Speaking of stupid people from Harvard—and that would be you Larry Summers—how about the federal bailout? We’ll take it as a given that the bailout was effective. That is, a bankruptcy judge wasn’t sitting on the ATM when I went to use it at lunch hour. But it’s hard to imagine that we taxpayers pulled all those singed, stinking bank and financial institution chestnuts out of the fire without causing a moral hazard.
“Moral hazard” is the term economists use for a situation that reduces the incentive to avoid bad economic behavior. If you have an insurance policy for $1 million on a house that’s worth $150,000, and you’re behind on your mortgage payments anyway, you’ll be less careful when lighting your gas grill. In fact you may drag your gas grill into the middle of the living room and light it there, adding some gasoline in case it doesn’t catch.
The message that the U.S. government sent to the broke banks and beggared financial institutions was: “Don’t you ever do this again or we’ll give you more money.” After which there was a flurry of government regulatory activity to make sure it was illegal to do “this” again. And the banks and financial institutions won’t do “this” again. They’ll do “that.”
John H. Cochrane, professor of finance at the University of Chicago, wrote a thoroughgoing article, “Lessons from the Financial Crisis,” in the winter 2009–10 issue of the Cato Institute’s Regulation magazine. Professor Cochrane pointed out that “the regulatory system ends up encouraging artificial obscurity.” Make the rules tougher and they’ll play the game tougher. Are the people named Masters of Regulation likely to be quicker and better motivated than the people named Masters of the Universe?
Besides, as Professor Cochrane noted, “It was the regulated, supervised part of the market that failed.” I’ve known Chris Cox for more than twenty years. Chris was head of the Securities and Exchange Commission when the financial crisis began. He was a congressman before his appointment. The average IQ in the House of Representatives dropped fifty points when he left, and what little moral capital there was in Congress sank to almost nothing. Still the bastards outwitted him. There are ten million people in the world trying to be the Salomon Brothers and nobody’s trying to be Chris Cox.
Financial regulations are law, but finance is mathematics, and Chris Cox is brilliant, but he’s a brilliant lawyer. What tipped the whistle-blowers on the Bernie Madoff scheme was not whether all of Madoff’s regulatory filings had been duly signed and witnessed but the fact that Madoff’s return on investment was too steady. Not too high, too steady. The thing that troubled people who are mathematically inclined—notably Boston investment analyst Harry Markopolos—was how no formula of investment, no algorithm of trades, could be created to reproduce Madoff’s returns. With the benefit of hindsight, you could make trades that were more profitable than Madoff’s. And lots of people made trades that were less profitable than Madoff’s. But nobody could flatline the high yields like Bernie. The trustees of Brandeis University didn’t see the problem. The rest of us wouldn’t have known what the rub was if it was down our shorts.
As for the works of our current regulators, Professor Cochrane said, “A lot of policy seems aimed at stopping anyone from ever again losing money in financial dealings.” Try that at the Indian casino blackjack table. If you voted for Obama often enough, it might work. Said the good professor, “To give government officials the power to bail out firms at their discretion, especially if those officials are elected or political appointees, is practically to guarantee a bailout.”
Kill the spending. Fuck the regulations. Marry an investment banker.
2
And While We’re at It...
Hello? Bailout people? Mr. Secretary of the Treasury? Aren’t you forgetting somebody? Like me? I’m a print journalist. Talk about financial crisis! Print journalists may soon have to send their kids to public schools, feed dry food to their cats, and give up their leases on Honda Insights and get the Hummers that are being offered at such deep discounts these days.
The print journalism industry is taking a beating, circling the drain, running on fumes. Especially running on fumes. You could smell Frank Rich all the way to Wasilla when Sarah Palin was nominated. Not that print journalism actually emits much in the way of greenhouse gases. We have an itty-bitty carbon footprint. We’re earth friendly. The current press run of an average U.S. big city daily newspaper can be made from one tree. Compare that to the global warming hot air produced by talk radio, cable TV, and Arianna Huffington.
