Wednesday, February 22, 2012

Immigration Reality

Our border should be a line in the dirt that we manage fully.

Nobody else should get to decide who is ok to cross the American border, but America itself.

We can at our choosing let in everyone, or no-one... or some people.

My principle.  What crosses our border should be our choice.

I don't care if America decides Amnesty is the best policy.
Or, mass deportation... or somewhere in between.

That is a nuanced matter for careful debate.

There is politics on every side.

What should be clear is this.

There are mass benefits to having immigrants here - illegal and otherwise.
There are also costs.  Many born more heavily by border states.

We should determine what costs we will share to take the burden off the states...
And we should determine a process of:

#1:  Securing our borders.  I would seal the borders today.  Deploy the military.  Put drones in the air.  End of story.  If you are caught crossing... we can't say what will happen to you.  The rules of engagement for the military should be such that there is mass deterrence from even trying to cross illegally.  Our presence should be such that there is no use trying.

#2: Bringing people out of the shadows.  We must create a process whereby all persons illegally in the country are brought out of the shadows.  If they do not comply and register and continue to hide... and are found - the consequences should be rather severe.  Again.  Severe enough to deter people from remaining hidden.

#3: America should make some values judgments.  We do need people to pick our vegetables.  Buildings and homes would be as much as 33% more expensive without immigrant workers.  Many are raising families here.  Many have started businesses.  At the same time - there are those involved in crimes - and using our health care system without paying.  So - we should look at the complete list of issues and decide one at a time on what we believe should happen.  The key - it should be our choice rather than the illegal immigrants and we should stop putting our head in the sand and we should decide what we believe and behave accordingly.

These are our borders.

#4: Western Union.  It is about dollars.  Illegal immigrants are often here - sending money back to their families in Mexico, or other places.  This is not subtle.  A massive portion of Western Union's business is the processing of these cross border wires.  We could even consider getting their database and running against our information to see who is not registered.  That would be controversial... but, look - we are dealing with our borders here.  We should figure out what the rules should be... not somebody else - business, country, our otherwise.  Those are our borders!

#5:  We should create a list of all possible methods of stopping the problem of illegal immigration and all methods for handling illegals already here.  We should look at what can feasibly be accomplished and we should move forwards.

This is a problem important enough that I believe it should be resolved.
I believe that having all people registered and not feeling like they are hiding in the shadows would be of benefit to us.
And I believe that they should then be here on our terms... not theirs.  (Regardless of what our terms are.)

Tuesday, February 21, 2012

This article on home prices is so wrong

He is writing about a 33% "COLLAPSE!!!" After a run up of 126% in three years before.

Home prices normally appreciate 2-3%

In 3 years prior to this "collapse" we had 63 years worth of appreciation and he is crying collapse that it fell a little.

Completely wrong.

Funny thing is... now... homes should be more affordable to anyone who does have a job.

Before - prices were higher.  That was not cause for celebration.

Husbands + Wives had to work 50 hours a week... then wrack up debt on multiple credit cards in the context of higher home prices.

Why the negative connotation on prices falling back to what the market can bear... what people can pay.

Look at the chart here with Price to Household income ratio.

If you want an entire analysis of "The coming collapse of the middle class," before it happened... watch this video.

This is Elizabeth Warren.  Obama tried to appoint her as the head of the new consumer protection agency.  Republicans blocked her.  She may soon be a Senator instead.  (Watch out... She is crazy smart... and She used to teach little kids so she can spot a liar from a million miles away.)

Benjamin Corey Feinblum

Monday, February 20, 2012

How Economic Analysis Works: Using Models

Ok... lets stop pretending that you can label an entire action by the government as one economic model.

In sociology, we study all the models and learn how to use them as perspectives for understanding approaches to a problem.

Health care law... fascist?  Well, if you don't follow the law... you get shot in the head.  That is Stalin.  That is fascist.

Socialist?  Socialism is on a spectrum.  And in a mixed-market economy like America... there is lots of it.  It works quite well, in synergy with the excesses of Capitalism.  It is a counterbalance to greed.

