y-intercept blog

Lending into Subservience

2010-02-07T12:49:00.000-07:00

The Post World War development efforts entailed a large number of sizable loans to the central banks of third world nations. The corrupt governments used this money on projects that centralized economies and led to even worse living conditions for their people. The result of the "benevolent" lending of the banks was worse poverty and debilitating debt.

In the United States, we have massive lending programs to put people into houses. These lending policies jacked up housing prices and led to a situation where American consumers struggle under unbearable debt.

We are now being told that the answer to the current job crisis is a massive lending program to small businesses.

Our ruling class and big banking system keeps positioning benevolent lending as the solution to economic challenges, yet history keeps showing that the lending programs lead to economic centralization and debilitates large swathes of the economy under debt.

The path to sustainable prosperity is not built on loans but is built on the development of solid equity. Large lending programs flood the market with cheap money and undermine the substantive equity needed for sustained economic growth.

The $30billion in new loans for small business is not an investment in small business, but a margin play. The true path to prosperity isn't more lending and cheap money but the hard work that builds sustainable equity. Obama would do more for the economy if he simply paid back any outstanding loans in the TARP program and encouraged Ameicans to return to a structure where small business grew through the organic reinvestment of profit.

A Margin Play in a Declining Market

2010-02-04T13:26:00.002-07:00

A margin play in a declining market simply hastens the decline. The term "margin play" refers to a situation where one takes out a loan, invests it, and hopes the return on the investment is greater than the interest on the loan. It is a form of legalized gambling.

In all likelihood, the person making the margin play does not have better knowledge than the rest of the market. In a declining market, people making margin plays will need find some way to cover their margin.

Of course, in some cases a player might have insider knowledge. For example Tim Geitners' friends in Goldman Sachs had insider knowledge on undervalued equities in the economic collapse. The special loans by Paulson and Geithner to Goldman Sachs allowed the firm to leverage its insider knowledge and make out like bandits in the economic turmoil. However, these special deals did not produce any global benefit. It simply allowed those with insider connections to reap the benefits of economic chaos.

The idea that we will stop this declining market by extending billions in loans to small businesses runs the risk of being nothing more than a margin play in a declining market. There might be some transfer of wealth from the community at large to businesses with insider access. The result of the margin play is likely to be nothing more than an acceleration of the centralization of the economy with little benefit for society at large.

NOTE: Margin plays in a growing market appear, at first, to be a good idea. A margin play in a growing market has the effect of increasing the rate of incline. The problem is such leveraged positions end up creating market bubbles which inevitably burst.

If we wish to have long term stability, we need a system where people develop and build equity. We need a system like the one advocated by Adam Smith and we need to move away from the Marxian/Keynesian systems.

On Receiving Preventative Care

2010-02-04T12:35:00.000-07:00

A primary reason that I turned against pool insurance was that I discovered that the gatekeepers of the pool were using intimidation to discourage policy holders from using care. For example, with employer based health insurance, one has to go to the HR clerk or union boss to request care. This entails confronting a person who has direct control over your personally well being in order to get care.

This intimidation has a big effect in preventing people from getting the basic care that could improve health and personal productivity, while reducing long term costs.

The HSA (a savings account and high deductible insurance) gives people a little more control over their care. One only needs to confront a gatekeeper for expensive medical concerns. However, the system really doesn't encourage people to seek preventative care. For that matter, the high deductible insurance creates a disincentive for seeking preventative care. People with high deductible insurance are likely to schedule their care in accordance with the calendar year of the policy and not their personal health needs.

The Medical Savings and Loan is the only system that directly confronts people with the long term consequences of their health spending and life style choices. When faced with a choice of spending now or spending more later, the person enrolled in the MSL will have the incentive to spend now.

This incentive for preventive care even applies to people whose health needs exceed their income as borrowing a little money now saves having to borrow even more money later.

As people own their whole health history, there are no gatekeepers to navigate nor are there perverse incentives to put off care.

Foundations for Good Health

2010-02-01T14:22:00.000-07:00

The last post began touching on the role of charities.

There are many diseases that are beyond the means of the individuals. The list of such diseases includes juvenile diabetes, hemophilia, cancer, multipleschlero, multiple sclerosis, etc..

Conquering diseases requires a great deal of dedicated research and science. Looking at the landscape of the American Medical community, we find that the best work to end these ailments is done through foundations.

The "comprehensive health care reform" efforts that place all health care under a single regulatory authority is a less effecient way to handling the research undertaken by foundations.

