Mike Kueber's Blog

October 23, 2011

Fareed Zakaria and Herman Cain

I have never been much of a fan of Fareed Zakaria, and I’m afraid that much of that is due to a xenophobic streak that runs through me.  Without knowing his personal story, I have concluded that he is too much of an internationalist for me to rely on.  I suspect the same thinking explains why I watch David Gregory instead of Christiane Amanpour on Sunday mornings.

But Zakaria’s column in Time magazine this week was refreshingly American.  He gave Herman Cain’s 9-9-9 plan a good-faith review and eventually concluded that the plan “isn’t perfect, but it’s less crazy than you might think.”

Zakaria approved the concept of Cain’s tax reform because:

  1. Simplification is urgently needed.  The current complexity enables special interests to do their dirty deeds while corrupting the election process with their campaign contributions.
  2. The corporate tax rate of 35% is too high (2nd highest in the industrial world), but loopholes are so prevalent that a large percentage of large companies pay in the 10-20% range.
  3. America is the only rich country in the world without a national sales tax or value-added tax.  Germany – 19%; Britain
    – 20%; Korea – 10%.  Advantages – more efficient, less fraud, and less volatile during economic cycle.

Regarding the urge to increase taxes on the rich, Zakaria notes that the top 10% in America pay 45.1% of the income tax, which is higher than in any of 24 countries examined in a study (e.g., Germany–31% and France-28%).

At the end of the column, Zakaria advised how he would tweak Cain’s 9-9-9 plan to make it even better:

  • Instead of a 9% flat tax on personal income, Zakaria would make it 9% on the first $150k, 18% up to $500k, and finally 27% on the top 1%, with deductions only for charity.
  • Corporate tax rate of 18%.
  • Impose a value-add tax (VAT) of 9%.

Zakaria’s plan would apparently raise more revenue that Cain’s, but I am not sure because I don’t know whether a 9% sales tax raises the more, less, or the same as a 9% VAT.

I especially like Zakaria’s final point – “I would enact a 50% inheritance tax, because nothing is more un-American than an inherited elite that perpetuates itself.”

I’m going to pay more attention to Zakaria in the future.  According to Wikipedia, he grew up in Mumbai, India, the son of an intellectually elite couple, obtained a bachelors from Yale and a doctorate in political science from Harvard in 1993.  Ever since then, he has been a writer on foreign policy issues.  He lives in NYC and is a naturalized American and is generally characterized as a centrist – i.e., his position on various issues is unpredictable.

My prospects with Christiane Amanpour are not as promising.  Like Zakaria, she grew up as an elitist in a poor foreign country (Iran) before obtaining her college degree in America (U of Rhode Island).  After college, both Amanpour and Zakaria leveraged their status as foreigners to rapidly climb the ladder of journalistic success before eventually trying to crossover into mainstream American journalism.

Amanpour’s opportunity to crossover came in early 2010, provide, when she replaced George Stephanopoulos as the anchor of This Week.  Unfortunately, she (or the show’s producers) went in with the wrong mindset:

  • I’m thrilled to be joining the incredible team at ABC News. Being asked to anchor This Week in the superb tradition started by David Brinkley is a tremendous and rare honor, and I look forward to discussing the great domestic and international issues of the day.

The ratings of This Week have been abysmal ever since, and I think the problem is that the show is too focused on international affairs.  Americans don’t consider international affairs (nukes in Korea or Iran) as interesting as internal affairs (Herman Cain or the TEA Party), so we will watch David Gregory’s Meet the Press instead.

June 29, 2011

The U.S. Constitution – does it still matter?

The title of this posting was a question posed on the cover of Time magazine this week.  Fortunately, only the first few paragraphs are available on-line.

No, that was not a typo.  I said “fortunately” because the article was so poorly written that its author could have been a college kid submitting a
term paper.  The author was, in fact, Richard Stengel, the managing editor of Time magazine, which probably explains how such a sophomoric article found its way into Time magazine.  Either his editors were too cowed to do their job or Stengel haughtily rejected their help.

