Monthly Archives: December 2009

Break Free: US Healthcare – Another Example of Our Bankrupt Culture

We are prisoners of our culture, break free or die.” (Click on quote for meaning.) This post deals with the healthcare bill.  Our broken culture has given us the worst healthcare system of the leading developed countries, and prevents us from even considering an approach that would give us a competitive healthcare system (w.r.t. both outcomes and cost).

1st my view on the current bill.  The house version is marginally better than the senate one, but we will end up with a version closer to the senate one.  The bill sucks, but it does have a few worthwhile attributes (e.g. providing 30M uninsured Americans with health care insurance starting in 2014), and, as such, I hold my nose, and support its passage (also see Krugman’s Op-Ed, Pass the Bill, and his blog entry, Numerical notes on health care reform).  Like Medicare Part D (the drug provision passed a few years ago), it improves the status quo, w.r.t. the suffering, but with a high cost to others, and a major boon to the insurance and drug companies .  Now, on to the culture aspects.

Our Healthcare System is Broken

First, all other developed countries provide healthcare for all their citizens.  Only in America do people die because of a lack of insurance.  As reported in a recent study, about 45,000 Americans die each year because of a lack of insurance.  The cost of covering the ~45 million uninsured Americans is about $100 Billion per year (about 3% of the Federal Budget).  In addition to the uninsured, about 25 million Americans are underinsured (a 60% increase from 2003).  62% of all personal bankruptcies are related to illness or medical bills.  About 80% of these are by families that have medical insurance.

(Note:  all the following comparative country data is from the 2009 OECD health report.  OECD consists of the developed democratic countries – 30 in all.  Here is the spreadsheet (XLS). The data is from 2006 since later data is not yet available for some countries.)

Second, by key metrics, we have worse outcomes than other developed countries.  In life expectancy at birth, the US ranks 24th (beating only Hungary, Turkey, Slovakia, Mexico, Poland, and Czech Republic).  In infant mortality, the US ranks 28th (only Mexico and Turkey have a higher rate). To get into the top 10, we would have to cut our infant-mortality rate in half.  But Americans surely have better access to health care, right?  Of the 20 countries reporting on number of doctor consultations per capita per year, the US is 19th (3.8) vs. Sweden (2.8).  Some others:  Canada (5.8), France (6.4), UK (5.1), Netherlands (5.6), Germany (7.4).  Of the 26 countries reporting (and also excluding Luxembourg, because of its size) on number of hospital beds per capita, the US is 25th at 3.2 vs. 2.7 for Turkey.  Some others: Canada (3.4), France (7.2), UK (3.6), Netherlands (4.5), Germany (8.3).

Third, we pay much more than any other developed country.  Total healthcare expense as percent of GDP (2006) was 16% for the US.  The average of all the other OECD countries was 8.6%.  The highest was France at 11%.  The ones between 10 and 11% are: Switzerland, Germany, Belguim, Austria, and Canada.  Another way of looking at the data is the per capita healthcare expense in US$ purchasing power parity.  In 2006, the US was $6,933.  The next highest countries are Norway ($4,507), Switzerland ($4,165), Luxembourg ($4,162), Canada ($3,696), Austria ($3,608), Netherlands ($3,611), Germany ($3,464), and France ($3,423).  The rest are less, e.g. UK, Spain, Italy, and Japan are all less than $3,000.  But one factor to take into consideration is the percent of the population over 65, since they account for so much of the healthcare expense.  I just downloaded a report from the US census bureau, An Ageing World 2008.  From table B-1, the percent of the US population 65 and older in 2010 is estimated at 13%.  For the large western European Countries, it is ~18% (e.g. 20% for Germany and Italy, 16.5% for France and UK).  Japan is at 22.6%.  So, given these demographics, we should expect the US to have near the lowest healthcare expense.  Yet the exact opposite is true!

Obvious conclusion: Our healthcare system sucks.  Besides being cruel to 15-25% of our citizens, the cost/benefit is the worst in the world, and it puts our US based manufacturing at a competitive disadvantage, since employers bare most of the insurance cost.

