Dr. Krugman has at it again about the health care scandal, today taking on Wellpoint. Here's the story. What he doesn't talk about, I suppose for lack of space is what I propose to talk about: divide and conquer.
In economics, there is the term market segmentation, wherein a producer seeks to extract profit by walling off groups and charging each a greater price than would exist without the walls. If you read the Wikipedia article, it's voiced rather blandly, only making a passing remark about monopoly. (You can see how this works by reading about consumer's surplus. The Market Segmentation author doesn't provide the link, which shows the bias.) The fact is, market segmentation (and its other name, price discrimination) is what the health insurance companies have been getting away with for decades.
For those old enough to have been there, in the 1970's health insurance was to be replaced by Health Maintenance Organizations (HMOs); the archetype being Kaiser-Permanente. The driving notion behind the HMO movement was that it is cheaper to take care of problems early rather than late. So, HMOs would engage in preventative care, screenings, and regular visits to a primary care physician. In recent years, studies have been done and promoted by insurance companies claiming that HMO practice is more expensive and no better at maintaining patient well being. It is also true that shortly after HMOs began to proliferate (often as part of traditional health insurance companies) the acronym became Healthy Members Only. Market segmentation.
The point behind insurance is shared/pooled risk. While it may be dismissed as just academics, if you've been an economics student you've known of or taken Risk and Insurance (the most common name). In such a course, you learn the algebra of risk and probability, and how it is that the many can pay a small amount to support the occasional disaster which befalls the individual. The whole point is market aggregation, not segmentation. The Wellpoint assault is purely segmentation. They claim that each segment, which they define as they choose, should make lots o money. The fact that the whole enterprise manages to make billions is denied. Wellpoint, and the rest, of course oppose the public option. The reason, which they'd never admit, is the public option removes the opportunity to segment the market and make monopoly profits.
Lastly, note the similarity here with the Banksters of The Great Recession. Having lost their shirts (and our trousers) in CDOs and such, they now seek to recoup their profits by squeezing those retail customers; most of whom have few other options given that the number of Banksters has shrunk. Again, segmenting the market. We need a revolution, and not the Tea Party sort.
19 February 2010
16 February 2010
United We Stand, Divided We Fall
By now, we should all know that the problems with American auto production is purely those pesky, recalcitrant UAW workers. Well, what you want to believe isn't always what's true. Today, Toyota is closing some plants, in the union free South of course, where those broken cars are built. You buy retarded rednecks, you get retarded rednecks. And never forget, the Right Wingnuts want the USofA to be just like Texas and Kentucky and Mississippi. Wake up America, you're being led around by the nose. All that religious pontificating is from hypocrites that just want to keep you poor and stupid. They are succeeding. If the rest of us didn't have to be burdened with stupid senators from your small, and small minded, states, I wouldn't give a rat's sphincter. But you people are evil.
Here's the story.
Here's the story.
09 February 2010
Toyota San
Ah, Toyota San. It will be found that NHTSA, during the Bush administration, placated Toyota and those nice right wing southern senators where Toyota got sweetheart deals to put the factories. It won't turn out to be those left wing union workers out to sabotage some capitalists. You read it here first.
Government doesn't work when those running don't want it to work. You're doing a great job Brownie.
Government doesn't work when those running don't want it to work. You're doing a great job Brownie.
04 February 2010
Olde Europe Kicks Ass
The Right Wingnuts' favorite whipping people are the continent of Europe, home of freedom hating welfare queens. Or something like that. Whenever anyone questions why the supposed most powerful nation on the planet has such a domineering ruling class, they trot out the Failure of Europe. Well, Europe has never been a failure. Europeans, until the end of World War II, were parochial and jingoist. The destruction, at their own hands, finally sunk in: let's admit we're in this together.
Through the 1950's, under a titularly Republican president, the USofA behaved similarly. Taxes were progressive not only de jure but de facto. Unions had power enough to balance corporations. The South was still fighting the Civil War, but that's another story.
