Like Obamacare, the Senate’s health insurance bill transfers wealth but less so

If you want a case study in the primary role of government, the latest health care insurance industry bill (H.R. 1628, the Better Care Reconciliation Act of 2017) provides one. Senate Democrats and Republicans yesterday having been throwing the predictable barbs at each other as highlighted by Senator Chuck Schumer’s (D-NY) description of the bill as mean, countered by Senate Majority Leader Mitch McConnell’s (R-KY) retort that Obamacare is on the brink of total collapse and that something needed to be done to save health care for America’s citizens.

But behind the posturing and talk of people being kicked out of the insurance market is the agreed upon transfer of capital from taxpayers to the health insurance industry; for that is American government’s primary mission; to transfer capital into the hands of the private sector so that returns on capital are hopefully optimized and bond holders (investors) are satisfied.

Take Section 106 of the bill. The section describes two funds; a short-term assistance fund designed to address disruption in coverage and access to health insurance, and a long term state stability and innovation program, designed to help high-risk individuals access health care. In 2018 and 2019, $15 billion will be transferred to health insurance issuers via the short-term assistance fund with the amount falling to $10 billion in 2020 and 2021. While proceeds from the long-term state stability fund go first to eligible states, eventually those funds will go to insurers. According to the bill, states will receive $8 billion in 2019; $14 billion in 2020 and 2021; $6 billion in 2022 and 2023; $5 billion in 2024 and 2025. and $4 billion in 2026.

And while Congress will have to wait until next week for the Congressional Budget Office to issue a score on the bill, Wall Street is keeping a score of its own. The NYSE Health Care composite was up 1.3% post release of the Senate bill. And while some insurers expect to maintain revenues and profits in the future immediate of the bill’s passage as a result in the removal of taxes on healthcare plans, eliminating the expansion of Medicaid may hurt hospitals, other health care providers, and insurers who administer Medicaid.

Major investment banks haven’t said anything about the bill and yesterday’s slight uptick in share values may be very short-lived if Congress cannot return Medicaid back to a major tax transfer program. The irony here is that conservatives are doing a poorer job of applying the role of government versus the progressives across the aisle that pushed the Affordable Care Act. The risk to conservatives is that reversing their position on Medicaid expansion will make them look like they have capitulated and such a reversal won’t look good to their base of supporters.

Either way, insurers overall will benefit from continued and less-taxed growth.

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A capital flow argument for LIHEAP

In a political economy that mixes tenets of pure capitalism with that of socialism, it is interesting to see how government programs, particularly those allegedly designed to protect consumers, are poorly described by both policymakers and the general public. Inaccurate descriptions of a government program may result in poor messaging or advocacy efforts when additional funding for such programs is being sought. In my opinion, the reason for the poor description and the poor advocacy has to do with the intent of the program.

Specifically, it has to do with the weight given to the consumer protection portion of the argument and the market portion of the argument, a portion that is often overlooked. In short, the consumer protection portion of the argument serves as traction, the reason for directing tax receipts to a program while the ultimate goal is to move this government-appropriated capital to private entities that can put the capital to its best use. In a market-based political economy like that of the United States, the consumer protection portion receives less weight than the market-based portion.

To best mask this discrepancy, the recipient should make its best efforts on delivering on the rationale behind the public policy, i.e. consumer protection, affordable rates, etc. Advocates for a social program should be schooled in how to make a market-based argument for additional funding where a private sector participant is being relied on to deliver on the promises of a particular public policy. Advocates seeking funding for programs threatened by government budget cuts fail to make these market-based arguments. Rather, social policy advocates emphasize the moralistic or altruistic sentiments that in today’s political environment falls on an increasing number of deaf ears.

With a pro-market Trump administration occupying the White House, groups advocating for increased funding for the Low Income Home Energy Assistance Program (LIHEAP) run the risk of making arguments that fall on deaf ears. Advocates make the noble and moral argument that low-income communities are at great risk of increased energy insecurity especially where incomes remain stagnant and energy bills take up a significant portion of disposable income. The social repercussions stemming from a significant portion of society unable to meet their energy needs arguably outweighs the costs of providing some type of safety net for these individuals, but if this argument were enough, LIHEAP would have more than enough funding.

I recommend a blunt, transparent approach to seeking additional LIHEAP funding in a pro-market environment based on a four-prong argument.

