[Note: This is a response I gave my sister regarding a piece she wrote for her local paper on the proposed ACA legislation]
I just now read your health care piece on the currently proposed healthcare reform. It's very good and I agree wholeheartedly that the legislation focuses on just half the problem (coverage) and ignored the problem that needs to be addressed first (cost). Fixing the latter will go a long way in fixing the former. Still, there are a couple of challenges that are very difficult to address from a purely free-market approach.
The first is that with every type of insurance, the more that risk is spread, the lower the cost of coverage. Imagine you ran a lottery that guaranteed a million dollar payout if the winning number is drawn, regardless of how many people played. You wouldn't sell tickets for a dollar if only 1,000 people played - the risk of someone winning might be tiny, but you'd go broke if you had to pay out. You'd have to charge $1,000 per ticket just to ensure you broke even. But if two million people played, you could charge a dollar, pay the prize and make a million for yourself (nice gig if you can get it).
Now, change that to health insurance. If you agree to insure one person against illness, you might be lucky and get a person who never gets sick - or you might get someone with diabetes who is going to be taking medication for life, suffer potential circulatory problems, blindness, amputations and more. The cost can be hundreds of thousands of dollars. So how much are you going to charge to cover that one person? You might not charge much if they're healthy, but you're still going to charge plenty to cover your risk. You are going to charge even more if they're at risk - a lot more because you need to cover your risk of payout. But if you are insuring a thousand people, the risk is spread and you can charge everyone far less. Perhaps more than you would the single, healthy person, but still less than the single at-risk person.
Therein lies challenge #1. When a company or individual signs up for health insurance, the insurance company considers them their own individual group. So an individual is a group of one, a small business a group of fifteen (or however many are covered), General Electric a group of 200,000. In each case, the insurance company will charge premiums to cover the cost of caring for the individuals in the group. If a GE employee gets sick, the cost is spread among 200,000 premiums. If a small-business employee gets sick, it's spread over 15 premiums. If the individual gets sick, the individual will eventually pay the whole load (I once hired a person whose husband had heart disease - that one hire increased my premiums $24,000/year. Since I only covered 12 employees, that worked out to $2,000 per employee per year. They couldn't afford to pick up that tab, so I had to eat it).
So let's say individuals band together and form their own group. They get better rates. Eventually, one member of the group gets sick and premiums go up 20% But then another insurance company approaches one of the healthy people in the group and tells them they can get coverage individually for the original premium - so the person bolts the group, driving up premiums even more for those who remain in the group. This makes individual coverage attractive for even more people in the group, so they also bolt and the cycle repeats. Eventually, the group is down to just the sick folks and they can't afford the coverage. So the question becomes how can we build groups that healthy people won't bolt? Or, if we do allow them to bolt, how do we keep premiums low for those who remain? Any attempt to address the latter will violate all the rules of actuarial risk taking, unless we somehow subsidize the remaining people.
Challenge #2 involves those healthy people who choose not to buy insurance. Sure, they may be healthy now, but what happens when they get sick? We don't turn them away, so in effect, they're covered though they are not paying. My brother-in-law is a perfect example. He was young, healthy and uninsured when he had a serious auto accident that required Air Care to the local trauma hospital, where he was in critical condition for days. His hospital bill came to $48,000. His dad negotiated that down to $4,800, which my brother-in-law paid over several years. So who paid the other $43,200? Those of us with health insurance. In effect, the uninsured are technically part of everyone else's "group", but they are largely getting a free ride. Is that fair? Should they be required to contribute to covering potentially catastrophic illness, or should we just say tough luck and refuse them treatment? You know how that would play on the evening news ("Uninsured six-year old allowed to die after getting hit by car. Film at 11").
These aren't challenges that are easily fixed - or even possible to fix - through purely free-market solutions. In a column years ago, I suggested a psuedo-public option. Allow small businesses and individuals to buy into the health insurance plan available to federal employees. These plans are private insurance plans, so it maintains a free-market component. But they also cover millions of people who are not going to bolt the group, so the risk is spread widely. The fact that it involves government employees scares people, but it's not a solution I'm ready dismiss out-of-hand. And I do believe that people who choose not to be insured should either be required to get basic insurance to cover emergency catastrophic care or be made to pay a tax that funds a catastrophic care program. Doing so will shift the burden from those who are effectively paying for that coverage (us) to those who are getting a free ride. The alternative is to tell them tough luck when they need help, and I'm not prepared to do that.
It's an incredibly complex problem. Still, it doesn’t need an equally complex solution. I think it could be fixed with a 20-page bill, not a 1,000+ page one. Unfortunately, that's not how our government thinks.
12/15/2009
Don't Misread Scott Brown's Win
Don't be fooled by White House officials blaming the loss of Ted Kennedy's old seat on Democratic candidate Martha Coakley. A lackluster candidate is not going to drive her opponent's supporters to brave wind and cold and rain to wave signs from sidewalks, street corners and parking lots, as Scott Brown's did days before the election even took place. That excitement and energy was driven by something else - something those White House staffers might find if they do a little soul-searching closer to home.
The seeds of Scott Brown's victory were planted more than a year ago when Democrats misread Barack Obama's overwhelming victory as an endorsement of their most liberal tendencies, rather than the very personal repudiation of the ineptitude of George W. Bush. Socially-moderate, fiscally-conservative Republicans and independents were essentially disgusted by the previous administration's profligate spending and flat-earth society approach to global issues. Add a financial crisis of bi-partisan making that hit the fan weeks before the election and it should come as no surprise that the party in power took a hit. In fact, if there were any surprise, it should have been that the election wasn't even more lopsided.
No, Obama's election and the ascent of a Democratic majority in Congress were not an endorsement of liberal ideals. If anything, they weren't winners so much as they were default beneficiaries of a dejected and derelict opposition. As is so often the case, the rose-colored glasses of the winning party blinded them, making it impossible for them to read the political tea leaves. In the process, they brewed themselves one heckuva a mess.
