The Myths About Money and Markets

There is a growing mythology in the United States about money and the "free market". The GlennBecks of the world have a platform to speak, and have set about aggressively using that platform to spread bad ideas to the people that trust them. The facts about these issues are within the grasp of most Americans, so lets correct the misconceptions now.

1. The falling dollar is a disaster. Wrong. The dollar's value, relative to other country's money, is not an omen of American doom or the end times. Businesses do not raise their prices when the commodity markets show the dollar trading lower, and a fall in value does not cause inflation. Period. As oil is listed in dollars, a fall in value does make foreign oil more expensive, which is another good reason to end our dependence on the stuff. That, however, is the biggest negative attacjed to a falling dollar. Inflation is caused by too much money in the system relative to the amount of products available. This is typically caused when the Fed monetizes our debt....in normal English, when they print money to pay bills. Inflation is something we will have to watch over the next few years, but is not now a threat (we have actually experienced some deflation, which is not as good as you might think). So what does the falling dollar do? It makes stuff we make cheaper for foreign consumers to buy, and it makes visiting our country cheaper for foreign tourists. It takes less of their money to buy ours. That is good for U.S. manufacturing and the U.S. tourist industry. It is also BAD for China, which is why they own so much of our debt. You see, the Chinese have been buying up our green to keep its value artificially high. They have done this because it makes THEIR stuff cheaper than what we make at home. If they stop buying our debt, our dollar falls and their stuff becomes more expensive for us to buy. A falling dollar leads directly to a reduced trade deficit, which is a good thing.
2. The dollar has no worth, so invest in gold. In my hometown, they would roll out the red carpet for you...Las Vegas knows a sucker when it sees one. When the financial crash happened last year, investors around the world pulled their cash out of the markets and invested in U.S. Treasuries. Despite all the crying in this country, foreign investors still place their trust in the "full faith and credit of the United States government". That's us kids. We back the dollar. Still not sold? The dollar has value because we believe it does, whereas gold has value because.....because it is gold. Gold has value because we believe it to be valuable. Its value is just like the dollar's in that it rises and falls with the whims of the market.
3. The United States is going bankrupt. Uhh...no. Ridiculous, breathless, ranting garbage. In the midst of the worst credit crisis since the Great Depression, the United States raised $1 trillion without a hiccup. The debt, as it is constituted now, is unsustainable over a timescale of perhaps two decades. This is not due to the short term investments incurred in the bank and auto sector bailouts as most of that cash will come back. The lack of sustainability is directly related to health care spending in general, and Medicare in particular. It is one of life's ironies that the same Republicans who have, this year, successfully sold themselves to seniors as "Champions of Medicare", were hard at work trying to kill the program completely for the previous four decades of its tenure. They tried to kill it because it is incredibly expensive. It is also increasing its expense exponentially, which is why health care reform was championed by BOTH parties before Republicans decided it was a good way to attack Obama. In the meantime, at least, the debt is not a threat. We will spend more than twice as much on our military this year as we will spend on debt service. Ask yourself this question; is there anything in your personal finances or that of your company's that you spend more on than your charge accounts and mortgages? Didn't think so.
4. Opponents of reform are protecting the free market. It would be comic if it were not so dangerous. First, free markets are VERY good at managing price and production levels. Artificially controlling either, like what we do in welfare programs like farm subsidies, raises prices and hurts the competitive abilities of the players. But these categories are the only in which the free market helps. I think that the performance of financial institutions, automakers, and others recently is sufficient to explain that point. In any case, the insurance market is not a free market. On this topic, I don't think there are many who would argue against the need for government oversight over the medical marketplace (although there is a very good argument for giving those oversight programs a major face lift!). In terms of economics, the marketplace is, by definition, not free; it has an anti-trust exemption. This is a government license to fix prices, drop coverage, discriminate and otherwise defecate on consumers. That's us kids. The government is also deeply involved with protecting the firms in the medical marketplace. The patent monopolies awarded to drug companies raise raise drug prices by a factor of ten over the rates of other countries. We pay about $250 billion more per year on drugs than anyone else. Everyone reading this knows how crippling those prices are, especially on our older relatives and friends. This is "government regulation" that NOBODY who is "pro-business" seems to ever mention in conversations that involve "keeping the government out of my medicine".
5. Some people on the cable channel "I" watch are "fair and balanced". I heard a speech given by President Clinton last year in which he described an opponent's point as being a "complete load of hooey". To paraphrase Justice Stewart, I can't tell you what hooey is, but I know it when I see it. I have yet to find a cable outlet that attempted anything resembling traditional journalism. Some newspapers still try, and the major network news programs are better at it than some folks give them credit for. Mostly though, they are all filled with opinions and talking points only loosely disguised as "panel debates". If you want good, strong reporting that gives you a complete picture, try watching your local PBS channel. The "Lehrer Report", "BBC News", and the newsmagazine "Frontline" all give complete, drama-free reporting at a depth that is leagues apart from the frantic chicken-dance of cable news.

