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Why the “Proposed Koch gift to WCU is a Bad Idea”

invisible hand About a week ago , I wrote about the events leading up to the dilemma faced by Western Carolina University faculty and administration with being offered a $2 million grant from a Koch Brothers foundation. What I did not mention is the recent domination of the North Carolina university system by Republican minded-administrators such as Margaret Spellings former President Bush Secretary of Education adding to the complexity.

Mark Jamison continues with the depiction of the dilemma Western Carolina University faces and provides the argument as to why the faculty and administration should reject this Koch Brothers donation. This article can also be found in the“Smoky Mountain News” as a guest column by Mark.

Mark Jamison

The proposed $2 million gift from the Charles Koch Foundation to WCU for the establishment of a Center of Free Enterprise raises several questions.

• Are gifts like these from private donors appropriate at public institutions? Do they entail a certain quid pro quo regardless of protocols to ensure transparency?

• Are certain types of gifts within certain academic disciplines different in their impact on the mission and perception of the university?

• In an era when we have seen the highest concentrations of wealth in more than a hundred years and when there exists a growing concern about the impact of money on the accountability and accessibility of political institutions do these sorts of gifts further a trend away from democratic institutions and public goods? Is this trend health? Unhealthy?

In 1971 Lewis Powell, a corporate lawyer and member of eleven corporate boards, wrote a memo to the Director of the U.S. Chamber of Commerce. Two months after he submitted the memo, Powell was nominated to the Supreme Court. The memo was essentially a diatribe against American Liberalism and a call for action from American corporate and business interests. It recommended a concerted effort to develop an intellectual infrastructure that would support the interests of American corporatism.

The Powell memo has often been credited as the birthing document of the web of think tanks, associations, and groups that advance conservative thought in this country. Another consequence of the memo was a renewed focus on capturing government and making it work directly for the interests of corporate elites.

Over the last generation we have increasingly seen the effects of Powell’s advice in action; especially as economic gains have concentrated in the upper .01% creating a class of billionaires able to buy an outsized voice and presence in politics and policy making.

Not content to simply fund think tanks that use non-profits to promote, advocate, and espouse particular points of view, the billionaire class has moved into other areas. A recent piece in the New Yorker on the Ford Foundation noted that the Gates Foundation, with an endowment of forty billion dollars, has done notable work in the fight to eliminate malaria. But Gates also “spent two billion dollars over eight years in an effort to break up big public high schools and form smaller ones.” Resulting analysis showed the effort had little impact on educational quality but it did spend millions on creating charter schools. Gates has been called “the nation’s unelected school superintendent”.

Mark Zuckerberg of Facebook fame spent over one hundred million dollars in a similar effort in the Newark schools that ended in dysfunction and controversy.

The owners of Hobby Lobby, famous for their suit against the ACA, have set up a multimillion-dollar foundation to create a Bible museum. The Atlantic has reported that as part of that effort the Green family has been acquiring ancient texts and antiquities, some in transactions that ignore international conventions in the trade of historical items. Scholars are concerned that access to these essential texts may be controlled in ways that limit research and scholarship.

The Walton family has placed a significant amount of its inherited fortune in nonprofit trusts, primarily as a way of avoiding taxes. One purpose of these trusts has been to create one of the largest private art museums in the world, Crystal Bridges. It seems we may be returning to a time before the Enlightment when the wealthy controlled arts and literature and the artist created at the whim of a patron.

In many ways these foundations act as a way of molding society in the image of a particular plutocrat. In some ways these foundations act as Super PACs, especially those that exist to advocate on behalf of political causes. There is one big distinction though, these foundations are created under nonprofit statutes so they are effectively subsidized by taxpayers to the tune of forty percent. The New Yorker piece quotes Judge Richard Posner on treating foundation assets as tax exempt,

”A perpetual charitable foundation . . . is a completely irresponsible institution, answerable to nobody. Unlike a hereditary monarch whom such a foundation otherwise resembles, it is subject to no political controls either. The puzzle for economics is why these foundations are not total scandals.”

The ubiquity of private think tanks and foundations assures that there is more than sufficient opportunity for the dissemination of political and ideological opinion. Here in North Carolina we suffer no lack of presence with Art Pope’s John Locke Society and Civitas.

Why then is it necessary to extend the reach of these essentially political organizations into the publicly funded university system? Even if one concedes that accepting donations from wealthy benefactors can be beneficial to a publicly funded university, does a difference arise with respect to what the benefactor chooses to fund?. Leaving the question of agenda setting aside it would seem that there is a fundamental distinction between funding a Center for Bioresearch and funding a Center for Free Enterprise. The one is largely a pursuit of empirically constrained hard science while the other, as indicated by its name, is a study of ideology. This becomes particularly evident when one looks at the specialty of the proposed director of the CFE, Professor Edward J. Lopez. Dr. Lopez focuses on a branch of economics that comes under the rubric of “Public Choice Theory.”

In his book, “Madman, Intellectuals, and Academic Scribblers” Lopez states,

“The basic idea of public choice theory is that economists shouldn’t have one set of theories for a person making a commercial decision and a separate set of theories for that same person making a political decision. Economists working in the public choice tradition argue that if we are going to look at market failure, then it makes sense to see if there is government failure, too. With this perspective in mind, it becomes clear why democracies so often generate inefficient policies and why they allow them to persist.”

The implication is that all the world, every facet of the human experience, is not a stage as Shakespeare wrote; but a market, a market where rational beings make rational choices based solely on profit and loss – maximization of utility.

This is more than merely economics, it encompasses the whole of social sciences as evidenced by a quote Dr. Lopez uses in a book of essays he edited. In “The Pursuit of Justice” (which oddly enough focuses not on theories of justice but on the idea that our legal systems and institutions are fundamentally corrupt because they are victims of pervasive and perverse incentives) Dr. Lopez quotes James Buchanan, one of the founders of the PCT school as saying;

“Public choice should be understood as a research program rather than a discipline or subdiscipline of economics.”

And in fact Dr. Lopez makes it clear throughout his writings Public Choice Theory (PCT) is “intertwined with philosophy, history, finance, psychology, development, linguistics, and other fields;” an all encompassing theory of everything – a dogma.

Matt Yglesias has suggested that PCT fits a syllogism (a logical argument that offers two or more propositions and a conclusion):

P1) Spread skepticism about government officials and their motives

P2) ?

C) Libertarianism

Indeed, this may be a good description of much of Dr. Lopez’s work. The question mark does a great deal of heavy lifting in his arguments but the first proposition is meant to gloss over everything else.

