I was watching several videos taken on Black Friday of people storming stores first thing in the wee hours to get their hands on the promotional items offer by many retailers. It never ceases to amaze me the efforts people go to in order to get the good deal.
After a few discussions with my father-in-law over the holidays it also ceases to amaze me what financial decisions people make in order to indulge in spending. One particular discussion was about the work my inlaws do at a food bank and a free clinic in northeast Oklahoma. One older gentlemen came into their free clinic one day to see a doctor. The man got to the clinic in a car that most people would not consider unsafe and that would make environmentalist keel over in disgust. As the man was talking to my father-in-law, he noticed that there was a new pack of cigarettes in this man's front pocket. So my father-in-law asked the man, "how do you afford your smoking habit?" To which the man replied, "you just learn to make choices and sacrifice."
Really? You make the choice to smoke over the choice to have regular medical care or safe (and maybe reliable) transportation? At $5/pack, I would imagine (based on the smell radiating from his clothing) that he drops a couple hundred dollars a month on Marlboros.
Unfortunately this is not single occurrence. My inlaws say they see the same choices being made when it comes many customer of the food bank. People showing up smelling of cigarettes, showing multiple tattoos and looking for free food for their multiple kids all while talking to someone on their cell phone.
For the life of me I do not understand how someone's economic priorities can be so screwed up. It really makes me think twice about charity this time of year. While I want to help the less fortunate, I don't want to contribute in any way to any one that believes Marlbors are more important than food, medical care and the basic needs of their family. By the way I do not consider Keystone Light, cable TV, internet, and cell phones basic life necessities. Call me crazy....
Tuesday, November 30, 2010
Saturday, November 27, 2010
End of Life Care
I always DVR Frontline on PBS. It is a great program that tackles some very difficult issues. When I was going through my DVR yesterday, I nearly deleted the latest episode of Frontline as its title was "Facing Death." It would have been a huge mistake to miss this program and I encourage everyone to watch it (click on the link).
I have been through end-of-life struggles with two grandparents. It was particularly diffficult watching the decline of my grandfather who was always a larger than life figure for me. However, the way my grandfather wanted to die was perhaps the most noble thing he ever did for his family. He wanted to die at home with little modern medical interference. He only wanted the basic care that doctors, friends and family could offer and wait for the inevitable. Fortunately, the family agreed to carry out his wishes and let him conclude his amazing life the way he wanted to, at home with the people that loved him.
As for the program on Frontline, it was interesting to contrast the experience with my grandfather with those of the four families chronicled. In some cases I agreed with the actions of the families, in others I was stunned at what families did and wanted done. I guess these decisions are what make people different, but life is about living. Life is not hooked up to a respirator for a year with no consciousness.
Aside from the ethical dilemma of these decisions, I think the program failed to navigate the thorny issue of end-of-life costs. I can completely understand keeping someone on a ventilation machine for a few days until affairs can be worked out when all hope is gone. However, a year in ICU with a ventilator? That really just seems cruel to me and against the laws of nature.
Anyone that thinks remotely about economics would realize that the cost/benefit analysis in many of these situations is simple and very easy to interpret. If the family of the 87 year-old woman would have been asked to pick up a portion of the cost of this care I am confident they would have removed the tube many months earlier. There was no financial cost to them to prolong the life of their loved one. When people perceive there are no costs associated with their decisions, they will over consume. In this case they over consumed precious, and costly, medical care that was completely unnecessary for quality of life.
My position on the above does not mean I endorse death panels. End-of-life decisions need to be made by individuals and family members, not bureaucrats. It does mean these issues need to be understood and discussed openly and, in most cases, clearly documented. There also needs to be economic consequences for these decisions. Can the rich prolong their lives longer than the less fortunate? Yes it does, but it does not mean they are living.
Watch the program and DVR Frontline.
I have been through end-of-life struggles with two grandparents. It was particularly diffficult watching the decline of my grandfather who was always a larger than life figure for me. However, the way my grandfather wanted to die was perhaps the most noble thing he ever did for his family. He wanted to die at home with little modern medical interference. He only wanted the basic care that doctors, friends and family could offer and wait for the inevitable. Fortunately, the family agreed to carry out his wishes and let him conclude his amazing life the way he wanted to, at home with the people that loved him.