First, be honest about what a government program actually is: a direct or indirect capital transfer from the public to the private sector. In the case of LIHEAP, it is a transfer of tax receipts from the public to utilities for the purpose of subsidizing the energy needs of the poor. The subsidies move society toward better ensuring that low income consumers are not put at health risk as a result of a lack of energy while keeping utilities “whole.”

Second, LIHEAP, as a pool of capital, plays a role in maintaining the demand for electricity services. Demand for electricity services has been flat since America’s 2007-2008 recession. Maintaining or increasing demand for electricity services is good for investors, particular utility bond holders. Given the that electric service delivery is capital intensive, utilities need to send the markets a positive signal that investors will see reasonable returns on capital.

Third, by maintaining demand for electricity services, there are more consumers upon which to spread utility costs thus keeping bills stable for those who rely solely on the utility grid. This leads to the fourth prong, where capital inflows from LIHEAP to the utilities helps keeps fixed and variable costs for maintaining the grid stable.

Success in obtaining additional LIHEAP funds will require advocates to step outside the box and modify the language needed for communicating with a new administration in Washington. A capital flows argument that brings together the needs of low income consumers with those of the market is appropriate and should not be feared.

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Of the State, the Klan, Netizens, and #netneutrality

I just finished listening to Federal Communications Commission member Mignon Clyburn make the argument for more State intervention in the digital data markets during an event sponsored by civil rights group Color of Change. Ms Clyburn’s remarks provided a foundation for the forum’s theme; that net neutrality is about promoting racial justice, and that communities of color could not afford to have corporations, particularly broadband companies, edit, block, or throttle their content and disrupt their narratives. The solution, according to Color of Change, is for more regulation by the federal government of broadband providers.

In Ms Clyburn, Color of Change, Free Press, and other “Netizens” have found a champion, a regulator willing to fly down from Washington, DC and declare that she is with them, listening to their concerns, and willing to take the good fight back to the Republican majority Commission. Ms Clyburn is very vocal in her support of applying Title II of the Communications Act of 1934 to regulate broadband providers; to prevent the shenanigans that blocking and throttling online content entails.

Ms Clyburn echoed the “what if” scenario of bad broadband company behavior. What if a broadband access provider blocked a consumer’s access to their favorite website? What if a broadband access provider slowed down the flow of a content company’s traffic to their subscribers? Ms Clyburn likened these scenarios to the civil rights movement of the 1950s and 1960s where she described efforts by telephone companies in the South to block calls made by civil rights activists relaying news to other activists in neighboring counties or states.

The problem with Commissioner Clyburn’s analysis is that is completely overlooks the state action; the state’s participation in the blocking of phone calls during the civil rights era. White supremacist citizens councils were behind the telephonic intimidation of civil rights groups. In Mississippi, the organization and funding of these groups were approved by the Mississippi legislature in part as a retaliatory reaction to Brown v. Board of Education, the landmark Supreme Court ruling that held that the segregation of schools and other public places was unconstitutional. State action by the legislature carried out by willing agents, the citizens councils, was one method to keep in check not only the enforcement of the ruling but any other civil rights advances. Bottom line, the state carried out the action. Although phone companies were agents, it was a state action prompting the blocking of calls.

Today, Commissioner Clyburn would like the federal version of the State apparatus to regulate the flow of traffic over the internet. All of a sudden, we are supposed to believe that because sixty-plus years have passed that the State has done a complete about face and should be trusted to do the just thing by consumers and producers of broadband access services. I’m not ready to make that leap because the State is not capable of the feel good actions that Commissioner Clyburn and her Netizens want the State to impart in. On the contrary, the State’s nature is to oppress. Nothing good for the individual or individuals who enter voluntarily into business associations comes from its actions.

The irony is that net neutrality proponents are acting like the very citizens councils that tried to intimidate Black Americans post the U.S. civil war. Net neutrality want the State to keep the hammer on the behavior of investors and service providers by regulating who they enter into strategic partnerships with; the speeds by which traffic should flow on private networks; and how closely unaffiliated individuals and groups can look at the management practices of private businesses. And the prejudice here? Presupposing that these carriers pose an existential threat to a consumer’s ability to speak.

Net neutrality proponents may feel offended by the observation but their behavior invites valid comparison to their great-grandfathers who did the tormenting and their great-grandfathers who were tormented. Fringe elements of these groups have visited the home of one past Commission chairman during the net neutrality rules debate while the current chairman has received threats to his person as well as ethnic taunts. The Klan would be proud of these Netizens.

