Right Angle Club 2016
New volume 2016-10-27 19:24:19 description
Right Angle Club: 2016
In a lovesong written by T.S. Eliot, the character named J. Alfred Prufrock complains that as he grows old, he wears the bottom of his trousers rolled. College freshmen who encounter this line are apt to glide over it, uncomprehending, but the allusion will eventually grow clearer. The old man tends to find his legs have apparently grown shorter, because he has to roll up his pants to keep them from dragging on the ground. Although the cartilages in his knees, hips and lower spine may have compressed a little, the shortened legs are more apparent than real. The pants seem longer because his belt line has dropped. Dropped below his pot belly, that is.
No medical textbook that I know contains much discussion of pot bellies, even though they are almost universal, and universally noticed. The muscles of the belly wall relax, allowing the guts to bulge forward over the pubic bone.
Even doctors don't know enough about this disorder of old age
The aging lungs tend to enlarge, pushing the guts downward. The spine bends forward, and of course fat tends to increase inside the abdominal cavity. If there has not been too much weight gain, the pot belly tends to flatten out when its owner lies down on his back; if weight has been gained, the pot sticks up like a pregnancy, obscuring the lower edge of the rib cage, bulging out at the sides. Normally, a young person's abdomen is described as "scaphoid", or hollowed out like the inside of a rowboat. A skinny young woman has wider flaring hip bones, exaggerating this scaphoid appearance, and making the waist narrower by allowing the guts to drop down into the larger pelvic cavity. Younger people are more active, with more muscle tone holding things together somewhat better.
Anyway, when the older person rolls over in bed, the innards of the belly cavity get squashed against the mattress. The old man's prostate leads to a fuller bladder, which means he gets up earlier when he rolls over it, and gets up a lot earlier if he is overweight and has more pot belly. Or it may be the upper stomach that gets squashed, forcing the acid stomach contents up the esophagus and resulting in heartburn, burping, and even cough or hoarseness if the acid gets up into the throat and back down the windpipe. With weight gain, the pressure of lying prone can press against the main leg veins as they cross the brim of the pelvis, resulting in swollen ankles. Since the large intestines are coiled and kinked, external pressure against them causes a minor degree of obstruction which can be experienced as constipation or sometimes bowel urgency. Since the bowels contain a fair amount of gas, pressure on them causes small gas bubbles to merge into larger bubbles, with resulting flatulence which can reach startling proportions in the early morning hours. For all these reasons, people with pot bellies tend to sleep on their backs, causing a lot of snoring. If they snort and waken, they may have night time insomnia, daytime drowsiness. One sure sign of this is that the bed partner flees to a separate bedroom.
|Scarlett O'Hara's Wasp-Waist|
Victims of this affliction may, if they choose, imitate Scarlett O'Hara in that famous scene in Gone With the Wind with the slave girls pulling a tight corset even more painfully tight, but corsets are currently out of fashion. Or they can take purple pills to correct the heartburn, or regular laxatives for some of the other problems. In general, however, leg-lifting exercises strengthen the belly wall muscles (abs, I believe they are called), and losing weight by eating less does the rest. Losing weight is never easy, but in this case a few pounds can make big differences in belly circumference, as measured by the belt size. Nothing will shrink the enlarged lungs pushing down, however, and arthritis of the spine may maintain the forward stoop. Very few older people are completely without some signs of this common affliction. Even so athletic a person as the ramrod-straight George Washington, developed just a little pot. And Benjamin Franklin, of course, had a hopeless case.
|F. Scott Fitzgerald|
The roarin' Twenties, just after the First World War, were a time when we seemed to change conventional attitudes about Society. But in many ways the convulsive changes of the Twenties were merely a process of facing up to what we already knew. In retrospect, many of the deeply emotional conflicts of that time, now seem entirely bearable. Scott Fitzgerald's most ponderous statement, the one that says "The test of a first-rate intelligence is the ability to hold two opposing ideas in mind at the same time and still retain the ability to function," reduces itself to the trivial agonies of loving two girls at a time, or choosing to stop smoking when you always knew you shouldn't start. Just about the only instance I can think of, where two deeply loved Philadelphia institutions are in seriously troubling conflict, are the First City Troop, and Quakerism. The matter came to mind at the Right Angle Club, when a Philadelphia Trooper who simply radiated the honorable dedications of upper-class Philadelphia gentlemen, meekly described his dedication to restoring the crumbling monuments of bravely fallen comrades. The monuments he finds and restores at great personal expense are not merely war heroes, although one suspects that is the root of it. The gravestones and monuments crumbling in the dust are markers of heroes of our civilization generally. But we do forget what we owe them, and neglect their monuments.
|Fourth Street Meetinghouse|
Although the dominant Quakers of Philadelphia's early days are now reduced to a handful of practicing believers, almost every educated Philadelphian knows those beliefs pretty well. The early Friends did not even sympathize with carving their names on their tombstones. If you visit the Fourth Street Meetinghouse, you will be told that forty thousand bodies have been buried on the grounds, but only two graves have tombstones. The worship of grave markers, you will softly be told, is idolatry. The goal of a funeral should not be to mourn a death, but to celebrate a life well-lived. And although the custom of gravestones has reasserted itself, it does not take long to be gently reminded that keeping alive the memories of one war's atrocities, can eventually lead to more wars. We recently have seen wars in Bosnia and Kosovo being fought over Thirteenth Century grievances which might better be forgotten. Some of this comes from immigration over three thousand miles of ocean, but the effect is the same. I have no idea even what nationality my own 13th Century ancestors might have fought for, and I doubt if the world would be improved if I found out and sought to wreak vengeance for the inevitable atrocities.