I am blogging about the article because it raised an important topic – i.e., the relevance of the U.S. Constitution toward four transcendent issues in America:

  1. Making war as applied to Libya
  2. Defaulting on the national debt
  3. Interstate commerce as applied to ObamaCare
  4. Birthright citizenship

Making war

The first issue revolves around the War Powers Resolution.  The Resolution, which became law in 1973, was designed to prevent another Vietnam and end the string of undeclared wars since WWII.  It allows the president to initiate military action without a declaration of war, but requires the military action to cease if Congress doesn’t give its approval within 60 days.  This seems like a very reasonable accommodation of (a) modern exigencies and (b) the Constitutional provision, “The Congress shall have power… to declare war.

The Resolution was passed despite a presidential veto, and every president has asserted that it is unconstitutional because it infringes on his constitutional power to “be commander in chief.”  But President Obama is the first president to engage in an extended military action (Libya) without obtaining Congressional approval.

Stengel’s take on this issue – he mildly chides President Obama for ignoring the following position staked out by candidate Obama: “The President does not have power under the Constitution to unilaterally authorize a military attack in a situation that does not involve stopping an actual or imminent threat to the nation.”  And he lamely excuses Obama because, “since 1973, Presidents have at best paid lip service to the resolution.”  The excuse is lame because, although previous presidents have claimed that the resolution was unconstitutional, they nevertheless complied with it, including George W. Bush in Iraq and Afghanistan.

Stengel complains that our Founders created this problem by drafting provisions that are conflicting.  That is hogwash.  If this issue ever gets
before the Supreme Court, they will certainly be able to reconcile the Congress’s power to declare war with the President’s power to be the commander in chief.  Without explanation, Stengel concludes this section by saying, “this matter will not end up in the Supreme Court.  Congress does not really want the responsibility of deciding whether to send troops to places like Libya.  It just doesn’t want the President to do so in a way that makes it look superfluous and impotent.

Washington Post columnist Charles Krauthammer recently addressed the application of the War Powers Resolution to the military action in Libya.  Unlike Stengel, he provided an explanation for why the courts haven’t resolved this issue – “Moreover, the judiciary, which under our
system is the ultimate arbiter of constitutionality, has consistently refused to adjudicate this ‘political question’ (to quote one appellate court judge) and thus resolve with finality the separation-of-powers dispute between the other two co-equal branches
.”

Like Krauthammer, I think the War Powers Resolution was a reasonable reconciliation of the constitutional provisions.  It reminds me of the Roe v. Wade decision on abortion, in which the Supreme Court balanced the privacy interests of women against the public interest in protecting the life of a fetus.  That is the type of public-policy decision, however, that should be made by legislatures, not the courts.  I wish President Obama would do what all previous Presidents have done – respect the law.

Debt ceiling

My conservative drinking friend thinks that the Founding Fathers had no idea that Congress would become such a profligate spender and, if they had, they would have included a balanced-budget provision in the Constitution.  In fact, however, the Founding Fathers knew that America had incurred huge debt during the Revolutionary War and they specifically approved the practice in Article 1, Section 8 of the Constitution – “The Congress shall have power … to borrow money on the credit of the United States.”

Regarding the possibility of default because on Congress’s failure to raise the debt limit, Stengel makes a suggestion that I haven’t previously heard – i.e., that the Constitution doesn’t allow government to default on its debt.  His suggestion is based on Section 4 of the 14th Amendment, which reads, “The validity of the public debt of the United States… shall not be questioned.”  The Amendment, which was passed shortly after the Civil War, was intended to affirm the Union’s Civil War debt while repudiating all Confederate debt.

According to Stengel, if Congress refuses to increase the debt ceiling, President Obama would be constitutionally authorized to take extraordinary measures such as ordering “the Treasury to produce binding debt instruments … sell assets, furlough workers, freeze checks.”  I have never heard of this possible scenario, and during President Obama’s press conference today, he did not refer to it when he was asked about the possibility of default.  Let’s hope that this doomsday scenario never occurs.

Interstate commerce

The U.S. Constitution authorizes Congress the power to regulate interstate commerce.  During law school, I learned that the Supreme Court has interpreted this provision extremely liberally, once holding that the provision authorizes the federal government to regulate a farmer who is growing grain for his own consumption.  In recent years, however, there has been push-back by constitutional conservatives against this expansive interpretation on the basis of the 10th Amendment, which says that all powers not expressly granted to Congress shall be reserved to the states, and with respect to ObamaCare, several federal judges have bought this argument.