It is far better to face the challenges of horrific diseases with private charitable groups dedicated to the cure of disease than through a socialized regulatory platform that rations research based on a politically driven basis.

The Health of a Nation

2010-02-01T12:19:00.000-07:00

I want people to have quality care, but I dislike the goal of "comprehensive health care."

The goal of having one system that covers all people is too absolutist for my tastes. The obsession with having one political structure that covers the health care of all is the very heart of totalitarianism.

I believe that Adam Smith was on a better track. Smith made the observation that a free people, acting on their own accord, tend to maximize the Wealth of the Nation.

I contend that a free people with more direct control of their Health Care resources would improve the Health of the Nation.

Our system of big insurance and big HMOs has created a paradigm where a ruling elite define our care and effectively control access to care. We have reached the point where not paying onerous premiums into the system means a person effectively has no access to care.

If we had a system where people owned their own health care resources, we would see each individual working to maximize the impact of their health care dollars.

Doctors, seeking to attract these customers, would invest their resources in ways that maximized the impact of their care.

The Medical Savings and Loan is like insurance in that it assures people have health care resources in times of emergency. Instead of doing the accounting at a group level. It does the accounting at an individual level. Each person owns a savings account. They have access to interest free loans in cases where savings fall short. With the MS&L most people will be able to self-finance their care and will go about the business of optimizing their resources.

Not everyone can self finance care. The MS&L creates a structure that identifies those people needing assistance. Charitable assistance can use this information to maximize the impact of their giving.

This process of maximizing each element of the health care system ends up better quality of care for more people than the totalitarian vision of "comprehensive care" which injects inefficiencies as the ruling elite try to meter care based on their notion of social justice.

Smith's observations about the Wealth of the Nation are relevant to the Health of the Nation.

SEC Climate Change Disclosure

2010-01-29T01:30:00.001-07:00

The SEC is requiring business to burn the midnight oil and cut down some trees to disclose to investors the bad effects that climate change will have on their company and the steps the company is taking to prepare for climate change.

Being a concientious business person, I will make my business plans on this blog post.

Climate change will adversely affect this blog because the entire world will be under a thousand feet of water. We will all live on boats floating in the ocean and will occasionally meet other adventurerers to discuss vague rumors of mountain tops still above the sea.

To prepare for the emergency, we have been doing illegal and unethical scientific experiments on the workers in the call center where we cross their DNA with that of fish ... hoping that they will evolve gills.

The board of directors have stock piled jet skis and plan on holding up in a really scary looking oil tanker and plan to spend the future floating about terroizing folks on small rafts.

Chronic and Pre-existing Conditions

2010-01-28T14:28:00.002-07:00

The Medical Savings and Loan is able to serve people with chronic and pre-existing conditions.

Living with a chronic condition requires a great deal of planning and structuring one's life to minimize the effect of the condition. The Medical Savings and Loan is a program designed to help people with financial planning. A person with a pre-existing or chronic condition will need to put a higher percentage of their income toward their health than others. Using a combination of savings accounts and lending accounts, the MS&L is able to help these people plan their health spending in ways that maximize the return from this expense.

The policy holder with a chronic or pre-existing condition will spend time with a Health Care Advocate designing both the budget and treatment schedules to assure that the care is delivered in the most effective manner.

In many cases, the Health Care Advocate and patient will simply find that the correct path of treatment is simply beyond the policy holder's means of self financing the condition.

In that case, they are armed with the information they need to seek out charitable or public assistance.

The paradigm of the Medical Savings and Loan allows charitable and public agencies to render aid in the context of the patient's personal financial situation helping the charitable organizations optimize the effect of their giving.

The aid in the Medical Savings and Loan is properly recognized as assistance.

At first glance, government run care and insurance appear to do a better job at distributing aid. This distribution of aid is done through coercion or subterfuge. The coercion and subterfuge hide the underlying economic realities of the pre-existing and chronic condition. This intellectual deceit leads to both a less optimal use of resources and can lead to public resentment as when the populace starts feeling that they were misled by the intellectual dishonesty.

In practice, the Medical Savings and Loan will do a better job helping people people with chronic and pre-existing conditions adjust their lives to the condition than insurance or socialist medicine. The paradigm helps people optimize the return from their personal investment in health care resources, and it helps the public and charitable communities optimize the benefit of their giving.

The system cannot do the following: It can't make people have more resources than they have. Nor can the system make public or charitable communities have more resources than they have available.

Of course, no system can do that!

