Previously published in the Terre Haute Tribune-Star, 8 July 2012
When did traditional American values change from thriftiness and frugality to “shop ‘till you drop,” buy now—pay later, and waste, waste, waste?
This isn’t an essay on the political mess in Washington, DC, this is about American households and “policies” that have put us on an unsustainable path (on so many levels) that a different future is inevitable.
The change in these values was not an accident. Henry Ford populated his early assembly lines with European immigrants and confronted his workers’ thriftiness and frugality with the Sociological Department who pushed the workers to spend their incomes on consumable durables instead of saving, saving, saving.
In the 70s and early 80s, tax policy gave a tax deduction for credit card interest.
How long has advertising been a business deduction? Indeed, television is practically completely paid for through advertising and television’s influence (and its advertising) on American culture is undeniable.
Mortgage interest deduction encourages home ownership and all the “stuff” that comes with it. And houses are huge compared to what they were just 30 years ago and those big houses need lots of stuff to put in it. I have a 25 year old refrigerator, dryer, and washer. I dread the day they need repair because repairs are hard to obtain. Instead, the push is to “just replace it.” My repair people scavenge parts from old machines because getting parts is difficult since they are no longer made.
We have so much “stuff” that each of us throws away 4 to 5 lbs a day, even when as much as 70 percent of it is recyclable. The amount of food Americans waste is astonishing. After paper and paperboard, food is what we throw away the most of. A University of Arizona researcher, with USDA funding, estimated that 40 to 50 percent of the food in the US is wasted. And our waist lines keep growing, nevertheless.
This was not always the way. My parents grew up during the Great Depression and they had different values, many which stuck with me. My parents didn’t throw anything away (it seemed), especially food. My dad always thought there was something he could do with cigar boxes, wrapping paper (yup, we reused it over and over again), plastic bottles and lots of other stuff. Wastefulness was not permitted! We shut lights off when we left a room, we didn’t take 45 minute showers, we didn’t waste things, even stuff that was cheap. Today, wastefulness is the default lifestyle.
Wastefulness used to be a vice (gluttony is a sin), now it is virtue. It is almost cliché to say we are “addicted to oil”, especially “cheap” oil. We have grown so used to wasting oil and other fossil fuels, from ridiculous SUVs, to monster houses, to 80 inch TVs, to moving goods from long distances, that we are now trapped by it. You can see the trap in the anemic recovery that now looks even more anemic. Despite an uptick in jobs, despite interest rates that are nil, despite the lowest taxes in 50 years, as soon as the recovery began to show some legs, oil prices began to tick up, gas prices began steadily rising, and because our society is so dependent on oil (for everything from the obvious, transportation to growing our food, to the myriad plastics that make life so cool, to pharmaceuticals) that it sucked the life out of any recovery.
We have the ingenuity to solve some of these problems. Oil is far too valuable (even if it is “cheap”) to burn up in our gas pipes. Oil is necessary if we hope to feed 9 billion people by 2050. It is too valuable to throw away in landfills in the form of one-time use plastic utensils, plastic water and soda bottles, and plastic bags.
At the very least recycle it, but even that still wastes this precious substance. We must demand greater efficiencies, eye with skepticism how much energy “convenience” actually costs, and develop alternative and renewable energy sources, including a return to human energy (that will help reduce our “waste” lines (pun intended)).
These aren’t brilliant insights nor an original viewpoint, but it’s a viewpoint that few of us and even fewer of our “leaders” are willing to address head-on. We don’t have to wait for government to begin change in our households. Recycling is getting more convenient locally even if the economics on it are upside down. But that is a start.
Sunday, July 8, 2012
Sunday, June 10, 2012
Top 1 Percent Holds More Than Third of Wealth
Previously published in the Terre Haute Tribune-Star 10June 2012
My last essay focused on growing income inequality and its demonstrated relationship with a range of social ills. This month I want to focus on wealth inequality. All statistics are taken from the work of Edward Wolff.
Income (conventionally defined) is money received in the form of wages, salaries, tips, alimony, welfare, interest and some dividends. For the most part, income is derived from employment —work. And for a brief period last fall, the press and the political bloviators discussed the graph showing the increasing concentration of income among the top 1 percent compared to the 99 percent.
Wealth is one’s (or one household’s) net worth, the sum total of cash on hand, the value of real estate, assets, stocks, bonds, and ownership of private business(es) minus debt. For the vast majority of people, the 90 percent, one’s home is their primary financial asset.
Whatever people think or believe about the state of income inequality, wealth inequality is far more striking. Wealth, since the 1970s, has become increasingly concentrated at the top. The most recent data on the distribution of wealth is from 2007 (new data should come out in 2013) and it shows that the top 1 percent owns 34.6 percent of the total wealth (it was in the 20s in the early 1970s). In contrast, the share of the top 1 percent of income earners was “just” 21.3 percent in 2007.
“Millionaire” still retains high status in the U.S. Despite popular views that millionaires are common, according to IRS figures for tax returns filed in 2009, only 0.1 percent of tax returns filed (among 235 million) had incomes of at least one million dollars. It is one thing to earn a million a year, another to have total assets of at least one million, and in 2007 just over 6 percent of households had net worth that high. Indeed, when we examine the bottom 40 percent of households, their mean net worth is just $2,200.
Wealth differs from income in terms of the social power it confers. Wealth is transferable. A job/career is not. If I inherit a business, I can hire my relatives, including my children, to work the business and can eventually pass the business on to them, but not my job. As I have written in these pages before, the employment relationship is a significant one and it is asymmetrical with respect to social power.
