Posts Tagged ‘economy’

Unions and the march of robots.

Wednesday, March 30th, 2016

port
California has now decided to impose a a $15 per hour minimum wage on its remaining business economy.

Denial of consequences is an important part of left wing philosophy.

“California’s proposal would be the highest minimum wage we have seen in the United States, and because of California’s sheer size, it would cover the largest number of workers,” said Ken Jacobs, chairman of the UC Berkeley center. “This is a very big deal for low-wage workers in California, for their families and for their children.”

Implicit in all the assumptions is the belief that employers will not adjust by reducing the number of minimum wage employees they have.

The UC Berkeley estimate also includes some who earn slightly more than the lowest wage and stand to benefit from a ripple effect as businesses dole out raises to try to maintain a pay scale based on experience, Jacobs said.

If Brown’s plan passes, 5.6 million low-wage workers would earn $20 billion more in wages by 2023, according to the UC Berkeley analysis. It assumed no net jobs would be lost as businesses look to trim costs.

The experience in other places has not been positive.

Even a former chairman of President Obama’s Council of Economic Advisers, Alan Krueger, has cautioned recently that “a $15-an-hour national minimum wage would put us in uncharted waters, and risk undesirable and unintended consequences.”

Krueger is the economist whose “study” of the effect of minimum wage increases in fast food industry has been debunked as invalid.

But Card and Krueger’s conclusion is that there’s no effect, not that increases in the minimum wage increase employment as a general rule. “We believe that this research provides fairly compelling evidence that minimum-wage increases have no systematic effect on employment,” they write in their 1995 book, “Myth and Measurement: The New Economics of the Minimum Wage.” They also write, “On average, however, our findings suggest that employment remains unchanged, or sometimes rises slightly, as a result of increases in the minimum wage.” It would be fair for Hanauer to cite the individual studies showing an increase in employment, but to characterize Krueger and Card’s work on a whole as showing an increase in employment resulting from a minimum wage increase is inaccurate.

In less polite terms, it’s bunk ! Newer studies with better methods have shown That employment is reduced.

Second, the studies that focus on the least-skilled groups provide relatively overwhelming evidence of stronger disemployment effects for these groups.

Now, we come to the larger issue the entire “Blue Model” of employment and politics.

The teachers’ unions won a temporary victory to force non-members to pay “agency fees” involuntarily, a decision that resulted from the death of Antonin Scalia last month.

With the absence of the late Antonin Scalia’s reliably-conservative vote, labor unions clenched an unexpected Supreme Court victory on union fees for government workers.

With agency fees – and the structure of union dues – remaining intact, union leaders hailed the court’s affirmation but warned there could be further challenges ahead.

The union case is among a handful of key disputes in which Scalia’s vote was expected to tip the balance toward a result that favored conservatives.

Some non-union teachers in California sued over the fair share fees, claiming that the fees are unconstitutional and violate their freedom of speech and association.

That decision will probably stand until a new Justice is confirmed and a Hillary Clinton presidency would keep the matter going. What about the rest of the world ?

But in the larger context the public unions greatest enemy isn’t the ghost of Antonin Scalia but the onslaught of technology. Recently, the mighty International Longshore and Warehouse Union (ILWU) was forced to let giant robots handle cargo in the port of Los Angeles. “At one of the busiest shipping terminals in the U.S., more than two dozen giant red robots wheeled cargo containers along the docks on a recent morning, handing the boxes off to another set of androids gliding along long rows of stacked containers before smoothly setting the boxes down in precise spots,” wrote the Wall Street Journal. “‘We have to do it for productivity purposes, to stay relevant and to be able to service these large ships,’ said Peter Stone, a member of TraPac’s board.”

About ten years ago the Longshoreman’s union struck the port of Los Angeles to try to keep out GPS devices to locate containers.

Traditionally, clerks had climbed around containers to identify them and mark their location. Like Luddites in the 18th century, they attempted to keep their 80 jobs by paralyzing the worlds busiest port.

The union says that over 51 permanent positions have been lost to outsourcing in recent years — a claim that the Harbor Employers refutes. According to the Harbor Employers, those 51 individuals either “retired with full benefits, quit, or passed away during the past three years.”

It is unclear when the strike will end but the Port of LA is urging both sides to come to an agreement promptly for the sake of international commerce.

But the union says the workers are standing up to some of the world’s largest shipping lines to protect the future of American jobs in the industry. “We just reached the point where somebody had to stand-up and draw the line against outsourcing, because these companies will eventually take all the good jobs,”said Fageaux.

According to its website, the Port of Los Angles is responsible for 1.2 million jobs in California and 3.6 million jobs across the country.

