Mixing Business With Racism Is Crazy

Last week I was shocked to get a Penzeys Spices newsletter with the title, “Newsletter +Racism Update!” As an IT professional I am familiar with the current best practices for email marketing practices. This title was a completely unnecessary risk to the business. For many businesses this is their peak season. Suffice to say anyone in their right mind would recognize this is the season to connect with their customers in positive ways. It takes about twenty postive engagements to overcome one mean spirited engagement. This is not the time to toss your marketing plan out the window because your candidate lost an election. You actually have to be an adult about running a business. To compound the problem he actually wrote in the body of the newsletter, “The open embrace of racism by the Republican Party in this election is now unleashing a wave of ugliness unseen in this country for decades. ” Regardless of how you felt about the election this statement will antagonize half of the population. Then on the next day I cringed again as he wrote another email with instructions on how to unsubscribe from the newsletter if the previous email bothered you. I am not making this up! On the third day he wrote again. This time the title was, “Opt-out results for racism update email!” When will the insantity stop!

To Opt Out Or To Not Opt Out Has Nothing To Do With Racism

I checked my records and my first order with Penzeys Spices was in 1996. Typically this is the time of year I stock up with their products. They have a great selection and good product quality but they are not the only business selling spices.  Recently I have been weaning myself away from them because I bought too many spices. To save myself from myself I opted to purchase spices locally when I run out. Jungle Jim’s has a great selection of spices. Someday I may buy bulk quantities of spices from Amazon. The important point is for a business like Penzeys Spices to remember is that customer retention is crucial. Customers have plenty of reasons to opt out of your newsletter without you forcing the question. Do not encourage them to opt out for an issue unrelated with your business. The number-one rule of business is to stay business-focused.

David Burge On Lefties

David Burge On Lefties

Senator Sessions And The Black Belt Voter Fraud Case

Once again I find myself fact checking the main stream media. When I read the USA Today article, Black Belt voter fraud case in Alabama shaped Senator Jeff Sessions’ career, I was surprised to find out that the prosecutors alleged that three people altered ballots for a 1984 primary election. One group of Democrats were defrauding another group of Democrats. This reminds me of the tactics used by Clinton supporters against Mr. Sanders. There was merit to the case since the defendants admitted that they altered the ballots but only under directions of the voter. Despite this admission the Democrats allege that this case was brought primarily to suppress black voter turnout. Allegations of voter fraud continue to dog at least one of the counties in the Black Belt, Perry county. In 2008 the New York Times reported new allegations of voter fraud. In 2012 tuscaloosanews.com reported a scandal involving a town in Perry county. According to the 2010 census this town had approximately 1,140 people older than 18 and yet it had 2,587 registered voters. If we admit that there were questionable voting practices in the Black Belt, what does this say about Mr. Sessions record as attorney general?

What Does Voter Suppression Mean In A Safe Democratic District?

In the most recent House election for Alabama’s 7th district which encompasses most of the Black Belt, Terri Sewell, won the election with 98.4% of the vote. You have to go all the way back to  1967 to find a Republican winning this district. None of the general elections were close. Obviously Mr. Sessions and the Republicans had nothing to gain from voter suppression. Republicans had almost no chance of winning any political office in the Black Belt. The Black Belt was and still is a safe Democratic district. The real political battle is over who would win the Democratic primary. So the only person who had a motive to report voter fraud was the person who lost the Democratic primary. In an ironic twist the Democrats are mad at Mr. Sessions because he respected the right of that person to have a fair election.

Which macroeconomic theories will rise or fall because of Donald Trump?

Tyler Cowen wrote an interesting post, Which macroeconomic theories will rise and fall in status because of Donald Trump?, that explored the potential rise or fall of macroeconomic theories under the Trump administration. I decided to jump on the bandwagon and offer my suggestions. Here are his choices and comments.

1. “The multiplier is high.”  That seems ready to decline in status.

2. “Even wasteful expenditures can boost demand and help pull us out of secular stagnation.”  Ditto.  “We need to do stimulus right” will make a comeback.  And I see “the distributional effects of stimulus really matter” lurking around the corner.

3. “Tax cuts aren’t as good as government spending.”  That actually may rise in status, especially if Congress gets the bargain they want — lots of tax cuts — rather than what Trump wants.

4. The notion of how a credibly irresponsible leader can improve macro performance won’t get cited as much.

5. Austrian-like theories of how there can be a boom in the short run, yet with great long-run dangers, will return to prominence, albeit with modifications to the original Austrian story.

6. Criticizing countries with trade surpluses will decline in status.

7. The efficient markets hypothesis will decline in status.  It imposes too much discipline on our judgments of leaders and their policies.  The more certain we are of our own judgments, the more that evidence contradicting those judgments should be downgraded.  Right?

My Choices For Macroeconomic Rise Or Downfall

  1. Zero Interest Rate Policy(ZIRP). We have sufficient evidence to conclude that a Zero Interest Rate Policy does not stimulate the economy. ZIRP stabilizes a financial crisis when it is timely, targeted, and temporary. It is not a substitute for a good, long term monetary and fiscal policies.
  2. Financial Engineering. The zero interest rate policy encouraged many companies to borrow money to buy back stock. Now the Federal Reserve is planning to raise interest rates. How are these self liquidating companies planning to raise sales without borrowing even more money?
  3. Wall Street Bailout of 2008.  The longer we go with stagnant wages and slow GDP growth the more the bailout resembles Japan’s Lost Decade. Hopefully, if we have a recession our policy leaders will not continue to borrow failed ideas from the Japanese.
  4. All Bubbles Matter. The Wall Street bailout did not reduce the systemic risk posed by the derivatives market. Now we get to watch the European Union deal with the systemic risk posed by Deutsche Bank and multiple Italian banks. At some point we have to admit Keynesian economics is more prone to bubbles than Austrian economics.

The Shame Game

There was a kerfuffle at the University of Virginia when President  Teresa Sullivan sent an email urging students to “remember their own responsibility in the world” following President-elect Donald Trump’s victory over Hillary Clinton.

“By coincidence, on this exact day 191 years ago — November 9, 1825, in the first year of classes at U.Va. — Thomas Jefferson wrote to a friend that University of Virginia students ‘are not of ordinary significance only: they are exactly the persons who are to succeed to the government of our country, and to rule its future enmities, its friendships and fortunes,’” she wrote. “I encourage today’s U.Va. students to embrace that responsibility.”

Instead of embracing this noble challenge 469 faculty and students chose to complain about Thomas Jefferson. They argued that the author of the Declaration of Independence, former President, and founder of the university was a bad choice for a “moral compass” because he “owned hundreds of slaves”. Instead they chose to bite the hand of someone trying to help them. Although the history surrounding Thomas Jefferson and slavery is interesting, it was not relevant to Ms. Sullivan’s point. When the words, slavery, racism, and Hitler, pop up in a discussion, the intelligent part of the discussion is over. Unfortunately the faculty and students resorted to using the same shame game strategy Ms. Clinton used unsuccessfully against Trump supporters. If the only tool you have is a hammer, everything looks like a nail. The shame game is a trap for those who are unwilling to engage in intelligent discourse.

How I Spent Election Night

Most nights my wife and I go to bed early. Last Tuesday was no exception for me. On my way to the bedroom my wife said she was going to stay up a little longer. She wanted to see how Mr. Trump did in Florida. So I went to bed. At about 11 pm I woke from a deep sleep to hear the television still going. My first thought was that my wife had fallen asleep in front of the television. So I got up and stumbled out to the living room. I was surprised to find her wide awake. She turned to me and whispered, “He is winning.” I mumbled something and headed back to the bedroom. My head was not on my pillow for more than 5 seconds before my eyes snapped open and my mind went into overdrive. What did she mean he is winning? The election should have been called by now. Could the impossible be happening? I grabbed a blanket and went back to the living room. Over the next couple of hours I watched Trump victory unfold. The impossible had happened. For the first time in eight years someone who listened to the people got elected.

trump coveragetrump coverage

Clinton Foundation Fraud

Back in September I wrote a post in which I wondered why the IRS had not pulled the 501(c)(3) non-profit classification from the Clinton Foundation. In the video Charles Ortel makes a persuasive argument that the Clinton Foundation Is The ‘Largest Unprosecuted Charity Fraud Ever’ [VIDEO]. You can follow his progress at his web site, http://charlesortel.com/.  On October 26 Wikileaks released Doug Band’s email describing “Bill Clinton Inc“.  At some point the FTC and FBI might want to distance themselves from the culture of corruption and pursue a fraud case against the Clinton Foundation.