Many argue that taxes on wealth should be reduced, if not eliminated. The argument goes that those who obtain money through their wealth (by investing in stocks, businesses, etc.) are risking their property and deserve to reap the rewards and should not be punished with a high tax rate. Hence, the 15 percent tax rate on capital gains (the selling of an asset and making money on it). Too bad I can’t auction off my job to the highest bidder when I decide to vacate it. My income is taxed at 28 percent. If I could sell my job, it would be taxed at 15 percent.
The amazing thing about risking one’s capital in business is that it gets others working for you. In the private sector, a job is not a gift or something miraculous that rich folks provide when they are happy, as the current rhetoric of “job creator” practically suggests. Business owners don’t create jobs to be civic-minded. Rather, businesses create jobs as a way to make money. Anyone who works in the private sector makes money for the company or provides some kind of valuable service or their job disappears. Unless a business owner has poor business skills, they are only going to create a job when there is a chance to make money for the business.
In 2007, the top 1 percent owned 49.3 percent of all stocks and mutual funds, 60.6 percent of all financial securities, 38.9 percent of all trusts, 62.4 percent of all business equity, and 28.3 percent of all non-home real estate. In short, they owned 49.7 percent of the productive assets in the United States.
Work in the private sector and it’s a 50-50 chance your job helps enrich someone in the top 1 percent.
My last essay focused on growing income inequality and its demonstrated relationship with a range of social ills. This month I want to focus on wealth inequality. All statistics are taken from the work of Edward Wolff.
Income (conventionally defined) is money received in the form of wages, salaries, tips, alimony, welfare, interest and some dividends. For the most part, income is derived from employment —work. And for a brief period last fall, the press and the political bloviators discussed the graph showing the increasing concentration of income among the top 1 percent compared to the 99 percent.
Wealth is one’s (or one household’s) net worth, the sum total of cash on hand, the value of real estate, assets, stocks, bonds, and ownership of private business(es) minus debt. For the vast majority of people, the 90 percent, one’s home is their primary financial asset.
Whatever people think or believe about the state of income inequality, wealth inequality is far more striking. Wealth, since the 1970s, has become increasingly concentrated at the top. The most recent data on the distribution of wealth is from 2007 (new data should come out in 2013) and it shows that the top 1 percent owns 34.6 percent of the total wealth (it was in the 20s in the early 1970s). In contrast, the share of the top 1 percent of income earners was “just” 21.3 percent in 2007.
“Millionaire” still retains high status in the U.S. Despite popular views that millionaires are common, according to IRS figures for tax returns filed in 2009, only 0.1 percent of tax returns filed (among 235 million) had incomes of at least one million dollars. It is one thing to earn a million a year, another to have total assets of at least one million, and in 2007 just over 6 percent of households had net worth that high. Indeed, when we examine the bottom 40 percent of households, their mean net worth is just $2,200.
Wealth differs from income in terms of the social power it confers. Wealth is transferable. A job/career is not. If I inherit a business, I can hire my relatives, including my children, to work the business and can eventually pass the business on to them, but not my job. As I have written in these pages before, the employment relationship is a significant one and it is asymmetrical with respect to social power.
Many argue that taxes on wealth should be reduced, if not eliminated. The argument goes that those who obtain money through their wealth (by investing in stocks, businesses, etc.) are risking their property and deserve to reap the rewards and should not be punished with a high tax rate. Hence, the 15 percent tax rate on capital gains (the selling of an asset and making money on it). Too bad I can’t auction off my job to the highest bidder when I decide to vacate it. My income is taxed at 28 percent. If I could sell my job, it would be taxed at 15 percent.
The amazing thing about risking one’s capital in business is that it gets others working for you. In the private sector, a job is not a gift or something miraculous that rich folks provide when they are happy, as the current rhetoric of “job creator” practically suggests. Business owners don’t create jobs to be civic-minded. Rather, businesses create jobs as a way to make money. Anyone who works in the private sector makes money for the company or provides some kind of valuable service or their job disappears. Unless a business owner has poor business skills, they are only going to create a job when there is a chance to make money for the business.
In 2007, the top 1 percent owned 49.3 percent of all stocks and mutual funds, 60.6 percent of all financial securities, 38.9 percent of all trusts, 62.4 percent of all business equity, and 28.3 percent of all non-home real estate. In short, they owned 49.7 percent of the productive assets in the United States.
Work in the private sector and it’s a 50-50 chance your job helps enrich someone in the top 1 percent.
Sunday, April 29, 2012
Politics suppresses issue of income inequality
previously pubished in the Terre Haute Tribune Star, 4/29/2012
It’s looking like a major theme of this year’s presidential election will be “fairness,” with a focus on income inequality. Of course, no serious discussion/debate about income inequality is going to occur as that will be swept aside in the theater of presidential politics.
Unfortunately, Democrats are framing the “debate” in terms of who has money and who doesn’t and increasing taxes on the haves while Republicans will counter with charges of class warfare, class envy and spending and tax cuts.
I’ve spent 25 years studying economic inequality. It’s too bad the topic isn’t discussed like a public health issue; don’t politicize the condition, politicize the solutions to it.
Yes, high income inequality negatively affects everyone, not just those on the low end of the income scale. Like pollution it negatively affects everyone, not just poor people (although it may affect them more).
Below, I am going to refer to data from The Equality Trust (www.equalitytrust.org.uk). “The Equality Trust is an independent, evidence based campaign working to reduce income inequality in order to improve the quality of life in the UK.” They use international comparisons of mostly western-industrial democracies (Japan and Singapore are included) to make much of their case. For most of the comparisons, they measure income inequality as a ratio of the proportion of total income received by the top 20 percent of households to the bottom 20 percent of households. The data they present are graphical and easy to understand. Basically they are correlations between income inequality and incidences or rates of other things.
