There is a serious problem with our election system and it has to do with the last nation to join the union. Hawaii has the lowest voter turn out in the nation. Hawaiians aren't really voting for president or in general. One of the biggest problems is that Hawaii was essential taken over by the united states and some of the population don't really consider themselves American. The other big problem is that Hawaii is 5 hours behind the East coast. So when the polls close at 7 PM ET it is only 2 in the afternoon in Hawaii. Why is this a problem? Imagine how you would feel if before you even got to the booth to vote all the major news outlets had already declared which candidate had won the election. Would you feel like your vote mattered if before you even get to vote Ohio had already declared Obama the victor? Imagine voting at 10 PM in your state on election night. It would be pointless. So how can we help this state feel more included when we forced them into the country to begin with?
The answer I believe is quite simple. You need to give them a concession and that concession is to let the General public of Hawaii vote one day before everyone else. It may not solve the problem entirely but at least they wouldn't feel that voting was entirely useless. Most states already allow early voting and then just count those votes on election night. So why not let Hawaii vote 18 hours before you? We could even wait to count their votes until later. They only get three votes anyway and it still couldn't throw the election. I find it laughable when CNN marks Hawaii as giving their electoral votes to the democratic party when only 1% of the votes have been counted there. Of course they are going to vote democrat for years to come as the labor unions hold sway over most of the people that actually go out and vote. However it would go a long ways toward helping Hawaii feel like they really are a part of this great nation. And after forcing them to join the club, letting them go first at something so important as a presidential election might assuage some of the anger some feel towards the US of A.
Next up, Organic food.
In one of my earlier posts I thought a guy was crazy for stating that Organic food is a major concern of middle class Americans. But it turns out this subject could become very important over time as food and water become difficult to obtain due to a growing population and as we continue to pollute the land and water. Organic food is much better for you and even more certainly it is expensive! So what can middle class populations do in order to eat more natural foods not full of preservatives? I am no farmer but I think a Co-op idea would be really cool. Each neighborhood gets together and buys some cows, chickens or whatever. Opt in would be entirely voluntary and those who are really organic smart could volunteer to help set up the program in their neighborhood. The richer people in the community could contribute a higher allotment of cash and those not as well off could donate more of their time on the farm. Obviously this wouldn't be possible in some major cities but for places like Utah it would be easy for the city of bountiful to own farm land in West Bountiful and the neighborhoods would share the animals to lighten the burden. This wouldn't feed everyone obviously but would supplement meals. Then if people decide they enjoy the taste of free range chicken and eggs they would be self motivated to grow the program and if they don't it would obviously loose steam. Seems doable but would require a large effort to get such a program started. I would also love to see plants and fruit trees on the roofs of buildings in major cities which could help reduce pollution and provide home grown organic fruit for major metropolises. I figure that is just a pipe dream, but it would be so great to turn the urban jungle into a real rooftop jungle. Join me next time for my ideas on education!
Friday, November 16, 2012
Monday, November 12, 2012
Is the Middle Class Shrinking?
In order to find out if the middle class is truly shrinking or being hollowed out as some say we first need to to define the middle class. This has been brought up recently in national politics as both Governor Romney and Obama refer to the middle class as those making "between $200,00-$250,000 and less". Obama doesn't want to increase taxes on anyone making less then $250,000 a year. According to the New York Times Cathrine Rampell, both candidates have been referring to the ceiling of the middle class not the midpoint. She continues however that this is a very high ceiling. The Census Bureau reported that the median household income was $50,000 a year.
Any definition of middle class tied to raw income levels or earning percentiles will be flawed by its failure to factor in vast geographic differences in cost of living, not to mention variations in household size and other relevant factors. As we can presume a given level of income goes further for a childless couple in Nashville than for a family of four in San Francisco.
