Tag Archives: deregulation

53. Global Dysfunction

3 Apr

To understand the major world problems, we must first separate two important levels of analysis:
Level-1: Morality and ethics (in a practical sense, MOST important).
Level-2: Understanding the way things work, apart from value judgments (also necessary).

In our everyday world and when we vote, we must observe Level-1, Morality. When we try to understand “basic causes”, we need to use bodies of objective knowledge like history, anthropology, and science. And the method must be unbiased reasoning.

The major “basic cause” for global dysfunction (wars, corruption, poverty, etc.) is a natural process of evolution. There are other causes, but I consider the following to be most important. Evolution is a Level-2 consideration and is independent of values and morals. It would be nice if nature included morality in evolution, but it does not. Governments, political parties, corporations and various social groups have a tendency to become more powerful and rich, as a natural process — OR — they simply fade away (like unsuccessful extinct species). Success often involves subtle or hidden corruption, because evolution is morally neutral.

Let’s start with an important example. I believe that the wars in the Middle East are a result of corrupt government evolution. Government leaders, if left alone, will tend to become more powerful and rich. As governments become richer, obviously, the people will lose out and poverty will grow. Any country with a large population of poor people is unstable and is subject to violent correction: revolution. Why is this happening now? Because technology has promoted communication and people are better able to see the corruption and unfairness of their governments. They also see other countries where the people are living better than they are. Rising corruption and improved communication reach a bursting point and violence ensues.

UNREGULATED INSTITUTIONS TEND TOWARDS CORRUPTION

Here are some other examples of natural, but corrupt evolution, more close to home. Banks tend to become larger and richer through mergers and questionable competition. As they develop greater size, they can better influence government bank-regulations to promote their profits.

Insurance companies evolve so that if unregulated, premiums rise and benefits diminish. Some politicians assert that we should not let government come between our doctors and us — but are perfectly happy to let profit-hungry insurance companies do just that. The assertion that competition among insurance companies will correct their corruption is not supported by history.

Educational institutions like universities, also evolve to create impossible high costs for education. The solution for this problem is complex and perhaps we need a total revision of the system. One of my thoughts on this matter is have three or four year public (tuition free) colleges where the learning functions are the total focus, and research, sport, and social functions are mostly eliminated. This will be detailed in my next blog.

Manufacturing corporations become gigantic and control Congress through campaign contributions. Enron Corp. a great example of the corruption of corporations that are not properly regulated. Many people in corporations are good and responsible, but it’s often the case that the most clever and greedy people rise to the top and cause horrible problems.

WHAT IS THE SOLUTION ?
Generally, more education is helpful. More people speaking out about injustice, lies, and corruption is helpful. Changes to campaign financing are essential because political contributions have a choke hold on our officials. But this is difficult because our current congressmen are a product of this system. It will take a major (non-violent) revolution to break this harmful cycle so that the greatness of America can be restored (yes, a poke at a common political sound-bite). The press could play a bigger role in identifying lies and corruption, but reporters and publishers seem somewhat controlled by fear.

The founding fathers, President Dwight Eisenhower and other great leaders have recognized these problems, but the leaders that profit from corruption are already so rich and influential that change is difficult. Some presidential candidates are obsessed with following the original constitution but disregard the fact that checks-and-balances were included to fight this very evolutionary pitfall, which is a problem as old as the rise of civilization. Final thought: It’s really more complicated than I have presented above, but I think these ideas emphasize an analysis commonly overlooked, and contribute to the ultimate solutions.

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Post 13. Health and Education: Rising Costs

2 Jun

There must be a lot written on this subject, but I have decided not to research it because I am hoping to come up with fresh ideas. It seems that no one disputes the fact that costs in the USA for these expenses, have skyrocketed and have become a severe burden in our society. Education costs have become an almost impossible barrier for young people. Graduates cannot easily find suitable work and often are deeply in debt. Government loans have allowed non-rich students to pay high tuitions and to get higher degrees, in spite of the high costs. In the area of healthcare, most people have private insurance (mostly through employers), or if older, through a first rate government Medicare program. In both cases, well-intentioned government support has unwittingly been an enabler of cost increases — but I would not recommend its termination as that will only cause more student hardship.

