Why Medicare-for-All is Best for America and Why Insurance Companies Hate It

Bernie Sanders and other lawmakers have proposed that America expand Medicare to cover all Americans. This is a very interesting idea. It would lower the cost of healthcare and it would ensure that every American citizen has access to affordable healthcare.

Medicare is a system that pays part of the medical bills for Americans age 65 and older. Medicare enrollees get their medical care from the doctors and hospitals of their choice just like everyone else. 55 million Americans have part of their medical bills paid by Medicare right now.  Medicare-for-all  is a proposal to let Americans of all ages enroll in Medicare. 

 Americans now pay for healthcare four different ways:

  1.  A few Americans just pay cash for their medical expenses without assistance from health insurance or a government program.
  1. Working Americans are usually enrolled in a private health insurance plan. Private health insurance may be obtained through an employer or it may be purchased by individuals. Obamacare is made up of private insurance plans.
  1. Americans 65 and over use Medicare to pay for their healthcare. Medicare enrollees pay a monthly premium and deductibles and co-payments, and Medicare pays the rest of their medical bills. Medicare is funded by payroll taxes of 1.45% on employees and employers. There are now 55 million Americans enrolled in Medicare.
  1. Some low income Americans qualify for Medicaid which is a state government program that pays for basic healthcare for those who qualify. Medicaid rules vary from state to state.

 The proposal would not affect how doctors and hospitals perform medical care and it has nothing to do with medical research and developing new medicines and treatments. It is just a better and more efficient way for Americans to get affordable healthcare. 

WHAT IS MEDICARE?

Medicare was enacted by Congress in 1965 to help pay healthcare bills for Americans who are 65 and older. Medicare patients use regular doctors and hospitals.  Most  doctors and hospitals in America accept Medicare.  Medicare is paid for by a combination of monthly premiums, deductibles and copays paid by Medicare enrollees, plus a 1.45% payroll tax. (There are no “Medicare clinics” or “Medicare Doctors”. Senior citizens use the same doctors and hospitals as everyone else.)

 Expanding Medicare to cover more Americans involves expanding a system that has worked for over 50 years that all doctors and hospitals and millions of Americans are familiar with. Medicare works.

No Conflict of Interest

 Under Medicare the actual work of processing claims is performed by private contractors that bid to do the administrative work on competitive contracts. Medicare contractors receive a few pennies for each claim they process. The contractors do not make any extra money if they deny a claim. This eliminates the conflict of interest that private profit-seeking insurance companies have with their customers.

Private Insurance Companies Can Compete For Medicare Business

Medicare includes an option called Medicare Advantage where private insurance companies offer insurance plans to compete with standard Medicare. Basic Medicare Advantage plans cost the same as standard Medicare. Insurers also offer enhanced Medicare Advantage plans that provide richer benefits than standard Medicare for enrollees willing to pay a higher monthly premium. About 30% of Medicare enrollees decide to enroll in a Medicare Advantage plan instead of standard Medicare. Enrollees can change their plan every year.

 

WHAT IS MEDICARE-FOR-ALL?

Medicare-for-all is a proposal to expand Medicare to cover American citizens of all ages. It would replace most of the private individual and group health insurance plans and eliminate all of their different rules, procedures, forms, schemes to deny claims, and the provider networks that limit patients choices of doctors and hospitals. Under expanded Medicare every American that enrolled would be covered by standard Medicare or an optional Medicare Advantage plan to pay their medical bills.  Most doctors and hospitals in America accept Medicare.    

Any change to Medicare must not reduce benefits or increase costs for existing Medicare enrollees. 

  

HOW MUCH WOULD IT COST?

The premiums that individuals and employers now pay to health insurance companies are more than enough to pay for Medicare-for-all to cover those same individuals. Medicare costs less that than private insurance because Medicare does not collect money for profits, executive salaries, and advertising. Medicare administrative costs are only 2%whereas private insurance administrative costs are 18%.

 Medicare users would most like pay a monthly premium plus deductibles and copays under Medicare-for-all.  The final details of how Medicare-for-all would be implemented need to be discussed and decided in Congress. 

 

WHY MEDICARE FOR ALL IS BEST FOR AMERICA

Relying on Medicare to pay for medical care rather than the assortment of private insurance plans would improve American citizen’s access to affordable healthcare because it would:

  1. Cost less due to the elimination of insurance company profits and executive salaries.
  2.  Cover everyone including individuals with preexisting conditions.
  3.  Eliminate the conflict of interest that insurance companies have.
  4.  Eliminate the insurance company tricks and schemes insurance companies use to not pay claims.

 

AMERICAN HEALTHCARE COSTS

 The United States pays far more per person (and total dollars) for healthcare than any other nation on earth. In 2014 America paid $9,024 per person for healthcare, compared to $4,506 per person for Canada, $3,971 for people in Great Britain, and an average of $3,620 for all developed nations. No nation on earth pays more for healthcare than America.

 Citizens in the United States do not live longer or stay healthier for the extra money they spend on healthcare. Medical practice standards are the same in all developed nations of the world. The procedures, treatments, and medications available to Americans are the same ones available to citizens in Canada, France, Great Britain and all other developed nations.

 The extra money that America pays for healthcare goes for excessive profits. America has more healthcare billionaires than any other nation on earth. America cannot compete in the world if we let healthcare costs keep rising far above what the rest of the world pays. 

  

MEDICARE IS MORE EFFICIENT THAN PRIVATE HEALTH INSURANCE

This may seem impossible but it is true. Medicare pays claims more efficiently than private insurance companies because Medicare does not have to collect money for corporate profits, income taxes, or executive salaries and Medicare does very little advertising compared to private insurance companies. . Insurance companies spend about 18% of revenue on administrative costsMedicare spends only 2% for these costs.

