, Democrat, Independent—conservative or progressive. We also have learned that the majority of us wish that all people could and should have access to the health care they need.

Sadly, we have also learned that the scope of healthcare we want everyone to have is simply unattainable—the economic cost for it well beyond what we can provide—or more importantly—what we are willing to allocate to pay for it.  It is not an issue of taking money here to pay for it there.  It is an economic issues in that the more we pay for care to workers the less competitive we become in the world stage.

I have come to be of the mind that there are two very important universal truths that have emerged from this recent health care bill proposal:

  1. We can’t afford what we want (and need) and,
  2. the prevailing atmosphere of “Us” vs. “Them” has been a recurring theme and extremely corrosive to the ideals we have set.

For example, the goal of Universal Healthcare was to include:

  • Affordable coverage for 100% of all Americans
  • A mandated minimum standard of care
  • Access to all, regardless of illness, state of disease or pre-existing condition
  • Reduction of the overall cost of care to all Americans
  • The elimination of “care disparity”
  • And assurance of coverage for the underserved

All good ideas; lofty goals, yes, but A) we can’t afford this “vision” package because the implementation and subsidy costs alone total $1.55 trillion, and only 155 million people are getting paychecks out of the 338 million Americans who need them, and B) under the suggested guidelines, the cost of care for individuals will rise between $1000 a year to $3000 a year.

Next, it seems we’re faced with an “Us” versus “them” mentality: For example, coverage for 96% of Americans is requested (although 94% were already covered before the proposed legislation). The actual goal was to provide coverage for the uninsured or under-insured. And, the 2% additionally insured breaks out like this:

  • O.8 percent are between 18 and 29 years old
  • 0.4 percent are elderly—those that previously were not enrolled in Medicare
  • The dilemma is where this leaves the uninsured and under-insured

The problem is that the minimum mandates for care were watered down; changes were made geared to garner support from AMA, AARP, Unions, and others such as the Medicare Advantage program which was effectively curtailed to get AARP support. Also, the cost to the nation will rise significantly; the curve does not bend down under full utilization, however. And, also the ideal to eliminate disparity has resulted in restrictions of options for “them” that can afford it, not an increase in options for the “us” that cannot.  In other words, it’s as though this bill has pitted two groups against one another rather than providing a plan that works for the good of the whole. The end result: we’re getting nowhere. As I said, we are stuck, stalled, stymied…the situation has created a sense of inertia precluding us from moving forward in any direction.

Here are some other statistics that need to be understood and made known:

  • Medicare and Medicaid account for 1.3 trillion in health care spending this year
  • Total health care spending in 2010 exceeded $2.8 trillion. Interestingly, some studies have shown that as much as 39% is lost to waste, defined as “duplication of services” and “unnecessary services.”  Other studies tell us that as much as 20% is lost to fraud and abuse.
  • Ultimately, estimates suggest that over $800-billion per year is lost due to waste, fraud, errors and inefficiencies.

So, you may be asking: What can we do about it?

I believe that a simple form of coordination of care and benefits across all available sources will save at least 10% of the total cost of healthcare, and by eliminating duplication of services we can provide increased capacity within the existing networks.  Yes, it is possible, and what a way to begin to open that door!  And it is not simply in healthcare where these benefits can be attained.  It will work in virtually any area where those that have a re providing benefits to those that need.

It is staggering as we try to comprehend that $800-billion dollars in waste exists in the healthcare system across the United States today. What do you think is happening in other segments of government run programs?

Can you imagine what we could do with that amount of money if it were available for health care purposes—if we put this money to better use? And it’s not just the money that we can put to better use; it is the resources as well.  If we eliminate duplicate visits and other services we will free up resources to treat the others who wait in lines.

This is just one way to begin to solve the problem—better appropriation of resources and the spending of funds that are currently available. I believe there are a number of other ways to begin to solve the health care plan dilemma and we must because, just like you, most of us are out of patience with those who wish to make the health care issue, and all the others, a political playground. I think we can all agree that we are fed up as we stand by and wait for a resolution to a problem that is really quite solvable.

WE need to eliminate the “them” versus “us” mentality. We need a platform for those who wish to help each other—to be able to quickly and easily find those in need.  We need a method to filter the truly helpless from the clueless; or worse from the charlatans who simply want to get everything for nothing. Washington can play a key role, an appropriate role, in helping to develop such a system.  A virtual place for people to post what they are willing to provide so they can be matched with those in need. This becomes a “them” and “us” –that culminates in a “WE” solution.

I believe there are many others just like us who are willing to participate, and help each other in the collective crises we face if we can be assured that the needy are appropriately vetted.  Lets face it our government has a horrible track record in this regard.  Their own data shows that Medicaid and Medicare provide only about 35 cents on every dollar to care and we know that there is between a 15 and 20% rate of fraud in the system. Regardless of the percentage due to inefficiency this is at least a 50% improvement just in duplication and reduction of systemic fraud which we know from history the government just can’t do. We need a public private partnership to provide the core system.  Fortunately there are many choices.  Social networking is not far from being able to provide an effective infrastructure. Companies like LinkedIn and Facebook, already have flexible platforms.  MySpace not only has the platform but could rebuild their suffering brand by providing such a valuable option.  Of course there is also Google +, offerings from Microsoft, and many others.  It need not be just one provider.  Why not something in each and every infrastructure?

Webster defines “them” as “a group of people other than the speaker or people addressed.”

Webster also defines “us” in a similar fashion: “another person or other people.”

Presently, the mood in Washington is one of pitting “us” against “them.”
But the word, and collective consciousness we must all adopt in order to find resolution to the health care crisis, is “WE.”

Webster defines “we” as “you and I and others;”

It is all inclusive and that’s exactly how we must all be thinking in order to solve this health care  problem—with a “WE” mind-set. And, we need to tell Washington that this is where we stand as a nation.

For lack of a better analogy: If the Occupy Movement wants to find a message perhaps they need to become more about the WE and less about the 99% vs. the 1%. The truth is that this is not where the problem lies. It was basic grass-roots campaigns that grew rapidly in the 60’s when thousands took to the streets to put pressure on those in Washington who could not agree on how and when to end the Vietnam “war.” But this outcry spanned the classes and with a small exception did not pit one economic segment against the other as a way to curry favor in the majority. Clearly it has been shown that voices who cry out in unison with a unified, consistent, effective message  combined with an obtainable goal shared in every city, township and state can be very effective.  The speakers need also to be in every industry, economic strata, and profession—every company and corporation—and they need to gather and be heard. They cannot be disruptive nor divisive.

Our constitutional republic was set up so that our leaders would make the proper and just decisions for the good of the country as a whole.  The framers know that if we were only a “democracy” that in the end the system would fail.  That the mass of people would in the end vote more for laws that provide to their own benefit regardless of the overall bad effect to the nation.  The point of the constitutional republic was to set up our representatives so that they would be able to make the best decisions with little consequence and the bad decision would provide no gain.  In the past 80 years we have gone a long way to destroying that subtlety.  Historically, the concepts of fairness and equality for all did not equate to unequal burden nor benefit for anyone.  Today the entire concept of fairness and equality is conditionalized first on who has what.

WE need to take these messages to Washington.  We need to make it clear to our elected leaders what we think the effective role truly is for government.  To do that, we need to agree ourselves.  Abraham Lincoln said, “a house divided against itself cannot stand”.   Does anyone today doubt that we are a divided nation?  Even within our political parties we are divided.  I submit that it is no longer our politics that divide us; it is a much more simple philosophic divide.  We seem to be a nation of thirds.  One third morally driven (termed liberal), one third pragmatically driven (termed conservative), and one third combining the best (or worst—depending on your point of view) of both. Lincoln would likely be horrified.

When addressing the most fundamental rights—those of life, liberty and the pursuit of happiness, the authors of The Declaration of Independence started that document with the words “WE the people….” They went on to write: “…to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed—That whenever any Form of Government becomes destructive to these ends, it is the Right of the People to alter or to abolish it…” I am not advocating its abolition.  I am advocating we recoup our original national character.

I think we need to invite all of us— the collective WE—those young and old; well and ill; others within the healthcare and other business communities—to speak out—and to help the government find a way to solve these problems.

No one should be asking for money to do this. Existing infrastructures should be encouraged to build the support tools in their existing systems. Others should be determining what they can provide to tie into these support tools.  The government should be encouraging us all to do this, to adopt this philosophy and to establish some standards and guidelines to facilitate the private sector to participate right along with our part time citizen politicians in constructing a viable solution that works. To date, we have people saying, “We are fed up.” We are in need of a healthcare, financial help, economic recovery, jobs etc. initiative that works for the good of the ‘governed’. And, “We are tired of the bickering in Washington.”

Occupy, or any other organizations, should all hope to collect a groundswell of support—one that makes a powerful collective statement and an impact on Washington, one that will cause those in charge to listen to alternatives as to how to approach and conquer these dilemmas and also as a means to utilize such virtual matching and help systems free of charge to serve others who are less fortunate.

In the words of Stevie Wonder, those who decided to unite as WE should be determined to “… keep on tryin’/till WE reach the highest ground.”

What do you think?” Do you know anyone who has something to offer? Do you know someone in need of something?  Wouldn’t it be great if we could have a place to go match one with the other? Some place were the helpless can be identified, and the clueless and the fraudulent can be identified and filtered out.   I am not proposing the Government take the role of the determinant of who and who is not eligible.  I am proposing the government take the role of encouraging, promoting and defining the standards, that then allow private industry to combine their systems to help and put such determinations in the hands of the people offering the help.  I don’t mean we should get rid of our safety nets; but we should change the cost structures to a more efficient system and get the government at least partially out of picking winners and losers.  The  collective WE can identify the helpless, and work in virtual teams-virtual villages, to help each and everyone in need.  Virtually coordinating our efforts around the one person in need–placing them in the center of the world that is teaming up to help them.  This is the solution.  This virtual teaming approach will reduce, and perhaps in many cases, eliminate the waste due to duplication of efforts and could go a long way to identifying and reducing fraud and abuse.

In the end my message is–this is all up to WE.  We can continue to delude ourselves that the government can provide this effectively and efficiently but 80 years of history says otherwise.  So is it us–as in the US government as our collective surrogate,  or WE–as in all of us as individuals, that is best suited to do this?

That decision is yours regardless, the only difference is whether or not we all accept the individual responsibility– the duty–to do it or we push it off to the collective others.

Headline Screams – Wealth gap hits record levels: But is this significant?

Click Image to Link to Article

Reading my local paper I was struck by the headline, “Wealth gap hits record levels” by Hope Yen.  The secondary headline “Divide between younger and older adults widens as lengthy downturns erodes net worth of those under 35” also raised my curiosity.  In both cases I did not find either statement unusual.  Why would there not be a gap in net worth between people 65 and older and people under 35?

The article further states that there is a 47-1 gap between the old and the young, and states it is the highest ever recorded.  The article cites that the median net worth of a household headed by a person 65 or older is $170,494 and that the median net worth of  households with people under 35 is just $3,662.  I really just want to say – Yea – So what’s your point?

I am more or less astounded that anyone would find this remarkable. All of my life experience indicates that there should be a substantial gap in net worth between the ages under 35 and those 65 and older.

Yea-So what’s your point?

I mean, after all wouldn’t it make logical sense for someone who has worked 40 or 50 years longer to have accumulated much more net worth?  In fact the statistic of the gap in the relative net worth of 47 times actually seems low to me – I will tell you why.  I am starting to knock on the door of the upper age quoted in the article.  From my own history, I had no where near the net worth when I was 35 or younger that I have today. Nor would I have expected it.  Let’s take a look at why that might be – shall we?

When I was 35 and younger, I did not earn anywhere near as much as I have during the period after 35, nor should I.  When I was under 35, I was learning my trade, earning my stripes, gaining experiences that helped me make fewer mistakes and become more valuable.  In those years I was just starting out.  For part of that period, I was renting a home, then later purchasing one.  As such, I was not yet rapidly building equity.  When I did purchase a home I had to buy stuff to put in it; so instead of building net worth I was spending money.