There are a plethora of internet sources that can give clarity to the more complicated political issues that informed voters should be aware of, and all of them are just as easy to gain access to as TMZ or Amazon. A good rule of them to use when researching sites; if the story you are reading sounds like it was written by a politician, ignore it. The simple truth is that the real problems our country faces are complicated and are caused by multiple villains.

Conspiracies are the easy way out. The rational middle encourages you to dig a little deeper and take on an American-style challenge....

The $7 Trillion Question

Over the next decade, this country will lose $7 trillion worth of productivity due to sick days and disability leave. The greatest country on the planet will continue to rank in the middle of industrialized nations in death rate, life expectancy, and infant mortality. Local public hospitals will continue to struggle to meet their obligations, and the states and counties that support them will continue to suffer under massive budget shortfalls due to medical costs.

Nowhere in the industrialized world do businesses have to deal with the costs and consequences of health care that businesses in the United States encounter. Like most of the real domestic issues in our nation today, health care is a matter of deferred maintenance; how long can we go without fixing an issue before it cripples our operations. The American people understand this, and they express it in polling every day.

Dozens of polls over the last two months done by both liberal and conservative leaning pollsters, have come up with a remarkably consistent vision for how we feel about this issue. We are split on the label; if the question asks about "health care reform", or the "plan that Obama...", or the "plan that Congress..." is proposing, the country is generally 45%-48% in favor and 49%-51% opposed. Note that "undecided" plays a roll in those totals. However, when asked about the specific provisions in the plan without the political labels of either party, the results change dramatically. Between 51% and 55% of Americans are in favor of a government-run plan that would compete with private insurers. Between 60% and 75% of Americans are in favor of a mandate that all Americans hold health insurance, provided that mandate includes support for lower income families. For reference, all of the supporting data can be found quite easily at http://www.pollster.com.

Not surprisingly, nobody wants to pay for these plans (and by nobody I mean that less than 40% are in favor of the various tax proposals). We Americans have mastered the art over the last three decades of complaining about taxes while demanding services. Because of this tendency, the burden of taxation has shifted to the working family as we have successfully labeled higher taxes on businesses and the wealthy "punitive" or "restrictive". I mention this reality in irony, because it is the businesses and wealthy who will eventually pay for the lack of productive workers that is the obvious outcome of these politics.

All of the plans proposed over the last several months have been attacked as "Socialist" or worse. Politicians and the good senior citizens who have supported them have simultaneously attacked Democrats for proposing Medicare cuts while criticizing the "Public Option" as Socialism. Medicare, of course, is the closest to socialized medicine we get in this country (it is mandatory, after all, where the public option would not be). Medicare has also been opposed, as a matter of party platform, by the Republicans since its inception. George W. Bush tried to privatize it (which would have cut more from the program in 4 years than the Democrats plan in 10), and Ronald Reagan cut his political teeth opposing its creation as....Communism.

