Sunday, May 29, 2011

The Reader


Yesterday I had the unexpected pleasure of watching The Reader, an incredibly moving and thought provoking movie produced in 2008 - starring Kate Winslet, Ralph Finnes, and the relatively unknown David Kross. If you get a chance to watch it, I highly recommend it.

Oddly enough, I came across the movie by sheer coincidence. Whenever I watch baseball, I always select a second channel to flip to during the commercials. The Reader was featured on Starz, so I thought, what the heck. Anyway, during the first commercial I flipped to the movie and got so hooked I never got back to the game.

The Reader (in German, "Der Vorleser") is based on an award winning book of the same name written by Bernhard Schlink and first published in Germany in 1995. I haven't read the book, but the wikipedia article on it is quite detailed. By way of a surprisingly original plot, the book deals with participation of ordinary Germans in the Holocaust - and the extreme difficulty of later generations of Germans to understand or accept the reasons why.

Critics of the book say that Herr Schlink is trying to offer an implausible and superficial excuse: that many Germans who played peripheral roles in the Holocaust were just simple, non-bigoted and often illiterate - who childishly considered their participation to be nothing more or less than performing the jobs they were paid to do. This is a fairly thoughtful step beyond the ordinary "I was only following orders...", or "No one knew what was going on..." justifications.

Kate Winslet's mastery her role is breathtaking. On trial as a concentration camp guard, she perfectly expresses the moral bewilderment of a common person forced to gradually absorb the horror her own guilt. The camp at which she was a guard was not a death camp, but hundreds of prisoners died tragically while in her care. For this, she ultimately accepted blame, but not before innocently posing some morally difficult questions to the judges.

"It was my job." She said. "What would you have done?" And the head judge was momentarily struck dumb.

What indeed. What would we have done - you and I that is, Steve. Sitting up here on the bank and watching someone else fight the crocodiles, it seems like an easy question to answer. But to me that question involves a great deal more than how we view ourselves as moral beings. Perhaps morality is not just about drawing lines between right and wrong, but relying on convenient ways to justify our own worth and purpose - which often obscure those lines.

I'm absolutely certain there are more than enough conscious, self-acknowledged racists in any country, including this one, to pull the switches at all the gas chambers of some modern day version of the Holocaust. But what about the more common and less connected work of erecting the fences, building the barracks, and guarding the prisoners? Or, more pointedly, what about the millions more who lack the moral clarity to hold up their hands and say "Stop!", before we reach the precipice?

Are we among them?

Now that's a disturbing question....


Thursday, May 26, 2011

Tort Reform


You've managed to get me interested in what you refer to as "tort reform". I've never really liked that term. It sounds a little euphemistic for an ideological notion which in reality advocates sweeping, unprecedented changes in our system of law. Nowadays, we're applying that ideology to health care. Yet it has been repeatedly advanced in the past as a sort of cure-all for many other problems - some genuine, some not. And to my mind this presumed cure has often been worse than the disease.

Largely, what we have is a philosophical divide between consumer advocates and advocates of free enterprise . An iconic moment arrived in 1994 when one Stella Liebeck, a 79 year old lady from Albuquerque sued McDonald's for burns she suffered when she spilled a cup of their coffee on herself - and won. Now be honest Steve, isn't it true that you, like myself, have always considered the "McDonald's Coffee Case" to be an almost perfect metaphor for what's wrong with our legal system?

The popular view is that some bumbling person spilled coffee, got a little inconvenienced by a few minor burns, hired some high powered "ambulance chaser" attorneys, and came away with millions she didn't deserve. Thus, because Ms Liebeck absolutely refused to accept personal responsibility for her own actions, the rest of us now pay more money for what is now disagreeably lukewarm coffee from McDonald's. And, if even a fraction of other similar iconic anecdotes are correct, this common avoidance of personal responsibility has resulted in an outburst of excessive and unwarranted litigation which every year adds billions to the price of everything from soup to nuts.

Don't bother denying you've bought into the McDonald's story - I won't believe it. Heck, I bought into it myself.

Truth is, when Stella Liebeck spilled that coffee, she suffered 3rd degree burns which initially required 8 days of hospitalization, skin grafts, and a subsequent 2 years of additional medical treatment. During her stay in the hospital, she lost 20% of her body weight and exited the hospital at 79 pounds.

But doggonit, coffee is hot, isn't it? Sure, Ms Liebeck's injuries were more severe than what has been popularly assumed, but so what? She spilled the coffee - how is that McDonald's fault? Well, the jury of 12 citizens decided it was 80% the fault of McDonalds and 20% that of Ms Liebeck. Why? Ms Liebeck's attorneys were able to prove that: 1, McDonald's knew the temperature at which they served coffee was too hot (according to their own internal investigations), 2, during the previous 10 years, McDonalds had settled over 700 complaints of similar injuries for a total of a half million dollars and 3, even their own internal quality control manager had confirmed the coffee was too hot - but that this did not constitute a problem worth addressing.

Or, in other words, Ms Liebeck's lawyers were able to prove that McDonald's knew they were serving coffee at a temperature much hotter than what was considered a safe, industry standard, but perceived this gave them a competitive advantage which outweighed the cost of paying for the inevitable injuries their customers might sustain. And what's more, a jury of twelve honest citizens agreed.

