What went wrong with Obamacare and jobs

There are good reasons why many government programs and Obamacare went sour.

2007, Washington State passed a law that employers couldn’t ask about a hiree’s credit scores. Oh, the pols congratulated themselves! This would stimulate more jobs for people with ugly pasts, the young, and blacks.  In fact, it did just the opposite. They made less. The reason is what economists call “information asymmetry”.

Let me explain. Suppose a good used car sells for $2000 and a lemon clunker for $1000. And a good market exists for both types of cars.  But what if dealers try hard to disguise the faults and do it successfully so that buyers can’t tell a lemon from a cream puff?  Then buyers will only offer  $1200-1300 to cover the possibility of buying a lemon.  Suppose you’re mechanically handy and don’t want to pay over $1000?  Then you offer $1000 maximum for everything on the lot, and the dealer will sell you something he’s willing to part with for that price.  But with those kinds of offers--$1000 and $1500—the good cars will sit on the lot. Likewise the job offers to the less employable in Washington State were less because employers often couldn’t tell good from bad.  They found the risk great that they’d accidentally hire a poor employee.  And fear caused them to have fewer jobs to offer. 

So the lemon problem can be circumvented if the better workers have ways to prove they are worth it—more education, experience and great references. That’s like the car dealer offering a big guarantee on a few cars. Hint, hint!  This is a good one!  Of course it is not a happy situation when you have to invest in education just to prove by credentialization that you are a good employee.  America was once built by dreamers who came here, didn’t  have much, got an opportunity, and worked their tail off to do something great.

Another way the sellers can guard against bad risks is to “screen” people.  Airlines offer first class and economy seating.  They make the economy seating purposefully cramped so that the people who can afford first class opt to do it at  a higher price.

Obamacare?  Let’s say, you offer health insurance for sale. And let’s say the government doesn’t allow you to “discriminate” against the sickly.  How do you screen for good risks?  If you get swamped by sickly patients, you lose your shirt in the insuring business.  Well, you offer two types of policies.  One has a cheap price but has a very high deductible.  The other has lots of benefits at a very high cost.  The guy who is sick all the time knows he is going to turn in lots of claims and dreads high deductibles.  He has to have the max benefits and high premium cost.  The customers with few health risks will opt for the high deductible policy at lower cost. Thus the Obamacare policies that the insurers offered had either big deductibles or much higher costs than in the past.  Saving $2500 per year, as Obama promised, turned out to be an average $3500 increase. Nobody can get a policy with low deductible and good benefits like in the past.  And because the insurers had foggy and less certain information about clients, everybody got less insurance for the money. Of course in the government’s world (Obama’s world) everybody’s behavior was supposed to be absolutely static and not affect the outcome and insurers weren’t supposed to do this.

Asymmetric information theory predicts something government economists couldn’t figure out about the labor market. Why is it that when a recession gets mature, why don’t  wages just fall until somebody starts hiring people at the new low rate?   Say you are an employer and want to retain a few very vital workers during tough times.  You might actually issue wages above the market rate.  When that happens employees (who look around;many friends have lost jobs) value their jobs because they could never get the same wage elsewhere.  They work hard and don’t quit, don’t slack lest they lose their good job.  Hence the employers were keeping their wages artificially high as a carrot and didn’t easily lower wages to reflect the labor market.  This happened far more 2009-2014 than ever before because other things (Obamacare mandates, extreme regulation growth, terrible foreign markets) scared employers.   For the 3^rd time in US history of 37 recessions, we had a jobless recovery where employment didn’t recover nearly as fast as it had collapsed. 

Economist George Akerlof won a Nobel Prize for this asymmetric information theory with his paper in 1970, and so much of it was so ‘common sense’ to business, that he had trouble getting it published!  Sometimes the stuff that businessmen know by heart is mystifying to ivory tower economists.  But it’s old news now.  So if Obama, Hillary, and company haven’t read it, I guess they must be a little behind on their reading. Or never had a job in business.

Armada

Do you believe that the war Islamic fanaticism is waging against us is JV? Will not effect our way of life or thinking? Let me tell you a story of what happened 428 years ago this week.

