Unions

Now I came from a union family. My father and brother were in the electrical union, my uncle was a senior person in the firefighters union, all in New York. I saw many sides of unions. As The New Republic states:

No, the real underlying story is that unions are losing their institutional legitimacy in modern America. The problem isn’t that most people hate unions. The problem for unions is that most people don’t care about them, or think about them, at all.

 In reality, truth be told, many people really do hate unions. I have seen union workers see themselves as set apart, anointed, owed, an worse. They take, do not understand from whom the take, they are often brutes, and are focused on just getting the most from the job, independent of what they do.

There clearly was once a time when unions served a purpose. But today with laws controlling every aspect of employment the need of a union is not only questionable but it has become a veritable drag on our economies.

This is especially true with public unions. I can see this especially in New Jersey where the benefits are extraordinary and the work done is often third rate at best.

The TNR continues:

When union membership peaked in the mid 1950s at about 35 percent, it was disproportionately weighted to the Northeast, the Midwest, and California. But that meant that in those regions—the most populous in the country—either a worker was in a union his/herself, had a family member in a union, or, at least, had a friend or neighbor in a union. People, for better or worse, knew what unions did and understood them to be an almost ordinary part of the workings of democratic capitalism. 

Most important, they knew, for better or worse, that unions had power. Sixty years ago, the UAW or the Mineworkers or the Steelworkers, not only deeply affected crucial sectors of an industrial economy, they also demanded respect from broader society—demands made manifest in the “political strikes” they organized, whether legally or not, to protest the issues of the day. 

Yes we had family members, and if truth be told they did not benefit from the union, it was a closed shop world, it kept out competition, it drove shipping from New York, it drove the costs in Manhattan skyrocketing, it complicated everyone's life, and unions did have power. They were and are even more so today a collection of thugs.

The time of unions has come and gone. Yet they are a source of compelled funding of Democrats. Thus they like so many other remnants of the past will continue to be a drag on society.

Future of Health Care

The NY Times announced a mega merger of hospitals in New York. They state:

The proposed merger would bring together NYU Langone Medical Center, a highly specialized academic medical center, and Continuum Health Partners, a network of several community-oriented hospitals, including Beth Israel and the two St. Luke’s-Roosevelt campuses.

It would create one of the largest health care systems in New York City, one that would have immense market power under the new federal health care system, and put pressure on insurance companies, independent medical practices and even rival medical schools, which may have to scramble to find places to train their students. 

The true challenge is to insurance companies since these mega providers can become their own insurers. Theoretically the overhead gets absorbed into the institution and again putatively it should be more efficient. But we know what happens with oligopolies, less efficiencies and more mega mergers.

Facebook and Value

In an interesting piece by Steve Coll of New America states:

Facebook has made jarring mistakes as its leaders have learned what it means to run a profit-motivated political and public forum. In 2009, for example, the corporation exposed Iranian dissidents to danger by unilaterally changing privacy rules that allowed the Iranian authorities to see the identities of activists’ online friends. The error was corrected quickly, but in general, Facebook has encouraged its users to accept greater and greater losses of privacy. Zuckerberg believes the world will be better off if it adopts “radical transparency,” as the journalist David Kirkpatrick put it in his book, “The Facebook Effect.”

Zuckerberg’s business model requires the trust and loyalty of his users so that he can make money from their participation, yet he must simultaneously stretch that trust by driving the site to maximize profits, including by selling users’ personal information. The I.P.O. last week will exacerbate this tension: Facebook’s huge valuation now puts pressure on the company’s strategists to increase its revenue-per-user. That means more ads, more data mining, and more creative thinking about new ways to commercialize the personal, cultural, political, and even revolutionary activity of users.

There is something vaguely dystopian about oppressed peoples in Syria or Iran seeking dignity and liberation inside a corporate sovereign that is, for its part, creating great wealth for its founders and asserting control over its users.

 Coll has some interesting reasons for leaving Facebook. In my case I had been on Facebook quite early on, driven there by my MIT grad students. It was interesting. But about two years ago I saw a disturbing trend. Namely that many of my "friends" were acquaintances of my children and then grandchildren. They were making statements which perhaps humorous amongst their closed groups could negatively reflect upon me. I did not agree with their comments and in fact found them a bit sophomoric. I also found that I was getting to see parts of their lives which frankly I had no interest in. Thus, with discretion being the greater part of valor, to quote from Henry IV Part 1, I withdrew.

But more importantly I asked what value this had. Google has substantial value. I find things, I get information, I keep current, and frankly I am infinitely more productive because of it. It creates true value. I saw none of that in Facebook. In fact Facebook was making decisions about me which I felt not only wrong but potentially injurious. It was at first interesting to see the comments, at the beginning, but I was soon overwhelmed about details that frankly went well beyond sound judgement.

For a business to have viability one must seek the value proposition, what is it doing for me, and at what cost? Facebook was of no value, in fact it was potentially a cost. Linkedin has "value" by tracking professionals, albeit of limited value. My life would not change if it went away. But Facebook could in my opinion have potential harm, thus my leaving.

Coll's article is worth the read.He has great insight to this and it is worth the read. It does pose the same question albeit in different terms. Somehow this issue has never been raised in terms of Facebook's long term value. Time will tell.