Income inequality is associated with negative physical and mental health. Singapore shows the highest level of income inequality with the U.S. close by in second, but the U.S. has the highest infant mortality among the compared countries (by a wide margin). As income inequality increases, so does obesity.
People like to chant that the U.S. is No. 1. Here are things the data show the U.S. is No. 1 in: obesity rates; drug abuse; prisoners per 100,000 population; murder rate (more than 50 percent higher than our closest competitor). The U.S. also has the highest rate of mental illness.
All these disparate “No. 1s” have one thing in common, our high level of income inequality. And it is not that we have really, really poor people, it is that our rich are so much richer than everyone else. The distance is astounding, creating very separate societies and realities.
No doubt many are thinking, “well, I’m not obese, I don’t know anyone who has been murdered, no one I know is in prison, I don’t use drugs and I am not mentally ill and don’t know anyone who is.” I’m not finished.
The graph for high school dropout rates and inequality shows data for the U.S. 50 states. And sure enough, the states with lower levels of income inequality have lower rates of high school drop-outs while those with higher drop-out rates also have higher rates of income inequality. Indiana is in the bottom quarter of drop-out rates and in the bottom quarter of income inequality. I wish they had a graph of the 50 states with the other international states.
Births to teens is easily the highest in the U.S. and we have very high income inequality. None of your family may be having babies while teens, but it is willful blindness to deny high teen birth rates don’t affect us all. And no doubt related to teen births is the association between income inequality and the UNICEF index of child well being. We lose our No. 1 rating there. Israel, New Zealand and the U.K. rate worse.
If these examples are not enough to convince you that income inequality negatively affects us all, then how about this: The more unequal a society is, the less likely people believe others can be trusted, so even if you trust others, others don’t trust you. Much of the experienced degradation of community and social life in the U.S. can be linked to increasing levels of income inequality.
I urge anyone interested in income inequality to visit The Equality Trust. There is more explanation of the observed associations as well as proposed remedies. Doing so won’t make you a liberal or want to vote Democratic, if you are worried about such things. Indeed, income inequality and its correlated “pathologies” are factual. It is the remedies we should be arguing over, not politicizing whether to acknowledge the problem.
It’s looking like a major theme of this year’s presidential election will be “fairness,” with a focus on income inequality. Of course, no serious discussion/debate about income inequality is going to occur as that will be swept aside in the theater of presidential politics.
Unfortunately, Democrats are framing the “debate” in terms of who has money and who doesn’t and increasing taxes on the haves while Republicans will counter with charges of class warfare, class envy and spending and tax cuts.
I’ve spent 25 years studying economic inequality. It’s too bad the topic isn’t discussed like a public health issue; don’t politicize the condition, politicize the solutions to it.
Yes, high income inequality negatively affects everyone, not just those on the low end of the income scale. Like pollution it negatively affects everyone, not just poor people (although it may affect them more).
Below, I am going to refer to data from The Equality Trust (www.equalitytrust.org.uk). “The Equality Trust is an independent, evidence based campaign working to reduce income inequality in order to improve the quality of life in the UK.” They use international comparisons of mostly western-industrial democracies (Japan and Singapore are included) to make much of their case. For most of the comparisons, they measure income inequality as a ratio of the proportion of total income received by the top 20 percent of households to the bottom 20 percent of households. The data they present are graphical and easy to understand. Basically they are correlations between income inequality and incidences or rates of other things.
Income inequality is associated with negative physical and mental health. Singapore shows the highest level of income inequality with the U.S. close by in second, but the U.S. has the highest infant mortality among the compared countries (by a wide margin). As income inequality increases, so does obesity.
People like to chant that the U.S. is No. 1. Here are things the data show the U.S. is No. 1 in: obesity rates; drug abuse; prisoners per 100,000 population; murder rate (more than 50 percent higher than our closest competitor). The U.S. also has the highest rate of mental illness.
All these disparate “No. 1s” have one thing in common, our high level of income inequality. And it is not that we have really, really poor people, it is that our rich are so much richer than everyone else. The distance is astounding, creating very separate societies and realities.
No doubt many are thinking, “well, I’m not obese, I don’t know anyone who has been murdered, no one I know is in prison, I don’t use drugs and I am not mentally ill and don’t know anyone who is.” I’m not finished.
The graph for high school dropout rates and inequality shows data for the U.S. 50 states. And sure enough, the states with lower levels of income inequality have lower rates of high school drop-outs while those with higher drop-out rates also have higher rates of income inequality. Indiana is in the bottom quarter of drop-out rates and in the bottom quarter of income inequality. I wish they had a graph of the 50 states with the other international states.
Births to teens is easily the highest in the U.S. and we have very high income inequality. None of your family may be having babies while teens, but it is willful blindness to deny high teen birth rates don’t affect us all. And no doubt related to teen births is the association between income inequality and the UNICEF index of child well being. We lose our No. 1 rating there. Israel, New Zealand and the U.K. rate worse.
If these examples are not enough to convince you that income inequality negatively affects us all, then how about this: The more unequal a society is, the less likely people believe others can be trusted, so even if you trust others, others don’t trust you. Much of the experienced degradation of community and social life in the U.S. can be linked to increasing levels of income inequality.
I urge anyone interested in income inequality to visit The Equality Trust. There is more explanation of the observed associations as well as proposed remedies. Doing so won’t make you a liberal or want to vote Democratic, if you are worried about such things. Indeed, income inequality and its correlated “pathologies” are factual. It is the remedies we should be arguing over, not politicizing whether to acknowledge the problem.