Consider the three questions Dr. Lopez poses in his book, “Madmen, Intellectuals, and Academic Scribblers:”

1. Why do democracies generate policies that are wasteful and unjust?

2. Why do failed policies persist over long periods, even when they are known to be socially wasteful and even when better alternatives exist?

3. Why do some wasteful policies get repealed (for example, airline rate and route regulation) while others endure (such as sugar subsidies and tariffs)?

The first question does not ask “Do democracies generate policies that are wasteful and unjust?”. It assumes that they do which certainly is true in some instances but the framing isn’t about discovering under what circumstances wasteful policies occur, there are no definitions of wasteful, and despite constant references to just or unjust actions Dr. Lopez never gives much of a definition beyond a nebulous reference to “rules” and “property rights”.

As an example Dr. Lopez writes approvingly in a couple of different papers of President Grover Cleveland’s 1887 veto of a disaster relief bill for Texas farmers wiped out by drought. Such aid was not, in Cleveland’s and apparently Lopez’s view, constitutional. Presumably, the implication still holds true.

There is not a great deal of intellectual inquiry here. There is an assumption that we are all homo econimicus, that institutions are subject to the same incentives and rent seeking behavior that individuals always exhibit, and that the answer must therefore be a laissez faire version of society as encompassed entirely by the market.

Throughout his writings Dr. Lopez is adept at telling just- so stories leading us in the direction of his conclusions. For example, in his recent letter to SMN that began with a rebuttal to a previous writer’s assertions about BB&T’s actions during the financial collapse Dr. Lopez references BB&T’s repeated claims that they were forced to take TARP money, a claim that may have some truth but which also ignores the fact that BB&T was also found to be significantly undercapitalized and overleveraged.

Lopez is also much taken with Adam Smith’s metaphor of the invisible hand, perhaps one of the most overused, abused, and misunderstood phrases in the annals of economics. Lopez uses the phrase 11 times in his book while Smith used it three times in his entire body of work; once in a treatise on astronomy; once in “A Theory of Moral Sentiments” in the context of similar needs of both rich and poor for basic necessities ; and once in “The Wealth of Nations” in the context of comparing domestic and foreign manufactures. From those three examples and particularly in the last, a mythology of a self-generating and correcting marketplace has developed to the level of religious or iconic status.

Oddly enough, Lopez never seems to quote Smith during his many discussions of the problems of working folks and the disadvantages and inequalities that labor faces. For example, it is unlikely that Lopez would cite Smith’s take on progressive taxation:

“The rich should contribute to the public expense,” he wrote, “not only in proportion to their revenue, but something more in proportion.” Adam Smith

Dr. Lopez is also adept at portraying his intellectual heroes in the most positive light while subtlety poking figures he is in disagreement with. In one passage, he says about John Maynard Keynes, “He even took both sides in love, not terribly unusual among intellectuals of his circles in that day. As a young scholar, Keynes had male lovers, including the writer and critic Lytton Strachey. But, like Pareto, he later married a Russian woman, the ballerina Lydia Lopokova.”

This puts one in mind of the controversy that arose after the Harvard historian Niall Ferguson took a Keynes quote about how in the long run we are all dead badly out of context and then proceeded to point out that because Keynes was gay and had no children, he had no sensitivity to future generations. I’m not sure what Dr. Lopez hoped to accomplish with this observation but for the life of me I can’t understand how Keynes’s sexual preferences, Russian wife’ or reference to Pareto tell us anything about his economic thinking.

Perhaps Dr. Lopez was trying to make a point that Keynes often changed and adapted his positions, a point that would have been served by offering up this well known quote from Keynes;

“When the facts change, I change my mind. What do you do sir?”

Dr. Lopez has been quoted saying that academic inquiry should not be censored even if unpopular. I heartily agree with him and I would never suggest that his teaching be censored or limited. I would suggest that each instructor, particularly in a public institution, has an obligation to present material in the spirit of intellectual honesty and inquiry and that would include presenting a fair assessment of ideologies or systems that conflict with an instructor’s preferred ideologies or systems. In his book, “Madmen, Intellectuals, and Academic Scribblers” Lopez’s main theme is that ideas should win out in the marketplace. While the marketplace is only a small part of the world and human experience, a point on which Lopez and I would disagree, his basic construction is correct – good ideas; ideas subjected to empirical, logical, and philosophical testing; ideas that advance, expand, or illuminate our concepts of justice; and ideas that have been broadly and fairly debated and contested ought to win our respect.

But the question here is more than what Dr. Lopez teaches or even how he teaches it. At issue is not the legitimacy of one professor’s views. The issue is whether a publicly funded institution ought to take a gift to establish a program with the clear mission to teach a particular ideology, an ideology that is, in fact – broadly contested. This is especially true in a discipline like economics and especially when the proposed center and its proposed leader mix economics, political philosophy, and political science. Maybe the discussion ends up being framed differently if we were talking about a hard science, or medical research, or a purely technical discipline. Even then, there might still be questions about billionaires dictating an agenda but in a discipline that is entirely empirical there are fewer and different problems. The search for facts and the search for truth are two different endeavors; that distinction is both critical and germane to this specific proposal.

Transparency is not the issue, no matter how unstructured the grant the undeniable fact is that $2 million buys influence, it gets phone calls answered, and it gets preferences on the agenda. The simple fact is that one of the basic tenets of the ideology Dr. Lopez preaches is that money talks, it is the measure of the market. More to the point, the ideology that Dr. Lopez espouses argues that institutions, particularly public institutions, are subject to manipulation and perverse incentives. The proposed grant is a demonstration of whatever truth lies in public choice theory.

The land grant colleges and public university systems were built to serve as great equalizers. These public institutions were built to give average folks the opportunity to acquire knowledge and pursue intellectual inquiry. Sadly as our world has graduated from a market economy to a market society, much of the mission of our public institutions has been lost. In a world where billionaires and corporate sponsors face few constraints in their ability to dictate public policy and control public discourse we ought not blithely encourage yet another venue for indoctrination, no matter how much the enticement. I would make this argument regardless of the source of the money whether it comes from the Kochs or some liberal bogeyman like George Soros.

Let Dr. Lopez teach what he wants but let WCU retain its integrity as a public institution, something it cannot do under any conditions if it accepts this gift.

