Friday, February 20, 2009

Fix The Health Insurance System, Fix The Economy

I'm reading Harry Dent Jr.'s latest book "The Great Depression Ahead" and it occurs to me that a significant cause for the pending deflationary economy according to Dent is the reduction in generational spending. As the baby boomers age, they are contributing less and less to the GNP. I can remember thinking in college that the limited number of births that occurred between 1961 and 1981 creates a gap in economic contributors. However, I also believed, and it seems now incorrectly, that situation would open up opportunities for individuals born between those years because there would be more jobs than workers. I did not anticipate that the reduction in GNP would also create an economic disaster removing those job opportunities.

So, the question becomes, what can the US do to bolster the GNP in light of this situation? The answer is obvious, but not simple to solve; increase productivity among the 28-48 year old. This cannot occur given our current heavily-weighted, "Big Corporation" mindset. We need to become lean and distributed in order to achieve our goal, which entails tearing down big corporations and creating smaller, more focused business units. It also means we need a more agile and transportable workforce; yet another constrast to big corporation design.

Now, the hurdle is how do we enable workers to leave big corporations for smaller, leaner pastures? We need to remove the one piece of leverage that big corporations hold over most of its personnel--benefits; specifically, health benefits. With the recession/depression in full-swing, retirement benefits and bonuses have already been impacted, so health insurance is the one major benefit companies can use to keep their indentured servants in their cubicles and not out on the street selling their services to the highest bidder.

Health insurance providers, states and big corporations have been in cahoots for years limiting the potential of small and individual business owners. The name health insurance isn't even accurate any longer, it's pre-paid health plans with a provision for major medical expense coverage (barely). Providers of these plans offer large corporations better benefits coverage at better prices than an individual or small business can buy. In some cases, they won't even offer small businesses and individuals comparable plans to those of the large corporations, with notable exceptions for things like flexible spending. Worst of all, this practice is protected by individual State's laws governing health insurance carriers.

There's an easy fix to this--national regulation of pre-paid health plans.

1) Pre-paid health plan providers must offer the same plans at the same price to everyone
2) Plans need to start being held by individuals and not by the employers;
3) This will:
a) allow people to take plans with them as they move between jobs
b) drive competition between pre-paid health plan providers
c) lead to health care providers normalizing prices
4) Once individuals take control over their own plans, they will no longer be beholdant to their corporate employers allowing them more freedom in job selection and allowing them to change more frequently
5) The government needs to make provisions for tax rebates for individuals paying for their own health care plan. This is key. Instead of handing out cash to spur economic growth, here's a valid use of a tax rebate that will spur change.

#4 and #5 above directly lead to greater productivity and faster economic growth. Indeed, it will spur an entirely new market. Best of all, once corporations get over the fact that this is no longer a control point for them over their employees, they will benefit from the reduced overhead associated with bringing employees on and dealing with their loss after they leave.

Friday, January 30, 2009

Expectations of Future Value Must End

People wonder how we got ourselves into the economic mess we're in today. I am not a trained economist, but even if I was, I don't know if I'd have anymore answers. That said, I'm never short on theories, and my current theory is we've become too enamored with the concept of investing in the future value versus investing in profitability.

The slowdown of 2000 was an indicator of what would come, but we all ignored it in favor of betting on economic growth and maximizing our investment. However, the culture of future value was nothing more than a well-disguised lottery system in which some people won big, but most people just lost their investments.

What's even more ironic is that the masses are still looking for that next "growth sector" to chase the almighty dream of becoming millionaires overnight. Wake up people, betting on future value is no better than betting on craps at a Vegas casino. We're potentially looking at a decade of minimal economic growth, which shouldn't be confused with a decade of no profits.

Indeed, we need to return to a mindset of investing in profitability and companies need to start sharing its profits with its investors again. There's nothing wrong with same dollar sales (taking into account inflation or perhaps even deflation) year over year as long as a company is profitable. Moreover, by sharing those profits with investors and employees, everyone wins.

Instead, we have a market that is best described as a group of wealthy people waiting until the table gets "hot" before they'll lay their money down. If you've ever spent any time in a casino, you've seen this phenomena. Small numbers of real gamblers at every table and a bunch of people moving between tables. Then, a table gets real hot and there's a swarm of people around it and every spot is occupied with lots of loot on the table.

There's considerable similarities between the casino and the economic markets as they are both reliant upon each investor's psychological state and the psychological state of a group of investors. As we've seen this connection is dangerous and faulty. Economic markets need to be managed by reason, not emotions. There will always be the potential for loss, but if you believe in what the products and services that a company provides, chances are so do others. And, as long as that company is reasonably well-run, it should be able to take the investors money, use it to build infrastructure, which in turn should generate profit that all can share in.

Money does make the world go 'round! And until we get some flowing through the system again, many will continue to hurt.

Saturday, January 24, 2009

And For Corporate America's Next Devasting Trick ... Hoarding!

As if the greed and avarice of Corporate America hadn't been devastating enough to the free market economy and Americans everywhere, they levy yet another huge punch to the system by hoarding cash. IBM announced in the same week an $8.93 per share gain and layoff of 10,000 to 16,000. Fiscal responsibility is important, but don't these greedy bastards feel any duty not to burden the already burdened unemployment system? Anyway you spin this, comes up as hoarding.

Hoarding is extremely problematic for the American economy right now. The banks are hoarding; they're even hoarding the money they received to help revive the economy. Companies are hoarding; they want to make sure that a select few employees are able to weather the economic storm, while the others sent adrift in a worsening economy. Wealthy Americans are hoarding; they're not investing in the market because they don't see an opportunity for gain. Combined, this leads to a "financial black hole" that will continue in a negative cycle unabated.

