Weaker Families = More Crime

Michael Gurian lists some amazing and disturbing statistics on page 183 of his book The Wonder of Boys.

• –Poor parents are twice as likely to break up as those with money. Once parents break up, a male child’s probability of becoming a criminal and a female child’s probability of becoming pregnant before the age of eighteen rise exponentially;


• –More than three fourths of crime in America, both violent and nonviolent, is committed by male children born to single parents or following their parents’ divorce;


• –90 percent of the nation’s prison inmates up to age thirty-five were born to mothers under eighteen;


• –About 20 percent of all violent crime is committed by children under the age of eighteen;


• –Most of these offenders, whether jailed or not, return to committing crimes;


• –90 percent of these offenders are boys.

The cause of these problems, asserts Gurian (with the support of much research) is that we have created a cultural climate that is in many ways antithetical to the physiology of developing human males. The segments of the population where the greatest problems exist are also those segments of the population where the greatest dissonance between culture and physiology exist.

Boys, says Gurian, need a stable family structure with caring parents of each sex. Especially as boys move into their second decade of life, they need strong adult male mentors that show them what it means to be a man — to accept responsibility, to overcome natural urges, to stand up for what is right. Adult female mentors are needed too, but their role is heavier during the first decade of a boy’s life.

No matter what the politically correct version says, Gurian charges that there is no way mentors of either sex can successfully teach a boy what he needs to learn from the opposite sex. Thus, our massive experiment with fatherlessness is producing dramatic societal costs.

Couple increased fatherlessness with the steady decline of volunteerism, and you have large swaths of adolescent American males that are left without adult male mentors that are positive role models. It was once more common for boys to be involved with groups like Boy Scouts where they regularly interacted with positive adult male mentors.

Boys now spend significantly more time with video games and computers. When they do get out, their male role models are other boys that are only a couple of years older than them and that know little of what it means to be a productive member of society. The problem is particularly egregious among the less affluent segments of society.

Most of the goods and ills that we see in broader society are a reflection of the state of our homes and families. It is bluntly obvious what we should be doing to strengthen our own families. How to help others do the same — particularly those most at risk — is not as simple.

The Religion of Politics?

Since the dawn of time humans have yearned for something that transcends this mortal sphere. From an anthropological viewpoint, elements of religion are found just about everywhere you look. Even after the culture wars have diminished the commonality of traditional religion, the “non-religious” among us still hew to religion. They don’t call it that, but their devotions share all of the characteristics of religion.

Kathleen Parker writes in this article:

“Thus, in post-Judeo-Christian America, the sports club is the new church. Global warming is the new religion. Vegetarianism is the new sacrament. Hooking up, the new prayer. Talk therapy, the new witnessing. Tattooing and piercing, the new sacred symbols and rituals.”

Parker’s words strike a chord. This church of secular narcissism also has its gods to worship. Parker writes that for this crowd, “apparently, Barack Obama is the new messiah.” Parker quotes a 20-year-old Obama-ite as saying that Obama is “like, whoa….” She then goes on to opine, “Whatever the Church of Obama promises, we should not mistake this movement for a renaissance of reason. It is more like, well, like whoa.”

There is no doubt that Obama’s campaign is working hard to package him as a messiah-like brand. And it is true that some of Obama’s supporters do a fine impression of tent revivalists. But according to Stephen F. Hayes, articles like Parker’s miss the point. Hayes notes in this article that Obama is able to disarmingly articulate his positions “in ways Americans can understand.”

Hayes’ article brings to light a rather odd thing. Republicans have spent the last two decades looking in vain for the next incarnation of Ronald Reagan. Democrats have spent the past three decades detesting Reagan. But now the next Reagan is leading the nomination race in the Democratic Party.

Of course, the policies of Obama and Reagan stand in sharp contrast to each other. But, like Reagan, Obama has a talent for using the power of words in a way that appeals to people and gives them a sense of something beyond mere politics. The critics of Obama’s airy rhetoric sound a lot like Reagan’s detractors of a quarter century ago. Like those Reagan detractors, claims Hayes, today’s Obama critics are underestimating the target of their scorn.

Isn’t Obama the U.S. Senate’s most liberal member? Yes. Isn’t he very short on executive, federal legislative, and foreign policy experience? Yes. But none of that will matter to a lot of voters if they get the sense that Obama can, to use Reagan’s words, “make America great again.”

For those of you that fear that Obama is the devil, Russ Roberts offers some consoling (although not very comforting) words in this NPR commentary. Roberts says that we like living in a fantasy world where we think that our candidate is going to be different by actually following through on campaign rhetoric.

“But,” says Roberts, our politicians “always break our hearts, don’t they?” Why? Because once they are in office they “respond to the political winds, rather than the rhetoric that got them elected. And when they break their promises because it’s politically expedient, they always have a justification.”

“The good news,” Roberts opines, is that the “evil candidate from the other party that you hate, isn’t nearly as dangerous as you think. Once in office, he or she will listen to the public rather than to principles. It happens every time.”

This might seem like a rather cynical view, but it is not terribly far off from reality. In a democratic republic the public doesn’t let any chief executive get too far away from what the mainstream wants for very long. We can be grateful that our Founders designed a system with this kind of strength.

Despite harsh rhetoric that claims otherwise, our relatively weak chief executive office won’t support a dictator. The curtain will soon be swept aside on any politician elected as a messianic figure to reveal just another fallible human — just another politician.

YouTube Leads to Sleeping on the Floor

Do you enjoy sleeping on the floor? I don’t. But I can do it if I comfort myself with the thought that when my ancestors had to sleep on the floor, they didn’t have comfy carpet for cushioning.

From time to time I find myself sleeping on the ground with nothing between me but my sleeping bag, my (relatively thin) foam pad, and a tarp. But that’s not like sleeping on the floor, because, for one thing, there’s no carpet. There’s also no adventure. The only real reason I sleep on the ground nowadays is to support a youth activity that aims to help youth have some kind of adventure. Short of that, my own bed will be just fine, thank you very much.

Where was I? Oh yeah, sleeping on the floor. I have spent significant portions of the last two nights sleeping on the floor, thanks to YouTube. How was YouTube responsible for two nights on the floor? It’s kind of a funny string of events. And it has a lot to do with parental oversight.

Just before leaving to attend a family wedding out of state the other day, my wife handed me a 10-paragraph list she had typed up of things that were to happen while she was away and how those things were supposed to happen. Good wives do those kinds of things. She had given each of the five children their personal responsibilities. Now I was getting mine.

Then my wife made an alarming discovery. The fifth grader had to build a diorama about Rhode Island. Somehow the fact that it was due on Monday had gotten lost in the shuffle, so it needed to be completed over the weekend. After delivering this news, my lovely bride kissed me goodbye and headed off for the kind of fun that I can only say that I was more than happy to miss out on.

Looking down the schedule, I could see that the first time we would get to work on the diorama would be Saturday afternoon. And then, according to the schedule, it had to be done by Saturday evening. With five kids ranging from 16 to five — each with his/her own schedule, wants, and responsibilities — our place can be pretty darn busy. So, even the time block we had for building the diorama was filled with various child shuttling events.

As soon as we got started on the diorama, it became clear why these kinds of tasks are usually my wife’s responsibility. For one thing, if something has to be built by hand and you want it to look right and function well, you do not want me involved. That is not an area wherein the Lord chose to bless me with much talent. My plan was to make the fifth grader figure out everything. Of course, that only goes so far if your middle child is like my middle child.

My son had already done a lot of research on Rhode Island, so I asked him what was important about the state beside the fact that it was the smallest state. OK, so it has the nation’s oldest Baptist Church in Providence and the nation’s oldest synagogue in Newport. What else? Well, it has the world’s largest silverware factory and a deep sea fishing industry.

Having lived his entire life in a land-locked state (and not being able to remember having seen the ocean when he was younger), my son had no idea of what deep sea fishing looked like. So I pulled up YouTube and searched for videos on that topic. After watching a couple of short videos, we returned to the project. After hours of long struggles, my son finally managed to put together a somewhat passable diorama. It looked like it was made by a fifth grader. If I had applied my hand to it directly, it would have looked like it had been made by a second grader.

I had not realized how captivating my son found the videos on deep sea fishing. He was soon back at the computer watching video after video of various deep sea fishing adventures. Over the period of 20 minutes, he kept yelling, “Dad, come and look at this!” Which I dutifully did again and again. He would say, “Look at this 400-lb fish,” and “Check out this hammerhead shark.”

Anyone that has spent any time on YouTube knows that there is always a list of links to videos that someone has classed as similar. You really don’t know what you’re going to get when you click on one of those. My son soon had me watch a short video that featured a variety of bizarre looking sea critters. It was more weird than scary, but you know how kids’ minds work.

