Yesterday, I posted numbers and an analysis of the profitability of health insurance companies.
Conclusion: They don’t make all that much money, so squeezing them will do little to alleviate spiraling healthcare costs.
Blogger ‘Consultant Ninja’ – reduced my analysis to a straightforward graphic.
Much better presentation of the data, same conclusion.
http://www.consultantninja.com/2009/07/us-health-care-costs.html
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Earlier this week, President Obama turned on a rhetorical dime and rebranded “healthcare reform” as “insurance reform”. Attacking insurance companies as profiteers and the root cause of spiraling healthcare costs.
Many naive Americans, will likely buy-in to the pitch . After all, it’s easy to hate insurance companies since they force us to give up our current doctors in favor of less costly ones, deny us the “right” to have certain procedures done, make us co-pay for drugs and services, and raise our premiums to cover the bloated medical expenses of obese smokers. Those guys are downright evil, right ?
The argument is standard liberal dribble. As typical, it falls apart when subjected to factual analysis.
Below is an analysis that I posted last fall.
Bottom line: (1) health insurance companies don’t make all that much money, and (2) if you think that insurance companies deny a lot of procedures and claims, just wait until government rationing of healthcare kicks in.
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Originally posted 09-09-08
https://kenhoma.wordpress.com/2008/09/09/health-insurance-those-health-insurance-companies/
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In the book Crunch, liberal economist Jared Bernstein criticizes health insurance companies, asserts that:
These are oft repeated refrains from folks who advocate government administered universal heath insurance.
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I think this argument displays a remarkably shallow understanding of what health insurance companies do, how much money they make, and how they make it. And. it places a remarkably high level of confidence in government administered programs (think, the FDA chasing down salmonella sources).
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First, what is the financial upside if all health insurance companies’ profits are eliminated and put in the national bank as economic cost savings.
Well, for openers, the health insurance companies — don’t make all that much money. Consider the 2007 financial results for the two biggest “pure” health insurance companies: United Health Care and Wellpoint.
Note that pre-tax profits are about 9% of revenues [12,555 divided by135,553]. About 1/3 of the pre-tax already goes to the government in taxes; about 2/3’s (6% of revenues) drops through to the bottom line.
Currently, U.S. health care expenditures are about $2,1 trillion (just over $7,000 per person). Of that, roughly half is “sourced” from the government via Medicare and Medicaid. Of the half that is private pay, about 2/3’s ($725 billion ) goes through health insurance companies — the other 1/3 is out of patient’s pockets or “other” (e.g. charitable gifts to medical centers).
So, what’s the financial upside if all health care insurers were “disintermediated” and their profits were banked as economic cost savings to the system ?
Well, assuming that the rest of the healthcare insurance companies have profitability profiles comparable to United and Wellpoint — there’s a pre-tax profit of 9% that applies to $725 billion in revenues — or roughly $65 billion dollars.
But wait, the government is already getting about 1/3 of that in taxes.
So, the net gain is at most $40 to $45 billion, or about 2% of the $2.1 trillion in total healthcare spending. Why “at most” ?
Simple, because it assumes that the government will be able to administer the programs as efficiently as the private companies. Call me cynical, but I doubt it.
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On the second point, that health insurance companies reject claims and refuse to authorize treatment as a means of boosting their.bottom lines.
Well, that’s at most partially true, and catches the government administration folks in a circular argument.
First, about 1/3 of health insurance companies’ transactions volume is administrative processing done in support of companies (usually big ones) that choose to self-insure. That is, the self-insuring companies take all of the risk, and only pay the insurance companies a fee (that includes profit, of course) for negotiating with health care suppliers and processing transactions — in conformance with terms, conditions, and rules dictated by the companies. There are agreed to standards that are enforced.
The other 2/3’s of their transaction volume is strictly premium based. If more treatments are authorized, costs go up and premiums go up to cover them. If treatments are denied, costs go down, and the competitive market pushes premiums down,It’s that simple.
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Want more from the Homa Files?
Click link => The Homa Files Blog
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Team Obama thinks that it has corporate America right where it wants it –- under its thumb.
CEOs and Boards serve at the pleasure of the President, executive compensation is overseen by a Federal czar, product lines are green-dictated by Federal czars and Task Forces, contract law is suspended at will, bankruptcy laws are changed on the fly — relegating secured creditors behind politically-favored unsecured ones, ineffective government agencies dictate to stumbling companies, unions are given jolts of legislated adrenalin.
The Administration has empowered itself to sort out good guys from bad guys, to pick marketplace winners and losers, and to destine survivors and failures, Companies (and individuals) that question government policy are ridiculed, harassed, and punished; those that oppose the policies are squashed faster than decades-old GM or Chrysler dealers.
Corporate CEOs are quaking in there boots … or are they ?
Team Obama –- which consistently demonstrates uncanny business naiveté — may be underestimating a staple of organizational behavior: the power of passive aggressive resistance. Rather than being openly insubordinate when confronted with undesirable tasks — and getting nailed by vindictive superiors — employees and organizational units will often just procrastinate and work work inefficiently, in effect, pocket vetoing the unpopular orders from above. In corporate jargon, it’scalled “slow rolling”.
Sure, corporate chieftains will tell President Obama what he wants to hear, and may even stand next to him on a stage in a faux show of support. Why risk the rath of a Presidential punishment, especially when there are other ways to skin a cat?
Specifically, with respect to continuing job cuts and rising unemployment, here’s a theory of the case.
First, you can’t let a good crisis go to waste, right? Businesses always use tough economic times to clean house. Fat builds in all organizations over time. In “normal” times, it’s difficult to get rid of dead wood. Employment laws — perhaps well-intended originally –- serve to protect slackers by making it cumbersome and difficult to fire anybody. When the economic tide rolls out, companies have the air cover they need to resize and purge under-performers en masse. The tendency is to cut deep. If some muscle gets pared too, so be it. It can be rehabilitated later.
In typical business cycles, employment is a so-called lagging indicator of an economic rebound. That is, when the economy starts to recover, jobs are usually added back very slowly. Why? Because businesses have a renewed zeal for productivity, they recommit to keeping the fat from building up again, and they want to be sure that the signs of better economic times aren’t false positives.
Eventually, open positions are filled and capacity — human and physical — is added to meet increasing demand. It may take awhile, but the system eventually gets back in balance.
If the economy is bottoming out now -– as many experts assert — employment would be expected to start rebounding in 2010. But, it won’t. Why?
Because the rules of engagement have changed. It has become far more costly and risky for companies to restore or enlarge their payrolls.
For openers, the minimum wage is scheduled to increase by over 10%, making entry level staffing more costly. Then, there is the risk that “employer mandate” will force companies to expand health insurance coverage or pay fines – again, making labor most costly. Then, there is the threat of “card check” legislation turbo-boosting the mass unionization of U.S. businesses . And now, there’s the evident risk that government will change rules and regulations on political whims, creating an unprecedented level of uncertainty.
The bottom line: businesses will resist government policies passive aggressively. Fewer jobs will get added back than history would suggest, and those that get added back will materialize later than past patterns. Businesses will add jobs as a last resort rather than trying to build capacity ahead of the economic growth curve. Why should companies increase their costs and risks any more than is absolutely necessary ? Companies will continue to off-shore jobs, but will be more clever and clandestine about it, e.g. by vertically disintegrating and simply buying goods and services from 3rd parties.
Given the Administration’s anti-corporate rhetoric, actions, and proposed game-changing rules, I doubt that many CEOs will be taking on added costs and risks to boost the administration. More likely, they will let unemployment continue to creep up, and will slow roll the process of rehiring. Corporate chieftains will sit back and watch the President squirm and spin his “4 million jobs – saved or created”. As Rev. Wright would say “the chickens will have come home to roost”. Passively aggressive resistance at its very best.
Unfortunately, that means we’ll be seeing double digit unemployment for some time – at least through the 2010 Congressional elections.
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Top-line Numbers
The most recent Rasmussen Poll reports that 30% of likely voters Strongly Approve of Obama’s performance as president, and 37% Strongly Disapprove. That puts his Presidential Approval Index — the difference between the percentage of likely voters who Strongly Approve and the percentage who Strongly Disapprove — at minus 7. The PAI has been negative for all of July, and it has been consistently around minus 7 for the past week or so.
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Top-line Analysis
The generally reported story line: Obama is personally popular, but his policies are causing concern among rock hard GOP opponents and some independents “at the margin”.
But, not to worry – ratings slips are to be expected when a President pushes an aggressive agenda and the Presidential honeymoon period winds down.
But, I’ve been noticing that acquaintances who were strong Obama supporters seem less willing to pitch his case and defend his actions to date. While “buyer’s remorse” overstates the case, I am seeing some doubts and head-scratching.
So, I did some digging.
I previously posted some FD-Hotline polling results that indicated Obama is slipping among males, independents, and rural voters. Interesting, but not earth-shaking.
The “internals” from Rasmussen polling – are way more revealing. They’re under-reported – even by Rasmussen – probably because they tarnish the Obama mystique and reek of political incorrectness.
For example:
Keep reading for the drill down …
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First Level Drill Down
Comparing Rasmussen poll results from the week of July 6-12 to the week of June 1-7
For the total sample of likely voters: Obama’s PAI (the difference between strong approvers and strong disapprovers) dropped by 10 points, from plus 3 to minus 7
Highlights from the “internals”
For males: Strong Disapproval increased by 7 points, from 35% to 42%
For females: Obama’s PAI dropped by 9 points, from plus 9 to even zero
For whites: Strong Disapproval increased by 5 points, from 36% to 41%
For blacks: Strong Approval dropped 10 points, from 70% to 60%
For “Other”: Strong Disapproval increased 16 points, from 27% to 43%
For Democrats: Strong Approval dropped 12 points, from 62% to 50%
For Republicans: Strong Disapproval increased 7 points, from 54% to 61%
For “Other”: Strong Disapproval increased 8 points, from 35% to 43%
For 18-29 olds: Strong Approval dropped 12 points, from 39% to 27% and Obama’s PAI dropped by 17 points, from plus 17 to even zero
For 30-39 olds:Strong Disapproval increased by 11 points, from 31% to 42%
For those earning between $20,000 and $40,000: Obama’s PAI dropped by 12 points, from plus 5 to minus 7
For those earning between $40,000 and $60,000: Strong Disapproval increased by 12 points, from 35% to 47%
For those earning between $75,000 and $100,000: Strong Disapproval increased by 9 points, from 35% to 44%
For more still more detail from the internals, keep reading.
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Rasmussen June to July Internals
Comparing poll results from the week of July 6-12 to the week of June 1-7
For the total sample of likely voters:
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Gender
For males:
For females:
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Race
For whites:
For blacks:
For “Other”:
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Party
For Democrats:
For Republicans:
For “Other”:
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Age
For 18-29:
For 30-39:
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Income
For those earning less than $20,000
For those earning between $20,000 and $40,000
For those earning between $40,000 and $60,000
For those earning between $75,000 and $100,000
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“As costs explode, Congress will try to wring out ever more “savings” by underpaying doctors and hospitals.”
