Show me the Numbers!

Either universal health care is an entitlement, or it isn't.  And, if its both, then we can divide the argument into two parts and solve from there.  Now, I do not want to hear a bunch of "blah blah blah" from the folks who are trying to push their own political agendas.  Let's keep this simple. 

If health care is not an entitlement, then how do you think this is going to work?  Is this some kind of trust fund that we will all pay into and get some benefit?  Is this going to be an equal benefit for all participants?  Or, is this another "progressive" program where those who make more have to pay more?  If this is another "progressive" program, where some people will pay more than others for the same service, then, in my opinion, this is just another "share the wealth" policy; yet another entitlement disguised as progressive legislation.  And, I certainly hope that Americans will be able to find out; so, when it comes time for elections they can vote accordingly. 

If health care is an entitlement, then how do you think you are going to pay for this?  I do not want to hear talking points.  I want to see numbers.  And, I want them presented without all the obfuscation that is usually used to hide the real agenda.  Its simple.  Where is the money to pay for this entitlement program coming from?  I have heard that this will not have any new taxes.  Forgive me, but I find this hard to believe.  So, the government is going to have to cut spending some where else, if this program is going to be funded.  Since I sincerely doubt that congress is going to reduce their sizable compensations, I suspect things like Defense and NASA are going to pay the price.

Again, let's keep this simple.  Show me the numbers.  Where is the money coming from to pay for the health care program?

We are in a very serious economic situation, that was caused by consumers spending more money than they actually had.  I know - I know - it's not their fault.  But, that is another blog.  Back to this blog.  Why in the world is the government doing the same thing?  Did we not learn anything from this economic mess?

I've heard that this health care program will "pay for itself through a
reduction is costs".  Oh really.  I thought the only way to control
costs was competition.  That's what that high-priced college economics class taught me.  How is there going to be real competition if the government is involved?  Today, pharmaceutical companies have to compete for market share; just like any business.  It's this competition that will control costs. 

I've heard that the government wants to cap the amount of profit a pharmaceutical company can make.  Okay.  So, how do you think pharmaceutical companies pay for research?  Imagine what would have happened if we had started controlling pharmaceutical companies 30+ years ago?  We might still have some of those really nasty diseases.  There is no way the government can "govern" the pharmaceutical business, in order to control costs.  Regulation always increases costs - look at the empirical evidence.  And, for anyone to think they can regulate this industry without damaging the research and development efforts; they are delusional. 

Some of my best friends have died of cancer.  I donate money every year to cancer research.  And, I still do not think enough money goes into medical research.  If the government gets a hold of this industry, I predict lifespans will start shortening because of the inability to get new medical treatments. 

Yet Another Tax

For those of you who have not heard, the Republicans have proposed to start taxing your health care benefits.  Yes - I said the Republicans.  The Republicans are supposed to be the party that wants to reduce taxes; except for our health care.  For some reason, that completely eludes me, the Republicans have decided that taxing our health care will make health care more fair.  From where I sit, this is the most idiotic thing I have ever heard.  It's bad enough the Democrats are planning to raise taxes on just about everything else.  Why in the world are the Republicans advocating taxing our health care benefits?  Can someone explain this to me please?

I think this is one of the key reasons why the Republicans lost the presidential election.  If you recall, talk of taxing our health benefits surfaced a couple of months before the election.  And, this is right around the time that the Republican candidate began losing ground against the Democratic candidate.  Republicans are supposed to be the party of fiscal responsibility; at least they were before the Bush-Delay days.  I believe it is policies like taxing health care benefits that drove all the moderates and independents away from the Republican party.  And, if they do not wake up soon, those folks are going to stay away from the Republican party. 

The bottom line is that unless the public starts to let their government representatives know how they feel about having their health care taxed, your health care benefits are going to be taxed.  And, we will have the Republicans to thank! 

Call your Senators and Representatives today!  We are Taxed Enough Already!

What Growth?

I was watching CNBC this morning.  And, I heard someone (don't remember who) talking about how good the earnings for companies were going to be.  This individual was clearly excited about the prospect of the market going up as a result of earnings going up.  At first thought, it sounded like good news.  Then, I thought about it ...

Unemployment numbers came out today, and they were not good.  Yeah, I admit the number is getting smaller every month.  And, if we continue on this trend, the new unemployment claims should reach a pre-recession level some time at the end of 2010.  But, we also need to consider that these numbers are not realistic.  You see, the government, by virtue of owning the automobile companies, has effectively kept the unemployment numbers from growing by continuing to pump money into the two now bankrupt car makers (GM and Chrysler).  Think about it ... the government is still paying these folks (and huge salaries by the way).  Yet, the unemployment numbers are not getting worse.  The government is in a win-win situation.  They are keeping a large number of the folks who put them in power employed.  And, they are keeping the unemployment numbers from increasing.  This is great, right?  After all, its all tax payers money.

