Is Socialism A Real Fear?

Recently I got into a discussion with friends over what danger some of the new Democrat Congress members posed.  “Why that woman from New York wants free college education for everyone” one friend said.  “How is the country going to pay for it?”  The person added, “that woman wants to tax the rich to pay for it and that means we are going to have to pay more in taxes”.  Hmmm.

Where does one begin?

The friend making that statement probably lives in the 90th% income bracket which is about $150,000 in yearly income.  The couple probably have a pension, social security, and some income from investments.  They own a home and a vacation house.  They live comfortably but certainly not extravagantly.  Compared to average household income of $61,000, they are doing well.  So why the fear of free college?

My friend did not stop at having to pay higher taxes.  My friend quickly added, free college education would take the US to socialism.  And another friend said, “from socialism, communism was next.  And just look at Russia, Venezuela, and Cuba”  (I guess they had never visited China.)  Hmmm.

These two friends are both educated, well spoken, and otherwise reasonably charitable people.  From where could this disconnect from logic and reality come?  That’s a “foxy” question I think.

I wonder whether my two friends have thought why someone would advocate for free college education in the first place?  I wonder whether they realize that educated people are a resource just like rivers, roads, and electricity.  An educated work force drives prosperity.  In the US, unemployment, average income, and home ownership are all correlated to whether one has a college education or not.

Of course the likely reply would be, “I had to pay for my college education, so should the kids today”.  Hmmm.  I would quickly agree to that if there were options for kids to borrow at no interest the money to pay for their college education and depending upon what profession they chose or where they applied their college education, there were “forgiveness” provisions.  

In many respects, the free college education argument is a red herring with respect to the risks posed by socialistic regulations and laws.  And the connections between socialism and communism are faint if at all.  Socialism arises invariably to counter the excesses of capitalism.     Hmmm.

Most people are surprised to see how much in our daily lives is a form of socialism.  Public roads, libraries, and utilities are starters.  Social Security, the VA hospital system, and the host of consumer protection agencies are socialistic in nature.  All our discrimination laws, rent protection, and FHA loans in some way overcome excesses of unfettered capitalism and are a bit socialistic.

The question of why unfettered capitalism is not dangerous is deceptively difficult to answer.  Unfettered capitalism opens a world of possibilities for those who seek to succeed in business and accumulate wealth.   But given time, the entrepreneur becomes very wealthy and for most everyone else, life can become a little (or a lot) less good.  

In a wealthy country, like the US with abundant natural resources and protection from enemies by the Atlantic and Pacific Oceans, great wealth can be amassed though hard work and intelligence. Question… if all it took was hard work and intelligence, why would these entrepreneurs not go to the Sahara Desert or the North Pole and put their skills to work?  Capitalism’s success has a lot to do with the inherent natural resources, which in some way belong to everyone, and how these natural resources are harvested by the risk taking capitalist.  A hard working, risk taking socialist should be just as successful under similar circumstances, I would think.

But, one might ask, why aren’t socialist Venezuela and communist Cuba successful countries?

Does anyone think that if Venezuela or Cuba simply said “unfettered capitalism” is the way of the future, that life would change?  IMO, history has shown that all that would change is who the rich people were.  The poor would remain poor.  

There is no simple formula for accumulating national wealth.  Clearly abundant raw materials play a big role.  So does motivated entrepreneurs and an educated and skilled work force.  And, don’t forget “guns and butter”.  A country consumed with defending itself militarily will not have the time or ability to concentrate on economic development if it is preoccupied defending its borders.

With Venezuela and Cuba there is another factor which IMO outweigh all the others.  These countries lost their way when they cast aside “democracy”, rule of law, and free speech/free press.  Graft, corruption, and incompetent leader escape the natural consequences of their decisions when free speech and free press are suppressed.

One last observation.   Countries like Japan, Germany, France, the Netherlands, Denmark, or Canada all utilize more socialistic laws and regulations than the US.  None of these countries are teetering on the edge of communism.  And all these countries offer their citizens healthcare costs roughly 1/2 or less that the US with healthcare outcomes uniformly better.  Hmmm. 

