Questions and Observations

Free Markets, Free People

UK’s NHS: “So try natural childbirth at home!”

We have been saying for, oh I don’t know, forever, that when the goal of government run health care is to make it less costly and better, you can only have one of the two.  They are naturally conflicting goals.  And anyone who thinks government can make anything less costly or better isn’t a student of history.  Finally, whether anyone likes to admit it or not, “less costly” means rationing.  Period.

The latest example of the point is our usual whipping boy – the UK’s National Health Service.  Seems it wants it’s pregnant patients to take one for the state:

Family doctors are being told to try to talk women out of having Caesareans and very strong painkillers during birth to save the NHS money.

New guidelines drawn up for GPs urge them to encourage women to have natural labours with as little medical help as possible.

But for many women the prospect of giving birth without the painkillers is unthinkable.

And critics have said the move has been made without any thought for the women themselves.

The guidelines also remind doctors to tell women to consider having their babies outside hospital in midwife-run units or in their own homes.

Of course the “move” is being made “without any thought for the women themselves”.  The job of bureaucrats isn’t to please patients.  It is to “save money”.  So guess where the priority and focus shift.  Not to those they’re ostensibly serving, but instead to numbers.

The result?  Well given the last sentence, a move back to the 19th century.

If there is anything “natural” it is the inevitability of this outcome given the goals of the system.  It isn’t about patient care.  It is about “saving money”.  Result?  Well right now its a suggestion.  At some point, it may move beyond that.  Ignore the advice, however, and it may become more than a suggestion.

Of course, by handing over your health care to unaccountable nameless and faceless bureaucrats, that should have been expected, huh?

~McQ

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They told us if we put a Republican in the White House seniors would suffer

Oh.  Wait.

Consider this:

Interest rates on bonds, CDs and money market accounts — staples of the retirement crowd’s portfolio — are at historic lows. (I’m always shocked to see what banks are touting. Really? 0.35% — that is, 35/100 of a percent — on a money market? 0.90% on a CD? Yep.) Stocks are nothing to write home about, still well below their highs of five years ago. As for those real estate investments? Forget about it.

The squeeze is real. Some years ago, when earning say 5% on your money was realistic, a $360,000 portfolio of CDs would produce $18,000 a year in interest — that’s $1500 a month. Couple that with an unexceptionalSocial Security payment of about the same amount, and that’s $36,000 a year, $3,000 a month. Nothing fancy, but enough to get by.

Now change that 5% to 0.9% and you’re earning $3,240 per year, or about $270 a month. Add that to $1,500 a month in Social Security and you’ve got $1,770 a month to live on; just $21,240 a year. That’s a brutal 41% cut in income. And it is why many senior citizens around the country are being forced to draw down savings to make ends meet.

Now, you’re saying, well yeah, got it but is that the President’s fault?  In a political system that considers all things that happen under a president’s watch to be “his”, yes.  If president’s are going to claim responsibility for good occurrences, then they also get the responsibility for the bad things as well.  And if I remember correctly, the current president promised to fix all this stuff.  But, this is reality:

The Federal Reserve’s low interest rates are a boon to overextended banks and to the borrowers who owe them money. (As well as the world’s greatest debtor, the U.S. Treasury). But these benefits come at the expense of savers — both those who hope to see their savings grow enough that they can retire someday, and those who have already retired expecting to live on interest at rates far higher than those that prevail today. The low rates are, basically, a tax on savers for the benefit of borrowers and those who made bad loans.

Couple that with the spendthrift ways of the past few years, with little to show for it, and you sort of have the perfect political storm don’t you.

The point about the seniors is their retirement income has been materially effected.  That’s totally real to them – they live with it daily.  And, frankly, they’re going to blame someone.  4 years ago they probably blamed Bush.  But now, well now they’re going to blame the guy who has had ample time, in their estimation, to do something about this … and hasn’t.

And who is the guy on the hook?  Right or wrong it’s the prez.

As if what is described above isn’t bad enough, there’s more:

For senior citizens, it’s a double squeeze. While incomes for retirees are going down, costs are going up. Gasoline is now roughly double what it was whenPresident Obama took office and, in many places, it’s back up in the neighborhood of $4 a gallon.

According to the Bureau of Labor Statistics, ground beef recently hit a national average of more than $3 a pound, the first time in history it’s reached that level. (When Obama was inaugurated, it was $2.35). Anyone who has spent time in a grocery store knows that this sort of thing is happening on every aisle — coupled with “shrinkage,” as manufacturers reduce the amount of product in a box while keeping the price the same, a way of hiding price increases from (they hope) inattentive consumers. And it’s going to get worse, according to the Department of Agriculture, when this summer’s drought hits food prices in a few months.