Posted in civil rights, Federal Communications Commission, Internet, net neutrality, Political Economy, race, statism | Tagged , , | Leave a comment

A brief note on Comey’s written testimony

Mr Trump, based on Mr Comey’s written testimony, should have followed the Tom Clancy “Clear and Present Danger” rule. He should have ordered a no holds bar investigation of himself. A risky move, yes, but given the chance of burying Democrats in minutiae and running the risk of finding nothing, Mr Trump would have come out victorious giving the Democrats no where to go and exhausting the energy they should have been putting into finding a candidate who could beat him in 2020 as well as crafting a message for the “Deplorables” who Hillary Clinton spent much of 2015 and 2016 flying over in her campaign jet plane.

Oh well, Cheetos-Man. Lesson learned.

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From Paris to the Caribbean with environmental love

So this morning, a bunch of Americans are bitching and moaning about the United States exiting a non-binding agreement between 195 countries where proposed actions could easily be taken individually and outside of any agreement. When you have Goldman Sachs bitching about how terrible it is to leave this agreement, red flags should go up and the search light turned on to find the money trail.

This agreement calls for the developed world to generate $100 billion in financing that will supposedly flow to developing countries, supporting their anti-climate change activities. For the Caribbean (and I do not apologize for my focus on the area), this may mean some money going toward ensuring against floods and coral reef erosion or, heaven forbid, money going to the yahoos that own those frickin’ Sandels hotels. Someone wants to administer that $100 billion per year slush fund and more than likely Goldman Sachs wants that action.

Developing countries in the Caribbean didn’t start this mess and we shouldn’t have to pay a red cent toward fixing it. A simpler approach would be to send non-polluting lesser developed nations a check and let the developed nations legislate within their borders the punishment pollution causers should face.

So for the next four to six days, pundits from the left and the right will be earning their paychecks verbally farting their own methane about Cheetos Man’s withdrawal from an agreement that will have nary an impact on the Flying Spaghetti Monster’s rewrite of Earth’s environmental code.

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Why wouldn’t government want Comcast and Google to manage your information?

American households represent untapped information that government wants to grow, harvest, and exploit. Local, state, and federal governments have data on your birth, your matriculation through school, your educational status, your income, your health records, your marital status, the schools your children attend, the value of your properties, your driving records, your financial records, the number of court appearances you have made, your bankruptcies, your foreclosures, etc.

Why does government collect this information? For one thing, personal information in the hands of the government, no matter the level of government, is a money make for their coffers. Hiding behind the adage of “public information” and “transparent government”, the monopolist of force, the State, sells information in their databases, arguing that it is okay to do so because no profit is being made; only the costs of providing the information is covered.

Ever wonder why, as a small business owner. you are getting junk mail from so many vendors, none of whom you have any relationship with?

And even public colleges get into the data trade by selling student information to meal plan providers or storage companies.

Government also requests or purchases data from hundreds of private corporations, some of whom you already know (Google, Facebook); other vendors you may never hear about.

But if you think of information or data as another piece of natural capital like land or spectrum, then, given the current Democracy-Mafia model of the State where it exercises jurisdiction over all of this nation-state’s natural resources, it should be no surprise that the State, under the guise of a free market, capitalist model, has turned over some of its data mining duties to private data miners. Some of these miners are virtually unregulated, i.e. Google, while the net neutrality posse would like to see broadband access providers heavily regulated.

Equity, something the net neutrality posse is afraid of applying, should require all data miners, whether Facebook, Google, Comcast, or AT&T, be regulated under a single regulatory framework. I, of course, prefer none of these entities be regulated at all, especially where households give up data voluntarily in exchange for value.

I know. I know. That type of exchange is not happening in all instances, but I’ll leave that discussion for another time. Bottom line, corporations conduct extraction of information more efficiently than government on government’s behalf. They should all, no matter whether to serve the core or the edge of the internet, enjoy regulatory slack.