In the years under 35, I was also living a more – I can live forever and worry about retirement after I do and get all the things I want – lifestyle.  I guess you could say, I was less responsible with my money.  Also, this is the period that we go from spending money to attract mates and practice the art of procreation to actually procreating.  For those of us who have both practiced procreating and then later actually procreated, I think we can all attest to the fact that both of those things cost money – sometimes a lot of money.  These costs significantly reduce what we can save and therefore our net worth.

Age - Net Worth Table (by author)

From the age of first procreation to the age of 35, the actual procreants got older and the worry of looming higher education cost came home to roost.  So not only did I have the expense of  increasingly ravenous, and growing children to contend with, I had the resulting increases in costs to go along with said children.  So increasing net worth was still not that much of a viable option.

So you see, maybe I am not typical, maybe I was just irresponsible, maybe it is simply my generation, but I don’t see how at the age of 35 and younger one would even begin to have the net worth of someone in 65 or older.  Another factor for the younger households among us is that the percentage of inherited wealth likely does not befall them until they break the 35 year barrier.  Since the average life span for a person in the U.S. has been between 73 and 83 years old throughout my life time, I would have typically been between 47 and 58 when I received an inheritance assuming that a.) my parents had me as their first born at the age of 25 and they lived the average lifespan.  Even if I was second born and my parents had a 5 years gap between their children,  I would have been over 40 before I received an inheritance. And to push the statistic one more level, If I was third born with another 5 year gap I would have been 37 upon receipt of inheritance.  So Inherited wealth, which can add to net worth, and should from my point of view, would not arrive till after the age of 35 years old.

I put together the above chart, simply to see how much a person would have to save each year from the age of 18 in order to achieve the 47 times multiple quoted in the article.  I used the number of periods to earn the multiple as 47 more for convenience than anything else.  I also chose it because it is exactly 47 years from 18 to 65 years of age.  I could not forgo the irony of the calculation.  You will see, that it is very possible for one to achieve this net worth from simple savings of $2450.85 cents per year at an annual interest rate of 1.5% alone.  Forget appreciation in home ownership, forget increasing value and salary in the workplace, forget lowering of cost as children grow and move on, forget inheritance, forget any other factor that could affect the rate of appreciation of net worth as one ages.

The point of the article seem to be saying there is some base inequity between the older generations and the younger generations.  Perhaps, it is laying the groundwork for elimination of social security and medicare because after all older people have had lifetimes to accumulate their wealth and the younger, under 35 have not – but they will won’t they? The article states, that it is the result of the economic downturn that the multiple has arrived at its worst in history.  But I simply do not believe that statement.  I want to see some indication of what the historical period of record is.  I suspect we will find that this measure is a relatively new one and its history does not go back that far.

The author states that Social Security accounts for 55 percent of the income of people 65 and older.  Duh – what would you expect to see as many over 65 are retired and rely now on Social Security, retirement, savings,  and pensions to pay their expenses.  And this measure they are arguing is NOT earnings, it is net worth –  apples and oranges.

In the article the author cites, Sheldon Danzinger, a University of Michigan public policy professor, who says,

“The elderly have a comprehensive safety net that most adults, especially young adults, lack.”

Again, I hope this was not some government funded study to come up with yet another “Duh” moment.

Paul Taylor, director of Pew Social & Demographic Trends and co-author of the analysis, said,

“the report shows that today’s young adults are starting out in life in a very tough economic position.  If this pattern continues, it will call into question one of the most basic tenets of the American Dream – the idea that each generation does better than the one that came before.”

Tell that to those who suffered growing up during the great depression.  I am sure they felt the same way.  The realty is that many generations have not done as well as the previous generation.  The history we learned in school simply ignored many of these facts.  Our history was written to drive the concept of American Exceptional-ism.   So these historical pronouncements often are based less on facts than perception.

Other findings:

-Households headed by someone under age 35 had their median net worth reduced by 27 percent in 2009 as a result of unsecured liabilities, mostly a combination of credit card debt and student loans. No other age group had anywhere near that level of unsecured liability acting as a drag on net worth; the next closest was the 35-44 age group, at 10 percent.

-Wealth inequality is increasing within all age groups. Among the younger-age households, those living in debt have grown the fastest while the share of households with net worth of at least $250,000 edged up slightly to 2 percent. Among the older-age households, the share of households worth at least $250,000 rose to 20 percent from 8 percent in 1984; those living in debt were largely unchanged at 8 percent

We have been preaching, some would say irresponsibly, buy on credit since the 1970s.  We have spent much of the past two decades allowing banks to market credit cards to students in college.  We have been stimulating everyone to go to college ignoring the very visible unintended consequences of a reducing labor pool, lowering income level for college graduates, and massive education debt load upon starting their early life.  Adding insult to injury, or stupidity upon ignorance, our own government practically has forced these individuals to purchase homes in those formative years where they could have perhaps saved a small bit, maybe $2,500.00 per year.  Instead, our government manipulated the market using Fannie and Freddy, stimulated the myth of viable ownership with steadily increasing money supply, and in some cases, forced banks to lend to these young people who were really not yet ready to assume such debts.

So what now?  Along with the class war Occupy Wall Street, you know the 99% against the 1% crowds, who are angry with the people who make large amounts of money through the form of legal gambling called the stock market and who are angry with banks for now wanting to collect on those student loans and mortgages they can’t or don’t want to pay back – will we have another group wage “age war”?  Will we see a new slogan the 27% (those under 35) vs the 12.3%(those 65 and older).

So what is the point of this article?  Is it to amplify a point of how capitalism doesn’t work?  Well it fails there because clearly it has worked for the elderly.  Is it to make the point that it won’t work any more?  Again it fails when you look at the gains simple savings will yield over time.  Is it to make the point that the young have it so tough?  Tell that to the people who grew up in the late 70s and 80s when mortgage interest rates were 14% and 16%!

Perhaps it is time to really look at the lessons from this study.  They are not how inequitable the world is and how unfair it is for the coming generations.  The lessons are imbedded in undoing some of the things that have caused the current problems.  Instead of preaching how all Americans should spend more, and use their credit card more, perhaps we need our government to start to preach austerity for the average citizen!  Perhaps, we should correctly instruct our youth on the real history of America.  You know they still may see America as a great nation!  Perhaps, we should once again tell our youth they need to save and become responsible for their retirement years.  That relying on the government to collect a dollar in taxes that will ultimately end up as less than 30 cents of benefits for them in the future is not a good formula. Perhaps, we need to eliminate the death tax so that what people save and gain in their net worth can actually go to help benefit their procreants – you know their children, their heirs and assigns – the ones who are now worrying so much about their future!

Whatever the point of this article, I submit it is not good for America, unless it was written to point out the fundamental systemic problems and address them in some way other than promoting more income redistribution, and more entitlements for all.  The approach seemingly inherent in this article will not be good for We – the People of America. Of course, maybe I am just reading it wrong. Then again maybe not!

Post a comment if you agree or disagree!  As I am declared a Mugwump, I hear both sides.  I try to decide what I think is best – not what any party tells me.  So tell me what you think!

Republicans & Democrats: Division destroys WE

This article is in response to a recent letter to the editor in my local paper.  In this letter entitled, ” GOP debt”, the writer makes his point that the U.S. debt is the Republican’s fault – that most of the debt incurred has happened under their watch, as a result of their programs.  He blames the current problems of America and its economy on thirty years of their dominance over Washington DC.  This article is not intended to challenge any of his assertions, or to attack the credibility of any of his arguments.  Fundamentally, it will not make any difference whether or not, he is correct as to who was actually controlling our government during the past 30 years.  The end point would have been the same.

Instead, I think it is time for all of us to take a hard look at a timeline for the past 76 years.  I have assembled a brief one here.  This is not meant to be inclusive of every single event, nor could it, as many would debate the events themselves.  I also have not intended this to try, by the volume or magnitude of events for either side, to lead anyone to the conclusion that one side is more at fault than the other – although I am sure some who read this will still complain of bias and that intent.

WE is us – We the People.  Not Republican, Not Democrat – neither liberal nor conservative.  It is simply WE.  Unless, or until, WE again congregate as one in purpose, we all will lose!

I have simply taken my own personal stroll through history and picked the particular events I felt were important, pivotal, in our long and involved – often entangled process – to arrive at the door of what may be America’s economic collapse.  We are at this doorway as a result of numerous decisions and actions.  We have made many many decisions in this period.  Most of the decisions were originally contemplated to fix contemporaneous problems of the day.  In this time we have developed a nasty habit of enacting short term programs with an intention to replace the programs with other solutions later, only to have the replacement step get lost along the way as we allowed the growth of a professional political class and the virtual elimination of the citizen politician on which the country was founded.

I don’t know if a professional politician is better for us in the long run than a citizen politician.  I can see advantages on either side.  History and the electorate soon will make that determination.  I do believe that at each step, for the most part, the politicians were attempting to fix the problem in a way they thought was best both for the country as a whole, their constituency, and their own re-electability.  While I can idealize a desire for so much more in the decisions of my representative, I must concede and accept the nature of humanity after all in this process.  It becomes my responsibility to elect the best person in support of the best solution. In effect to be a Mugwump.

In the end, it makes little difference.  Until we truly understand the mechanisms and fundamentals of our current situation – and correct them, we will continue to glide through the open door of disaster – slipping at some point into the empty maw of the economic abyss.

A Time-Line of Key Events

  • 1935: Social Security Act – Franklin Roosevelt (D)
  • 1965: Extension to Social Security Act (Medicare & Medicaid) – Lyndon Johnson (D)
  • 1972: Elimination of the Gold Standard – Richard Nixon (R)
  • 1974: Equal Credit Opportunity Act – Stimulates credit purchases – Gerald Ford (R)
  • 1977: Community Reinvestment Act – Jimmy Carter (D)
  • 1980: Depository Institutions Deregulation and Monetary Control Act – Jimmy Carter (D)
  • 1981: Initial Application of the Mark to Market Rule – Ronald Regan (R)
  • 1985: Home State Savings Bank begins to fail – Ronald Regan (R)
  • 1986: Tax Reform Act – Ronald Regan (R)
  • 1995: End of S&L Collapse – Assets sold to Banks – RTC cost $87.9 Billion – Bill Clinton (D)
  • 1995: National Homeownership Strategy Announced – Bill Clinton (D)
  • 1999: Fannie Mae eases the credit requirements to encourage banks to extend home mortgages to individuals whose credit is not good enough to qualify for conventional loans.
    The Gramm-Leach-Bliley Act repeals the Glass-Steagall Act of 1933 – Bill Clinton (D)
  • 2000: Lenders originating $160 billion worth of subprime, up from $40 billion in 1994. Fannie Mae buys $600 million of subprime mortgages, primarily on a flow basis. Freddie Mac, in that same year, purchases $18.6 billion worth of subprime loans, mostly Alt A and A- mortgages. Freddie Mac guarantees another $7.7 billion worth of subprime mortgages in structured transactions.
    Credit Suisse develops the first mortgage-backed Derivative (CDO).
    Commodity Futures Modernization Act of 2000 declares credit default swaps (and other derivatives) to be unregulated, banning the SEC, Fed, CTFC, state insurance companies, and others from meaningful oversight. – Bill Clinton (D)
  • 2003: Federal Reserve Chair Alan Greenspan lowers Federal Reserve’s key interest rate to 1%, the lowest in 45 years – George W. Bush (R)
  • 2008: Global Financial Crisis Begins – Feds Take over Fannie Mae Freddie Mac and guarantee $6trillion of mortgages, Fed Reserve Lends $85 Billion to AIG, $700 Billion TARP Program goes into effect, Fed lends $1.3 Trillion to companies outside financial sector – $900 Billion loans to banks and buys $540 billion in short term mutual find debt – Fed Loans 133 Billion to foreign banks, Fed pledges $800 Billion more to buy mortgage bonds from Fannie and Freddie – George W. Bush (R)
  • 2009: Fed increases support of AIG by $182.5 Billion, U.S. Government supports various Auto Manufacturers with $34 billion bailout package, Fed Injects approximately $2 trillion into the economy in new currency under term Quantitative Easing. – Barack Obama (D)
  • 2010: Federal Reserve continues injecting money into market under quantitative easing of $1.5 trillion, Banks begin to repay Govt. Loans, Patient Protection and Affordable Care Act is passed – Barack Obama (D)

Whats The Point

When I was contemplating writing this article, I had thought I would explain the relevance of each of the events I have listed.  In the end, I decided it is not up to me to tell you what to think.  It is your right, your privilege, and your obligation to find that out for yourself.  Should any of you wish to ask my opinion, or to tell me what you think, you may feel free to post in the comment section.  I will tell you my thoughts and conclusions and of course listen to your point of view.  Perhaps along with the others who read here we can continue to refine and get closer to a solution – get closer to WE.