The two items in the current bill that are most controversial (outside of the purely semantic abortion amendments) are the anti-trust exemption and the public option. The House included a revocation of the insurance industry's anti-trust exemption because you can't call it a "free market" when an anti-trust exemption exists. The Senate did not because it had to placate Ben Nelson of Nebraska, a Democratic Senator and wholly-owned subsidiary of the nation's health insurers. The CBO has repeatedly scored the public option as a deficit and total cost reducer. The more aggressive the option is, the more the deficit is cut and health care costs are reduced. Period. This is the same CBO that Republicans have pointed to when Cap and Trade was scored as raising costs on the middle class, and the initial health bill in the House (HR 3200) was scored at $1.6 trillion. They were OK with the CBO then, they better not crawfish their bet now.

A well-written compromise bill that reconciles the House and Senate legislation will reduce our deficit by over $150 billion over the first ten years, and over $600 billion over the next ten years. It will increase worker productivity by reducing sick and disability time, and it will pave the way for a small business expansion by providing easy access to health care for entrepreneurs who, right now, can't afford to chase their dreams and risk losing their employer's coverage.

It is time to get over the hysteria and over the top labelling that has pervaded this debate. It is time to pass this bill into law and move on to new challenges.

The rational middle waits for your thoughts...

The N.o F.un L.eague

Once upon a time, when Pete Rozelle was still commissioner, there was a brash young QB named Jim McMahon. McMahon came into the league after a college career that saw him rewrite the records (in a number of ways) at his university, the conservative BYU. As the QB of the Chicago Bears, he was the leader and chief troublemaker of a fun-loving but tough team on its way to a Superbowl. Of his habits, McMahon's penchant for headbands that advertised products or displayed messages was probably his least dangerous. Rozelle saw the use of the headband to advertise as a breach in the NFL's exclusive control over media partners and "official products", and promptly ordered the young QB to cease and desist.

At the next game, McMahon wore a headband labeled "Rozelle". The commissioner simply laughed and remarked, "nice gag". That, as they say, was then. The NFL really is becoming the no fun league, and its executives seem to be on a mission to use up all of the football watching public's good will. The rational middle is...really struggling to be rational.

I am a huge football fan. I have, for many years, followed the sport religiously in print and on television. A great deal of money has been spent by my household acquiring magazines, expanded cable, and video games all with the intention of feeding my addiction. In this, I am not alone. Billions of dollars are spent by fans annually playing fantasy football, watching television, playing video games, and buying memorabilia. NFL franchises have also pulled up a chair at the all you can eat municipal bond feast, where helpless cities and counties are blackmailed with the loss of their team if they don't cough up several hundred million to build the infrastructure for the billionaire that owns the team.

The insult to the injury for all of this, is that the league is not satisfied. What follows is a list of steps, taken by the league in recent years in the name of "corporate growth" that threatens the game by virtue of the abuse of its fans (customers):

1. Publicly funded stadiums. Not alone in this offense, the NFL is nonetheless, guilty of blackmail. What other business demands money on this scale for the construction of its sole capital asset? I would support a federal law banning the use of public money for any venue built for use by a professional sports franchise. Such a law would level the playing field.
2. Exclusive deals with satellite. I don't like satellite TV, so the NFL does not want my business. Ridiculous! The NFL does not sell a prestige product, so the notion of limiting its distribution channels is flat out stupid. Somewhere in the league office in New York, there has to be a marketing MBA that is trying to change this.
3. The NFL Network. While the idea of a fully committed network for football junkies is not a bad one, the notion of restricting access in other channels to support this one demonstrates how poorly the league understands marketing. This is a good idea done in by pure greed on the league's part. The summer the network spent covering the "Terrill Owens Saga", complete with the whiny and unprofessional Adam Schefter's opinion rants masquerading as reporting, told the audience all it needed to know about its strategic plan... i.e. there wasn't one.
4. Exclusive deal for Madden NFL to the exclusion of the very competent software done by 2K studios. When NFL 2K was in production, customers could get the new game of their choice every year for $30 bucks...now, as a monopoly, Madden will cost you $60. The price has doubled in five years. Once again, the league (with help from the players union here) tells its customers to suck eggs.
5. Fantasy football crackdown. The league is doing all it can to control all fantasy football games. It (and the union again) wants the profits from any use of the player's names. This is an enterprise that has no chance of threatening cash flow for players or the league, and actually tends to drive merchandise and TV viewing; but again, greed is driving the league.
6. NFL films. Most of today's NFL fans grew up watching NFL films productions. The "voice of God", the late John Facenda, and his able replacement, the late Harry Kalas, were combined with fantastic music to create powerful productions that reinforced our dreams of the league. The NFL has steadily eroded the budget at NFL films, and tried to scuttle the excellent "Inside the NFL" series.