Elizabeth I of England came to the throne and looked doomed.  She was just a young girl and Parliament, under her Catholic sister had declared her a bastard and bastards could not sit on the throne.  Protestant nobles, who had gotten the booty of church lands when Henry VIII declared himself Protestant, feared Catholic takeover and installed Elizabeth.  But ¾ of the people were still Catholic.  The government was broke and had to pay 14% interest because of the spendthrift Tudors before her.  The nation was backward and had far more paupers than the continent.  France claimed Britain and already had troops in Scotland.  But the heart of an emperor lived behind the young girl’s smiles. 

She saved and cut back on government, getting finances in order, installed William Cecil, and other commoners as advisors until she had Parliament under her thumb.  She curbed Catholic rebellion by stiff laws and hangings, yet with some tolerance.  She flirted with first France’s crown prince, then King Philip of Spain triangulating the two super-powers.  And she played cat-and-mouse with Spanish shipping by funding privateers to raid.  Hawkins, then Drake plagued Spain all the while she played hard-to-get with Philip. Spain was in total control of the Americas with over 100 colonial cities and incredible wealth.  There was just one man who couldn’t live with that, Francis Drake—trained from youth to pirate, Lutheran and strong about his faith, and dreaming of leading a yet-to-be-built British navy.  From 1580 to 1587, Drake sailed against those American settlements, extracting ransoms and gold and slaves.   Finally, Philip had had enough, broke off the relationship and declared war. 

Philip got a pledge from Pope Sixtus, payable when he invaded England and began building the largest invasion fleet ever seen in Europe.  Drake learned of the Armada in March and begged Elizabeth for ships to raid the fleet in port before it became unstoppable.  At Cadiz he destroyed half of it but Philip kept building.  The Spanish crews (130 ships) and soldiers  (19,000) felt they were on a holy mission to re-establish Catholicism. England waited in dread.  Then the English Catholics came out in support of their queen. All over the country militias were formed.  And pecunious Elizabeth, reluctant to tax found her people donating towards a navy. Asked for 15, the merchants of London refitted 30 merchants as warships and with the 52 from a new British navy and privateers, Drake sailed into the Channel to do battle.  On July 21, 1588 action began.  Spanish thought the Brits would fight like pirates, trying to board their ships.  Instead the English gave them broadsides and outmaneuvered them with light ships.The Iberian guns were unable to hit the Brits as they were mounted too high and the English sailed under them, splintering holes in hulls.  The fight went on for days until the slow Spanish vessels retreated to Calais harbor to re-group, July 27.  Drake wouldn’t let them.  He lit 6 small craft afire and pushed them toward the Spanish docks.  The Armada ships fled to sea where Drake picked off more, sank several and captured a major vessel.  On July 30 the wind carried the Armada into the North Sea.  English pursued for awhile but gave up the chase.  The Spanish had nowhere to go but home to Spain, north around the British Isles.  Heavy storms claimed more ships. 17 were wrecked on the Irish coast where fierce native Celts massacred the survivors.  Of the 27,000 men who had left Spain, 10,000 returned; 54 of 130 ships. Since nobody invaded England, Pope Sixtus reneged payment.

The defeat of the Armada affected almost everything in modern European civilization. It changed naval tactics from grappling to broadsides.  The weakening of the Spanish Hapsburgs helped the Dutch to win independence, advanced Henry IV to the French throne, and opened North America to English colonies.  Protestantism was preserved and strengthened.  Catholicism waned in England.  The Elizabethan energy that lifted up Shakespeare and Bacon and the sciences, would have been burned at the stake had the Inquisition come to Britain. And the British got their navy.

The ability to defend in war is a prerequisite to live and build in peace.   