There are many compelling reasons to save America’s print journalism. And I’ll think of some while the bartender brings me another drink. In the first place one out of three American households is dependent on print journalism.31 And if you think home foreclosures are disruptive to American society, imagine what would happen if USA Today stopped publishing. Lose your home and you become homeless, a member of an important interest group with many respected advocates and a powerful political lobbying arm. But lose your newspaper and what are you going to do for covers on a cold night while you’re sleeping on a park bench? Try blanketing yourself with Matt Drudge to keep warm.
The government is bailing out Wall Street for being evil and the car companies for being stupid. But print journalism brings you Paul Krugman and Anna Quindlen. Also, in 1898 Joseph Pulitzer of the New York World and William Randolph Hearst of the New York Morning Journal started the Spanish-American War. All the Lehman Brothers put together couldn’t cause as much evil stupidity as that.
Moreover, rescuing print journalism is a two-fer. Not only will America’s principal source of Sudoku and Doonesbury be preserved but so will an endangered species—the hard-bitten, cynical, heavy-drinking newshound with a press card in his hatband, a cigarette stub dangling from his lip, and free ring-side prizefight tickets tucked into his vest pocket. These guys don’t reproduce in captivity. And there are hardly any of them left in the wild. I checked the bar. Just Mike Barnicle, as usual. How’s tricks, Mike? Where’d everybody go? Sun’s over the yardarm. Time to pour lunch.
We print journalists are victims of economic forces beyond our control. We were as surprised as everyone else was by the sudden collapse of the reliable reporting market. We had no idea that real news and clear-eyed analysis were being “bundled” with subprime celebrity gossip, U.S. Weekly derivatives, and Jennifer Aniston/Sarah Jessica Parker swaps. We need a swift infusion of federal aid. Otherwise all the information in America will be about Lindsay Lohan’s sex life.
Saving print journalism will be a bargain for the U.S. government. Nothing approaching $787 billion is required in our case. We’ll settle for having the Treasury Department pay our tab at the Washington Palm. True, there is the danger that network television, with its much higher potential losses, will demand equal treatment. But this cannot be justified. Network television has been attempting to lure viewers for years with its low-interest-programming only to have those viewers discover that their brains are bankrupt.
Some taxpayers may object to a print journalism bailout on the grounds that it mostly benefits the liberal elite. And we can’t blame taxpayers for being reluctant to subsidize the reportorial careers of J-school twerps who should have joined the Peace Corps and gone to Africa to “speak truth to power” to Robert Mugabe. Senators and congressmen may have their objections as well. They want first call on those twerps themselves. Twerps make excellent Hill staffers and can help elected officials angle for appointment to high positions in the administration, such as Boxer Shorts Bomb Czar. Obviously more twerps will be available if print journalism doesn’t exist anymore. But I think we can ask America’s legislators to make this sacrifice. (Memo to pols from an old press hack, strictly on the q.t.: the J-school twerps don’t smoke, don’t drink, do yoga, and will tell dailykos.com if you paw them.) And I think we can ask taxpayers whether they would prefer to pay journalists to harmlessly tickle keyboards at the New Republic or whether they would prefer to pay journalists to be in positions of influence on political poli
cies that will wreck the taxpayers’ lives.
Remember, America, you can’t wrap a fish in satellite radio or line the bottom of your birdcage with MSNBC (however appropriate that would be). It’s expensive to swat flies with a BlackBerry. Newsboys tossing flat screen monitors onto your porch will damage the wicker furniture. And a dog that’s trained to piddle on your wireless router can cause a dangerous electrical short circuit and burn down your house.
3
Generation Vex
The financial crisis did not begin in September 2008; it began on October 15, 2007, and was reported the next day by the Associated Press.
The nation’s first baby boomer applied for Social Security Monday, the start of an avalanche of applications from the post–World War II generation.
Kathleen Casey-Kirschling, a former teacher from New Jersey, applied for benefits over the Internet.
Casey-Kirschling was born one second after midnight on Jan. 1, 1946, making her the first baby boomer—a generation of nearly 80 million born from 1946 to 1964.