There is no program that has zero socialism in it.

Having a military is socializing the defense of a nation.  The government owns the business of war.  That is socialism.  The government hires private companies to make the stuff... that is Capitalism.

My point... it is all meshed together.  We understand things by counterbalancing all the perspectives until we find something we believe would be most effective.

Health care came FROM - hospitals and the government paying for the uninsured as they show up sick.  And then passing off the cost to you.  Well, the current system was socializing the costs of the uninsured... and today - you pay for it.  That is the status quo.

Anything can be less socialist than that.

Libertarians like to believe their decisions don't effect others... until they are 27 years old and believe they will die... and show up at the hospital expecting treatment... paid for by someone else!  Just because they don't have insurance today... doesn't mean they want to die tomorrow.

So - those are the extreme positions.

What if we had extreme capitalism.

Forget about the fact that we are in the wealthiest country on the planet.  If you can't afford health care yourself... when you show up in the hospital... it is survival of the fittest... and you will die.  You aren't going to cut into the profits of anyone else.

Well - truthfully, I don't like the sound of that version of America.  And this is why we have a mixed-market system that draws from each economic perspective.

Any one of these economic models in their pure form is crap.

Communism for example is a horrible system.  However, the current Chinese model, which is a synergy between Capitalism and Communism is producing 10% growth rates in their economy.  (Not to mention a poor record on human rights!)

So... here is the analysis of the health care law.  The way analysis really happens.
By looking at the parts... seeing how the best elements of a variety of perspectives can help us find a choice somewhere in the middle... that works best.

Let's jump into the sausage factory.

First: Let's end the socialist element.  If you show up in the hospital uninsured, you should not expect service.  Why?  Right now, your family pays about $1000 more a year in insurance premiums (to cover half the cost the hospital passes on to you when it raises prices) and the government (funded by your taxes) pays for the other half of the cost... also passed on to you.

Why is that socialism?  We take the cost someone else incurs and socialize it.  The capitalism side of the equation raises the market cost for all services that you will partake in if you are insured, to cover it.  The federal government will own part of that cost as well.

But, there is a value here.  A value that in the wealthiest nation on Earth people should not die on the floor of a hospital waiting room just because they don't have insurance.  Previous generations came here as brave immigrants and they didn't have their act together when they got here.  Some people still don't.  But, it doesn't mean we should impose a death sentence.

The 19 year old kid who lives on his own... doesn't need to die to teach the all important lesson that he is not invincible.

Pause for some research?
You don't have to take my word for anything.  Here is a full study by the Kaiser Commission on Medicaid and the Uninsured.  Yes, this one is from 2004, but my guess is things only got worse after that.
The internet is amazing.  Everything is available.

Here is one passage from the report:
"Moreover, research shows that leaving a large share of the population without
health insurance affects not only those who are uninsured, but also the health and economic wellbeing
of the nation. Yet, despite these findings, the number of uninsured Americans continues to
grow. Although the national debate over ensuring health coverage for more Americans periodically
gains momentum, it then stalls—perhaps in part because not enough is known about both the
benefits and the costs of expanding coverage to more, if not all, of the uninsured."

As my Grandmother would say... Democracy only thrives when the population is involved, educated, and informed.  Well, hopefully, there is some info that can help inform you.

A shortcut:  In 2004 the total dollars involved in health care for the uninsured... "$124,500,000,000."  So, the being uninsured does not mean their health care is free.  It does not mean that somewhere, nobody is paying for it.  It may mean that the uninsured are being paid for in the least effective way.  

Total health care spending in 2004 was about $1,500,000,000,000.  So maybe if there are some easy to pin-point issues with the system... it would pay to address them rather than kick the can down the road and ignore systematic problems for another 80 years.  There has got to be some low hanging fruit in a system that big.

"In 2001 hospitals accounted for over 60% of uncompensated care dollars;" hmmm.... so, somebody is already paying for it.  "The primary source of funding for uncompensated care is government dollars."  Ok.  So when they don't have insurance... it is already expensive for anyone in America  who pays taxes.