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“Executive Actions to Reduce Gun Violence and Make Our Communities Safer”

President Addressing Weapon Safety: Link New Executive Actions to Reduce Gun Violence and Make Our Communities Safer

To me this is “mostly” a reiteration of what is already out there for law with restrictions plus some enhancements. President Obama appears to be calling for enforcement of what is already there for law. There are adders such as linking Social Security to NICS, allowing HIPAA restrictions to be viewable by NICS, additional funding for mental health, more staffing in critical areas, internet tracking, “smart-weapon” technology, etc. much of which depends upon funding by Congress. I do not see these enhancements as any more restrictive than what is in place today.

Just so you know and before you comment to this post; please recognize, I shoot bullet-spewing-weapons and I am X-military who has been to a war. Spare me the diatribe and the rant. I do not care about prying the weapon from your dead hands or your anecdotal information on who done what down the street. In my opinion doing nothing today and into the future is not going to fly forever and will only lead to something else far harsher being crammed down your and my throat later.

I believe I have captured the 4 points from President Obama’s Executive Order and the associated data below.

1. Keep guns out of the wrong hands through background checks.

– Where ever business is conducted — from a store, at gun shows, or over the Internet; if you are in the business of selling firearms, you must get a license and conduct background checks.

– No specific threshold number of firearms purchased or sold that triggers the licensure requirement.
– Even a few transactions can be sufficient to establish that a person is “engaged in the business.”
– Without the required license, subject to criminal prosecution and can be sentenced up to five years in prison and fined up to $250,000.
– Dealers are also subject to penalties for failing to conduct background checks before sales.

– Require background checks for people trying to buy some of the most dangerous weapons and other items through a trust, corporation, or other legal entity.

– Individuals have been able to avoid the background check requirement by applying to acquire these firearms and other items through trusts, corporations, and other legal entities. The number of these applications has increased over the years — from fewer than 900 applications in the year 2000 to more than 90,000 applications in 2014.

– Sent a letter to States highlighting the importance of receiving complete criminal history.

– Overhauling the background check system to make it more effective and efficient. Improvements include processing background checks 24 hours a day, 7 days a week, and improving notification of local authorities when certain prohibited persons unlawfully attempt to buy a gun. FBI will hire ~ 230 additional examiners and other staff to help process these background checks.

2. Make our communities safer from gun violence.

– Federal prosecutors to continue to focus on smart and effective enforcement of our gun laws.

– FY2017 budget will include funding for 200 new ATF agents and investigators to help enforce our gun laws.

– Establish an Internet Investigation Center to track illegal online firearms trafficking and is dedicating $4 million and additional personnel to enhance the National Integrated Ballistics Information Network.

– Dealers who ship firearms must notify law enforcement if their guns are lost or stolen in transit.

– Encourages every U.S. Attorney’s Office to renew domestic violence outreach efforts and prohibited persons from obtaining firearms.

3. Increase mental health treatment and reporting to the background check system.

While individuals with mental illness are more likely to be victims of violence than perpetrators, incidents of violence continue to highlight a crisis in America’s mental health system. In addition to helping people get the treatment they need, we must make sure we keep guns out of the hands of those who are prohibited by law from having them.

– Proposes a new $500 million investment to increase access to mental health care.

– Social Security Administration has indicated that it will begin the rule-making process to include information in the background check system about beneficiaries who are prohibited from possessing a firearm for mental health reasons is reported to NICS.

– Finalizes a rule to remove unnecessary legal barriers preventing States from reporting relevant information about people prohibited from possessing a gun for specific mental health reasons. The Department of Health and Human Services issued a final rule expressly permitting certain HIPAA covered entities to provide to the NICS limited demographic and other necessary information about these individuals.

4. Shape the future of gun safety technology

– Directs the Departments of Defense, Justice, and Homeland Security to conduct or sponsor research into gun safety technology to reduce the accidental discharge of weapons.

– Directs the departments to review the availability of smart gun technology on a regular basis, and to explore potential ways to further its use.

Like I said, most of this is old stuff which you have had to live with already. Maybe it is time to enforce it more rigorously.

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Your Tax Dollars Subsidizing Methane Gas Emissions

Sandwichman at Econospeak has a post up on subsidizing Methane and the BLM. It fits in with the Bundy take over of the Wildlife Refuge Bldg. He credits 538 Politics for this exclusive The Armed Oregon Ranchers Who Want Free Land Are Already Getting A 93 Percent Discount We are paying for the air pollution and they are getting a hefty discount on the grazing of their cattle.

Sandwichman: Well, looky here. On the one hand, the minimum wage has declined substantially over the last several decades in real terms. But on the other hand, federal government subsidies to a small number of cattle ranchers has increased as the gap between the market price and the Bureau of Land Management grazing fees has widened.

According to a report from the Center for Biological Diversity, “fewer than 21,000 — or 2.7 percent of the nation’s total livestock operators — benefit from the Forest Service and BLM grazing programs in the West.” Furthermore;

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Universities and Donations – Western Carolina University

invisible hand What does a public university do when a donation to it comes with strings? This is the situation Western Carolina University finds itself in today as a $2 million donation is being given to it by a Charles Koch Foundation to establish a Center for the Study of Free Enterprise under BB&T bank sponsored department chair Dr. Robert Lopez.

Just to be clear, this is not the only donation ever made by a Charles Koch Foundation to a college or university, the “Koch brothers and their various funding arms awarded $108 million to 366 colleges and universities from 2005 to 2014 — with $19.3 million across 210 college campuses in 2013 alone — according to political funding analysis by the Institute for Southern Studies and Center for Public Integrity.” More and more, we can see moneyed and political interests making large donations no longer tied to just a name on a building in memory of that person: but, the donations are tied to a particular and current interest with an active participation. This is not only happening at universities or colleges, you can see conservative or other groups showing interest in think tanks such as CAP and Brookings for topics such as student loans and changing the law with regard to “mens rea.” The later being a direct attempt to change the law so as to protect their business. It is difficult for a college or a university, much less a think-tank, to accept a donation from an outside interest with ties to an ideology or interest without favoring it in the future.

In answer to WCU Provost Alison Morrison-Shetlar questioning whether Faculty Senate Leader opinion really reflected the overall view of the faculty. “The Faculty Senate voted in majority opposing the establishment of this new center, which is consistent with what I have heard from the general faculty,” said Dr. Bill Yang, chair of the faculty senate rules committee. There does not appear to be a conflict here to what WCU Provost Alison Morrison-Shetlar and what Senate Faculty Chair Dr. David. MCord said; “It is not a small stakes issue here. This is the academic integrity of the institution over the long run” and suggesting it is “fairly unique” to have the overwhelming majority of faculty take a stand one-way and the administration do the opposite.