President Obama's plan, may be earnest or it may be a facade--we won't know until we know--still cannot address the key issue: the rich are greedy and refuse to share with those that do not have. When profitable businesses lay people off in the name of fending off potential future loss, we have a serious issue that cannot be fixed in a free market economy. Short of socialistic labor laws that would make moves like this extremely painful for the employers, Corporate America is poised to continually deal significant doeses of pain into Washington's efforts.

Where does that lead? Washington MUST respond with supporting the goals and efforts of Corporate America against the needs of its citizens or continually face the fallout of Corporate America working against the system. But, you ask, "doesn't that impact Corporate America's ability to survive?" Unfortunately, many of these companies are generating a good portion of their revenues overseas these days, so, no, it won't hurt them we hoped it should. Globalization has made it possible for American companies to generate significant revenues and have ZERO incentive to drive that money back into the American economy.

Wow, what a horrible predicament we have created for ourselves. We have companies generating wealth by providing products and services to non-American companies and people, hoarding the profits and not putting the revenues back into the American economy. Isn't this the same complaint we have about immigrant workers?

Monday, January 19, 2009

Reviewing History on Martlin Luther King Jr. Day

The one reason I created this blog was to explore the depths of idiocy and laziness in America. On this, 1/19/2009, Martin Luther King Jr. Day, my thoughts of remembrance focus on the lies that every American school teacher teaches their students regarding slavery and Black rights.

In schools throughout America, we are taught "Lincoln freed the slaves and was a great President." Rubbish I say! Lincoln ultimately did more to hurt race relations in American than any one else in American history.

First, the Emancipation Proclamation was a weapon used against Confederate states. It ultimately freed very few slaves; only those that were part of border states that switch sides in the confrontation. While casting this "spell" on Southern Confederates, slavery continued in the North unabated until after the war was over. That is, the part of slavery where one person "owns" another person. After that, poor freed Blacks were essentially relegated to indentured servitude as a means to survive.

Moreover, Lincoln's harsh punishment on the South left a bitter taste in the mouth of many white Democrats. This only fostered great resentment against the Federal government and camaraderie among many men in the South, which turned into mob mentality that was used to secure all political positions in the South again by 1877. After years of harsh reparations, white Democrats used their new found power to enact the Jim Crow laws; which essentially led to racial segregation that continued until the 1960's.

Ignoring his "W."-like approach to abusing the war powers act, was Lincoln the great man they make us believe as children? For what purpose do we teach our children these lies? I cannot explain how the vocation of academics and education can be so comfortable spreading innuendo as truth. Lincoln's hard line politics and lack of compassion for the cessationists led to massive casualties, deaths and significant debt for the United States. Essentially, his ego, not his "big heart" tore this country in two and for this we build him a monument?

People, wake up and smell the roses. The only defense is knowledge. Learn, read, know the truth. It's not hidden from you, but it's also not handed to you on a silver platter. The only thing handed to you on a silver platter that is paid for with government dollars is propaganda. This is not a conspiracy; that would take too much work. This is simply powerful, cunning individuals working together to leverage the laziness around them. In short, this is Rome in the time just before it was overrun by the Germanic hoard.

Sunday, January 18, 2009

Realist or Doomsayer?

We live in curious times. As an American, I watch with the curiosity of a ten year old the actions of my neighbors. Do they not understand what is happening around them? Is it their religious faith that carries them through or just sheer stupidity? Some would say that last question was redundant.

Sometimes it makes me question my own beliefs. It is true that in the past America has entered into downward corrections followed by periods of great growth many times over its short history. This pattern leads many to believe that all downward corrections will eventually be followed by a positive correction; a flawed belief.

I believe that this current correction is different. I believe that this downward correction has profoundly changed the underlying mechanics of the American economy. I do hate to be wrong, but in this case, nothing would please me more than to be incorrect. With this correction, unlike the others before it, we came to a crossroads and we took the path most traveled, when we need to take the path less taken. History tells us that the symptoms of corrupt government and out of control greed indicate that the Republic is near collapse and yet we ignored the signs.

The biggest indicator to me that we do not have the intelligence to save ourselves was this past election. I believe after 8 years of George W. Bush, even those with a High School Diploma, but a 6th grade understanding knew that if we didn't change we were heading for disaster. But, it wasn't enough to take the "big step", so change became the theme of the election as our "real" choices for President were narrowed to an aging politician with no clue how to maneuver us through the problems of the day and a youthful politician with no clue how to maneuver us through the problems of the day.

Yet, what better way for the powers that be to distract the masses from this truth. What better way to dissuade the masses from taking the path less traveled and throw those that have continually failed us out of power and replace them with an entire group of new individuals, from multiple parties, so it would be implausible for them to act in a collusive manner. What better way to distract the masses from their short-lived anger over a failed and unnecessary war and failing economy, then the promise of breaking through racial barriers and putting our first "African-American" man in the White House.

But, let us not forget that 45.7% voted in favor of continuing the incumbent party with its proposed Vice-President that was capable of campaigning at a 9th grade student body election level. But, perhaps her pretty face was simply another example of the distraction at work.

So, here we stand. 52% (perhaps more now) of the Nation feeling hopeful for having broken a significant racial barrier, but handing over almost complete control to a single party. And the masses go back to their daily rituals, that is, those that haven't lost their jobs or homes, believing that on January 20th a new day will dawn.

And here I sit, continually seeking signs of intelligent life on earth. I have found plenty, but so few that we cannot make a difference against the masses of ignoramuses that don't understand that the only way out of this mess is through tremendous sacrifice and thrift, not more handouts, and certainly not undermining the basis for our whole economy, the free market system.