The consensus among economist is that the simplest definition of the middle class is "not rich and not poor". Eric at the Atlantic defined the Middle class as follows:
You should define class by the ability to pay for two new cars, a $1200 mortgage, private schools, a $3,000 health insurance deductible, and organic/sustainably produced foods. (Huh? Organic food? who is this guy?) Then assume that most people pay for cable and cell service. Anyone who doesn't worry about these things is above middle class. Anyone who must make trade-offs among them is in the middle. Anyone who cannot pay for any of these is poor.
Some people believe that being middle class is a state of mind and there are several surveys that go out and ask people if they believe they are in the middle class. Apparently many who earn more then $100,000 still believe they are middle class. Much of economics is perception and I guess that can extend to peoples own perception of their economic standing.
Most people in the US refer to tax brackets to define the middle class.
Wall Street Journal Marketwatch piece simply asserted that the middle class is comprised of "the 50% of American households earning between $39,000 to $118,000." Using the Journal's calculator, that range runs from the 46th to the 84th percentile of tax filing households. Another Wall Street Journal article defines the middle class as households with between two-thirds and double the nation’s median income. The median income is $50,000 So let us loosely define the middle class as those earning between $35,000-$120,000. Now back to our original question, what is happening to the middle class?
The Pew research center indicates that in 2011 the middle class shrank to 51% from 61% back in the 1970s. The Pew research shows that the Upper crust has grown by 6% while the Lower income bracket has grown by 4%. This sounds like reason to cheer until we consider the sheer population numbers.
Since 1971, the ranks of the upper crust have grown by 27.9 million, but the ranks of the lower-income group have grown by 34.5 million. The largest group by far, the middle class, has grown by the smallest percentage, adding just 27 million people since 1971. (In other words, 4% of a big number is a lot more then 6% of a small number) As pew puts it, there has been virtually equal parts movements up and down the income ladder. So there has been both progress and regression in the economic status of American families." So the country is indeed becoming more polarized economically speaking. I guess it is true what they say "your either moving forward or falling behind, never standing still. So which way is your household moving?
Any definition of middle class tied to raw income levels or earning percentiles will be flawed by its failure to factor in vast geographic differences in cost of living, not to mention variations in household size and other relevant factors. As we can presume a given level of income goes further for a childless couple in Nashville than for a family of four in San Francisco.
The consensus among economist is that the simplest definition of the middle class is "not rich and not poor". Eric at the Atlantic defined the Middle class as follows:
You should define class by the ability to pay for two new cars, a $1200 mortgage, private schools, a $3,000 health insurance deductible, and organic/sustainably produced foods. (Huh? Organic food? who is this guy?) Then assume that most people pay for cable and cell service. Anyone who doesn't worry about these things is above middle class. Anyone who must make trade-offs among them is in the middle. Anyone who cannot pay for any of these is poor.
Some people believe that being middle class is a state of mind and there are several surveys that go out and ask people if they believe they are in the middle class. Apparently many who earn more then $100,000 still believe they are middle class. Much of economics is perception and I guess that can extend to peoples own perception of their economic standing.
Most people in the US refer to tax brackets to define the middle class.
Wall Street Journal Marketwatch piece simply asserted that the middle class is comprised of "the 50% of American households earning between $39,000 to $118,000." Using the Journal's calculator, that range runs from the 46th to the 84th percentile of tax filing households. Another Wall Street Journal article defines the middle class as households with between two-thirds and double the nation’s median income. The median income is $50,000 So let us loosely define the middle class as those earning between $35,000-$120,000. Now back to our original question, what is happening to the middle class?
The Pew research center indicates that in 2011 the middle class shrank to 51% from 61% back in the 1970s. The Pew research shows that the Upper crust has grown by 6% while the Lower income bracket has grown by 4%. This sounds like reason to cheer until we consider the sheer population numbers.
Since 1971, the ranks of the upper crust have grown by 27.9 million, but the ranks of the lower-income group have grown by 34.5 million. The largest group by far, the middle class, has grown by the smallest percentage, adding just 27 million people since 1971. (In other words, 4% of a big number is a lot more then 6% of a small number) As pew puts it, there has been virtually equal parts movements up and down the income ladder. So there has been both progress and regression in the economic status of American families." So the country is indeed becoming more polarized economically speaking. I guess it is true what they say "your either moving forward or falling behind, never standing still. So which way is your household moving?