Heard anything about all of this?  Yeah, me neither.  Glenn Reynolds hasn’t either and he’s pretty sure he knows why:

In fact, with this double squeeze, we have the makings of a major national crisis. There’s only one thing missing: the kind of news media attention you’d usually get with this many senior citizens suffering in an election year.

I’ve been watching these developments for a while, and by now you’d expect a lot of sad news coverage about old people who diligently saved for retirement being squeezed by high prices and federal policies, being forced to choose between medicine and food or having to let go of pets and move in with children because things have just gotten too expensive, living on cat food and the like. But actually, we’re not hearing much.

And we all know why?  When the 4th Estate becomes a 5th Column, you’re unlikely to hear much about the things that might reflect on their chosen one.

Report it or not, it remains a real problem and those suffering from this turn around are likely to want to point the finger at someone.  And usually that someone is whoever is in charge on election day.

Another “indicator”.

~McQ

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Economic Statistics for 30 Aug 12

The following US economic statistics were announced today:

Personal income rose 0.3% in July, while personal spending rose 0.4%. The PCE price index was unchanged at both the headline and core levels. Year-over-year, the PCE shows 1.3% inflation, with the core rate, which doesn’t count food or energy costs, at 1.6%.

Initial Jobless claims were unchanged at 374,000. The 4-week moving average rose slightly to 370,250. Continuing claims fell 5,000 to 3.316 million.

Following last month’s strong results, today’s sales reports from chain stores are good to mixed, and, on net, slightly higher than last month.

The Bloomberg Consumer Comfort Index remains weak, rising only 0.1 to -47.3, following a 6-week decline in the index.

The Kansas City Fed manufacturing index rose to 5 in July from 3 in June, indicating a slightly better growth rate. That headline hides some underlying weakness, however, as the production index fell from last month’s 12 to 2 in July. New orders are also declining, though at a slightly slower rate than last month, as the index rose to -4 from -7.

~
Dale Franks
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Democrats and Republicans: A pox on both their houses

We’ve talked in the past about why these “wave” elections, as they’re called, are happening with increasing frequency.

Well one of the reasons, I would assert, is people are tiring of the same old promises – promises that are rarely if ever kept – with the same old results – business as usual with vituperative partisan sniping and finger pointing, while we spend ourselves into oblivion.

No matter who is put into power, nothing substantive happens.  So voters keep switching the sides in hope that some group they put in there will “get it”.

So along come this poll, which is quite interesting.  No matter how “popular” Obama is alleged to be, it seems the party he is associated with is now at their popularity nadir.

Today’s Gallup Poll, "GOP Favorability Matches 2008 Pre-Convention Level," shows the pre-convention favorability ratings of the two Parties going back as far as 1992. For the very first time, the favorable/unfavorable ratios are now higher for the Republican Party than for the Democratic Party. For the first time ever, the Democratic favorability ratio, which has always been within the range of 1.20 to 1.56, is now below 1. It is a stunningly low .83, which is 31% lower than the prior Democratic Party low of 1.20, which was reached in 2004.

The Democrats find themselves at John Kerry territory in terms of popularity.  Gee I wonder why (*cough* ignore the voters and pass ObamaCare, unemployment at 8.2%, economy in the crapper, etc., *cough*)?

But  before Republicans celebrate because they’re better than Democrats, they should realize they’re only marginally better. 

By contrast, the Republican ratio is now .88, which compares with the 2008 ratio of .80, which was that Party’s lowest-ever ratio, reached at the end of the Bush Presidency. Prior to 2008, the ratio was 1.16 in 2004, 1.41 in 2000, 1.16 in 1996, and 1.36 in 1992.

Those figures compare with the Democratic ratios of 1.38 in 2008 (compared with the Republican .80), 1.20 in 2004 (vs. 1.16), 1.56 in 2000 (vs. 1.41), 1.50 in 1996 (vs. 1.16), and 1.42 in 1992 (vs. 1.36).

So?  So right now,  Republicans seem to be enjoying a slightly better level of “popularity” than are Democrats.  But both should note that their relative popularity is near the bottom of their historic range.

What does that say?

It says to me that voters are truly considering the lesser of two evils.  That their “popularity” is a function of there being no other choice but these two and there being little if any confidence in either doing what is necessary to turn this mess around.  But, at the moment, they are inclined to give the Republicans a shot, simply because the Democrats have been so lousy.

Another “indicator” poll.  Expect the media’s full court negative press to continue unabated.  We now know more about Mitt Romney than we’ve ever known about the President of the United States (of course that’s partly because Romney has actually run things and done things prior to running and has an actual record to examine).

Meanwhile voters seem inclined toward the Republicans, but not such that anyone in the GOP should get arrogant or cocky by any means.  This is all touch and go at the moment.