Oh rend thy garments, America. Heap ashes upon thy head. We the generation of generations—triumphant in our multitudes, invincible, indomitable, insufferable—have come into our inheritance. Hereby we claim our birthright. Give us all your money.
The pittance that is a current Social Security payment was intended to maintain the decrepit retirees of yore in their accustomed condition of thin gruel and single-car garages. Such chump change will hardly suffice for today’s vigorous sexagenarians intent on (among other things) vigorous sex in places like Paris, St. Barts, and Phuket. How can current Social Security allotments be expected to fund our skydiving, bungee jumping, hang gliding, and whitewater rafting, our skiing, golf, and scuba excursions, our photo safaris to Africa, bike tours of Tuscany, and sojourns at Indian ashrams, our tennis clinics, spa treatments, gym memberships, personal fitness training, and cosmetic surgery, our luxury cruises to the Galápagos and Antarctica, the vacation homes in Hilton Head and Vail, the lap pools, Jacuzzis, and clay courts being built thereat and the his and hers Harley-Davidsons?
And we haven’t even touched on the subject of Social Security’s civil union life partner, Medicare. It won’t take much skydiving, bungee jumping, hang gliding, and whitewater rafting before we all require new hips, knees, and elbows, fused spinal discs, pacemakers, and steel plates in our heads. The expense of these will be as nothing compared to the cost of our pharmacological needs. Remember, we are the generation that knows drugs. We know drugs and we like drugs. From about 1967 until John Belushi died we created a way of life based almost entirely on drugs. And we can do it again. Except, this time, instead of us trying to figure out how to pay for it all by selling each other nickel bags of pot, you the taxpayer will be footing the bill. And did I mention that we’ll expect to be airlifted to the Mayo Clinic every time we have an ache or pain? Nothing smaller than a Gulfstream G-3, please.
So just give us all the money in the federal, state, and local budgets. Forget spending on the military, education, or infrastructure. What with Afghanistan, falling SAT scores, and the California freeway system buried in mud slides, it’s not as if the military, education, and infrastructure are doing very well anyway. Besides, you don’t have a choice. We are 80 million strong. That’s a number equal to almost two-thirds of the registered voters in the United States. Do what we say or we will ballot you into a condition that will make Haiti look like Ibiza (where we’ll be staying).
And that’s the good news. Emptying government coffers is the least of the damage that we baby boomers intend to inflict over the next thirty or forty years. What we’re really up to is something more diabolical. Our generation is going to do what our generation has always done best. We’re going to shape the American social fabric to our will and make the entire nation conform to our ideals, judgments, and tastes. It will be like the Clinton administration but much, much worse. (An interesting irony since in ‘08 you narrowly avoided getting a Clinton administration that was much, much worse.)
What we’re going to do is make all of you old like we are—old and dumpy and querulous and fuddled. We’re achieving it already. Look at the hip young men walking around in their high-water pants, wearing stupid bowling shirts buttoned up to the collar. A bunch of twenty-six-year-olds are going to coffee shops (coffee shops! how antique!) dressed as their grandpas. And what about teenage droopy drawers? That’s gramp’s other fashion-forward look, perfect for a weekend of crabgrass killing and mulching the hydrangeas.
Those great big cushy, ugly sneakers—be they ever so expensive or young athlete–endorsed—are nothing but the dread “comfortable shoes” that have been worn forever by the geriatric. We have made mere schoolchildren as dependent upon Ritalin as we are upon Lipitor and Cialis. And notice that traffic jams are everywhere, but it’s not because of too many cars or too few highway lanes. It’s just slow driving in the famous oldage mode, with cell phones and onboard navigation systems to provide someone with whom to have a confusing, grumpy argument even when you’re alone.
What else do oldsters do besides drive slowly? They watch TV. Leave it to the baby boom to invent something that makes viewing a small screen even worse than TV—the Internet, TV that talks back! Not that we haven’t done a pretty good job of worsening TV as well. Flip through the cable channels and compare what you see to what was seen a generation ago: Jersey Shore vs. The Dinah Shore Show, The Bachelor vs. The Honeymooners, The Tonight Show vs. The Tonight Show. When it comes to befuddled, is not the whole entertainment industry drooling in its second childhood?