Saturday, November 3, 2012
Does Trickle-Down work?
The battle is nothing new. Do we support Keynesian Economics or supply-side economics? Keynesian Economics in brief states that you should give the poor an extra fish or two (aka money back) which they will spend. This extra spending will encourage employers to hire more people.
Supply side or trickle down economics rests heavily on the idea of taxes and revenue. If the Government charged no taxes, there would be no revenue (for the government). If the government charged 100% taxes no one would work or report earnings. So the tax rate at both extremes would generate 0 revenue. The question that economist Arthur Laffer asked is what is the maximizing revenue point between those two extremes. He created what is known as the Laffer Curve. He argued that if tax rates became too high the steep tax discouraged work to the extent that revenue suffered. (if a million dollars is taxed at 50% but anything over a million would be taxed at 90% it would discourage you from working as you get close to reaching that point. You would settle for a little under a million and retire to your beach house. Why work harder if you only were to keep 10% of any additional revenue?) The range when taxes are too high is called the prohibitive range and this range discourages production.
Jude Wanniski then built on this idea in "The way the World Works" explaining that boosting the supply side or increasing production will give more people jobs and they will have money to buy more products. This has been re-titled as supply-side economics, but the meaning is the same.
so to sum up the idea -tax breaks improve revenue and boosting production is key to exiting a recession.
Moving forward-The idea of giving the wealthy tax breaks causes them to invest in equipment and more employees (they spend money to make money) the employer must create jobs before they can expect to see profits. So the idea is the employers are spending their money and it is the workers who receive immediate relief not the wealthy. (He has to wait and see if his investments pay off). Somehow we come up with the number 2.5. For every job created an additional 2.5 jobs is made. Essentially if you pay your workers well they will then go out and buy stuff. This means that lots of other commercial businesses pop up. Imagine the auto industry. You have a factory that makes cars. these workers then need to buy food, clothing, find housing and buy luxury goods. This creates work for real estate agents, banks, food chains and retailers.
Trickle down follows the idea that a rising tide lifts all boats-an improving economy benefits everyone.
Many people think Reagan was the first president to implement the tactic but Harding, Coolidge and Kennedy all used the theory before Reagan.
The disconnect comes because of globalization. People don't have to make stuff in the same place it is sold anymore. So Apple makes transistors and touch screens in Japan, and has their product assembled in China, which is then sold in the USA (and many other places including Japan & China) But how are US citizens going to buy luxury goods when the products are being made overseas? Is trickle down broken because it is not working at the local level? The truth is that trickle down still works but we are now seeing it work throughout a global community. As Chines workers start demanding more luxury goods at better prices, China will start sending jobs overseas to 3rd world countries. How many countries would have to be used to support the demand in the USA, China and Europe? A lot. You have millions of chines jobs that would be sent to 3rd world countries. This should lift more and more countries out of poverty due to the huge influx of work. So we still see jobs (or industry) continues to create additional jobs, they just aren't in your neighborhood anymore.
So in order to improve the situation at home things get more complicated. Do we want lower wages so we can get those jobs back from China? (no one wants that do they?) Or do we increase our education so we can get the high paying, high tech jobs back from Japan and Germany? I believe Trickle-Down is still the answer as opposed to giving a temporary but false jump start to the economy as Keynesian's suggest. I believe a lot of economics is based on perception and trust and little hand-outs to the poor don't provide enough trust that the economy is well and back on its feet again. We just need a nation that knows how to compete. Something Obama apparently doesn't know enough about. Which is why I feel we need capitalists in office to get things moving again.