Now, as to why this particular case is absolutely relevant to our discussions on health care and tort reform...

First, this case is probably the most notorious of many others which have been used to establish in the public's mind the image of a legal system gone off the rails. Don't get me wrong - I have no doubt there are probably other cases where the litigants received unjust or excessive settlements. But even in those latter examples, there is another aspect of the Liebeck case which bears examining:

Before Ms Liebeck even retained an attorney she offered, on her own, to settle with McDonald's for the sum total of $20,000.00 - which amounted to nothing more than her medical costs and lost income. Yet McDonald's counter offer was only $800.00. This offer presented Ms Liebeck with only one option if she wanted fair, dollar for dollar compensation: to go out and hire an law firm on a contingency basis. Now think this through Steve...

Whatever law firm Ms Liebeck retained would have to face going to court against the expert legal team of a multi-billion dollar corporation. Without any prior guarantee of success, they would have to invest their own money in countless hours of research, issuing subpoena's, preparing depositions, obtaining testimony from a variety of experts - not to mention all the additional court costs and fees necessary to pursue a case like this. Furthermore, one is hardly justified in assuming such a firm should be required to do all this work pro bono - after all, McDonald's lawyers weren't.

Although the initial award due Ms Liebeck and her attorneys came to over two million, the suit was eventually settled for an undisclosed figure less than $600,000.00 - hardly the catastrophic, industry changing amount most people assume - and possibly not much more than the total costs of litigation incurred by Ms Liebeck's team.

Now let's do the math. Suppose someone had sued McDonalds 10 years prior to Ms Liebeck - and thereby added $600,000.00 dollars to the cost McDonald's pays for preparing coffee (which by the way they were selling at the rate of 1.35 million dollars a day). Its entirely reasonable to assume this would have prevented the subsequent 700 injuries. And, if those injuries resulted in medical costs and lost wages at even a quarter of Ms Liebeck's, consumers would then have been saved a total of a little over 3 million dollars. Not a bad trade-off, don't you think? Here's the wrap up:

I mentioned before that in the rush to enact "tort reform", we're basing the potential savings on what amounts to either biased or anecdotal evidence. Furthermore, as in the iconic Liebeck case, we're ignoring the possible benefits - and savings - the present system is capable of producing. And finally, the ideology is sometimes based on faulty initial assumptions - the most frequent of which is this:

The "McDonald's Coffee Case" would never have reached the public's attention, indeed, would never have aquired its sensational reputation, if McDonald's had promptly acted with appropriate concern for its customers. Remember, it was Ms Liebeck herself, not some "ambulance chasing attorney", who came to them first and asked for reasonable compensation.

In an age where we often tend to view lawyers and litigants as little more than money grubbing opportunitists, why shouldn't we at least take the time to determine how many of these high profile cases only got off the ground - and for that matter, became a financial burden - because of a defendant's initial refusal to even consider modest and fair compensation at the outset?



Tuesday, May 24, 2011

Tort Reform Links

A quick, off-the-top list of links to several articles for consideration concerning tort reform (it is by no means complete, but what I could generate quickly):

"The Tort Tax" (WSJ): here

"Tort costs and the economy: Myths, exaggerations, and propaganda" : here
(Response and Rebuttal to EPI): here

"America's #1 Domestic Problem" : here


"10 Steps to Tort Reform" : here

There are many others. I am sure you will provide rebuttals (although I did present at least some links from both sides of the issue). All worth considering. However, let's not focus too much on generating a competition over who's 'experts' are 'better' : this is not an Appeal to Authority.

It is difficult, at best, to predict changes in behavior or to properly define the dollar-cost specifics of a "what if things were different". Any (and *ALL*) reductions in Health Care Costs *must* be explored; even if only "1-2%" as claimed by some. To ignore or set aside Tort Reform as an integral part of the process is foolish.

- Steve

Monday, May 23, 2011

New(?) Thoughts on simplifying and improving health care.

Just thinkin'....

1. Require insurance providers to treat the entire county as one (1) risk group, with NO divisions like “preferred”, “Non-smoking”, etc… everyone in the same pool.

2. Allow deductions to be applied against the policy premium based on “healthy lifestyles” or other reasonable conditions, at the option of the insuring company, which may/will vary. Implement reasonable penalties for deliberate fraud on the part of the consumer (misrepresentation) to receive unearned benefits.

3. Use the commerce clause to allow companies to sell policies across state lines. Example: As a Georgian, I could buy a policy written under the state requirements of Montana (or California, Texas, etc.) – I’m not restricted to Georgia state requirements. *I*as the end-consumer – get the option to pick-and-choose which set of state-level rules *I* wish to be obligated under (as a payer and recipient of benefits). Some tricky details here, but you get the idea.

4. Set a low minimum coverage requirements (specific conditions) at a national level. Require states to accept national minimum but states may (will) define insurance coverage mandates as they see fit: but which only apply to polices under their state guidelines (see #3). Kick 2% of the premium back to the state whose rules were selected by the consumer for his personal policy (incentive to states to encourage business in their state).

