Archive for March 2010

Prime Movers

March 31, 2010

President Obama has signal that education is a key Administration initiative. His goal is to enable the US to graduate more college trained students than any other country. Education is believed to be a critical route for anyone to exit poverty. President Obama, however, sees other objectives.

Providing everyone with health care protection is also a key policy of President Obama. It is incomprehensible for some why anyone should be denied coverage, but never the less, tweaking the current health care delivery system with the recently passed health care reform is a giant step towards that goal. Good health is a noble goal, but that is not President Obama’s only goal.

Weaning the country’s dependence upon imported foreign oil (and all the financial and political consequences) was an Obama campaign pledge. His recent announcements on opening the discussion around new nuclear power plants and oil exploration off the eastern and Gulf of Mexico shores, is a clear step in that direction. President Obama, however, has other goals in mind with these initiatives too.

The President appears to have considered long and hard about how to make the US competitive again in a world where base labor rates are out of reach for the US. South America and Southeast Asia can produce manufactured goods requiring large amounts of manual labor far more cheaply than can anyone in America. Import quotas and other trade restrictions are a dead end solution if intended to exclude goods produced with lower cost labor. President Obama seems to have concluded that the US must get more productive if it wants to revisit the glory days following World War II.

  • Education for all citizens is a great starting place. It can level the playing field between all residents.  Access to education is morally and ethically the right thing to do.  It may, however, not be just about equality.  An educated population can also do things no one can imagine today. That is what innovation and productivity are based upon. The President’s goal is to generate a society that produces economic growth and, as a natural by-product, higher tax revenues.
  • Health care to many seems an obvious right. Health care, however, goes far beyond. Universal coverage is the route to the lowest cost medical expense. Prevention and proper consumption of health care services are key steps in controlling American health care cost, and President Obama is headed that way. Lower health care costs are essential to gain partial control of the cost side of the budget deficit.
  • Expanding the sources of energy will enable the US to avoid some level of dependence upon foreign oil. Coupled with an alternate energy component and a robust green program, the US can reduce the trade imbalance and protect the environment. Expanding the US sources is a first step in capping the outflow of money and the long term incalculable cost of pollution (such as clean up, future fixes, and increased health costs).  All of this will have positive impact upon the budget.

In short, each of these feel good initiatives have a direct connection to other goals. In total, all these other goals are consistent with growth, a stronger American economy, and a balanced budget.

Connective Tissue

March 30, 2010

The surest route to failure, it is said of great leaders, is to try to do too many things. In our complex world, many government policies and initiatives end up have unintended consequences just because that is the way things are. From day one, President Obama has unveiled one initiative or policy statement after another. For many months, there was little to point to as success.  Obama was said to have tried too many things.

Guantanamo remains open and its end is not in sight. The Palestinian-Israeli conflict has seen little progress. The Iranian nuclear arms program seems as viable as ever. The withdrawal of US troops in Iraq, while on schedule, is still subject to the outcome of the recent Iraqi elections, and these results are not clear. At home the economy has stopped getting worse but for most Americans the economy is certainly not growing. Banks remain as unregulated as they were when President Obama took over.

There is, however, some rays of sunshine peaking through. Health care (read insurance) reform has been signed into law, and there has been a major agreement with Russia on nuclear warhead reductions. Republicans have chosen a very risky strategy of saying “no” to everything. In effect they are reinforcing in the minds of so many Americans that government does not work. The risk for Republicans is that they will be identified with main reason Government does not work, and this may benefit Democrats in the end.

On a different front, the subway suicide bombings in Moscow have sent a strong message to both the Russia and Chinese Governments. The message says, “these bombs were plastic explosives, but they could have been nuclear”.

The Obama Administration may soon be seen as having set out attractive deck chairs from day one of his term. Although the chairs have gone empty for quite some time, the chairs were positioned well (pragmatic and internally consistent), and will be appreciated once occupied. Both China and Russia, from their own national interest perspectives, have good reasons to cooperate with other nations including the US in ways that eliminate or significantly reduce armed conflicts and the spread of nuclear weapons. President Obama, from day one, has endorsed an open dialog with other countries without preconditions.  He has created an atmosphere where there is a chance that some yet to be foreseen development could be addressed productively. On domestic issues, Obama has pushed for legislation that rights clear wrongs and will be seen as such with the passage of time.