The inherent intellectual dishonesty of insurance and socialized medicine creates the comfortable illusion that we can deliver more by discarding physical reality. In practice, these systems based on intellectual dishonesty create systemic faults that cause a reduction in quality and effectiveness of care.

When discussing the Medical Savings and Loan, it is obvious that it cannot cover everything. The system simply creates a structure that optimizes the effects of one's personal resources and optimizes the effects of assistance.

Optimizing both ends of the health care equation means that we would be delivering better care for less.

The discussion of socialized medicine and insurance mask the reality of limited resources. It creates an illusion of a paradise, but in practice one finds that ignoring limits leads to poor use of resources which ends up meaning lower quality of care for more.

Medical Savings and Loan Convention?

2010-01-23T16:12:00.000-07:00

I've been trying to figure out ways to build interest in the Medical Savings and Loan. The MS&L is a business model that would compete against insurance.

This new business model would solve most of the complaints that led to the cry for insurance reform. Establishing the Medical Savings and Loan as an accepted business practice would achieve the reforms that Americans want to see in health care, while dramatically cutting the cost and improving the efficiency of care.

My entrepreneurial spirit says the best way to start the reform would be to create my own business. Unfortunately, I lack the capital and access to a suitable market at the moment.

There are many people who happen to have both the access to capital and market that I desire. Specifically credit unions, small banks, small insurance companies and mutual funds. To be honest, many large companies have a suffience market on their own to replace their lumbersome insurance plan with a cutting edge Medical Savings and Loan.

Considering that there are many groups across the nation that could benefit by starting an independent medical savings and loan, I realized that one could bring the idea of a Medical Savings and Loan to fruition by holding a convention.

The Convention would invite people from around the country to a resort location for a structured three day conference to help lay the framework for Medical Savings and Loan. Ideally, the convention will get a few medical savings and loans launched around the country.

The Convention would invite folks interested in starting businesses along with insurance companies, banks, mutual funds, credit unions, accounting firms, legal firms and businesses wanting a way to control health care costs. There would be room for economists, free thinkers, politicians and tea party patriots.

The big question at this point would be location of the convention, and timing.

Timingwise ... it is likely that many of the people interested in this idea work on taxes. So, the convention should be a week or two after tax day.

Locationwise, I am partial to Salt Lake City, Colorado Springs or Denver ... but I would be interested in going anywhere where there is sufficient interest in the idea.

If you like the idea of a convention, please drop a comment to this post.

Affordability of Health Care

2010-01-21T11:25:00.001-07:00

A primary reason that health care is unaffordable today is that much of the system was designed to siphon off resources from patients to the special causes favored by the political class.

From an economic perspective, health care is simply the application of labor and knowledge to issues of health. Labor will rush to whatever areas give the highest return for the investment of time; so the costs of health care should be a pariety between health care and other segments of the economy.

Unfortunately, the political class is rife with Robbinhood-style delusions that they were endowed by the creator to rob from Peter to care for Paul, and end up pricing Peter out of care.

Our current health care system is defined by progressive tools for redistributing care. Doctors pay outlandish progressive taxes. They are burdened with onerous malpractice law and an inpenetrable wall of regulations. The flow of cash in health care is controlled by insurance (a mechanism to redistribute health care resource). There is very little honest human to human negotiation and trade in the system.

The do-gooders behind the money shuffle fail to acknowledge that this paper shuffle is the thing which prices people out of the market. By pricing people out of access to care, the Robinhoods of health care do substantially more harm than good through their efforts.

Looking at health care as a whole, one realizes that a system of fair pricing would do a better job of distributing resources. Conversely, the artificial acts designed to do good have the negative effect of concentrating wealth and pricing the lower middle class out of access to health care resources.

The do-gooder's efforts to save ten price a hundred out of the market.

As everyone needs health care, at some point in their lives, it is far better to design a system that empowers the people to one that empowers an elite that views itself as Gods.

If we pulled all of the garbage in the medical system that was designed to redistribute care, we would find the price of health care dropping and we would find more people getting better care a living longer.

Transparency In Health Care

2010-01-20T14:17:00.000-07:00

Transparency has been a big political issue of late.

Interestingly, one of the primary differences between standard insurance and the Medical Savings and Loan is transparency.

With standard insurance, policy holders place their health care resources into a mysterious insurance company. The policy holders receive health care, but never really get the straight scoop on the cost of the care.

If you lose your job and can't pay the elevated cobra premium, your access to health care and claims experience is gone. Vanished.

In the Medical Savings and Loan, policy holders get a full accounting of their medical expenses. Policy holders will have a savings account with money that they have at the ready to spend on care. They will own Loan Reserve Notes showing the funds lent from their account to other policy holders and they will have loan account showing any outstanding loans in their name.