They call these "DSH payments."  "Payments intended to offset losses hospitals incur when large shares of their patients are unable to pay their hospital bills."

That was the status quo.  That is how the system operated before we changed.
Again.  In economic analysis... cost/benefit analysis... one must consider the new plan in the context of what exists today.

Part 1: We are already paying out the nose for the uninsured.  Part 2: "The uninsured who are without coverage for the full year receive about half (55%) of the medical care per person compared to those who have health coverage for the entire year, even after taking uncompensated care into account."  So, part 2: We pay... they get crappy... insufficient care.

"Compared to persons who have health insurance, the uninsured:
• receive less preventive care,
• are diagnosed at more advanced disease states,
• and once diagnosed, tend to receive less therapeutic care and have higher mortality rates."

So, this is a problem people are dying from.  And they do not get the benefit of small preventative actions that are far less costly.

Again: I return to the premise... there are costs that remain by doing things the way we have... in the context of what was the status quo.

So, how much would it cost to cover all the uninsured?  Based on what the insured are spending a year, the cost would go from $125,000,000,000 that the uninsured spend now to a walluping... $173,000,000,000.  (For all of this, I am using the same source - the Kaiser Commission report.)

The interesting thing is that it has been so hard politically to touch health care reform that we can't even touch the programs we know are working horribly without people going nuts.

Medicare Advantage... well, that has been working horribly.  Medicare has been far more effective.  By slashing Medicare Advantage you can make up the difference between $125 and $173 billion dollars... and bingo... more people have... (What?) private insurance under the new model rather than the government program.

Aka.  We cut out a large socialized medicine program... to have the money to provide incentives... and maybe subsidize the cost of people being privately insured when they can't afford it.

Now, this has some people crying, "Tyranny," "Fascism..." Well, I've got news for you.  Hitler was as fascist.  His plan was... if you don't have blond hair and blue eyes your medical treatment is a gas chamber.

It is hard to define efforts that rely on more intelligent uses of money to cover 44 million more people so that they can be healthy... as fascism.  I'd rather define it as... "Uncommon sense."  What people would do if they took the time to develop some sense!

Another quote from the article,
"A benefit of a comprehensive rather than an incremental approach to covering all of the uninsured
is that some of the public money already being used to pay for care received by the uninsured
could be reallocated towards the cost of insurance. However providers caring for the uninsured
now, primarily hospitals that now receive the largest subsidies for uncompensated care, may be
reluctant to relinquish their existing subsides unless assured that all people will have health

Aka: If you are going to do it, you've got to go all the way.  Everyone needs to be insured or you don't get the buy in from the hospitals.

So - in 2004 - the writing was on the wall for how to solve the problem of the uninsured.  How to fund it.  How to get the buy-in of hospitals.  And how to do it in a way that gets more people off public programs and into private insurance.

Another element of the status quo at the time was, there was no leader gutsy enough to take on health care reform.  In fact, Bush went around the country trying to save social security... when health care was the bigger problem.  Along comes Obama and he says essentially... "I can take the heat."

Well - here is a comparison of costs and benefits to expanding health coverage.  Heck, I'm going to copy and paste all of page six of this article:


How do the costs of expanding health coverage
compare to the benefits?

Research showing that having health insurance positively affects the use of health services is clear
and widely accepted—and the case has also been made that having health insurance leads to
improved health and longer lives by means of better access to medical care.
• A conservative estimate based on the full range of studies is that a reduction in mortality of
5-15% could be expected if the uninsured were to gain continuous health coverage.1
• It has been estimated that the number of excess deaths among uninsured adults age 25-
64 is in the range of 18,000 a year.2
• The annual economic value of foregone health among the 40 million uninsured in 2000 has
been estimated to be between $65 and $130 billion in that year.3 If the middle of that
range ($97.5 billion) is inflated to 2004 dollars, the annual economic value of the foregone
health of those 40 million uninsured increases to $103 billion—a sum considerably larger
than the $48 billion in increased costs of expanding coverage to all of them.
The additional $48 billion/year of medical spending needed to provide universal coverage, beyond
what is currently being spent, can be viewed from several broader perspectives:
• Relative to current government spending for public health insurance programs and the
subsidization of private insurance in 2004, the additional spending to cover the uninsured
is relatively small.
o Medicare will cost $266.4 billion;
o Medicaid will cost $280.7 billion;4 and
o the tax subsidy for private insurance will be $188.5 billion5
• The new dollars would constitute less than 3% of total personal health care spending in
this country.
• The $48 billion would increase the share of GDP going to health care by 0.4%.