Progressive pragmatism wins over rigid ideology given enough time (that is when the spin is spun and the facts are clear).

Swing and A Miss

March 29, 2010

Palm Sunday was the first game in the Easter Week series. The home team, the Vatican, stepped into the batters box. Their top player, Pope Benedict, went to the plate. He took a deep breath, stared at the anxious public, took a swing and missed.

The Pope seemed oblivious to the public relations, if not ethical and moral dilemma facing the Catholic Church. In at least five major countries, there are front page reports which all sound the same. Priest molests child, local church ignores and ultimately transfers the priest, priest does it again, and church tries to silence victims while stonewalling the police. In at least three instances, the line of authority (and need to know) passed up to Pope Benedict (then Cardinal Ratzinger).

Good work is usually rewarded. The Catholic Church ultimately rewarded Joseph Ratzinger by naming him Pope. But what was the good work? What was the example and “tone at the top” that should be held up to all people, especially catholic believers?

It seems that stonewalling and denial are the tones preferred by the Vatican leaders. That is a powerful message to send at Easter which otherwise is a time for forgiveness and renewal.

Maybe the Pope does know better. Maybe irrelevance is preferred over renewal because renewal will undoubtably involve cleaning the Vatican house of old, all male leadership. Without a clean broom, you can not expect to rid yourself of vermin.

When Morning Comes

March 28, 2010

It may not seem like it but Americans are living it up in a huge all night party. There’s plenty of food and drink, and the band is playing without breaks. No one seems to be noticing the time, and one must wonder what they will think when the sun begins to rise.

Some may think they will just sleep it off. Get some shut eye and when they wake up it will be party time again. Others are hoping there won’t be another party for a while so they can rest their bodies, not to mention get the place cleaned up. And still others just do not think about anything.

The “party” is metaphorically our nation budget and its companion national debt. It is almost surrealistic to listen to our Congress members discuss or debate any piece of legislation. Congressional deliberations are totally void of any realistic consideration of how to pay for what Congress might pass. It makes no difference whether Democrats or Republicans introduce legislation. Everything is free, or so they seem to make it sounds.

Wait, you say, Republicans are for fiscal responsibility and always seek smaller government. Well, let’s forget the George W Bush years where the federal charge card was the card of the day. You say wait, now the Republicans really mean it.  So tell me what their plan is.

Current law projects about a $10 trillion increase in the national debt over the next 10 years. Of that $10 trillion, about $6 trillion stem from entitlements that existed during the “W” years (including the addition of the unfunded Medicare Part D), about $2 trillion accumulates from the “W” tax cuts (versus the level of Bill Clinton’s term), and about $ 2 trillion result from President Obama’s activities around stabilizing the banks and stimulating the economy. So what is the Republican’s or the Democrat’s, or for that matter, anyone’s plan for dealing with this hole?

The party has been non-stop.  Morning, however, will come.  Congress members can still huff and puff and debate colorfully, and then pass whatever, and put it on the charge account making the debt even greater. Just imagine, though, when there is no more room to charge. Just imagine when all of us have to clean up the mess. Just imagine when the party is over.

Back Together Again

March 27, 2010

It was actually satisfying to see John McCain and Sarah Palin on the stage again yesterday. Following McCain’s defeat in the 2008 Presidential election, McCain never once bad mouthed Palin who had proven to be all show and no substance during the campaign. McCain never took the opportunity to throw her under the bus.

Yesterday was pay back time.

McCain is in a tough primary battle against ultra conservative J D Hayworth. The prospects of McCain winning are in question because of all things, McCain is viewed as not conservative enough.

So Ms Tea Party agreed to come and make a campaign appearance with McCain (or is it McWho?). It might as well have been Oprah. Palin was dressed in a black “motorcycle-ish” jacket and treated the friendly crowd to humorous one liners after another. It was really show business and Palin was the star.

