The reason why no bailout is yet at hand for the current problems is simple: there is not enough trust.
Calls and letters coming in to congress are running 50-1 against the bailout. Why? few trust Wall St. and congress to be telling them the truth and most suspect that this is simply a gambit for continued big paydays by wall st. honchos.
Why?
In the mid to late 1990's the pundits and experts lauded the so called "new economy" which needed no profits and then didn't even need revenues. All it needed was "eyeballs" watching the new web sites that the new economy was spawning. Spawning massive new wealth practically through thin air (A.K.A the internet). Those who were skeptical and felt business would need revenues and profits were told they "just didn't get it." The "new economy" was not a fringe idea, it had became conventional wisdom before the concept crashed and burned in the "tech wreck" of 2000-2002. This kind of episode erodes trust.
Why?
The election of 2000 was contested. It was not won cleanly but decided by a supreme court decision. Never before in our history had we gone through something like that. Some important assumptions about our country flew out the window in that episode. This kind of thing erodes trust.
Why?
In 2003 our nation was led into war via a claim that Iraq had "Weapons of Mass Destruction." Iraq was invaded and no Weapons of Mass Destruction were ever found. Iraq is believed to possess the second largest reserve of oil of any nation on earth. This kind of episode erodes trust.
Why?
Throughout the middle of this decade a deliberate effort was undertaken to bolster/inflate the housing market. Lending standards went down down and then down some more. We were told by the "experts" not to worry. Housing cannot go down. None other than Alan Greenspan claimed that there was nothing systemic to worry about because there could not be an overall drop in housing prices. Simply couldn't happen. He lectured that there was "no nationwide housing market" - that housing consisted instead of many local markets that moved somewhat independently so if Phoenix was dropping then Philadelphia would probably be rising and if not Philadelphia then somewhere else. Bottom line: don't worry your pretty little heads about a housing downturn. It has never happened and can't happen. As we know, housing is now in a dreadful tailspin; according to Case/Schiller it's down 17% and dropping. This kind of episode erodes trust.
Furthermore, in each of these episodes there has been skepticism from those of us outside the halls of power and it has often met with a concerted effort to get us all "on board."
- See the video's of Abby Joseph Cohen, Bill Gates and others in the 90's extolling the "new economy." Those who didn't see the new economy just didn't "get it" - maybe they were not so smart.
- Watch the mocking sarcastic comments of Donald Rumsfeld when asked directly where the WMD's were in early '03. Watch the comments of Dick Cheney and Bush on the subject in 2002-2003. We were told that everyone knew they were there. Everyone.
- Watch the oh-so-sober presentations of Alan Greenspan on the possibility of a housing bubble (it can't happen he said). Watch other "expert" commentary on the risk of a housing bubble. Consensus until this year was that it cannot happen.
The unwashed masses might *think* that any asset could be bid to high and a mania could develop anywhere but the experts assured us that housing was an exception. They used advanced statistics and calculus and a lot of other neat things to drive home the point.
Put together, these events have done a lot to diminish trust in our leaders over the past 10 years and given the ultimate outcomes one must ask what the hell is going on.
A subtext to all of this of course was sky high executive compensation for those who were on the inside and a yawning gap between the "haves" who were running the show and the unwashed "have nots" - who were often the doubters.
We were told that our leaders really knew what was going on, we were told that our leaders had the character to stick with the program and make the tough decisions, we were told that our leaders had the seasoning to have "been through it all before" and the intelligence to make good tactical decisions. They create the wealth we were told. And in return for all this a 10 or 20 million a year was but a trifle.
But now we know that the new economy was a fraud, there were no WMD in Iraq and housing prices are now dropping like the price of unsold Halloween candy on November 1.
There is extremely little trust right now. People do not trust their leaders, they do not trust the CEO's, they do not trust Bush, they do not trust the Democrats.
Most "main street" type people feel this wall street bailout is just a grasp at another grandiose payday by powerful people who seem very adept at manipulating and used to getting their way.
Could this bailout be just an attempt to again profit at the expense of the rest of us? Much of the public believes this.
Consider that CEO and upper management pay packages are based on stock prices and nothing has to get paid back if stock prices decrease later. These guys are usually in their 50's or 60's. Helping along a "new economy" bubble could therefore be rational from their perspective. Consider that a big new market should have been opened up with the invasion of Iraq (it's as big in population and size as California and has 4 times as much oil as the U.S.) Consider the paydays "throughout the chain" from the origination of mortgages. None of those origination fees have to be paid back.
Could it be that the much of the general "advice" from our leaders and experts on the subjects I touch upon above was self-serving (as opposed to 24-Karat gold insight?)
Could it be that they simply told us to do what was good for them and were not all that concerned about the risks we were exposed to in following it?
The troubling fact is that the self-serving thesis makes sense given the ultimate outcomes: the insiders made out like bandits even while their rationales were exposed as bunk each time.
We probably cannot know yet whether our leaders are being sincere of whether this is another "new economy" sham but regardless we have no reason to trust them.
If they are finally telling the truth then we are all in deep *****.
Monday, September 29, 2008
Saturday, September 27, 2008
The case for progress and reason
The essay "The Case Against Perfection" by Michael J. Sandel (http://www.theatlantic.com/doc/200404/sandel) encapsulates well the establishment argument against Genetic Engineering.
His case is groundless.