Liberation Theology

So the Pope, it turns out, was the one who prodded Obama to open up relations with Cuba.  As an unrepentant Protestant, I reserve the right to challenge the Pope.  But it’s more interesting than that.  Pope Leo in the 1891 published Rarum Novarum, an encyclical about how the church is to view systems of government.  And in particular it launched an idea called Social Justice.  Social  Justice holds that it is the responsibility of governments of Christian countries to uplift the poor economically. Labor unions were applauded.  Monarchies, which had always been allies of the Catholic Church, could then claim, as part of a divine right to rule, that they favored and helped the little guy.  The imperative on “helping” is collective and progressive (seizes assets, by gov’t force, from those who aren’t inclined to share).  I really gagged when I read Rarum and have always wanted to call Sean Hannity on his radio show and ask how a conservative Catholic reads this document.  (He’d probably say, Thanks for your opinion, Father.)

What this has to do with Cuba and Francis is this.  During the 50s, Protestants began to evangelize Latin America.  Catholic thinkers diagnosed Protestant success as an mere appeal to poverty relief. The Church, established and rich, was heavily invested in land and tyrannical governments often taxed individuals as mandatory tithes on behalf.  So they borrowed an idea from a Peruvian priest, who justified communism by Christianity and Social Justice.  The theology was rather suspect because it proposes ‘collective salvation’, a doctrine of Islam. (‘Acting together’ as in voting or revolution, brings salvation.  This violates the biblical standard, “Each man shall die for his own inquities”Dt. 24:16, Jer.31:30)  It directly linked to Karl Marx and Che Guevara.  It was anti-capitalist and thus anti-US businesses.  It was thinly veiled politics. 

I had the experience of having a Lutheran pastor who had done his Doctor of Divinity on Liberation Theology.  I befriended him since he was such a loner, a strange thing for a pastor.  I found out he watched CSPAN 6 hours a day, was vegetarian with a heavily liberal belief system and that is why the strange sermons on Buddha and other new age things.  He was greatly saddened that the Lutheran church had passed a resolution that Liberation Theology was heresy and he had to swear off of it in order to remain a reverend. 

Liberation theology appealed to many leftist intellectuals, priests and nuns.  Yet it died out in Latin America with few followers among the laity.  The primary proponent of Liberation Theology today is Pope Francis who declared “Inequality is the root of all evil.” The other guy who loves LT is Reverend Wright of Obama’s Chicago church.  In fact, Obama was mentored by Frank Marshall Davis of the Communist Party USA as a teenager.  Some of his former Harvard classmates, labeled Obama a closet Marxist. And Islam is what Obama learned as a child.  It doesn’t take much imagination to realize that Obama’s “”conversion” from Islam to Christianity, which occurred at Wright’s church was through Liberation Theology.  And between likeminded Obama and the Pope, they decided to politically redeem the murderous Castros.

But I sit in my chair thinking about the Good Samaritan.  In the story, the half-dead guy is bypassed, first by a priest, the local leader and head of theocratic government, like a modern politician.  Then the Levite, the human services guy in charge of social relief of orphans and widows, passed by.  Finally, an individual, a Samaritan, had compassion, spent his own money and time. The collective salvation thing has no voice in Jesus.  The individual faith does.  And so I ask the liberals, who believe that pulling voting levers collectively makes them compassionate, why they don’t do something personal?  If you love the homeless, why don’t you take them home?

Anybody out there?

Conservative Christian but not fundamentalist concerning origins. For within all of creation is interlocked a story of how things came to be through change. Surely God wants us to discover this. Had Adam cut down a tree on his first day he might have found 108 rings, then through study found that each corresponds to a year.  So the tree had a hidden history it was created with.  Becoming more astute, he might have postulated how oil originates from deposition, cooks from kerogen to petroleum, migrates into porous rock trapped by geology.  Now Adam has gas for his car, just as soon as he can figure that out.  Do you get a way to find oil from stubbornly insisting on a fundamentalist picture of Genesis?  We’ll leave that argument aside for the moment.  I respect your beliefs if you respect mine. 

Those who have been hard at work to find life in space are being surprised lately.  First, we have discovered life here on earth in places of adversity and in conditions never dreamed of before.  Single celled critters have been found at 300 degrees Farenheit and below zero, at 12,000 feet of depth in formations 80 million years old.  Plants and animals are too narrow in classification to include these so 3 “domains” now supercede the kingdoms we had before.  And the extremeophiles are thus included.  Some of these don’t need oxygen, indeed get energy from decomposing rock minerals.  And it is studied and argued that quite possibly Mars rocks have fossils of single cells in them, and that these kinds of simple critters may exist and have originated spontaneously all over our solar system, from Venus to the moons of Neptune. Encouraging that there is plentiful life out there.

