There's been a lot of publicity over the huge increases in premiums that are being pushed through in California by Anthem.  39% increases over last year.  This is, to say the least, crazy.  But the reasoning is that they've had a lot of people drop their insurance.  As such, they need to increase premiums in the remaining pool to offset those losses.  

Of course, the problem with this is that it becomes a feedback loop.  The more people you lose, the more you charge and then you lose all the more people because it becomes too expensive.  So health insurers are seemingly pricing themselves out of the market and that seems foolish.  But is it?

What I would propose is that these private health insurers may be looking to Apple's business model for guidance.  Apple, since the return of Jobs, has established itself as a premium brand.  Yes, you pay more for Apple's stuff but you get generally better quality and the cache of having apple products.  This is to Apple's benefit because it means less price competition, higher margins, and enhancing their brand reputation.  It allows them to avoid competition in a very competitive market and make all the more money for it.

So what I'm thinking is that perhaps the insurers, at least the ones that are publicly traded and largely focussed on individual health care planes, are looking to become more upscale if you will.  Make every effort to cater to a wealthier demographics, offering robust policies with lots of bells and whistles and charging exorbitant amounts for it.  Generally wealthier people are in better health, and are less likely to be problematic when it comes time to pay the copays, deductibles, etc.  That means lower overhead in terms of customer service, etc.  

So perhaps it is to their advantage to just price out the general population.  Make health insurance a luxury rather than a commodity.  Higher margins, lower pools of insured people to manage.  Greater profits.  Sure, they might not make as much in raw dollars but the percentages should improve markedly.  

So there's been talk of how the CTA workers are too expensive, ranking 3rd in the US in their pay.  But check this out:

Sony is on the verge of releasing a firmware upgrade to the PS3 to permit it to handle 3D.  However, in order to enjoy the 3D experience, in addition to needing to wear silly glasses, you'll need a new TV.  My question is: why?

The thing is, in order to view a 3D image on your TV, you need to have video on your screen that shows a left eye image followed by a right eye image.  Then, synced to this, you'll need glasses that show the left view and the right view.  This makes sense, but what does the TV have to specifically be 3D capable?  Granted, you somehow need to tell the glasses when to show the left versus the right, but it seems to me that you could have such a transmitter attached to the PS3 directly.

I remember seeing a demonstration on an Atari 1040ST of 3D shutter glasses.  Yes, that long ago.  They were expensive and the shuttering was a little too slow, so there was an obvious flicker.  But in principal it worked.  The monitor you looked at was just a normal monitor, and it was up to the computer to tell the glasses and the monitor to go left and right in sync.  So why, decades later, is this an impossible feat for electronics manufacturers?

My sense of things is that it's a deliberate effort on the part of the electronics companies, particularly Sony, to try to force people into buying new TV's.  Sony could add a transmitter device as an add on to the PS3, and use that to sync the glasses, but they'd rather charge you several thousand for a brand new TV than say $100 for a dongle you'd attach to your console.  With other blu-ray devices, obviously the upgrade path is more problematic because they don't necessarily have USB ports, etc.  

Personally I find the notion of 3D gaming intriguing, but not enough to go buy yet another TV.  If I could add it onto my existing system, then I'd consider it.  Otherwise it'll happen when I replace my LCD-TV in a decade or so.  If I want to see a movie in 3D (a very rare occasion) I'll go see it in a theater.

So it seems there's a movement afoot to get people to stop using the word "retarded".  Perhaps I'm nearing that age where I'm drifting from smart ass into budding curmudgeonhood but this just seems stupid, idiotic, and moronic.  Now, to be clear, I think using the "r-word" as a description for somebody with some kind of mental disability is wrong.  It's a broad brush and suggests limitations on the person that may not be true.  The levels of mental ability for somebody with say down's syndrome can vary widely.

However, using the term retarded to suggest some action or person is stupid, idiotic, or moronic that isn't speaking to a specific impairment seems perfectly fine to me.  In fact, stupid, idiot, and moron were all the words we used to use for such conditions until we moved on to another term.  So for a time we used "retarded" to describe the medical conditions and now we've moved past it.  So I would argue that calling Rahm Emanuel retarded is actually doing a service to people with those conditions because clearly Rahm is merely a moron and an idiot and not suffering from a specific condition other than having his head up his ass.

