How's the US Doing?

Everything Washington needs to know--presented courtesy Judge Posner:

Capitalism—Posner - The Becker-Posner Blog: "The institutional structure of the United States is under stress. We might be in dangerous economic straits if the dollar were not the principal international reserve currency and the eurozone in deep fiscal trouble. We have a huge public debt, dangerously neglected infrastructure, a greatly overextended system of criminal punishment, a seeming inability to come to grips with grave environmental problems such as global warming, a very costly but inadequate educational system, unsound immigration policies, an embarrassing obesity epidemic, an excessively costly health care system, a possible rise in structural unemployment, fiscal crises in state and local governments, a screwed-up tax system, a dysfunctional patent system, and growing economic inequality that may soon create serious social tensions. Our capitalist system needs a lot of work to achieve proper capitalist goals."

Need anyone say more?

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Obamacare: when is "not a tax" a tax?

So when is "not a tax" a tax?  Answer: when the Supreme Court says so!

Supreme Court Health Care Decision - Live Coverage - Election 2012 - NYTimes.com: "On Sept. 20, 2009, President Obama insisted that the insurance mandate in his health care bill was not a tax. Today, the Supreme Court said it was. In the middle of the health care fight, Mr. Obama was eager to avoid the characterization of the mandate — and its financial penalties — as a tax on people. He had promised no tax increase for middle-class families and Republicans were poised to pounce. “No. That’s not true, George,” Mr. Obama said to George Stephanopoulos during an interview on ABCs “This Week” program. “The — for us to say that you’ve got to take a responsibility to get health insurance is absolutely not a tax increase.” In a contentious interview, Mr. Obama added: “What it’s saying is, is that we’re not going to have other people carrying your burdens for you anymore than the fact that right now everybody in America, just about, has to get auto insurance. Nobody considers that a tax increase.”But the court disagreed. They said the insurance mandate was, effectively, a tax on consumers of health care, and is therefore constitutional. “Our precedent demonstrates that Congress had the power to impose the exaction in Section 5000A under the taxing power, and that Section 5000A need not be read to do more than impose a tax,” the court wrote. “This is sufficient to sustain it.”"

It's a tax. End of story. Or is it? Some say it is the "largest tax increase in the history of the world."

CURL: Roberts to the rescue for Romney - Washington Times: "Obamacare is unconstitutional if it were to be enacted via the Commerce Clause, but not if it’s simply a tax, the justice (Roberts) wrote. “Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.” In so doing, Justice Roberts has just busted Campaign 2012 wide open. The high court’s ruling leaves in place 21 tax increases costing nearly $700 billion. Of those taxes, 12 would affect families earning less than $250,000 per year. Now that Obamacare’s penalty is a “tax,” not a “fee,” Mr. Obama is breaking a 2008 campaign pledge not to raise taxes on Americans earning less than $250,000. This new “tax” will hit across the economic spectrum, despite his campaign declaration that health care should “never be purchased with tax increase on middle-class families.” Now, Mr. Obama and congressional Democrats have enacted the largest tax increase in history."

Will the unintended consequences of the "largest tax increase in the history of the world" cause the United States to fall back into recession? Not if some have their way--


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Steve Jobs Told Obama, 'You're Headed For A One-Term Presidency'

Obama's Problem? OK there are many--but to name just one--he doesn't listen. He sure didn't listen to Steve Jobs (who was offering him "friendly" advice):

Steve Jobs Biography Reveals He Told Obama, 'You're Headed For A One-Term Presidency': "Jobs, who was known for his prickly, stubborn personality, almost missed meeting President Obama in the fall of 2010 because he insisted that the president personally ask him for a meeting. Though his wife told him that Obama "was really psyched to meet with you," Jobs insisted on the personal invitation, and the standoff lasted for five days. When he finally relented and they met at the Westin San Francisco Airport, Jobs was characteristically blunt. He seemed to have transformed from a liberal into a conservative. "You're headed for a one-term presidency," he told Obama at the start of their meeting, insisting that the administration needed to be more business-friendly. As an example, Jobs described the ease with which companies can build factories in China compared to the United States, where "regulations and unnecessary costs" make it difficult for them. Jobs also criticized America's education system, saying it was "crippled by union work rules," noted Isaacson. "Until the teachers' unions were broken, there was almost no hope for education reform." Jobs proposed allowing principals to hire and fire teachers based on merit, that schools stay open until 6 p.m. and that they be open 11 months a year. . . . Though Jobs was not that impressed by Obama, later telling Isaacson that Obama's focus on the reasons that things can't get done "infuriates" him, they kept in touch and talked by phone a few more times. . . ."

