Airline Security--Here We Go Again!

It's possible that I will never travel by air again. Only the direst of emergencies would cause me to endure the mess that has been created by our government and our air lines.

Every time a radical pulls a terrorist ploy on an airplane, all the idiots jerk their knees and impose inane restrictions on thousands of innocent travellers. Granny can't take her knitting needles on the plane, and that 3-year old toddler must undergo a random search because his number is up. The latest one seems to be that for the last hour of a flight a person may only sit still and pick his nose.

Mind you, I am willing to submit to reasonable measures to ensure that the passenger compartment is safe. That is, I am willing to show proper identification when I travel. I and my carry-on bag can and should be scanned. My laptop can go through the scanner separately. I will even take my shoes off. If something rings the bell, I will submit to a pat-down search. But if I do not want to check my bag, I should be able to take as much shampoo and shaving cream as I need in my carry-on bag, and maybe even a bottle of wine.

But the way it is done now, passengers for some flights spend more time in the airport than they do on the plane. For some of the shorter trips it is actually faster to travel by automobile. It's because too many people are subjected to too many security precautions.

The more absurd measures are either knee-jerk reactions or fill in work for people who are not competent enough to define the most effective measures or to implement them correctly.

For example there is a "no fly" list (good idea) and 3 other lists. Apparently only two of the 3 are actually used, since Abdulmutallab is on the third. Logic says that only two lists beyond the "no fly" list are needed:

• the first is a "suspect list" of all the 1/2 to 1 million people whose life choices are such that we worry about them. Subject those on the "suspect list" to any and all restrictions and inconveniences you want to. They have chosen to behave suspiciously. If they don't want to be inconvenienced, they can choose to behave and associate with appropriate respect for humankind.
• the second is an "express list" for frequent business travellers and others who demonstrate a long-standing reputation for trustworthiness.

I understand that the criterion for the "no fly" list is that of prior actions. The other two lists rely to a significant degree on (nasty word) profiling. I understand profiling as well or better than any of the nuts who are so vehemently opposed to it. A profile is not about a person's race or religion or the way he dresses, but rather about who he associates with, where he has been working or studying, and other actions he has chosen to perform. The simple fact is that every person that has committed a terrorist act fits a terrorist profile.

I'm also aware that a small number of people who fit the terrorist profile never have and never will do something bad. But they will be on the "suspect list." They and only they will be subject to the numerous and onerous restrictions. That is the result not of our meanness, but of their personal choices.

The rest of us can and should proceed with little or no inconvenience.

Global Warming--Caught Red-handed

I hate to say it, but I told you so.

The "consensus of global warming experts" is now exposed for the sham that it is. Internal documents from the Climate Research Unit at the University of East Anglia expose the falsification of data and the 'cherry picking' of data that the Unit used to 'cook the books' on global warming.

They claim that we don't understand the subtle interplay among experts during the study process. That's simple hogwash.

The scientific method involves obtaining and organizing data to support a hypothesis, but it does not condone selecting only the data that supports the hypothesis. Nor does it allow adjusting or adding data to support the hypothesis. Nor does is involve hiding data or preventing the publication of data that does not support the process. But the members of the "global warming consensus" have apparently committed all of these sins.

When we look at all of the data, we will see that climate change is occurring. There is no conclusive proof however, that mankind is causing it, or can alter it.

But that reality does not keep us from doing the right things: conserving water, using less energy, reducing our use of fossil fuels, preserving and restoring the rain forests, and on and on. We should do all of these things for our own good, and for the good of the planet, not because the 'global warming' crew is trying to scare us into doing them.

Water and Health Care

I was happy to see the Yorba Linda Water District embrace conservation in order to minimize the impact of the recent draught. Back in July, I reset the timers on my irrigation system to operate on the schedule provided by the District. Conservation is good, I think. We should all do our part to conserve the precious resources that Providence has provided.

This month I decided to see exactly what is the impact on my water bill. My November bill was 15% lower than the bill for November last year. My effort to conserve was rewarded!

