Trader Joe’s wanted to build a new store in Portland, Oregon. Instead of heading to a tony neighborhood downtown or towards the suburbs, the popular West Coast grocer chose a struggling area of Northeast Portland.
The company selected two acres along Martin Luther King Blvd. that had been vacant for decades. It seemed like the perfect place to create jobs, improve customer options and beautify the neighborhood. City officials, the business community, and residents all seemed thrilled with the plan. Then some community organizers caught wind of it.
The fact that most members of the Portland African-American Leadership Forum didn’t live in the neighborhood was beside the point. “This is a people’s movement for African-Americans and other communities, for self-determination,” member Avel Gordly said in a press conference. Even the NAACP piled on, railing against the project as a “case study in gentrification.” (The area is about 25 percent African-American.)
After a few months of racially tinged accusations and angry demands, Trader Joe’s decided it wasn’t worth the hassle. “We run neighborhood stores and our approach is simple,” a corporate statement said. “If a neighborhood does not want a Trader Joe's, we understand, and we won't open the store in question.”
Hours after Trader Joe’s pulled out, PAALF leaders arrived at a previously scheduled press conference trying to process what just happened. The group re-issued demands that the now-cancelled development include affordable housing, mandated jobs based on race, and a small-business slush fund. Instead, the only demand being met is two fallow acres and a lot of anger from the people who actually live nearby.
Posts tagged ‘US’
Apparently, hundreds of US prosecutors have written Eric Holder opposing his support for reduced mandatory minimum sentences. Their letter to Holder illustrates exactly why these mandatory minimums need to be reduced:
As you know, mandatory minimum sentences are a critical tool in persuading defendants to cooperate, thereby enabling law enforcement to dismantle large drug organizations and violent gangs. Present law provides numerous opportunities for deserving defendants to avoid mandatory sentences through: cooperation in providing information about other criminals and criminal enterprises; plea bargaining, which resolves the vast majority of federal cases; the “Safety Valve,” which has allowed tens of thousands of defendants to receive lower sentences; and executive clemency, which President Obama recently employed.
The last of these is of course a joke, since Obama plays more rounds of golf in two weeks than he has commuted sentences. But this does illustrate exactly why prosecutors all love mandatory minimums and why we should hate them. Read what they are saying in this paragraph. Basically it says that mandatory minimums take sentencing out of the hands of judges and juries and puts it in the hands of ... federal prosecutors.
The problem is that very high mandatory minimums raise the stakes so high that even the innocent are often forced to cut a deal. People sometimes wonder how the innocent could ever plead guilty to something. Well, think of it this way. Can you stand on one foot for 10 seconds without losing your balance? Are you sure? Would you bet $100 on it? You would? OK, would you bet 20 years of your life on it?
How sure of something would you have to be to bet your life on it? And no matter how innocent you are, can you ever be that sure that a jury will see it your way when the federal government is sending everything it has at you?
Mandatory minimum sentences raise the stakes of trusting the judicial process so high that few people can tolerate that much risk. They cannot afford to risk going to a jury. So with this threat in hand, prosecutors gain 1) a slave that will basically do or say whatever they demand and 2) total control of the outcome of cases that should be going to trial.
I was not aware Eric Holder had supported this change but despite having my issues in the past with Holder I have to give him Kudos.
Update: Ken White at Popehat (writing about a different story) says, "As I often say here, the criminal justice system is full of people who believe that its purpose is to deliver convictions and any other result shows a malfunction." By the way, read the Popehat article at the link, it will horrify you.
Wall Street Journal reporter Robin Sidel, along with Andrew Johnson, reported on the success that the federal government is having in barring access to the banking system for a number of businesses. As we've discussed previously, "Operation Choke Point" and related arm-twisting efforts by the Feds are aimed at making life difficult for a variety of targeted businesses. Among those disfavored businesses are online lenders, payday lenders, check cashers, virtual currency dealers, gaming businesses, and marijuana-related businesses (although our beloved US Attorney General has been making noises that he simply will look the other way when it comes to enforcing federal drug laws against marijuana businesses that are operating legally under state law)....
In the article and a companion audio interview, Sidel states that the primary concern appears to be with the difficulty of complying with BSA and money laundering risk. While that's certainly true with many of the businesses, it's also true that some of the businesses have been targeted by the regulators for extra scrutiny because they're in a line of business, like payday lending, where the regulators simply don't like the business model on social policy grounds. If we see the Feds back off of weed but still keep the heat on payday lenders, then the argument that it's all about money laundering risk becomes a bit tenuous.
I have seen this fact a number of times and am always amazed when I read it, since poverty figures are never, ever presented with this bit of context
LBJ promised that the war on poverty would be an "investment" that would "return its cost manifold to the entire economy." But the country has invested $20.7 trillion in 2011 dollars over the past 50 years. What does America have to show for its investment? Apparently, almost nothing: The official poverty rate persists with little improvement.
That is in part because the government's poverty figures are misleading. Census defines a family as poor based on income level but doesn't count welfare benefits as a form of income. Thus, government means-tested spending can grow infinitely while the poverty rate remains stagnant.
Rector argues that poor today is very different than poor in Johnson's day, and that perhaps we might celebrate a bit
Not even government, though, can spend $9,000 per recipient a year and have no impact on living standards. And it shows: Current poverty has little resemblance to poverty 50 years ago. According to a variety of government sources, including census data and surveys by federal agencies, the typical American living below the poverty level in 2013 lives in a house or apartment that is in good repair, equipped with air conditioning and cable TV. His home is larger than the home of the average nonpoor French, German or English man. He has a car, multiple color TVs and a DVD player. More than half the poor have computers and a third have wide, flat-screen TVs. The overwhelming majority of poor Americans are not undernourished and did not suffer from hunger for even one day of the previous year.