Stengel’s legal defense of ObamaCare includes several glaring faults:

  1. He fails to mention the 10th Amendment.
  2. He notes that government can compel us to buy car insurance, but fails to recognize the important distinction that car insurance is compelled under a state’s police powers, not the federal government’s power over interstate commerce.
  3. He says it’s silly to argue that health care – which accounts for 17% of the U.S. economy – doesn’t involve interstate commerce, but fails to recognize that conservatives are arguing that the individual mandate is unconstitutional, not the entire law.

Birthright citizenship

The principle objective of the post-Civil War 14th Amendment was to grant citizenship to former slaves.  It reads, “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and the State wherein they reside.”  The problem with that wording is that it creates so-called birthright citizenship, i.e., if you are physically born in
the United States, you’re a citizen.  The United States is one of the few countries in the world that grants birthright citizenship.

Birthright citizenship has become extremely problematic in America because there are millions of illegal immigrants who are having babies, so-called “anchor babies.”  The anchor babies are American citizens entitled to a vast array of welfare and can eventually, as adults, sponsor their parents into the United States.  Until then, however, their parents are entitled to little more than deportation.

Stengel concedes that Congress was not thinking about illegal immigration when it drafted the 14th Amendment, but he gives short shrift to the argument from constitutional conservatives that the Amendment doesn’t apply to illegal immigrants because of the term, “subject to the jurisdiction thereof.”  Stengel haughtily asserts without explanation that “this argument doesn’t hold up under scrutiny.”  I have reviewed the judicial precedent on this issue, and there is nothing definitive.

Stengel also concedes that birthright citizenship makes no sense, yet he asserts, “There are liberals and conservatives alike who oppose changing
birthright citizenship
It’s seen as a core American value.”  That is hogwash.  I don’t know of a single well-known conservative who endorses birthright citizenship.  If there were, why didn’t Stengel name the person?

Ultimately Stengel concludes that resolving the birthright-citizenship issue will not resolve the bigger issue of illegal immigration.  For that, he recommends a carrot-and-stick approach.  The carrot is to make immigration easier and to give a path to citizenship to undocumented young people who go to college or join the military.  The stick is workplace enforcement and better enforcement.

Stengel concludes his article by quoting Judge Learned Hand, one of the greatest non-Supreme Court jurists in American history, who said the following in a speech during WWII:

  • “I often wonder whether we do not rest our hopes too much on our constitutions, upon laws and upon courts.  Liberty lies in the hearts of men and women; when it dies there, no constitution, no law, no court can even do much to help it.”

Stengel rephrased this sentiment by warning, “The Constitution does not protect our spirit of liberty; our spirit of liberty protects the Constitution.  The Constitution serves the nation; the nation does not serve the Constitution.  That’s what the framers would say.”

Sounds like Stengel is not a constitutional conservative.  Rather, he sees the Constitution as a living document that “is more a guardrail for our society than a traffic cop…. a st of principles, not a code of laws.”  I think the framers wanted the Constitution to live and grow through amendments, not through the liberal thinking of arrogant jurists.

If the Constitution is construed to provide citizenship to children born to illegal immigrants, the Constitution should be amended.  If the Constitution is construed to empower the federal government to force individuals to buy health insurance, the Constitution should be amended.  If the Supreme Court determines that the War Powers Resolution is unconstitutional, then it should reconcile the Congressional power to declare war with the Presidential power as commander in chief.  And finally, if Congress fails to raise the debt ceiling, the Supreme Court will decide whether the President has extraordinary powers to avoid default.

The U.S. Constitution is not as dysfunctional as liberals like to think.

May 25, 2011

Hypocrital politicians or a double standard

A couple of weeks ago, I blogged about Newt Gingrich’s imploding campaign for the presidency and suggested that he had committed two sins – (1) he demagogued Congressman Ryan’s plan to reform Medicare financing, and (2) he had a revolving charge account for several hundred thousand dollars with Tiffany’s jewelry store.  Although the first sin would appear to be a mortal sin while the second only a venial sin, that would be overlooking the longstanding practice in America of holding conservatives to a higher standard.