Full article: WSJ, What’s Up, Docs?, July 20, 2009
http://online.wsj.com/article/SB124804389935663419.html
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Ken’s Take
Cutting to the chase, the crux of ObamaCare is (1) to provide tax-payer funded health insurance to 45 million uninsureds — many of them who don’t deserve it (think non-citizens, and young workers who choose to self-insure) (2) to ration medical services, especially among older folks and (3) squeeze doctors’ earnings.
Frankly, I think doctors deserve to make a lot of money. Most are pretty smart, all go through rigorous (and expensive) training, all get paid a pittance in their early years as they work round-the-clock as residents and, most important to me, they are gatekeepers to quality of life for me and my loved ones.
Doctors are already being squeezed.
One doctor friend of mine gave up the fight a couple of years ago, quit his practice, and went to work for a pharma company.
Another – a doc who prided himself on providing highly personal care — is now forced to treat 1/3 more patients to maintain his income level. Dr. Welby is being forced to become Dr. McDonald’s.
Still another doc has ‘vertically integrated’. As payment rates have dropped on her basic services, she started providing services previously done by specialists. Think OBY-GYN docs doing ultrasounds — lots of them — on pregnant moms. That boosts their income, but pressures the radiologists — who used to do the procedures — to find fill-in business. A vicious cycle.
Does anybody really think that’s a formula for higher quality, lower cost healthcare? Seems penny wise, pound foolish to me.
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Ken’s Take: The ballooning deficit and national debt raise two mega-worries: (1) An eventual increase in interest rates as it gets increasingly difficult to find buyers for US bonds, and (2) the increasing dependence on foreign buyers of the debt – especially China. Neither should be taken lightly …
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Excerpted from NY Post,”The Never Ending Pork Parade”, July 4, 2009
Thanks to ongoing trade deficits and relentless borrowing, America’s financial status is deteriorating rapidly.
So while the Obama administration frets that we are dangerously dependent on foreign oil (Note: Canada sends us as much oil as the Persian Gulf region, and Mexico not much less), we are increasingly threatened by dependence on foreign bondholders who could wreak havoc on the dollar and our interest rates far more easily than OPEC could cut off our oil.
Full article:
http://www.nypost.com/seven/07042009/postopinion/opedcolumnists/the_never_ending_pork_parade_177485.htm?page=0
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To cover the $1 trillion cost of heath care “reform”, Team Obama has proposed raising taxes by $544 billion, almost all on the “rich” — those in the top 5% of incomes.
That raises a couple of issues:
1) What if the rich “lay down” – working less as their prospective marginal take home pay gets cut? (see chart below)
2) How to inspire the next generation to bust their butts to grab for the golden ring? Maybe “doing good” will be enough motivation, but I’ll be betting “under” on that one.
3) What happens when the filthy rich are fully taxed and there’s still a big budget gap? My hunch: they’ll be coming after the rest of us.
Source: IBD, Tax Hike Comin’,July 16, 2009
http://www.ibdeditorials.com/IBDArticles.aspx?id=332637892829537
For details (local + state + federal)– all states — see Tax Foundation Report
http://www.taxfoundation.org/publications/show/24863.html
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The Diageo/Hotline Poll of 800 U.S. registered voters conducted from July 9-13, 2009, finds that the percentage of American voters who approve of the job President Obama is doing has dropped 9points to 56%. The percentage who disapprove jumped by 7 points to 38%. So, the approve / disapprove “spread” was cut almost in half from 34% to 18%.
According to Hotline, the approval decline was primarily driven by 15 point drops among men from 61% to 46%), independents from 63% to 48%), and rural voters (from 59% to 44%). Note that a minority of voters in these 3 segments now approve of the job that Obama is doing.
Hotline also reports that 55% of voters now believe that the country is “seriously on the wrong track”; that only 11% are “very confident that Stimulus I will create new jobs”; and 40% “strongly oppose a second stimulus package”.
For all of the poll results:
http://www.diageohotlinepoll.com/documents/diageohotlinepoll/FDDiageoHotlineJulyTopline_FORRELEASE_07.15.09.pdf
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Homa Note: Mankiw – a Harvard prof – is probably the foremost econ teacher these days. Evidence: he got an author’s advance of over $1 million for his textbook …
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Excerpted from NY Times, “That Freshman Course Won’t Be Quite the Same”, Mankiw, May 24, 2009
Despite the enormity of recent events, the principles of economics are largely unchanged. Students still need to learn about the gains from trade, supply and demand, the efficiency properties of market outcomes, and so on. These topics will remain the bread and butter of introductory economics courses.
Nonetheless, the teaching of basic economics will need to change in some subtle ways in response to recent events. Here are four:
THE ROLE OF FINANCIAL INSTITUTIONS
Students have always learned that the purpose of the financial system is to direct the resources of savers, who have extra funds they are willing to lend, to investors, who have projects that need financing.
The economy’s financial institutions — banks and insurance companies are part of a system [that is largely taken for granted] and quickly fade into the background
The current crisis, however, has found these financial institutions at the center of the action.
Financial institutions are like the stagehands who work behind the scenes at the theater. If they are there doing their jobs well, the audience can easily forget their presence. But if they fail to show up for work one day, their absence is very apparent, because the show can’t go on.
THE EFFECTS OF LEVERAGE
The economic crisis arose because some financial institutions had, in effect, invested in housing by holding mortgage-backed securities. When housing prices fell by about 20 percent nationwide, these institutions found themselves nearly insolvent.
[The] important question: “If housing prices have fallen only 20 percent, why did the banks lose almost 100 percent of their money?”
The answer was leverage, the use of borrowed money to amplify gains and, in this case, losses.
Economists have yet to figure out what combination of mass delusion and perverse incentives led banks to undertake so much leverage. But there is no doubt that its effects have played a central role in the crisis.
THE LIMITS OF MONETARY POLICY
The textbook answer to recessions is simple: When the economy suffers from high unemployment and reduced capacity utilization, the central bank can cut interest rates and stimulate the demand for goods and services.
When businesses see higher demand, they hire more workers to meet it.
But, what would happen if the central bank cut interest rates all the way to zero and it still wasn’t enough to get the economy going again?
Now, with the Federal Reserve’s target interest rate at zero to 0.25 percent, that question is pressing.
The Fed is acting with the conviction that it has other tools to put the economy back on track. These include buying a much broader range of financial assets than it typically includes in its portfolio.
Economists are far from certain how well these tools work.
THE CHALLENGE OF FORECASTING
It is fair to say that this crisis caught most economists flat-footed.
In the eyes of some people, this forecasting failure is an indictment of the profession. But that is the wrong interpretation.
In one way, the current downturn is typical: Most economic slumps take us by surprise. Fluctuations in economic activity are largely unpredictable.
Yet this is no reason for embarrassment. Some things are just hard to predict. [The vest an economist can do is] assess risks and to be ready for surprises.
Full article:
http://www.economics.harvard.edu/faculty/mankiw/files/That%20Freshman%20Course.pdf
Ok, another $1 billion government program . This one is intended to to jump-start — or as VP Biden would say “dropkick” –the car industry.
Let’s start with the basics: if the program were to work, fewer than 300, 000 cars would be sold –- about 1 weeks worth of sales. And, not all of those would be be incremental to the ones that might have bought any way. So call it 250,000.
But, not to worry, not much of this money will make its way out of Treasury’s vault.
Why?
Though there are no income limits on voucher recipients, nor restrictions on where the new cars are made — the program has lots of “small print” qualifiers.
According to Business Week:
• Vouchers of either $3,500 or $4,500 will only be given to people who trade in an older vehicle to buy a new one.
• The trade-in, or clunker, must be no older than 25 years, have average gas mileage of less than 18 miles per gallon.
• The clunker must have been owned by the seller for at least a year.
• The new car must cost less than $45,000 and get more than 22 mpg. To get the higher voucher, the new vehicle must also average 10 more miles per gallon than the old one.
• To get the higher voucher, the new vehicle must also average 10 more miles per gallon than the old one.
• For trucks—SUVs, pickups, and minivans, a improvement of at least 2 mpg between the old and new vehicles qualifies for $3,500; 5 mpg or more entitles buyers to $4,500.
Ken’s translation of the rules: good luck.
If a clunker qualifies, there are some obvious questions about whether the folks driving those clunkers are willing and able to step up to brand-new wheels.
Think about it.
The economic impact is less than the face value of the rebates. Why? Because the clunkers probably have some market value that is greater than zero – i.e. the owner can sell it as a step-up model to somebody driving a clunkier (or dead) clunker. An economist would say that only the difference between the rebate and the clunker’s fair market value counts as an incentive.
More important, people usually drive clunkers because they can’t afford any thing else. People driving clunkers often buy used cars – not new ones, and even with a $4,500 discount, they probably won’t want to take on new-car payments during a time of economic hardship.
Maybe an arbitrage market will emerge, with upscale people buying a clunker on the open market for less than its clunker program rebate, and trading it in for fancy new wheels (that they were going to buy anyway) – deducting the the clunker rebate’s full “coupon” value.
What about the rule that somebody has to have owned the car for at least 1 year? Easy: the current clunker owner uses the rebate to buy a new cay, and then immediately turns around and flips the new car to a pre-arranged “partner”. Pretty easy.
Congressional reps really should read these bills before they enact them …
Source article:
Business Week, Cash for Clunkers: What Can $1 Billion Buy?, June 24, 2009
http://www.businessweek.com/magazine/content/09_28/b4139000349712.htm
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These guys were supposed to be the finance and economics studs in the administration, but have been practically invisible of late.
What’s up?
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Ken’s Take: During the campaign, Candidate Obama promised repeatedly: “not one dime of new taxes if you make under $250,000” and “for the top brackets, no higher than under President Clinton”. The latter will fall by the wayside if the Rangel proposal is enacted. Think the former is far behind ?
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Excerpted from WSJ, The Small Business Surtax, July 14, 2009
Every detail isn’t known, but late last week Ways and Means Chairman Charlie Rangel disclosed that his draft bill would impose a “surtax” on individuals with adjusted gross income of more than $280,000 a year.
This would hit job creators especially hard because more than six of every 10 who earn that much are small business owners, operators or investors, according to a 2007 Treasury study.
That study also found that almost half of the income taxed at this highest rate is small business income from the more than 500,000 sole proprietorships and subchapter S corporations whose owners pay the individual rate.
In addition, many more smaller business owners with lower profits would be hit by the Rangel plan’s payroll tax surcharge. That surcharge would apply to all firms with 25 or more workers that don’t offer health insurance to their employees, and it would amount to an astonishing eight percentage point fee above the current 15% payroll levy.
Full article:
http://online.wsj.com/article/SB124753106668435899.html
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Catastrophe, Dick Morris, HarperCollins, 2009
Morris is a former Clinton adviser turned conservative pundit. For each of the past couple years, Morris has penned a bestseller castigating the direction and tactics of liberals. Catastrophe – a pretty well researched and documented book – continues in that tradition.