Remember what I presented a while back. This is what the Left thinks, or wants us to think, American income inequality looks like -- our rich are richer than comparable European welfare states because our poor are poorer.
And this is what income inequality in the US actually looks like -- our rich and middle class are richer, but our poor are not poorer. A less redistributionist approach floats all boats. I compared the US to many European welfare states, using the Left's own data source. Here is an example, but hit the link to see it all.
Revisionism on the causes of WWI seems to ebb and flow like a 20-year clock. It was Germany's fault, no it wasn't, yes it was. Etc. Here is the latest iteration.
I have read quite a bit on the topic of late. It was horribly complex, but here are a few thoughts.
- At some level, it was everyone's fault, at least as measured by the enthusiasm that greeted the war in nearly every country. It was the last war begun by folks who thought it would be incredibly romantic and glorious.
- Austria simply has to bear a lot of the blame. No doubt a crisis in the Balkans could have been started by Russia or Serbia, and in an alternative universe where the Archduke was not assassinated, they might well have. But the fact is that Austria made this one happen. They crafted a set of demands on Serbia that were supposed to be unreasonable. They were meant to be a Casus Belli. Austria had determined it was going to war with Serbia.
- Much is made of the German blank check to Austria, but the key fact for me were the actions of Germany several weeks later. In response to a building crisis in the Balkans to their southeast, the Germans entered the war attacking to the northwest, into Belgium and France. With conflict inevitable in the Balkans, the Germans (with a helping hand from the Russians) helped turn a limited conflict into a World War.
The Germans were also responsible through bad decisions in bringing the US into the war, via a u-boat campaign that failed to achieve its goals (starve the Brits) but managed to bring US troops to Europe at almost the exact moment when British and French troops might have collapsed. Incredibly, the Germans made the exact same mistake in WWII, declaring war on the US so they could initiate a u-boat campaign against US shipping, when Congress might well have been happy to keep America's war limited to Japan.
I thought this was a useful simple picture from Arnold Kling, vis a vis countries and their economies:
|Low Creation||High Creation|
|Low Destruction||Corporatist Stagnation||Schumpeterian Boom|
|High Destruction||Minsky Recession||Rising Dynamism|
He suggests the US may currently be in the lower-left quadrant. Europe and Japan in the upper left. My sense is that China is in the upper right, not the lower right (too much of the economy is controlled by the politicians in power for any real destruction to occur).
Once a government gains powerful tools for economic intervention, it becomes politically almost impossible to allow destruction to occur, no matter how long-term beneficial it can be. The US is one of the few countries in the world that has ever allowed such destruction to occur over an extended period. The reason it is hard is that successful incumbents are able to wield political power to prevent upstart competition that might threaten their position and business model (see here for example).
It takes a lot of discipline to have government not intervene in favor of such incumbents. Since politicians lack this discipline, the only way to prevent such intervention is by castrating the government, by eliminating its power to intervene in the first place. Feckless politicians cannot wield power that does not exist (though don't tell Obama that because he seems to be wielding a lot of power to modify legislation that is not written into my copy of the Constitution.).
The American Studies Association has voted to initiate an academic boycott of Israel ostensibly to protest its denial of civil rights to Palestinians in the occupied territories. Forgetting for a moment Israel's unique security concerns (what would the US do if Mexico routinely lobbed rockets and artillery shells into US border towns), the implication is that the Palestinians in Israels have it worse than any other group in the world, since this is the first and only such boycott the ASA has ever entered into. Is it really worse to be a Palestinian in Israel than, say, a woman anywhere in the Arab world** or about anyone in North Korea? Do academics in Cuba have more ability to write honestly than they do in Israel? I doubt it.
The only statement the ASA makes on the subject that I can find is in their FAQ on the boycott
7) Does the boycott resolution unfairly single out Israel? After all there are many unjust states in the world.
The boycott resolution responds to a request from the Palestinian people, including Palestinian academics and students, to act in solidarity. Because the U.S. contributes materially to the Israeli occupation, through significant financial and military aid - and, as such, is an important ally of the Israeli state - and because the occupation daily confiscates Palestinian land and devastates Palestinian lives, it is urgent to act now.
A couple of thoughts. First, I am not sure why US material aid is relevant to choosing a boycott target. I suppose the implication is that this boycott is aimed more at the US than at Israel itself. But the question still stands as to why countries like Saudi Arabia, which receives a lot of US material aid as well, get a pass. Second, the fact that Palestinian academics can seek international help tends to disprove that their situation is really the worst in the world. I don't think the fact that the ASA is not hearing cries for help from liberal-minded academics in North Korea means that there is less of a problem in North Korea. It means there is more of a problem.
I am not a student of anti-semitism, so I can't comment on how much it may explain this decision. However, I think it is perfectly possible to explain the ASA's actions without resorting to anti-semitism as an explanation. As background, remember that it is important for their social standing and prestige for liberal academics to take public positions to help the downtrodden in other countries. This is fine -- not a bad incentive system to feel social pressure to speak out against injustice. But the problem is that most sources of injustice are all either a) Leftish regimes the Left hesitates to criticize for ideological reasons or b) Islamic countries that the left hesitates to criticize because they have invested so much in calling conservatives Islamophobic.
So these leftish academics have a need to criticize, but feel constrained to only strongly criticizing center-right or right regimes. The problem is that most of these are gone. Allende, the Shah, Franco, South Africa -- all gone or changed. All that's left is Israel (which is odd because it is actually fairly socialist but for some reason never treated as such by the Left). So if we consider the universe of appropriate targets -- countries with civil rights and minority rights issues that are not leftish or socialist governments and not Islamic, then the ASA has been perfectly consistent, targeting every single country in that universe.