No matter. Those 51 jobs were important !

Eventually, the union lost. Now new troubles are coming.

In the end, even those advantages proved insufficient to stop automation. There will be pressure to deploy more robots. The “TraPac site is one of only four cargo terminals in the U.S. using the technology. That is fewer automated terminals than there are at the Port of Rotterdam in the Netherlands alone.” The ILWU is fighting a rearguard action; its members are training on automated terminals “to ensure there’s a future for the workers”. And probably to keep alive the possibility of paralyzing the docks via strike by console operators.

None of this can disguise the fact is that the glory days of union crane jobs are over. The CEO of Carl’s Jr, a hamburger chain, predicts that fast food restaurants of the near-future will have no human employees. A special report in the New York Times says “the robots are coming to Wall Street.”

Within a decade … between a third and a half of the current employees in finance will lose their jobs to … automation software.

Already, CAT scans are read by radiologists in India. Radiologists who have no local credentialing and who are unknown. All X-rays now are digital and can be transmitted across the world.

For the poor the citizenship deal is votes in exchange for welfare or sinecures. For the financially better off it is campaign contributions in exchange for crony capitalist opportunities. The Friedrichs vs California Teachers Association is an example of the latter, with the Supreme Court unable to reject a transaction that is ultimately unsustainable.

Technology may have changed the debate around closed union shops, quotas, identity politics and mandatory minimum wages from one of ideology to economics. What’s the use of ideological policies, if they’re can’t deliver the goods? If the public employee’s unions can do no better at protecting their fiefdom than the ILWU, if immigrants from Mexico can find no employment because robots are doing all the work then what will the politicians promise?

Yes. What can they promise ?

Will California real estate prices collapse ?

Tuesday, January 26th, 2016

I sold my house in 2010 and moved to Lake Arrowhead where I bought a house on a rare level piece of land that I fenced for my dog.

After, living there for two years, I found that I could not tolerate the altitude, even though it is only 5200 feet. I was short of breath and had trouble sleeping. I had to sell the house and move back to sea level. In doing so, I lost a lot of money and have been renting since 2012, first a small condo and now a three bedroom house in Mission Viejo. I have slowly rebuilt my funds and have started to think about buying another house. I would really like to move to Tucson but my children are in California and I would be alone in Tucson. Jill and I are back together since 2014 and so one reason for staying here is less important. I would not be alone.

The other reason why I am reluctant to buy another house in southern California is the insane level of real estate prices. In moving to Lake Arrowhead, a resort, I found the only real estate market that is NOT increasing in value. Mission Viejo, where I have lived since 1972, is in Orange County and has some very high real estate values. I have been nervous about another collapse in prices and don’t want to buy at the peak of the market.

Recently there have been a few signs that the party may be over.

In the 1980s, there was a surge of buying from Japan as Japanese used the towering real estate prices in Japan to borrow and buy expensive houses in southern California. When Japan entered the present 25 year slump, the prices of southern California homes also dropped and many were sold for a fraction of the previous price. An impressive example, is what happened at the Pebble Beach golf resort. In 1989, a Japanese investor bought the resort for an amazing price. Ten years later, he had to sell for a fraction.

The sale will end nearly a decade of Japanese ownership of Pebble Beach, which became a symbol of the exorbitant prices paid and, subsequently, the massive losses suffered by Japanese investors who flooded into U.S. real estate during the late 1980s and early 1990s.

“We think it’s the best golfing place on the globe,” said Ueberroth, who began negotiations to purchase the property in March. “I’ve been lucky enough to have played there over the last 40 years.”

The purchase of Pebble Beach Co. includes the Pebble Beach Golf Links and three other nearby courses; two luxury hotels, the Lodge at Pebble Beach and the Inn at Spanish Bay; and 17-Mile Drive, a popular tourist destination.

Pebble Beach Co. is owned by a partnership between Taiheiyo Club Inc., a Japanese golf resort company, and Sumitomo Credit Services Co., one of Japan’s largest issuers of Visa cards. The partnership purchased Pebble Beach in 1992 from golf tycoon Minoru Isutani, who bought the company only two years earlier from a group headed by oilman Marvin Davis. However, the debt-ridden Isutani was forced to sell the property at an estimated $350-million loss.

That’s a big loss and an example of what happened. Now, China is is seeing a stock market crash similar to the Japan real estate crash in 1990.

china

China is still going through a difficult transition from socialism to capitalism, meaning its government that once tightly controlled the economy is slowly letting the global market take the wheel. That’s a tough process, particularly for a government that is used to being able to turn the economic knobs as it pleases. It still likes to do so from time to time, as it did on Thursday — a currency move that will get to in a bit.