While I was busy with my daughter for about 10 minutes, my fifth grader got his second grader brother to the computer to watch the video of the strange fish. Then he clicked on a link to another video. The two young boys soon found themselves watching a video that had a creepy depiction of a supposed ghost. And then they watched another short scary video. That was when I returned to the scene.

I was not happy. I know that kids can be curious, but my fifth grader should have at least known enough not to let his little brother see scary stuff like that. My seven-year-old has a very active imagination, and he was officially freaked out by what he had seen.

A few minutes later when I had all of the children together for our evening devotional, I explained what the boys had done and what was bad about it. My kids were a little shocked when I explained that creepy media content like that is similar to pornography. It fills your mind with unrealistic images that are intended to excite certain regions of the brain to elicit unnaturally strong responses.

And, boy did it work that way this time. Neither of my younger boys wanted to turn off their lights when they bedded down. The only way I could get the seven-year-old to go to sleep was to repose on his floor until he was dead asleep. Of course, by then I was asleep too. I woke up sometime later and groggily got myself to bed.

Then last night at bedtime, we had a repeat of Saturday night. The seven-year-old has bunk beds in his room, so the fifth grader came in and slept on the top bunk so that neither would have to spend the night alone. But they wouldn’t go to sleep without me being there. So I slept on the floor for a while. I might have made it several hours had not a neighbor had the gall to call at some unearthly hour (for me anyway, because I get up quite early) to ask about something that was totally not urgent.

This whole experience goes to show that even a conscientious parent (with Internet filters and the whole bit) has to be very aware of their children’s media content consumption. Since you can’t be with your children every moment, you have to teach them how to deal with bad content and hope that they follow your advice. You can’t control everything that goes into your child’s mind, so you must teach them how to filter content themselves.

At least now I’ve got the second grader to help. He is our ‘informant.’ I’ve never seen such a reliable tattler. Computer use for the fifth grader is going to be on a probationary basis for the next little while. I am greatly looking forward to my wife returning from her trip. She has a talent for soothing the kids to sleep, so I may not have to sleep on the floor again tonight.

Serving Medical Customers

HHS Secretary (former Utah Governor) Mike Leavitt says that the best hope we have for keeping medical costs under control is to give patients enough information to form a solid basis for medical decisions (see SL-Trib article). Leavitt says that putting healthcare provider data into the hands of the people would foster healthy competition and lower costs.

Leavitt is certainly correct on that point, but his solution won’t achieve the desired results. I applaud efforts such as the database discussed in the article. Information like that certainly can’t hurt. But this kind of effort alone is insufficient because it does not overcome the system’s basic problem.

One of the primary rules of economics is that suppliers do their best to supply what buyers actually demand. Who are the real buyers of medical services? Not you. Unless you pay for everything yourself or have only catastrophic insurance, you are not the buyer.

Your co-pay or deductible do not make you the buyer. They make you a minor partner to the buyer. They inform your decisions about buying health insurance. But they do not make you the buyer of the medical services you consume. The real buyers — the real power entities in purchasing medical services —are the government (via Medicare) and insurance companies.

Since suppliers provide what buyers demand, let’s ask ourselves what the real buyers of medical services demand. Do they demand the best possible medical outcome for each patient? Nope. It’s not possible for them to do that. So they design systems that aspire to that lofty goal. These systems seek to demand proof that proper procedures are being followed and tightly control what procedures will be covered.

Of course, to administer these systems, the government and insurers spawn massive bureaucracies of paper pushers. Medical practitioners actually serve their buyers quite well, supplying the desired paperwork. They report procedures that will bring payment. As I mentioned in this post, as long as the paperwork shows that proper procedures were followed, the actual medical outcome for the individual patient is not a priority. Since the patients are not the buyers, they are in no position to demand satisfaction.

Electronic Health Records (EHRs) have been touted as a way to improve the medical system. But it turns out that EHRs do not improve actual medical outcomes (see here). This is because they are only a more efficient way of pushing paper around through the bureaucracy. They are designed primarily for the government and the insurance companies rather than for patients.

Likewise, the push to achieve universal health insurance for everyone will not improve matters. That simply removes all patients from the buyer position. That’s why studies have found that health insurance increases access but does not positively impact actual medical outcomes.

Medicare is planning to refuse to pay hospitals for a handful of common medical errors (see here). Private insurers will likely follow suit. This will help hospitals refrain from specific counterproductive activities. It should be helpful, but it will produce unintended side effects as well. It will still not overcome the basic problem of medical service consumers not being the buyers of those services.

If you think that the database Leavitt touts will significantly improve matters, consider how things work today. After my Dad had a stroke, his cardiologist said that he needed to implant a defibrillator device in Dad’s chest. He talked to us about it and gave us some information. But with all of the information, we really had nothing upon which to base a decision. Not only did we not really know how necessary it was and what others’ experiences with the device were, we had absolutely no cost information provided, other than, “Medicare will cover it.”

A few weeks after the procedure, the itemized bills came in. We looked over the multitudinous individual charges, often stunned at the prices attached to each item. But the end price for everything — the device, the surgeon, the operating room, the anesthesiologist, nursing care, etc. — was eye popping. But my parents paid only a tiny portion of the whole bill. Medicare and insurance picked up the rest. The fact is that you never spend someone else’s money as efficiently as you spend your own.

If we knew then what we know now, Dad would have opted to skip the device. It turns out that these things are installed mostly to help practitioners avoid lawsuits claiming that they didn’t do everything possible. If anyone had said up front that the device installation would cost the amount it did, Dad might still have opted to have it done, because the money wasn’t coming out of his pocket. So, even if Leavitt’s database had been available, it probably would have made little difference. Besides, the doctor made it sound so necessary. On the other hand, if Dad was self-insured, he likely would have foregone the device.

Health insurance and Medicare were instituted to solve the problem of people being underserved. Most health insurance plans were once catastrophic insurance only. But public health officials and practitioners worried that too many people were avoiding preventative and routine care, waiting until situations became critical. Thus, the push to increasingly cover everything, including treatments that most people once paid for out of their own pockets.

This pattern has increased access, but it has not improved medical outcomes. And costs have skyrocketed. What we have today is a top-down system that dictates to us how much and what kind of medical services we should use. We do not have a dynamic, innovative patient-driven system that produces improvements while reducing costs — because patients are not in the driver’s seat. The bureaucrats are.

The only way we are going to solve today’s health care crisis is to turn patients back into actual buyers of medical services. This is heresy to the universal coverage crowd. But good public health and free medical markets are not mutually exclusive, as many assume. It is amazing what people will come up with when you give them liberty.

The Road to High Def

When I got my new laptop just over a year ago, it included a feature that was not among those I felt were essential: an HD-DVD drive. I could have bought a laptop with almost duplicate specs excepting that it had a Blu-Ray drive, but it would have cost an additional $900. Besides, I was pretty sure that Blu-Ray would go the way of the Betamax. How could something with such a huge price differential compete?

It turns out I was wrong, and Sony was right. The war between the two high definition disc formats is over and Blu-Ray has carried the day. But it won’t impact me a great deal. While I have used my drive to burn regular DVDs, I have only actually viewed an HD-DVD disc on it once. I once watched five minutes of the disc that came with the laptop, but I frankly don’t watch much TV. Unless it’s an extremely compelling flick, I just can’t seem to find the time to sit down and watch it. So after five minutes, something else came up and I never went back to it.

Until Blu-Ray disc burning gets cheap enough to be included as a common laptop feature, it won’t matter to me that my laptop doesn’t have a Blu-Ray player. And probably by that time, it will be time to replace my laptop anyway. For me, the high-def disc wars were kind of like the cola wars. Since I don’t drink cola (and rarely drink soda of any kind), I just don’t care.

Even though Blu-Ray has won out, don’t expect Americans to run out and plop down $400 for a new disc player. They’ve come down a lot in price, but they’re going to have to get a lot cheaper. And when will Blu-Ray recorders become inexpensive enough for average folks to buy them?

In the meantime, this WSJ editorial suggests that the long disc war may have opened the door for “other home-viewing options -- from high definition video-on-demand cable offerings to digital downloads off the Internet.” Sony’s victory, which is seen as sort of revenge for its Betamax defeat, may turn out to be a pyrrhic one.

On a related note, the ability to get high-def content via the Internet is the topic of this WSJ op-ed by the Discovery Institute’s Bret Swanson and George Gilder. By 2015, the institute estimates, Internet traffic will exceed “1,000 exabytes, or one million million billion bytes.” This, they say, “will require some $100 billion in new Internet infrastructure in the U.S. over the next five years.”

That kind of investment will only occur if the market is sufficiently free. It will not happen if we have a “digital traffic cop … policing every intersection of the Internet.” The current push for what regulation supporters call net neutrality, Swanson and Gilder argue, would mean that “Every price, partnership, advertisement and experimental business plan on the Net would have to look to Washington for permission.” It would be a bureaucrat’s dream, but a consumer’s nightmare.