As for the program on Frontline, it was interesting to contrast the experience with my grandfather with those of the four families chronicled. In some cases I agreed with the actions of the families, in others I was stunned at what families did and wanted done. I guess these decisions are what make people different, but life is about living. Life is not hooked up to a respirator for a year with no consciousness.
Aside from the ethical dilemma of these decisions, I think the program failed to navigate the thorny issue of end-of-life costs. I can completely understand keeping someone on a ventilation machine for a few days until affairs can be worked out when all hope is gone. However, a year in ICU with a ventilator? That really just seems cruel to me and against the laws of nature.
Anyone that thinks remotely about economics would realize that the cost/benefit analysis in many of these situations is simple and very easy to interpret. If the family of the 87 year-old woman would have been asked to pick up a portion of the cost of this care I am confident they would have removed the tube many months earlier. There was no financial cost to them to prolong the life of their loved one. When people perceive there are no costs associated with their decisions, they will over consume. In this case they over consumed precious, and costly, medical care that was completely unnecessary for quality of life.
My position on the above does not mean I endorse death panels. End-of-life decisions need to be made by individuals and family members, not bureaucrats. It does mean these issues need to be understood and discussed openly and, in most cases, clearly documented. There also needs to be economic consequences for these decisions. Can the rich prolong their lives longer than the less fortunate? Yes it does, but it does not mean they are living.
Watch the program and DVR Frontline.
Sacrifices
I found this story about Alan Simpson to be very interesting. In it, he calls out Seniors for being greedy. I don't think it is just seniors that are being greedy, but everyone that has their hand in the government cookie jar. That includes State Governments, Unions (public sector and private sector), Green Energy, Big Agriculture, Small Agriculture, Defense, Health Care, and many many more.
So what is it going to take in the way of sacrifices for the US to find its fiscal way? I'm not entirely sure. However, I am willing to make sacrifice as I undoubtedly benefit from many government programs (defense, transportation, education, etc.). To be fair (whatever that means) I am willing to make sacrifices if the government is willing to makes changes. If the government would adopt the changes being recommended by the National Commission on Fiscal Responsibility and Reform, I am willing to give up what they recommend and maybe a little more.
The sacrifices that I am willing concede include raising the age in which I can collect social security to 69, dropping the mortgage interest reduction, and cutting the child credit. In fact, I am willing to forgo my entire social security check if the government would stop collecting the piece of Social Security Tax they collect directly from me. They can keep what they have already collected (over $190K) and they can continue to draw the piece my employer pays on my behalf (which is part of my total compensation by the way).
I give the chances of the NCFRR recommendations being implemented at close to 0%. Why? Because special interests will not make sacrifices. The government has created this cruel dependency over the last 100 years and people won't, and in some cases can't, go into rehab to get over this addiction. This addiction is powerful as the demonstrations in Greece, Ireland, Britain and France clearly indicate. There will be lies and misinformation, scare tactics and intimidation every time someone's handout is eliminated.
Politicians have neither the will or desire to stand up and do what is right to save this country. They only have the incentive to get re-elected, not do the prudent fiscal tasks to improve our situation. Term limits will help, but the political incentive system is unfortunately the down side of democracy. When more than 50% of eligible voters have the incentive to keep the gravy train running, there is not much that can be done to save the Republic.
It is all rather depressing, and hopefully I am wrong and the American people will awake from their funk.
So what is it going to take in the way of sacrifices for the US to find its fiscal way? I'm not entirely sure. However, I am willing to make sacrifice as I undoubtedly benefit from many government programs (defense, transportation, education, etc.). To be fair (whatever that means) I am willing to make sacrifices if the government is willing to makes changes. If the government would adopt the changes being recommended by the National Commission on Fiscal Responsibility and Reform, I am willing to give up what they recommend and maybe a little more.
The sacrifices that I am willing concede include raising the age in which I can collect social security to 69, dropping the mortgage interest reduction, and cutting the child credit. In fact, I am willing to forgo my entire social security check if the government would stop collecting the piece of Social Security Tax they collect directly from me. They can keep what they have already collected (over $190K) and they can continue to draw the piece my employer pays on my behalf (which is part of my total compensation by the way).