This league is operating under the delusion that it can't be replaced. Major League Baseball was once the national pastime, so I am not sure what fantasy the executives in New York are living in, but they need to wake up. I am not advocating a walk-out or fan-strike, I am simply reminding a big business that even loyal customers can get tired of bad service and walk away.

There are just too many other choices these days...

The rational middle is ready to hear angry football fans...

The Strange Case of Germany

Germany is an enigma for Americans. Several articles published in the mainstream media in recent months have contained references to German inability "to address the problems of Socialism" and deal with the "economic threats of labor unions and environmental activism". When an average American looks at Germany (an indeed most of the member nations of the E.U.) they see a political atmosphere that would scare the heck out of Glenn Beck's cardiologist.

Professional level individuals in Germany take home about 50% of their pay after taxes. That is half of their check. Some of that comes from the German version of the VAT (value-added tax); this tax is essentially a sales tax added at every level of production. Corporations are not able to get away from the heavy taxes either.

German companies have already agreed to the carbon reductions that the United States is starting to debate...sort of. Rather than individual companies reducing outputs, we in the United States are going to beg our corporate masters to play with the pollution they produce like a dog bone at an auction. This at least, is how I perceive "cap and trade". Germany and the rest of the European Union nations are a decade ahead or more in every area of environmental management; from clean energy, to environmental managerial accounting procedures, to total resource management, to the gas taxes.

That's right folks...gas taxes. Taxes that are similar to our average price per gallon here in the US of A. Not our taxes per gallon, our TOTAL price per gallon.

German companies have another headache to deal with...labor unions. Powerful unions. Like baseball player union powerful. These unions literally pushed Wal-Mart out of Germany after the Arkansas firm had already made an enormous investment.

So with all of these factors, the U.S. mindset would expect huge, systemic economic problems. U.S. journalists project this impression on German politics, and it would be reasonable to project an economy devoid of competition, innovation, and jobs. It would be reasonable, but it would also be wrong, which is what defies U.S. logic.

Germany is the world's leading per-capita exporter. They make more stuff per person to be sold around the world than any other country in the world. If you are a big total fan, and think averages are for the little guy, they export more outright than the U.S., which is almost 4 times more populous, and are close to number one China, which is almost 15 times as populous. German companies are world leaders in innovation across a huge array of fields. German unemployment rates have always run a little higher than the U.S., but there is something deceptive in those numbers. Germany counts people employed in part-time jobs who desire full-time labor among the unemployed. The United States does not follow this practise, functionally making the two nations unemployment numbers the same.

All of this is written with a simple idea in mind; the best companies in the world benchmark their competitors, so why shouldn't the best nation in the world follow suit? There are many policies in Germany that would simply not translate well, but they are doing something correct. They treat healthcare as a public utility, so individuals and corporations are not burdened with the budgeting issues the subject creates in the U.S. To wit, when GM went belly up, its investors held some $28 billion in bonds which were the residue of decades of poor capital decisions and bad strategy. The firm was also on the hook for $15 billion to the UAW, most of that allocated for, you guessed it, healthcare. There are many, many techniques that a nation can use to handle healthcare as a public utility. Unfortunately for us, the debate in this country on which technique to settle on was hijacked by the pro-insurance/status-quo lobby's $400 million "stimulus" plan for ad agencies and lawmakers.