The aforementioned timeline is by no means each and every issue that has drawn us into the potential collapse of our economy that we face today.  What is evident from even this brief review, is that the bad decisions were all short term fixes to solve contemporaneous imminent problems of the day – they span all parties and administrations.

My Conclusion

Our economic problems are neither Republican nor Democrat, they are only American.  We have done this to ourselves.  Only if we are united in this purpose, can truly fix them!

My Request of You

I ask each of you, who are kind enough to read my writings, to please circulate this to others if you feel it is valuable.  I believe we can all make a difference if we come together.  I know I can’t do it alone.  I ask you, my readers, to help at least get others to consider that there is something here bigger than ourselves and our politics.

State and Federal Budget Crisis Solved: Professional Political Class Finally Provide Value

OPresient Obama leaving Air Force One upon arrival in San Francisco on fundraising tour

"A picture is worth a thousand words." -Fred R. Barnard: Its about the money.

Please bear with me on this article.  in contrast to the best advice for writing, I have not put the conclusion at the start.  I am assuming you are all thinking Americans, and you are willing to make a short journey with me to find your own answers at the end!

Unequivocally, we have developed a professional political class.  We, the people, have created this new ruling class of professional legislators – or at least allowed them to evolve – over the past 72 years.  Like most of our entanglements in modern history, this consequence  was driven by little more than a series of short term decisions that were made to accomplish short term goals with no thought to the long term impacts of these actions.

Why not a national sales tax on all political sales(contributions)?

Up until the early 1900s, politicians were citizens first.  They were regular people, living and working alongside their neighbors.  They had local jobs, farms, or businesses and each and every piece of legislation they passed affected the citizen politician exactly the same way it did their neighbors.  Since the wages and expenses that they derived from their service in state or federal government was both part time and not meant to provide a living wage; their motivations were to be productive members of their localities, emphasis on production in whatever capacity, as it was the best path to wealth and prosperity.

Since these citizen politicians, could not make their livings relying on the payment from government, the various legislatures were part-time with the sessions restricted to just a few months each year. While in session, citizen politicians also made sure they got as much done as possible, and their supporting staffs and expenses were kept well in check because often the governmental stipends did not adequately support them, so the citizen politicians often came out of their own pockets for at least some of their staff. A great way to assure dedicated representation.

As we move through the early 1900s we see a gradual and steady increase in the salaries, perks, and reimbursable expenses that our legislatures received.  Like all of our historical short sited decisions, there was strong rationalization to such increases.  Some of the citizen politicians, living with the constant drain on their personal funds, were susceptible to graft and corruption by the men hanging out in the lobby of the Willard Hotel in Washington, DC (origin of the term lobbyist) – where most stayed during the legislative sessions. Of course, it was argued by the legislators that if they received better wages, more liberal expense budgets, and perquisites in office, they would be less susceptible to corruption.

Commerce (n)

(Business / Commerce) the activity embracing all forms of the purchase and sale of goods and services

[from Latin commercium trade, from commercārī, from mercārī to trade, from merx merchandise]

Collins English Dictionary – Complete and Unabridged

The next step, taken in the middle of the 1900s, was to extend the legislature.  Again, it was rationalized that the part-time legislatures, were critical to the growth and prosperity of the country, or the states, and there was so much work to be done that they needed to increase their time in session.  These arguments, like all of the rationalizations before them, were seen as reasonable and necessary.  As a result, buy the end of the century, we have, with few exception, full-time state and federal legislatures, and most importantly, a full-time, professional political class.  Their livelihoods significantly disconnected from the legislation passed and its effects on their local communities.

While in the past, our citizen politicians life and liberty was supported by their own personal productivity in their local communities as farmers, shop owners, business owners, manufacturers, and professionals like doctors and lawyers; for the most part today’s professional political class trades in votes and legislation for the specific benefit of those who can get them re-elected.

It is an easy statement to say that there is a direct relationship from big corporate money and the payments the professional political class receive, through various means both legitimate and illegitimate.  While corporate interests play a part, the aggregation of small money interests plays at least as significant a role through unions, political action committees, professional organizations, and the strength of the various parties, among others.  Regardless of the source, the money alone is not the focus of the trade – in the end it is about the votes!

Votes themselves are the stock and trade of professional politicians.  All the money paid into the various campaigns is exchanged for this tangible, valuable item – the vote.  Since we no longer have citizen politicians and most of our state and federal legislatures are the full time employers of this new professional political class – who employ by far much more than half of all the people in America, why don’t we recognize this for what it is?  This is nothing more than a commercial enterprise! No different than Google, Linkedin, Facebook, the AARP, or many other national organizations.  It can be argued that the parties themselves as simply franchisors.

“Obama visit nets millions: Next stop – LinkedIn for town hall meeting”
– Contra Costa Times, 9/26/2011

President Obama, arguably the top franchisee of the Democratic party, was in the San Francisco Bay area this weekend selling his wares.  He collected, somewhere between, $3.5 and $5.5 million in back to back fundraisers.  Think about all the money that is being paid for these goods and services sold by our professional political class.  It begins to boggle the mind; does it not?

When we had part-time citizen politicians it was appropriate to call these campaign contributions.  But I think today we can all agree that calling them political sales is more accurate in this day and age.

Perhaps we should have a national sales tax!  But it may not be necessary to assess this tax on all segments of commerce in our economy.  We only need to assess a “National Political Sales Tax” (NPST) on the one segment of the economy that is clearly generating most of the “commerce” in the nation.  We should implement a national sales tax on these political sales.

In the long run we may get some real benefit.  We could see a significant reduction in our state’s and national debts in the short run as the massive amounts of money flow into the various coffers. We may also begin to see the reduction is the constant din of political advertizing, direct marketing and evening phone call solicitations.  If for some reason this benefit does not rise, or rise fast enough, then we could extend the NPST to cover all political purchases as well.  At a 10% tax rate, the purchase of one of those $19.00 muffins would yield $1.90 in revenue to the federal and/or state coffers.  How many muffins do these guys consume in a year?  Looking at Jerrold Nadler, Barney Frank, Chris Christie, Haley Barbour, and many, many others this alone could wipe out lots of debt!

Of course many are just not going to like this idea! No one wants to see their livelihood threatened by taxes.  I would suggest that if they object to the tax then we should demand a return to the citizen politician, and the part time legislatures of the past.  In the long run I think it could be one of the most beneficial changes we could make for our country.

Hey, I’m just asking!

Opinion – Image – NYTimes.com: Understanding in Three Steps?

Opinion – Image – NYTimes.com.

Understanding Step 1

This chart from the New York Times, is very interesting.  The data presented is very telling but perhaps not in the way the author intended.

When you look at these charts what do you see?  After you look and answer the question for yourself go to the next step.

Understanding Step 2

See this article for more information: President Obama’s Speech: Critical Question Continued.

What I see when I look at the data is very different from what I think the author’s point is.  We are all tainted by our biases.  We look at data, compose charts and in the end we see what we want and often construct the defense of the reality we want to see.

What I see when I look given the discussion in my prior article is first that Productivity tracks point for point with the increases in currency from 1972 on.  This should not be any surprise.  The way we measure Productivity is directly related to currency.  The question is in this case the old one, “which came first the chicken of the egg?”  In this debate one side will say chicken and the other will say the egg.  One side will be firmly of the mind that the productivity drove the increase in currency according to economic theory,  the other side will say the increases in currency inflated the productivity numbers.  Either may be correct and both are at this point irrelevant.  Which drove what now pales in comparison to the question of is the current net value of the U.S. supportive of the amount of currency (value) we have applied to it.  This is 1/2 of the most important questions.  The other 1/2 is – if not, how do we fix it?

The next thing I see in the charts, is that Wages did not track to the rise in currency nor did the gains of the wealthy.  While you see some trending with the increases in either prosperity or currency, you should expect to see that.  Wealthy people have the ability to derive more of their worth from long-term gains and theoretically should capture more of the currency in the economy.  Again the argument of fair or not fair, while a fun and spirited debate does not change the fact that the trend-line of the data does not correlate to the Currency in circulation chart in the prior article anywhere nearly as closely as Health Care Costs or Housing Costs.  It is these subtle differences that suggest an alternate cause for the increases of prosperity.  Further it is the timing of the trends.

Finally, I see that the debt line that is shown in the chart is not indicative of the true debt but in fact the result of the application of the increased capital to pay off part of the debt that accumulated from 1972 due to the trade imbalances.  We have accumulated over $12 trillion in trade deficits to the world since 1972 when we dropped the gold standard.  If you plot that curve against the Currency in Circulation curve again they are almost a point for point match.  The debt curve reported is not a point for point match.  It is the result of result of the combination of the two.

Understanding Step 3

Remember Mark Twain said, “there are lies, damn lies and statistics!”  All of these numbers need to be suspect – mine included.  But in the end this is not a republican issue nor democrat issue – it is an American issue and it will take all of us to address it.

President Obama’s Speech: Critical Question Continued

In his speech last night president Obama asked a key question.

President Obama asked, “Where would America be if we had not passed Medicare and Medicaid?”

As I said in my post last night, “President Obama’s Critical Question,”  the president’s question should not have been be a feel-good throw-away line, as it is the underpinning of the base argument, that Medicare and Medicaid have been good for us as a people and for the country. Clearly, the president believes that the answer to these questions is in the affirmative. But, what if the answer is not?  These are areas that I think many need to analyze.

Those who have been reading my articles know that I have a strong concern that the underlying issues in our health care system and our economy are systemic and the areas we are focusing on are, in effect, addressing the symptoms of the problems – not the root causes.  In my upcoming book, “The History and Evolution of Health Care in America: The untold back-story of where we’ve been, where we are, and why health care needs more reform!” I look at the relationship between the rising costs of health care and trace in part one cause to the large expansion of government programs like Medicaid and Medicare.  I also found correlations between the rapid increase in the amount of currency we created, after we jettisoned the gold standard in 1972, and the disproportionate allocations of these new monies to health care and other government subsidized programs like housing.

The relationship of the Total Money Supply (M3) to our current economic issues I will cover in a later article, but for now look at the direct, almost point for point, correlation of the rise in the total health care spend in the U.S. and the increase in the money supply.  I think there is no doubt that the significant increase in the amount of currency in circulation and the rapid rise of health care costs run hand in hand.  It is very clear, as Sancho said to his master, Don Quixote de la Mancha,

“Whether the stone hit the pitcher or the pitcher hit the stone – it was going to be bad for the pitcher!”

In this case, we can argue later whether the increase in currency drove the increase in costs or the increase in costs drove the need to increase the currency, it was the expansion of Government programs like Medicaid and Medicare that drove the increase in costs.

Housing also rose in a point for point correlation as well.  Unlike with health care, you can see it was an advance indicator.  This make sense, according to economic theory and the basic premise of fractional reserve banking because our the engine of economic expansion (the creation of new money) is debt.  Most preferably mortgage debt.  If housing prices did not rise and new homes and the resultant mortgages did not happen then the banks would have become rapidly out of covenant if the new money existed before the new mortgages were there to leverage against.

Lastly in this article, I include a chart of a few other cost histories, lest we think that all parts of the economy had the same correlation to the increase in the money supply.  Clearly, wheat corn and eggs did not experience the same effect from the increase in the money supply – nor does it appear they led the need to increase the supply.  I believe that most peoples practical experience is that not all things have risen in value twenty times in the past forty years.  Herein is the potential rub!

I will continue the discussion related to the presidents key question in my next article.  In that I will focus on how the creation of Medicaid and Medicare changed our personal character related to our view of our personal responsibility for our health care and how this change has affected our fiscal habits and our purchasing patterns and trends.