Wait a minute... So... by covering 44 million people we only increase the share of GDP going to health care by .4%?  And in the process we are carrying out economic activity... which itself increases the GDP... So... it might night even be that much of an impact at all.
Jump to page 14 of that article.  Yes, we can assume there are costs and benefits to insuring the uninsured.  But, people... I've never heard a single person consider the actual costs of NOT covering the uninsured.

Here are three main reports from 2003 on the topic.

The project’s major reports, published in 2003, include:
“Sicker and Poorer – The Consequences of Being Uninsured: A Review of the Research
on the Relationship between Health Insurance, Medical Care Use, Health, Work, and
Hadley, Jack. Medical Care Research and Review, 60(2) Supp. June 2003
Available at:
“How Much Medical Care Do the Uninsured Use, and Who Pays for It?”
Hadley Jack and John Holahan. Health Affairs (Web Exclusive). Feb. 12, 2003
Available at:
“Covering the Uninsured: How Much Would It Cost?”
Hadley, Jack and John Holahan. Health Affairs (Web Exclusive). June 4, 2003.
Available at:

Ok - so something has happened here.

Something I do not hear in the national discourse... in an economic analysis I used data from empirical research and not talking points.  Just curious... in all the great debate back and fourth on health care... has anyone heard any dollars and cents talk in this economics issue?

NO.  It is being played around with and messed with to our detriment as a political issue.  Well, this is health care and economics... it should be about health outcomes and dollars and cents decisions... not politics!

If you are informed on this now and you hear people fighting about health care... help them make a distinction between when they are talking pure politics, health outcomes, or dollars and cents - the economics of it.

Decisions on health care should be made by health outcomes and dollars and cents smart choices.

Conclusion:  By the report above... getting everyone covered on private insurance will be cheaper than having the current government programs... even if we have to pay some of the costs... there are great benefits to paying those costs - society wide - and if we don't bring everyone into the system... hospitals won't go along with it.

So - one might say... the only way forward that makes sense for health outcomes and economics is a system everyone is in... and the only thing in the way is politics?  Huh?

So - we should allow our system to remain totally screwed up... ineffective... with more people on government programs... because... of politics?

That sounds stupid to me!

Let's put health first.

So - it sounds like some sort of individual mandate... partially paid for by those who can't afford the insurance would go right at the heart of the solution of most of the problems of the uninsured right there.

Well - that is, "ObamaCare."  How do you feel about it Mr. Romney?

Yeah - lets talk to a prominent Republican on the issue.
What does Mitt Romney have to say about an individual mandate?

Wait - did he just call it the Republican free market approach to health care and blame Democrats for the status quo?

Is there any more blatant, overt, playing of politics rather than focusing on health outcomes than what I just saw?  NO!

Let's go one step further.

Let's return to something I posted earlier.

The man who helped Romney create his Massachusetts plan is the same guy who helped Obama write his.  And he is a little pissed at Romney because the plan was the most effective ever and 98% of people in Mass are covered now.  The highest in the nation.


Let's not play.  HEALTH and our ECONOMY are on the line.

Note: In the video.  Dr. Sanjay Gupta is the CNN reporter.  He is a surgeon.

So - while playing politics they created a distortion of what socialism is... what the status quo is... what works... what they view as the capitalist free market model... what they did themselves and recommended nationally... and they did all this at the EXPENSE of our economy and health care in America.