German firms also have those pesky environmental regs to deal with. The trick there is that they actually do deal with them, rather than using all of their energy trying to cheat or get the regs cancelled. Management guru Michael Porter wrote that companies in markets with tough environmental regulations were pushed to innovate and become more efficient, better competitors. Porter's proof can be found throughout Europe, including the continent's industrial heart in Germany. The math is fairly simple on this point; if more of the stuff your factory buys is turned into saleable product than waste and pollution, then your factory will make more money.

It seems like Germany isn't such a strange case after all...they just haven't given up trying to get better. As an American chauvinist, it irritates me that ANY European nation can look better on ANY scorecard than the U.S.A. Currently, I am irritated a lot. Surely we Americans can get back on top, if only we could hold OUR business community accountable.

We love our kids here in this country, and we love to make them happy. We also, however, know that sometimes we have to make them mad at us to do what is best for them. In that spirit, we should continue to be pro-business...we just can't forget to do those important things that "...they may not like, but someday they will understand."

The rational middle is listening...

I Could Be A Republican...

There is a great deal about traditional conservatism that fits comfortably into my worldview. I was raised in a traditional household by married parents (still going strong after 38 years mind you). I was educated in the Catholic tradition, attended church regularly, served as an altar boy, and was read to from the Bible by my father. The last 15 years of my life have been spent as both manager and student of the world of business, and I am certainly a capitalist. My greatest heroes growing up were soldiers and airmen (there are few children who would list their idols at age ten to be Generals George Patton, Claire Chenault, and Vinegar Joe Stillwell).

That my parents are liberal Democrats who did not force religion on their children or believe in mixing their strong patriotism with xenophobia, remains a powerful force pulling me firmly to the center-left of our often silly political structure. I do believe that a liberal interpretation of the commerce clause of our Constitution is the one reading most responsible for the economic power of our nation. The uniformity of our laws, levels of education, capacity for law enforcement (civil and criminal), and infrastructure have provided the platform for local businesses to grow into world-beaters over the last century-plus. This uniformity ONLY exists with a strong federal system, which by the way, we all have a voting stake in.

So I could be a Republican, if only the party would spend more time working on solving problems, and less time making asses out of itself trying to creatively criticize the President. I will highlight a few examples this week, and attempt to revisit the topic once a month. I will also, of course, pen a similar column about those lovable losers, the Democrats with similar frequency. The Republicans first, though.

Item #1: Terrorist trial misfire

When the Obama administration announced that five terrorists would be tried in federal court in New York, according to our laws and traditions, most of the right went into spasm. While Republicans could have, had they asked questions before they shot, focused on the victims families, most focused on something less noble. The predominant argument, repeated early and often by commentators, was that we should not try these idiots according to our laws and traditions, because the trials might make us targets. The Republican talking point was that America should give up its tradition because we are afraid. Speak for yourselves cowards!

Item #2: GM quarterly earnings report

Michael Steele, the less than stellar "leader" of the Republican Party, came out swinging against the Obama administration on news that GM is still losing money "even after $50 billion worth of taxpayer's money". What? This kind of "analysis" would be comical if it didn't hurt so many people. The pro-business party and its presumably pro-business chair too often demonstrate a complete and comprehensive ignorance concerning how business works. We invested cash to keep them going, and to finance the restructuring while the firm was in bankruptcy. Businesses that size don't turn on a dime, and the federal government (contrary to the tantrums of the Tea Baggers) was not "in control of" that firm. General Motors was and remains a colossal mess wrought by decades of abysmal management, cultural protectionism, and short-sighted union partners. The move by Steele is the kind of purely political fiction that the rational middle dislikes from both sides.