Please feel free to comment on this article or send it to others.  As I have said many times this is not a republican nor democrat issue.  I think this is an American issue.  I am not an economist just someone trying to understand why these things are happening now.  We need pragmatic solutions not demagoguery so lets find out what is the truth and then how we can fix it!

The Blame Game: A Recent Letter to the Editor

“…it is thus compromise on the basis of tolerance for others’ opinions that lead us to good solutions….” – Benjamin Franklin

In a recent letter to the editor, yet another writer wants to make the point that the current economic problem is President Bush’ fault. He uses all of his 200 words to carefully craft a picture of why it was Bush’ fault.

Yesterday, I saw the same thing as to why it was President Obama’s fault. Again, all two hundred words carefully selected to make this seemingly very important point.

Having written a few letters to the editor, I can tell you from first hand experience it is not usually for me a five-minute thing. Two hundred words is a very narrow field to present a counterpoint to some point you are debating. Usually it takes almost half of the space to frame the issue in the first place.

These two writers are not alone. I see tens, if not hundreds, of these dialogs each day. Each side spending an inordinate amount of time to present the case why this person, or this party was wrong, wrong, wrong…

Clearly, the sheer volume of people, and the amount of time, bandwidth and ink devoted to this subject would indicate it is of the most extreme importance. Well it’s not!

The big issue at the moment is solving the problem. And solving this in a pragmatic way – not partisan way. unfortunately, it is not just the new mayor of Chicago who thinks no crisis should go to waste. It seems to be the philosophy of many of us if not most of us.

Each issue appears not to be an issue we need to solve – more it seems they are issues we should exploit for some other benefit. This has been the pattern since the early 1960s. The Great Society was not just to find solutions to help the poor, it was as stated by Lyndon Johnson on a phone call with Wilber Mills and Carl Albert,

“something that we (democrats) can run on for the rest of the century.” (listen to the President Johnson Tapes online, search on medicare)

And we can’t leave republicans out of this either. They have played the same games over the years.

Since everyone seems to think we need to assign blame before we solve the problem, let’s do this. Lets agree to start at the beginning of the root causes…

  • It is Franklin Roosevelt’s fault for describing Social Security in 1935 without recognizing that the transition to a private annuity system as he described would be lost to the winds of entitlement fever.
  • It is Truman’s fault for both extending the coverage and not addressing the concerns of the legislators at the time that argued about future insolvency.
  • It is Eisenhower’s fault for also increasing benefits and coverage while again not addressing the growing concerns over solvency
  • It is Kennedy’s fault for again extending the coverage and entitlements and getting assassinated before he could begin to affect some of the changes he saw needed to be done.
  • It is Johnson’s fault for extending the original act to include Medicare and Medicaid, ignoring the advice of the experts in congress including Wilbur Mills who repeatedly warned this scheme would not work, and then codifying the grants and gifts to the poor as the method to ensure democratic election and instituting the class warfare approach that is now the norm.
  • It is Nixon’s fault for removing the country from the gold standard instead of extending the standard to all precious metals.
  • It is Carter, Regan, Bush and Clinton that further reduced the restrictions on the banks, changed the regulations like the Mark to Market Rule and eliminated the Glass Steagle Act that multiplied the fiscal problem and continued the course of expanding entitlements.
  • And it was both Bush and Obama that again compounded the problem by consenting to the short-term solutions and compounding debt based fixes.
  • Further, it is all the congresses, bankers and federal reserve leaders that are also at fault for not addressing the issues, using them to fulfill other agenda and promulgating their self interests ahead of strategic solutions.
  • And finally, it is us for not paying attention and reveling in the constant, and unrealistic, expansion of our wages, home values, benefits, and desire for more without looking for or listening to concerned opinions.

Did all of these actors in this damnable play behave badly for their own self-interest? Not really. Where there certain hooks that were included at each phase to get our consent that were in their best interest? Of course! In every case there was justifications for why, and many times good arguments on why in the short-term this solution, or that solution, made sense. The problem was, they also knew in the long-term there would be a problem and did, or could do, nothing at the time to fix it. Of course, once the issue was temporarily solved – no one else chose to address it so it was pushed to the future to deal with it. And now it is ours. And it is, in fact ours. It is not our children’s as we like to think. We have run out of time and circumstance. That is why the symptoms of the disease are again raising their ugly heads with a vengeance.

Now that we have discussed blame, let us all tolerate the blame assigned to our favorite figures as we relish the blame in those we don’t like. If we simply agree the blame is inclusive and historically almost all-encompassing, then perhaps we can stop the blame debate, at least for some of us, and focus on solving the current dilemma.

This problem is a collective problem. One – many years, many parties and many administrations in the making. It is at our doorstep and will either define the next stage of our prosperity as a nation or our inevitable decline. We must all stop trying to focus on who it was that is at fault and how we can use it to foist our “pure” ideology on the other side. We simply must find a good pragmatic solution.

As Ben Franklin said, ” it is thus compromise, based on tolerance of others opinions that leads us to the best solution!”

ACA, Politics, Mandates and the Commerce Clause

Focusing on the insurance mandate in the Affordable Care Act, (Obamacare) a few months ago I wrote a series of four articles for a publication, reproduced here as, “Health Care Mandate and the Commerce Clause Articles.”  In these four articles, I explored why I found the base argument that the government could regulate activities like these in a state difficult to fathom by reading the commerce clause in the constitution.

[The Congress shall have Power] To regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes;

In my original look at this issue, I examined  the precedent cases cited by many as the basis for the idea of why the Federal government had, in this case, a superior right to the sovereign rights of the states, something that all agree was expressly limited by the framers of the constitution.   Reading these historical rulings made this concept that this is a Federal right even more difficult to swallow because I found that these earlier rulings often were even less convincing and often more startling in the extent that the arguments became even more extracted and remote in their nature.

In reading  the arguments and the rulings of the 11th Circuit U.S. Court of Appeals, I found an additional reason why I find the base idea that the Federal government has the right in instances like this to regulate the action of individuals in a state even more specious.  This is actually the simplest argument against such a right, and likely it would even hold the same effect at a state level.  It is part of the many arguments that have been made in the numerous constitutional challenges over these past few months.  But like much of these debates, the nature of the arguments has become complicated by excess verbiage and legal flanking obscuring for most of us the basic concept.

This additional argument comes in to points.  First, let us look at the definition of the word commerce.  In reviewing the many variations of the definitions available there are some basic common elements throughout.  They combine into the following.

com·merce
(komerse)
NOUN:

  1. The buying and selling of goods, especially on a large-scale, as between cities or nations.
  2. Intellectual exchange or social interaction.

Second, we simply need to ask a very obvious question, and one that while it has been raised by the legal scholars in the various debates in one form or another, it has been lost in the myriad levels of complexity provided more, it seem, to delight the ears than to illustrate the point. 

If commerce is either the act of buying or selling something, and depending on whether or not the activity was international, with the indian tribes or among the several states it could either be regulated by either the Federal government or the states.  How is NOT buying anything then an act of commerce in the first place?  And, if it is in fact NOT commerce then the argument on who regulates the action under the commerce clause is moot.

Of course legal scholars will use tangents of the “Wickard vs. Filburn” case to argue that not buying is an action that reduces the commerce among the states and therefore in reducing the revenue is itself something that impacts commerce and therefore can be regulated.  I guess this is the kind of argument our parents made for us to eat lima beans.

As a child my parents, who were good and nurturing parents, used to make me eat lima beans.  Every time I took a mouthful of lima beans, I had to rush to the bathroom to vomit.  And of course when I came back to the dinner table, I had to have yet another mouthful of lima beans, promulgating the same response.  Their justification was they were good for you.  Of course, the loss of the rest of the contents in my stomach and the various fluids and electrolytes that went along for the ride, did not enter into the equation – lima beans are good for you, we have lima beans, ergo  you need to eat the lima beans because they are good for you!

My father, a lawyer and son of a prominent judge, I suppose was simply adapting some of the arguments from the prior court rulings justifying the extension of the federal powers under the commerce clause, when he said, “There are people in other lands who are starving and it would be a sin for you not to eat those lima beans while they starve.”  He must have chosen this argument because it is so similar in the base points made in the historic extensions of federal power under the commerce clause.

In “Wickard vs Filburn,” the court ruled that poor old Roscoe Filburn’s wheat had to be destroyed because he grew more than the law, at the time allowed, even though he was using it on his own farm to feed his animals.  In the case against Roscoe, it was deemed against the law because his flagrant activities of wanting to feed his animals this ill grown wheat, reduced the grain he would have had to purchase from other states if he had not committed the heinous act of growing it himself.  Of course the fact that he likely would have bartered with the farmer down the road in his same state and that Roscoe, during the depression, likely did not have any cash to pay for the wheat in the first place was not relevant.  Roscoe, was not buying wheat from other states and as a result he was affecting interstate commerce and therefore the Federal government had the right under the commerce clause to regulate him so his wheat had to go.  Now Roscoe, eat those lima beans because they are good for you!

We have a strong habit in this country to stretch quite far to make the points we want to make.  We will obscure, misdirect, abstract and extend, often by many more than the “Six Degrees of Kevin Bacon,” in order to get the result that we want.  In doing this, either in the desire to accomplish an end we know people otherwise would not support or to appear brilliant by the use of flowery language and abstract argument, we often forget the simple and common sense argument.  The one we can all understand.  The one that actually stands up to quick and continued scrutiny.

Throughout these articles I have not wanted to argue whether or not we as a nation should require all to purchase insurance.  There are very good arguments both for and against this practice.  I simply am saying making these further and further abstract arguments, whether by legislative action, or judicial injection is not the way to achieve it.  In the end we spend billions of dollars arguing points that any person working in the fields or factories would screw up their faces and say, “What?”    If you related the “Wickard vs Filburn” issues to anyone working for a living they would have a simple answer.

In the end it is not hard to subvert intentions.  In the case of our current political motivations regarding the Affordable Care Act , so called Obamacare, we see exactly the extent that politicians and governments will go to get the outcome they want.  It takes years of very expensive education and hundreds of millions, if not billions of dollars, to arrive at the decisions that have been rendered based on the various political governmental and abstract interpretations of the commerce clause!  Only we can ultimately stop this and force those we elect to find the simple and most pragmatic answers.

Semantics: Its just not for politicians anymore.

America Circling the Drain

America CTD?

Word games – we all love to play them. On occasion it is fun to pit ones intelligence against another and use words to obscure what we are saying or twist another’s words into something they clearly would never have said. But, has an intellectual challenge for some, become a threat to our national existence?

 we have lost connection with the little engine that for over two centuries made us, that little engine that could…

It seems the word games we all learned to play as children have become the weapons of war on ourselves, wrought by others for their own gain and power. The diatribe that is now offered as debate in all phases and venues of our public discourse – from the popular media to the halls of our congress (once the proud battlement of high ideals and lofty goals) has become a bitter, petty and self-serving process. Its practitioners now use language to obfuscate, confuse, deflect, disguise, denigrate, excoriate, and disrupt anyone and anything, usually in pursuit of goals that no clear majority would support.

As a result of this semantic game, we have lost connection with the little engine that for over two centuries made us, that little engine that could. By using words to cloak and obscure the faults in our economic systems, created by years of short-sighted decisions and weak temporary corrections, the economic crisis some have long predicted appears to be on our door step at last. But unlike 70 years ago, the “our” is no longer the American “our.” It is now most of the world’s “our!”

 A reader commented – without the government subsidizing this purchase, regardless of the long-term economic sense of the investment, the industry would not exist…

In 2007, Ellen Hodson Brown, J.D. published a book titled, “Web of Debt.” In it she chronicles the rise of the fractional reserve banking systems, how this historical standard architecture was flawed, and how we could expect to see evidence of its predictable mathematical failure. This book is a very good read, whether or not you are an economist or even mathematically inclined. It will get you thinking, and whether you agree with Ms. Brown’s conclusions or not, she will help you see some things you have yet to see about one of the main processes that provide us our modern existence.

Recently, in a brief post I wrote relating to a local news article on the purchasing of solar panels for Yosemite National Park, a reader responded with the comment that I was failing to see the whole picture. He stated that, without the government subsidizing this purchase, regardless of the long-term economic sense of the investment, the industry would not exist as no one would be able to afford the products and therefore we would not get the benefits from them or have these options for future generations.