So how do we deal with the fact that infrastructure companies in the U.S. have been slow to implement newer technologies and more favorable pricing plans? Swanson and Gilder suggest, “New pricing schemes that charge per byte consumed might also help to manage supply and demand on the Internet.” A similar approach sort of works for the wireless phone industry.

It would also help to open up the field of competition. Jesse Harris says here that the government involvement in the teleco industry has been a steady string of bungles. He says that we need “a wholesale telecommunications network that remains retailer-neutral.” I’m not sure I agree with Jesse’s proposed solutions, but I am sure that the path to substantial improvement of our current systems does not run through the slaughterhouse of more federal regulation.

Financial Rules for Life

For my final piece in my financial series, I will recap some of the points that have been seeded throughout the series. Financial peace of mind doesn’t require a great deal of money. It can be had by anyone willing to follow a few simple rules. Some of these rules include:

• -Live within your means. If you can’t afford something you want, do with less or do without. It doesn’t matter how much you want it if you can’t afford it.
• -If you want something, work for it. Do what it takes to get it honestly.
• -Understand the difference between your own money and other people’s money. Understand that you generally have no claim on others’ property.
• -Be brutally honest in distinguishing between needs and wants.
• -Do not go into debt for wants.
• -If you must incur debt for long-term needs — housing, productive transportation or education — obligate yourself only to that which you can comfortably afford.
• -Always pay your obligations on time.
• -If you unexpectedly get into financial trouble, work with your creditors.
• -If something sounds too good to be true, it probably is. Be wary of schemes that offer unrealistic returns.
• -Be trustworthy, but keep your eyes wide open when it comes to trusting others. Not everyone has pure motives.

There is a parallel between how the people of our nation regard and handle their personal finances and how the nation handles its finances. Most of the rules listed above for financial peace and security apply to government as well as they apply to individuals.

One of the major problems in this nation is that our politicians don’t understand the difference between YM and OPM. And while we elect them to spend other people’s money, they lack restraint in spending it because few incentives for fiscal responsibility exist. Former Rep. Dick Armey (R-TX) correctly said, “Three groups spend other people's money: children, thieves, and politicians. All three need supervision.”

Nor do our politicians have a good track record of grasping the difference between wants and needs. This should not be surprising, because much of the electorate seems to lack this understanding as well. Activist groups and lobbyists make everything sound like a need. And all too often, we go along with it.

Programs expand and new programs flare up constantly, frequently under the radar of the electorate. All are well meant. But seldom do we stop to ponder whether they fall within the actual constitutional mandate or whether they are truly needed. We have entire programs that obligate future generations to pay for our consumption of services today.

Financial peace of mind is possible both in our individual lives and within our government entities. All it requires is obeying simple rules. It takes acceptance of financial realities. Each of us has the power to make this real in our own lives. It would take a great deal of concentrated efforts by many Americans to make this a reality in our government. It sounds impossible, but we’ll never get there if we don’t start.

Past posts in this series:
Money Attitudes
YM and OPM
Repo Man
Our First House
The Tax Auditor
The Fiddler Must be Paid

The Fiddler Must be Paid

During my second and third decades of life, I saw a number of financial schemes move through the area. A common thread was the enticement to get rich — to make it big. Some of these things were legal; others were not. The amount of enthusiasm these schemes generated among people in the area was truly amazing.

Perhaps the most common scheme was multi-level marketing. Most of these plans were completely legal. But I found that almost universally, the claims being made were misleading at best. Many were outright lies. It’s not that you can’t turn a profit at MLM, but you have to do it through the drudgery of actual product sales, rather than simply recruiting a “down line” that continually feeds you royalties for nothing more than personal consumption.

The world’s premier MLM company is Amway. I knew many people (including relatives) that were involved in Amway. At one point I allowed myself to be recruited as a distributor by a relative. I attended a number of meetings, but I found that being a successful distributor required something I lacked: sales ability. I also found that some of the meetings were very cult-like and were filled with propaganda.

Most MLM is quite benign compared to the more insidious schemes I have seen. Relatives of mine were very dedicated to their Amway distributorship for four years. After that time, they did a financial analysis of their income, costs, etc. They discovered that after four years they had almost broken even. That means they had earned less than zero for their thousands of hours of work. That was the end of their distributorship. They had lost time, but at least they didn’t lose their shirts.

In the late 70s and early 80s, a dynamic fellow by the name of Grant Affleck ranged through northern Utah and southern Idaho with his scheme. He used his religion as a strategy to get fellow believers to take out second mortgages on their homes and invest in his plan that would produce huge returns. Even before it all fell apart, my Dad told me that if anyone used religion as a basis for a business proposition, I was to run the other way as fast as I could. Thousands of people that invested in AFCO ended up with second mortgages they couldn’t afford. Affleck ended up in prison.

Another scheme that was popular briefly was one that got people to buy diamonds and then re-sell them. It looked really good to people that went to sales meetings. Neighbors would be featured that had sold their diamonds at a huge profit after only a few weeks. But the scheme turned out to be a pyramid. Earlier participants were being paid off with funds from later participants. Saturation point was reached rapidly. The schemers suddenly turned up missing, and so did most of the money.

There have been many other get-rich-quick schemes. They all have two features in common. 1) They play on greed, promising to produce substantially greater returns than ordinary work and investing. 2) They play on people’s good natured willingness to trust others. People that strive to be trustworthy themselves naturally trust others. Sometimes this leads to gullibility. When combined with the natural human tendency toward greed, this produces a willing gullibility. We refuse to see the facts that might detract from the rosy view we want so badly to be true.

Many government programs work on these same two factors. They play on human greed and on the innate desire to trust in something that sounds good. The desire to produce a happy outcome — to solve some social need — overcomes critical consideration of the facts. We enter into many programs with a willing gullibility, throwing caution to the wind. Our willingness to see these programs for what they actually are is optional. But reality is not optional. The undesirable side effects these programs produce always pop up eventually. And once a program has a foothold, it becomes a maw that perpatually gobbles down increasing amounts of taxpayer money. As the proverb says, we may dance all night, but we must pay the fiddler in the morning.

Next segment in this series: Financial Rules for Life

Past posts in this series:
Money Attitudes
YM and OPM
Repo Man
Our First House
The Tax Auditor

Bad Medicine

In November 2006 my father suffered a stroke. He spent the next couple of weeks in the hospital and was eventually able to go home. The following spring he ended up back in the hospital after nearly dying from internal bleeding (thanks to medications intended to help his heart).

As I contemplate our experiences with the medical system over this period of time, I conclude that the system works poorly. It over-delivers in some areas and under-delivers in others. The abundant knowledge and technology in our system does not integrate well. Patients often have little basis for making choices in the system.

We thought Mom was being a bit paranoid when she insisted on staying at the hospital nearly 24x7 while Dad was there. But now I realize that not only was this necessary, it actually saved Dad’s life. Although trained medical practitioners treated Mom like she was an imbecile, her attention to detail and insistence on knowing everything that happened stopped treatments that almost resulted in Dad’s demise.

Both in the hospital and in Dad’s subsequent medical care, we have repeatedly seen competent and knowledgeable medical practitioners doing their jobs. Each functions within his/her specialty without a great deal of regard for the whole patient. Each has so much professional courtesy for other specialists that they would rather watch a patient suffer than step on another specialist’s toes.

Why does this system work so poorly? GMU economist Russ Roberts offered an interesting opinion on this topic on his blog last month. Free market proponents argue in favor of specialization. Each person works within her/his specialty without a complete knowledge of ultimate suppliers and customers. Pricing provides an effective message system that helps people make market decisions. The result is a self organizing system that functions relatively well. Free market proponents contend that such a self organizing system, with very few exceptions, functions far better than any kind of centrally planned system.

In his post, Roberts seeks to respond to such criticisms of the medical system as I have listed above. If specialization — everyone doing his/her own narrow scope job — is the ideal, why does it work so poorly when it comes to medical care? The system lacks an adequate advocate for the patient. Without a coordinating advocate, the patient receives copious medical care, but much of it is contradictory, useless, or detrimental. Roberts explains this phenomenon thusly:

“So why do we need someone in charge in the hospital but not in the graphite industry? In the graphite industry, there are plenty of pencils, tennis rackets and fishing rods and the dozens (thousands?) of products that use graphite. We don't need a graphite czar to make sure there's enough graphite to go around. All the specialists that contribute to those products don't get out of control. Their interactions don't get ignored. As Hayek pointed out, the knowledge gets coordinated without a coordinator. Why does it work there but not in the hospital?