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The problem with mainstream media "journalism"

The problem with mainstream media "journalism?" They are too often "wrong on the facts" and then there is the "partisanship." Two examples of many:

1. The night of the Wisconsin recall vote, CNN reported their "exit poll" showed the vote to be a "dead heat" and spent unbelievable amounts of time with "talking heads" about the significance of a "close race" or "Walker defeat." Later CNN corrected itself and said their exit poll showed 2 percentage point favor to Walker (still "too close to call") and then abruptly switched to coverage of the Queen's Jubilee. CNN was wrong on the facts (and their so-called "exit poll" was "garbage."). The election results in the Wisconsin recall vote were never "tied" or even "close." Walker's victory margin? Seven percentage points!

2. CBS Chief Moonves Attends Obama Fundraiser, Outs Journalism as 'Partisan': "Though he heads a news division, Moonves (CBS Corp. and chairman Les Moonves) said, "ultimately journalism has changed … partisanship is very much a part of journalism now.""

Someone once said, you have a right to your "opinion." You don't have a right to be wrong on the "facts." That's why I don't watch or listen to "mainstream media" anymore--I prefer not to be misinformed. To give other than "passing attention" to mainstream media "journalism" is a waste of time.

Your best source of news? The internet without question--I use a variety of sources including foreign sources, Drudge, Twitter feeds, blog feeds, and other news feeds, and of course Google uncovers whatever you want or need very quickly. The day and age of "news domination" by a few sources in New York-Washington are over.

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Why Everyone Should Only Get Their News From The Internet:

This Is Why Digital Media Is Winning - Business Insider: "The four of us were the only news outlets, as far as we saw, to bother going to the courthouse to get the document so our readers would know, as soon as possible, what Kleiner was saying in response to Pao's charges. . . .  We didn't see anyone from the New York Times, the Wall Street Journal, or the San Francisco Chronicle. No one from CNN or the local broadcast channels. . . . In between running to and from the courthouse on the day the Pao filing came, we also broke stories based on extensive research, public corporation filings, and exclusive tips. You wouldn't get those stories anywhere but on Business Insider. We know that's a major reason why you keep coming back, and we promise to deliver more. At the same time, we quite honorably picked up on stories broken elsewhere and did sharp synthesis and smart analysis from others' reporting. It's not either/or. It's both/and. And it always has been. All that's changed is who's doing it, and who's doing it best. This is why digital media is winning. Because we are doing the work of journalism." 


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The Truth about China?

Financial Repression, Chinese Style - NYTimes.com - Paul Krugman: "Financial Repression, Chinese Style I have no idea whether this John Hempton piece on China is at all right, but it’s a terrific read, and provides food for thought. Hempton basically argues that China has turned financial repression — controlled interest rates on deposits, which ensure a negative real rate of return — into a giant engine of kleptocracy. The banks extract rent from depositors, transfer those rents on to state-owned enterprises in the form of cheap loans, and then the Party elite essentially embezzles the money. Underlying the whole system is a high savings rate that Hempton attributes to the one-child policy."

Bronte Capital: The Macroeconomics of Chinese kleptocracy: "China is a kleptocracy. Get used to it. I start this analysis with China being a kleptocracy – a country ruled by thieves. That is a bold assertion – but I am going to have to assert it. People I know deep in the weeds (that is people who have to deal with the PRC and the children of the PRC elite) accept it. My personal experience is more limited but includes the following . . . (go to the link above and read the full post) . . . .This however is only the beginning of Chinese fraud. China is a mafia state – and Bo Xilai is just a recent public manifestation. If you want a good guide to the Chinese kleptocracy – including the crimes of Bo Xilai well before they made the international press look at this speech by John Garnaut to the US China Institute."



One of the interesting things revealed in Hempton's article is that the Chinese are getting a better return on their low-interest U.S. securities, than the lower (or even negative) returns from their other investments.

And finally, take everything above with a "grain of salt"--I would also recommend reading the comments to Krugman's post referenced above.

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Parsimony and American Justice

What happened to the Parsimony Principle in American Justice?

Allen Stanford gets 110-year prison sentence for $7 billion fraud - The Washington Post: "“A triple-digit, eye-popping sentence might make for good headlines but it does not make any sense whatsoever in terms of sound sentencing policies,” Barry Pollack, a Washington-based criminal defense attorney, said in a phone interview yesterday."

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The Parsimony Principle - How "justice" becomes unjust

The following is the most profound thing I have ever read in the legal/judicial subject area, and I just came across it recently:

Occam's razor - Wikipedia, the free encyclopedia: "Penal ethics - In penal theory and the philosophy of punishment, parsimony refers specifically to taking care in the distribution of punishment in order to avoid excessive punishment. In the utilitarian approach to the philosophy of punishment, Jeremy Bentham's "parsimony principle" states that any punishment greater than is required to achieve its end is unjust. The concept is related but not identical to the legal concept of proportionality. Parsimony is a key consideration of the modern restorative justice, and is a component of utilitarian approaches to punishment, as well as the prison abolition movement. Bentham believed that true parsimony would require punishment to be individualised to take account of the sensibility of the individual—an individual more sensitive to punishment should be given a proportionately lesser one, since otherwise needless pain would be inflicted. Later utilitarian writers have tended to abandon this idea, in large part due to the impracticality of determining each alleged criminal's relative sensitivity to specific punishments."

