Beyond the Cusp

February 15, 2014

Let’s All Celebrate the End of “Joblock”

A new term has been coined in Washington DC to describe virtually every job I have ever had over my forty plus years of employment with one or two exceptions. Even though the majority of the employments I have held can optimistically be classified as joblock positions which lacked the spiritual fulfillment of a supposed non-joblock position, not once was the primary reason that I worked at these positions hinged on the health insurance provided. The health insurance was a perk, not the main reason for working, the main reason was called a salary. I even had one position which I remained in a few years longer than the changed management team was tolerable, due to their generous retirement plan, but never have I kept or taken a job because of the fantastic health insurance, even when I worked for a leading thousand bed hospital in a major American city. So, I am led to wonder what the world must be like for those politicians who believe that people are working in order to have health insurance or some health care plan. Then, I should not be too critical of people who mostly have never held an actual real-world productive job and spent their entire lives, since running for Junior Class President, running for the next position where they simply sold influence and invented requirements for those not as influential as they and their fellow political class members. But the recent past since the CBO report that Obamacare will eliminate over two-million job seekers there has been a parade of Democrats and Administration people speaking on the great advantages of people being freed from the necessity of working for one’s health insurance will be for Americans in the future under Obamacare.


I have been trying to look at the bright side of this situation and not dwell on the fact that taxes will necessarily skyrocket, to use a phrase Obama liked to apply to electrical prices after Cap & Trade gets passed, in order to pay for the health insurance for those no longer victimized by joblock, and I may have found a few. This now explains why Obamacare forces parents to provide coverage for their non-joblocked children up to age twenty-six. The reasoning must be that by twenty-six even the most ardent refusenik avoiding joblock will have figured out that a salary is another bonus of joblock and surrendered to taking a joblock position even if they must explain to their future employer their demand for health coverage over their need for a salary. It also explains why the Democrats are pushing to raise the minimum wage one more time, for now. They are making it so that there will be no entry level positions forcing people into joblock. Now those tasks will either be outsourced or demanded of lower management or the new guy depending on the size of the company. We will now finally allow more starving artists to starve in good health. After visiting some art museums a few years back I decided we had enough artists and judging by the “art” and their price tags, I would like to call for an investigation to find out how they could be starving. As an example, one group of pieces consisted of pieces of driftwood painted one color and they were named “Yellow Driftwood #4” and “Green Driftwood #7” and I wondered how did they manage to sell any color driftwood numbers 1, 2, and 3? This will also be a new approach to minimizing the unemployment rates as it will manage even better than the Obama Presidency to encourage people to leave the job market thus removing any possibility that they will be counted among the unemployed still seeking employment. Perhaps the government will see its way to making the NEA (National Endowment for the Arts) pay all the new self-proclaimed artists some form of subsistence remittance kind of similar to welfare so the funds they receive can find new avenues for their use.


The introduction of more people simply enjoying a life of leisure will stimulate the leisure industry which supplies the tools for such pursuits though how these people will have funds to purchase anything is still a mystery. Then again, it also explains the rumblings in the political circles, particularly the far left, that are calling for a guaranteed minimum wage which having this many idly avoiding joblock will make a necessity. There has to be additional item I have failed to realize as this is nowhere near sufficient plans to keep the over two-million people who will not become job seekers employed in other pursuits. Of course, if I understood the implications from some of those speaking in favor of this set of statistics, they were speaking more as if most people will simply not be working the long hours they currently work and instead will have part time work. Of course this part time work will always be under thirty hours per week thus not providing any health insurance making the position a non-joblock position. You see, only those positions which provide health insurance qualify as joblock as nobody takes a full time position except for the health insurance. Who needs a full time salary; especially if they can simply get the minimum wage up to a more respectable level of say twenty-five dollars an hour. I am still scratching my head trying to get my arms around the concept that all these years I was laboring away simply for the health insurance, who knew?


Beyond the Cusp


February 10, 2014

Obamacare has not yet Begun to Strike

We seem to hear of a new calamity attributed to the Affordable Care Act, a.k.a. Obamacare, every week if not every few days. One of the latest is from the CBO (Congressional Budget Office) which predicted that there will be two-million fewer full-time workers by 2017 and 2-million-five-hundred-thousand fewer full-time workers by 2024. What has been even more disturbing than the CBO’s reported bad news has been the attempts to soften the impact of the report by the Obama administration and Democrat Party leaders in the House of Representatives and the Senate. The main underlying explanation that this large number of full-time job loss is that it will free people to pursue their other interests since they will no longer be required to hold a job in order to have healthcare. Also on the jobs front, a report from the retail sector found that the average hours worked weekly fell dramatically more and faster than had been expected. This report also predicted that the average retail position will be a twenty-eight hour a week job in order for retail employers to avoid the requirement to provide health insurance for their employees. This is expected to be an epidemic problem most prevalent at the lowest end of scale of hourly workers such as in retail, food service, hospitality industry and other positions which normally pay the minimum wage or slightly above the minimum wage as these employers feel they will be unable to afford to provide health insurance while making a profit without needing to drastically raise prices as higher prices would make their enterprise no longer competitive.


