Sunday, March 11, 2012

Double Dipping Into Moral Hazard

A Walk In The Park

Yesterday was one of those days that make it impossible to imagine living anywhere else. We drove down to South Platte Park and Carter Nature Center, the expansive open space area leading from Mineral all the way to Chatfield Reservoir. A paved bike path side by side with a gravel trail for walking meanders along the Platte, under C-470, and up to a huge leash-free area directly below the dam. That is just one route, mind you. There must be half a dozen optional paths and countless river accesses along the way.

I was able to wear hiking shorts (I am determined to only wear shorts from this day forward) and a cool yellow sweat shirt that I had to take off in the 70 degree weather. There were lots of white legged folks out there with us riding bicycles, walking dogs, fishing, taking photos, bathing in the woods, as Katherine likes to call it. We just felt so damn proud to live in a community that has oases like this. Then, this being an election year and all, we realized that there were lots of folks who would not share our appreciation of this flagrant waste of taxpayer dollars. Interestingly, we noticed very few of those types (read: grumpy white men) on the trail. There were some. You could tell because they wore long pants with their hands in the pockets of their windbreakers. If they wore hats, they were invariably baseball hats sitting too high on their brows, like they were waiting for the bus to Black Hawk.

Then we started worrying about Moral Hazard, the idea that some undeserving folks might get a benefit paid for with our tax dollars directed toward an otherwise worthy goal. For instance, while most individuals receiving unemployment still look for work, others just sit back and take advantage of the system. There were probably some people using that trail who didn't pay their fair share in taxes! I saw a few people fishing who could have been illegal! There was one group zooming past us on bikes who looked suspiciously like Muslims. And there were surely some walkers who made so little money that they paid no income tax at all, only payroll tax and that, thanks to all those liberals in Congress, has been halved!

Suddenly, I realized that I was one of those people enjoying the benefits of Moral Hazard. And I began to feel guilty. I remembered Limbaugh, Hannity, Rosen (Limbaugh-Lite), et. al. blasting away at public employees and how our (largely) undeserved benefits and salaries were leading the country to financial ruin. I'm was one of those employees! Worse yet, I receive a tidy pension from PERA (talk about four letter words). I am, according to those pundits, on the dole. Why Mike Rosen has even asserted that people like me do not really pay taxes at all! All we do--I think this is his argument--is get a percentage of our pay withheld which is then immediately returned to us in the form of pay.

I am not only a prime example of Moral Hazard, but I am double dipping as well. I'm using the beautiful parks paid for by taxpayer dollars, but since I get all my "taxes" back, I haven't paid my fair share. Yet there I was shamelessly using the place.

I picked up a cigarette butt on the side of the trail and carried it to the next trash can. It was the least I could do.

Thursday, March 1, 2012

Understanding Business

I saw a headline in today's POST that read, "Apple market value tops $500 billion with more growth seen." The article went on to say that Apple was the most valuable company in the world and if current projections come to fruition, it would have a market capitalization of $552 billion next year.

I mention this because I have been brooding over a comment someone made to me a few months ago. In the middle of a friendly argument about the economy, he said that I obviously didn't understand business and so any further discussion was pointless. I resisted an impulse to tell him to go fuck himself and had to agree that there are many things about business that baffle me.

On the other hand, would someone please give me the name of someone who does understand business and the economy. Wall Street execs? The Secretary of the Treasury? Any Secretary of the Treasury. The President? Any previous President? Rush Limbaugh? I figure my understanding of business is just as good as theirs.

Here are the things I understand about business. The two times I actually worked as a copy writer/editor for small businesses, once when I was fresh out of college and the other when I was fresh out of teaching, I learned that both offices felt a lot like these people were "playing business," the way I used to play school as a kid. And yet both of these business were successful.

And judging by the rate at which people in the second business got fired there was at least as high a percentage of incompetence as there was in the public school system I was a part of for most of my life.

I also know that my son has managed his small business through the last four tumultuous years by being loyal to his employees, by being willing to pocket a little less, by refusing to cut back on health benefits. It was touch and go for a while, but he grossed $4 million last year and business is better than ever. It takes courage, faith, and a willingness to adapt, compromise, and cooperate. It also takes a whole lot of talent.

I know that businesses need to be able to count on the future in order to make informed decisions and that is certainly a big stumbling block in our current situation.

I know that businesses need to reduce friction in order to be profitable and in order for our society to prosper. Exchanging goods and services was rather cumbersome until someone came up with the bright idea of currency. Currency greased the pathways of commerce and everybody profited. Deregulation is important because it reduces friction, but the conservative dream of regulating nothing ends in disaster because a business world without friction holding it back, as we have learned, can be a disaster. It's like having sex in a hot tub. You don't feel anything until one of the jets sucks you in. Sorry, I couldn't resist.

The only way our standard of living can rise is if we can get the same stuff for less money. That way we'll have more money to spend on other stuff. The only way to get the same stuff for less money is if manufacturers can somehow manage to produce the stuff more efficiently. That means automation, busting unions, farming work out overseas, fighting health benefits, etc.

The article about Apple cited above leads me to the last thing I understand about business. A business' loyalty is to the stockholder; it is not to the country. That's where my understanding takes a negative turn. At the beginning of Obama's term he sat down with a collection of tech industry giants. Steve Jobs, of course, was there and the President, aware that iPhones and iPads were being manufactured in China rather than in the US, asked Jobs what it would take to get those jobs back here. Jobs leaned over and said, "Mr. President, those jobs aren't coming back."

It is much more efficient to do mindless assembly in China, India, and the like. Any good MBA would argue that the residual benefit to our economy and to employment rates in related companies more than makes up for the assembly line jobs lost to China. Tell that to the thousands of poor, undereducated slobs who lost their jobs.

I'll never forget an episode of "Sixty Minutes" that aired when I was in high school or just beginning college. Mike Wallace was interviewing Roger Smith about all the plant shutdowns in Flint. He asked, "When you are sitting around at a board meeting does anyone ever suggest that there is such a thing as too much profit?" Roger Smith looked at Wallace like he had just landed from Mars. Too much profit? Is this a trick question?

So, that's what I understand about business. Go ahead and laugh.