Archive for the ‘Economics’ Category.

Cord Cutting 2017

Back in Dec 2015 I wrote an update to my experience cord cutting, ending my subscription to DirecTV having cancelled my service in June of that year. Here’s an update.

So approaching two years of living without DirecTV or cable television. So how do I feel about that? Do I miss commercial pay television? That laughing you hear over the Internet is me. Having spent roughly $7,000 on pay TV till that point I reckon that since June 2015 I have saved roughly $60 a month, or over $1,300, and I still watch a ton of TV. I currently subscribe to Amazon Prime, Netflix, Hulu (although I’m about ready to ditch it), HBO Now, Acorn TV and recently added Crunchyroll for Japanese anime and drama all via a Roku 3. I probably watch an average of 3 hours of TV a day, less than most Americans, but what I do watch is much better quality, shows like Grimm, the Walking Dead, The Expanse, plus a slew of Japanese stuff that you cannot get anywhere but Crunchyroll.

Cutting the cord changed my viewing habits. I used to leave the TV on for company but replaced it with streaming music from Pandora. When I was bored I’d watch Discovery Channel but now I do other things. So when I sit down to watch TV it is to watch something good, not to avoid boredom. That wasn’t my original intent when I cut the cable, but it is a perk.

There is danger on the horizon. I’m discovering new streaming channels, so it’s only a matter of time before much of the cost savings is eaten up by new streaming offerings. For example I’m looking for more Japanese TV subtitled in English, and worst of all there is a competitor to Acorn TV for British shows that just started up, Britbox. There’s always plenty to watch even for a niche viewer like me who is hooked on Japanese dramas and British comedies.

Oh and DirecTV? I still get junk mail from them every few weeks with the same stale offer, return to paying $100+ a month for stuff I don’t watch and they’ll give me a $200 Visa gift card. Woo-hoo! Not. Ain’t happening and I really regret the holes in my roof caused by the satellite dish that remains there, gazing at the southern sky, slowly rusting away.

United Airlines Forgets Capitalism Beats Up Passenger

Social media is ablaze with video taken of a United passenger being forcibly removed from an overbooked flight to open a seat for a United employee.

The video inspired this new United commercial by Jimmy Kimmel:

I understand that airlines need to be profitable and overbooking is a necessary evil. The airlines follow the best solution: pay a passenger to give up their seat. Evidently on this flight United personnel offered $400 + hotel, then doubled that to $800 but no one volunteered. United’s mistake was to stop there.

Offer enough money and someone will take it. There were 70 passengers on the flight. Would a $1,000 + hotel have convinced someone to volunteer? If not how about $1,200 or $1,500? Everyone of those 70 people had a dollar figure they would have accepted for the inconvenience of being stuck in Chicago for another day.The next flight was 22 hours later (why didn’t United offer to book the passenger on another airline? Was that really the next flight or the next United flight?) which is a considerable delay for most travelers but for the right price someone would have taken the cash.

United had an auction on their hands, the staff just didn’t realize it. They quit bidding before hitting the lowest price a passenger was willing to accept for another day in Chicago. Had they raised the offer by $200 increments they likely would have found someone quickly. $800 is pretty tempting to me but offer $1,200 airfare to Italy and I would have been off that plane and in a deep dish pizza restaurant, no beating necessary.

The problem is that United forgot that we live in a capitalist society. Airlines including United have been coddled since 9-11 by the government and have operated as a monopoly that competition is no longer in their DNA. When the capitalist tool of cash appeared to fail the United personnel immediately resorted to state sanctioned force in the form of the police. United is a private corporation and that knee-jerk resort to force over cash is what troubles me most about the incident. United acted like Aeroflot during the Soviet days instead of a competitor in a free market.

Every problem doesn’t need the involvement of Congress, but the problem this incident highlights is due to government intervention in the market. The federal government has limited competition in the US domestic market from foreign airlines to protect US airlines. Since deregulation in the late 1980s the US has gone from dozens of domestic carriers to just three. Foreign carriers are allowed to fly from domestic US airports to foreign destinations but are forbidden to fly from one US city to another. Allowing foreign airlines to fly routes like Chicago to Louisville would shake up Delta, United and American Airlines and discourage such heavy handed behavior as seen on that United flight. UK-based carrier Virgin Airlines bans overbooking so the incident never would have happened on one of its flights.

US airlines have forgotten how to compete. It’s up to Congress to act and allow foreign airlines to teach them in their home market.

Our Miserable 21st Century

Our good friend and fellow Watchers council member The Glittering Eye alerts us to a must-read post at Commentary magazine that explains why Americans feel their country is on the wrong track. “So general economic conditions for many ordinary Americans—not least of these, Americans who did not fit within the academy’s designated victim classes—have been rather more insecure than those within the comfort of the bubble understood. But the anxiety, dissatisfaction, anger, and despair that range within our borders today are not wholly a reaction to the way our economy is misfiring. On the nonmaterial front, it is likewise clear that many things in our society are going wrong and yet seem beyond our powers to correct.”

It’s a must read.

For generations Americans came to expect a rising standard of living. But the jobs that provided that for those without a college degree are pretty much gone, and the college degree itself has become increasingly expensive and its value debased. Many of the same trends that gutted the manufacturing sector such as offshoring in search of cheap labor and increased mechanization are now moving into the service sector. For many Americans it has become a Red Queen’s Race to maintain their current lifestyle, often they often resort to credit to do so. For others their standard of living is in decline and they know it.