But to show how precarious things are, a relatively small tweak sent investors into a pretty steep nose dive. And when China dives, so does everybody else, as evidenced by the market declines around the world.

So, how much effect will that have on Los Angles real estate ? This much.

Prices for the top 5 percent of U.S. real estate transactions remained flat in 2015 while all other houses gained 4.9 percent, according to data from Redfin Corp., a real estate brokerage and data provider.

In the Los Angeles suburb of Arcadia, where Zhang is struggling to sell the six-bedroom home, dozens of aging ranch houses were demolished to make way for 38 mansions built with Chinese buyers in mind. They have manicured lawns and wok kitchens and are priced as high as $12 million. Many of them sit empty because the prices are out of the range of most domestic buyers, said Re/Max broker Rudy Kusuma, who blames a crackdown by the Chinese on large sums leaving the country.

And now, the Chinese market is crashing. Hmmm. Can southern California real estate be far behind ? I’m waiting. Meanwhile, I still like Tucson where prices are much lower.

For example. We are still thinking about it.

The Trump Phenomenon

Sunday, December 27th, 2015

trump

A good column in the NY Post today describes the elites horror at the Trump supporters.

It was quite evident at Meet The Press this morning as the guests expressed suitable horror at Mr Trump’s progress toward the GOP nomination.

Now, after months of whistling past the graveyard of Trump’s seemingly inexorable rise and assuring themselves that his candidacy will collapse as voters come to their senses, a CNN poll released Wednesday showing Trump now lapping the field has the GOP establishment in full meltdown mode. The survey shows Trump with nearly 40% of the primary vote, trailed by Ted Cruz at 18%, Ben Carson and Marco Rubio tied at 10%, and the also-rans (including great GOP hope Jeb Bush) limping along far behind.

I am not a Trump supporter but I am intrigued at the steady progress he is making toward success. I have been a fan of Angelo Codevilla’s characterization of America’s Ruling Class.

The recent collapse of Republican Congressional resistance to the left’s political agenda as noted in the surrender of Paul Ryan to the Democrats in the budget, has aggravated the Republican base and its frustration.

Ryan went on Bill Bennett’s radio show on Tuesday to tell his side of the story, which involves the fact that he inherited from outgoing Speaker John Boehner an unfavorable budget framework, as well as some of the tradeoffs involved (especially defense spending). He also laid out the argument I’ve heard elsewhere, which is that he needed to “clear the decks” so that a real return to “regular order” budgeting next year will be possible. You may or may not be persuaded, but the contrast with Boehner is fairly plain, I think.

In other words, perhaps the omnibus should be thought of as something like the Dunkirk evacuation. But if so, we still need our Churchill to explain it and chart the path forward in a compelling way. This requires the presidential field to step up.

Dunkirk brought the British Expeditionary Force home almost intact, although minus their weapons. Ryan did the equivalent of surrender.

Their panic was best articulated last week in The Daily Beast by GOP consultant Rick Wilson, who wrote that Trump supporters “put the entire conservative movement at risk of being hijacked and destroyed by a bellowing billionaire with poor impulse control and a profoundly superficial understanding of the world .?.?. walking, talking comments sections of the fever swamp sites.”

Some might take that as a backhanded compliment. Can the GOP really be so out of touch with the legions of out-of-work Americans — many of whom don’t show up in the “official” unemployment rate because they’ve given up looking for work in the Obama economy? With the returning military vets frustrated with lawyer-driven, politically correct rules of engagement that have tied their hands in a fight against a mortal enemy? With those who, in the wake of the Paris and San Bernardino massacres by Muslims, reasonably fear an influx of culturally alien “refugees” and “migrants” from the Middle East?

The Daily Beast is not exactly the Republican voter and the “GOP Consultant” seems to be ignoring the possibility that his job prospects might be harmed by his contempt for the voters he is supposed to understand and convince.

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Is the Republican Party Worthwhile ?

Sunday, June 14th, 2015

hillary

Today, an interesting column was published suggesting that, if the Republicans don’t beat Hillary, they should just disband the party.

I think this makes some sense. We have an attractive group of candidates and some valid issues, including the economy and foreign policy. She is a terrible candidate.

Add this to the mounting scandals, polls showing a lack of trust for her, the historical difficulty of political parties winning three presidential elections in a row, and the deep bench of fresh-faced Republican options, and the GOP should be in prime position to win the next election.

But the next election will test whether demographic headwinds are too much for Republicans to overcome.

Maybe the country is just not serious about issues anymore.

She brought up Republican skepticism on climate change and opposition to abortion, saying “they shame and blame women rather than respect our right to make our own reproductive health decisions.”