Here is a way to understand these rising costs. Imagine a baseball on a table that is slightly tilted downward to the right. Because the baseball has a slighly irregular shape, it will tend to be stationary. But every slight vibration can cause a small movement. Since there is a small force (tilt) to the right and no force to the left, the ball will gradually drift to the right. Your own exeriences may help to verify this principle.

Healthcare and education costs are like the tilted table. Basically, there are no significant downward forces for salaries and fees. So they increase little by little. No one in authority is calling for lower salaries for doctors. The type of person that makes the laws (often older Congressmen) are very dependent on the services of doctors and are not likely to alienate their health providers by demanding lower salaries, or by promoting socialized medicene. There is also tremendous pressure to leave it alone because it creates high profits for influential rich executives. The healthcare business interests, such as health insurance companies, are very clear. There is little resistance so the rates just keep going up.

Rising education costs are not as clear, but I think they do operate on the same principle. Universities compete for government and private research grants. And also have excellence as a natural goal. All of this competition drives the search for professors that will bring in the grants and increase the prestige of the institution. To get the best educators and researchers, you must pay higher and higher salaries. Supporting the increases are government loans to students at low interest rates. I can’t think of any downward pressure, except for the complaints of powerless students who are mostly cocerned about their own personal problems. There is a lot of upward force and little downward.

Education and healthcare systems are well protected by their administrators. Rich, private health insurance companies have powerful lobbies and political friends. Although not as clear, universities have powerful alumni associations and political support. Making major economic changes to these system is almost impossible. It would take a dramatic plan involving socialization or severe regulation. These systems are entities subject to the general principle of “evolution.” An entity if successful tends to grow stronger — in this case, to bring in more money.

What can be done? Perhaps, look to Scandenavia, where costs are less and citizens are happy. In that part of the world, the governments have taken over and controlled costs. If this were attempted in America, doctors, professors, administrators, insurance companies and all those they pay off, will fight like hell to keep their outrageous income. It seems that there is no other way. But, perhaps gradual government regulation can have the effect of “tilting” the table a little in the oposite direction.

11 The “Private Sector” Solution

10 May

There are two points I want to make in this essay: 1. Experience in the private sector is not appropriate for a president, and 2. Shifting major governmental responsibility to the private sector is dangerous.

1. Experience in private sector

Businessmen like Mitt Romney often say that we should run the country like a business. But the end goal for most businessmen is to make as much money as possible up to the point of risking arrest. The bottom line is the acquisition of personal wealth, and if necessary, paying dividends to stock holders. In business, there is little concern for the health and welfare of the workers. To increase profits, workers are paid just enough to keep them productive, or to satisfy union demands. Note that not all businesses are ruthless, but looking at Romney’s business record, it appears that his personal wealth was more important than company success or worker welfare.

What does a businessman actually learn aside from the specifics of an actual organization. He learns trivial things, like if income exceeds expenses you make a profit. If you pay your executives well, they will be loyal to you. Paying your workers less will increase your profits. If a company is doing poorly, then give youself a huge salary (or bonus) and let the company go bankrupt. A good businessman does well whether the company succeeds or fails. Governing a country is different.

Governments could run like businesses, but if you ask most people, our leaders should be concerned with the strength and welfare of the country, and the health and economic success of all its citizens. We don’t elect our leaders so that they can increase their peronal wealth, or the wealth of their friends. A president must maintain an army and police to protect us, educational institutions, efficient energy production, ethical industries, transportation, budgets, and other governmental factors. Budgets are extremely important and must maintain a balance between lowering national debt and supporting the needs of citizens.

If a leader has spent much of his life in the private sector, he sees and particpates in a society where money is king. People compete and show off their wealth. Romney cannot hide this orientation. He talks about his car elevators, his wife who has a couple of Cadilacs, how he knows the owners of teams, etc. Romney is not oriented to provide for the citizens, he lives in a world where wealth is almost everything. We don’t want his experiences and orientation, we want a president that cares about his country’s citizens.

2. Shifting to the Private Sector.

The theory is that competition among businesses always leads to lower prices and more efficiency. Sadly, this is not the case. Governments are not perfect, but there is more emphasis on constructive and beneficial work than on the accumulation of personal wealth.