Among Morris’s targets in this book are:
At length, Morris documents Pres. Obama’s apparent strategy of political control:
For regular news readers and news watchers, there is little new in Morris’s book. But, there are plenty of facts, specific examples, and references.
Catastrophe is a quick read that – fr the most part – is worth the time for conservatives wanting ammunition for the next cocktail party.
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This was a new one to me…
In the book Catastrophe, Dick Morris includes a chapter on PennyMac — a joint venture set up by former high-level executives at Countrywide Financial. The name stands for Penny Mortgages After Countrywide.
Here’s the scheme:
Penny Mac buys distressed mortgages from failing banks at the lowest possible prices, works out affordable deals with homeowners, and then re-bundles and re-sells the now “performing”.loans.
For example, according to Morris, Penny Mac recently bought $558 million of home mortgages from the FDIC, which acquired the notes after the collapse of the First National Bank of Nevada. PennyMac paid only $42.2 million, averaging only $.30 to $.50 on the dollar. PennyMac keeps $.20 on every dollar that it initially recovers, with an increase to $.40 down the line.
Think about it. Countrywide executives made bad loans, sold them in packages to investors, and then, they buy them back as distressed loans at a deep discount, restructure the terms — since they have plenty of spread to play with — and then sell the loans again, at a profit.
Makes you scratch your head, doesn’t it?
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The unemployment rate is 9.5%’ including discouraged folks who have stopped looking for work, and it’s approaching 20%; for teenagers, it’s almost 25%, for black teens, it’s almost 40%
The unemployment rate in June for American teenagers was 24%, for black teens it was 38%
With that as backdrop, Congress has scheduled an increase in the minimum wage later this month, taking the minimum wage up over 10% – from $6.55 to $7.25 an hour. The predictable impact: employers are certain to cut back at the low-end – laying off existing workers and not hiring new ones. It’s simple economics.
“Studies that focus on the least-skilled groups [i.e., teens, and welfare moms] provide relatively overwhelming evidence of stronger disemployment effects.”
Proponents argue that millions of workers will benefit from the bigger paychecks, but those who lose their jobs or who never get a job in the first place get a minimum wage of $0.
Economists estimate that the 70-cent per-hour minimum wage hike this month will kill about 300,000 jobs for those between the ages of 16-24.
“But the union economic model that now dominates Washington holds that wages only matter for those who already have jobs. The jobs that are (lost or) never created don’t count.”
Source articles:
http://online.wsj.com/article/SB124657739768489217.html
http://online.wsj.com/article/SB124743988386729701.html#mod=djemEditorialPage
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I ask again, has anybody in Washington taken Econ 101 ?
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Ken’s Take: It’s almost incomprehensible that a company with Microsoft’s tech savvy and heft could have blown it as badly as they did with Vista. For their sake, Windows 7 had better be an acclaimed product. You can only shoot and miss so many times.
The intro pricing expense makes sense except the $10 discount is simply leaving money on the table. Do they really think that it will motivate any incremental purchases?
* * * * *
Excerpted from WSJ, Microsoft Plans Lure for Windows 7, June 26, 2009
The product
Windows 7 is a critical test of whether Microsoft can polish the reputation of its operating system after Windows Vista suffered early technical problems.
While Windows remains by far the most dominant software for running PCs, Vista’s problems were exploited relentlessly by Apple in marketing campaigns for Macintosh computers. Macs have gained market share steadily over the past few years.
So far, early reviews of test versions of Windows 7 have been favorable.
* * * * *
The pricing
Microsoft announced a plan to encourage pc users to move to a much anticipated new version of its operating system, Windows 7 … scheduled for release in late October.
Until July 11, consumers can preorder an upgrade copy of Windows 7 Home Premium through retailers for $49.99.
Most new PCs coming out starting in October will have Windows 7 preinstalled.
Any consumers who buy new PCs running its current Windows Vista operating system from now until Jan. 31 will receive free upgrades to Windows 7.
For consumers who bought PCs prior to the free upgrade program, Microsoft said it will charge $119.99 for Windows 7 Home Premium — expected to be the most popular version for consumers — instead of the $129.99 upgrade price for the comparable version of Windows Vista.
Full article:
http://online.wsj.com/article/SB124593802040653741.html#mod=testMod
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Rasmussen Reports, Wednesday, July 08, 2009
The Rasmussen Reports daily Presidential Tracking Poll for Wednesday showed that 32% of the nation’s voters now Strongly Approve of the way that Barack Obama is performing his role as President.
The number who strongly disapprove inched up another point to 37% — the highest level measured to date.
Obama’s Presidential Approval Index rating – the difference between strong approvers and strong disapprovers — is minus 5 — the lowest level yet for Obama .
Obama’s total approval rating – the sum of strong and “somewhat” approvers – has dropped to 52% among likely voters.
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According to some political-psyche pundits and news reports: they’re all narcissists.
Some have gone a step further and presumptuously diagnose them as having Narcissistic Personality Disorder (NPD), which is also called pathological narcissism. (Details below)
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When I heard the term the second or third time, I got curious.
Initially, I thought that NPD was a made-up talk show slur. But, I did some digging and discovered that Narcissistic Personality Disorder really does exist as a documented pathology.
Below are its diagnostic criteria and the “so whats” of the pathology.
Worth reading …
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Pathological Narcissism: How do you know ?
People may be clinically diagnosed as having Narcissistic Personality Disorder if they exhibit at least 5 of the following attitudes and behaviors:
1. Have an exaggerated sense of self-importance; obsess over appearance and image
2. Are preoccupied with fantasies of unlimited success, power, brilliance, beauty, or ideal love
3. Believe they are “special” and can only be understood by other special or high-status people
4. Require excessive admiration; crave the spotlight; expect to be recognized as superior to others.
5. Have a sense of entitlement; expect special treatment and automatic compliance with their wishes
6. Selfishly take advantage of others to achieve their own ends; lie, deceive, and manipulate; believe rules of morality don’t apply to them
7. Lack empathy; fail to recognize or sympathize with other people’s feelings and needs.
8. Are often envious of others and believe that others are envious of them; covet others’ relationships and possessions.
9. “Act out”: present arrogant, patronizing, contemptuous, risky, self-destructive behaviors or attitudes; when caught and confronted, blame bad behavior on other people and burdensome circumstances, show little conscience or true remorse.
Excerpted from:
http://www.halcyon.com/jmashmun/npd/dsm-iv.html
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Pathological Narcissism: So what ?
Most people are somewhat narcissistic.
A healthy level of narcissism is a mature, balanced love of oneself coupled with a stable sense of self-worth and self-esteem. A healthy narcissist has a proportionate and realistic appraisal of his achievements and traits, and respects interpersonal boundaries.
Pathological narcissism is marked by an immature or impaired sense of one’s “true self” and situational reality that is exaggerated into a fraudulent, compensatory self-image
Down deep, a pathological narcissist is usually deficient in self-esteem or self-worth. He draws esteem and worth from the attention and admiration of others Hence, the pathological narcissist is in constant pursuit of recognition and adoration, relishes the spotlight, and habitually preys his environment for more dependable admirers
Pathological narcissism is often a reaction to abnormal environments and situations (e.g., abuse, trauma, smothering, etc.), the repression of overwhelming memories and experiences, and the suppression of inordinately strong negative feelings (e.g., hurt, envy, anger, or humiliation).
Pathological narcissism is addictive and dysfunctional. Pathological narcissists are obsessed by delusions of grandeur, superiority, and perfection – in life and love. As a result, they present themselves as image-obsessed (flawlessness) and very competitive (win at all cost). They want to be at center stage, and when others might be merely motivated, they are strongly compelled. They are driven, relentless, tireless, and ruthless. They strive and fight and learn and climb and create and think and devise and design and conspire. They need to be in control of their relationships and environments.
Pathological narcissists are prone to self-defeating and self-destructive behaviors. They often abandon their commitments, careers, and relationships in mid-stream – losing interest, giving up, moving on.
Sub-consciously, a pathological narcissist may masochistically frustrate his deepest desires and drives; obstruct his own efforts; alienate his friends and sponsors; provoke figures in authority; actively (but unconsciously) seek, submit and relish mistreatment; incite anger or rejection; engage in risky and improper behavior — all without conscience or true remorse.
Pathological Narcissism: What’s the prognosis?
While Narcissistic Personality Disorder can sometimes be moderated with psycho-therapy. the “prognosis is generally not good”. That is, the likelihood of recidivism (i.e. repeat behavior) is very high and progressive (i.e. it gets worse}.
Excerpted from:
http://www.mayoclinic.com/health/narcissistic-personality-disorder/DS00652/DSECTION=symptoms
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Best online medical summary of NPD – from the Mayo Clinic:
http://www.mayoclinic.com/health/narcissistic-personality-disorder/DS00652
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Final shots; Obama, Sanford and Palin may be narcissists, but pundits shouldn’t be throwing around the term “Narcissistic Personality Disorder “ lightly. It’s a real pathology. Not to be taken lightly.
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These songs and videos have been making the rounds.
(Over 12 million Youtube views)
The theme: street singers around the world.
Worth a view when you need a pick-me-up.
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From the summer read:
Why Loyalty Matters, Keiningham & Aksoy, Benbella Books, 2009
in prior posts, I highlighted 25 notable nuggets from the book and recounted the 10 Relationship DNA Factors (i.e “styles”)..
Here’s an acid test of loyalty:
Do your friends believe without a doubt that you convincingly demonstrate your loyalty to them? Specifically, do you
Being truly loyal isn’t easy to do.
Virtually all of us fall short in delivering true and comp,ete loyalty to friends and family.
The good news: there is always room for improvement. Get started.
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Takeaway: About half of all foreclosures are attributable to loans going underwater. That is, the borrower could keep the loan commitment and keep paying, but chooses to simply stop making payments. For the other half, about half lose their jobs and can’t make payments and almost 40% are simply deadbeats who shouldn’t have been given the loans in the first place. Relatively few borrowers are forced into foreclosure by rate hikes – e.g expired teaser rates and ARMs.
The good news: looks like almost all of the air has be let out of the bubble, i.e. the bottom may be near.
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Stanley Liebowitz — professor of economics at the University of Texas, Dallas – cranked through a database covering more than 30 million mortgages to determine the root causes of foreclosures.
His main conclusion:”Although the government is throwing money — almost $2 trillion and counting — at the mortgage markets with the intent of stabilizing house prices, its methods are poorly targeted”.”
Why? Because “Zero money down, not subprime loans, led to the mortgage meltdown. The important factor is whether or not the homeowner currently has or ever had an important financial stake in the house. Yet merely because an individual has a home with negative equity does not imply that he or she cannot make mortgage payments so much as it implies that the borrower is more willing to walk away from the loan.”
