ACA/Obamacare: Hospice Thrown Under The Bus.

ACA Exchanges: Sloppy Software, Stray Codes and Poor Web-Efficiency Techniques

“The website is troubled by coding problems and flaws in the architecture of the system, according to insurance-industry advisers, technical experts and people close to the development of the marketplace.

Among the technical problems thwarting consumers, according to some of those people, is the system to confirm the identities of enrollees. Troubles in the system are causing crashes as users try to create accounts, the first step before they can apply for coverage.

Experian PLC, an information-services firm, holds a federal subcontract to support that system. The company declined to comment.

Information technology experts who examined the healthcare.gov website at the request of The Wall Street Journal said the site appeared to be built on a sloppy software foundation. Such a hastily constructed website may not have been able to withstand the online demand last week, they said.

Engineers at Web-hosting company Media Temple Inc. found a glut of stray software code that served no purpose they could identify. They also said basic Web-efficiency techniques weren't used, such as saving parts of the website that change infrequently so they can be loaded more quickly. Those factors clog the website's plumbing, Media Temple said.”

“So far, Web-traffic problems are allowing only a small trickle of buyers, said John Gorman, chief executive of Gorman Health Group, an insurance-industry consulting firm with clients selling policies on the exchanges.

Large insurers have seen enrollment figures totaling in the hundreds each, said Sumit Nijhawan, chief executive of Infogix Inc., a data-integrity firm that works with such insurers as WellPoint Inc., Aetna Inc. and Cigna Corp.

So far, many tens of thousands of people had started the application process but the number of those who were able to create accounts and shop for coverage is likely in the low thousands, according to people with knowledge of the situation and estimates by insurance-industry advisers.

The administration has declined to say the total number of enrollees.” - Software, Design Defects Cripple Health-Care Website, Wall Street Journal, 10/06/2013

Link to the entire article appears below:

http://online.wsj.com/article/SB10001424052702304441404579119740283413018.html?mod=WSJ_hpp_sections_health


　

　


　

Socialized Medicine - Milton Friedman

Economic Results, Economic Processes and Political Judgments of Economic Processes

'Perhaps the greatest achievement of market economies is in economizing on the amount of knowledge needed to produce a given economic result. That is also their greatest political vulnerability. The public can get the economic benefits of such systems by judging results without understanding processes. But in their political behavior, the public must judge processes - including economic processes of which they may be ignorant or misinformed. Public misunderstandings can lead not only to misinterpretations of economic benefit as harm, but to actual harm resulting from policies designed to “correct” perceived problems. Once the process is underway, every perceived problem - whatever its reality or origin - calls for political solution, and these “solutions” tend to create a never-ending supply of new problems to be “solved”.'
-Thomas Sowell, Knowledge and Decisions, p.69



http://www.amazon.com/Knowledge-Decisions-Thomas-Sowell/dp/0465037380/ref=sr_1_1?s=books&ie=UTF8&qid=1353411092&sr=1-1&keywords=knowledge+and+decisions+by+thomas+sowell

Upon Further Review: a residential housing market with shadow market of foreclosures -or- a total eclipse of foreclosures?

John B. Taylor in his book Getting Off Track : How Government Actions and Interventions Caused, Prolonged, and Worsened the Financial Crisis makes the grand observation that the financial crisis was a government lead failure. That government policy, or more succinctly politico policy, set the stage for shenanigans that occurred in the private sector leading to the financial crisis. (1)

Morgenson and Rosner in their book Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon write a detailed account, stretching back decades, and names-names regarding politico policy and the actors that set the stage for shenanigans. (2)

In an essay entitled Upside Down Economics Thomas Sowell writes a concise time line regarding politico policy setting the stage for shenanigans. (3)

M. Jay Wells essay Why the Mortgage Crisis Happened also provides a very good chronological history of politico policy from 1933 to 2008 which set the stage for shenanigans. (4)

Regardless of history and empirical study, certain individuals want to notionally blame the private sector or the market or banks for the financial melt down when in fact the case is politico failure of the first degree. The “market failure” mantra regarding the financial crisis is, of course, carried forward and lauded by politicos themselves to deflect the true case of politico failure.

One then arrives at today’s aftermath, a murky quagmire of residential home values falling and few new homes being built, a deflationary spiral of value if you will. The declining values fueled, in part, by abundant foreclosures with a pipeline full of foreclosures yet to come to market. One might find that the shadow inventory of foreclosures yet to come to market, depicted as a “pipeline”, may well be much bigger than advertised. How so?

Roger Arnold, chief economist for ALM Advisors, writes in an essay entitled U.S. Housing Market Cannot Recover:

“The most important issues to consider are:

　


How many foreclosures have there been?
How many more will there be?
What do the banks plan to do with them?
　
Properties received by banks through the process of foreclosure are carried and accounted for as Other Real Estate Owned (OREO). The three primary categories of OREO are 1-4 Unit Residential, Commercial, and Construction and Development.

In this column, I will only address 1-4 Unit Residential properties, which represent 25% of all OREO at U.S. banks. I will discuss the others in future column or in the comments section below if readers are interested.