|Philadelphia First City Troop|
But unless one is determined to denounce anything at all admirable about everything our society does to defend itself -- and there are some who go that far -- it is necessary to make a sad concession to force in successful governance. The 18th Century Quakers perhaps seldom acknowledged the need for occasional force as a condition for leadership, but they watched their children drift away from the religion, once they absorbed the lesson. Even those who choose conscientious objection for themselves, must occasionally acknowledge the debt they owe to those who do answer the call of force, and knowingly fail to survive it.
|Society of Friends|
There simply is no choice but to honor both sides of this issue, both permanently and side by side. There are some who can't, and in various ways fail to retain the ability to function. As in many of his more juvenile pronouncements, Fitzgerald does go much too far with assessing all the rest of Philadelphia as having less than first-rate intelligence. Philadelphians generally have at least a taste of the experience of holding these two opposing ideas-- the City Troop and the Society of Friends -- in mind at the same time, with approval for both. And generally seeming somewhat improved for having made the struggle.
|Notions of Immortality|
When we are children, we have childish notions of immortality. Perhaps we still nourish them for lack of replacement, busying our thoughts with premature death, instead. Most of us forget the dreams of robbing candy stores or marrying a princess, and never bother to replace them. After all, everyone has to die, don't they?
So put it this way: we now have semi-realistic plans to end our lives with a thirty-year paid vacation, but what can be said about a fifty-year paid vacation, or even a hundred? Life itself is degraded by seventy years of loafing, as those who could afford it will tell you. All notions of purpose to life eventually disappear. No longer defining ourselves as soldiers and housewives; we're just cats, dogs and lice. And all our yesteryears have lighted fools the way to welcome death. As that day approaches, it will be marked by waves of awesome but fruitless literature. The Calvinist worship of work gets the last laugh of the comedy.
Subsequent generations of would-be hedonists have certainly given Calvin a hard time. Harder, in a way, than dunkings and pillories. Perhaps harder even than burning at the stake, because Calvinists had the audacity to get rich and comfortable by their effrontery. Perhaps poor and comfortable is better, and comfortable is the real goal, as Quakers were executed for advising. Once you get over the ambition to be King, what else is there?
Soon after the release date of the first edition of this book, an article appeared in the Wall Street Journal by Lanhee J. Chen and James C. Capretta of Stanford University, entitled Instead of Obamacare: Giving Healthcare to the People. The authors were in general sympathy with the Health Savings Account approach, and made three other suggestions with which I more-or-less agree. But they add a fourth which makes me unhappy :
1. Continuous Coverage Protection. They rightly notice many mandatory auto insurance recipients take out insurance, pay a single month's premium, during which time they obtain their drivers license. And then no further payments are made for the insurance. The authors propose higher premiums for those who do the same thing with healthcare insurance, but presumably waive the higher cost if insurance is continued for a full year. There are many people who are suspicious of making anything mandatory, but if it's mandatory, it's unfair to allow obvious loopholes of this sort to persist.
2. Medicaid Reform. The two commenting authors are evidently aware of the unsatisfactory quality of many state Medicaid programs, and propose splitting Medicaid into two parts, one for able-bodied adults and their children, and another for the disabled and elderly. Essentially, this is a rewording of high-risk pools, partially achieved by splitting Medicaid from federal plans. While this division might mesh more easily with existing workers and their families in the event of universal coverage (under a single-payer system), by itself it would not address much else.
A more useful split would be between inpatients and outpatients. That would match Medicare A and B, as well as the underlying Blue-Cross/Blue Shield organization of paperwork. Moreover, splitting helpless inpatients from ambulatory outpatients could surprisingly enable the marketplace to influence inpatient costs. Since a large number of outpatient and inpatient services are identical, it would establish a comparison framework for approximating inpatient to outpatient prices through a two-step market mechanism, which ultimately approximates market prices. For those inpatient services which have no outpatient match, a relative value system would provide a more stable way to set prices for the remainder of helpless inpatients. Doing this would close a loophole commonly employed to cost-shift inpatient costs to the outpatient area, resulting in vast confusion between two pricing systems for identical procedures. Hospital administrators would resist losing the ability to shift prices, so ultimately this is an argument about who is to dominate prices, the consumers or the providers. The "market" is a compromise between the two.
3. Medicare Reform. The main reason Medicare is often preferred to Medicaid is, it is potentially available to everyone regardless of income. But Medicare itself is 50% subsidized by the general taxpayer. No wonder Medicare doesn't need to mandate coverage. Effectively Medicare is subsidized more generously than Medicaid, and thus is the main source of healthcare deficits. You might subsidize Medicaid more generously, or you could apply a 50% subsidy to a single payer system. Either way will cost more, not less. Speaking politically, it is a question of whether you wish to offend the elderly Medicare patients, or the younger indigent ones. Essentially, Congress has already chosen sides once, and is unlikely to change its preference for current voters rather than potential ones. Finally, there remains one suggestion in the article which does make me uncomfortable, because of what it fails to say.
(4.) Retaining Employer Coverage. It still costs less to provide health insurance for employees, than to pay them wages and let them buy the same health insurance with what is left. Employers are therefore better off giving the health insurance as a gift, even though recent inflation has held back wages more than health costs. Presumably this anomaly would not survive tax reform, because employer-basing has turned into one big tax dodge.