** To this day I am amazed how little heat the gender apartheid in the Arab world generates in the West in comparison to race apartheid in South Africa. I am not an expert on either, but from what I have read I believe it is a true statement to say that blacks in apartheid South Africa had more freedom than women have today in Saudi Arabia. Thoughts?
Update: I twice emailed the ASA for a list of other countries or groups they have boycotted and twice got a blurb justifying why Israel was selected but with no direct answer to my question. I guess I will take that as confirmation this is the first and only country they have ever targeted. They did want to emphasize that the reason Israel was selected (I presume vs. other countries but they did not word it thus) had a lot to do with he fact that Israel was the number one recipient of US aid money (mostly military) and that it was this American connection given they represent American studies professors that made the difference. Why Pakistan or Afghanistan, who treat their women far worse than Israel treats Palestinians, and which receive a lot of US aid, were not selected or considered or mentioned is not explained. Basically, I would explain it thus: "all the cool kids are doing it, and we determined that to remain among the cool kids we needed to do it too". This is a prestige and signalling exercise, and it makes a lot more sense in that context, because then one can ask about the preferences of those to whom they are signalling, rather than try to figure out why Israel is somehow the worst human rights offender in the world.
By the way, by the ASA logic, it should be perfectly reasonable, even necessary, for European academic institutions to boycott US academic institutions because the US government gives aid to such a bad country like Israel. This seems like it would be unfair to US academics who may even disagree with US policy, but no more unfair than to Israeli academics who are being punished for their government's policies. I wonder how US academics would feel about being boycotted from European events and scholarship over US government policy?
When people ask me about my business, one of the things that is hard to explain is just how deep and visceral the skepticism of private enterprise can be. I constantly have people take single words I might have uttered in the immediacy of a live TV interview and try to craft straw man positions for me out of them**. Sometimes it is not even something I said, but something where some lazy journalist has poorly paraphrased my position.
Here is a great example, where a Flagstaff writer (who by the way knows me and my phone number quite well but did not bother to interview me) tries to take my opposition to the government shutdown to paint me with some sort of entitlement. She lectures me that I don't actually own the land on which I operate, as if that is somehow news to me. You can read my comments if you are interested, but the issue with the shutdown was the lawlessness of Administration officials, not any sense that I am entitled to the land any more than my lease contract allows me to be. (As an aside, she seems to be expressing a strong theory of landlord rights, that my landlord (the US Forest Service) should have the absolute right to shut me down whenever they want. Why is it that I don't think she has the same position vis a vis other tenants and landlords?)
By the way, compare her straw man to my actual position on public land, which is likely to the Left of many of my readers:
In my history of public discussions on private operation of public parks, it is no surprise that I run into a lot of skepticism about having any private role at all. But I also run into the opposite -- folks who ask (or demand) that the government sell all the parks to private buyers. So why shouldn't privatization of parks just consist of a massive land sale?
The answer has to do with profit potential. Over time, if in private hands, a piece of land will naturally migrate towards the use which can generate the highest returns. And often, for a unique piece of land, this most profitable use might not be a picnic area with a $6 entrance fee -- it might instead be something very exclusive which only a few can enjoy, like an expensive resort or a luxury home development (think: Aspen or Jackson Hole). The public has asked its government to own certain unique lands in order to control their development and the public access to them.
Public ownership of unique lands, then, tends to have the goal of allowing access to and enjoyment of a particular piece of land for all of the public, not just a few. Typically this entails a public agency owning the land and controlling the types of uses allowed on the land and the nature and style of facility development. I call these state activities controlling the "character" of the land and its use. (One could legitimately argue that private land trusts could fulfill the same role, and in fact I have personally been a supporter of and donor to private land trusts. However, I am not an expert in this field and will leave this discussion to others).
Having established a role for the government in setting the character of the lands we call "parks," we can then legitimately ask, "does this goal require that government employees actually staff the parks and clean the bathrooms?"
** Postscript: A couple of years ago I was asked to do an interview with Glen Beck on my proposal to keep open, via private operation, a number of Arizona parks slated for closure. It was the first time I ever did live TV, and a national show to boot. I had never seen his show but he had the reputation of being freaky and unpredictable, which just made me more nervous. Anyway, during the interview I said that typically an agency would contract with us for a group of parks, instead of just one, so the stars could help cover the cost of the dogs. This terminology is from a framework many business school students learn early, often called a BCG matrix (named after the Boston Consulting Group). It is a two by two matrix with market share or profitability on one axis and market growth on the other. Anyway, the profitable high revenue units within a company are stars and the unprofitable stagnant ones are called dogs (the profitable stagnant ones were cash cows and I can't actually remember what was in the fourth box). You can see this nomenclature is so established they actually put little pictures of stars and dogs in the boxes.
Anyway, it was a poor choice of wording, but the nomenclature is wired do deep in my now it just came out. The context of the entire interview was that I cared deeply about the parks and that I was offended that the legislature was going to let them close when there was an easy solution at hand. No matter. The #2 guy at Arizona State Parks took the video and make the rounds of the state park staff, highlighting my use of the word "dog" and inflaming their rank and file that I thought their parks were bad places and I was bent on destroying them, or something. Anyway, none of the Arizona Park Staff I have ever talked to has ever seen an operations manual for their parks but they have all seen the video of me saying "dogs."