Then there are the young, facing college degrees that cost well into the six figures which deliver incomes only into the middle five. Education was always the “ace in the hole” for Americans, but while degrees are used to weed out candidates, unless they are in very specific niche fields they rarely justify the expense to obtain them.

I am middle aged, married and by most measures comfortable. Yet I have no retirement savings, I am still paying off my wife’s medical school loans, and I worry about the job prospects of our adult child. I feel like ours was the last generation to advance up the ladder through conventional means (hard work, sacrifice and education) and that after we arrived someone pulled the ladder up behind us.

How are people now in their teens and twenties supposed to succeed if their aren’t any well-paying jobs?

Of course there will always be entrepreneurs like Steve Jobs, but we can’t be a nation of Steve Jobs especially when Apple is the biggest company in the USA yet employs less than 70,000 people here. We need the equivalent of the old manufacturing companies that employed hundreds of thousands of people at salary levels that would be well into the six figures by today’s standards.

Sure the stock market is reaching highs, but most people don’t own stock and most that do can’t touch that wealth until they retire. Will it still be there when they do?

Americans know something is wrong, but we haven’t put our fingers on exactly what yet, and even when we do it’s not clear to me what the solution is.

How do we employ millions of people at $100k a year or better? I have no clue and neither do any of the Nobel prize winning economists.

We are entering uncharted territory. It is possible that the gap that has become a gulf between the wealthiest and the rest of of us will continue to grow, in which case the only solution might be some form of redistribution. But the wealthy are very good at protecting their wealth and can move it as a last resort should the less well off demand “their fair share.” Raise taxes on the wealthy and their money will disappear in the blink of an eye.

As an American I am supposed to be optimistic about the future, but I’ve seen too many smart people make stupid decisions that make things worse for everyone to be anything but pessimistic.

The Failure of the Davos Globalist Elite

When did people start believing that “buy American” and thinking about America first were bad?

Countries already worry about their own first. They enter deals which benefit them or their people. The Japanese enter trade deals because it creates jobs and improves the lives of the Japanese. The Chinese do the same as do the Russians. Most countries already have laws that encourage governments and their citizens to buy their own products. It’s naive to think that countries don’t put the interests of their citizens first.

What globalization proponents have failed to do is to explain how trade with other nations benefit a specific country. Free trade is supposed to be a benefit to all participating countries, not a zero sum game where one country wins at the expense of another.

Globalization proponents have failed to fully appreciate the devastation to workers and their communities when factories and businesses move abroad. This is because within a trading country free trade is a zero sum game: there are winners such as the Silicon Valley billionaires and consumers who pay less for products, and losers, such as factory workers in the Midwest and South. Many globalists don’t have any contact with or understanding of the lives of these people. For them it’s an academic argument “there will be winners and losers in the economy blah blah blah” but for a person working at the factory it’s the center of his or her existence.

For twenty-somethings with college degrees it’s easy to switch careers. For people in their forties and fifties who have mortgages, children and elderly loved ones to support, and car payments it’s nearly impossible. We haven’t found a way to take a laid off middle aged factory worker in the Midwest and train her with new skills that will immediately pay the same or more than she is currently earning in her factory job. When factories close workers usually end up finding jobs earning half of what they previously earned. The trickle down effects of this can be seen throughout communities in the South and Midwest.

Those who have suffered from globalization have found little support from the major parties. Democrat Bernie Sanders recognized them as did Republican Trump but the ruling elite of both Democrats and Republican is controlled by globalization forces. Democrats like Hillary Clinton and Republicans like Jeb Bush have supported free trade and immigration policies that have crushed the working poor. Only Sanders and Trump appreciated their plight.

If we are to maintain a free trade globalist system we must come up with a means of redistributing wealth from the winners to the losers within a country. But so far this has been completely ignored by globalists meeting in Davos Switzerland. “People talk about inequality, how it’s a major problem, the greatest threat to globalization and the global economy,” (Nobel Prize wining economist Joseph) Stiglitz said. “You have to recognize that the way we have managed globalization has contributed significantly to inequality. But I have not yet heard a good conversation about what changes in globalization would address inequality.”

Redistribution of wealth is instinctively hated by libertarians and conservatives, but the Left has remained silent, refusing to confront their globalist allies in Silicon Valley, Hollywood and New York. Free Trade has been oversold to citizens. It’s not perfect and it does damage lives. Unfortunately the ruling elite hasn’t figured out how to fix that damage and support those who lose their jobs by confiscating wealth from the few winners and handing it to the millions of losers in an economy. Until they do it will be populists like Trump, Farage and Le Pen who will write History.

Oh the Taxes You’ll Pay

Here in the US tax season has begun and my inbox is getting cluttered with offers from tax software companies. This got me thinking a depressing thought: What are all the taxes we pay, and how much do they take?

Federal income tax is the big one. Depending on your earnings you will pay between 10% and 39.6%.

FICA is a federally mandated wage tax comprised of Social Security tax (6.2% on first $127,200) + Medicaid tax (1.45% on the first $200,000). If you are employed as a W-2 employee your employer will deduct these taxes out of every check you earn. In addition the employer pays the same amount (6.2% + 1.45%) as their share of FICA to the IRS.