“The simple answer is that the price system and profit motive interact in the graphite industry causing the whole thing to work smoothly without it being anyone's intention. The prices and the profit motive lead to feedback and accountability. There are a whole bunch of people with the incentive and the information to make the system work well.”

One can complain that Roberts is comparing apples to oranges, but this begs the question of why the system works so differently in medicine. Here is where the comparison of the graphite and medical industries is helpful. In medicine, Roberts says, “There are very few informational feedback loops. Very little accountability.”

Think about it. A nurse was about to inject a traditional amount of a particular drug into Dad’s IV when Mom stopped her. The nurse was angry with Mom. She knew the procedure well and was following all prescribed rules properly. And yet Mom knew from her own research and from watching events over the previous few months that the dosage that was about to be administered would have killed Dad.

What would have happened if Dad had died from the treatment? Who would have borne any kind of consequence for it? Nobody in the medical system. No lawsuit would have held any practitioner or company responsible because all proper precautions had been followed. The nurse would have suffered no negative consequences outside of her own conscience. After all, she was just doing her job, and doing it correctly.

Roberts explains, “There are no feedback loops within the hospital to reward generalists who look for the costs of specializations. And the reason there are not is because the patient is not the customer. The patient is not paying the bill. The financial incentives that do exist are coming from Medicare and Medicaid and the insurance companies. The normal feedback loops that protect the customer from error and greed and simple stupidity are missing. In a way, it's amazing it works as well as it does.”

I am not saying that anybody that works in the medical system is a bad person or doesn’t care about her/his patients. In fact, it may be their level of personal caring that actually makes the system work as well as it does. I am saying that we have a lot of good, caring people that work in a system that is messed up — a system where incentives for proper treatment do not exist. We have highly competent people working in a system that prevents them from providing the kind of high quality care of which they are actually capable of administering.

We do not need more money to fix the medical system. There is plenty of money in the system already. We do not need more bureaucratic oversight or more training. We need to restore incentives that recognize the patient as the customer rather than as just a product. Until that happens, we will continue to have high-cost, high-tech medical care that fails to meet the needs of the patients the system serves.

The Tax Auditor

Many people are surprised to discover that I spent a number of years working as a tax auditor for the IRS. I was hired to do audit work at a service center where I did not interact directly with taxpayers. But my training, which lasted over a year, required me to spend a lot of time doing face-to-face audits. Frankly, I hated that part of the job.

Most of the people that I audited were folks that were honestly trying to file their taxes correctly. But there were more than a few that purposely pushed the envelope on what was appropriate. Then there were a handful of downright dirt bags. Two in particular stick out in my mind.

I wondered why one guy had paid nearly triple the amount of tithing that was required by his church. At least it looked like that from the amount of income and charitable donations he listed. I requested bank records and discovered that he had a lot more income than his tax return showed. Eventually, we discovered that the man had embezzled from the business he worked for. But, hey, at least he paid tithing on it. I had to turn that case over to the criminal investigators.

Another guy worked as a private assisted living specialist. He would go to old peoples’ homes and prepare food, bathe them, lift them, and help them do what they could not do for themselves. This guy carried an air of distrust about him before, even I ever heard him even utter a word. His banking records showed a lot more income than he had reported on his return. He had received regular infusions that he said were gifts from the elderly people for whom he cared. He claimed these were not a form of compensation, but were free will gifts. This was difficult to verify because most of his clients from the tax year I was auditing had passed away by the time I was doing the audit.

Contacting the estate executors of these people (usually one of the children), revealed that this guy had taken advantage of these folks. Many of this guy’s elderly clients had at least somewhat diminished mental capacities during the period of care. He schmoozed these folks and suggested gifts, which some of them gladly gave, much to their children’s chagrin. The guy was a slimeball. But from the perspective of the IRS, he had not violated any tax laws.

Perhaps more interesting than the direct taxpayer interactions was the corporate culture at the IRS. The power structures in the organizations where I worked were somewhat bizarre. It seemed like ego was the primary benefit of management, since pay wasn’t very high. People that were otherwise nice folks frequently ruled their organizations in a Stalinist style once they came to power. And many workers put up with it. The tenacity with which some managers and workers guarded their ‘turf’ was like something from a bad Cold War spy novel.

I found the attitudes of other auditors particularly instructive. Many were simply trying to do their job. They were trying to make sure that tax laws were followed, but they also tried to give people a fair shake. They understood that it’s deucedly difficult to correctly file a tax return in the U.S. if your situation has any kind of complexity at all.

But then there were the auditors that enjoyed sticking it to taxpayers. I recall a woman that seemed to particularly enjoy haranguing taxpayers over what I thought amounted to petty issues. She would go after a $10 unverified deduction with the tenacity of a pit bull. And then there was the guy we called Killer. He would sit across the desk from a taxpayer, looking at them with this condescendingly smug-evil smile on his face that reminded me of when the Nazi SS Major Arnold Toht in Raiders of the Lost Ark says, “Fräulein Ravenwood, let me show you what I am used to....”

One of our nicer auditors once had occasion to audit a former congressman. The issues were not terribly complex, but an adjustment was necessary. The former congressman (who was a nice guy, but perhaps not a terribly effective politician) remarked that if he had realized how these laws impacted regular people, he would have paid more attention during committee meetings. Now, doesn’t that give you warm fuzzies about the laws that come out of Washington, DC?

I spent most of my auditing years working on tax shelters. Congress had passed all kinds of tax loopholes that encouraged the formation of small corporations and partnerships. Unfortunately, many of them were nothing more than sham organizations that generated no revenue, except for the money that came from often unwitting investors. This cash was pocketed by the main scammers in exchange for tax write-offs, which many investors dutifully took.

By the time the jig was up, the scammers were nowhere to be found. The tax returns of the (often elderly) investors had to be adjusted to remove the tax write-offs. These people had no recourse. They now owed IRS thousands of dollars in taxes, interest, and penalties. And they had no way to get their scammed investment back from the guys that had sold them the bill of goods. It was not a pretty picture.

During my years as a tax auditor I gained an appreciation for the immense complexity of our tax laws and the stifling effect this has on entrepreneurship in our nation. I learned that most taxpayers are willing to pay their share, but many are frustrated that it is so difficult to do. I found that there are some bad guys out there that prey on others. And I found that there are some bad guys within the IRS that enjoy exercising unrighteous dominion over others.

The interesting thing about all of this is that it hardly matters who is in the White House or which party controls Congress. The bureaucracy has a life of its own. National politicians might be able to change its course one or two degrees, but the bureaucracy is so strong that most of what is done at the top levels has little effect other than to grow the size and scope of the problems.

The idea that the federal leviathan will be cowed and properly managed by whoever seems to be the next great hope is an incredibly ignorant concept. They might manage better than our current crew, but it will make little difference. The only way to better manage the beast is to reduce its scope and size. It does not appear that Americans want that right now, as evidenced by those they are bringing to power. Both major parties have embraced the engulf and devour style of central government. Does anyone out there care?

Next segment in this series: The Fiddler Must be Paid

Past posts in this series:
Money Attitudes
YM and OPM
Repo Man
Our First House

Our First House

Our first home was a tiny three-year-old house in a neighborhood of starter homes. It seemed to be about the right price for us. The sellers were divorcing. They were behind on their payments, so it was a distressed sale. They had dropped the price without finding a buyer. Finally, they threw in their appliances. That was when we saw it. We offered even less than they were asking and they snapped up the offer.

The neighborhood had been built during a period of obscenely high interest rates. Many original buyers had only gotten into their homes by financing with late-loaded ARMs, which subsidized lower rates for the first couple of years with higher rates later on.

It was assumed that most buyers of starter homes were in a period of increasing income early in their careers. As their income increased, homeowners should have been able to refinance to more favorable terms or else make the higher payments when they came due. Being starter homes, it was also assumed that many buyers would move on to bigger homes before their payments got too bad.

It actually worked that way for many of the homeowners in our area. But it didn’t work that way for others. By the time we came along, interest rates had dropped dramatically, so we had a relatively low rate. But some of the area’s residents had rates above 24%, due to expanding ARM payments. These people were stuck in a bad place. Many of them actually owed more on their homes than when they moved in.

To make matters worse, home values had not increased, so homeowners would still owe money if they sold their homes. The real estate market wasn’t doing well at the time, so even though many had their homes for sale, few of these homes were being sold, even at bargain prices. Consequently, it was common to see vacant homes going through foreclosure. It was a dismal feeling.

Each of the families that lost their home ended up living elsewhere in situations that they could afford. In each case where a home defaulted or was sold at a distressed rate, somebody else came along that had a better chance of affording the home. By that time, ARMs and late-loaded loans had fallen out of favor, so most people coming into the neighborhood had flat rate mortgages.

