The Elusive Palace of Wisdom

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Perhaps this would be a good time to summarize the many roots of America’s financial malaise.  While most pundits bemoan its symptoms, they tend to shun its root causes.  Symptoms include the high costs of gasoline, air fares, baggage fees, electricity, college tuition, medical care, cars and food.  Other symptoms include massive national debt, growing instability of the bond market (including Treasuries), and a plateauing stock market.  Why is this happening?  After a brief survey of blog history, here are my conclusions about root causes.

Medical care.  The costs of medical care are disproportionate to the benefits.  While of generally high quality, our health care costs roughly double that of care in countries like Canada and Finland for a similar result.  The reason?  Patients have no “skin in the game”, i.e., no incentive to shop for low cost.  The elderly and the poor are covered by Medicare and Medicaid and more than a third are content to shun medical insurance and rely on emergency room care, bills for which mostly go unpaid.  The medical care problem is so large that the national debt problem and the budget deficit problem can not be solved without addressing it, and yet the electorate, and hence the pols, are unwilling to face the necessity of dealing with it.  Democrats failed the people when they passed the ACA, an otherwise admirable bill, without addressing the cost issue.  They were essentially spoiling their constituents like children by so doing.

Housing.  Far too many mortgages are still underwater and homeowners are walking away from their payment obligations.  How did this happen?  Congress catered to public demand for liberal regulations that enabled extremely low or zero down payments while at the same time, both GOP and Democrat administrations were complicit in permitting the bundling of mortgages into salable “instruments” which hid the risk element.  It was a failure of government oversight and regulation enabled by popular self-indulgence (more child-spoiling).

Education.  College students are paying far more than they should for a product of increasingly dubious value.  The college educational system operates as a virtual monopoly.  With the complicity of state and federal pols, it uses limited accreditation to punch tickets and issue diplomas, often without meaningful standards (exceptions perhaps being with engineering, some sciences and medicine).  It is an incestuous industry, selling graduate degrees also to themselves (teachers), as though multiple courses could improve inherent teaching ability.  Increasingly, college courses are taught by TA’s while grade inflation is rampant.  No objective measure of educational quality exists.  Although the industry touts their product as essential for getting good jobs, more than half of recent college graduates are currently living with their parents because they can’t find jobs.  Not all the fault of this is due to the Great Recession – part of it is that college has failed to properly equip students for the workplace.  The massive size of student debt has now exceeded that of credit-card debt.

Nation building.  The cost of rebuilding Iraq and Afghanistan will probably top One Trillion dollars before we manage to disentangle, providing we do.  And the real horror is, it might have all been wasted.  The jury is still out.

Energy policy.  We don’t have one.  Wealth has been flowing out of America to OPEC and its kin (like Gabon) for decades.  While third-world people languish in poverty, their oil-rich leaders (like Gabon president Bongo) lead life-styles of disgusting luxury.  The American electorate has been unwilling to sacrifice in the short term to be free from this heavy burden in the long term.  It could have been done through tax policy.

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Government size.  It is way too large.  America, already having too large a federal government, was scared into increasing it still further by 9/11.  The creation of the Department of Homeland Security and the powerless Directorate of National Intelligence simply added unnecessary and very expensive layers of bureaucracy that probably made government less rather than more effective.  The Education Department is another failure, in my opinion.  No Child Left Behind has degraded education by placing testing above quality.

Immigration.  America needs cheap labor to harvest crops, make beds and do basic muscle jobs.  Every economy is a pyramid with the affluent at the top.  Without a broad base at the bottom, everyone suffers, and yet we have allowed xenophobia and demagoguery to keep us from having a sensible immigration policy.  That was on full display during the last presidential election when John McCain unforgivably abandoned his previous position on immigration reform.

Tax policy.  The George W. Bush tax cuts have been a failure because they pushed past the point where trickle-down no longer balanced revenues.  Current GOP intransigence on taxation insists on rewarding the wealthy few percent at the expense of the rest.  Trickle-down is a meme of partial truth, one that fails at the low extreme and that is where the economy is now.  Even worse, the black-market economy is enormous, allowing myriad lapses in proper tax collection.  Some countries have successfully repaired their taxes, but our Congress clings to the Frankenstein’s Monster tax code as a source of political power and corrupt influences.