In a subsequent interview WCU Provost Alison Morrison-Shetlar claimed “the majority of written comments from faculty support the creation of a free enterprise center. She said only one-third of those who submitted comments opposed it.” According to an analysis of the written faculty responses by The Smoky Mountain News; “The written comments showed 20 were against the center, 14 were for it and three were in the middle.” Still a majority against the donation.

The Free Trade Center was originally pitched in August 2105 and Dr. Lopez was given the go-ahead to pursue the Center and construct a proposal with only the Provost’s and the Dean of the School of Business’s knowledge. Coming up for a vote to approve, both the Dean and the Provost came to “finally” realize they would need faculty input before the meeting and the planning stage. Coming out of the October 1st Provost Council meeting, it was decided to present the proposal to the faculty and on October 14 (don’t they have documented rules [like Robert’s] for this stuff?) it was accomplished with a stipulation a decison was to be reached by the next Provost meeting November 1. The failure of the Dean, the Provost and Dr. Lopez to notify faculty members left something to be desired leaving a bad taste in the mouths of some as the process was hurried and not transparent.

One email as disclosed by the Smokey Mountain News gives the impression the center was a foregone conclusion as the administration was on board from the beginning or shortly after Dr. Lopez was given the go ahead. Dating back to late September, the email states; “The Chancellor would like for the proposal to be to the Board of Trustees by the last meeting of this semester. That means we will have to get this turned around and back to the Provost Council in a timely manner,” Dean Darrell Parker wrote in an email to Dr. Brian Kloeppel, the dean named to handle the faculty input process.

Ahhh, but there are University policy rules to be followed. The email “predates several steps outlined in university policy governing the creation of a new center or institute. Administration was already angling to have the center on the desk of trustees within a couple months, despite two rounds of faculty input still needed and a two-phased approval by the provost council.”

“I am not aware of criticisms the policy wasn’t followed,” Lopez said. “This decision is the end of a process that from the very beginning was transparent and inclusive.”

– Wardell Townsend, chair of the WCU board of trustees, said university policy related to the center’s creation was followed, based on what he was told by the provost.

Provost “Morrison-Shetlar said in an interview the policy was ‘followed to the letter.’”

So much for the complaints of the faculty about not following policy and it being truncated.

The process to start a Center for Free Enterprise was well on the way by the time the faculty was informed. In early October, Distinguished Professor of Capitalism Dr. Lopez had already penned a job description “two months before the free enterprise center would come before the board of trustees for a vote” and the position would “participate in a new interdisciplinary center for free enterprise research.”

The position would be a part of the Center for Free Enterprise as the Gimelstob-Landry Distinguished Professor of Regional Economic Development. The position was also announced the previous year with no candidates found to fulfill the role. It was thought at the time the mention of a Free Enterprise Center may prejudice candidates and only those candidates of this mindset might apply. A concern by those opposing the center was the funders might influence who was selected to fill the professorship.

“As far as I’m involved, there is no chance that any donor will appoint any university personnel, full stop,” Lopez said.

References:

“WCU leaders, faculty at odds over Koch-funded free enterprise center” Smoky Mountain News, Becky Johnson

“WCU community grapples with academic pursuits in the face of politically-charged outside funding” Smoky Mountain News, Becky Johnson

” WCU chancellor pledges transparency, faculty involvement to vet controversial Koch money” Smoky Mountain News, Becky Johnson

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Some Great Reads on a Wintery Night

Been taking some time to recoup from back surgery (8 inch gash Lumbar area), catch my breath, and find some more interesting topics on which to write. There are some awesome reads out there if you just take some time to search for them.

Another Christmas gift from Dean Baker; The Effort to Divert Class War Into Generational War: Lessons On Economics You Won’t Get from Jeff Bezos In 5-Easy Lessons, Dean Baker takes apart the Washington Post’s Catherine Rampell’s Drunkenmiller-style rant on how baby boomers are ripping off the younger generations. Prof. Baker gives some sound explanations on SS/Medicare, PPACA, National Debt, the Economy, and Global Warming. Hat tip to Commenter Sandi for pointing to this Christmas Day article.

Obama, the Job Killer Paul Krugman compares Job Creation during Obamas and Bush’s Presidential tenures to date.

Charles Dickens on Seeing the Poor Tim Taylor at Conversable Economist uses Dickens Household Words journal reporting on poverty during a textile strike and a scene at a workhouse. “I know that the unreasonable disciples of a reasonable school, demented disciples who push arithmetic and political economy beyond all bounds of sense (not to speak of such a weakness as humanity), and hold them to be all-sufficient for every case, can easily prove that such things ought to be, and that no man has any business to mind them. Without disparaging those indispensable sciences in their sanity, I utterly renounce and abominate them in their insanity;.” “A Nightly Scene in London;” Charles Dicken. Excellent read if you are of a Dicken’s mind. You can also catch Tim Taylor’s other Charles Dicken’s article; “Management vs. Labor.”

– Paul Krugman writes an article Checking up on Obamacare. It appears the “sky is falling” conservatives have been wrong so far on the PPACA coming apart at the seams. Enrollments appear to be up if you also read Charles Gaba’s blog

” As of today, we should be appx. 1.9 million ahead of last year…but as you note, the question now is whether it will continue to stay ahead of last year *proportionately*.

11.2M vs. 9.3M = appx. 20% ahead. My 14.7M projection assumes 25% growth over 11.7M. It’s that 5% difference I’m concerned about (again, see the final week).

20% growth by 1/31 would be just over 14.0 million even. Again, I’m holding out for the Week 8 numbers before making any adjustments.”

– I had written about Brooksley Born, “The messenger wore a skirt,” says Marna Tucker, “Could Alan Greenspan take that?” a couple of years back and her efforts to regulate the derivatives market as the head of the CFTC. Greenspan, Rubin, Summers, Gramm and others fought to block her and were successful in doing so. I ran across this article by Bill McBride telling the story of Tanta, a blogger and another woman whose Calculated Risk articles were spot-on in detailing the issues leading up to the 2008 collapse. Tanta was widely read by many on the blogosphere as well as the news media.