The reason I took the scenic route on this "rant" was because I wanted to talk about unemployment in context of earnings.  Have you noticed that a number of companies are reporting record earnings?  Haven't you wondered how this is possible?  Well, if that company cut a bunch of its employees in order to cut costs; that would be one explanation.  There are two parts to the earnings calculations: Revenue and Cost.  Growth is typically an increase in Revenue (either by real growth or price inflation).  In an earlier post ("Maximum Wage"), I already talked about what companies are doing to increase revenues, so, I will not go into a lot of details here.  The key point to be made here is that companies are still laying off employees.  Further, companies are not increasing revenue as a result of growth in the market.  If there is any revenue growth, it is because companies are increasing prices in response to increases in the prices of the raw materials they consume. 

So, why do we care?

Before you start buying stocks, you might make sure the company who's stock you are buying is not just increasing their earnings by reducing their workforce.  Eventually, they are going to run out of people to cut.  And, as more and more folks lose their jobs, the demand for products and services is going to drop as well.  So, the company's revenue will have to decrease because demand for products and services will have to decrease.  Its a vicious cycle.  Nevertheless, think very carefully before you invest your cash.  People want to hope that things are going to turn around quickly.  We know this from experience.  Hope will not pay your grocery bill.

Entrepreneurial Spirit

I was coming back from a trip last Sunday.  I had just gotten onto the parking lot van; after loading my own luggage.  Other customers were still boarding the van, so I sat down out of the way.  After everyone had boarded the van, the driver stood up and called out for parking tickets (the paper that tells him where we are parked).  Now, here is the thing: instead of coming back to the van to collect the tickets from each and every person, the driver stood in the front of the van making all the passengers get up and hand him the tickets.  This, after everyone was already seated.  Imagine 20 people trying to stand up in the isle of a van, in order to hand their parking ticket to the van driver.  Was this an example of good service quality?  Well, I can only say that if I were the owner of that parking lot, I would have had a serious talk with my driver concerning the definition of "service".  And, after a lot of reflection, I decided to post my thoughts.

To me, there are two kinds of people out there: the ones that will stand in the front of the bus making customers come to them, and, the ones that will go to the customer.  As an entrepreneur, if you are providing a service, you need to provide the service in the best manner possible; you need to keep the customer happy at all times.  Otherwise, your competition will do a better job than you, and, you will be out of business.  This is the impetus for providing the best quality of service.  But, I think it goes further than that.  I think there is an underlying mentality that we are dealing with in this case.  And, I think this kind of mentality is changing (or at least impacting) America. 

Lets look at this example from another point of view: the driver's point of view.  From his point of view, he did not see any reason to take the extra steps to collect the tickets.  From his point of view, the customers should bring their tickets to him.  This mentality is what I call the "Entitlement" mentality.  This mentality is what I believe has infected America; threatening our ability to continue to be a global economic competitor.  This driver was not willing to take the extra steps necessary to provide quality service to his customers.  He essentially wanted his customers to come to him.  It was all about him.  This is not the entrepreneurial spirit that made America the hegemonic economic power that it is today.  Rather, the driver felt he was entitled to his compensation whether he provided quality service or not.  And, with this kind of mentality, the driver is going to do the minimum required in order to maintain his compensation.  He clearly did not believe that providing excellent (or at least better) service would provide him with any additional career opportunities.  Again, he was simply doing the minimum required to maintain his existing compensation. 

Imagine what America would be like if everyone had the same mentality as this parking lot van driver!  Imagine an America where the majority of the population is not interested in providing a quality service; they are only interested in doing the minimum required to maintain their compensation!  Are you starting to get scared yet?

American Banks

If you put your money into a bank, what do you have to look forward too?

• A very low interest rate
• The potential that the bank may go out of business

When
you put your money into a bank, are you expecting to have this money
put at risk? People put their money into banks because they do not want
to take big risks; they want their money to be secure. That really does
not work if the bank takes the risk (with your money) anyway. Not only
is the bank taking big risks with your money, they are paying managers
huge salaries and bonuses. For what? Making bad loans? Taking huge
risks with your money?