Supply side or trickle down economics rests heavily on the idea of taxes and revenue. If the Government charged no taxes, there would be no revenue (for the government). If the government charged 100% taxes no one would work or report earnings. So the tax rate at both extremes would generate 0 revenue. The question that economist Arthur Laffer asked is what is the maximizing revenue point between those two extremes. He created what is known as the Laffer Curve. He argued that if tax rates became too high the steep tax discouraged work to the extent that revenue suffered. (if a million dollars is taxed at 50% but anything over a million would be taxed at 90% it would discourage you from working as you get close to reaching that point. You would settle for a little under a million and retire to your beach house. Why work harder if you only were to keep 10% of any additional revenue?) The range when taxes are too high is called the prohibitive range and this range discourages production.
Jude Wanniski then built on this idea in "The way the World Works" explaining that boosting the supply side or increasing production will give more people jobs and they will have money to buy more products. This has been re-titled as supply-side economics, but the meaning is the same.
so to sum up the idea -tax breaks improve revenue and boosting production is key to exiting a recession.
Moving forward-The idea of giving the wealthy tax breaks causes them to invest in equipment and more employees (they spend money to make money) the employer must create jobs before they can expect to see profits. So the idea is the employers are spending their money and it is the workers who receive immediate relief not the wealthy. (He has to wait and see if his investments pay off). Somehow we come up with the number 2.5. For every job created an additional 2.5 jobs is made. Essentially if you pay your workers well they will then go out and buy stuff. This means that lots of other commercial businesses pop up. Imagine the auto industry. You have a factory that makes cars. these workers then need to buy food, clothing, find housing and buy luxury goods. This creates work for real estate agents, banks, food chains and retailers.
Trickle down follows the idea that a rising tide lifts all boats-an improving economy benefits everyone.
Many people think Reagan was the first president to implement the tactic but Harding, Coolidge and Kennedy all used the theory before Reagan.
The disconnect comes because of globalization. People don't have to make stuff in the same place it is sold anymore. So Apple makes transistors and touch screens in Japan, and has their product assembled in China, which is then sold in the USA (and many other places including Japan & China) But how are US citizens going to buy luxury goods when the products are being made overseas? Is trickle down broken because it is not working at the local level? The truth is that trickle down still works but we are now seeing it work throughout a global community. As Chines workers start demanding more luxury goods at better prices, China will start sending jobs overseas to 3rd world countries. How many countries would have to be used to support the demand in the USA, China and Europe? A lot. You have millions of chines jobs that would be sent to 3rd world countries. This should lift more and more countries out of poverty due to the huge influx of work. So we still see jobs (or industry) continues to create additional jobs, they just aren't in your neighborhood anymore.
So in order to improve the situation at home things get more complicated. Do we want lower wages so we can get those jobs back from China? (no one wants that do they?) Or do we increase our education so we can get the high paying, high tech jobs back from Japan and Germany? I believe Trickle-Down is still the answer as opposed to giving a temporary but false jump start to the economy as Keynesian's suggest. I believe a lot of economics is based on perception and trust and little hand-outs to the poor don't provide enough trust that the economy is well and back on its feet again. We just need a nation that knows how to compete. Something Obama apparently doesn't know enough about. Which is why I feel we need capitalists in office to get things moving again.
Friday, November 2, 2012
Premium Support and Medicare
I am going to start this post by admitting that my health care knowledge is lacking. If I overlook or misinterpret information I am more than happy to make corrections to my writing. My brother in law asked about Premium support and it got me going on health care and this is what I have found so far.
First understanding a few key terms is helpful.
Pay-for-quality or pay-for-performance: is supposed to pay health services for the quality of care they deliver. Better service means they get better payments. Payment-for-quality programs take many forms, such as bonuses to physicians for satisfying certain performance measurements or incentives to physician groups for implementing health information technology, or, conversely, can include financial disincentives for not meeting quality benchmarks. This is a key component of Obamacare and current payment policies are not effectively structured to reward improvements in the quality of care.
Exchanges: Exchanges use competitive bidding to allow insurance companies to offer the cheapest price possible for comparative coverage. These will be advertised online and each state will have their own exchange site. Exchanges are part of both Obamacare and Romney's health plan.