...or so it seems at first glance.

But, wait a minute--the bill also states that my water usage was over 40% lower than last November. Why isn't my bill 40% lower?

The reason is obvious: the price per unit of the water increased by 42%.

Oh yes, the rate increase was announced in advance. A public hearing was conducted. Of course, most of us sheep were to busy, or too lazy, to attend. And, after all, The water district obviously needs to compensate for the reduced consumption by raising the rates. After all, they have to keep paying those high salaries and exhorbitant pension benefits. And they need to pay the "water cop" who comes around to make sure I am not watering my lawn on the wrong days.

We can see a similar situation coming with the federal government's so-called health care reform. Instead of passing laws to reduce and control the costs of health care, Congress wants to establish commissions and committees to "oversee" health care and to provide subsidies to people who cannot afford it. Taxpayers will see the system "reformed," but the prices will go up, not down.

So this is the insanity of our times. Our government agencies ask us to pitch in and help. For our efforts they reward us by taking more of our money. Voters need to think deeply about this before we go to the polls again. We need to find and elect representatives who will cure the madness, not prolong it.

Public Option Revived?

I see in today's paper that the Senate is considering ways to include some form of public option in the health care legislation. The stated reasons are fears of high costs for the plan and mistrust of insurers.

It sure has taken them long enough to figure that out. Both reasons are valid. The proposed plans cost too much because our legislators refuse to identify the root causes of the high costs and to write specific laws to reduce them. The continued pressures of insurance company lobbyists and campaign contributions have blinded our lawmakers to the greed of the insurers. These issues are not new--I have mentioned them from the start in my posts on health care costs. Maybe the reality is beginning to set in for our lawmakers.

It is obvious that we are not going to keep the federal government out of the health care situation. I suspect most people want the government to find a way to make health care more affordable, and therefore more available.

The initial solution seems almost silly: force everyone to buy health insurance. There is no better way to drive the cost of health insurance costs even higher. If we want the government to take action, and if we want everyone to have health insurance, then a public option is mandatory. If the public option is not part of the deal, the insurers will raise prices to their hearts' content, and government (taxpayers') money will be paying that price via subsidies for individuals who cannot afford the increased premiums. Has it taken the Senate so many years to understand that simple fact?

What other obvious flaws are in the health care bills proposed in the House and the Senate? We don't know. We haven't read the thousands of pages of the bills. Nor have most of our legislators.

Wouldn't it be nice if we had access to a simple 'dot list' of the elements of each proposed bill so we could see exactly which cost drivers are being addressed, and how they are brought under control? That will never happen because the lawmakers fear that such a list would generate more opposition than support. Each item on the list would offend a major lobby or source of contributions. Insurers would oppose the public option; pharmaceutical companies would oppose any action to reduce the prices of prescription drugs, and so on.

Congress should expect that kind of opposition to any legislation that is designed to bring the price of health care down because that legislation reduces the (excess) profits of the providers of health care goods and services. But that opposition comes from a small minority of our population who make large campaign contributions and who hire persistent lobbyists. The voting majority of the population are the consumers who purchase health care; they will support reasonable measures to reduce the price of good health.

The public option is one of those reasonable measures.

Greedy Executives

I just have to hammer this nail one more time to drive it home.

I recently heard on the radio that financial organizations have given $11 billion of the taxpayers' bailout funds to their own executives in the form of bonuses.

These companies are not lending the money to stimulate the economy; instead they are paying it to their own greedy executives. In other words, they are rewarding themselves for not using the bailout funds as we intended.

Most of us are unaware that this is happening. The rest of us just yawn and do nothing about it.

The Week magazine spotlighted Lloyd Blankfein, CEO of Goldman Sachs, last week. They quoted him as saying that much financial activity "lacks social or economic value." That is essentially what I said in my earlier postings on the subject.

So we continue to pay these executives huge salaries and bonuses for activity that lacks social or economic value. This needs to stop. Let's restructure so that the money goes to people who make things and who provide needed services.