The good news: “Housing prices are likely to stop falling fairly soon … That’s because current prices are approaching their long-term, inflation-adjusted pre-bubble level. These pre-bubble prices appeared to be a long-term equilibrium, meaning that prices would be expected to return to those levels.”
WSJ, New Evidence on the Foreclosure Crisis, July 3, 2009
http://online.wsj.com/article/SB124657539489189043.html#mod=djemEditorialPage
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Cutting Prof. Leibowitz’s numbers another way: about half of all foreclosures are attributable to loans going underwater. That is, the borrower could keep the loan commitment and keep paying, but chooses to simply stop making payments. For the other half, about half lose their jobs and can’t make payments and almost 40% are simply deadbeats who shouldn’t have been given the loans in the first place. Relatively few borrowers are forced into foreclosure by rate hikes – e.g expired teaser rates and ARMs.
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Ken’s Take: I hate taxes. Not because I’m not willing to pay my fair share, but because so much of tax revenue is wasted or applied to questionable political missions.
That said, if there have to be taxes, I’m a fan of user taxes (think toll bridges) and consumption taxes (think sales taxes).
So, it never made sense to me that internet sales should be sales tax free, except for sites that have a local physical presence (think Best Buy or Barnes & Noble). Of course, I take advantage of the rules and buy stuff over the internet. But, why should states forego this revenue and why should retailers with a local physical presence be put at a disadvantage. It just doesn’t make sense.
I expect many states to pit internet sales in the sales tax bullseye.
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WSJ, Amazon Cuts North Carolina Affiliates to Avoid Tax,
June 27, 2009
North Carolina is in the process of passing a law that would force companies to collect the tax if they have in-state online-marketing affiliates — people who get a sales commission from links on their Web sites. To avoid getting caught by the law,
Amazon is dropping the affiliates. Amazon.com Inc. said it has ended business relationships with marketing affiliates in North Carolina to avoid collecting sales tax in the state.
But the decision highlights mounting tensions between online retailers and cash-strapped states across the country. Other states are considering similar laws that would use affiliates as a way to force companies to collect a sales tax for online purchases.
Consumers are technically supposed to pay a so-called use tax for online purchases on their own, but most don’t. Many e-commerce sites rely on the price advantage they have over traditional retailers because they don’t have to collect taxes. , and forcing them to collect the tax upfront could take away some of that advantage.
Full article:
http://online.wsj.com/article/SB124603593605261787.html#mod=testMod
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Excerpted from WSJ, “College Football Goes Down the Hatch:,
July 7, 2009
Today the Senate antitrust subcommittee will hold hearings on the Bowl Championship Series (BCS). Like an earlier hearing in the House, this one will ask whether the system by which college football chooses its national champion is “fair.”
Specifically, the congressional look-see into college football has been led by Sen. Orrin Hatch (R., Utah) and Rep. Joe Barton (R., Texas). They have not been shy about the menace they see. Mr. Hatch calls the BCS “un-American.” Mr. Barton likens it to “communism.” The Texas Republican has even introduced legislation that would forbid the BCS from holding a “national championship game” unless that game was the result of playoffs.
Full article:
http://online.wsj.com/article/SB124692993074303505.html
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Ken;s Take: Now, some may ask: why is the Senate wasting time on this issue instead of working on the economy, healthcare reform, cap & tax … ?
I disagree with those people. This is precisely the kind of issue I want filling Congressional agendas. .I figure that every minute they’re fretting over college football, is a minute that they’re not wastefully spending another $1 trillion of our money.
In fact, isn’t it about time that Congress reopened their baseball steroids investigation? Or, what about hearings on the Designated Hitter rule? I say, keep ‘em distracted as long as possible.
P.S. Since I prefer controversy over clarity, I like the BCS
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From the summer read:
Why Loyalty Matters, Keiningham & Aksoy, Benbella Books, 2009
in a prior post, I highlighted 25 notable nuggets from the book.
In my opinion, the most useful part of the book was a relationship framework based on the notion that each of us has our own relationship DNA that serves as the code for how we interact with one another.
While no two people are identical in how they connect with others, all are made up of the same 10 basic building blocks:
Being high or low on a particular factor does not imply good or bad, since each factor has the potential to have both the positive and negative impact on our relationships, regardless of where one falls on the factor.
People have their own idiosyncratic relationship styles. We are able to build strong, loyal relationships with one another precisely because each of us is different. It is our differences that allow us to enrich each other’s lives.
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Leadership is the ability to influence others to follow you voluntarily. Leaders have a general sense that they are in control of themselves and their surroundings, are motivated to achieve success, attain a comfort level interacting with others, and are not afraid to take risks. The leaders competitive spirit fuels ambition. Some people see this fortitude as a blessing; it alienates other people who see it as being too competitive and too aggressive.
Reliance describes how well a person trusts and attaches to people around him. Reliant people have a support web that is based on openness and accountability. They are willing to ask for help when it’s needed. Reliant people tend to have “deep” and long-lasting friends. People low in reliance usually try to solve problems autonomously without depending on others. They often have difficulty building long-term relationships.
Empathy is the ability to identify and sympathize with others. Empathetic people tend to have a more flexible outlook and appreciate people for who they are. This brings with it more friendliness and is inviting to others. Empathetic people are compassionate, kindhearted, and understanding. They see problems through the eyes and hearts of others. People with low empathy create distance between themselves and others.
Security is a general sense of stability and comfort with oneself and one’s environment. It’s a feeling that things are going well and there is no need to worry excessively or be anxious. This leads to life with a lower amount of stress and pressure, and prevents being needlessly encumbered by a sense of the impending. Secure people are able to manage anxiety and stress successfully. Insecure people often feel “on the edge”, and think that things are either wrong, or are going to go wrong. Insecurity leads to worry.
Calculativeness is an attempt to control and promote one’s self image and create an ideal environment for personal benefit. Calculating people place importance on showcasing themselves in the right way. So, they have an air of formality in their interactions, selectively articulate themselves to others (versus “being themselves”), and tightly control their self-presentation. Calculating people are often viewed as contrived, less sincere, and less worthy of complete trust. They are often perceived by others as unemotional and manipulative.
Connectedness is how one interacts with others on a personal level Close and tight relationships typify the crux of this dimension. The feeling of connection to others forms the basis in the bedrock of happiness. People low in connectedness may be loners, or may be surrounded with casual friends — lacking deep and intense bonds.
Independence is marked by autonomy, self-discipline, and thoroughness. On the upside, independent people are rarely disappointed by others, since they usually take matters into their own hands. But, they often miss out on valuable opportunities by failing to capitalize on other people’s ideas and strengths.
Traditionalism reflects a desire for consistency, normalcy, and regularity. Traditionalists like to operate within their comfort zone, and are cautious when approaching truly unfamiliar situations. Traditionalists rarely flaunt their successes, instead preferring humility. As a result, they may sometimes be underrated and underappreciated. Of course, traditionalists miss out on new experiences that could potentially provide novel perspectives and excitement.
Problem-focused coping is taking a planned, reasoned and rational approach to solving problems, meeting challenges, overcoming obstacles, making choices, and withstanding the consequences of decisions. Problem-focused people dissect issues and examine them from multiple angles. They are sometimes viewed as coldly analytical and callous in their decision-making.
Emotion-focused coping tries to suppress or manage the emotions surrounding a problem, rather than the problem itself. Often, advice and comfort is sought from others.
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Next up: The “Are you loyal? “ checklist.
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Ken’s Take: As a “get it done” aficionado, I’m intrigued by Team Obama’s inability to make anything really happen. Banks are still holding toxic assets and foreclosing, the economy is still unstimulated, etc. Their recipe: motivating rhetoric, passed legislation, a new web site, and a declaration of victory … followed by ginned up numbers that they don’t even believe. Below is a partial explanation …
* * * * *
NY Times, “Vince Lombardi Politics”, David Brooks, June 30, 2009
There are two types of political pragmatism. There is legislative pragmatism — writing bills that can pass.
Then there is policy pragmatism — creating programs that work. These two pragmatisms are in tension, and in their current frame of mind, Democrats often put the former before the latter.
On the stimulus bill, the Democratic committee chairmen wrote a sprawling bill that incorporated the diverse wishes of hundreds of members and interest groups. But as they did so, the bill had less and less to do with stimulus. Only about 40 percent of the money in the bill was truly stimulative, and that money was not designed to be spent quickly.
For example, according to the Congressional Budget Office, only 11 percent of the discretionary spending in the stimulus will be disbursed by the end of the fiscal year. The bill passed, but it is not doing much to create jobs this year and it will not do nearly as much as it could to create jobs in 2010.
On cap and trade, the House chairmen took a relatively clean though politically difficult idea — auctioning off pollution permits — and they transformed it into a morass of corporate giveaways that make the stimulus bill look parsimonious. Permits would now be given to well-connected companies.
The bill passed the House, but would it actually reduce emissions? It’s impossible to know. A few years ago the European Union passed a similar cap-and-trade system, but because it was so shot through with special interest caveats, emissions actually rose.
The great paradox of the age is that Barack Obama, the most riveting of recent presidents, is leading us into an era of Congressional dominance. And Congressional governance is a haven for special interest pleading and venal logrolling.
When the executive branch is dominant you often get coherent proposals that may not pass. When Congress is dominant, as now, you get politically viable mishmashes that don’t necessarily make sense.
Full article:
http://www.nytimes.com/2009/06/30/opinion/30brooks.html?_r=2&ref=opinion
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Why Loyalty Matters, Keiningham & Aksoy, Benbella Books, 2009
This book positions itself as presenting “the groundbreaking approach to rediscovering happiness, meaning, and lasting fulfillment in your life and work.” While the book falls short of that tall order, it did contain some insightful material,.
The central thesis of the book:
Loyalty binds us together as people, grounds us on principle, and breeds happiness.
Though a lack of loyalty is one of the major causes of failure in every walk of life, our culture seems to have decided that loyalty is an old-fashioned and unimportant virtue. That’s wrong and needs to be fixed — the sooner, the better.
Below are 25 nuggets that I highlighted in my reading.
* * * * *
Ken’s 25 Nuggets from Why Loyalty Matters
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Subsequent posts will ask the questions: what is your relationship style? And, are you loyal?
* * * * * *
Note: “”Mulligan” is a golf term. When a golfer hits a particularly bad shot, he may petition his buddies (usually fruitlessly) for a 2nd try, a “do over”. That’s called a Mulligan
* * * * *
Ken’s Take: Washington has thrown trillions of dollars at this recession, including that famous $787 billion in more spending that was supposed to yield $1.50 in growth for every $1 spent.
The ‘stimulus’ promised a jobless peak of 8%; it’s now 9.5%.
The defense: (1) We guessed wrong (Biden), (2) Less than 20% of the stimulus has hit the economy (wasn’t it an “emergency bill” intended for this year?), (3) It’s Bush’s fault (remember him, from long ago?)
Since so little of the stimulus has been spent, let’s reclaim the dough and either bank it or do it right.
