Archive for June 11th, 2010

You’ll understand what’s in it when we pass it …

June 11, 2010

Pelosi argued that once ObamaCare was passed, folks would see what was in it and rally to support it.

Seems that the opposite is occurring: as reality gets unveiled folks are jumping off the canoe …

The reasons: bad economics and aversion to so-called social democracy’.

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Excerpted from RCP: Refusing the Entitlement Lollipop, May 28, 2010

After a brief bump, support for Democratic health reform has declined.

According to a recent Rasmussen poll, 63 percent of voters support repeal of the law, the highest level since passage.

On the theory that the distribution of lollipops usually doesn’t provoke riots of resentment, opposition to the health entitlement requires explanation.

First, the economic case for Democratic health reform has been weak, contrived, even deceptive.

Recent events in Congress make the point. Two months after passing a law that supporters claimed would reduce federal deficits, largely through Medicare cuts, the House is moving toward a temporary “doctor fix” that would add tens of billions in Medicare costs.

The economic arguments for reform — that it would reduce the deficit and health inflation — were questionable from the beginning. Now they have been revealed as absurd.

Second, Americans are troubled with health reform, not because they lack knowledge of its provisions, but because they are uncomfortable with social democracy.

  • When entitlements began in America, they were mainly focused on the elderly (through Social Security and Medicare) and the poor and disabled (through Aid to Families with Dependent Children and Medicaid).
  • Benefits for the middle class were largely given through tax deductions for mortgage interest and the purchase of health coverage by businesses.
  • America eventually retreated from some entitlement commitments to the poor because they involved a moral hazard — discouraging work and responsibility.
  • Entitlements for the elderly have remained a strong, national consensus.

The idea of a middle-class entitlement to health care, achieved through an individual mandate, subsidies and aggressive insurance regulation, seems to change the nature of American society.

Entitlements in the Obama era are no longer a decent provision for the vulnerable; they are intended for citizens at every stage of life.

Americans resist taking this lollipop precisely because America is not Europe

http://www.realclearpolitics.com/articles/2010/05/28/refusing_the_entitlement_lollipop_105762.html

Posted in Health Care / Medical Insurance | Leave a Comment »

Unleashing millions of entrepreneurs …

June 11, 2010

Tom “World is Flat” Friedman laments that there are now a dirth of start-ups which ultimately fuel any economy.

Here’s his Rx …

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NYT: A Gift for Grads: Start-Ups, Thomas L. Friedman, June 8, 2010

Good jobs — in bulk — don’t come from government. They come from risk-takers starting businesses — businesses that make people’s lives healthier, more productive, more comfortable or more entertained, with services and products that can be sold around the world. You can’t be for jobs and against business.

A surprising number of entrepreneurs and innovators have told me they had voted for Obama, and an equally surprising number of them now tell me they’re unhappy.

I think part of the business community’s complaint about Obama has merit.

This administration is heavily staffed by academics, lawyers and political types. There is no senior person who has run a large company or built and sold globally a new innovative product.

And that partly explains why this administration has been mostly interested in pushing taxes, social spending and regulation — not pushing trade expansion, competitiveness and new company formation. Innovation and competitiveness don’t seem to float Obama’s boat.

How can we unleash millions of entrepreneurs.

Curtis Carlson, the chief executive of SRI International, the Silicon Valley-based innovation specialists says he would create a cabinet position exclusively for promoting innovation and competitiveness. “Secretary Newco” would be focused on pushing through initiatives — including lower corporate taxes for start-ups, reducing costly regulations (like Sarbanes-Oxley reporting for new companies), and expanding tax breaks for research and development to make it cheaper and faster to start new firms.

I’d also cut the capital gains tax for any profit-making venture start-up from 15 percent to 1 percent.

I want our best minds to be able to make a killing from starting new companies rather than going to Wall Street and making a killing by betting against existing companies.

Full article:
http://www.nytimes.com/2010/06/09/opinion/09friedman.html

Posted in Entrepreneurship | Leave a Comment »

When was the last time you got bumped from an overbooked flight ?

June 11, 2010

Answer: Probably a long, long time ago.

About 1 in every 5,000 passengers … about 100,000 people each year.

Doesn’t sound like a lot to me.

Still, the Feds are up in arms about it.

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WSJ: Auctions for Overbooking, June 8, 2010

The Department of Transportation has announced new rules for airlines to compensate passengers who are involuntarily bumped from an oversold flight.

The feds want to raise payments for those involuntarily bumped to $600 from $400 for short delays and to as high as $1,300 from $800 for lengthy delays.

We have a better idea — or, more precisely, the late economist Julian Simon had one 30 years ago.

In the 1970s, Simon proposed an auction system in which airlines would offer passengers on overbooked flights a gradually rising reward for giving up their seat.

For example, if 115 passengers showed up for a flight with 100 seats, the airline would start to offer, say, a $300 voucher to passengers who agreed to take a later flight. If there weren’t enough takers at $300, the airline would increase the offer to $400, then $500, a free round trip ticket, etc., until 15 passengers volunteered.

Auctions like this are highly efficient ways of allocating a scarce resource.

Starting with American Airlines in the late 1970s, a version of the proposal was widely adopted. Studies demonstrated that airlines saved money and the rate of bumping was reduced by more than 80%.

So why are there still so many involuntary bumpings?

Because many airlines offer one take-it-or-leave-it deal — say, a $500 voucher — and if there are not enough takers, the random bumping begins.

A real auction would prevent this and optimize the welfare of all parties. Those who take the payment for a later flight are better off because they have freely chosen this option. Passengers who cannot afford at nearly any price to miss the scheduled flight are guaranteed a seat.

The airlines also benefit because an auction may save them money over a set price or a government penalty.

Full article:
http://online.wsj.com/article/SB10001424052748703303904575293011757655060.html?mod=WSJ_Opinion_LEADTop

Posted in Airlines | Leave a Comment »