Item #3: The Bow!

With apologies to the family of the brainless Steve Ducey of Fox and Friends, there is not a 200 year precedent of Presidents not bowing to foreign leaders. Conservative commentators and the GOP politicians that have taken to repeating what the commentators say are either hypocritical, dishonest, or stupid. The FLAG must not be lowered below the level of another flag...if President Obama orders our flag to submit at the Olympics, than I will jump in line to scream at him. In the meantime, the same commentators who rightly criticized the left for laughing at George W. Bush (who held hands with King Abdullah of Saudi Arabia and kissed him) are now criticizing Obama? It is DIPLOMACY...and I wonder how many of these people were critical of Nixon, who bowed to the Emperor that attacked Pearl Harbor?

Come on people...keep your eye on the ball and stop looking for an excuse to attack the President every day. If you are patient, you will capitalize on real opportunity (it always happens), and when you do, the public won't dismiss it as another BS line from the "Party of No".

The rational middle is listening...

Putting Terrorists In Their Place

Ronald Reagan's administration had its struggles with international terrorism. Early miscalculations in Lebanon combined with the despicable work of the governments in Syria and Lybia captured nearly as many headlines as the Cold War. In the end though, Mr. Reagan and his team had a coherent strategy for dealing with the issue; for the countries that sponsored activity, proportional response and international castigation; for the terrorists themselves, death by special operations or treatment as a common criminal.

Reagan's FBI director put it best when he stated that treating terrorism exclusively as an act of war elevates the terrorists to the level of nations. The administration wanted to debase the individuals by treating them as the worthless criminals that they truly were. They accomplished this by not allowing them to claim a cause. The old saying that "one man's terrorist is another man's freedom fighter" crumbles in the face of justice fairly (and ruthlessly) dispensed. Khalid Sheikh Mohammed and his ilk are murderers, nothing more. This fact does not diminish the sacrifice and heroism of the citizens of this nation on September 11, 2001. A finding, in our court of law, that these pieces of garbage are nothing more than murderers worthy of execution reinforces the strength of our nation.

The federal court in New York that is the destiny of these killers successfully convicted the first bombers of the World Trade Center, and the U.S. court system has successfully prosecuted and punished dozens of these criminals on our soil. The argument that this prosecution should not go forward because the prosecutors might fail, or because the trial might make New York a target is despicable. Our presence in the Middle East and our support of our friends in Israel make us a target, and yet we do not yield. Is our nation to believe that we can't dispense our justice for fear of reprisal? Are we to be so frightened of this "sheikh" that we shrink away from our system of justice and our ideals? Are we to be a nation of cowards who choose to abdicate everything we believe in when we are tested?

The same commentators who have spent months crying about the Founding Fathers and bemoaning the loss of our nation are now insisting that we let fear determine how we deal out justice and to whom. Patrick Henry stood two and a half centuries ago and demanded "Give me liberty or give me death". After 9/11, those of us happy to give up freedoms to the Patriot Act seem to have quickly forgot his intent. We must stick to our beliefs ESPECIALLY in times of crisis. A time of war is precisely the moment that our values should be fought for, lest those doing the fighting in distant lands make their sacrifices in vain.

Be proud of our democracy and bring these worthless killers to justice. Their labels do not dictate the level of honor to which their victims are entitled. Do not assign greater significance to these villains than they deserve. When the United States brings this petty "sheikh" to his justice in court, he will attempt to turn it into a grand stage; but the free people of our nation and those of our allies will see him revealed as he really is; another killer looking for an excuse.

The rational middle looks forward to your thoughts...

A Total Loss of Perspective

The images from the protests held Thursday on the steps of the Capitol were disturbing; the (by now) typical Obama-as-Death effigies and confused references to both Fascism and Communism shared the stage with a new twist. One of the protesters decided that graphically comparing the health care bill to a Nazi death camp was a good idea.