The known big lie which President Obama claimed almost incessantly when selling the public his healthcare plan was, “If you like your doctor/health insurance, then you can keep your doctor/health insurance, period.” Less stressed was the other big lie repeated almost as frequently when President Obama exclaimed first made during a State of the Union speech when referring to his healthcare initiatives he stated, “Nothing I’m proposing tonight should increase our deficit by a single dime.” President Obama was actually correct but not in any manner that could be framed as a good thing as Obamacare was predicted by the GAO (Government Accounting Office), a nonpartisan agency tasked to be the audit, evaluation, and investigative arm of the United States Congress, to cause a six-trillion-two-hundred-billion dollar addition to the national deficit. That is definitively not a single dime; it is over sixty-trillion dimes. Then there was President Obama’s promise that insurance premiums would be decreased by his healthcare initiative by two-thousand-five-hundred dollars per family per year. The unfortunate truth has been estimated that the average family healthcare premiums have increased by at least three-thousand dollars. When both the Obama prediction and the reality are combined, the result is that healthcare premiums missed the President’s predictions by a mere five-thousand dollars per family per year, a full two-hundred percent under actual cost error for the President. No matter which way one looks at the costs of Obamacare it has been nothing short of a disaster which promises to make the initial problems appear insignificant when the entirety of the law has been allowed to be implemented.


That brings us to another problem, implementation of the legislation which was approved by both houses of Congress and signed by the President and then it has been selectively applied with some of the most damning requirements and implementations being put on hold or even repealed due to the financial consequences of allowing them to go into effect as demanded by the law. President Obama has deferred the application of some aspects of the Affordable Care Act such as the employers’ mandate, passed out exemptions to unions and certain other groups who have special access to the President including Congressional staffers if their Representative or Senator saw fit to exempt them, or outright cancelled such as the section which pertained to extended care coverage which proved to be so fiscally demanding that it had to be dropped using a clause injected in the bill by some republicans that demanded that the extended or long time care insurance had to be proven to be deficit neutral or it had to be eliminated from the legislation. Secretary of Health and Human Services Kathleen Sebelius tried every which way she could find and was unable to make this provision come even close to deficit neutral thus it was quashed. It really is a shame that such a clause was not placed in the Obamacare legislation covering the entirety being rescinded if it proved not to be deficit neutral.


There is another time bomb ticking away in Obamacare that is also being spun as the opposite of what will inevitably be the result of the clause. Insurance companies supported Obamacare for one very good reason; it provides them with a win-win situation. There is a reimbursement clause which sets up a situation where the insurance providers make an estimate within certain relatively liberal criteria of their expected payout each year. Should their actual payouts exceed their estimates by a certain percentage, then the government will compensate the insurance company for eighty percent of these losses. The clause also has stipulations that should the insurance companies have payouts sufficiently below their estimation, then the government applies an excess profits tax and this is intended to mitigate the payouts. The extended predictions through 2024 show that the government will pay out eight-billion dollars while over the same period the government will take in sixteen-billion dollars which results in an eight-billion dollar profit for the treasury. Excuse my serious reservations but I always get suspect of figures that fit so nicely together that they balance so perfectly and results show multiples of one-hundred percent as this prediction does. Also, does anybody really believe that the insurance companies have accountants, some of the most meticulous and exacting people in the universe, who would produce estimates of expenditures to insured parties knowing that their company will receive an eighty percent reimbursement for any payouts over their estimate and a penalty should payouts fall short of their estimate set their estimate at the higher? Of course not; they would low ball their estimates by as close to ninety-nine and ninety-nine-one-hundredths percent towards the low end. For an example, if the range under the guidelines provided in the Obamacare legislation calculated that their annual payouts could be estimated to be between a low end of five-hundred-billion dollars and a high end of ten-trillion dollars, where would you as an accountant for the insurance company place your estimate, at nine-trillion dollars risking an overestimate and penalty or closer to five-hundred-fifty-billion dollars and most probably receive a bailout reimbursement for excess payments to insured account holders. My suspicions is that there will be very few if any insurance company financial predictions of expected payouts that will be an overestimation rather than an underestimation. Expect the Federal Government to be reimbursing health insurance companies by very significant amounts year after year without ever bothering to investigate how such a situation could have come into being. They set this in the legislation knowing full well what the end results were going to be and honestly expected to use this as exactly what it is, a bribe to get the insurance companies on board. We can also expect at some point the government to withdraw this safety net leading to numerous health insurance companies either going out of business or nearly doubling already higher premiums in order to assure they do not go broke any faster than avoidable. That is not to claim their health is expected to be good enough for them to survive in the long run as the real aim of Obamacare is to destroy sufficient amounts of the healthcare industries as to make a government run, single-payer healthcare system appear desirable to the majority of the American population.