This information can be used by policy holders for long term financial planning.

My goal with the Medical Savings and Loan is to create tools to empower policy holders. I would want to take the transparency one step further and create a full life cycle analysis program that would give policy holders a full view of the anticipated health care expenses associated with being a human being.

Empowering the individual is the first step to creating a healthy individual.

With standard insurance, policy holders pay a hefty premium to be part of an insurance pool. This design reduces the policy holder to dependency on the group. The internal decisionmaking process of the insurance firm is opaque.

The Medical Savings and Loan creates a set of tools to help individuals understand expecte health care expenses, and hopefully empowers the individual in handling these expenses.

Owning the Risk

2010-01-20T13:35:00.001-07:00

In the last post, I introduced the Loan Reserve. The loan reserve is a pile of money held aside for medical lending. This medical lending is used in conjunction with medical savings accounts to assure people have resources to pay for health care. NOTE: As people are honest creatures, the bulk of the loans will be repaid. That part of the loan not repaid is the premium policy holders pay to have access to guaranteed interest free medical loans.

In my sample, I set the loan reserves to an amount substantially higher than anticipated lending. I also divvy up the loan reserve so that each policy holder owns a share of the loan reserve.

This design creates a structure where the policy holders directly own the medical and lending risks associated with their policy.

This ownership of risks is very important. After all, insurance companies justify their massive profits by claiming to be the owners of the risk.

Taking this concept of ownership one step further, one realizes that the policy holders are in fact the owners of the Medical Savings and Loan, and that the best corporate structure for the Medical Savings and Loan is that of the Credit Union or Mutual Fund. There, of course, is nothing wrong with a corporation running a MS&L. The pricing of the service should take into account that the policy holders holders own the risk.

On the Loan Reserve

2010-01-20T12:53:00.000-07:00

The challenge in creating a medical savings and loan is finding the money to serve as the base of the loans. There are numerous ways to get the money. For example, one could borrow the money for the loans on an open speculative market.

After examining, alternatives, I've decided that the best source of the loans would be the medical savings accounts.

One could create a program where the money for medical loans came directly from the medical savings accounts. As the loans are interest free and have a high default rate, the medical savings account would have a negative rate of return.

The problem with directly using the savings accounts as the basis for the loans is that there is an indirect relation between the amounts of money a person has in savings and the chance that they will borrow money for medical expenses.

To solve this problem, one needs to create an indirect mechanism for lending money from the savings accounts to the loans.

I've decided the best way to accomplish this task is to create a "loan reserve." All accounts will contribute the same amount to the loan reserves. For example, a group with 10,000 policies might set their loan reserve at $2,000 per policy. That would raise an immediate $20,000,000 for loans.

Ideally, the loan reserve will be substantially higher than the amount lent out. Imagine that $10,000,000 is lent during the year. The $10,000,000 not lent out can be credited back into the savings accounts. The policy holder's perspective is that they paid $2,000 in the loan reserve and got $1,000 back at the end of the first year. Now imagine that 50% of the loans get paid back in the second year. The policy holders would get $500 back in year two, and so on.

There is a high default on the loans. Imagine that $300,000 never gets repaid. That would end up being a loss of $300 per account. This long term loss is the premium that policy holders paid for having access to a guaranteed medical loan.

From a policy perspective, one would see this as the amount of money transferred from the healthy to those in need.

There would be a new loan reserve for each year. Policy holders would be repaid $1000 at the end of the first year, but they would need to buy a loan reserve for the second year. The Medical Savings and Loan might decide that $20,000,000 was insufficient and raise the reserve to $25,000,000.

Since policy holders get much of the money in the loan reserve back, it is desirable for the loan reserves to be substantially higher than anticipated lending. This encourages savings and helps the group prepare for catastrophic events. Personally, I think a group would want the loan reserves to be about 3 to 4 times anticipated lending. After all, the money in the reserves will be gaining interest on the open market to the benefit of all policy holders.

Determining the amount of money to go into loan reserves in the first year of a group policy will be tricky. One could use the amount that a group currently pays in health care for guidance. If a group has medical expenses of $5.000 per policy holder, one could guess that the loan reserve would be something less than $5,000.

From a mathematical viewpoint, over-funding the loan reserve is not that big of a problem. The over-funding of the reserve in the first year simply shows up in the account as a credit in the second year. So, one could comfortably start a medical savings and loan by setting the loan reserve to the current insurance premium, and set the amount in the savings accounts to the current deductible. As people repay loans made in the first year, things will even out.