We baby boomers are growing old, but growing old with a vengeance. Our hands may be palsied and arthritic but we hold America’s fate in them. And America’s fate can be summed up in one word: youthanasia.
4
Health Care Reform
America’s politicians are making enough noise about health care costs to wake the dead (an item on the Obama second term legislative agenda). Medical care in America is expensive. Our country spent $2.5 trillion on health care in 2009, 17.6 percent of the gross national product—an amount equal to $8,170 per person.
We persons, on the other hand, aren’t spending anywhere near that much of our take-home pay on health care. According to the U.S. Bureau of Labor Statistics, Consumer Spending in 2007 (the most recent figures available), the average annual household out-of-pocket expenditure on health care was $2,853. This is a third of what we spent on “transportation” and 10 percent less than what we spent on the “transportation” subcategory of “vehicle purchases.” (Go for a drive or stay alive?) What we spent on health care was just $185 more than what we spent on “food away from home,” which, given our obesity statistics, we shouldn’t be eating. If we cut down on “entertainment” ($2,698) and did something more worthwhile (“reading”: $118) we’ll have plenty to spend on the higher taxes that are on their way to fund less expensive health care.
What part of the cost of medical treatment is supposed to get reformed? The cost or our cost? Somehow, in the mouths of politicians, it’s always both. The quality of health care will increase, the quantity of health care will increase, the number of people receiving health care will grow, and therefore health care will cost less.
It was not my proudest moment as a Republican when, in a September 2009 joint session of Congress, representative Joe Wilson of South Carolina shouted, “You lie!” at the president of the United States during the president’s speech about health care reform. Joe was definitely rude, Joe was probably in violation of parliamentary rules of order, and there’s the possibility that Joe was not completely sober. But was Joe wrong?
Something doesn’t add up. Politicians are telling me that I can smoke, drink, gain two hundred pounds, then win an iron man triathlon at age ninety-five.
And will the reformers please quit talking about “health care providers”? What the hell is a “health care provider”? That could be some guy just off the boat from China with a fistful of rusty acupunc
ture needles. A “health care provider” was the school nurse when I was in third grade who gave you peppermint oil if you broke your neck on the playground. I caught Buster, my six-year-old, playing “health care provider” with one of the little girls in his first-grade class. They were filling out toy forms fully clothed.
Why does medical treatment in America cost so much? It’s not because doctors are getting richer. In 2009 the Archives of Internal Medicine published a study showing that between 1995 and 2003 the average annual income of primary care physicians dropped by 10.2 percent to $146,405, a lot less than we pay Joe Biden.
One problem leading to high health care costs is the liability lawyer, of course, with his face up on billboards everywhere: “You Might Have Been Maltreated On by a Doctor and Not Even Know It.” But I don’t want to make anyone ill by bringing up the subject of John Edwards.
A worse problem is that we’re getting what we pay for. Sally Pipes (no relation to the previously cited Richard Pipes) is the president of the Pacific Research Institute think tank in San Francisco. She is the author of two books and numerous articles about health care and has been named by Forbes as one of the world’s thirty leading experts on the subject. In The Top Ten Myths of American Health Care32 Pipes notes that for a man born in the United States in 1900 there was an almost one in five chance of dying before his first birthday. Now a man has to live to be my age before the annual mortality rate is one in five, which is why I’m careful with things like stairs and go down to the wine cellar only four times on any given evening.
We are, Pipes says, paying fourteen times as much for medical treatment as we were in 1950, but since then our life expectancy has increased by ten years. It’s not a spectacular bargain. Life expectancy in 1950 was sixty-eight and, by my calculation, for fourteen times as much money we should be living to age 952. But Medicare is already overburdened. And imagine getting trapped on a Carnival cruise with some old fart who can’t stop complaining about how nobody cooks pig bladder the way they did in 1066. Ten years isn’t bad. I may live to see a Massachusetts Republican elected to the Senate.
Don’t Vote Page 11