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Extracted from WSJ, “Tilting at Windmill Jobs”, July 3, 2009
As always, a sustained expansion and job creation must come from private investment and risk-taking.
Yet as America’s entrepreneurs look at Washington they see uncertainty and higher costs from:
a $1 trillion health-care bill;
None of this inspires “animal spirits.”
The best thing Mr. Obama could do to create jobs would be to declare he’s dropping all of this and starting over.
http://online.wsj.com/article/SB124657739768489217.html
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Extracted from “Is Twitter for Serious Marketers?”,Tom Davenport The Next Big Thing, April 9, 2009
Do serious marketers spend a lot of time and energy on Twitter campaigns? I doubt it. Sure, go ahead and play around with it — it doesn’t cost much. But I defy you to do serious brand management in 140-character messages. I defy you to prove that Twitter users are your typical customer — unless you sell bubble tea or something similar — or that their tweets are a true reflection of their relationship with your company.
Let’s face it — Twitter is a fad. It has all the attributes of a fad, including the one that people like me don’t get its appeal. It has risen quickly and it will fall quickly. It’s this year’s Second Life — which, you may have noticed, nobody is talking much about anymore. One Daily Telegraph article that did talk about it noted, “While the site is still beloved by geeks and the socially awkward … it has been virtually abandoned” by “normal” people and businesses.” Ouch!
I’m not as negative about the business and marketing potential of some other social media. For example, because Facebook offers the promise of monetizing social networks — though it hasn’t done so yet — they are not to be easily dismissed.
One conclusion I’ve come to is that we should unbundle the concept of “social media,” because some of its components are much more useful than others in a business and marketing context:
Facebook? I suspect it faces prosperity, over time. Second Life? On life support. Twitter? In the long run, not worth a tweet.
Full article:
http://blogs.harvardbusiness.org/davenport/2009/04/is_twitter_for_serious_marketer.html
I usually cite the Rasmussen poll numbers. For the record, they now show Obama running a negative PAI (Presidential Approval Index). That is, more people strongly disapprove of the job he’s doung as president than strongly approve. In prior posts, I’ve argued why that’s a better indicator than the groos approval numbers usually reported in mainstream media, and I’ve highlighted the demographics (e.g. rock solid among blacks; double digit negative among whites).
Gallup is longer established than Rasmussen, more brand-recognized and its methodology is arguably more favorable to Obama since it samples more than “likely voters’.
Well, there even seem to be some “issues’ cropping up in the Gallip numbers.
Gallup has made available Obama’s approval ratings over time, by demographic groups. While his support is rockhard among some groups (Liberals, blacks, low income, Northeasterners), it is slipping among some demographic groups with approval majorities in those groups threatened. More specifically,
Comparing the periods Jam.19 to 25 (the Inauguration) to the latest reporting period June 22 to 28:
Pres. Obama’s overall job approval rating is still high (60%), but that’s down 7 points
Disapproval has increased by 20 points, from 13% to 33%
Approval among folks earning $90,000 or more is down 14 points to 52%;
Among whites approval is down 11 points to 52%;
in the South approval is down 10 points to 54%;
Among college grads w/o post-grad degrees approval is down 14 points to 55%;
Among marrieds approval is down 9 points to 52%;
Among weekly churchgoers approval is down 9 points to 49%.
Is the bloom coming off the rose ?
Source data:
http://www.gallup.com/poll/121199/Obama-Weekly-Job-Approval-Demographic-Groups.aspx
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Ken’s Take: Yesterday, Walmart jumped on the Obamawagon and threw its support behind employer mandated healthcare insurance – the provision that layers additional taxes on any company that doesn’t offer its employees health insurance.
For sure, Walmart isn’t being altruistic. This is a straightforward strategic-political gambit.
Walmart already provides health insurance to the majority of its employees – essentially, all full-timers. They might have to extend coverage to part-timers – or, they might be hoping that part-timers are outboarded from legislation — or, they just hire fewer part-timers (since their advantage over full-timers gets minimized)..
More important, few smaller retailers provide health benefits today. All of these guys – Walmart’s competitors – will get slammed with higher taxes. In other words, their costs go up, theor margins go down, and Walmart gets a huge competitive advantage. The small guys won’t be able to compete.
Also, there may be a quid pro quo for Walmart politically.
Specifically, if union “card check” gets passed, Walmart will have to be priority one for unionization. That would be a way bigger problem than employer mandated healthcare insurance.
My bet: Team Obama prizes the healthcare plan more than card check and cut a deal with Walmart to back off card check.
Problem for Walmart: administration has a tendency to change rules and break promises. Could backfire on Walmart.
* * * * *
Excerpted from WSJ, “ Everyday Low Politics” – Wal-Mart buys protection by selling out its competitors”. July 2, 2009
The employer-mandate endorsement falls into the self-interest department. A boost in the minimum wage helps Wal-Mart because most of its workers already earn well over the wage floor, and it hurts smaller, less-profitable competitors that can’t afford to pay more. On health care, an employer mandate will also reduce the margins of their rivals. This is especially true for businesses of a slightly smaller size that cannot insure on the same scale or currently don’t reach the 55% of the 1.4 million Wal-Mart employees who are insured through the company. (Another 40% or so are covered by spouses or the likes of Medicaid.)
The Wal-Mart-Stern-Podesta troika made sure to specify that “shared responsibility” must be “fair and broad in its coverage,” with an emphasis on the latter. The Mom & Pop stores that liberals accuse Wal-Mart of running out of town may get hit hardest. Democrats say they’ll exempt certain small businesses, size details to be determined. But if the mandate is limited to large employers, it won’t reduce the number of uninsured. According to the Kaiser Family Foundation, 99% of firms with more than 200 workers provide health benefits, only 62% of smaller firms.
Businesses are also largely indifferent whether compensation comes in the form of wages or benefits, so an employer mandate — an indirect tax on employment — may cause wages to rise more slowly. Or it may simply mean fewer jobs.
Full article:
http://online.wsj.com/article/SB124649408574683287.html
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Ken’s Take: Yesterday, Walmart jumped on the Obamawagon and threw its support behind employer mandated healthcare insurance – the provision that layers additional taxes on any company that doesn’t offer its employees health insurance.
For sure, Walmart isn’t being altruistic. This is a straightforward strategic-political gambit.
Walmart already provides health insurance to the majority of its employees – essentially, all full-timers. They might have to extend coverage to part-timers – or, they might be hoping that part-timers are outboarded from legislation — or, they just hire fewer part-timers (since their advantage over full-timers gets minimized)..
More important, few smaller retailers provide health benefits today. All of these guys – Walmart’s competitors – will get slammed with higher taxes. In other words, their costs go up, theor margins go down, and Walmart gets a huge competitive advantage. The small guys won’t be able to compete.
Also, there may be a quid pro quo for Walmart politically.
Specifically, if union “card check” gets passed, Walmart will have to be priority one for unionization. That would be a way bigger problem than employer mandated healthcare insurance.
My bet: Team Obama prizes the healthcare plan more than card check and cut a deal with Walmart to back off card check.
Problem for Walmart: administration has a tendency to change rules and break promises. Could backfire on Walmart.
* * * * *
Excerpted from WSJ, “ Everyday Low Politics” – Wal-Mart buys protection by selling out its competitors”. July 2, 2009
The employer-mandate endorsement falls into the self-interest department. A boost in the minimum wage helps Wal-Mart because most of its workers already earn well over the wage floor, and it hurts smaller, less-profitable competitors that can’t afford to pay more. On health care, an employer mandate will also reduce the margins of their rivals. This is especially true for businesses of a slightly smaller size that cannot insure on the same scale or currently don’t reach the 55% of the 1.4 million Wal-Mart employees who are insured through the company. (Another 40% or so are covered by spouses or the likes of Medicaid.)
The Wal-Mart-Stern-Podesta troika made sure to specify that “shared responsibility” must be “fair and broad in its coverage,” with an emphasis on the latter. The Mom & Pop stores that liberals accuse Wal-Mart of running out of town may get hit hardest. Democrats say they’ll exempt certain small businesses, size details to be determined. But if the mandate is limited to large employers, it won’t reduce the number of uninsured. According to the Kaiser Family Foundation, 99% of firms with more than 200 workers provide health benefits, only 62% of smaller firms.
Businesses are also largely indifferent whether compensation comes in the form of wages or benefits, so an employer mandate — an indirect tax on employment — may cause wages to rise more slowly. Or it may simply mean fewer jobs.
Full article:
http://online.wsj.com/article/SB124649408574683287.html
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This one speaks for itself … bailing out the Queen:
From the UK Guardian, “Queen running out of money for palace expenses”, June 29, 2009
The Queen’s reserve of public funds is set to run out by 2012, according to Buckingham Palace accounts published today, raising expectations that the government will be asked to increase the civil list, which pays for the running of the royal household.
The Queen has used up £6m from the cash reserve to boost the civil list. The amount is the largest ever drawn from the reserve of surplus cash from the list.
Palace officials have complained that they lack funds to properly maintain some royal residences. They once claimed that part of the facade of Buckingham Palace was in such bad repair that a chunk fell off, narrowly missing Princess Anne.
The total cost to the taxpayer of keeping the monarchy increased by £1.5m to £41.5m during the 2008-09 financial year – effectively 69p per British person last year and an increase of 3p on the previous year. The civil list was £13.9m last year, 43% of which came from the Queen’s reserve.
If she continues drawing on the reserve at the current rate, she will run out of funds by 2012 – the year of her diamond jubilee.
The fund has gone down from £35m to £21m over the last decade.
The current deal – in which the Queen gets £7.9m a year – was agreed by Sir John Major in 1990. The arrangement expires in 2010.
http://www.guardian.co.uk/uk/2009/jun/29/queen-civil-list-running-out
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Ken’s Take: The Safeway healthcare program – loaded with insurance discounts for people who don’t smoke, watch their weight and cholesterol, and generally live healthier – has gotten mucho press coverage – since it works !
Nonetheless, proposed healthcare reform packages are either silent on healthy lifestyle incentives or explicitly deter them. I guess the logic is that they would discriminate against people who smoke, eat too much, and refuse to walk around the block. My view: those are choices and behaviors, not genetics. Go ahead and do them, but don’t expect me to subsidize them.
On a related topic: all the proposed healthcare reforms include – explicitly or implicitly – a rationing of healthcare in an person’s final years. First, how can regulators know when the game clock is about to expire? Second, shouldn’t Sen. Kennedy – who, incidentally, is old, fat, and a notorious alcohol abuser – walk the talk and start refusing medical treatments ?
* * * * *
WSJ, “Reform Needs Healthy Life Incentives”, Garrington, June 29, 2009
Sen. Kennedy doesn’t want insurers to reward good behavior.
The House Democrat and Kennedy-Dodd proposals do all they can to prevent health-insurance premium rates and coverage terms from reflecting the health status — and thus health-related behavior — of any insured person. Health status would not be permitted to affect coverage decisions, terms or pricing.
