In 1954, the congress decreed that health insurance is an especially desirable thing. A law was passed allowing companies to deduct health care insurance premiums as an expense against income even while allowing workers to receive healthcare income tax free. About 10 years later, President Johnson pushed through dramatic expansions of the same basic concept.
What if the congress and President Johnson had stated that America is a nation of football fans and we need to support football? What if they decided to subsidized professional football instead of health insurance? What if the congress had passed laws allowing companies to deduct the cost of NFL tickets while allowing employees to receive tickets tax free?
Some of the likely results would have been:
1) The NFL would have enjoyed huge growth rates because many people who don't care all that much for professional football would have accepted $100 tax free tickets in lieu of $100 in taxable income.
2) Cities all across America would have requested teams and built massive football stadiums.
3) The quality of the football played would be effected in a number of ways. The increase in the number of teams would have spread the best players over more teams. On the other hand, Americas great passion for football would have caused many more young people to "major in football".
4) Millions of young men would spend billions of more hours working out. Body building food supplements would be in even greater demand.
5) Sunday attendance at church would likely suffer? Millions of more hours would be spent watching and talking about football.
6) College football programs would be all the more important as the training grounds for professional players, but some college fans would be too burned out to attend college games. Many more people would spend their entire weekend attending football games: Friday Night to see prospects, Saturday at College, Sunday at the pros.
7) Football would grow as a percentage of our total economy.
8) Before long, professional baseball, basketball, tennis, golf and soccer enthusiasts would be yearning for "reform". The pressure would be great on the congress to include other sports in the program.
9) Ticket prices would be artificially high.
10) Groups of self employed and retired individuals and families might "opt out". There might be 46 million people choosing not to attend NFL games.
11) To get everybody covered, very powerful lobbies, supported by teams almost every major city in America, might push to make the ticket programs mandatory.
To paraphrase William, "Oh what a tangled mess we make, when government solutions we first take".
In reality, professional sports teams in America have been granted "government protection". True competition has been declared illegal. Thus, ticket prices are high and player salaries are incredible. Three year, $50 million dollar contracts are mind boggling.
Rightfully, Americans have difficulty making sense out of the nonsensical. We want our representatives to fix the healthcare mess. Few Americans have the knowledge or inclination to connect all the dots. Unfortunately, power hungry legislators have all the incentive they need to take advantage of an unsophisticated public.
The good news is that the congress has already gone to such spending extremes that the people have taken notice. A backlash is in progress. Blanch Lincoln and a couple of other senate democrats, who are worried over re-election prospects, have voted to tone the bill down. Blue Dog democrats in the house are resisting pressure from Pelosi. Harry Reid of Nevada has pushed back against the tax burden being pushed upon the states.
Never-the-less, the thirst for power is a powerful force. Ultimately, Olympia Snow, will sign-on to a toned down healthcare bill, giving democrats the 60 votes they need.
Real reform would be to get rid of the laws that are driving up the price. Tort reform, nationwide insurance competition, taking the hand cuffs off nurse practitioners and increasing the number of education slots for doctors would all help drive down the cost of healthcare. Many current plans are crazy. Some people are being given "more football tickets" than they can possibly use. Healthcare benefits should not be deductible by corporations and simultaneously be tax free to employees. The bill that Senator Snow will sign will include at least a few steps in the right direction along with many steps in the wrong direction.
We really don't need NFL teams in every city in America.
Wednesday, September 30, 2009
NFL Football in Every City in America
Monday, September 28, 2009
Technology Moving Forward Smoothly
The technology sector is the best performer since the March lows. It is performing well quietly. It is not attracting traders. No big moves up and down, just steady progress. Here is a chart from Bespoke.
Sunday, September 27, 2009
Do Dumb Parents Birth Dumb Teens or What?
Here is a chart that with teenager IQ compared to teenage spanking. On average, parents who beat their teenage children have children with below average IQ. Do you suppose this is genetic or environmental? Do dumb people beat their kids or do angry people beat the good sense out of kids?
Friday, September 25, 2009
Words of Wisdom -- C.S. Lewis
Every tyrant must begin by claiming to have what his victims respect and to give what they want. The majority in most modern countries respect science and want to be planned. And, therefore, almost by definition, if any man or group wishes to enslave us it will of course describe itself as ’scientific planned democracy’.
