Paying for New Healthcare Plan
I see that Senator Baucus is about to solve the issue of paying for healthcare reform—he wants to tax the insurance companies! Perhaps he is following the lead of Oregon Governor Kulongoski, who recently signed into law a new tax on health insurance companies operating in Oregon…in order to help pay for the “Oregon Plan.”
Needless to say, the Oregon health insurance companies immediately passed every penny of the new tax onto their insured through increases in premiums. What are these politicians thinking? Don’t they understand that taxing the insurance companies is simply taxing the insured through increased premiums?
This type of thinking is what is driving the small business person crazy—they don’t know what to think, or do, but many of those who have health insurance programs in place for their employees are certain that they will likely be dropping, or reducing, those plans. So, what is the government gaining if they price insurance premiums out of reach of small business?
Hopefully, there are enough people in Washington, who have some sense of reality, to overcome those who are totally out of touch. I know that is a lot to hope for, but maybe I’m just an optimist.
Cash for Clunkers?
I just read that 4 out of 5 new cars sold through the “cash for clunkers” program were foreign brands. True, some foreign models are assembled in American factories, but even then, the far greatest stimulus through this program is to the foreign parts manufacturers, foreign assembly plants, and foreign owned businesses. The “cash for clunkers” program also seems to have helped Toyota get on track to become the largest auto producer in the world. (WSJ 7/29/09)
I am sure that this program does help many (not all) dealers, car salesmen, and financial institutions in the U.S. I’m also sure it has provided some benefit (at least temporarily) to the American auto industry. But, I wonder if that was the best way to spend $3 Billion (so far) of taxpayer money?
What if…
What if that $3 Billion had been allocated to small business in general. Money for expansion and growth. Money for new startups. Money for R&D. Money to retrain the unemployed. This is where meaningful re-employment will take place. Small businesses have virtually unlimited needs in order to achieve the economic recovery mandate set out for them by the current administration. And yes, small business may be the most innovative—but to innovate “quickly” they need to have access to capital. The $3 Billion just spent would have gone a long way to accomplish this.
That’s my take—what’s yours?
Home Businesses…Beware!
Seventy percent—around 21.1 million—U.S. businesses have no employees, and many, many of these businesses are conducted out of the owner’s homes. This practice has been ongoing for generations, if not centuries. It is a time-honored and normal entrepreneurial endeavor.
However, that may be coming to an end, at least in part. I ran across a post in makezine.com, by Robert Bruce Thompson, a chemist with several books to his credit, among them, An Illustrated Guide to Home Chemistry Experiments. Thompson’s post is a little scary, and should be soberly considered by all entrepreneurs who work in their homes. Excerpts would not do justice to Thompson’s post, so I will include it in its entirety below:
The Worcester Telegram & Gazette reports that Victor Deeb, a retired chemist who lives in Marlboro, has finally been allowed to return to his Fremont Street home, after Massachusetts authorities spent three days ransacking his basement lab and making off with its contents.
Deeb is not accused of making methamphetamine or other illegal drugs. He’s not accused of aiding terrorists, synthesizing explosives, nor even of making illegal fireworks. Deeb fell afoul of the Massachusetts authorities for … doing experiments.
Authorities concede that the chemicals found in Deeb’s basement lab were no more hazardous than typical household cleaning products. Despite that, authorities confiscated “all potentially hazardous chemicals” (which is to say the chemicals in Deeb’s lab) from his home, and called in a hazardous waste cleanup company to test the chemicals and clean up the lab.
Pamela Wilderman, the code enforcement officer for Marlboro, stated, “I think Mr. Deeb has crossed a line somewhere. This is not what we would consider to be a customary home occupation.”
Allow me to translate Ms. Wilderman’s words into plain English: “Mr. Deeb hasn’t actually violated any law or regulation that I can find, but I don’t like what he’s doing because I’m ignorant and irrationally afraid of chemicals, so I’ll abuse my power to steal his property and shut him down.”
In effect, the Massachusetts authorities have invaded Deeb’s lab, apparently without a warrant, and stolen his property. Deeb, presumably under at least the implied threat of further action, has not objected to the warrantless search and the confiscation of his property. Or perhaps he’s just biding his time. It appears that Deeb has grounds for a nice juicy lawsuit here.
There’s a lesson here for all of us who do science at home, whether we’re home schoolers or DIY science enthusiasts. The government is not our friend. Massachusetts is the prototypical nanny state, of course, but the other 49 aren’t far behind. Any of us could one day find the police at the door, demanding to search our home labs. If that day comes, I will demand a warrant and waste no time getting my attorney on the phone.
There’s a word for what just happened in Massachusetts. Tyranny. And it’s something none of us should tolerate.
Here is an interesting follow-up from Mr. Deeb’s daughter:
I am the daughter of Victor Deeb and what they did and took from my father is not only unfair but devastating to an old man whose life for the last 40 years has been chemistry. They not only took all of his chemicals (which he used in his research for non-toxic sealants for baby food jars) but 20 years of notes that were valuable only to him. Now his research notes have magically disappeared into thin air. Can someone tell me where the justice is in that?
-m deeb
What do you think—could anything like this happen in your town…in your neighborhood? Homeland Security and the Patriot Act have changed the landscape in the U.S., and it does make a person wonder…….
Foreign Lending to the United States
Have you ever wondered which countries have loaned money to the U.S.? We hear a lot about China loaning us money, and before that it was Japan. But, that is not where the foreign lending ends—take a look:
- China – $767.9 Billion.