Health Reform Plan--More Nonsense

Amid anguished cries of 'fascism' and 'socialism,' critics of the Government's health care reform bills proclaim that THEY DO NOT WANT THE GOVERNMENT RUNNING HEALTH CARE.

At the same time, people say, 'Health care costs too much,' 'Millions cannot afford health care,' 'Millions cannot afford health insurance,' 'THE GOVERNMENT SHOULD DO SOMETHING ABOUT IT.'

Come on, guys, you can't have it both ways. We all can see that health care costs too much, and the costs continue to increase. The players in our health care system can not, will not take actions to cut the costs. If we want the government to fix the problem, the government will either have to regulate the system, or take it over.

But is the government capable of doing either of those things? As I mentioned in my last post, I doubt it. Congress is refusing to identify 'cost drivers' in the system and eliminate or regulate them. Instead of trying to simplify the process and regulate the specific activities that are out of control, Congress is proposing to add complexity to the system, get more people involved, and introduce more reporting and paperwork. It's another example of their "comprehensive" plans.

The Commentary section of Sunday's Orange County Register contained two diagrams of the proposed reform plan. One drawn by Republicans on the front page, large and in color, was on the front page. The second, drawn by Democrats, nearly microscopic and monochrome, was on page 5. For me the issue is not the relative emphasis of one over the other because both are ridiculoulsy complex. One had over 50 'bubbles' on it; the other had over 60 blocks. Commisions, boards, reports, hundreds of people doing everything except curing illnesses. The costs will show up on our health care bills and our tax bills as increases, not reductions.

A direct, top down analysis would start with a simple diagram that has only a few boxes:

1. consumers
2. health care providers (doctors, laboratories, hospitals)
3. pharmaceutical manufacturers
4. health insurance companies and management organizations
5. Law firms (handling the suits pressed by consumers against providers)
6. federal government (assuming we want them involved)

Then you draw some lines between them that represent the flow of money, products, and services. To do it right, the preparer has to virtually 'sit' in each block and determine where revenue comes from, where the income is spent, and what the net gain is. The resulting diagram will generate a lot of questions to be answered, and identify real problems to be resolved in order to make sure that the largest portion of the dollar spent by the consumer is used directly to cure his health problem.

I read an article the other day claiming that a congressman stated he does not want to look at ways to cut costs. If that is so, I know why I cannot support the administration's health care reform plan

Health Care Reform Is a Farce

Unfortunately, the health care reform issue is a total shambles. Only politicians could muck things up so totally. I posted some suggestions months ago, but I'm sure very few read them and nobody acted on them.

Political payoffs prevent the President and Congress from doing the obvious and logical thing, that is: Determine what portion of each health care dollar goes to each element of the process: patient insurance, hospital liability insurance, doctors malpractice insurance, insurance billing and administrative costs, hospital buildings and maintenance, cost of medication, doctors office rent, and (I almost forgot) doctors pay, and nurses pay.

Such a study would reveal the obvious -- that insurance companies and pharmaceutical companies take the lion’s share of the dollar in exhorbitant premiums and obscene profits. To change that, government must enact controls to minimize those cost drivers. Elected officials will never do this, because their elections were bought and paid for by those very companies. Democrats won't give up the financial support and Republicans will scream that the changes stifle free enterprise…

Professor Gates and Officer Crowley

I read that they had a "beer summit" with President Obama, and that they agreed to disagree.

Now that I have read both versions of the story, I have formed my own opinion.

I worked in Cambridge, MA, for two years. The Cambridge police department has a specific procedure that an officer must follow when he investigates a report of attempted break in. I believe that the procedure is exactly the same, no matter what the race is of the person who answers the door. And I believe that an officer who is given authority to investigate must maintain control of the situation to the extent needed to complete the investigation. I was taught always to comply courteously with requests from a policeman. The time to challenge his authority, if necessary, is after the fact, in a court of law. That's the way it works in our country.