But if it should survive, it presents the alternative to rectify the injustice to the other half of (small business) employees, whose employers usually can not donate the coverage and then make it up at a spuriously higher corporate tax rate. Persisting eighty years after World War II which created the pretext, this is an unnecessary reminder of the many irregularities in the tax code. However, a one-line amendment to the HSA Law would suffice to extend the same tax exemption to outsiders, allowing other issues to remain dormant. This simple amendment would permit the premiums of a catastrophic health plan to be paid by the Health Savings Account itself, thereby extending its own tax shelter to HSA owners, at less additional commotion to the Treasury than full exemption. The present inflation distortion should not be missed as an opportunity to restore fairness, which almost everyone now recognizes to be nothing but a lobbying plum.
Placing a termination point for Health Savings Accounts was originally occasioned by recognizing the overlap created in 1965 by Medicare for everyone. At the time, it seemed pointless to be covered by Health Savings Accounts in addition to Medicare, and there was confusion with Health Spending Accounts with their "use it or lose it" features. Pouring remaining HSA surpluses into a regular IRA retirement fund, seems in retrospect the most effective way to create some incentive to save as much as you can in the Accounts. You couldn't lose it, and might well need it. To a certain degree, the size of the resulting retirement package is determined by the frugality of the individual client during his whole medical lifetime long before, but also during, the time he is on Medicare.
He would, however not be in the position of needing to do that, if he had been born earlier. The subscriber to an HSA could continue to deposit extra tax-exempt money in the roll-over IRA for his retirement, giving the appearance of laundering it. Unfortunately, he would first have to drop out of the healthcare benefits, so he would lose the laundered tax exemption for health benefits on withdrawal. You would now have to view the extended tax exemption as repairing that unintended inequity. As Medicare began to be less generous, there were increasing gaps in coverage, and there may be many more in the future.
In what follows, we extend the retirement roll-over idea to several other medical entitlements without suggesting it be required as a universal rule. The time-honored old approach was to use an insurance surplus to reduce costs by recycling its surplus, but there are other things to consider. The first would be to imagine a theoretical sharp drop in the cost of Medicare, itself. Since 80% of Medicare is now spent on five or ten diseases, the possibility of a sudden cheap cure of one of those diseases is raised. The astonishing savings in the cost of strokes and heart attacks, created by taking a daily aspirin tablet -- shows what it might be possible to imagine as happening again. Not to promise, but to imagine.
On the other hand, it is also possible to imagine less desirable priorities getting into the competition for such a financial windfall. Confronted with the issue, the average person would likely suspect such a windfall might as likely pay for aircraft carriers as Medicare deficits. But another opinion would emerge, and should be the default position. The Medicare program and its members had experienced the unexpected -- and expensive -- consequence of more protracted retirement than they planned on (five times as expensive, by one estimate). A more just assignment of such windfall would be to pay for the extra-long retirement cost it had provoked. If other emergencies seemed more pressing at the time, they could always be given priority on the money, but by default Medicare should first pay for its own consequences. In fact, nothing of the sort occurred.
In a sense, President Obama later created the same political problem for himself with the original budget for Obamacare. He did not need to make any speeches directing attention to the diversion of Medicare money to help pay for Obamacare costs, because plenty of Republican opponents were studying the budget. And plenty of Republicans remembered Richard Nixon's advice, "Watch what I do, don't listen to what I say." Having spoken to many groups of retirees about healthcare financing, I am acutely aware that retirees are watchful for any move to strip Medicare funds for Obamacare's benefit. It's about their highest priority.
And indeed their anxiety would be heightened by discovering Medicare is already 50% subsidized by general taxation, and then unsustainably maintained by borrowing money (selling US Treasury bonds) to foreign countries like China. And still more to the point, medical costs have been and will continue to migrate from working age people to retirement age people in the future. Just about everyone who dies right now, dies at Medicare expense. Even more than that, the effect of medical science has tended to eliminate terminal medical costs for people under 65, shifting them to people who get sick when they are over 65. It can be predicted a major cause of future Medicare cost increases, compared with the cost of living, lies in this shift of disease cost to the elderly. So it's a little hard to project whether Medicare costs will go up or go down, even if the cost of illness remains the same.
Recipients will change insurance compartments. Many attempts have been made to shift Medicare costs to the non-sick working population, such as through the payroll tax deduction and hospital internal cost-shifting, but the trend continues. A more sophisticated thing for the retirees to worry about, is the instability of a system which depends for its financing on that one-third of the population who are at work -- but who are themselves becoming progressively more healthy -- to support the medical finances of the other two thirds of the population, who are sick.
Taken in summary, there exists a great political opportunity for both political parties to put a stop to this "third rail of politics" talk. And to amend the Medicare Law immediately to provide that any declines in Medicare costs be immediately transferred to Social Security, for the purpose of paying for further increases in longevity. That provision should not cost much for some time to come. But the incentive it would give to the retirees to reduce their health expenditures might be considerable. Just as the comparable position Health Savings Accounts achieved, once Medicare coverage was attained.
But its real benefit might be tested on that fateful day in the future. The day you pick up the morning newspaper and discover someone has cured cancer.
A recent article in the Wall Street Journal announced to the world that Health Savings Accounts were a better bargain for the investor than were 401(k). That's certainly true if you spend the money in an account for approved medical expenses, or if you roll it over into an IRA at the time you receive Medicare. But it's also even arguable if you spend it in any other circumstance.