It has been sad to see McCain groveling for right wing votes when the Country desperately needs fiscally conservative, straight shooters. McCain’s career has had a number of moments where he has acted on conscience and voted moderately. Just as Mit Romney went to the dark side in hopes of winning the 2008 Republican Presidential nomination and totally lost the nomination and his credibility, the same fate could await McCain.

None the less, it was satisfying to see that loyalty and class on the part of John McCain repaid by Palin. For sure it did not hurt Palin’s star power and only time will tell if it helped McCain.

In the land of 30 second “he’s my good friend” sound bites, it was nice to see a genuine payback.

Connecting the Dots

March 26, 2010

On the eve of the passage of President Obama’s historic health care reform (read insurance reform) and since, there has been some bizarre behavior by elected officials and some elements of the general population. The leading actors have been members of the Tea Party and the fundamentalist anti-abortion coalitions. While it is risky to trust any politician at his word, neither supporters of the bills passage, or opponents have leveled with the American people on health care.

The anti-abortion opponents should be thoroughly ashamed of themselves.  Their opposition starkly demonstrates the lunacy of their overall argument.  They were counting fairies on the head of a pin while they could have been supporting provisions that enabled more women to carry a baby full term.

The Tea Party opponents, however, may have an important objection even if they did not articulate it clearly.

The major omission by both sides has been how seriously the previous health care delivery system was underfunded and how certain it was to bankrupt the country. The previous system was on a path to exclude more and more Americans while “passing on” higher and higher premiums. Health care must be paid for just as any other public or private service.  The passed health care reform is on the same track for bankruptcy too.

Most of the worried opponents believe that they, personally, will pay for health care for others who are too lazy to work. Some of these people are having a hard time meeting all of their needs already, so the prospect of giving Uncle Sam a little more brings on “tilt”. People such as these are putty in the hands of special interests and politicians whose primary goal is to get reelected.

The opponents who demonstrated aggressively are not intellectuals who believe that necessity drives innovation and productivity, and when the masses are satisfied with government provided services, they will cease to work. Rather these opponents are mainly working types who do not see the American dream as easily in reach as they had been lead to believe.

Health care costs too much, both in an absolute measure and in a comparative measure versus all other modern countries. While there are many reasons, two of the reasons are that (1) some Americans use too much health care and (2) there are no incentives for the overall industry to reduce its costs.

The American dream is more about the ability to get a “good job” and have the means to raise a family like we see on TV. Here again there are many reasons why this picture is not so clear. Two key reasons, however, are that (1) everyday services, like education, cost too much, and (2) the global standard for wages is not high enough to support some Americans’ interest in private schools and university education for all.

Most of the more vocal opponents are free marketeers. Ironically it is the free markets that set wages (and salaries) and with South Americans and Southeast Asians willing to work for substantially less than Americans, goods produced by that labor will be more competitive in our market than American made goods.

That is true unless America focuses on productivity and innovation.

Being against health care reform is not the answer for how to balance the budget, or to achieve the American dream. America first established its wealth versus England and the rest of the world by producing useful goods at attractive prices. America was more productive than Europe. Our politicians must refocus and strategically think about how as a nation, we can be more productive.

The Tea Party has it wrong, but maybe their noise will awake the rest of us.  The anti-abortion support simply have it wrong.

Toyota and Rome

March 25, 2010

It is not new information that public “for profit” corporations and private “for profit” churches have a lot in common. Toyota seeks to save people time by providing affordable transportation. The Roman Catholic Church seeks to save men’s souls and lead them to the mythical next life. You might say that these missions do not seem much alike.  How are they alike?

Stop for a moment and think what else Toyota is about. They provide affordable transportation for only one reason, profit. Centuries ago, the Catholic Church learned that it could not survive unless its operations earned a lot of money and even more importantly sent a lot of it to Rome. In and of itself, making a profit is not bad. Problems arise when the need for profit out pace the main purpose any organization has for existence.

