Author: Mark Tokarski

Just a man who likes to read, argue, and occasionally be surprised.

EconX01

A visual representation of market failure
I am regularly visited here by two ghosts – people unknown to me who present themselves as skillful and successful entrepreneurs. Each assumes suggestive names and persona that mask their real identities. (This leaves open room for speculation that such success would not require anonymous blog identities to advertise their success. But leave that aside – even if they are fictional characters, they present a great opportunity to throw ideas around, and are fun to boot.)

(One of the two is supposedly off in the Southwest now doing reach-arounds for millionaire investors, and so isn’t able to access the Internet, which is not available in that part of the country, and which millionaires know nothing about anyway. But I’ll leave this hanging for his return.)

Here’s what troubles me – each of these literary devices posing as humans preaches the infallibility of market mechanisms in guiding us towards proper outcomes in all areas of life. Government is a negative force, and where governments and markets operate together, the former always screws things up, while the latter picks up the pieces. Our long term survival depends on the elimination, or at least minimization, of government, so that markets can work their magic.

According to one of these Jungian dreamscapers, all of life is about economic transactions. Humans know of no other way of dealing with one another than to exchange value for value. Where we act without economic motivation, we inevitably end up in disastrous consequences. Further, any transaction that enriches one at the expense of another is theft. So the concepts of social insurance, or even private insurance, are forms of theft, as are, of course, taxes and transfer payments. Economic regulation is, even if seeming effective, redundant, as markets self-correct, so that even when regulation appears to have worked, it is just an illusion. Regulation, by definition, interferes with market efficiency.

Econ101 tells us that people acting for their own benefit inadvertently help all of us, so that selfishness is a virtue. We are free from any care or concern for our fellow humans, as by merely creating wealth, we are charitable. Government, which can only exist by expropriating wealth created by private individuals operating in markets, is by definition intrusive, overbearing, and even evil.

That’s my take on my two regular visitors. If I’ve put words in their mouths, I apologize.

I only have two questions:

1) When human transactions are reduced to an economic exchange, not everyone affected by that exchange has a say in the matter. As a thought experiment, place two people in a cold room with a wood-burning stove. One person has control of the wood supply, and so offers to sell the heat from burning the wood to the other. They agree, and one builds a fire, and both benefit from the heat and survive the winter. But the fire also produces smoke, which the owner of the wood conveniently vents into an adjoining room, where people choke and eventually die. They have no say in the exchange, as they are not part of the economic transaction. Is this not market failure?

2) We often don’t know the outcome of our economic transactions for years, sometimes decades. Yet we need to be paid in the present to survive. So, as another thought experiment, imagine bankers from a place called “Wall Street” create elaborate financial instruments, free of government oversight. Because these instruments appear to be immediately profitable, they pay themselves huge rewards for that profitability. Later, when the instruments prove defective (in fact, destructive and harmful), these same bankers refuse to repay their bonuses. Is that not market failure?

Just as a thought experiment, suppose that we changed the measuring period for profitability of economic transactions from one year to, say, twenty. Suppose that our retirements hinged on the long-term consequences of our current affairs. Add one more step – suppose that we measure profitability by including all outflows from transactions, whether the people affected are involved in the financial exchange or not.

Would the world be better, or worse off?

These two questions are fundamental. Obviously I have my opinions, and I’ll put them out there right now so there is no guessing. In my view, market economies and “free” markets are destructive of wealth, societies, positive human values, and in the end, the planet.

Mentch of the month (year?)

Mentch
Good news today from film maker Michael Moore. He has put up $20,000 to guarantee bail for Julian Assange, Wikileaks founder. He has also offered use of his servers for Wikileak traffic*. It’s a move that would be unquestioned anywhere in the world, but probably puts him at legal risk here in the U.S., and perhaps if it were done in China.

International criminal
In other news, Halliburton has reportedly agreed to pay $250 million to Nigeria to encourage that country to drop its bribery charges against Dick Cheney. (Sounds suspiciously like another bribe.) As with all well-connected criminals, Cheney walks free.