Benefit design and marketing of coverage would be regulated in an attempt to keep insurers from rewarding healthier people. Retrospective “risk adjustment” would be employed to reallocate funds from insurers that experience lower medical costs to those with higher costs. If an insurer were to attract relatively more healthy people — or keep more people healthy — it would run the risk of paying some or all of the gains to competitors.
The proposals’ strong aversion to having insurance rates or coverage terms related to health status reflects the view that either the need for health care is immune from individual control, or that a person should not be financially responsible for behavior that contributes to poor health, or both. These views are difficult to reconcile with the consensus that unhealthy behavior contributes significantly to obesity, diabetes, heart disease and cancer, and thus accounts for a substantial proportion of health-care costs.
Regulation that seeks to divorce insurance rates and coverage terms from health status would deter potential innovation that might provide meaningful financial incentives for healthy behavior and lower costs.
Incentives for healthy behavior have traditionally been weak under employer-sponsored health insurance, in part due to federal and state regulation that constrains the ability to reward healthy behavior. Turnover among employees and policy holders also reduces incentives to make long-term investments to promote healthy behavior.
Health-care reform should seek to encourage rather than discourage private innovation to provide incentives for healthy behavior. Safeway’s program offering employee premium discounts related to tobacco use, weight control, blood pressure and cholesterol levels is a good example.
Financial incentives for healthy behavior have the potential to significantly reduce costs without reducing quality.
An aversion to having health-insurance rates and coverage linked to individual behavior may be on the verge of becoming national policy. If that happens, the unintended consequences could be very costly.
* * * * *
Mr. Harrington is professor of health-care management and insurance and risk management at the Wharton School of the University of Pennsylvania
Full article:
http://online.wsj.com/article/SB124623169143066199.html
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Ken’s Take: An interesting irony – current proposals tax company provide health insurance benefits except for union members – and most plans involve paying doctors less – fewer reimbursable services and lower fees. I guess union autoworkers contribute more to society than doctors do.
Begs a couple of rhetorical questions: (1) will lower pay attract better or worse doctors ? (2) would you rather be treated by a good doctor or a bad doctor ? (3) how long are you willing to wait to see a bad doctor.
The shallowness of Washington thinking never ceases to amaze.
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Prompted by: IBD, “Alice in Medical Care”, Sowell, June 30, 2009
Politicians may talk about “bringing down the cost of medical care,” but they seldom even attempt to bring down the costs. What they bring down is the price– which is to say, they refuse to pay the costs.
We can even refuse to pay for so many doctors. But that just means that we will have to wait longer to see a doctor– as people do in countries with government-run medical systems.
In Canada, 27 percent of the people who have surgery wait four months or more. In Britain, 38 percent wait that long. But only 5 percent of Americans wait that long for surgery.
Surgery may well cost less in countries with government-run medical systems– if you count only the money cost, and not the time the patients have to endure the ailments that require surgery, or the fact that some conditions become worse, or even fatal, while waiting.
A recent report from the Fraser Institute in Canada shows that patients there wait an average of ten weeks to get an MRI, just to find out what is wrong with them. A lot of bad things can happen in 10 weeks, ranging from suffering to death.
Anybody can refuse to pay any cost. But don’t be surprised if you get less when you pay less. None of this is rocket science. But it does require us to stop and think before jumping on a bandwagon.
Full article:
http://www.realclearpolitics.com/articles/2009/06/30/alice_in_medical_care_97231.html
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Ken’s Take: One of the reasons that college costs so much is that faculty salaries are the bulk of the costs, many (most) faculty positions are tenured – guaranteed lifetime employment, and many tenured faculty have throttled back or turned off the ignition completely. Colleges have virtually no way to purge the slackers from the payroll – even in tough economic times.
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Excerpted from WSJ, Tenure and Academic Freedom, June June 23, 2009
All over the country, colleges and universities are feeling the financial crunch: Endowments are down, students can’t afford to pay tuition, and some state legislatures are even trimming higher-education budgets.
Unfortunately, thanks to the recent ruling of a judge in Colorado, some college administrators have just lost one way to keep their costs under control.
Under the current system at most colleges, some professors many professors have a job for life – that’s “tenure”. They can technically be fired for gross misbehavior or incompetence. But once they’ve been granted tenure, a university is generally stuck with these teachers. And paying the salaries of tenured professors can add up, especially when a professor may no longer be teaching many classes either because of laziness or lack of student interest in his or her field.
Tenured profs argue thatwithout tenure, they are subject to firing risk if administrator’s or trustee’s dislike for his teaching or research, or for positions taken on public issues. Courts have agreed that “the public interest is advanced more by tenure systems that favor academic freedom over systems that favor flexibility in hiring or firing … by its very nature, tenure promotes a system in which academic freedom is protected.”
But does tenure, as the judge argues, actually protect academic freedom?
To protect academics from arbitrary dismissal, as well as to attract smart people to the profession, schools offered a certain amount of job security.
Some of the courses taught by professors who have sued to protect tenure … are all fields of study (e.g. statistics) that have fairly definitive answers. Faculty members don’t really need the freedom to ask controversial questions in discussing them.
But what about those teachers who are pursuing higher truths? Has tenure really protected their ability to question and research freely? For the most part, no.
The truth is that tenure has served as an instrument of conformity since tenure votes are often glorified popularity contests. Those professors who want tenure and disagree with the prevailing trends in their field — or the political fashions outside of it — know that they must keep their mouths shut for at least the first seven years of their careers.
Harvard professor Harvey Mansfield once famously advised a conservative colleague to wait until he had tenure and only then to “hoist the Jolly Roger.” But few professors are getting around to hoisting the Jolly Roger at all. Either they don’t have a viewpoint that is different from their colleagues, or they’ve decided that if they are going to remain at one place for several decades, they’d rather just get along.
The fact that university professors donated to President Obama’s campaign over John McCain’s by a margin of eight to one is only the tip of the iceberg.
Is tenure to blame for the unanimity of thinking in American universities? It’s hard to tell. But shouldn’t the burden of proof be on the people who want jobs for life?
http://online.wsj.com/article/SB124571593663539265.html#mod=djemEditorialPage
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Sunday’s Rasmussen tracking poll showed Pres. Obama’s Presidential Approval Index at zero … 32% strongly approved of the job he’s doing as president; 32% strongly disapprove – netting to a zero.
Things get more interesting when you dive down into the numbers. Previously, I posted that virtually all blacks strongly approve; he runs about a 10 point PAI deficit among whites; and he roughly breaks even with all others.
By income, low earners (under $20,000 per year) give him a plus 34 PAI; folks earning $60,000 (about where income taxes kick in these days) to $100,000 give him double digit negatives; he breaks even among the rest.
TakeAway: nation is increasingly split by taxpayers staus – if you don’t pay income taxes (or are so rich that it doesn’t matter). Obama’s likely to be your man.
* * * * *
Sunday’s Rasmussen tracking poll showed Pres. Obama’s Presidential Approval Index at zero … 32% strongly approved of the job he’s doing as president; 32% strongly disapprove – netting to a zero.
Things get more interesting when you dive down into the numbers. Previously, I posted that virtually all blacks strongly approve; he runs about a 10 point PAI deficit among whites; and he roughly breaks even with all others.
By income, low earners (under $20,000 per year) give him a plus 34 PAI; folks earning $60,000 (about where income taxes kick in these days) to $100,000 give him double digit negatives; he breaks even among the rest.
TakeAway: nation is increasingly split by taxpayers staus – if you don’t pay income taxes (or are so rich that it doesn’t matter). Obama’s likely to be your man.
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Ken’s Take: The foreclosure program didn’t slow foreclosures, the stimulus program hasn’t stimulated anything, and the toxic asset program hasn’t bought any toxic assets. Are these guys ever going to be held accountable for their free-spending and ineffective programs?
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WSJ, “Wary Banks Hobble Toxic-Asset Plan”, June 29, 2009
The Obama administration’s plan to enable banks to dump troubled assets is facing troubles.
In March, Treasury Secretary Geithner announced a two-pronged plan to offer favorable government financing to entice investors to buy bad loans and toxic securities from banks.
But that initiative — called the Public-Private Investment Program, or PPIP — has lost momentum.
Big banks worried about having to sell at fire-sale prices while small banks feared they would be shut out.
Potential buyers balked at the risk of doing business with the government, concerned that politicians might demonize them for making big profits.
Early this month, the Federal Deposit Insurance Corp. essentially shelved one arm of PPIP — the government-financed buying of bad bank loans.
Mr. Geithner recently said the other part — to facilitate the buying from banks of troubled securities, many backed by real-estate loans — could be scaled back because investors are “reluctant to participate.” This week, the government is expected to name investment firms to manage this securities-buying portion
Full article with lots of detail:
http://online.wsj.com/article/SB124622976702566007.html#mod=testMod
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Ken’s Take: The foreclosure program didn’t slow foreclosures, the stimulus program hasn’t stimulated anything, and the toxic asset program hasn’t bought any toxic assets. Are these guys ever going to be held accountable for their free-spending and ineffective programs?
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WSJ, “Wary Banks Hobble Toxic-Asset Plan”, June 29, 2009
The Obama administration’s plan to enable banks to dump troubled assets is facing troubles.
In March, Treasury Secretary Geithner announced a two-pronged plan to offer favorable government financing to entice investors to buy bad loans and toxic securities from banks.
But that initiative — called the Public-Private Investment Program, or PPIP — has lost momentum.
Big banks worried about having to sell at fire-sale prices while small banks feared they would be shut out.
Potential buyers balked at the risk of doing business with the government, concerned that politicians might demonize them for making big profits.
Early this month, the Federal Deposit Insurance Corp. essentially shelved one arm of PPIP — the government-financed buying of bad bank loans.
Mr. Geithner recently said the other part — to facilitate the buying from banks of troubled securities, many backed by real-estate loans — could be scaled back because investors are “reluctant to participate.” This week, the government is expected to name investment firms to manage this securities-buying portion
Full article with lots of detail:
http://online.wsj.com/article/SB124622976702566007.html#mod=testMod
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Ken’s Take: First, the gov’t tossed contract and bankruptcy laws out the window and screwed the secured creditor (i.e. bondholders) by subordinating their claims beneath unsecured UAW claims.
What I missed was that the gov’t was also tossing product liability claims out, too. For example, if you’re driving a Chrysler car and the engine blows up because of a defect, your family gets zilch from the New Chrysler.
GM was trying to pull the same trick. But, since GM is bigger and folks had time to think about the details of the gov’t orchestrated settlement, a ruckus broke out.
Now, the New GM will altruistically accept responsibility for claims that might arise from Old GM cars that are still on the road. Big of them.
Question: why in the world would anybody buy a bond issued by New Chrysler and New GM, knowing that their security is, well, unsecured.
And, why would anybody take a chance buying a car from those companies. You’ve gotta have a high risk tolerance, for sure.