People suffering from autism were once called idiot savants.  That was what a doctor would describe your child as having if they developed that condition.  But thanks to it's overuse in our colloquial language, idiot is now an insult that's not really  So now we call idiots idiots and we call people with autism autistic.  Because we're dealing with such a specific mental condition at that point, to refer to somebody who's an idiot as autistic doesn't actually make sense.  You wouldn't describe something as being so "down's syndrome".  That would just be retarded.

I would suggest that if we skip this whole "r-word" nonsense, eventually we'll see retarded as being little different from the previous incarnations of the terminology.  The nice thing is that since our understanding of mental impairments has gotten better, I don't see another word coming along to take it's place.  So if people just throw the word around and disconnect it from describing genuine impairments eventually it won't be used in that context and the problem will be solved.

On the other hand if we start using the "r-word" then what happens is "retarded" will actually be given even more power.  We'll put in the same camp as the c-word and the n-word and it will still contain all the damaging connotations that it once had.  Nobody's particularly offended if they are called an idiot today and wouldn't it be great if down the line retarded had the same feeling to it?  

Am I completely off base here?  Have I watched one too many Carlin specials?  Okay, I KNOW I've watched one too many Carlin specials, but I think on language he largely had a point.  We choose to empower the words or not.  My sense is that we actually lend power to a word by making it forbidden and we eliminate it's power by overusing it.  

This is what's going to get us into space:

Here's a bit of faulty logic on the state of the national deficit:
This is really not a good point of comparison.  The debt accumulated in World War 2 was a one-time spending spree to pay for guns, boats, planes, etc.  This means that as we went forward from World War 2 we weren't adding to the debt in a subtantial way so we were able to bring the debt down quickly.  By comparison, today we have serious structural deficits where the government has made commitments to pay for Social Security and Medicare, on top of all the other standard discretionary expenses.  These aren't going to spontaneously go away and will in fact get worse as the ratio of retirees to employed people grows.

That's the critical difference but there are others:

1. At the end of World War 2 we had the baby boom which lead to a huge number of people entering the work force and being productive at the same time
2. World War 2 decimated manufacturing in Europe and Japan.  This lead to us becoming an enormous exporter.  Today we have competition from all over the world.
3. The vast majority of that debt in World War 2 was held by Americans (war bonds, etc).  This doesn't change how it's ultimately paid for, but it does change the political dynamics of the debt significantly.  It's very hard to have political leverage with China because we owe them a ton of money.

Having said that, the immediate concern does need to be on getting the economy growing again.  People who are unemployed don't pay taxes and that hurts revenue which makes the deficit problem worse.  Spending billions now that improve the economy lead to years of return on that investment from people working in the growing economy. 

Of course, after we get the economy going again we'll need to deal with the debt in a big way.  I just don't buy into the notion that if the debt didn't cripple us after World War 2, then we're fine with the level of debt today.  The nature of the debt is very different and so we can't assume that reaching a debt level of 110% is going to be something we can recover from. 

So this week is the week of mass destruction in my condo.  I am trying to address certain lingering flaws in the organization and layout of the stuff in my apartment.  Specifically I have done all of the following:

1. Replaced the dresser in my bedroom with a brand new dresser that looks much nicer and has more storage space.  Furthermore, it not longer has all that vaguely usable shelving that was on the top of my former dresser which just begged for more and more clutter.
2. Took that old dresser and moved it into the second bedroom which I'm now converting into an office.  The old dresser, while poorly suited to storing clothes is perfect for holding up a computer, various networking gear and providing storage drawers for random electronic odds and ends.
3. Got a desk for the office so now I have an actual desk instead of an extended shelf.  This means more actual space and a generally more stable surface for my computer crap to reside on.
4. Moved all the computer crap from the kitchen into the office.

So as I type this, my bedroom is looking really good and I just finished up the office.  I still need to figure out a couple things, but it's actually relatively neat and tidy at this point.  The kitchen looks like I should be expecting a red cross relief team to show up shortly, but it's improving.  Just took out a lot of garbage so now it's still messy, but at least I have room to maneuver.

