–THANK GOD WE HAVE OBAMA FACING IRAN, HEALTHCARE AND FISCAL CRISES
Wednesday, June 24th, 2009 at 9:50 pm ©I. Part One: The Iranian Abyss
II. Part Two: The American Healthcare Embarrassment
III. Part Three: Greed, Corruption and Wretched Excess
OBAMA VERSUS McCAIN
The point of the lead is to emphasize the importance, and good fortune, we have in the fact that we have a President Obama instead of a President McCain to face and hopefully solve the prime issues of today–or at least those most current ones which are threatening to tear us apart. In more precise terms, we are each asking, or should be asking ourselves, whether Senator McCain had the wherewithal, intelligence, honesty, empathy, and broad-based U.S. and international support necessary to do as well (or better than) President Obama? And could he have to this point designed and articulated his Administration’s proposed remedies for the financial and military chaos the Country is experiencing and sustain the consideration therefor on Capitol Hill as well as has the President?
I have to personally believe that if anyone honestly looks inward at the totality of: his or her and family’s welfare; the interests of the Nation as a whole; and then, factors in this immensely charismatic man’s ability to convey ideas, his eloquence, and, too, the wisdom he has demonstrated to not dictate conclusions and solutions, but, rather, to seek as much consensus as possible, the answer is obvious. A McCain Presidency would have been stumbling and chaotic at best, and it would perhaps have even led at least to the attempted effectuation of former Vice President Cheney’s “unitary executive” concept and the “Corporatocracy” that both he and former President Bush worked for with so much zeal. This was the “Wall Street” and the “market knows best” policy urged at many points during the Bush Administration, combined with the effectuation of their deliberate plan (initiated by Cheney) to permanently do away with the necessity of Congress and the Constitution in situations the President might unilaterally label as involving “exigent” circumstances or national security.
I. The Iranian Abyss:
“Issue number one” as of this date is likely that of Iran and its recent election of June 12 with much apparent irregularity and fraud, which led to a wide, organized, street protest which is now winding down under vicious government repression and violence. I see a patent difference in this Administration’s studied approach and what it would likely have been under a President McCain–considering the over-zealous, extreme right-wing, uber-nationalistic staff which would have surrounded him. President Obama has to this point plied a steady course expressing strong yet not “wildly anti-government” support for the demonstrating populace complaining that the election was “rigged” by President Ahmadinejah and “The Supreme Leader,” the Grand Ayatollah Ali Khamenei. His object, of course, is to support the protestors and their grievance–without totally alienating the extant government and closing the door to dialogue–a door he had opened before the election in hopes of solving the Iranian nuclear issues which threaten the peace of the World, and not just exacerbating the current conflicts in the Middle East.
But when I recall the statements of the Republican Party’s leaders and their “captive” pundits, e.g., Dick Cheney, Karl Rove, Eric Cantor, Newt Gingrich, John McCain, Stephen Shelby, Mitch McConnell, John Boehner, Glenn Beck, Lou Dobbs, Bill O’Reilly, Anne Coulter, Sean Hannity and the omnipresent Rush Limbaugh, I have heard nothing on the Iranian issues but the standard “we have to do more”…to demonstrate our power and to threaten the current regime! The strident comments of these people, mostly vitriolic and not representing any actual thought process, would, if Mr. McCain had been President, very likely have meant that the Sixth Fleet would already be deployed as close to Iran as possible–inviting attacks from Iranian aircraft and the commencement of a third or fourth war in that part of the world–depending upon how one “counts” the continuous “state of war” between Islamic extremists (such as that fringe that controls Iran and kills it s own people) and the State of Israel. With this coming at a time when the military might of the United States is stretched so much and is at such a terribly low ebb. And that drastic state of affairs is summed up without even a bit of reflection upon the crisis on the Korean Peninsula.
II. The American Healthcare Embarrassment:
President Obama concluded his news conference of June 23 with routine following questions from the White House Press Corps just yesterday. In addition to Iran, the major topics of discussion and questioning were, understandably, the current healthcare debate and the economy in all of its credulity-stretching facets. If anyone truly experienced in the delivery of healthcare and in insurance administration (as am I with eighteen years as a senior corporate counsel and as a senior insurance regulator in Texas, Arkansas and Tennessee) honestly looks at the current absurd state of healthcare, he or she will find it impossible to defend it.
The starting point of any discussion is in the fact that within the United States one finds, simultaneously,
a.) the Earth’s best physicians, the finest medical schools and hospitals, and the most technologically-advanced systems of treating disease of any type; yet,
b.) the lowest percentage of its population covered by insured healthcare of any Nation in the “Western World”; the highest infant mortality rate; and the most expensive and, arguably, one of the most inefficient and ineffective healthcare delivery systems in the entire world.