Setting the loan reserve too high might have a psychological affect of encouraging people to lean too heavily on the loan reserve and not saving.

Regardless, this loan reserve program coupled with the savings account creates a paradigm in which policy holders have equity in their own health care and will start becoming more responsible for health care spending.

Accounting for Health

2010-01-20T11:13:00.001-07:00

In the last awkward post, I brought up the fact that health concerns of an individual may not be in line with ideas about the health of the group.

Insurance plays a large role in the current health care regime. With insurance, people pool together their resources with the hope of funding their individual care by withdrawing funds from the pool.

The people administering insurance inevitably stop seeing the individuals and start seeing themselves as administering to the care of the group. Pooling resources for health care immediately creates a conflict between the individual and group.

The conflict between the group and individual becomes most pronounced in employer based insurance. When a person changes employment, that person is no longer part of the group. Attending to the needs of the former employee is no a priority of the group insurance plan.

The conflict also shows up when some members of group insurance game the system to get more than their fair share of care. Some policy holders blatantly commit fraud. If you look at any group policy, you will find that there are some people who get a great deal of care, and others who are underserved.

Group funding of private care also creates a moral hazard: The simple fact that policy holders spend group money on their individual health care means that they are less attentive to costs than they would be if they were spending their money.

The conflict between the individual and insurance pool is the source of most our angst in health care. The solution is to create a new business model that creates a healthier balance between the individual and group.

The Medical Savings and Loan is a new business model for funding health care. The business model differs from standard insurance in that it centers all of the accounting on the individual. The heart of the system is the individual's savings account. Policy holders deposit a portion of their income into their savings account for anticipated medical needs.

In addition to savings, policy holders will have access to interest free guaranteed loans.

Considering that people who suffer medical emergencies often see a decline in income, the program will anticipate a high default on the medical loans.

Like insurance, the Medical Savings and Loan transfers some wealth from the healthy to those in need. The difference between the medical savings and loan is that the accounting is done on an individual basis and that each policy holder ends up owning their individual medical history and ends up building equity in their policy.

The Medical Savings and Loan does not eliminate the conflict between individual and group. Nor does it completely eliminate moral hazard. The main thing the program does is create a more accurate accounting of one's individual health care to help the individual take better control of their health care resources and consequently of their health.

Defining Health Care

2010-01-20T09:09:00.000-07:00

I will start writing in this blog today as if the debate were just reset.

The 2009 Health Care Debate was a poisonous affair in which the political elite threw before the people a political power grab without any effort made to discuss the nature of health care or to explain why a power grab by a centralized authority would approve health care.

A reset debate should start with the fundamentals. It should start with a discussion of the nature of health care and what is in place to help us care for health.

In the current debate, we hear absurd statements about millions of people without "health care." Yet, when we look at the system, we find these people living lives, seeing doctors, and engaged in all sorts of activities to care for their health.

Clearly, this debate is disingenuous. The political class has equated not having a particular type of insurance with not having health care.

Such equivocation does not form a solid basis of debate.

An authentic approach to the health care debate starts by examining the nature of "health."

Health is an attribute of an object. A healthy object is one that is in good working order. An ill object is one that that is not.

I used the term "object" in the above sentence to emphasize that the term can apply to all sorts of things. We can apply it to plants, animals, and inanimate objects. For example, one might say, a healthy economy is one with plenty of jobs, and steady growth. Environmentalists love applying the term health to an ecosystem. Environmentalists often see the actions of people as a disease in the ecosystem.

There is not a universal state of good health. There are complex interrelations in health. For example, having a healthy, robust colony of worms in your intestine would be considered a disease.

When discussing health, one must be attentive to the object to which we apply the term health.

When we talk about health care, are we talking about the health of individual, or the health of the group?

The health of an individual and the health of a group are not the same thing.

As a quick exercise: Think of a healthy group. In all likelihood, you are imagining a group of active young vibrant people. Think of an unhealthy people. A hospice full of terminally ill patients is an unhealthy group.

Now, think of your individual health. If you had a large cancerous growth on your forehead; you would want it cut off.

If the health of the group was our concern, the solution to health care is simple. If you cut off the dying parts, you would have a healthier population.

This is the way nature works. Wolves tend to the health of the herd of deer by killing off the unhealthy parts.

Sadly, in human history, there have been numerous societies that accepted the natural model for maintaining the health of the group by letting the old an infirm die.

