Health system discourages innovation
Andy Sullivan, Reuters, May 28, 2009

I’ve been talking about “job lock” since long before I knew there was a term for it. It is perhaps one of the most devastating consequences of our troubled health care system industry–and one that barely receives mention. Innovation and entrepreneurship are what made this country great. Our health care system is destroying far more than our health; it’s wrecking our economy and global dominance.

Economists call this phenomenon “job lock,” and studies suggest that it keeps between 20 percent and 50 percent of workers from leaving their current jobs.

Because health insurance is tied to employment in the United States, workers who leave their jobs can see health bills skyrocket if they strike out on their own or take a position with a company that offers fewer benefits. Workers who would like to retire early stay on, unable to qualify for the government’s Medicare program until they turn 65.

As head of the National Federation of Independent Businesses, Todd Stottlemeyer frequently encountered would-be entrepreneurs who let their ideas go stale and their products languish on the workbench because they did not want to shoulder their own health care costs.

Troubling.

New Jersey saw a 14 to 20 percent rise in entrepreneurial activity due to a 1993 law making it easier for the self-employed to afford health insurance, a study by Philip DeCicca of McMaster University in Hamilton, Ontario found.

A major problem with most proposed solutions to rising health care costs and covering the uninsured is that there is little support for abandoning employer-based health insurance. The Democrats want to reduce costs and make insurance affordable for all. That’s great, but insurance companies ARE cost, and provide zero value. They make their money collecting premiums and denying care. Perhaps a public insurance option would give would-be entrepreneurs the security to leave their job and the health care benefits that went with it.

The Republicans have introduced a plan that would give each family a tax-credit to pay for insurance and remove incentives companies have had to provide health insurance to their workers. Perhaps these benefits could be converted to cash which would allow employees to shop around, thereby ending the problem of job lock.

Job lock is a real problem and should be a primary consideration in any health care discussion or proposal.

business · economy · entrepreneurship · health care · innovation · job lock · usa

Sink and Swim
Megan McArdle, The Atlantic, June 2009, p. 30

Far too many Americans are more concerned with fairness than a reasoned pragmatic approach to social and economic problems. Bankruptcy is one of the areas with which many of us would like to punish irresponsible behavior despite the obvious negative results of such policies.

This article enumerates several reasons why the punitive strategy to financial irresponsibility is ill-considered. Our “free-and-easy, all-is-forgiven model” of bankruptcy is vital for a healthy agile economy.

Our leniency toward those with unsustainable debts helps not only profligate debtors, but the rest of us as well. Less onerous bankruptcy procedures boost rates of entrepreneurship: reduce the cost of failure, and people become more willing to take risks. America’s business environment is much more dynamic than that of Europe or Japan, for many reasons—and our generosity to capitalism’s losers is one of them.

“But that isn’t fair!”, you protest. (more…)

bankruptcy · economy · the atlantic · united states

Luxury or Necessity? The Public Makes a U-Turn
Rich Morin and Paul Taylor, Pew Research Center, April 23, 2009

Could our current economic recession be beneficial? In several ways, yes. One benefit may be that our gluttonous consumerism will wane. Hopefully the new behaviors will be required long enough to become habits.

It finds that eight-in-ten adults have taken specific steps of one kind or another to economize during these bad times. Almost six-in-ten say they are shopping more in discount stores or are passing up name brands in favor of less expensive varieties. Nearly three-in-ten adults say they’ve cut back spending on alcohol or cigarettes. About one-in-four say they’ve reduced spending on their cable or satellite television service or canceled the service altogether. About one-in-five say they’ve gone with a less expensive cell phone plan, or canceled service.

Our family has done all those things (except reduce spending on alcohol).

These shifts have occurred across-the-board, among adults in all income groups and economic circumstances — perhaps suggesting that consumer reaction to the recession is being driven by specific personal economic hardships as well as by a more pervasive new creed of thrift that has taken hold both among those who’ve been personally affected and those who haven’t.

Hopefully thrift is becoming cool. What surprised me about the survey is that 68 percent of those surveyed think a landline phone is a necessity and only 50 percent say the same about a home computer. I was also surprised to learn that anybody could think a flat-screen television is a necessity. That says a lot about who we are.

economy · frugal · pew research · recession · thrift · united states

Porsche Chooses China for Its Entry Into Sedans
Keith Bradsher, NY Times, April 19, 2009

Marijan Murat/European Pressphoto Agency

A dark gray Panamera rolled onto a stage Sunday night on the 94th floor of the 1,614-foot Shanghai World Financial Center, the tallest building in mainland China, having been wedged nearly vertical into an elevator barely wide enough for the task.