But here’s a key which is hard to ignore, speaking of Obama’s “popularity”:

The Democratic brand has thus suffered more (down 39%) under Obama than the Republican brand suffered under either of George W. Bush’s two terms (-16%, then -31%).

Democrats have reason to be worried.

~McQ

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Economic Statistics for 29 Aug 12 (Updated)

The following US economic statistics were announced today:

The National Association of Realtors’ pending home sales index rose a strong 2.4% in July t0 101.7. The year-on-year rate of 12.4% is the highest since 2010.

US corporate profits in the second quarter decreased to $1.648 trillion annualized, compared to $1.671 trillion in the first quarter, falling an annualized 5.3 percent.

The Commerce Department’s initial revision to 2nd quarter GDP growth was 1.7% on an annualized basis, up from the initial estimate of 1.5%.

The Mortgage Bankers’ Association reports mortgage applications fell -4.3%, with purchases up 1.0% and refinancings down 6.0%.

UPDATE: The Federal Reserve’s Beige Book report on the state of the US economy says that economic activity "continued to expand gradually" in the current period. Retail sales and real estate were mainly positive. Six of the Fed districts had modest growth; five were moderate; two were slower; and one was mixed.

~
Dale Franks
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It is QandO’s 9th “Blogversary”

9 years ago today, QandO was launched on the Blogger platform. Jon Henke started it up by putting up a two or three line post about “first post” jitters. Since then we’ve migrated to many different platforms,  literally thousands of posts have been written, over 60,000 comments have been made and over 8 million have viewed QandO’s pages.

This blog has been a labor of love for all those associated with it.  By far not the biggest of the blogs out there, it is one of the older ones (think dog years as a metaphor for blog years).  We started back when there were just hundreds of us.  Now, there are literally millions of blogs.

Thanks from the QandO gang to all our loyal readers and commenters.  You’re the incentive that keeps us writing.

~McQ

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Academia: Ivory tower or “The New Plantation”?

A friend of mine sent along a link to a brand new blog written by a former Professor at Georgia Tech.  He only has 6 posts up but I’m already intrigued.  He takes on the Southern Poverty Law Center (which he once supported monetarily) and he also has a pretty biting review of academia, an institution within which he spent 40 years.  His metaphor for academia, as the title states, isn’t that of an ivory tower, but instead that of the plantation:

The proper metaphor for the university is no longer the “ivory tower,” a shining refuge from daily life that promotes creative thought—if it ever was. A better metaphor is something more down-and-dirty. Like any metaphor, it only goes so far, but in its limited way may aid our understanding.

The modern university is a plantation.

I’m defining “plantation” as a large agricultural enterprise that raises and sells livestock and crops for profit. Antebellum Southern plantations were defined by slaveholding; after the War Between the States those that were left shifted to a different but hardly more moral system. This is what characterizes modern public research universities. Consider the parallels between universities and plantations:

Undergraduates are livestock. In an actual plantation, livestock are raised and sold for profit.

How much profit depends on quality, numbers and value. Undergraduates bring money in two ways. First is tuition and fees, and is the lesser contribution. The last estimate I heard, from two separate schools, was that tuition and fees accounted for 15% of the operating budget.* The greater contribution comes from State funding, which pays some number of dollars per student credit hour. This accounts for 35% of the annual budget, according to the same sources.

So the “livestock” are, in reality, a rather minor portion of the money coming in (tuition and fees) but worth a lot because of the government funding tied to the credit hours taken.

How is that a function of govenment again?  And why, if that’s going on, have tuition and fees become so outrageous?  Why are student loans so high?

To answer that question, it is high because it can be.  Low interest loans actually don’t help the process and students, and more problematic, parents, have fallen for the siren song of academia – “we’re vital for you child’s future and success”.

Of course, the government end of it provides another incentive that’s not particularly good.

What’s important here is that moving undergrads through the system is how universities make a great deal of money. The better the students and the more of them, the more funding.

Some schools depend more on quality to attract students (or a reputation for quality, which isn’t the same thing), some more on perceived value for tuition money, whether that includes classes or party time. The principle is the same regardless. Profit (how much is left over from direct expenses for salaries, new buildings, fancy office furniture and so forth) depends on spending as little as possible on livestock production while maintaining a salable product. What’s the outcome? Large classes taught by the cheapest employees. Dependence on online services instead of real (and responsive) human contact. Discarding hands-on laboratories in favor of computer simulations. All of these make undergraduate production easier and cheaper.

Plantations not only have livestock, but they raise crops.  And what are the “crops” of academia?