And isn’t it interesting that $20,000 is a blow for free speech, while $250 million allows a criminal to walk free. What’s wrong with this picture?
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*Moore’s web page

Perception adjustment time

U.S. District Judge Henry Hudson, a Bush appointee, strikes a blow for civil liberties
JC has a nice post about the recent federal court ruling throwing out the individual mandate from the Health Insurance Company Protection Act (HICPA) passed by Obama (usually referred to as “health care reform”). It’s one of those instances where the work of civil libertarians is being carried forward by principled conservatives while liberals sit on their hands. (The bill was pushed through congress by President Obama, a perceived liberal.)

Any fool can see that a mandate that we buy a product from a private company without a public option is immoral. Whether or not it is unconstitutional will end up in the hands of our right wing Supreme Court, and the odds are that this court will come down on Obama’s side, and against civil liberty.

Perceptions screwed up? Try adjusting them, and leaving reality as it is.

Obama contemplating power …


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“He’s a con man. I have no use for him.” Ralph Nader

The famous painting above is by Salvador Dali, Gala Contemplating the Mediterranean Sea. I saw the original at the Dali Museum in Figueres, Spain. It’s a beautiful image of a nude looking over the sea, but from twenty meters away you realize that it is actually a portrait of Abraham Lincoln. (I have to stand about twenty feet back from my computer screen for that effect to kick in.)

Clever, I suppose, like those Bev Doolitte paintings so popular in the west – eagles and bears concealed right out in the open among trees and snow banks.

Concealed in plain view … read here how the Obama Administration is now actually negotiating with his opponents, decorating a Christmas tree with goodies to sell tax cuts for the wealthy. They have a myriad of ways to make people vote their way. The open and obvious ones are the bribes – ethanol is the biggest scam going on right now. Underneath that and not discussed are threats – elected officials are told that their funding will dry up, that they will face a primary opponent or well-funded candidate from the other party. Committee positions are auctioned off and earmarks are used as carrots.

And then … one level below that … do you really think that wiretaps are benign, that call girls camped out on Capitol Hill are just for fun, that a little cash bribe here and there can’t be brought back to form a scandal? (When you see an abrupt resignation on Capitol Hill, it is a safe bet that someone has been cornered and threatened with exposure.)

Obama contemplates the nature of power
But the point is that Obama could use all of these tools to pass bills favorable to the left. He has them all at his disposal. But with the Public Option … not done. With EFCA, not even introduced. But when a bad health care bill was finally on the docket, and now with tax cuts, the power is there, and he is flexing his muscles.

He’s negotiating with his opposition. Who are his opposition? Democrats.

He’s a con man. I bristle when I hear Democrats and others say that Obama is actually a “centrist” or a “moderate.” He is nothing like that – he is a right wing Republican. And it is right there, out in the open. All you have to do is take a view from twenty meters back.

Obama goes off all sanctimonious on us

Sanctimonious bastard fist-bumps wife
One nice thing about being president is that you get to create your own reality. Ordinary meaningless words sound like thunder. Critics are a mere distant echo, as sycophants use up all the existing band width. Here’s Obama after his latest betrayal of his base:

“So I pass a signature piece of legislation where we finally get health-care for all Americans, something that Democrats had been fighting for a hundred years, but because there was a provision in there that they didn’t get that would have affected maybe a couple million people, even though we got health insurance for 30 million people and the potential for lower premiums for a hundred million people, that somehow that was a sign of weakness and compromise. …people will have the satisfaction of having a purist position and no victories for the American people.”

Gave up a lucrative career in health insurance for other pursuits
Reality: A health care bill written by the health insurance companies (AHIP) and pharmaceuticals (PhRMA), carefully constructed to preserve their business model, offering only a few tidbits of true reform, and those at taxpayer expense.

The reforms?

Expanded Medicaid, is a true reform, but one affecting AIHIP and PhRMA not in the least. There was no potential for the new Medicaid clients to be profitable to the health insurers, so they allowed them to be dumped on taxpayers.

People can no longer be denied coverage due to preexisting conditions, but it isn’t the health insurance companies that offer that coverage. People formerly turned down for coverage are still turned away, but sent to state exchanges. Those exchanges suffer from adverse selection, and so offer lousy coverage with high premiums. People are staying away in droves – when the premium subsidies finally come through, low-income people will be able to get this coverage, and the health insurance companies will be paid to manage the exchanges, but will not actually face risk exposure.