The seeds of Scott Brown's victory were planted more than a year ago when Democrats misread Barack Obama's overwhelming victory as an endorsement of their most liberal tendencies, rather than the very personal repudiation of the ineptitude of George W. Bush. Socially-moderate, fiscally-conservative Republicans and independents were essentially disgusted by the previous administration's profligate spending and flat-earth society approach to global issues. Add a financial crisis of bi-partisan making that hit the fan weeks before the election and it should come as no surprise that the party in power took a hit. In fact, if there were any surprise, it should have been that the election wasn't even more lopsided.
No, Obama's election and the ascent of a Democratic majority in Congress were not an endorsement of liberal ideals. If anything, they weren't winners so much as they were default beneficiaries of a dejected and derelict opposition. As is so often the case, the rose-colored glasses of the winning party blinded them, making it impossible for them to read the political tea leaves. In the process, they brewed themselves one heckuva a mess.
12/13/2008
Letting Automakers Go Bankrupt Not Simple as it Sounds
It's not hard to find lots of emotion on all sides surrounding the predicament our automakers face in the wake of the current credit meltdown. Certainly understandable given all the issues involved - labor, management, government, taxes, personal experiences, perhaps even a bit of nostalgia (first cars, first loves, old lemons and whatnot). Lord knows I have my own personal biases, given that my dad's a retired GM exec.
Anyway, here are my thoughts.
1) The current crisis is a direct result of the credit meltdown. That is not a problem of the automakers' making
2) The fact the credit meltdown became a crisis for the automakers IS a problem of their own making.
3) It became a problem because of cars, agreements and decisions made 10, 20, 30 and even 40 years ago (stretching back before the 1973 Arab oil embargo).
4) Current management and union leadership have made more progress in working toward fixing the problems in the past five years than was made in the previous thirty.
5) That progress is still nowhere near enough.
So where are we today from an operational/business model standpoint?
The cars are far superior to what was being turned out even a few years ago, and continue to improve with each passing year. The most recent UAW agreement promises to eliminate the cost differential between domestic and transplant automakers, putting them on a level competitive playing field. [sidenote - my dad, no fan of the union, was saying long before this mess that current UAW head Ron Goettelfinger is the first union leader who "gets it"]. Top management has agreed to aggressive pay cuts. The dividend was cut in half. Retired executive health insurance has been completely eliminated. Bondholders have been asked to exchange debt for equity.
In other words, all stakeholders, except perhaps retired UAW members who are contractually protected, have taken or been asked to take a hit.
But that's still not enough. As a result, GM and Chrysler face imminent bankruptcy. Ford has a bit more time, but they are leveraged to the hilt and will quite likely face a similar crisis in 12 to 18 months if sales do not turn around.
Now, I would clearly appear to have a bias in wanting to see GM survive for my dad's sake, but at this point I believe his fate is sealed, no matter what happens. His basic pension is secure even in bankruptcy, but his health insurance is gone for good, ditto the value of his stock holdings. The remaining dividend is as good as gone, as is his supplemental executive pension. So whatever happens from here on out really has no bearing on the personal situation.
That said, we first must decide if saving the domestic auto industry is not just a worthwhile goal, but an imperative one. First, we should keep in mind that despite all the talk of the domestics not making cars Americans want to buy, GM, Ford and Chrysler still rank 1, 3 and 4 respectively in total vehicles sales (and they retained those ranks in November). The prospect of their failure carries heavy economic, social, national security and global competitiveness implications.
The economic factors have been discussed at length - some 2.5 million jobs at risk, with all the attendant impact that would have on our precariously positioned economy. Simply from a timing standpoint, failure of one or more of the automakers could cause an economic tailspin that could take many, many years from which to recover.
But the intangible losses could be far worse. The auto industry, including ancillary industries, is the nation's largest R&D spender. Those dollars employ engineers and scientists of all stripes, researching and designing everything from power plant technologies that include electric, hydrogen fuel cell and biofuels to metal alloys, plastics, safety, navigation, pollution control and a range of technologies that have benefits that go far beyond the automotive world.
Beyond the fruits of that R&D, the demand for those scientists and engineers (automakers are the single largest employers of mechanical engineers) provides a market that encourages students to pursue studies in those fields. The industry is also a rich source for instructors in those fields. We must consider the impact the loss of such a vital skill set could have on our long-range ability to innovate and compete globally, not to mention what life-improving innovations may be lost to posterity.
That is a point that should not be taken lightly. Anecdotally, I own a business that helps source parts and components for companies. A while back we were asked to find a part for an old piece of equipment. I scoured the U.S. trying to find it, but was finally told I'd have to go to China. The reason was haunting. It wasn't just that it wasn't made in the U.S. anymore, but that - and I quote - "You won't find anyone here that knows how to make it." A skill we had lost forever, ceding it to our greatest upcoming competitor. How many more such stories will we encounter if we lose our domestic automakers? I'd rather not find out.
The loss of skills does not just pertain to college-educated professionals. Despite all the comments about bumper-hanging, hubcap-attaching autoworkers, the truth is that today's line workers have become highly skilled technicians. The equipment in today's auto plants are technical marvels that require a great deal of training and expertise to operate and maintain. Whether they are overpaid or not in today's environment may be a point of debate, but the value of those jobs and the skills they require are precious. We should not dismiss them quite so cavalierly.
Even more frightening might be the impact on our social fabric, especially in Midwestern states. The city of Detroit already provides a blueprint for what happens when good jobs leave. Crime, poverty and desperation are sure to rise. We've seen how intractable those problems are once they become a routine part of life. The financial and social cost of dealing with the fallout of failure is almost certain to far outweigh whatever cost we're considering today.
All that said, it still makes no sense to bail the automakers out if the business model remains broken. So can it be fixed? I believe it can. First, we have to separate current operations from legacy costs. A sizable, perhaps insurmountable, portion of their problems stem not from operations today, but the costs imposed by decisions made decades ago. If current operations can be freed from those costs, a thriving domestic industry can emerge. And if we believe a thriving domestic industry is important - which is what the argument above is all about - then finding a way to deal with those costs are the basis for a revival.
So how do we go about it?