What's funny about my collection of stuff is that I have this tendency to have a running queue to the dumpster.  What I mean is this, there are some things that I have that are obvious throwaways like old papers, etc.  But then there's things like unused shelving systems, old computers, and things that aren't as simple to get rid of.  Things that need recycling, or are just too bulky to throw in a dumpster.

So what happens is that I take whatever crap down to my storage room in the basement because then it's out of my apartment, but not forcing me to deal with how to actually throw out these more complex items.  But of course this means going through the storage room and getting rid of less complex things that have piled up there.  Eventually I'll reach a point that the storage room is filled completely with things that are a pain in the ass to get rid of.  Then, presumably, I'll see what I can accomplish with explosives.

Not really sure who cares about any of this, but just got done hauling a bunch of crap and felt compelled to comment on it.  Now I think I will take a nap :)

If you hadn't heard, Anthem Blue Cross Blue Shield of California has decided to jack up rates on individual policy holders by a whopping 39% this year.  Why?  Here's their response:


So...  when the economy turns around that means they'll be reducing rates, right?  Consider that they are making this decision after making $2.7 billion in Q4 of 2009.  So it's not like they aren't making money at their current rates.  It's not like they are going to have to fold up shop if they don't jack up rates like this and yet they do.

Of coruse what's going to happen is that with the rates going up, even more people will decide they can't afford insurance.  So that will mean less people on their plans, and then they'll have to jack up rates even more presumably.  Good call Anthem.

Can we PLEASE get a public option now?  Seriously?

Every so often I stumble across an article with logic that's so odd to me I feel compelled to comment.  Here's today's example:

Think of advertising as oil and Google as one big emirate. What happens when the oil runs out?

Maybe it already is. Citing a “Natural Born Clickers” study by ComScore and Starcoma, Ad Age last year reported that “the number of people online who click display ads has dropped 50% in less than two years, and only 8% of Internet users account for 85% of all clicks...What's more, the 8% of Internet users that compose a majority of clicks is also down by half from the last study, which found 16% are responsible for 80% of clicks. The 2008 study found half of all clicks come from lower-income young adults.”

The free rides won't go on forever. There are better ways than advertising for demand and supply to find each other (including search, which is free), and more will be found. Google will be in the middle of that discovery process, no doubt. But it's an open question whether Google will make the same kind of money in a post-advertising marketplace. I'm betting they won't.

First of all the comparison to peak oil is completely ludicrous.  Oil is a finite resource.  We may never actually run out of it, but at some point it'll get to be too expensive to burn in a car engine.  Advertising, to brutalize the metaphor, is a renewable resource.  It might fluctuate depending on the economy, but ultimately, there will always be products to be sold and advertisements to convince people to buy those products.

What we're witnessing is a shift in advertising to deal with a far more fragmented media environment.  It used to be that you'd pay a lot of money to get one ad on television that would get seen by millions of people.  You can still do that to an extent today, but you also have the ability to spend a little bit of money for a few ads that are highly targeted.  Those ads may or may not yield clicks but ultimately they still can have value in creating brand awareness, etc. 

In contrast to this article's thesis, I would argue that advertising is going to become even more important going forward even if it's nature changes a bit.  Advertising is ultimately about solving a signal to noise problem.  How does one make your particular product stand out above the other similar products that compete with it.  Given that the Internet is actually increasing the amount of noise, advertising is even more critical because it's that much easier to get drowned out by all the other competitors. 

I will admit that back when Bush was in charge I was an enormous fan of the filibuster.  It seemed the only thing that kept Republicans from taking apart our government piece by piece.  Even with the filibuster, they did a pretty good job of it.  So you might think I'm a hypocrite to now say I'm against the filibuster.  I grant it's an easier position to take when the people I want in power are in power.  However, there is a logic to my change of heart here.

The thing is, with the filibuster in place, it is nearly impossible for our government to address any of it's core problems.  In order to achieve a 60 seat majority on any issue requires so much horse trading that ultimately any legislation that comes through it is badly damaged by pork and loopholes.  Furthermore, in today's environment, it's allowing Republicans to basically shut down the entire legislative process.