Postscript #2: Don't ever think that consulting is different from any other business. When I was an McKinsey, we had piles of frameworks we used (the 7S organization framework being perhaps the most common and actually fairly useful, as its intent was to take focus away from structure alone in organizational work). Anyway, McKinsey had to have a growth-share matrix, but to try to differentiate this product a bit they had a 3x3 matrix rather than a 2x2.
Since I am somehow oddly onto a consulting tangent here, the single most useful thing I garnered from McKinsey was the pyramid principle in persuasive and analytical writing. I have talked to a lot of other ex-McKinsey folks, and almost all of them wonder why the pyramid principle is not taught in high school. I am not a believer in business books -- I am looking around my office and I don't think I see even one here. But if I had to offer one book for someone who wanted a business book, this is it.
I have not written much about climate of late because my interest, err, runs hot and cold. As most readers know, I am in the lukewarmer camp, meaning that I accept that Co2 is a greenhouse gas but believe that catastrophic warming forecasts are greatly exaggerated (in large part by scientifically unsupportable assumptions of strong net positive feedback in the climate system). If what I just said is in any way news to you, read this and this for background.
Anyway, one thing I have been saying for about 8 years is that when the history of the environmental movement is written, the global warming obsession will be considered a great folly. This is because global warming has sucked all the air out of almost anything else in the environmental movement. For God sakes, the other day the Obama Administration OK'd the wind industry killing more protected birds in a month than the oil industry has killed in its entire history. Every day the rain forest in the Amazon is cleared away a bit further to make room for ethanol-making crops.
This picture demonstrates a great example of what I mean. Here is a recent photo from China:
You might reasonably say, well that pollution is from the burning of fossil fuels, and the global warming folks want to reduce fossil fuel use, so aren't they trying to fight this? And the answer is yes, tangentially. But here is the problem: It is an order of magnitude or more cheaper to eliminate polluting byproducts of fossil fuel combustion than it is to eliminate fossil fuel combustion altogether.
What do I mean? China gets a lot of pressure to reduce its carbon emissions, since it is the largest emitter in the world. So it might build a wind project, or some solar, or some expensive high speed rail to reduce fossil fuel use. Let's say any one of these actions reduces smog and sulfur dioxide and particulate pollution (as seen in this photo) by X through reduction in fossil fuel use. Now, let's take whatever money we spent in, say, a wind project to get X improvement and instead invest it in emissions control technologies that the US has used for decades (coal plant scrubbers, gasoline blending changes, etc) -- invest in making fossil fuel use cleaner, not in eliminating it altogether. This same money invested in this way would get 10X, maybe even up to 100X improvement in these emissions.
By pressuring China on carbon, we have unwittingly helped enable their pollution problem. We are trying to get them to do 21st century things that the US can't even figure out how to do economically when in actuality what they really need to be doing is 1970's things that would be relatively easy to do and would have a much bigger impact on their citizen's well-being.
I have a new column up at Forbes.com, and it addresses an issue that has bothered me for a while, specifically:
Do we really care about income inequality, or do we care about absolute well-being of our citizens? Because as I will show today, these are not necessarily the same thing.
What has always frustrated me about income inequality arguments is that no one ever seems to compare the actual income numbers of the poor between countries. Sure, the US is more unequal, and I suppose from this we are supposed to infer that the poor in the US are worse off than in “more equal” countries, but is this so? Why do we almost never see a comparison across countries of absolute well-being?
I have never been able to find a good data source to do this analysis, though I must admit I probably did not look that hard. But then Kevin Drum (in a post titled “America is the stingiest rich country in the world”) and John Cassidy in the New Yorker pointed me to something called the LIS database, which has cross-country income and demographic data. I can't vouch for the data quality, but it has the income distribution data and it struck me as appropriate to respond to Drum and Cassidy with their own data.
In short, Cassidy made the point that the Gini coefficient (a statistical measure of income inequality) was higher in the US than for most other wealthy western countries. Drum made the further point that the US is "stingy" because we do the least to coercively alter this pattern through forced redistribution.
But all we ever see are Gini's are ratios. We never, ever see a direct comparison of income levels between countries. So I did that with the data. I won't reiterate the whole article here, but here is a sample of the analysis, in this case for Sweden which has one of the lowest Gini ratios of western nations and which Drum ranks as among the least "stingy". This is the model to which the Left wants us to aspire:
I argue that the purchasing power parity(ppp) numbers are the right way to look at this since we are comparing well-being, and on this basis Sweden may be more equal, but more than 90% of the people in the US are better off. Sweden does not have a lower Gini because their poor are better off (in fact, if you consider the bottom quartile, the poor are better off in the US).
We are going to see months of obsession by the Left and Obama over income inequality -- but which country would you rather live in, even if you were poor?
Read the whole thing, there are lots of other interesting charts.
I am working on some posts on income inequality, especially as compared between nations. One thing I have been thinking about is whether the US GINI (a measure of income inequality) is overstated because the US has a tiered retail system that gives lower income people access to lower prices (though for sometimes lower quality goods). We have Wal-Mart and Family Dollar, discount retail concepts that are rare, and often illegal (due to limitations on retail discounting) in European countries.
On a sort of purchasing power parity basis, I wonder if this has any impact in narrowing the US effective GINI. Of course, this mitigating factor is somewhat mitigated itself by the fact that a number of urban areas with some of the poorest families (e.g. Washington DC) restrict entry of these low-cost retail establishments.