By any civilized standard, and in view of the parsimony principle above, the American "justice system" has become unjust -- see Incarceration in the United States.

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What needs to be done

What needs to be done to bring back prosperity to the United States is not a hard issue. The Federal Reserve Chairman told us. The head of the IMF told us. Short term stimulus (and this should only be needed infrastructure) + long term consolidation (the latter being more important). What's "long term consolidation"? Putting the fiscal house of the U.S. government on a sound, long-term, sustainable basis. What specifically is needed? Comprehensive tax reform, comprehensive reform or elimination of public pensions (federal, state, local), comprehensive reform of Social Security, Medicare, Medicaid, and finally, curbing excessive long-term government spending.

Republicans are loathe to do the former (short term stimulus)--yes, it is hard to spend money you don't have when you can see you're going bankrupt long-term. Democrats are unwilling or unable to do the latter (long term consolidation). This is troubling.

While the Democrats (including Obama) live in a fairy-tale world that if government just spends more, eventually everything will turn out all right, the Republicans (after their drunken spending party during the Bush years) have sobered-up enough to realize "the party is over" and the new normal is here to stay. States like Indiana have already started doing the right things to start back on the road to fiscal responsibility. States like Illinois continue to live in denial and get deeper in the hole, hoping for a "bail-out" from Washington--sorry Gov. Quinn, "ain't going to happen."

Here's the real rub--the rest of the world is not waiting, nor are they going to wait, for the United States to "get its act together." Yes, there will be effects upon the world economy from the downward spiral of the United States--but China, Brazil, etc., will manage, and move ahead on the economic scale. Europe has its own problems, but at the end of the day, the Germans and French will do what is in the best interests of Germany and France--after all, Germany is the world's second largest exporter (after China) and is hardly dependent on the U.S.A.

So where do we go from here? Simpson-Bowles gave us a map. Rep. Ryan has given us his plan. It's not like no one knows what to do. We know what to do. Our leadership is just unwilling or unable to do it. The world is not waiting.

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Law and Order - 15 years for using Skype!

Law and Order Ethiopian Style--

Going to Ethiopia? If you use Skype, you could be there 15 years - latimes.com: "If you're heading to Ethiopia sometime soon, I'd like to offer you one small but crucial bit of advice: Don't get on Skype. The Ethiopian government last month passed a law making it a crime for people to utilize audio or video communication using Voice-over-Internet-Protocol (VoIP) services, which include Google Voice, Skype and essentially any other video chat service available. So what's the punishment? Well, the maximum penalty for breaking the law is 15 years in prison. That's right -- a decade and a half. . .
Ethiopia has a track record for censoring the communication activities of its journalists and citizens. . . . The country says the law is needed for national security and also to protect its monopoly of telephone communications, according to Reporters Without Borders. . . . Ethiopia telecom, the state's telecommunications provider that has the monopoly and charges very high prices -- and doesn't want to have its service undermined," former BBC Ethiopia correspondent Elizabeth Blunt told the BBC.

Yeah, I get it--sounds like what's been coming out of Washington, D.C.--NDAA or SOPA or CISPA anyone?

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Paul Krugman at the London School of Economics (video)

Whether you agree with him or not--definitely worth watching--

Paul Krugman at the London School of Economics - The Great Recession is more than four years old—and counting. Yet, "Nations rich in resources, talent, and knowledge—all the ingredients for prosperity and a decent standard of living for all—remain in a state of intense pain."
In his new book, End This Depression Now! which he will discuss in this event. Krugman shows how the failure of regulation to keep pace with an increasingly out-of-control financial system positioned the United States and the world as a whole, for the greatest financial crisis since the 1930s. Decrying the tepid response thus far, he lays out the steps that must be taken to free ourselves and turn around a world economy stagnating in deep recession. His is a powerful message: a strong recovery is only one step away, if our leaders find the intellectual clarity and political will to see it through. Paul Krugman, the recipient of the 2008 Nobel Prize in Economics, is a best-selling author, columnist and blogger for The New York Times. A professor of economics and international affairs at Princeton University, The Economist called him "the most celebrated economist of his generation."

podcast here

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Microsoft Surface vs Apple iPad: the coming battle

Smart move yesterday by Ballmer and Microsoft to let everyone know "what's coming down the pike." From what I saw yesterday, I'd prefer a Microsoft Surface to an Apple iPad, but I'm still waiting to see Google's Android Tablet--

Microsoft Windows 8 Surface Tablets: Big Hardware Play - Hardware - Handhelds/PDAs - Informationweek: "After days of speculation about a Microsoft-crafted Windows 8 tablet, the software giant delivered the goods Monday night in Los Angeles, in the form of Surface--one tablet for Windows 8 RT running on NVidia's ARM processor, and one for Windows 8 Pro, running on Intel's Ivy Bridge (using the i5 core). Despite rampant speculation, the announcement still felt a little like a surprise." Microsoft Surface vs Apple iPad: the battle of the specs | VentureBeat: "Microsoft Surface vs Apple iPad: the battle of the specs . . . ."