But big organisms and especially animals like us, may be extremely rare.  How rare?  Maybe we are the lone wolves in our galaxy or even all of creation.  Why?  Because getting large animals may be the result of several fantastic circumstances that happened to earth.  First, our earth has an iron-nickel core, i.e. heavy metals, that set up a magnetic field and is coated with lighter elements.  This thin light crust combined with a highly radioactive core gives us plate tectonics.  Thirdly we have a moon that could only have been a highly rare event astrophysically.  We have a perfect-sized star with a perfect-sized large planet, Jupiter.  Without these, you get sporadic orbits, no protection from asteroid bombardments (hence life is constantly snuffed out by catastrophe), no water or air, too hot or cold, no complex evolution of species.  Atop all these is how strange plants and animals are in having cells with mitochondria and other embedded organelles which allow cells to be larger and specialized.This too, by near catastrophe.  Bottom line, Earth and animal life is rare, rare, rare.

Let me give a flavor of the arguments.  If a star is 1/3 larger than our sun, all the planets will be heavy metals and lighter elements will be driven off entirely to interstellar space.  If 10% smaller, then light elements comprise almost everything. Neither type spawns an earth. If earth’s orbit of 93M miles was 1 M miles farther out, we’d be glacial, but 4 M miles closer, we’d be greenhoused like Venus with no oceans.  But 90% of stars are 10% smaller than ours and 7% are much larger.  If stars are found in clusters or on galactic arms, the neighbor hood is too crowded.  Neighbors mess up nice circular orbits, conflict with interstellar bombardments of junk, and climates would contain no nights.  Thus even if the mix of elements was right, the atmospheres would boil off.  So scratch all but 1 out of 100,000 stars of the 200 billion in Milky Way. Our sun, 3/4 the way from galaxtic center and out between arms in a lonely location may well be among just a handful with location.  Next, galaxies are stratified with elements.  Inner galaxies are full of heavies and outer galaxies are light element laden.  Add to this elliptic and young galaxies have crowding and element problems. Scratch almost all galaxies. This does not bode well for your Star Wars fantasies about a bar scene with creatures from all over.

Within our solar system, not only do we occupy a sweet spot, but what if our world had erratic days and climes?  This would happen if we didn’t have an adjacent partner moon that is also large enough to stabilize the axis tilt and day lengths.  Without this, the spinning earth would resemble a wobbly top, which we have come to realize characterize other planets in our system.  But such a large moon is unique, maybe almost unheard of, caused from accident.  Geologic similarity with our crust, yet no core of the moon, could only have happened if early earth was bombarded by a Mars-sized planet but orbiting also almost perfectly circularly—a smaller twin. Then it had to strike at an angled blow.  The result can be modeled as a spun-off moon of lighter crust elements, but no core. No other physical explanation works. Moon stabilizes our weather, gives us tides that work coastal beaches, most important sites for origin of earth’s multicellular life.  The magnetic field protects us from asteroid bombardments so that all life doesn’t go extinct every few million years.  Jupiter’s mega-magnetics and big gravitational pull keeps us from becoming comet fodder.  Yet a smaller population of invading objects has struck the earth--almost a perfect number that has given us continents amid oceans.  More light elements brought by comets and we’d be water world with ocean completely covering and a tendency to be like the ice world Arctic ocean.  This also results from insufficient continental drift. Without continents, there can’t be forests that replace the CO2 and methane of an early atmosphere with O2. And we know that plants and forests had this effect by the massive iron and copper band deposits all around the world where oxygen made rust and precipitated these elements out of the oceans.