5. Allow consumer to choose to Opt-Out of *any* requirement: federal or state level. If I do not want to pay for pregnancy coverage, I’m not covered. The point: why are MY PARENTS - in their 70’s and 80’s - *required by law* to have a policy that covers pregnancy?

6. Require states to insure citizens (not "residents") of their state at the minimum national level, regardless of income. This could be handled by a “pre-bate” of the monthly premium amount required for national minimum (a health care spin on the Fair Tax pre-bate) – everyone gets the pre-bate regardless of economic status (only fair).

7. With new system in place, drop Medicare/Medicaid and eliminate workers comp. Not needed.

8. Require citizens to insure themselves or prove legitimate reason why not, i.e., taking a pauper’s oath.

9. Establish barrack-style living quarters for those taking pauper’s oath – these become VOLUNTARY “Service Camps”. Minimum living needs (food, shelter) to be provided by state. Unless physically unable, as established by state doctor, pauper to work for state in “community service”. Definition of work required left to states. Sidebar: All illegal immigrants shipped to service camps instead of being deported?

10. Tort reform: Adopt “loser pays” rule for all health care claims. Legal counsel (lawyers) to be personally liable under “loser pays” for lost claims by pauper or any situation where individual loses and has no assets to cover legal costs of winning side.

More details to be sure – a Big one is receiving care for a condition when you chose not to pay for coverage – but that can be handled simply.

BTW - I don’t like it, but I am willing to accept, an individual mandate if imposed on the state level – but I have a constitutional issue with any federal mandate. I can move if I want. *But* under the suggestions above, I don’t *have* to move, I can just take my business elsewhere.


- Steve

Sunday, May 22, 2011

They're at it again!


Holy hoppin' horny toads Steve, have we lost our minds?

On November 30th, 2010, Jared Laughner bought a 9mm Glock pistol at The Sportsman's Warehouse in Tuscon, Arizona. Everybody knows that. They know where he bought it - they have witnesses, records and video. They even know how much 9mm ammo he bought later at a Walmart. Then, the next year on January 8th, he took the loaded pistol with him on a taxi ride to a Safeway store in North Tuscon, got out, walked over to a political gathering hosted by Gabriel Giffords and opened fire, killing six people, including a 9 year old girl, and wounding 13 others.

There isn't any doubt about this. He was taken to the ground at the scene by several heroic bystanders and quickly arrested. They didn't get the wrong guy. There wasn't any mix-up. It was Jared's gun that did the shooting. Many people actually witnessed Mr. Laughner aiming the gun and pulling the trigger - repeatedly. Its even on tape for Pete's sake! There is absolutely zero possibility the shooter was anyone else but Jared Laughner.

Now we learn from the Arizona Daily Star that Jared Laughner might not be "competent" to stand trial. He may not "understand" the charges against him. Plus, he might not be able to "assist his lawyers" in their defense of him.

What in the Sam Hill is there to understand?

Judge: "Mr. Laughner, you shot and killed six people."

Mr. Laughner: "I don't understand."

Judge: "Oh. I see. Well now that's a whole different kettle of fish..."

What? Who gives a flip if this jerk understands how to zip his pants??

And by the way, what defense? Are you kidding me?

So now, once again, justice will have to wait until he gets enough taxpayer funded psycho-therapy until a taxpayer funded doctor says he's "competent". And that could take years. Who knows? Maybe he never will be. And even then, when that magic day arrives and he gets hauled back to court, who wants to bet his taxpayer funded lawyers won't use the "well judge, he just sorta' flipped out" defense. Poor guy - maybe he sat out in the sun a little too long and lost track of the fact that killing 6 people is considered a no-no!

Steve, I tell you what. Man, when it comes to human rights, I'm huge on it. I mean big. Everyone, including scumballs like Jared Laughner deserve swift access to a fair trial. But in this guy's case, why not just get it over and done with? The guy shot 6 people - there's no possible doubt about it. Who cares if he's incompetent, a little messed up or crazy as a loon? I say get him to court, try him, then string him up. I don't even think we should have to pay for a new rope.


Saturday, May 21, 2011

Enough already!


You and I routinely disagree on many issues, and climate change is a perfect example. Plainly, each of us thinks the other is wrong. But importantly, neither of us believe the other is supporting his position by intentionally lying about the facts. That's as crucial to me as I'm sure it is to you. We wouldn't have maintained this blog for so long if that was not the case. I'm not only willing, but happy to debate the issues with an honest person like yourself. But a liar, no matter what his views may be, deserves no credibility or respect - none whatsoever.

Just lately I've had an epiphany of sorts. It occurred to me that when it comes to politics, there are two sorts of people and the dividing line is absolutely clear: there are those who are willing to lie about the facts to support their positions, and those who are not. Now I suppose a man could justify lying if he believes some outcomes are more important than that they are attained by dishonesty. Call me old fashioned or naive, but I don't believe dishonesty is ever justified. Case in point:

On 5/19, the President gave a major speech on foreign policy. What he had to say about Israel was especially important:

"So while the core issues of the conflict must be negotiated, the basis of those negotiations is clear: a viable Palestine, a secure Israel. The United States believes that negotiations should result in two states, with permanent Palestinian borders with Israel, Jordan, and Egypt, and permanent Israeli borders with Palestine. We believe the borders of Israel and Palestine should be based on the 1967 lines with mutually agreed swaps, so that secure and recognized borders are established for both states." (my emphasis)

As you are no doubt aware, these last 30 words set off a political firestorm on the Right.