The interesting thing was reading/listening to tech people who have convinced themselves it's all about "Apple and Google" now--forgetting that Microsoft still dominates the market in personal computers (operating systems, browsers, and software applications) and dominates in the gaming console market (Xbox360) which is morphing into an all encompassing entertainment center (Apple TV? Google TV?). Sure, Microsoft is struggling with its mobile phone software--but don't count them out--Steve Jobs isn't around anymore (funny how often his picture appeared yesterday in the news coverage about the Microsoft Surface tablets). I remember when the tech "experts" thought Microsoft was "nuts" to try to build a gaming console (Xbox).

With the mess (fragmentation problem) Google has with its android phone ecosystem, we might be moving to a world where vertical integration (like Apple) is the business model for success--after all the only smartphone hardware manufacturers making money are reportedly Apple and Samsung!

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5 Tips To Toughen Passwords

Heard several tech people say they "closed their Linked-In accounts" after passwords were reported stolen--typical comment--"I never used or needed my Linked-In account anyway." But if you have an account at Linked-In or elsewhere requiring secure passwords, I pass along the following:

7 Tips To Toughen Passwords - Security - End user/client security - Informationweek -- of the Seven Tips, here are the top five IMHO:

Use separate and unique passwords for each site
Use non alpha characters such as ?!$% in the password
Use Uncommon Patterns
Do Not Use Biographical Details
Use Longer Passwords

Be safe, be secure!

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State-sponsored attacks using IE to hijack GMail

'State-sponsored attackers' using IE zero-day to hijack GMail accounts | ZDNet: "In the absence of a patch, the company has shipped a “Fix-It” tool that blocks the attack vector for this vulnerability. See Microsoft Knowledge Base Article 2719615 for instructions on applying the automated tool. Microsoft also recommends that Windows users deploy the Enhanced Mitigation Experience Toolkit (EMET), which helps prevent vulnerabilities in software from successfully being exploited. Internet Explorer users can also configure Internet Explorer to prompt before running Active Scripting or disable Active Scripting in the Internet and Local intranet security zone. These mitigations can be found in the “Suggested Actions” of Microsoft’s pre-patch advisory. Internet Explorer users should keep in mind that this vulnerability is different from another under-attack issue fixed yesterday with the MS12-037 bulletin."

Bottom Line: Stop using Internet Explorer (IE) as your internet browser. Install and use Chrome.

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It's all Greek to me! (Sunday Election Results)

Greece--all is  not what it seems:

Greek Election Results - Business Insider: " . . . at first it all seemed good... but then around 9:00 PM in Athens, word came that the leader of PASOK, Venizelos, was threatening to withhold support for a new government unless SYRIZA also joined as part of a broad coalition. . . The meme in Athens is that SYRIZA leader Alexis Tsipras didn't even want to win, and always wanted to come back and run again in 4 to 8 months after the establishment parties lost standing. So suddenly what looked like a solid result had gone sour. But Athens insiders figured right away that Venizelos HAD to be bluffing . . . And that now seems to be the case. According to reports, Venizelos is signaling an agreement to join the government, but it's not clear how he will. . . . The mood here now is fatigue. Everyone expects elections soon, and nothing at all has really changed. Markets may be temporarily relieved that SYRIZA did not win, but this is far from a powerful market positive. It just averts what might have been a disaster. . . . "

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Europeans Dig Themselves Deeper

The Greeks vote today, and yet nobody in Europe wants to face the truth and do the right thing:

Hussman Funds - Weekly Market Comment: The Heart of the Matter - June 11, 2012: " . . . what is really happening is that a continent that is already excessively in debt is promising funds so that Spain can increase its government debt, and then needlessly protect the bondholders of Spanish banks, who should be subject to orderly restructuring instead. . . . The only way Spain could make a more explicit gift to bank bondholders would be to include wrapping paper and a bow. If it seems as if the global economy has learned nothing, it is because evidently the global economy has learned nothing. The right thing to do, again, is to take receivership of insolvent banks and wipe out the stock and subordinated debt, using the borrowed funds to protect depositors in the event that the losses run deep enough to eat through the intervening layers of liabilities (which is doubtful) . . . "

At some point, something's got to give--until then, caveat emptor.

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BBC - Virtual Reality Trumps Reality!

BBC mistake computer game logo for United Nations Security Council symbol - Telegraph: "In a News at One bulletin about the United Nations Security Council, the channel accidentally used the logo of the fictitious United Nations Space Command from Microsoft's Halo."

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Adios Microsoft Unless You Fix This!

"I don't want no Metro!"