In a communitarian society, such as feudalism, one would see a worker staying home to attend a sick parent as an act of greed. By attending to a dying parent, the greedy peasant is denied the benefit of his labor to the group.

Because we live in a nation rooted in Christian values, most of us automatically think that the term "health care" applies to the health of individuals. Yet, when one jumps into discussions of public policy, one must be attentive to the dimensions of the debate. Is the public policy about the health of individuals in the society or about the health of the group?

The health of the individual, the health of the group and the health of the environment are not necessarily in harmony. For this reason, one has to be attentive to the way they define the term.

As we reset the debate on health care, I think we need to think about fundamentals including the definition of health along with serious thoughts about conflicts between the health of the individual and the health of the group.

Resetting the Debate

2010-01-20T07:47:00.000-07:00

America: It's time to reset the health care debate.

The health care debate of the Ted Kennedy era was based on the paradoxical view that one can improve health care through greater centralization of the medical market. The belief is that if you transfer the control over health care resources and decisions from the individual to a centralize authority, that the individual will some how get better.

This paradoxical view is popular among the elite who will have control over the resources; however, in practice, the transfer of health resources to the central authority has historically done little more than diminish the individuals.

A better approach to health care is to find a way to structure society that empowers the individual and gives the individuals greater power to act over their health care.

I will work today on a series of blog posts introducing a health care reform that would empower individuals, and local communities and does not require a massive centralized government authority. For that matter, the reform is not a government program. It is a new business model.

A letter to the Massachusetts voter:

2010-01-18T11:55:00.000-07:00

Dear Massachusetts,

I really dislike that a vote in your state will have a profound impact on health care thousands of miles away.

My state, Utah, did not exist when great thinkers from Massachusetts gathered with other colonialists to form a new Constitution. These great thinkers from your state realized that, in order to have a vibrant society, different levels of government needed to address different issues.

They created Federal, State and Local governments with different authorities and placed Constitutional limits on these authorities.

The Bush and Obama administration are both guilty of trying to break this framework. The Bush No Child Left Behind program affected local control of schools. The Obama Health Care proposal is grabbing the State's power over local health care.

The vote you cast tommorrow will be the deciding factor in one of the most important pieces of legislation in our lifetime. It will determine if States retain their regulatory power over health care or if it will remain in the hands of the States.

Just as I dislike that the Massachusetts vote affects my health care, I would hate for the idiocies of my state's elections to affect yours.

I hope that your state votes for Scott Brown as a symbol that Federal control of health care is a step in the wrong direction.

Sincerely,

Kevin Delaney

Throwing off the TARP

2010-01-17T18:19:00.000-07:00

During the financial meltdown of 2008, I reluctantly came out in support of the first bipartisan effort to buy up undervalued assets. I supported the effort as markets were imploding and people were at a loss on how to value the bizarre securities that came to dominate the market since the Securities Modernization Act of 2000. The first part of the bailout turned into the TARP fund.

I turned against the bail out once special interests started eying the crisis as a trough.

The first part of the bailout was actually a pretty clean bet. A lack of confidence meant securities were woefully undervalued. As new accounting standards forced banks to mark to market, many banks were facing insolvency despite the fact that the long term prospects of their portfolios looked okay.

The first wave of the bailout in the summer of 2008 had bipartisan support and was a solid financial decision.

I admit, I was a bit ticked off during Obama's campaign speech for Martha Coakley which tried to score partisan points for one of the few bipartisan acts we've seen in Congress in the last several years.

The fact that loans made in 2008 are being repaid is a sign that the lenders did a good job lending.

The money spent on the stimulus is not being repaid. For example, the cash for clunkers was cash, given for clunkers. It will not be repaid.

The timing of these loans is important. The US Government started working a little bit better when it had a mixed Congress.

The current campaign is about maintaining a Democratic Super Majority. If Coakley wins, the Democrats will retain a super majority through the summer.

Just as when the Republicans held both houses and presidency, every bill passed be the idea good or bad. So the timing of the loan is a critical issue in the Ma elections. The loans were part of a bipartisan effort. The stimulus spending by the super majority that was supposed to save or create jobs did not appear to save or create jobs.

Financial Planning

2010-01-17T13:23:00.002-07:00

Penteco is a company in DC that offers financial planning and insurance. I am not familiar with the company beyond reading the first page of its twitter stream.

I do believe this company is headed in the right direction.

One of our biggest problems in health care is that people are sold insurance without adequate financial planning. If you are sold insurance and can't pay the premium or can't pay the deductible, then you effectively have no health care.

