I’ve come to the conclusion that INSURANCE is the root of most evil in our country today. In my view, INSURANCE and LAWYERS together are to blame for most of what’s wrong.
Think about how many insurance pools affect your life. At home you have your home owner’s liability policy, your fire insurance policy and your auto policies covering your liability and your casualty loss. If you have a mortgage, you probably have mortgage insurance. If you are prudent you may have life insurance.
At work you are covered by Worker’s Compensation through Department of Labor and Industries and Employment Security (Unemployment Insurance) both paid mostly by your employer.
Increasingly, Health Care Insurance has come to dominate our lives. Whether you pay for it individually or your employer pays for it, Health Care Insurance is becoming the most insidious form of insurance in our lives.
For a long time the discussion was focused on the “health care” part of the deal. The thought was that the cost of care was driven by health care providers. Then when we looked closer we saw that insurance companies were entrenched in the businesses of those providers it wasn’t about the quality of the care, it was only about what the insurance company would pay.
Who hasn’t heard about Mal-Practice and Business Liability insurance for the doctors, the clinics and the hospitals? It isn’t just the medical related businesses that are affected though; nearly every profession is impacted by Insurance policies.
The Lawyers compound the need for insurance because if someone fails to perform as they agreed in their insurance policy, an ambulance chaser, personal injury, mal-practice attorney will sue you and the insurance company for the failure. Threatened with the loss of your stuff, you toe the line.
Insurance companies have been changing our behavior for many years. Life insurance companies did it with smoking. Auto insurance companies did it with seat belts and motor cycle helmets.
If you engage in behavior they decide is “risky” your rates go up or your policy is cancelled. And that is the central issue of this whole piece.
I guess the other component is not canceling your policy but reducing your benefits; which is happening everywhere we look.
This week, New York Mayor Michael Bloomberg suggested that sugared soft drinks larger than 16 ounces should be outlawed in New York City, citing the cost of health care paid by our health insurance carriers as the justification. Obese people who are covered get subsidized health care because they are not as healthy as skinnier folks. (Think about how far an idiot could extend that logic.)
The mayor focuses on how your personal bad choices affect insurance premiums paid by everyone. Last time it was trans fats in the cooking oil used by restaurants. Can you see how INSURANCE is becoming the dominant factor in our lives?
Insurance is the binding force that the government uses to change your behavior. By making coverage mandatory you increase the size of the money pool supposedly making the unit cost less while giving the insurance company the leverage over the service providers to reduce their reimbursement rate.
Certainly the Supreme Court’s pending decision on Obamacare will be the deciding factor in whether the government and the insurance companies can require that you buy their insurance and accept their prescribed level of care without competition in the market. It will also determine whether a doctor can set the price for his services or whether the insurance companies will have a strangle-hold on all the actual medical providers.
Don’t get me started about Medicare. We supposedly paid into a pool that should have compounded and grown into a huge fund that would pay for our medical costs when we retired. Unfortunately the government raided the fund and left it with a bunch of IOU’s so the actual cost of care today has to be paid out of current revenue.
Insurance companies will be the downfall of our society if the government requires that we all be covered for all perils.
Lawyers will be the enforcers since they will either sue you or threaten to sue you for whatever meager possessions the government allows you to have.
No doubt I would be in favor of “tort reform” limiting the dollar amount that could be awarded in a mal-practice or liability trial and providing that the plaintiff be held financially liable for the cost incurred by the defendant if the defendant is found to be not guilty.
Do I sound a little edgy? Good!
No Loss for Words 
Is Middle Class Second Class?
by Steve DanaOne of the big political arguments swirling again this season is “how do we rebuild and restore the Middle Class?”
The next question for me is “what income range is considered Middle Class?”
I’m no economist but I think of Boeing Machinists as being Middle Class type folks. I would guess their incomes range from $40,000 per year to $80,000 per year or roughly $20/hour to $40/hour. And even though they are highly trained, many of them are not college educated.
So for the sake of my argument that is how I will define Middle Class.
Once you establish the income range you just look around for the jobs that pay that kind of money. Or maybe you look for the jobs that used to pay that kind of money and follow that with where did those jobs go?
As a resident of the Puget Sound region in Washington State Boeing is a big part of our economy. For many years it was the only game in town. Fortunately we lucked out when Bill Gates and Paul Allen decided to keep Microsoft local, Howard Schultz opened Starbucks in Seattle; and again when Jeff Bezos headquartered Amazon in town.
So we have four very different businesses that produce and incredible amount of wealth in the region with very different operating models. One that manufactures a product, one that produces a digital product and two that provide services.
Without a college degree in computer science or business management, most remaining Microsoft employees struggle to make it into the middle class. The bulk of the Amazon and Starbucks employees also just bump the bottom of the range at best.
What is missing is the manufacturing jobs like Boeing offers. And what we know about Boeing is that they are also looking to reduce the cost of their workforce as well by opening factories in locations where the cost of labor is lower.
Is anyone surprised that I have an opinion about this dilemma?
Since our government bought into the “world economy” argument the American manufacturing sector has been withering and along with it the Middle Class.
The jobs most often associated with the Middle Class in the past were family wage factory jobs that have been shipped over seas to build up the economies of our trading partners. The adoption of the North American Free Trade Agreement NAFTA signaled the exit of many manufacturing jobs to Mexico. American participation in World Trade organizations encourage relocation of previously American jobs to third world economies to bolster those countries as trading partners but at the expense of American manufacturing jobs.
In most cases the jobs that go overseas are jobs that require training but not significant education.
The jobs that remain here are the ones that are tied to raw materials or require a highly trained and educated workforce; and even those raw materials jobs are at risk as the government is regulating many of them out of existence.
By today’s standards the Middle Class jobs are the public sector employers like governments and school systems. Locally we have city and county governments, we have Policemen, Fire Fighters and Public Works employees and at the state and federal levels we have the Department of Transportation, Department of Energy, Department of Ecology, Department of Education…..yadayadayada. Is it any wonder that the Middle Class has changed so dramatically?
The Middle Class swapped private sector jobs that produced the highest standard of living and best quality products in the world for public sector jobs that suck up the resources of society and produce nothing but a bill.
The Middle Class today is the Bureaucrat Class with the Service Sector groveling for a handout.
The cost of government skyrocketed at every level while the private sector industries our country was famous for have fled. Even a country boy like me could see this as it was happening but the rationale for world trade was too deep for me to grasp.
Whether it’s big business or big government, both political parties still champion the world trade argument even though it sells American workers down the river. There is no safe haven with either the Democrats or Republicans.
If you really want to know what happened to the Middle Class look at China where economic development is producing record numbers of millionaires even in this depressed economy. Our Middle Class moved overseas!
If our goal is to return America to the prosperity we enjoyed for many years after WW2 we have to examine what our government did to cause the exodus and systematically reverse it. We will also have to analyze the political ramifications to our trading partners and make value judgments. Bringing the private sector Middle Class back to America will have international implications.
Posted in Economic Development, Political commentary | Leave a Comment »