 Medicare claims are processed by government contractors who bid very competitively for the business. As a result Medicare only pays a few pennies to process every medical claim. The contractors are paid for the number of claims they process and they do not get to keep any extra money when they deny a claim. 

 

MEDICARE LETS YOU CHOOSE YOUR OWN DOCTOR

 “Do you accept my health insurance?”

 Every health insurance plan restricts which doctors and hospitals you can use.  Health insurance only pays the bills for doctors and hospitals in the provider network. They will not pay your medical bills if you use a doctor or hospital that is not in the provider network.  

Medicare is accepted by almost all doctors and hospitals in America. Obviously there are some doctors who do not accept Medicare such as plastic surgeons and others who provide optional medical services that are not covered by Medicare. 

HEALTH INSURANCE CONFLICT OF INTEREST

When a health insurance company refuses to pay a claim the money they save is profit. This means that health insurance companies have a conflict of interest between their duty to maximize profits for investors and their obligation to pay customers’ medical bills. Most American adults have had the experience when their health insurance company denied a medical claim with some insurance company the excuse (“Exceeds reasonable and customary amount”, or “You did not obtain pre-authorization for the treatment.”)

DENIED HEALTH CLAIMS CAN LEAD TO PERSONAL FINANCIAL DISASTER

When the health insurance company denies a medical claim it can have a catastrophic effect on the financial situation of the patient and his family.

 At the time the patient decided to go get medical treatment they believe that the insurance company will pay the bills. When the insurance company denies the claim, the medical treatment has already been provided and the patient is unexpectedly obligated to pay all of the medical bills using their own financial resources. Sometimes denied claims can impose bills on a family that exceed their ability to pay, resulting in the loss of all of their liquid assets. It made matters worse when in 2006 big business lobbied Congress to change bankruptcy laws to make it harder for individuals to dismiss medical bills through bankruptcy. 

INSURANCE COMPANY TRICKS AND SCHEMES

Over the years health insurance companies have engaged in countless schemes and strategies to collect premiums and avoid paying claims. Here are details for some of the worst scheme (where they were caught).

 

The UnitedHealthcare Group Scams (NYSE:UNH)

UnitedHealthcare Group (NYSE: UNH) is the largest health insurance company in America. To understand just how ruthless and unethical some health insurance companies can be you need to know about the illegal things that America’s largest health insurance company was caught doing.

 Back-Dated Stock Option Compensation Scam

 In 2006 the CEO of UnitedHealthcare Group was a man named William W. McGuire. In 2005 Dr. McGuire was paid $125 million as CEO of UnitedHealth Group.  In 2006 the SEC began investigating Dr. McGuire and several other UnitedHealthcare executives and found that they participated in a scheme to back-date stock option compensation awards to steal from investors and fraudulently enrich themselves. Not only did Dr. McGuire created the illegal scheme to cheat and steal millions of dollars, he persuaded UNH director William G. Spears, General Counsel David J. Lubben, and several other UNH senior managers to go along with the scheme and illegally enrich themselves.

 Under pressure from the SEC and prosecutors (that is, the government). McGuire resigned from UnitedHealth Group but he was still paid about $1 billion in severance pay; the UnitedHealth Group board of directors apparently decided that McGuire’s behavior was not bad enough for him to lose his severance pay. McGuire was never prosecuted.

 Think about that:  One crooked senior manager was paid a billion dollars in one year by the UnitedHealthcare corporation. 

 

The “Reasonable and Customary” Scam

Did you ever have the health insurance company deny your medical claim because they said the amount that the doctor charged exceeded the “reasonable and customary” amount?

In February 2008, New York State Attorney General Andrew M. Cuomo announced an industry-wide investigation into a scheme by health insurers to defraud consumers by manipulating reasonable and customary rates. Cuomo found that incorrect health care cost records had been stored in a database maintained by a company named Ingenix (that was created by UnitedHealth Group) so that they could be used by health insurance companies as fake proof to deny medical claims. For example, if your doctor charged $65 for an office visit and that was the normal amount where you live, the insurance company would use the fake Ingenix reportto say that $20 was the reasonable and customary amount for an office visit and they would refuse to pay more than $20, so you would have to pay the remainder of the bill and the insurance company kept the difference as profit. In October 2009 UnitedHealth Group paid a settlement and agreed to shut down its fake medical cost database

 

WE NEED TO GET INSURANCE COMPANIES OUT OF THE HEALTHCARE BUSINESS

Now you understand why some the executives of health insurance companies will do anything to stop Americans from adopting a better system to pay for medical care, and how crooked and ruthless they can be in pursuit of their goals.

Many developed nations do not use insurance to fund healthcare because of the inherent conflict of interest and the cost of profits. America needs to get insurance companies out of the healthcare business.

WHY INSURANCE COMPANIES HATE IT

Health insurance companies have things the way they want it right now. They are the middleman in the healthcare business where they make billions of dollars from the healthcare business every year. Healthcare insurance company executives have gotten extremely rich off of healthcare, but their schemes have imposed never ending chaos, confusion, and frauds on the American people.

Medicare-for-all would disrupt this business model and reduce the cost of healthcare for Americans. Plus it would eliminate the insurance company tricks they use to deny claims and keep the premiums as profit. 

 

THE INSURANCE INDUSTRY WILL DO ANYTHING TO STOP MEDICARE-FOR-ALL

 Health insurance company executives are smart, motivated, energetic, ruthless, and they have enormous amounts of money to spend to preserve the current system. They will pay people to lie. The will publish articles full of false information. They will pay off politicians. 