I would love to see more people providing financial planning type services to the middle and lower middle classes.

This costs money.

One of the biggest sources of money for financial planning services is health insurance commissions.

The health care billn self-righteously sets limits on administrative expensive, which I assume includes commissions. This effectively dries up a source of revenue for financial planning. Drying up funds for financial planning perpetuates a system where people buy insurance but lack the financial planning to be able to depend on their insurance.

In the Medical Savings and Loan, I create a legion of people called Health Care Advocates whose job is to help people with long term health planning. Such a program could easily be merged with financial planning services. A service like this could provide tremendous value to people's lives. It would also employ thousands of people. Unfortuately, the service is made untenable with the new legal constraints on administrative services placed in the health care reform.

I understand the impulse to want to regulate the profits of evil insurance companies. The problems with regulations that set administration expenses is that it weeds out those expenses that benefit policy holders along with the evil profits.

Big Labor's Investment

2010-01-17T10:10:00.000-07:00

I've written several posts on the difference between Capitalism and the Free Market.

In this legislation cycle, we've seen that big labor received big payoffs for its sizable investment in the Democratic Party. They've received special breaks on health care, special protections on their investments and, with a little help of from taxpaayers' money, controlling interest in the automotive industry.

This type of garbage has been going on for years in health care (which is highly regulated at the state level). Big insurance routinely makes big donations to progressives in both parties, and is routinely rewarded with regulations that drive out small insurance companies and hamper people's ability to self fund health care.

This type of collusion between government and big business is part of "Capitalism."

The term "capitalism" simply refers to a society that is ruled by the reinvestment of capital. A rich group invests in a political party. They receive great rewards from that party.

This purchasing of power is antithetical to the free market.

The Free Market an Capitalism are not synonyms and Libertarians have done themselves a great disservice by arguing as if they were.

Favorite Founders

2010-01-16T00:41:00.002-07:00

Apparently the interview below is supposed to show how stupid Sarah Palin is. When asked who was her favorite Founding Father, she started talking about how she liked how they got along as a group. They had a diversity of opinion but were able to communicate and compromise without as much partisan infighting as today.

Quite frankly, I think governor Palin was right. It was not the men, but the way they were communicating that made the difference.

The founders had a classical education (the Trivium). Their education seemed to have distilled out the cynicism and traps that were used to support emperors and monarchs.

With a sound logical foundation, they were able to create an ideology of liberty. I like to call the whole framework of discourse along with the ideology of freedom: "Classical Liberalism."

Modern Liberalism began when American intellectuals imported the ideas of the French Revolution (eg. the gap between left and right) and the new dialectical methodologies of Kant and Hegel. Southern Democrats were interested in finding ways to preserve slavery, Northern intellectuals were simply following fads of the elite.

The sites Affirmative Rationality and Plusroot.com are trying to address this underlying system of logic.

Anyway, it's great that people are once again engaged in researching the US Founders. My favorite founder is Benjamin Franklin. The video says that there were six founders. I am not sure where they got that idea. There was a large number of people involved in the discourse that rise of classical liberalism.

So, I enjoyed watching progressive intellectuals show their knowledge of our country's history ... although, I was led to believe that came some four score and seven years after the founding of the nation, but Mika Brzezinski is a leading progressive mind. I must be wrong.

Employment Litmus Tests

2010-01-15T11:13:00.000-07:00

In the radio interview below, Martha Coakley voices support for the use of abortion as a means to weed Christians out of the medical community.

After a year of debate, many Americans are finally catching on to the fact that "Health Care Reform" is about backroom deals to reward political groups, to buy votes or to punish political enemies. And it is about forcing people to buy products they do not want, or to force people to engage in activities that they find objectionable.

Prior to Obama, Health Care was regulated by the states. Due to this distributed regulation, it did not suffer as severe a down turn as the parts of the government regulated by the Feds.

This corrupt health care bill will not only force people to engage in activities they find objectionable, it will lead to further centralization of the economy. Centralization of the economy leads to wider and wider gaps between rich and poor.

Every bad thing projected onto Bush has happened tenfold under Obama.

Watching the Closed Doors

2010-01-15T00:18:00.000-07:00

A large number of people are watching the closed doors in Congress as Senators and Representatives trade special deals for votes behind the closed doors.

Some people are livid with the rumors they hear from behind the closed doors.

The progressive faithful hold out that this initial round of legislation is just to get the Federal Governments nose in the health care tent. After the first bad bill is passed, shiny new wonderful bills will arise in open sessions in the future.

Guess what?

The current legislative process is the most open that Federal control over health care will ever be.