Culture.  In America, success is defined as more and bigger.  More stuff, bigger houses, cars and boats.  Is this the way it should be, or should we have learned differently in, well, college for example?

The road of excess leads to the palace of wisdom.  — William Blake

But, how bad must it get before wisdom comes?  What leader will have the courage to tell us the truth about the root causes of our problems?  I’m still looking.

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About Jim Wheeler

U. S. Naval Academy, BS, Engineering, 1959; Naval line officer and submariner, 1959 -1981, Commander, USN; The George Washington U., MSA, Management Eng.; Aerospace Engineer, 1981-1999; Resident Gadfly, 1999 - present. Political affiliation: Independent, tending progressive as the GOP recedes from its Eisenhower roots.
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18 Responses to The Elusive Palace of Wisdom

  1. sekanblogger says:

    Ron Paul is standing up and telling many “truths”, but I don’t believe that a purely libertarian philosophy is the path out of this mess. In fact, I believe it would just lend itself to more “self-will run riot” especially from more affluent Americans.
    The black-market economy, which I prefer to call guerilla capitalism, is thriving, The millions of people who can’t or won’t participate in the lawful economy are mostly doing this for survival. Hence, the illegal immigrants and the “day-laborers”. I will not blame the immigrants for this. If I were from Mexico, and my family was starving, what kind of a man would I be if I didn’t even attempt to find work, even illegally?
    The medical/insurance lobbyists have sure done well keeping the real statistics out of the MSM, huh?

    No answers from me, I’m just a mediocre blogger who works 2 jobs trying to have the necessities my family requires.

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  2. Pingback: The Elusive Palace of Wisdom (via Still Skeptical After All These Years) | KANSAS MEDIOCRITY

  3. writerdood says:

    Good post. A lot I agree with here. Resolution? Not forthcoming from either party at this point. Extremism is killing us on either end.

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    • Jim Wheeler says:

      I agree, writerdood. Was it not remarkable that the Republican “debate” in New Hampshire consisted almost exclusively of Obama-bashing rather than discussing how to deal with the root causes of the Great Recession? I find that depressing, but not at all unexpected. Such is politics. Thanks for commenting.

      Like

  4. Jennifer Lockett says:

    A great post! I’ve always wondered when I hear people “We shouldn’t punish success” (for keeping the large tax cuts for the rich while strangling the middle class)… why should we punish people for not being wealthy? Don’t get me wrong, I’m not saying that we should all lay about and get everything handed to us. However, my goals aren’t millions in the bank. Me? I want a roof over my family’s head. I want to have a reliable vehicle that will last me a decade. I want to ensure that my future children have a good education. I want to occasionally splurge on a dinner out. I like the idea of taking a vacation every year. I want to be able to pay my medical bills. I want to put a little money away every year for my retirement.
    I do *not* want the government and my fellow citizens to step in and pay all of my bills. I just want a level playing field where I don’t have to go into excessive debt or scrape to get by.
    I want the American Dream of my parents (although it appears to be gone for them too) and my grand parents. That if you work hard and are honest, the system will treat you fairly. Not that you must work hard, sacrifice everything you have, and some-day you might be the next millionaire. I’m a school teacher. I love what I do. I’ll never get rich off of it, and that’s okay. But I don’t like the culture today that thinks there’s something wrong with that mentality.

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    • Jim Wheeler says:

      Well said, Jennifer, and I couldn’t agree more when you say you want a “level playing field”. In a perfect world of course, that is what we would have, along with a decent social net for the frail, elderly, handicapped and under-gifted. But, as I tried to show in this summary post, the playing field is seriously tipped. Because of your comment I decided to make a list, off the top of my head, of categories of people who appear to have an unequally-advantageous edge in today’s global economy (in no particular order and with some overlap).