A few quick thoughts:
- I have a constant frustration that we never see these comparisons just on a straight purchasing power parity absolute dollar number. Numbers related to income distribution are always indexed to a number that is really high in the US, thus making our ratio low. I seriously doubt Turkey has a higher minimum wage in the US, it just has a much lower median wage. Does that really make things better there? I have this problem all the time with poverty numbers. The one thing I would like to see is, on a PPP basis, a comparison of post-government-transfer income of the US bottom decile or quintile vs. other countries. Sure, we are more unequal. But are our poor better or worse off? The fact that no one on the Left ever shows this number makes me suspect that the US doesn't look bad on it. This chart, from a Leftish group, implies our income distribution is due to the rich being richer, not the poor being poorer.
- Drum or whoever is his source for the chart conveniently leaves off countries like Germany, where the minimum wage is zero. Sort of seems like data cherry-picking to me (though to be fair Germany deals with the issue through a sort of forced unionization law that kind of achieves the same end, but never-the-less their minimum wage is zero).
- All these European countries may have a higher minimum wage, but they also have something else that is higher: teen unemployment (and I would guess low-skill unemployment).
Admittedly this only has a subset of countries, but I borrowed it as-is from Zero Hedge. By the way, by some bizarre coincidence, the one country -- Germany -- we previously mentioned has no minimum wage is the by far the lowest line on this chart.
As much fun as it is to mock the US Postal Service, their inability to restructure their costs is not all their fault. Every time they try to close a facility, they get met by opposition from about everywhere. Here is an example where Berkely, CA is doing all it can to prevent the USPS from selling a post office building.
The Postal Service over the summer began moving ahead with a plan to sell its 1914 Beaux-Arts post office in the heart of Berkeley near the old city hall and a park named after Martin Luther King Jr. The move drew howls from residents worried that the building would turn into condominiums or office space, even drawing dissidents to camp out for days by the columned building entrance.
Now, opponents are gaining traction with an unorthodox zoning restriction: that the mustard-colored building must remain open to the public
The Berkeley Planning Commission last month approved a measure that would restrict the use of the post office and adjacent government buildings to government agencies or public uses like a theater. Residential use and many other private functions would be banned by the action, which requires City Council approval.
This is simply bizarre. What, do residents have so many fond memories of their time spent in the line at the post office that they want these golden memories preserved? The assumptions made by local opponents are just bizarre -- they seem OK if the building is used for offices of the Social Security Administration but not if it is used for private offices. Why would anyone possibly care. From my experience, private urban office buildings tend to be cleaner and better maintained than government offices.
Kevin Drum thinks it is an insight to his readers that the insurance companies are a source of support for President Obama in keeping Obamacare alive. And perhaps it is a surprise. After all, most of the anti-insurance company rhetoric was for the progressives, who are always fired up for any endeavor they think will punish a private corporation.
The rest of us understand that of course the health insurance industry is all for Obamacare. For them, this is the greatest bit of crony legislation in history. For all the Administration rhetoric, essentially the US government has required that every citizen buy their product, and subsidizes many of these purchases with taxpayer money. Corporatism is rampant nowadays, a bipartisan affliction, but ethanol is that only other industry I can think of that has been granted this ultimate crony grail of subsidies combined with a requirement to purchase (though maybe ethanol wins because, at least for cellulosic ethanol, there is actually a mandate to purchase a product that does not even exist).
Hospitals are required to treat everyone who shows up at the door, which results in a substantial amount of uncompensated care that hospitals must spread into their rate structure for other patients (and which also gives the lie to the syllogism that being uninsured means one does not have access to health care).
Supposedly, the PPACA was going to eliminate all these costs. Actually, it does not eliminate these costs, it just changes who subsidizes them. Currently, other hospital patients (and their insurers) subsidize this care. In the PPACA medicaid expansion, some of this subsidy would shift to taxpayers (whether the actual amount of costs subsidized would go up or down depends on your assumptions as to whether the Feds or the hospitals are better at managing them).
But hospitals think they might have found a third approach. By law, insurance companies cannot legally turn down any applicants, particularly through the exchanges, based on their health condition. So why not have the hospital (or its non-profit Foundation) buy policies for its perennially most expensive uncompensated patients?
US hospitals are exploring ways to buy “Obamacare” insurance plans for their sickest and poorest patients as they strain under the weight of tens of billions of dollars in uncompensated costs from the uninsured.
...The controversy is another reminder of the complexity of the US healthcare system, where hospitals are forced to pay about $40bn a year in so-called “uncompensated care”. People who are not insured go to emergency rooms because they cannot legally be turned away, and often hospitals bear the brunt of the costs.
“Hospitals are considering it,” says Mindy Hatton, general counsel of the American Hospital Association, the hospital lobby group. “Hospitals shouldn’t be on the front lines delivering preventive care that patients should be receiving in a clinic or doctor’s office. That doesn’t make sense for anyone.”
This is insurance companies' worst nightmare, of course. It would not take very much of this sort of thing to trash the whole insurance market.
The Administration response to all this has been typical of its behavior through the whole PPACA implementation. In general their approach to all new problems has been to:
- Make it clear that it hadn't really thought very deeply or completely about important implementation issues
- Make snap implementation decisions to tactically deal with one problem only to find they had created new problems
- When everything gets really messy, claim broad dictat-by-press-release powers it is not clear the law actually gives them
In this case, the Administration was faced with questions from Representative Jim McDermott. He asked if exchange-sold health plans were considered Federal Qualified Health Plans (QHP) under the law. If so, he pointed out that several of the things the Administration had discussed (e.g. allowing insurers to offer monetary inducements to customers who maintained good health habits) could be illegal under anti-kickback provisions.
As usual, it was pretty clear the Administration had no answer. Or more accurately, had five different answers from five different people and agencies. Kathleen Sebelius wrote back to McDermott that no, exchange sold plans were not QHP's and so the anti-kickback law did not apply. This tactically solved McDermott's issue. But it created large new issues, since it is the anti-kickback law that would have prevented hospitals from buying exchange plans for their most expensive patients. If exchange plans are not QHP's, then hospitals considered that buying such plans was now legal.