Sunday, March 25, 2012
New law takes wrong approach to conflicts of interest
Previously published in the Terre Haute Tribune-Star, 3/25/2012
The new Indiana conflict-of-interest law, as described in last Sunday’s Tribune-Star editorial, “prohibits employees of local government units from serving as elected officials on the councils that oversee those units. The bill also forbids local government officeholders from directly supervising relatives.” There is no question legislation is needed here, but this law simultaneously goes too far and not nearly far enough.
At a time when it seems finding good people to run for any kind of office is getting harder and harder and legislature after legislature, beginning with Indiana, passes legislation making it harder for people to exercise their right to vote (funny how Second Amendment rights are so eagerly defended by politicians but not voting rights — the fundamental democratic right), we enact a law that requires entire classes of people, based on their employer, to give up their livelihood if they wish to serve their local community as elected officials.
Why is a fireman or police officer serving on the city or county council a worse conflict of interest than a local business owner influencing tax abatements, zoning, or infrastructure improvements that benefit their personal interests? A conflict of interest is a conflict of interest.
All laws are enacted in a context. The same governor who ended collective bargaining for state employees, who enthusiastically supported legislation to limit the collective bargaining rights of teachers, and who just signed into law “right-to-work” shares his unacceptable vision of a conflict of interest: “The conflict of interest when double-dipping government workers simultaneously sit on city or county councils, interrogating their own supervisors and deciding their own salaries, must end.”
And so the Indiana law creates an effective ban on public-minded public employees from serving their communities as elected officials. But why not other, just as egregious conflicts of interest, like a real estate broker serving and pushing through local legislation that clears the way for housing where that broker is the exclusive broker; or a contractor who has contracts with the city or county? Why is the animating horror of conflict of interest an employee “interrogating” his or her own supervisor? If it were not an employee in this situation, but a real estate developer, would this be interrogating or negotiating? And ending negotiations between employees and employers seems a recurrent theme in many Republican-controlled states right now.
The law doesn’t go far enough because a public employee’s spouse is not banned from serving. That, too, is a conflict of interest and the logic of this law, if it were extended, would require the elected official to divorce their public employee spouse before taking office. Why is the spouse of a firefighter or police officer “interrogating” their spouse’s supervisor not a conflict of interest?
A superior law would be one where dual roles are identified (if an elected official stands to personally (financially) gain from a policy they are about to make because of another role they play in life, they should be barred from making that policy. This would include spouses and immediate family members). A mechanism must be in place that if a particular individual refused to recuse themselves from hearings and voting, to force recusal upon them. Conflicts of interest are fairly easy to identify, at least the most obvious ones, and once a good law is in place, norms of practice emerge, and conflicts of interest will be reduced.
Conflicts of interest are also about undue influence. Gov. Daniels apparently sees it only as a problem when an employee is “interrogating” a supervisor or double-dipping, but a supervisor can place undue influence on an employee, too, to vote for and support certain policies. But when a viewpoint privileges one side of the employment relationship and diminishes the other, those concerns fade into the background.
Hence, this is a bad law and likely will not reduce the conflicts in the long run, because it is construed too narrowly, conceiving of conflicts as only a problem with public sector employees and not citizens in general. The law doesn’t define conflicts of interest, it only offers a draconian remedy for those with conflicts that the current Republican view cannot tolerate. It does not address conflict of interest as a serious problem per se.
Rather than bar otherwise good people from serving their local communities, bar all elected officials from making policy and voting in areas where they have a conflict of interest.
The new Indiana conflict-of-interest law, as described in last Sunday’s Tribune-Star editorial, “prohibits employees of local government units from serving as elected officials on the councils that oversee those units. The bill also forbids local government officeholders from directly supervising relatives.” There is no question legislation is needed here, but this law simultaneously goes too far and not nearly far enough.
At a time when it seems finding good people to run for any kind of office is getting harder and harder and legislature after legislature, beginning with Indiana, passes legislation making it harder for people to exercise their right to vote (funny how Second Amendment rights are so eagerly defended by politicians but not voting rights — the fundamental democratic right), we enact a law that requires entire classes of people, based on their employer, to give up their livelihood if they wish to serve their local community as elected officials.
Why is a fireman or police officer serving on the city or county council a worse conflict of interest than a local business owner influencing tax abatements, zoning, or infrastructure improvements that benefit their personal interests? A conflict of interest is a conflict of interest.
All laws are enacted in a context. The same governor who ended collective bargaining for state employees, who enthusiastically supported legislation to limit the collective bargaining rights of teachers, and who just signed into law “right-to-work” shares his unacceptable vision of a conflict of interest: “The conflict of interest when double-dipping government workers simultaneously sit on city or county councils, interrogating their own supervisors and deciding their own salaries, must end.”
And so the Indiana law creates an effective ban on public-minded public employees from serving their communities as elected officials. But why not other, just as egregious conflicts of interest, like a real estate broker serving and pushing through local legislation that clears the way for housing where that broker is the exclusive broker; or a contractor who has contracts with the city or county? Why is the animating horror of conflict of interest an employee “interrogating” his or her own supervisor? If it were not an employee in this situation, but a real estate developer, would this be interrogating or negotiating? And ending negotiations between employees and employers seems a recurrent theme in many Republican-controlled states right now.
The law doesn’t go far enough because a public employee’s spouse is not banned from serving. That, too, is a conflict of interest and the logic of this law, if it were extended, would require the elected official to divorce their public employee spouse before taking office. Why is the spouse of a firefighter or police officer “interrogating” their spouse’s supervisor not a conflict of interest?