This got “me-to-thinkin’” as they used to say where I grew up. Is it possible that, what I see as desperately flawed logic could make some sense? Even though many of my recent posts appear to be more based on our economy, what I am most focused on is our health care system, or lack of a system to be more precise.

As I researched my upcoming book, “The History and Evolution of Health Care in America: The untold backstory of where we’ve been, where we are, and why health care needs more reform,” I learned that many of the drivers of our currently unsustainable health care system have their roots in; semantic based obfuscations, bad economic policy decisions of the past and the political fostering of the entitlement philosophy we have today.

In the area of health care, and retirement, we are now of the mind that these are our due. We believe we should be able to receive any care we want, at any time that we want, and if we can’t afford it then the government, i.e. everyone else, owes this to us. And just between you and me – we never really can afford it, can we? I mean, with all the modern conveniences we also want; like the large flat panel, and the vacation every year, and the new car, and the second home, and for all of our kids to go to college and become doctors and lawyers; I mean it’s not right to expect us to not have these things in order to pay for retirement or health care later now is it?

…have the government subsidize the cost of the product so we can buy it. Now, in a vacuum this logic can make some sense…

Thinkin’ more on this, I also came to the belief that another flaw of this logic is the base economics of the decision itself. To recap, we can’t build the product at a price that people are willing, or able to pay. Therefore, we need to have the government subsidize the cost of the product so we can buy it. Now, in a vacuum this logic can make some sense. If the consequence of these decisions was not exclusionary to other things we need then, assuming we all agreed, taking some money from each of us to pay the cost of a non-sustaining industry with the hope that it would become sustaining, may be something we would choose to do. But we are not in a vacuum. Every decision we make in our economy to subsidize one industry is taking monies we need for other things-like health care and retirement.

The larger problem today, is that we have inflated our domestic costs so much already, in this new world economy, few, if any, of the things we build here in the U.S. are cost-effective. Solar is yet another great example. Comparing the cost of U.S. designed and built solar panels with those made in China shows a stark reality. We are in the long run subsidizing a business we will never gain from. This is exactly what we have been doing for the last 75 years. First Japan, then China, next Indochina, now India, we have subjugated ourselves to being pioneers in technology, and letting the rest of the word dominate by base production. Their base production margins dwarf our pioneering margins. In this new world economy, we are now in competition to all others. Throughout the past 75 years we have either lost, or purposely abandoned, many of the market segments that gave rise to our industrial and economic power.

So in our semantic fed delusion, first, let’s tax, or fine, some group, who we can use semantics to argue has more than us and if possible demonize how they got it from us unfairly in the first place. Next, since, according to the semantic, they abused us in some way to get it, the government needs to subsidize it because a different, and semantically disadvantaged, abused, and often relatively small group wants it be paid for, at least in part so they can have it. One other key to this semantic process of entitlement is this group must be, or have a semantic appeal to another group, large enough to represent a significant voting bloc.

Now, just like the Yosemite solar panels someone, actually all of us, must pay for them. Some say, “We all pay for them!” Others say, “Oh no! We will make the ‘Rich’ pay for them!” This brings up other faults in this tortured logic tree. Whether it is taxes, fines or fees, the additional costs reduce profits, increasing prices, decreasing discretionary spending, lowering domestic sales, increasing relative costs, lowing profits, driving down wages, and shifting higher margin to other countries production. This very observable and familiar Zero Sum Game process now requires more subsidies. This progression is referred to by a very technical term (CTD) “Circling the Drain.” If you have any difficulty grasping this problem, you can go back to the beginning of the paragraph and repeat, reading until it becomes clear. For some this clarity happens just after they hear the big flushing sound! Woooooooooooossssssshhhhhh!

As I thought more about this issue, I realized if Ellen Brown is correct, and I suspect she is, continuing to apply this logic is not only dangerous, it is fatal economically. Normally, when a government prints new money, it is not inflationary, but stimulative, as historically this new currency is offset by real work product with real value that has a lingering effect in our domestic economy.

I just wonder if this new world economy, combined with our current lack of competitive margin based productivity, exacerbated by the governments current practice of allocating new currency to be created for non-value based activities like paying interest, or for goods and services where the bulk of the effect of the capital is being transferred to those countries manufacturing the goods. These are the same countries where the components or primary materials yield high margins due to their significantly lower costs.

I am starting to wonder if this process is causing that WOOOSSSSSSHHHH’ing sound I am hearing? Or maybe it’s just the semantic wind, whistling though the solar panels.

If you are starting to find the overall situation increasingly frustrating and perhaps scary come check out http://www.mugwump.co (yes that’s CO not COM)

Of Volks-latures:Our future – Sold – to us, by us.

Volks-lature vs Maybach-lature

These early citizen statesmen, tended to relate the effects of everything they did to the impact on themselves, their family and the community.

The collective display that was put on last night by our elected officials shows that we have allowed political privilege to supersede the role of elected legislator. Historically, our elected officials were for the most part volunteers. Up until the mid-1930’s congress operate largely on an alternating 3 month then 6 month period in order to allow the legislators to go back home and tend to their farms, and businesses. As such, they stayed quite engaged in community and reality.

These early citizen statesmen, tended to relate the effects of everything they did to the impact on themselves, their family and the community. Their ideals appeared larger and more discrete. Likely to our mind they also had more character and commitment since they served, often and significant cost, not benefit, to family and business. Of course there was corruption, but that form of corruption was more visible, as the delta between those partaking in graft, stood out like beacons from those who did not.

A citizen statesman returning home to a significant increase in prosperity as a result of his short time in Washington tended to send tongues ‘a-waggin’ if you know what I mean. Today our professional class politician is tacitly expected to find his fortune in the words and ideals he may sell to the most or the richest. Like comparing a Maybach to a Volkswagen Beetle, we have politicians who are the ‘Volks-Vagon’ the people’s car; and those who are the Maybach Laundolet the car where “the customers’ wishes come first.”

In the case of the ‘Volks-lature’, they focus their message and sales pitch more towards the masses. They chose the low-cost high volume strategy and offer to convey as many as possible to the nirvana they seek. On the other hand, we have the ‘Maybach-lature’ who have selected to sell to a very few with much higher margins. Unlike the Volks-lature who feed in the troughs with the rest of the masses, the Maybach-lature have chosen to feed in the food chain of the rarefied air, at the table with the best linen and the finest wine. And in realty they are no different, just existing in a different part of the econ-system.

In the end it is we who are providing their existence and much of the things they do are in fact self-fulfilling activities, calculated to continue their reign and enhance their equity.

You see, for the most part, they both exist to do one thing. Sell us our dreams in return for their livelihood and existence. Sure, some still have ideals and the drive to make a difference, but it is more the sirens song of wealth and power that has captured most of their hearts minds and more importantly – practice. Even the most ideological fall rapidly under the spell of the professional political class in Washington, who control their moments, provide their thoughts and calculate their longevity with a keenness that would have made Mr. Gillette very proud.  The tools of each, are one as with the other, as their weapons are all class focused. For one it is envy – for the other – fear.  In either case, it is the other classes that are the fault, and only theirs can save those that matter!

Overall, it ends up the same for us all regardless of whether we eat at the trough or at the fine table. In the end, it is we who are providing their existence and much of the things they do are in fact self-fulfilling activities, calculated to continue their reign and enhance their equity. It is we who pay for it and it is we who are now suffering for it.

This is one reason I have declared: I am a Mugwump. Further frustrating is the fact that the overall debate continues to be focused on who should get what from whom as opposed to what we need to do for ourselves and our neighbors. There are those that argue anyone that has more should be forced to give it up to all of those that have less. Then there are those who also argue that there are some who need a safety net and that we should provide systems and some government intervention for those who can’t – not those that won’t. See Was Shakespeare Correct.

Looking sharply at the debate you see similar ideals in the grand area but in the graphite at the point of the pencil the line is obscure – not so fine. The real debate is in the definition of who should get the benefits of government intervention and at what point personal responsibility ends and public responsibility begins. Further debate centers on the dividing point between personal philanthropic charity and government mandate over personal property redistribution.

In the end, the biggest problem is that we have allowed our political system to degenerate to the point where the body politic, once a largely part-time and voluntary collection of average citizens – making laws and regulations for themselves as well as their neighbors – and in whom little direct benefit of the laws they passed held influence, has been replaced by a full-time professional class legislature with little influence from the laws they pass and maximum influence, in fact their livelihood, comes from the direct (in the form of compensation), and indirect (in the form of votes and campaign contributions).  It is this that is their lifeblood driving the legislation they make – specific to any and all vested interest.

So whether you are a conscript of the Volks-lature or an acolyte of the Maybach-lature, we have all ended here at the same point. We have been sold a significant bill of goods by those we trusted to protect us and it will, regardless of what they do or don’t do in the next few days, be on our shoulders to again pay the bills. All of our shoulders! Because never in the history of mankind has a political system been able to provide a way for everyone to get everything – with no one doing nothing.

It is a damnable shame!

Was Shakespeare correct: is the fault within ourselves?

Cassius:
“Why, man, he doth bestride the narrow world.  Like a Colossus; and we petty men walk under his huge legs, and peep about to find ourselves dishonorable graves.  Men at some time are masters of their fates:  The fault, dear Brutus, is not in our stars, but in ourselves.”

Julius Caesar (I, ii, 140-141)

Historically, the interpretation of this dialog has been, Cassius, a nobleman, is speaking with his friend, Brutus, and trying to persuade him that, in the best interests of the public, Julius Caesar must be stopped from becoming monarch of Rome. Brutus is aware of Caesar’s intentions,  and is torn between his love of his friend Caesar and his duty to the republic.  Cassius continues by reminding Brutus that Caesar is just a man, not a god, and that they are equal men to Caesar. They were all born equally free, and so why would they suddenly have to bow to another man? On another level this phrase has been interpreted to mean that fate is not what drives men to their decisions and actions, but rather the human condition.

In this case, Cassius was arguing that the problems of Rome’s people were a result of the human condition.  And that if the avarice of Caesar, and his cohort, could be eliminated then the condition would itself improve.   This historical diatribe is truly the argument of the ages.  If frames the argument of many, if not all, of the issues of our time.

Whose responsibility is _________?
(fill in the blank with almost any word or phrase)

Is our health care – our responsibility or that of the collective society?  Is our survival in terms of food, housing, clothing, creature comforts of heat and air conditioning that of ourselves, or the responsibility of those that have more than we?  On whose shoulders does the success of our society reside – to each according to their need from each according to their ability/initiative – or – to each according to our ability/initiative and from each to those in need according to our humanity and generosity?

Looking across our political landscape, today, we clearly are a nation divided by our ideologies and views of how the world should work.  We seldom exercise compromise either, outside our ideological castle (see my article On Tolerance) or, it seems, even within it (see my recent article, Consider a Mugwump).  For quite a while, I have felt we were a nation of thirds:  one-third hard left, one-third hard right, and a third in the middle, the middle drifting either way based on the issues and ideologies at hand.  But is that really the case?

For those that confidently inhabit the edges of the bell curve, they have the utmost convictions that their ideological purity is what is important for solutions to be correct and just.  RINO and DINO labels tarnish anyone foolish enough to consider a position with even the slightest hint of grey.   To argue such a grey area can often lead to more than chastisement, but often to banishment. How have we arrived at this locus?  Is it that the middle is growing, and the tea-party despite the attempts at marginalization or reinforcement from both sides is representing a new and still defining set of values and frustrations?

Macbeth:
To-morrow, and to-morrow, and to-morrow,
creeps in this petty pace from day-to-day,
to the last syllable of recorded time; and all our yesterdays have lighted fools the way to dusty death.  Out, out, brief candle!  Life’s but a walking shadow, a poor player, that struts and frets his hour upon the stage,
and then is heard no more. It is a tale told by an idiot, full of sound and fury, signifying nothing.

Is it possible that the root cause of our problems is in fact ourselves?  That our economic and ideological problems are an extension of our innate nature?  Are we now so enamored with our own Colossus, that we believe we are due all?  That we should all have anything we want, whenever we want, and the consideration that achievement of these things rests firmly in the divine rights passed from the stars and our own demands and that all others who have should – no,  must – grant part of their ‘haves’ to the rest of us who don’t and remain wanting?  Clearly, for some, this is not the case – I do not intend to damn any segment of mankind in this discussion.