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Excerpted from WSJ, “GM to Take On Future Product-Liability Claims”, June 28, 2009
GM under pressure from state attorneys general, has agreed to assume legal responsibility for injuries drivers suffer from vehicle defects after the auto maker emerges from bankruptcy protection.
The concession means consumers who are injured in car accidents after GM emerges from Chapter 11 protection will be able to bring product-liability claims against the new government-owned auto maker.
Under GM’s original bankruptcy plan, the auto maker planned to leave such liabilities behind after selling its “good” assets to a “New GM” owned by the government. That meant future GM car-accident victims who believed faulty manufacturing caused their injuries would be unable to sue the New GM. Instead, they would have been treated as unsecured creditors, fighting over the remains of GM’s old bankruptcy estate.
In court papers, GM maintained it was not legally-required to take on the claims, saying “federal-preemption” meant the bankruptcy code overrode state laws governing the rights of car-accident victims to sue the new GM. It also noted that Chrysler, which recently emerged from bankruptcy in a deal with Fiat, would not be responsible for such claims.
But the auto maker said it agreed to take on future product-liability claims “to alleviate certain concerns that have been raised on behalf of consumers.”
Full article:
http://online.wsj.com/article/SB124614495545265019.html#mod=testMod
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Ken’s Take: The mainstream media seems to be ignoring it, but virtually nobody watched the Obama healthcare infomercial on ABC. Hmmm.
Couple of observations:
(1) Maybe, just maybe, Obama yak-yak fatigue is finally setting in
(2) So, ABC took a hit to it’s journalistic reputation without even getting a swell of viewers, That should teach the compliant networks a lesson.
(3) Imagine the ratings if Michael Jackson (may he RIP) had died a day earlier than he did
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From The Live feed, “ABC’s White House special struggled for viewers”, June 25, 2009
President Obama’s town hall meeting on health care delivered a sickly rating Wednesday evening.
The one-hour ABC News special “Primetime: Questions for the President: Prescription for America” (4.7 million viewers, 1.1 preliminary adults 18-49 rating) had the fewest viewers in the 10 p.m. hour (against NBC’s “The Philanthropist” debut and a repeat of “CSI: NY” on CBS). The special tied some 8 p.m. comedy repeats as the lowest-rated program on a major broadcast network.
The special was shot at the White House and featured the president answering questions about his health care plan. The president’s primary message was that those who like their current insurance will be able to keep it and that taking no action will result in higher health care costs.
The special drew fire from Republican leadership after refusing to allow an official opposition response, or even a paid ad. ABC also interviewed Obama on “Good Morning America” to help promote the special.
ABC points out that “Questions for the President” continued after the local news during late night on “Nightline” (4.3 million) and helped boost the news program to pull more viewers than CBS’ “Late Show” and NBC’s “Tonight Show.”
Source:
http://www.thrfeed.com/2009/06/abcs-white-house-special-struggled-for-viewers.html
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Ken’s Take: The mainstream media seems to be ignoring it, but virtually nobody watched the Obama healthcare infomercial on ABC. Hmmm.
Couple of observations:
(1) Maybe, just maybe, Obama yak-yak fatigue is finally setting in
(2) So, ABC took a hit to it’s journalistic reputation without even getting a swell of viewers, That should teach the compliant networks a lesson.
(3) Imagine the ratings if Michael Jackson (may he RIP) had died a day earlier than he did
* * * *
From The Live feed, “ABC’s White House special struggled for viewers”, June 25, 2009
President Obama’s town hall meeting on health care delivered a sickly rating Wednesday evening.
The one-hour ABC News special “Primetime: Questions for the President: Prescription for America” (4.7 million viewers, 1.1 preliminary adults 18-49 rating) had the fewest viewers in the 10 p.m. hour (against NBC’s “The Philanthropist” debut and a repeat of “CSI: NY” on CBS). The special tied some 8 p.m. comedy repeats as the lowest-rated program on a major broadcast network.
The special was shot at the White House and featured the president answering questions about his health care plan. The president’s primary message was that those who like their current insurance will be able to keep it and that taking no action will result in higher health care costs.
The special drew fire from Republican leadership after refusing to allow an official opposition response, or even a paid ad. ABC also interviewed Obama on “Good Morning America” to help promote the special.
ABC points out that “Questions for the President” continued after the local news during late night on “Nightline” (4.3 million) and helped boost the news program to pull more viewers than CBS’ “Late Show” and NBC’s “Tonight Show.”
Source:
http://www.thrfeed.com/2009/06/abcs-white-house-special-struggled-for-viewers.html
* * * * *
TakeAway: Studies suggest that much maligned plastic bags aren’t so bad for the environment after all … as long as they get recycled.
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Excerpted from WSJ, “ Paper or Plastic? A New Look at the Bag Scourge”, June 12, 2009
When plastic grocery bags were introduced some 30 years ago, they were touted as light, long-lasting and cheap. They caught on so well that hundreds of billions are dispensed each year, creating a modern menace that often winds up nestled in trees, stuck in sewers and drifting in oceans.
Faced with the growing blight, countries from Ireland to China and cities from San Francisco to Washington, D.C., have moved to ban or tax their use. A United Nations official called for outlawing them world-wide.
There is growing evidence that the production, use and disposal of plastic bags put less burden on natural resources than paper bags. Meanwhile, a knock against plastic bags — that they can’t be conveniently recycled — is becoming less persuasive as more cities start accepting plastic bags in curbside recycling programs.
Most American consumers .. go through five or 10 plastic bags each week. More than 90% of Americans reuse their bags at least once … for lining wastebasket, carrying lunches, or from or cleaning up after a dog.
Various studies have examined whether paper or plastic grocery bags are environmentally friendlier. Plastic bags consume less energy and water and produce less pollution, including greenhouse-gas emissions. But, plastic bags are rarely recycled. But plastic bags are recycled at less than one-third the rate of paper bags.
Plastic bags are difficult to recycle for the same reasons they are convenient to use. They are so light they fly out of curbside recycling bins, which often lack lids. If they make it to a recycling plant, the bags tend to wrap themselves around machinery, gumming it up. So, most curbside recycling programs don’t accept them.
U.S. cities that accept the bags in their recycling bins typically ask residents to stuff a lot of bags inside one bag, sausage-like, to make the bags easier for recycling workers to handle. It’s what industry insiders call a “bag of bags.”
Virtually all studies say the environmentally friendliest option is to choose a reusable grocery bag, and to reuse it at least 4 times, regardless of what that bag is made of.
Full article:
http://online.wsj.com/article/SB124473522987806581.html?mod=djemalert
Ken’s Take: Kawasaki has a track record, so worth listening to. Note especially #1 re: mission statements and #5 re: rolling the DICEE
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Knowledge@Wharton, “Ten Commandments from Entrepreneurial ‘Evangelist’ Guy Kawasaki”, June 10, 2009
Guy Kawasaki became the second software “evangelist” at Apple Computer, where his job from 1983 to 1987 was to convince people to create software for the Macintosh. Kawasaki fondly recalls his colleagues at Apple as visionary, driven and “arguably the greatest collection of egomaniacs in the history of California — though the record has subsequently been broken by Google.”
Here are Kawasaki’s “Ten Commandments” for innovation and entrepreneurship:
1. Make meaning, not money. “Most companies founded on the concept of making money pretty much fail … focus on making their product or service mean something beyond the sum of its components “. Nike “turned $2.50 of raw materials into something that stands for efficacy and power and liberation. Apple has done it with the Mac and the iPhone.
2. Make a mantra, not a mission statement. Bland, generic company mission statements — about “delivering superior-quality products and services for our customers and communities through leadership innovation and partnerships” — serve no one … keep it short and define yourself by what you want to mean to consumers. FedEx is about “peace of mind.” To get everyone internally and externally on the same page, explain why your organization exists and how it meets customers’ needs and desires.
3. Jump curves. Innovating is harder than just staying a little bit ahead of competitors on the same curve. “If you’re a daisy-wheel printer company, the goal is not to introduce Helvetica in another point size. The goal is to jump to laser printer”.
4. In product design, “roll the DICEE.” That’s an acronym. “D” is for deep, which to Kawasaki means thinking about features that go beyond the norm. One of his favorite “deep” ideas: Fanning Reef sandals, which have a bottle opener built into the sole. “I” is for intelligence, as seen in the design of Panasonic’s BF-104 flashlight, which uses batteries of three different sizes to accommodate the random mix of extra batteries many people have around the house. “C” is for complete — or being not just a product, but including support and service. The first “E” is for elegance: Beauty matters, according to Kawasaki. The second “E” is for emotive. “Great products generate strong emotions: Think Harley Davidson, Macintosh.”
5. Don’t worry, be “crappy.” This doesn’t mean ship a bad product, but “your innovation can have elements of crappiness to it,” Kawasaki said. Twitter has a litany of flaws, but it is changing people’s habits.
6. Polarize people. Try to be all things to all people and you often ship mediocrity. The boxy Toyota Scion xB looks ugly to some people but very cool to its devotees.
7. Let 100 flowers blossom. You never know where the flowers will emerge, so let them grow. Innovations may attract unexpected and unintended customers. Think of Avon Products’ Skin-so-Soft cream, which became popular as a mosquito repellent. Learn who’s buying your product, ask them why and give them more reasons. “That’s a lot easier than asking people who aren’t interested ‘why not,’ and trying to change their minds.”
8. Churn, baby, churn. Always improve. Listen to customers for ideas. Once the product reaches the hands of customers, it’s time to start listening to their feedback.
9. Niche yourself. Find your place. A product or service does not need to be unique if it delivers extraordinary value to a select group.
10. Follow the 10-20-30 rule when pitching to venture capitalists. That means no more than 10 PowerPoint slides, a limit of 20 minutes for the pitch, and using a 30-point font size in the presentation (to keep it simple). The goal of such pitches isn’t to walk home with a check, it’s to “not be eliminated” from consideration.
Full article:
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2258
Ken’s Take: It’s no secret that click through response rates to online ads) is miniscule. A current hot topic is whether “engaged” or “attentive” site visitors are more ad responsive. Conventional wisdom says ‘yes’. If true, sites with engaged visitors should be able to command higher ad rates.
Couple that with longstanding wisdom that people take stuff more seriously when they pay for it. and you have a new formula for online profits: generate revenue by charging a subscription fee for site access, and sell advertisers on the notion that they should pay more for an engaged base of exposures.
Might work … if the content is powerful and the base of subscribers is big enough.
* * * * *
Excerpted from Business Week, “ESPN Bets Sports Fanatics Will Pay for Online”, June 4, 2009
ESPN The Magazine, the decade-old print offshoot of Walt Disney (DIS)’s wildly successful cable sports network, is about to begin charging $6.95 a month for access to its Web site.
At a time when many media companies are merely jawboning about demanding fees from online users, this magazine is doubling down on it.
More broadly, such a move by a well-known name will plumb whether a paying customer equals a more enthralled customer—the term in the trade is “engaged”—and a more valuable target for advertisers as well.