The title implies that genetic engineering is a "quest for perfection" but this idea is of course a canard. We engineer cars, airplanes, roads, buildings and all sorts of other things and such engineering is neither a "quest for perfection" nor is it denounced as such. It's problem solving and it's what we do.
Sandel further states that "the moral quandary arises when people use such therapy not to cure disease but to reach beyond health, to enhance their physical or cognitive capacities, to lift themselves above the norm."
But wait, I drove a car to my office and that car traveled at times faster than any human has ever physically run. The computer that I am using now is providing me with a very real cognitive boost, checking the spelling as I type and allowing me to look up just about anything I want in another browser window. Many people in this world do not have cars nor computers hence I have have a clear advantage and have been thusly lifted "above the norm". Is it incumbent on me to ditch my car and computer for these reasons? If so where do we draw the line?
An important difference between genetic engineering vs. engineering cars, computers and the like is that engineering cars and computers do not change us from the "inside", they do not change who we are, they do not change our "character".
Or maybe they do.
Human beings have been changing physically since our ancestors left Africa and much of those changes have been driven by technology. We have little body hair yet live successfully in cold climates because we figured out how to make clothing. We can throw an object with deliberate aim (we are the only animal that can do that!) and have been perfecting things to throw for a long time (spears, stones, bows and arrows etc.) Clearly we have already been changing ourselves and this did not begin yesterday.
We have already been changing our character via technology, genetic engineering would only make the changes more exact and deliberate. If you look at the arc of human history you see that more exact and deliberate methods of change are the rule as time goes on. Sandel does claim to be favorably inclined towards this "conventional" technological progress but he (and like minded people) want to make an exception in the case of genetic engineering. Everything else is be under one framework (go for progress, progress, progress) but an exception is to be made in the case of genetic engineering where we should eschew progress. This is inconsistent and will not hold up. In the long run exceptions cannot and will not be made.
Sandel claims that genetic engineering would usher in a world "inhospitable to the unbidden." (things not asked for). This is not the case. The unbidden will still lurk around every other corner. Genetic engineering could *in theory* only eliminate the unbidden in the realm of biological reproduction - a tiny slice of the physical universe. But even here it's elimination is questionable - just watch "Prototype This".
And much of modern civilization has been about changing the unbidden into the bidden! Boil that concept down and what you are talking about is progress. Hunting and gathering were dependent on the the vagaries of wild animals and plants. The "unbidden" Wolly Mammoth could be the difference between starvation and living. With agriculture, cows and sheep are deliberately raised for sustenance. Big change from the unbidden to the deliberate. How about government. Prior to democracy we had monarchies - kings and queens. The people did not ask for their king, he was given: he was unbidden. Democracy has made government what the people deliberately ask for. Is this a bad thing?
I would suggest that moving the unbidden and unknown "away" is part and parcel of progress - and it's generally a good thing (think democracy). I would also suggest that there will be no way to entirely eliminate the unbidden - ever. Worrying about that is kind of like worrying that engineering will eliminate entropy.
Sandel correctly notes that we do not really have a meritocracy because much of success is based on inherited genetic talent and that inherited genetic talent is not earned - it's given. Then Sandel goes on to make the absurd claim that "genetic control" would erode the "actual solidarity that arises when men and women reflect on the contingency of their talents and fortunes." This "solidarity" is a fantasy. Kind of like the "solidarity" that kings and queens had with the people they ruled. The prevailing mindset throughout history is "things are the way they are for a reason", or "it's part god's plan". Inherited gifts (like royal blood) inevitably lead to feelings of superiority and entitlement - not solidarity. Royal blood is really just another form of generic gift.
Sandel would have us give up the possibility of an actual *real* meritocracy in order to maintain fantasy "solidarity" that clearly does not exist.
There is of course a class warfare element here. Sandel and his cohorts in the elite of this world have generally inherited a relatively superior genetic profile and their relative position in the genetic lottery would of course be threatened by the introduction of genetic engineering.
What is going on is that Sandel and his fellow "Genetic royals" are peddling fear in an attempt to frighten the majority into rejecting what would be for them positive change. This is similar to the scare tactics Royal monarchs used against democracy in the 1600's and 1700's. They and their apologists (who included much of the elite of the time) had dire warnings about democracy. Democracy, it was said would lead to chaos, "mob rule" and ultimately starvation. Equally important, democracy violated god's divine order, his master plan: the divine right of Kings and it's associated order. Messing with that order would result in all sorts of trouble and chaos.
Does that argument sound familiar?
Genetic engineering is really genetic democracy - and it too will ultimately emerge and win the day.
His case is groundless.
The title implies that genetic engineering is a "quest for perfection" but this idea is of course a canard. We engineer cars, airplanes, roads, buildings and all sorts of other things and such engineering is neither a "quest for perfection" nor is it denounced as such. It's problem solving and it's what we do.
Sandel further states that "the moral quandary arises when people use such therapy not to cure disease but to reach beyond health, to enhance their physical or cognitive capacities, to lift themselves above the norm."
But wait, I drove a car to my office and that car traveled at times faster than any human has ever physically run. The computer that I am using now is providing me with a very real cognitive boost, checking the spelling as I type and allowing me to look up just about anything I want in another browser window. Many people in this world do not have cars nor computers hence I have have a clear advantage and have been thusly lifted "above the norm". Is it incumbent on me to ditch my car and computer for these reasons? If so where do we draw the line?