What is happening behind the carefully watched closed doors of Congress is nothing compared to what will happen with your healthcare dollars when the public tires of watching the closed doors.

How do I know this?

I know this because health care is currently regulated by the 50 States. The state level regulatory process is routinely under-reported and misunderstood when it is reported. The process is routinely dominated by the big players in the state's health industry. Health care is already one of the most heaviliy regulated industries.

The regulation in the states not only happens behind closed doors; there is rarely anyone standing outside the closed door wondering what's going on.

The under-reported state regulations are the primary cause for the current inefficiencies in health care.

Increasing the role of the Federal government in regulation is unlikely to result in any substantive change. What will happen when we have both the Federal Government and State governments jealously competing for control of health care is that the number of backroom deals will increase, and the ability of health care providers to provide innovative new approaches to care will decrease.

It is fun watching people yell at the closed doors behind which our health care future is decided, for, once this bill is finalized, indivisual Americans will pretty much see the end of their ability to influence the health care in their communities.

Ownership and Privacy Rights

2010-01-14T13:54:00.002-07:00

The terms "ownership" and "property" simply refer to control over a resource.

Property is an abstract concept. It really means that a person has say-so over a physical resource. The statement "Bob owns property in Aspen" doesn't mean that Bob is physically possessing the land. It means that Bob has say so over the piece of land in Aspen. Bob might physically be in Vegas, but he still has property rights in Aspen (well, he had property rights before placing a foolish bet on two sixes.)

Anyway, i was writing a blurb on property rights in the Medical Savings and Loan when the relation between property rights and ownership struck me like a thunderbolt.

A key element of the Medical Savings and Loan is that the patient owns their own medical records. In standard pooled insurance, the insurance company owns and carefully guards your medical records as a proprietary business asset.

In the Medical Savings and Loan, policy holders contract with a group of people called Health Care Advocates to maintain and help interpret their medical records. If a policy holder changes to a different health care advocate, the records will follow the policy holder.

The thunderbolt that struck me was the realization that, since policy holders own their record, privacy rights become a non-issue. Their ability to control access to their records flows through their property rights.

The observation that "privacy rights" automatically flow from "property rights" brings up the specter that the thing we call "privacy rights" is not really a fundamental rights. In an axiomatic system of fundamental rights, the fundamental rights should be logically independent of each other.

Now the fact that people are so head-over-heels with privacy-rights is a sign that businesses have been systematically taking away more fundamental property rights.

Even worse, it is possible that the concerted effort to promote privacy-rights as a fundamental right is really nothing but a diversion to allow the systematic stripping of property rights from the people by big business and big government.

In the classical liberal tradition, property rights flow from the person. The most important right is right to their own body (a right which a person really can't sell). We see this principle in copyright laws that has people owning their ideas as they flow from the writer through the pen. One can derive privacy rights in a similar fashion saying that people have rights to the information that flows from them.

The so-called "privacy rights" are not fundamental rights but a recognition of one's fundamental property rights.

Rhetoric that tries to elevate a seconary right to a fundamental right runs the risk of undermining that real fundamental rights.

On the Haitian Revolution

2010-01-13T11:12:00.001-07:00

In colonial days, the island of Hispanola was wealthier, per capita, that the US colonies.

The US Revolution in 1776 was founded classical liberal ideas of inividual liberty and limited government.

The Haitian revolution in 1791 held to the French ideals of a strong central government engaged in restributive justice.

If redistributive justice was truly the superior foundation for a society to individual liberty, Haiti, not the US would be the premiere power of North America.

Haiti Relief

2010-01-13T10:32:00.000-07:00

What matters most in all disasters is the relief supplies already in the pipeline. Disaster relief works through networks. When a disaster occurs, the resources closest to the disaster will rush to aid. The donations made for the disaster will often be used to replenish the resources.

As our hearts go out to the victims of the Haitian disaster, I thought I would remind readers that the best action for helping the diaster victims is to make donations for the relief effort through your local Red Cross (or other favorite disaster relief) organization. Such donations have the dual effect of aiding Haitians in need and strengthening the entire network.

Conversely, marketing efforts to raise funds in the wake of disasters are often dubious.**

The earthquake in Haiti left millions in need. As people look at the confusion donation options, I strongly suggest making donations to international relief networks with a strong reputation like the Red Cross or Catholic Relief Services (80% of Haitians are Catholic).

Donations through local charities have the effect of strengthening the overall network while providing targetted aid.

**Charities, such as the Haitian Habitat for Humanity are worth following.