Over time, I had occasions to discuss this situation with various parties, including realtors, lenders, home builders, and homeowners. It was interesting to see their various points of view on the matter. This subdivision had been built during a housing boom, despite the fact that it was also during a period of high and increasing interest rates. With more of their monthly payments going to interest, buyers could afford less house than they would have under more favorable interest rates.

The builders that developed the subdivision specialized in smaller, less expensive homes. They easily sold the homes and then moved out of the picture. Lenders working to find ways to take advantage of the high demand for entry level housing came up with a variety of financial instruments, including ARMs and late-loaded loans. Many buyers barely qualified for the high mortgage payments. Many of these bought homes they could ill afford, assuming that somehow everything would work out.

Since rates were climbing, payments went up each time the contracts allowed for adjustments. On top of that, the lower payments of the first couple of years automatically increased after that. Some homeowners saw their monthly payments nearly double over a period of five years. Refinancing didn’t benefit many because interest rates were still very high.

Then the housing market flattened out, as it always does at some point following a boom. People that were in houses they could no longer afford were unable to sell those homes, even after dropping the price. At that point, foreclosures became common in the subdivision. By the time interest rates came down, many people were in too much financial trouble to qualify for refinancing, so foreclosures continued. It took a long time before the market started to pick up so that willing sellers could find buyers.

While all players in this scenario bear some responsibility for the fiasco, the people that obligated themselves to a payment plan they could not reasonably afford were most at fault. They simply should have lived within their means instead of incurring debt that was beyond their means. Next in the blame line are the lenders, who made risky loans. They should have known better. Next come the sellers — the realtors and home builders that directly sold homes. Once the sale was complete, they had their money and were out of the picture. But they had frequently pushed prospective buyers to stretch beyond their means. A salesman with a conscience does not encourage his customers to make purchases that will likely harm them.

Players were punished as stated above. The homeowners that engaged more debt than they could afford suffered the most. Lenders that made risky loans suffered quite a bit in lost revenues and in foreclosure and disposition costs. Realtors and home builders only suffered when the market went flat again and their income stream dropped off. Their punishment was much less direct.

The number one lesson I learned from all of this is that even when it comes to a life essential, such as housing, you must strictly limit yourself only to that for which you can afford to pay. It doesn’t matter how much you want something or how good the salesman is. It doesn’t matter how much you think you ‘need’ it. It only matters whether you can comfortably afford it.

If you can barely afford what you are purchasing, you put yourself in a situation where the least downturn can cause your whole financial house of cards to come crashing down. It’s not worth it. If you don’t like living in what you can afford, you will have to pay the price to develop the skills necessary to earn a higher income.

Not coincidentally, the same rules that make for individual financial stability can and should be applied by governments to make for public financial stability.

Next segment in this series: The Tax Auditor

Past posts in this series:
Money Attitudes
YM and OPM
Repo Man

Repo Man

At the peak of my banking career I worked in the collections area of the loan department. That’s right; I was a repo man.

This segment of my career was very educational. I quickly realized that most loans that were seriously in arrears had been high risk loans in the first place. We collectors had data available that made it clear that loan officers had often allowed other factors to cloud their judgment when approving loans that obviously had a high risk of default. But they kept making these loans because, oddly enough, many high-risk debtors regularly made their payments either on time or less than 45 days late — at least for a period of time.

It was never fun when a loan got to the point of default. We would do just about anything to keep a loan from defaulting. The bank would go through all kinds of contortions to try to work things out. The last thing we wanted was to repossess the collateral, because this was usually the most expensive and least profitable course of action.

The main reason loans went into default is that debtors that got behind on their payments would avoid us and refuse to talk with us. If they would talk with us, we would work with them and try to find some way for them to keep the collateral and pay the bank. Sometimes debtors could see that they had stuff they couldn’t afford, so they would sell the collateral and pay down or pay off the loan.

Usually when we had to repossess collateral, it had been trashed. Sometimes loan officers had insufficiently collateralized the loan, so that even if the collateral was in good shape, we could only recoup a fraction of the outstanding loan balance by disposing of the property. Rarely did we repossess collateral (cars, trucks, motorcycles, boats, snowmobiles, pianos, construction equipment, houses, etc.) that had been kept in good shape. People that handled their finances in a trashy manner treated their property the same way.

It was frequently a heart rending experience to repossess collateral. I once had to go to a restaurant to repossess the car of a waitress that was married to a guy with whom I had graduated high school. I still remember her tear-stained face as she cried that she didn’t know how she was going to pick up her baby from day care after work that day.

A guy once came after us with a hammer when two of us went to talk to him about being behind on his truck payments. We had to hire a private cop to help us repossess the truck. As luck would have it, the guy was in the driveway and was about ready to pull out when we arrived. This was an unusual case because the truck was in cherry condition. It had lots of cool add-ons.

Our private investigator pulled his vehicle in behind the truck and boxed the guy in. As the PI walked up to the driver’s window, I could tell that he was ready to use his weapon if necessary. He talked with the guy for a long time — maybe 10 minutes. The guy sat there emotionless, staring straight forward, only speaking occasionally. Finally the guy got out of the truck, leaving his keys in the ignition, and walked back into the house. We could see through the kitchen window as he sat down at the table and bawled like a little baby with his wife at his side. The neighbors could hear the commotion half a block away. We were able to sell the truck for more than the outstanding loan balance, an unusual occurrence.

I believe that this man spent money on truck accessories rather than on his truck payment, because it was a way to bolster his ego and hide from his personal insecurities. It had become an obsession for him. Our repossession of his truck effectively emasculated the guy, because his self image was based in the flimsy junk of this world. Spending money on “that which cannot satisfy” ill serves any of us. Such a course of action causes problems for individuals and for governments.

Going into debt to fund current wants — buying today’s whims (that we often foolishly think of as needs) with tomorrow’s income — is also a serious source of problems for individuals and for governments. Only it’s even worse for governments because individuals usually can’t pass their debts onto future generations, as do governments.

Next segment in this series: Our First House

Past posts in this series:
Money Attitudes
YM and OPM

Huntsman Plans to Implement HillaryCare in Utah

Utah Governor Jon Huntsman, Jr. has threatened the state’s health insurance industry that if they don’t shape up and “play ball” by next year, he is going to seek an individual mandate (see SL-Trib article). An “individual mandate” would entail creating a law requiring all Utah citizens to purchase health insurance.

OK, let’s parse the logic behind the governor’s threat of government coercion. If the health insurance industry does not discontinue responding to market forces and respond instead to political forces — if they do not live up to some kind of unspecified standard that exists in the governor’s head (presumably making health insurance accessible and affordable to all Utahns) — he is going to force all Utahns to purchase health insurance from the insurance industry.

Can someone please help me out with this one? Apparently I’m too dense to get it. Let me try one more time. If health insurance companies do not defy the market and offer unprofitable low cost health plans to everyone, the governor is going to force the state’s citizens to buy health insurance from these companies.

Let’s see now. “If you guys don’t kill your profits,” our esteemed governor is saying, “I’m going to bring you more customers than you can imagine. In fact, they won’t be able to get away from you, because I’m going to make it illegal for them not to buy your products.” Can someone explain to me how this kind of tough talk incentivizes health insurance companies to turn themselves into public charities?

The fact is that the insurance companies are very happy to hear this kind of Stalinist drivel. They would love to have a captive customer base. The small amount of competition that exists today will become largely unnecessary, despite rhetoric calling the governor’s universal health care plan “market based.”

The push for an “individual mandate” puts Governor Huntsman to the left of Barack Hussein Obama — the most liberal senator of 2007 — and puts him in league with Hillary Clinton on this issue. Huntsman, like Clinton, favors compassion by coercion. Let’s see. Mormons have a story about some guy in the pre-earth life that had a plan like that.

As explained in this WSJ editorial, Obama loves the whole universal health care thing, but he draws the line at mandating that individuals purchase health insurance — except for children. Obama simply says that most people that don’t have health insurance are in that situation because they can’t afford it, not because they don’t want it. Forcing them to buy something they can’t afford is more harmful than not having health insurance, he claims.

But we don’t have to discuss this matter in a vacuum. We have a test case we can look at. RomneyCare in the People’s Democratic Republic of Massachusetts has the individual mandate feature. How is that working out for them?

Shikha Dalmia of the Reason Foundation explains in this WSJ article that with the implementation of RomneyCare, premiums and medical expenses in the Bay State are now climbing at more than double the rate prior to implementation. State lawmakers are predictably responding by creating price caps. Price caps ensure lower quality care, longer wait times, and rationing. The high costs of the program are causing many to pay the fine for not buying health insurance and to go without. Those that can least afford it are being hit hardest. With the deteriorating quality of care, those that can afford to do so are going outside of the system and paying high out-of-pocket expenses for higher quality care.