Tanta, alias Doris Dungey, as a co-author at Bill McBride’s Calculated Risk blog had taken up reporting on the mortgage market (an industry in which she had 20 years experience) and pointing out their risky behavior prior to 2008. Here are some of her words on “piggyback mortgages, mortgage insurers, under pricing-risk, etc. (and I have already said too much) as taken from Calculated Risk (“Remembering Tantra”):

“Back to business: the mortgage insurers can raise rates all day long and it won’t do dog for them or anyone else. The whole problem is, precisely, that the “piggyback” mortgage was designed to get around MI. As long as there are second-lien lenders willing to price them cheaper than MI–and perhaps we’re seeing the beginning of the end of that–the MIs just lose business entirely in a credit bubble, since they’ve been burned before and haven’t been willing to follow the pricing down to ruin again. They remember the early 90s better than the regulators do (or did, maybe).

The real point is they have two dogs in this fight: they have lost market share because competitors (second lien and 100% lenders) have been willing to underprice risk, and they are at risk for the book of business they do have because increasing foreclosures and bubble-deflating in their market areas drag down values on insured as well as uninsured collateral. A lot of lenders and RE brokers have been dismissing the MIs for years now on the grounds that they’re just crying over lost business, but in my unhumble opinion the MIs have been pretty good risk managers in an irrational market for a long time, meaning they’re damned if they do and damned if they don’t. The fact that their interest in all this isn’t quite public-spirited altruism doesn’t mean they aren’t right. (If you remember, I’ve often made that argument about Fannie and Freddie.)

As I have been saying for years now, the reports from the MI companies ought to scare the crap out of Alt-A RMBS holders, but it never seems to. If the sector of the industry whose whole function is to underwrite default risk won’t touch that stuff at the (then) current market price, what makes anyone think the risk is adequately managed by a structured security? What are we going to do here, “make it up on volume”? (Inside joke: mortgage lenders always think they can keep slicing off risk premiums and ‘make it up on volume.’)”

What makes the story of Tanta interesting are several things:

– Her articles on Calculated Risk are crystal clear and go right to the heart of the issue which took me months of reading many difference sources and I still do not have as clear a picture as Tanta did. The articles are still there for those who wish to gain insight.

– “One of the criticisms of the movie ‘The Big Short’ is there are no women lead characters. That is a huge oversight, especially since Tanta was a key source for understanding the mortgage industry for many hedge fund managers!” Here was an expert right in the midst of us.

– Bloomberg’s “Odd Lots” has picked up on this missing and important element of a person’s story sounding the alarm of the coming collapse. Odd Lots: How One Woman Tried To Warn Everyone About The Housing Crash Joe Wisenthal and Tracy Alloway report on Tanta, “Tanta,” a pseudonymous mortgage industry professional who was trying to blow the whistle on the problems she saw emanating from her industry.”

I never got to know this Cassandra, Tanta, or read her words till much later than 2008 when she died and I had later joined Angry Bear. It is a great read by an interesting and very real person who was on the mark with what she reported on the mortgage market. Bloomberg took the time to recognize her as well as the WSJ, Boston Globe, WaPo, NYT, etc.

A conversation I was having with a PPACA expert:

“Reform is a process and not an event (I was complaining of the lack of reality by commenters) — and the process is happening. By about 2020 I think we will see results that will begin to make you & I, (not to mention folks like Elliot Fisher, Don Berwick, Diane Meier, etc. happy)

Medicare is beginning to negotiate better pricing (paying hospitals and docs for value, to volume) and in 2-3 years it will refuse to pay for many overpriced drugs. (This will make many Americans angry. They think they should have any drug that they think they need–or that their doctor tells them they need (even though their doc hasn’t read any medical research in 15 years) and that the rest of us should pay for it. Eventually, people will adjust.”

Much of the issue with healthcare is the uncontrolled cost of it. Pharma, hospital supplies, and doctors pretty much charge what they want to with little interference due to Congress. Whether it is a two-tier system of public and private funded healthcare or single payer; the control has to be put in place to administer cost and pricing the same as other advanced countries do. There is no magic bullet and it is un-nerving to me the insistence Single Payer is the magic bullet without the cost controls in place.

T.S.A. Moves Closer to Rejecting Some State Driver’s Licenses for Travel Not all Driver’s Licenses meet the requirements of being used for air travel identification. You may be pushed into a passport or a TSA Travel ID

U.S. Corporations Don’t Need Tax Breaks on Foreign Profits

Yves here. Notice that the justification for tax breaks so that corporations can show more profits is “competitiveness” that we’ve debunked repeatedly. As we wrote last year:

. . . ” Those provisions also serve corporations and the wealthy generally, since they further the use of tax reduction as an illusory economic stimulus. In fact, the main effect is a race to the bottom on corporate taxes, which results in a shifting of the tax burden to regressive consumption taxes and not-very-progressive personal income taxes. In other words, tax avoidance has long been a means for redistributing income to the capitalist classes.”

Sandwichman’s Lump-of-Labor Odyssey Part II ” Sneering at the so-called Luddite fallacy under the conviction that productivity would inevitably create more jobs than it destroyed used to be known as the ‘economic law’ that ‘supply creates its own demand’ — a faith that was once said, by John Kenneth Galbraith, to have “sank without trace” in the wake of John Maynard Keynes’s refutation of it.” A different view and one in which I agree.

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Merry Christmas Bears, Commenters, Visitors, and Yes even Trolls . . .

3:00 PM Eastern Std Time.

Christmas Eve and my wife has made raviolis which will be our dinner along with salad and her home made Italian Dressing. Even with being achy and tired from the events impacting me this year; I am still fortunate to be enjoying a home cooked meal this year safe from the violent incursions affecting so many, to be home and not overseas staying alive while being short and counting the days to fly out, to have food on my table when so many go hungry or wait in lines at the shelters, to have a warm home in which to live with my family, to be employed making greater than median income and have other companies chasing me for my expertise, to have healthcare insurance in which to fall back upon when ill for the umpteenth time, etc. I am sure there are so many stories to be told here amongst us of how each of us are more fortunate than what we have written about, experienced, seen and know of, etc.

Merry Christmas, be safe with family, and enjoy the holiday

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How Probability Is Perceived . . .

I ran across this explanation of Probability as seen by different professions at Sam Wang’s Princeton Consortium and tracked it down to Ben Orin’s Math with Bad Drawings blog. A little about Ben and his blog as told by himself: “This blog is about the things I like. It’s also about the things I can’t do. I hope that the juxtaposition here – carefully edited writing alongside art that my wife (charitably) likens to ‘the average 6th grader’ – captures the contradictory state of the teacher, of the mathematician – and, what the hell, of the human. We are all simultaneously experts and beginners, flaunting our talents while trying to cover our shortcomings the way an animal hides a wound.”