An important difference between genetic engineering vs. engineering cars, computers and the like is that engineering cars and computers do not change us from the "inside", they do not change who we are, they do not change our "character".
Or maybe they do.
Human beings have been changing physically since our ancestors left Africa and much of those changes have been driven by technology. We have little body hair yet live successfully in cold climates because we figured out how to make clothing. We can throw an object with deliberate aim (we are the only animal that can do that!) and have been perfecting things to throw for a long time (spears, stones, bows and arrows etc.) Clearly we have already been changing ourselves and this did not begin yesterday.
We have already been changing our character via technology, genetic engineering would only make the changes more exact and deliberate. If you look at the arc of human history you see that more exact and deliberate methods of change are the rule as time goes on. Sandel does claim to be favorably inclined towards this "conventional" technological progress but he (and like minded people) want to make an exception in the case of genetic engineering. Everything else is be under one framework (go for progress, progress, progress) but an exception is to be made in the case of genetic engineering where we should eschew progress. This is inconsistent and will not hold up. In the long run exceptions cannot and will not be made.
Sandel claims that genetic engineering would usher in a world "inhospitable to the unbidden." (things not asked for). This is not the case. The unbidden will still lurk around every other corner. Genetic engineering could *in theory* only eliminate the unbidden in the realm of biological reproduction - a tiny slice of the physical universe. But even here it's elimination is questionable - just watch "Prototype This".
And much of modern civilization has been about changing the unbidden into the bidden! Boil that concept down and what you are talking about is progress. Hunting and gathering were dependent on the the vagaries of wild animals and plants. The "unbidden" Wolly Mammoth could be the difference between starvation and living. With agriculture, cows and sheep are deliberately raised for sustenance. Big change from the unbidden to the deliberate. How about government. Prior to democracy we had monarchies - kings and queens. The people did not ask for their king, he was given: he was unbidden. Democracy has made government what the people deliberately ask for. Is this a bad thing?
I would suggest that moving the unbidden and unknown "away" is part and parcel of progress - and it's generally a good thing (think democracy). I would also suggest that there will be no way to entirely eliminate the unbidden - ever. Worrying about that is kind of like worrying that engineering will eliminate entropy.
Sandel correctly notes that we do not really have a meritocracy because much of success is based on inherited genetic talent and that inherited genetic talent is not earned - it's given. Then Sandel goes on to make the absurd claim that "genetic control" would erode the "actual solidarity that arises when men and women reflect on the contingency of their talents and fortunes." This "solidarity" is a fantasy. Kind of like the "solidarity" that kings and queens had with the people they ruled. The prevailing mindset throughout history is "things are the way they are for a reason", or "it's part god's plan". Inherited gifts (like royal blood) inevitably lead to feelings of superiority and entitlement - not solidarity. Royal blood is really just another form of generic gift.
Sandel would have us give up the possibility of an actual *real* meritocracy in order to maintain fantasy "solidarity" that clearly does not exist.
There is of course a class warfare element here. Sandel and his cohorts in the elite of this world have generally inherited a relatively superior genetic profile and their relative position in the genetic lottery would of course be threatened by the introduction of genetic engineering.
What is going on is that Sandel and his fellow "Genetic royals" are peddling fear in an attempt to frighten the majority into rejecting what would be for them positive change. This is similar to the scare tactics Royal monarchs used against democracy in the 1600's and 1700's. They and their apologists (who included much of the elite of the time) had dire warnings about democracy. Democracy, it was said would lead to chaos, "mob rule" and ultimately starvation. Equally important, democracy violated god's divine order, his master plan: the divine right of Kings and it's associated order. Messing with that order would result in all sorts of trouble and chaos.
Does that argument sound familiar?
Genetic engineering is really genetic democracy - and it too will ultimately emerge and win the day.
Thursday, September 25, 2008
Deafening silence from Wall Street's powerful on the subject of their compensation
We have all witnessed the circus surrounding the big Wall St. bailout that has been going on for a couple of weeks now.
Trust me the big shots like Len Lewis (CEO Bank of America), Lloyd C. Blankfein (Goldman Sachs), James Dimon (JP Morgan Chase) are watching this whole thing with keen interest and in fact lobbying like mad behind the scenes in favor of this bailout.
And they know darn well that the issue of their compensation WILL come up.
What floors me is that they ask for so much from the rest of us (the bailout is estimated to cost $3,000 for every man woman and child in this country), yet they offer no sacrifice whatsoever from themselves.
There could be a grand gesture from these guys that would take the issue of executive compensation right out of this bailout controversy and grease the works in favor of quick passage. Remember Lee Iacocca? He offered to work for 1$ for a year in return for a government guaranteed loan. He asked for something and he offered something back and the whole thing worked.
Fast forward 28 years. Now Wall St. comes hat in hand to Washington and asks for a hell of a lot more than Iacocca ever asked for yet they offer...nothing. They lecture day after day that if Wall St. does not get bailed out then there will be financial Armageddon for everyone. Give us a huge bailout or we all go down. Sounds almost like blackmail. It would not seem so much like blackmail if they offered something back- but they offer nothing.
Ken Lewis could offer to work for 1$ for a year. Lloyd C. Blankfein could offer to work for a $1 for one year, James Dimon (JP Morgan Chase) could offer to work for $1 next year also. A grand gesture like that from Wall St. leaders would take the executive compensation issue off the table and be quite inspiring to all of us. But we hear nothing of the sort. It looks like they are looking at this as a high stakes poker game and they are trying to get the other side (congress and by extension the other 299 million of us) to blink first giving them yet another huge windfall.