Toyota is now caught in an embarrassing product defect problem and the inevitable question, “what did they know and when did they know it” is staring them in the face. To make a mistake, even a serious one is human. To make a mistake, deny it or worse cover it up, is a serious ethical and moral breach.

Toyota appears to have been tempted to fix the problem ‘“quietly”, without telling the public. Their motive was certainly to first protect the public and then to contain the bad news so their sales of new cars would not be hurt (read so that they could make the most money they could). So far in the investigation, there appears to be no indication that Toyota was not serious about fixing the basic problem.

Rome, however, has a much different problem and does not seem to realize it. In many different countries, catholics have come forward and disclosed sexual abuse at the hands of priests (and in some cases nuns) while they were children or adolescents. Reports indicate that when church officials learned of these allegations, they immediately transferred the offending priest, thereby “fixing” the problem. When the offended party continued to protest, quietly the church arranged for payments in exchange for silence. Clearly this type of payoff is not intended to fix any basic problem.

Rome story gets even worse. As reports grew, higher and higher church officials were involved. Transfers and “counseling” were approved by very senior officials. In addition, senior church leaders refused to cooperate with public law enforcement except when confronted with a subpoena. It now appears that the current Pope was well aware of this problem and had failed to act while a senior official in Germany.

In corporate life, there would be no option but for the most senior leader to resign and accept responsibility (even though he may not have directly participated). The corporate leader “sets the tone at the top”, and actions speak louder than words.

But the cover ups and the lack of taking responsibility is not the basic problem the Catholic Church has missed. Rather, haven’t they asked the question of how this child abuse could have happened in so many different countries and cultures? Have they not asked why anyone whose stated goal is to shepherd the parishioners into the mythical next life safely, could become a priest or nun and then abuse the power of their office and take advantage of the young? Have they not asked why their leaders were not outraged and moved to expel these criminal actors?

The basic problem the church is overlooking is who their leadership is. They are all men who were coerced into celibacy and are now living unnatural lives. Their leadership is picked from within and must carry some of the same traits to the highest levels.

Diversity, of course, contains the answer. Female and married couples as priests are a first step. But then you have to ask the question, why would the current church change? How can an all male, celibate organization suddenly change? And, maybe the real question is “why care”? Why not let market forces take their natural course and let the empty pews (just like empty automobile showrooms) speak for themselves.

Repeal and Replace

March 24, 2010

Someone stayed up late recently in order to give Senate minority leader Mitch McConnell a sound bite that almost makes sense. Mitch, just like Senators Fluster and Bluster, stood tall and promised Americans that Republicans would “repeal and replace” the health care reform just passed by Congress.

Giving him the leeway that he is in fact a politician, and politicians are known to say a lot that sounds important and not mean a word they have said, McConnell’s sound bite really could forecast the future of the Republican Party.

At the heart of health care reform has been the notion that access to basic heath care is a right of all Americans, just as it is in all other modern industrialized countries. Our health care system had denied or excluded basic coverage from some 35 million people, and is still the most expensive method of providing health care in the world (and not by a little either). So the question arises, what do Republicans mean when they say “replace”?

Do they mean they will propose a comprehensive plan to provide access to health care for all Americans? If not all, then which ones and why just those? If they do propose to provide access to health care, then how do they propose it be paid for? Do they propose “borrowing” like when they passed Medicare Part D unfunded, or when they started the Iraq and Afghanistan wars without budgeting for them?

Republicans should be quite worried these days about their leaders. Leadership in the Republican Party is now about tactics and not broad goals and strategies to achieve them. Being the most generous to Republicans that I can be, I would say they seek a world that ended in the 60’s.

It is not terribly clear that Democrats have answers for these pressing questions either. Democrats, however, have stepped up to the ball and said basic health care is a right. This position reflects not only ethical and moral high ground, but it also mirrors what the rest of modern countries have done. To that extent Democrats seem more in line with a path forward more similar to what other countries have found as an acceptable compromise.  Never the less the question of bringing health care costs in line with what the country can afford remains a huge challenge for Democrats too.