There are about 7,000 banks in the U.S. and OREO affects all of them. The principal value of mortgages tied to the OREO at the four largest institutions, JPMorgan Chase(JPM_), Bank of America(BAC_), Citigroup(C_), and Wells Fargo(WFC_) is much lower as a percentage of outstanding loans than at the smaller institutions below them. This is because the smaller banks have foreclosed on non-performing mortgages while the larger institutions have not.

The result of this is that the outstanding value of non-performing mortgages held by the four largest money centers are much higher than at the smaller banks. The money centers have simply not been foreclosing.

The value of the loans attached to OREO, the properties already foreclosed on by the four largest money centers, is only 3% of the value of the non-performing loans they hold; the properties that have yet to be foreclosed on but most probably will be.

The 97% of mortgage loans that have not been foreclosed on but probably will be makes up the largest percentage of what is known as shadow inventory. This number is so horrifically high that even the pundits aware of the issue won't discuss it publicly -- probably because their own livelihoods could be at stake for doing so.” (5)

Arnold goes on to make this statement:

“Just think of the damage that has been done to the housing sector, as well as the national and global economies and financial markets, with only 3% of the probable foreclosures required as a result of the U.S. housing crash having been completed to date.” (6)

Hence the pipeline of foreclosures on their way to market is nothing in comparison to the reservoir of foreclosures feeding the pipeline. Hence it’s not so much a shadow inventory of foreclosures as it is a total eclipse of an inventory.

Notes:

(1) John B. Taylor, Getting Off Track : How Government Actions and Interventions Caused, Prolonged, and Worsened the Financial Crisis.

http://www.hooverpress.org/productdetails.cfm?PC=1342

(2) Morgenson and Rosner, Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon.

http://www.amazon.com/Reckless-Endangerment-Outsized-Corruption-Armageddon/dp/0805091203

(3) Upside Down Economics, Thomas Sowell.

 http://townhall.com/columnists/thomassowell/2009/02/18/upside_down_economics/page/full/

(4) M. Jay Wells essay Why the Mortgage Crisis Happened.

http://www.americanthinker.com/2008/10/what_really_happened_in_the_mo.html

　
(5) U.S. Housing Market Cannot Recover, Roger Arnold


http://www.thestreet.com/story/11533664/2/us-housing-cannot-recover.html

　

　

U.S. Federal Budget: the un-balanceable budget!

April 15, 1913 and April 15, 1936 and First Degree Political Dupery: Great Politico Counterfactual Arguments

What about those politically driven counterfactual arguments that make the assertion that without government intervention all would have been lost?

If Markets fail, then governments fail too. However, politicos enjoy framing positive externalities of government intervention without ever mentioning the negative externalities of government intervention [also known as cascading unintended consequences]. The politico argument is based on the “counterfactual”. That is, the politico frames the abstract and unknown outcomes that surely included dire consequences vs. politicos stepping into the breach via intervention and creating wonderful outcomes. Stated alternatively, the politico compares the first stages of intervention outcomes with the unknown non-intervention outcome –or- politically framed opinion based reality is compared with politically framed opinion of non-reality.

Since politicos enjoy comparing their supposed grand accomplishments [positive externalities only] with non-reality, what if one went one step further and out counterfactual-ed the politico? That is, what if one went back to April 15^th 1912 and wiped the slate clean of income tax, the Federal Reserve and the 1930’s proposition of politicos manipulating economic levers to achieve supposed outcomes?

In 1913, the 16th Amendment to the Constitution made the income tax a permanent in the U.S. tax system. Prior to the 16^th Amendment the U.S. tax system was basically a tariff on imported goods [tariffs not being a wonderful world in and of itself]. The tariff tax revenue funded a government of very limited size and scope. (1)

Also during 1913 The Federal Reserve Act was passed. (2)

“In one respect the System [the Fed] has remained completely consistent throughout. It blames all problems on external influences beyond its control and takes credit for any and all favorable occurrences. It thereby continues to promote the myth that the private economy is unstable, while its behavior continues to document the reality that government is today the major source of economic instability.” - Milton and Rose Friedman (3)

During The Great Depression John Maynard Keynes advocated intervention into the economy by politicos. That is, that politicos should manipulate the economic levels and intervene into the free market to create outcomes:

“Keynes was exceedingly effective in persuading a broad group—economists, policymakers, government officials, and interested citizens—of the two concepts implicit in his letter to Hayek: first, the public interest concept of government; second, the benevolent dictatorship concept that all will be well if only good men are in power. Clearly, Keynes’s agreement with “virtually the whole” of the Road to Serfdom did not extend to the chapter titled “Why the Worst Get on Top.”

Keynes believed that economists (and others) could best contribute to the improvement of society by investigating how to manipulate the levers actually or potentially under control of the political authorities so as to achieve desirable ends, and then persuading benevolent civil servants and elected officials to follow their advice. The role of voters is to elect persons with the right moral values to office and then let them run the country.” - Milton Friedman (4) (5)

Hence one can surely go back to 1912 and create the ultimate counterfactual world of no income tax, free banking, and an economy based on economics rather than politics. What is to say this counterfactual world is not much more free and prosperous than the reality of politically driven taxation, politically driven banking, and politically driven economy?

The point being that politically framed counterfactual arguments that without government intervention outcomes would have been world-ending is political dupery of the first degree. Any counter-factual argument can be created to support or deny the outcomes.