No soup for you!
Children with preexisting conditions can no longer be denied coverage. This was a purely American phenomenon – parents who could not afford or were denied coverage could still buy policies for their kids … if the kids were potentially profitable for the insurance companies. The new law said that insurers had to take all comers, no matter health their status. I don’t know about the rest of the country, but here in Colorado, the insurers simply stopped writing policies for kids.

Preventive care must be covered, indeed a real reform, good public policy. We who have insurance can now go to a doctor for a physical, or a man-ogram, and the insurance company has to pay for it. Here’s how my insurer, Anthem Blue Cross, handled this matter: They now cover preventive care, as required by law, but no longer cover any other office visits of any type.

Frankly, this is the worst possible outcome for our health coverage crisis – fake reform. Democrats told us that we should take what was offered because we could always come back and fix it later. Not on this planet – there will never again be an opportunity like that, and their squandering of that chance is an historic betrayal of their mission and constituency.

There are other parts of the bill that might benefit us, but it is all done under the hovering shadow of AHIP and PhRMA. Before passage of the bill, typical private insurer overhead was 20% – Wall Street watches this number very carefully – if “medical losses” exceed 80% of premiums, stock prices go down. (A Harvard study found that total medical overhead in this country is 31% – that other 11% is hospitals and doctors share of the burden). The Obama bill, in a striking reform, mandates that their overhead not exceed …. 20%. There was a push at one time to get that number down to 15% … it disappeared in the reconciliation process.

Yes, we will have health insurance. We’ll be required to buy it, and if we can’t afford it, the government will pay … the insurers. There’s very little in the bill regarding quality of coverage – deductibles and co-pays, policy premiums – all of that untouched. Lifetime coverage caps are gone now – perhaps that is the one thing that the insurers did not like, as it introduces a wild card feature into their rate structure – they cannot precisely define their risk. But it all gets built into the premium structure anyway, and so will not affect their bottom line, as they are free to charge whatever they feel they need as a buffer.

Screw you, Democrats, screw you, Obama. You are worthless. We cannot afford your good works, don’t need that kind of help anymore. The tragedy of business-run America is that as bad as the Democrats are, and they are truly bad, our only other choice is worse.

Whose telling the truth here?

I want to get this up for consideration, as it makes sense to me. Thom Hartmann, the liberal radio chatterbox, has speculated that the financial attacks on Wikileaks did not start until the group announced that they had collected a large cache of documents on a Wall Street bank, thought to be the Bank of America. The day after that announcement, in short order, Amazon, PayPal, VISA, Mastercard and others pulled the plug.

PayPal’s vice president, Osama Bedier, says that it pulled out on advice from the U.S. State Department. P.J. Crowley of the State Department denied that, saying they had no communication with PayPal.

Someone is obviously lying, and my initial gut reaction was that it must be the State Department. Everyone lies all the time about everything – that’s not my concern. But consider the possibilities:

PP telling truth, SD lying: This would mean that the U.S. government is orchestrating the attack on Wikileaks. Since Wikileaks has committed no crime, this is tyranny.

PP lying, SD telling truth: This would mean that the attack on Wikileaks is orchestrated from another source, possibly Wall Street, and Hartmann’s speculation factors in.

PP and SD both telling the truth: This would indicate a scam or covert operation against PayPal.

PP and SD both lying: This is unlikely but would indicate a covert operation with involvement by both PP and SD.

Wikileaks is doing important work, and I find it hard to imagine how they can be stopped short of executions and imprisonment. That would really expose our government’s true nature. As it stands, however, and totally out of the blue, a huge blow has been struck for freedom of speech. That the guy that did it is in jail? Read history. Rights are never given. They are taken, and it usually requires force. (The only exception I know of to this rule – a peaceful transition from tyranny to representative government, was the fall of the Soviet Union. Factor that into your thinking, report back.)

New York Times-style “journalism” is threatened by Wikileaks

News ordered to fit
Julian Asange, writing in the Australian shortly before his arrest:

WikiLeaks coined a new type of journalism: scientific journalism. We work with other media outlets to bring people the news, but also to prove it is true. Scientific journalism allows you to read a news story, then to click online to see the original document it is based on. That way you can judge for yourself: Is the story true? Did the journalist report it accurately?