Notice that I have chosen people in this post (Ken Lewis, Lloyd C. Blankfein and James Dimon) who who are currently viewed as having done a good job over the last several years. You might think something along the lines of "these men should be rewarded, the ones who did a bad job punished" hence the sky's the limit for their compensation. But these men are the ones who will benefit from this massive bailout. These guys have already gotten paid for their prior performance, this bailout will give them even more.
They come now to the federal government and ask that the taxpayer pay about $3,000 apiece to them. To put it as succinctly as I can: the "bad" CEO's have already lost their jobs and are out, they will not benefit from this bailout. Lewis, Blankfein, Dimon and guys like that WILL benefit PERSONALLY from this (as it is now constructed) and in a very big way. And these guys engaged in the very same things that the others did! They just played the game better so others went down first.
Take a look at the compensation last year for these guys and grok on who and what your $3000 is going for:
Lloyd C. Blankfein $70,323,572
James Dimon: $27,766,073
Ken Lewis: $21,601,594
.
.
source: salary.com
Note: there are lots more wealthy bankers and brokers who will also be getting a piece of your $3000.
Trust me the big shots like Len Lewis (CEO Bank of America), Lloyd C. Blankfein (Goldman Sachs), James Dimon (JP Morgan Chase) are watching this whole thing with keen interest and in fact lobbying like mad behind the scenes in favor of this bailout.
And they know darn well that the issue of their compensation WILL come up.
What floors me is that they ask for so much from the rest of us (the bailout is estimated to cost $3,000 for every man woman and child in this country), yet they offer no sacrifice whatsoever from themselves.
There could be a grand gesture from these guys that would take the issue of executive compensation right out of this bailout controversy and grease the works in favor of quick passage. Remember Lee Iacocca? He offered to work for 1$ for a year in return for a government guaranteed loan. He asked for something and he offered something back and the whole thing worked.
Fast forward 28 years. Now Wall St. comes hat in hand to Washington and asks for a hell of a lot more than Iacocca ever asked for yet they offer...nothing. They lecture day after day that if Wall St. does not get bailed out then there will be financial Armageddon for everyone. Give us a huge bailout or we all go down. Sounds almost like blackmail. It would not seem so much like blackmail if they offered something back- but they offer nothing.
Ken Lewis could offer to work for 1$ for a year. Lloyd C. Blankfein could offer to work for a $1 for one year, James Dimon (JP Morgan Chase) could offer to work for $1 next year also. A grand gesture like that from Wall St. leaders would take the executive compensation issue off the table and be quite inspiring to all of us. But we hear nothing of the sort. It looks like they are looking at this as a high stakes poker game and they are trying to get the other side (congress and by extension the other 299 million of us) to blink first giving them yet another huge windfall.
Notice that I have chosen people in this post (Ken Lewis, Lloyd C. Blankfein and James Dimon) who who are currently viewed as having done a good job over the last several years. You might think something along the lines of "these men should be rewarded, the ones who did a bad job punished" hence the sky's the limit for their compensation. But these men are the ones who will benefit from this massive bailout. These guys have already gotten paid for their prior performance, this bailout will give them even more.
They come now to the federal government and ask that the taxpayer pay about $3,000 apiece to them. To put it as succinctly as I can: the "bad" CEO's have already lost their jobs and are out, they will not benefit from this bailout. Lewis, Blankfein, Dimon and guys like that WILL benefit PERSONALLY from this (as it is now constructed) and in a very big way. And these guys engaged in the very same things that the others did! They just played the game better so others went down first.
Take a look at the compensation last year for these guys and grok on who and what your $3000 is going for:
Lloyd C. Blankfein $70,323,572
James Dimon: $27,766,073
Ken Lewis: $21,601,594
.
.
source: salary.com
Note: there are lots more wealthy bankers and brokers who will also be getting a piece of your $3000.
Saturday, September 20, 2008
A thousand points of light (control)
We do not have a free market in the United States and the structure and layout of our economy is not based on unfettered decisions.
Much of it is rigged. Our transportation system (biased in favor of private car ownership), finance where a cartel controls access to the IPO market, health care, high tech where one company (Microsoft) has had a near monopoly in a key place for 20 years. We don't live in a totalitarian society of course, it's far from that but our economy has become progressively more and more rigged as time has gone on. There are a thousand points of light (as opposed to heavy) control.
Take nursing homes:
---------------------------------------------------------------------------------
Fla. Medicaid recipients want out of nursing homes
By MATT SEDENSKY, Associated Press Writer
Sat Sep 20, 6:37 AM ET
Charles Todd Lee spent a lifetime going backstage at concerts, following politicians on the campaign trail and capturing iconic shots of everyone from Martin Luther King Jr. to Mick Jagger to Mickey Mantle. Today, he enjoys such freedom only in his dreams.
The 67-year-old photographer has been confined to a nursing home for five years, the victim of a stroke that paralyzed his left side. And he's angry.
"Most of the people come here to die, so you want to die," he said. "It is a prison. I can't escape it."
Lee is among the Medicaid recipients across Florida challenging the nightmare of the old and disabled: to be forced from comfort and familiarity into a nursing home.