Notes:

(1)    History of the Income Tax in the United States

http://www.infoplease.com/ipa/A0005921.html

(2)    Federal Reserve Act

http://en.wikipedia.org/wiki/Federal_Reserve_Act

(3) Free to Choose, Milton and Rose Friedman

(4) Milton Friedman, Richmond Federal Reserve Economic Quarterly, volume 83/2 spring 1997.

http://www.richmondfed.org/publications/research/economic_quarterly/1997/spring/pdf/friedman.pdf

(5) The General Theory of Employment, Interest and Money

http://en.wikipedia.org/wiki/The_General_Theory_of_Employment,_Interest_and_Money

PIIGS: Remember it is Portugal, Italy, Ireland, Greece and……Spain.

“…the historically important central puzzle of economics was to explain how independently acting people in an unplanned decentralized, private ownership economic system allocate their resources and, in particular, to explain how it is that the uses they seem to make of resources seem to be well coordinated”. - Harold Demsetz (1)

Independently acting people in the unplanned aggregate economic environment coordinate well. Man-made systems do not coordinate well in a vast and aggregate economic environment. (2)

Imagine if one is faced with having to “unwind” man-made political systems masquerading as economic systems in Europe. Europe being a vast economic environment. The unwind becomes a crisis for many as the man-made politico systems, the larger and more complex they are, breed larger and more complex negatives that public choice theory explains. (3)

Robert Higgs at the Independent Institute has made the assertion that legislation leading to regulation “ratchets up”. That is, little is ever repealed, merely more is added on. Hence we have a corpus of regulation that can never erode, only expand. A zero floor of erosion in corpus with all new gains in regulation becoming part of the corpus – rarely or never to erode. (4)

Imagine being on the ground in Europe and trying to ratchet back/unwind all the man-made politico silliness and during every step of the way encountering Marie, Thomas, and Peter living off of, and depending upon, the zero floor of erosion of corpus that sustains his/her income in one form or another.

Notes:

(1) From Economic Man to Economic System, Harold Demsetz
http://www.amazon.com/From-Economic-Man-System-Institutions/dp/1107640857

(2) F.A. Hayek, from the essay The Pretense of Knowledge

(3) James M. Buchanan and Gordon Tullock, The Calculus of Consent: Logical Foundations of Constitutional Democracy, 1958

(4) Dr. Robert Higgs, http://www.independent.org/aboutus/person_detail.asp?id=489

Nitwitery Warning: Math Quest and ObamaCare. Ops! We Spent the Savings Twice.

“Under Obamacare, Medicare cut's [$500 billion] is transferred into Medicaid to pay for the expansion of uninsured coverage outlined above--but, it is also simultaneously credited as savings to the [Medicare] trust fund.

 The CBO and Medicare's own economic estimators already said the government can't spend the same money twice.”

“…the [independent] public trustee overseeing Medicare and Social Security finances, analyzed Obamacare, and found that it will add at least $340 billion to the national deficit--citing federal accounting practices that have obscured the true fiscal impact of ObamaCare. (1) (2) (3) (4)

Hold on, the CBO said last month ObamaCare would cost 1.76 trillion rather than $940 billion:

“President Obama's national health care law will cost $1.76 trillion over a decade, according to a new projection released today by the Congressional Budget Office, rather than the $940 billion forecast when it was signed into law.” (5)

Then $940 billion becomes $1.76 trillion last month which now becomes $2.1 trillion this month.

Notes:

(1)    Public Trustee Report: Obamacare deficit reduction mostly accounting fraud, Examiner.com, 04/10/2012 http://www.examiner.com/political-buzz-in-national/public-trustee-report-obamacare-deficit-reduction-mostly-accounting-fraud

(2)    New study shows ObamaCare increases deficit, knocking down president's vow, Foxnews.com, 04/10/2012 http://www.foxnews.com/politics/2012/04/09/study-claims-obamas-health-care-law-would-raise-deficit/#ixzz1res8ro73

(3)    HHS Secretary Sebelius admits to double-counting in Obamacare budget, Daily Caller, 03/04/2011 http://dailycaller.com/2011/03/04/hhs-secretary-sebelius-admits-to-double-counting-in-obamacare-budget/

(4)    America Crack Open Your Piggy Banks – Obamacare Costs Revealed, 60plus.org, 04/10/2012, http://60plus.org/america-crack-open-your-piggy-banks-obamacare-costs-revealed/

(5)    CBO: Obamacare to cost $1.76 trillion over 10 yrs, The Washington Examiner, 03/13/2012, http://campaign2012.washingtonexaminer.com/blogs/beltway-confidential/cbo-obamacare-cost-176-trillion-over-10-yrs/425831

Quiz! How many days has it been since the Senate passed a budget? Answer: 1,063 days (32 more days and it will be 3 years)

March 45,000 Low Volt Shocker: GM Halts Production Of Chevy Volt… Again

When oil prices climb in a constant fashion [rising oil prices vs. oil price shocks] the consumer has time to adjust consumption patterns. That is to say, James and Jane Goodfellow can change the composition of their basket of goods consumed to accommodate rising oil prices. As the story goes, the Goodfellow’s delay a purchase, substitute goods, and put off some purchases all together (skip a night out for dinner) to accommodate the rising energy price.