Our Culture Inhibits Good Solutions – NIH and a Broken Political System

In the context of healthcare, NIH is the acronym for our National Institutes of Health, one of our better government funded agencies.  But in this post, I mean: Not Invented Here.  Rather than learn from the experience of others, we are more inclined to view other approaches negatively.  And, our political ideologies outweigh pragmatic, known-to-work solutions.

Ideology vs. Pragmatism.  We live in a global economy. The far-left view of “Globalization is bad for the American worker” is true to some extent, but is irrelevant – Globalization is simply the new waves in the ocean of life – you either get up on your surfboard and ride the waves, or drown.  The far-right view of no significant change to our broken healthcare system has already proven (over more than just the last decade), through increasing costs and continued suffering, to lead us into a competitive death spiral w.r.t. cost per employee.

Neither the far-left nor the far-right wants to compromise their ideals and realize: “OK, our healthcare system is totally broken.  All developed countries have a better system than we do.  What can we learn from their success to reduce our costs, improve our healthcare, and reduce the suffering of so many of our fellow citizens?”

The far-right is the biggest obstacle to change, and with the greatest NIH attitude.  All the reform proposals are labeled as an increasing step to “socialism”.  They are correct.  For 20+ years, I was registered as a Libertarian.  A Libertarian believes that the only role of government is a “monopoly of force” – e.g. police and military.  EVERYTHING else should be provided by the private sector – including roads, schools, firefighters, etc.  A Libertarian is a free-market capitalist.  There is no role for most of the taxes that we pay, especially the income tax.  There is no social security, no medicare, no medicaid, no unemployment insurance, no Federal Reserve, no FDIC, no national parks, no environmental regulations, etc.  When most of these was proposed in the last 100 years, it was rightly labeled “socialism”.

But since retiring in 2001, I’ve switched from being a Libertarian to being a Pragmatist.  In the context of healthcare, in particular, we all need to be pragmatists.  Forget the ideologies and labels.  Almost 50% of US healthcare expenses are already paid by the government.  So are we already healthcare socialists?  So let’s get real. Since the founding of our country, we have increasingly become more socialist – we are now only debating the extent.  One example to think about: Utilities (electric, gas, water) are mostly private, but are heavily regulated.  Are you OK with your electric utility being regulated, but not your healthcare (especially given the above economics)?

The far-left makes the mistake of advocating single-payer healthcare.  And the far-right uses this to scare people, e.g. the death-panel rhetoric.

However, very few people realize that many of the healthcare systems in other developed countries are NOT single payer.  Although Canada and the UK are single payer, France, Germany, and the Netherlands are not.  In these 3 (and many others), there is a multiplicity of competing private insurance companies.  In these 3, there is significant government regulation.  But in all 3, individuals have a choice of their insurance – it is not tied to their employer.  And, all people are covered.  I am not going to describe the healthcare system of each of these countries, but here are a few links for more information:  Netherlands, France, and, Germany.

My major “culture” concern is our NIH attitude that I’ve just described.  But of equal importance is the political influence of the health-insurance and drug-companies on our political system.  The latter is obvious to even the casual observer.  But for completeness, one example is appropriate.  The Medicare Part D regulation prevented the government from negotiating drug prices.  But the Veterans Administration (VA) does negotiate drug prices in connection with VA drug benefits.  So the price paid by the VA for a drug is less than that paid for under Medicare Part D.  The current healthcare bill continues this practice.  The Senate bill also prohibits the importation of drugs from other countries.  My proposal is simple: for a drug to be approved for sale in the US by the FDA, the drug company must agree to not sell it for more than the 1.05X the lowest price it charges for the same drug in the OECD countries.  Simple, but political death to any congressman/senator who would propose it.


Our culture has resulted in a broken healthcare system.  And, our culture prevents us from fixing it.  The best we can hope for is a bill that will help many of the abused victims, but, at best only slow the system’s cost/benefit deterioration.  Depressing, isn’t it?