 David Merritt, an executive vice president of America’s Health Insurance Plans, a lobbying group for health insurers, condemned Medicare-for-all saying:

 “Whether it’s called single-payer or Medicare-for-all, government-controlled health care cannot work. It will eliminate choice, undermine quality, put a chill on medical innovation and place an even heavier burden on hard-working taxpayers.”

In this short statement David Merritt uttered six lies.

1) “government controlled health care” – Medicare is not government controlled healthcare.  Medicare cannot tell any doctor how to do his or her job. Medicare pays medical bills like health insurance but without all the insurance company tricks and schemes to avoid paying claims.

2) “cannot work” – Since 1965 Medicare has paid the medical bills of Americans 65 and older; it works better than private insurance, costs less, and generates fewer complaints. 55 Million elderly Americans are using Medicare right now. If it can work for 55 million elderly Americans who need a lot of healthcare, it can certainly work for the other 200 million younger healthier Americans.

3) “eliminate choice” – Medicare enrollees can use almost any doctor or hospital in America unlike insurance plans that restrict choice with their hundreds of tricky provider networks that limit which doctors and hospitals you can use.

4) “undermine quality” – Again, Medicare in no way changes the way doctors and hospitals perform medical care.

5) “chill on medical innovation” – Innovation  (new medications and treatments) are developed from medical research which is performed at universities, pharmaceutical companies, and research institutes, not at insurance companies. Switching to Medicare to pay medical bills will not affect the research institutes. This is just a scare tactic. 

6) “place an even heavier burden on hard-working taxpayers” – Medicare will cost less than private health insurance and it will eliminate the tricky scams that health insurance companies use to collect premiums and deny claims and avoid paying medical bills. In all likelihood, the cost of Medicare-for-all  will be paid in full using the health insurance premiums that employers and individuals now pay to insurance companies.

MORE INSURANCE COMPANY LIES

No insurance company spokesperson can speak up and say that the health insurance business is good for America because the truth is, utilizing profit-seeking insurance companies as middlemen to pay bills in the healthcare business is a terrible system. The fact that every developed country in the world provides healthcare for less than half of what Americans pay proves that we have a problem, and we need to change. 

To fight Medicare-for-all, health insurance companies will spread lies and propaganda to confuse and scare Americans, and they will contribute large amounts of money (bribes) to those Congressional Lawmakers who will take it and protect the insurance company profits. 

Here are some of the lies that the health insurance industry has published.

“Government Healthcare Takeover”

Health insurers use this term to try to make people think that Medicare-for-all means that they will have to go to some dreary understaffed government office on the other side of town and wait in line to see a slow-moving government doctor. It is a complete lie. Medicare-for-all would not make any change to how doctors and hospitals work in America.

“Socialized Medicine”

Medicare-for-all is a system to pay medical bills for Americans without the limitations and denied claims and other schemes health insurers use to collect premiums and avoid paying claims. Medicare enrollees pay a monthly premium, deductibles, and copayments. Government  programs that make America a better place to live are not Socialism. 

“Medicare-for-all will take away your freedom to choose your doctors”

Health insurance companies restrict the doctors and hospitals that you can use with their out-of-network provider restrictions and pre-authorization rules. Medicare is accepted by almost every doctor and hospital in America.

You must wait 122 days to see a doctor to see if you have cancer!”

Medicare enrollees can make an appointment and see a doctor just as quickly as anyone else in America. There are 55 million retired Americans currently enrolled in Medicare. Do you think they would quietly put up with 122 day wait to see their doctor?

“Medicare is going broke!”

Medicare is paid for with a payroll tax that is 1.45% on employees and another 1.45% on employers, plus the premiums, deductible and co payments that paid by those enrolled in Medicare. There is a Medicare trust fund. Every month money goes in and out of it. 

“We will have healthcare rationing and death panels!”

Medicare has been in effect since 1965 covering only the elderly and there is no rationing and no death panels. Why would these things be added to Medicare just because we let younger, healthier people join in? This is just a lie to scare people.

“Canadians have to wait for years to get bypass surgery.”

Canadians are happy with their national healthcare system but we are not talking about adopting the Canadian system. Medicare-for-all means letting all Americans use the same medical payment system your parents, grandparents and great-grandparents enjoyed in their golden years.

“Only 30% of Doctors Accept Medicare and Medicaid”

Medicare is accepted by most doctors and hospitals in America. Medicaid is accepted by fewer doctors. 

“It Will Cost $32 Trillion Dollars!”

This misleading statement is based on a sentence in a study by the Urban Institute taken out of context. It is the total estimated cost of healthcare for all Americans over the next ten years without considering any premiums, copayments, or deductibles paid for by the patient. Medicare-for-all will cost less than the health insurance premiums Americans now pay to cover the same individuals over the same period of time. 

 

The insurance industry pays a lot of people to speak out and write articles to oppose any proposal to improve access to affordable healthcare and change the current system. Whenever you hear someone say that Medicare-for-all won’t work remember that it has worked great for American senior citizens since 1965.

What doesn’t work well anywhere in the world is using profit-seeking insurance companies to pay medical bills.  America is in last place among  nations of the world with our out-of-control healthcare costs.

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WHAT EVERY AMERICAN SHOULD DO

1. Contact Your U.S. Senators and Your Representative

Whenever the issue of health care is being discussed in the U.S. Congress every citizen should contact their representative and each senator once every week to tell them what you want. You can call their office, mail a letter, send an email, or fax a letter. I suggest you do all of these things.

You need to contact your representative and each of your senators regardless of their political party. 