Beyond the Cusp


January 11, 2014

Minimum Wage, Livable Wage, and Income Inequality

President Obama will soon give his “State of the Union” speech before Congress and the American people. President Obama has promised that he intends to stress his feelings of urgency in taking on the challenges pertaining to income inequality as well as transforming the United States from the idea of a minimum wage to the ideals of a livable wage and even a guaranteed minimum salary which would be received from the government for those who are not employed. President Obama is continuing down the road to transform the United States Constitution from a guarantor of negative liberties which limit the ways that government is permitted to act and influence any individual’s life, into a guarantor of positive liberties where the government takes an active role in everybody’s’ lives guaranteeing things the government must provide and perform for every citizen. Never mind that President Obama aims to fashion the United States by implementing every failed concept ever attempted by any European country, exactly the opposite of what has separated the United States from European fantasies and experiments in socialist policies and central planning which combined to make the United States so successful where many European governments and nations have failed. This is the final push to complete President Obama’s promises from his initial campaign for the Presidency when he peddles the mantra of “Hope and Change”, “Fundamentally Changing the United States”, “Altering the Constitution from an Interpretation of Negative Liberties to an Interpretation of Positive Liberties”, and finally “Changing the Concepts to Ones Supporting Equality and Fairness” which stands for central planning for the economy thus guaranteeing to lessen wage disparities and providing employment, salaries and benefits for every American. But what do all these high sounding phrases mean going forward for the average American?


Taking them in some form or order, let’s start with minimum wages. The one truth which has been proven by virtually every study of minimum wages done outside of government subsidized studies has shown a marked decrease in the number of positions earning minimum wage in the job market. This is despite one of the consequences of raising the minimum wage which takes those who have worked their way up from the minimum wage and are showing some degree of promise find themselves back making the minimum wage as the increase either brought the minimum wage up to their salary level or took it beyond their salary level which gave them a backhanded raise in salary though less of one than those people who had been making merely the minimum wage before the increase. The loss of positions available after the government raises the minimum wage is obvious just as when the price of apples is raised people will buy less apples in order to remain within their allotted food budget. The total effect of raising the minimum wage is difficult to measure as it remains unknown if the number of positions available for employment ever reaches the identical level as it would have done if the minimum wage was never changed. Then there are the sarcastic arguments that if raising the minimum wage by a dollar or two is such a great idea, then why not simply raise the minimum wage to $20.00/hr or higher still to whatever price one believes is necessary to support the average family of four.


That argument brings us into the livable wage argument which claims that the minimum wage be scrapped and the livable wage be substituted. There are some among those supporting a livable wage who actually agree that in such a system the livable wage be calculated for every individual area such that the livable wage for New York or Los Angeles would be different than the livable wage for Wasilla, Alaska and Rawlins, Wyoming. Calculating the livable wage such that a family of four can afford to live at an agreed defined level of comfort if one person working at a livable wage was their sole source of income would have a wide disparity depending upon where one sampled in order to make such a determination. As stated above, the differences between major metropolitan areas and small towns and rural areas would have little commonality. The one truth is that in almost every location a livable wage being implemented would spike the minimal salaries far higher than any proposed adjustment which has been proposed for the increased minimum wage. The damage and loss of positions available in the job market under a livable wage law would be far more drastic than should the minimum wage be raised rather than replaced by a livable wage. So, the arguments both for and against a livable wage system and a simple raising of the minimum wage are close to identical with the main difference being the predicted results effect on the job market. Either idea being implemented currently with the still sluggish rate of the recovery would be a shot through the heart on the economy and would still any recovery for the immediate future until equilibrium was reestablished. The new equilibrium is also another argument that raising the minimum wage either to a higher level or drastically raising it to meet livable wage standards has to be addressed. Eventually prices will catch up to the increased minimum wage and inflation will have erased any amount of additional salary earned at the lowest level of wages. If a family has their gross income increased by five percent because the minimum wage was increased five percent, they will initially feel the benefit but within a year or possible two the family will find that their new higher level of income no longer has any effect on their purchasing power. Prices will eventually track upwards and remain at the same or only bear a slight difference from the percentage of income the family paid at the previous level. There is little to any residual improvement when the minimum wage is raised except that government debt gets reevaluated lower but only because of inflation making each dollar worth less and eventually could render the dollar worthless.