A superior law would be one where dual roles are identified (if an elected official stands to personally (financially) gain from a policy they are about to make because of another role they play in life, they should be barred from making that policy. This would include spouses and immediate family members). A mechanism must be in place that if a particular individual refused to recuse themselves from hearings and voting, to force recusal upon them. Conflicts of interest are fairly easy to identify, at least the most obvious ones, and once a good law is in place, norms of practice emerge, and conflicts of interest will be reduced.
Conflicts of interest are also about undue influence. Gov. Daniels apparently sees it only as a problem when an employee is “interrogating” a supervisor or double-dipping, but a supervisor can place undue influence on an employee, too, to vote for and support certain policies. But when a viewpoint privileges one side of the employment relationship and diminishes the other, those concerns fade into the background.
Hence, this is a bad law and likely will not reduce the conflicts in the long run, because it is construed too narrowly, conceiving of conflicts as only a problem with public sector employees and not citizens in general. The law doesn’t define conflicts of interest, it only offers a draconian remedy for those with conflicts that the current Republican view cannot tolerate. It does not address conflict of interest as a serious problem per se.
Rather than bar otherwise good people from serving their local communities, bar all elected officials from making policy and voting in areas where they have a conflict of interest.
Sunday, February 19, 2012
Why must U.S. rely on employer-provided health care?
Previously published in the Terre Haute Tribune Star, 2/19/12
Even an irregular columnist like me can see “column fodder” in the contraception controversy that is dominating dysfunctional Washington right now. Never mind the disconnect between the U.S. Catholic bishops’ stand in face of the birth-control practices of Catholics (both men and women practice birth control and safe sex). Never mind the bishops riding this moral high horse when they still haven’t figured out which horse to ride in the face of covering up child molestation by priests.
If the bishops aren’t enough, Sen. Roy Blunt (R-Mo.) offers legislation that would allow employers to opt out of paying for any health care they object to on moral/religious grounds. It would be fun to write a column supporting that posturing so that when the inevitable lawsuits come up, the courts and Congress are then deciding what is moral and what is not (think of it as the Jon Stewart objection … no medicine, just laughter, because laughter is the best medicine and that is my moral belief).
Or even better, let’s pass a law that one’s religious and moral beliefs trump all things government. Hindus and Buddhists could refuse to pay taxes that go for beef subsidies, Quakers could opt out of all tax money that goes for war, and we Methodists could opt out of all tax monies that support the production of alcohol (all those corn subsidies for instance). Yes, all that would be just too easy.
It’s not easy, though. What this controversy does reveal is that it is time to change the U.S. reliance on employer-provided health care. This controversy reveals the irrationality of making health care contingent upon being employed.
Health care costs are rising too fast and are now so expensive that it is a drag on U.S. business. Health care costs are volatile, something that businesses don’t like. And rising labor costs should rise with productivity. Rising health care costs have nothing to do with productivity. Hence, in a recession, the provision of and commitment to provide health care is a drag on hiring new employees. It’s been a generation since we had such a deep recession and the slow recovery is surely influenced by labor costs (if taxes are such a drag, then surely so are health care costs). Why should an engineering company also be in the health care providing business?
According to the Labor Department, about a quarter of current employees have been with their current employer for a year or less (this dates back about 20 years). Think about that — about a quarter of people change employers every year, which means they are also likely changing health insurers and very possibly their health care providers. Only about 10 percent of employees have been with their current employer for 20-plus years. And even though they have had the same employer, they may have had multiple health insurers and thus different health care providers because the employer decides to change insurers.
What the Labor Department statistics don’t capture are the employees who would like to change jobs but don’t because of the health coverage. I know people who want to pursue the American dream, owning their own business, but the question of health insurance keeps them from pursuing it. How many public servants are remaining in their jobs, burned out and grumpy, and instead of retiring early, hold on, because of the health insurance, just waiting until they qualify for Medicare. This is irrational. It is also a competitive disadvantage in a globalized marketplace where, like the refusal to adopt the metric system, the U.S. insists on employer-provided health care — and pretty much stands alone.
Employers are the de facto provider of health care in the U.S. With rising costs, employers are looking to reduce costs. “Obamacare” reduces employers’ (insurers’) ability to do this through formerly common means such as not covering pre-existing conditions. The unintended consequences of “Obamacare” will be to create perverse incentives for employers to delve deeper into the lives of their employees. Recently “60 Minutes” reported on employers firing employees, based not on their work performance, but based on their perceived future health care costs, such as those who smoke, are overweight or eat the wrong diet.
Employers justified this based on the fact they pay for the coverage.
Insurance companies are hard enough to deal with; one shouldn’t have to feel their job is at risk because they have high cholesterol, high blood pressure, enjoy beer over red wine, or don’t like to eat vegetables.
Even an irregular columnist like me can see “column fodder” in the contraception controversy that is dominating dysfunctional Washington right now. Never mind the disconnect between the U.S. Catholic bishops’ stand in face of the birth-control practices of Catholics (both men and women practice birth control and safe sex). Never mind the bishops riding this moral high horse when they still haven’t figured out which horse to ride in the face of covering up child molestation by priests.
If the bishops aren’t enough, Sen. Roy Blunt (R-Mo.) offers legislation that would allow employers to opt out of paying for any health care they object to on moral/religious grounds. It would be fun to write a column supporting that posturing so that when the inevitable lawsuits come up, the courts and Congress are then deciding what is moral and what is not (think of it as the Jon Stewart objection … no medicine, just laughter, because laughter is the best medicine and that is my moral belief).
Or even better, let’s pass a law that one’s religious and moral beliefs trump all things government. Hindus and Buddhists could refuse to pay taxes that go for beef subsidies, Quakers could opt out of all tax money that goes for war, and we Methodists could opt out of all tax monies that support the production of alcohol (all those corn subsidies for instance). Yes, all that would be just too easy.