Repeal And Replace

“Obamacare is a disaster, a jobs killer, and should be repealed at the first opportunity”, we have been told by Republicans. The Affordable Care Act is in the GOP cross hairs and all that is slowing action is January 20th and Donald Trump’s inauguration. Oh, if it were that easy.

There are various estimate for how many Americans owe their healthcare insurance coverage to Obamacare. Most reports come in around 20 million (out of about 300 million insured Americans) and a good piece of that 20 million lies in Medicaid expansions. And amongst these 20 million are those with pre-existing conditions, children under 26 still living at home, and those unable to afford insurance. So, why the great need to throw out the Affordable Care Act?

Consider the following first:

US per capita health care spending is in excess of $9,400 and in first place globally. In comparison, Germany spends about $5,400, France about $4,900, Canada about $5,300, and high cost Japan about $3,700!  Does that make you wonder why healthcare is so expensive in the US compared to the rest of the world?

Could it be with this high cost healthcare that Americans must be the healthiest in the world.   Do they live longer than residents in other countries?

Hmmm, the numbers don’t say that… Germany (81.0 years), France (82.4), Canada (82.2), high cost Japan (83.7) and the winner is US (79.3), in other words, the US spends almost twice as much per person on healthcare and ranks 31 out of 168 countries and well below other modern industrial countries.

And by the way, these comparison countries cover all residents and therefore do not need a separate Obamacare to increase coverage.

The Affordable Care Act is just part of an overall US healthcare delivery system, which includes open enrollment health insurance (individually purchased or provided through an employer), Medicare, Medicaid, Veterans Administration Health System and the Affordable Care Act.  ACA was added with the intent of closing the gap of uninsured Americans and if possible begin reversing the year over year price increases.

The underlying assumptions with ACA are two, cost will decrease and health outcomes will improve with a preventive based healthcare delivery system which would be available and affordable to all Americans, not just who can afford to pay what the market will bear. ACA, unfortunately, is still built upon a free market, for profit model. Accordingly there was no incentive for insurance carriers, hospitals, or drug companies to work at cost control or to insure all Americans. Case in point, of course, is the completely out of control greed associated with increasing drug prices.

So, once again, what is the big deal about Obamacare?

Conservatives and a wide range of special interests believe ACA represents a step along the path to “socialize medicine”. Conservatives would prefer “under” and even “uninsured” Americans in preference to seeing full coverage in a single payer, universal healthcare system as found in Germany, France, Canada, and Japan.

The collateral damage for this ideological strategy is a grossly uneven distribution of healthcare services. Those without health insurance receive the best that emergency rooms can provide and have no protection from potentially massive hospital bills.

Of course there are many questions and concerns with single payer systems. Healthcare is not free and must be paid for in some way. And abuse of any government service is always possible, if not predictable. Never the less, why would it be the case that the US should be proud to be the only modern, developed nation at ease knowing that children of some Americans will grow up without sufficient preventive healthcare when compared to sons and daughters of Wall Street executives?

Healthcare cost is probably one of the most misunderstood realities of American life. Most Americans receive their healthcare coverage through their employer. Even with co-pays, deductibles, and employee sharing of premium costs, these Americans still are hugely insulted from the true healthcare costs. Supporting the repeal of Obamacare is wholesale hypocrisy since the main benefits accrue to those most in need.

A less obvious reason to more seriously study US “cost of healthcare” is income inequality and scarcity of good paying jobs. Healthcare spending which was more in line with Germany and France would reduce insurance premiums for both individuals and businesses thereby freeing up disposable income for individuals and retained earnings for businesses. Accordingly individuals would have more left from the pay check to spend as they please and businesses would have more to invest and grow their businesses.

It appears there will be no such discussion or even interest in a single payer system.  Rather, Republicans will thrash around trying to find ways to keep the ACA benefits and make believe the extra costs do not exist.

Feel The Bern – Universal Healthcare

The odds may be that Hillary Clinton will be the Democrat Presidential standard bearer come November. Never the less Bernie Sanders should be expected to give her a run for our money and perform a national good service in the process.  For America the Clinton-Sanders contest will be best chance in years (maybe ever) to “feel the bern” about Universal Healthcare.