She blasted Republicans for supporting policies that would increase deportation of immigrants and for “turn[ing] their backs on gay people who love each other.” She lashed out at Republican support for voter ID laws. “I’ll fight back against Republican efforts to disempower and disenfranchise young people, poor people, people with disabilities and people of color,” she said. And she argued that, “Fundamentally, [Republicans] reject what it takes to build an inclusive economy. It takes an inclusive society.”

Some of us read history and can recall that the Whig Party dissolved over the issue of slavery. The history of the Whig Party was of a party devoted to economic progress. It was also a party of opposition. Lincoln, when a Whig, opposed the Mexican War at some cost to himself.

The work of the Whigs was, as (James G.) Blaine admitted, negative and restraining rather than constructive. Still, “if their work cannot be traced in the National statute books as prominently as that of their opponents, they will be credited by the discriminating reader of our political annals as the English of to-day credit Charles James Fox and his Whig associates—for the many evils they prevented.” If that is true, then we have not had very much in the way of “impartial” histories of American politics since Blaine’s day.

Also true. Particularly Coolidge and Harding were slandered by the Progressives of the New Deal and its apologists.

Part of the success of Schlesinger’s casting of antebellum America as Jacksonian lay in Schlesinger’s identification of Andrew Jackson and Jackson’s Democratic party with Franklin Delano Roosevelt and the New Deal. To this day, one comes away from The Age of Jackson with the clear sense that Jackson and the Jacksonians embodied democracy and championed the interests of the “common man,” while the Whigs were the voice of selfish elite interests, and looked like nothing so much as forecasts of Herbert Hoover and Robert Taft.

The Republicans have had hardly better treatment by the news media of today than the Whigs by the Progressives.

[T]he question arose whether the Whig complaint against Jacksonian Democracy might have had more substance to it than it had seemed.

That question rose first in one of the genuinely pathbreaking works of American political history, Daniel Walker Howe’s The Political Culture of the American Whigs (1979).

The Whigs sound more like Republicans today than those of the 19th century.

Howe reintroduced the Whigs, not as Eastern elitists bent upon wickedly obstructing the righteous class-leveling justice of Jackson/Roosevelt, but as the “sober, industrious, thrifty people,” as the party of the American bourgeoisie, attracting the economic loyalty of small businesses and small commercial producers, and enlisting the political loyalty of those who aspired to transformation. Transformation was the key concept. It made the Whigs optimistic and serious all at once, since it embraced both the religious moralists and moral philosophers of the established denominations and colleges who preached personal and moral transformation as well as the upwardly mobile professionals who found in the dynamic world of international commerce the opportunity to escape from rural isolation and agrarian drudgery.

Sound familiar ? The Whigs were the party of railroads and canals that linked commerce across the country. Their fall from power, and from grace, occurred as the culture broke apart in the colossal struggle with slavery.

it was the Whigs who advocated an expansive federal government—but it was a government that would seek to promote a general liberal, middle-class national welfare, promoting norms of Protestant morality and underwriting the expansion of industrial capitalism by means of government-funded transportation projects (to connect people and markets), high protective tariffs for American manufacturing, and a national banking system to regulate and standardize the American economy.

The question today is whether the Republican Party can cope with the rapid debasement of the culture with gay marriage and bizarre aberrations like transexual exhibitionism.

The Democrats seem to be succeeding with their new emphasis on the strange and the bizarre.

Jackson’s Democrats came off as frightened, snarling, and small-mindedly anticapitalist in mentality. Jacksonianism glorified agriculture and defined wealth as landholding, and its interest in the “common man” was limited to building defenses around an agrarian stasis—simple subsistence farming, trade in kind, and no taxes, banks, or corporations—that would never be threatened by the demons of competition or the fluctuations of markets. Linked to this preoccupation with stasis and personal independence was the Jacksonians’ resistance to public declarations of morality.

Andrew Jackson fought a duel with a man who criticized his wife, Rachel, who had some controversy regarding her previous marriage.

During the presidential election campaign of 1828, supporters of John Quincy Adams, Jackson’s opponent, accused his wife of being a bigamist, among other things.

Here is Holt’s story of the Whigs, in as compressed a fashion as possible: Rather than being a branch out of the root of Federalism, the Whigs evolved like the Jacksonians from the original Jeffersonian Republicans who triumphed in the “Revolution of 1800.” They were originally an opposition faction to Andrew Jackson in the 1820s, but they detached themselves as a separate organization in 1834 under the leadership of Jackson’s nemesis, Henry Clay of Kentucky, and took the name Whig to underscore their opposition to Jackson’s high-handed near-dictatorship in the presidency. They cast themselves first as republican antimilitarists.