I know, I know, Apple is the best and Chrome is getting better. But I've been a Microsoft user since MS-DOS was the operating system du jour, but it looks like I'll have to change the next time I upgrade:

How Windows 8 Throws Computer Users Under the Bus: "But Microsoft has made the curious decision not to let PC-based users choose to avoid the Metro screen altogether. Unless you come up with some hack or third-party add-on (which most computer users will never do), you’ll still have to navigate through Metro every time you turn on your computer. That simply doesn’t make any sense from an end-user perspective. Microsoft seems so infatuated with the tablets and smartphones that it’s throwing those boring old computer users under the bus. Sure, Windows 8 includes plenty of cool new features for PC users, but that’s not the point. The company is clearly betting the farm on trying to catch up in the mobile space."

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The Wreck at the White House

It's not getting any better for the Obama campaign--

Car wreck at the White House - The Washington Post: "This has been one of the worst stretches of the Obama presidency. In Washington, there is a creeping sense that the bottom has fallen out and that there may be no second term. Privately, senior Obama advisers say they are no longer expecting much economic improvement before the election. Carney (White House Press Secretary) had the unenviable task of confronting the full arsenal of gloom at Monday afternoon’s briefing. The AP asked about the president’s unfortunate private-sector-is-fine remark. The Reuters correspondent asked about the economic “head winds” from Europe. Ed Henry of Fox News Channel asked about the looming contempt-of-Congress vote against Attorney General Eric Holder. Margaret Talev of Bloomberg News asked about the Supreme Court striking down Obamacare. Norah O’Donnell of CBS News asked about calls for a special prosecutor to probe leaks. Victoria Jones of Talk Radio News asked about the stalled talks with Pakistan. Carney sought relief by calling on TV correspondents from swing states, but the one from Wisconsin asked about the failed attempt to recall Republican Gov. Scott Walker and the one from Nevada asked about her state’s unemployment rate, the nation’s highest."

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Internet as Police State

Think groups who oppose SOPA, CISPA, et al are overreacting? Better think again--

World’s Oldest BitTorrent Site Shuts Down | TorrentFreak: "After a lengthy legal process the authorities eventually dropped the charges against the admins in 2011. The court concluded that the evidence was solely provided by FACT and thus unreliable. While this was a huge relief and a welcome victory for the admins, the legal process effectively killed the once-so-vibrant FileSoup community."

Techdirt.: "Back in 2009, we wrote about how anti-piracy organization FACT worked closely with UK law enforcement to have the guy who operated Filesoup arrested. At the time, we noted that it wasn't at all clear what he was doing that was illegal, as the site was merely a forum. Though some people did, in fact, use that forum for the sake of infringement, that shouldn't implicate the forum host. And, in fact, after about a year and a half, the courts dropped the case, realizing that the arguments the industry kept feeding law enforcement didn't add up to anything illegal."

Tell The White House To Stop Illegally Seizing & Shutting Down Websites | Techdirt: "Last week, a White House petition was set up, calling for the White House to put an end to Operation In Our Sites. To date, the administration has done everything possible to hide from the fact that it's censoring websites, while playing up claims that it's "stopping piracy." This needs to stop. Signing the petition is one step in making that happen, along with actually holding the White House responsible for the fact that it is censoring and shutting down websites, even while it's telling the rest of the world that they need to stop censoring the web. Please pass the story around to others, so that they recognize what's already being done by the US government to censor websites under the guise of copyright law."

Feds Tell Megaupload Users to Forget About Their Data | Threat Level | Wired.com: "Federal authorities say they may shut down cloud-storage services without having to assist innocent customers in retrieving data lost in the process. The government is making that argument in the case of Megaupload, the file-sharing service that was shuttered in January following federal criminal copyright-infringement indictments targeting its operators. The Obama administration is telling an Ohio man seeking the return of his company’s high school sports footage that he should instead be suing Megaupload — even though the government seized Megaupload’s assets in January."

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The Devil Wears Obama?

Romney uses Vogue editor’s campaign ad to portray Obama as out of touch - TheHill.com: "Mitt Romney’s campaign is capitalizing on May’s dismal jobs report by portraying President Obama as out of touch on the economy and focused more on his own job than finding work for America’s unemployed. Romney and Republicans underlined their message on Monday by seizing on an Obama campaign video featuring Anna Wintour, the well-heeled editor of Vogue and inspiration for “The Devil Wears Prada.”"

"Don't be late?" Some would say of the Obama administration on the economy: "Too little, too late."

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Paul Krugman on Newsnight video

Paul Krugman on Newsnight, 30 May 2012: OK, this is too good to pass up as it frames the present economic debate better than I've heard anywhere else (note that the British moderator, unlike American moderators, keeps his mouth shut and allows the guests to have a meaningful discussion of some depth).

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What Small Business Wants From Washington

Read an interesting article in Forbes--and even wrote a comment (below):

Small Business Owners Weigh In On Tax Cuts, the Buffett Rule and the Election - Forbes: "When it comes to tax, everyone has an opinion about what’s best for small businesses. President Obama has told us what small businesses want. Presidential hopeful Mitt Romney has told us what small businesses want. Congress has told us what small businesses want. But small businesses haven’t really told us what they want. I suspect it’s because no one has bothered to ask. So I did. . . ."