Though out history, the private sector has learned to circumvent competition to increase profits, and to develop practices that are highly profitable, but unethical. Industrial laws and regulations were not developed without cause. Laws and regulations are based on serious abuses. Governments need industry, but there is recognition of a need to control it. One of the earliest attempts to control industry greed was the establishment of anti-trust laws. Businesses were working together to fix higher prices.

The Sherman Act of 1890 was the first anti-trust law and covered the fixing of prices by competitors. The Clayton act of 1914 prevented mergers of companies which would tend to stifle competition. U.S. Steel and Standard Oil controlled entire industries and prices rose dramatically. There were additional laws after these fundamental acts. My point is that even a hundred years ago business leaders saw an advantage in joining forces and stifling competition.

A great variety of regulations followed, which were necessary to protect consumers. In their obsession to create personal wealth, private sector persons ignored air polution, contamination of drinking water, tainted foods and drugs, etc. It is very common for people to drift into unethical practices as they compete to be the wealthiest guy around.

I have one more comment on Romney. He tends to turn everything around so that it appears that he and his Republican friends are the good people. He complains that government workers make more than industry workers. It is much more the other way around. Studies of regulators hired by Republicans earn much less (and perform worse) than their industry counterparts. He also makes the absurd claim that Democrats have a war on women, when it is clearly the Republicans.

 

6. Self-Defeating Votes

9 Apr

It is my view and the view of many others, that many citizens vote in a way that is self-defeating.  They vote politicians into office that will legislate to their disadvantage. Non-rich people often vote for candidates that will raise their taxes and lower taxes for the very rich — causing economic hardship and a decrease in public services, like:  Medicare, social security, public safety, education, air, water, and food inspection, etc.

What are the “basic causes” for this voter “error”?   Here are some factors:

1. Politician and media lies, distortions, and omissions.

Politicians have learned to alter information in a way that is appealing to many people. They disguise their economic goals with phrases like “free enterprise”, “freedom”, “big government”, “government control”, “deregulation”, “job creators”, “hate business”, etc.  They also switch the topic to moral factors, to misdirect people from the important budget matters. (Moral principles are important, but legislators can do little in this area — and note that many conservatives have had affairs, divorces, and various shady practices.)
The politicians and media are supported by wealthy people, who can produce persuasive advertisements.  The lies are pointed out by the opposing party, but in the end, because of factors discussed below, there is little effect.  Each side says that the other is lying and some people cannot determine who is right.

2. Failure to investigate and find truth.

Many people do not know how to perform the searches that will lead to the truth.  Having a wealth of  information on the internet should make this easy, but not in many cases. And, others don’t the have the time or motivation to research. They are happy with what they believe in and only listen to those with views similar to their beliefs.   I will talk more about this in the future, but I want to list some areas where truth is found, but often overlooked:

An actual look at national budgets written by party leaders (not just the promotional lies) or at least    listen to what the opponents say.

Signed pledges (!) not to: increase taxes,  fill tax loopholes, or cancel subsidies.  (How many ordinary people can use tax loopholes or get corporate subsidies?)

False claims like: give more money to “job creators” so that it will trickle down.  The very wealthy have been trickling down on us for way too long!  Currently, “job creators” have more money than ever before. And remember that most of the so-called “job creators” are simply rich, and do not actually do any hiring.  It is better to directly reward actual job hiring,  than to throw more support to all rich people.

Remember that anti-trust legislation was developed not because of a whim, but because private businesses were greedy, and did communicate, and did stifle competition to vastly increase profits!  Not all businesses are unethical, but many are simply consumed with increasing profits in any possible way.

3. Pride and Social pressure

Social pressure from family and friends provides a powerful influence on many voters.  Those that stray lose support and friendship. Many are simply convinced by traits like “conservative”.  Someone who is fearful decides to become a conservative because it seems safer.  Once a person has made that choice, he is often trapped, because any contrary arguments bring back the fear. I have a very conservative and fearful friend who becomes visibly uncomfortable when presented with alternative ideas.

Another factor is pride. For example, an uneducated person that has worked for a corporation as a lower level manager and achieved some success takes pride in his loyalty and achievements. He is a good soldier. Once he strongly identifies with big business and corporations he ignores other considerations because they lead to internal conflict.

My next post (7th) will be concerned with the difficult job of melting hardened minds.