Government

The WSJ has an interesting article on Safeway’s healthcare plan:

Safeway’s plan capitalizes on two key insights gained in 2005. The first is that 70% of all health-care costs are the direct result of behavior. The second insight, which is well understood by the providers of health care, is that 74% of all costs are confined to four chronic conditions (cardiovascular disease, cancer, diabetes and obesity). Furthermore, 80% of cardiovascular disease and diabetes is preventable, 60% of cancers are preventable, and more than 90% of obesity is preventable.

Jeff Rubin, chief economist at CIBC gave a great talk on what caused the recession, why the oil price is going up, and the future of globalization.

Here’s something to think about:

In 1917 the breakdown in consumption for a typical family ( 38 year old working father, non-employed mother, 13-yr old boy and 8 yr old daughter ) was:

Food – 41%
Housing – 27%
Clothing – 18%
Healthcare – 5%
Transportation – 3%
Other – 7%

By 1987 this had changed to

Housing – 33%
Transportation – 26%
Food – 19%
Clothing – 5%
Healthcare – 4%
Other – 12%

You might ask: how do we reconcile this with the 17-20% of GDP ( ~$8K per person ) that we are spending on healthcare today? First, it’s interesting to note that the average citizen took the money they saved on food and clothing (the basic necessities of life) and ploughed it straight into bigger houses, more expensive cars and (probably) an increased level of entertainment. Along the way, though, we gradually socialized the cost of healthcare so that despite saving 20% of our consumption on food (not to mention the saving on clothing), we are now unable to find that same 20% to pay for our healthcare.

However, I don’t think it is a problem, per se, that we are spending an increasing amount on healthcare. It seems as though it’s a trend that is irreversible and given the continuing decline and commoditization of the other line items in the typical family budget, it shouldn’t come as a surprise. Healthcare is one of the industries where we continue to spend R&D dollars for new products and an expanded menu of options is inevitable.

The real problem is that neither “the American people” nor their elected representatives and the Chairman, are willing to put aside the $8K per person per year that we’re currently inclined to spend. The future price of US 10 yr notes is left as an exercise for the reader.

Twubs is a great website for tracking a specific Twitter hashtag. For instance, you can follow the post-election chaos in Iran in real time. The window below shows the current activity surrounding the election in Iran. It was getting over 1000 messages per minute on June 16, 2009.

US consumers need to break their bondage to bling. On the other hand, there is talk of public debt in the US rising from 40% of GDP to 80% and even higher over the next ten years. For perspective on where this would fall on the spectrum of public debt, take a look at the CIA factbook figures on public indebtedness by country.

Bear in mind, that government spending as a percentage of GDP is about 25%.  That means that the public debt will be rising from 160% of public spending to 320% of public spending. That’s some pretty hefty leverage from a government in an age when most “American people” have concluded that leveraging oneself to the hilt is no longer a core component of the American dream.

Apparently “playing by the rules” , according to Obama, includes taking an adjustable mortgage that results in monthly payments equal to 43% (or more) of income. According to the Homeowner Affordability and Stability Plan

“For a sample household with payments adding up to 43 percent of his monthly income, the lender would first be responsible for bringing down interest rates so that the borrower’s monthly mortgage payment is no more than 38% of his or her income. Next the initiative would match further reductions in interest payments dollar-for-dollar with the lender to bring that ratio down to 31 percent…”

So in the case of two families with identical earnings and living in identical houses we take the tax money of the responsible family that saved for a downpayment and give it to the irresponsible family that didn’t. And if you were responsible enough to rent until prices came down then you’re just out of luck.

Redistributing wealth based on income is a crude, but necessary, manner of levelling an uneven playing field. Redistribution based on debt introduces considerably more unfairness.

Panel discussion at Edge between behavioral economist, Kahneman and author Taleb on the economic crisis.

Note: They might be at the edge of thought but they certainly aren’t at the edge of the network! Get yourselves a CDN people!

H1-B visa holders are the Palestinians of American politics (with apologies to the Palestians). Each side uses them for their own interests. One side wants to protect them from being exploited and the other side wants to prevent them from exploiting. Neither side has their best interests at heart.

U.S. Senator Charles Grassley, an Iowa Republican, sent this letter to Microsoft [emphasis mine].

January 22, 2009

 Mr. Steve Ballmer

Microsoft Corporation

One Microsoft Way

Redmond , WA   98052-6399

Dear Mr. Ballmer: 

I am writing to inquire about press reports that Microsoft will be cutting approximately 5,000 jobs over the next 18 months.  I understand that the layoffs will affect workers in research and development, marketing, sales, finance, legal and corporate affairs, human resources, and information technology. 

I am concerned that Microsoft will be retaining foreign guest workers rather than similarly qualified American employees when it implements its layoff plan.  As you know, I want to make sure employers recruit qualified American workers first before hiring foreign guest workers.  For example, I cosponsored legislation to overhaul the H-1B and L-1 visa programs to give priority to American workers and to crack down on unscrupulous employers who deprive qualified Americans of high-skilled jobs.  Fraud and abuse is rampant in these programs, and we need more transparency to protect the integrity of our immigration system.  I also support legislation that would strengthen educational opportunities for American students and workers so that Americans can compete successfully in this global economy.

Last year, Microsoft was here on Capitol Hill advocating for more H-1B visas.  The purpose of the H-1B visa program is to assist companies in their employment needs where there is not a sufficient American workforce to meet their technology expertise requirements.  However, H-1B and other work visa programs were never intended to replace qualified American workers.  Certainly, these work visa programs were never intended to allow a company to retain foreign guest workers rather than similarly qualified American workers, when that company cuts jobs during an economic downturn. 

It is imperative that in implementing its layoff plan, Microsoft ensures that American workers have priority in keeping their jobs over foreign workers on visa programs.  To that effect, I would like you to respond to the following questions:

*          What is the breakdown in the jobs that are being eliminated?  What kind of jobs are they?  How many employees in each area will be cut?

*          Are any of these jobs being cut held by H-1B or other work visa program employees?  If so, how many?

*          How many of the jobs being eliminated are filled by Americans?  Of those positions, is Microsoft retaining similar ones filled by foreign guest workers?  If so, how many?

*          How many H-1B or other work visa program workers will Microsoft be retaining when the planned layoff is completed?

My point is that during a layoff, companies should not be retaining H-1B or other work visa program employees over qualified American workers.  Our immigration policy is not intended to harm the American workforce.  I encourage Microsoft to ensure that Americans are given priority in job retention.  Microsoft has a moral obligation to protect these American workers by putting them first during these difficult economic times.

 Sincerely,

Charles E. Grassley

United States Senator

Of course, no mention of Microsoft’s moral obligation to its shareholders. And I don’t remember anyone caring about “the American workers” when we tied Microsoft up in court for years and drained their coffers. Maybe those laid off can dust themselves off and volunteer at Mozilla, the organization “dedicated not to making money”.

If US immigration policy is not intended to harm Americans then who is it intended to harm?