To date, the argument has largely centered on one of two options: Give them the money or let them fail. Many believe Chapter 11 bankruptcy is the best option. In a way, I agree. But I don't believe a standard filing could work for several reasons. First, consumers are sure to be scared off from buying vehicles if they fear warranties won't be honored, parts and service may not be available and that resale values will plummet. That would make emerging from any Chapter 11 filing almost impossible. Second, the industry is extraordinarily dependent upon credit to finance operations, including dealer floor plans, parts and raw materials, finished inventories and capital investment. It's the nature of the business, whether we're talking GM or Toyota. Even if one wiped their current debt off the books, they'd need to secure new debt immediately to finance the business. This debt is not a bad thing, but it would be very difficult to secure it while in a Chapter 11 situation.
Therefore, I believe the best option is a pre-brokered, government-backed bankruptcy. The government would infuse cash in exchange for future consideration, whether it's in the form of warrants, preferred stock or some other form of temporary equity position. The government would then guarantee both the new debt needed to finance operations and customer warranties, thereby putting a floor to the downside of consumer expectations.
Meanwhile, the Chapter 11 filing would open the door to the draconian cuts that must take place. Current shareholders (which include my dad) would largely be wiped out. Bondholders would exchange debt for equity in the new shares. Management would take across-the-board pay cuts. The union would accelerate concessions scheduled to take effect in 2010 and accept health care plans that are more in line with what most working Americans have. They would also have to open the door to retiree concessions, particularly with regard to health insurance. It need not be eliminated, but it certainly needs to be restructured. Dealerships would be pared and product lines cut, thereby reducing overhead, redundancies and managerial jobs. No one would like it, but that's the point - everyone must sacrifice.
The result would be a far different, but very competitive, American auto industry. Analysts estimate that such cuts would make GM cash flow neutral at an industry sales volume of 13 million or fewer units annually. That's a level that has been exceeded every year since 1993 (including this year), and has been missed only twice since 1983 (12.3M in 1991, 12.9M in 1992). In other words, GM would be breaking even to slightly cash flow positive today and profitable in almost any other circumstance. That's a successful business model.
It would not be painless - not by a long shot. But it would be far better than what we're facing. I know it won't satisfy the visceral need some seem to have to see the union or management “get theirs.” But it would also mean we're not going to cut off our nose to spite our face. I've never been one to care what someone else is getting. It just doesn't matter. Nor do I have much stomach for government getting involved in private industry. Still, it happens all the time, from state and local tax breaks that encourage companies to relocate to publicly funded stadiums. None of those would appear to be nearly as important as a strong, competitive domestic auto industry.
I'll close with a well-known, though often misquoted, line from former GM president Charles Wilson, made during his 1953 confirmation hearing to become Secretary of Defense. In response to how he'd handle a situation where there was a conflict between what was in the nation's and GM's best interest, he replied "For years I thought that what was good for our country was good for General Motors, and vice versa."
I think that line captures today's situation perfectly. We're all part of one interwoven community. We should not look at this as helping the automakers - and we absolutely should not see it as helping them maintain the status quo. Instead, we should see this as helping us all. For what's good for the automakers, in this case, really is good for the country.
Anyway, here are my thoughts.
1) The current crisis is a direct result of the credit meltdown. That is not a problem of the automakers' making
2) The fact the credit meltdown became a crisis for the automakers IS a problem of their own making.
3) It became a problem because of cars, agreements and decisions made 10, 20, 30 and even 40 years ago (stretching back before the 1973 Arab oil embargo).
4) Current management and union leadership have made more progress in working toward fixing the problems in the past five years than was made in the previous thirty.
5) That progress is still nowhere near enough.
So where are we today from an operational/business model standpoint?
The cars are far superior to what was being turned out even a few years ago, and continue to improve with each passing year. The most recent UAW agreement promises to eliminate the cost differential between domestic and transplant automakers, putting them on a level competitive playing field. [sidenote - my dad, no fan of the union, was saying long before this mess that current UAW head Ron Goettelfinger is the first union leader who "gets it"]. Top management has agreed to aggressive pay cuts. The dividend was cut in half. Retired executive health insurance has been completely eliminated. Bondholders have been asked to exchange debt for equity.
In other words, all stakeholders, except perhaps retired UAW members who are contractually protected, have taken or been asked to take a hit.
But that's still not enough. As a result, GM and Chrysler face imminent bankruptcy. Ford has a bit more time, but they are leveraged to the hilt and will quite likely face a similar crisis in 12 to 18 months if sales do not turn around.
Now, I would clearly appear to have a bias in wanting to see GM survive for my dad's sake, but at this point I believe his fate is sealed, no matter what happens. His basic pension is secure even in bankruptcy, but his health insurance is gone for good, ditto the value of his stock holdings. The remaining dividend is as good as gone, as is his supplemental executive pension. So whatever happens from here on out really has no bearing on the personal situation.
That said, we first must decide if saving the domestic auto industry is not just a worthwhile goal, but an imperative one. First, we should keep in mind that despite all the talk of the domestics not making cars Americans want to buy, GM, Ford and Chrysler still rank 1, 3 and 4 respectively in total vehicles sales (and they retained those ranks in November). The prospect of their failure carries heavy economic, social, national security and global competitiveness implications.
The economic factors have been discussed at length - some 2.5 million jobs at risk, with all the attendant impact that would have on our precariously positioned economy. Simply from a timing standpoint, failure of one or more of the automakers could cause an economic tailspin that could take many, many years from which to recover.
But the intangible losses could be far worse. The auto industry, including ancillary industries, is the nation's largest R&D spender. Those dollars employ engineers and scientists of all stripes, researching and designing everything from power plant technologies that include electric, hydrogen fuel cell and biofuels to metal alloys, plastics, safety, navigation, pollution control and a range of technologies that have benefits that go far beyond the automotive world.
Beyond the fruits of that R&D, the demand for those scientists and engineers (automakers are the single largest employers of mechanical engineers) provides a market that encourages students to pursue studies in those fields. The industry is also a rich source for instructors in those fields. We must consider the impact the loss of such a vital skill set could have on our long-range ability to innovate and compete globally, not to mention what life-improving innovations may be lost to posterity.