The real issue is credit cards and other
"retail" debt. Retailers want to be able to make sales to customers
that do not have the money to make the purchase. And, they also do not
want to take the risk of loaning that money to the customer directly.
Hmm - let's think about this again. What, are we stupid?! I am sure it
makes perfect sense to a banker that wants to keep getting his/her
million dollar bonus. But, is it really fair to the American people,
who are going to get stuck with the bill for those who have spent money
they do not have? The biggest irony is that the retailers shift the
risk to the banks, and the banks shift the risk to the government and
ultimately to the American taxpayer. Clearly, if certain American
taxpayers did not spend money they did not have in the first place, we
would not be where we are today. Then, there's the accountability; if a
retailer wants to sell something to someone who cannot afford it, they should be the ones taking the risk - not the American taxpayer!
So, what is the answer? Well, let's keep it simple ...

Americans needs some place to put their money where:

• The money is 100% safe (insured)
• They will be paid a fair interest rate
• Their money will not be put at risk - forcing the government to bail out the bank if the bank's management makes bad decisions
• The bank is not paying huge salaries to its management while only paying depositors a ridiculously low return on their money

Here's
a thought: why not have banks that are only allowed to make certain
stable investments with depositor's money? These banks could be 100%
insured by the FDIC - this would be less risky than the banking model
today, because the banks would not be taking on risky loan portfolios
(e.g. credit cards and other unsecured debt). If banks take deposits
from American taxpayers, they should have a responsibility to use the
money in a way that will ultimately benefit the depositors directly,
and the American public in general.

So, why not have Deposit Banks and Credit Banks?

Horse & Buggy

Why don't we still ride around in a Horse & Buggy?

I would like to think it is because the Horse & Buggy was replaced by something else, as society evolved. Imagine what would have happened if the Government had kept the Horse & Buggy going just because a bunch of Unions organized a large voting block for a particular political party. I realize this sounds like Republican rhetoric. And, I apologize to all my independent and moderate friends out there. But, I am trying to make a subtle point here. So, what if the Government had kept the Horse & Buggy alive?

Well ... I think we would have kept the people of the times employed. But, we would also still be riding around in a Horse & buggy.

Sometimes natural selection determines when a technology or company should go the way of the Horse & Buggy. If the government continues to intervene just to protect a certain block of the voters, then we are going to be in serious trouble. Society is going to give up on trying to realize the American Dream. And, they are going to just sit back and wait for whatever the Government will provide to them. That, in my opinion, is not what made America great!

We need to maintain our meritocracy. We need for all Americans to continue to strive to be better each day. This is what made America great - not an entitlement based socialist society.

Let me ask you a different question: Do you own auto maker stocks? Would you have bought auto maker stocks on your own? If not, why not? Guess what?! You, as an American taxpayer, are now a part owner in the auto makers. That is, the government took the risks with your money, that you would not have done with your "own" money. Essentially, since no one would put up the money to save the auto makers, the Government reached into your pockets, and gave the money to the auto makers.

Doesn't this bother anyone else?

I suspect this post will get flamed. But, I had to get this off my chest. :-)

Maximum Wage

In this time where class warfare is on the rise, I think there are a few things we need to keep in mind. 

First and foremost, I want to remind everyone that Congress routinely gives themselves automatic raises.  We (in this country) already have a minimum wage.  So, why not a maximum wage?  Why not tie all the congressional raises to the minimum wage?  That is, Congress does not get a raise unless the minimum wage is raised.  We can set this to be a fixed multiplier on the minimum wage.

I find it ironic that Members of Congress (on both sides of the isle) are chastising corporate executives for their bonuses and perks, and, yet, these very same Members of Congress are getting automatic pay raises.  Isn't this a double standard?  In economic times like these, everyone is focusing on Wall Street.  What about the Members of Congress?  Do we really know how much money is being spent by these folks?  It seems to me that we need to start reigning in Government Spending.  It seems to me that the Government should be setting a good example - they should not be spending money they do not have.  Isn't this really what has put the country in the trouble we are in today?

Now, lets think about the "rich are getting richer and the poor are getting poorer" mind set.  America is the land of opportunity.  That means that some of these folks are going to be lucky enough to be running a Fortune 100 company.  Not very many - but a few.  The key concept has always been (as communicated to me by my parents and grand parents), you get what you earn.  If you want to work your way into a better paying "job", then, you need to work hard enough to achieve that goal.  The thought that the Government is supposed to provide everyone the same opportunity seems to fly in the face of this concept. 

On the other hand ... when a corporation is not providing its employees with cost of living raises, at the same time the company is giving CEOs and Executives huge salaries and bonuses - something is just not fair.  This is the real problem.  How can we have a meritocracy that rewards hard work, that will also protect these hard working folks against corporate greed?  How can we eliminate the double standard by Government - shouldn't they take pay caps and cuts like the rest of the "average" Americans?

Just my two cents ...