Is this who we are today?  If so, when did we change?  Did we ever change, or have we really been like this all along?  Interestingly, the discussion has been alive and in debate throughout recorded history.  From Socrates to Aristotle, from Shakespeare to Twain, all have debated the relative merits and shortcomings of man.  Are we improving, degrading or simply continuing our journey with lots of sound and fury – signifying nothing?

While for the most part, I do not know much – in the end, I do feel I know this!  With all the talk of the crushing federal debt, and for many states like California crushing state debt as well, and the debate over tax cuts for the rich, or the role of unions in our demise – or their role in our success, or entitlements vs. safety nets, or our trade deficit or competitiveness in the world – whatever the topic; we are doomed to the creeping and the sound and the fury if we don’t change our own dynamic.  If we continue to pay, as an example, $68 dollars per man hour to produce a widget in the U.S. that others in the world are willing to produce for $28.00 per man hour, we will remain an acquiring not supplying nation.  If we continue to demand ideological purity, then the best men, or women, for the jobs will never come into office.  If we abdicate our own responsibilities to ourselves and each other in favor of some small group, who will for the most part be corrupted like all who gain power and control are corrupted, we will end up as we are today and as it appears we have been for all time.

We can continue to allow our elected officials to flummox us with the same pandering, platitudinous, piffled phraseology like;

  • the deepest recession since the great depression; or
  • this will provide business the certainty they need to...; or
  • we will continue quantitative easing and strengthen the economy… (Fed-Res speak for inflating the currency)

Each of these phrases, and many, many more just like it, are geared to obscure, conflate and confound the public into continuing to creep in our petty pace from day-to-day and not upset the status quo.  But it is the status quo we must upset or we come once again to the sound and fury part.  Like a big circle, or perhaps a loop by Dr. Moebius, we always seem to be ending right back at the same point.

At the beginning I asked a question.  It is clear to me that I cannot answer the question for anyone other than myself.  I ask you to find your own answer to this question.  And if you find the same answer as I, then let us all change ourselves.  In doing so we may change others and perhaps cut through the creeping, the sounds and the fury and signify something after all!

Joblessness: So which is it?

Perhaps I am old fashioned!  Perhaps I am an anachronism!  Maybe I need to move more rapidly into the modern era!  During my morning routine – “Oh, God, I got a routine…  When the heck did that happen?”  

Anyway, my angst over finding I have a routine aside; when I was reading my morning paper, the headline of the business section this morning shouts,

June jobs outlook turns around”.

– San Ramon Valley Times Business and Technology Section July 8, 2011

Immediately, I felt pretty good.  We have all been looking for some good news – Right?  With the general irritation over the Casey Anthony trail, the wall street ups and downs, the problems with California’s fiscal health, the concerns over the rising cost of health care, the debt ceiling debacle, Japan’s nuclear crisis, Arnold and Maria, comets, global warming, the effect of sunspots –  a little good news is certainly a welcome relief – isn’t it?  Well, at least that was what I was thinking as I went into my office to login to my computer.

As I was basking in the glow of good news and logging in…

Almost immediately when I login to my PC, my glow is harshly doused. First I see,

“A dismal report showing the U.S. added the fewest jobs since September soured Wall Street’s optimism over the strength of the economic recovery, sending the Dow sliding more than 100 points on Friday morning.”

then almost immediately following,

“President Obama to deliver statement on the June employment report at 10:35 a.m. ET”

So which is it?

Is it just me, or, have we seen a constant, reversible pattern over the past few months?  Sometime we see, glowing economic statements telling us how everything is just hunky dory, only to have them followed in a day, or so, later with dismal news based on the exact same indicators.  Other times, we get the dismal news first, and a few days later, great articles about how the economy is improving so much.

All this prompts me to have a few questions:

  • It this just bad reporting?
  • Is this propaganda and good reporting?
  • Or do most just think we are all stupid?

if we all work together to help each other then, most of the big problems can get solved much easier and much, much cheaper

I am not sure myself which of the above, if not all of the above, is the right answer.  But for me this – along with a myriad of other things I now see day-to-day, from reporting (both print and broadcast), to business matters, to personal interatcions, to governmental actions (at all levels) – makes me feel like nobody really gives a darn about each other, or themselves, anymore.  If we really did care, how in the world would we allow these kinds of things to keep happening?

So now on top of the problem that I now realize I have become my father, not that he was a bad guy at all – in fact he was a great guy – and I have a routine –  mostly meaning I am getting old – I now have to worry about what the deeper cause of this growing phenomenon is.

Let’s make a deal!

I will make you all a deal!  If you agree with me and try to help me cope with the growing angst and stress, I will help you find an answer to fix what is wrong.

If we have a deal, post a comment and tell me what it is you think is the problem.  Who knows maybe someone else might have an answer along the way and they might be good enough to respond.  See, I believe if we all work together to help each other then, most of the big problems can get solved much easier and much, much cheaper.

Do you want to try?

Health Care Mandate and the Commerce Clause (Part 4)

The patient protection and affordable care act purchase mandate –
A four-part series on the relation and effects of the Commerce
Clause to Health Care

By: Thomas W. Loker

The following is the last segment of a four-part series where author, Tom Loker, explores the impact of the Commerce Clause on Obama-Care.

Image by Author

PART FOUR: A Time for a Fresh Look

In the last article, Sliding Down the Slope, we discussed how continuing court decisions and additional legislations have continued to push us further and further down the slope of federal oversight and control of increasingly larger parts of our daily lives. We also looked at how our historical interpretation of the commerce clause has muddied the water as to where the responsibility of the states to regulate our actions ends and responsibility federal government begins. Now, let’s look at this, from an everyday person’s perspective, as to what this may mean related to the current debate over the constitutionality of the PPACA mandate for all to purchase insurance.

 Who’s Right?

However, going back to the issues the framers were attempting to protect against, is it consistent with the framers view that the expansion of liability, as it is promulgated under this act, should so far abrogate personal responsibility as to the outcome of bad choice and bad behavior? Merely arguing that there is some benefit to a consumer does not make the clause relevant. The original expansion argument under Filbern that any commerce can be derived to be interstate commerce no longer seems to be a reasonable inference. Intrastate commerce itself is not innately subject to federal jurisdiction. The principle motivation to protect the consumer is not, in-and-of-itself, sufficient justification to regulate intrastate commerce, nor does it immediately give rise to the notion that all commerce is interstate.

The issue of the application of the Commerce Clause related to PPACA is even more muddled in that one of the principled arguments against this legislation is that it does not open the state-centered administration of health insurance nor does it provide an open and competitive interstate market. Most, if not all states, specifically regulate insurance provided within their borders. The inability of consumers to purchase insurance plans across state lines itself should stave off the argument that this is in some way per se interstate commerce and subject to the clause. The historical Filbern argument is even more difficult to rationalize in the absence of a transportable open state policy mandate.

Intrastate Regulation and Fairness

A reach to enforce the mandate for purchase of insurance under the auspices of the Commerce Clause is a hard one, indeed, in that the benefits to consumers that could be argued in the justification to impinge individual freedoms and economic liberties for the greater good are lost when the purchase itself is confined within intrastate regulation. Effective argument can only be made based on interstate availability of insurance whereby the policies available across the state line are comparable in standard of fees and services provided and transportable from state to state after purchase. An item, good, or service that is purchased in, and only is consumable, within one state and is subject only to the regulations of the state where the service was purchased and consumed in no way logically rises to become interstate. Further, any argument that attempts to provide nexus for an interstate affect, as in the case of Filburn, should be deemed to interpretation in the same manner as was done in Lopez.

A Voice Speaks Out

Specifically in relation to the Commerce Clause; let us agree with Justice Kennedy and walk a slow and careful path. In every case possible, let us demur to the authority of the state and the preservation of individual rights and liberties.

Finally, most recently in hearings of the Judiciary Committee relating to the debate for the need of tort reform legislation pursuant to the PPACA debate, one congressman, who shall remain nameless, while arguing why Tort reform was not necessary for the federal government to consider, made the following argument: He stated that in his long history as a strong states’ rights advocate, he had never seen an instance where health care was provided in a clinical setting and where the clinic existed simultaneously in two states, or between the borders of two states. As such, the provision of care was always done within the border of one state and therefore could not be interstate. The congressman further stated that if the person received care in one state, while a resident of another state, and that the care was provided under the licensure, regulations and authority of the state where the service was provided, that this was still no more interstate commerce than any other commercial action as prosecuted within a state on a daily basis.

Clearly, the evolution of the argument of the Commerce Clause, as providing a basis for regulations governing protection to consumers, can from time to time provide a broad and expedient method to justify such federal powers; these powers are innately the proverbial slippery slope. The framers carefully crafted the Constitution to preserve individual liberties and freedoms above all others. To allow expansion of federal powers under the aegis of the Commerce Clause, which has happened over the past few hundred years, is one of the more dangerous areas of law we have today. As such, full and unfettered caution must ensue.

The Judge Steps Up

Justice Kennedy wrote,

“[T]he Court as an institution, and the legal system as a whole, have an immense stake in the stability of our Commerce Clause jurisprudence as it has evolved to this point. Stare decisis operates with great force in counseling us not to call into question the essential principles now in place respecting the congressional power to regulate transactions of a commercial nature. That fundamental restraint on our power forecloses us from reverting to an understanding of commerce that would serve only an 18th century economy, dependent then upon production and trading practices that had changed but little over the preceding centuries; it also mandates against returning to the time when congressional authority to regulate undoubted commercial activities was limited by a judicial determination that those matters had an insufficient connection to an interstate system.”

Let us agree with Justice Kennedy and walk a slow and careful path. In every case possible, let us demur to the authority of the state and the preservation of individual rights and liberties. I also suggest we only allow federal regulation when such regulation is meant to provide a mechanism by which it can normalize controls on behalf of consumers among states; where interstate commerce requires only federal control for solution or provision of benefit; or where it is necessary to regulate the actions among the states, not among or between the citizens of the states. Let us be mindful that the actions of the states themselves will not harm the public good or unfairly impost taxes, duties or levies between the states or with other nations or Indian tribes.

This treatise, outlied in these four articles, is just one lay person’s read of this issue. If we cannot explain it to every man and woman. Perhaps the reach is simply too far!

Please remember to post a comment below.  If you like the article please let others know about it!

Consider a Mugwump

To those that know me, I am clearly a conservative, also seemingly staunchly Republican.  But I harbor an inner secret – a secret that I share with a number or Americans that have gone before – perhaps well before.  Americans like:
Image from Wikipedia

I am a Mugwump!  What is a mugwump?  Well you need to let historical records be your guide, not modern interpretation.  If you use Wikipedia, where I got the image I use in this piece, you would come to the conclusion it was a bunch of Republicans who betrayed their party to vote for a democratic candidate.  In much of the modern literature, you will see a similar characterization.  You need to go back and read contemporaneous descriptions.

While it is true the name was applied to those Republications like Mark Twain (Samuel Clemmons) who felt the corruption of then Republican presidential candidate James G. Blaine in 1884, was beyond their limits and instead they campaigned and voted for Grover Cleveland.  Soon, this movement rapidly began to encompass members of both political parties deciding to vote the best man as opposed to the party line.  The most notable Democratic rise of “mugwumpery” was during the election of Teddy Roosevelt in 1901.

Why do I think we need more mugwumps today?  Perhaps, it is the constant cry for political purity I am reacting to.  I find myself, more and more, irritated by those seeking their political solace in the wrapping of party purity.  Party purity is always a much easier choice – isn’t it?  Simply swallow the syrup and be content with your choice.  If you do that little thing, we will assure you that you will get exactly what we, I mean you want.  No worries!  We will take care of it all.  Don’t pay any attention to the man behind the curtain.

This has worked so well for both parties throughout my lifetime, most people can’t contemplate any other way.  The divisions in ideology have gotten progressively further and further apart!  There is one problem – it’s never worked for me!