That is a point that should not be taken lightly. Anecdotally, I own a business that helps source parts and components for companies. A while back we were asked to find a part for an old piece of equipment. I scoured the U.S. trying to find it, but was finally told I'd have to go to China. The reason was haunting. It wasn't just that it wasn't made in the U.S. anymore, but that - and I quote - "You won't find anyone here that knows how to make it." A skill we had lost forever, ceding it to our greatest upcoming competitor. How many more such stories will we encounter if we lose our domestic automakers? I'd rather not find out.
The loss of skills does not just pertain to college-educated professionals. Despite all the comments about bumper-hanging, hubcap-attaching autoworkers, the truth is that today's line workers have become highly skilled technicians. The equipment in today's auto plants are technical marvels that require a great deal of training and expertise to operate and maintain. Whether they are overpaid or not in today's environment may be a point of debate, but the value of those jobs and the skills they require are precious. We should not dismiss them quite so cavalierly.
Even more frightening might be the impact on our social fabric, especially in Midwestern states. The city of Detroit already provides a blueprint for what happens when good jobs leave. Crime, poverty and desperation are sure to rise. We've seen how intractable those problems are once they become a routine part of life. The financial and social cost of dealing with the fallout of failure is almost certain to far outweigh whatever cost we're considering today.
All that said, it still makes no sense to bail the automakers out if the business model remains broken. So can it be fixed? I believe it can. First, we have to separate current operations from legacy costs. A sizable, perhaps insurmountable, portion of their problems stem not from operations today, but the costs imposed by decisions made decades ago. If current operations can be freed from those costs, a thriving domestic industry can emerge. And if we believe a thriving domestic industry is important - which is what the argument above is all about - then finding a way to deal with those costs are the basis for a revival.
So how do we go about it?
To date, the argument has largely centered on one of two options: Give them the money or let them fail. Many believe Chapter 11 bankruptcy is the best option. In a way, I agree. But I don't believe a standard filing could work for several reasons. First, consumers are sure to be scared off from buying vehicles if they fear warranties won't be honored, parts and service may not be available and that resale values will plummet. That would make emerging from any Chapter 11 filing almost impossible. Second, the industry is extraordinarily dependent upon credit to finance operations, including dealer floor plans, parts and raw materials, finished inventories and capital investment. It's the nature of the business, whether we're talking GM or Toyota. Even if one wiped their current debt off the books, they'd need to secure new debt immediately to finance the business. This debt is not a bad thing, but it would be very difficult to secure it while in a Chapter 11 situation.
Therefore, I believe the best option is a pre-brokered, government-backed bankruptcy. The government would infuse cash in exchange for future consideration, whether it's in the form of warrants, preferred stock or some other form of temporary equity position. The government would then guarantee both the new debt needed to finance operations and customer warranties, thereby putting a floor to the downside of consumer expectations.
Meanwhile, the Chapter 11 filing would open the door to the draconian cuts that must take place. Current shareholders (which include my dad) would largely be wiped out. Bondholders would exchange debt for equity in the new shares. Management would take across-the-board pay cuts. The union would accelerate concessions scheduled to take effect in 2010 and accept health care plans that are more in line with what most working Americans have. They would also have to open the door to retiree concessions, particularly with regard to health insurance. It need not be eliminated, but it certainly needs to be restructured. Dealerships would be pared and product lines cut, thereby reducing overhead, redundancies and managerial jobs. No one would like it, but that's the point - everyone must sacrifice.
The result would be a far different, but very competitive, American auto industry. Analysts estimate that such cuts would make GM cash flow neutral at an industry sales volume of 13 million or fewer units annually. That's a level that has been exceeded every year since 1993 (including this year), and has been missed only twice since 1983 (12.3M in 1991, 12.9M in 1992). In other words, GM would be breaking even to slightly cash flow positive today and profitable in almost any other circumstance. That's a successful business model.
It would not be painless - not by a long shot. But it would be far better than what we're facing. I know it won't satisfy the visceral need some seem to have to see the union or management “get theirs.” But it would also mean we're not going to cut off our nose to spite our face. I've never been one to care what someone else is getting. It just doesn't matter. Nor do I have much stomach for government getting involved in private industry. Still, it happens all the time, from state and local tax breaks that encourage companies to relocate to publicly funded stadiums. None of those would appear to be nearly as important as a strong, competitive domestic auto industry.
I'll close with a well-known, though often misquoted, line from former GM president Charles Wilson, made during his 1953 confirmation hearing to become Secretary of Defense. In response to how he'd handle a situation where there was a conflict between what was in the nation's and GM's best interest, he replied "For years I thought that what was good for our country was good for General Motors, and vice versa."
I think that line captures today's situation perfectly. We're all part of one interwoven community. We should not look at this as helping the automakers - and we absolutely should not see it as helping them maintain the status quo. Instead, we should see this as helping us all. For what's good for the automakers, in this case, really is good for the country.
9/17/2008
Lessons From Hurricane Ike
[Written three days after the Lehman Brothers collapse began the 2008 financial meltdown]
It's Wednesday night in Cincinnati, where about 1/3 of the
city is still without electricity three days after a storm blew through on
Sunday. I'm back online, though it's dial-up since Time Warner hasn't repaired
the cable yet. At one time, 90% of the entire metropolitan areas was without
electricity. Here are some of the strange things about the last 3-1/2 days or
so:
1) The city was knocked out by a "storm" where it
didn't rain, it didn't snow, it didn't freeze and it didn't flood. Heck, it
wasn't even cloudy. All we had were sustained winds that reached 55 mph in
places, with gusts as high as 86 mph, thanks to the remnants of Hurricane Ike.
Trees and power lines are down everywhere. The two most precious commodities
have been ice and gasoline (I waited an hour and 20 minutes for gas at 11 pm on
Monday - when the lines were "short").
2) The kids have been off school for three days, but without
electricity or cable - and with sunny, 75 degree weather - they've had to
resort to playing football, riding bikes, throwing frisbees and walking dogs
instead of watching TV and playing video games. It's amazing to see how many
kids actually live around here when they're all outside.
3) I haven't been able to check my portfolio or watch CNBC,
so...
4) I got to take my son fishing on a Wednesday morning in
September.
You know what I've learned?
The sky is still blue, the fish still bite, the kids have
lots of interesting things to say when they're not glued to an electronic
device and it's nice to just sit with my wife. I've learned how neighbors will
help with gas for a generator or share space in their refrigerator if they're
lucky enough to have electricity. Food cooked on a grill is especially tasty
when it's the only option you have.