As you may recall, Bush's move against Social Security hit a wall after the 2004 election.  Democrats had the filibuster to shut down any actual legislation and the move to change Social Security was broadly unpopular with the public.  So what if they hadn't had a filibuster?  Would Republicans have been able to pass Social Security changes on their own?  I don't think so.

The thing is, as much as Republicans claimed to want that, there was a huge public consensus against it.  Had they made that move in 1999, they could have pulled it off I suspect.  But after the market beat people up a bit during the 2001 recession, there was a lot less appetite for that kind of change.  Had they managed to pass it in spite of public pressure, they would have suffered even greater losses in the 2006 election.  The result would have been a larger Democratic majority who would have been better positioned to make changes no longer facing a filibuster themselves.

See the problem with the filibuster is it's actually a benefit to incumbency and corporate power.  It allows the majority party to complain about obstructionism and get nothing done, while the minority complains about lack of bipartisan cooperation.  So nothing actually gets done and nobody gets blamed for it because they can claim to have no power to change the situation.  On the other hand, if there was a simple majority vote, then more things would pass, both good and bad, and then the politicians responsible would be held to account by the electorate.

Perhaps a filibuster could continue in a more limited form, but the 60 seats required to shut it down now is just too difficult to achieve in our polarized climate.  Better to be rid of it, or severely weakening it so that our government can actually get things done.  Instead of relying on the obstructionism of a minority party, we will instead rely on the voters to shut down bad legislation.  If you go out and try to do something that's a bad idea, then the public will put pressure on you to stop.  If you ignore them you do so at your peril.  That is what a representative republic is supposed to be all about. 

I was thinking a bit about private health insurance today and another problem with private health insurance came to mind.  Specifically in a capitalist system, private markets will tend to charge the price that the market will bear.  While that price is somewhat governed by the cost to produce whatever good or service is being priced, ultimately it has a lot more to do with what consumers will spend.  The goal is to achieve the optimum profit from whatever you're producing.

For example, let's say that you are making a new device and you've figured out that if you sell it for $500, you'll achieve the optimum profit.  Whether that device costs you $50, or $250, or $450 to make, you'll price it at $500 because that's what will achieve optimum sales.  So long as you're not losing money on each unit this makes sense.  Sure, if you make the device for $50 and sell it for $100 you'll sell more units, but not enough to justify lowering the price.  

Now take this same model and apply it to health care.  It is not in the interests of a private insurer to make sure everybody can afford their product, instead, they want to charge a price that hits that optimum point.  So if they can charge $200/month and not lose many customers compared to $100/month, then they'll charge more.  Granted it's a bit more complicated for an insurer because the people they insure are both a source of revenue and costs.  But my point is that their pricing really doesn't have any consideration of affordability aside from attaining that optimum price point.

If you had a government run health insurance system and it cost $100 to deliver your health care, they'd charge you $100.  With private insurance, they'll charge you whatever you'll pay.  So if that's $200, $500, $1000, or more, then that's what they'll charge you.  In the mean time they'll still have every incentive to trim your benefits, cut payments to hospitals, and doctors, etc.  It all maximizes their profit and that's ultimately the goal here.

Am I off base in thinking about it like this?  I'm a bit of an economics hack, I realize, so anybody else have any thoughts on this? 

I present as evidence, one Senator Richard Shelby of Alabama.  He has decided that Obama gets none of his appointees through the Senate.  He's planning to put a hold on every single one of them, thus necessitating 60 senators to vote to override the hold.  Why? 

If you haven't heard, Obama had something akin to question time with the Republican caucus today.  He got up there and, live on CSPAN took all manner of questions from an audience entirely composed of the Republican Congress.  I need to go back and watch it, but all the reports I'm hearing make it sound like he made them look like the fools that they are. 

I really hope that Obama can make this a routine thing and we can establish this as a normal presidential function like press conferences.  A few times a year, the President goes and opens up the floor to the opposition party and deals with their questions.  A President who doesn't have a good grasp of the facts will quickly be called out.  Somebody like Bush would get torn apart.  