If we are truly a “humane” and caring people (as we so often profess to the rest of the World that we are) and are truly interested in the most efficient, effective and “people-friendly” delivery of healthcare to all, regardless of race, religion or lack thereof, we have to make dramatic changes to eliminate every one of the tragic facts in paragraph “b” above. If anyone is to intelligently address these issues, he or she must understand a bit of the history of health insurance and of the fiscal dynamics driving the health insurance industry, the pharmaceutical industry and the medical profession. Group health insurance applicable to employees and their families did not truly exist before World War II when the needs of the defense industry to compete for workers led to this development, a system almost if not totally unique in the Western World.
A little known fact is that the corporate magnate and brilliant inventor Henry J. Kaiser is the one person most responsible for the development of the group insurance system as discussed above. Kaiser is also the man who developed the modular construction process which made possible the mass production of the famous “Liberty Ships” which played an invaluable role for the Allies in the winning of WWII. Some of us older folks may remember his line of automobiles sold for a few years following the War–one which did not last very long and which, consequently, made well-maintained Kaiser automobiles great collector items. Much more importantly, however, the Kaiser name is linked in a very telling and corrupt fashion to the very inception of Health Maintenance Organizations (HMO’s) in the United States.
In 1973 Edgar Kaiser, son of Henry Kaiser and CEO of Kaiser-Permanente Health Maintenance Group met with John Erlichman of President Nixon’s staff. As Erlichman related the Kaiser HMO idea to the President, he indicated that the essential premise behind an HMO, as he had been told by Kaiser, was to make money by denying or limiting as much care as possible. Next, according to the Nixon tapes which recorded the entire conversation, Nixon responded, “Well, that appeals to me.” Then with the President behind it, the HMO Act of 1973 became law and healthcare has been cursed with HMO’s and that business model ever since. This point is seriously made…, for while the basic premise of taking premiums and not paying claims would work to the financial advantage of insurers, the phenomenon, in my extensive experience, has been used for that purpose far more often on the HMO side. This most likely is due to the “captive” physician concept of such organizations, who have traditionally been compensated under a formula which increases their “take home” by some percentage of an allocated service level per patient (member) for every patient treatment the physicians can avoid performing. State insurance departments are notoriously inept at catching such machinations…and they have no authority, in any event, to punish physicians.
I personally experienced a shift in the “culture” of health insurance companies as more and more of the smaller, generally family-owned businesses were purchased by or merged into larger conglomerates. My experience, as most politicians and the insurance industry lobbyists always argued, is “anecdotal”; but my come-back has always been: “Well, there certainly are a lot of anecdotes out there.” To put it more specifically, the traditional smaller company used to have the philosophy, or starting point, in the consideration of claims that all claims were to be paid unless a review of the case revealed an actual fraudulent intent to deceive the insurer. The premise was that if the premiums had been paid, if the claims over time for that type of policy were too high, the rates needed to be adjusted for the unanticipated exposure or the policy provisions themselves might have to be adjusted en futuro.
Once the health insurance business was over-taken by the huge conglomerates, another business model became applied more and more often in both the individual and group markets. That model was based upon a dramatically different initial premise, i.e., “Let us find a way to avoid paying this claim.” The different financial consequences are obvious. And the second “model” is the dominant health insurance business model n America today. The author John Grisham’s tale in his novel The Rainmaker overstated the case in describing how that fictitious insurer operated, but he did not do so by a great deal…in that during my career I became aware of a few which were quite close.
Millions and perhaps even billions of dollars are stolen from Medicare and Medicaid each year by scam artists, primarily by billing for services not rendered. This is often done through organizations formed by lawyer/ politicians, and I have personally seen it done several times in Arkansas, was informed of it in many other states–and have had it confirmed many times by personal friends in Medicaid positions around the Country.
The difficulty here is that while this type of fraud could easily be stopped in its tracks, there is not sufficient staff in the appropriate Medicare or Medicaid offices to audit the billing process. The problem, of course, is that the United States Congress has always refused to fund for this expense or authorize the positions.
The most common complaint made against any health care reform is AGAINST ANY HEALTHCARE REFORM. The chief statement of a reason why reform is opposed is that most individuals do not trust anyone who works for the government to be trustworthy or efficient. It is also argued, without statistics, that millions of jobs will be lost, trillions of taxpayer dollars will be lost, and private insurers will be forced out of business. This is an opinion that many of the unknowing are told by the Party out of power at the moment, represented by the spokesmen and pundits noted above–and hundreds others like them. The real problem is that there are many inefficient and ineffective government workers at both the State and Federal Level, and that is endemic to the system and will continue to be so as long as politicians choose inept and spineless heads of their Medicare system, their State Insurance Departments, and Medicaid offices. There are many qualified workers and specialists that work for state insurance departments, particularly persons who have worked in the insurance industry before, or with an HMO earlier, but the problem is that the lobbyists so often “own” the Commissioners or the Governors, in the same way some Congressman said in the last couple of weeks on the banking crisis that the banks “…own the Congress.”
Most people do not even remotely understand how lobbyists work–but before I explain the seamy side of that endeavor, I must first state that there is a vital role for real, honest lobbyists–generally from the industry or interests concerned and NOT independent paid lobbyists. It is a simple fact that no Congressman or state representative can possibly understand the effects of all legislation upon all potentially affected industries and organizations. They need persons schooled and experienced in the subject matter of the legislation to advise them of its effects, both good and bad–for the draftsmen are often persons who do not appreciate interests other than their own. Oh, and in the event one might not realize it, often bills supposedly regulating the mining industry, or the timber industry, merely for example, are not drafted by Congressmen or their often more able aides–rather, they are drafted by the industries concerned and then given to “friendly” Congressmen or state representatives to see to their passage.
It is not necessarily “evil” or even wrong to be a paid lobbyist, but to be a paid lobbyist is to be one who is paid to advocate a certain result–much as is an attorney in private practice. The problem, as I see it, comes in two areas: some lobbyists representing certain industries “pay” elected representatives to perform their will, with pay being mutually understood as campaign contributions, often in great “bundled” amounts, as well as free trips for conferences at exotic places, often with many extra benefits; and secondly, there are lobbyists who know little or nothing of the issues involved in a given bill, e.g. Tom Daschle and Bob Dole, but as former congressmen or legislators themselves, they are still able to garner support and draw upon friendships and acquaintances from persons still in office. The problem here, in each instance is that the votes and the outcome of so much legislation at every level is “purchased,” without there being any consideration of the public interest.
I have done business with many lobbyists over many years, and with the exception of some who represented citizens’ or public interest causes (who all seemed to have the flaw of dramatically over-stating their cases and over-playing their facts or proofs), most were dishonest in one way or another. I will never forget one lobbyist who was himself a former representative and he did, in fact, understand the business he was trying to assist. The only problem was that he make the mistake of assuming that I was as corrupt as he when he once laughed and admitted that the “product” that his client was illegally “adding on” to the primary item purchased was really irrelevant, for the primary item was of such poor quality that it would almost always wear out before the “add on” would ever be needed! I made certain that the bill I had drawn for the Arkansas Insurance Department outlawing his client’s “add on” was passed.
In another era when I was Senior Associate Commissioner for the Texas Department of Insurance, another group of businessmen from the Lubbock area attempted, several years later, to pass a bill in Texas accomplishing, in effect, the same end as I had defeated in Arkansas by the passage of the bill I had drawn. But while the bill was actually passed in Texas, in my last chance to affect the matter, I went into conference with Governor George W. Bush. I explained the matter to him; and, after saying to me and those of his staff present in his office that it did not seem to him to be a good bill, he vetoed it in my presence.
The cost of pharmaceuticals is the most serious cost factor in medical care–and the most difficult to solve. The huge pharmaceutical companies fund the largest and most successful lobbying campaigns in Washington. They have such an interest to protect that one can easily see why they feel they must be able to charge hundreds of billions of dollars to hospitals, HMO’s, physicians, Medicare, Medicaid, and clinics of one sort or another–while the same drug, made by the same company is often sold in countries other than the United States for one one hundreth (1/100 ‘th) of the cost of domestic sale! The reason? Patent, the protection thereof, and the funding of research and development to produce other drugs that will solve a plethora of conditions and diseases that are not yet under control or eradicated. Proper audits and “tweaking” of one sort or another may be possible–such as slight changes in the patent area; but, other than that, I see these companies as a permanent and not unwarranted problem for purposes of cost control.
But I do see a way out of the problem at large with an improvement of care, coverage of everyone, and which incorporates a government “provider of last resort.” The key to the business of insurance is the “law of large numbers.” Rates for given levels of coverage and benefits can be calculated, for example, upon any large population by actuaries, rates which will pay for and cover any illness or hospitalization that anyone may have–regardless of pre-existing conditions–because the underwriting and the resultant rates are made to reflect ALL risk factors. But the key is to assure that everyone in the United States is covered by the same plans and at either at the same benefit level or at a chosen level of several available–with the caveat that which additional coverage may be added to lower level coverages if, in fact, there be multiple plans, e.g., childbirth.
In this fashion, every insurer would be subject to the same laws (Federal and not state–based upon the 1934 Southeastern Underwriters case) and have the same policy coverage and applicable variable cost of living rates and statistics across the Country factored in. Policy sales, then, will be much less expedient or beneficial for insurance agents, sales will not be based upon false promises of coverage that does not exist or services that are not provided, for there is almost no motive for any agent misrepresentation in these areas; ultimately, it may not even be necessary to have “agents” as we currently know them. Rather, sales will be based not upon fancy brochures or agent misrepresentations but upon how good the service of the insurer is and how quickly and accurately the claims are paid. The rates charged will be determined in part by the efficiency of home office operations and of the actual providers of healthcare.
HMO’s and other similar providers which have built-in incentives to cut services or create conflicts of interest must be outlawed. One example of the latter is the too common practice of physicians owing shares or percentages of businesses to which they refer patients for special examinations, such as lab services, M.R.I.’s, or which involve other esoteric medical hardware and testing. Most often, as one would expect, these special services, e.g. diagnostic and imaging services, are charged at two or three times the nearest hospital coverage rates available. (Obviously, if not such services be available within a certain, set number of miles from a given physician owned or controlled facility, then in that case the physician owned or controlled facility could operate with only anti-fraud prohibitions or by being limited to rates not over a given percentage higher than the nearest metropolitan not-for-profit hospital. Or some other rational control factor could be agreed upon.)
And “fee for service” billing by physicians and medical providers to insurers would have to be heavily scrutinized. And perhaps made illegal, for if there is an incentive on physicians to perform unneeded tests or procedures, costs will remain artificially and unduly high. A recent article in Time Magazine pointed out that the Mayo Clinic and its on-staff physicians practice medicine upon this premise and have a better outcome record at lower cost than any other organization of hospitals and physicians in the Country. Nurse practitioners educated under the nurse variant or the physician variant of the extra training to become a “nurse practitioner” should be used in every feasible area to save the time (and cost) of Medical Doctors.
All providers of Medicaid and Medicare services must be subjected to complete certified audits no less than annually. No temporary or leased employee programs of any kind shall ever be allowed in any circumstance where the effect is to deny, or attempt to deny, insurance or healthcare coverage.
And I would suggest that if any citizen is unable (subject to examination and investigation) to afford insurance of any kind, he or she and family shall be entitled to the minimum level of coverage from a government-sponsored “carrier of last resort” that would be set up primarily to absorb and administrate all “slippage” of coverage by the private carriers, e.g., in loss of coverage from changing jobs, from becoming ineligible under one’s parents’ policy, from moving out of the carrier’s loci, (orphan coverage), etc. The underlying premise is that ALL persons are covered by the “Plan”; it is just that the coverage is to be primarily administered by the private sector with the carrier of last resort always in place to assure absolute, unbroken continuity of care. Government coverage rates and delivery costs shall (must) be the same as the rates and costs used by private carriers.
This is but one way of several ways it could be done, and no patient would have to attend any physician he or she does not choose. And no one can be denied coverage. Payment for coverage will in almost its entirety come from the premiums paid, both private and public. And Medicare and Medicaid cost control, when combined with the cost savings and the universal law of large numbers rates generated as above illustrated, will cover all or almost all of the cost of the public premiums.
The insurers will yell and scream that they are having their “property” confiscated; yet that argument ignores that without extra and unanticipated morbidity exposure in a particular year (which is always possible–just as it is always possible that an Air France flight will fall into the sea in the middle of its flight from Rio de Janeiro to Paris), the Companies may actually do quite better financially on the underwriting side over time. And, too, one cannot forget that the major source of income for almost ALL insurers is in the investment of premiums–not the insurance underwriting profits. That would not change one iota. The better service a private carrier provides, of course, the more premium income there would be to invest.
III.: Greed, Corruption and Wretched Excess:
This complaint against President Obama and Secretary of the Treasury Tim Geithner is that the “Bail-outs,” the “Stimulus” packages, and the purchase by the Federal Reserve of shares in private companies is “socialism”–or even communist. Of course, the Republicans and Blue Dogs egg them on. Oh, and many people duped by the Republicans, et. al and who are upset with the money sent to Wall Street, all across the Nation are saying, “Where is my “bail-out?”
What the Terms
“Capitalist,” “Socialist” and “Social Policy” Really Mean
The Republican Party, “Blue Dog” Democrats who in many places call themselves Democrats for some purposes but Unity Party Members along with Republicans for others, non-mainstream religious extremists and our “out of time and place” true racists are having a lot of trouble with language these days. It would be unrealistic to believe that former disc jockey and current rabid pundit Rush Limbaugh, former House Speaker and new millionaire lobbyist Dick Armey, multi-billionaire news mogul Rupert Murdoch (owner of Fox News), Alabama Congressman Spencer Bachus, former Speaker Newt Gingrich or Republican National Chairman Michael Steele truly do not understand:
a.) the differences between Capitalism and Socialism on the one hand, and,
b.) between Socialism and “Social Policy” on the other.
Thus, one has to conclude that their recent pronouncements concerning the so-called new “Socialist” government of President Obama are designed solely to lie to their constituencies with the object of confusing and even enraging them–playing, of course, upon either the ignorance or the ingrained prejudices thereof.
The Democratic Leaders need to communicate to the People at large, some very simple, elemental political and social concepts. One could begin with very basic definitions of the relevant terms–which here are taken directly from the Encyclopedia Britannica (1968 ed.). The first sentence of one of the relevant articles or sections reads, Socialism is “…a broad term that generally denotes a system of public ownership and management of the means of production and distribution of goods as contrasted to capitalism, that emphasizes private ownership and management.” (emphasis added).
The first paragraph of the article discussing “Capitalism” reads, in relevant part, as follows:
“—Fundamental to any system called capitalist are the relations between private ownership of non-personal means of production (land, mines, industrial plants, etc., collectively known as capital) and free but capital-less workers (or employees), who sell their labor services to employers…;” and,
“–since (most) laborers do not possess the means of production required for self-employment, they must, of economic necessity, offer their services on some terms to employers who do control the means of production. The resulting wage bargains determine the proportion in which the total product of society will be shared between the class of laborers and the class of capitalist entrepreneurs.” (emphasis added).
I believe I am correct in saying that most of us will agree and recall that pure and unadulterated socialism simply does not “work.” One perfect example that readily comes to mind is what happened with or as a result of the post WW II economic systems adopted in East Germany and West Germany. West Germany adopted the Constitutional Democratic form of government of the old, traditional pre-war and pre-Hitler Germany and continued its capitalist economic system of control of production and distribution of the product of business and industry. As a result of this, and I suspect much Allied aide to accelerate the process, West Germany shortly had a booming economy and a standard of living among the very highest in the World. Having spent a short time in West Germany in 1963, I can say from my own travels that the cities and the rural areas of that Country, even at that time so shortly after the conclusion of the War, were new architectural marvels, re-constructed buildings centuries old and all were utilized and maintained immaculately. It all made me think of idealized towns, cities and farms that were a thousand times cleaner, and more well-planned than almost any similar properties or entities in the United States. I remember quite clearly while traveling on the railroad from Frankfurt to Paris that even the grounds along the railroad tracks both in the countryside and within the cities were absolutely clean! That is something which one never sees in our own country.
East Germany continued under the post-war dominion of the Soviet Union burdened by a classic socialist economic system as described above. Sadly, the people of the East were lead by a puppet government kowtowing to Moscow as part of the Communist bloc of Nations, and geographically behind what was popularly called the “Iron Curtain,” a descriptive term first coined by Sir Winston Churchill. East Germany remained a bombed-out shell of a country with poverty rampant and the only persons assured of a “good evening meal” were well-connected party members or highly paid managers of industries, all politically-appointed communists who, in the state-managed system of the production and distribution of goods and services, were not possessed of the massive skills which would have been required to do a passable job of dividing or allocating the product of an entire Nation’s economic system. The differences between the two countries were stark. And they alone, even without considering the political repression extant there and throughout the Soviet Bloc, explain why so many persons from East Germany “climbed the wall,” literally, and were shot while trying to flee seeking freedom and a new way of life. Socialism does not work, at least in the modern world and outside of utopian novels.
Little changed in the territory of East Germany until after the collapse of the Soviet Union and the reunification of East Germany with West Germany in the period from 1989 to 1991.
Capitalism “works.” But it is not the Gordon Gekko (”Greed is good.”) and George W. Bush version of capitalism.
The reason for the high standard of living in the United States as compared to most of the rest of the world (although the difference between the U.S. and other countries is shrinking, as we speak, due to the current recession) is the unstated “magic” of capitalism–which is its unleashing of the basic human drive to do the best he or she can (economically and in terms of education and security) to help himself and his loved ones achieve whatever they wish to achieve or can achieve. No one sets the prices in such an economy (except for Republican President Richard Nixon during the oil shortages of the 1970’s after OPEC first flexed its muscles). Entrepreneurs in any and all lines of business simply compete against one another, and those that end up building a better “widget,” delivering it more quickly, providing it more cheaply to the consumer, or providing the most effective and customer friendly service (or the best combination thereof) always “win.”
Another great thing about the system is that there are untold numbers of “winners,” both on the entrepreneurial side and the worker side…since many people are BOTH entrepreneurs and consumers, and we are ALL consumers. A particular aspect of any product which is important to your brother or your spouse in a stereo sound system, a cell phone or a laptop may not be important to you in one or more of such items, but the key is that there are enough of such differences in our vast, variegated economy that there is almost always some entrepreneur to service almost any niche by building and selling a product which will fit that group of consumers’ taste.
The number of “winners” goes down quickly, however, even in a capitalist economy, if those who only have their own labor to sell are unable to successfully compete in the labor market, or if the entrepreneurial system itself is “broken” in some critical way.
Problems With Unfettered Capitalism
In a capitalistic system there are often failures which relate to the provision of “basic human services” (healthcare, shelter, educational opportunity, food) to the population at large because of discrimination of various types. Not all able and qualified persons are allowed to enter into labor contracts providing wages sufficient to support their families. It used to be an endemic problem, especially back during the Nineteenth Century and early Twentieth Century era of the “Robber Barons” and the sweat shops (some of which still exist). The leverage or power of business owners over their workers was so complete that perhaps as many as one-half of all laborers could not obtain reasonable wages for their labor. It was only after the institutionalization of labor unions to bargain on their behalf, and, beginning in approximately 1913, the establishment of the Department of Labor and, ultimately, passage of the National Labor Relations Act, the Fair Labor Standards Act, the Occupational Safety and Health Act, among many others, that it generally became possible for non-disabled workers to be reasonably assured of a living wage.
Think what we will of the long, violent legacy of labor bosses and the enormous number of criminals involved in that job description, it is nonetheless unquestioned that had it not been for the labor movement and related legislation, the economy of the United States would not be one fifth of what it is today. The reason? Fair wages and good working conditions result in more consumers and more consumers mean more commercial transactions, more profit and more investment.
To fully appreciate how well capitalism works in the United States, it is highly instructive to see how poorly the People fare when the State utilizes the Gordon Gekko form of capitalism, i.e., where basic human values are ignored. There is another capitalist economy which is “working” in an output sense but which has de facto social policies which institutionalize abuse of its workers and not allowing normal factory workers a living wage or safe and sanitary working conditions. And it does not even provide routinely enforced health and safety tests of foodstuffs to protect consumers, even if those products be shipped to the United States. I am, of course, speaking of mainland China—which is today the world’s third largest economy–treading upon the backs of its workers and the money paid to its entrepreneurs and government by entrepreneurs and consumers of the United States (and much of the rest of the World) who always, understandably, try to obtain the “best price” on every product possible.
China is able to produce so many manufactured goods and foodstuffs because of its vast population of over one Billion Three Hundred Million people, vast natural resources, its repressive, dictatorial communist government and its lack of freedom of speech and right of assembly. But were it not for the China production machine, it is clear that manufactured products and foodstuffs in the United States would be more expensive across the board. The practice of “outsourcing” production of all kinds of products and the resulting need to import manufactured goods and foods from China and other countries with such abysmal human rights policies is quite controversial, even though it is a long established practice and is not likely to be changed in the foreseeable future.
We must not forget, however, that even in the United States many workers in some industries, most significantly large retail establishments, are taken advantage of by reason of their race, gender or lower economic status—which means in more than a proportionate part, by reason of their immigration status. These people are totally denied the chance of being able to obtain that “magic,” but sometimes elusive, living wage–or they are abused by being forced to work long extra hours for no pay so as to “pad” the “bottom line” and stock price of the employers–although by doing so these employers intentionally violate the Wage and Hour laws. And even if most women are now allowed to compete for a living wage and even climb the ladder to top posts, they are in many areas of the economy still running up against “glass ceilings” and “good old boy” networks which keep them from competing for many higher and more responsible positions for which they may well be capable. As can easily be seen, in the United States gender and race still play a significant role in employment discrimination. One only has to be a labor and EEOC lawyer for a very brief time, on either side of the dynamic of business and labor, to become very familiar with this harsh reality.
Gordon Gekko’s pro-capitalistic mantra of “Greed is good” was used in the very popular 1987 motion picture Wall Street starring Michael Douglas, and the phrase afterwards became a part of the lexicon of our capitalist society. While the screenplay was itself fictional, it told an all too true story, as the “greed is good” phenomenon is very real–and very frightening. Greed at any cost is within the breast of many members of our species, and, unless tempered, it will turn back upon the very society which gave it life and safe haven–and devour it.
And it is not as though this dangerous flaw were not known, as represented by these great thinkers whose comments bear directly upon the mantra of “Greed is good;”
a.) “The forces of a capitalist society, if left unchecked tend to make the rich richer and the poor poorer.”—Jawaharlal Nehru; (emphasis added)
b.) “We are inclined to confuse freedom and democracy, which we regard as moral principles, with the way in which these are practiced in America—with capitalism, federalism and the two-party system, which are not moral principles, but simply the accepted [political] practices of the American people.”—United States Senator J. William Fulbright; (emphasis added)
c.) “Unlimited power is apt to corrupt the minds of those who possess it; and this I know, my Lords, that where laws end, tyranny begins.”—William Pitt, Earl of Chatham and two time Prime Minister of Great Britain. ;
One perfect example of capitalism run amok in the United States is found with a look at those real estate brokers, securities dealers, and many highly placed officers of large banking, securities and insurance firms who were willing to ignore the long term impacts of what they were doing. They were actually supported by the Bush Administration in laying aside any concerns about regulation by the Securities and Exchange Commission, as President Bush is said to have ordered the Securities and Exchange Commission (headed by Chris Cox) to cease routine audits of the investment bankers in NYC and, as a result:
a.) it allowed Wall Street to push their economic interests without regard for either common sense based upon historic real estate value trends or prescribed (regulatory) restrictions on capital and reserve margins enacted for the protection of the Society as a whole; and
b.) it resulted in the lack of detection of the high default risks of the Adjustable Rate mortgages and Sub-Primes, running up the financial chain through the bundled mortgages, to the Credit Default Swaps and the insurance thereof.
These failures and the over-reaching and personal greed evidenced thereby, along with the marginally related bankruptcy of two of the three major American automobile manufacturers, brought about the current recession which now “bedevils” each and every one of us. The “downside” of the unfettered Gordon Gekko mantra can be truly catastrophic.
When capitalism is allowed to operate without reasonable regulation designed to protect the society at large, the “greed” becomes something other than “good.” We as a Nation are, as of this writing, in the current economic crisis because the very delicate balance of our wonderfully successful, even sometimes “magical” capitalist economy, are suffering as a direct result of the “evil” of the mantra of unfettered human greed.
Law and Social Policy
No “free” Nation can long exist if a majority of the People is not comfortable with its government or with how it is perceived to be working for or against its benefit. Satisfying most of the people most of the time is the requisite for giving a government what is termed “legitimacy”…and without “legitimacy,” any such government can fall. And this is where we come to the differences between forms of government (e.g. Representative Democracy, Pure Democracy, Monarchy, Dictatorship, Plutocracy, Communism, Oligarchy, Despotism) and laws which enact and enforce ameliorative, humanistic “social policy.”
Social policy is that area in which a government, usually representative, enacts laws and regulations pursuant to the will of the majority designed to assure certain rights and obligations belonging to the People at large but which the People cannot handle or carry out for themselves individually as well as the well-funded and coordinated activity of government can. The first and best example is National Defense. An Army, Navy and Air Force cannot be created or maintained “by the people” with the requisite structure and the coordinated activity made possible by a government financed by taxation upon the benefits accruing to the members of the society which is to be protected.
Anther example is education. The several states, under their separate Constitutional responsibilities are required to maintain public education for its people in such manner as they each see fit. Education of the masses has throughout the existence of the United States been viewed as one of the unalienable rights even though it was not one of such rights originally set forth in the “Bill of Rights” or in the original Constitution. In Eighteenth Century America, there were no schools as such, and education was, in fact, only available to the children of the wealthy–who often brought private tutors from Europe to educate their young. Gradually, various Church established schools, even universities for the wealthy. As time went by, and as late as the 1840’s, the need for an educational system serving all citizens was recognized, and all states had enacted laws, even Constitutional provisions, to provide for such.
The Federal government became involved in education early, but initially it was only in that in the expansion of the Nation westward it was mandated that the lands be surveyed under what was known as the Public Land Survey System. This provided that all lands be surveyed with “Townships” of six miles by six miles and that within each township there would be thirty six sections, each with six hundred forty acres. One section, number sixteen, was in each plotted township set aside for the benefit of public school when and as needed. This process was critical for the development of schools across the Nation since the sections of land were dedicated to the school because of the economic value they did, or would, represent, not their value at the time of the Act itself. It was not planned that the schools would simply be constructed on those sections of land.
The necessary litany of labor and safety laws discussed above are a major “player” in the complex quilt of protections for the laborers and consumers of America, assuring them of safe workplaces, minimum wages and the right to join together for bargaining with their much more powerful employers for various benefits in connection with the sale of their only “capital” asset–their minds and their muscles.
Critically important in American social policy are the protection of the consumer as to the safety of products that are purchased, controlling matters such as lead-based paint, contaminants in our food supply and assuring that we have safe and clean water. Also, laws to protect the consumers or purchasers of insurance and securities (stocks) from misleading sale offers or from actual fraud or insolvency are each a part of the “quilt.” These laws and hundreds, perhaps thousands, of others make up the commitment of Americans to protect and look after the welfare of other Americans.
Social Policy is also in play when it comes to laws protecting the environment, allocating drilling leases among bidders therefor off the Gulf and Pacific coasts of our Nation, and other laws, fought over constantly as to whether we will, for example, use Yucca Mountain as the National repository for nuclear waste; whether we will allow drilling for oil in the Arctic National Wildlife Refuge, or again, allow the building of another transport line for oil and gas from the north slope of Alaska to the Continental U.S.A. Building highways, toll roads, bridges, dikes and other flood control infrastructure, airports, maintaining a postal service, providing some sort of unemployment compensation, and maintaining some sort of a welfare social “safety net” for our least fortunate, for example Veterans’ benefits and healthcare for mentally or physically wounded soldiers returning from war, are each “social policy.” Projects such as building high-speed rail lines, improving the delivery of healthcare, providing and continuing to assure a minimal Social Security and Medicare system for the aged, improving the rapidly deteriorating infrastructure of the United States, or even adjusting the tax policies (e.g. as proposed by President Obama to reduce them to essentially the same structure that existed during the Clinton Administration!) are all also matters of social policy that will either be approved by a majority of our elected representatives–or will fail.