It’s not easy, though. What this controversy does reveal is that it is time to change the U.S. reliance on employer-provided health care. This controversy reveals the irrationality of making health care contingent upon being employed.
Health care costs are rising too fast and are now so expensive that it is a drag on U.S. business. Health care costs are volatile, something that businesses don’t like. And rising labor costs should rise with productivity. Rising health care costs have nothing to do with productivity. Hence, in a recession, the provision of and commitment to provide health care is a drag on hiring new employees. It’s been a generation since we had such a deep recession and the slow recovery is surely influenced by labor costs (if taxes are such a drag, then surely so are health care costs). Why should an engineering company also be in the health care providing business?
According to the Labor Department, about a quarter of current employees have been with their current employer for a year or less (this dates back about 20 years). Think about that — about a quarter of people change employers every year, which means they are also likely changing health insurers and very possibly their health care providers. Only about 10 percent of employees have been with their current employer for 20-plus years. And even though they have had the same employer, they may have had multiple health insurers and thus different health care providers because the employer decides to change insurers.
What the Labor Department statistics don’t capture are the employees who would like to change jobs but don’t because of the health coverage. I know people who want to pursue the American dream, owning their own business, but the question of health insurance keeps them from pursuing it. How many public servants are remaining in their jobs, burned out and grumpy, and instead of retiring early, hold on, because of the health insurance, just waiting until they qualify for Medicare. This is irrational. It is also a competitive disadvantage in a globalized marketplace where, like the refusal to adopt the metric system, the U.S. insists on employer-provided health care — and pretty much stands alone.
Employers are the de facto provider of health care in the U.S. With rising costs, employers are looking to reduce costs. “Obamacare” reduces employers’ (insurers’) ability to do this through formerly common means such as not covering pre-existing conditions. The unintended consequences of “Obamacare” will be to create perverse incentives for employers to delve deeper into the lives of their employees. Recently “60 Minutes” reported on employers firing employees, based not on their work performance, but based on their perceived future health care costs, such as those who smoke, are overweight or eat the wrong diet.
Employers justified this based on the fact they pay for the coverage.
Insurance companies are hard enough to deal with; one shouldn’t have to feel their job is at risk because they have high cholesterol, high blood pressure, enjoy beer over red wine, or don’t like to eat vegetables.
Sunday, January 22, 2012
More to labor issue than basic economics
previously published in the Terre Haute Tribune Star (1/22/2012)
Right-to-work (RTW) is another of Gov. Daniels’ crises of the season. From daylight-savings time to leasing the Indiana Toll Road, to privatizing (and substituting computers for people) welfare offices, overseeing significant rollbacks in governmental services (BMV), property tax caps, and school reforms, Gov. Daniels isn’t afraid to lead the state into political turmoil.
To be fair, Gov. Daniels didn’t want the RTW fight. But he couldn’t find any traction among Republicans for his reform agenda (sentencing reform and local government reorganization), so he’s following the Republican lawmakers instead. Nevertheless, he has made RTW his number one issue and will no doubt take credit for this dubious “job-creating” policy. Indeed, almost everything Gov. Daniels has done has been justified as economic development. How is that going anyway?
For the record, I have made public statements at academic conferences that I do not favor “closed shops.” I understand the free-rider problem (non-members receive the benefits of collective bargaining without having to financially support the costs of achieving those efforts). I’d think Republicans would understand that, too, as they are quick to point out free-riders all the time (welfare recipients). I think closed shops lead unions away from continually making their case. Never underestimate the power of peer pressure.
I’m disappointed in both the unions’ and Democratic Party’s response to RTW. By focusing so narrowly on pay, they miss so much more about the impact of unions on the Indiana workplace. I’d like to see them reframe the question from right-to-work to “rights-at-work.”
Indiana, as most states, is an “employment-at-will” state. This legal doctrine essentially states: a person employed for an indefinite period is employed “at-will” and either the employee or the employer may terminate the employment relationship at any time for any reason or no reason and without notice. Those who work under a contract are not subject to “employment-at-will.”
There is not enough room here to go into the intricacies of how the law has evolved around employment-at-will, but think of it this way: the legislature (or Congress) and the courts can make public policy exceptions (law) to the doctrine. The broadest exceptions are in the area of demographic discrimination and for when an employee refuses to do something that is illegal (perhaps immoral). Indiana is known as one of the least fettered by public policy exceptions employment-at-will state. Stated another way, Indiana is a state where an employer is the freest to fire employees “at-will;” or, a state where employees have the fewest rights at work.
Over time, the Indiana Supreme Court (ICS) has preserved the employer’s right to fire in cases that, in my experience, really open the eyes of lay people. For instance, the ICS ruled that an employer was free to fire an employee for marrying someone the employer did not approve of. Unless a whistleblower is protected by a very narrow statute, even an employer engaged in illegal activities can legally fire a worker for informing authorities about it. One exception to “employment-at-will” is for an employee exercising their constitutional rights, such as filing a lawsuit against their employer. Indeed, the ICS reinstated an employee who was fired for filing in small claims court over travel expenses. The employee prevailed in the suit but was fired again when he tried to collect his claim.
Back to the ICS. It found that while the employee had the right to sue, he had no right to collect. It is safe to say that suing an Indiana employer for wrongful termination is very, very hard.
Hence, I wish the opposition to RTW would point out how union workers are not subject to the capricious will of employers. And this is becoming a bigger issue as employers mine deeper into their employees’ off-work activities, especially as it relates to health care. Employers are firing employees who they deem too expensive for their health-care plans or who engage in otherwise private behavior they disagree with. Should an employer be able to dictate an employee’s diet, their preferred form of recreation, their political affiliations?