So the question for Mitch, or Senators Fluster and Bluster is, “replace with what?”

Government’s Size

March 23, 2010

Just as we talk about a man’s suit measurements or a lady’s dress size, the terms “large or extra large” is also applied to the size of our Government. Of course they are quite different in nature, but the corrective action sounds eerily the same for suits, dresses, and government. Just say no, cut out the fat, and trim down.

What is fat, however, has little agreement amongst most Americans. Farm subsidy for people living in New York City are absolutely necessary for some while building airports no one needs is just as critical to others. Neither of these, while unnecessary, are the real fat of Government.  Fat comes from the creation of “life time” jobs for people (salaries, health care, and retirement benefits) administering programs that are generally viewed as useful or even necessary.

In the private sector, the free market tends to take care of “fat”. If a business does not stay relevant and competitive, it soon is out of business. In Government, once something is law, it is as if it was chiseled into stone. But is “fat” the right word?  How about “wasteful”?

I would suggest we look at what Government is doing and whether we need to spend that much. For example, the broad category of “Security” as submitted in President Obama’s 2010 budget was just short of a trillion dollars. The largest piece of that is the Department of Defense when the US spends more than all other nations combined and ten times more than Russia who is number 2. Why?

There are many special interests (like the defense industry) who drive the national defense bandwagon. There are the States and Communities where these jobs are located who recognize the enormous redistribution of wealth these jobs represents. There are the right wingers who just like guns and do not even consider how much is enough or how much is too much.

Recently, thanks to the collapse of the financial sector at the same time our economy entered a recession, our Government has spent mightily on “toxic assets” and jobs creation. Whether it is security, jobs, or the banking system, this is wasteful money that could be spent on investing in America’s future, or simply not spent.

Another huge Government expense is social security and health care.  The recently passed health care reform has been criticized because it is alleged that Government will now be responsible for 27% of GDP (instead of 25%). This is misleading in the sense that health care is still solidly performed by private, for profit doctors, hospitals, and drug companies. Never the less, the hand writing is on the wall.

While this reform is a significant improvement, it does not tackle cost in any meaningful manner. The train is still headed for a European-like system where Government will need to become the single payer, or write the rules about how not for profit private insurers will pay the bills at prices already set by some national process.

As the US moves forward, life will be about choices. Some of those choices will be hard ones and we have little experience recently at that.

The Morning After

March 22, 2010

In what can only be described as either a victory for the world’s greatest democratic process, or the sorry output of a corrupt, incompetent, and mean spirited Congress, never the less, the health care reform bill passed the House of Representatives yesterday and is destined to become law shortly. Which one is it?

As reforms go, it probably falls in the middle. As for what the Country needed, it is woefully short. But in the perspective of change, it is a giant step towards universal health care and bringing the US into the modern world.

Imagine for a moment that Congress had passed instead a reform bill doing away with all subsidies for health care. According to some, that would have been the right path for free enterprise and libertarian freedom. So there would be no employer provided health care, no Medicare or Medicaid, and no government supports of any kind. Everyone could choose for themselves whether they would purchase insurance, and every insurance company could set its own rules on what it would cover. This is America at its “free-ist”.

In this new free world, each household would be in the market trying to find coverage for themselves and their children, if they could afford it. Seniors would get to decide between food, heat, or medical insurance, if they could afford or get it. The truly poor would simply have to get used to going without any coverage since even Emergency Rooms would be under no obligation to provide care. Pretty picture?

So you might say, let’s add back some of the government support. Employer provided insurance seems logical (even though it is a tax in another name). Medicare and Medicaid seem necessary because Gramma shouldn’t be forced out of her home in order to pay for health care. And it seems cruel to punish some children because their parents are profoundly poor.

But why would you stop with just these subsidies we have known for years?

The cost of health care, before the passage of this bill, was already out of control. It will continue to be out of control until there is true health care reform. The good news is that when the next health care debate arise, the question will be how to reduce and contain costs, and not who should be covered.