A phenomena expected to occur during a constant oil price increase would be the price of gasoline rising hence signaling consumers to increasing car pooling, more combining of trips and one would expect an increase in consumer interest and consequential purchase of electric vehicles and/or hybrid vehicles. That is, consumer preference may change regarding solely gasoline powered vehicles, in that, electric or hybrid vehicles would garner some additional consumer preference even if the increase is at the margin.

Enter the Chevy Volt. General Motors announced today that Chevy Volt production will be halted with 1,300 idled and are anticipated to be recalled April 21^st. 


' "Even with sales up in February over January, we are still seeking to align our production with demand," GM spokesman Chris Lee said.

The car company had hoped to sell 45,000 Chevy Volts in America this year, according to the Detroit News, but has only sold about 1,626 over the first two months of 2012.' (1)

"The news comes just one day after GM announced that the Volt sold 1,023 vehicles in February, up from just 603 in January.” (2)

“General Motors has told 1,300 employees at its Detroit Hamtramck that they will be temporarily laid off for five weeks as the company halts production of the Chevrolet Volt and its European counterpart, the Opel Ampera.” (3)

“It will be the third time that Volt production has been stopped for at least a month since the car first went on sale in December 2010.” (4)

Therefore we do see marginal consumer preference change from  603 Volts sold in January climbing to the astounding sales rate of 1,023 albeit the assumed sales rate is 3,750 per month (45,000 unit goal/12 months). Hence January production rate was 16% of goal and February sales was 27% of goal. Wow!

When considering rising gasoline prices pushing Chevy Volts to the astounding sales pace of 1,023 per month, one must not overlook an additional incentive: a $10,000 tax credit! Yes, your tax dollars are at work!

“The White House intends to boost government subsidies for wealthy buyers of the Chevy Volt and other new-technology vehicles — to $10,000 per buyer.


That mammoth subsidy would cost taxpayers $100 million each year if it is approved by Congress, presuming only 10,000 new-technology autos are sold each year.” (5)

Despite rising gasoline prices, despite the massive tax subsidy, the Chevy Volt must be contrasted to total vehicles sales for the month of February which spiked upward.

“For the second month in a row, U.S. auto sales came in much higher than the consensus expected in February and reached a four-year high of 15.1 million units at a seasonally-adjusted annual rate. Despite higher gas prices, total February light vehicle sales came in an impressive 15.7% above a year earlier, led by a 40.4% increase for Chrysler and 34% increase for Volkswagen. Sales of the Ford Focus doubled over the last year, and the company overall had a 14.4% increase. GM highlights included a 28% year-over-year sales increase for the Chevrolet Silverado truck and a 20% annual gain for the GMC Sierra truck.” (6)

Is there a lesson to be learned? Has this lesson been learned before in the US auto industry? The basic lesson is that consumer preference is revealed by the market place. The producers then need to match the demand revealed by the preference. However, if from the supply end producers create a supposed preference item, most times the item does not match the consumers revealed preference as a centrally planned preference rarely matches a spontaneous/emergent order preference of millions of freely choosing consumers. If one recalls, in the early 1970’s Detroit built vehicles they considered vehicles that customers wanted. Sales slumped as low quality non-demand vehicles would not sell and a flood of imports came into the US market that more closely matched consumer preference. Ah, the evil of it all.....history repeats itself yet again.

Moreover, there is likely a third lesson. If a bailed-out producer, beholding to politicos who bestowed taxpayer money onto such producer, is coerced into producing a supposed preference item merely reflecting the vision of particular politicos and their preference for “the way things ought to be”, the plans of the few end in not matching the plans of the many.


Notes:

(1) GM Laying Off 1300 Due to Low Volt Sales, Washington Examiner, 03/02/2012

http://campaign2012.washingtonexaminer.com/blogs/beltway-confidential/gm-laying-1300-due-low-volt-sales/406771


(2) GM shuts down Chevy Volt production for five weeks, temporarily lays off 1,300, Torque News, 03/02/2012


http://www.torquenews.com/1081/gm-shuts-down-chevy-volt-production-five-weeks-temporarily-lays-1300


(3) GM Halts Production of Chevy Volt, Lays Off 1,300 Workers, Zipwire, 03/02/2012


http://weaselzippers.us/2012/03/02/heartache-gm-halts-production-of-chevy-volt-lays-off-1300-workers/

(4) G.M. Again Pauses Production of Chevy Volt, NYT, 03/12/2012


http://www.nytimes.com/2012/03/03/business/gm-suspends-production-of-chevrolet-volt.html?_r=1

(5) More than one way to sell a volt, Edmonds.com, 02/13/2012


http://townhall-talk.edmunds.com/direct/view/.f157543/920

(6) Car Sales Shift Into High Gear, 4-Year High in Feb., Carpe Diem, 03/01/2012


http://mjperry.blogspot.com/2012/03/car-sales-shift-into-high-gear-4-year.html

Examining the Argument Basis for the Continuation of Economic Development Authorities

State, local and municipal economic development authorities based on collective action and funded by taxpayer dollars come in many varieties. In the main one might categorize the central planning entities as:

(1)    those based on central planning techniques regarding urban planning,

(2)    those based on central planning techniques that attempt to attract private or public sector entities via industrial parks or site preparation,

(3)    those central planning techniques awarding tax holidays, subsidized loans and grants-in-aid to attract firms.


