Saturday, October 31, 2009

Ego, Ideology, Acquisitiveness, and Science

The New York Times Book Reviews of November 1, 2009 (tomorrow at the time of this post) offers three very revealing reviews that deal with the general theme of economic theory and practice. If you care to think about such things these reviews will make for good reading.

There is one about the life of Ayn Rand, whose comic book ideology and powerful ego served to capture the fancy of many a naive but intelligent youth, including one as distinguished as Alan Greenspan - the one who, in recent years, managed to play a role in royally screwing up the American economy.

Ayn Rand

The second one is about the professional career and successful acquisitiveness of Jamie Dimon who helped to build that monstrous corporate entity called "Citigroup" and who currently is at the helm of JP Morgan Chase bank.

Jamie Dimon

The third is a review of two books about the life and the contributions of John Maynard Keynes to economic theory and practice. He is the economist to turn to when your favorite ideology again fails.


Draw your own conclusions. Mine are particularly simple and it astounds me that I had to become an octogenarian before I could clearly express them. I cannot explain that except to concede that I am a slow learner. Perhaps you can do better.

Ego is probably ubiquitous in humans, at least in the ones I know anything about. Mine now takes the form of simply wanting to understand things as well as I can, but it can take many forms - even in scientists. However, while ego can motivate science ego cannot replace science and it needs to be carefully restrained.

Acquisitiveness is to be found in varying degrees but it is a widely distributed trait that has not spared the subspecies called "bankers." The book about Jamie Dimon, a very successful banker, may to some extent explain why bankers should not be the final arbiters of financial regulation.

Ideology is for the simple minded and for manipulators and exploiters of the simple minded. By confining their ideas to one small ideological box it spares them the arduous labor of thought and gets in the way of real progress. It is much to his credit that "Keynes’s political views were dominated by a pragmatism similar to what Clarke describes, where the best is the enemy of the good. Keynes was no socialist, but also no free-market ideologue. He was interested in what worked."

Friday, October 23, 2009

Corruption, Inc.

Corruption is ubiquitous in this world, even in the USA, even in the Congress. If you doubt that you might just as well stop reading this now, because you are on the wrong planet. As one intelligent limo driver put it, "money makes the monkey jump." Of course, the monkey is us.

There are some folks who are unalterably opposed to corruption and, just occasionally, they have their way. We need more of them and they need our help. There are at least three ways to stamp out corruption:

1) Genetic engineering of the human psyche (maybe doable but not in this century),

2) Cultural evolution (I believe this to be possible and that the process is underway but that it will take at least a couple of generations),

3) Rigorous regulation and vigorous enforcement. We can begin immediately.

The implementation of effective regulation and enforcement will not be easy while money still makes the monkey jump. It is not enough to have the president on your side. Observe that the Fed and the Treasury Department are currently under the leadership of two high level banksters. They are good men but there is a lot of cultural conditioning and old boy values to be overcome.

old boys



If you really want justice you will have to loudly and persistently demand it. Use the Internet, the media, public forums, and use the streets. Say NO to weak regulations, to loopholes, to toothless regulators. Write to the president, to your congressperson, to your senators, to Barney Frank, to Chris Dodd. Put a strong wind into their sails.

What goes for financial regulation also goes for health insurance regulation.

I have a dream that an effective bill for health insurance regulation falls short of the 60 votes needed for cloture in the Senate and that the president finally draws a line in the sand.

"My fellow Americans, as you know, the health insurance reform act has fallen short of the 60 votes needed to bring it to a vote and the Republicans are threatening to filibuster. While they speak, large numbers of Americans will be losing their coverage or will be denied benefits, will be going into bankruptcy, will be dying for lack of good health care.

"The time has come to end the culture of corruption which is willing to pauperize or kill decent Americans in trying to sustain the unsustainable profits of a few insurance giants.

"Therefore, we shall continue to demand cloture, week after week, until the elections of November 2010 if necessary. In that case, the American people will be in a position to act decisively one way or the other.

"The question at hand is a fundamental one. Will the government of the United States be a government of the people, by the people and for the people or will it become a corporate state: of the lobbyists, by the venal politicians and for the big corporations.

'May God bless you with understanding and may God bless America."

Sure, it's only a dream.

Dr. John

Tuesday, October 6, 2009

Health Care Insurance, Inc.

Let's skip a torrent of detail and go to the heart of the matter. The health care insurance for-profit companies exist to earn as much profit as they can for their executives and stockholders. Normally, if you are ideologically in favor of entrepreneurial, free market capitalism you would consider this to be a normal and correct activity but there are several giant problems in this situation.

1) The companies earn their money by rejecting applicants for coverage who seem to be poor risks. These people remain uninsured. They also refuse payment for legitimate medical treatments whenever they can legally do so, mostly on the grounds of preexisting conditions or because the recommended treatments are "experimental." They also raise premiums and co-pays for all the traffic can bear. A consequence of this is that large numbers of Americans are dying for lack of treatment or going into bankruptcy for lack of the money to pay for it.

2) A lot of money that could be spent on health care is diverted into overhead costs and profits.

3) Doctors and their assistants spend time that could be used to treat patients in dealing with the insurance companies.

4) Some of the companies' cash flow is utilized in massive lobbying because their profitability is highly dependent upon legislation, particularly, legislation that enables them to avoid competition. The companies have a huge stake in avoiding competition, either with each other or with a governmental entity. This intense lobbying has a very corrosive effect upon the integrity of government.

When the insurance companies win, you lose.