There is a tendency of conservatives to accuse the liberal media of creating a double standard – one for liberals and another for conservatives – and there might be some basis for this accusation because conservative sinners are routinely labeled as hypocrites whereas liberals are labeled as merely fallible.  For example, this week’s Time magazine included a “Misconduct Matrix” of leading politicians, and the “Massively Hypocritical” section contained six conservatives (Gingrich, Schwarzenegger, Craig, Thomas, Ensign, and Haggard) and only two liberals (Spitzer and Edwards).  By contrast, the “Just Plain Stupid” section contained no conservatives and four liberals (Clinton, Kennedy, and Hart).

But I think the more important reason for the double standard is that conservative voters demand more from their politicians than do liberal voters.  When Newt argued on “Face the Nation” that his jewelry purchases were a personal matter, the media would be forced to accept that unless it were willing to pursue this information from all candidates.  But that doesn’t mean that conservative voters have to accept it.  This issue resonates and the damage has been done regardless of Newt attempting to say the subject is off-limits.

Although I don’t remember Nixon’s “Checker’s” speech in 1952, I have read about it, and it provides a how-to guide for conservatives dealing with charges of hypocrisy from liberals.  Nixon had been elected to the Senate in 1950, and his campaign team decided to campaign continuously for his re-election in 1956.  To pay for these campaign activities, Nixon set up a fund that accepted large contributions ($1,000) from sixteen rich benefactors.

The fund was legal, and Nixon took the additional precaution of not being told who the benefactors were, but that didn’t stop his opponents from arguing that the fund was morally wrong and that a Senator who campaigned on returning integrity to the Senate shouldn’t be taking money from others so that he could live above his means.

Shortly after the existence of the fund was leaked to the press, there was an avalanche of criticism that threatened Nixon’s recently secured place on Eisenhower’s presidential ticket.  Nixon’s campaign was met with posters that read, “Pat, what are you going to do with the bribe money?” and “No Mink Coats for Nixon — Just Cold Cash.”

Unlike Gingrich, Nixon decided to meet the issue head-on.  He gave a speech to the nation that was heard by 60 million Americans.  In the speech, he said that none of the money in the fund was spent for personal use and there were no mink coats for the Nixons.  He was “proud of the fact that Pat Nixon wears a good Republican cloth coat, and she’s going to continue to.”  The only gift for personal use was a puppy by the name of Checkers for his daughters, and Nixon was keeping him.

Unfortunately, it doesn’t appear that Newt has as good an answer to give.  He seems to like buying expensive jewelry, and most frugal people would accept a vendor’s standard offer to accept payment over time with no charged interest.  Neither of these acts is particularly sinful, but together they are a lethal combination for a conservative politician.  RIP Newt.

April 14, 2011

Kueber plays an amateur psychologist

I am currently reading Dinesh D’Souza’s book, The Roots of Obama’s Rage.  Although it sounds like a radical right-wing diatribe, the first 40 pages make an interesting argument that Obama’s political policies are best explained, not by his belief in the welfare state or the civil rights movement, but rather by his father’s anti-colonialism. 

D’Souza’s psychological analysis has apparently rubbed off on me.  Just today, I had two psychological insights that I want to share:

  1. White guilt.  One of the regular guests on Imus in the Morning is Alan Colmes, the liberal half of Hannity & Colmes.  After Colmes’s recent appearance on Imus’s show, Don asked his resident comedian Tony Powell if he had a chance to visit with Colmes in the show’s waiting room, and if so, what he thought of him.  Tony Powell, who happens to be black, said that he had talked to Colmes and he thought Colmes was afflicted with white guilt.  For those of you not familiar with this term, George Will defines it as “a form of self-congratulation, where whites initiate ‘compassionate policies’ toward people of color, to showcase their innocence to racism.”  With that term in mind, I wondered if white guilt also explained why Time magazine earlier this week was so upset that many Americans failed to recognize that slavery caused the Civil War.  Could it be that their “white guilt” agenda was best served by reminding Americans that their country was guilty of great sins related to slavery?
  2. Tiger Obama.  I missed ESPN’s The Sports Reporters this week because I was watching Face the Nation.  But my brother Kelly reported to me that Bob Ryan, an old curmudgeon from Boston let Tiger Woods have it with both barrels.  According to Ryan, Tiger was a jerk and a baby who acted like he was the only golfer who ever missed a putt or landed in a divot.  That character flaw seems to have afflicted another bi-racial superstar – Barack Obama – who was raised by an Asian parent while living in the shadows of a strong black father.  Obama put this character flaw on display again today during his speech on dealing with the American debt and deficit.  While describing America’s current mess, Obama claimed that everything was rosy until 2000, when a new president decided to engage in two wars and adopt a prescription entitlement for seniors, all without paying for them.  Worse, in 2008 Obama inherited a trillion-dollar deficit and a recession that required even more deficit spending.  Listening to him, you would think he was the first president who ever had to assume a basket of problems upon becoming president.  America was damned lucky he came of the scene when he did.  Because of his stewardship, America is on the road to recovery.  In my corporate career, I encountered a lot of individuals who mastered the art of claiming that their inherited situation was god-awful bad and that it would take a miracle to salvage anything.  With Obama and Woods, however, I get the feeling that they really feel cheated whenever they experience a tough break.  They have a narcissistic sense of entitlement, and I have no idea where it came from.