They say the state is illegally forcing them to live in nursing homes when they should be able to live where they choose. Advocates charge that nursing homes, afraid of losing money, have successfully pressured politicians to make qualifying for community care more difficult. They have filed a federal lawsuit seeking class-action status on behalf of nearly 8,500 institutionalized Floridians.
Whether the litigation gets Lee and others moved out of nursing homes remains to be seen. But at the very least, it has illuminated the frustration experienced by older people or those with disabilities who say they're shuttled into nursing homes when they are healthy enough to live at home, with relatives, or in other less institutional settings.
"There are very, very, very few people who cannot be cared for outside in the community," said Stephen Gold, a Philadelphia disability lawyer who, along with AARP attorneys and others, is representing the group. "Why should the state give a damn whether you put the money in the left pocket of the nursing home or the right pocket of the community?"?
Americans who qualify for Medicaid and get sick or disabled enough to require substantial care typically have little problem gaining admission to a nursing home. But obtaining Medicaid-supported services at home, such as visits from an aide, is substantially harder and often involves a long waiting list, even though it may cost the government less.
Advocates for the elderly and disabled had hoped a 1999 Supreme Court case would change that. The Olmstead decision, as it is known, involved two Georgia women, both Medicaid beneficiaries with mental retardation who wanted community-based services, but were refused and were treated in institutions.
The high court ruled unjustified isolation of the disabled in institutions amounted to discrimination under the Americans with Disabilities Act. It said states must provide community services if patients want them, if they can be accommodated and if it's appropriate. Medicaid is the state-federal partnership that provides health coverage and nursing home care to the poor.
"There's a lot of concern that the nursing home industry is very powerful in many states and has made sure that a lot of Medicaid dollars go to institutional care as opposed to home and community-based care," said Toby Edelman, an attorney at the Center for Medicare Advocacy.
States have been putting more money into community services, but not nearly enough to meet the demand of people who would rather stay at home than go to a facility. Nationally, state Medicaid payments for long-term community care have skyrocketed since the Olmstead decision, from $17.4 billion in 1999 to $42.8 billion last year, though spending on nursing homes and other institutions is still substantially higher.
A total of $59.5 billion was spent last year on institutional care through Medicaid.
The Florida Agency for Health Care Administration, the Florida Department of Elder Affairs and Gov. Charlie Crist's office — the three defendants — all declined to comment on the litigation. So did the attorney general's office, which is representing the defendants.
In court filings, the defendants have claimed the plaintiffs lack standing because they haven't proven that treatment professionals deemed community-based care appropriate for each patient.
"Plaintiffs are not alleging that Florida's Medicaid program has failed to cover their medically necessary services," the defendants wrote. "Instead, plaintiffs want this court to second-guess the manner by which Florida's elected officials and policymakers have chosen to make those services available in light of the state's available resources."
The American Association of Homes and Services for the Aging represents about 5,700 not-for-profit organizations from nursing homes to adult day care to in-home aides. A spokeswoman, Lauren Shaham, said there is "an institutional bias" in the Medicaid program that limits home and community care, but also noted nursing homes are needed for some of society's frailest or most disabled.
The American Health Care Association, which represents about 11,000 nursing homes and long-term care facilities, a majority of them for-profit, also said such institutions were often most appropriate for round-the-clock care. Spokeswoman Susan Feeney noted, "You don't want to be there but sometimes for health reasons beyond your control, you have to be."
John Boyd, 50, has been in a nursing home for the last nine years. He hates them. He became a quadriplegic 36 years ago when he fell off a wall and broke his neck.
"I can't choose what meal I want, I can't have a visitor after 8 o'clock — it's just like a prison without bars," he said. "People are making decisions for and about me that don't even know me or even care about me. All they care about is the money they're getting for me."
---------------------------------------------------------------------------------
This is not an isolated case. It's a somewhat egregious one but other than that not remarkable. A determined and well funded minority (in this case the Nursing Home industry via it's lobby, the innocuous sounding "American Health Care Association") manages to rig the Medicare process in their favor and (in my opinion) clearly at the expense of the other 299.9 million of us). Again and again we see this in our "free" economy: a determined, well connected, well funded minority trumps the common interest.
In this case the resulting tragedy is almost Soviet: in failing health we can be forced out of our homes and into a nursing home even if there are other less expensive and more humane options. Much of the money going to nursing homes could instead go to care-giver(s) or other aids that could allow us to stay in our homes. It's of course likely that the nursing home option will be more expensive. Sometimes vastly more expensive. If Medicaid was working for the benefit of the people it serves and for the benefit of the taxpayer a nursing home would be a last resort. Instead it's pretty much where you go when you need care and are out of money. It's not a last resort, it's the default!
The Medicaid system in this space is working for the Nursing Home industry and at our expense. This is both a fiscal and human tragedy.
Much of it is rigged. Our transportation system (biased in favor of private car ownership), finance where a cartel controls access to the IPO market, health care, high tech where one company (Microsoft) has had a near monopoly in a key place for 20 years. We don't live in a totalitarian society of course, it's far from that but our economy has become progressively more and more rigged as time has gone on. There are a thousand points of light (as opposed to heavy) control.