That brings us to income inequality. The first thing one needs to understand is that government has very little effect on income inequality or income disparity. Anything the government could enact to lessen the amount of income disparity has to have one or the other effect, either it raised the bottom end of the salary scale or it lowers the upper end of the salary scale. Raising the lower end we discussed when looking at minimum wage and livable wage programs and realize that these tactics really have little if any permanent effect. When the government raises the minimum wages of worker that initially will decrease the disparity between the bottom and the top temporarily but over time such changes will only result in an even larger amount of disparity. This is due to a simply principle that the top salaries tend to reflect the level of the salaries of those at the bottom. The top salaries will usually stay at a certain multiple of the lowest end wages. If you increase the bottom end of the wage scale by two percent, this will work out to increase the top salaries by two percent in close order. That mean that the total amount of wages will increase by the same percentage but that also means that the top scale rises faster and farther than the bottom. A simple example is one person makes $20,000 per year and another makes $2,000,000 per year. Then let’s say that both people receive a five percent increase but that the person at the higher level has that increase take place over a two year span while the lower paid person gets their increase immediately. At the end of two years the higher paid person will be making an additional $100,000 while the person at the lower end will receive an additional $1,000. This makes an increase to the difference of their two salaries of $99,000 even though both people got a two percent increase. The real question is if we consider the person at the higher level has a steady, straight-line increase for the two years, how long will it take before the higher salaried person eclipses the totality of the increase of the other person. Remarkably enough, it would take one week for their respective salary increases to balance dollar-wise, give or take a day; and after that first week, every subsequent week would represent an increase in their wage inequality. Obviously raising the bottom salary range upward with no restraints of the top salaries would prove completely ineffective.


This leaves placing limits of some kind on the salaries of those earners at the top end of the scale in order to limit income inequality. The easiest way to curtail higher incomes is to raise the taxes beyond a certain point; even to the point of making salaries beyond whatever is considered the maximum reasonable wage taxed at or over one-hundred percent. Relying on this application of limiting wages has been implemented in the past and all it proved was that the people at the top of the wage scales are not idiots. They, almost to an individual, took far lower salaries and replaced the rest of their earning into stock options, a company vehicle, company house, company jet, company membership to a gym, country club, exclusive restaurant privileges plus any additional privileges and other dispensations as replacements of dollar salary. No matter the restrictions or limitations placed to force the appearance of wage equality, there will be no lifestyle equality as the people at the top have direct control of the levers and accommodations which they will receive as compensation, otherwise known as salary except that the salaries at the top and even some mid-level positions will be given in a form which is not attacked by the income tax rate. That is why raising the tax level actually is counter-productive and will not actually change the most important inequality, the inequality of the quality of life at the various levels of the wage scale. The reality is actually even more depressing than income inequality; almost any method which is implemented to erase income inequality through government intervention actually results in increasing lifestyle inequality and makes it more difficult for those people aspiring to climb into the ranks of the top echelons in compensation in succeeding in their quest. The reason this is true is the disparity between the very rich and the average and poor is not a function of income or even compensation but is a result and measure of wealth which is not taxed. This is in no way a call for such taxation and even if it were, the very people in Congress would never pass such a law as it would have dire effects upon them and their well-heeled moneyed backers. A true wealth tax would not be simply a tax on savings, like the theft of savings from the banks as was committed by the Greek government, but would encompass all wealth including homes, cars, jewelry, gold, silver, precious metals, gemstones, stocks, bonds, real estate and an almost endless list of assets. Should such a tax ever be levied, even if it advertised as an emergency one-time tax, then it is time to worry and worry deeply as such a bald-faced theft committed by the government is a definitive sign of insolvency and possible imminent threat of default on debt payments. Such an act would be an act of desperateness and would shake the very foundations of the economic system under which such a desperate act was resorted to. A nation in such a desperate state as to literally legislate such a theft is a nation where income inequality is the least of their worries, keeping civil order in the aftermath would be the immediate problem as any government which resorts to stealing from the people cannot be expected to stand and would become a pariah among nations as their promises would no longer be trustworthy. Even a simple savings tax as proposed recently by some from the IMF (International Monetary Fund) would be an indicator that the government has gone economically beyond the cusp and into the valley below the cliffs, a valley from which climbing out takes generations if it is even possible without dissolution of that government and the implementation of new governance. Such is a very painful place to live and there are few examples other than Zimbabwe or, from history, the Weimar Republic. Under such conditions even tulips may become a basis for currency, but I have heard even that was tried and failed.


Beyond the Cusp


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