From The American Spectator:

"...Obama is now ready to advocate the next step of his plan to wipe Israel off the face of the Earth.

This is absolutely outrageous. There is no way that Israel can be secure, geographically, with the 1967 borders. He knows that. Israel knows that. The world knows that. He may as well have just declared a proxy war against Israel..."

From Fox News:

"Obama, in a sweeping address tackling the uprisings in the Middle East and the stalled peace process, stunned Washington and Jerusalem by endorsing Palestinians' demand for their own state based on the pre-1967 borders. The break with longstanding U.S. policy appeared to immediately aggravate the Israelis, who want the borders of any future Palestinian state determined through negotiations."

Especially egregious, this, from Charles Krauthammer:

"...A new formulation favorable to maximal Arab demands. True, that idea has been the working premise for negotiations since 2000. But no president had ever before publicly and explicitly endorsed the 1967 lines. (!!!!!!)

Even more alarming to Israel is Obama’s omission of previous American assurances to recognize “realities on the ground” in adjusting the 1967 border, meaning U.S. agreement that Israel would incorporate the thickly populated, close-in settlements in any land swap. By omitting this, Obama leaves the impression of indifference to the fate of these settlements. This would be a significant change in U.S. policy and a heavy blow to the Israeli national consensus."

From Orin Hatch:

"Utah Sen. Orrin Hatch (R) announced Friday he would introduce a congressional resolution disapproving of President Obama's stance on Israel's border lines, saying that "threatens Israel's security."

"By calling for a return to the pre-1967 borders, President Obama has directly undermined her," Hatch said of Israel. "Rather than stand by Israel against consistent unprovoked aggression by longtime supporters of terrorism, President Obama is rewarding those who threaten Israel’s very right to exist. This is not only ridiculous, but dangerous." "

I could go on and on - this is just a sample. Just about all the usual right wing pundits, not to mention most of the presumed Republican presidential candidates, congressmen, party leaders, and of course Fox News, as if on cue, condemned the speech as a horrifying sell-out of Israel.

Let's back up a minute and ask if this amazing, spontaneous outburst was factually justified. But more importantly, were the facts easily accessible to those making the accusations?

Jeffrey Goldberg, a Jew, a consistent conservative, and of all things, a veteran of the Israeli Defense Force had this to say:

"I'm amazed at the amount of insta-commentary out there suggesting that the President has proposed something radical and new by declaring that Israel's 1967 borders should define -- with land-swaps -- the borders of a Palestinian state. I'm feeling a certain Groundhog Day effect here. This has been the basic idea for at least 12 years. This is what Bill Clinton, Ehud Barak and Yasser Arafat were talking about at Camp David, and later, at Taba. This is what George W. Bush was talking about with Ariel Sharon and Ehud Olmert. So what's the huge deal here? Is there any non-delusional Israeli who doesn't think that the 1967 border won't serve as the rough outline of the new Palestinian state?"

So what was going on here? Was Barak Obama, as Mr. Goldberg said, just re-stating what had been U.S. policy for the last 12 years - and the right-wingers were just misinformed? Or was it Mr. Goldberg himself who was lying about the facts?

Here's an excerpt from the publicly accessible, well known (to all the right wingers), and thoroughly disseminated letter written to Ariel Sharon by George W. Bush on April 14th, 2004:

"As part of a final peace settlement, Israel must have secure and recognized borders, which should emerge from negotiations between the parties in accordance with UNSC Resolutions 242 and 338. In light of new realities on the ground, including already existing major Israeli population centers, it is unrealistic to expect that the outcome of final status negotiations will be a full and complete return to the armistice lines of 1949, and all previous efforts to negotiate a two-state solution have reached the same conclusion. It is realistic to expect that any final status agreement will only be achieved on the basis of mutually agreed changes that reflect these realities."

---my comment: U.N. Resolution 242, which Mr. Bush was referring to as a basis from which negotiations should start, included the following:

"(i) Withdrawal of Israel armed forces from territories occupied in the recent conflict (i.e. to the 1967 borders);

(ii) Termination of all claims or states of belligerency and respect for and acknowledgment of the sovereignty, territorial integrity and political independence of every State in the area and their right to live in peace within secure and recognized boundaries free from threats or acts of force."

Steve, its just not plausible to believe at least most of the people making the accusations against Obama were not aware of this clear and succinct strategy outlined and pursued by George W. Bush and everyone else before him.

Go back and compare this excerpt with the 30 lines from Obama's speech:

"We believe the borders of Israel and Palestine should be based on the 1967 lines with mutually agreed swaps, so that secure and recognized borders are established for both states."

This is precisely the same thing George Bush was talking about - and for that matter, Bill Clinton before him. Even as far back as Reagan, no President advocated a process which has as a goal the end result of Israel returning to its 1967 borders. Yet all presidents, regardless of party, have acknowledged the 1967 borders should serve as a starting point of negotiations - exactly as President Obama said in his speech.