More than just higher pay, union employees can’t be fired for such nonsense. Why? Because their union negotiates a contract on their behalf to protect them from such things. RTW is about undermining collective bargaining and thus those protections.
It may be that most employers respect “boundaries” and would never fire an employee for such ridiculous reasons as not liking who they married. But unless you are working under contract, they can.
Right-to-work (RTW) is another of Gov. Daniels’ crises of the season. From daylight-savings time to leasing the Indiana Toll Road, to privatizing (and substituting computers for people) welfare offices, overseeing significant rollbacks in governmental services (BMV), property tax caps, and school reforms, Gov. Daniels isn’t afraid to lead the state into political turmoil.
To be fair, Gov. Daniels didn’t want the RTW fight. But he couldn’t find any traction among Republicans for his reform agenda (sentencing reform and local government reorganization), so he’s following the Republican lawmakers instead. Nevertheless, he has made RTW his number one issue and will no doubt take credit for this dubious “job-creating” policy. Indeed, almost everything Gov. Daniels has done has been justified as economic development. How is that going anyway?
For the record, I have made public statements at academic conferences that I do not favor “closed shops.” I understand the free-rider problem (non-members receive the benefits of collective bargaining without having to financially support the costs of achieving those efforts). I’d think Republicans would understand that, too, as they are quick to point out free-riders all the time (welfare recipients). I think closed shops lead unions away from continually making their case. Never underestimate the power of peer pressure.
I’m disappointed in both the unions’ and Democratic Party’s response to RTW. By focusing so narrowly on pay, they miss so much more about the impact of unions on the Indiana workplace. I’d like to see them reframe the question from right-to-work to “rights-at-work.”
Indiana, as most states, is an “employment-at-will” state. This legal doctrine essentially states: a person employed for an indefinite period is employed “at-will” and either the employee or the employer may terminate the employment relationship at any time for any reason or no reason and without notice. Those who work under a contract are not subject to “employment-at-will.”
There is not enough room here to go into the intricacies of how the law has evolved around employment-at-will, but think of it this way: the legislature (or Congress) and the courts can make public policy exceptions (law) to the doctrine. The broadest exceptions are in the area of demographic discrimination and for when an employee refuses to do something that is illegal (perhaps immoral). Indiana is known as one of the least fettered by public policy exceptions employment-at-will state. Stated another way, Indiana is a state where an employer is the freest to fire employees “at-will;” or, a state where employees have the fewest rights at work.
Over time, the Indiana Supreme Court (ICS) has preserved the employer’s right to fire in cases that, in my experience, really open the eyes of lay people. For instance, the ICS ruled that an employer was free to fire an employee for marrying someone the employer did not approve of. Unless a whistleblower is protected by a very narrow statute, even an employer engaged in illegal activities can legally fire a worker for informing authorities about it. One exception to “employment-at-will” is for an employee exercising their constitutional rights, such as filing a lawsuit against their employer. Indeed, the ICS reinstated an employee who was fired for filing in small claims court over travel expenses. The employee prevailed in the suit but was fired again when he tried to collect his claim.
Back to the ICS. It found that while the employee had the right to sue, he had no right to collect. It is safe to say that suing an Indiana employer for wrongful termination is very, very hard.
Hence, I wish the opposition to RTW would point out how union workers are not subject to the capricious will of employers. And this is becoming a bigger issue as employers mine deeper into their employees’ off-work activities, especially as it relates to health care. Employers are firing employees who they deem too expensive for their health-care plans or who engage in otherwise private behavior they disagree with. Should an employer be able to dictate an employee’s diet, their preferred form of recreation, their political affiliations?
More than just higher pay, union employees can’t be fired for such nonsense. Why? Because their union negotiates a contract on their behalf to protect them from such things. RTW is about undermining collective bargaining and thus those protections.
It may be that most employers respect “boundaries” and would never fire an employee for such ridiculous reasons as not liking who they married. But unless you are working under contract, they can.
Sunday, December 11, 2011
Win your arguments with "fuddle," not facts
Previously published in the Terre Haute Tribune Star, 12/11/2011
Remember C.S. Lewis’ “The Screwtape Letters”? It is a satire involving Screwtape, a senior demon from Hell, instructing his nephew, Wormwood, in how to secure the damnation of a man, known at “The Patient.” I had not thought of this book for a long time until I read about Frank Luntz’ plenary speech at the Republican Governors Association meeting last week in Orlando. Luntz is perhaps the top Republican political message master.
“Letters” opens with Screwtape mentoring Wormwood on how to sway “The Patient.” Screwtape emphasizes the importance of language over evidence and argument. “Jargon, not argument, is your best ally in keeping him from the Church. Don't waste time trying to make him think that materialism is true!” Screwtape continues about the folly of trying to argue the points, “The trouble about argument is that it moves the whole struggle onto the Enemy's own ground.”
Luntz addressed the Governors about how to talk about Occupy Wall Street. Said Luntz, “ "I'm so scared of this anti-Wall Street effort. I'm frightened to death. "They're having an impact on what the American people think of capitalism." If Luntz took the role of Screwtape advising his Wormwooods (the Governors) on how to talk about Occupy Wall Street and address increasing questions from constituents about “income inequality” and “paying your fair share” it might sound like this if you substitute the public for “the Patient”: (quotes are from Luntz’ address)
My dear Wormwoods,
Don’t try to argue with them. "First off, here are three words for you all: 'I get it.' . . . 'I get that you're angry. I get that you've seen inequality. I get that you want to fix the system." If you argue with them, you might have to argue Biblical references or statistics.