The three central planning techniques mentioned above have been challenged as non-effective and unrealistic based upon the position that the private sector will respond if a demand exists [let the market determine]. That is, the spontaneous/emergent order of the plans of the many will be more effective than the central plans of the few. (1)

One of the rebuttals to the argument that economic development plans are ineffective is:  “…others are providing central planning and collective action taxpayer dollar incentives hence one must compete with the other state, local and municipal governments”. That is, the basic debate point of “if they are doing it, we must do it too”.

Drilling down into the rebuttal’s debate point of “….since others offer taxpayer dollars, than we must offer too…” what if the debate point is a signal to consider/investigate the implicit assumption of “if they, then we” and that this aspect of the rebuttal in fact points directly to the summation of components of public choice theory? How so?  

If collective action by use of taxpayer dollars begets another set of collective action through another set of taxpayer dollars, and so on down the line, as argued in the above debate point, then the debate point boils down to  “perpetual” [if they, then we, and we become the next they, and so on]. However, is the underlying basis for the debate point a signal of “purposely perpetual”? Stated alternatively, is "if we, then they" no more than an exercise of purposeful perpetuation, which is a reflection of, and indication of, a purposeful spider web of rent seeking, special interests, politico enablers, and political constituency building through taxpayer dollars?  

Hence the rebuttal is merely based upon perpetuation which then leads one to consider the rebuttal as an indicator of a purposeful perpetuation of a pre-built network of rent seeking. That state, local and municipal authorities that argue they must offer taxpayer dollars in the form of economic development as an exogenous set of state, local and municipal authorities are offering taxpayer dollars in the form of economic development, is not an argument of the exogenous rather an indicator of a scheme of purposeful perpetuation.

One might consider taking the above proposition of a purposeful perpetuating scheme and putting it into “action”:

(1)    local economic development authority X is directed by politico enablers Y and made up of economic development authority employee group G, the summation of which is dispensing taxpayer dollars T.

(2)    one knows as a fact that anytime T is dispensed activities as evidenced by public choice theory emerge i.e. rent seeking, special interests, politicos acting as special interest enablers, crony capitalism, etc. That is, a special group is benefiting from the associated rent seeking and we will designate this group as RS.

(3)  the economic development authority X is necessarily  perpetuated as both Y and G have a vested interest in employment and power, respectively, and RS has an interest in the taxpayer dollars bestowed upon RS.

(4)  in order to legitimize and perpetuate the existence of X the group Y, G and RS merely point to the existence of another local economic development authority designated as A.

(5)therefore, as the argument goes, since A exists then X must exist and since X exists then A must exist.

However, both X, A and the multitude of other local economic development authorities B, C, D and so on do not exist because of one another. However, they may well exist as an emergent coordinated scheme. That is, once the multitude of local economic development authorities came into existence, then Y, G, and RS associated with each individual authority have a grand incentive to perpetuate their internal employment, politico external power and rent seeking activities of the taxpayer dollar. Their self-preservation then becomes a coordinated scheme of existence due to/based upon their own and other's emergence over time. The self-perpetuation of such authorities then becomes: since X emerged, and A emerged, then B, C, D and so on must exist due to the emergence of others. However, their existence is not due to greater emergence, their existence is due to their internal employment, politico external power and consequential rent seeking activities of the taxpayer dollar.

Which then leads one back to the proposition: it is not an argument of the exogenous rather an indicator of a scheme of purposeful perpetuation. That the separate authorities merely find themselves in a collection of authorities and conveniently point to the other authorities as the basis for their continued existence. That the convenience of other authorities as a basis regarding each seperate authority’s existence is fallacious. That the convenience of other authorities is more likely the knowledge that political power, rent seeking activities and internal employment of the authorities themselves can be perpetuated, in a coordinated sense, by each authority purposefully pointing the other authority as a basis for existence.

Notes:

(1) The Use of Knowledge in Society, 1945, F.A. Hayek.

http://www.econlib.org/library/Essays/hykKnw1.html

“Free Contraceptive”: Upon Further Review the “free contraceptive” problem is merely an indicator of base model failure.

A point that seems to be missed by talking heads, pundits, and media-types regarding the Catholic contraceptive issue is: this is one more episode in a series of endless episodes associated with a central planning scheme known as ObamaCare. Further, it is not Obamacare specifically, its any centrally planned scheme that by design continuously exhibits an endless series of negative episodes also known as unintended consequences.

The centrally planned scheme, as with any scheme, comes with endless tangents. Tangents of the unintended, that then interact into cascading unintended consequences.

When the unintended consequences surface one will most certainly note the classic central planning after-the-fact attempt to address unintended consequences by way of back tracking e.g.: ...oh we really meant this or that, ...oh that doesn't apply to YOU after all, ...oh we will waiver that aspect, and on and on and on it goes.

In the main, its not about Catholics, its not about contraceptives, its about a central planning scheme. Yet another scheme in a long parade of schemes based on "the way things ought to be". Scheme based propositions are never able to sort out the endless tangents.