 

Posted in American society, big data, broadband, broadband access provider, data brokers, Economy, free markets, government, Internet, libertarian, libertarianism, net neutrality, Political Economy, regulation | Tagged , , , , , | Leave a comment

I have expectations, not rights

Rights come from our humanity, according to Judge Andrew Napolitano. I don’t like the word rights. I always align it with some special privilege that government can give and take away when it wants. I prefer expectations as a human being. I expect to be hungry and seek out food to satisfy that hunger. I expect to be sleepy and prepare shelter where I can rest. I expect to go through these feelings and needs because of my emotional and physical makeup.

Mr Napolitano goes on to explain that humanity comes from God and sense God is free, we too, as humans, are free since we are made in God’s image. I don’t have to go that far in order to exercise authority over myself or explain the reasons for my expectations. It is enough that I exist and that I leverage the resources of this planet in order to maintain myself.

Supporters of the State won’t see Mr Napolitano’s argument that humanity is source of rights or my argument that my existence and the resulting expectations are sufficient grounds for my freedom. They are too enamored with the false comforts that the State provides.

Posted in American society, Anarcho Capitalist, government, human rights, libertarian, libertarianism, liberty, Political Economy | Tagged , , , , | Leave a comment

Janet Yellen’s real girl power and anarcho-capitalist life boats

The leaders of your country are making moves on behalf of their constituents. Don’t get excited. By now you should know I’m not talking about the verbose blow-fart sitting in a cushy chair in some government office suite. I’m talking about the real national leaders, the bond holders, and the State’s chief investment banker, Janet Yellen(real frickin’ girl power), and her posse at the Federal Reserve.
 
The Federal Reserve wants to reduce its holdings of Treasury notes, the bonds or IOUs that the federal government issues in order to raise money for interesting projects like sponsoring a musical about climate change. The Federal Reserve has been accumulating and holding this debt (now at 23% of gross domestic product) since the financial crisis of 2008. As these IOUs hit the market, the price to purchase them will fall as their supply is added to whatever current supply there is in the current market. As the prices fall, the yields on these IOUs will increase, driving up the costs to access capital or borrow money.
 
Statists (Keith Ellison, Maxine Waters, John McCain, Louie Gohmert, Corey Booker, Rand Paul) won’t have any solutions to offer to consumer-labor as producer-entrepreneurs see increases in their costs of doing business and are forced to cut labor loose and replace labor with more technology. Bondholder-investors will welcome the move away from labor and toward technology because the move creates certainty of constant returns to capital.
 
Collectivists (the aforementioned statists and their do-gooder grassroots groups) are going to complain about system failure , arguing that the Trump administration is creating an economy that is failing the public as costs to access capital and consumer prices continue ticking upward while wages remain flat in the face of flat labor productivity.
 
Ironically, producers see less reason to pay higher wages or invest in more capital because of flat productivity, preferring to hoard cash or return earnings to shareholders.
 
Anarcho-capitalists should continue to keep our eyes on the writings on the wall. Proceeding from the platform that the administrative state (no matter which gang, Crips-Democrats or Bloods-Republicans, is in charge) serves no value, programs that promote self-sustainability should be pursued. Examples include using renewable energy to generate our own electricity; using technology to grow food at home; and moving more of our holdings out of bogus “full faith and credit” currencies into gold and silver as a hedge against changes in the value of paper currencies.
 
As the masses seek comfort huddling in a political economy taking in water, we should build our own life rafts.
Posted in American society, Anarcho Capitalist, bondholders, capital, Federal Reserve, government, libertarian, libertarianism, Political Economy, renewable energy, solar, statism | Tagged , , , | Leave a comment

What the GOP has wrong about taxation

This week’s print edition of The Atlanta Voice provides two Associated Press stories discussing the Democratic Party’s fifty-state strategy and the GOP’s about face on fiscal responsibility. In one article, the Democrats’ “Resistance Summer” is designed to organize and expand the local Democratic voting rolls, seeded by an initial $1 million. According to the article, the Democratic Party wants to help its local affiliates manage rallies, town halls, neighborhood meetings, registration drives, and voter database improvements. The party wants to have local infrastructure in place that support their candidates’ arguments that Democrats provide a better way of governing.

The current governing Republican Party, putting health care on the back burner for a hot minute, has hopes that it can provide Americans with the ultimate political package, economic growth, and hope to do it with tax cuts. The Republicans also want to close the deficit gap and reduce debt by cutting programs including social welfare programs as proposed by President Donald Trump.  To make their tax cuts revenue neutral, Republicans are looking at getting rid of certain deductions including state and local tax deductions and the mortgage interest deduction.