By his own account, Professor Gates operated on the assumption that a white police officer who comes to his door is there to hurt him, not to help him. Professor Gates, operating on that prejudice, is the racist. Instead of being civil to an officer of the law, the professor chose to be belligerent. But the good professor is blind to his own racism, and he belligerently accused an officer who was following protocol of being a racist, without any specific facts to support that accusation.

There is is no way for me to know how intense things got at that moment, and whether or not the professor's actions justified an arrest for "disorderly conduct." For me, that issue is secondary; it would not have come into play if Professor Gates had not acted on his own prejudice in the first place.

A double standard applies to the concept of racism--perpetuated by radicals like Professor Gates, Rev. Wright, and Al Sharpton.

Economic Food for Thought

I recently read an article proposing a “progressive consumption tax.” It made me look at economics and taxation from a totally different viewpoint. On the surface the ideas have merit, but I am a little concerned about the possible unforeseen consequences.

The author, Professor Frank, suggests that the Feds tax consumption rather than the income. You report your total income, the amount you saved, and the amount you spent. Both the amount saved and a pre-determined portion of the amount you spent are not taxed. The “excess” spending is taxed at a progressive rate. To me, it seems a lot more fair than the "fair tax."

The populist side of me has always sought a way to tax the super-wealthy. The article reminded me of Thorstein Veblen’s writings about “conspicuous consumption.” And it occurred to me that if we really want to “soak the rich,” we should find a way that does not penalize earning, but instead punishes wasteful consumption and enables and encourages spending of money on things for the common good. Theoretically, government revenue increases. With this approach, the economy is not driven by an "invisible hand," but by a very visible government.

The article does bother me a little because I believe that the purpose of taxation is to fund government operations, not to control human behavior.

I am including a link to the article. It is fun to see the (almost fanatic) comments it drew from the (somewhat conservative) Cornell alumni.

http://cornellalumnimagazine.com/index.php?option=com_content&task=view&id=483

If you are too dogmatic a conservative to read this with an open mind, please don't append knee-jerk tyrades in your comment. I am looking for calm analytic discussion of the merits and potential dangers of the concept.

Executive Compensation Caps

While announcing his policy to cap the salaries of executives in the companies that receive federal bailout funds, President Obama declared the same disgust that I have for the activities of the "bad guys" that I mentioned in my Tuesday posting. Thank you, President Obama, for acknowledging the need to prevent the misdeeds of the "bad guys."

The ultra-right-wing critics are screaming, "socialism," of course. But they need to understand that if you live in your parents house, and accept an allowance from them, you must obey their rules. People involved in education and health care have known this for years. When schools accept money from the Government, they can expect that the Government will place constraints on the content of their courses and on school activities. If you don't want Government control, don't accept Government money.

Rightfully, the cap policy extends only to a few very high-paid executives of some large corporations, the greediest offenders. CEO's of many small banks and companies will not be impacted, nor should they be. As much as I would like to "nail" the specific "bad guys" I mentioned in Tuesday's post, I understand that legal complications make a retroactive order impractical.

But I am not sure the order reaches far enough. Many brokers and salesmen who get absurdly high salaries and bonuses are not included in the order. Bonuses and golden parachutes are not just received by executives; they are also distributed by executives, often to people who are equally incompetent or equally guilty of shoddy practices. And nothing is done to prohibit luxurious office remodeling and other gifts such as "retreats" at luxurious resorts.

It appears that President Obama has a reasonably good understanding of the current financial problems and their solutions. He has established a policy to curb executive greed. Unfortunately the policy seems more symbolic than effective.

The president also needs to be more active in steering Congress toward a truly effective stimulus bill, as opposed to the current collage of government spending on programs and activities that do little to create jobs for people.

Merely pumping money into our economy will not resolve our financial problems. We must implement projects that create many jobs for workers in many disciplines. We must aggressively act to eliminate the greedy, selfish, and foolish practices that created the problems in the first place.