Those gazillion tangents, that the central planners of the centrally planned scheme were suppose to take into account. Those experts with Omni-present knowledge, with grand supposed abilities, with continuous and dynamic real-time knowledge of each and every mundane aspect, that go onto design a socio-economic system…. with knowledge they do not in fact possess. (1)

Those tangents, which are so conveniently assured to never occur when central plans are sold based on a proposition of “the way things ought to be”. Those tangents that have absolutely no chance of being accounted for, but most assuredly were sold as accounted for when “the way things ought to be“ was a warm and fuzzy politico info-mercial. Yes, those many, varied, and consequential tangents go on to tarry at their haunt and re-visit time and time again.

One needs to consider being ahead of the curve regarding the following propositional arguments that surely will surface regarding the endless tangents of the scheme as it unravels and reveals its many and varied errors: (a) if the plan had been different, (b) if the planners had been different, (c) if circumstances had been different, (d) if we would have had more money, (e) if all of the above, a combination thereof, had been different.

Do centrally planned schemes by “experts” through the use of coercive powers, armed at best with non-real time general knowledge….do such schemes historically sort through items resulting in wonderful outcomes? -Or- do free market based, free people, free people basing decisions on real time mundane knowledge, making free decisions at the point of mutual self interest historically result in the best overall outcome?

Notes:
(1) F.A. Hayek, from the essay The Pretense of Knowledge

Spirit Airlines “Unintended Consequences Fee": Pricing the Negative Externalities of Government Failure?

‘Spirit Airlines announced this week that it would add a $2 "unintended consequences fee" to all tickets due to new federal regulation aimed at protecting consumers.

The "Department of Transportation Unintended Consequences Fee" was added to each ticket effective immediately and is a direct response to new DOT rules put in place Jan. 26 to offer travelers better "passenger protections."

The most visible of the new rules was a law that required airlines to include mandatory government taxes and fees in all advertised fares. Other rules pertained to ticket cancellation policies and baggage fees. Spirit says it's the DOT regulation allowing passengers to change flights within 24 hours of booking without paying a penalty that's forced them to add the fee.

"Spirit believes that consumers have a right to know that this misguided regulation is expensive and is hitting consumers directly in their pocket books," the company stated on its website.

"People love the idea of not having to commit to a reservation, but this regulation, like most, imposes costs on consumers," CEO Ben Baldanza added in the airline's statement. "Wouldn't we all like to eat all we want and not get fat? Regulators like to try to sell the idea of this rule, but have ignored the cost impact to consumers. You simply can't eat all you want without consequences." ‘ - Internation Business Times, Mark Lohanso, 02/02/2012

Link to the entire article apprears below:

http://www.ibtimes.com/articles/292054/20120202/spirit-airlines-dot-unintended-consequences-fee-2.htm

“Fair Share”: The Allocation Process of Fair-Share-Units

Suppose one viewed the political argument of “fair share” as fair-share-units? That is, if one considers the fair share argument, that of transferring [redistribution], what about considering the argument in terms of transferring or redistribution of fair-share-units from some sort of production realm to some sort of recipient realm.

Putting aside one’s political view of redistribution, consider the following:

(1)    In the abstract, regarding these units of fair share, is it possible that one would experience a production problem of fair-share-units as no incentive exists for production?

(2)    On the consumption side of fair-share-units, would one experience a grand incentive to consume?

(3)    Skipping by utility, marginal utility, production frontiers, etc. …. would there be any chance [using particular debate jargon of particular debaters] of these fair-share-units being affected by “greed” or “hoarding”?

(4)    Would there exist a “1%” of fair-share-unit holders and the other “99%”?

(5)    Would the consumption of fair-share-units create “envy” and lead to class warfare distinctions among those consuming fair-share-units?

(6)    If fair-share-units, the production thereof, suffered problems, is it possible that fair-share-unit production would have to be “bailed out”?

Economics is the allocation of scarce resources with alternative uses. If the allocation thereof, with free participants in a free market is politically framed as greed, hoarding, 1% vs. 99%, envy, class warfare, and bail outs…. then the allocation process of fair-share-units would be otherwise?

Buffaloed in Buffalo -or- The Home of The Public Employee Face Lift

“This is an old story for Buffalo. Ever since the city began losing its manufacturing base in the 1950s and gradually declined into one of America’s poorest cities (the poverty rate today is nearly 29%), the federal and state governments have poured hundreds of millions of dollars into subsidized redevelopment schemes that have yielded few tangible benefits.

Buffalo may be the paradigmatic example of why expensive government revitalization efforts often fail. Back in 2004, the Buffalo News estimated that the city had garnered more federal redevelopment aid per capita than any other city in the country, a total of more than half a billion dollars since the 1970s. Yet, the paper noted, the city had virtually nothing to show for the money.

Officials squandered millions granting loans and subsidies to projects that went bust. There was a proposed trade center near the famed Peace Bridge that was never completed even after the city granted it federally backed loans; a failed shopping plaza on William Street; and several hotels that defaulted on their government loans. Among the past three decades’ failures have been a dozen or so businesses in the theater district—”one of Western New York’s most heavily subsidized stretches of real estate,” said the Buffalo News.”

“But Buffalo also struggles because it remains among the highest-taxed localities in the country. According to Cato Institute scholar Dean Stansel, a Buffalo resident pays 25% more in income taxes than does the average resident in America’s 100 largest metro areas. Buffalo’s 8.75% sales tax, according to the Tax Foundation, is the fifth highest among the country’s 120 cities with more than 200,000 residents. And the property-tax burden in Buffalo and surrounding Erie County ranks in the top 10% nationwide.