Take nursing homes:
---------------------------------------------------------------------------------
Fla. Medicaid recipients want out of nursing homes
By MATT SEDENSKY, Associated Press Writer
Sat Sep 20, 6:37 AM ET
Charles Todd Lee spent a lifetime going backstage at concerts, following politicians on the campaign trail and capturing iconic shots of everyone from Martin Luther King Jr. to Mick Jagger to Mickey Mantle. Today, he enjoys such freedom only in his dreams.
The 67-year-old photographer has been confined to a nursing home for five years, the victim of a stroke that paralyzed his left side. And he's angry.
"Most of the people come here to die, so you want to die," he said. "It is a prison. I can't escape it."
Lee is among the Medicaid recipients across Florida challenging the nightmare of the old and disabled: to be forced from comfort and familiarity into a nursing home.
They say the state is illegally forcing them to live in nursing homes when they should be able to live where they choose. Advocates charge that nursing homes, afraid of losing money, have successfully pressured politicians to make qualifying for community care more difficult. They have filed a federal lawsuit seeking class-action status on behalf of nearly 8,500 institutionalized Floridians.
Whether the litigation gets Lee and others moved out of nursing homes remains to be seen. But at the very least, it has illuminated the frustration experienced by older people or those with disabilities who say they're shuttled into nursing homes when they are healthy enough to live at home, with relatives, or in other less institutional settings.
"There are very, very, very few people who cannot be cared for outside in the community," said Stephen Gold, a Philadelphia disability lawyer who, along with AARP attorneys and others, is representing the group. "Why should the state give a damn whether you put the money in the left pocket of the nursing home or the right pocket of the community?"?
Americans who qualify for Medicaid and get sick or disabled enough to require substantial care typically have little problem gaining admission to a nursing home. But obtaining Medicaid-supported services at home, such as visits from an aide, is substantially harder and often involves a long waiting list, even though it may cost the government less.
Advocates for the elderly and disabled had hoped a 1999 Supreme Court case would change that. The Olmstead decision, as it is known, involved two Georgia women, both Medicaid beneficiaries with mental retardation who wanted community-based services, but were refused and were treated in institutions.
The high court ruled unjustified isolation of the disabled in institutions amounted to discrimination under the Americans with Disabilities Act. It said states must provide community services if patients want them, if they can be accommodated and if it's appropriate. Medicaid is the state-federal partnership that provides health coverage and nursing home care to the poor.
"There's a lot of concern that the nursing home industry is very powerful in many states and has made sure that a lot of Medicaid dollars go to institutional care as opposed to home and community-based care," said Toby Edelman, an attorney at the Center for Medicare Advocacy.
States have been putting more money into community services, but not nearly enough to meet the demand of people who would rather stay at home than go to a facility. Nationally, state Medicaid payments for long-term community care have skyrocketed since the Olmstead decision, from $17.4 billion in 1999 to $42.8 billion last year, though spending on nursing homes and other institutions is still substantially higher.
A total of $59.5 billion was spent last year on institutional care through Medicaid.
The Florida Agency for Health Care Administration, the Florida Department of Elder Affairs and Gov. Charlie Crist's office — the three defendants — all declined to comment on the litigation. So did the attorney general's office, which is representing the defendants.
In court filings, the defendants have claimed the plaintiffs lack standing because they haven't proven that treatment professionals deemed community-based care appropriate for each patient.
"Plaintiffs are not alleging that Florida's Medicaid program has failed to cover their medically necessary services," the defendants wrote. "Instead, plaintiffs want this court to second-guess the manner by which Florida's elected officials and policymakers have chosen to make those services available in light of the state's available resources."
The American Association of Homes and Services for the Aging represents about 5,700 not-for-profit organizations from nursing homes to adult day care to in-home aides. A spokeswoman, Lauren Shaham, said there is "an institutional bias" in the Medicaid program that limits home and community care, but also noted nursing homes are needed for some of society's frailest or most disabled.
The American Health Care Association, which represents about 11,000 nursing homes and long-term care facilities, a majority of them for-profit, also said such institutions were often most appropriate for round-the-clock care. Spokeswoman Susan Feeney noted, "You don't want to be there but sometimes for health reasons beyond your control, you have to be."
John Boyd, 50, has been in a nursing home for the last nine years. He hates them. He became a quadriplegic 36 years ago when he fell off a wall and broke his neck.
"I can't choose what meal I want, I can't have a visitor after 8 o'clock — it's just like a prison without bars," he said. "People are making decisions for and about me that don't even know me or even care about me. All they care about is the money they're getting for me."
---------------------------------------------------------------------------------
This is not an isolated case. It's a somewhat egregious one but other than that not remarkable. A determined and well funded minority (in this case the Nursing Home industry via it's lobby, the innocuous sounding "American Health Care Association") manages to rig the Medicare process in their favor and (in my opinion) clearly at the expense of the other 299.9 million of us). Again and again we see this in our "free" economy: a determined, well connected, well funded minority trumps the common interest.
In this case the resulting tragedy is almost Soviet: in failing health we can be forced out of our homes and into a nursing home even if there are other less expensive and more humane options. Much of the money going to nursing homes could instead go to care-giver(s) or other aids that could allow us to stay in our homes. It's of course likely that the nursing home option will be more expensive. Sometimes vastly more expensive. If Medicaid was working for the benefit of the people it serves and for the benefit of the taxpayer a nursing home would be a last resort. Instead it's pretty much where you go when you need care and are out of money. It's not a last resort, it's the default!
The Medicaid system in this space is working for the Nursing Home industry and at our expense. This is both a fiscal and human tragedy.