My response:
Your article started "what small businesses want" instead of more accurately--"what small businesses want from government"--there is a difference. Generally speaking, it has been my experience that what small businesses want from government are:

1) to be left alone (hence small business has a small voice in Washington since we are not trying to get "handouts" from Washington unlike big corporations, welfare recipients, federal workers, etc.) nor are we trying to get "regulations" in order to limit or eliminate our competition;

2) that government "get its act together;" Washington today is dysfunctional--hence the crying need for "comprehensive tax reform and comprehensive entitlements reform" just to get to fiscal sustainability.

Bottom line--small business needs the federal government to "reform itself"--it is bloated, ineffective, dysfunctional, and fiscally unsustainable. Simpson-Bowles gave a framework on what to do--unfortunately neither the President nor Congress is willing or able to lead.

I wonder if anybody in Washington is listening?

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Health care--yes it's a mess (and expensive!)

This is a follow-up to my post Government We Can Afford.

Health care? Fiscally unsustainable. It doesn't matter whether you are for or against Obamacare. The bottom line is accelerating health care costs, aging population, unlimited benefits, etc., are all leading to a fiscal disaster.
It's just not working.

What to do? Design a system that is fiscally sustainable, while providing the scope of services we need--fortunately some physicians have been working on an answer--

About PNHP | Physicians for a National Health Program: "Physicians for a National Health Program is a single issue organization advocating a universal, comprehensive single-payer national health program. PNHP has more than 18,000 members and chapters across the United States. Since 1987, we've advocated for reform in the U.S. health care system. We educate physicians and other health professionals about the benefits of a single-payer system--including fewer administrative costs and affording health insurance for the 50 million Americans who have none. Our members and physician activists work toward a single-payer national health program in their communities. PNHP performs ground breaking research on the health crisis and the need for fundamental reform, coordinates speakers and forums, participates in town hall meetings and debates, contributes scholarly articles to peer-reviewed medical journals, and appears regularly on national television and news programs advocating for a single-payer system. PNHP is the only national physician organization in the United States dedicated exclusively to implementing a single-payer national health program."

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Defense--what and how much do we need?

This is a follow-up to my post Government We Can Afford.

Defense--what and how much do we need?

Short answer: The future appears to belong to the drones, special forces, and cyber capabilities (cyberwarfare/defense/security); everything else is relative and can be scaled up or down as necessary.

The U.S.Military Spending is presently estimated at Total Spending of $1.030–$1.415 trillion.

So how much is enough? That depends upon the needs, wants, and priorities:

"Secretary of Defense Robert Gates wrote in 2009 that the U.S. should adjust its priorities and spending to address the changing nature of threats in the world: "What all these potential adversaries—from terrorist cells to rogue nations to rising powers—have in common is that they have learned that it is unwise to confront the United States directly on conventional military terms. The United States cannot take its current dominance for granted and needs to invest in the programs, platforms, and personnel that will ensure that dominance's persistence. But it is also important to keep some perspective. As much as the U.S. Navy has shrunk since the end of the Cold War, for example, in terms of tonnage, its battle fleet is still larger than the next 13 navies combined—and 11 of those 13 navies are U.S. allies or partners."[43] Secretary Gates announced some of his budget recommendations in April 2009.[44]" (source: Wikipedia)

By almost any measurement, the U.S. has more military than it needs--"As much as the U.S. Navy has shrunk since the end of the Cold War, for example, in terms of tonnage, its battle fleet is still larger than the next 13 navies combined—and 11 of those 13 navies are U.S. allies or partners."[43] (source: Wikipedia above).

So reduction in military spending is a given, but for lack of political will.

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Education--an easy solution

This is a follow-up to my post Government We Can Afford.

Education in the US is in crisis. What to do? There is an easy, elegant solution.

Quit feeding the beast and allow parents (remember them?) to choose the best schools for their children. How? Use most of the federal money (and encourage state governments to do likewise) now being funneled to the states from the federal Department of Education to fund a "federal voucher program" whereby each child in the U.S. has a federal voucher which his/her parent(s) can assign annually for education to any duly qualified/accredited school (public, charter, private, etc.) of their choice.

What do the taxpayers expect to get in return? Schools that are accountable, transparent, competent, and actually achieving the education objectives and goals which must be set by government--e.g., common core standards and core curriculum requirements, periodic transparent testing and assessments.

Oh, I know this proposal will not be popular with a lot of entrenched bureaucrats, public teacher unions, etc. But remember, the present system is broke and isn't working. Past time to try something else. As usual the simple, elegant solution is best (source: a solution may be considered elegant if it uses a non-obvious method to produce a solution which is highly effective and simple. An elegant solution may solve multiple problems at once, especially problems not thought to be inter-related).