Universal health care proponents can say that everyone in Massachusetts now has access to health insurance, but this is pretty much a sham. Dalmia cites one doctor’s apt diagnosis, that “Forcing people to buy substandard care they cannot afford is not universal care. It is a hoax.”

Last month, another liberal GOP governor, California Governor Arnold Schwarzenegger tried to pass a HillaryCare/RomneyCare type plan (dubbed GovernatorCare by some) through one of the most liberal state legislative bodies in the nation. But the plan failed to pass because labor unions correctly “argued that a mandate would force uninsured, middle-income working families to divert money from more pressing needs toward coverage whose price and quality they cannot control.”

News of this kind of thing appears not to have reached Governor Huntsman. He is already ramping up to ram HuntsmanCare (or maybe it should be called JonCare) through the legislature in 2009. HB133 is just the prelude to this push. Between now and the 2009 session, Governor Huntsman must stand for re-election. Despite the fact that his policies fit better in the Democratic Party than the Republican Party, his high approval rating makes it inconceivable that heavily Republican Utah will refuse to re-elect him.

Governor Huntsman will take his re-election to mean that he has a mandate to impose a mandate upon you and all of your neighbors. Unlike California, however, labor unions will not come to the rescue of Utahns. My question is who will stand up against Governor Huntsman’s Stalinist coercion and stop his JonCare before Utahns have his brand of compassion rammed down their throats. The legislature appears willing to go along with the governor’s health coercion plan. Is there anyone up there that will stop it?

YM and OPM

In my early 20s I worked at a bank. I began in the mail room, but ended up working in a variety of positions, including teller, vault teller, and branch operations manager. As a vault teller, I worked in a room enclosed with what was supposed to be bullet-proof glass. I was surrounded by hundreds of thousands of dollars in actual currency.

An acquaintance once asked if I was ever tempted to pocket any of that money. I was shocked at this suggestion. Such a thought had never crossed my mind. Besides, I explained, I had to account for every penny of the money twice daily.

A few days later, I mentioned this conversation to my branch manager. He said, “You have learned a very important lesson early in your life that many people never learn: the difference between YM and OPM.” I queried, “YM and OPM?” “Yes,” he replied, “your money and other people’s money. Some people never understand this and it causes them and others problems throughout their lives.”

I have come to understand that my branch manager’s comment about YM and OPM is a very important principle that can be applied to finances at every level.

One of the sorriest sights I ever saw was when a guy working in the accounting department was caught embezzling. He was a young guy with a wife and little kids. He managed something called the over-and-short fund. Tellers that do lots of cash transactions daily often make minor mistakes. So when they balance out at the end of their shift, they sometimes end up with a little bit more or a little bit less than their registers say they should have. In fact it is rare for tellers to balance out to the penny. The difference goes into or comes out of the over-and-short fund.

When I worked at the bank, differences under a dollar were pretty much expected. Larger differences, particularly amounts in excess of $10 were a concern. The computer tracked patterns. It was generally expected that a teller’s overages and shortages would more or less balance out during a month or two. If a teller was consistently short, surveillance was begun to see if the teller was pocketing money. More than once I saw a teller let go for what amounted to petty embezzlement.

The young guy in the accounting department had come into his job behind a highly trusted career employee. The old guy was known to be as honest as the day was long. He had managed the fund for decades, from the time the bank was a tiny concern. There was never any thought of implementing appropriate modern audit controls on the fund. When the younger guy took it over, he was taught to do the way the older guy had always done it.

A couple of years after the young accountant began managing the over-and-short fund, the bank went through a major modernization from top to bottom. A consultant team was brought in to revamp all processes. They implemented appropriate audit controls at all levels. Of course, this meant that each process required a baseline audit. The audit of the over-and-short fund seemed to go OK. The auditors left. Then the police showed up. We watched as police officers walked the young accountant out of the bank in handcuffs. He was later sentenced to 10 years in prison and his wife divorced him.

It turned out that this guy had slowly siphoned off relatively small amounts of money from the fund over a couple of years, but the total amounted to quite a large sum. The strange thing was that for all of the money the embezzler had stolen over the previous couple of years, he had basically nothing to show for it. His home was a little run-down dump. He drove a run-down old beater car. He dressed in beat-up suits. He had no money in the bank. It wasn’t like the family had experienced major medical expenses. He didn’t even have any fancy electronics. It was difficult to figure out where all the money had gone.

A simple understanding of the difference between his own money and other people’s money would have saved this young accountant a lifetime of problems and misery. Everyone should develop a healthy understanding of the difference between their own money and other people’s money. This is particularly a good trait to look for when choosing political leaders.

Next segment in this series: Repo Man

Previous posts in this series:
Money Attitudes

Money Attitudes

My first real experiences with how people manage their finances began at age 11 when I took over my older brother’s newspaper route. Back in those days I had to go door to door each month to collect for the previous month’s deliveries. My route was in a decent middle class neighborhood. Most of my customers readily paid up the first time I found them at home. Some were hard to find at home. About 20% — almost always the same people — made me come back a second time.

There were a few on my route that made me come back four or five times every month. There was always an excuse. Probably the most common was that the spouse was out with the checkbook. I’d think, come on, people. You’ve already received the goods and services. We’re talking about a grand total of $4.25. Quit giving me the run around and cough it up!

Sometimes I’d have to threaten to stop delivering the paper. I only had to actually stop delivery a few times during my nearly six-year tenure. It was funny how quickly people came up with the money when that happened. My parents wondered more than once how people like that treated their other creditors, given that they were willing to stiff a little kid.

Over the next few days I am going to discuss my experiences with people’s attitudes and relationships with respect to money and finances. I believe that how people in our nation relate to these matters creates the basis for how our government handles money and finances in the name of We the People.

Next segment in this series: YM and OPM

Unlikely that Huckabee Will be McCain's VP

There seems to be a fair amount of scuttlebutt out there suggesting that Mike Huckabee is angling to be John McCain’s vice presidential pick. Some of this discussion comes from erstwhile supporters of Mitt Romney, claiming that that the other two worked together to tag-team their guy.

While there is no question that Romney suffered from competition by the combined forces of McCain and Huckabee, I think that it is highly unlikely that McCain would give any kind of serious thought to selecting Huckabee as his running mate. I doubt that Huckabee is on McCain’s long list of VP nominees, let alone his short list. Let me explain.

What does a candidate need to look for in a running mate? Should a running mate be selected to gain regional support? History shows that this rarely works. VP candidates do not tend to bring in votes from their region or even from their home state. Pundits talk about region like it’s important, but it turns out that it’s not really very important when it comes to actual votes. History also shows that the VP candidate rarely brings in votes from outside of the candidate’s party.

The main role a VP candidate plays during the campaign is to shore up the party base. They are sort of a cheer leader for the base. Wise candidates select running mates that provide the appearance to the base of balancing out the candidate’s perceived shortcomings.

Reagan picked Bush I (after trying for Ford) to reassure the moderate wing of the GOP, which had been strong prior to Nixon’s demise. As a moderate, Bush I picked conservative Quayle. That didn’t work out so well, because Quayle was not known for his conservative leadership. As a moderate Democrat, Clinton selected Gore, a solid liberal. Compassionate conservative Bush II partnered with Cheney, a defense hawk.

In each case, the candidate selected a running mate that was to help energize the registered party members. In each case, the candidate picked a running mate that had strengths where the candidate came up short in the party’s eyes. The same can pretty much be said of the candidates that lost. Very few people vote against a candidate based on his/her running mate, but a running mate can help determine the level of enthusiasm among party voters and workers.

The question then is whether Huckabee can energize the GOP base in ways that McCain cannot. On this point we must say that the answer is no. Huckabee has deep support in states with high concentrations of Evangelicals, but he generates little enthusiasm outside of that group. Polls show that even prior to Romney dropping out, two-thirds of Huckabee supporters listed McCain as their second choice. In other words, McCain will get most of Huckabee’s supporters without even having to ask for them.

McCain is currently faltering with the conservative GOP base. Many of these people feel downright alienated by McCain. He needs to pick a running mate that helps shore up that base. He already has broad support, but he also needs deep support. Many conservatives are ready to sit out this election and watch McCain go down in flames. They don’t need him. But he needs them. Despite his appeal to independent and moderate voters, McCain still needs the deep conservative base to do the grass roots work.

In that vein, former PA Rep. Pat Toomey (President of the conservative Club for Growth) had this op-ed in the Wall Street Journal. He suggests the likes of SC Gov. Mark Sanford, SC Sen. Jim DeMint, IN Rep. Mike Pence, former TX Sen. Phil Gramm, and Forbes Inc. CEO Steve Forbes.

Secretary of State Condoleezza Rice’s name has been tossed around by some, but her close affinity with the Bush administration likely counts her out. Nor does she have any real record on fiscal issues that would appeal to conservatives. Some have suggested SD Gov. Mike Rounds. How about OK Sen. Tom Coburn?