From the New York Times, Around the World, Distress Over Iran, written by David E. Sanger, James Glanz and Jo Becker:

The cables also contain a fresh American intelligence assessment of Iran’s missile program. They reveal for the first time that the United States believes that Iran has obtained advanced missiles from North Korea that could let it strike at Western European capitals and Moscow and help it develop more formidable long-range ballistic missiles.

From Counterspin, December 3, 2010: (I’m summarizing, as it is an audio broadcast): The Times faithfully gave the U.S. side of Iran’s weapons program, as cited in the leaked memo, but failed to tell the whole story. In the memo, which the Times refused to publish, representatives of Russian intelligence doubt that Iran has such missile capability, and note the North Korea has never successfully tested such a missile. Other news outlets cite American sources that downplay any Iranian missile threat.

In other words, the New York Times, in giving only half the story, is again lying to us about the weapons capability of a country that, as it so happens, our government (and the military-industrial complex behind it) want to attack. Seems we’ve been through this before.

If, as the jailed Assange asserts, “scientific” journalism should now show us the source of stories being reported on, the Times story would have immediately been seen as a lie. Ergo, the Times refused to allow access to the memo, which Counterspin obtained at the Wikileaks site.

It reminds me of the report put out by the United States Senate Select Committee to Study Governmental Operations with Respect to Intelligence Activities, aka the “Church Committee,” back in 1975.

The committee noted that the CIA had moles in most of our large newspapers, and even then, pre-Bush, maintained surveillance of members of congress, the White House and cabinet departments. They plant stories in the media (a favorite technique is to plant a story in a foreign newspaper so that it can be “discovered” by an American news source).

The Times' Miller: She lied, she lied, she lied
They have “journalists” who work as operatives for them, and operatives that work as journalists. (No doubt the Times’ Judith Miller, who fed a pipeline of lies to us about Iraq before the invasion, is such an operative. The Times, which noisily beat its breast in public about its integrity in firing low-level journalist Jayson Blair for plagiarism, never repudiated Miller.)

The Church Committee found 500 editors, journalists and publishers to be supported by the CIA. The CIA had subsidized publication of hundreds of books, and even owned wire services, newspapers, magazines, a publishing complex. It had recruited 5,000 or more academics around the country as spies and researchers, secretly financing them as they present themselves as independent scholars to the media.

As the Church Committee fades into history, the New York Times carries on with its disinformation, and Julian Assange is in jail for a broken condom.

A Social Security primer, again …

Wall Street is yet to get past the bouncer, but he is wearing down
[Sigh] – this is tedious, but must be done. I have had yet another “debate” with a person regarding Social Security. The trouble with the “debate” concept is that the person in question, assured of the rightness of his convictions, hasn’t a clue about the nature of the system. I’ll describe the nature of the system here yet again.

Social Security is not “retirement.” The “I” in FICA stands for “insurance.” That’s an important distinction. If I were to buy a life insurance policy and then die the next day, the company would have to pay off in full. If insurance were like retirement, the company would refund my premium plus earnings minus expenses.

Social Security is a “defined benefit” system. The private sector hates defined benefits, and insists on “defined contributions” like IRA’s and 401K’s and the like. With the latter, retirees are always in fear that their funds will expire before they do. Social Security benefits are available for so long as people live. That’s why it’s called “Security.”

Social Security is also survivor and disability payments – as much as a third of the payments are for widows and orphans and disabled people. Private plans offering such payments are not affordable for ordinary people. And there is nothing in the private sector that offers defined benefit retirement, survivor and disability benefits. It’s not feasible.

The private sector cannot afford to fund a program like Social Security. That sector is laden with bureaucrats, administrative costs, and high-bonus executives along with the regular assortment of Wall Street criminals who recently brought down the banking system. The boom-bust cycle means that a large percentage of privatized retirees would be regularly wiped out.

Social Security, in its eighty years, has never had a scandal or failed to pay a benefit. People have ripped it off, but the people who run the program have been remarkably honest, and (!!!) have not gotten rich off the system.

Social Security is affordable. It has survived for eighty years without debt (it is illegal for it to go into debt.) It is not in debt now, nor will it be for decades.

Social Security is paid for by the people who benefit from it. The tax is applied only against wages and current recipients, and not against corporate profits, dividends, rents and royalty and interest. There is no transfer involved from the wealthy sector to workers. It is entirely self-funded.

