ObamaCare

On this day:
1066
Norman Conquest: Battle of Hastings – In England on Senlac Hill, seven miles from Hastings, the Norman forces of William the Conqueror defeat the English army and kill King Harold II of England.
1322
Robert the Bruce of Scotland defeats King Edward II of England at Byland, forcing Edward to accept Scotland’s independence.
1586
Mary, Queen of Scots, goes on trial for conspiracy against Elizabeth I of England.
1656
Massachusetts enacts the first punitive legislation against the Religious Society of Friends (Quakers). The marriage of church-and-state in Puritanism makes them regard the Quakers as spiritually apostate and politically subversive.
1867
The 15th and the last military Shogun of the Tokugawa shogunate resigns in Japan, returning his power to the Emperor of Japan and thence to the re-established civil government of Japan
1912
While campaigning in Milwaukee, Wisconsin, the former President of the United States, Theodore Roosevelt, is shot and mildly wounded by John Schrank, a mentally-disturbed saloon keeper. With the fresh wound in his chest, and the bullet still within it, Mr. Roosevelt still carries out his scheduled public speech.
1913
Senghenydd Colliery Disaster, the United Kingdom’s worst coal mining accident, occurs, and it claims the lives of 439 miners.
1943
The American Eighth Air Force loses 60 B-17 Flying Fortress heavy bombers in aerial combat during the second mass-daylight air raid on the Schweinfurt ball-bearing factories in western Nazi Germany.
1947
Captain Chuck Yeager of the U.S. Air Force flies a Bell X-1 rocket-powered experimental aircraft, the Glamorous Glennis, faster than the speed of sound - over the high desert of Southern California - and becomes the first pilot and the first airplane to do so in level flight.
1962
The Cuban Missile Crisis begins: A U.S. Air Force U-2 reconnaissance plane and its pilot fly over the island of Cuba and take photographs of Soviet missiles capable of carrying nuclear warheads being installed and erected in Cuba.
1968
Jim Hines of the United States of America becomes the first man ever to break the so-called “ten-second barrier” in the 100-meter sprint in the Summer Olympic Games held in Mexico City with a time of 9.95 seconds.
1994
The Palestinian leader, Yasser Arafat, The Prime Minister of Israel, Yitzhak Rabin, and the Foreign Minister of Israel, Shimon Peres, receive the Nobel Peace Prize for their role in the establishment of the Oslo Accords and the framing of the future Palestinian Self Government.
2003
Chicago Cubs fan Steve Bartman becomes infamously known as the scapegoat for the Cubs losing game 6 of the 2003 National League Championship Series to the Florida Marlins. This has become known as the Steve Bartman incident.

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In Eric Trump's new book. he documents that he and his family received 112 subpoenas and spent 400 million dollars in their defense during the Biden Regency's legal attack on Trump and his family. The shocking intensity and the volume of these attacks in a free nation make Trump's response look less churlish. 

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Has advertising, Hollywood, and TikTok made everything in life a performance?

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Ms. Crockett, the representative, says the Left is no threat to people because they are bad shots.

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ObamaCare

"When Democrats passed the Affordable Care Act in March 2010 — known universally as ObamaCare — they largely ignored every basic actuarial principle of insurance. As a result, ObamaCare was always going to collapse in what health insurers refer to as the “death spiral.”

The only reason it hasn’t already collapsed is Democrats passed additional taxpayer subsidies that insulated the insured from rising costs. This, in turn, explains why Democrats are now so determined to keep those subsidies.

In a normal insurance market, when someone applies for coverage, actuaries assess how much risk that applicant brings to the insurance pool. In life insurance, an older person generally brings more risk than a younger person. A home on a Florida beach brings more risk than a home in Nebraska. And a young male driver brings more risk than a middle-aged driver.

In all of these cases, actuaries would normally impose a higher premium or refuse coverage to the risker applicants.

That decision is based on the risk of some unforeseen event happening, not an event that has already occurred. Individuals can’t buy a homeowners’ policy when their house is burning down or auto insurance to cover a recent accident.