 The power of democracy is that American citizens can vote representatives and senators out and replace them.

When you contact your representative or senators, tell him or her:

  • “I am a registered voter and I vote in every election. I want you to support Medicare for All. Can I count on you to support expansion of Medicare to cover all Americans who can pay the premiums?”

Every American has one Representative and two Senators in Congress. There is a Representative for every 500,000 citizens, and there are two Senators for every state.

The Representative is elected every two years so they are very sensitive to the opinions of the people in their district.

Senators are reelected every six years and they become most sensitive as their time to be reelected approaches.

( You also have representatives and senators that serve in your state legislature but they are not the involved in passing healthcare reform.)

2. Vote In Every Primary And General Election

You must vote in every primary election .  Here is why.

Insurance companies are allowed to give unlimited amounts of money to U.S. lawmakers. This has allowed insurance companies to buy politicians in both parties who are dedicated to serving their interests.

Most voters never vote in primary elections. Because of this,  corporations have often been able to give big money to corporate-friendly primary candidates in both parties to overwhelm all of the other candidates in the primary election.

If you do not vote in the primary elections, the only candidates on the ballot in the general election are candidates that are owned by corporations.

We must all vote in every primary election for the candidate that promises to support access to affordable healthcare for all Americans. I switch my party affiliation as needed so I can vote in the Republican or the Democratic primary to help the candidate I want to help.

3. Register To Vote

If you do not vote, you do not count. You do not matter.

A long time ago when you registered to vote you would often be called to serve on a jury. That is not done anymore because it discouraged people from registering to vote. If you are not registered to vote, get registered now, before the end of the next week.

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NEVER Put an ACCOUNTANT in Charge of Information Technology

As I write this article, the ramifications of the loss of personal information for 143 million Americans by EQUIFAX (NYSE:EFX) are still emerging.

Yesterday the company announced the immediate departure of the Chief Information Officer David Webb and Chief Information Security Officer Susan Maudlin. Presumably CEO Richard Smith whose career future is now measured in days (update: he was fired Sept 26) is trying to erase the fact that he hired a CIO with an undergraduate degree in Russian literature (a good English chap), and a CISO with a degree in music. These two incompetent clowns had bounced around corporate America making the right friends and claiming to know everything about everything including information technology. As professional bullshitters they made a lot of money until they were exposed as frauds.

God bless the unappreciated IT workers who kept things going as long as they did at EQUIFAX because these overpaid senior managers certainly contributed nothing.

Obviously CEO Smith takes the country club approach to selecting senior managers, relying on whether having a person has right friends, a cool personality and good breeding rather than proletarian qualifications like education and accomplishments in information technology. One can only wonder whether there are any competent senior managers or board members at EQUIFAX or if they are all just club members.

Accountants have a clear career path to a career in senior management by rising through the ranks of the major accounting firms that perform the annual audits of all large publicly traded corporations. The culture of the accounting firms rewards development of an enormous ego and quick glib condescension. It is amazing how many times one of these accountants can manage to weasel their way into a senior management position in charge of information technology for a major corporation.

So let me clear this up for anyone who thinks that you do not need to understand IT to be an effective senior IT manager. Without a deep and complete understanding of the fundamentals of information technology, a person cannot possibly comprehend and gain sufficient understanding of all of the rapidly emerging new developments in information technology to recognize new opportunities and risks and their relevance to the corporation in a timely manner; cannot possibly evaluate an IT risk assessment and determine if it is complete; cannot determine whether the company’s IT policies and procedures are adequate. You cannot possibly determine whether any individual who claims to be an expert in an IT specialty really knows what they are doing or not; without a genuine personal understanding of information technology, an IT bullshitter can flim-flam you forever and you will never catch on until after there has been a major failure and you are the corporate failure of the week.

Corporate information technology is extremely complicated and new technologies and risks emerge every day. An ideal competent IT professional would have a bachelor of science undergraduate degree in information technology from a decent school and at least five years of intensive hands on experience in each of the major IT fields of software development, operations, networking, and security; an MBA from one of the top B schools would round out the individual’s education. The only way that a person without an IT background can be an effective CIO is if they are riding on the back of a competent IT person.

The problem is much bigger than this particular drama at EQUIFAX. Very few genuinely competent American IT professionals complete their career without finding themselves subordinate to a complete idiot at some point. Part of the problem is that IT is cool and sexy so it attracts bullshitters like moths to a flame. Another part of the problem is the lack of single broadly recognized professional credential that reliably identifies a competent IT professional; there are some IT certifications that are worthy of respect but there are hundreds of IT certification acronyms that are nothing more than moneymakers for the companies that issue them. But a big part of the problem is that senior corporate management is rife with overpaid bullshitters whose only skills are political maneuvering and quick put-downs delivered at strategic moments. Many very large corporations are machines that run themselves and the $100 million dollar CEO is just a figurehead, no more essential than a hood ornament on a car, except in those situations when he is caught engaging in financial reporting fraud to loot investors (Ebbers, Skilling, McGuire, et al); in those cases the bonehead did indeed CEO have real impact. In this culture the boys never pause to consider that a lack of knowledge about IT or anything else might be a problem.

Here for your entertainment are a few more stories of about incompetent corporate IT management.

 

MILLIKEN & CO

Milliken & Company hired an IT project manager named Delmar Young who managed a team that over the years included enough IT talent to start another Microsoft. Del had no knowledge of information technology the day he was hired and he never learned anything useful during his long destructive career. Del was a raving alcoholic who expended his best mental effort at arranging to go on expense paid trips so he could get drunk for free while sleeping in a relatively nice place. The strongest theory of how Del got and kept his job is that he was drinking buddies with John McClendon the director of corporate personnel who was another raving alcoholic. During Del’s career at Milliken a long procession of very smart young software developers were hired, worked a few years until they saw what was happening at Milliken, and then left to work for a better company.