ESPN The Magazine is well placed to test these waters. Rabid sports fans have bottomless appetites for sports info and the universe of data, jargon, and inside jokes surrounding it.
“There is an audience that just loves games” and flits on and off sports sites only to grab scores, says ESPN.com Editor-in-Chief Rob King. But others “love the in-between stuff—the predictive stuff that helps them be smarter fans.” They’re the people the company is banking on. It also helps that many like to wager on sports, though ESPN doesn’t say so: When information can be translated into currency, people pay for it. Insider’s most popular features include data, tools, and deep-dig analyses geared to fantasy-league players and other stat geeks, and “Rumor Central,” which gathers and comments on sports tidbits from other media, such as newspapers and local call-in radio shows.
“Why is it, in this business, we are apologetic when asking [consumers] to pay for what we give them online?”
There is a a case that a subscribing customer is more “engaged” and thus more valuable to marketers than one who hops from one free site to another.
But, industry observers warn that it’s not a sure thing that an obsessive fan’s focus on ESPN Insider also means “there is more engagement with advertising.” That’s a debate that ESPN will presumably take up later, should it persuade more readers to pay up online.
Full article:
http://www.businessweek.com/magazine/content/09_24/b4135072008154.htm?chan=magazine+channel_business+views
Bold Endeavors: How Government Built America, and Why It Must Rebuild It Now by Felix Rohatyn
Background: Rohatyn was an investment banker with Lazard Freres before a second career in public service bailing out NYC from the brink of bankruptcy and serving as Ambassador to France under Clinton.
Central premise: “The nation is falling apart — literally. America’s roads and bridges, schools and hospitals, airports and railways, ports and dams, water lines and air control systems — the country’s entire infrastructure — is rapidly and dangerously deteriorating.
America needs to rebuild its infrastructure. It is a critical national priority, a costly long — term investment, and a visionary enterprise. It is a program that can provide tens of millions of much-needed jobs.
It is an undertaking that can only succeed if it is directed, coordinated, and largely financed by the federal government.
And, contrary to the glib reaction for many contemporary ideological naysayers, large-scale public investments can work, and with remarkable long-term success.”
Consider 10 bold endeavors that were done by the Federal government and had a
Bottom line: The above is about all that you ever need, so save your money
TakeAways: Safeway’s keys to containing healthcare costs (1) make sure everybody has some “skin in the game” – i.e. focus on “out of pocket” costs — don’t eliminate them;(2) steep premium discounts for good behavior, e.g. not smoking, weight control; (3) a database of providers and costs so people can shop around. Works for me …
* * * * *
Excerpted from WSJ, “Mr. Burd Goes to Washington Business will pay for government health care”, June 19, 2009
As recently as 2004, Safeway was suffocating under health-care costs growing at 10% a year. The company blew up the company’s existing health-care structure and replaced it with one that embodied market principles — choice, responsibility, competition and price.
Nearly 80% of the 30,000 nonunion Safeway workers who take part in the program rate it good, very good, or excellent.
The Safeway plan has two main parts that work in tandem.
The first involves giving employees a financial stake in the system. Employees have skin in the game. The company deposits $1,000 each year into a “health reimbursement account,” which workers can use to pay for care. The next $1,000 in expenses is the employee’s responsibility. After that, employees pay 20% of costs up to a $4,000 maximum.
Safeway workers these days treat that first $1,000 carefully, since anything beyond it comes out of their pockets. The company is alive with stories of people who no longer visit the emergency room for routine care but instead call around to doctors to ask prices, and swap information with colleagues. Employees go on a Web site, punch in a zip code, and get a list of providers and costs. One discovery was that within 30 minutes of its California headquarters routine colonoscopy prices ranged from $700 to $7,000.
The second part of Safeway’s plan was an embrace of the obvious: Healthy people cost less: 75% of health-care costs are the result of four conditions — cardiovascular disease, cancer, diabetes and obesity. The majority of these are preventable. and, for example,an obese employee can require 10 times the number of doctor visits in a year than someone of healthy weight.
Under Safeway’s voluntary “Healthy Measures” program, employees are tested for smoking, weight, blood pressure and cholesterol. Every area they “pass” results in a reduction in their premium, of as much as $1,560 for a family, a year. Those who fail but prove progress can get refunds.
Today, Safeway’s smoking and obesity rates are roughly 70% the national average.
Full article:
http://online.wsj.com/article/SB124536722522229323.html
Summary: Business is booming for Netflix as people stay at home more during the recession. But, online streaming video is certain to overtake mailed DVDs eventually. Netflix is trying to stay ahead of the curve. Good luck.
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Excerpted from WSJ, Netflix Boss Plots Life After the DVD, June 23, 2009
Netflix is a standout in the recession. The DVD-rental company added more subscribers than ever during the first three months of the year.
But Netflix’s CEO Reed Hastings thinks his core business is doomed. As soon as four years from now, he predicts, the business that generates most of Netflix’s revenue today will begin to decline, as DVDs delivered by mail steadily lose ground to movies sent straight over the Internet. “As a capitalist, I’d rather have Blockbuster as my primary competitor than all those Internet companies,” Mr. Hastings says. So he is quickly trying to shift Netflix’s business — seeking to make more videos available online and cutting deals with electronics makers so consumers can play those movies on television sets.
Companies across the entertainment and technology landscape are struggling with how to profit from Internet video. There’s still significant risk that Netflix could falter or lose out to another company that figures out how to do it first. And having picked his battle, Netflix may risk missing other growth opportunities: – the company hasn’t yet expanded internationally or mounted a direct challenge to kiosks, such as Coinstar Inc.’s Redbox, that let customers pick up $1-a-night DVD rentals. It is considering expansion opportunities outside the U.S. and has no plans to open kiosks.
One of the biggest hurdles will be persuading Hollywood studios to give Netflix rights to show more and better movies through its Internet service at a time when many studios are protective of their DVD-sales revenues.
The company stumbled in an earlier effort to introduce a set-top box that would bring Internet video service into the living room. Netflix developed the hardware but then abandoned it after executives got cold feet.
Mr. Hastings, the CEO says he is a student of companies such as AOL that tripped up by failing to adapt to technology shifts.
Netflix’s big break came as a different industry leader failed to keep step. In the late ’90s, the home-video business was shifting to DVDs from VHS tapes, offered by rental giants such as Blockbuster Inc. Netflix emerged with warehouses that stocked larger selections of DVDs than Blockbuster’s rental outlets could, mailing them around the country in red envelopes. Netflix charged consumers a flat monthly rate to rent as many DVDs as they liked, eliminating the late fees charged by rental chains.
Blockbuster eventually started its own DVD rent-by-mail service, but scaled it back in late 2007 after consistently losing money on it.
Now, amid gathering signs of the DVD’s decline, the industry is poised to shift again.
Home-video sales, mostly from DVDs, last year dropped to $14.5 billion from $15.9 billion the previous year. Movie rentals remained flat over the period, at about $8.2 billion. The number of DVDs Netflix rents every year — about a half-billion in 2008 — is still growing, and Mr. Hastings predicts the company will still be shipping discs to consumers 20 years from now.
But he expects rental figures to begin to dwindle in four to nine years.
Anticipating the demise of DVDs almost from the beginning, the company’s name didn’t reference discs or mailboxes and the company invested in software formulas to crunch data about its customers’ tastes so it could recommend DVDs to them, a technology that could carry over to an Internet movie service.
In January 2007, Netflix began letting subscribers stream video to their PCs from the company’s Web site, allowing users to watch video almost instantly without keeping permanent copies on their hard drives. The service featured only about 1,000 movies and television shows — about 1% of its DVD selection — but subscribers could use it for no extra charge.
Now more than 20% of Netflix members regularly use the service. The company says new users attracted by streamed movies have helped push its subscriber total up 25% to 10.3 million at the end of March from a year earlier.
The online model has another benefit for Netflix. The company currently pays about 80 cents to post a DVD to a customer’s home and back. Its bandwidth costs for streaming a typical two-hour movie: roughly a nickel.
Netflix’s biggest challenge in getting Hollywood to go along for the ride. Netflix’s selection of more than 100,000 DVD rental titles is made possible by the “first-sale doctrine” of U.S. copyright law, which permits buyers of DVDs to lend them out without studios’ consent.
In Netflix’s early days, its buying team would sometimes purchase DVDs at local Wal-Marts or Best Buys if it couldn’t get copies through studios.
In contrast, to deliver movies and television shows over the Internet, Netflix has to license them from studios. So far, it has gotten only about 12,000 titles, a hodgepodge of older films such as “Diehard,” episodes of popular TV shows including “30 Rock” and a smattering of new releases.
The main reason: Netflix must compete with television subscription services like Time Warner’s HBO, Viacom Showtime and others that gain exclusive rights to show studio movies on cable channels or through on-demand systems. These pay channels have bigger audiences than Netflix and a longer history of securing movie rights. Their lucrative deals can prevent Netflix from getting Internet rights for movies until years after they’re released on DVD.
If Netflix is to expand the titles on its Internet service, it will have to considerably boost its licensing spending, from roughly $100 million last year.
“Netflix has yet to show that it has the resources and profitability to be in the markets where licensing is the business policy.
Hollywood is “clearly conflicted” about the online service’s growth because it could help accelerate the decline of DVDs.
http://online.wsj.com/article/SB124570665631638633.html#mod=testMod
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TakeAway: All major polls show that Obama’s approval rating is still over 50%, but showing significant recent slippage.
For the first time, Obama’s Presidential Approval Index has gone negative. Keep reading …
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Rasmussen
Overall, 53% of voters say they at least somewhat approve of the President’s performance so far … 46% at least somewhat disapprove.
But, the Rasmussen Reports daily Presidential Tracking Poll for Sunday showed that 32% of the nation’s voters now Strongly Approve of the way that Barack Obama is performing his role as President … 34% Strongly Disapprove giving Obama a Presidential Approval Index rating of -2.
That’s the President’s lowest rating to date and the first time the Presidential Approval Index has fallen below zero for Obama.
Sorted by self-identified race, Obama’s PAI is plus 80 among blacks, minus 6 among whites, and minus 7 among all others.
By party affiliation, Obama is plus 56 among Dems, minus 50 among GOPs, and minus 6 among independents.
38% say we’re on the right track, 56% say we’re on the wrong track.
These results are consistent with recent Gallup and WSJ polls summarized below.
Gallup
President Barack Obama’s job approval rating fell to 58% in Gallup Poll Daily tracking from June 16-18 — a new low for Obama in Gallup tracking. In the past couple of weeks, Dem approval has remained unshakable; GOP has fallen by 8 points; Independent support has fallen by a whopping 11 points.
http://www.gallup.com/poll/121028/Obama-Job-Approval-Slips-58-First-Time.aspx
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WSJ / NBC
Since Feb., approval is down 4 or 5 points – disapproval is up 8 points – as some “not sure” have become negatively “sure”
The Homa Files 