Next, earth is borderline Ice Earth (where glaciation completely covers everything) and we have had numerous Ice Ages when poles get corralled by landlocked oceans or continents like today. There are two episodes when this ran away into Snowball Earth—entirely covered with 5000 ft. of ice (known from deposition). Almost all life was extinguished.  But then came Vulcanism and some massive spew of ash atop the glaciation melted the snowball.  Life flourished again.  But to survive the hot-cold-hot, there were enormous evolutionary changes like the mitochondria in cells that are key to larger multi-celled organisms.  So we only get big critters if we have these rare Snowball Earth episodes--and a recovery.  Yet astrogeologists say  that almost always snowball earths are irrecoverable.  Cover a planet with white reflective ice and it stays forever cold. Hence our rare, rare twice recovery is key to evolving large critters and plants.  And in the aftermath it created an oxygen-rich atmosphere, key to growing carbon-based life.   

Beyond this are stunning new developments in understanding of the evolution of life that require earth to evolve from faint, cooler young sun to older warmer just like ours has done.  (But I have not time to write all these)  Bottom line: we’d be lucky to find intelligent life elsewhere in our galaxy because we are the result of so many crazy coincidences and accidents.  As one scientist said, “If an Almighty wanted to create an utterly unique life within the universe, this seems to be the rare circumstances he would impose.”

Vacation

Sorry, I haven’t written much.  Been on vacation with the grandkids and having a swell time. A Harvard study has concluded that Independence Day celebrations make kids into conservatives.  Think of the anguish of the NEA.  One doggone day of fireworks and a patriotic song and it undoes 180 days of public education!  Well, we did our part with sparklers and patriot pancakes for breakfast.  The 3- and 5-year old are clearly hooked.  Concerning the NEA, half my relatives are school teachers.  My wife, daughter, neice, sister-in-law, aunt, wife’s mother—all teachers in public schools.  I have taught for both OU and KSU.  I listen a lot. So my conclusion is that if the teacher’s unions were more amenable to school choice, like choice for kids who attend failing schools or impoverished areas, they would garner a lot more sympathy from the general public when it comes to state funding.  But the obsession of keeping public schools a monopoly turns people off when the product does not measure up (70% support choice).  And I believe that increases in school competiton would soon make public schools more academically productive, less administration and sports laden, with teachers left free to teach to a greater extent.

Okay, so Hillary gets off of criminal charges.  The Democrats said the email investigation and Benghazi committee report were just a witch hunt.  Just as Hillary was about to speak, a house fell on her.  The Benghazi report concludes that Hillary lied.  Hillary says they found nothing new.  She demanded Trump turn over copies of his tax returns.  Trump said, “I thought I emailed them to you.” And then Slick Willie got into the act by meeting with AG Lynch. Then both of them insisted they didn’t talk about the investigation.  Now what dummy believes that Bill talked to the woman potentially prosecuting his wife and thinks the subject never came up? ”I did not have legal discussions with that woman, Loretta Lynch!”  And I saw that Elizabeth Warren got a big boost from doing a speech with Hillary.  Hey, split the fee and with another speech, Warren will have enough to retire on.

So the devout Muslims are still killing Christians during the Ramadan month. But true Muslims are full of love and peace and no disharmony like Christians.  No Muslim baker would refuse to serve if asked to serve a big party at a gay stoning.  Libs believe all the news—Orlando, San Bernardino, Istanbul, Paris, Brussels-- is a bunch of nonsense because it was caused by insufficient gun laws.  Apparently they didn’t see me carrying a sign after the Boston Marathon Bombing, “Guns don’t kill people.  Pressure cookers do!”  I hear that a lib went into a Bed Bath & Beyond and started yelling about Assault Cutlery.  “How many knives does a cook need?  No one needs high-capacity knife storage blocks. Why does anyone need a knife with a jagged edge?”   Just a bunch of angry intolerate jerks with a sense of entitlement who react violently to anybody with a different opinion, who despise America, Christianity and Israel. Um, I seem to have lost my train of thought.  Was I talking about Muslims or Democrats?  Like Obama says, “You can’t just broad-brush a whole belief system as evil, unless it is conservatism.”