With those insights, this amateur psychologist is getting back to reading D’Souza.

April 4, 2011

Tiger moms and Finnish calm

There is a ubiquitous public-service announcement (PSA) sponsored by Time Warner cable that decries the mediocrity of public education in America as compared to that in many other countries of the world.  According to the PSA, America cannot continue to lead if it fails to produce an educated population. 

America’s current mediocrity in education is revealed by the Program for International Student Assessment (PISA), a test of math, science, and verbal skills possessed by 15-year-olds throughout the world.  The PISA is administered every three years to between 4,500 and 10,000 students in each country.  According to the 2009 results, most of the countries that America can’t keep up with are in Asia – China (Shanghai), Singapore, Korea, and Japan – so the inclusion of Finland on the list is noteworthy. 

An article in Time magazine this week expands on the Finnish noteworthiness by describing the many aspects of Finnish educational philosophy that are diametrically opposed to those common in Asian cultures.  As I previously blogged about Chinese tiger moms, Asian parents have a reputation for raising their kids with strict discipline, high standards, never-ending studying, and minimal fun.  According to a PISA director, “In Asia, it’s about long hours – long hours in school, long hours after school.  In Finland, the school day is shorter than it is in the U.S.  It’s a more appealing model.”  And there is less homework, too.  A Finnish educator notes that, “An hour a day is good enough to be a successful student.”  As a parent of four boys who hated homework, that is music to their ears and mine.

The most distinguishing aspect of the Finnish-education model is the high stature of teachers.  Although their pay is comparable to U.S. teacher pay ($40k – $60k), the process of becoming a teacher is highly selective, with only 10% of the applicants being accepted into a five-year program that results in a master’s degree.  And most importantly, teachers are given immense latitude to teach with their own personal style and methods.  The Time article fails to note whether Finnish kids are regularly tested, as in America. 

Historically, Finnish schools had a two-tier system in secondary education – with the bright kids in one tier and the less-bright kids in another.  Since 1968, however, Finland has a single system without “streaming” into different tiers.  This fits the Finnish disdain for elitism.  As a Finnish educator noted, “In Finland, outperforming your neighbor isn’t very important.  Everybody is average, but you want that average to be very high.”

That sounds a bit like Garrison Keillor in Lake Wobegon, who said of Minnesota – “all the women are strong, all the men are good looking, and all the kids are above average.” 

This also suggests that perhaps the Finnish model is not transferable to America, where people haven’t bought into having a Europe-type welfare state.  Americans seem to be more comfortable with a competitive life.        

btw – instead of seeing the glass as half-full, some Americans might be happy to learn that kids in a lot of countries perform worse than Americans.  Below America in the 2009 PISA is Russia, Brazil, U.K., France, Italy, Germany, Israel, and China (Macao).  India did not participate in 2009, but the results of a 2010 supplemental assessment will be published in 2012.

March 31, 2011

“Spare the rod,” says Big Brother

Corporal punishment of a child by a parent in the home has been under assault for many years.  The assault seems to be led by secular liberals, who are less prone to accept biblical teachings on the benefits of stern punishment and more prone to accept government interjecting itself into the lives of its citizens.