CBO Testimony

The CBO Testimony before Congress today atsted:

First, it is not possible both to keep taxes at their historical average share of gross domestic product (GDP) and to keep the laws unchanged for Social Security, Medicare, and Medicaid.

Second, keeping federal deficits and debt no larger than what we project under current law would involve difficult policy trade-offs.

To be sure, the Congress might not enact those changes in law, or it might choose to allow more debt than would occur under current law or to reduce debt more quickly relative to GDP than would occur under current law. There are many possible combinations of policies that Congress might pursue depending on its policy goals, and CBO will make neither recommendations nor predictions about them. The point is simply that the path of debt under current law would still leave debt at a historically high level relative to GDP, and even achieving that path would require very large changes in current policies.

 Clearly the issue of Medicare costs must be addressed. 
 

CBO and The Debt, Stop It Now

 The CBO has just issued its report on the debt. It is chilling. They project a doubling of the debt, as a percent of GDP, exceeding 200%. Is anyone listening?

They state that the impact of this doubling of the debt will be:

Rising levels of debt would have other negative consequences beyond those estimated effects on output:

• Greater debt would result in higher interest payments on that debt, which would eventually require higher taxes, a reduction in government benefits and services, or some combination of the two.
• Rising debt would increasingly restrict policymakers’ ability to use tax and spending policies to respond to unexpected challenges, such as economic downturns or financial crises. As a result, the effects of such developments on the economy and people’s well-being could be worse.
• Growing debt also would increase the probability of a sudden fiscal crisis, during which  investors would lose confidence in the government’s ability to manage its budget and the government  would thereby lose its ability to borrow at affordable rates. Such a crisis would confront  policymakers with extremely difficult choices. To restore investors’ confidence, policymakers would probably need to enact spending cuts or tax increases more drastic and painful than those that  would have been necessary had the adjustments come sooner.

They argue that the guaranteed benefits such as health care will be a major driver. They state:

According to CBO’s projections, if current laws remained in place, spending on the major federal health care programs alone would grow from more than 5 percent of GDP today to almost 10 percent in 2037 and would continue to increase thereafter.

Spending on  Social Security is projected to rise much less sharply, from 5 percent of GDP today to more than 6 percent in 2030  and subsequent decades. Altogether, the aging of the population and the rising cost of health  care would cause  spending on the major health care programs and Social Security to grow from more  than 10 percent of GDP today to almost 16 percent of GDP 25 years from now. That combined increase of more than 5 percentage points for such spending as a share of the economy is  equivalent to about $850 billion today.

By comparison, spending on all of the federal government’s  programs and activities,  excluding net outlays for interest, has averaged about 18.5 percent of GDP over the past 40 years. 

If law-makers continued certain policies that have been in place for a number of years or modified  some provisions of current law that might be difficult to sustain for a long period, the increase in spending on health care programs and Social Security would be even larger. Absent substantial increases in federal revenues, such growth in outlays would result in greater debt burdens than the United States has ever experienced.

Clearly many things must be done. Healthcare is an over riding burden. Two things must be done promptly. First increase the Medicare fees, by at least a full percent per payer, and increase Medicare age from 65 to 70 over the next decade. Second, focus on preventable disease such as Type 2 Diabetes by making the fatty pay! Since obesity is the cause of over 95% of Type 2 Diabetes and its sequellae then we must charge for those costs up front.

Otherwise the "giving away" "free"health care will result in a total economic collapse.

The West and Civilization

I recently saw some of Niall Ferguson's television series on his book. Now think I can see what this somewhat self promotion was meant to do, not for the BBC but PBS audience, namely in my opinion  sell his book and make money, but frankly it was in my opinion filled with some many distortions in my opinion that one must wonder what the students walk away with.

Let me comment on but a few.

First the Protestant Work Ethic. Excuse me but did he ever hear of the Jews? What were they, chopped liver? They managed to add bundles to our civilization despite being whacked and hacked by everyone. Then the Catholics, that collection of loafers as far a Ferguson says. Dis he ever hear of the Penal Laws. The denied Catholics property, jobs, education, land, the right to vote or hold office, being in a profession, and work in any area competitive to a Protestant. One must likely be out of their "bloomin head" to ascribe anything but abject English Protestant hatred and inhuman cruelty to such actions.

Second, a forgotten or misplaced element of the West which was present from about 600 forward to today is the University. Yes, that very institution in which the good Professor seems to occupy space. The West had developed a center of learning open to anyone. It arguably can be dated back to about 600 with Columbanus, the Irish monk and his wandering scholars who established open institutes of education, for religions and lay folks, starting at Luxeuil and on to Bobbio. Here was taught languages, philosophy, and even crafts such as irrigation, water management, and agriculture. Then just after 1000 we have the formation of the great Universities at Paris, Oxford, Cambridge and the dozens of others, on grounds similar to Columbanus. Today we have in the West some of the best in the world and the envy of many outside the West. Somehow the good Professor seems to have missed this one.

I am always suspect of ad hoc propiter hoc arguments from television based preachers of the Academy. Perhaps we should all be.