Then came civil rights and voting rights laws in the 1960's, and the Right Wingnuts found the wedge issue it needed to transform all White People, not just the inbred retards of the South, into the Oppressed Majority. A signficant aspect of this effort was to take back the money. The Rich didn't feel quite rich enough anymore, so they concocted stories. Nixon initiated the plan, and it has largely worked. Our economy is only vaguely different from your average Banana Republic.
The "winners" of the 40 year war then gave us The Great Recession (so far, The Great Depression II is still on the table). The Right Wingnuts continue to blame the workforce for the mess. But what's been going on in Olde Europe?? To believe the Right Wingnuts, it's Oh So Much Worse.
Not really. Today's Times has the real story. You should read it; you will read how it is that a community can survive if the community, in its whole, accepts that the solution lies in equity. There is a reason that the other title of this endeavor is: It's The Distribution, Stupid.
Through the 1950's, under a titularly Republican president, the USofA behaved similarly. Taxes were progressive not only de jure but de facto. Unions had power enough to balance corporations. The South was still fighting the Civil War, but that's another story.
Then came civil rights and voting rights laws in the 1960's, and the Right Wingnuts found the wedge issue it needed to transform all White People, not just the inbred retards of the South, into the Oppressed Majority. A signficant aspect of this effort was to take back the money. The Rich didn't feel quite rich enough anymore, so they concocted stories. Nixon initiated the plan, and it has largely worked. Our economy is only vaguely different from your average Banana Republic.
The "winners" of the 40 year war then gave us The Great Recession (so far, The Great Depression II is still on the table). The Right Wingnuts continue to blame the workforce for the mess. But what's been going on in Olde Europe?? To believe the Right Wingnuts, it's Oh So Much Worse.
Not really. Today's Times has the real story. You should read it; you will read how it is that a community can survive if the community, in its whole, accepts that the solution lies in equity. There is a reason that the other title of this endeavor is: It's The Distribution, Stupid.
31 January 2010
The 1% Solution
Today's Week in Review features essays by Volker, Friedman, and Rich. They are all required reading. What they miss, individually and in toto, is the essence (not of Emeril). The playing field has been tilting regressively worse since Reagan.
C-SPAN has been rerunning an interview with the authors of "The Forty Years War: The Rise and Fall of the Neocons, from Nixon to Obama", Len Colodny and Tom Shachtman. I haven't read the book, but their presentation, along with the Q&A, demonstrates an understanding of the rise of right wing divisiveness to the body politic.
Taken as a whole, the op-eds and the book describe how it is that the playing field has become so tilted toward the top 1%. What none does is offer up a proposal for an answer. Herewith a Modest Proposal.
We need to start with the obvious cause of recessions and depressions, the lack of purchasing power in the hands of the majority. It is not a coincidence that recessions and depressions follow from periods of income concentration. Obama has to find the stones to make this obvious fact obvious to under-educated classes (I saw recently that Obama's highest approval was, in the words of the article, among the "over-educated", as if there really is such a thing).
The root cause of any economic calamity is a twisting of incentives from doing productive work to doing non-productive work (well, then it really isn't work, now is it). As I have mentioned a few times during the course of this endeavor, I first became aware of incentive twisting while building my senior thesis on Uruguay, way back in 1971. The Right Wingnuts have twisted the incentives toward simply "making money"; banking, financial services, and the like. It is no wonder that they now rail against any hint of "inflation", since in a fundamental economy, money has no intrinsic worth; it is merely a conduit for barter of real goods and services. In 2007, 40% of corporate profit was from financial services, not production of physical goods. Put another way, these corporations wouldn't exist in a real economy.
Let's start by *increasing* the capital gains tax. Since capital gains are purely financial, not productive, the incentive to put fiduciary capital into CDOs and other instruments decreases relative to real investment in plant and equipment. Let's go further and raise the tax rate on foreign produced goods sold by corporations in the USofA.