Check out the video here.

Mayor Daley on the tax increases on higher income individuals in Oregon:


First of all:

1. The tax increase only affects 2.5% of the people in Oregon
2. The tax increase is only 2% more for individuals making more than $125K/year (for couples it's $250K)

So it's not an enormous increase that we're talking about.  It's not "class war".  It's saying, as our country has always said since income taxes started, that if you make more you pay more.  The reason for this is that the expenses of life do not scale in proportion to your income.  If you make $25K/year it doesn't mean your cost of living is half that of somebody making $50K/year.  So we tax people less when they make less because there's a fundamental cost of living that can't be avoided.  We offset that by taxing the wealthier for a larger percent of their income.

Bad for Oregon?

Daley is saying that this is going to be bad for Oregon.  Really?  First of all it will plug a hole in the state budget so that's a good thing.  Second of all, is this really going to drive the wealthier individuals in the state to move or some such?  It's 2%.  If you're making a lot of money, 2% of your income isn't going to deeply affect your lifestyle.  Of course there's a point where tax rates are so painfully high that it does cause people to work less and to flee to lower tax havens, but 2% higher isn't that threshold.

People Don't Live in Tax Havens

To illustrate my point, how many of the world's rich people live in the Caymans?  In theory, because of the lack of taxes, the wealthy of the world should all be living there, right?  Yet they don't.  Why?  Because they like living in New York and Los Angeles and Chicago.  They pay more taxes, but they get something back that makes it worth the cost.  There are very few people in this world who choose where to live because of tax policy. 

Tax policy has that negative effect only when it's comparatively easy to get around the taxation.  For example, if the sales tax in one city is 10% and the city next door has no sales tax, where will you shop?  Simple.  But if your choice is to live in New York and pay 10% or live in Montana and pay 0% (I'm making up these numbers), are you automatically moving to Montana?  Not likely.  Certainly not if you enjoy the lifestyle that New York offers. 

Which is worse?

Finally, I would make this point: which is worse, a government that can't afford basic services and is constantly on the verge of bankruptcy?  Or a government that is stable and securely funded?  If you're a business owner, or an individual, you want to have a government that is stable in it's funding so that they don't have to do emergency cuts in services or increases in taxes.  These shifts in taxation and services are far more harmful to business and the public at large than a consistently higher tax rate.

Nobody likes paying higher taxes, but we've gotten in this very nasty habit in our politics of promising more services while cutting taxes.  That's unsustainable and in the long run forces tax increases to make up for revenue that was lost in the short term.  The Bush tax cuts in 2000 ultimately lead to deficits that will have to be paid by other cuts in services or increases in taxes down the road.  Had we just maintained a consistent tax rate, that wouldn't be necessary.

Yeah that Obama, he so crazy with his liberal commieness!  Oh... wait...


Just wanted to point out that, once again, Obama is not acting as the raging liberal that he's always being claimed to be by the right.  He's instead looking to private industry for answers, instead of expanding government programs.  It's his standard m.o. and it would be nice if people would recognize that.

Having said that I largely agree with the move.  Basically he's scrapping the investments that were being made in a new rocket capable of delivering people to the moon.  Of course that same rocket was to be the fill in for the space shuttle when it retires.  I don't know if you realize this but we still have people on that space station thingy so we kinda need a way to get people to and from it.  So the theory appears to be relying on the Russians for now but developing private industry options to accomplish the task.

This, I believe to be a good thing in the long run.  Ultimately we aren't going to get very far in space unless there's a profit motive for doing so.  As long as the heart of space flight is embedded in a government program that's not going to happen.  We've seen expansions of what private industry can do in the form of Virgin Galactic, but this needs to grow if we're ever getting off this little rock in any real way.  As soon as it's profitable to go to the moon or mars, we'll get there.