C.S. Lewis wrote the above words about 60 years ago. Americans somehow seem to forget that more than 100 million people were killed by their own governments. Today, the powerful in America believe that they should impose their solutions upon others. Tyranny by democracy is still tyranny.
Thursday, September 24, 2009
Economic Recovery Continues
Home sales fell 2.7% in August; not great news but not unusual. Home buyers have always liked getting settled well before the start of the school year. Home sales August 2009 were up 3.4% over home sales August 2008, so, while the headlines say there was a decline, the rebound continues. The rebound can be seen in the depletion of inventories. New home inventories are at the lowest level in...
Wednesday, September 23, 2009
Public News Takeover!
Sunday night my associate pastor expressed frustration with the media. Nothing new here except the perspective offered. From virtually every point of view, there is frustration with the media. Many Americans despise the blatant biases of major "news services" from Fox to MSNBC. The frustration is that biases are heard with little avenue to respond with our own biased rebuttals.
Look a little deeper at Facebook status updates, Twitter tweets and Blogger blogs and you discover that the public is in the process of taking back control of the media. We no longer accept "That is the way it is", because we have come to realize that "news" is inherently biased. (Walter Cronkite passed away recently, God rest his soul.) In the past two months, there has been more video posted on Youtube than has been posted by the major media in all the years of existence! The growth in the "private" production of "news" has just begun!
18.3 Year Real Estate Cycle
The real estate cycle averages 18.3 years. It is composed of the good part and the bad part. The good part is about 15 years of up, with a hiccup about halfway through. The hiccup is a "manufacturing recession", like the one in 2000-2001. The bad part averages about 3 years, like the 1988 to 1991 time. Here is a chart from
Google Preparing to Neuter Microsoft Monopoly
A couple of years ago, MSFT's browser market share was better than 90%. Today, MSFT holds a 67% share. The problem for MSFT is that it behaved like monopolist do. It stopped discovering what its customers wanted and instead soaked them for excess profits. Google is preparing to serve-up a much better...
Tuesday, September 22, 2009
The Wealth of Consumers
The fact that consumer spending has reached the all time high of 72% of GDP is being used by alarmist to suggest that a long down turn is underway. (see chart below) For various reasons, some people do not want to see the good and to be happy.
Trade to Boost Economy for Years to Come
The long decline in the US Dollar has made US goods cheap. In recent months, trade has been rising rapidly. Most importantly, exports have been rising even faster than imports. Trade is going to boost US economic growth for years to come. If one looks at US made computer chips, the ones offered today are many times as powerful as the ones offered a few years ago. The innovations produced in America cannot be purchased from anyone else. Countries such as China, which hold large quantities of US Dollars, can trade those dollars for very powerful computer chips that will increase productivity in China. We are in a win-win economic cycle.
No Hyper Inflation -- Hyper Prosperity Instead!
In the 1970's, after a long period of negative real interest rates, the US experienced hyper-inflation. In the past year, our government has inflated its balance sheet while corporations and individuals have worked at paying down debt. The ballooning of the Fed balance sheet has caused many folk to believe a period of hyper inflation is coming. The following chart shows that conditions are not nearly the same as after the 1973-74 recession. Thus we can expect different results.
Monday, September 21, 2009
Leading Indicators Portend Strong Economy
The chart below shows a .79 r square between leading indicators and GDP. According to the chart, an economic boom is just getting underway.
Saturday, September 19, 2009
Google Versus Microsoft
Google continues to gain ground in areas where Microsoft has held monopoly numbers. Google is offering innovative solutions at very low prices. In one area after another Google is forcing Microsoft to change...
Snooping Through the Trash
The volume of Tweets is growing exponentially. The things one can learn from Tweets is quite amazing. The mundane example might be how long the wait time at a retail health clinic or an oil lube shop. One new interesting use is snooping through a persons trash!
Keep Buying Stocks!
One of the ways to tell if you should be buying stocks or not is to look at inflows to mutual funds. In the chart below, you can see a strong pattern.
Friday, September 18, 2009
The Hunger - Corruption Connection
Here is a Wikipedia map of corruption. Dark red being the most corrupt and green being the least.
Thursday, September 17, 2009
Taxes and Job Growth
Look at the maximum tax rate in the USA and the rest of the world and you see why job growth is weak in the USA. Obama and the democratic congress have plans to raise the maximum rate from 35% to 39.4%!