Now if you were a mind reader, you might be able to claim the "mutually agreed swaps" referred to by Obama were not of the same magnitude or nature advocated by W. Bush, Clinton, H.W. Bush and Reagan. But you know, none of Obama's right wing accusers are mind readers. So on what evidence did they base their accusations?

Steve, they don't have any. Or, in other words, they're lying about the facts.

Now I'm willing to accept the opinion that Barak Obama is not the same, staunch ally of Israel that his predecessors were. I don't agree with that opinion, but neither do I consider it dishonest for someone to say it. What I do object to is someone who boldly, consciously lies about the facts in order to support that opinion. This brings me to the whole point of this post...

I consider the entire problem of poor government to be, not the honest differences in philosophy like you and I have, but the differences created and sustained by dishonesty. In other words, a good policy of governance advocated by dishonesty is worse than a bad policy advocated honestly.

Why? I mean, why would not good policies transcend whatever means were employed to enact them? I'll tell you why. You can't rely on a dishonest man. Sooner or later, an honest man who favors a bad policy will have the moral courage to question the effect of that policy and change his mind. A dishonest man is not capable of this. A dishonest man will stake a claim to one position or another and never, never change his mind - regardless of the facts. As I said in a previous post, some people - lots of them in fact - are so afraid of being wrong that they are willing to sacrifice honesty to keep from admitting it.

This is especially true of Our Leaders. And maybe it is as much our fault as it is their's. After all, isn't it true the most suicidal act in politics is to say, "Sorry, I was wrong." ?


P.S. : I apologize for not yet posting a follow on to your most recent, and excellent two posts. I'll work on it. But this last mass expression of political hypocrisy has got me so mad I just had to say something.

Thursday, May 19, 2011


Here's a novel idea. If you really think it through, maybe Social Security and Medicare are nothing more than an effort to institutionalize a uniquely American concept of personal independence. Stay with me here...

I read somewhere that two thirds of Medicare payments go to nursing homes and I have no reason to doubt this figure. But for the elderly, what are the alternatives to nursing homes? There's really only one I can think of. That would be living with one's kids. In American culture, this arrangement is almost universally viewed a failed lifestyle. Consider:

While watching the National Geographic show about The Three Gorges Dam in China, I was particularly struck by the tremendous difficulties the Chinese faced in relocating families whose homes and farms were going to be submerged by the rising waters of the Yangtze River.

In nearly every case, the families being displaced were noticeably different in composition from typical American families. To wit: a typical, traditional Chinese family usually consists of at least 3 generations living together. And each generation - at least so far as I could see - had some worthwhile skill to add.

Here in America, we tend to view things differently. We attain adulthood, establish careers, get married, raise families, then retire. In China, traditionally, all of these phases of life occur within the same family in the same home.

In America, the success of parents in raising kids is determined by how soon and how well the kids are able to move off and start their own lives - independent of their parents. Well brought up kids are supposed to reach a point in life where they no longer need the help of their parents to make their way.

Steve, I can well remember the stories of how my grandfather and grandmother looked after my great grandmother in her declining years. My great grandmother had her own room in my grandparent's home. My grandmother spend considerable time attending to her.

Nowadays that sort of arrangement is a thing of the past. In today's world, my great grandmother would be living in a nursing home, essentially a ward of the state. In all cases, parents, forced by necessity to live with their grown kids, would be mortified, and consider themselves absolute failures.

Is it possible that in the process of limiting, culturally, the definition of what constitutes a successful family, we have lost something?

Ironically, it seems to me that all the cultural warriors out there fighting to define and defend marriage - the "one man one woman" crowd - are missing the point. What they should be actively promoting is not traditional marriages, but traditional families.

Maybe this sounds naive and simplistic and I'm sorry if it does, but if you are going to assert that stable marriages comprise the bedrock of American society, why would you not consider multi-generational families to be the best (and perhaps only) alternative to entitlements - and have the courage to say so?

Just trying to think a little outside the box here...


Tuesday, May 17, 2011

Corporate tax Reform - some ideas

In addition to targeting “the (evil) rich”, loud noises are being made about businesses not paying “their fair share” of taxes. Without jumping into an argument over what could/would be considered “fair”, I’ll admit there *ARE* some problems with business taxation.

I will accept as fact that Corporate tax revenues are now at historical lows as a share of the economy. This is happening at a time when we face deficits and debt that are expected to grow to unsustainable levels. HOWEVER, the top statutory corporate tax rate is high, the average tax rate (the share of profits that companies actually pay in taxes) is substantially *lower* because of the tax code. This is due to a multitude of write-offs and ‘loophole’ advantages, implemented over the years, so corporations can reduce their taxes. And while I think U.S. corporate tax rates are WAY too high to be competitive on a global scale, when measured as a share of the economy, U.S. corporate tax receipts are somewhat low compared to other developed countries.

But, this is all about dealing with that nagging debt problem…

In ‘fairness’, some (not all) of the burden of helping us get out of this deficit mess will have to fall upon business. I’ll make the flat statement that *ALL* parts of the budget and the tax code, including corporate taxes, should contribute to deficit reduction. This will require across-the-board reform of the tax code itself.

Now, I’m on record as supporting the Fair Tax for a variety of reasons. (The application of true ‘Fairness’ into the tax code itself is the biggest.) But since doing the Right Thing - moving from income tax to consumption tax via the Fair Tax – is unlikely in our current political environment, here’s a few suggestions for what to do under the current set of rules.