      Oil-rich oligarchies
      Corrupt officials
      Corporate executives
      The under-taxed rich
      Doctors (mainly specialists)
      Lawyers (mainly corporate and class-action types)
      Universities, including tenured professors and administrators
      Big pharma
      Big medical device companies
      Some bureaucrats (not top-tier)
      Big Agriculture (unwarranted govt. subsidies, esp. ethanol)

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  5. ansonburlingame says:

    T all,

    As a nuclear operator of sorts for a fairly long time I am only too familiar with “root cause analysis”. It is a tricky subject and can easily be “politizied”.

    I submit that BEFORE a root cause analysis can be attempted there MUST be a problem to analyze. It must be an easily stated problem and not a combination of lesser problems that “added up” to cause a bigger problem. Take the Japanese nuclear crisis from last spring. How would one state the problem to then lead to a root cause of the problem. One could state the problem as “Japan used nuclear power”. That problem would lead to a different root cause than “3 reactor cores were damaged and released radioactive material to the environment”.

    Frankly JIm I do not believe you have adequately stated THE problem in America today. You have stated a bunch of smaller problems like “Taxes”. I also note that you left out “spending” as a problem.

    So I suggest everyone take a step back, way back, and try to articulate what our real problem might be. Taxes, spending, culture, healt care, etc. are all subsets of a bigger issue in my view.

    I would state the problem to then be analyzed as “America does not have the means to do all that it wants to accomplish”. Or perhaps “American cannot find a way to use all of its means to accomplish what it wants to achieve”. Probably the latter statement will meet better with liberal concerns while still satisfying conservative concerns as well.

    Given such a broad statement of the problem a GOOD root cause analysis will evaluate the means available as well as how they are allocated today. It would then look at what is left over “still to be achieved” when all available means are “used up”

    I will not presuppose the outcome of such a problem statement and the root cause analysis that would flow from it.

    Note above in Jennifer’s response where she used the word “want” several times. Well a lot of Americans “want” but are unfulfilled in satifying those “wants”.

    Just a suggestion. But I also add that “learning to live within our means” may well result from such an analysis. That does NOT mean cut spending entirely. But it would imply to be willing to “increase the means”. And that of course means to increase production of “means”, like money, food, housing, and on and on.

    Anson

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    • Jim Wheeler says:

      @ Anson,

      Thanks for your comments. I submit the following in reaction.
      1. The requirements for a root cause analysis for nuclear engineering are not the same as for economics because the factors are less of a science. But, I agree, it is complex.
      2. “There must be a problem to analyze.” I suggest that I have defined numerous, specific imbalances that need to be addressed for the economy. If you disagree with any, I invite a discussion of same. As for “spending” as a problem, I agree, but I see the items I listed as “root causes” as needing to be addressed to remove the pressures for that spending. You lightly dismiss my treatment of “THE problem”, implying that the areas I discussed are trivial. I disagree. There are numerous problems, not one overarching problem. George W. Bush, for example, did not view “spending” as a limitation before he undertook the re-building of Iraq. I surely agree that America can not afford all that people want, but saying that does little to remedy the fiscal crises. America has become an increasingly divided culture of haves and have-nots, as I tried to explain in a post ( https://jwheeler59.wordpress.com/2011/06/08/a-different-gulf-disaster/ ) . Simply turning off the money spigot in Washington is not going to cure the malaise.
      3. Yes, Jennifer has “wants”, but I have to point out that her “wants” are quite modest, and as a college graduate she is willing to work hard to get them. She sounds to me like she is very willing to live within her means. If you will honestly consider the areas of unfair imbalances, and I do not use the term “unfair” lightly, I hope you can consider those as starting points. To point to “spending” as the problem is to oversimplify it, IMO.
      4. Increasing production of basics will not help if most of the money stays in bank vaults. If you don’t think I have identified the real root causes, then suggest some yourself, but please, don’t dismiss my candidates for root causes as not worth discussion. That is, frankly, patronizing.