The most important lesson? I've found I'm a lot richer than
I thought I was last Friday, regardless of what's happened in the market the
past few days.
So, no matter how stressed or worried or scared you might be
because of what's happening in the market, take a moment and reflect on your
family, friends and all the good things in life. Then ask if you'd trade them
for all the money you might have lost since Monday.
My guess is you wouldn't. Be thankful.
7/28/2008
Something Foul Is In The Air
Excuse me if this column seems to go over the line, but I promise it is in the interest of creating a more civilized world. My apologies in advance.
Have you ever let one rip in public, insulting the sensibilities of innocent bystanders with your foul emissions? Do you let ‘em roar at ballgames so everyone within ten rows can hear you? Or rattled one off at a fine restaurant, thinking those at nearby tables wouldn’t notice? Have you ever set one off just as you passed by someone sitting on a park bench or run into a casual acquaintance you haven’t seen in years, reintroduced yourself, then ripped three crisp ones in quick succession in front of your friend’s young son?
Thought not.
Yet you may be surprised to learn that I’ve witnessed every one of these situations in just the past few weeks. No, I’m not talking about flatulence. Instead, I’m talking about a different sort of f-bomb, one that originates somewhat further north in the anatomy. And it’s one whose use seems to be reaching epidemic proportions.
What’s surprising is how similar these two nasty releases are. Though neither cause permanent damage, both are foul. Either can slip out accidentally, yet can almost always be controlled with a little self-restraint. Neither is likely to ease an already tense situation. And the most striking similarity? If the setting isn’t appropriate for one, it probably isn’t for the other.
In a job interview? No. Church? Certainly not. Alone with friends? Perhaps. Hunting trip? Practically required. Sitting with your spouse? Depends upon your spouse. With your boss? Ditto. Trying to set an example for young children? Hardly. In public among strangers? Never.
But here’s one way in which they’re different. A person who lets go with a gaseous sort will act rightfully embarrassed. Question the verbal offender, however, and you'll often get the “Hey, it’s a free country” look. Yes, it’s a free country and I will defend to the death your right to be rude, thoughtless and disrespectful, but you are being rude, thoughtless and disrespectful nonetheless.
And that’s the thing. I have no problem with a well-placed expletive. I don’t even mind if my kids hear them. In fact, it’s not the word itself I have a problem with, it’s the selfish nature of the act. It’s no different than cutting the grass at 6 AM, carrying on a conversation in a theater or blasting music into the wee hours. There are things some people just don’t want to hear. We should all respect that.
Which is what it all comes down to – respect for others. An inappropriate f-bomb is about as welcome as an f-bomb from one’s backside. Put in that light, it’s odd that some believe spewing them makes them cool in a Sopranos sort of way. To our public f-bombers, I’d argue there’s a better word – one that rhymes with cool – to describe how you come across. Try to guess what letter that word starts with.
7/20/2008
Hedges, Home Makovers and Small Acts of Kindness
When I finally reached the age where I could stay home while the rest of the family left town for the weekend, I decided I was going to surprise my mom by trimming the overgrown hedge that had become the bane of her existence. And it wasn’t going to be your typical teenager-style, bare-minimum job. I was going to trim, weed, edge and haul. I could envision both the finished job and the reaction when my parents returned. But then my mom uttered her final words of instruction as the old wood-grained Chevy wagon backed out of the driveway.
“You know, it wouldn’t hurt you to trim the hedge while we’re gone.”
Well, deflate me with a pitchfork. My labor of love now became a chore and my mom’s pleasant surprise was now an expectation. Ugh.
I was reminded of that when ABC’s Extreme Home Makeover visited our little corner of the world. I’ve often marveled at the enthusiasm that surrounds the Big Reveal, when the bus is moved and the new house is seen for the first time. Why are we so thrilled by the big gift and so willing to donate time, goods and cash to a family of strangers, yet so begrudging when it comes to food stamps, school lunch programs and other institutional charity directed at the masses?
Part of the answer may be found in my story of the hedge. It is in the difference between appreciation and expectation. We like our generosity greeted with sincere thanks, rather than a sense of entitlement. Furthermore, there’s always a greater sense of satisfaction when we act out of the goodness of our own hearts than when we’re told to do so, whether by mom or Congress.
I think it also reflects the rather schizophrenic nature of the American public. This is the group that can elect a George W. Bush twice (the dispute over that first election, notwithstanding), then go gaga over Barack Obama. Or choose Republican presidents for 20 of the 24 years from 1968 to 1992, while sending a Democratic majority to Congress that entire time.
What it comes down to is that we are a nation built upon conservative principles, but liberal ideals. We believe in hard work and personal responsibility, yet feel for those left behind. We’ll buy into Reaganesque calls to pull ourselves up by our own bootstraps, then reach out to those who haven’t got bootstraps to pull. And that dichotomy likely explains why so-called red states – the conservative ones – consistently rank higher in charitable giving than the supposedly more compassionate blue states. It’s not that conservatives don’t care, it’s just that they don’t believe in the blank check. It’s accountability, not accounting, that determines their generosity.
“Extreme” is the operative word in ABC’s makeover show. But we needn’t go to extremes when trying to make a difference in others’ lives. Small, personal acts can go a long way – and it doesn't require an act of Congress to do them.
“You know, it wouldn’t hurt you to trim the hedge while we’re gone.”
Well, deflate me with a pitchfork. My labor of love now became a chore and my mom’s pleasant surprise was now an expectation. Ugh.
I was reminded of that when ABC’s Extreme Home Makeover visited our little corner of the world. I’ve often marveled at the enthusiasm that surrounds the Big Reveal, when the bus is moved and the new house is seen for the first time. Why are we so thrilled by the big gift and so willing to donate time, goods and cash to a family of strangers, yet so begrudging when it comes to food stamps, school lunch programs and other institutional charity directed at the masses?
Part of the answer may be found in my story of the hedge. It is in the difference between appreciation and expectation. We like our generosity greeted with sincere thanks, rather than a sense of entitlement. Furthermore, there’s always a greater sense of satisfaction when we act out of the goodness of our own hearts than when we’re told to do so, whether by mom or Congress.