1. Reduce the tax code’s bias towards debt financing. The current corporate tax code encourages corporations to finance their investments with debt (by issuing bonds) rather than equity (by selling stock). This encourages corporations to rely excessively on debt, which, as the recent financial crisis demonstrated, poses risks for both the firms and the broader economy. It’s not good for individuals *or* business to rely on debt. The tax code should be more even-handed in treating these two types of financing. And it goes without saying that reversing the recent trend in ignoring bond holders and shareholders (e.g. the GM debacle) must *never* happen again.

2. Reduce the tax code’s bias in favor of overseas investments. U.S. multinationals pay much lower taxes on profits from their overseas investments than on profits from their domestic investments. That gives corporations a strong incentive to shift economic activity and income from the United States to other countries. Policymakers should address aspects of the corporate tax code that allow so much business activity to escape taxation and that favor foreign investments over domestic ones.

3. Improve economic efficiency by reducing special preferences. This is the absolute height of ‘fairness’… The existing corporate tax code taxes different kinds of corporate investments at very different rates. This “un-level playing field” encourages businesses to choose among investments in a large part based on their tax benefits, instead of making those decisions based entirely on investments’ real economic value. Policymakers should level the playing field.

4. Provide neutral treatment of corporate and non-corporate businesses. Over time, various policy changes have made it easier for companies to enjoy the benefits of corporate status without being subject to the corporate income tax. Reform should reflect the principle that firms engaging in similar activities and enjoying similar legal benefits should be taxed at similar rates… just add more ‘Fairness’ again.

5. Take specific steps to discourage tax sheltering. If policymakers lower the statutory corporate tax rate to *well* below the top individual tax rate, they should also establish safeguards to prevent high-income individuals from sheltering their income in corporations in order to pay taxes at a lower rate. Again, level the playing field: more fairness.

That’s a few points. I think they make sense. A lot of folks won’t like them, but that’s because they’ve been given advantages over others. Favoring one group over another is WRONG – it just isn’t fair.

Of course, if we can develop the courage to dump the existing tax code entirely and shift to the Fair Tax, none of this would be necessary.

- Steve

Friday, May 13, 2011

A rambling diatribe on what Ayn Rand got Wrong (and Right)…

I wonder if Ayn Rand ever read, The Man Without a Country, by Edward Everett Hale. I *know* that too many of today’s generations have not. Pity. Folks could at least read the Wikipedia summary… (All those folks out there - If you aren’t familiar with Hale’s story, go read it, or the rest of this post will make little sense.)

Along those lines, Ayn Rand is sometimes misinterpreted to imply that people *should* have no loyalty to anything except themselves. It’s an incorrect conclusion, but it’s easy to see how some might think that is her point. This explains why Atlas Shrugged and Rand’s philosophy of Objectivism reached a popular new height in the Me-Generation 1980’s – it fit nicely with the prevalent mood of the times. The Baby Boomers (of which I am one, albeit on the tail-end) are spectacularly good at practicing what they see as desirable aspects of Objectivism, at least up until the point where they have to directly contribute something to the equation personally.

I would like to take a moment to remind anyone that might read this opinion that – IMHO, a person with no loyalty to anything but his/her own pleasure is NOT a noble hero of individualism, but instead represents a pathetic failure as a human being. Now, to be sure, there is more than one way to be a failure as a human being. An easy identifier is a self-centered narcissist blissfully pursuing the power to make others miserable for their own good. This describes way too many folks in the political arena today.

But where Rand didn’t make things particularly clear was that while it *IS* true that "the business of business is profit," such an attitude is not inherently smart, or useful to the country, although it CAN be. The downside is especially true when “business” is granted the rights of a “citizen” but not the attached responsibility. Yes, Rand didn’t exactly promote such a situation either, but to paraphrase her own words, “you cannot disregard reality”. A key point – citizens, as individuals, have another business, besides whatever actions pay their rent: the ultimate business (duty?) of being a Good Citizen is the welfare of the nation.

The definition of "success" for a business may be an increasing stock price, or increased sales...but the definition of success for a citizen has little/nothing to do with stock prices or corporate income (or personal income). A citizen is a success (as a citizen) by making things better. It does not matter how this happens, as long as it does.

A parent who manages to convey to their children the responsibility of citizenship – specifically, that the world doesn’t revolve around them and their petty desires/emotions *and* that life is NOT “fair” *and* will NOT be “a bowl of cherries – has been able to instill the belief system that, Yes, one does owe something to the society that nurtured them. And before you think I have fallen off my Individualism high-horse, there is a clear and distinct difference between contributing to ‘society’ and taking (stealing) resources from one to ‘give’ to another according to YOUR discretion.

The honest shopkeeper, the honest craftsman, the honest teacher, the honest tradesman, the honest truck-driver… are among those who obey the laws and make roads safer by their driving or make neighborhoods safer by their cooperation; those who volunteer for tasks like ambulance work or mentoring kids or working in food pantries, etc., etc., etc. These are concrete, every-day examples of doing what successful citizens do...they are supporting the social and cultural infrastructure that supports them. It sometimes appears that Rand thought those day-to-day issues would simply take care of themselves – but the Real World is more complex.