These social policies each, to a greater or lesser extent, obviously involve funding by taxpayers…over a period of time which circumstances dictate. The word “social” in itself pertains to “…noting or pertaining to activities designed to remedy or alleviate certain unfavorable conditions in a community…” (Webster’s Random House Unabridged Dictionary); and the term “social contract” refers to the voluntary agreement implied within a mutually dependent group of any size, e.g. a household, a city, state or nation, which by the “… voluntary agreement among individuals…organized society is brought into being and invested with the right to secure mutual protection and welfare or to regulate the relations among its members…” (ibid)
But I have recently heard very angry persons who are upset with the initial policies the Obama Administration is pursuing to alleviate the Nations’ economic ills (all brought on or made much worse by policies of the previous Administration) saying things such as, “I’m not going to pay taxes so the government can pay the mortgage of someone else who cannot pay it himself.” Also, “If they can’t take care of themselves, its’ not my $%^*&()(&^%#$ responsibility to take care of them.” “It’s not my fault they are so dumb they don’t have a job and can’t feed their family.” But by far the most “fear-mongering” and unthinking line being used in reference to the “stimulus” and “toxic asset purchase” programs, involving trillions of dollars–some of it misspent by the government (both Bush and Obama) and misused by the “Wall Street” and Detroit recipients, are those that say the public “…debt will be so huge our grandchildren will have to pay it off!”
These people forget some of the first and most simplistic lessons of economics–applicable regardless of which group of competing “experts” to whom one happens to listen! If the various stimulus ideas work, (and the economic numbers at this point and the relevant polls indicate they are):
i.) bank credit is loosened up and money is loaned to entrepreneurs both small and large and jobs are created!
ii.) Wages received by workers are used to purchase capital items or consumables, e.g. food, homes, new automobiles, and when the economy fully recovers…or at least when people feel more secure about the future, they can and will again begin buying items which they might now consider “frivolous.”
The key economic factor, however, is that once there are jobs and wages paid, money performs a “magic trick” of its very own. That is, it circulates and at each point of the circulation a “taxable event” takes place…funding the coffers of the Government and making possible not only the above and many other social programs but the paying off of the National Debt! This principle of money turning over and over and over is most often called, “the velocity of money.” And it is the best friend of all Americans at this critical juncture–and if we can just get it back into play or “…running at full speed,” it means less and less national debt over time. The normal “rule of thumb” as to velocity of money is that once issued, a one dollar bill “turns over” (and is taxed) four to five times before the bill is retired.
If the current programs, or some subsequent better and more effective ideas, do not instill the requisite confidence, then all of us, including the current day equivalent of the “Robber Barons” of old are all, in the vernacular, as a wrestling coach buddy of mine often says, “…in a world of hurt.”
But so critical to all of this is for the “naysayers” to get out of their lounge chairs and start exchanging ideas to help…since, like it or not, we are all in this together. And they must remember the salient fact searing its way through this entire matter, i.e., they must personally cease the ranting, and they must stop the Republican and “Blue Dog” (Unity Party) politicians from the negativism and force them to work together with the Administration toward a solution. And it would greatly help if they would just remember that, if these social policies, or any of them, be passed or amended, that does not somehow, as if by the touching of a “wand,” transform the United States into a Socialist nation! Such restorative and ameliorative actions would just re-affirm the place of the United States as the greatest nation in the world.
If it were not for the debate upon our form of government and social policy by a unique and even stellar group of men—and the commitment of our “People” to fairness and caring for all—that took place in the Old Pennsylvania Statehouse back in 1787, there would be no ameliorative “social policy” and no “United States of America.” Let us not lose it all now.
Bottom Line
Bail-Outs were made first by President Bush and Treasury Secretary Paulson, and then by Messrs. Obama and Geithner for the purpose of assuring the continuation of businesses which were, in fact, too big to be allowed to fail. Had any of the companies A.I.G., Bank of America, Citigroup, Goldman Sachs, or Merrill Lynch, just to name several, been allowed to fail, as they each would have without massive assistance, entire sectors of our economy would not only have slowly lost money, they would have closed down. And the Country cannot function as an organized society without an organized financial system–to assure that we all have a medium of exchange for needed goods and services.
In each instance of bail-out, the money was not “given” to anyone. The money in each instance was given in return for common shares of stock in the affected entities. This was with the provision that the if the industries were successful, the stock could be redeemed and the Government would be removed from the equation.
The subsidies were and are being paid to individuals in the form of small tax rebates, or large grants to governments and public entities to build infrastructure, which can only be accomplished by persons given jobs to complete the projects. And once there is one project completed, there is money generated and more jobs created for other projects, etc.
It is really not all that complex. But we would not have had a chance under a President McCain.
Don Switzer
Rogers, Arkansas
(c) June 24, 2009
Revised: June 29, 2009
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