OTOH: CDOs – Collateralized Donkey Obligations

I just wrote a “heavy” post, Break Free: Afghanistan – Between a Rock and a Hard Place.  So, I thought it best to write a lighter one.  The following bit of thought-provoking humor occurred in an Andrew Sullivan blog post:

Young Chuck moved to Texas and bought a donkey from a farmer for $100. The farmer agreed to deliver the donkey the next day. The next day the farmer drove up and said, ‘Sorry Chuck, but I have some bad news, the donkey died.’

Chuck replied, ‘Well, then just give me my money back.’

The farmer said, ‘Can’t do that. I went and spent it already.’

Chuck said, ‘OK, then, just bring me the dead donkey.’

The farmer asked, ‘What ya gonna do with a dead donkey?’

Chuck said, ‘I’m going to raffle him off.’

The farmer said ‘You can’t raffle off a dead donkey!’

Chuck said, ‘Sure I can. Watch me. I just won’t tell anybody he’s dead.’

A month later, the farmer met up with Chuck and asked, ‘What happened with that dead donkey?’

Chuck said, ‘I raffled him off. I sold 500 tickets at two dollars apiece and made a profit of $898.00.’

The farmer said, ‘Didn’t anyone complain?’

Chuck said, ‘Just the guy who won. So I gave him his two dollars back.’

Chuck now works for JP Morgan.

I sent this off to a wall-street financial guru, and got this thoughtful reply (with a few insignificant edits):

This reminds me of securitizations.  You take junk (dead donkey) and put it in something, you mix it up, slice and dice it into a CDO (Collaterialized Debt/Donkey Obligation) and magically, some triple A paper comes out of it. The buyers don’t complain, they just bought the crap (tickets) because it is rated AAA.  JPM was the master of this type of securitization.  So Chuck has all of the qualifications to make it big at JPM!  Wall Street has been selling dead donkeys for a long time and they paid signing bonuses to people like Chuck who could find creative ways of selling dead donkeys.  The $64K question:  was there a donkey to begin with?!  On Wall Street, in the end, they started creating securitizations from thin air.  The really sad joke is some of this crap is on the Fed’s balance sheet, as revealed in documents of the Lehman bankruptcy filings and subsequent court documents.

And to further complete the picture:  AIG sold CDSes (credit default swaps) on these CDOs, i.e. AIG was insuring that the “dead donkey” wouldn’t die.  And, by our government’s bailout of AIG, we effectively paid off on these insurance policies.

I could have made this post part of my “Break Free” series, since our financial/economic crisis was enabled by our declining culture.  But I want to leave that to a more detailed blog post on the subject.

Break Free: Afghanistan – Between a Rock and a Hard Place

We are prisoners of our culture, break free or die.” (Click on quote for meaning.) This post deals with our Afghanistan strategy.  For hundreds of years, western countries have projected their culture onto native populations (e.g. in Africa in the 1800’s) with fatal consequences for all.

We have made this mistake from our invasion of Afghanistan in 2001, and continue to do with Obama’s strategy.  Fundamentally, Afghanistan is roughly equivalent to a 12th century European feudal society in a bleak landscape with insignificant natural resources, and we are trying to impose a 21st century government/societal/economic structure.

Various facts about Afghanistan are available from the CIA.  72% of adults (age 15 and over) are illiterate.  The birth rate is the 4th highest in the  world (6.5 children born per woman).  Life expectancy at birth is 44 years (214th in the world out of 224).  75% of the population is in rural areas.  Key environment issues: “limited natural fresh water resources; inadequate supplies of potable water; soil degradation; overgrazing; deforestation (much of the remaining forests are being cut down for fuel and building materials); desertification; air and water pollution.”  The terrain is mainly rugged mountains.  The climate is arid to semi-arid, with hot summers and cold winters.  There are multiple ethnic groups (Pashtun 42%, Tajik 27%, Hazara 9%, Uzbek 9%, Aimak 4%, Turkmen 3%) and languages/dialects (Dari 50%, Pashto 35%, Turkic languages 11%, 30 minor languages 4%).  The 2008 GDP was $11.7 Billion, of which ~$3 Billion was from the illicit Opium trade.  80% of the labor force is engaged in agriculture.  The unemployment rate is 40%.

Afghanistan is a tribal society with adherence to tribal authority, and loyalty is to the tribe.  And, we are trying to impose a centralized government onto this tribal structure which has lasted for hundreds of years.  And, just to make it even more challenging, we are trying to do this with an illiterate, rural population living in a bleak landscape, with opium being the cash crop.

To get a sense of the hopelessness of the Afghan situation, articles by Scott Ridder (long) and Glenn Greenwald (short) are worth a read (click names for the articles).  Here is an excerpt from Ridder on Obama’s strategy:

At its heart, the strategy requires a fiercely independent people to swear fealty to a man, Hamid Karzai, whose tenure as Afghanistan’s president has been marred by inefficiencies and corruption. Trying to reverse centuries of adherence to local authority and tribal loyalty with the promise of effective central government would represent a monumental challenge for the most efficient and honest of Afghan leaders. That we are attempting to do so behind the person of Karzai represents the height of folly.

For any military-based solution to have a chance of succeeding, we would need to deploy into Afghanistan an army of social scientists capable of navigating the complex reality of intertribal and interethnic relationships. They would require not only astute diplomatic skills that would enable them to bring together Hazara Shiite and Pashtun Sunni, or Uzbek and Tadjik, or any other combination of the myriad of peoples who make up the populace of Afghanistan, but also an understanding of multiple native languages and dialects. But the reality is we are instead dispatching 20-year-old boys from Poughkeepsie whose skill set, perfected during several months of predeployment training, is more conducive to firing three rounds center mass into a human body.

The Greenwald (late October) article is interesting, because of this:

Matthew Hoh, a former Marine captain with combat experience in Iraq, resigned last month from his position with the Foreign Service, where he was the the senior U.S. civilian in the Taliban-dominated Southern Afghanistan province of Zabul, because he became convinced that our war in that country will not only inevitably fail, but is fueling the very insurgency we are trying to defeat.  Hoh’s resignation is remarkable because it entails the sort of career sacrifice in the name of principle that has been so rare over the last decade.

Here are some excerpts from Hoh’s resignation (click to download the 4-page PDF) – emphasis is mine:

Next fall, the United States’ occupation will equal in length the Soviet Union’s own physical involvement in Afghanistan. Like the Soviets, we continue to secure and bolster a failing state, while encouraging an ideology and system of government unknown and unwanted by its people.

If the history of Afghanistan is one great stage play, the United States is no more than a supporting actor, among several previously, in a tragedy that not only pits tribes, valleys, clans, villages and families against one another, but, from at least the end of King Zahir Shah’s reign, has violently and savagely pitted the urban, secular, educated and modem of Afghanistan against the rural, religious, illiterate and traditional.  It is this latter group that composes and supports the Pashtun insurgency. The Pashtun insurgency. which is composed of multiple, seemingly infinite, local groups, is fed by what is perceived by the Pashtun people as a continued and sustained assault, going back centuries, on Pashtun land, culture, traditions and religion by internal and external enemies. The U.S. and NATO presence and operations in Pashtun valleys and villages, as well as Afghan army and police units that are led and composed of non-Pashtun soldiers and police, provide an occupation force against which the insurgency is justified. In both RC East and South, I have observed that the bulk of the insurgency fights not for the white banner of the Taliban, but rather against the presence of foreign soldiers and taxes imposed by an unrepresentative government in Kabul.

I find specious the reasons we ask for bloodshed and sacrifice from our young men and women in Afghanistan. If.honest, our stated strategy of securing Afghanistan to prevent al-Qaeda resurgence or regrouping would require us to additionally invade and occupy western Pakistan, Somalia, Sudan. Yemen, etc. . . . the September 11th attacks, as well as the Madrid and London bombings, were primarily planned and organized in Western Europe; a point that highlights the threat is not one tied to traditional geographic or political boundaries.

I fail to see the value or the worth in continued U.S. casualties or expenditures of resources in support of the Afghan government in what is, truly, a 35-year old civil war.

Although I strongly disagree with Obama’s Afghan plan, I am sympathetic with his thoughtful decision.  Even the president is a “prisoner of our culture.”  If he failed to supply the troops that General McChrystal requested, the political fall-out would have been severe.  I doubt if any of Obama’s challenging legislative plans on the myriad of other issues could be passed.  So Obama’s decision was politically pragmatic, in my view.  It is also likely that the troop surge will temporarily improve the Afghan situation.