- Japan – $686.7 Billion.
- Caribbean banking centers – $213.6 Billion. (Bahamas, Bermuda, British Virgin Islands, Cayman Islands, Netherlands Antilles, Panama.)
- France, India, Korea, Turkey – $204 Billion.
- Oil exporters – $192 Billion. (Algeria, Bahrain, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Oman, Qatar, Saudi Arabia, U.A.E., Venuzuala.)
- Russia – $138.4 Billion.
- Channel Islands, Isle of Man (U.K.) – $128.2 Billion.
- Brazil – $126.6 Billion.
- Egypt, Israel, Italy, Netherlands, Norway, Thailand – $124.3 Billion.
- Luxembourg – $106.1 Billion.
- Belgium, Canada, Chile, Colombia, Malaysia, Philippines, Sweden – $89.5 Billion.
- Hong Kong – $78.9 Billion.
- Taiwan – $74.8 Billion.
- Switzerland – $67.7 Billion.
- Germany – $55 Billion.
- Ireland – $54.7 Billion.
- All other countries combined – $156.7 Billion.
This adds up to almost $3.3 Trillion, or almost a third of the U.S. debt. With the U.S. economy on the rocks, and more money needed to pay for Congressional spending, about the only place the U.S. can get that money is from foreign investors—thus raising the stakes in foreign ownership of America.
Just one more thing for business owners and individuals alike to think about.
Who’s In Charge?
I seem to recall that, in his last press conference, President Obama said the government was not going to run auto companies. I guess I must have misunderstood what was said, because here is what BusinessWeek writer David Welch said in a recent article.
“Make no mistake: The Whitehouse and the task force overseeing the restructuring of both GM and Chrysler since February are calling the shots.”
You can take a look at Welch’s complete article here, but I will point out a few interesting highlights from his article in the following.
“Treasury has a couple dozen staffers and executives from Boston Consulting Group (BCG) scrutinizing operational details at the car company. (BCG is getting paid $7 million from the government for its work on both GM and Chrysler.)”
“Some GM insiders fret that Treasury’s key players have precious little industry experience.”
The head of the Treasury Task Force is Steven Rattner, the Wall Street financier and co-founder and Managing Principal of the investment firm, Quadrangle Group. (Yes, this is the same Rattner who is being investigated for his alleged connection to a scandal involving a New York State retirement fund.) No one on the Treasury Task Force has any experience in the car industry.
Welch also reported that a dozen Treasury staffers and outside consultants recently descended on GM, and pushed them to dump Buick and GMC, in addition to Pontiac, Hummer, Saab, and Saturn. The staffers said that Toyota was successful with just two brands—Toyota and Lexus—why couldn’t GM just sell Chevrolet and Cadillac? After GM pointed out that Buick and GMC were moneymakers, and that Buick was in high demand in China…Treasury relented.
Treasury and BCG were not finished, however. The staffers and consultants made GM managers jaws drop when they questioned why GM was spending money to continue development of the Volt. Apparently, Treasury thinks the current lineup of gas-guzzling Chevrolets and Cadillacs is just fine.
Not to be outdone by staffers, one Treasury Official wanted to know when the new Chevy Malibu would go on sale. It has been in showrooms for 18 months.
I’ll bet Ford is glad they didn’t take any bailout money from the government.
Gee, I can hardly wait for these folks to take over my health care.
A New Capitalism?
After writing the post on “The Nationalization of Big Business,” I received a number of emails and comments that made me take a closer look at this issue. Since I’m not a futurist, economist, nor academic, I rely on the following definition of capitalism, which pretty well spells it out for me.
Capitalism is an economic and political system characterized by a free market for goods and services and private control of production and consumption.
Princeton University’s Wordnet defines capitalism as an economic system based on private ownership of capital…antonym of socialism.
To me, capitalism means that if the market (we consumers) likes what a business has to offer, we buy from that business and it becomes successful and continues to grow and prosper. If the market does not like what the business has to offer, we don’t buy from that business and it fails. That is the simplest form of capitalism. Capitalism is totally market driven, and it has worked well for American companies for a very long time–until now.
Now, although we have over 30 million American businesses that fit the basic definition of capitalism…Robert Reich, former Secretary of Labor, has pointed out in a recent article, that we also have companies which operate outside our capitalistic system, because they are no longer accountable to the market. If they were accountable to the market they would close–with mass loses of jobs, which would heavily impact our entire economy. Therefore, they cannot be allowed to fail, because they are too big to fail.
So, if we have companies that are not accountable to the market, and operate outside our capitalistic system, who should they be accountable to? If some of these companies can only survive by living on taxpayer’s money, shouldn’t the taxpayers hold them accountable? Unfortunately, that would mean the government would become involved in the operation of these companies, and does anyone think the largest bureaucracy in America can better manage them?
There are no simple answers, but lots of questions-for instance:
- When is a company, no longer accountable to the market, and becomes too big to fail?
- Should large, unaccountable, businesses be forced to break up into smaller, more manageable (and accountable) units…similar to the former Bell system breakup?
- Should the government take control of these large “too big” companies and dictate who should manage them, and how they should be run?
- Or, should these large unaccountable companies simply be allowed to fail–putting 10′s (maybe 100′s) of thousands of people out of work?
These are pretty heady questions for just a street guy, but I would really like to hear the opinions of anyone out there who wonders what is happening to our capitalistic system–and should it be happening? Better yet, how can it be made more successful in our global economy?
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