The modern Republican Party has adopted national security as a core issue but it was not always so. Democrats dominated military subjects from 1912 until Lyndon Johnson when the party revolted over the Vietnam War. Republicans fought the Civil War over slavery, the basic reason of the party, but the rest of the century was one of peace and only Theodore Roosevelt, a figure of the early Progressive Movement, was interested in war. His career really took wing with the Spanish-American War, which was not a “war of necessity” shall we say.

The 1837 economic panic also set in place the two principal mechanisms for Whig electoral success, which were (a) to concentrate public attention on the failings of Democratic politics and (b) to scoop up the largest percentage of new voters in every presidential cycle. It is a significant point in Holt’s description of antebellum parties that American voters, once recruited to a party, rarely switched allegiances over time. What was critical in each presidential cycle, then, was to energize the existing Whig voter base by throwing their policy distinctives into sharp contrast to the Democrats’ and by organizing new voters.

Can the Republicans, or a succeeding party, interest new voters ? The welfare state did not exist prior to the New Deal and this has warped American politics in new and unprecedented ways.

[W]henever it made the mistake of relying on charming personalities to head tickets or making generous accommodations with the Democrats on major issues [it lost ground]. But keeping such focus steady was an ideological problem for Whigs. They prided themselves on being a coalition of independent thinkers, unlike (in their imagination) the disciplined faithful of the Democrats, and they did not hesitate to turn on each other with divisive and disheartening abandon. Linked to that, the Whigs valorized the image of themselves as statesmen rather than (like their opposite numbers) party hacks who loved politics only for the power political office conferred.

The similarity is striking. There are differences, of course,. The issues of the 1850s were not the same as they are now but there is a theme to be kept in mind.

What finished the Whigs was their failures, not over national policy questions, but in the state and congressional elections in 1854 and 1855, where the new parties could get the most ready purchase on the electorate. No longer did Whig voters, galvanized by Democratic awfulness, take their votes to Whig candidates to express their disgust; they could go to the Know-Nothings, to the Free-Soilers, the Republicans, and so on.

Third parties are no solution to the problem of the Republicans. I think the Tea Party must capture the party mechanisms and oust the representatives of The Ruling Class. If that does not occur peacefully, it may occur with violence.

Could Obama go rogue if the Senate flips ?

Saturday, October 11th, 2014

Roger L Simon has an interesting column on the consequences of a GOP win this fall.

Barack Obama is a man unaccustomed to losing. Life has been exceptionally kind to him, sailing, as he did, through balmy Oahu sunsets, college, law school and career on into the presidency with scarcely a bump. He has been a protected man beyond any in recent memory, feted and praised virtually everywhere he went until the last couple of years. Even now, despite catastrophe after catastrophe, there are acolytes who continue to celebrate him, paying tens of thousands merely to have their photographs taken with him.

When such cosseted people are forced to confront failure, they typically do not do so with grace.

Obama’s style of governing seems to be quite unusual for modern presidents. He does not have a circle of “Wise Men” as most presidents have done, including Bill Clinton, who had Robert Rubin advising him on economics and the bond market.

Obama, instead, relys on a small circle of advisors with little or no experience in national affairs.

Insider books by Robert Gates, Hillary Clinton and Leon Panetta have appeared in rapid succession, implying or directly alleging that the president lives in a bubble, unwilling to listen to advice. He frequently threatens to — and sometimes does — go around the Congress to get his way via, often unconstitutional, executive fiat. We all know that he lies, constantly.

His closest advisor appears to be Valerie Jarrett who has no policy experience and who seems to be a Chicago insider.

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Where is housing going ?

Sunday, March 9th, 2014

UPDATE: Megan McArdle has some doubts about house prices.

housing

The housing inflation seems to be limited to certain cities. How will this last in the poor (except District of Columbia) economy ?

I live in south Orange County and have noticed a huge amount of rental construction going on. This area has been mostly single family homes and condos since 1972 when I moved here. Now, we see big projects like this and others nearby that I don’t know the name of. These are big projects including hundreds and perhaps thousands of units. The builder is the Irvine Company which, in my previous experience, has built mostly homes and condos. Recently, I began to notice more rental projects in Irvine.

The Irvine Company Apartment Communities is dedicated to making it easy to find a home you’ll love with unsurpassed services meeting your every need. With approximately 122 exceptional apartment communities located throughout the prime California regions of Orange County, West Los Angeles, San Diego and Silicon Valley, we offer choices to fit every lifestyle and budget.

They seem to be going to rental property in a big way. Maybe this is the reason.