Sanders, who calls himself a “democrat socialist”, has already begun to talk about the absurdity of our current healthcare system (costs and not everyone is covered) and in his efforts to calm fears of socialism points out in clear and unambiguous terms why the American “private enterprise” healthcare delivery system is antiquated, not to mention unaffordable

Sanders speaks of nothing new. Anyone who has read about healthcare knows that most of the developed countries around the world have healthcare outcomes as good or better than the US. In addition to excellent health outcomes, other countries offer full resident coverage and as a nation, spend one half or less than the US. These are staggering statistics.

In the past when someone raised this comparison, the public was told universal healthcare is socialism (and socialism is not the American way). Sanders presents a wise, grandfatherly image and tells Americans what they should have been able to figure out themselves, and not offend them. Hmmm.

Even if Sanders does not win the nomination, the more light he can throw upon the inherent unfairness of American healthcare and the stupidity of paying so much more than is necessary, could plant the seeds of change.

The irony might be that the GOP could propose a universal system to replace Obamacare and offer Americans a real reason to vote for them. For a party which can’t leave women alone to make their own reproductive health decisions or deal with a comprehensive immigration reform or show interest in something other than tax cuts for the wealthy, promoting universal healthcare… hmmm, not likely.

Media Fiction Until There Are Two

The primary season leading up to the 2016 Presidential race seems to be a media fiction bonanza.  The media seems quite content to embellish any story so as to attract more readers.

While the more than two dozen declared 2016 candidates try to out do each other and garner voter attention (and deep pocket donor support), the media are beavering away trying to build excitement where banality exists, trying to build tension where laughter might be more appropriate, and trying to puff up importance where “so what” comes closer to the mark. Take the continuing saga of Hillary Clinton and her private email account. Did she or didn’t she?

The breathless question is whether Hillary sent or received classified emails on her private email device. Hmmm. Seems pretty straight forward to me, either she did and there is evidence to show it, or she didn’t (that comes from a lack of evidence). It should not count, for reasonable people, if an email is later classified and now its possible to say “gotcha”.

Or, re-litigating the Iraq war, the surge, and the eventual withdrawal of US combat forces is tempting, especially if your point is President Bush or the GOP made a mess of things, or if the opposite is the case where clearly (in your opinion) Barack Obama pulled US troops out too soon (even though former President George W Bush had signed the agreement and set the date).
The problem of course is that what has happened and what (in the minds of GOP candidates) should President Obama should have done has happened. All of it did not need to have happen, had “W” not invade Iraq.

Unless a candidate is willing to say, “with what I know now, I would have still invaded Iraq”, there is no intelligent conversation possible. But it is oh so tempting to catch a candidate unprepared for the “what would you have done” question.

Cutting taxes, cutting government spending, and of course, increasing defense spending simply can’t be said enough by our candidates. There are truck loads of great questions the media could put forward to those candidates but we don’t hear or read much.

The country has a crumbling infrastructure, is lagging in education (despite spending per capita more than any other country), has an urgent guest worker need but can’t seem to find the front door, has a readiness to trash “Obamacare” (Affordable Care Act) which has resulted in more Americans having healthcare insurance than ever before (sound like a positive to me), yet the real health care problem is still alive and thriving. US healthcare cost is the highest in the world, delivers no better or worse health outcomes, and still does not insure everyone. Where is the media on this easily documentable problem?

The choice of healthcare model has important influences on a host of other US “problems”. Medicare and medicaid costs more than what is collected in payroll tax revenues.  This, in turn, puts pressure on other discretionary budget items. For example, how can one discuss Defense spending when (with no tax increases) the money for defense must come from other important (IMO) line items.

Changing healthcare to a single payer system is very easy to say but will be very difficult to make happen. First, current healthcare providers (hospitals, doctors, drug companies, and medical device makers) do not want to take less revenue. Second, these providers will shamelessly employ lobbyists and spend gobs of money to influence law makers and confuse the public. And, third, law makers and media advertising departments will also not wish to receive less money from donations and advertisement purchases. Hmmm.