Always blame Washington. Tell them, "You shouldn't be occupying Wall Street, you should be occupying Washington. You should occupy the White House because it's the policies over the past few years that have created this problem."
Call it what it isn’t, just don’t call it capitalism. "I'm trying to get that word removed and we're replacing it with either 'economic freedom' or 'free market’. The public . . . still prefers capitalism to socialism, but they think capitalism is immoral. And if we're seen as defenders of quote, Wall Street, end quote, we've got a problem." Christianity doesn’t view greed well, preaches equality before God, and concern for the poor.
Even the rich are beginning to say wicked things, like Warren Buffet endorsing a millionaires’ tax. The public now responds favorably to talk of raising taxes on the rich. Thus “… talk about government taking the money from hardworking Americans, the public says no. Taxing, the public will say yes."
Don’t talk about jobs. "Watch this," Luntz-Screwtape said. He then asked everyone to raise their hand if they want a "job." Few hands went up. Who wants a "career." Almost every hand was raised. "So why are we talking about jobs?" A job just pays for food, rent, and cable. A career is about status and power.
We have been too successful at instilling feelings of greed in the public. As you cut your state budgets, don’t say sacrifice. "There isn't an American today in November of 2011 who doesn't think they've already sacrificed. If you tell them you want them to 'sacrifice,' they're going to be pretty angry at you. You talk about how 'we're all in this together.' We either succeed together or we fail together." Success is on our terms.
If Luntz were Screwtape he might have finished with a quote from “Letters:” “You begin to see the point? … Above all, do not attempt to use science … as a defence against [OWS]. … If he must dabble in science, keep him on economics and sociology; don't let him get away from that invaluable "real life." But the best of all is to let him read no science but to give him a grand general idea that he knows it all and that everything he happens to have picked up in casual talk and reading is "the results of modern investigation." Do remember you are there to fuddle him. From the way some of you young fiends talk, anyone would suppose it was our job to teach!
Your affectionate uncle,
SCREWTAPE”
I wonder if Frank Luntz ever read “The Screwtape Letters?” If so, he might have missed the satire.
Remember C.S. Lewis’ “The Screwtape Letters”? It is a satire involving Screwtape, a senior demon from Hell, instructing his nephew, Wormwood, in how to secure the damnation of a man, known at “The Patient.” I had not thought of this book for a long time until I read about Frank Luntz’ plenary speech at the Republican Governors Association meeting last week in Orlando. Luntz is perhaps the top Republican political message master.
“Letters” opens with Screwtape mentoring Wormwood on how to sway “The Patient.” Screwtape emphasizes the importance of language over evidence and argument. “Jargon, not argument, is your best ally in keeping him from the Church. Don't waste time trying to make him think that materialism is true!” Screwtape continues about the folly of trying to argue the points, “The trouble about argument is that it moves the whole struggle onto the Enemy's own ground.”
Luntz addressed the Governors about how to talk about Occupy Wall Street. Said Luntz, “ "I'm so scared of this anti-Wall Street effort. I'm frightened to death. "They're having an impact on what the American people think of capitalism." If Luntz took the role of Screwtape advising his Wormwooods (the Governors) on how to talk about Occupy Wall Street and address increasing questions from constituents about “income inequality” and “paying your fair share” it might sound like this if you substitute the public for “the Patient”: (quotes are from Luntz’ address)
My dear Wormwoods,
Don’t try to argue with them. "First off, here are three words for you all: 'I get it.' . . . 'I get that you're angry. I get that you've seen inequality. I get that you want to fix the system." If you argue with them, you might have to argue Biblical references or statistics.
Always blame Washington. Tell them, "You shouldn't be occupying Wall Street, you should be occupying Washington. You should occupy the White House because it's the policies over the past few years that have created this problem."
Call it what it isn’t, just don’t call it capitalism. "I'm trying to get that word removed and we're replacing it with either 'economic freedom' or 'free market’. The public . . . still prefers capitalism to socialism, but they think capitalism is immoral. And if we're seen as defenders of quote, Wall Street, end quote, we've got a problem." Christianity doesn’t view greed well, preaches equality before God, and concern for the poor.
Even the rich are beginning to say wicked things, like Warren Buffet endorsing a millionaires’ tax. The public now responds favorably to talk of raising taxes on the rich. Thus “… talk about government taking the money from hardworking Americans, the public says no. Taxing, the public will say yes."
Don’t talk about jobs. "Watch this," Luntz-Screwtape said. He then asked everyone to raise their hand if they want a "job." Few hands went up. Who wants a "career." Almost every hand was raised. "So why are we talking about jobs?" A job just pays for food, rent, and cable. A career is about status and power.
We have been too successful at instilling feelings of greed in the public. As you cut your state budgets, don’t say sacrifice. "There isn't an American today in November of 2011 who doesn't think they've already sacrificed. If you tell them you want them to 'sacrifice,' they're going to be pretty angry at you. You talk about how 'we're all in this together.' We either succeed together or we fail together." Success is on our terms.
If Luntz were Screwtape he might have finished with a quote from “Letters:” “You begin to see the point? … Above all, do not attempt to use science … as a defence against [OWS]. … If he must dabble in science, keep him on economics and sociology; don't let him get away from that invaluable "real life." But the best of all is to let him read no science but to give him a grand general idea that he knows it all and that everything he happens to have picked up in casual talk and reading is "the results of modern investigation." Do remember you are there to fuddle him. From the way some of you young fiends talk, anyone would suppose it was our job to teach!
Your affectionate uncle,
SCREWTAPE”
I wonder if Frank Luntz ever read “The Screwtape Letters?” If so, he might have missed the satire.
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