All Sebelius has been able to do to temporarily quiet this mess has been to claim vague and unlimited powers to regulate virtually any behavior related to the exchanges. Like Obama, she believes her press releases have force of law. But in fact, even if she does have the claimed regulatory power, she actually has to go through a rules-writing process before any such rules can take effect. These are structured, drawn out affairs with long delays for public comment. This is the type of thing she needed to be doing 18 months ago.
Got this from some Republican group (the "virtue" of being a libertarian is that I get bipartisan spam).
Tim Bishop = ObamaCare
Bishop Has Been a Co-Conspirator in the Disaster That is ObamaCare; It’s Time for Him to Apologize For This Colossal and Expensive Mistake
WASHINGTON – Today, in a rambling press conference, President Obama admitted he “fumbled” the ObamaCare rollout. And the president even warned of more problems to come.
Tim Bishop has been a vocal ObamaCare supporter from the beginning—voting for the bill in 2010 and giving the president a blank check on ObamaCare time and time again. Now that the law is becoming more of a disaster every day, Bishop needs to answer for the higher premiums and canceled plans facing families in his district.
Didn't even know who this dude was until I checked (US Representative from NY, apparently). I expect to see a lot of this. At least for now. Things can change quickly. After all, just 30 days ago the Republicans were supposedly on the ropes from self-inflicted wounds vis a vis the shutdown. Now, no one even remembers it.
I was reading about the DOJ push back on the proposed American-US Airways merger. It strikes me that you never want to be the last merger in an industry consolidation. When the consolidation begins, say with 8 players, a merger -- even if it results in a very big company -- reduces the number of competitors from 8 to 7. After a while, though, the later mergers are proposing to reduce the players from, say, 4 to 3. This will look worse to the DOJ, who by this point in a consolidation may be feeling remorseful, in retrospect, that it let some of the earlier deals go unchallenged. So the last deal gets to catch up / payback from the earlier deals.
I think this is in part what is happening with the American merger. I don't have the data, but my sense is that earlier mergers (e.g. United and Continental) were far more problematic from an anti-trust standpoint.
Disclosure: living in Phoenix, whose US Airways hub will likely get downsized or eliminated in the merger, my life will be worse likely if the merger is approved. Executives swear Phoenix will remain a major hub but most residents here consider this a "If you like your hub you can keep it" type promise.
It turns out that the US is one of the few industrialized nations to meet the terms of the Kyoto protocols (reduce CO2 emissions to 1997 levels) despite the fact we never signed it or did anything to try to meet the goals.
Thank the recession and probably more importantly the natural gas and fracking revolution. Fracking will do more to reduce CO2 than the entire sum of government and renewable energy projects (since a BTU from natural gas produces about half the CO2 as a BTU form coal). Of course, environmentalists oppose fracking. They would rather carpet the desert with taxpayer-funded solar panels and windmills than allow the private sector to solve the problem using 50-year-old technology.
On September 26 of this year, President Obama said this of the new Obamacare exchanges:
“If you’ve ever tried to buy insurance on your own,” he said, “I promise you this is a lot easier.”
Well, let's see. Here are some notes on my previous health insurance buying decision
- I was able to price shop policies online without creating an account, without giving up my social security number. The websites to do so worked and operated quickly
- A broker who had decades of experience in health care (rather than being a former Obama campaign worker with a few hours of training) walked me through the options and how they worked.
- Once we chose a policy, the application process online was quick and easy
Here is one thing that was likely worse
- I had to provide medical history information, which probably is not required under Obamacare because of community rating (though I am not sure)
And here is one thing that was better for me but I guess must be worse for the Left since they complain about it so much
- There was a lot more choice. If the process was "harder" in any way before, it was because there were far more choices. It was harder in the same way that it is generally harder to shop in the US than, say, in the old Soviet Union. Obamacare circumscribes policies such that a large package of benefits are mandated, not optional (I have to pay for mental health coverage and probably aromatherapy) and the size of one's deductible is capped.
It is also this latter difference that will make my next policy substantially more expensive. In standardizing options, the Congress standardized on the most expensive options (broadest possible benefits, smallest possible deductible).
By the way, this is not proven yet but there is probably one other way my Obamacare policy will be worse than my last one: the doctor network in my policy will very likely be a LOT smaller. We could almost be sure this would happen precisely because Obama promised it wouldn't (his promises on health care are pretty good "tells" that the opposite will happen).
Understanding "Mix": Is Flattening in Income Growth Due in Part to Geographic Cost of Living Differences and Migration Within the US?
For 20 years, before I liberated myself from corporate America, I spent a hell of a lot of time doing business and market analysis (e.g. why are profits declining in Division X). I was pretty good at it. If I had to boil down everything I learned in those years to one lesson, it would be this: Pay attention to changes in the mix.
What do I mean by "changes in the mix"? Here is an example. A company has two products. One has a 20% margin, and the other has a 30% margin, and both margins have been improving over time because of a series of cost reduction investments. But overall, company margins are falling. The likely reason: the mix is shifting. The company is selling a higher proportion of the lower margin product.