Then there are state income taxes which range from none in several states including Texas, Nevada and Washington to 13.3% in California. Full list here.

Localities such as cities and some counties have income taxes. For example, if you live inside the city limits of New York City you pay between 2.9–3.4% income tax. Source.

If you own a home you will pay property taxes based on the value of your home. Hawaii charges the lowest rate, 0.28% and homeowners in New Jersey pay the highest, 2.29%,

Then there is personal property tax which is levied by states and counties on property such as vehicles. These taxes are usually collected when vehicles are registered.

We also have sales taxes. Delaware and New Hampshire don’t have them but most states tax sales of goods and services and sometimes food. In my state the tax rate on food is 2%, on everything else 7.7%.

“Sin taxes” are extra taxes placed on the sale of alcohol and tobacco products to make them less appealing to buyers and to help recoup some of the costs these items place on society. In many places the taxes are the biggest component of the cost of cigarettes and hard liquor.

And if you drive you’ll pay gasoline tax which has both a federal and state component. These range from $.30 to $.70 a gallon depending on where you live. Think you can get around these taxes if you drive an electric car? Think again. Several states have implemented taxes on electric cars.

Here’s a summary:

Zerohedge has a list of 97 taxes Americans pay. For conservatives it makes for depressing reading but I bet it makes liberals positively giddy.

Keep Calm and Carry On

Over the past few days we have witnessed the aftermath of the Brexit vote. Stock markets have plunged and the British Pound has lost 12% of its value over two trading days. Ratings agencies have downgraded the UK from AAA to AA, to say nothing of the hysterical reactions by the the European ruling elites and their Remain camp supporters. Rachel Maddow is not even a Brit but that doesn’t stop her from claiming Brexit will lead to World War 3, and livid commentators both British and European are saying things like “Some things are too important to put to a vote,” and “Democracy doesn’t work.”

Some things are too important to put to a vote when that some thing is your pet project. Democracy doesn’t work when votes are cast and you lose. The meltdown of the progressive transnational elite isn’t surprising to those of us who have raised kids. It’s nothing more than a toddler laying down in the aisle of the grocery store to have a fit when you refuse to buy him a breakfast cereal sugar-bomb, just those freaking out are much older, better dressed and speak with pleasant accents. Many of these people truly believe that they know better than others, and they cannot believe that the ignorant masses ignored them to do the opposite. Unfortunately they are too busy making fools of themselves by peddling apocalyptic visions like Jeremiahs in tailored suits that they are blind to why the masses voted the way they did. After all, they have profited from globalization and the European project. They don’t worry about their job being shipped abroad, or watch as their neighborhoods get turned into refugee camps.

So the stock markets are jittery because they hate volatility. That’s a natural reaction because everyone would love to live in a nice predictable world and that includes stock traders. But Brexit is a scapegoat for an overvalued market in an earnings season where few companies outperformed their mediocre expectations. The drive to contain volatility that started under Paul Volcker has led to a string of market bubbles that burst every 8-10 years. We’re about due for a blow up and the increased volatility the markets are showing right now reflects traders coming to their senses more than it does an unknown impact Brexit will have on the EU. Oh, and as for S&P and Fitch downgrading the UK’s credit rating, I happened to watch a great little movie called The Big Short on the way back from Ireland last month, and these are the same outfits that were slapping AAA ratings on balloon mortgages with zero down in Florida just before they tanked the economy in 2008, so I’d recommend keeping that in mind whenever someone mentions the ratings downgrade in an important-sounding tones. Here’s a brief clip from the movie.

Although I supported Brexit and continue doing so, I see it as a step towards a better future not just for the UK but for an integrated Europe that includes the UK. That continent has 3000 years of history written in blood, and it is naive for us to think that the EU is going to fully integrate 27 nations, end all conflict and govern 400 million people effectively in 25 years. The EU as it exists today has failed and Brexit proves that, but Brexit doesn’t mean that the dream of a united Europe is dead.

Americans tend to forget that our republic’s first shot at ruling itself was the Articles of Confederation, a disaster that almost ended the experiment in democracy within a few short years after independence. The articles gave too little power to the central government and too much power to individual states, whose governors took them in different directions. Thankfully cooler heads prevailed and a second attempt was made, and in 1789, 13 years after independence and 6 years after the end of the Revolutionary War, the US Constitution was ratified. The constitution created a series of checks and balances between various branches of government as well as protected minority votes and proscribed majority votes, providing a balance of power that the articles lacked.

Europe can do the same. If cooler heads prevail, Europe can create the balance of power needed, allowing Europeans to have a say how they are governed, creating institutions that serve the people instead of dictating to them. Provide more effective governance and people will be clamoring to join just as they did in the early days instead of threatening to leave as they are now.

These are all large issues with answers beyond everyone, including the commentariat on BBC and CNBC. It will take time for tempers to cool and for sanity to be restored, but in the mean time the best course of action is to do what the British are best at: Keep Calm and Carry On. It’s about time the Continent learned this from their island neighbors.

Why I Support Brexit

25 years ago the Maastricht Treaty and the subsequent creation of the EU excited me. Now a quarter century on the EU has become a bureaucratic and anti-democratic mess. While the decision to stay or go lays solely with citizens of the UK, as a devout Anglophile and friend of the UK I believe that it is in the best interests of the UK to leave the EU and resume its role in the world as a beacon of Democracy unfettered by the laws and regulations set by Brussels.