McCain’s support among the GOP faithful, particularly among those that consider themselves to be conservative is poor. His overall support among actual Republicans is fairly weak. He already appeals to independents and moderate Democrats. What he needs in a running mate is someone that looks like a real tax cutting, anti-spending, social conservative. Huckabee fails on two of those three points. Having someone that looks strong (but not crazy) on immigration would help as well.

There are a lot of people that could help bolster McCain’s standing with the GOP conservative base as his running mate. Mike Huckabee is not among that number.

Will Evangelicals Leave the GOP?

Brett Grainger hits on a significant challenge facing the modern conservative movement in this Christian Science Monitor article. Evangelical Christians have been an important part of the conservative coalition that makes up the Republican Party for the past four decades, although enough of them broke with the party in 1976 to help elect Jimmy Carter.

The various factions of the modern conservative coalition include fiscal conservatives, business people, military/foreign policy conservatives, conservo-libertarians (small government advocates), and members of the religious right, among others. The factions are not always mutually exclusive in the minds of many voters, but each has a significant core that works to promote the interests they find most important.

It is no secret that there has been a competitive relationship between the various factions of the coalition since the beginning. Social/religious conservatives have often felt that their issues have been given short shrift by the other interests.

The real reason for this, Grainger points out, hearkens back to the inception of the evangelical movement. During the 19th Century, the U.S. underwent a religious revival. Many of the newly formed Christian groups held views that included both progressive and conservative elements; both “social justice” and “moral values.”

That has not really changed. But fundamentalists and progressives eventually split, with that split becoming more pronounced during the 20th Century. During the culture wars of the 60s, evangelicals felt driven from the Democratic Party by its strong embrace of the counter culture movement. Evangelicals’ new home in the GOP has been anything but comfortable.

A generation has now passed since harsh lines were drawn in the 20th Century culture wars. Grainger says that Mike Huckabee’s primary wins in states with large concentrations of Evangelicals has “demonstrated the viability of a Republican candidate who represents Evangelicals but who also believes that the state has a positive and necessary role to play in the lives of citizens, especially those whom Jesus called "the least of these."”

The Savior admonished his followers and listeners to reach out and help others through voluntary acts of charity and service. But I must admit that it is a mystery to me how Bible-believing Christians can assume that anything in scripture means that people should be compelled to such acts by the heavy hand of government. A clear doctrine is that charitable actions done involuntarily rather than by free will are in no way virtuous. Still, Grainger says that many Christians are willing to support such policies.

With the generation passing that has fought on the front lines against the abortion culture and the homosexual agenda, the GOP has less of a lock hold on many of the newer generation of evangelicals. More of them are willing to consider voting Democratic than at any time in the past four decades. It is possible that this has been helped along by Huckabee “transcending the false division between "moral values" and "social justice."”

Of this, Grainger says, “By helping to close another gap in American political discourse – one that long separated social-justice issues and "moral values" – Huckabee may inadvertently be ushering many "new Evangelicals" out of his party.” We really won’t know until we see the outcome of the November general election how close to the mark Grainger is. Even that won’t be definitive. It will take a few elections before a clear trend is apparent.

For the time being, it seems that at least some Republican leaders are concerned enough to be lashing out at these apostates from party orthodoxy. Let me just say to those leaders, that such behavior is no way to win people to your cause.

Expecting Too Much From Our President

The AP reports that people are unhappy with how things are going in the US, and that they expect the next president to come along and make it all better. This is a patently silly notion. Make no mistake, the president has tremendous power to affect issues and to set tone, but he is not totally the master of his own fate. Nor is his power so awesome as to positively affect everything that is currently making people feel uneasy.

The federal government has grown to such size and scope that no single person can effectively manage it. We have turned on its head JFK’s admonition, “Ask not what your country can do for you. Ask what you can do for your country.” Rather than being wary against government encroachment in our personal lives, today Americans demand that government manage our personal health, get us jobs and homes, educate us, keep us from doing anything risky, fund our retirement, and make us happy.

Frankly, we ask too much of an entity that is not structured to fill our endless desires. That won’t stop politicians from pretending they can do so or from raising taxes and imposing restrictions in a futile attempt to at least make a good show of it. The idea that the federal government can be all of the things we demand it to be is ludicrous. And the idea that one person, however capable, can effectively manage such a sprawling beast is equally ludicrous.

The only way any president is going to make us feel good about the direction the country is headed is to have the great luck to preside over a good economy, have the media regularly talk up the good portions of the economy, have no serious terrorist attacks on US property or personnel, and keep everything quiet on foreign fronts, all while employing sleight of hand to keep people from paying attention to what the government is doing domestically.

In other words, the only way a president is going to make us think the country is headed in the right direction is to carefully keep people in the dark while simultaneously experiencing tremendously good luck and great relations with the media. Experience shows that a left-leaning media will often give more favorable coverage to left-leaning politicians, but the number one rule of media is that they are out for a story that will sell. Experience also shows that the media sharks are not above turning on their ideological friends if it will produce a good selling story.

Americans that are setting high expectations for their next president are quite certain to eventually be disappointed. No politician, however capable, can succeed in delivering what they want.

The answer to this problem is not a larger federal government. The answer is a smaller, more tightly focused federal government. Some things absolutely must be centralized, but a great deal of what the federal government does today should be relegated to state and local governments. And some of it should be scrapped altogether.

While it is true that decentralizing creates less order, not all order is good. Nazi Germany had great order. Meeting needs on a level closer to the people means that different jurisdictions will do things differently, but that can be a good thing. One-size-fits-all programs rarely serve people well.

These are ideals that should pervade every thought of those we elect to represent us at every level. If that were the case, by and by, government would get better rather than simply larger, more oppressive, more expensive, and less efficient.

The Contest Gets Somewhat Clearer

Super Duper Tuesday has produced a bona fide GOP front runner and a serious contest on the Democratic side. It appears that for only the second time in history, a sitting U.S. Senator that has no high level military or executive experience will be elected the next President of the United States outside of a three- or four-way split race. (JFK was the first.) This CNN site shows the current estimated delegate counts for both parties. You can also look at results by state and by calendar date.

The Democrats
As recently as last month, most observers thought that each party’s nominee would be clear by the morning of Feb. 6, but it has not worked out that way. Senator Clinton still holds an advantage over Senator Obama. It appears that she can count on most Democratic super delegates, but some of those votes could change depending on future performance. It also appears that Clinton has a strong base among Democratic women.

Obama’s supporters are noisier and more enthusiastic than Clinton’s supporters, but that doesn’t mean she lacks support. The upcoming primary schedule seems to favor Clinton, but conventional wisdom on points like this has often proved to be inaccurate this year. In other words, the Democratic race is just too close to call at this point.

One thing that has been observed for months, however, is now clearer than ever. The Democrats are vigorously enthused about their two candidates. The heavy battle being waged is about which of the two is the best. The Republican contest, on the other hand, seems to be about which candidate is least bad. Across the nation, Democratic voters have turned out in larger numbers than GOP voters.

The Republicans
Senator McCain now has more than half of the delegates he needs to win the nomination. He has achieved GOP front runner status with the lowest percentage of available Republican votes in history. McCain does well with independents and Democrats that can vote in open GOP primaries, but the large majority of actual registered Republicans that have voted so far have voted against him.

One of last night’s surprises was the performance of Governor Huckabee. He has proved to be a strong regional candidate, performing very well in areas of the South with high populations of evangelical Christians. With a budget that is only a tiny fraction the size of Governor Romney’s budget, Huckabee to date has racked up 16.2% of the available delegates to Romney’s 25%. Of course, Huckabee can’t count on winning more than a handful of delegates outside of the Bible Belt, but he has little to lose by staying in the race until the convention.

Several factors about Governor Romney’s campaign are now clearer than ever as well. He cannot win in areas with heavy concentrations of evangelicals. Apparently, they simply can’t bring themselves to vote for a Mormon. Conventional wisdom has been that if Huckabee dropped out, much of his support would fall to Romney. But data suggests two-thirds of Huckabee supporters would favor McCain instead.

Outside of the Bible Belt, Romney appears to perform well in states that hold caucuses, but not so well in states that hold primaries (except for states where he has a strong personal connection). GOP caucuses are dominated by grass roots conservatives that watch issues and candidates closely. Primaries allow more moderate and independent voters, and people that don’t follow politics closely to have a voice. Except for evangelicals, Romney has consistently won conservative votes. But it’s clear that this is just not enough to capture the nomination.