I give the chances of the NCFRR recommendations being implemented at close to 0%. Why? Because special interests will not make sacrifices. The government has created this cruel dependency over the last 100 years and people won't, and in some cases can't, go into rehab to get over this addiction. This addiction is powerful as the demonstrations in Greece, Ireland, Britain and France clearly indicate. There will be lies and misinformation, scare tactics and intimidation every time someone's handout is eliminated.
Politicians have neither the will or desire to stand up and do what is right to save this country. They only have the incentive to get re-elected, not do the prudent fiscal tasks to improve our situation. Term limits will help, but the political incentive system is unfortunately the down side of democracy. When more than 50% of eligible voters have the incentive to keep the gravy train running, there is not much that can be done to save the Republic.
It is all rather depressing, and hopefully I am wrong and the American people will awake from their funk.
Thursday, November 25, 2010
Understanding Economics
I like to read a paper from my home town on line. Every so often, I like to read the LTTEs or Opinions. Here is one that I had to comment on in the Pratt Tribune. My response to letter is at the bottom, but also here:
To the Editor:
It is unfortunate there is such a misunderstanding about basic economics as this Letter to the Editor shows. It is important to first understand some facts.
US manufacturing output has grown every decade since the beginning of the 1900s. Today Americans produce more output while using less inputs than ever before. This means this country is very productive. It is this productivity that is often confused with reduced output. The confusion is the result of fewer people actually being employed in traditional heavy industry that leads people to believe there is less output. That is wrong. Fewer workers in heavy industry means we can have more people working in services, engineering, and medical care that help improve the quality of our lives as well.
Anyone that has traveled outside the US knows that US Dollars are essentially useless in most countries. The beautiful thing about international trade is we Americans get to give our trading partners pieces of green paper in exchange for goods that make our lives better. So why do our trading partners bother to give us goods in exchange for 6 inch strips of paper? Because they need those dollars to buy our goods because if you want to trade in this country you need dollars. For extra dollars that these entities have, they can put them in a vault and wait to buy more goods, or they can take those dollars and invest them in this country. That is exactly what that Chinese (and many others) are doing today when they buy US Treasuries and help finance our Government's spending addiction.
Free trade is what makes our lives better. In fact, I believe it was the free trade between States that helped create our prosperity. I like getting fresh fruit in the winter months from Chile, eating bananas and drinking coffee from Central America, and having cheap electronics from Asia. Limiting our trade means goods will be more expensive driving our standard of living lower, not higher.
So the question is how can we continue to increase our standard living and give our children a better life? Government cannot great prosperity. That has been proven time and again (think China during the time of Mao or the experiment of Communism in the USSR). Government can only created the environment where prosperity is allowed to blossom.
There are five simple things that government can do to create the necessary environment for prosperity.
1. Secure private property rights
2. Secure Rule of Law
3. Allow for spontaneous order without unnecessary regulations
4. Allow entrepreneurs to enjoy profits and endure losses without interference
5. Secure free speech and promote knowledge exchange
Isolating ourselves from the rest of the world through embargoes, tariffs, and other protectionist measures will only make matters worse for future generations, not to mention make the world less secure. After all, who wants to be at war with a good trading partner (known as killing the goose the lays the golden eggs).
I know it is easy to get caught up in politics and rhetoric. However, politicians rarely give service to good economics so let's make them accountable.
To the Editor:
It is unfortunate there is such a misunderstanding about basic economics as this Letter to the Editor shows. It is important to first understand some facts.
US manufacturing output has grown every decade since the beginning of the 1900s. Today Americans produce more output while using less inputs than ever before. This means this country is very productive. It is this productivity that is often confused with reduced output. The confusion is the result of fewer people actually being employed in traditional heavy industry that leads people to believe there is less output. That is wrong. Fewer workers in heavy industry means we can have more people working in services, engineering, and medical care that help improve the quality of our lives as well.