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Social Security and Pensions--what's the future?

This is a follow-up to my post Government We Can Afford.

As presently constituted, the irrefutable facts in the US are:
1) Social Security is fiscally unsustainable;
2) Private pensions are disappearing;
3) Public pensions are fiscally unsustainable and are bankrupting local and state governments.

What to do?
a) abolish all public pensions--obviously this would be "phased-in" so those already retired or nearing retirement would not be affected. Also note that pensions are already disappearing from the private sector;
b) bring every worker into the Social Security system (e.g. currently some federal employees and other public employees are exempt from social security taxes);
c) establish tax-exempt, self-funded retirement accounts for every worker in the US--funds must be deposited with a financial institution regulated by (and in an account guaranteed by) the US government. The default (direct-deposit) automatic deduction from wages would be 5% of gross wages, but each worker could choose to contribute up to a total 20% per annum of gross income to such accounts--self-funded (no employer contributions), complete mobility, and safe. All other retirement programs--pension funds, IRAs, 401ks, etc., would terminate and balances merged into the single "self-funded, tax-exempt, retirement accounts."
d) Remember that my prior post recommended abolishing all social security taxes, so social security would be funded from income taxes and the employer tax, with benefits determined by lifetime earnings, and means-tested per Simpson-Bowles.

The combination of a reformed and broadened Social Security program, together with tax-exempt self-funded retirement accounts, solves the fiscal crisis of unfunded public pension liabilities and unsustainable Social Security benefits. It also provides retirement benefits for everyone, is fair and equitable, and achieves the goals set out by FDR:

American Rhetoric: Franklin Delano Roosevelt - Speech Upon Signing the Social Security Act: "Today, a hope of many years' standing is in large part fulfilled. The civilization of the past hundred years, with its startling industrial changes, had tended more and more to make life insecure. Young people have come to wonder what will be there lot when they came to old age. The man with a job has wondered how long the job would last.This social security measure gives at least some protection to 50 millions of our citizens who will reap direct benefits through unemployment compensation, through old-age pensions, and through increased services for the protection of children and the prevention of ill health. We can never insure 100 percent of the population against 100 percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-stricken old age. This law, too, represents a cornerstone in a structure which is being built but is by no means complete. It is a structure intended to lessen the force of possible future depressions. It will act as a protection to future administrations against the necessity of going deeply into debt to furnish relief to the needy. The law will flatten out the peaks and valleys of deflation and of inflation. It is, in short, a law that will take care of human needs and at the same time provide the United States an economic structure of vastly greater soundness."

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Government We Can Afford

For those of us living in the United States and watching the travails of Europe, it is too easy to overlook our own fiscal cliff looming right before our eyes.  The problem has been festering for years. What's the problem? We have a government we can't afford. 

This problem has variously been referred to as "our fiscal crisis" or "fiscally unsustainable government spending" etc.  Bottom line, federal spending has increased, government revenues haven't kept up. Simpson-Bowles provided a framework to navigate out of this mess. But no one in Washington, from the President on down, has the courage to steer the vessel to a sustainable future.

What to do? In simplest terms, the thing to do is figure out the priorities, fund them, terminate spending for everything else. How much total can we allow for "spending?" About 22% of GDP (2011 it was 24% of GDP--historically federal spending is 21%). Paul Krugman says in addition, right now, we need stimulus--OK, we can also have (in addition to the 22% of GDP spending above) infrastructure spending by borrowing at historically low rates on 30 year bonds--this would provide stimulus through spending on, and only on, needed infrastructure--e.g., updating to 21st Century standards the mass transit systems of our 50 largest MSAs.

If we can agree on the foregoing, then we need to raise revenue annually equal to about 20% of GDP (Paul Krugman says a small deficit is "OK"). How to get there? Abolish all payroll taxes, all capital gains taxes--capital gains, like everything else (including interest and dividends) would be taxed as "income"--why should a billionaire speculator on Wall Street pay a lower tax rate than our best "brain surgeons?" Abolish all tax "expenditures" (deductions, exemptions, special tax breaks, etc.). Only two tax brackets for all taxpayers--individuals, corporations, etc. (which would be territorial taxation only) plus an "employer tax:"

a) First $200,000 in income -- 16% tax rate (withheld by employers and other payors);

b) Income over $200,000 -- 24% tax rate (withheld by employers and other payors).

c) Employer tax: this tax on employers would be equal to 8% of gross "U.S. employee wages and inducements" including "wages, stock options, bonuses, and other corporate executive inducements" but excluding the income of self-employed individuals (which is equivalent to a dividend paid to a corporation stockholder). This tax provides that businesses including corporations, and non-profit corporations, as well as governmental entities, will contribute to the social security and health care costs of the population as well as other costs of government from which they benefit.

I'll let the "wonks" crunch the numbers--adjusting the "rates" is OK--but that's the framework. One benefit of the above is that no annual federal tax return would be required of employed individuals making less than $200,000 a year!