Quoting a John McCain e-mail to his supporters:


One of the more irritating games in DC is the bandying about of the terms debt and deficit, using them interchangeably and in ways that are deliberately confusing.  So, to clarify:

Watching the live blogging of the iPad release and Steve Jobs had this to say:


Is it better than a laptop at browsing the web?  No.  No flash support, and typing on a soft keyboard in a pinch is doable but it's not great.  Is it better than an iPhone at browsing the web?  No, because it won't fit in my pocket.  Is it better for reading books than a Kindle, or an old fashioned paper book?  I rather doubt it.  I'd need to see the screen in person, but what makes the Kindle work is that it's actually easy to read for hours on end. 

Price for this device: $500.  Now if only I could think of a reason why I'd want to own one...  I mean yeah it'd be nice for when I'm flying somewhere, so if I was a real road warrior maybe worth it.  But otherwise I just don't see the point.

Getting back to my previous posting on the Apple Tablet:

Evidence currently points to Apple releasing basically what I described in my last sentence: a big iPhone.  I have no doubt that the big iPhone will have some nifty bells and whistles, but to my mind, what will distinguish it is the quality of the display.  Either you can read text on it for hours at a time without wanting to stab your eyes out, or you can't.  That's what will make it a success or a failure.

Having said that, if Apple can get that right, then they have a definite winner.  One device for watching movies, reading books, playing music and games, as well as being able to purchase all of those things with a mere flick of your finger via iTunes?  That's an impressive combination.  It will be really interesting to see how the interface for the new device works. 

I will say, that ignoring the display quality consideration, Apple is being smart and trying to scale up an iPhone rather than scaling down a laptop.  All of the Windows tablet devices are a poor compromise on a full laptop.  Apple is going the other route, trying to make a bigger better iPhone, and I suspect that'll be more successful in the long run.

Apparently Obama is looking to turn deficit hawk while the economy is still recovering.  Here's the rough outline:

The freeze would cover the agencies and programs for which Congress allocates specific budgets each year, including air traffic control, farm subsidies, education, nutrition and national parks.

But it would exempt security-related budgets for the Pentagon, foreign aid, the Veterans Administration and homeland security, as well as the entitlement programs that make up the biggest and fastest-growing part of the federal budget: Medicare, Medicaid and Social Security.

 

So first of all they'll be cutting back spending when we're still in the economic ditch.  Unemployment is at 10%, the housing market is still weak, and the commercial real estate market is actively melting down.  So cutting spending right now is probably not a good idea and it might even make sense to do further stimulus.

Second of all, if they do give a shit about actually reducing the debt, this is not the way to do it.  Go look at a break down of the budget and the single biggest expense is the military and all the money we are burning in Iraq and Afghanistan.  Of course that is off the table.  A few small cuts to needless military research projects would likely save a hell of a lot more money than this spending freeze.

The one thing I would support in that freeze would be farm subsidies which should simply be abolished.  Furthermore, in the current economic situation, it's probably the one outflow you can cut without severe consequences.  The down turn has largely not touched the areas of the country where food production happens.  Of course so long as Iowa is where the first caucus is held and Iowa has a largely agrarian economy, we'll have farm subsidies.  

I voted for Obama on the theory that he'd sell progressive ideas to conservatives.  Instead he's trying to sell conservative ideas to progressives and failing badly.  Where he's been in a position to make decisions independent of the rests of government he's generally done well.  Whenever he's dealt with the legislature and been called on to actually lead he's been an abject failure.  I had hope that the Massachusetts election would wake Obama up, but this move suggests he's going to be even worse. 

We'll see what happens at the SOTU but my hope and optimism is fading fast...

Today I got out and voted in the Democratic primary.  You can still vote early up until the 28th.  If you don't do it then, the real election day is on February 2nd.  So you can check out your shadow and vote while you're at it. 

To that end, I wanted to give my recommendations.  Actually, more specifically, recommendation in the singular.  There are a number of seats up in the election, but there's only one I'm really informed about and have an interest in.  Specifically: Cook County board president.  Cook Count has one of the highest tax rates in the nation, and the current president, Stroger, is a product of nepotism.  It's long past time to get rid of the Stroger family grip on Cook County.

To that end, I would suggest voting for Toni Preckwinkle.  I met a couple people who were at the Democracy for America campaign training and they were working to help get Toni elected.  She's been endorsed by all of the major papers, and here's an excerpt from the Trib's recommendation: