Friday, November 22, 2013


Today is a day that separates those in their mid-fifties and older from everyone else. We are the ones who can remember the day that John F. Kennedy was murdered. For us he is not simply a figure in a history book. For us November 22, 1963, is the quintessential “Where were you when…?” date.

A half-century later, my memories of the day are vivid enough, although I cannot be sure how much is real memory or how much is a memory of the memory. This is how I recall it. I was a student in Mrs. Hare’s fifth grade class. With no warning another teacher, Mrs. Ganz, popped her head through the classroom door and, to the best of my recollection, exclaimed, “Let’s all pray! The president has been shot!”

We were sent home for the rest of the day. It was a Friday, so our weekend started early. Normally, that would have been a cause for excitement, but the atmosphere in our house—and in every house—was somber. Television provided no escape since the three channels on our black-and-white set were running non-stop coverage of the assassination. I think it was the next day that our neighbor and family friend Elmer decided that he would escape the mourning and head up to his mountain cabin at California Hot Springs. He brought along his kids and some of us neighbor kids. So, unlike much of the country, I did not see Lee Harvey Oswald’s murder on television in real time.

The political tone in our house was set by my father, who was a lifelong Republican. He had not voted for Kennedy. Indeed, he considered the president’s father one of the biggest crooks of all time, whose money had bought—if not outright stolen—JFK’s razor-thin victory over Richard Nixon. But Dad was horrified and disgusted at the president’s murder. Everyone was, regardless of politics.

Given Kennedy’s youth, charisma, aspirational politics and the manner in which he died, it was inevitable that he would become the secular equivalent of a saint. And if he has been the object of hagiography in America, it is nothing compared to the way he is regarded here in Ireland, the land of his ancestors, where he was universally embraced and idolized.

The sad fact is that Kennedy did not have enough time to accomplish most of what he is sometimes credited with. History, in deference, has been more than willing to acknowledge his actual accomplishments (defusing the Cuban missile crisis), to give him full credit for things he set in motion (the Peace Corps, the Apollo space program), to discount embarrassments (the Bay of Pigs) and to give him the benefit of doubt for what he might or might not have done in a second term (Vietnam).

Kennedy’s image looms so large in American history that both major political parties do their best to lay their claim to him. Of course, he has always been held up as a standard bearer for modern liberals but, approaching today’s anniversary, you can also hear others arguing that his policy of tax cuts and tough foreign anti-Soviet policy stance showed that he was really a conservative.

The tug-of-war over JFK’s legacy extends to his death itself. It has been interesting to hear people like Kennedy’s niece Kathleen Kennedy Townsend and Secretary of State John Kerry betray their lack of certainty as to whether Lee Harvey Oswald was the lone assassin. In the wake of the killing, a theme quickly emerged—and was only amplified by subsequent political assassinations—of collective guilt, that there was something wrong or sick about the country which had made this terrible crime possible.

More than a few people have narrowed down this collective guilt to the city of Dallas. A prime example is a piece by James McAuley in Sunday’s New York Times which carries the head “The City With a Death Wish in Its Eye” and the subhead “Dallas’s Role in Kennedy’s Murder.” After doing a serious hatchet job on a city he knows well and clearly has issues with, McAuley does clarify that “Dallas is not, of course, ‘the city that killed Kennedy’"—before invoking “the environment of extreme hatred the city’s elite actively cultivated before the president’s visit.”

The theme could also be heard on ABC’s This Week on Sunday in an interview with Dan Rather, whose career at CBS was given a boost by his reporting on the assassination. “Everybody knew, if there was going to be trouble anywhere,” said Rather to Byron Pitts, “it would be in Dallas.”

So even people who actually lived though that time—let alone those who know about the murder only as a historical event—might be forgiven for assuming that some rightwing gun nut or a militia guy pulled the trigger. The hardest fact about the murder for people to accept seems to be that it was, in the end, a stupid random mindless act committed by a disturbed individual. It’s as though the lack of apparent political motive—or even a conspiracy—robs JFK of some of his importance. It doesn’t help that the country was denied the opportunity to hear Oswald speak for himself about his reasons in a courtroom.

All we have is what he said in response to questions he was asked after his arrest. The man who had defected to the Soviet Union four years earlier and who had applied for a visa to Cuba a month earlier was asked if he was a Communist. “No,” he replied, “I am not a Communist. I am a Marxist.” He declined all offers of legal representation, saying he wanted to be represented by the chief counsel of the Communist Party USA or by the American Civil Liberties Union.

Monday, November 18, 2013

Beta Tester Revolt

“[W]hat we’re also discovering is that insurance is complicated to buy.”
President Barack Obama, 14 November 2013

I happened to hear last week another in the seemingly endless stream of news reports on Obamacare. It was on National Public Radio and was about a White House promotion that stated that half of people under the age of 35 could get health care for $50 a month or less. As NPR reported, the government’s own numbers say that the number of people who could get insurance that cheap is actually 32 percent.

The most interesting part of the NPR piece was the reporter Chris Arnold’s somewhat blasé summation of the government’s misleading message: “So in other words, it’s like any other marketing campaign. All the pitches aren’t exactly entirely true but they get your attention.”

In a roundabout way, this highlights a fundamental problem that conservatives and libertarians have with the Affordable Care Act. If a major corporation ran high-profile advertisements that were as patently false as the above promotion or the infamous “If you like your insurance, you can keep it” assurances, it would face penalties for fraud. But who protects consumers from fraud when it’s the government committing the fraud?

Normally, that role would fall to the press, but the most pervasive media outlets seem to be acting as surprised as anyone that it has turned out that millions of people cannot keep their insurance policies.

I’ll confess to being taken aback by the furor over the canceled policies. I never considered President Obama’s repeated “If you like your insurance, you can keep it” assertion a lie because it was always so obviously untrue that I assumed no one actually took it seriously. It’s one of those falsehoods where the fault should lie with anyone clueless enough to believe it rather than with the person actually saying it. People have never had any guarantee they could keep their insurance, and nothing in the new healthcare law did anything to change that. In fact, the whole point of the law was to change the system. As NPR’s Mara Liasson cogently describes the law, it was specifically designed to be a disruptor.

But that “If you like your insurance, you can keep it” line apparently served its purpose. The vast majority of Americans, who had insurance and were reasonably happy with it, tuned out, assuming that the new law had absolutely nothing to do with them. They thought it was only about providing health care to those who did not already have it.

One of the questions we kept hearing when the website bombed so badly was, why on earth didn’t they test it before rolling it out? The obvious answer is that it is being tested—now. A general principle that I remember from my days in the software business was that responsible companies do not use their paying customers as beta testers. But the fact is that insurance consumers in the individual market are now beta testers—not just for the website but for the new healthcare system in general.

Remember, originally the new system was meant to roll out for the entire insurance market on October 1. But, in a move that some argue was illegal since it changed the healthcare law without congressional action, the administration decided to delay the implementation of the new system for people who get their insurance through their employer. If not for that, we would be talking about complaints from across the entire insurance market—not just those in the relatively small individual market.

As I’ve said before, the anecdotal reports of people having their policies canceled or having to pay higher rates are not even the real problem. The real problem is that the new system is virtually designed to raise the costs of medical care and will inevitably be a drain on the government budget—on top of Medicare and Social Security, which are already on trajectories toward insolvency.

The trouble with anecdotes is that they can distort things and do not necessarily reflect the larger truth. But we pay attention to anecdotes because we can relate to people’s individual stories more easily than to reams of statistics.

The individual case that has made the biggest impression on me is that of Daily Beast columnist Kirsten Powers. Her comments may be discounted by Obama’s true believers because one of her jobs is as one of Fox News’s token liberal pundits. But she is a Democrat, a consistent Obama supporter and a veteran of the Clinton Administration, and she has gamely defended Obamacare all along, while conceding that she would have preferred a single-payer system. So it was a bit of a stunner when she went off on a rant about losing her own insurance policy canceled.

“If I want to keep the same health insurance, it’s going to cost twice as much,” she said. “There’s nothing substandard about my plan… All of the things they say that are not in my plan are in my plan, all of the things they have listed. There’s no explanation for the doubling of my premiums other than the fact that it’s subsidizing other people.”

But that was always clear—at least to me. That was always the idea of Obamacare: require everyone to buy insurance, subsidize those in the lower income brackets, and highly regulate the industry to spread out the costs.

Why is everyone acting so surprised?

Tuesday, November 12, 2013

Money Coming Through a Wormhole

It’s official. The U.S. jobs report for October shows that the government shutdown had virtually no impact on the economy—even though pundits and journalists everywhere were telling us that the economic effects of the shutdown would be severe and long-lasting.

As I said at the beginning of the shutdown, everything the media told us about the potential effects of the shutdown—at least in terms of historical precedent—was pretty much wrong. That’s a slight exaggeration, but not by much.

Yes, it did have temporary bad effects for federal workers, businesses dependent on federal spending and people who needed or wanted to use federal services and facilities. But, as far as the general long-term economy was concerned, it was a ripple, not a tsunami.

Democrats had a vested interest in the shutdown-will-ruin-the-economy storyline because that positioned them to blame Republicans for every problem in the economy for the next year or so. I’m not sure why so many journalists went along with it, though. I guess they are just gullible and too lazy to check to see what happened as a result of previous shutdowns.

Meanwhile, all the fuss over shutdown—as well as the less than glorious launch—pretty much overshadowed the news event in October that could actually have more impact on the economy in the long run. That would be the president’s nomination of Janet Yellen to replace Ben Bernanke as chair of the Federal Reserve.

It’s hard to know in advance whether it will really matter that much if Yellen has the job as opposed to, say, Larry Summers, who was apparently the president’s first choice before the left wing of his party put up resistance. The fact is that Yellen is unquestionably fully qualified and, since the Fed works mainly by consensus, it’s not clear if Fed policy will be that much different as a result of the new chair. But the journalistic shorthand on her is that she is more inclined to easy money than Bernanke or Summers.

Is that true and will it make any difference? Well, Bernanke has been trying to tighten up the money supply for ages but, every time he implies in public that he might actually do that at some future point, the markets throw a hissy fit. So it’s not clear if it’s the Fed controlling the money supply or the markets controlling the Fed.

Why would the left-of-center wing of the Democratic Party be so keen on easy money or, as it’s otherwise known, “quantitative easing” or “bond buying.” Typical of the non-financial media’s attitude toward the growth of the money supply was National Public Radio’s report on the Fed meeting on October 30. In the course of his report, Jim Zarroli explained “bond buying” to listeners as being “aimed at keeping interest rates low and, you know, doing good things for the economy.”

Well, that’s one way to look at it. Quantitative easing seems to appeal to people who think that money and the economy is the same thing. The economy is the collective activity of everybody who lives and works in a society and how that activity contributes to everybody’s comfort and wellbeing. Money, as the old gag line goes, is just the way of keeping score.

A nation’s wealth consists of its population’s productivity, not of the amount of currency issued. The more currency issued in relation to productivity, the less the currency is worth. So why has the Fed been doing just that for years now? Because it takes a while for the real economy to catch up with the extra money printed by the Fed, so that extra money acts temporarily as a kind of stimulus. Think of it as a loan to help the country get through a rough patch. Of course, that rough patch has been going on now since before Barack Obama was elected president.

But if quantitative easing can be thought of as a loan, how does it get paid back? Ideally, it gets paid back by increased future productivity on the part of the population. In other words, it’s kind of like using a time machine to borrow money from your future self. What could better than that? Right? The problem comes, though, when the Fed “borrows” too much from the future and the economy doesn’t expand to absorb the extra money. Then you just have money that is worth less, i.e. inflation. People like me (and every German government) worry a fair amount about inflation. The reason we haven’t seen too much inflation so far, despite an awful lot of money printing, is that the economy has just stayed so darn weak.

So who actually gets the all the new money the Fed keeps printing? As I used to tell my daughter before she got too old and smart, it’s complicated. But in general it largely winds up in the stock market. The extra money comes from the government issuing bonds and then buying them back, which puts the money in the hands of investors. And investors invest. That is why, despite a weak economy, the stock market keeps reaching record highs. The economy has been so weak for so long and investors have gotten so used to easy money that we’re in the perverse situation where good economic news actually sends the markets sliding. That’s because investors are now more afraid of the money spigot being turned off than they are of unemployment or slow business expansion.

Has your irony detector gone off yet? That’s right. The very politicians most anxious to see easy Fed money continuing are the same ones who claim to be extremely concerned about “income inequality.” But the main beneficiaries of the Obama economy and the Fed’s resultant easy money policy are not the unemployed or the working poor. The main beneficiaries are investors and speculators—as long as they are savvy enough to get out of the market before the bubble eventually bursts.

Friday, November 8, 2013

Your Parrot Is Dead

There is a small silver lining to the problems that have plagued the rollout of America’s new healthcare exchanges. It has made me feel somewhat better about the Irish healthcare system.

Granted this silver lining is pretty limited and doesn’t apply to the vast majority of Americans, but it’s something.

As someone who wanted to see the U.S. healthcare system reformed to be more affordable and universal but who saw Obamacare as making the problems worse, I could probably be expected to be saying, I told you so. But I can’t. My problem with the Affordable Care Act was that it nearly seemed deliberately designed to make health care more expensive without necessarily expanding it to that many additional people. It never seriously occurred to me that the federal government, with well over half a billion dollars at its disposal, would be incapable of building a viable web portal.

The whole rollout of seems like a classically wicked Monty Python sketch. The chronic political kibitzing, the vendors with no incentive to be efficient because they bill by the hour and the reflexive CYA among various levels of management all bring back vivid memories of my days in the software industry. This kind of mess is endemic in all kinds of large enterprises without clear and strong management—not just the government. But nowhere is it more pervasive than in the federal government, where no one ever seems to be responsible for anything when things go pear-shaped—the pending resignation of the CIO of CMS notwithstanding.

That doesn’t mean that government cannot do anything competently. I have been annoyed at various people comparing the healthcare exchanges to “the DMV.” Personally, I have no complaints about my acquisitions and renewals of driver’s licenses over many years in the states of California and Washington or even in Ireland. And I have done business for years with all kinds of government websites that have worked perfectly well.

In a strange way, the brouhaha over the website—and even the stories about people having policies canceled—may actually be good news for the Affordable Care Act. As long as people are talking about those things, nobody is talking about the real problems with the law, which will become apparent much more gradually than a botched website launch or anecdotes about policyholders being dropped. Those problems can, and probably will be, fixed. What will be more entrenched is the fact that the new healthcare system will have a lot of inefficiencies and waste built in.

The Affordable Health Care Act is perversely named because, as currently devised, it cannot help but raise the cost of health care. This will probably show up over time in higher premiums for everyone and, the more the government tries to combat this with subsidies and Medicaid coverage, the more the costs will be converted into long queues for care and, ultimately, rationing. Maybe fewer people will show up at emergency rooms because of not having coverage, but more are likely to show up because they don’t want to deal with the hassle of getting in to see a GP or scheduling time in a hospital.

There are some ironies in the way things have played out so far. One is hearing Democrats defend the law by noting that the exchanges in least some of the states are working much better than the federal one. Doesn’t that vindicate failed presidential candidate Mitt Romney, who said that this kind of system should be run by states and not by the federal government?

Another irony is that Democrats up for reelection next year are reportedly pressuring the administration to agree to delay the individual mandate for a year. Isn’t that the very same offer Republicans made to Democrats to avoid the government shutdown—after their initial demand to defund Obamacare went nowhere? If the individual mandate does get delayed, it will mean in hindsight that Democrats could have avoided the shutdown by admitting to Obamacare’s problems just a bit earlier. Now, for Democrats to get the delay they may well have to deal with Republican demands for other concessions to go along with it.

Things could still turn around on this issue for the Democrats, at least in the short to medium term. If the administration can get its website working reasonably well, the media narrative could go from debacle to turn-around. Stories about low-income people getting subsidies could eclipse those of middle-class people getting saddled with higher premiums—at least for a while.

Barring that, the president’s party will have little choice but to double down on its fallback strategy, i.e. heap as much blame as possible on the insurance companies and on “sabotage” by Republicans who, voters will surely remember, opposed the law unanimously and consistently from the very beginning.