      Jim

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    • Jennifer Lockett says:

      You’re right, I did use the word ‘want’ rather than, perhaps, the word ‘need’ – I need shelter, food, health care, and transportation (as i listed above as wants). This is not my ‘wanting’ to live in a $400,000 house or Prada Shoes or a new BMW. What I find appalling is that the middle class dream is disappearing for Americans. Most of us spend more on our health insurance costs than we do on our mortgages (and the only other option is to go sans insurance). This when health insurance companies are recording record profits. LIkewise, I would like to visit my parents (who live several states away), but cannot afford the gasoline in the car or the high airfare costs for travel as gas is pushing $4 and likely $5/gallon (and my car gets about 30mpg). This in years when oil companies are reporting record setting profits.
      The middle class is hurting – a lot. Most of us are willing to work hard and pay our own way to satisfy our ‘needs’ (to forgo your disdain for the word ‘want’). We cut coupons, we go without, we play by the rules, yet we get shafted. It’s abhorrent to me that Wall Street, that threw our economy in the toilet, insisted on paying their employees their million dollar bonuses (with my tax dollars), yet want to strip teachers of a livable wage and any benefits. I’m not a recent grad that is walking out of my college doors and expecting a $80k job waiting for me the next day. I’ve been in the work force for more than a decade (heck almost two if you count all the jobs I worked to get through college and graduate school).
      I see this all the time today and I don’t know how my friends with families (that have the added costs of health insurance premiums for their children, braces, pre-school, etc) can afford to not be on the streets when their raises (if they get them) don’t even match COLA.
      I am not proposing a nanny-state by any means. My belief in government is not that they should ‘provide’ for their citizens, but that they work to ensure that their citizens have a ‘fair shake.’ If you work hard, pay your dues, and have modest goals – they should be achievable (with hard work and effort). Now, it seems like the middle class works more, spends less time with their family, and gets fleeced more and more by big corporations and politicians (on all sides) that are in their pockets. Part of the justification for this is that Americans should all aim to be exceptionally wealthy and until they reach the point of a 7+ figure salary, they should somehow be ‘penalized.’ If you make a million dollars a year, the government should not be subsidizing your life-style whatsoever (which they do not with tax cuts and off-shore loopholes in the tax system).

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  6. Rawhead says:

    You forgot to mention the “war on drugs”

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  7. ansonburlingame says:

    First to Jim and then Jennifer,

    I suggest that I indeed did give a shot at stating the problem in a boader yet still accurate manner as the PROBLEM. You chose to ignore that problem statement proposed and suggested that I was patronizing your thoughts. I will not lower the tone of my response by saying any more of that subject.

    A root cause analysis is in fact a tedious and scientific approach to trying to find solutions to vexing problems. If the problem is not solvable by precise means then stop using terms like “root cause”. As you have pointed out with your “shotgun” number of problems don’t expect to find a “root” cause for unique to all of them. There may well be a whole series of “runners” that make up a “root” sytem. The tree will die if the “root” is bad, but you can’t fix “runners” individually and expect the tree to live or prosper.

    Root cause analysis is becoming a popular phrase like cost benefit analysis. Yet the way they are implemented or “explained” is mere politidcal rhetoric and NOT a precise analysis. And economics is just such a field where many think a scientific approach will solve problems. But I have long said that I see economics as far more art than science. Supply and demand curves look scientific but try putting numbers, real numbers on such a graph instead or mere curves showing trends and the “science” goes out the window.

    Now for Jennifer,

    I do not discount your concerns for your own lifestyle or profession in any way. Neither do I discount the concerns of the minimum wage earner “flipping burgers” and trying to live in today’s society. I hasten to add that I do not put you in the catagory of a “burger flipper” either. As you said you are a college graduate with a long track recorded in your chosen field and seem to work hard to succeed in that field for which I give you high praise.

    But you do imply that you would expect more money for good reasons, like visiting your parents more often, while you work in an honorable and important field or profession. I faced the same concerns as a Naval Officer. Considering my education, experience and capabilites I thought that I was “worth more” than I was being paid as a Naval Officer. And when I left the Navy I made a helluva lot more money than when in uniform. But I would not change that old decision to work in my chosen field ( a nuclear trained naval officer) for a moment. Ultimately the money did not matter nearly as much as the sense of purpose and achievment gained from being a “Cold War Submariner”. We all have to make those kind of choices throughout our lives and many times we cannot have our cake (a great and fulfilling profession) and eat it also (make a lot of money).