Yet Democrats wanted uninsured individuals — note that ObamaCare coverage is for individuals, not those with employer coverage — to obtain health insurance regardless of how sick they were, which is known as “guaranteed issue.” And they also wanted everyone to pay the same premium, again, regardless of their health, which is known as “community rating.”

When everyone is charged the same health insurance premium, older people who tend to have more medical issues pay an artificially lower premium. Younger, healthier people pay a higher premium. The young and healthy subsidize older adults.

The result is that younger, healthier people begin to drop their coverage because they are paying too much, leaving the insurance pool smaller and sicker. Health insurance premiums go higher, driving even more healthy people to drop their coverage. Eventually, the pool gets very small and very expensive. That’s the death spiral." 

This is from The Hill, a reasonably neutral reporter. And describes something inherent to the social debate in the U.S. and the world: risk.

Freedom carries with it terrific individual responsibility because it includes the freedom to fail as well as succeed. Much of the discussion in the U.S. involves the acceptance of risk. Risk is a part of the amalgam of freedom. Denying risk is more than economically naive; it implies the inability of a man to care for himself, the need for the State to intervene. While a real element in life, that should be an exception, not a condition, of man.

In addition to wanting what you have, the tyrant always says he wants to help.

Butterflies Meet Black Swans

 "Critical state" is the point at which something triggers a change in the basic nature or character of the object or group. Earthquake. Landslide. Avalanche. Epidemic. Market crash. Revolution.

Mark Buchannan has a book out call "Ubiquity. Why Catastrophes Happen" in which he examines this notion.  It is a heady topic in science that involves chaos and game theory but fearlessly these scientists apply their abstract science thinking to modern life.

 In essence, as a stable state grows, the instability of the state grows, a very Minsky-like belief. "The collapse is fundamentally due to the unstable position; the instantaneous cause of the collapse is secondary." (Didier Sornette, a French geophysicist who wrote a book on money markets!)

So any non-static entity gradually builds its own instability. The triggering event is relatively minor in the equation but, as complexity grows, it is less predictable in timing and source. See this in terms of growing populations, growing technology and growing motives.

These are scary ideas. The only good seems to be that these scientists have finally broken the monopoly: Now, insted of just politicians, scientists are moving into areas they know nothing about.

Taylor Hunt once wrote: " We are really not managing risk anymore. We are managing uncertainty." (Mauldin)

Government investment 2

If the U.S. government wants to do "investments", they should clarify the nature of investments first.

There are a couple of types of investments, generally debt and equity. With an investment in debt, the investor is giving money for a certain return, the debt backed by something like real estate, or company assets or intellectual property. If the debtor doesn't pay his debts, the bondholder takes what was pledged. In equity the investor invests in the company and its future; that investment is backed by the company's property but the debt holders have first claim and, in a failure, there is usually little left. Next, the investor invests his own money, or someone the investor assigns or pays invests the money for him.

There are several components to this type of transaction that are obvious. First, an investment is voluntary; it is always done with the approval of the person whose money is being invested. Second, investment involves risk; the investor may lose his money. Indeed, the risk determines what kind of investment the investor is willing to make. Risk is an inherent part of investment; it is what the investor is paid for. But the risk is not simply the loss of money; the other side of the risk coin is pain. In an investment, the investor investigates the investment, takes money from another aspect of his life and deprives himself of its use--perhaps forever, and risks his money, his comfort and a bit of himself in his decision. (An interesting aspect of the 2008 meltdown was the appearance of "investments" that appeared "riskless', a sure sign of something wrong.)

Now, how can the government do this?--aside from the practical questions of whether they can do it well--whether their motives are good and their assessment even adequate. They can give money to people or things; that's easy. But investments demand a relationship with the investor and the entity he invests in; that relationship hinges on the possibility of risk and pain. So the government takes Other Peoples' Money and gives it to someone else and calls it an investment. But an investment requires one's own money. And regardless of how the bureaucrat may want the target of the money to succeed, it will never be his "investment".