 

AAA of N Cali

AAA hired a big-four accounting guy to be their CIO. Among his bright ideas was to eliminate the Chief Information Security Officer position to save money and assign his essential duties to other people. Mercifully he was replaced before he was able to totally destroy the IT function.

 

New Horizons Rehabilitation

New Horizons was a small organization that operated a substance abuse treatment facility in Florida. When the state imposed a requirement that they migrate to electronic patient records and electronically report to the state databases, the company owners turned to their Chief Finance Officer, a former big-four accountant, and told her to handle it. She hired a 24 year old whiz kid who had never completed a corporate IT project and over the next five years he extended his record of never completing a corporate IT project.

 

 

A Good Economy

A point of universal agreement during every election year is that we need a good economy. Voters are offered an assortment of propaganda about why each particular candidate’s agenda is best for the economy. Obviously the United States and the world have major problems with the economy. Europe and Japan are trying negative interest rates, an economic poultice that has never been tried before. And so far it is not working.

We need to first think about what it means to have a good economy, and then we can correctly evaluate how each candidate might get us where we want to be.

For Whom?

For working Americans

Those who work for a company or in their own business producing valuable goods and services for customers, a Good Economy is when working Americans have a full time job matched to their skills and abilities and they are receiving middle class wages. When everyone has middle class wages they purchase homes and lots of things for them, automobiles, travel and entertainment – things that make life enjoyable. All of these purchases generate economic activity that allows other Americans to earn middle class wages. This is the consumer economy and it makes up about 70% of all economic activity in the United States.

For professional investors

For the pros, a Good Economy is when things are set up to make the stock market go up. As the stock market goes up, stock investors get richer. Stocks go up for a lot of reasons, some financial and some emotional. Improving financial performance of publicly traded companies causes their stock price to rise. Reduction in interest rates increases the value of future cash flows which also tends to cause stock prices to rise. Emotional feelings also move the stock market; optimism about future economic conditions fuels stock price increases, whereas concerns about the future may trigger a sell-off.

For Corporations

A Good Economy is when things are set up to allow profits to increase. Profits can increase through higher prices, lower costs, or increased volume of business. Corporate profits also benefit from lower taxes.

For Billionaires

For individual billionaires, a Good Economy can mean several different conditions. Billionaires often have a large stake in a single enterprise, such as Bill Gate’s ownership of a large chunk of Microsoft, or Larry Ellison’s ownership of Oracle. Policies that help Microsoft or Oracle stock to go up are good for those particular billionaires. Billionaires are investors. Billionaires like policies that make stocks go up. The income tax bill for a billionaire can be staggeringly large, so it is not surprising billionaires may focus on policies that reduce taxes as being good for the economy.

However Steve Forbes and Warren Buffet both said that it doesn’t much matter who is in Washington because they will do all right no matter who is running the country. Or to put it another way, the smartest billionaires are rich because they know how to prosper in any environment.

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These goals are often in conflict. Reduced costs for a corporation mean lower wages for American workers. Reduced taxes for the rich mean higher taxes for the not rich.

These different (and conflicting) definitions of a Good Economy are the reason that politicians use a lot of vague promises to get elected. A Republican candidate can stand in front of any group of voters and promise to enact policies to promote a Good Economy, allowing the voters to fill in their own definition of what he or she means.

Since the Great Recession America has experienced an unprecedented economic phenomenon. The Gross Domestic Product and corporate profits have recovered from 2009 levels, driving the stock market to new highs, but wages for working Americans have not risen. This is the fundamental problem with the economy today. The consumer economy that is supported by the purchases of ordinary Americans is anemic because Americans do not have as much money to spend, relative to the economy as a whole, as they had in previous eras. Fed action to lower short term interest rates to 0% had very little effect on the economy. Many economists with vision firmly planted in the rear view mirror predicted that the zero percent interest rates would spawn runaway inflation, but the dreaded inflation never materialized. Fed minutes are now littered with arguments to justify raising (normalizing) interest rates on the grounds that the members believe that the economy can probably tolerate a rate increase, rather than to to throttle an overheated economy that the hawks predicted would occur about five years ago.

The healthiest economic period in modern American history is the period from the end of World War II in 1945 until the early 1980’s. During that time, wages and the standard of living for ordinary working Americans consistently rose and fueled the American consumer economy which was the envy of the world. The biggest gold mine on the planet was the American consumers. If a company developed a product that American consumers wanted,  the economic rewards were enormous.

The prosperity of the 1945 – 1985 period was based on an economic measure called Wage Share. Wage Share is the proportion of Gross Domestic Product that is paid out in wages to American workers and other developed nations every year.

Wage Share chart

The graph above illustrates Wage Share as a percent of GDP for the United States and other nations for the period from 1960 to 2012. As indicated by the red line, Wage Share in the United States peaked at 73% in 1969, declined slightly to 72% in the early 1970s, and then declined continuously to less than 65% at the lowest point on the chart in 2012.  Over the same period of time, corporate earnings, earnings of the richest people in the world, and the stock markets have all grown to new records highs.

The fact of the concentration of wealth in the hand of very few individuals has been documented in the last few years by many credible sources. A neutral summary of the situation is available in Wikipedia in the article Income Inequality in the United States. Citing data from several sources, the article reports that the proportion of the wealth produced in American that is paid to the top 1% has risen from about 10% in 1970 to almost 25% today.