Hmmm... Get Romney out of here... I can't look at him.

Funny thing is... we are riding the coat tales of some of his success... but, he is a giant liar in the process.

So - I've looked at a few angles... socialism... fascism... capitalism... and analyzed how some of these things happen.

Question: Is an individual mandate only free market capitalism if Romney does it... and it is socialism if Obama does it?

This is called leadership by confusing the hell out of everyone and being dishonest.

Wednesday, February 8, 2012

Reality check for a CNN Money Reporter

This is a response to writer Charles Ray of CNN Money.
Here is the article.
Summary: Top Economic Improvement Rates Compared
Reagan: 8%
Obama:  12.4%

Context of Improvement
  •  Low national debt allowed Reagan to drop income tax by 23% for all. 
  •  Interest rates were very high pre-recovery to break inflation.  Once inflation broke, they were dropped to nothing, money was nearly borrowed for free, and the economy exploded.
  • Reagan faced a "garden variety recession," vs. a breakdown of the entire financial system and economy that rivaled the Great Depression once by the day Obama took office.  
  • Massive national debt before Obama took office prevents the scale of action Reagan took.
  • Interest rates were near zero at the start of the recession so the main tool to jump start the economy was already spent.
  • The housing market brought us down, the paperwork is so bad we don't know who owns what, so we can't figure out who to help to fix it, and foreclosures peaked in 2011 and a single home takes 3 years to process.  Putting a massive weight on the economy until at earliest 2014. 
Premise: Under Obama the entire economy swung 12.4% by his third quarter in office.  

Reagan's most impressive growth was 8% when conditions were favorable to use the main tools of recovery.

-------- Descriptors of my bullet point summary.
Reagan achieved 8% GDP growth.  This in the context of a country with no debt and a recovery that began when he was able to floor interest rates.

Obama achieved a swing in the GDP of the country from -8.9% to a positive 3.5% GDP rate.  A 12.4% swing in the GDP of the nation.  This in the context of interest rates at zero at the START of the recession.  And massive national debt that prevented the solutions Reagan used.

Simplified math:  3.5 + 8.9 = 12.4 % swing in economy.

(The swing written in original equation form.  3.5 - (-8.9) = 12.4
Minus a negative makes it plus.)

Intellectual distinction: We are concerned with the rate the economy improved.  This is distinct from GDP growth rate, which measures from 0%.  We measure from -8.9% because the economy did not grow from zero percent.  The economy was in contraction.  Thus, I define a new measure.

% of Economic Improvement: What is the % swing in the positive direction of the economy?  From starting point A to GDP point B?

Reagan's 8% was also achieved when the economy grew 1.6% the quarter before.
Obama's 3.5% was achieved when the economy shrank 8.9%.
Aka - Reagan's economy grew from growing.  Obama's economy displayed a massive turnaround and then grew.

With no debt, Reagan was able to drop income tax by 23% and maintain a government.

This is also in the context of a peak in foreclosures in 2011.  The cause of the crisis.  With foreclosures taking three years to process.  Showing 2014 as the year the foreclosure problem subsides.

Lastly, this is in the context of about 4 Million jobs being available in America that employers cannot fill because nobody has the necessary high tech manufacturing skills for the jobs of today.

Conclusion:  The proper recoveries to compare would be today's recovery to that of the Great Depression.

The Great Depression was from October 1929 to 1940.  11 years.  And only ended with the help of the largest global military conflict in history.
And now my full response to the article

Your article is using old data.  You are way off what measures have told us now on GDP.  In 2008 Q4 the Government data revisions show the economy contracted 8.9%  It was way way worse than anyone knew.

Here is a FAQ regarding this.
You have to do better with your Data.  No-one is reporting the most current data on that period.

Here is the previous data on 3rd quarter 2009 GDP.  There may be a revision out there.

GDP growth as stimulus came in reached 3.5%

If you keep reporting that as what the stimulus did:
1) You are reporting the math wrong
2) You are reporting Obama's effectiveness wrong

Going from -8.9% GDP (with a stimulus targeted for a -6% economic contraction, the max the Republicans would allow) and reaching a 3.5% GDP growth rate by Q3 2009 is a 12.4% swing in the GDP of the entire nation.