Healthcare, education, and security spending are three big ticket areas where candidates could speak long and passionately about how to reform these national programs where the outcomes remain the same or improve but the costs drop dramatically. In this manner, money could be found for infrastructure work which could help drive productivity (read jobs) gains.

The media, rather than creating excitement where there is none, could ask penetrating questions about these areas, The media could push back at candidates who speak of “block grants” (like in solutions for Medicaid deficits) as a method and insist on knowing what the candidate would do at the Federal level. Failure to answer should mark the candidate as unimaginative.

Not to be overlooked in questioning all candidates, those who intimated “tax the rich” should be just as sternly criticized. How can the country reform what we have, delivering the same output, but at a fraction of the cost. After that, and only after that should taxes be seriously entertained.

So will we have more media fiction or will we have media purposefulness?

Hillary’s Free College Flyer

Democrat Presidential candidate Hillary Clinton has proposed that college education should be free, or at least no one should incur debt when pursuing the first four years. Hmmm.

When one examines the current state of higher education, there are some glaring short comings which smack you right away, For example,

• Many Americans are racking up $100,000+ personal debt to attain undergraduate and graduate degrees.
• On top of that, many of these debt loaded graduates are unable to land jobs and if successful, too often these jobs do not pay enough to live and make debt payments.
• And worst of all, many students run up huge amounts of debt only to drop out of school without a degree.

Not a pretty picture.

The Progressive answer seems to hinge upon the Government somehow shielding students from the debt burden. Advertised as “free” education, we are once again pursuing the preverbal free lunch. Nothing is going to happen with this proposal.

Free college education is certainly a government service which voters could decide was a good thing. Free public schools and universal health care (single payer) are two other government services voters have or could decide were essential. Reality, however, will demand that “government” deal with four associated issues,

• nothing is free
• tax revenues must be raised to cover the actual costs.
• there needs to be a control method to keep the costs of these services from skyrocketing. (Any business will seek to expand its offering and the selling price that goes with the offering. When the government is the “payor”, there is often little reason not to raise the price as much as possible.)
• It should not be overlooked that any such “free education” system also needs some method to ensure the product delivered is “as advertised”.

Hillary’s “campaign appealing” suggestion has the potential to (1) tax a minority of Americans to help educate many Americans, (2) unintentionally increase the cost of education for all Americans, and (3) still deliver a substandard product or one simply unsuited for gaining “good” paying jobs in real life. Is that a trifecta?

Hillary’s “free college education” pledge may have long term benefits but not without provisions that control the prices college charge and ensure the education product is both appropriate and of consistent quality necessary to obtain a “good” job.

Pragmatically, it seems funding must ultimately involve a broadly based tax base where each person using government funded education pays too (taxes or maybe community service) so they know they are covering the “free education” for the next person.

Sadly, a GOP proposal for “free college” education would be suspected as disingenuous (probably a proposal never meant for implementation or if sincere, meant only for certain groups).  On the other hand, a Democrat proposal would be (should be) suspected of being naively formulated (good in intent, poorly thought through for unintended consequences).  Hmmm.

That’s politics, I guess.

2016 Presidential Race – What’s Important?

With 21 announced candidates for the Democrat and Republican Presidential nominations, once again we are reminded of what a great job POTUS is. These 21 Americans are willing to spend millions (of other people’s money) and rendered themselves naked though constant scrutiny from the media. Truly their lives no longer belong to them as they are steadily sucked into the public light. Why do people go down this path?

The candidates usually offer in one form or another the message that America has been good to them and they now wish to give back. Some candidates dress this basic statement in a dire description of today’s America. With a serious look each candidate tells America that they are the most qualified to become commander in chief and lead Americans towards the American dream. Hmmm.

None of the candidates, however, relay how much money they are spending, or at what type of expenses they are throwing their money at. Candidates almost never reveal the sources of their campaign donations and absolutely never discuss what they have promised (or what implied policy choices they will make) in order to gain a donors’ money.

And candidates leave no hint of how much time they spend on raising money versus how much time they spend thinking about policies. Hmmm.

The GOP hopefuls have been particularly vocal in the early primary stages. When not wrapping themselves in the flag, many have made it their business to tout their own qualifications by tearing down those of their competitors.