I have a friend who was recently arrested for “injury to a child.”  According to the news reports, she stuck her seven-year-old daughter with a belt after her daughter was sent home from school for “playing in a school bathroom and had talked back to a teacher.”  An affidavit indicates that the belt struck the girl on her face, stomach, and back and left bruises.

Coincidentally, I had spoken to this person a few weeks ago about an article in Time magazine that described a child-rearing concept called the Chinese tiger-mom method, and my friend admitted that she subscribed to that theory.  (Essentially, the method involves little play, never-ending work, and ultra-strict discipline.)

Obviously, this incident has huge implications for my friend.  She was arrested and had to post a $15,000 bond to get out of jail.  Her child has been taken away from her and she will have to deal with the criminal charge.  (“Injury to a child” is a felony in Texas.)  There have been are television reports, with interviews of neighbors, and an article in the city’s newspaper.  The newspaper article drew numerous on-line comments from readers and the most of them suggested that severe punishment was in order.  Although we don’t know all the facts yet, I disagree with those readers.

Corporal punishment is physical punishment that involves the deliberate infliction of pain to punish an offender or deter future offense.  It usually refers to methodically striking the offender with an implement.  Although most nations in Europe have outlawed intra-family corporal punishment of children, it is legal in all 50 states of the U.S.  The problem is deciding when corporal punishment of a child by a parent becomes so severe that a state is forced to intervene for the safety of the child. 

Child abuse v. parental discipline 

  • Under the Texas Penal Code (Section 22.04), “injury to a child” is defined as: “intentionally, knowingly, recklessly, or with criminal negligence, by act or intentionally, knowingly, or recklessly by omission, causes to a child, elderly individual, or disabled individual: (1) serious bodily injury; (2) serious mental deficiency, impairment, or injury; or (3) bodily injury.”  The Penal Code (Section1.07) defines bodily injury as “physical pain, illness, or any impairment of physical condition,” and serious bodily injury as “bodily injury that creates a substantial risk of death or that causes death, serious permanent disfigurement, or protracted loss or impairment of the function of any bodily member or organ.”
  • Under the Texas Family Code (Section 261.001), “child abuse” is defined as: “physical injury that results in substantial harm to the child, or the genuine threat of substantial harm from physical injury to the child, including an injury that is at variance with the history or explanation given and excluding an accident or reasonable discipline by a parent, guardian, or managing or possessory conservator that does not expose the child to a substantial risk of harm.”
  • The Texas Family Code (Section 151.001) also specifically declares that parents have “the duty of care, control, protection, and reasonable discipline of the child.”

These statutory definitions are problematic because what is reasonable discipline to one person might be child abuse to another person.  Personally, I believe it is possible, maybe even preferable, to raise a child without applying corporal punishment, but I don’t think government should outlaw it.  People who assume responsibility for parenting should be left a lot of latitude and shouldn’t be faced with government second-guessing unless there evidence of serious physical injury.  A frustrated, angered parent who strikes a child’s face with a belt deserves counseling; I don’t think she deserves to be arrested.  But based on the comments to the SA Express-News article, I’m not confident that most juries would agree.

Debit-card swipe fees and campaign contributions

I remember Nancy Pelosi famously saying that Congress needed to pass ObamaCare to find out what was in it.  That is often the case with 2,000 pages of legislation, and another good example of this is the Dodd-Frank financial regulation bill, which became law last summer.  One of the provisions in the Dodd-Frank bill directed the Federal Reserve Bank to set limits for debit-card “swipe fees” in April and put them into effect on July 21.

Historically, the debit-card swipe fee has been a percentage of a transaction, and in the past decade the fee has more than tripled to $.44.  In response to the Dodd-Frank directive, the Fed has tentatively determined that the fee should be no more than $.12, regardless of the amount of the transaction. 

Obviously the banks are not taking this reversal lying down.  According to Time magazine (paper edition only):

  • Faced with the prospect of losing swipe swag, the bankers started dialing their lobbyists, who started dialing their employees – oops, their Senators.  Soon enough, a letter from a group of solons fretted about ‘replacing a market-based system for debit-card acceptance with a government-controlled system.’
  • “The banks warn that swipe fees subsidize things like free checking and that you can kiss those things goodbye if the new flat fees take effect.”