Let's put it this way: If you had an IRA or 401(k) but not a Health Savings Account how would you justify it? The HSA gives a double tax exemption for health services, but you are no worse off if you remain healthy. Of course you are better off with an HRSA. Of course, that may change, but then the oceans might some day pour over Chicago.Most of the arguments for having an HSA rather than a 401(k) boil down to saying they are the same thing, but HSA gives you some health options in addition, so why not have them. However, it is possible that your employer has selected a poor 401(k) vendor, one who adds unnecessary fees and requires investments which themselves have poor performance because they are loaded with more fees. So, if you are dissatisfied with 401(k) results through your employer, you may wish to shop around for a better deal, and you might as well pick one with some health benefits attached. After all, the Affordable Care Act mandates high-deductible insurance, so that part of the requirement is likely to be fulfilled already. Since you picked it because of disappointment with your employer's 401(k) investment results, you may encounter some resistance from the Human Relations Department. All in all, there is little value in switching until the employer mandate issue is settled -- except the value of the uproar you create, trying to get treated more fairly. However, there are a few other issues if you have an agreeable employer.
Well, you can't have an HRSA if you are under 21, over 65, or covered by a health insurance policy that doesn't have a high deductible. The Affordable Care Act mandates high deductibles for everybody, but there are still occasional loopholes, probably soon to be closed. If your policy has co-insurance features, that's actually probably an argument to switch out of it. You can't have an HSA if you are also covered by some other government plan. All three plans are sometimes subverted by self-serving intermediary fees, but you just have to shop around for the ability to choose your own investments. That may cause you to pick an inferior health insurance plan, so keep looking. Eventually, some people will reach their limits and need more than one retirement plan, but that's different. Although Health Saving Accounts are spreading nicely, there must be a hundred million people who have no reasonable answer to the question of why they have a 401(k) but not an HRSA, so please read on.
Claims Adjusting for Trivial Claims. In the first place, the HSA wanted to make it possible to skip the middle-man cost and oversight, and simply pay bills with a debit card. So an "allowable" medical expense is more broadly defined than what a health insurer might allow, or at the very least it dispenses with the cost (and delay) of insurance review prior to payment. Since the Account part of the HSA was mainly intended to pay for deductibles, it didn't seem cost-effective to subject extra costs to fruitless but expensive insurance scrutiny. It also eliminated the delay occasioned by remaining on the desk of the hospital billing department for several weeks before someone submits it to the insurer to pay -- when the debit card could just as well have paid it immediately. Just how much these thoughtless design features actually add to the cost is uncertain, because it's used as an excuse for delays which may have other causes.
Skipping Insurance Claims Entirely for Small Claims. As things have turned out, forty percent of HSA accounts have never submitted a claim. Maybe they don't get sick, but more likely the client calculates it is cheaper for him in the long run to pay his small out-patient charges in cash, while letting the Account gather compound interest. Aristotle is said to have complained that most debtors don't realize how compound interest is itself compounded, and rises with time. But maybe debtors are now smarter than Greeks in a toga. A debit card directly adds 2% to the cost, while interest rates vary with the economy. Incurring costs greater than the net is a waste of money, largely growing out of a supposition the employer is paying for this as a gift, and taking a tax deduction at higher corporate rates. That's only true half the time, but the other half haven't marshaled their lobbyists to equalize the tax exemption. Apparently, Congress believes the self-employed don't deserve this tax exemption as much as employees of major corporations do. Or possibly eighty years isn't long enough for Washington to fix the flaw. Let's go on with this, a bit.
Non-trivial Returns From Saving Small Scraps. We were saying HRSAs were a better investment than 401(k). To go forward with the logic, the client is effectively taking out a loan from his 401(k) when he pays his medical bills from it, or in cash, if the purpose is to preserve the preferable interest-bearing account. Assuming both accounts pay the same (you didn't get sick), the result is a wash. But as time goes on, the effective compound interest rate will steadily rise; so the extra profit was made without incurring any extra risk. That may not seem like much, until you employ the old maxim that money at 7% will double in ten years. Two, four, eight, sixteen, thirty-two -- it rises 3200% in fifty years. The stock market may rise or fall during those fifty years, and the client may get any one of a thousand diseases. Inflation may intervene, wars are likely to break out. But the relentless superiority of this riskless choice will persist. And get this: at the conclusion of the exercise, the client who gets sick pays no tax, while the one who was scared to do it, pays the higher progressive tax rate he attains later in life. The hypotheticals have to be carefully chosen to reach any other conclusion. But remember to get started young, because to wait ten years will reduce the multiplier from 32 to 16. The millennial generation complains the tax laws are stacked against them, but I don't see it. They are offered the chance of a lifetime, but they will only get one bite at the apple.
Is that all? Well, no, but there are competitors. The deposits in a Health and Retirement Savings Account, just as surely as the deposits in a 401(k), are occasionally subject to rather extreme middle-man costs. The stock market has steadily risen by 11% for the past century. Never mind that it's true past results can be unsound future predictions, just recall that even the "buy and hold" philosophy has seldom presented the investing customer with more than 5% net-of-inflation return. That's because inflation took away 3%, and hedging against "black swan" crashes (by putting 40% of the portfolio into bonds) has taken away 2% more. That leaves about 1% for the customer and the broker to fight about. More than anything else, this slim working margin has driven the investor to choose "buy and hold" over "market-timing". The evidence continues to accumulate that "buy and hold" is at least as successful as "market-timing", but people continue to market-time when they are desperate for the occasional big winner, never mind that big losers outnumber them. To me, the conclusion is clear the public will increasingly squeeze their friendly advisors for a wider slice of the pie. And in this, our central theme is repeated; the HRSA will out-perform the 401(k). Because the shopper for an HSA manager is the customer, whereas the choice of a 401(k) manager is made by the employer. Pass all the laws you wish about kickbacks; allowing the customer to select the manager will usually beat letting the employer do it for him. There's often nothing so expensive as getting something free.