UK Justice Minister Michael Gove said, “the laws we must all obey… should be decided by people we choose and who we can throw out… But our membership in the European Union prevents us… from being able to choose who makes critical decisions which affect all our lives. Laws which govern citizens in this country are decided by politicians from other nations who we never elected and can’t throw out.”

That’s the only reason I need to hope the people of the UK decide to leave the EU.

 

Time to Outsource the CEO?

Workers in the industrialized world have been looking over their shoulders ever since the Industrial Revolution. First automation threatened their jobs. Then with the advent of globalization and the rise of free trade cheaper labor abroad either left them unemployed or kept a lid on their wages. More recently lax immigration law enforcement coupled with legal labor dumping through programs like the H-1b and J-1 visa programs have limited wages low paid hotel maids to high paying legal and computer jobs. Decades of this competition in which the American worker or professional feels as if she is running a Red Queen’s Race have fueled the support of anti-establishment, anti-trade candidacies of Donald Trump and Bernie Sanders. These workers and professionals are told that they must constantly upgrade their skills, change careers or uproot and move in order to earn a living, often by academics who are tenured and corporate executives whose jobs are secure against those same pressures.

Trump and Sanders peddle protectionist or tax solutions to decrease the gap between the rich and poor. But what if there was another way besides raising walls and taxes to level the pay gap between the average worker and the average corporate CEO?

What if business executives including CEOs and entire corporate boards felt that same pressure? Is it possible to outsource the corporate board, replacing it with a more effective and cheaper solution? After all, a company doesn’t exist for its workers nor for the benefit of society. A company exists to make money for its shareholders. Shareholders own the company not the CEO or the board of directors, so they work for the shareholders just as a minimum wage employee does. So why shouldn’t corporate officers face the same pressures as rank and file employees?

The Economist notes, “Boards are almost exactly as they were a hundred years ago: a collection of grey eminences who meet for a few days a year to offer their wisdom.”The past 100 years have witnessed assembly lines and mass production, automation, the rise of suburbia and the demise of rural life, free trade regimes, the death of labor unions in private industry and its expansion in the public sector, liberal immigration policies, offshoring, outsourcing, specialization and numerous other changes that have remade the American economy several times over. Yet corporate boards function as they did when most cars were hand built and women couldn’t vote.

Is this what our economy needs? Corporations run by boards packed with cronies like “the former headmistress of (former Disney CEO Michael Eisner’s) children’s school and the man who designed his house.” Why shouldn’t the top leadership be subject to the same economic Darwinism of the lower ranks?

In the May 2014 issue of the Stanford Law Review Professors Stephen M. Bainbridge & M. Todd Henderson suggest shareholders replace their corporate boards with “board service providers.” They advocate that  outsourcing the board of a company “will increase board accountability, both from markets and from courts,” improve corporate transparency, boost efficiency and lower the cost of corporate governance. In summary outsourcing the board would deliver the same promised results as offshoring production or outsourcing departments. Bainbridge and Henderson believe that all it would take would be a simple change to state corporate law requiring directors to be “natural persons.”

There are times when companies have truly visionary CEOs. Apple’s Steve Jobs or Microsoft’s Bill Gates come quickly to mind. But most companies don’t have anywhere near that level of talent, and would do well with experienced, efficient and competent leaders who also happened to be paid far less than they were in the past. It’s easy for those of us who have worked in IT for a generation and seen the changes in the field brought by outsourcing and offshoring to support such a change as replacing the board of directors with a board service provider. If we have to look over our shoulders and constantly upgrade our skills just to remain employed at the same salaries, why shouldn’t the decisionmakers at the top?

Free Trade: I Want to Believe

Bloomberg has an article showcasing the winners and losers of a manufacturing company’s move from southern Kentucky to northern Mexico. First the losers. “Randall Williams and his wife, Brenda, were two of those workers. For three decades, they helped assemble the hermetically sealed motors that power air conditioners sold all across America. At the end, they were each making $16.10 an hour. That kind of money’s just a dream now: Randall fills orders at a local farm supply store; Brenda works in the high school cafeteria. For a while, he said, their combined income didn’t even add up to one of their old factory wages… ”

Then there are the winners. “Just as the Williamses were being informed by A.O. Smith that they’d be let go, a young Mexican woman named Zoraida Gonzalez was hired some 1,200 miles away in the hardscrabble town of Acuna, just over the Rio Grande from Texas. To replace its Kentucky output, A.O. Smith was ramping up production in lower-cost Mexico, a move facilitated by the signing a decade earlier of the North American Free Trade Agreement. Gonzalez was brought in to help handle phone calls. Now 30 years old and in charge of payroll, she makes about $1.75 an hour…”

In theory free trade should make more winners than losers. A company that offshores manufacturing should save money. This money will go into hiring other employees  whose jobs cannot be sent abroad, or be paid to investors in the form of dividends. This money will stimulate demand or be used for more investment, creating jobs that will replace those lost by the Williams’s while at the same time lowering the cost on the things they buy, though the Williams’s might have to relocate to get those jobs.