Progress With Iran?
Obama has continued the Bush carrot and stick policy in regard to Iran. Thus, yet another deadline for stopping the production of nuclear bombs is fast approaching. This time could be different.
Tuesday, September 15, 2009
Big Government
When government gets too big, economic growth slows. Here is the Rahn Curve, developed by Richard Rahn.
Monday, September 14, 2009
Early Education
"Preschool activists consider Georgia and Oklahoma model states because they have long running, fully implemented, universal preschool programs that proponents consider to be high quality…. The real-world evidence demonstrates that, at the same time [these] preschool programs have been massively expanded and their quality… has supposedly improved, the test scores of children in Oklahoma have eroded significantly compared to the national average. And while Georgia’s reading gap narrowed, its math gap stagnated or widened." Adam Schaeffer--Cato Institute
Saturday, September 12, 2009
Me: Economic Libertarian-Social Moderate; Obama: Statist (fascist)
Tuesday, September 08, 2009
Exciting Times! Read Your Snoogle!
Sony Corporation is the grand old name of transistorized sound machines. Sony did not invent the transistor or the transistor radio, however, Sony was an early licensee of the transistor and the first to sell transistor radios at a profit. From 1955, until recent years, Sony was the sound machine leader. The Sony Walkman was the portable music device of choice, until Apple took a dominating lead in both Internet enabled phones and music sales. Sony still has almost double the revenues of Apple, but Apple's growth rate has been huge. Since the top of the Internet 1.0 bubble, shares in SNE have fallen in price by 80%; shares in Apple have climbed 520%!
Thursday, September 03, 2009
Cold Weather Coming? Real Estate Values to Climb!
Over the past 11 years, satellite readings have shown that the earth's temperature is cooling. Indeed, the chart below suggests that the earth's temperature has only slightly bounced after starting on the down swing of an interglacial temperature peak. The short term trend is clearly down but eleven years hardly establishes a temperature trend in terms of the interglacial cycle. This cycle takes about 20 to 25,000 years to complete but the very obvious peaks only come in combination with other cycle peaks that occur about every 120,000 years.
Wednesday, September 02, 2009
Home Ownership to Rise!
The famous bond market guru, Bill Gross, is pessimistic about the economy and about home ownership. He believes home ownership will fall from 69.2% of the population to 65%. He could be right or he could be trying to sell a few trillion dollars worth of securities, but, in any event, powerful forces are encouraging people to buy homes.
Mortgage rates have dramatically lowered the price of homes. Earlier this year, homes were the most
Tuesday, September 01, 2009
Americans Spend More on Healthcare. So What?
A doctor who supports the monster healthcare "reform" package notes that Americans spend more on healthcare than other people. The following response says, "So What?"
The good doctor provides us with another example of picking statistics to fit ones mind set. The following statistics, pulled from a Wikipedia table, were found with the search "GDP by Sector". Americans spend .9% of their income on agricultural products, 20.4% on goods and 78.5% on services. Citizens of the European Union spend 2.1% on agricultural products, 27.3% on goods and 70.5% on services. Europe is not a bad place to live but, the average American is economically better off than the average European. Taking a look at places where you would probably not want to live, we find: the citizens of Sudan spend 35.5% of their income on agricultural products, 24.8% on goods and 39.7% on services, the people of Cameroon spend 45.2% on agricultural products, 16.1% on goods and 38.7% on services, and the people of Laos spend 43.4% on agricultural products, 30.6% on goods and 26% on services. Americans spend a much smaller portion...
Response in Health Care Debate
Much of the back and forth debate in regard to health care is narrowly focused. Here is a response made to a fellow who thinks government has the information necessary to decide what care is best for the individual.
Open your eyes. Everyday people die because they do not have the money they need. They die of hunger, malnutrition, untreated disease and even untreated water. Terms such as information asymmetry show that you have "book learning". When will you recognize and acknowledge that "big government answers" are not about solving problems, but about giving wealth and power to special interests? If your goal were to lower the death rate, you certainly would not be spending time trying to figure out who is entitled to incredibly expensive kidney drugs, where the money spent on one patient would pay for a sizable water treatment plant and save the lives of hundreds. Thousands of children could be vaccinated,...
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