Note the differences in viewpoint of which some are a matter of convenient and profession. I thought you might enjoy the truth and the humor in it as explained by a Ben, a Math Teacher.

Actual Meaning

B Political Journalist

C Investment Banker

D Local News Anchor

E Philosopher

F Weather Forecaster

G Mission Impossible Agent

H Millennium Falcon Captain

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African Americans, the Poor in Court and Sentencing Reform

As one person I read consistently would say upon discovery of something quite obvious; “Quelle Surprise.”

I was told if I saw a prisoner, a parolee, or an Ex with a tattoo of the number “13-1/2” on their arm, it meant 1 judge, 12 jurors, and 1/2 of a chance. 1/2 of a chance to win in court as the cards were stacked against those who could not afford adequate representation or were African American. For sure if you went to trial, the resulting sentencing would be harsher as you made them work rather than accept the offered plea bargain.

Part of the sentencing reform as proposed by Congress, backed by the Koch Bros, and supported by CAP as well as other progressive orgs. is meant to prevent the Koch Bros. associates and white collar business types from going to prison when they break the law. As to be expected, the Koch Bros. could care less about minorities and the people lacking economic means to fight back in court to prevent going to prison. Mind you now, those minorities and people of little means would still benefit from an early release; however, the effort by the Koch Bros., CAP, etc. does nothing to prevent them from going to prison in the first place.

I had previously warned on another site the effort to revise sentencing guidelines is flawed as it failed to address the upfront justice system as I explain here;

Sorry Ed, Keith, and Nancy:

The issue was always in the courts and how defendants are represented and what avenues they had available to them once and if they were convicted and sentenced. The resources are not there, they are over burdened, and they are understaffed. Defendants do not raise much of a fight in the courtroom as they lack the resource to do so. Today, plea bargaining rules the courtroom and 85%+ of all cases before a judge are plea bargained away with many defendants even signing away their rights to appeal for a period of time. It is a matter of expediency as counties and states do not want to fund the courts and defendants can be moved through the system speedily to the prisons. Besides prisons being in unlikely places away from the crowds, they are an economic incentive as they employ people and raise tax revenue in areas not populated by business.

What is happening in states and in Congress is akin to giving a person with pneumonia an aspirin and telling them they are cured. For all that is said, talked and written about for criminal justice reform, it is a just bromide to the true issues. Besides have any of you looked at the tenets of parole?

Tethering in one state costs $13 per day for the parolee just released from prison and to which there is no escape. At the end of a 2 year parole, the parolee owes a state ~$9,490 if they do not pay it as they go along (mind you they may not have a job in this economic environment). If you do not complete paying for it, you are kept on parole until it is paid. If you refuse to pay it, you go back to prison. States use these funds to finance other state costs besides just keeping tabs on the parolee.

In most states, the Parole Officer judgment is the same as a court’s decision. A prison psychiatrist can decide a parolee needs no additional counseling only to be overruled by the Parole Officer. The length of the counseling is set by them also as they all have their medical degrees(?). The parolee pays for this also. If the parolee fails the course, the course can be extended or they can go back to prison. So much for the issue of recidivism.

Today, the Washington Monthly admitted they were taken in by the efforts of the Koch Brothers. The Koch Brothers have no interest in justice for all as the administration found out and the Washington Monthly (and I assume the CAP) also found out.

“One of those bills – which has been supported by Koch Industries, libertarians and business groups – would make wholesale changes to certain federal criminal laws, requiring prosecutors to prove that suspects “knew, or had reason to believe, the conduct was unlawful,” and did not simply unknowingly violate the law.

Many laws already carry such a requirement — known as “mens rea” – but Congress left it out of many others, and libertarian groups say that has made it too easy to unknowingly violate obscure laws. Some environmentalists argue, however, that the real motive of Charles Koch, the philanthropist and the company chairman, in supporting the legislation is to block federal regulators from pursuing potential criminal actions against his family’s network of industrial and energy companies, a charge the company denies.”

Why would the Koch Brothers be interested in such a change? It appears “‘Koch Petroleum Group knowingly and voluntarily pleaded guilty to criminal violations of the Clean Air Act and to making false statements,’ the DOJ spokesman, Wyn Hornbuckle, said. ‘These admissions and the significant criminal liability in this matter speak for themselves.'”

Is ignorance of the law an excuse for having committed a felony? It sure does not work when caught speeding (misdemeanor) . . . “well officer, I did not see the speed limit sign,” nor does it work when a person lacks cognizance when committing a crime as witnessed by the numbers of mentally ill locked away in prisons. One recent case has arisen where a 21 year old with the capacity of a seven year old is being charged after tweeting threats to schools. Reading the comments of people who know him, it does not appear he might have an evil intent or mind. The difference between the two being, those who are capable in making cognizant decisions and those being incapable of doing so (Bev Jack?). Even though it is not fool proof and when there is a question of ignorance of the law, it is time to ask for a jury trial. In which case, one can test the law by asking the question, “what would a reasonable man expect and do?”

This really is not the question in that there are those who have better standing in court than the average or less than average citizen due to the availability of resource. Those who have better resource and as a result better standing in court no longer want to make their case and be given a pass. November 24 in a NYT article “Rare White House Accord With Koch Brothers on Sentencing Frays”. Why would this be? It appears H.R. 4002 sponsored by “Wisconsin Republican Jim Sensenbrenner has made it complicated for House Democrats who have been warned (by Republicans) the passage of H.R. 4002 would be essential for obtaining support from Republicans for a larger package of criminal justice bills.” What does this bill do?

In effect it gives businesses a get out of jail free card; “would make wholesale changes to certain federal criminal laws, requiring prosecutors to prove that suspects ‘knew, or had reason to believe, the conduct was unlawful,’ and did not simply unknowingly violate the law.”

Many laws already contain such language which causes the court to prove the defendant knowingly violated the law (except in the case of insanity where the burden of proof is with the defendant). As DOJ spokesman Melanie Newman stated: “Countless defendants who caused harm would escape criminal liability by arguing that they did not know their conduct was illegal.” Those who suffer from mental illness have to prove they lacked an evil mindset and those who do not declare mental illness, do not have such a burden. The potential impact is many more of those could cause potential harm to the environment and walk free. The mentally ill (favored scapegoat of the NRA and weapons promoters these days) are held to a higher standard.