Unfortunately the theory isn’t working that way in practice as a recent paper by M.I.T.’s David H. Autor, UCSD’s Gordon H. Hanson, and the University of Zurich’s David Dorn of the University of Zurich found. “Instead, unemployment rose both among manufacturing and nonmanufacturing workers, suggesting that the ill effects of increased trade had a spillover impact on the larger local economy. On top of that, average weekly wages declined. In general, places like Tennessee were very slow to adapt to the new economic reality—their elevated unemployment rates and diminished wages persisted for a decade, the paper’s authors estimate. The workers there are also saw a lower lifetime income.”


Even the free trade cheerleader The Economist takes American companies to task for hoarding cash saved by offshoring and other job cutting measures instead of plowing it back into the economy. “Abnormally high profits can worsen inequality if they are the result of persistently high prices or depressed wages. Were America’s firms to cut prices so that their profits were at historically normal levels, consumers’ bills might be 2% lower. If steep earnings are not luring in new entrants, that may mean that firms are abusing monopoly positions, or using lobbying to stifle competition. The game may indeed by rigged.”


One of the theories of Karl Marx’s insomnia cure, “Das Kapital” is that under capitalism money tends to accumulate as winners take all and leave scraps for everyone else. When it accumulates it is less useful than when it is spent. It then becomes up to the government to step in and redistribute it – at least until money is completely abolished. Or something like that. I think that’s as far as I ever got in that billion page long book, required reading in my Marxist Economics class taught by a real honest-to-goodness Israeli Communist.


Free trade is supposed to improve the economic prospects of everyone in aggregate. For losers like the Williams’s, there should be winners not just in the USA but in their own communities. But that is not happening. Instead of leading to greater prosperity, free trade has created stagnant wages and diminished prospects for American workers. The economy booms when a company opens, and everyone in the area prospers as the wages filter through the economy. Then the jobs are lost in one area, but gained by another as the wave of prosperity crosses borders and improves the life of those like Ms. Gonzalez.


But the wave will not stop in Mexico. As prosperity descends on northern Mexico, wages will increase and reach a point where there will be an economic incentive for companies to find cheaper labor elsewhere. This has already happened in Latin America as many of the jobs created by NAFTA move from there to China. And even the Chinese are feeling pressure from lower wage nations such as Vietnam, Cambodia and others. People float in an economic sea, and become prosperous as the wave of prosperity raises them up, but then makes them less so as the wave moves on. The question then becomes: Are the people better off after the wave recedes? Will another follow it?


And that’s where the Williams’s come in. Ask them if they are better off. Then pull the lens back and look at the communities in America’s rust belt cities and see whether cities like Pittsburgh, Detroit and Gary are better off today than they were forty years ago. As the paper by Autor, Hanson, and Dorn proves that next wave of prosperity may never come for some.


Marxist Economics class aside, I was educated to believe in the free trade. Even after I suffered the indignity of training my foreign replacement at my tech job, I wanted to believe that my community was better off under the free trade than it would be without it. I remember talking with a reporter about how America’s real religion was free market capitalism, and that our nation had embarked on a great experiment based on the faith that the the free trade would benefit everyone.


But after decades of trade deficits, wages that haven’t changed since the 1970s and the American worker’s Red Queen’s Race, I think it’s fair to ask, has our faith been well-placed?

Ammo Tax? How About an Abortion Tax?

One of the posts at The American Interest suggests the tactic of gun grabbers should switch from gun confiscation, which the writer says is unlikely to ever happen, to taxing ammunition. He even tries to make it more palatable by saying ammo could be tax free at shooting ranges and for police but in the free market a 10,000 percent tax – making a $.19 9mm round $19 – would curb gun usage and ultimately, gun ownership. Chris Rock raised the same argument, saying gang-bangers would shoot more carefully if each round cost $5,000.

Legally it would be much easier to raise the taxes on ammunition than ban its sale completely. A similar tactic could be used by pro-Lifers to discourage abortion.

For the sake of argument I’m going to make the following assumptions: The wealth spent on raising a child would be spent on other goods and services, making the economic activity from a social perspective the same whether a child is born or not. The expenses in retirement are covered by social taxes paid earlier in life – a big assumption on my part I know.

From Society’s point of view a child consumes resources until adulthood, at which time s/he generates income by working and paying taxes until s/he retires. For argument’s sake let’s assume the aborted child would have held a job. started earning at the age of 25 and stopped at the age of 65, a total of 40 years of productivity. S/he would then die 15 years later, assuming the current life-expectancy of around 80.

So 40 years of productivity. The average income in the United States is roughly $50,000. Multiplying the two together we get $2 million in lost earnings. Earning $50,000 means contributing about $10,000 a year in taxes, making a total tax bill during the productive years of $400,000 in lost tax revenue.

So each abortion costs the government roughly $400,000. In 2014 there were roughly a million abortions, meaning the potential lost revenue of $400 billion. Since abortion was legalized in the US over 25 years ago, this means that the US government today is missing out on the taxes that would have been paid by the “lost taxpayers” who were aborted in 1991 – about 1.4 million. Just this cohort could have contributed $14 billion in taxes this year. There were nearly 23 million abortions in the US from its legalization in 1973 until 1991. Applying our numbers to these lost taxpayers and we find that abortion has cost the state, local and federal governments in the US $230 billion in 2016.