Are you measuring the GDP movement based on assumed 0% GDP?

Or, are you measuring the GDP movement from -8.9% to +3.5% because Obama looks to have been an extraordinary parachute.  As we fell out of an airplane, we should be profusely thanking the man that provided the parachute.

A 12.4% swing of the entire US economy, within 3 quarters of taking office is nothing short of extraordinary and should be reported on.  If you are not reporting on it and also reporting on the revisions which showed the economy was far worse than anyone knew - then you are failing at your job as a reporter.

Lastly, your article speaks a tiny bit about the context of the Reagan recovery.  A recovery starting when there is low debt so you can drop tax rates by 23% is an extraordinary difference.  Not even close to the situation.  And, coming into the recession with record low interest rates already is a massive difference.

In critique of your article, you have a major failing.

You ignore the housing market.  You mention a bubble, but that is not the context of today.  So, you fail.

Research when the peak number of foreclosures was occurring.  Then, research the length of time one foreclosure takes.

First, the peak of foreclosures was 2011 and another small peak may happen in 2012.

Second, a foreclosure takes about three years to work through the system from filing date.  If the peak was 2011 and it takes three years - we are looking at 2014 before the current foreclosures that we are processing today moved.

How are you comparing economic records without including that context?  The main cause of the recession was a collapse in housing.

While it is all well and good to look at that data - policy wise - you cannot ignore that it is a super glue situation.  The paperwork was so poorly handled by these mortgage companies that we can't help people.  It is very hard to figure out who owns the property to begin with.  How can we solve problems with assets when the asset holders can't even produce the paperwork?  Mortgage lenders or otherwise?

The fact that each program Obama put forward helped roughly a million people is a God-send because it stabilized home price valuations.  So, the price of homes remains stable while the toxic bubble of assets passes (the bubble hit, but the real toxic bubble is passing through the system now).

Comparing to Reagan.  Comparing to time-lines under Reagan, or solutions under Reagan is a ridiculous comparison.  It also ignores that corporations are multinational and might take profits and hire elsewhere because Obama has no cadre of trained Americans to fill high tech manufacturing jobs... where there are 3 Million - 4 Million jobs available in America that cannot be filled.

So, do you say his jobs recovery was too slow?  Or, do you say... he is investing in the training that allows us to recover the problem.  But, even the training takes 2-5 years once it has begun.  So, your time horizon for solutions is set based on reality.  Not based on comparisons.

Comparing to Reagan is like comparing Nuclear Weapons to Kiwi Fruit.

Follow the GDP down a few extra quarters if Obama had not acted.  And you have WORSE than the great depression.  You can't gloss over that the turn, was from an economy in absolute free fall to one of normalized growth.

So, what is more impressive.  Reagan's 8% growth (when looking at only the numbers at a baseline of 0%.  Or, Obama's 12.4% swing from a -8.9 revised GDP figure?

I am an independent.  I move based on data.  I would take Obama's recovery ANY day.  As an owner of 4 businesses.  I also used every policy he put forth to help business and demand for my services spiked and remained stable since... I am in business because of the Stimulus and Obama.  I was out of business the day he took office.  It was that bad.

The phones rang 13 hours a day for four months... it was that good.

With the profits, I bought a house and opened two of my newest ventures, which now employ people.  

Please, spread my message around CNN.  I used the correct data in my article, you did not.  That is why you are a writer and I am a CEO.  I expect better of you now that you have the links to the data.

Thank you for your time.

Ps.  I did not write this portion to the writer.
Why not compare the recovery of today to the recovery of the most similar economic condition?
The great depression.

Here is some data.  If you look at this image you will see FDR slashes spending to balance the budget.
This is timed with a newly elected run of conservatives.  Look at the election winners of that year.  It was like the Tea Party.  There is a major drop off in GDP and they had to put the foot on the gas to get us out of the problem again.