I think it also reflects the rather schizophrenic nature of the American public. This is the group that can elect a George W. Bush twice (the dispute over that first election, notwithstanding), then go gaga over Barack Obama. Or choose Republican presidents for 20 of the 24 years from 1968 to 1992, while sending a Democratic majority to Congress that entire time.
What it comes down to is that we are a nation built upon conservative principles, but liberal ideals. We believe in hard work and personal responsibility, yet feel for those left behind. We’ll buy into Reaganesque calls to pull ourselves up by our own bootstraps, then reach out to those who haven’t got bootstraps to pull. And that dichotomy likely explains why so-called red states – the conservative ones – consistently rank higher in charitable giving than the supposedly more compassionate blue states. It’s not that conservatives don’t care, it’s just that they don’t believe in the blank check. It’s accountability, not accounting, that determines their generosity.
“Extreme” is the operative word in ABC’s makeover show. But we needn’t go to extremes when trying to make a difference in others’ lives. Small, personal acts can go a long way – and it doesn't require an act of Congress to do them.
6/28/2008
A Conservative Argument for Single-Payer Health Care
Might a conservative argument exist in favor of a single-payer health insurance system? Yes, it’s a stretch, but our system is clearly failing many businesses and individuals, and taking such a sweeping reform off the table leaves us merely tweaking around the edges. The result is an ever more costly and complex problem that will only worsen as our population ages. A single-payer system might be the greatest boondoggle in the storied history of government boondoggle-ry, but the issue is too critical to too many not to consider every option.
So why might conservatives support a single payer system? For one, health costs are crippling our global competitiveness. Domestic automakers spend more on health insurance than they do for steel. Disputes over coverage have led to costly strikes and work stoppages in numerous industries. And finally, the cost of caring for the uninsured is built into healthcare prices, which are passed on to business in the form of higher premiums.
The problem is even worse for small business, the conservatives’ darling of economic growth. With limited ability to pool risk – and insurance companies cherry-picking low risk firms away from groups when small businesses do unite to form larger risk pools – a single unhealthy employee or family member can drive premiums up by tens of thousands of dollars (My premiums once increased $24,000/year thanks to the condition of one employee’s spouse). Furthermore, the fear of going without health insurance is one of the risks that prevent people from pursuing businesses of their own, driving yet another stake through America’s entrepreneurial heart.
One reason conservatives rightfully endorse free markets is that they are extremely adept at wringing out bureaucracy and inefficiency. But our current system does neither. Instead, it adds redundant sales and underwriting overhead, confusing billing practices that increase administrative costs for doctors and hospitals, and absorbs a not insignificant portion of our healthcare dollars in profits and executive salaries. Not that those are bad things, but when healthcare dollars are at a premium, we should be looking to maximize our bang for the buck – an elementary conservative tenet.
Philosophically, even limited government advocates such as yours truly would agree that some needs are so vital that a degree of government inefficiency is tolerable in exchange for universal availability. Highways, schools and mail service come to mind. Granted, none of these are perfect, but if left to free enterprise, we’d surely see large gaps in service, much like we see today with health insurance.
Finally, no one is safe from the expense of unforeseen medical bills. A 2005 Harvard University study showed that half of all bankruptcies were due to medical bills, though three of four filers had health insurance. We’re all at risk.
This is not a liberal or conservative issue, but a human one. I’d be the first to argue that healthcare is not a right, but I’m far less prepared to argue it’s not a responsibility – one that we owe to ourselves and each other. Let’s not dismiss any solution.
So why might conservatives support a single payer system? For one, health costs are crippling our global competitiveness. Domestic automakers spend more on health insurance than they do for steel. Disputes over coverage have led to costly strikes and work stoppages in numerous industries. And finally, the cost of caring for the uninsured is built into healthcare prices, which are passed on to business in the form of higher premiums.
The problem is even worse for small business, the conservatives’ darling of economic growth. With limited ability to pool risk – and insurance companies cherry-picking low risk firms away from groups when small businesses do unite to form larger risk pools – a single unhealthy employee or family member can drive premiums up by tens of thousands of dollars (My premiums once increased $24,000/year thanks to the condition of one employee’s spouse). Furthermore, the fear of going without health insurance is one of the risks that prevent people from pursuing businesses of their own, driving yet another stake through America’s entrepreneurial heart.
One reason conservatives rightfully endorse free markets is that they are extremely adept at wringing out bureaucracy and inefficiency. But our current system does neither. Instead, it adds redundant sales and underwriting overhead, confusing billing practices that increase administrative costs for doctors and hospitals, and absorbs a not insignificant portion of our healthcare dollars in profits and executive salaries. Not that those are bad things, but when healthcare dollars are at a premium, we should be looking to maximize our bang for the buck – an elementary conservative tenet.
Philosophically, even limited government advocates such as yours truly would agree that some needs are so vital that a degree of government inefficiency is tolerable in exchange for universal availability. Highways, schools and mail service come to mind. Granted, none of these are perfect, but if left to free enterprise, we’d surely see large gaps in service, much like we see today with health insurance.
Finally, no one is safe from the expense of unforeseen medical bills. A 2005 Harvard University study showed that half of all bankruptcies were due to medical bills, though three of four filers had health insurance. We’re all at risk.
This is not a liberal or conservative issue, but a human one. I’d be the first to argue that healthcare is not a right, but I’m far less prepared to argue it’s not a responsibility – one that we owe to ourselves and each other. Let’s not dismiss any solution.
6/27/2008
Burning Flags and Flying Bullets
Did anyone else notice the irony in the reaction to the U.S. Supreme Court’s decision that struck down Washington, D.C.’s 32-year-old gun ban? George W. Bush, John McCain and Orrin Hatch, among others, lauded the Court’s decision as a landmark victory for a basic American right. Nothing surprising in that. But these same people have spent nearly twenty years decrying and seeking to overturn another landmark decision upholding a basic American right – the right to free speech.