Mugwump Revelation #1

I voted for Jerry Brown…  There I said it, although I have said it before as well.  I voted for Jerry, because I have come to know him personally and professionally and his actions undermined the convenient image I allowed to be crafted by the media of “Governor Moonbeam” many years before.  I found him refreshingly pragmatic, dedicated, committed to concepts much larger than himself and highly principled.  Most importantly, I learned I could trust that he would do as I expected – not always as I want.  That is for me, and should be for all of us, highly prized in a politician.

Mugwump Revelation #2

I consider Don Perata (the President Pro Tempore emeritus of the California Senate) a good friend.  If I had been a resident of Oakland, I would have voted for him as well – for the same reasons.  I have found him to be highly dedicated, pragmatic and committed to issues bigger than himself as well.  Like Jerry, he is – from my viewpoint- predictable and willing to listen and assimilate contra-posing viewpoints.

So, I have been damned and ridiculed by some for these positions, but I feel I am a stronger man for it and more importantly I feel we are a stronger California and country as well.  I am fortunate that I was raised to have good self esteem, and a strong personality so I don’t have a problem saying scr– them to those who have attacked me on this front.  Like Twain, I will pick who I feel is the best person to fulfill the task in  front of them, regardless of party and opposing ideology.

Sure there are some ideological positions that are selection points but they are not all inclusive.  Now, I simply have become able to look deeper at the candidate and find out where we agree and focus there as opposed to vilifying where we disagree.

I shout – I am a mugwump – and I am proud!

More should be mugwumps, in my opinion.  If we had more mugwumps we may have less, and more effective government because ideological pandering would no longer be profitable.

So, in the end I ask you: Consider a mugwump!  Perhaps you have an inner mugwump yearning to be free!

Health Care Mandate and the Commerce Clause (Part 3)

The patient protection and affordable care act purchase mandate –
A four-part series on the relation and effects of the Commerce
Clause to Health Care

By: Thomas W. Loker

The following is the third segment of a four-part series where author, Tom Loker, explores the impact of the Commerce Clause on Obama-Care.

Part Three: Sliding Down the Slope

The Dreaded Slipery Slope

At the end of the last article, Simple Issues – Complicated Problems, we were discussing some of the earlier expansions of the federal reach under the commerce clause and one landmark case, Wickard vs. Filburn, which strains many ordinary people’s cognitive grasp.   There are some other significant legislations and court decisions that take this strain to a new level – perhaps venturing into lands, heretofore, exclusively explored by the venerable Rod Sterling of Twilight Zone fame.

Two Sides of the Same Coin

The Pure Food and Drug Act of 1906, made law that the liability for addiction and potential harm of a nostrum was in the hands of the person who purchased it not the manufacturer

In the late 1880’s, the rise in power of monopolies and cartels was having a deleterious effect on the population.  State laws provided effective controls intrastate, but the lack of solid legislative protections for the patent medicine manufacturers interstate was leaving them open to both economic and physical damage. The so called patent medicines were not protected by patent at all. Patents mandated disclosure of materials and methods so instead these manufacturers relied on trade secrets and brand protection.  Brand protection on an interstate level was the root of the problem for the patent medicine men.  In this mix grew one of the most dangerous cartels, the Proprietary Manufacturers Association, the makers of patent medicines.  While most states had forms of trademark protection, it was effective interstate protections that the Proprietary Association effectively lobbied for, and congress passed, with the Trademark Act of 1870.  Enacted under the authority of article 1, section 8, clause 8 alongside the Commerce Clause (clause 3), the Trademark Act allowed the members of the Proprietary Association to receive additional protections fostering their rapid growth and providing an instrument that allowed them to secure their brands interstate without having to disclose their formula or ingredients.  The effect on the population was devastating, not so much as to the economic impact, but to the addictive and deadly nature of the hidden ingredients in these nostrums. The effect on congress was even more troubling as the association’s power grew exponentially and soon they controlled 80% of all newspapers in the U.S., and with that and other contract-related devices, they had substantially gained effective legislative control.

Trademark Law Found Unconstitutional

As part of the political battle taking hold to reign in this emerging problem, the initial Trademark Act was challenged and found unconstitutional because it failed to make any reference to commerce with foreign nations, among several states, or with Indian tribes.  Moreover, the court found that the act made no mention of “the character of the trade to which it was to be applied or the residency of the owner.”   The battle continued with the Trademark Act of 1881, and then later the Trademark Act of 1905.

In addition to the Trademark laws that were effectively lobbied on behalf of the patent medicine men, the Sherman Antitrust Act of 1890 was another step in  the government’s battle to protect the citizenry.  Created to control the anticompetitive and harmful actions of cartels like the Proprietary Manufacturers Association, the Sherman Act provided a framework to protect consumers from anticompetitive behaviors of cartels, monopolies and trusts.  Reflecting the political climate of the day, and the power of the Proprietary Manufacturers Association, the Sherman Act politicians were virtually unwilling to use the law until Theodore Roosevelt’s presidency fifteen years later.  Specifically justified under the Commerce Clause, the Sherman Act and the extensions that followed like the Clayton Act, Robinson-Patman Act and other pieces of law began to leverage the Commerce Clause as a means to argue for and extend the reach of federal regulation in areas of interstate commerce, particularly when it was for the good of the consumer.

The Control of the Patent Medicine Industry

Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373 (1911) established that Retail Price Maintenance (RPM) was per se illegal and helped to interrupt the significant control the patent medicine industry was exerting over retailers of the period.  The tenant of the per se illegality of Retail Price Maintenance remained black letter until recent years.  Recent rulings like GTE Sylvania (1977) and Leegin Creative Products, Inc. v. PSKS, Inc., 128 S. Ct 2705 (2007) have begun to reverse these long standing decisions as reconsideration by the courts are again questioning the underlying basis of authority under the Commerce Clause.

Like Wickard v. Filburn, the creation and enforcement of the Sherman Act was motivated by the desire to protect the public.  Unlike Filburn, the Sherman Act stays well within the logical confines of interstate commerce to provide its authority for the protection of the consumer. It also serves to establish a limited framework for its use.  This act provided an indirect method by which to limit harm to consumers being wrought from the Proprietary Manufacturers Association.  This indirect method also became necessary and appropriate because the courts at that time did not recognize an ability to assess the manufacturer of an items liability mainly because the consumer made a reasonable choice.

As seen codified in the enactment of the Pure Food and Drug Act of 1906, much of the liability for the addiction and the potential harm of a nostrum was not in the hands of the manufacturer, but in the hands of the person responsible for its purchase. So, as long as the manufacturer made the consumer aware of any of a list of specific potentially “harmful” ingredients it was thought to be held harmless.

Civil Rights Act—Interstate Normalization

The Commerce Clause has repeatedly been used to help legislate behaviors at the federal level.  After the passage of the Civil Rights Act of 1964, the Supreme Court issued several rulings supporting the use of the Commerce Clause in regulating enforcement of discriminatory behavior in businesses.  In the case of Heart of Atlanta  v. United States, 379 U.S. 241, the court ruled that Congress could regulate a business that served mostly interstate travelers.  More interestingly, in Daniel v. Paul, 395 U.S. 298 (1969), the court ruled that the regulation of recreational facilities was permitted because three out of four items sold at its snack bar were purchased outside of the state thereby subjecting the facility to the jurisdiction of the federal regulation under the Commerce Clause.

Again, it is clear that the intention of the act itself was to protect consumers against discrimination based on race, religion, or national origin.  The intention of this particular legislation is clear and understandable.  For the everyday person, the argument endorsed in Daniel v. Paul becomes problematic in that it smacks of interpretation driven by outcome.  For most readers, it is very hard to swallow that the Commerce Clause comes into play because some or even most of the items sold in a related activity may have been subject to interstate purchase.  This stretch makes it hard to find any tacit alignment that bolsters the rest of the arguments many of which appear weak and overly broad.

Gun Free School Zones

Gun-Free School Zones v. Lopez, the Supreme Court was faced with a challenging decision.  A 12th grade student had been convicted of carrying a concealed handgun into a school in violation of the Gun–Free School Zones Act of 1990.  The lower court found that in Wickard v. Filburn the Court had ruled that Congress was exercising its Commerce Clause power to police local economic activity because the individual states were powerless to regulate it themselves. More specifically, this was determined to be the case because in the opinion of the court only the federal government was able to manage the national wheat supply and control prices.  The lower court reasoned that if you extrapolated the same arguments to acts of gun violence because crime negatively affected education, congress could conclude that crime in schools clearly affected commerce; therefore it ought to be federally regulated.

Nationalizing Police Power

One can rapidly come to the conclusion that if this in fact were true, the entirety of all police power in all states could be nationalized because all crime therefore has some impact on interstate commerce. In this case, the Supreme Court overturned the lower courts verdict.  Justice Thomas, in his concurring opinion, argued that allowing Congress to regulate intrastate, noncommercial activity under the Commerce Clause would confer on Congress a general “police power” over the entire nation.

Clearly, once again, the intention was to find some way to allow the federal government to help protect the citizenry from harmful acts.  While the intention was and is noble, the argument that this is an applicable extension of federal power under the Commerce Clause simply does not hold.  In allowing these stretches to carry our normal imagination to such levels that old Rod would be proud.  Mr. Sterling started each show with the quote, “You’re traveling through another dimension — a dimension not only of sight and sound but of mind. A journey into a wondrous – land whose boundaries are that of imagination. That’s a signpost up ahead: your next stop: the Twilight Zone!”  The difference between Mr. Sterling’s excursions and the commerce clause debate, are that the ramifications of this mind trip have very significant  consequences on each of us, and ultimately the health care we will be able to
access.  In the last and final article we will discuss the Patient Protection and Affordable Care Act. (PPACA)

Health Care Mandate and the Commerce Clause (Part 2)

Health Care Mandate and the Commerce Clause

The patient protection and affordable care act purchase mandate

A four-part series on the relation and effects of the Commerce Clause to Health Care

By: Thomas W. Loker

The following is the second segment of a four-part series where author, Tom Loker, explores the impact of the Commerce Clause on Obama-Care.

Part Two: Simple Issues—Complicated Problem

In the prior segment, Clear Words – Muddy Intent, we discussed the evolving debate over for what most people on the surface seems a simple, clear and concise statement as to where the federal branch of government’s responsibility related to commerce begins and ends.  The simple and direct interpretation that most laypeople draw from the Commerce Clause—which is an “enumerated power” in the United States Constitution (article I, section 8), that provides that Congress has the power ” To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes”—is that when commerce transpires among the states, as in between one or more states, then the federal branch is responsible to provide regulations that control such commercial transactions, and when commerce is between citizens inside of the boundaries of a state then it is the state’s responsibility to regulate those transactions.  This seems clear to most people but…

Over the past several hundred years, smart men, (perhaps sometimes not-so-smart) often trying to secure honorable goals, (OK, sometimes selfish goals) for the common good, (yes, sometimes not for the common good at all) have parsed, prodded, twisted and convoluted these sixteen simple words into marvelous interpretations that confound the average persons intellect.

Wickard v. Filburn: A broad reach?

Filburn was growing more wheat than allowed—even though it for private consumption. He was fined and ordered to destroy his crops by the federal government.

The historical applications of the authority as interpreted under the sixteen words in this clause have ranged from the sublime to the ridiculous.  In Wickard v. Filburn, 317 U.S. 111 (1942), the U.S. Supreme Court upheld a lower court’s decision that increased the power of the federal government to regulate what  would seem to most a state-based, perhaps private activity.  Roscoe Filburn was growing wheat for his own consumption.  As part of the “New Deal” legislation, rushed through congress to ameliorate the effects of the Great Depression, The Agricultural Adjustment Act of 1938 limited the area in which farmers could devote to wheat production. Filburn was growing more wheat than was permissible—beyond the limits even though it was not for sale. Filburn intended it for private consumption. Ultimately, he was fined and ordered to destroy his crops.  The courts found that because Filburn was growing more wheat than allowed, his actions somehow reduced the amount he would have purchased on the open market. Simply because wheat was traded nationally, the courts maintained Filburn’s acts affected interstate commerce which meant that he was under the federally regulated mandate of the court’s interpretation of the Commerce Clause.