“The proposed standard, Justice Department officials said, might have prevented guilty pleas in a variety of cases, such as the charges filed in 2013 against Jensen Farms of Colorado for failing to adequately clean cantaloupe, resulting in an outbreak of food-borne illness that was cited as a factor in at least 33 deaths. It also might have prevented the plea in the 2012 charges against the owner of a pharmacy who sold mislabeled, super-potent painkillers blamed in three deaths.” The same holds true for “a compounding drug company prepared drugs for injection which resulted in a total of 25 deaths and injury in Michigan and other states.

Even so, some liberal representatives still support the legislation which may result from the passage of H.R 4002 even though it does little to provide the necessary representation in court for minorities and others to get a fair trial without plea bargaining. In a statement on Tuesday (November), Michigan Representative John Conyers said “he supported the bill which the Judiciary Committee approved by voice vote last week because outside parties had raised ‘a number of concerns about inadequate, and sometimes completely absent, intent requirements for federal criminal offenses.’” Seriously, Representative John Conyers? Where is the concern for your constituents who face the courts on a daily basis with nothing to defend themselves other than plea-bargains and the grace of the court (if such exists). The present legislation is little more than a back door correction of what happens and should not have happened in the first place during court proceeding.

Critics have said those who oppose the change due to the Sensenbrenner addition are exaggerating the impact of it as it is only a small portion of the entire bill focusing on eliminating mandatory sentencing. The elimination of mandatory sentencing will not stop a judge from applying a harsh sentence forcing a defendant to apply to a COA to overturn the judge and costing $thousands more. It is true a reduction in sentencing will help the overall issue of too many in prison; but, this solution is only a part of the problem. Most of the issue is on the front end of the justice system in the US. The lack of adequate representation, the under-staffing of public defender offices, the cutting of funds for public defenders, the over use of plea bargaining to short circuit the justice system, the burdens on courts, etc. The poor and minorities deserve the same representation and access to justice as what the associates of the Koch Bros. industries receive in court. This is a far bigger problem and sends many more people to prison than does drug sentencing which could be mitigated if better representation existed. It is here Congress, Conyers, CAP and all the progressive orgs should spend their money and energy. Otherwise much of the effort will not yield the payoff in preventing people from going to prison as expected.

12 Jurors, 1 judge, and 1/2 of a chance.

My $.02 . . .

References:

A Study In Contrasts Nancy LeTourneau; Washington Monthly
Criminal Justice Reform: It Depends Upon Where You Look; Ed Kilgore; Washington Monthly
Quick Takes – my answer to Washington Monthly; Nancy LeTourneau; Washington Monthly
Rare White House Accord With Koch Brothers on Sentencing Frays; Matt Apuzzo and Eric Lipton; NYT

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For Profit College, Student Loan Default, and the Economic Impact of Student Loans

For Profit Goes on Probation

The University of Phoenix has been placed on probation by the Department of Defense preventing the university from recruiting on military bases. The probation comes after the Federal Trade Commission and the California Attorney General’s investigation into the University of Phoenix recruiting methods, its high costs, and the resulting poor student performance.

This is not the first time Phoenix-U has been in trouble. In 2013 the University of Phoenix was threatened with probation by the accreditation board for a lack of “‘autonomy’ from its corporate parent -– a development that prevented the university from achieving its ‘mission and successful operation.'” In other words, the for-profit university #1 priority by its owners was to turn a profit at the expense of teaching, retaining, and graduating its students. This is precisely what I had alluded to previously on higher rates of defaults.

Student Loan Defaults

An interesting analysis by the NY Fed suggests students with lower amounts of student loan debt are more likely to default than those students with higher amounts. This is a new take on student loan debt and associated default as it was always thought the higher the debt the greater risk of default. Student Loan Debt has increased as more attend college, costs to attain an undergraduate degree have increased, even higher costs are sustained for Masters and Doctorate degrees, and students have been staying in school longer. Coming out of college the study finds amongst students loan debt is distributed rather evenly over time with one third being held by those in the 20s, one third held by those in the thirties, and one third held by those forty years of age and older. A large percentage of those borrowers or ~39% of them have loans of less than $10,000 and it is the holders of debt who have been defaulting at a higher percentage. The study goes on to break it down as to why they might be defaulting more frequently than tose with higher amounts of debt.

Using Equifax credit data, the NY Fed broke down the data into loan origination cohorts of student loan borrowers and using the same Equifax data, developed default rates for each cohort. Taking the origination date information for each academic year, the Fed was able to assign borrowers to loan-origination-completion-cohorts. The analysis did not reveal dropout or graduation information; however by using loan origination data, the methodology used does approximate whether students left school finished their education or just left school.

invisible hand

As shown on the graph and nine years out for the 2005 and the 2007 cohorts 24% of the students and greater had defaulted on their student loans by the 4th quarter of 2014. While the data for the 2009 cohort is incomplete and depicts five years as opposed to nine years, the data depicts a worsening default rate at 5 years then what can be found with the 2005 and 2007 cohorts at 9 years. Typically what we read and hear about is a 3-year window as reported by the Department of Education and is discussed by the news media. The 3-year window default rate is much less for each of the cohorts with the 2005 cohort being ~1/2 or 13% of what it is in 2014 as shown by the Fed study.

As I mentioned above, a large percentage of those who defaulted had student loan debt of less than $10,000. 34% of those borrowers in that group who defaulted on their student loans had balances of less than $5,000. 21% of the 2009 cohort were in this category of < $5,000 in student loans five years out which depicts a worsening trend when compared. A closer examination of the 34% also reveals this group to be made up of students who attended community college, did not finish, perhaps discovered this is not what they wanted to do, or the curriculum did not fit their needs. What the NY Fed concludes is the default rate worsens when a much longer period of time is taken into consideration as opposed to the 3 year window the Department of Education looks at and which the public hears about in the news. The longer the period, the higher the default and it continues through years 4 through nine for the first two cohorts. As shown the default rate for the 2009 cohort is already higher. Those who had lower amounts of student debt in the end may have defaulted due to a worsening economy or potentially did not get the payback expected from a two year degree at a community college or for-profit school. The study also revealed those who are current today with their student loans did experience stress in making payments and 63% of those student loan borrowers appear to have avoided delinquency and default over the last decade. On the other side of the coin, student loan borrowers with $100,000 of debt had a default rate of 18% which has been attributed to their being higher earners after graduation.