There are several fundamental facts to keep in mind when discussing the economy.

First, the wealth of the nation is valuable goods and services that are produced by all economically active producers. Monetary amounts are used to measure the wealth, but the measurement only has meaning when it is conceived in terms of the desirable things that the money can buy.  Every valuable good or service is produced by a person who is doing productive work. This is an economic fact that many would like to suppress. Because if you acknowledge this inescapable truth, then it follows that the people who do the work and produce the valuable goods and services have a legitimate claim to receive a fair share of the wealth they produce.

But there is another argument in favor of a more fair distribution of wealth between workers and the one-percenters that doesn’t rely on idealism and fair play; almost everyone’s good economy needs consumers with money to spend.

Suppose you imagine a future where technology has advanced and a handful of Silicon Valley geniuses have created a huge sophisticated computerized company that can create any product completely automatically without the need for labor. Pipelines bring in raw materials from near and far. Computers control 3D printers and automated fabrication machines that can make clothes, automobiles, food, medicine, even complete homes. Products are delivered by a fleet of computerized trucks that drive themselves and automatically load and unload the goods. Online animated characters interact with humans over the Internet to provide personal services like health care. Over twenty years the geniuses enhance and refine the automatons until they can produce almost everything that the nation needs. In this futureworld, the Silicon Valley titans end up owning virtually the entire GDP of the nation.

But there is a problem. The customers have no money.

Billionaire genius Elon Musk as expressed some interesting thoughts about the future effects of technology advances.

The Secrets of Business Success – Tom’s B-School

Business schools don’t have the brass to publicly say what the game of business is really all about. The late George Carlin got it right and said so:

Everybody knows by now, all businessmen are completely full of shit; just the worst kind of low-life, criminal, cocksuckers you could ever wanna’ run into – a fuckin’ piece of shit businessman. And the proof of it, the proof of it is, they don’t even trust each other. They don’t trust one another. When a business man sits down to negotiate a deal, the first thing he does is to automatically assume that the other guy is a complete lying prick who’s trying to fuck him outta his money. So he’s gotta do everything he can to fuck the other guy a little bit faster and a little bit harder. And he’s gotta do it with a big smile on his face. You know that big, bullshit businessman smile? And if you’re a customer – Whoah! – that’s when you get the really big smile. Customer always gets that really big smile, as the businessman carefully positions himself directly behind the customer, and unzips his pants, and proceeds to ……service…….the……..account.

Business success means winning by any means that you can get away with.

Business Schools wisely refrain from offering degrees in becoming a ruthless financial predator, in part because a lot of moms would not be comfortable with that, but mostly because they cannot actually turn anyone into a successful financial predator. So they make money by moving junior along for four enjoyable years while he sits through a lot of courses that are not too challenging for most people.

But the truth about business is there for all to see.

Near the turn of the century it became vogue for corporate business executives to portray themselves as supermen who could use their unique genius to transform a mediocre company into spectacular profitability in only a few years if the board of directors would agree to pay them a billion dollars. After a few years of this game it finally became clear to lawmakers that all these experts were doing was corrupting the accounting system so they could publish fake financial reports with a lot of big impressive sales and profit numbers, reap their billions, and cash out and move to Florida. The government eventually caught up and passed Sarbanes-Oxley to shut down this particular swindle, but don’t believe for one second that the Sarbox legislation ended the game.

So here in shockingly frank terms are the real skills needed to succeed in business; The Secrets of Business Success – Tom’s B-School Curriculum.

101. Bragging

Brag. You must constantly tell everyone how great you are. No one ever made it to the top on pure untouted virtue. Bragging may have been the primary skill that elevated General Douglas MacArthur to become a five star general and ultimately the Viceroy of Japan. Both he and his mother wrote letters endlessly to generals and politicians telling them how great Douglas was.

201. Bullying

You must be a bully and you must be a bigger bully than your opponent. You must have the personality and the large intimidating physical presence to intimidate people to do what you want them to do, and to prevent them from doing that to you.

This fact explains the dearth of women at the highest levels of corporate management. Some women are very smart, some are stunningly beautiful, and a few are both smart and beautiful. But in a genuine brutish fight women are not worth a flip at bullying. You will note that most women are, fundamentally, pussies.

301. Bullshitting

Of course. To succeed in business you must be able to convincingly bullshit anyone at any time about anything.

401. Bluffing

Another of the essential arts of deception. The successful corporate executive must be able to win a hand from time to time merely by bluffing opponents out of the game.

501. Brown Nosing

Or in corporate-speak, cultivating strategic relationships. This is primarily a skill that one needs to climb the corporate ladder and to have one’s way with the Board of Directors. The late great F. Ross Johnson used his excellent brown nosing skills to climb the corporate ladder all the way to the CEO’s chair in every company where he worked. Ross was a master at using corporate resources to bribe his superiors and directors to get them to do whatever he wanted them to do, without them feeling bribed. Amazing.

601. Back Stabbing

And of course, one must be able to destroy your opponents, particularly opponents who are smarter than you are. This is accomplished by attacking them in ways that all fall under the category of back-stabbing.

Back stabbing techniques range from merely heaping ridicule upon an opponent to running a sting where one lures the opponent into compromising behavior and then exposes them.

____________

So there you have it. Tom’s B-School; The Secrets of Business Success. The real package of skills you need to rise to the top of the corporate jungle and eat meat with the big dogs.

Harvard can help but you really need to be born with predator DNA to play and win this game. It would really help if one of your ancestors was a successful pirate, because at its core business is often highly organized, systematic looting and plundering.