The court’s gun ruling came nearly nineteen years to the day after it ruled that flag-desecration was protected speech under the First Amendment. That earlier ruling did not evoke the howls of joy we’ve seen these past few days. Instead, it led to numerous attempts to legally and legislatively bypass a decision some saw as a trampling of our sensibilities. (In another irony, the court seems to like to announce these decisions just prior to the 4th of July, where we can reflect on our newly-affirmed liberty by flying flags and sending untold tons of flaming gunpowder screaming into the sky, but I digress).
What I’d like to know is why the fear of burning flags, but not flying bullets? Clearly, the statistics since the court’s 1989 flag ruling paint a pretty stark picture. U.S. gun-related deaths: 567,020 (CDC numbers through 2005). Flag burning-related deaths: 0. To put those numbers into perspective, that’s about 138 private citizens killed for every U.S. soldier killed thus far in Iraq. In fact, it’s almost 150,000 more than we lost in all of WWII. Whatever one's view on guns, it's hard to argue that they don't pose a more immediate threat to one's personal safety than a burning flag.
I’d like to think the dichotomy of opinion arises from an understanding that the power of ideas, however repulsive, is greater than the power of brute force and therefore, more in need of suppression. Unfortunately, I think it’s just the opposite. The argument in favor of permitting undesirable speech requires an intellectually nuanced consideration that the argument in favor of guns does not. It’s a lot easier to understand the power of a gun.
That lack of nuance can manifest itself in self-destructive ways. It’s been said that when your only tool is a hammer, you see every problem as a nail. Likewise, when your only weapon is a gun, every adversary becomes a target. We see it on the streets of our cities and in the halls of power. Instead of turning to violence only as a last resort, we seek the preemptive strike. Kids are shot down because they make the mistake of riding their bike into the wrong neighborhood. Bombs are launched in order to “get them before they get us” – even when we’re not quite sure they’re really trying to get us.
I’ve always subscribed to the adage that the pen is mightier than the sword, which is why the pen has always been my weapon of choice. Unfortunately, it appears the sword is not only easier to use, but easier to protect.
The court’s gun ruling came nearly nineteen years to the day after it ruled that flag-desecration was protected speech under the First Amendment. That earlier ruling did not evoke the howls of joy we’ve seen these past few days. Instead, it led to numerous attempts to legally and legislatively bypass a decision some saw as a trampling of our sensibilities. (In another irony, the court seems to like to announce these decisions just prior to the 4th of July, where we can reflect on our newly-affirmed liberty by flying flags and sending untold tons of flaming gunpowder screaming into the sky, but I digress).
What I’d like to know is why the fear of burning flags, but not flying bullets? Clearly, the statistics since the court’s 1989 flag ruling paint a pretty stark picture. U.S. gun-related deaths: 567,020 (CDC numbers through 2005). Flag burning-related deaths: 0. To put those numbers into perspective, that’s about 138 private citizens killed for every U.S. soldier killed thus far in Iraq. In fact, it’s almost 150,000 more than we lost in all of WWII. Whatever one's view on guns, it's hard to argue that they don't pose a more immediate threat to one's personal safety than a burning flag.
I’d like to think the dichotomy of opinion arises from an understanding that the power of ideas, however repulsive, is greater than the power of brute force and therefore, more in need of suppression. Unfortunately, I think it’s just the opposite. The argument in favor of permitting undesirable speech requires an intellectually nuanced consideration that the argument in favor of guns does not. It’s a lot easier to understand the power of a gun.
That lack of nuance can manifest itself in self-destructive ways. It’s been said that when your only tool is a hammer, you see every problem as a nail. Likewise, when your only weapon is a gun, every adversary becomes a target. We see it on the streets of our cities and in the halls of power. Instead of turning to violence only as a last resort, we seek the preemptive strike. Kids are shot down because they make the mistake of riding their bike into the wrong neighborhood. Bombs are launched in order to “get them before they get us” – even when we’re not quite sure they’re really trying to get us.
I’ve always subscribed to the adage that the pen is mightier than the sword, which is why the pen has always been my weapon of choice. Unfortunately, it appears the sword is not only easier to use, but easier to protect.
6/15/2008
When Yes Means No
Whatever happened to common sense? Michael McKinney, a former teacher at Arlington Heights Academy outside of Cincinnati, recently pleaded guilty to gross sexual imposition for having a sexual relationship with a student last year. Under the plea agreement, he faces up to twelve months in jail and will be required to register as a sex offender for the next fifteen years. Under normal circumstances, I’d say he deserves all he gets. But these aren’t normal circumstances, and to be quite honest, I’m not sure where to begin.
First and foremost, this was not a case of having an affair with a fifteen, sixteen or even seventeen year-old student. The woman was eighteen, old enough to enlist in the armed forces and serve in Iraq if she so chose. But apparently not old enough to choose to be intimate with a fellow adult. Furthermore, she no longer attended the school, having begun classes at Cincinnati State University after accumulating enough credits to graduate from high school. She was only classified as a student because the rest of her class had not yet graduated and therefore, her name remained on the school enrollment – unbeknownst to both parties. Nor had she ever been a student in one of McKinney’s classes. Finally, the woman claimed the affair was consensual and had no desire to see McKinney prosecuted.
So what we have is a young man (McKinney was twenty-five at the time) having a relationship with an adult college student. Had the woman attended any high school other than Arlington Heights, there would be no crime. But because she once attended the same school where McKinney taught, he now faces the future as a convicted felon and sex offender.
Now, the first question that comes to mind is what purpose the sex offender registry is meant to serve. As the father of a pre-teen girl, I have every incentive to make sure my daughter is safe from the creeps who prey on women against their wishes and children under any circumstance. But when the list becomes populated with people such as McKinney it risks becoming as pointless and disregarded as the warnings that tell us our coffee is hot.
The second question is what this case says about our perception of women. Are we not saying that an adult woman is incapable of making an informed decision regarding the relationships she may have? It seems reminiscent of the kept woman culture of days gone by, where women were thought weak and in need of protection from their own impulses.
Katie Pridemore, the assistant prosecutor pursuing the case, argued that we must keep an eye on anyone who preys on those in a subordinate position. That is a broad and dangerous definition, especially in light of this case. Perhaps what we really need is protection from overzealous prosecutors who prey on headline-grabbing cases, with no regard for the lives they damage in the process.