Shouldn’t the government recoup that cost somehow? Perhaps if a woman had to pay a $40,000 tax she’d be more careful about getting pregnant just as gun grabbers claim extreme taxes on ammunition would discourage people from shooting others.

As a pro-Life, gun owning libertarian who supports legal abortion I believe such taxes whether on abortion or ammunition prohibit liberty instead of enhancing it. But the above little “thought exercise” shows how easy it is to take a tactic used to curb one freedom and use it to justify curtailing another. Gun-grabbing Pro-Choicers take note.

 

 

The NFL: Not For Long

As a former St. Louisan I’m not sad to see the Rams leave town. They’ve always been the Los Angeles Rams to me, even when they won the Super Bowl. Football in St. Louis always came second to baseball, and St. Louis is destined to forever be a baseball town with its beloved St. Louis Cardinals.

St. Louis Rams fans can at least take some consolation in the fact the tax deductions they see in their weekly paychecks aren’t going to line the pockets of billionaires. Using public funds to build sports stadiums is a bad investment by communities, yet that doesn’t stop civic boosters from taking money from their poor and middle class citizens and showering it on billionaire team owners and real estate investors. But hey, at least it’s not as bad as tobacco growing states like my homestate of North Carolina handing cash to the cigarette companies.

Or is it?

A century ago boxing was  tied with baseball as the most popular sport. Today boxing is tied with “Not Sure” at the bottom of the country’s top 10 most popular sports. Football only edged out baseball to become the nation’s most popular pastime in the mid-1980s, and recently its popularity has leveled off. Movies like Concussion which chronicle the NFL’s cigarette company-like stonewalling the investigation into chronic traumatic encephalopathy (CTE), and the publicized deaths of players such as Junior Seau might have something to do with this cooling of interest on the part of sports fans.

What will send the popularity of football plummeting? It will likely take a drastic event, and the only such event I can think of will be a player getting killed on the field. It’s only a matter of time. In fact one player has already died on the field, Detroit Lions wide receiver Chuck Hughes who suffered a heart attack while running back to the huddle and died on the way to the hospital in 1971.

Some Sunday in the future a player is going to take the gridiron and be killed on it in front of tens of thousands of screaming fans, an event not unlike the gladiator bouts in the Colosseum of Ancient Rome. Fans will have to ask themselves was his life worth their momentary joy? Was his life worth the billions the billionaire owners make from the sport? Fans will be faced with some hard and disturbing questions and their fervor for the sport will wane.

After all, it’s not like there aren’t alternatives out there already. Soccer’s popularity is growing in the US, driven by changing demographics. Basketball, both college and professional, continues to sell jerseys and sell out venues. And even venerable old baseball still manages to enthrall during the playoffs and World Series.

NFL players know their shot at fame, glory and millions is fleeting, leading them to understand the acronym NFL as meaning “Not For Long.” It’s about time the owners wake up to the same realization.

Update: “Right now, I wouldn’t be surprised if football isn’t around in 20, 25 years,” Former Washington Redskins and Pittsburgh Steelers wide receiver Antwaan Randle El.

Cord Cutting Update

Back in August I wrote about my experience as a reluctant cord cutter. Here’s an update.

What I didn’t mention is that to avoid the high pressure sales pitch from DirecTV, I didn’t outright cancel; I suspended my service. When asked for details I said I was leaving the country (I was – but on vacation in Italy a few months later) and wouldn’t need the service. No problem. Service suspended and my  $103 bill dropped to $0.

I subscribe to the following streaming services: Hulu Plus, Netflix, Amazon Prime, Acorn Media (for UK shows), and HBO Now (for Game Of Thrones). Even adding up all these services, some of which I subscribed to for a long time before I stopped my DirecTV service, is $38 a month. Doing the math over the 6 months of this experiment I have saved $390.

Subtract from that figure about $90 in pay-per-episode charges for Walking Dead and a few other shows and I’m still up $300.

But a fairer assessment should look at the total of what I spent on TV prior to cutting the cable. For instance before cutting the cable I subscribed to all those services except for HBO Now (which only became available in September) and Hulu. So if I add the cost of Netfilx, Acorn, and Amazon Prime (considered free because I buy just about everything through Amazon) I’ve saved an additional $78. Plus the HBO Now will allow me access to the new Game of Thrones season included in the $15 monthly price (I ended up watching the entire series through Amazon Prime paying extra) and I figure the HBO Now will pretty much pay for itself starting in April.

After cutting the cable I missed a lot of the “junk TV” shows I used to watch like Fast N Loud and Gold Rush on the Discovery Channel. Discovery guards its content carefully and only allows episodes that are several years old to stream for free, charging $3 a pop for everything else. I have no problem paying $3 for a Game of Thrones, Breaking Bad or Sons of Anarchy episode. I’d sooner set 3 Washingtons on fire then hand them to Discovery to watch Misfit Garage.

Then I started watching Hulu, and amazingly enough I found plenty of junk TV there. I found Difficult People entertaining in an annoying sort of way, and am now hooked on RocketJump (although its PC self-awareness is a pain).