Lest you leave thinking this is all one big joke let me call your attention to the career of Al Dunlap. “Chainsaw” Al Dunlap made a reputation in the 1980’s as corporate business GENIUS. Bring Al into any mediocre business and pay him a lot of money, and he would use his apparently superhuman business genius to increase sales and profits in no time, sending the price of the stock skyrocketing. But in the end Al was found to be a fraud. Although he would fire a lot of people (often good diligent long term employees) and make speeches about all of the strategic changes he was making, the spectacular financial results were found to be the result of nothing more than fraudulent accounting. Al was cooking the books. He was a professional financial reporting fraud artist who used Bragging, Bullshitting, and Bluffing to make steal a huge pile of money.

Al was on the front of the wave in financial reporting fraud. He got out of the game with a pile of money and a slap on the wrist before the government got really mad and put some of the fraudsters in prison like Bernie Ebbers of WorldCom and  Jeff Skilling of Enron for doing more or less the same things that Al did.

But this is the United States of America where money talks. Al Dunlap is now retired in Florida where his name is proudly plastered on a building in the school of business at Florida State University. I kid you not. Al donated $20 million to Florida State University.

 

 

 

The Juror’s Handbook

Quite a few years ago when I was a highly confident 31 year old man I was summoned for jury duty. I responded and appeared in the courthouse at the appointed time only to be selected to sit on a jury to try a serious felony case despite my best efforts to appear undesirable to the prosecution and the defense. The trial took a little less that a week and we the jury reached a verdict after about 8 hours of deliberation. Over the years since that experience the impression of how ill prepared I was for the task has only grown stronger. I walked into the criminal judicial arena that day with only a television drama viewer’s knowledge of our system of law enforcement and criminal justice. If I had it to do over again with the benefit of the wisdom gained over a full lifetime of living the defendant would receive a different verdict.

Most cops, prosecutors, and judges in America are fair and honest and they do a good job of keeping our communities safe for law abiding citizens. I am especially grateful to cops, the front line soldiers who go wherever they have to go 24/7/365 and deal with whatever is there, often placing themselves at risk of personal injury and death.

Somewhat over 1,000,000 individuals are convicted of a felony in state court every year in the United States. Overwhelmingly, the system charges the right person with the crime but errors do happen. John Grisham did an excellent job explaining how an innocent man’s life was ruined by the incompetence and corruption in law enforcement, prosecution, and the court system in his excellent non-fiction book The Innocent Man. In that case misdeeds by the police officers, investigators, forensic experts, and the prosecutor that led to the wrongful conviction were so egregious that it is impossible for me to believe that some of it was not intentional. As of June 2017, the Innocence Project has helped to exonerate 2052 individuals who were convicted and imprisoned for crimes they did not commit; estimates are that there are many more such individuals still behind bars. The damage done to the lives of these people cannot be undone. It is impossible to restore a person’s life after they have been wrongfully convicted and imprisoned.

Problems with criminal courts and juries swing both ways. In the Casey Anthony trial a young Florida mom was tried for the death of her baby girl (Caylee). The prosecution presented evidence that supported the conclusion that Casey Anthony killed her daughter, and went a long way to establish when, how, and why she did the deed. The defense offered some far-fetched explanations for Casey Anthony’s behavior around the time when the little girl disappeared and was killed. The jury gave her a not guilty verdict and set her free. A serious misunderstanding by the jurors of the meaning of “reasonable doubt” is the only plausible explanation.

Serving on jury for a criminal trial is a weighty responsibility. The jury must stand up for civilization and vote guilty to protect society from those who refuse to conform to society’s rules and live in peace with their neighbors. The jury must also serve as the is the last hope for the wrongfully accused who regretfully appear in courts somewhere in America every month.

When the jury finds the defendant guilty (convicts), the decision is subject to review (appeals) at several levels. When the jury finds the defendant not guilty (acquits) the decision is final.

1. A Crime Occurred

The first thing the prosecution must prove is that the stated crime actually occurred.

A defendant must be charged with committing one or more actions that violate a specific criminal statute according to the literal text of the law. Merely doing something that is morally wrong or behaving in an uncivilized manner is not sufficient grounds to convict a person of a crime. The prosecutor must identify a specific criminal statute that the defendant is charged with violating in order to establish grounds to impose punishment.

In cases where there is no physical evidence and no objective witnesses, the jury may find that they have questions about whether the specific crime that is charged actually occurred. Sometimes prosecutors are lazy or bend the rules to suit themselves. There have been prosecutors who decided that whenever any citizen discharged a firearm in public then they must be arrested and charged with a crime. In these cases the prosecutor would charge a defendant with a cornucopia of violent offenses in the hope that the defendant would plead guilty to something rather than incur the expense and risk of a trial.

Early in the deliberations the jury must find that they are all convinced beyond a reasonable doubt that the specific crime(s) that are charged actually occurred. If they are not convinced that the charged crime occurred then the defendant cannot possibly be found guilty.

2. The Defendant Did It

If the prosecution establishes that a crime occurred, the next task is to introduce and defend evidence that the accused committed the crime. Here the prosecution has a huge advantage over the defendant. The police officers, detectives, and crime scene technicians are all government employees who may be utilized by the prosecutor to gather evidence and build the case. The defendant usually has no prior experience with crime technology and certainly has no on-call staff available to gather their own exculpatory evidence or to review the work of the state to find errors. Few defendants will have the personal financial resources to hire a team to mount an effective challenge to the state’s experts. Although the judge is supposed to be impartial, juries should not ignore the fact that the judge is also a state employee. It is impossible for judges to not get familiar with prosecutors, police officers, detectives, and crime technicians. They work together year after year.