In addition to the cultural flaws in our war strategy, the way that we are waging the wars in Iraq and Afghanistan is degrading our culture.  War should always be the last resort, and when we go to war, it must be a shared sacrifice.  Instead, the sacrifice in our current wars has fallen on just 1% of our population, and the financial burden we’ve left to future generations.  Bob Herbert had a thoughtful OpEd in the NY Times on this.  An excerpt:

The air is filled with obsessive self-satisfied rhetoric about supporting the troops, giving them everything they need and not letting them down. But that rhetoric is as hollow as a jazzman’s drum because the overwhelming majority of Americans have no desire at all to share in the sacrifices that the service members and their families are making. Most Americans do not want to serve in the wars, do not want to give up their precious time to do volunteer work that would aid the nation’s warriors and their families, do not even want to fork over the taxes that are needed to pay for the wars.

To say that this is a national disgrace is to wallow in the shallowest understatement. The nation will always give lip-service to support for the troops, but for the most part Americans do not really care about the men and women we so blithely ship off to war, and the families they leave behind.

Within the context of our broken culture, the right paths for many issues (i.e. the Iraq/Afghan wars, climate change, immigration, health care, the economy) are beyond our reach.  Instead the available pragmatic paths are best described by Woody Allen: “We stand today at a crossroads: One path leads to despair and utter hopelessness; the other leads to total extinction. Let us hope we have the wisdom to make the right choice.”

Breakfree: Climategate – The Depressing Implications

We are prisoners of our culture, break free or die.” (Click on quote for meaning.) This post deals with the decline in the quality of mainstream news reporting and the increasing mistrust of science by Americans.  “Climategate” provides a perfect example of both.

What is Climategate? A computer server at the Climate Research Unit at the University of East Anglia was hacked into and emails going back many years were stolen.  As Media Matters notes: “Since the reported theft of emails from the Climatic Research Unit (CRU) at the University of East Anglia, conservative media figures have aggressively claimed that those emails undermine the overwhelming scientific consensus that human activities are causing climate change, dubbing the supposed scandal ‘Climategate.’ But these critics have largely rested their claims on outlandish distortions and misrepresentations of the contents of the stolen emails, greatly undermining their dubious smears.”

It has been fascinating to see the continuing lies in the media.  They have no interest in the facts and no interest at all in the science.  Of course, some of the biggest culprits are the expected ones: Faux Noise Channel, Washington Times, Wall-Street Journal, Investor’s Business Daily, et al.  And, then there are the pundits, Limbaugh, Palin, and George Will.  Perhaps most disturbing is the spread to more reputable media, e.g. ABC.

Media Matters does a thorough job of tracking the distortions and lies.  Here are but a few links to their reports on:  Palin, George Will, Faux Noise, Washington Times, ABC.  These reports also have the links to the originals.  A good succinct one is the Palin one.  For far more detailed and much longer analysis, see Climategate Exposed.

Irrespective of “Climategate”, the WSJ had a balanced article on what the Global Warming skeptics say, and what the scientists say:  What Global Warming? For a more scientific (but still brief and readable), article, see the Scientific American article: Seven Answers to Climate Contrarian Nonsense.

Joe Conason had a good short opinion piece on Climategate: Fair and Balanced (and Phony) Science. His closing paragraph: “Meanwhile, the scientific consensus remains unshaken and profound. From the thousands of scientists who participated in the Intergovernmental Panel on Climate Change to the National Academy of Scientists, the National Oceanographic and Atmospheric Administration, the U.S. Geological Survey, the Royal Society and the hundreds of peer-reviewed studies published over the past 15 years, the findings are plain enough. Global warming is real, with serious consequences for humanity. Hiding from the truth won’t change it.”