Washington could occasionally display a wicked temper, but in general he was a reserved and dignified man. Physically large and unusually athletic, he tended to dominate by glaring at people rather than debating them. And so, after a lifetime of leadership and distinction, he seldom engaged in arguments. As a consequence of this studied behavior it is possible to have many opinions about his underlying thoughts, except one: he always seems to come out on the winning side. It certainly was effective: he was Commander in Chief, The President and probably the instigator of the Constitutional Convention, and the First President of the United States. To decide whether he got what he wanted means deciding what he wanted, and he hardly ever stated it.
Conrad Black, the newspaperman who went to jail, stated the Canadian point of view, which is perhaps extreme. Black's view was "the Americans" first got the British to help them throw out the French, and then twenty years later got the French to help them throw out the British. These two statements are undoubtedly true if abbreviated. Added to them was the plain history that Washington had personally started the French and Indian War. One has to wonder what was in his mind when the French aristocrat LaFayette came to join him. And later on, what he thought of Thomas Jefferson's love affair with the French Revolution. Or what he thought of the antics of the French ambassador "Citizen Genet".
Washington didn't like the Indians, and he put down the radicals of the Whiskey Rebellion with extreme prejudice. Is it so hard to perceive the barons of Runneymede acting any differently?
One of the great books about Benjamin Franklin has just emerged, and it has an interesting current Philadelphia connection. Benjamin Franklin in London fills in the eighteen years Franklin spent in Europe, with many details and insights not possible to have with three thousand miles of ocean separating his activities from his home base. In fact, it raises the question of what was really his home in his own mind. Boston claims him because he was born there, but it takes a London writer to tell us he moved to Philadelphia because of disputes over vaccination for the small pox epidemic, between his publisher brother and Cotton Mather. XX Goodwin, writer in residence at the Craven Street Ben Franklin Museum, will forever change our views about his subject. We hope he produces much more.
A word about the museum. The Craven Street house is the only Franklin residence still standing, restored with funds from Countess XX, Anthony Biddle's XXX, who unfortunately died this year. Her daughter, Charlotte Petropolis has an apartment in Philadelphia and regularly attends meetings of the Shakspere Society at the Philadelphia Club, which is itself the oldest club in America, and second oldest in the world, according to Matt Dupee, one of the local authorities on such matters, himself a member of a great many clubs around the world. To return to the original point, Goodwin is the beneficiary of this important interest by prominent Philadelphia families in our Founding Father.
|Revolutionary Boston Reconsidered|
One gathers from the book that Franklin had considered himself a lifelong British subject, and from the Albany Conference of 17XX to his abject public humiliation in the "Cockpit" of Whitehall in 1775, nursed the hope that Great Britain and America would join in an empire as equals. He foresaw the growth of America, and expected the capital of the joint empire to move to America. After he returned to America, of course, the gauntlet had been thrown down, and he made it his task to enlist France on our side, bankrupting France and thus eventually provoking not one, but two national Revolutions. The French stilll think of him as their darling, but the lessons of the French Revolution taught Franklin some things he needed to know at the American Constitutional Convention of 1789. Letting others like Hamilton and Gouverneur Morris do the talking, his influence at dinners and private meetings put a stop to egalitarian babble, and established a firmly Federalist nation. His activity in London would have won him a Nobel prize instead of fairy tales about kites and keys, he was friends with Mozart and Beethoven, plus about five kings. You don't humiliate a man like that without living to regret it, and King George III certainly regretted it in his saner moments.
Which, after three paragraphs, brings us back to the Stamp Tax of 17XX. To begin with, it isn't enough to want to do something, you must figure out a way to get it done. The early 18th Century colonists had learned that smuggling and counterfeiting would frustrate any tax plan for colonies so far away with diversified economies. The oceans were filled with pirates, sometimes described as privateers, and the American coastline was thousands of miles long. Furthermore, maintaining a large British navy from the Spanish Armada to the War of the Austrian Succession required thousands of British sailors, and the Navy had been stripped down to spare expense. So naturally the idea came up to have the colonies pay for their own defense at least, but how were you going to do it, in a way you could afford to continue?
A little digging in history would probably reveal the main author of the Stamp Tax Act, but such things are often the product of staff rather than the parliamentary member who introduced them. But it ingeniously solved the empire taxation problem. You just printed up the stamps and sold them, then required the objects of taxation to have a stamp pasted somewhere on them. You still would have to worry about smuggling and counterfeiting, but the whole thing was an inexpensive way of collecting the money, and enforcing the tax. It even provided some nice patronage jobs for loyal stamp sellers.
Apparently, it was much too clever by half, since the colonists could immediately see what might be ahead of them. An uproar ensued, leading ultimately to repeal of the tax, except for a token tax on tea in order to preserve the principle. But the principle was exactly what bothered the colonists, and a tea tax wouldn't do, either. The rest is history, except I don't happen to know whose idea it really was. But I do know that Franklin was in London at the time, and Franklin's inclinations were strongly in favor of a combined British Empire. Franklin almost lost his job in this uproar, and some of his fellow colonists may have suspected his person position on it.
The Progressive Era lasted several decades, some say it still continues. Around 1910, the Progressive Era, reacting to the Gilded Age which preceded it, started doing painful things in the best interest of the individual, like the graduated income tax, the War to End Wars, and employer-based insurance.