    If my “passion” was to fix automobiles or be a really good mechanic then I would have to chose between that “passion” or staying in school (which I might “hate”) and getting an accounting degree to make more money. But once I make that choice to “drop out” and be a mechanic, then is it the government’s responsibiility to pay me like a CPA?

    You knew full well that most teachers, at least the really good ones are grossly underpaid, yet you chose to go into that profession. My step daughter, now a teacher for 25 years with a Master’s Degree in childhood development thrives in her profession. Would she like more money, even need more money? Sure she would, but… And neither you nor my step daughter are one step away from the streets. And both of you (I assume because I don’t really know you Jennifer) could quit teaching and make more money doing something else in the private sector, probably.

    People make choices all the time. It is part of living. When bad choices are made is it government’s responsibility to make you whole financially and how does one define “whole”? And when good choices are made based on one’s “passion” but the money to pay for that “passion” is simply not there, then what role should government play to offer up more money?

    No “starving artist” wants to starve. But would he give up his art to fix cars or become a CPA to live better. I doubt it if he/she was a great artist, no matter how little food he/she had to eat or money to put in a car for gas.

    If you, Jennifer, have read my comment posted yesterday on your blog about education, you will see that I consider education, public education a real failure in today’s America. But I do NOT consider it a failure due to lack of money. The problems of public education will not, in my view, be solved with higher pay for teachers, fundamentally.

    Rickover did NOT create a preeminent, world class nuclear submarie force through throwing money at the creation of such a force. He did it by demanding extraordinary levels of performance for each and every man that he alone allowed to become part of that force. And those demands began when college “kids” were 21 years old and went one-on-one with Rickover, personally, and lived for entire careers under his very demanding thumb. And each one of those that stayed in that profession got only a fraction of the wages that they were worth by private compensation comparisons. I don’t know a single career nuclear submariner that “did it for the money”. They would be crazy if that was their reason. Same with good teachers, in my view.

    But then again, I also do not know of any good nuclear submariners or teachers that live or lived with one foot in the “streets”.

    Anson

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    • Jim Wheeler says:

      Anson,

      The concept of a root cause to an economics problem need not be confined to the same context as that of a nuclear engineering problem. The Wikipedia page on “root cause” says,

      “The term root cause has been used in professional journals as early as 1905, but the lack of a widely accepted definition after all this time indicates that there are significantly different interpretations of exactly what constitutes a root cause.

      “The two biggest differences in viewpoint regard the possibility of an outcome having more than one root cause.”

      My post on the “problem” attempted to identify multiple root causes, and by that I meant areas of government which contributed to overspending. My reasoning starts from the premise that much government spending is necessary for a modern society and that other spending is unnecessary. Therefore, taking the simple approach of shutting down the spending valve alone runs the risk of diminishing “necessary spending”. Your insistence in confining the problem to the same context as a forensic engineering problem, your personal area of expertise, I took to be dismissive of the points I had tried to make. Whether you meant it or not, your syntax implied that such analysis would be beyond my understanding. (I may not be a Rickover graduate, but I have had variety of experience and education nevertheless.)

      The Wiki article on “root cause” is clear that the term can be used in a broader context. In this regard it says,

      “There is little agreement as to the types of conditions that can reasonably be considered root causes. One view holds that, in theory, one would have to return to the Big Bang or point of Creation to find true root causes. An alternate viewpoint is that one need only consider factors within the boundary of the system that exhibits the problem. The former is usually used as one argument against attempts to single out specific factors as root causes, while the latter (or some version of it) is usually proposed as a practical bound within which useful information can be obtained.

      “Practitioners of root cause analysis often define what the phrase “root cause” means for a particular setting and application. The benefits of finding deeper layers of root cause tend to diminish after a certain point. The practical application of root cause analysis therefore often searches only as long as the benefit of answers outweighs the effort of the search.”

      I do not consider that I have all the answers to the complex debt problem, but we should not throw the baby out with the bathwater. I am looking for that “practical bound within which useful information may be found.” The principal problem in both the Congress and the body politic as I see it is the refusal to deal with the hard decisions that need to be made on the topics I raised. You say it is “. . . mere political rhetoric and NOT a precise analysis.” Well, I say it is much more than political rhetoric. These are real problems. And I never SAID it was a precise analysis. They don’t call economics the “dismal science” for nothing.

      The Wikipedia link is here: http://en.wikipedia.org/wiki/Root_cause

      Jim

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    • Jennifer Lockett says:

      Anson, first, check your email – I responded to your post (just not publicly).

      Second, I think that we are arguing around the same point but that you’re not hearing what I’m putting forward. I am *not* arguing that the government needs to step in and pay me (or anyone else) more, for that matter. The issue that I am address is the rising cost of expenses (exponentially) that are strangling the middle class who now cannot what we would consider a ‘middle class lifestyle.’ This is not solely an issue of income (which is of course problematic), but the unchecked, exponential rise in cost of basic living expenses.
      In terms of income, when you adjust for the rate of inflation, middle class workers make less now than they did in 1971.
      Food prices have risen 3.9% in the last month (the largest jump since 1974)
      The U.S. Labor Dept cites that the cost of living in the U.S. is significantly higher than it has ever been in the past
      The average cost of health insurance premiums for a family of four is $12,000/year; the median income for a family of four is $48,000/year (before taxes); the average health insurance deductible is $2,000 and then it will only cover a percentage after it is hit
      Health Insurance premiums rise on average 10-20% per year
      The U.S. Economy now has 10% fewer middle class jobs
      Average student loan debt for a B.A. from a public university is over $24,000
      Half of all American workers make $25,000/year or less (try making those $12,000 insurance premium payments on that).
      Fuel costs for families (in spite of dramatically lower rates of car travel and highest peaks of public transport use) is 30% more this year than the previous year.
      Employee compensation relative to the gross domestic product in 50 years
      Meanwhile:
      Oil companies are recording record profits (and have come out shining in spite of multiple monopoly and price fixing violations)
      Health Insurance companies are reporting record profits
      Quality of health care and longevity of life are going down significantly.

      I’m sorry, but I don’t see the root cause of these simply people not being able to live within their means or needing to keep up with the Joneses. Yes, part of it is a compensation issue, but the significant issue is the staggering rise of cost of living. This is something that our government has allowed to continue unchecked – largely due to the corruptive practices we see (on both sides).

      In terms of your comments specifically about teachers, I actually know quite a few that do have one foot on the streets (especially those with families). Even a few on food stamps. The median salary for teachers is *now* $32,000/year (meaning many make less). They actually make less now than they did a decade ago and have fewer benefits and no pensions. And no, with this economy (47% of working age adults out of work and fewer and fewer jobs available), most of us can’t just jump ship – even with advanced degrees. I also find the comment that pursuing teacher rather than a CPA a ‘poor choice’ a bit condescending.

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  8. ansonburlingame says:

    To both,

    Patronizing and now condesending, hmmm. I don’t believe that I said being a teacher instead of a CPA was a bad choice. But if money was you object to live at a higher level on the economic plane then it would have been a “bad”personal choice given your druthers. Both are “good” professions but one makes more money being a CPA than and teacher, given equal levels of capabilities.

    Now back for a moment to “root cause analysis”. During my 23 years analyzing “why” people made mistakes operating submarines I did NOT do a tedious and mathematically driven “analysis. I used my own judgment and experience which became better thru experience over time. But when I went into the civilian world of nuclear issues, I was not allowed to use just my judgment. The NRC “types” demanded a tedious analysis on paper with all sorts of logic diagrams, etc. And my critics when in a leadership role in civilian life were correct. When I analysis why people made mistakes at Rocky Flats and other areas of the country I was using judgment, not analysis.

    Now I know exactly what both of you are trying to “get at” in the blog and comments. The economy is in terrible shape today by comparison to historical recoveries from milder recessions. And I do not disagree that it is harder to live the “middle class lifestyle” now as opposed to earlier years. I am personally “stuck” in that situation as well as a fixed income retiree. Had you told me during my professional years the income level I am now receiving I would have said “fine, I can do that and live basically as I choose”. Well I can’t do that today though of course I do not have one foot in the streets either. But I like most other folks must adjust to the new economic reality of today as well.