So exactly what, you might ask, distinguishes the unsuccessful citizen? Some old-fashioned vices: greed, dishonesty, laziness, selfishness, cruelty, anger, resentment, or – in short - refusal to take responsibility for his/her own acts and their consequences. This is not limited to personal accountability, but extends to anything that degrades the resources of the nation. And that includes deliberate actions ,whether intentional or not, which damage the human resources needed for a healthy society. Please note that this does not imply approval of forcing ANY particular actions upon individuals which - in your opinion - are needed to benefit "the planet". Good Citizenship does not require the slavery of mankind in service to 'lesser creatures' or 'the environment'.

When a construction firm uses substandard materials to build a highway or bridge or apartment building...that's being a bad citizen. And no amount of donations to a political candidate, or university, or any collective group, and no matter what your INTENTIONS may have been - nothing can undo the damage done to the fabric of trust that underlies healthy societies...

When a member of the armed forces uses supplies for personal gain; or fails to learn his/her job and carry out his/her duties with dispatch; or does anything that reflects badly on the service… that's damage done to public trust and/or to the reputation of the nation...

When a policeman or jail guard rapes a prisoner...when a judge rules in favor of a corporation in which he owns stock...when a company fires the employees in its own nation and hires cheaper labor elsewhere...that's damage done to the fabric of the nation. And that's being a Bad Citizen.

This nation was founded with an overt appeal to universal rights of mankind – as endowed by their Creator – which begins with Life, Liberty, and the Pursuit of Happiness. (Note that you are not guaranteed by your Creator that you WILL achieve the tangible benefits of these Rights, only that you have an Opportunity to do so.) And be aware that, by design, Rights are *not* created by Man – an important distinction.

The survival of this nation depended, from its very beginning, upon citizens taking Responsibility, not just Liberty, as one of the rights of mankind. It was so obvious, I believe to the Framers, that this principle was left unsaid. Had the signers of the Declaration been as wedded to the concept of personal liberty as the Far Right (e.g. conservatives) are accused of being today, there would have been no successful Revolution against England.

Those brave men, who pledged their "lives, their fortunes, and their sacred honor" to the cause, did not want total freedom for themselves. (Such would lead to anarchy.) They did not demand that others bear the burdens so they could ride in a comfortable coach. (Involuntary financial redistribution is self-destructive.)

The Framers, as I see it, were familiar with, and based their concept of citizenship on, an ancient understanding of citizenship: that courage, fortitude, integrity, temperance, sound judgment and other similar traits were all desirable virtues which, if held by all citizens, would knit together a culture that could not only survive, but yield a better country and a better lifestyle for all. They knew enough of human nature to know that no nation – at that time - had yet achieved such a citizenry. That knew it might be unlikely for such a society to always exist indefinitely in future, even with the best of intentions. But they also knew it was a goal worth trying to achieve. They knew it would take a huge sacrifice. First their own personal sacrifice, which they were willing to make, and then (in succeeding generations) more of the same. They knew that risking one's physical life in combat or a dangerous public service is NOT the only sacrifice necessary to make and preserve a sound nation. Any successful society depends on Contributors, not just the Takers.

This was one of the things Rand got Right… a society which elevates those who TAKE, while demonizing those who MAKE, is doomed to Fail. There are those who make the tools and those who use them, those who bear and support and teach and train the young who will carry on the work as adults. Society must benefit all of them – not just those at the top; not just those at the bottom; not just capitalists; not just labor; not just those who skim off a profit from the work of others; not just those with legislative responsibilities and duties…

Yes, a large and complex society needs a complex social and financial structure to support it. But a structure which deliberately (despite the best of Intentions) increases the gap between rich and poor, a society that ignores or devalues the contributions of the poor and middle-class, a society which criminalizes the successes of upper class - is a society that creates bad citizens by its very structure. This is where we find ourselves today.

When a rich man, like Ken Lay of Enron, can claim that he has suffered more than the low-level employees of the company because he's lost more money – when such folks can spend pre-sentencing time at a luxurious home in Aspen with his family, while a poor man will spend his pre-sentencing time in jail: the system is obviously creating bad citizens.

When a person with no visible means of support - who has squandered the opportunities they have had - is legally given a manufactured “Right” to collect and receive financial gains based upon the efforts and hard work of others: the system is creating bad citizens.

When a President's wife publicly announces that she and her husband have suffered more from the war than anyone else and then retire to a cushy central Texas ranch; while brain-injured and amputee vets and their families suffer in ‘different ways’: we have an excellent example of citizenship failure right at the top. When a subsequent President proclaims that he and his followers can do whatever they want to whoever they want, because “we won”: we have a crisis of petty vindictiveness ruling the roost… It’s not about particular parties or ideologies; it’s a problem of attitude. To paraphrase the comic/movie line, “with great power and wealth should come great responsibility and accountability.”

Ayn Rand got quite a few things right… she got some things wrong… and she has some that straddle the fence. For example, “Civilization is … and some that the progress toward a society of privacy. The savage’s whole existence is public, ruled by the laws of his tribe. Civilization is the process of setting man free from men.” But Rand fails to consider that No Man Is An Island. It's the balance between individual liberty and civic responsibility that is so difficult. And it MUST be an exact balance, for to ignore or favor one side over the other will certainly lead to destruction.