"National Socialist Health Care" was the label, superimposed over the emaciated bodies stacked at Dachau. Horrifying.

To protest legislation on the steps of the Capitol is a responsibility as well as a right; it is one of the prices we must pay for freedom. The rational middle contends that those protests should be passionate and pointed, but that they should also stay within some set of boundaries. There was a time when we were able to recognize when those boundaries were violated. Has that time passed?

This space takes no exception to those who believe that the election of Barack Obama or a large Democratic majority in both houses is dangerous; people on the other side of the fence believed the same of George W. Bush. This space also agrees that active and vocal political conflict is appropriate for those who are in the political minority. The difference exists in the scope and tone of the conflict. In an effort to discredit the health care bills, many in the country have built this bill into monstrous proportions. The various bills have been cast as granny killers, communist plots, and insidious Muslim conspiracies.

I definitely miss the tax and spend arguments that Reagan used to win debates. In the case of these bills, Republicans and Populists would have a great deal to question (indeed attack) regarding the spending levels and benefits attached. The great pity is that Republicans had a natural position in health care reform; only recently taking a tiny step towards it in their own version of reform. They could have acted to end anti-trust exemptions, create co-ops and/or exchanges, and provide credits to small businesses. These pro-business positions would have been reasonable and proactive attempts to resolve problems, and would have found wide support. They could have chosen a more aggressive stance, and used the opportunity to go after payroll taxes on small businesses.

The grand ole party chose to drift down to its lowest common denominator, and has missed a golden opportunity. They will vote against a bill that will disappear as an issue until people start benefiting from it. Even the costs now have some justification. The current bill, HR 3692, will end up costing about $100 billion per year over ten years (after the conference work between the House and Senate). While this is a large number, consider this fact: the Bush tax cuts were designed to stimulate the economy and will cost $300 billion per year over the 6 years of the plan. I think we all know what happened to the economy.

The big question is what this bill will or won't do. Here is a list of things the bill will not do:

• It will not mandate that anyone take Federal insurance. The exchanges and co-ops constructed by the bill rely on the existence and competitiveness of private insurance firms.
• It will not tell doctors what they can or cannot treat. The doctor-patient relationship is specifically outlined in the bill.
• It will not cover everyone. The most optimistic estimates make a claim of 96% covered. Some estimates are lower.

What will it do?

• It takes away the industry's anti-trust exemption, meaning that insurance companies can no longer operate as a monopoly.
• It creates and provides support for private, non-profit co-ops to allow individuals and small businesses to come together to get better coverage and lower rates.
• It creates exchanges that will like an insurance "stock market". This is another tactic provided to provide competition in the marketplace. It is within the exchange that the much misunderstood public option exists.
• It outlaws preexisting conditions and excessive rates for older Americans.
• It sets a floor at 85% of premiums collected to be returned to clients in the form of services. This industry measure was in the mid 90's during the mid 1990's and has declined since.

A controversial piece is the mandate for individuals to carry insurance. The idea is that many of these measures will reduce per-customer margins for the industry. When margins tighten in business, companies must replace lost margin with increased volume. This combination of directives is designed to turn the health insurance industry into a traditional service provider that is forced to deliver higher quality products at lower prices to be competitive.

Not the worst idea in the world, even if it isn't the best. What this bill represents is entitlement programs for the 21st century. It is public policy used to redefine a marketplace and refocus market pressures to drive private business solutions. Done properly, the result will force more insurers and health providers to find solutions like those used by the Mayo Clinic, Kaiser Permanente, or Intermountain Healthcare; solutions that find these systems with the highest service levels and lowest prices in the country.

Big dollars...yes. Socialism....uh, no. I think that opponents of the President's agenda should continue to resist with courage and passion. It might, however, be advisable for these folks to read the bills they are attacking first. Even better, folks should proactively propose solutions to problems we know are out there. Then we could have a good old fashioned political debate!

The Rational Middle is ready....