Here is a real world example: When I was at AlliedSignal (now Honeywell) aviation, they had exactly this problem. They were operating in a razor and blades business -- ie they practically gave the new parts away to Boeing and Airbus to put on their planes, because they made all their money selling aftermarket replacements at a premium (at the time, government rules made it almost impossible to buy anything but the original manufacturer's part, so they could charge almost anything for a replacement, especially given that an airline likely had a $50 million plane sitting dormant until the part was replaced). I routinely would tell managers in the company that essentially our business made money from unreliability -- the less reliable our parts, the more money we made. Because newer technology, competition, and pressure form airlines was forcing us to greatly improve our reliability (at the same time we were giving stuff to Boeing at ever greater losses), all our newer products on newer planes were less profitable than the old stuff. As planes aged and dropped out of the fleet, our product mix was getting less and less profitable.
This same effect can be seen in many economic and political issues. Take for example an argument my mother-in-law and I had years and years ago. She said that Texas (where I was living at the time) had crap schools that were much worse that those in Massachusetts, her argument for the blue political model. She observed that average educational outcomes were much better in MA than TX (which was and still is true). I observed on the other hand that this was in part a result of mix. Texas had better outcomes than MA when one looked at Hispanics alone, and better outcomes for non-Hispanics alone, but got killed on the mix given that Hispanics typically have lower educational outcomes than non-Hispanics everywhere in the US, and Texas had far more Hispanics than MA.
All of this is a long introduction to some thinking I have been doing on all the "Average is Over" discussion talking about the flattening of growth in median wages. I begin with this chart:
There is a lot of interstate migration going on. And much of it seems to be out of what I think of as higher cost states like CA, IL, and NY and into lower cost states like AZ, TX, FL, and NC. One of the facts of life about the CPI and other inflation adjustments of income numbers is that the US essentially maintains one average CPI. Further, median income numbers and poverty numbers tend to assume one single average cost of living number. But everyone understands that the income required to maintain lifestyle X on the east side of Manhattan is very different than the income required to maintain lifestyle X in Dallas or Knoxville or Jackson, MS.
Could it be that even with a flat average median wage, that demographic shifts to lower cost-of-living states actually result in individuals being better off and living better?
For some items one buys, of course, there is no improvement by moving. For example, my guess is that an iPhone with a monthly service plan costs about the same anywhere you go in the US. But if you take something like housing, the differences can be enormous.
Let's compare San Francisco and Houston. At first glance, San Francisco seems far wealthier. The median income in San Francisco is $78,840 while the median income in Houston in $55,910. Moving from a median wage job in San Francisco to a media wage job in Houston seems to represent a huge step down. If you and a bunch of your friends made this move, the US median income number would drop. It would look like people were worse off.
But something else happens when you take this nominal pay cut to move to Houston. You also can suddenly afford a much nicer, larger house, even at the lower nominal pay. In San Francisco, your admittedly higher nominal pay would only afford you the ability to buy only 14% of the homes on the market. And the median home, which you could not afford, has only about 1000 square feet of space. In Houston, on the other hand, your lower nominal pay would allow you to buy 56% of the homes. And that median home, which you can now afford, will have on average 1858 square feet of space.
So while the national median income numbers dropped when you moved to Houston, you actually can afford a much nicer home with perhaps twice as much space. Thus, it strikes me that there are important things happening in the mix that are not being taken into account when we say that the "average is over".
Of course, while this effect is certainly real, I have no idea how much it affects the overall numbers, ie is it a small effect or a large effect. Fortunately my son is studying economics in college. If he ever goes to grad school, I will add this to my list of research suggestions for him.
Postscript: This exact same discussion could apply to US poverty statistics. We have one poverty line income number whether you live in Manhattan or Tuscaloosa. I have always wondered how much poverty statistics would change if you created some kind of purchasing power parity test rather than a fixed income test.
You may be wondering under what authority the government is taking actions during the government shutdown. We had a meeting with the Chief of the US Forest Service on Friday. This is the specific text the Administration is using to justify all of its shutdown actions
(a)(1) An officer or employee of the United States Government or of the District of Columbia government may not—
(A) make or authorize an expenditure or obligation exceeding an amount available in an appropriation or fund for the expenditure or obligation;
(B) involve either government in a contract or obligation for the payment of money before an appropriation is made unless authorized by law;
(C) make or authorize an expenditure or obligation of funds required to be sequestered under section 252 of the Balanced Budget and Emergency Deficit Control Act of 1985; or
(D) involve either government in a contract or obligation for the payment of money required to be sequestered under section 252 of the Balanced Budget and Emergency Deficit Control Act of 1985.
I will leave it as an extra credit exercise for the reader to explain how this text justifies either a) spending extra money to barricade war memorials on the Washington Mall or b) closing privately-funded parks that take not a single dime of government money. All these tests have everything to do with limiting government expenditures, not limiting citizen access to public lands.
We had some delays (in part because the government is taking a holiday from the shutdown today, so everything is REALLY closed) but we file our lawsuit seeking a temporary restraining order on the US Forest Service in the morning.
This was posted by the US Forest Service outside of a privately-funded, privately-operated campground:
All the maintenance at this site, as well as all cleaning, utilities, security monitoring, staffing, customer service, etc. are provided and paid for by a private concessionaire that does not take one dime of government money. The "our ability to perform maintenance" is incredibly disingenuous, because over the course of a year likely no US Forest Service maintenance person even steps on the property. The last half of the message therefore has absolutely nothing to do with the first half. The campground is closed and not being maintained because the US Forest Service has arbitrarily suspended the concessionaires contract in an apparent attempt to make the shutdown more painful for the public.
I have been playing around with this DVD, which is a collection of high resolution situation maps from the European theater of war after D-Day in WWII. The maps are really interesting, though the interface is awful. Like something from the AOL era. I would play with this much more but it is just too kludgy.
This is probably my favorite map (click to enlarge)
Of course, on the very next day, the last great German attack on the Western Front came right out of that empty red circle.