From reading the mainstream press all you hear are glorious signs of housing resurrection! Come one come all into the house of real estate where the almighty Fed will allow no harm to occur. Just sign and pray and the next thing you know you’ll be the next Donald Trump. The flipping, rehabbing, and housing shows are once again filling the space on a cable station near you. The perception of the Fed being this almighty protector of housing makes a bit of sense but where was the Fed in 2007?

I see lots of housing flips in southern California, not in Orange County so far.

foreclosure-completions

Even in 2013 we had 1.4 million properties with notice of defaults, scheduled auctions, and full on REOs taken on. Early in the crisis these stories were common since they were a novelty to the press. Now however, many of these properties are shifting over to large investors pushing inventory up. A clear consequence of this is a large pool of potential buyers that are unable to buy.

These may be the renters.

first-time-home-buyer

Yup. The would-be first time buyers have student loans and bad credit. They are renting.

The number of first time buyers is pathetic because household formation is weak and many young Americans are living at home with mom and dad. Forget about buying, they are having a tough time paying higher rents to the new feudal landlords. You would expect with the rapid rise in prices that existing home sales are off the charts but they are not.

Housing prices do NOT mean buyers who will be occupants. Look at mortgage applications !

mortgage-apps-for-purchase

Wow ! We are back to levels last seen nearly 20 years ago! Only difference is that we have 50,000,000 more people today walking the streets of the U.S. of A. than we did back then. Since access to middle class living is getting tougher thanks to weak income growth, more people are opting to rent:

rentals-vs-households

This is what I am seeing in Orange County. I have been looking in San Pedro for a small house near the ocean. I can no longer afford Orange County except condos. I sold my house four years ago and bought a house in the mountains. That was a bad move. I found that I could not tolerate the altitude. I had to sell into the bad market of 2012. That cost me a lot. Now, I have to lower my sights and may just stay a renter for a while. At my age, it may make better sense.

Here comes 1933.

Saturday, November 23rd, 2013

images

The Depression did not really get going until the Roosevelt Administration got its anti-business agenda enacted after 1932. The 1929 crash was a single event, much like the 2008 panic. It took major errors in economic policy to make matters worse. Some were made by Hoover, who was a “progressive” but they continued under Roosevelt.

James Taranto has a good take and quotes a couple of lefty commentators. Like Ezra Klein.

There’s a lot of upside for Republicans in how this went down. It came at a time when Republicans control the House and are likely to do so for the duration of President Obama’s second term, so the weakening of the filibuster will have no effect on the legislation Democrats can pass. The electoral map, the demographics of midterm elections, and the political problems bedeviling Democrats make it very likely that Mitch McConnell will be majority leader come 2015 and then he will be able to take advantage of a weakened filibuster. And, finally, if and when Republicans recapture the White House and decide to do away with the filibuster altogether, Democrats won’t have much of an argument when they try to stop them.

As Taranto puts it:

“”The political problems bedeviling Democrats” is a marvelous bit of understatement. The abject failure of ObamaCare has made the prospect of a Republican Senate in 2015 and a Republican president in 2017 much likelier. Thus even from a purely partisan standpoint, rational Democrats would have been more cautious about invoking the nuclear option when they did than at just about any other time in the past five years.”

The filibuster maneuver by Reid is not a demonstration of strength. It is an admission of weakness. The idiots at HuffPo and the LA Times are beating their chests in joy at the prospect of eternal Democrat majorities that can ignore those pesky Republicans.

In fact, what Reid is acknowledging is that the Democrat majority in the Senate is going away and now is the time to pack the courts and regulatory agencies with ideologues and get all the anti-business regulations in place while they can. The hard left, which believes in magic and Cargo Cults, is cheering them on.

Bloomberg sees what happened, too.

“Under any administration, federal agencies seek to implement the president’s policies by developing regulations,” Jeff Holmstead, a lawyer at Bracewell & Giuliani LLP in Washington who has represented coal-heavy utilities, said. “But in most cases, the judges on the D.C. Circuit are the people who decide whether those regulations comply with federal law.”

I fully expect to see anti-fracking regulations roll out soon, once the Obama appointments get confirmed by the rump Senate. However, what goes around, comes around.

It is our understanding that the Supreme Court exception was included to satisfy pro-abortion extremists, the most active and basest part of the activist base. The Wall Street Journal’s Laura Meckler reported yesterday that the two biggest such groups, Planned Parenthood Federation of America and NARAL Pro-Choice America, both declined comment on the nuclear move, “leaving it unclear whether they are concerned about their ability to block future objectionable”–i.e., Republican–“nominees.”

The abortion lobby sees the future better than giddy leftists who think government creates wealth and jobs.

Why healthcare is in trouble.