Regardless of originator or date, employer based health insurance was imported as an idea from Germany in the nineteen-teens, getting started in the nineteen twenties, and becoming the prevailing standard by World War II. Although control later shifted from employers toward government during this period, Harry Truman was unable to move it further. It was only in 1965 that government control jumped forward, coming to a climax in the 1965 Medicare and Medicaid laws. Curiously, the employer-based format itself reached a peak in the Lyndon Johnson legislation. Since 1965, one president after another has struggled to convert the rest of health insurance to government-based, but always retaining its same general employer-based form. Along the way, two people significantly modified the model: Abraham Flexner, promoting the research-oriented teaching hospital into custodian of the standard of care, replacing the physician guilds; and Henry J. Kaiser, retaining control of a wage cost by calling it a gift, with high corporate income taxes and exempted employee income taxes reducing its effective cost to the employer. In a curious way, high corporate income taxes increased the proportion of healthcare paid for by the Federal Government, by increasing the value of the deduction. Not everyone would agree with this description of history, but I'm convinced of its essence.
Whether the gift comes from business or from government, makes little difference, except to the two contestants. Henry Kaiser seems to have become enlightened that corporate taxation higher than individual rates actually results in important tax advantages for the employer's gift. It allows employers to shift most of the cost to the government, while retaining ultimate control in employers' hands. For many decades the commercial insurance industry tried to break in, but the greatest recent threat to this collusion was accidental. All insurance is a system of cross-subsidies, but the Obama Administration superimposed a subsidy of the poor by the rich, onto an employer system of the young employees subsidizing the older ones. The mismatch between the two seemingly similar subsidies now threatens the coherence of the medical finance system. It also brings out the advantageous warping of the insurance idea by calling it a gift.Furthermore, the gift is ultimately one of money, so how did service benefits get mixed into this? What does the diagnosis have to do with paying hospital bills, except as a mechanism for obscuring the price? The insurance premiums begin with money, and the insurance intermediary ultimately sends money to the provider of care. Money-in, money-out is what the insurance industry calls indemnity insurance. They were using indemnity for centuries before health insurance came along. Why change to a unique and expensive accounting system, if final prices remain unchanged? This device probably started as a way for an insurance intermediary to check the medical validity of a remote claim, but has gradually evolved into an elaborate cost-shifting device. The unfortunate result is to blind the doctors in charge to the true costs of their options. So doctors nowadays totally disregard the posted prices which emerge, when they devise their treatment strategies. The result is very bad, no matter what the original purpose was.
There may be something to the idea that adding diagnoses and services adds enough mystery to the process to keep away competition, but there are business incentives which seem more central. Now that health cost consumes almost 17% of the gross domestic product, corporate taxes are an important part of the federal budget, largely explaining why the President might not want to lower them, even driving international businesses to consider moving abroad, rather than lower corporate tax rates. However, if the tax reduction which results from the gift is considered, the net corporate taxes actually paid are not too different from prevailing international rates. If corporate income taxes were eliminated, at least the employer would have to pay for his own wage costs masquerading as gifts. They might even discontinue them, since employers could get the same tax abatement by calling them what they are, wage costs. Following this scenario, the main benefit appears as the tax exemption in the workers' pay package, and the main victims are the competitors who do not receive the gift. If the government is willing to lose the revenue from the tax-paying half of the workforce, they could permit the Health and Retirement Savings Accounts to pay the premiums, essentially providing tax exemption to everyone. If unwilling to lose revenue, the government could start taxing the large employers, which they are now prevented from doing by the seemingly high rates. It's hard to know whom to blame, except this sort of Byzantine structure creates winners and losers, and is ultimately unhealthy.
Two simple and comparatively painless steps -- equalization of tax preferences, and lowering of corporate income taxes -- might soften the objection to indemnity, so why continue the service benefits concept? For this answer you must return to Abraham Flexner, who brought Bismarck's "der herr Professor" system to America, stimulated much research, and ultimately made teaching hospitals vastly more expensive than community hospitals for routine medical care. And now it is necessary to understand the system of calling all activities which are unrelated to patient care "indirect overhead". Although research is largely funded by outside agencies like the NIH and drug companies, it is described as indirect overhead, and distributed among the patient care bills as additional indirect overhead. Unfortunately, a great deal of bloated administrative cost is classified as indirect overhead, as well. No modern corporation could exist without a certain amount of cross-subsidy, but the present amount of it in hospitals is unreasonable. Beyond a certain level, indirect overhead should be forced out of the hospital cross-subsidy system, funded independently, or at least forced into public view. In short, too much routine care is being reimbursed at a high tertiary care level in the teaching hospitals, and this may well stimulate excessive administrative costs as well, even though it may be hard to trace how it comes about. Their competitors in the community hospitals also probably get a little raise, indirectly, to help suppress their complaints. Wall Street was once lambasted for steak dinners and Superbowl tickets from vendors, but you don't hear much about the hospital administrator version.
To make a long story short, service benefits tend to equalize the cost differences between teaching hospitals and community hospitals, ultimately raising the cost of both, but particularly the cost of routine care in teaching hospitals. Historically, this surplus subsidized the research revolution, to which we owe a thirty-year lengthening of our life expectancy. So, go figure. But nevertheless it now blinds physicians as much as the public to the true cost of their medical decisions until they are unable to respond effectively to rising prices, and don't try. A century of it is long enough to devise a better approach, so apparently some pain is needed. But any way you go about lowering them, if you want to control costs, you must start and end with undiluted true costs, not accounting fictions.