Startling! The Supreme Court says that Texas can’t insist on clean, safe facilities that match out-patient surgery centers when it comes to abortion. Maybe now Kermit Goznel can go back in business.  Obama wants to put Harriet Tubman, the gun-packing Christian abolitionist who founded the Underground Railroad on the Twenty.  Now isn’t that replacing the founder of the Democrats with a Republican, gun-carrying evangelical Christian woman? So tell me what did Obama learn in public school?

Meanwhile, I volunteered to help one of our state Corporation Commissioners run for re-election.  Last week her Dem opponent announced he wasn’t going to run against her citing the fact that he needed more time with family and grandchildren.  I’ll bet they have been shooting fireworks and listening to patriotic songs and he panicked.

The Nasty Nineties

I about choked when National Geographic subtitled their series on the 90’s as “the last great decade”.  Great for economic growth, no doubt was the reasoning.  But we remember the nineties as significantly un-great in the sense of common ethics and morals.  We’ve been in the lodging business since the late 80’s when we and two other families started the Oklahoma Bed and Breakfast Association.  We would put people up in our home, zoned for guest privacy and a common area where we served gourmet breakfasts.  People in the late 80’s and early nineties were polite, happy with the experience (or didn’t make a fuss), and paid willingly.  We branched out into the hotel/motel business which serves a wider clientele, including some nasty characters.  But again, there were some who could be counted upon to be honest and good customers.  That all began to fall apart in the 1993-96 period and by 2000 it had reached about the level of rudeness, crudity, profanity, and cheating as today. 

It seemed in the 88-92 era we could always count on seniors to pay bills, though some would hint that they wanted discounts or further services—we often tried to work a deal.  But in the 90’s seniors became profane and began to claim they had an agreed-upon rate which never existed in the history of our hotel.  People in the 90’s went ballistic as the new term was.  They tried to trick you into free lodging, and so forth.  My favorite story is from our son who grew up with the business and  became Asst. Mgr. for a Holiday Inn for a time.  He told about a fairly well-heeled couple who checked in on a Sunday afternoon right after the hotel had hosted a convention that ended the previous night.  And he had few housekeepers to make up enough rooms.  So taking a maid cart he began helping staff furiously clean rooms.  About 1pm that couple arrived, and hurrying back to the desk, he knew the room he had just cleaned was good to go.  5 minutes after they had checked in they called him and demanded a free stay.  There was toilet paper they had thrown into the toilet, the fresh sheets had been rumpled to look like the room was unmade.  And something was purposely spilled on the carpet. Just 30 seconds before he saw them he had cleaned that room himself.   And so he told them that he was going to void their lodging bill and that he wanted them to leave forthwith and that they were never to stay at another Holiday Inn again—he could make it stick in the reservation system.  But then he got scared that he had gone too far and so he brought up the incident at a Holiday Inn convention.  Instead of drawing worried faces, the convocation gave him cheers.  They had all experienced things like this.

If seniors got nasty and profane, young people were sometimes almost scary.  We had robbery of fellow guests, stolen items from the kitchen when the lights were off, fights started with other guests, and, my favorite, throwing a TV over the balcony onto the parking lot below.  We had human trafficking, drug dealing, and con artists.  As our hotels were small, we could provide close, stiff security backed by 911 and police.  The nasty guest behavior wasn’t anything new under the sun, but other managers to whom I talked swore it had doubled or tripled during the mid to late-90’s. 

Why?  The political thing to say is that the President lied and lying became common and somewhat acceptable.  Except that this nastiness began prior to 1998 and Willie’s blue dress problems.  I wonder if the rap music, which glorified killing your mother and the cops, began to make us cruder in the late 80’s.  Pop culture was in decline.  When half the teens in high school chose to listen to 60’s oldies on the radio, we knew something was rotten in Denmark.  The generation of latch-key kids of the 70’s had also grown up.  Peter Drucker predicted that a generation raised without sufficient parenting was sure to bring lots of anti-social behavior into the workplace.  Government became lawless by not following the law concerning illegal immigration and income tax.  (horrendous income tax auditing scandal with the IRS in the mid nineties).  Whatever the cause, it seemed like everyone with an inclination to cheat or chisel came into full practice.  For this reason, we often reminisced about the change in people and dubbed it the Nasty Nineties.