The sources of the financial mess are bi-partisan. One party encouraged the use of unsound credit practices in order to allow people who could not afford homes to purchase them. The other party insisted on less and less regulation and oversight of financial activity. One party insisted on spending more and more money of federal give-away programs and pork-barrel projects. The other implemented tax cuts, loopholes, and tax-dodges for the greedy billionaires.

So the solutions to the problem must also be bi-partisan. The time has come for members of Congress to stop blaming each other and to accept ownership of both the problems and the solutions. The current Democratic Party leadership in Congress appears both unable and unwilling to do that.

Who Are the Bad Guys?

Like just about everyone, I have been watching the value of my house and my IRA decline over the last year.

Someone once told me we should try to fix the problem, not the blame. But to fix the financial mess we are in, fixing the blame is essential. That's because problem was caused by people acting irresponsibly, and we must identify the people and stop their greedy and irresponsible actions.

So who are the bad guys? They are in two groups of people that I have criticized before:

The first are corporate executives who not only take obscenely large salary and benefit packages, but also accept gigantic bonuses and/or separation packages even after their poor decisions have driven their company into the ground. In addition, they pay out large bonuses to second- and third-tier executives even when their actions fail to improve the company's financial position. They attempt to justify these bonuses by saying they need to pay them in order to keep good employees from leaving the company. If these employees are so great and so worth keeping, why have they driven the company down the drain? Some companies even used Federal bailout funds to pay the bonuses. The Orange County Register of Sunday, Feb. 1, names some of the specific bad guys:

• Ameriquest--Roland Arnall and Dawn Arnall, whose net worth was estimated at $1.5 billion in the year their company closed. Lee was paid $34 million as a consultant. A federal lawsuit brought by a group of borrowers argues the Arnalls paid Lee "hush money" to keep their predatory lending secret.
• Countrywide Financial--Angelo Mozilo, who sold off $478 million in shares while his company fell into the position where it had to be sold, then walked away with a gigantic separation package.
• Lehman Brothers--Richard Fuld acceped $40 million in compensation in 2007. He recently transferred his $13.3 million Florida home to his wife for $100.00.
• Washington Mutual--Kerry Killinger accepted $46 million in compensation from 2005 to 2007 while he lowered WaMu's underwriting standards.
• Merrill Lynch--John Thain spent $1.2 million to redecorate his office last year, and doled out $4 billion in 2008 bonuses after the investment house lost $15.3 billion.
• New Century Financial--Robert Cole, Ed Gotschall, Brad Morrice took $58 million in stock profits, dividends and bonuses in 2005 and 2006 as the company headed for collapse in 2007.

A second category, related in some ways to the first, is people who identify their profession as "investor." An investor buys shares in an enterprise in hopes of sharing the the profits from its success. There is nothing wrong with investing--it's the core of the capitalist system. In fact, if we are all smart, we make investments in addition to doing our "real job." But some investors have no "real job." They buy one stock and sell another, based on projections from analyists, newspaper articles, and plain old rumors. Their entire "work day" is spent pushing paper, gambling on the success of one business or the failure of another. That's what they really are: professional gamblers. They do not make a product or provide an essential service. They invest their money in a company, but not their time, work, or wisdom. They do not contribute to a company's success. If a company they have invested in runs into hard times, they do not try to help it succeed, they just sell their stock and buy a more promising one. Even today while the rest of us work, these professional "investors" are responding to rumors and driving the stock market further down with their continuing gambles.

The goal of the bad guys is not to help companies be successful, but rather to get as rich as they can.

Some people have already identified a few of the bad guys. Federal and state attorneys have begun investigations. Shareholders and borrowers have initiated lawsuits. But the bad guys are devious, and not dumb. They will rationalize, duck, and weave. The process of nailing them will be long, costly and inefficient.

We need to identify the bad guys and pursue them zealously. We need to punish the greedy, the incompetent, the gamblers, and the thieves. We need to regulate their successors so that the errors and the crimes will not be repeated. And we need to stop rewarding people who do poor work, or no work at all.