I wonder whether these candidates think that in the unlikelihood they were to become President that they could conduct foreign policy by pointing out how short sighted the French economic policy might be or how meager the effectiveness of British military efforts?

Sooner or later, all the candidates will address subjects like the Affordable Care Act, Medicare, Medicaid, Social Security, Defense Spending, Balancing the Budget, and keeping US interests abroad well managed. The GOP will see domestic issues as costs and foreign issues as national security concerns. This generally means less domestic services and more defense spending.  Democrats will propose robust support of domestic programs if not increasing their coverage and cost.

The GOP will shrink costs without revealing the people and places which will obtain less while the Democrats will sing the virtues of more without confirming the “more” will also cost “more”.

More fundamental discussions such as really reforming healthcare and lowering the amount of money America spends will be absent.  Making healthcare available to everyone (as in Europe) could have profound impacts upon the Affordable Care Act, Medicare and Medicaid. The two dozen or so healthcare models around the world deliver better health outcomes than the US at about one half the cost. If America put its mind to it, a Universal Healthcare System would eliminate the need for the Affordable Care Act, Medicare, and Medicaid themselves.

Investments in infrastructure, education, and poverty reduction could enable America to become more competitive on a global stage and in doing so, provide better jobs for more Americans. More competitiveness will translate into a rebirth of the American dream. Hmmm.

So, when we hear candidate “X” speak of fixing Medicare by vouchers or Medicare by block grants or the Affordable Care Act by eliminating mandatory enrollment, you can be sure this candidate is really about rationing these services on ability to pay. This candidate has no interest in how to provide the service in a more cost effective manner.

If each of us had a magic wand, and when one of these 21 candidates began to speak we could raise a hand and say “stop, I have a few simple questions to ask”. For example,

• How much time are you spending raising money
• Who are the major contributors to your campaign
• What have you promised or implied in order to gain this money
• How can healthcare be made available to all Americans in an affordable manner
• How can American workers aspire to better paying jobs
• Where should America invest in order to improve our national productivity
• How should any improvements in national productivity be shared

In such an imaginary discussion, we would quickly separate the pretty face and slick one liner candidates from those of substance.  Hmmm.

Anyone Home?

The dust has hardly settle on the Supreme Court decision affirming one more time the Affordable Care Act. Never the less, the US healthcare delivery system’s wheels seem to be coming off the cart.

Two huge signals occurred this week which should inform the simplest of minds that the current US healthcare delivery system, yes Obamacare, is obsolete and needs serious modification. Hmmm.

The Affordable Care Act, to its credit, fixed the immoral and unethical (but not illegal) practice of US healthcare insurance companies who would deny healthcare coverage to individuals.  Their targets were individuals who used “too much” healthcare services, or who had “pre-existing conditions” and might use too many services. The previous system also allowed individuals to avoid insurance all together and simply wait until they needed care and then visit a Hospital Emergency Room (and pass the cost onto everyone else). ACA fixed those faults and added an estimated 30 million more Americans to the healthcare rolls.

This past week financial news reported Aetna and Humana will merge operation and Cigna and Anthem were in discussions about merging. If these deals go through the big will have gotten bigger.

Now, all by itself, this merger news might not be that interesting. But there is more. Across the country, health care insurance companies are requesting/announcing huge rate increases (20-40%!!!). These companies claim that the new enrollees (thanks to Obamacare) were sicker than they thought and now there needs to be relief in the form of higher premiums.

Hmmm. And again why do the companies want to merge and get bigger in a business where they claim they are losing money?

The US healthcare system is structurally defective if one assumes healthcare should be available to everyone. The current system, including Obamacare, in essence separates the population into high risk and low risk pools. The high risk Americans cannot afford the premiums which unregulated hospitals, doctors, and drug companies want to charge. The consequence will be either poorer healthcare or the government will need to pick up even more of the tab. The winners will be insurance companies and the providers of medical services.

All of this might be understandable if it were not for so many other successful healthcare delivery models around the world which produce healthcare outcomes equal to or better than the US, insure all residents, and costs about half as much as the US spends.

Mergers and rate hikes could not be a louder signal that ACA has not solved the fundamental US healthcare problem.