Social Security does not add to the deficit. Over the past thirty years, due to accounting legerdemain, the program has been used to mask the true size of general fund deficits. The government spends all excess Social Security funds, but using an accounting trick called the “Unified Budget” (where Social Security surpluses are combined with general fund deficits), funds borrowed from Social Security are not reported as such. The true general fund deficit over the last 30 years is $3 trillion higher than reported.

That $3 trillion is called the “Trust Fund.” Unlike generations before us, we baby boomers were asked, by Ronald Reagan and the Democrats in the early 1980’s, to pre-fund our Social Security benefits. We have been paying in excess tax for thirty years now based on his promise that those excess taxes would fund our own benefits.

Repayment of the debt to the Trust Fund is not Peter paying Paul. We boomers are now in a position where we expect all taxpayers, including those who live off the dividends and corporate profits etc. that have not been taxed, to repay the money borrowed from us, most of which was used to finance their Pentagon and its many wars.

The $3 trillion will be repaid over the come 20-30 years. Our country can easily afford it. (If not, we’re all sunk anyway.)

After we boomers are gone, Social Security will again be on pay-as-you-go funding, with no need for a Trust Fund. (Think of the boomers as a snake swallowing a pig. We will pass.) It will, in theory, survive indefinitely. However, it is constant need of adjustment. That’s all it takes to maintain it.

The Trust Fund is a legal obligation. In order to walk away from that obligation, the government is going to have to legally renege on us. Even though the reneging will be “legal,” it will be highly immoral and disreputable. The people who know how the systems works and still want to renege on us are the Wall Street bankers and their allies in both parties. They are criminals who never have to pay for their crimes.

Ronald Reagan was the first president to openly challenge Social Security. He fell on his face – the program is wildly popular. On failing to undo it, “he” (“he” being his people, as he was clueless) jacked up the FICA tax to recoup some of the massive revenues lost with his tax cuts for the wealthy. That was the “Trust Fund” promise. Many of us felt that he was lying at the time, and that there was never any intention of honoring the bargain.

The only way the bargain will be honored is if we, the people who fund the system, hold them, the people who want to plunder and loot the system, to our bargain. That takes organization and effort. A contract means nothing if there is no will to enforce it.

I expect to see no comments beneath this post for the following reason: I will insist on integrity. I will not suffer ignorance or empty arguments based on the false “facts” that are regularly spread about how the system is going to fail, how it “won’t be there for me when I need it” as young people have been taught to believe. If such comments are put up, I will not take them down, as I don’t do that. But I will edit the comment, not to change content, but only to embolden the part that has no substance. If you see a comment below and part or all of it is in bold, that is the part that has no substance.

Too stupid to live

Well, Obama has abused his base yet again, this time an open-handed bitch slap. Anyone with half a brain could see that the tax cuts were going to be extended, and the only question was how the Democrats would be made to fold their tent. Now we are going to see something that ought to bring to mind the word “contradiction” – Obama, the man who doesn’t know how to negotiate, who punts on third down, who expects the Republicans to repay his gestures of conciliation, will become a new man. He did this after the bad health care bill was a done deal. He becomes a street fighter. He’s tough, fights dirty, and is clever, kind of like a guy we would want fighting for us, instead of against us.

If they cannot see, as with Clinton, that he is a faux bonhomme, there is no hope for them. They are too stupid to live.

Give while you can …

Until the Obama people shut it down, it is still possible to make contributions to Wikileaks via Xipwire.

Said co-founder Sibyl Lindsay today,

“We do think people should be able to make their own decisions as to who they donate to. The fact that people can’t donate to where they’d like to and make that decision for themselves does bother us.

The company has offered to process all contributions to Wikileaks free of fees. I just made a donation, and (hee-hee), charged it to my MasterCard.

Taking his cue from Chinese dictators, Senator Joe Lieberman is said to have immediately called for Lindsay’s arrest. There is also talk that she might be hauled up on a jaywalking charge in Milwaukee from 2003 – city authorities there, who say it is entirely coincidental that the matter is coming up now, have issued arrest warrants for her in Federal District Court. Attorney General Holder is said to have taken an interest in the case, saying “far too often scofflaws are allowed to walk free. I only want to see our sacred laws upheld.” Conviction could involve time at Guantanamo, and torture.