They take the risk
For a long time now apologists for stratospheric executive compensation would say (regarding executives) that "they take the risk" and hence they deserve the rewards.
Did anyone ever really believe that? I think many thought this concept would never really be tested - but now it is, and it's clear that it's us (the taxpayers) who were always taking the risk.
Many of the complex structures born of "financial innovation" are now crumbling and it is the U.S. taxpayer -not the high paid executives- who it turns out is on the hook. We had over the last 30 years an extraordinary privatization of reward (while times were good) and now that times turn bad we get the socialization of risk.
In 2007, Lehman Brothers CEO Richard S. Fuld raked in $34,382,036 in total compensation according to the SEC. In 2008 - and for many years to come, some of the taxes paid by Janet Mckenzie (Brockton MA, salary $28,436, three kids) will go to fund the bailout of our financial system made necessary because of the irresponsibility and greed from likes of Mr. Fuld. In 2007, Daniel H. Mudd (CEO of Fannie Mae) raked in $11,648,409 in total compensation according to the SEC. Fannie Mae's bad assets will now be guaranteed by taxes paid by Roger Santeria (Bakersfield CA, salary $41,822, wife, 2 kids) and millions of others at his level. According to Forbes Magazine, AIG honcho Maurice Greenberg is the 98'th richest person in America (2.8 billion). The government bailout of AIG could be worth a billion to Greenberg personally. Taxes paid by John Barstow (Sanborn Minnesota, salary $39,832) will contribute to this billion for Greenberg.
If something good can come out of all this mess it might be the revamping of executive compensation in America. The idea that "they take the risk" has been exposed as fiction. WE take the risk. Not the CEO's but all of us. This is nothing new. Government action (and taxpayer money) was required as early as 1893 to stabilize markets. It happened again in 1907 and again in 1929 and again in 1991 and most recently in 1998 (Resolution Trust Company). The long time between 1929 and 1991 may be explained by that being a period of strong regulation and governmental involvement (until 1980 or so). Has it not been proven beyond a reasonable doubt that unfettered capitalism without some sort of collective safety net will collapse?
That being the case, who exactly is taking the risk.
Did anyone ever really believe that? I think many thought this concept would never really be tested - but now it is, and it's clear that it's us (the taxpayers) who were always taking the risk.
Many of the complex structures born of "financial innovation" are now crumbling and it is the U.S. taxpayer -not the high paid executives- who it turns out is on the hook. We had over the last 30 years an extraordinary privatization of reward (while times were good) and now that times turn bad we get the socialization of risk.
In 2007, Lehman Brothers CEO Richard S. Fuld raked in $34,382,036 in total compensation according to the SEC. In 2008 - and for many years to come, some of the taxes paid by Janet Mckenzie (Brockton MA, salary $28,436, three kids) will go to fund the bailout of our financial system made necessary because of the irresponsibility and greed from likes of Mr. Fuld. In 2007, Daniel H. Mudd (CEO of Fannie Mae) raked in $11,648,409 in total compensation according to the SEC. Fannie Mae's bad assets will now be guaranteed by taxes paid by Roger Santeria (Bakersfield CA, salary $41,822, wife, 2 kids) and millions of others at his level. According to Forbes Magazine, AIG honcho Maurice Greenberg is the 98'th richest person in America (2.8 billion). The government bailout of AIG could be worth a billion to Greenberg personally. Taxes paid by John Barstow (Sanborn Minnesota, salary $39,832) will contribute to this billion for Greenberg.
If something good can come out of all this mess it might be the revamping of executive compensation in America. The idea that "they take the risk" has been exposed as fiction. WE take the risk. Not the CEO's but all of us. This is nothing new. Government action (and taxpayer money) was required as early as 1893 to stabilize markets. It happened again in 1907 and again in 1929 and again in 1991 and most recently in 1998 (Resolution Trust Company). The long time between 1929 and 1991 may be explained by that being a period of strong regulation and governmental involvement (until 1980 or so). Has it not been proven beyond a reasonable doubt that unfettered capitalism without some sort of collective safety net will collapse?
That being the case, who exactly is taking the risk.
Wednesday, September 17, 2008
Finance Fatcats Live Large as Firms Crumble
Just finished reading:
http://abcnews.go.com/Business/story?id=5821887&page=1
and a number of comments that users posted.
Basic point of the article is the upper managements of many of the crumbling companies have been getting very rich (more rich then they already were actually) while their companies crumbled, and most are getting golden parachutes with bigger monetary values than the lifetime earnings of most of us.
In a nutshell: pretty close to zero accountability and pretty extreme economic injustice. The average employee in many of these companies is getting pretty hammered.
Many comments rant about seizing assets of these people and redistributing them to the poor or even "French revolution" type justice. Problem is these people have everything locked up legally so there is not much that can be done. The problems of "French Revolution" style justice I think pretty much speak for themselves. I suppose the government could go after them on some sort of fraud basis and try to take their assets that way but this to would open up a whole different can of worms. History shows vengeance to be counterproductive.
So what can be done. I thought about this today and I have an idea. The financial engineers who created this mess should be shunned. This has to be a grass roots thing of course to some extent and I'm talking about serious shunning. Guys like James Cayne (Bear Stearns) and Richard Fuld (Lehman Brothers) should never get positions of serious authority again. No CEO positions no Board of Director appointments, if possible they should even be thrown out of their country clubs. This can only be engineered via social pressure. Shun them and then ignore them. It might feel better to see their money taken away but where would their money go: chances are it would go to people just as undeserving (IE lawyers and the government) and the cycle of unjust predatory gains would just continue.