Let's, in general, tilt the playing field away from money manipulations to production of real goods and services. We will, thereby, re-create a middle class which not only takes most of the national income, but also produces and consumes what is produced. Recessions and depressions happen when aggregate demand drops below aggregate production, and that happens when those that work don't earn enough to buy that which is produced. In our time, the situation is worse in that much of what we "produce" has no intrinsic value, only some monetary number. Those that "produce" these services have a strong vested interest in preserving the status quo: the harried cry of "inflation is coming, inflation is coming". Japan has been through, is currently re-visiting just such a deflationary spiral, and for the same reason, the placating of its 1%.
C-SPAN has been rerunning an interview with the authors of "The Forty Years War: The Rise and Fall of the Neocons, from Nixon to Obama", Len Colodny and Tom Shachtman. I haven't read the book, but their presentation, along with the Q&A, demonstrates an understanding of the rise of right wing divisiveness to the body politic.
Taken as a whole, the op-eds and the book describe how it is that the playing field has become so tilted toward the top 1%. What none does is offer up a proposal for an answer. Herewith a Modest Proposal.
We need to start with the obvious cause of recessions and depressions, the lack of purchasing power in the hands of the majority. It is not a coincidence that recessions and depressions follow from periods of income concentration. Obama has to find the stones to make this obvious fact obvious to under-educated classes (I saw recently that Obama's highest approval was, in the words of the article, among the "over-educated", as if there really is such a thing).
The root cause of any economic calamity is a twisting of incentives from doing productive work to doing non-productive work (well, then it really isn't work, now is it). As I have mentioned a few times during the course of this endeavor, I first became aware of incentive twisting while building my senior thesis on Uruguay, way back in 1971. The Right Wingnuts have twisted the incentives toward simply "making money"; banking, financial services, and the like. It is no wonder that they now rail against any hint of "inflation", since in a fundamental economy, money has no intrinsic worth; it is merely a conduit for barter of real goods and services. In 2007, 40% of corporate profit was from financial services, not production of physical goods. Put another way, these corporations wouldn't exist in a real economy.
Let's start by *increasing* the capital gains tax. Since capital gains are purely financial, not productive, the incentive to put fiduciary capital into CDOs and other instruments decreases relative to real investment in plant and equipment. Let's go further and raise the tax rate on foreign produced goods sold by corporations in the USofA.
Let's, in general, tilt the playing field away from money manipulations to production of real goods and services. We will, thereby, re-create a middle class which not only takes most of the national income, but also produces and consumes what is produced. Recessions and depressions happen when aggregate demand drops below aggregate production, and that happens when those that work don't earn enough to buy that which is produced. In our time, the situation is worse in that much of what we "produce" has no intrinsic value, only some monetary number. Those that "produce" these services have a strong vested interest in preserving the status quo: the harried cry of "inflation is coming, inflation is coming". Japan has been through, is currently re-visiting just such a deflationary spiral, and for the same reason, the placating of its 1%.
28 January 2010
The State of the Union: doo dah, doo dah
I didn't bother to watch the Black Face Minstrel last night. Watching Serena waste that Chinese girl was much more fun. Herewith the true State of the Union. And it won't take 70 minutes of babbling.
My fellow 99% of Americans. I speak to you tonight with a heavy heart. I have spent the first year of my presidency hiding behind the rhetoric of bipartisanship, which I have always known was a fantasy. It was a helpful fantasy during the election, in that it allowed me to sound inclusive, as if inclusiveness were important. It is not, and the Republicans have practiced divisiveness since 1968. Yes, 1968, the year that Nixon and his handlers invented the Southern Strategy.
The Southern Strategy exploited reactionary white folks in the South, West, and incrementally, suburbia. The Southern Strategy had its roots in the both civil rights law and voting rights law under Johnson. It turned out that lots of white folks, and not just the Southern ones, weren't all that inclined to play on a level field with Darkies. The Right Wing, using sometimes subtle rhetoric, concluded that it could take over the country (and re-make it in the image of Mississippi) by goading angry white folks with inflammatory sloganeering. And it worked. Starting with Reagan through George Bush the Second, there are 28 years. In that time, 22 years were marked by the Republicans controlling two or three out of three of the branches of government.