When as often happens the defendant has few personal resources, the state will assign a public defender. I admire public defenders. They perform a task that will never earn them admiration from the rest of the criminal justice staff. A defendant relying on a public defender is at a

3. The Burden of Proof

The prosecutor must provide the jury with convincing evidence that a crime occurred and the defendant committed the criminal act.

The prosecution has wide discretion to decide whether to charge an individual with a crime. Although elected officials and newspapers may clamor for the cops and prosecutors to “do something” about a crime problem, criminal charges should only be filed when the prosecutor has reliable evidence that a crime occurred and that a specific individual engaged in behavior that violated a specific criminal statute. As such the entire burden of providing the jury with convincing evidence to support a guilty verdict rests squarely upon the prosecutor. The prosecutor has the resources of the police officers, investigators, crime scene technicians, and forensic experts to work to gather evidence to solve the crime.

If during deliberations the jury finds that there are unanswered questions about whether the crime occurred or whether the accused committed the crime then the jury should regard this as a failure by the prosecution to prove its case. The jury has no duty to fill in the gaps. The prosecution should tell a convincing story supported by evidence about how the defendant committed the crime and explain any gaps in the narrative with respect to things that matter to determine guilt or innocence.

4. Reliable Evidence: Who Do You Believe?

 

Studies with video recordings of events show that eyewitness accounts of what happened when witnesses saw a staged crime event are far from perfect. When watching a crime scene most people do not perceive everything that happens within their field of view. They tend to focus on one part of the scene and fail to observe other activity happening in the area. They may blink or flinch and miss critical moments. They may be intentionally distracted from seeing the criminal act.

Even eyewitness identifications have proven to be marginally reliable. At the time a crime occurs very few people will carefully scrutinize the criminal. Due to the stress of the encounter the victim is focused on survival. The criminal may do things to obscure his identity. The crime may take place under poor lighting conditions. The victim may have a general idea of what the criminal looked like but unless the criminal has a unique distinguishing feature (purple hair) the victim will not be able to identify the criminal from a group of similar looking men with any reliability. Additionally, studies of wrongful convictions have shown that line-ups can be manipulated to guide a victim to select a particular candidate.

Our memories are not perfect. The best witness accounts are those that are recorded as soon as possible after the event such as words spoken on a recorded 9-1-1 call or a statement made to an investigating officer writing his report shortly after a crime occurs. As time goes by recollections by witnesses tend to fade or become modified in their memory.

And of course people lie. Everybody lies. When your wife asks “Honey, do you think I look fat” what do you do? If a cop or an attorney is found to have lied to the court they face severe adverse professional consequences and criminal prosecution. But they may omit details that they know are relevant in order to try to steer the jury to a conclusion.

Because of these problems jurors should adopt a skeptical demeanor while listening to testimony. Watch the witness’s eyes to see if he looks down or to the side before he speaks, which is an indication that he is measuring his words rather than plainly reciting what he saw.

Physical evidence is extremely useful to provide a foundation of reality that jurors can depend on. Crime scene technicians who gather and analyze physical evidence are usually one or more steps removed from the actors in the crime and investigation. Although they may make mistakes they are very unlikely to be drawn into a conspiracy to suppress or alter evidence. In a trial of a major crime it would be very difficult to convince me to vote to convict someone without providing physical evidence that a crime occurred and that ties the defendant to the crime.

The defense should work to expose weaknesses in the prosecution’s case. A skillful defense attorney is very effective at identifying inconsistencies in testimony and pointing out the limitations in expert opinions and technical errors in the physical evidence.

5. Beyond a Reasonable Doubt

At this point please take a moment to note that in life it is nearly impossible to be absolutely certain about matters concerning the behavior of other human beings. Absolute certainty means beyond the possibility of the slightest doubt. Absolute certainty is rarely attainable in life and never in court. Jurors will always have some doubt when they decide a case.

How convincing must the prosecution’s case be? The threshold for the burden of proof in a criminal case is beyond a reasonable doubt. To find a defendant guilty the jury must decide beyond a reasonable doubt that the crime occurred and that the defendant is guilty as charged. It is very important that jurors in a criminal trial have a clear and precise understanding of what is and is not reasonable doubt.

So what is reasonable doubt? Reasonable doubt exists when there is a reasonable explanation for all of the evidence without the defendant being guilty of the crime.

 

Reasonable doubt cannot:

  • Depend on magic, miracles, or supernatural events.
  • Rely on the occurrence of extremely unlikely events without strong proof that the unlikely events happened in this case.
  • Be founded on a theory of conspiracy among the cops, technicians, prosecutor and judge unless there is strong evidence presented in this trial that such a conspiracy exists.
  • Be founded on anecdotes about similar cases that occurred in the past.

If the prosecution’s story leads you to conclude the defendant did it, and the evidence cannot be explained away without relying on one of the unreasonable elements above, then the case is proven beyond a reasonable doubt and a guilty verdict is supported.

 

6. Civil Matters

The foregoing concerns criminal trials where the defendant may lose his freedom or even his life based on the jury’s decision.

You may also be called to serve on a jury for a civil matter. Civil matters are usually lawsuits where one party is seeking compensation (money) from another party. It is a money fight. It is theoretically possible to file a lawsuit and ask the judge to order the other party to take certain action, like sign a deed, but that is rare. The state is not involved in civil trials beyond the fact that the trial is conducted in a state courtroom staffed by a judge who is a state employee.

The standard of proof in a civil matter is the preponderance of the evidence.  Preponderance is the legal way of saying the jury should decide which side has more convincing evidence that the jury believes has more truthfulness and accuracy than the other side. This statement implies that there will be some attempted deception during the proceedings.