George Goodwin appears to have written the best book I ever read, in Benjamin Franklin in London, which that writer in residence of the Craven Street Franklin Museum. has just produced. At least I have never read a book which proceeded to explain so much I knew puzzled me. There have been hundreds of books about Benjamin Franklin, but all of them fall back on Franklin's Autobiography which while surely authoritative, often omits significant details. Goodwin, concentrating on the eighteen years Franklin spent abroad, had access to many unnoticed personal papers. It was also written while Franklin was in England, where many things did not appear to need explanation to 18th Century Englishmen. And the autobiography was written for his son, who needed even less explanation. So it's a mistake to ascribe the autobiography's vagueness to deliberate deviousness, to say nothing of basing a whole theory of his personality on deviousness. Its hazy points now seem more attributable to his assuming his intended audience needed little explanation for what to us was seemingly left vague. And so as a first impression, Franklin himself emerges less deserving of his reputation for deceptiveness.
|Ben Franklin In London|
It occurred to me as I read it, that national opinions will change so quickly, that the transitional opinions of people like me will soon be swept aside. I am no scholar, but have read twenty or so excellent books about Benjamin Franklin, and adopted a number of fixed ideas which I will have to change. Therefore, Goodwin's achievement is in danger of becoming lost in a stampede of permanently revised views. Goodwin himself may be oblivious to his own achievement, which was probably gathered slowly after poring over heaps of primary documents, and living in a London world which needed less explaining to a Londoner. Heaven knows I am no Keats, but my place in all this can possibly aspire to his goals in the poem On First Looking into Chapman's Homer.
|Join or Die|
In the first place, Franklin appears to have been a staunch British subject, at least from the Albany Conference of 1754 to as late as 1774. His dream, formulated at Albany and expressed in many forms later, was that of a combined British-American empire, with its headquarters eventually to be located in America. For the largest part of his life, his attitude was not that America should be independent of Britain. It was the two nations should unite even more closely, America would inevitably grow larger, and the British Empire would become a British World. After King George III unleashed Wedderburn to excoriate Franklin before the crowned heads of Whitehall, it all changed, of course, but it did so after a personal dispute with the King about lightning rods, where Franklin never doubted he was the world-acknowledged authority. In essence, Franklin was the inventor of electricity, but King George in effect responded, "Who do you think you are, a King?" Those weren't the words they used, but that was the sense of it. Or, considering what was at stake, the nonsense of it. Franklin had been challenged to destroy the British empire if he was so smart, and that is exactly what he set about to do.
|King George III|
Without editorializing a word, Goodwin allows us to read a line Franklin wrote in 1773, that King George was "perhaps the only Chance America has for obtaining soon the Address she aims at."
Franklin was not without British allies. Lord Chatham, later prime Minister, and Edmund Burke, author of "On Reconciliation With the Colonies" came very close to toppling the government over this issue. Even Lord Howe, Franklin's chess partner and brother of even-more-avid chess partner Lady Carolyn Howe, who was later designated to lead the British repression of the rebellion, is quoted as saying in 17XX, XXXXXXXX. Lord Howe's words are going to require some re-examination of his motives in abandonment of Burgoyne against direct orders, and redirection of the fleet toward Philadelphia. Frankin's response, of course, was to use the victory to sign a treaty of alliance with France.
|William Pitt 1st Earl of Chatham|
In victorious America, of course, Franklin was celebrated for flying a kite in a rainstorm, something every schoolboy knows is too dangerous to try. It was during his time in England that Franklin performed a series of experiments which invented electricity which every physicist would agree would today win him a Nobel Prize. It made him a friend of Mozart and Beethoven, Joseph Priestley and five kings. Goodwin even restores the tarnished reputation of Peggy Stevenson.
But it isn't all for the better. Goodwin tells us Franklin didn't invent bifocals, some British optometrist did. So he raises a question, for those who are looking for it, about how many of the other American "firsts" for which he is famous, were ideas he picked up in his first trip to London in 17XX, and transported to an America eager to have what was the latest and trendiest. There are probably other innuendoes in this eminently readable but essentially scholarly work. But I missed them, and a hundred graduate students will have to put the record straight.
The innovator is protected by patents. To some extent, the public is harmed by them, because the public wants the innovation to be cheaper. is reported to have hated patents, because they harmed the public. But less innovation harms the public, too.
Once the inventor invents an innovation, he wants to see it work. Often he employs a craftsman to make one that works, money no object. A few rich people hire artisans to make high-priced versions for various purposes, some of them noble, some just frivolous.
So, some entrepreneur risks a lot of money to build a factory, hire cheap labor if he can find it, and mass-produces a cheaper product. He hates patents, but he loves cheap labor, and he particularly hates automation, which threatens his investment.
But automation is cheaper, so it wins. The automator has to spend a lot of money to accomplish automation, but his cheaper product puts the earlier factories out of work, so they fight automation as long as they are excluded from it, but eventually surrenders. Corporations almost always defeat factories, family businesses, and artisans. Ultimately, automation, corporations and possibly inventors, tend to win. Hand craftsmen, family businesses and cheap labor tend to lose. High volume usually defeats high margins of profit, so the public usually wins, too. If the entire cycle is fast enough, the patent protects the inventor. If it's too slow, the inventor loses. It's easy to see what side each of these participants will take in the political battles, assuming the hope of profit is what motivates each one of them. The public has the votes, so at first they can do almost anything. In the long run, more innovation and cheaper prices will win public approval, but in the short run, patent impairment and job losses may hold things up.
So what is in the public interest? Job retraining and regional movement of labor are two things which come up, their expensiveness probably varies with the particular issue. But one universal good sometimes clashes with another. Is home ownership always a good thing? Are there not times when it would be better to be a renter, and move to a different employment location when your job disappears?