Instead, lets put those lawyers and our government to work in preventing this from happening again.
The system of executive compensation in America is badly broken and needs to be totally changed from the bottom up. Maybe now there will be an opportunity to really fix it.
At another time I will go into more detail but I'll give you the basics of what I think are wrong. The basic problem is that most compensation is "performance based." This is something that is designed to sound good but when you think it through you realize it's a huge mistake. It is (and was) really a scam - and always will be. How is performance for upper management measured? Stock price or profits of course. Both can be and have been manipulated. Both can be manipulated *legally* (to some extent). Plus there is a deeper issue: the stock price is influenced by all the employees of the company and is influenced by events outside of the control of *anyone* at the company. The fed can lower interest rates and that can result in an overall increase in stock prices. A scientist or engineer can come up with a great advance. A salesperson can make a big sale. Why should a tiny group of people (upper management) reap the windfall from everyone else. This is the inevitable result of paying people at this level for "performance." There is no way around this. Pay for "performance" for people at the top has not worked, is not working now and will *never* work.
It needs to be stopped and a different system put in place. This is not to say that upper management should not be highly compensated - they should be. But *how* highly compensated is a big issue and what compensation is based on is also a big deal.
I also think that if a company requires help from the Government that it's CEO and top management team should be required to have their compensation set to 1 dollar less than the President of the United States - or lower. These things need to be negotiated at the outset of course, you cannot force this on people after the fact.
It must really gall people that the likes of James Cayne and Richard Fuld are now the beneficiaries of government largess - and to a much bigger tune than anyone on so called "welfare".
For years apologists for high executive compensation maintained that CEO's "took the risk" and therefore deserved the money. Nope: we now know that we the people in the middle and bottom (the taxpayers) were the ones taking the risk (the government is bailing these entities out with our money) and the people at the top are walking away with huge additional paydays.
http://abcnews.go.com/Business/story?id=5821887&page=1
and a number of comments that users posted.
Basic point of the article is the upper managements of many of the crumbling companies have been getting very rich (more rich then they already were actually) while their companies crumbled, and most are getting golden parachutes with bigger monetary values than the lifetime earnings of most of us.
In a nutshell: pretty close to zero accountability and pretty extreme economic injustice. The average employee in many of these companies is getting pretty hammered.
Many comments rant about seizing assets of these people and redistributing them to the poor or even "French revolution" type justice. Problem is these people have everything locked up legally so there is not much that can be done. The problems of "French Revolution" style justice I think pretty much speak for themselves. I suppose the government could go after them on some sort of fraud basis and try to take their assets that way but this to would open up a whole different can of worms. History shows vengeance to be counterproductive.
So what can be done. I thought about this today and I have an idea. The financial engineers who created this mess should be shunned. This has to be a grass roots thing of course to some extent and I'm talking about serious shunning. Guys like James Cayne (Bear Stearns) and Richard Fuld (Lehman Brothers) should never get positions of serious authority again. No CEO positions no Board of Director appointments, if possible they should even be thrown out of their country clubs. This can only be engineered via social pressure. Shun them and then ignore them. It might feel better to see their money taken away but where would their money go: chances are it would go to people just as undeserving (IE lawyers and the government) and the cycle of unjust predatory gains would just continue.
Instead, lets put those lawyers and our government to work in preventing this from happening again.
The system of executive compensation in America is badly broken and needs to be totally changed from the bottom up. Maybe now there will be an opportunity to really fix it.
At another time I will go into more detail but I'll give you the basics of what I think are wrong. The basic problem is that most compensation is "performance based." This is something that is designed to sound good but when you think it through you realize it's a huge mistake. It is (and was) really a scam - and always will be. How is performance for upper management measured? Stock price or profits of course. Both can be and have been manipulated. Both can be manipulated *legally* (to some extent). Plus there is a deeper issue: the stock price is influenced by all the employees of the company and is influenced by events outside of the control of *anyone* at the company. The fed can lower interest rates and that can result in an overall increase in stock prices. A scientist or engineer can come up with a great advance. A salesperson can make a big sale. Why should a tiny group of people (upper management) reap the windfall from everyone else. This is the inevitable result of paying people at this level for "performance." There is no way around this. Pay for "performance" for people at the top has not worked, is not working now and will *never* work.
It needs to be stopped and a different system put in place. This is not to say that upper management should not be highly compensated - they should be. But *how* highly compensated is a big issue and what compensation is based on is also a big deal.
I also think that if a company requires help from the Government that it's CEO and top management team should be required to have their compensation set to 1 dollar less than the President of the United States - or lower. These things need to be negotiated at the outset of course, you cannot force this on people after the fact.
It must really gall people that the likes of James Cayne and Richard Fuld are now the beneficiaries of government largess - and to a much bigger tune than anyone on so called "welfare".
For years apologists for high executive compensation maintained that CEO's "took the risk" and therefore deserved the money. Nope: we now know that we the people in the middle and bottom (the taxpayers) were the ones taking the risk (the government is bailing these entities out with our money) and the people at the top are walking away with huge additional paydays.
Subscribe to:
Posts (Atom)