These taxes have gone to support a spendthrift local government that nourishes itself at the expense of the private sector. In 2003, then-Gov. George Pataki appointed a financial control board to audit Buffalo’s finances. The Buffalo Fiscal Stability Authority accused city government of financial mismanagement, inadequate oversight, and fragmented record keeping. It detailed numerous wasteful practices in city government, including loading employee contracts with expensive provisions.

The city’s virtually insolvent school district, for example, paid for elective cosmetic surgery for its teachers and other staff. “Buffalo must have the best looking teachers in the country,” says John Faso, a former member of the control board, which lobbied unsuccessfully to have the perk ended. It continues today, to the tune of some $6 million a year.

The city also struggles to cut spending because of expensive state-imposed mandates, including a union-friendly binding arbitration law that results in rich public-employee contracts, and a state law that allows unionized public workers to continue receiving the benefits of a contract—including pay increases—even after the contract has expired. Good luck getting concessions from union leaders in new contract negotiations under such conditions.”

“In the Empire State, the official version of Buffalo’s decline is that the city lost its manufacturing jobs to cheap overseas competitors. But the flight of blue-collar jobs from upstate New York began in the late 1950s when businesses and investment bolted to more competitive American states, not to foreign countries. Today, business executives consistently rank New York one of the least desirable states in which to open or expand a business.” (1)

Read the entire essay, How Stimulus Spending Ruined Buffalo, at either of the following links:

http://online.wsj.com/article/SB10001424052970204409004577156603296740624.html




http://newyorklibertyreport.com/?p=4717



Notes:

(1) How Stimulus Spending Ruined Buffalo, The Wall Street Journal, weekend edition, 01/14-15, 2012, Steven Malanga

Regarding Self Appointed Minor Deities: Lisa Jackson of the EPA

The Wall Street Journal

 Editorial: Lisa Jackson's Power Play

Date: 12/22/2011

At an unusual gala ceremony on the release of a major new Environmental Protection Agency rule yesterday, chief Lisa Jackson called it "historic" and "a great victory." And she's right: The rule may be the most expensive the agency has ever issued, and it represents the triumph of the Obama Administration's green agenda over economic growth and job creation. Congratulations.

The so-called utility rule requires power plants to install "maximum achievable control technology" to reduce mercury emissions and other trace gases. But the true goal of the rule's 1,117 pages is to harm coal-fired power plants and force large parts of the fleet -- the U.S. power system workhorse -- to shut down in the name of climate change. The EPA figures the rule will cost $9.6 billion, which is a gross, deliberate underestimate.

In return Ms. Jackson says the public will get billions of dollars of health benefits like less asthma if not a cure for cancer. Those credulous enough to believe her should understand that the total benefits of mercury reduction amount to all of $6 million. That's total present value, not benefits per year -- oh, and that's an -illion with an "m," which is not normally how things work out in President Obama's Washington.

The rest of the purported benefits -- to be precise, 99.99% -- come by double-counting pollution reductions like soot that the EPA regulates through separate programs and therefore most will happen anyway. Using such "co-benefits" is an abuse of the cost-benefit process and shows that Cass Sunstein's team at the White House regulatory office -- many of whom opposed the rule -- got steamrolled.

As baseload coal power is retired or idled, the reliability of the electrical grid will be compromised, as every neutral analyst expects. Some utilities like Calpine Corp. and PSEG have claimed in these pages that the reliability concerns are overblown, but the Alfred E. Newman crowd has a vested interest in profiting from the higher wholesale electricity clearing prices that the EPA wants to cause.

Meanwhile, the Federal Energy Regulatory Commission, which is charged with protecting reliability, abnegated its statutory responsibilities as the rule was being written.

One FERC economist wrote in a March email that "I don't think there is any value in continuing to engage EPA on the issues. EPA has indicated that these are their assumptions and have made it clear that are not changed [sic] anything on reliability . . . [EPA] does not directly answer anything associated with local reliability." The EPA repeatedly told Congress that it had "very frequent substantive contact and consultation with FERC."

The EPA also took the extraordinary step of issuing a pre-emptive "enforcement memorandum," which is typically issued only after the EPA determines its rules are being broken. The memo tells utilities that they must admit to violating clean air laws if they can't retrofit their plants within the EPA's timeframe at any cost or if shutting down a plant will lead to regional blackouts. Such legal admissions force companies into a de facto EPA receivership and expose them to lawsuits and other liabilities.

The economic harm here is vast, and the utility rule saga -- from the EPA's reckless endangerment to the White House's failure to temper Ms. Jackson -- has been a disgrace.

Solyndra: Purple Marbles and Dupery.

‘Testifying under oath on a widening controversy, Chu said he was unaware of his staff predictions in 2009 that Solyndra was likely to face severe cash-flow problems. He said that market changes which led to a steep decline in the price of solar panels were "totally unexpected." ‘

‘Solyndra went belly-up after getting the $528 million loan from the government and Chu told the House Energy and Commerce Committee that he made all decisions involving the loan to the solar-panel manufacturer. He said he made all judgments regarding Solyndra with the best interests of the taxpayer in mind’.