Charles Ortel discussing that the Clinton Foundation is largest charity fraud

Did The Affordable Care Act Save Us Money?

I was thinking about Paul Krugman’s claim that the Affordable Care Act is saving us money when I remembered a graph I made in 2014. My graph showed the life expectancy at birth vs. health spending per capita for various countries in 2011. An updated graph should show the progress the Affordable Care Act made at saving us money.

Did The Affordable Care Act Make Our Health Care Costs Better Or Worse?

According to the OECD the United States spent $8,508 per person in 2011 to achieve a life expectancy of 78.7 years. In 2013 the United States spent $8,743 to achieve a life expectancy of 78.8 years. This means we spent an extra 2.7% to achieve a 0.1% gain in life expectancy. For the amount of money the United States is spending we should expect our life expectancy would be 84.6 years. When you compare these numbers to a country like Denmark it looks like we got a really bad deal. Denmark spent an extra 1.2% to achieve a 0.6% gain in life expectancy. The United States spent way too much money on health care in 2011 to achieve average health care outcomes. The Affordable Care Act was going to fix that problem by creating affordable health care. The graph below shows that this ratio is still way outside of band of developed countries in 2013. Using these simple metrics the Affordable Care Act made our health care cost problem much worse.

OECD Healthcare 2015

OECD Life expectancy at birth vs. health spending per capita

My Health Insurance Inflation Story

One of my Affordable Care Act pet peeves is the claim that it is saving us money. As an example Fortune said it this way in the article, U.S. Will Spend $2.6 Trillion Less on Health Care Than Previously Estimated.

The United States will save about $2.6 trillion on health care expenses over a five-year period compared to initial projections made right after the passage of the Affordable Care Act.

Cost Savings Or A Bad Estimate

The trick to understanding the Affordable Care Act cost savings is the qualification, “than previously estimated”. If there are actual health insurance savings than we should see the cost curve bend. When we use 2011 as our benchmark health insurance inflation metrics tells us a different story. The cost curve did not bend. Health insurance inflation was largely unaffected.

My Health Inflation

My Health Inflation

Health Care Strategies for 2017 – Revisited

Something strange happened this weekend. My health insurance company sent me a letter saying they could continue my grandfathered health insurance plan with them as long as I was happy with a 13% increase in my premium. I threw it out on the counter for my wife to look at. Her gut reaction is to screw them. It is a natural reaction from someone who is still reacting to the misinformation that “you can keep your health care plan if you like it”. Since I did not expect my insurance company to offer my grandfathered health insurance plan in 2017 I had to think.

My previous health care plan for 2017 was based on my presumption that my grandfathered plan would not be available. Despite the craziness of the Affordable Care Act it still makes sense for an insurance company to attempt to keep the perfect customer in the program.  The problem is that for the last five years I endured 12% increases despite never making a claim. Now that I have over $5,000 in my Health Savings Account I can be more aggressive about the  price I would self-insure. The fact that the lowest cost bronze plan from the exchange is much worse than my current plan is not relevant except that it makes me exempt from the individual mandate. The Health Savings Account with an extra $6,500 in my savings account is a very attractive health care strategy. At what price would my grandfathered health insurance plan be attractive?

Did The Affordable Care Act Screw Up The Health Insurance Market?

Medical Care Inflation

Medical Care Inflation

Recently I came across a chart over on the Health Care Blog that summarizes my problem. If my health insurance had increased at the inflation rate for medical care(~3.2% annually since 2011) my health insurance would be well within my boundaries for affordable health insurance. It did not. If my health insurance premium in 2011 was the fair market price then you have to wonder why my health insurance did not increase at a rate closer to 3.2%. Were the 12% annual increases an unintended consequence of the Affordable Care Act meddling with the health insurance market for healthy people?

My Revised Health Care Plan For 2017

Since I was already outside my boundaries for affordable health insurance in 2016 the question is what price would lure me back in for 2017? My plan is to ask my insurance company if they would accept a 0% increase. If they accept my proposal we will continue with our health insurance and putting additional funds in our Health Savings Account. If they reject my proposal we will self-insure.