There are certainly times when it is better to own your own home. I finally sold my house after living in it for sixty years. The real estate agent was rueful. He saw it as his losing six sales commissions, over the years, because I did that.
|Minister David Cameron|
In June, 2016, Great Britain voted by a million plurality, to withdraw from the European Union. The plebescite was not binding on Parliament, but Prime Minister David Cameron promptly resigned, and there remains little discussion of anything but going ahead with "Brexit". It will take at least two years to accomplish the matter, and there remains great uncertainty about the terms of separation. The British stock market took a sharp dip. Stock markets always hate uncertainty, and from the start there was little doubt Britain would experience some economic hardship, but still they went ahead with it.
|Archbishop of Canterbury|
By the greatest stroke of good luck, I happened to be in London for this event. It had been barely noted in the Americana press before I left, and indeed a discussion group hadn't even put it on the agenda after my return. But let me tell you, the British public was talking about nothing else. From the lowest barmaid in a pub to the Archbishop of Canterbury, there was only one topic of conversation, and a very real understanding that Britain might well vote to leave the EU. Once the vote had been taken, of course, even the American public appreciated its significance, and its resemblance to the headlong tumult in our own political parties. Donald Trump might well win the election, and logic or rhetoric had little to do with it. Other countries, Scotland in particular, were teetering in the same direction of demonstrating how far a democracy was from a republic, when each "leader" had a million constituents. And how well the public appreciated the tendency of elected representatives to forget who elected them. Or else, in more rational moments, to appreciate how difficult it is for elected representatives to communicate with constituents.
|Ben Franklin London Townhome|
To go on with this insight for a moment, my Washington daughter tells me Democrat congressmen are required to spend thirty-six hours every week in a call center, soliciting campaign funds; where do they find time to legislate? But the central background reflection I happened to have about Brexit was how enduring the political split apparently was between the Whigs and the Tories. This thought came to me from one of the real reasons I was in London, to visit Ben Franklin's imposing rowhouse on Craven Street, fifty feet from the National Museum on Piccadilly. Franklin lived there for most of eighteen years, in a style quite different from the two-penny loaf of bread in Philadelphia. He was personal friends with five kings, Voltaire, Mozart and Beethoven, as well as Priestly, Lavoisier, and Hume. Townsend may indeed have passed the Stamp Act, but he invited Franklin to spend the weekend at his hundred-room castle. The neighbors on Craven Street easily recognized the carriage of the Prime Minister when he came to call on Franklin on Craven Street. From the point of view of this social set, the uproar over the colonies was whether England should conquer them and send their raw materials to British factories (the Tory view), or should instead colonize them with Brits, give them the vote, and rule the world as a commonwealth (the Whig view). Naturally, Franklin supported the Whigs, but his loyalty to his good friend George III, never wavered until 1775. And then, lightening struck St. Paul's Cathedral.
|King George III|
Quite logically, the King asked Franklin's advice. The King however insisted on a brass ball on the top of the church. Franklin resisted, saying a spire was much more effective. We don't have the exact words exchanged, but essentially the King said he was going to have his way, while Franklin in effect asked him who he thought he was talking to. In those days, far less direct wording was needed to give offense on such a central issue of the king having the last word whenever he wanted. It is intimated the King suggested to Weddeburn he should take care of the issue for him, and within a few weeks Franklin was subjected to public humiliation in the cockpit at Whitehall, threatened with arrest, and fled to America to start the war. I had never heard this story, before.
The point it leaves me with is not that Franklin lost his cool and should have known better than to express his opinion. Rather, it is the reflection that never before had a king been challenged on his divine opinion on any subject. Just think of the shock this must have caused him, to have to realize this was the first snowflake in a blizzard. With the Enlightenment and the Industrial Revolution, the world was going to be full of experts, who could make a fool of any king by disagreeing with him in public. This particular king was able to have his way, no matter what, but the day was soon approaching when any science editor, any university professor, and ultimately every barmaid in a pub, could pontificate to the Pontiff.
A long time ago, a rich oriental man flew five thousand miles to ask me a question, "What is the secret of long life?" I was so startled by the experience I never did ask him why in the world he would think I knew the answer to such a question. But after a few seconds, I blurted out an answer. "The secret of long life," sez I, " is never get sick." I don't know what his opinion of my profundity was. But I do know what he died of. He was executed by his government, so I hadn't given him the right answer to his question.
At other times, people especially my children, asked me how to get rich. After some practice, I developed a pat answer to that one, too. "The secret of getting rich is to spend less than you earn." What I realized too late to be useful, was that, "Don't get sick and don't spend more than you earn", is a peculiarly American viewpoint, a Philadelphia attitude, and ultimately a Quaker one. It probably explains why there have been so few Pennsylvania Presidents of the United States, few Nobel prize winners, and relatively few Philadelphia glitterati in general.
Because, "Avoid risky behavior" comes closer to the right answer, since risky behavior is a fairly good pathway to glitterati success, and the Quakers had figured out it was a fairly good trade-off, to prefer longevity with prosperity. When I worked at the National Institutes of Health, I was struck by how many eminent scientists went through red lights, and otherwise exhibited risky driving behavior. Everybody knows eminent politicians play around with risky sexual behavior, as do movie stars and glitterati in general. But it is less noticed that America has an even larger proportion of risk avoiders who use that method to live long and prosperously. America has developed an environment where it is possible to get old and prosperous without so much tiresome risk-taking. Kingley's famous text of, "Be good, sweet child, and let who will be clever", doesn't quite get to the root of it. It's risk you want to minimize, not cleverness.
And the verb is minimize, not eliminate. The Quaker term is "steely meekness". And a bothersome American response comes from Winston Churchill, "If the enemy comes, be sure to take one with you."
" It isn't just your weight that changes as you grow old, it's your shape.
Honoring the Fallen
Two of Philadelphia's most honored institutions, Quakerism and the First City Troop, are in conflict.
HRSA preferable to 401(k)?
New blog 2016-02-05 23:26:12 description
Looking a Gift Horse in the Mouth
New blog 2016-04-06 16:44:14 description