Now that I would like to have seen.

automobile · business · china · economy · engineering · environment · porsche

The road not taken
The Economist, March 21, 2009, pg31

I recently wrote about home ownership and how the recession has the power to change America’s landscape. These changes should be encouraged and accelerated.

Recession and Geography
Brent Danley, The Rhetoric, February 22, 2009

The essay I read today in The Economist magazine only strengthened my opinions about both home ownership and health care. Both issues are devastating our economy and weakening our chances to grow and lead.

“Mobility is part of the American dream”, the author writes. And I agree. People should move to where the work is and where they will be able to find employment that will best utilize their talents and skills. Unfortunately, policies of past administrators have succeeded in promoting home ownership as the new American Dream. The consequences of this short-sighted idealism should be obvious to even the casual observer.

(more…)

america · economy · government · health care · home ownership · insurance · mobility · policy · united states · worker

Infinite Debt: How unlimited interest rates destroyed the economy
Thomas Geoghegan, Harper’s Magazine, April 2009, p31

In this scathing essay, Mr. Goeghegan enumerates the problems of allowing interest rates to escalate to grotesque and immoral levels. His analysis and insights are fascinating and worth consideration. He says what many are thinking and few are saying: that our current problems weren’t caused by bad bankers or a collapsing housing market. Instead, they were caused primarily by our lust to consume beyond our means and to “earn” absurd rates of return quarter after financial quarter. We gave up our manufacturing sector to pursue easier money in the financial markets.

Want to get a peak under the hood of our economy to get an idea of the roots of the collapse? Check out the article. Here’s a teaser.

And then we dismantled the most ancient of human laws, the law against usury, which had existed in some form in every civilization from the time of the Babylonian Empire to the end of Jimmy Carter’s term, and which had been so taken for granted that no one ever even mentioned it to us in law school. That’s when we found out what happens when an advanced industrial economy tries to function with no cap at all on interest rates.

(more…)

collapse · economy · finance · harpers · interest · loan · market · recession · usa

Maine’s largest city OKs backyard chickens
Boston.com, February 19, 2009

Maine’s largest city has become the latest municipality in the state to allow residents to keep chickens in their backyards.

Portland officials said the council received 150 e-mails, the most it’s ever received on any issue, which came up as the recession has more people interested in locally grown food.

It’s a fantastic idea. Cut out the middle-man and get fresh eggs and meat while helping the environment by producing locally. Bravo, Portland.

chicken · economy · egg · environment · food · frugal · maine · pet · portland

A reassuring figure for Treasury
Economist.com, November 22, 2008

I’m so glad Hank Paulson is going to be leaving with W. What a disaster. I’m equally thrilled by President-elect Obama’s choice for his replacement. Perhaps I should be grateful Mr. Paulson was ineffective, otherwise we would have privatized Social Security. Imagine that!

Mr Geithner looks a lot younger than his 47 years (though not as young as he did before the crisis began). He skateboards and snowboards and exudes a sort of hipster-wonkiness, using “way” as a synonym for “very” as in “way consequential” and occasionally underlining his point with the word “fuck”.

Cool.

In temperament he seems similar to Mr Obama: he is suspicious of ideology, questions received wisdom, likes a competition of ideas and is keenly aware of how uncertain the world is.

He is a quick learner: within a year of joining the New York Fed he could debate the intricacies of monetary policy with academic experts. But he will join an Administration rapidly filling up with heavyweights on economic policy, not least of them Mr Summers. Indeed, one of the big questions of the new team that Mr Obama is expected to unveil on Monday is just how Mr Summers, a brilliant but intimidating and sometimes abrasive figure, will fit in.

Mr Obama is assembling a formidable economic team. With the economy perhaps on the precipice of its worst recession since the Depression, he will need it.

So instead of an ideological crony we’re going to get competence? Fuck yeah.

Related post:
Krugman for Treasury, November 10, 2008

economy · geithner · government · obama · paulson · politics · treasury

I’ve recently been having a discussion with a friend about economic philosophies, among other things. The last three books I’ve read have been about economics. I dig the free market, I do, but only one that is heavily regulated. Capitalists serve themselves first, and society maybe never. Taking care of us is the responsibility of the collective we call government.

I read a very interesting article in the current issue of Esquire magazine about Dean Kamen, his inventions and idiosyncrasies (which are many). One quote that particularly resonated with me concerns America and her values.

you get what you celebrate in a free market and America builds momuments to the things it values and unfortunately most of those monuments are giant sports arenas, which don’t contribute anything to the future.
~John H. Richardson, Esquire, December 2008, page 98+

Well said.

business · capitalism · economy · esquire · government · politics