Anyone that has traveled outside the US knows that US Dollars are essentially useless in most countries. The beautiful thing about international trade is we Americans get to give our trading partners pieces of green paper in exchange for goods that make our lives better. So why do our trading partners bother to give us goods in exchange for 6 inch strips of paper? Because they need those dollars to buy our goods because if you want to trade in this country you need dollars. For extra dollars that these entities have, they can put them in a vault and wait to buy more goods, or they can take those dollars and invest them in this country. That is exactly what that Chinese (and many others) are doing today when they buy US Treasuries and help finance our Government's spending addiction.
Free trade is what makes our lives better. In fact, I believe it was the free trade between States that helped create our prosperity. I like getting fresh fruit in the winter months from Chile, eating bananas and drinking coffee from Central America, and having cheap electronics from Asia. Limiting our trade means goods will be more expensive driving our standard of living lower, not higher.
So the question is how can we continue to increase our standard living and give our children a better life? Government cannot great prosperity. That has been proven time and again (think China during the time of Mao or the experiment of Communism in the USSR). Government can only created the environment where prosperity is allowed to blossom.
There are five simple things that government can do to create the necessary environment for prosperity.
1. Secure private property rights
2. Secure Rule of Law
3. Allow for spontaneous order without unnecessary regulations
4. Allow entrepreneurs to enjoy profits and endure losses without interference
5. Secure free speech and promote knowledge exchange
Isolating ourselves from the rest of the world through embargoes, tariffs, and other protectionist measures will only make matters worse for future generations, not to mention make the world less secure. After all, who wants to be at war with a good trading partner (known as killing the goose the lays the golden eggs).
I know it is easy to get caught up in politics and rhetoric. However, politicians rarely give service to good economics so let's make them accountable.
Friday, November 19, 2010
Excuse me...That's my &*$# your touching....
I absolutely love the American revolt around the new TSA procedures involving full-body scans and pat-downs. This says more about the political climate of America today than the Tea Party movement.
I have to say that I am stealing come material from Cafe Hayek, but this change in not about providing 100% assurance that no one is killed by a terrorist with an airplane. As Russ says, if that was the case then the government would just ban flying.
Airlines have a lot to lose if people do not feel safe on airplanes. They have the financial incentive to find the right balance of security and discretion. Too much security and people will pick another airline. To little discretion and people won't feel safe and pick another airline. The TSA is trying to impose more bureaucracy on an agency that is already bloated and ineffective (how about those puffer machines any one...millions down the drain) with no idea whatsoever about the costs they impose (just look at your tickets taxes the next time you fly).
American should revolt and push back on these new procedures. They are an infringement on privacy and liberty. If people don't feel safe, they won't fly. If airlines can't provide the right level of safety, people won't fly. The current TSA policies are not market based. These ideas are big-brother based where a few do-gooders are imposing their own ideas of safety on the public.
It won't stop here. The bigger government gets, the more do-gooders will impose there will on the public. Before long, people won't have their own choices to make, the do-gooders in DC will be doing that for you. There will also be times when do-gooders conflict with other do-gooders as more and more people want to impose there will on you. How about one part of the Dept of Ag giving away cheese (who doesn't what to help the down trodden Dairy Farmer) while another dept, within the Dept of Ag, decries the fat content that Americans consume (who wants to have all these obese Americans).
There is no doubt in my mind that all these d0-gooders want to make America a better place (at least what is better in their mind). Better for me is to let me (and others) choose what airline has the balance of safety I want. Better for me is to let me decide what I want my America to look like. Chances are that is a much different vision America than that of many other folks. That's what makes America great and that my friends is what Liberty looks like.
I have to say that I am stealing come material from Cafe Hayek, but this change in not about providing 100% assurance that no one is killed by a terrorist with an airplane. As Russ says, if that was the case then the government would just ban flying.
Airlines have a lot to lose if people do not feel safe on airplanes. They have the financial incentive to find the right balance of security and discretion. Too much security and people will pick another airline. To little discretion and people won't feel safe and pick another airline. The TSA is trying to impose more bureaucracy on an agency that is already bloated and ineffective (how about those puffer machines any one...millions down the drain) with no idea whatsoever about the costs they impose (just look at your tickets taxes the next time you fly).