McCain has performed poorly with conservatives, but has won handily among independents, moderates, and crossover Democrats. His campaign is looking forward to open primaries in several large states. McCain can expect to win these delegates, given Romney’s apparent inability to appeal to voters in the middle, even after far outspending other candidates. Romney vows to stay in the battle until the convention, but it is difficult to see how he can win by only appealing to non-evangelical conservative voters. Even if he were to somehow pull it off, how could he then appeal to the large number of independent, moderate, and non-ideological voters that will vote in November?

Front runner McCain is expecting that the majority of conservatives will align with him once he seals the nomination. He’s probably right. But many of them will only do so grudgingly. A fair number will simply choose to not vote in November. And some are vowing to sabotage McCain’s candidacy, preferring ideological purity to a win. While this may seem vindictive, who will argue that conservatives giving their hearts and souls to eek out a win in 2004 has turned out well for them or for the country?

Looking Ahead to November
While the fight between Clinton and Obama currently seems infused with acrimony, it’s hard to say what this will mean for the party after the convention. Would wounds be healed if one ended up being the other’s running mate? Will supporters of the one angrily sit out the November vote? It’s just too early to tell.

McCain would probably perform better against Clinton than against Obama. Despite the fact that Obama is far from moderate (he was ranked the most liberal senator of 2007), he is a great speaker, and his soaring but vacuous talk about bipartisan unity appeals to voters. Senator Clinton can count on her husband’s political machine, but it’s clear that many voters have tired of that bag of tricks.

As of right now, however, it would appear that McCain’s best chance for victory in November would be the disintegration of the Democratic Party or a serious national security incident. In other words, his chances of prevailing against either Clinton or Obama in November don’t seem very good.

Wandering in the Wilderness
Many Republicans are wondering how they got to this point. Some of the factors around which the party coalesced a generation ago have changed. For example, the Cold War ended and the economy has overall been the best in the history of the world. Even the occasional downturns have been very mild by historical standards. Perhaps Republicans are the victims of their own successes. But without focusing factors, it seems as if the GOP is no longer sure of its own identity — of what it stands for.

What does it mean to be a Republican? At one time the answer to this was clear, but today it seems like an enigma. The party has become Democrat-lite. How do you select a candidate when the only reason for doing so is trying to get a win in the R column? How do you appeal to voters when you can’t even tell them what you’re about or when you offer no clear alternative? Voters can’t get enthused about voting for ambivalence.

Democrats can express schadenfreude at the Republicans’ plight, but if they’re honest, they’ll acknowledge their own problems. When the Republican Party figures out what it is about, it will again be able to nominate strong contenders. For now, it appears to be on track to nominate one of its weakest candidates ever for the presidency.

It’s too early to concede November, but Republicans shouldn’t get their hopes up. If they want a brighter future, they’ve got some serious work to do.

Saving Money Through Obesity and Smoking

According to a newly released Dutch study (see AP report), you can do your part to reduce medical costs by smoking and getting fat. The study found that adult lifetime medical expenses for thin, healthy people run $417,000 on average, while medical expenses run $371,000 for obese people and $326,000 for smokers.

The main reason for these cost differences is that leaner healthier people live longer than obese people or smokers. In their old age, people that have had relatively healthy adult lives tend to get diseases that are far more expensive to treat than the diseases from which their less healthy counterparts die at a younger age. One researcher remarked, “Lung cancer is a cheap disease to treat because people don't survive very long.”

This study somewhat confirms what people have long known intuitively. I once saw a cartoon depicting a decrepit old man sitting on his doctor’s examination table. The doctor was saying to him, “You know all those years you added to your life through good, clean living? Well, you’re living them now.”

Of course, an accountant’s expense estimate says little about quality of life. A neighbor friend of mine found herself in her early 50s severely limited in what she could do as the result of over three decades of smoking. She is on oxygen and can barely walk more than a few feet at a time. She hates her addiction, yet it is so strong that she still smokes after years of trying various smoking cessation programs. She might save the medical system money, but no one would argue that the savings are worth her reduction in life quality.

Similarly, obesity reduces quality of life. So does being overly thin, for that matter.

As we collectivize medical care, whether this is done through government, private industry, or some combination of the two, we effectively give everyone that must pay into the system a say in our personal health. This can lead to a bean counter approach to medical care. From a pure accounting perspective, it is cheaper if you die earlier, even if you have lots of health problems before you die.

One of the benefits cited by proponents of Dutch-style euthanasia is that it saves money. It could be said that people that make life shortening health choices are taking a long-term self-imposed approach to money-saving euthanasia. They are slowly killing themselves, but by doing so they are saving the rest of us money.

Another result of collectivized medical care is that it allows people to impose compassion by coercion. They are so concerned about others’ quality of life that they are willing to use political power to create coercive disincentives to engage in unhealthy behavior. Sufficient political power toward such an end can only be generated for whatever the current cause celebre happens to be.

This means that manipulation of medical policies and priorities can be based more on whim and passion than on sound science. This is how New York City came to outlaw trans fats in restaurants. What will the next health crisis be that warrants oppressive government intrusion in our personal lives?

Collectivization of medical care inserts the concerns and emotions (and power structures) of a whole host of unrelated people into the relationship between the provider and the patient. This reduces availability and/or quality of products/services while simultaneously driving up costs. Of course, this is all done with the best of intentions.

Compassion is a wonderful thing. But we do not have the right to use coercion to enforce our version of compassion. That kind of approach is the opposite of virtue and leads to all kinds of undesirable unintended side effects, even if it makes us feel good.

Will It be Back to the Future with McCain?

Significant portions of the Republican coalition seem to be gelling around Senator John McCain. Michael Medved likes to point out that McCain has a lifetime rating of 82 from the American Conservative Union, which is higher even than Fred Thompson, and is on par with Ron Paul. But it should be noted that McCain’s recent record per the ACU is much lower (65 in 2005) than in some of his earlier years.

McCain has a decent conservative voting record on “pro-life and free trade issues, favors private social security accounts, and opposes socialized health care. McCain also supports school vouchers, capital punishment, mandatory sentencing, and welfare reform.” He also is strong on national security and foreign policy. He has been an outspoken critic of pork barrel spending. From a conservative standpoint, that all sounds pretty good.

But McCain has another side that does not endear him to conservatives. He notably worked to pass McCain-Feingold, which restricts political speech. He was famously and contentiously at odds with conservatives over last year’s failed immigration reform bill. He worked hard to expand the grasp of the federal leviathan into your child’s classroom. McCain voted against the 2001 and 2003 Bush tax cuts, a position he now suggests that he kind of regrets. (Somehow when Romney does stuff like this, it’s called flip-flopping.)

So McCain has a mixed record as far as conservatives go. He is frequently described as a moderate. You’re never going to find a perfect candidate, so it might seem OK to settle for what you can get, right?

Maybe. But McCain’s differences with the conservative orthodoxy are more a matter of style. He has worked hard over the years to develop a reputation as a maverick that is willing to stand up to the GOP establishment. When he has differed with the establishment, he has seemed to enjoy dissing them in the process. This has earned him the adulation of the media, which is considered a black mark to conservatives.

McCain is now having to play kissy-face with the conservative establishment, but you can expect that to last only as long as he finds them useful. McCain seems to view those that disagree with him as personal enemies.

One of the woes being voiced among Republicans is that McCain is the reincarnation of the 1996 Bob Dole. In both cases, you’ve got a moderate long-time senator septuagenarian that is a war hero and that is known to get testy. In both cases, there is little cause for enthusiasm. And perhaps, in both cases, he is running against a Clinton. The difference is that this time, he isn’t running against a charismatic sitting president, but against another senator with a harsh personality. Some Republicans shudder at the thought of McCain in debates with Senator Obama this fall.

Some conservatives have vociferously argued that if McCain gets the GOP nomination, it will sunder the Reagan coalition, which is necessary to victory. I’m not sure I believe that the coalition will seriously split over a McCain nomination. Some might look for other options, as they did in 1992, but I don’t see a permanent split occurring. My guess is that if McCain is nominated, most conservatives will coalesce behind him.

Besides, where else do these people have to go? And exactly how necessary are talk radio listening conservatives to victory? There are parts of the GOP coalition that would like to dump them. Can enough independents and conservative Democrats be lured to vote for a GOP candidate to negate the need for serious conservatives?

I’m not sure that a McCain candidacy is the best test case for that. Like Bob Dole, McCain represents a throwback to the past rather than a look to the future. It’s more like looking backward to the GOP of Nixon. As of today, the only remaining major GOP challenger to McCain is Romney, and he has his own problems.

Of course, if the Democrats nominate Senator Clinton, they will have their own throwback to the past, so this election could end up being a back to the future kind of thing. Do you vote for the crotchety old man Washington insider or the domineering avaricious nag Washington insider? Now, there’s a happy choice. But it’s one with which the growing army of non-ideological voters could be saddled this November. No wonder most Americans are turned off by politics.