So the government might give money to a wind farm. A transfer of money takes place; but that doesn't make it an "investment" any more than Charlie Sheen's professional girlfriends are receiving investment money from him. The wind farm is getting a "subsidy", a gift for a purpose--albeit a possible good purpose--but it is not an investment. And what if you own a competing wind farm? Is the appropriation of your money to subsidize your competitor in any way right?

Any politician who calls this an investment is either foolish or insincere.

Serious Government

One reason that the government contribution to GDP can not be examined is because of the remarkable warmth the "G" creates in the cold GDP = C+I+G+X equation. Government, as opposed to the rapacious and self-centered private sector, has good motives, an evenhanded outlook that treats all citizens equally and does things for the betterment of all that may not be economically advantageous.

How could we evaluate the economic value of what government does? What is the economic value of the building of a school? Or a road? There certainly seem to be some social value to all but there is also some social value to a church social; should they be underwritten? It seems reasonable that an educated populous is more economically valuable that an uneducated one, it seems that roads would encourage easier and faster economic activity than cow paths but how exactly are those advantages quantified? Should the government build hospitals, which seem to have social value? How about libraries? Libraries have a lot of social value; should we build them? If so, how many? Is it possible to build too many libraries? How should we analyze the right number of libraries? And how to we evaluate a successful road or school?


But even if we accept as true that the government "has good motives, an evenhanded outlook that treats all citizens equally and does things for the betterment of all that may not be economically advantageous" that does not excuse the government from honest and clear self assessment. Modern surgeons have a regular monthly or bimonthly self assessment called M&M, Mortality and Morbidity. It is a conference attended by the hospital surgeons where the recent surgical errors, misjudgments and bad results are discussed. The discussion, often among friends, is brutal. Cases are dissected like cadavers, thinking processes are probed, behavior and decision-making are laid bare. There is never any animosity; the truth and improvement guided by the truth are the only objectives.

The General Accounting Office spoke before a congressional committee a few years ago and said that they estimated 7% of federal programs were lost to graft before they were implemented. Nobody blinked. Very few businesses in the private world could afford that kind of loss because they are serious. The physicians in M&M conference hear every word of the discussion because they are serious. What makes people serious is risk, the risk of loss or failure or death--risk the involved people are responsible for. Improvements in government will certainly come from visionaries and philosophers, but up until now, such visionaries have been few and most of them have been murderous.

Making governmental personal responsible for planning their projects, defending them, and analyzing their social and financial success or failure would be a refreshing start in developing governmental programs that create value. That's what everybody else does.

risk and the american character

There is a recent article about the American character, how risk is inherent to it, how the history of the settling of the west symbolizes it and how federal regulations endanger it. The author's point is that regulation in the future will inhibit a successful aspect of the American character and impair our recovery. I, on the other hand, think the damage has been done; the current problems are directly attributable to the markets aversion to risk. There are countless factors in the economic disaster we are experiencing, and about to experience. The obvious are expanding credit/debt, the purposeful loaning of money to less than credit worthy people and the tremendous leverage that has developed in the economy (by that I mean using less and less assets to support more and more debt.) But I'll bet when the final assessments are written there will be a more basic culprit: the attempt to eliminate risk. This "risk" concept is essential to free markets. Every economic encounter should contain risk because risk is a proxy for responsibility. If you can buy a house with no money down and get 125% from the bank, you can walk away from the mortgage with 25% of the loan and put it in your pocket. No risk. No responsibility. On the other hand, the creditor is completely dependent on the good will of the borrower, as vulnerable as a woman in the street. Such thinking makes investment closer to theft. No wonder the creditor runs to homogenize the risk. And I will bet it is the underlying problem in the "illiquidity" of the economy: no one wants to give money in a culture that holds irresponsibility in such high esteem. Everyone wants to be as safe as possible but transactions that are risk less, like
other efforts, are worthless--or will prove to be. Life cannot be seen as
risk less. Nothing in, nothing out. The real question is if the risk aversion nature of our economy will supplant the the older pioneer quality of the country. That would be real change.