Research grants and contracts. Not research itself, but research done in order to receive outside money. Most people outside the university don’t know that grants, whether from Federal or State agencies, foundations or industry, cover not only direct costs such as equipment and salaries, but “indirect costs,” expressed as “overhead.” Overhead was originally intended to cover such necessities as building maintenance, lights, water, heat and so forth. Today overhead may add 45% or more to the cost of a grant. If, for example, direct costs amount to $1,000,000, the grant must be written for $1,450,000 or more.  This $450,000, minus actual overhead, is what corresponds to profit, and can be used by administrators for pretty much whatever they want. Overhead from grants and contracts amounts to another 35% of operating budgets.

In the modern research university, obtaining grants is a requisite for employment. Yes, one can do research without external funding, but that doesn’t count, at least not for much. An assistant professor in science or engineering must obtain grant funds to receive tenure, regardless of other contributions. A tenured associate or full professor can’t be fired out of hand (most places) for a lack of funding, but can be punished in other ways. Forgoing raises, for instance. Having one’s teaching load increased and being assigned to basic undergrad classes, for another. Losing office space, lab space, or travel funding for conferences. Having fewer grad students. These may not seem terribly severe penalties to non-academics, but trust me, they’re very effective.

While there is nothing wrong with making a profit, this points to how government has again had a hand in distorting a market.

He goes on to discuss a lot more in the post that deals with academia today (to include recommended solutions).  Worth the read and a new blogger to keep an eye on.  Seems he’s gone through the halls of academia, survived there for quite a while and is now looking back and saying WTF?  A valuable look and some interesting analysis.

~McQ

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Meanwhile, the economy returns another “unexpected” negative

I’m not sure how this is “unexpected, but it certainly isn’t good news around election time.  Why?  Because when consumer confidence dips, that means the likelihood of an increase in private consumption, something that would help the economy, isn’t at all high.

U.S. consumer confidence unexpectedly weakened in August to its lowest in nine months as Americans turned more pessimistic about the short-term outlook, according to a private sector report released on Tuesday.

According to the article, consumers are concerned about price increases and expecting inflation during the next 12 months. It was the lowest level since November. July was originally reported as 65.9.

“Consumers were more apprehensive about business and employment prospects, but more optimistic about their financial prospects despite rising inflation expectations,” said Lynn Franco, director of The Conference Board Consumer Research Center, in a statement.

But hey, don’t worry … be happy!  Hope and change.  Forward.

Yee haw …

~McQ

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Economic Statistics for 28 Aug 12

The following US economic statistics were announced today:

The seaonally adjusted S&P/Case-Shiller 20-city home price index rose strongly in June at an adjusted 0.9%. This follows three strong gains in a row of between 0.7% and 0.9% between March to May. Prices came off the bottom, reflected in the year-on-year rate which is finally positive at 0.5%. Non-seasonally adjusted results are much stronger, with the index up 2.3%.

The Conference Board’s consumer confidence index in July fell 5 points to 60.6. July was revised -0.5 lower to 65.4.

The Richmond Fed manufacturing index rose in July to -9 from last month’s -17 to show continued contraction. New orders rose to -20 from July’s already very weak -25.

The State Street Investor Confidence Index, which measures the changes in investor holdings of equities, is down sharply this month, more than 3 points to 90.9.

In retail sales, Redbook reports a weak 1.5% year-over-year sales growth. Conversely, ICSC-Goldman Store Sales rose a solid 0.5% for the week and 3.4% year-over-year.

~
Dale Franks
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You are just not relying on government enough

Or perhaps, you’re just not thankful enough for the nanny’s help and nanny feels a little put off.  Why?  You just don’t rank mommy government high enough (especially at election time) in your hierarchy of what helped you most through these difficult economic times:

“Given that only 15 percent of you turn to government assistance in tough times, we want to make sure you know about benefits that could help you,” USA.gov announced today. The ”government made easy’ website has created a “help for difficult financial times” page for people to learn more about the programs.

The government got that statistic from a poll asking Americans what helps them the most during tough times. Here are the results:

  • Savings 44%
  • Family 21%
  • Credit cards/loans 20%
  • Government assistance 15%
Oh my, you mean people are being too “self-reliant”?  Not enough reliance on government?  Why, if this sort of trend continues the people may not vote to expand government like certain parties would prefer.
So we get the “pitch”:
“Government assistance comes in different forms—from unemployment checks and food assistance to credit counseling and medical treatment,” USA.gov reminded readers.
Good to know, no?  Also good to know that self-reliance isn’t yet dead.  But the government sounds desperate that you don’t realize how important they are to you:

This leg of the financial assistance push has ended. “Although our campaign to highlight Help for Difficult Financial Times has ended, we know that your struggles may continue,” said USA.gov today. “We will keep updating the tools and information we provide to help you get back on your feet.”

“Because without us, well, you can’t even find your feet” … or something.

~McQ

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