When Reagan took office, 1% of Americans took 8% of our national income. As Bush the Second left, that 1% took 24%, and the economy was in cardiac arrest. The economy and our society will not recover until that 1% relinquishes a large measure of its ill gotten gains.
This will be my mission for the remaining three years of this term, and the following four years of my second term. I entered the White House with American society closer to that of a Banana Republic than at any time in our country's history. I will work to reverse this fatal trend. We cannot have an economic recovery if the 99% have no income to buy the goods and services we can produce.
The first step in this job will be to restore the progressive tax structure of President Eisenhower. We will then dis-incentivize American corporations from outsourcing jobs to autocratic countries and nominally democratic countries which deny rights to workers through the tax code.
We will roll back the reactionary Supreme Court decision allowing corporations to buy elections. This will be difficult, but corporations are not individuals, and cannot be permitted to have the luxury of protection as individuals, all the while escaping the responsibilities. The tea bag movement claims to be grass roots. Grass roots means fighting corporate power. The Republicans made law, and repealed law, to enable further corporate control of our country. Government protection of corporations against the people is fascism. This country has been creeping toward fascism since Nixon, and it stops here and now.
My fellow 99% of Americans. I speak to you tonight with a heavy heart. I have spent the first year of my presidency hiding behind the rhetoric of bipartisanship, which I have always known was a fantasy. It was a helpful fantasy during the election, in that it allowed me to sound inclusive, as if inclusiveness were important. It is not, and the Republicans have practiced divisiveness since 1968. Yes, 1968, the year that Nixon and his handlers invented the Southern Strategy.
The Southern Strategy exploited reactionary white folks in the South, West, and incrementally, suburbia. The Southern Strategy had its roots in the both civil rights law and voting rights law under Johnson. It turned out that lots of white folks, and not just the Southern ones, weren't all that inclined to play on a level field with Darkies. The Right Wing, using sometimes subtle rhetoric, concluded that it could take over the country (and re-make it in the image of Mississippi) by goading angry white folks with inflammatory sloganeering. And it worked. Starting with Reagan through George Bush the Second, there are 28 years. In that time, 22 years were marked by the Republicans controlling two or three out of three of the branches of government.
When Reagan took office, 1% of Americans took 8% of our national income. As Bush the Second left, that 1% took 24%, and the economy was in cardiac arrest. The economy and our society will not recover until that 1% relinquishes a large measure of its ill gotten gains.
This will be my mission for the remaining three years of this term, and the following four years of my second term. I entered the White House with American society closer to that of a Banana Republic than at any time in our country's history. I will work to reverse this fatal trend. We cannot have an economic recovery if the 99% have no income to buy the goods and services we can produce.
The first step in this job will be to restore the progressive tax structure of President Eisenhower. We will then dis-incentivize American corporations from outsourcing jobs to autocratic countries and nominally democratic countries which deny rights to workers through the tax code.
We will roll back the reactionary Supreme Court decision allowing corporations to buy elections. This will be difficult, but corporations are not individuals, and cannot be permitted to have the luxury of protection as individuals, all the while escaping the responsibilities. The tea bag movement claims to be grass roots. Grass roots means fighting corporate power. The Republicans made law, and repealed law, to enable further corporate control of our country. Government protection of corporations against the people is fascism. This country has been creeping toward fascism since Nixon, and it stops here and now.
26 January 2010
Sandy, Just Say Arf!
I wrote, not here, a few days ago that Sandra Day O'Connor's leaving the Supreme Court was about the most evil act in decades. So, today I here her decrying on NPR the Court's decision to allow corporations to flood the political process with their cash. What the hell did she think they would do? Turn toward the center with her gone? The most selfish, stupid act by a public servant in decades. She handed the USofA to Robo Cop. I doubt she has the self-awareness to be ashamed.
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