OK that covers "comprehensive tax reform" --what about entitlement reform and other "sacred cows?" I'll cover those over the next few days:
Social Security and Pensions--what's the future?
Education--an easy solution.
Defense--what and how much do we need?
Health care--yes it's a mess (and expensive!)

If you've got any ideas on any of this, feel free to leave a "comment" below.

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Rejection -- a Good Teacher

I came across the following in Metropolis Magazine about the High Line park in New York City--and I recommend it--whether you're in a start-up or not:

Rejection is a Good Teacher | Metropolis POV | Metropolis Magazine: "You need lots of rejections to get one sale. So instead of a daily sales goal, I reversed the normal rules of the game and developed a daily rejection goal. If I wasn’t getting rejected, I wasn’t trying hard enough. If I got a lot of rejections, I made my goal. . . . Sometimes rejection can be a good teacher. Sometimes you almost need to seek it out to be freed from it. When you see the High Line, I hope it reminds you that crazy dreams can come true, and if that is too precious, then maybe you can use my rejection game. It also works pretty well in bars."

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"More Government" is NOT the "Answer"

You think "more government" will solve the U.S. unemployment problem? Look at France--

Why France Has So Many 49-Employee Companies - Businessweek: ". . . Once a company has at least 50 employees inside France, management must create three worker councils, introduce profit sharing, and submit restructuring plans to the councils if the company decides to fire workers for economic reasons. French businesspeople often skirt these restraints by creating new companies rather than expanding existing ones. “I can’t tell you how many times when I was Minister I’d meet an entrepreneur who would tell me about his companies,” Thierry Breton, chief executive officer of consulting firm Atos and Minister of Finance from 2005 to 2007, said at a Paris conference on April 4. “I’d ask, ‘Why companies?’ He’d say, ‘Oh, I have several so that I can keep [the workforce] under 50.’ We have to review our labor code. . . . Companies say the biggest obstacle to hiring is the 102-year-old Code du Travail, a 3,200-page rule book that dictates everything from job classifications to the ability to fire workers. Many of these rules kick in after a company’s French payroll creeps beyond 49. . . . There are now 2.9 million people out of work in France, almost 10 percent of the workforce and the most in 12 years. . . . "

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Mary Meeker: Internet Trends Presentation

Well worth the time for a thorough review: Mary Meeker's presentation concerning internet trends including mobile. Meeker (a partner at Kleiner Perkins Caufield Byers) presented the report at the All Things Digital conference in Rancho Palos Verdes, Calif.KPCB Internet Trends 2012




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UN to regulate the Internet? A VERY BAD IDEA

When I first read this I thought it was some kind of joke--

House to examine plan for United Nations to regulate the Internet - The Hill's Hillicon Valley: "House lawmakers will consider an international proposal next week to give the United Nations more control over the Internet. The proposal is backed by China, Russia, Brazil, India and other UN members, and would give the UN’s International Telecommunication Union (ITU) more control over the governance of the Internet. . . . The Internet is currently governed under a “multi-stakeholder” approach that gives power to a host of nonprofits, rather than governments. Strickling said that system brings more ideas and flexibility to Internet policymaking. “We lose that when we turn this over to a group of just governments,” Strickling said. In an op-ed earlier this year in The Wall Street Journal, McDowell warned that “a top-down, centralized, international regulatory overlay is antithetical to the architecture of the Net.” “Productivity, rising living standards and the spread of freedom everywhere, but especially in the developing world, would grind to a halt as engineering and business decisions become politically paralyzed within a global regulatory body,” McDowell wrote. He said some governments feel excluded from Internet policymaking and want more control over the process. “And let's face it, strong-arm regimes are threatened by popular outcries for political freedom that are empowered by unfettered Internet connectivity,” McDowell wrote."

The idea of giving control of the internet to the UN is A VERY BAD IDEA.  It would be the end of internet freedom.  The United Nations is not competent to administer the internet.  The internet should be free. Its management should continue as it has--under a “multi-stakeholder” approach that gives power to a host of nonprofits, rather than governments.

Web freedom faces greatest threat ever, warns Google's Sergey Brin | Technology | The Guardian: "The principles of openness and universal access that underpinned the creation of the internet three decades ago are under greater threat than ever, according to Google co-founder Sergey Brin. In an interview with the Guardian, Brin warned there were "very powerful forces that have lined up against the open internet on all sides and around the world". "I am more worried than I have been in the past," he said. "It's scary." The threat to the freedom of the internet comes, he claims, from a combination of governments increasingly trying to control access and communication by their citizens, the entertainment industry's attempts to crack down on piracy, and the rise of "restrictive" walled gardens such as Facebook and Apple, which tightly control what software can be released on their platforms."

Oh, I am sure every totalitarian government is lobbying for the "UN" to be given control of the internet. Why Congress is even considering this is unclear. If you care about internet freedom, tell your Senators and Congressman to vote "NO!"

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