First and foremost, this was not a case of having an affair with a fifteen, sixteen or even seventeen year-old student. The woman was eighteen, old enough to enlist in the armed forces and serve in Iraq if she so chose. But apparently not old enough to choose to be intimate with a fellow adult. Furthermore, she no longer attended the school, having begun classes at Cincinnati State University after accumulating enough credits to graduate from high school. She was only classified as a student because the rest of her class had not yet graduated and therefore, her name remained on the school enrollment – unbeknownst to both parties. Nor had she ever been a student in one of McKinney’s classes. Finally, the woman claimed the affair was consensual and had no desire to see McKinney prosecuted.
So what we have is a young man (McKinney was twenty-five at the time) having a relationship with an adult college student. Had the woman attended any high school other than Arlington Heights, there would be no crime. But because she once attended the same school where McKinney taught, he now faces the future as a convicted felon and sex offender.
Now, the first question that comes to mind is what purpose the sex offender registry is meant to serve. As the father of a pre-teen girl, I have every incentive to make sure my daughter is safe from the creeps who prey on women against their wishes and children under any circumstance. But when the list becomes populated with people such as McKinney it risks becoming as pointless and disregarded as the warnings that tell us our coffee is hot.
The second question is what this case says about our perception of women. Are we not saying that an adult woman is incapable of making an informed decision regarding the relationships she may have? It seems reminiscent of the kept woman culture of days gone by, where women were thought weak and in need of protection from their own impulses.
Katie Pridemore, the assistant prosecutor pursuing the case, argued that we must keep an eye on anyone who preys on those in a subordinate position. That is a broad and dangerous definition, especially in light of this case. Perhaps what we really need is protection from overzealous prosecutors who prey on headline-grabbing cases, with no regard for the lives they damage in the process.
5/30/2008
The Definition of Success
I recently had an opportunity to consider the meaning of success when my dad came down from Michigan to watch my son play a basketball game at his elementary school. When I told him I hoped he’d get a chance to meet George Losh, the teacher responsible for the intramural program, he immediately wondered if George was related to Michael Losh, who my dad knew from his days at GM.
It turns out they are brothers. J. Michael Losh has a profile on Forbes.com that includes the following:
Chief Financial Officer of Cardinal Health, July 2004 to May 2005; Chairman of Metaldyne Corporation, October 2000 to April 2002; Chief Financial Officer of General Motors Corporation, 1994 to August 2000; director of AMB Property Corporation, Aon, H.B. Fuller Company, Masco Corp. and TRW Automotive Holdings Corp.
George Losh has no such Forbes profile, but if he did, it would read like this:
Teacher, Phys Ed., Union Elementary, 1973-2008.
If one were to judge success solely on the basis of resume, it would appear to be no contest. One has held senior executive positions at some of the world’s largest corporations. The other spent an entire career in a single gym at one of the state’s oldest schools (ninety-two years old and counting). Thanks to our unfortunate tendency to measure success in dollars and cents, for many the comparison would end there.
But that would do all involved – George, Michael and ourselves – a disservice. Because success should not be measured by the dollars we pocket, but the lives we touch. And by that measure, George Losh has enjoyed the type of success to which we should all aspire. His after-hours basketball, volleyball and gymnastics programs have attracted hundreds of children each year (some years saw up to 200 kids – more than 1 in 3 students – participate in gymnastics alone). My conservative calculation estimates that as many as 3,500 children left Union as better athletes and better people because of the countless hours George dedicated to his calling.
Now it has come to an end. Wednesday, June 4, marked George’s last day at Union. Reflecting on his career, he is proud of the good athletes he helped make better. But he positively lights up when it comes to those kids who arrived scared and unsure, but left excited and confident. Just as he lights up when talking of his brother – not about Michael’s money or power, but of his humility and unassailable integrity.
I can hear a basketball bouncing as I write this. That would be my daughter working on free throws and layups. She would not be out there were it not for George Losh. At one time, she preferred only sedentary pursuits like reading, writing, arts and crafts. That she wants to play ball is a measure of George’s success as a teacher. And if someday, someone speaks of her integrity the way George speaks of his brother’s, I will consider that a measure of hers as a person.
It turns out they are brothers. J. Michael Losh has a profile on Forbes.com that includes the following:
Chief Financial Officer of Cardinal Health, July 2004 to May 2005; Chairman of Metaldyne Corporation, October 2000 to April 2002; Chief Financial Officer of General Motors Corporation, 1994 to August 2000; director of AMB Property Corporation, Aon, H.B. Fuller Company, Masco Corp. and TRW Automotive Holdings Corp.
George Losh has no such Forbes profile, but if he did, it would read like this:
Teacher, Phys Ed., Union Elementary, 1973-2008.
If one were to judge success solely on the basis of resume, it would appear to be no contest. One has held senior executive positions at some of the world’s largest corporations. The other spent an entire career in a single gym at one of the state’s oldest schools (ninety-two years old and counting). Thanks to our unfortunate tendency to measure success in dollars and cents, for many the comparison would end there.
But that would do all involved – George, Michael and ourselves – a disservice. Because success should not be measured by the dollars we pocket, but the lives we touch. And by that measure, George Losh has enjoyed the type of success to which we should all aspire. His after-hours basketball, volleyball and gymnastics programs have attracted hundreds of children each year (some years saw up to 200 kids – more than 1 in 3 students – participate in gymnastics alone). My conservative calculation estimates that as many as 3,500 children left Union as better athletes and better people because of the countless hours George dedicated to his calling.
Now it has come to an end. Wednesday, June 4, marked George’s last day at Union. Reflecting on his career, he is proud of the good athletes he helped make better. But he positively lights up when it comes to those kids who arrived scared and unsure, but left excited and confident. Just as he lights up when talking of his brother – not about Michael’s money or power, but of his humility and unassailable integrity.
I can hear a basketball bouncing as I write this. That would be my daughter working on free throws and layups. She would not be out there were it not for George Losh. At one time, she preferred only sedentary pursuits like reading, writing, arts and crafts. That she wants to play ball is a measure of George’s success as a teacher. And if someday, someone speaks of her integrity the way George speaks of his brother’s, I will consider that a measure of hers as a person.
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