And – IMHO - she’s absolutely correct with, “A government is the most dangerous threat to man’s rights: it holds a legal monopoly on the use of physical force against legally disarmed victims.” And also, “Government ‘help’ to business is just as disastrous as government persecution… the only way a government can be of service to national prosperity is by keeping its hands off.” A bit extreme perhaps, but observed evidence from the Real World supports here position, unfortunately. I suspect this is due to Results, not Intentions of those responsible.

With the real world conflict with Rand’s views, there is a strong tendency to disregard *all* of her philosophy as being “unworkable”. That’s an overstatement: the principles therein haven’t even been tried. There *is* a distinct difference from what Rand proposes and what has been used (and failed) in the Real World. One must admit, she has some good points. But blind adherence to Objectivism is just as wrong as blind acceptance of Collectivism. The key word here is… BLIND.

Rand is correct when stating, “…it only stands to reason that where there’s sacrifice, there’s someone collecting the sacrificial offerings. Where there’s service, there is someone being served. The man who speaks to you of sacrifice is speaking of slaves and masters, and intends to be the master.” Rand’s solution, “I swear, by my life and my love of it, that I will never live for the sake of another man, nor ask another man to live for mine” doesn’t go far enough, only because it fails to consider the duties and responsibilities of True Citizenship. She does rebound nicely with, “Individual rights are not subject to a public vote; a majority has no right to vote away the rights of a minority; the political function of rights is precisely to protect minorities from oppression by majorities (and the smallest minority on earth is the individual).”

* * * * *

Whew. That’s all for now: I’ll be posting further along these lines…

- Steve

Tuesday, May 10, 2011



I got one of my first real lessons in honesty back when I was about 13. I took over a neighborhood paper route and spent maybe a week or so learning the route from the kid who was giving it up. Then came the first day I was to deliver it myself. Since I wasn't sure I knew all the houses to deliver to by heart, I decided to go by the kid's "route book" - that's the book with little stubs in it that paperboys used to go around each week and collect. Well, wouldn't you know it, at least a third of the houses I remembered delivering to while learning the route, weren't in the route book. What this meant was that the paperboy before me had been mistakenly delivering papers to a lot of houses which had not been paying. Afterwards, I called the manager at the paper and told him about this. The manager said I should only deliver papers to the people in the route book. If there had been some mix up, anybody on the route who stopped getting a paper would surely call and let us know.

Well, nobody called. Repeat, Nobody.

Now back then, paperboys didn't make a lot of money. You got up around 5 in the morning, picked up your papers at a local drop off (mine was the fire station), banded them, put them in your paper bag and took them around. Each week you had to go around and spend another afternoon collecting. In the end, you made maybe 20 bucks a week for a good 30 hours worth of work. Like I said, not a lot of money, but not bad either for a 13 year old kid - especially with the minimum wage at below $2.00 an hour.

Anyway, it turned out that the poor kid who had the route before me was essentially paying by himself for all the papers those customers were getting who weren't paying. Now this wasn't some kind of down and out neighborhood either. Most of the people who lived on the route had good jobs and surely enough money to pay the measly 3 or 4 bucks a week for a newspaper delivered right to their front porch. You had to figure that at some point the kid had just lost their billing cards and and thoughtlessly kept delivering papers to them. Probably they were otherwise good people - went to church, obeyed the laws, said please and thank you, the whole bit. But for some reason, when they started getting a paper they knew they weren't paying for, not one of them called the office and arranged to make payment. Not one! All of them were perfectly happy with getting a free newspaper and letting some poor 13 year old kid pay for it.

It may not sound like much, but this taught me a great deal about honesty. One other example:

Once, while walking down the side-walk with my mother in Indianapolis, Mom looked down and spotted a 20 dollar bill. She picked it up, thought for a second, then went into the nearest store, handed the 20 to the clerk and told him to hang on to it in case the person who lost it should come back looking for it. Imagine that! Steve, there wasn't any way in Hell that 20 would ever get back to who ever lost it. But you know, Mom didn't care. All she knew was that it wasn't her money, and any effort to get it back to its rightful owner, no matter how futile, was preferable to keeping it.

Mom wouldn't have gone for two seconds without paying for a newspaper. Neither would Dad. If we got a paper delivered to us without paying, my parents would have tracked the paperboy down and made sure he got paid. That's the kind of family I grew up in. But sometimes I wonder how many families like mine there really are. If my experience with the paper route was any indication - probably not many.

I like to think of honesty as one of the ultimate acts of instinctive selfishness. Really, really honest people got to be that way because they just can't deal with how dishonesty makes them feel. All their lives, they will always, in every instance, chose to be honest when the choice to be dishonest would benefit them more - and never be known by anyone other than themselves. They don't require the threat of laws or law enforcement to goad them into making these choices. Even in a lawless world, where honesty is considered stupid and useless, they would still be honest.

I'm like that and I think you are too. If you're anything like me, you've made more than your share of mistakes. As a matter of fact, if you're anything like me, you've never done anything right that you didn't do wrong at least once before. But you know, honesty has nothing to do with right or wrong answers, but how you go about getting them.