In the software, one can zoom very deep into these maps, deeper than these images allow. So it's a shame that the interface is so bad.
PS - The Bulge is deservedly a part of American military mythology but we should remember that in many ways it was a small battle compared to any number in the East. This is one of those facts that always perplexes this libertarian, because there is no way the Western Democracies could have ever defeated Germany IMO. Only Stalin's willingness to soak up astounding losses really defeated Germany. German army casualties on the Eastern Front were nearly three times their combined casualties in Africa, Italy, France, and Benelux.
The flip side of this is that no one else other than the US could have defeated the Japanese, though again the Soviets would have given them real troubles in Manchuria. That war was more about projecting power across great distances than pure numbers. We did bravely soak up absurd casualties in short bursts. But again, the Russians were soaking up Bettio-level casualties every few hours, and sustained it day in and day out for years.
By now, readers will know that our company operates public parks and campgrounds in the National Forest without taking one dime of Federal money. We pay for the cleaning, maintenance, utilities, and staffing of the facilities entirely from the user fees paid by visitors at the gate. Because we take no government money(we actually make lease payments to the government) we have never been closed in past shutdowns, but we were closed last week as the White House overruled an early Forest Service decision and ordered us closed.
Well, here is a photo from yesterday of the parking lot of one of the recreation areas we operate and were forced to closed. Doesn't look very closed, does it?
As it turns out, yesterday the local Sheriff was concerned with traffic jams on the highway near here as people tried to park and walk in. It is a danger I warned the US Forest Service about way back on October 2 in a letter to Cal Joyner, the Regional Forester for Arizona and New Mexico (and was promptly ignored). The Sheriff forced the gate open and let everyone in.
The amazing thing I found out today, and confirmed through pictures and news reports, is that the Sheriff was accompanied by US Forest Service personnel who apparently accepted this action. This means in effect that the US Forest Service believes this site is safe to occupy by visitors without our company present to clean the bathrooms, take out the trash, monitor security, watch for fires, stop vandalism, etc. but is not safe, somehow, with us present and actively staffing the site. This obviously makes no sense and just points out how arbitrary the decision-making has been.
Starting yesterday morning I begged the US Forest Service to let us return to staffing the site (which should be an easy decision since, unlike opening National Parks, this would require zero dollars from the government) but I got no response.
We have also found numerous other sites operated by third parties like ourselves on US Forest Service land in Arizona still open. For example, the Oak Flats campground in the Tonto National Forest is still open for business. In addition, we know of at least three Arizona State Parks, including Slide Rock SP, that operate on US Forest Service land just as we do but who have not been ordered to close. I know that Fool Hollow SP operates with a special use permit very similar to ours, but unlike us, its permit has not been temporarily suspended and it is open for business.
In fact, I cannot find a single third party who operates on the National Forests in Arizona who have had their operations suspended except for the private campground concessionaires. The powerful ski associations got their operations on Forest Service lands exempted from the get-go, probably because they have a full-time lobbying staff in DC and I do not. The same goes true for BLM lands, where the BLM has not closed its campgrounds or parks to the public. And the same goes true now for the Grand Canyon NP, which has been reopened by the state of Arizona. In fact, we may be the only recreation operations on Federal land in this state that are still required to close.
Update: The Forest Service made us cease operations at the Locket Meadow campground near Flagstaff. After kicking us out, they have reopened the campground to the public (without any staff or services on site). It is absolutely outrageous that the US Forest Service believes that the campground is fine for public visitation but that our company must be banned from operating it. Clearly, the resource and the visitors are safer and better protected and better served with us there, so this can only mean that the Forest Service is for some reason arbitrarily targeting our business, rather than use of the land, for shutdown. I cannot think of any possible justification for this action. If the campground is safe for public visitation during the shutdown, it is safer for us to operate and keep clean and protected.
PS- I should say targeting private SMALL companies. Large companies with political pull seem to be getting the National Parks open where they have operations. Just like with Obamacare and nearly everything else in modern government, restrictions are passed on private enterprises but exceptions are granted to those large enough to have staff lawyers, full-time lobbyists, and who can bundle a lot of donations.
As you know (and am sure are tired of hearing about) the US Forest Service has closed all our privately-funded and operated parks on their land. These include a number of very popular campgrounds and parks in the Sedona area.
Today we got a call from the County Sheriff saying that visitors were parked all over the highway and walking into our (closed) concession areas. He said they were creating a serious public safety problem, particularly at Call of the Canyon** (also known as West Fork) and Crescent Moon Ranch (also known as Red Rock Crossing). I told him that I had specifically raised this issue about these specific sites all the way up to Cal Joyner, Regional head of the USFS in Arizona, New Mexico and parts of Oklahoma and Texas. And the US Forest Service had closed us anyway. The Sheriff begged us to reopen the facilities and I told him I would love nothing more but my contracts were suspended and I had no legal basis for doing so.
So, apparently, the sheriff cut the cable on the facilities and is letting cars into the facilities, creating even more chaos. There is no one there to monitor safety, provide security, clean the bathrooms, pick up trash, etc. -- all the things we do every day without taking one dollar of Federal money, if only the US Forest Service would let us. I am actually happy the Sheriff is giving visitors access. These facilities are particularly lovely in the Autumn. But the US Forest Service needs to send 15 or 20 people to help manage them, but that would cost them money they do not have. Or they could just let us get back to operating the sites, which does not cost them one dime.
** The West Fork of Oak Creek Canyon is so beautiful in the fall that Zane Grey immortalized it in a novel called "Call of the Canyon." The trailhead and parking area are cramped and require a lot of active management even when staffed to keep them operating safely.