Republicans have long argued that high deficits, high debt, and high taxes have limited individual liberty while the Democrats still have to go to a dictionary to look up the meaning of the word, “liberty.” Democratic efforts seem just focused on securing more bodies to the voting booth. No plan coming out of the Tom Perez-led Democratic National Committee on how to boost the economy for those very rural voters who thought, erroneously, that Donald Trump had a plan for growth.

I’m not surprised that the Democrats are lacking. Their idea of economic growth has always been low wage earning jobs combined with increased social welfare programs. And forget individual liberty unless the notion is closely related to crime against minorities or abortion rights for primarily white women.

The GOP talk a good game on liberty (see the article’s quick discussion of Orrin Hatch’s 2011 position on individual liberty, prosperity, and national security), but increasing military budgets or more weapons for cops does not increase individual liberty. The GOP is simply in favor of moving tax dollars, the collection of which is an oppressive action by the State, from one progressive-sponsored political package (social programs) to a conservative-preferred political package (national defense).

And when it comes to economic growth, the GOP offer nothing better. Tax cuts, going primarily to wealthier individuals, won’t do much for personal consumer expenditures. The wealthy have a higher propensity to save. Unless they see the “next big thing”” in terms of investment, I don’t see much pick up in economic activity.

Based on the structure of the political economy and the administrative state apparatus that runs it, diverting greater returns to investors or bond holders is what we should expect. Government ensures an orderly political economy in order to secure return of and on capital.

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Making Medicaid, SNAP lower priorities is an opportunity for communities

Last night, The Washington Post reported that the Trump administration would seek cuts to Medicaid and the Supplemental Nutrition Assistance Program. Medicaid, a joint federal and state program, provides financial assistance to low-income medical services consumers while SNAP is known for providing financial assistance to low income consumers with difficulties buying food.

As with any budget proposal offered by any president, this proposal gives the general public and the bond markets an idea as to the priority Mr Trump places on social spending, apparently very little. I expect bond markets overall to see cuts as an attempt on the Trump administration to be fiscally disciplined. So far this morning the bond market is flat with more attention being paid to Congress’ probe into whether the Trump campaign colluded with the Russians to disrupt the November 2016 elections.

Left leaning congressmen and advocacy groups are making the collectivist arguments that Mr Trump and the GOP are heartless; putting at risk 10 million consumers who may find themselves kicked off the Medicaid rolls over the next ten years. Government has a duty to provide these services and people will suffer without them, they argue.

Their argument demonstrates not only naivete but a disregard for the resiliency of individuals and community. It is not government’s role to be a health care provider. Government’s role is to provide the day-to-day operations of the State. The State has an interest in maintaining civil order including authorizing the political packages i.e. health care, necessary for keeping the barbarians from knocking down the gate.

And the services that government offers are one dimensional and sub-par such that if they went away, fewer people would miss them than assumed. Take for example food stamps. The monthly maximum allotment for one person is $194. In reality, individuals may not even get half that amount per month, relying on family members, church groups, other civic groups, and friends to fill the gap where income cannot. While some may argue that something is better than nothing, I find that argument to be empty; a half-ass justification of political packaging designed to get votes rather than actually aiding people.

Collectivists will argue that the best solution is increased funding for Medicaid and SNAP. In other words, increased funding for their insurance company friends that administer Medicaid for the states; more money to the commercial banks that provide clearing services for food stamps; and more money to the program managers with the administrative state that set policy for Medicaid and SNAP.

A better solution is one that is community-based without a lick from the government. Churches, families, individuals, and other social agents can fund preventative care facilities and small hospitals or clinics that serve patients within their geographical area, i.e. West End Atlanta, Oakland City, Westview.  In addition, these social agents should fully fund students from their community who commit to completing nursing, medical, or pharmacy programs and working directly in these communities. Such commitments would reduce the costs of supplying medical and wellness programs.

This is not a panacea, nor does this recommendation address a community’s short term needs, but if health care costs are to be kept under control in the long run, then a community-based plan where the community is invested in the performance of health care providers to the point where health care costs fall is the viable option. The administrative state’s half ass “scratch my back, I’ll scratch yours” approach does not work.

Posted in Anarcho Capitalist, Budget, Donald Trump, health care, healthcare, libertarian, libertarianism, liberty, Political Economy, statism | Tagged , , , | Leave a comment