‘"I want to be clear: Over the course of Solyndra's loan guarantee, I did not make any decision based on political considerations," Chu said. He was facing sharp questions in the biggest showdown so far in the energy panel's nine-month investigation of Solyndra’.

‘Chu said his decision to approve the loan was based on the analysis of experienced professionals and on the strength of the information they had available to them at the time.

"The Solyndra transaction went through more than two years of rigorous technical, financial and legal due diligence, spanning two administrations, before a loan guarantee was issued," he said. "Based on thorough internal and external analysis of both the market and the technology, and extensive review of information provided by Solyndra and others, the (Energy) Department concluded that Solyndra was poised to compete in the marketplace and had a good prospect of repaying the government's loan."’

Chu also took responsibility for a later decision to approve a restructuring of Solyndra's debt that allowed two private investors to move ahead of taxpayers for repayment in case of default

‘Although both options involved significant uncertainty, Chu said he made the judgment that restructuring was the better option to recover the maximum amount of the government's loan. The decision also meant continued employment for the company's approximately 1,100 workers, he said.

Chu said it was worth noting that U.S. taxpayers remain first in line for repayment of the initial loan and noted that private groups invested nearly $1 billion in the company.

Solyndra faced another crisis in August, Chu said. This time, after consulting with outside analysts, he decided that the U.S. should not provide additional support to Solyndra. Days later, the company filed for bankruptcy.

While disappointed, Chu said the U.S. should continue to support clean energy.

"When it comes to the clean energy race, America faces a simple choice: compete or accept defeat. I believe we can and must compete," he said.

Solyndra was the first renewable-energy company to receive a loan guarantee under the 2009 stimulus law, and the Obama administration frequently touted the company as a model for its clean energy program. Chu attended a 2009 groundbreaking when the loan was announced, and President Barack Obama visited the company's Fremont, Calif., headquarters last year’. (1)

Regarding the above testimony of Mr. Chu in front of the House Energy and Commerce Committee, one needs to take special note of the following references: no political considerations involved, sudden market changes, loan guarantees, rigorous technical considerations of the loan, the clean energy race, that we must compete [clean energy race], and ultimate bankruptcy of  Solyndra. It’s very likely that Mr. Chu does not realize he is explaining the very building blocks of economic rent seeking of taxpayer dollars which is in fact a politico constructed event through the mechanism of government. That Chu is indirectly explaining public choice theory in action. Stated alternatively, Chu is explaining a classic case of rent seeking in action.

Upon further examination, Chu is explaining a “clean energy race” that only exists in the minds of those wanting such a “race”. That the clean energy race, if in fact it did exist, is an energy race that would require market participants to compete in the greater energy market place by gathering private capital and then deploying the capital, human capital, and technology to create economically competitive energy sources in the greater energy market. However, in essence, the “clean energy race” is merely a political urgency condition created by rent seekers through politicos that want to create a clean energy market which somehow, someway is framed as walled off from the greater energy market. The entire “clean energy race” is in fact a political attempt to segregate a market subsection from the real market place which is in fact “energy” with all forms of energy competing in a private free market environment.

Think about Chu’s testimony is the following light:

(1)    if the clean energy  market place is indeed not a political market place for energy i.e. “clean energy race”,

(2)    then the market place is a private market place,

      (3)    then no loan guarantees would exist,



      (4)     meaning no taxpayer money would be involved,

     
      (5)    hence no hearings and no story being told in front of House Energy and  Commerce Committee.

Hence Chu invalidates his position that no political considerations were involved as the entire clean energy rent seeking process is in fact political and in fact the taxpayer was involved. How did taxpayer money become involved if politicos did not bestow the taxpayer funds through the mechanism of government? It’s of no matter that Chu, the White House, the energy department, or any other entity is denying political considerations are involved as any statement of such non-consideration of politics is ridiculous when the entire environment of clean energy is in fact a political rent seeking exercise to seek taxpayer dollars to subsidize uncompetitive energy sources.

This particular situation is in fact a case of certain special interests championing clean energy. These special interests have a preference for clean energy. Next an urgency condition is created much like the implicit urgency condition which exists in the concept “advertising”. This urgency condition is then promoted and advertised [clean energy race] as a notional proposition that somehow validates the special interest seeking taxpayer dollars through politicos.

Note: one needs to reflect upon the above described situation for a moment. That the special interest has in fact created a notional proposition, promoted the notional proposition, and then seeks taxpayer dollars based upon a notional proposition. Nothing empirical exists in this exercise. In essence, one likes purple marbles, one promotes the urgency of producing purple marbles, then one has purple marbles produced and paid for by a third party. Pure purple marble dupery.

However, supposed clean energy is not in fact competitive within the greater energy market place. In order to make supposed clean energy competitive the special interests lobby politicos for subsidies which come in the form of taxpayer money. The politico then grants subsidies through the mechanism of government as a political constituency building exercise i.e. those receiving the subsidy will then support the politico through campaign donations and other campaigning efforts. Therefore the entire process is political with the entire political process funded by the taxpayer.

Notes:

(1) Chu: No White House Influence on Solyndra Deal.

http://www.newsmax.com/Newsfront/SolarInvestigation/2011/11/17/id/418395?s=al&promo_code=D899-1