    Now I can complain about the economy and call for higher “retirement wages” based on the changing economy. For example I could complain about little or no cost of living increases in SS, less copay in Medicare, etc. But I don’t do that. I either live within my means or go find another job. I have not yet become a greeter at WalMart, but….

    So understanding the point of Jim’s blog, I only objected to the long list of problems. I remain convinced that the FIRST thing we must do as a country is to pull back on government spending and at the same time increase government revenues to beging to “bend the curve” as Duane always says. But so far we are unable to do even that small task, bend the curve. Instead we hear the drumbeat of “needs” that must be met, damn the slope of the curve, at least from some. Joplin aid is a perfect example, in my view and it is a very small problem when viewed at the federal budget overall problem. But so far we are politically unable to come up with $1 Billion out of $3500 Billion to pay for aid to Joplin, politically. That to me is ridiculous.

    But try to cut $1 Billion somewhere NOW to pay for Joplin aid NOW, and look at what happens.

    I don’t need a “root cause analysis” to tell me what that problem encompasses. It is our inability at the federal level to prioritize our “needs” putting some lower than others and only doing what we can pay for, however painful that may be. If, politically, we cannot raise taxes then cut spending. If we cannot cut spending then raise taxes. But we are unable to do either. Do we need a root cause analysis to figure our way out of that mess. No in my view. It is pretty simple, at least to me.

    And while we “dither around” politically, look what is ahead for us. Your grocery bill or gas bill is going to continue to skyrocket and things will only get worse, not better. And mine will do the same.

    Education is another “perfect example” in my opinionated view. We have been throwing money at public education for decades now and look at the slope of THAT curve in terms of “output” or quality and quantity of public education.

    NO ONE likes to have to prioritize today in America. But everyone calls for “more” of something. Well there are lots of ways to “get more” in my view but until we find a way politically to do that, we had better learn to prioritize and live with less, individually and as a nation.

    And if you Jennifer think it is bad now, just wait, in my view, for both of us. And just raising taxes on the rich is only a drop in a huge bucket to prevent what looms ahead as we “wait”. And I don’t need again a root cause analysis to show me such and challenge any root cause analysis that tells me differently, at least so far.

    Anson

    PS, I have not seen your email Jennifer but will go look for it in either spam or deleted emails and will respond accordingly if I find it. Also resend it if you like and I will be more careful what I delete.

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  9. Jim,
    I only thing I have time today (my daughter and granddaughter are here on a visit) to tackle is this claim you made:

    Democrats failed the people when they passed the ACA, an otherwise admirable bill, without addressing the cost issue.

    Let’s forget for now the fact that it was almost impossible to get anything passed, what with Republican resistance, but instead focus on what the bill actually does. For that, I will submit a lengthy excerpt from an essay published about a year ago, written by Peter Orszag, Ph.D. and Ezekiel Emanuel, M.D., Ph.D:

    Many commentators have claimed that the bill focuses mostly on coverage and contains little in the way of cost control.
    Yet we would argue that even from a purely “green eyeshade” viewpoint, the bill will significantly reduce costs. Projections suggest that with reform, total health care expenditures as a percentage of the gross domestic product will be 0.5% lower in 2030 than they would otherwise have been. In addition, although the Congressional Budget Office (CBO) expressed concern that health care costs will remain high even after reform, it also determined that the ACA will reduce the federal budget deficit by more than $100 billion over the first decade and by more than $1 trillion between 2020 and 2030. And the Commonwealth Fund recently projected that expenditures for the whole health care system will be reduced by nearly $600 billion in the first decade.1
    But these savings will be illusory if we do not reform health care delivery to bring down the long-term growth in costs, and the ACA puts us on the path to doing just that. In fact, it institutes myriad elements that experts have long advocated as the foundation for effective cost control. More important is how the legislation approaches this goal. The ACA does not establish a rigid bureaucratic structure to be changed only episodically through arduous legislative action. Rather, it establishes dynamic and flexible structures that can develop and institute policies that respond in real time to changes in the system in order to improve quality and restrain unnecessary cost growth.