Friday, November 8th, 2013

Our health care system has been built up over the years in a jury-rigged, ramshackle fashion. Before World War II, there was very little health insurance and what there was often was the product of labor union contracts. The early years were concerned with accident insurance and workers compensation laws.

The American life insurance system was established in the mid-1700s. The earliest forms of health insurance, how­ever, did not emerge until 1850, when the Franklin Health Assurance Com­pany of Massachusetts began providing accident insurance, to cover injuries re­lated to railroad and steamboat travel. From this, sickness insurance covering all kinds of illnesses and injuries soon evolved, but the first modern health insurance plans were not formed until 1930.

The Baylor program for school teachers was the first in 1929.

Medical insurance took stride in 1929 when Dr. Justin Ford Kimball, an administrator at Baylor University Hospital in Dallas, Texas, realized that many schoolteachers were not paying their medical bills. In response to this problem, he developed the Baylor Plan – teachers were to pay 50 cents per month in exchange for the guarantee that they could receive medical services for up to 21 days of any one year.

In those days, the concern was lost wages more than hospital care.

In 1939, the American Hospital Association (AHA) first used the name Blue Cross to des­ignate health care plans that met their standards. These plans merged to form Blue Cross under the AHA in 1960. Considered nonprofit organizations, the Blue Cross plans were exempted from paying taxes, enabling them to maintain low premiums. Pre-paid plans covering physician and surgeon services, includ­ing the California Physicians’ Service in 1939, also emerged around this time. These physician-sponsored plans com­bined into Blue Shield in 1946 and Blue Cross and Blue Shield merged into one company in 1971.

The modern insurance plans were very recent in origin. I was there for much of it. The commercial insurers fought the status of Blue Cross, which was not required to have reserves. Blue Cross asserted that it promised hospital care, not payment, so reserves were not necessary.

The 1940s and 1950s also saw the proliferation of employee benefit plans, and the included health insurance pack­ages became more and more compre­hensive as strong unions negotiated for additional benefits. During the Second World War, companies competing for labor had limited ability to use wages to attract employees due to wartime wage controls, so they began to compete through health insurance packages. The companies’ healthcare expenses were exempted from income tax, and the resulting trend is largely responsible for the workplace’s present role as the main supplier of health insurance.

The war produced much of this as wage limitations were in force but fringe benefits, like health insurance, were permitted. A lot of this history is contained in Paul Starr’s book The Social Transformation of American Medicine.

From the first, commercial insurers focused on employer plans while Blue Cross and Blue Shield (which was founded by the California Medical Association to pay doctor bills) were individual plans.

In 1954, Social Security coverage included disability benefits for the first time, and in 1965, Medicare and Medicaid pro­grams were introduced, in part because of the Democratic majority in Congress. In the 1970s and 1980s, more expen­sive medical technology and flaws in the health care system led to higher costs for health insurance companies. Responding to higher costs, employee benefit plans changed into managed care plans, and Health Maintenance Organizations (HMOs) emerged. Man­aged care plans are unique in that they involve a particular network of health­care providers that have been verified for healthcare quality and that have agreements with the insurer about price and related issues. HMOs were originally primarily nonprofit, but they were quickly replaced by commercial interests, and managed care only suc­ceeded in temporarily slowing the growth of healthcare costs.

Two major changes came in the 1970s. In 1978, the federal government established what were called Professional Standards Review Organizations or PSRO. All doctors had to receive training in how to do these reviews and it was immediately apparent that cost was the only consideration, not quality of care.

I decided to educate myself and took a course from an organization called “The American Board of Quality Assurance and Utilization Review Physicians. I took the exam and passed, then attended the annual meeting. This was about 1986. People I met at that meeting informed me that the exams were graded by throwing them up in the air. Any that landed balancing on one edge were flunked. Nonetheless, the experience was valuable because I could see what was coming.

I was president of the Orange County Medical Association that year and had served for eight years on the Commission on Legislation of the CMA, now called The Council on Legislation. This gave me an opportunity to meet many legislators, many state level and some federal. The impression they made on me was that few knew anything about medicine and most were not very intelligent.

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The rolling catastrophe

Monday, November 4th, 2013

Obamacare debuted on October 1. It is now November 4 and the mess is worse. I have been posting about it, here, and here, and here, and even here.

The political left is trying very hard as can be seen here.

keep-your-plan-flowchart

It’s kind of complicated so I will summarize. You are screwed !

There are accusations that insurance companies are using this to drop high risk subscribers. Maybe that is true but it is the consequence of ignorant people designing Obamacare. Did these guys ever set up a new business ? As Casey Stengel once said to the Mets , “”Can’t anybody here play this game?”

I guess not.

The New York Times has done what it can.

We are also told that “in all the furor, people forget how terrible many of the soon-to-be-abandoned policies were. Some had deductibles as high as $10,000 or $25,000 and required large co-pays after that, and some didn’t cover hospital care.” Never mind that we have seen cancellations of insurance policies with deductibles much lower, and customers forced to purchase replacement policies with higher deductibles, and with premium increases of 100%, if not higher.

Then there is this argument.

Why can’t people opt out of mental health coverage if there is not a reasonable chance that they will need that coverage? Why can’t they get mental health coverage when it is needed? After all, pre-existing conditions can no longer be denied, so in the event that mental health coverage is needed down the line, it can be obtained and the insurance companies cannot deny people who already have pre-existing mental health conditions. The Times assures us that over-coverage–and the high premiums that come with it–is “one price of moving toward universal coverage with comprehensive benefits.” They don’t explain why having unnecessary coverage is a step towards social justice, but as we saw from the beginning of this intelligence-insulting, repulsively dishonest op-ed, the New York Times is less about explaining, and more about covering up a disastrous rollout with disastrous policy consequences for the country.

Weak attempts at best.

Peggy Noonan, who has frustrated me with her obtuseness at times, gets it now.

Politically where are we right now, at this moment?

We have a huge piece of U.S. economic and social change that debuted a month ago as a program. The program dealt with something personal, even intimate: your health, the care of your body, the medicines you choose to take or procedures you get. It was hugely controversial from day one. It took all the political oxygen from the room. It failed to garner even one vote from the opposition when it was passed. It gave rise to a significant opposition movement, the town hall uprisings, which later produced the tea party. It caused unrest. In fact, it seemed not to answer a problem but cause it. I called ObamaCare, at the time of its passage, a catastrophic victory—one won at too great cost, with too much political bloodshed, and at the end what would you get? Barren terrain. A thing not worth fighting for.

So the program debuts and it’s a resounding, famous, fantastical flop. The first weeks of the news coverage are about how the websites don’t work, can you believe we paid for this, do you believe they had more than three years and produced this public joke of a program, this embarrassment?

She assumed that it wasn’t worth it if it worked !

The problem now is not the delivery system of the program, it’s the program itself. Not the computer screen but what’s inside the program. This is something you can’t get the IT guy in to fix.

They said if you liked your insurance you could keep your insurance—but that’s not true. It was never true! They said if you liked your doctor you could keep your doctor—but that’s not true. It was never true! They said they would cover everyone who needed it, and instead people who had coverage are losing it—millions of them! They said they would make insurance less expensive—but it’s more expensive! Premium shock, deductible shock. They said don’t worry, your health information will be secure, but instead the whole setup looks like a hacker’s holiday. Bad guys are apparently already going for your private information.

This is the worst that could be imagined. The New York Times is trying.

We are also told that “in all the furor, people forget how terrible many of the soon-to-be-abandoned policies were. Some had deductibles as high as $10,000 or $25,000 and required large co-pays after that, and some didn’t cover hospital care.” Never mind that we have seen cancellations of insurance policies with deductibles much lower, and customers forced to purchase replacement policies with higher deductibles, and with premium increases of 100%, if not higher. Really ?

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The Lost Boys

Saturday, March 2nd, 2013

Belmont Club has an unusually good post for yesterday. I could say that more than once a week, if truth be known. This one is quite to the point on Sequester Day.

The NHS, which its creators boasted would be the ‘envy of the world’, has been found to have been responsible for up to 40,000 preventable deaths under the helm of Sir David Nicholson, a former member of the Communist Party of Britain. “He was no ordinary revolutionary. He was on the hardline, so-called ‘Tankie’ wing of the party which backed the Kremlin using military action to crush dissident uprisings” — before he acquired a taste for young wives, first class travel and honors.

The NHS is dealing with the shortage of funds by pruning its tree of life, so to speak. He also does not tolerate anyone telling the truth about it.

it emerged he spent 15 million pounds in taxpayer money to gag and prosecute whistleblowers — often doctors and administrators who could not stomach his policies.

The public money spent on stopping NHS staff from speaking out is almost equivalent to the salaries of around 750 nurses.

It has recently been noted that NHS staff no longer recommend their own hospital for family members. Also one quarter report being harassed or bullied at work.

The other half of the equation involves the youth.

The European Youth will remain outside the Death Pathways for some time yet. But they will spend the time waiting for their turn at affordable, caring and passionate medicine in poverty and hopelessness. With the exception of Germany youth unemployment in Europe is over 20%. “A full 62% of young Greeks are out of work, 55% of young Spaniards don’t have jobs, and 38.7% of young Italians aren’t employed.”

Unemployment exceeds even our own Obama economy for failure. (more…)