The Government’s Unfettered Access

It seems that it is a difficult and dangerous stretch to view the Commerce Clause as a law that allows the federal government unfettered license to restrict individual freedoms in the same manner as the restrictions against Filburn. By nature of the argument as upheld in Filburn, any self-reliant activity could be determined to impede commerce in that if I,  as an individual grow it, hunt it, or fish it, then I am not purchasing the item from others and therefore am affecting interstate commerce.  I further find the argument specious, in that there is no basis to determine, other than abject supposition, that should Filburn have not grown his wheat himself that the wheat would have been purchased from an interstate supplier instead of an intrastate source.   More likely in keeping with the times, he would have simply bartered for the un-grown grain in the first place.  I believe this is a very dangerous expansion of federal powers that directly and potentially infringe permanently upon Filburn’s liberties which, in the end, caused him economic harm.

What’s the Logic?

If this remains the modern interpretation of the Commerce Clause, then it is would be clear that the mandate to purchase health care, as proscribed by the PPACA, strictly by the historic definition as decided in Wickard v. Filburn is therefore constitutional because any commerce between parties, even intra-state, can affect the purchase of goods and services inter-state.  Further, using the same logic, any affect that the lack of purchase could have on the cost of care to others within a state to offset the cost to the individuals supported by the state’s health systems, including private insurance, Medicaid, community based etc., would also become subject to the federal regulation under the commerce clause.

There are at least two flies in the ointment to these arguments.  One is the obvious one as discussed in the Wickard v. Filburn case, which is that it is a large conceptual leap for most normal people to see how the actions that Mr. Filburn engaged in should have been subject to federal intervention in the first place.  But the second, and more interesting, argument is based on the circumstances of how insurance is actually provided to citizens of the states in the first place, and the resistance by some in the federal government to actually have a national insurance market at all.

Crossing State Lines?

Insurance within states today is subject to regulations that exist in, and are specific to, each state.  Health care provided within one state is subject to the health regulations of that state.  There is little, to no, transportability of an insurance policy for a worker in Pittsburg, Penn. to have the same policy in San Francisco, Calif.  Recently, during a congressional hearing on tort reform, one democratic congressional representative (and noted constitutional lawyer) remarked—and I will paraphrase here—that since health care was not provided in a manner that it crossed state lines, that in every case he was aware of such care was provided within the jurisdiction of the state, and since he had never heard of care being provided in any hospital where the patient receiving care, or the hospital itself for that matter, existed simultaneously in two states at the same time, therefore, in his learned opinion, tort reform was a state’s rights issue and not subject to federal jurisdiction under the commerce clause.   So how is it that the foregoing statement can be factual and true, while at the same time Wickard v. Filburn is also true?  One of them simply must be a dangerous canard!  But the key question is which one?  This is THE question that today we, the people, must decide as the outcome of this decision will either fundamentally empower us or further restrict our life and liberties.   This must be our collective choice alone.

In the next installment, we will look at other regulations and decisions by the courts that further confound this vital determination, and most importantly, further expand the gulf between the ordinary ability of a normal person to read and understand common language and the legal wrangling and interpretations that follow.

On Tolerance

Tol·er·ance – noun

[tol-er-uhns]

Common Language

  1. A fair, objective, and permissive attitude toward those whose opinions, practices, race, religion, nationality, etc., differ from one’s own; freedom from bigotry.
  2. A fair, objective, and permissive attitude toward opinions and practices that differ from one’s own.
  3. Interest in and concern for ideas, opinions, practices, etc., foreign to one’s own; a liberal, undogmatic viewpoint.
  4. The act or capacity of enduring; endurance: My tolerance of noise is limited.

Medicine/Medical, Immunology.

  1. The power of enduring or resisting the action of a drug, poison, etc.: a tolerance to antibiotics.
  2. The lack of or low levels of immune response to transplanted tissue or other foreign substance that is normally immunogenic.

“…it is thus compromise on the basis of tolerance for others’ opinions that lead us to good solutions….” – Benjamin Franklin

It is amazing, that such a small word can reflect so much of what all of us are actually wrestling with today! During the recent debates and congressional committee meetings working on ObamaCare, the “Us” vs “Them” attitude that was displayed kept bringing me back to this simple word and the realization that, for a country founded on tolerance, we had seemingly lost our way.

In an attempt to reinforce what I thought were the lessons drilled into me by my father as to the meaning of tolerance and our fundamental obligation to extend tolerance so we can get such in return; I went to reading. Reading things like the writings of Thomas Paine, Thomas Jefferson, and others of our founding fathers. I wanted to see if the teaching of my father, and my often flawed memory or interpretation of them, were in fact accurate. Lo and behold, and seemingly for once in my life, they were.

But Houston we have a problem! If these are accurate understandings of the meaning, and if my father was correct that the act of tolerance is likely the single most important ingredient of our counrty’s success and our main obligation as a people, then what the heck happened? How have we moved to the point where the only thing we tolerate today is intolerance? How have we gotten to the point that anything that could possibly offend anyone else is something that becomes prohibited. This is in fact the textbook definition of intolerance! For one to tolerate something, one must not like it in the first place.

Mark Twain

For you to exercise tolerance, you must object to the action of another – morally, ethically, religiously, what have you – and still allow the other party, or parties, to continue their expression or action. As I have studied this more over the past few months, I began reading the recently released Autobiography of Mark Twain, Volume 1, from the University of California Press. In this excellent read, I found an interesting observation from Mr. Twain, dictated to his scribe January 24, 1906, in a section called, The Character of Man.

“All the talk about tolerance, in anything or anywhere, is plainly a gentle lie. It does not exist. It is in no man’s heart; but unconsciously and by moss-grown inherited habit, drivels and slobbers from all men’s lips. Intolerance is everything for one’s own self, and nothing for the other person.

The main-spring of man’s nature is just that – selfishness. Let us skip the other lies, for brevity’s sake. to consider them would prove nothing, except that man is what he is – loving, towards his own, – his family, his friends, – and otherwise the buzzing, busy, trivial, enemy of his race – who tarries his little day, does his little dirt, commends himself to God, and then goes out into the darkness, to return no more, and send no messages back – selfish even in death.”

Now I am not sure who is correct… Clearly, from reading the words of our founding fathers they felt it was very important for America to be successful both in succession from England and as a future nation. We needed to become one people, not a nation of singularities – not singularities of religions, or singularities of cultures, or singularities of language or behaviors. We had to all become Americans and develop an American identity – first and foremost. Thomas Paine was one of the people who was enlisted to help establish this identity. But by 1906, a relative drop in the bucket of time, Mark Twain was already observing, to his own dismay, that man had again reverted.

So where are we today, really? We face may issues and problems of historic proportions – in American terms and timescale. Can we defeat the current obstacles, most of our own creation, if we don’t again become a nation united as one? I am not advocating an abandonment of cultural, racial, or religions identity! I am just asking, can we get where we need to go, if we don’t again find tolerance?

I would submit, the problem we have in all of our governmental bodies today – federal, state and local – is that we have lost our tolerance. Benjamin Franklin said, “…it is thus compromise on the basis of tolerance for others’ opinions that lead us to good solutions….” Perhaps we need to revisit this concept – and soon!

Health Care Mandate and the Commerce Clause (Part 1)

The first of a four-part series on the relation and effects of the Commerce Clause to Health Care

The following is a four-part series intended to provide a historical perspective as to the exhaustive debate over the constitutionality of the health care mandate. Part One, “Clear Words—Muddy Intent” explains the Commerce Clause—its origins and purpose and what our fore-fathers intended with it; Part Two, “Simple Issues—Complicated Problems” delves into “New Deal” legislation and the impact of the Willard vs. Filburn Supreme Court case as well as the Agricultural Act of 1938 and how all those legalities intertwined with the Commerce Clause; Part Three, “Sliding Down the Slope,” explores the Trademark and Sherman Acts and its effect on the patent medicine manufacturer’s industry and further discussion of how these two acts, and court cases addressing them, have created more federal oversight and control. In the final segment, Part Four, is a discussion of how Obama-Care is yet another legislative act that allows Congress to enact legislation that states and individual’s rights regarding the intent of the Commerce Act.

Part One: Clear Words—Muddy Intent

The Commerce Clause has defined the balance of power between the federal government and the states.

There has been a constant battle in application of the Commerce Clause between the need to protect consumers from abuse and the obligation of individuals to exercise personal responsibility

It has a direct impact on the lives of ordinary Americans beginning with the enactment of the Interstate Commerce Act of 1887 and the Sherman Anti-trust Act of 1890. According to Article 1, section 8 of the United States Constitution, this is an “enumerated power” in the United States Constitution (article I, section 8), provides that Congress has the power “To regulate Commerce … among the several States …” In response to rapid industrial development, Congress used the Commerce Clause to justify a new era of federal regulation, beginning with enactment of the Interstate Commerce Act in 1887 and the Sherman Antitrust Act in 1890. The outer boundary of Congress’s use of this power over the states has been the subject of a seemingly never-ending – and sometimes heated – debate. The Commerce Clause has defined the balance of power between the federal government and the states. It has a direct impact on the lives of ordinary Americans.

Speaking strictly as a layman, I find it very difficult to justify the argument that the mandate in the Patient Protection and Affordable Care Act (PPACA), so called “Obama-Care,” to purchase some form of health insurance is consistent with the intention of the Commerce Clause. I am neither a constitutional law scholar nor even a lawyer. However, I am well read and I had the benefit of growing up around a family law practice. Like some, whose fathers ran a hardware store, or whose family was in the grocery business, my understanding of the law comes mostly from my grandfather who was a judge, and also as a result of long hours after school following the explicit instructions of my father, or numerous uncles; gathering research, or hanging out in the record room of the old county courthouse documenting title transfers or other such legal recordings.

Regardless, in my everyman’s view and due to significant reading, I still am stymied at how one can assume the intention of the Commerce Clause was to use it to regulate such a wide array of activities. In fact the argument itself is not only counterintuitive; it has been very difficult for the courts to maintain a consistent view of federal power under this clause almost from the time of its original writing.

Simply Constructed

The Commerce Clause is exceedingly simple in construction. To most readers, it comes across as straight up in its potential interpretation, yet like much of the practice of law these days, interpretation is more driven by the desired outcome than the original intent of the wording.

There has been a constant battle in application of the Commerce Clause between the need to protect consumers from abuse and the obligation of individuals to exercise personal responsibility. Spending considerable time reading various papers written by the framers of the constitution, it is clear to me at least that the founders were attempting to solve relatively simple issues.

One State Over Another

As the U.S. was forming out of the chaos that was a byproduct of the Revolutionary War, the founders were wrestling with a number of problems that had been endemic in the colonies and in the end decided to only provide a set of very limited controls for federal exercise. The framers wanted to empower the federal government to act in a central fashion in negotiations and commerce relations with foreign nations in order to not have one state undercutting another state in the impost of duties, taxes or discounted prices. Second, there was an intention to restrict the ability of a state to impose interstate duties and taxes. It can be persuasively argued that part of the role of the Commerce Clause that the framers saw as necessary, but that does not seem explicit in the language, included a role for the federal government to play in adjudicating the differences arising between actions under disparate laws between the states in order to provide continuity for interstate issues as to fair and equitable protections of the individuals rights and freedoms. These intentions do not readily translate to the many arguments currently defined in expanding federal reach. For instance, in the phrase “To regulate commerce… among the several states…” they specifically use the term “among,” not between the states. Nor does it say between the citizens of the states, nor among the citizens of the states. In truth, it seems to become even clearer to me and others that if the framers had intended to empower the federal government to regulate commercial relationships between the citizens of one state to the citizens of another, or within a single state, these powers would have been specifically said so in pointed and specific language as one of the few federal enumerated powers.

Who has the Authority?

Therefore, the basic issues over the constitutionality of the PPACA mandate to purchase insurance, hinges on whether or not the original intention of the framers of the constitution was to give the federal branch, as opposed to the various state governments, the authority to regulate transactions between the citizens inside the borders of a state. Regardless, of whether or not you believe the framers intended to only have the federal branch control the business between the states or not, there have been a series of decisions and additional legislations that have significantly muddied the water of their intentions in regard to what is, or is not, a simple and clear statement. We will be discussing this in more detail in the next article.