In contrast, the Washington Times editorial provides a key example of the main point of this post.  Some key excerpts:  “Belief in global warming had long had a tinge of theology about it, a form of cultism that adherents and defenders elevated to a holy crusade.  . . . The e-mails from the University of East Anglia’s Climate Research Unit reveal systematic attempts by high priests of this religion to silence scientists who disputed their rigged findings. . . . Global warming was an academic Ponzi scheme. Its leading proponents were mini-Madoffs, peddling a vision of global catastrophe to gullible activists, bureaucrats and policymakers.  . . . The veil has been pierced, the myth revealed, the scales have fallen from the people’s eyes. The pagan priests are fleeing the temple, their sacred idols are being pulled down, their holy works renounced. Their god, finally, is dead.”

For more information on the physical science basis for global warming: IPCC 2007 report (~1000 pages). But a better and more readable piece is their FAQ (PDF format), which is just 45 pages and filled with lots of pictures and charts.

One other disappointment in the US media reporting on the Copenhagen summit is no mention of the relatively newer scientific findings that increased levels of CO2 is having the on the oceans, i.e. the problem of Ocean Acidification.  The good news is that our oceans are a big sink for CO2.  The bad news is that this increases ocean acidity.  This poses a major risk for marine life, and could have both sooner and more significant effects than Global warming.  In contrast to the US media, UK’s Guardian has had excellent coverage on this issue:  Ocean acidification rates pose disaster for marine life, major study shows (Report launched from leading marine scientists at Copenhagen summit shows seas absorbing dangerous levels of CO2).  Here is an excerpt from the article:

“The world’s oceans are becoming acidic at a faster rate than at any time in the last 55m years, threatening disaster for marine life and food supplies across the globe, delegates at the UN climate conference in Copenhagen have been warned.  A report by more than 100 of Europe’s leading marine scientists, released at the climate talks this morning, states that the seas are absorbing dangerous levels of carbon dioxide as a direct result of human activity. This is already affecting marine species, for example by interfering with whale navigation and depleting planktonic species at the base of the food chain.”

The article has several good links to other articles, as well as a link to a 12-page European research report (the introductory guide).  If you would like something that is easier to digest, watch online the 20-minute NRDC documentary with Sigourney Weaver:  Acid Test.

In a recent CNN poll, the number of Americans who say that global warming is caused by humans has dropped from 54 percent last summer to 45 percent now.

Bottomline: I see the results of the degradation in our culture, but have no idea on how to change it.  Depressing, isn’t it?

Break Free: Prisoners of Our Culture

I am going to start blogging again.  As the title implies, I am going in a different direction.  In the future, when you see a blog entry title “Break Free”, it will be on this theme: “We are prisoners of our culture, break free or die.” This entry will discuss what I mean by this.

Our broken political system and, to some extent, our values prevent sound long-term solutions from being implemented in education, health-care, infrastructure, immigration, energy, climate change, the economy, foreign policy, tax system, food safety, etc.  I feel about our country about the same way that I felt about Intel when I left in 2001 – in a downward spiral and powerless to stop it.

I had hoped that 8-years of Bush were enough of a shock to turn our country around.  Apparently, not.

Intel was able to turn itself around, before things became too bleak.  Unfortunately, I am not hopeful on as favorable outcome for our country.  So we will likely continue on our downward spiral until we get to the point of sufficient despair which will facilitate real change.

Our downward spiral will be an uneven journey, and occur over a period of several decades.  But it doesn’t have to be this way.

But first since some of the words in this entry could be easily misinterpreted, I want to make one very clear point.  I am NOT advocating a revolution. But I suspect that the kind of changes that I will be discussing over the next month or so will probably require a constitutional convention.  In 1787, there was a constitutional convention which resulted in replacing our Articles of Confederation with our current US constitution.

There are solutions to our problems.  But we are trapped by our “culture”.  We only consider workable solutions to a problem within this context, e.g. what legislation can get passed by the congress versus the legislation that we actually need to solve the problem (which can’t get passed).  In this sense, we are prisoners of our culture.

The only path must then be to change our culture, i.e. our political system and our values.  We must break free, or we will die.  More specifically, like the Roman Empire we will suffer from the rot within.

My intent in future blog entries is to provide some examples of how broken our culture is, and sometimes directions for solutions that are impossible in the context of our current culture.