American should revolt and push back on these new procedures. They are an infringement on privacy and liberty. If people don't feel safe, they won't fly. If airlines can't provide the right level of safety, people won't fly. The current TSA policies are not market based. These ideas are big-brother based where a few do-gooders are imposing their own ideas of safety on the public.
It won't stop here. The bigger government gets, the more do-gooders will impose there will on the public. Before long, people won't have their own choices to make, the do-gooders in DC will be doing that for you. There will also be times when do-gooders conflict with other do-gooders as more and more people want to impose there will on you. How about one part of the Dept of Ag giving away cheese (who doesn't what to help the down trodden Dairy Farmer) while another dept, within the Dept of Ag, decries the fat content that Americans consume (who wants to have all these obese Americans).
There is no doubt in my mind that all these d0-gooders want to make America a better place (at least what is better in their mind). Better for me is to let me (and others) choose what airline has the balance of safety I want. Better for me is to let me decide what I want my America to look like. Chances are that is a much different vision America than that of many other folks. That's what makes America great and that my friends is what Liberty looks like.
Sunday, November 14, 2010
Rich vs Poor
I usually read Frank Rich's work in the New York Times every week. As a result I usually get frustrated that a writer with as much influence as this man can write materials like this that are just plain nonsense. His Op-Ed this week is no different, but slightly more irritating.
The first thing that hits me about this column, which is primarily about income inequality, is that the author makes no case for why differences in income are bad. He just frames up the issue that there are people that are have nots and other people that are haves. What exactly is wrong with this?
Mr. Rich wants higher taxes on the rich. Is it not enough that the top 10% of income earners pay 68% of the income tax in this country? Even worse, 47% of people pay nothing or get money back at tax time.
From the column...
I also have to argue that non-superrich lost ground. Relative to the top 1% maybe they did lose ground by comparing relative incomes by class (most like not the same people), but does that mean their standard of living fell? I doubt it. My guess is that most people in the bottom 20% of incomes enjoy a much higher standard of living today than people in the same economic class 40 years ago. I would bet that they enjoy things like color TV, cable, cell phones, microwave ovens, computers and many other things that only the superrich/rich had access to 40 years ago.
It is easy for newspapers to write articles that get the middle class fired up and play on the jealous attitudes of people that feel victimized. While this might be good for newspaper sales, it just makes it more apparent that people are more uninformed than ever about facts and have no basic understanding of economics. This is the real crisis, not income inequality.
The first thing that hits me about this column, which is primarily about income inequality, is that the author makes no case for why differences in income are bad. He just frames up the issue that there are people that are have nots and other people that are haves. What exactly is wrong with this?
Mr. Rich wants higher taxes on the rich. Is it not enough that the top 10% of income earners pay 68% of the income tax in this country? Even worse, 47% of people pay nothing or get money back at tax time.
From the column...
the superrich who have gotten spectacularly richer over the last four decades while their fellow citizens either treaded water or lost ground. The top 1 percent of American earners took in 23.5 percent of the nation’s pretax income in 2007 — up from less than 9 percent in 1976.Why did the top 1% of earners get 23.5% of the nation's income? Did they steal it? Did they cheat someone out of it in a game of poker? No, they got wealthy because the created value for people that bought their products and services. Bill Gates became a multi-billionaire because his software allowed millions of people to create even more wealth using his products.
I also have to argue that non-superrich lost ground. Relative to the top 1% maybe they did lose ground by comparing relative incomes by class (most like not the same people), but does that mean their standard of living fell? I doubt it. My guess is that most people in the bottom 20% of incomes enjoy a much higher standard of living today than people in the same economic class 40 years ago. I would bet that they enjoy things like color TV, cable, cell phones, microwave ovens, computers and many other things that only the superrich/rich had access to 40 years ago.
It is easy for newspapers to write articles that get the middle class fired up and play on the jealous attitudes of people that feel victimized. While this might be good for newspaper sales, it just makes it more apparent that people are more uninformed than ever about facts and have no basic understanding of economics. This is the real crisis, not income inequality.
Tuesday, November 9, 2010
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