Both Obamacare and Romney's plan are based off of existing Medicare Models. Medicare Advantage or MA is medicare brought into the private sector. Romney's plan takes a lot of its ques from MA.
To answer Micah's question:
Premium Support: There’s a big difference between vouchers and premium support but regrettably it goes unnoticed. According to Politifact: vouchers are paid to individuals who may use the funds for a designated purpose. School vouchers are an example. They are a specific amount that don't keep up with rising costs. So essentially vouchers lose value over time. By contrast, premium support payments in Medicare would be made directly to qualified health insurance plans on behalf of seniors who choose them from a Medicare exchange. In order for a policy to qualify as "Premium Support" it’s crucial to peg the beneficiaries’ payment to the actual rise in health care costs so people don't end up having to pay more because of inflation. Voucher plans that don’t do this "are virtually guaranteed to become increasingly inadequate," You could argue and some do, that Obamacare is actually a premium support plan.
According to Reihan Salam The difference is as follows:
Vouchers cannot be "topped up" or people cannot add their own money on top of it. With school vouchers this is supposed to prevent parents who would send their kids to private schools regardless of financial aid from taking advantage of the system. Premium Support on the other hand allows people to top up their aid. Wealthier seniors will be expected to add onto their medicare to get more expensive coverage. Under Romney's plan, the wealthier you are, the more you pay on your own.
For a great overview of Obamacare vs. Premium Support plans I highly recommend visiting:
http://www.tnr.com/blog/plank/106298/guide-to-medicare-debate-romney-ryan-obama-voucher-premium-support#
At the bottom it has a quick breakdown with commonly asked questions.
First understanding a few key terms is helpful.
Pay-for-quality or pay-for-performance: is supposed to pay health services for the quality of care they deliver. Better service means they get better payments. Payment-for-quality programs take many forms, such as bonuses to physicians for satisfying certain performance measurements or incentives to physician groups for implementing health information technology, or, conversely, can include financial disincentives for not meeting quality benchmarks. This is a key component of Obamacare and current payment policies are not effectively structured to reward improvements in the quality of care.
Exchanges: Exchanges use competitive bidding to allow insurance companies to offer the cheapest price possible for comparative coverage. These will be advertised online and each state will have their own exchange site. Exchanges are part of both Obamacare and Romney's health plan.
Both Obamacare and Romney's plan are based off of existing Medicare Models. Medicare Advantage or MA is medicare brought into the private sector. Romney's plan takes a lot of its ques from MA.
To answer Micah's question:
Premium Support: There’s a big difference between vouchers and premium support but regrettably it goes unnoticed. According to Politifact: vouchers are paid to individuals who may use the funds for a designated purpose. School vouchers are an example. They are a specific amount that don't keep up with rising costs. So essentially vouchers lose value over time. By contrast, premium support payments in Medicare would be made directly to qualified health insurance plans on behalf of seniors who choose them from a Medicare exchange. In order for a policy to qualify as "Premium Support" it’s crucial to peg the beneficiaries’ payment to the actual rise in health care costs so people don't end up having to pay more because of inflation. Voucher plans that don’t do this "are virtually guaranteed to become increasingly inadequate," You could argue and some do, that Obamacare is actually a premium support plan.
According to Reihan Salam The difference is as follows:
Vouchers cannot be "topped up" or people cannot add their own money on top of it. With school vouchers this is supposed to prevent parents who would send their kids to private schools regardless of financial aid from taking advantage of the system. Premium Support on the other hand allows people to top up their aid. Wealthier seniors will be expected to add onto their medicare to get more expensive coverage. Under Romney's plan, the wealthier you are, the more you pay on your own.
For a great overview of Obamacare vs. Premium Support plans I highly recommend visiting:
http://www.tnr.com/blog/plank/106298/guide-to-medicare-debate-romney-ryan-obama-voucher-premium-support#
At the bottom it has a quick breakdown with commonly asked questions.
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