Since my suspension was running out in a few days, I made the call I avoided back in June. “Cancel service,” I told the automated attendant and soon found myself in Shaniqa’s headset. She asked why I wanted to cancel, and I gave her a summary. She then asked if I was aware of DirecTV’s streaming options. I thought for a second; had DirecTV begun offering something like Dish Network’s Sling TV? If so, I was interested. She gave me the spiel on DirecTV’s offering, and it’s not what I consider streaming: it’s really being able to watch DirecTV content on multiple devices in your home. It has nothing to do with Dish Network’s over-the-web service.

I politely thanked Shaniqa for explaining what DirecTV offered, but refused. She said if I had an issue with the cost, and I admitted I did. I said that it was hard to justify spending $103 a month on channels that I didn’t watch. I said that I would consider keeping the service if she could get the cost down to say, $20 a month. She put me on hold several times then came back with a $70 figure. I said thanks but no thanks; send me the box for the DVR. So she got my details, read some legalese about closing the account, and I was done. I had subscribed to DirecTV for  years and spent about $7,500 with them (about $1000 of that specifically for NFL Sunday ticket). Doing the math I’m almost embarrassed to admit that I spent so much on TV, but that’s the insidious nature of monthly bills: they add up.

So 6 months on the only regret I have is that I waited as long as I did to cut the cable. DirecTV’s picture was the best, and it’s true that with streaming one does have to put up with less than perfect, occasionally pixelated video, but is putting up with the occasional issue worth the savings? It is for me. More importantly I feel that while I feel I watch less TV, the TV I do watch is better quality. Plus we have complete control over when we watch, so no worries about DVRs. And there’s always purchasing an antenna for local stations if I felt the need.

My recommendation is that if you are thinking about cutting the cord, do what I did and suspend service for a few months just to see. If it’s too difficult, negotiate a lower rate before rejoining, but if you are like me and learned to live without spend the money on something better – like a present for your significant other or a new AR-15, or better yet, a new AR-15 for your significant other.

Why a Libertarian Supports Socialized Medicine – Part 1

I am a libertarian.

If I am not hurting anyone else I want to be left alone. At the core of this philosophy is the belief that I do not know what is best for you, and conversely neither you nor any external entity knows what’s best for me. This trips me up with conservatives who think the military or perhaps God knows what I need. It also separates me from liberals whose collectivist urges tend to gravitate towards more and bigger government.

But there are limitations to every philosophy, which shouldn’t surprise anyone. No idea is perfect and most are works in progress. No one says “Democracy is worthless because people don’t have time to make decisions about governing while raising families and holding down jobs.” Likewise I think that libertarian ideas such as “Do unto others…” should be followed until they no longer make sense.

For most of the past 2 decades I have witnessed the American medical system from the inside as the spouse of an American primary care physician. I’m the one who makes her a coffee and waves goodbye to her every morning, and I am the one who has dinner ready when she arrives home late at night after a long day at the office. I am the one who pays her medical school loans, cutting a mortgage-sized check every month that unfortunately fails to move the principle very much. During that time I estimate my wife has treated about 40,000 patients in a variety of settings, from poor inner city communities to wealthy boutique practices. She has even treated patients volunteering in rural communities in Africa.

Anyone who tells you they have a solution to the American health care system is frankly an idiot. The system is so big, so complicated, so riven with competing interests, contradictory regulations and demands that only here in America could we build such a huge, expensive, and f***ed up system. Our healthcare is such a disaster that it is hard to imagine anyone thinking it up from scratch. It combines the worst attributes of a single payer system with the dregs of capitalism to produce to produce the monstrosity we live with daily. No, such a system can only happen over a period of decades with the involvement of millions of decisionmakers.

And it is getting worse.

In the most recent attempt at cost-savings, patients are being asked to become consumers and are being tasked with shopping for health care in order to inject market forces into the system. This takes the process of say, buying a television, through comparison shopping and seeking the lowest price and attempts to squeeze visiting your doctor or a hospital stay into the paradigm. As David Shaywitz writing for Forbes notes, it won’t work. For one thing we are asking sick people with exhausting task of making decisions that are hard for healthy people to make. Think about the mental energy you put into a recent television or car purchase, then imagine doing that while sick. It’s unrealistic even for those of us who are relatively healthy, let alone for the 20% of the population who consume 80% of our healthcare. Take my late mother. It took my retired sister and her husband all their energy to make sure she received just the care she needed during all her bouts of pneumonia, her falls, and her failing kidneys. Now some expect them to have shopped around for the cheapest care on top of all. It’s not only unrealistic, it’s cruel. My sister spent the last few months with our mother in a constant state of stress and worry about providing my mother the care she needed instead of spending that time simply being with our mother.

Part of this “consumer driven health care approach” is the reliance upon customer feedback and surveys. Over the past year I have seen multiple doctors after almost killing myself in a dirt bike accident a year ago, and several times I have received emails and even robo-calls asking me to rate my doctor. There are several assumptions underpinning these surveys. First is the assumption that I have the knowledge necessary to grade him. My orthopedic surgeon has several medical degrees. I have a BA in political science. He has been doing surgeries for over 40 years. I have been working in IT for almost 20 years. He has performed thousands of surgeries like the two he performed on me. I can’t even carve a turkey without running to YouTube for instructions. To put another way, if your daughter needed a plate installed in her shoulder after a motorcycle accident, would you rather I did it or my doctor? If you answered the latter then why would you take my review of him seriously?