    The article then goes on to list the elements of the ACA that “aim to eliminate unnecessary costs to the system.” I recommend the article to you and those who are, understandably, skeptical of the bill’s ability to control costs.
    Duane
     

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  10. Jim Wheeler says:

    Duane,
    When I got your comment about the ACA having actual cost-saving mechanisms to read about I felt a frisson of hope. I read the Orszag/Emmanuel paper. But first, you said,

    Let’s forget for now the fact that it was almost impossible to get anything passed, what with Republican resistance, but instead focus on what the bill actually does.

    If memory serves, Duane, there were many cries of outrage from Republicans because the ACA was passed in spite of their complete opposition. In other words, the opposition was ineffective. If the Democrat leadership had introduced some additional cost-saving measures, wouldn’t it have garnered more, not less support? Maybe not, I don’t know. I do know that the AMA supported the ACA, and it is my opinion they did that because the ACA does not significantly diminish medical revenues. (I am not so naive as to believe the AMA’s positions are not business-driven, and you shouldn’t be either. This is the Medical Industrial Complex, remember?)

    Now, the Orszag paper. I am disappointed in it because it changes little about the way medical care is delivered. Under the ACA Americans will still be looking for magic pills to cure every ailment. They will still queue up at the doctors’ offices and the doctors will still be incentivized to get them out the door as quickly as possible, maybe even quicker. I found the report to be full of bureaucratic mumbo jumbo. For example,

    “Cost Measures”. Vague measures against “fraud and abuse”, “administrative simplification”, “a pathway for generic drugs” (what does that mean, anyway? Medicare already pushes that concept.) And finally, the piece de resistance, “eliminating unjustified subsidies to Medicare advantage plans”. What the heck is that? Beats me, but I really doubt that it should take a phone-book sized stack of regulations to do it.

    Then there are “Measures” to cut the growth of costs, which appears to be an excise tax (40%) on Cadillac health insurance plans. It is not at all clear to me how this would work nor how much might be saved. I can tell you though that i don’t know anyone who has such a thing. Maybe I don’t know enough rich people. (Maybe Anson knows some.) Not only that, but it seems to me that if the rich are unduly taxed for such things they will simply look for their more-expensive healthcare needs in a different country. From what I read there is quite a bit of that going on already. (Facelifts in India, 1/3 price!) Reminds me of when government raised taxes on yachts – put the American yacht-builders out of business for years.

    Other “measures” mentioned to slow cost-growth were electronic health records (I’m all for it, but costs will rise, not fall, in the short term, is my prediction), and, under the heading of “Infrastructure”, there was “enhanced horizontal coordination among providers and more constant monitoring of patients.” You will have to explain that one to me. I completely don’t understand the first term and I sure can’t see how “more constant monitoring of patients” is going to lower any costs. (Also, “more constant” is redundant. You can’t get more constant than constant, can you? Someone should tell Mr. Orszag.)

    Finally, the ACA hopes to slow the growth of costs by providing an additional $500M (an inadequate amount, seems to me) for doctors to follow-up on patients discharged from hospitals, the idea being that readmissions would thereby be reduced. Sorry, but I really can’t see much savings there, although the goal is admirable. (Why couldn’t they just educate the patients better before they are discharged?) But, darn it, they are spending more, not less.

    I didn’t just fall off the turnip wagon, Duane. Orszag’s paper is pretty much dreck as far as I’m concerned. I like many of the ACA’s provisions, but I am completely unconvinced about the cost aspect.

    If you can show me where I’m wrong about any of this I am eager to hear it.

    Jim

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  11. ansonburlingame says:

    To all,

    I am going to blog today on this recent (last night) event, a “public forum” in DC, supposedly split by Obama supporters and antagonists, 50/50. The one man that won the show, hands down was Steve Wynn.

    Regarding health care he indicated the following. Since 2005 his health care for employees (LOTS of employees) rose by 8% per year. Between 2005 and 2009 his health care costs ROSE from $17 Million to $33 Million per year. He did not lower benefits, increase copays, increase employee contributions, etc, he simply took those increased costs off his bottom line to be “fari” to his employees.

    After ACA his annual health care cost went up by 12% for just the first year.

    More later on my own blog site.

    Anson

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