Economic Impact of Student Loan Debt

invisible hand

One aspect of the fall-out resulting from increased student loan debt as suggested by the Fed study is decreased home ownership. From 2008 onward the study depicts a steady decrease in the numbers of graduates burdened by student loans investing in homes. Dropping from a high of ~34% in 2008, the percentage of homeowners and having student loan debt has declined to ~23% in 2014. What has occurred, those 27-30 year old having no student loan debt have surpassed those with student loan debt in home ownership. While both groups experienced a decrease in home ownership during bad economic times, the decrease for those having student loans was far more severe. The decrease in home ownership still continues for both groups with those having less debt owning homes at a higher level.

invisible hand

A similar situation holds true for new auto ownership. The numbers of 25-year old college graduates purchasing automobiles and with student loan debt retreated from the market place at a faster pace than those without student loan debt. It is only recently have increased numbers of both groups returned to the market place to buy automobiles. While the purchase of automobiles has increased for all 25 year old people, the numbers of college grads with student loan debt no longer surpass those without student loan debt and at best are at the same level as those without student loan debt. Student loan debt is a burden and more of a burden in harsher economic times.

Much of the retreat from the market place is due to large loan and higher interest rates on undergraduate student loans, even higher interest rates and balances on graduate and doctorate student loans, higher balances due to the increased costs of colleges across the board, and longevity in paying back student loans. There are no controls on colleges and universities to rein in costs and it is the only cost to increase at a faster rate than healthcare. The higher costs play out in student loan debt as states do not subsidize colleges to the same ratio as they did 20 years ago, Pell Grants have not kept up with the costs of colleges, and parents can not afford the increased cost out of pocket either.

For the purchases of homes, cars, appliances; the bank assesses your ability to repay the loan as these loans can be discharged in bankruptcy unlike student loans which can not be discharged. Many college graduate households today consist of two married adults both of which are burdened with having student loans to pay off making the situation even more precarious. The result is increased risk.

invisible handUsing the same data, the NY Fed reviewed the risk rates of 25 and 30 year olds with and without student loan debt. As can be expected, those households with student loan debt were deemed a higher risk due to student loan balances and higher interest rates and a decrease of potential income over time. Those students would be less likely to obtain a loan or a loan with lower interest rates. A higher interest rate adds to an already high financial burden.

There are probably many other reasons why young households may have retreated from the market place; cultural changes in how younger households view home ownership, automobiles, and other purchases; higher costs of financing; lowered expectations of future earnings; unwillingness to take on more debt, etc. The fact of the matter is, not only does the market place view them as a higher risk; but, these college-educated young buyers are not buying homes, autos, etc. or making large investments at the same level that once existed and it does not bode well for the economy.

It also never ceases to amaze me the number of anti-educational opinions which flare up when the discussion of student loan default arises. There are always those who will prophesize there is no need to attain a higher level of education as anyone could be something else and be successful and not require a higher level of education. Or they come forth with the explanation on how young 18 year-olds and those already struggling should be able to ascertain the risk of higher debt when the cards are already stacked against them legally. In any case during a poor economy, those with more education appear to be employed at a higher rate than those with less education. The issue for those pursuing an education is the ever increasing burden and danger of student loans and associated interest rates which prevent younger people from moving into the economy successfully after graduation, the failure of the government to support higher education and protect students from for-profit fraud, the increased risk of default and becoming indentured to the government, and the increased cost of an education which has surpassed healthcare in rising costs.

There does not appear to be much movement on the part of Congress to reconcile the issues in favor of students as opposed to the non-profit and for profit institutes.

References:
The Race Between Education and Technology

Just Released: Young Student Loan Borrowers Remained on the Sidelines of the Housing Market in 2013

University of Phoenix Accreditation Hits Snag As Panel Recommends Probation

For-profit college banned from recruiting military students

The Student Loan Landscape

Looking at Student Loan Defaults through a Larger Window

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More Shopping Around . . .

I want to stress the need to shop around when looking for healthcare insurance on the exchanges by citing one example of how it can make a difference. As mentioned earlier here and on Charles Gaba’s ACA Signups blog, Shopping Around does make a difference. If you did not do so, you could be suckered into paying far more than what is necessary for healthcare insurance. This is supposedly the impact of the free market and as there is a sucker born every minute, there are those who will invest the time to look for and find the best policy at the best price. The market is not static.

I pulled another example of how the market can vary by going from a state to state view to looking within one particular state. In particular, I chose Missouri as an example to portray as it is showing an advertised high increase of cost at 27 and 22%. Charles Gaba does an excellent job of explaining the impact of these two increases within Missouri, which I will portray at AB. Charles Gaba fills the gap which Healthcare.Gov does not fill by pointing out the number of policies which have lower rates of increase than 10% (Healthcare.Gov only mentions increases >10%).

invisible hand

As you read the top half of the chart (click on the chart for a larger chart), you can see Coventry Health and Life appears to dominate the market place with >80% market share. If we look at the number of participants in the market, Coventry is only being measured against 48% of the market place. The other half of the market place which is reporting less-than a 10% rate hike is not reported by Healthcare.Gov. It is there, Healthcare.Gov does the consumer a great disservice by not reporting market place increases less-than 10%; the PPACA a disservice as it creates only a picture of out-of-control increases; and a disservice by feeding the naysayers with data of >10% increases only. While the PPACA is not perfect, it is certainly a step in the right direction as we waited ~22 years since Hillarycare for the healthcare industry and the Republicans/Congress to bring something to the table.

The bottom half of Charles Gaba’s chart depicts what could be happening using an estimated increase of 9.9% with the other healthcare insurance companies. If Charles is to be wrong in his calculations, he has erred to the high side of a potential increase by them. The total increase for the state is not 33% or 42% as reported in the news media. Nor is it 21% using a weighted average calculation as Charles Gaba determines. It is an ~ 15% total increase (Charles Gaba calculated) as determined by a high estimate of what is being paid by >50% of the market place insured participants. Could the state’s 15% be decreased? Yes, if more people shopped around in the lower half of cost in the market place.

Is this a failure of the market place, a failure of people not to “Shop Around,” or a failure of Healthcare.Gov to advertise low increases by not reporting on those lower-than 10%? Some of each I suspect; but, do not expect the healthcare insurance companies to come to your door and tell you they are going to gouge you this year as they will not. Maybe Healthcare.Gov should report on the low increase companies and maybe people should spend more time looking for a low cost and better policy . . . the same amount of time they will spend investigating an automobile and looking for the lowest cost than what they will for something impacting their health. After all, which is more valuable?

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