Next the consumer driven approach assumes that I know what I need. Say I need a new car because my old one broke down and I can’t get to work by public transportation. That’s a reasonable need that buying a new car fills, but even that comes with caveats. Why a new car? Why not a used one? What about a motorcycle or how about a bicycle? Patients walk into my wife’s office every day presenting with colds and demanding antibiotics. My wife examines them and diagnoses them with the common cold. She advises bed rest, symptomatic treatments like Ny-Quil, and explains that not only will an antibiotic not help them, it can cause severe side effects. My wife knows all about these first hand. She was prescribed a common antibiotic for the treatment of a minor infection and lost her sense of smell for almost 2 years. But she has faced irate “clients” (the word the corporation she works for advises doctors to use when referring to their patients) who will not leave unless they get what they want.

Doctors in this position face a predicament. Do they satisfy the patient by prescribing him or her drugs they don’t need, or do they risk complaints being lodged with the companies they work for, or on websites that grade doctors? These comments and complaints have been used by health care systems to deny their doctors raises and in some cases limiting advancement and even the renewal of their contracts. This stress is one of the factors behind physician burnout that drives doctors out of clinical practice, exacerbating the physician shortage.

Going to the doctor or hospital is not like buying something at Amazon or Ebay, and we shouldn’t fool ourselves into thinking that it is.

(to be continued)

St. Louis to Start CalvinBall League

Well not yet, but here’s the idea:

St. Louis and the state of Missouri are itching to hand $400 million of their citizen’s money to Stan Kroenke, a billionaire seven times over, in order to induce him to keep his lousy underperforming football team from absconding to LA or San Diego. From a financial point of view football stadiums are lousy investments for cities. From an environmental standpoint they are monuments to man-made global warming since they consist of concrete, the making of which is one of the worst known emitters of carbon dioxide. From a utilitarian standpoint they are useless, being designed specifically for football which limits their utility at any other time than the 8 out of 365 afternoons they are used. There are clearly better ways to use the money.

So here’s my idea. Have the state, county and local governments pony up the $400 million. Then take that money and invest it with Stan Kroenke and his partners to help them mug invest in the publicly backed stadium in Los Angeles or San Diego. After all everyone knows Californians are rich, so let wealthy Californian taxpayers build Kroenke’s stadium but profit from his greed and chutzpah by backing him with $400 million. Kroenke will have no problem delivering a 10% return on the money, netting the state of Missouri and the St. Louis area $40 million a year from their investment. Figure that’s good for about 10 years until Kroenke gets cranky and decides he needs another stadium, but who knows? During that time maybe the San Diego Rams or the LA Weasels will actually become good teams, substantially boosting the value of the investment.

But in the meantime take that $40 million every year and start a new sports league. Given the nostalgia Gen-Xers have for Calvin & Hobbes, I vote for the creation of a CalvinBall league with the money. For those of you too young to know, CalvinBall is a game played between the young boy Calvin and his stuffed pet tiger Hobbes in the Calvin and Hobbes cartoon where pretty much anything goes. Think of it as a mashup of dodgeball, rugby, baseball, karaoke and the Rocky Horror Picture Show. Well maybe not so much the Rocky Horror Picture Show but who knows? The rules of CalvinBall are there aren’t any rules – and think of what entertainment value that would bring to a Sunday afternoon. While the Rams quarterback-du-jour is getting his clock cleaned  in Southern California by the Packer’s defensive line, just imagine the fun Missourians would have watching young athletes pretty much run around, wear masks and sing. It would be refreshing and maybe even entertaining.

I figure the government could fund an entire 20 team league, each having a 10 person roster out of the $40 million it earned from investing in Kroenke (just not in St. Louis). CalvinBall does not need singularly purposed billion dollar stadiums to be played in. It can be played pretty much everywhere, but to maximize attendance I would recommend it be played in existing venues like Busch Stadium or the Scottrade Center. After all, to St. Louisans football season is just the weeks between the World Series and Spring Training.

British Calvinball legend M. Montgomery Hughes jumping into The Must Be Airborne To Enter This Zone Zone to recover a lost Calvinball.

 

Welfare for Billionaires – St. Louis and State of Missouri Offer to Fund Stadium

My hometown and home state are being suckered into ponying up 40% of the cost of a new billion dollar football stadium necessary to keep the St. Louis Rams (formerly of Cleveland, formerly of Los Angeles) from moving yet again. That’s $400 million dollars for a building that will likely house happy football fans 4 times a year (assuming an 8-8 record for the Rams which is really fantasy). Figuring it’s likely 8 years before Stan Kroenke likely agitates for another stadium. Do the math and Missourians are going to shell out over $10 million a win.

Seriously?

Kroenke’s personal net worth is $7.7 Billion. That’s BILLION. He could build the stadium himself with the change in his sofa cushions.

So my next question is this: Since when did my hometown get so flush with cash so that it could waste $400 million dollars for a building that will be used AT MOST 8 times a year? St. Louis and Missouri politicians are evidently ready to transfer their taxpayer’s hard-earned dollars (Missouri per capita income, $25,649) to a billionaire. Are there no better ways to spend $400 million on Missouri’s 6 million residents?

I have a suggestion: Buy every Missourian a ticket to a baseball Cardinals game. The team is one of the league’s best, isn’t going anywhere and doesn’t bully politicians into subsidizing their hobbies.