The author of the Time article, Bill Saporito, concedes that this is not a David v. Goliath fight, but rather Goliath v. Goliath, with retailers like Wal-Mart on one side and big banks on the other.  Nevertheless, Saporito takes the side of the retailers and attempts to refute the banks’ arguments by suggesting that (1) the current system is not really “market-based,” but rather the duopolistic pricing of Visa and MasterCard operates more like a utility; thus, the tripling of the fee in the last decade; and (2) retailers should not be required to subsidize free checking account, but rather banks should charge whatever its retail-banking products are worth.  Saporito makes sense to me.   

The Fed handling of swipe fees has also been addressed by recent articles in USA Today and the New York Times.

The NY Times article on the Fed’s swiping fee was the least opinionated.  Instead of evaluating the merits of the new fee cap, the article simply reported that the nine senators (not 17, as reported by USA Today) who were proposing a two-year delay of the Fed cap faced long odds against success.  The provision had passed in the original bill by a vote of 64-33, and there was no evidence that Tester could pick up the necessary 18 votes. 

The article in USA Today focused on the intense lobbying being conducted by the banks to delay the implementation of the Fed-mandated fee.  It reported that a bipartisan group of 17 senators, led by John Tester (MT-D) have characterized the proposed cap as “price-fixing by Congress” and warn that consumers will be hit with the elimination of free checking and the increase of ATM fees.   

According to the USA Today article, “Tester, who serves on the Senate banking committee, counts the political action committees and employees of Wall Street firms among his top campaign contributors, according to a tally by the non-partisan Center for Responsive Politics.”

Tester denies that he is serving his Wall Street master, but instead says “he’s pushing to delay the new limits to protect community banks in rural states. ‘I’ve never been about the big guys on Wall Street. They are big enough to fend for themselves,’ Tester said. ‘This bill is about protecting consumers and protecting small businesses.’”

From my perspective, John Tester has no credibility on this issue.  Although he can make good arguments for either side of this issue, how can his constituents be confident that those buckets of money from Wall Street didn’t influence his decision?  That is why politicians shouldn’t accept large contributions from companies, especially those outside of their district.

March 30, 2011

The FDA strikes again

Last month I blogged about prescription ads with lengthy warnings of possible side-effects.  Although I discussed both print and TV ads, I focused on the TV ads because their long recitation of possible side effects is so jarring when you have to listen to it, even when it is speed-spoken.  Today while reading Time magazine, I was jarred not only by the number of prescription ads, but by amount of space wasted on small-font warnings that I’m sure no one reads.

This week’s edition of Time magazine contains 80 pages, and it included full-page prescription ads for the following:

  1. Cymbalta (chronic musculoskeletal pain) (two-page ad)
  2. Vimovo (arthritis pain reliever) (two-page ad)
  3. SeroquelXR (depression) (two-pages of legalese)
  4. Advair (asthma)
  5. Niaspan (anti-plaque in arteries)
  6. Abilify (depression)
  7. Zetia (cholesterol)

Thus, out of 80 pages in this issue:

  • Seventeen pages (more than 20% of the magazine) were devoted to marketing drugs, with nine page devoted to drug ads and eight pages devoted to FDA-required legalese). 
  • There were a total of 30 pages of ads in the issue, which means that drug companies consumed more than half of the ad space.

Lessons learned:

  • The FDA is forcing drug companies to waste large amounts of money for fine print that no one reads; and
  • There are huge amounts of money that can be made by persuading people to ask their doctor for certain drugs.

March 28, 2011

Public on-line universities

An article in the Sunday edition of the San Antonio Express-News reported that financially challenged states like Texas are looking to enter the world of on-line university degrees.    Although I’ve always been a snob about on-line degrees, and even night schools, I think the concept is worth pursuing.

My prejudice against on-line degrees and night schools is based on a belief that college is a time to make the transition from being the high schooler you are to being the college person you want to be.  This transition happens best when you are given space from your family and you are allowed to interact with others going through the same process – all while being exposed to new ideas by extraordinary thinkers.

The popularity of on-line universities, however, reveals that my idyllic college experience is not for everyone.  Many people need the flexibility that on-line learning affords.  That flexibility includes not only the location of studies, but also the timing and pacing of those studies.  And from the perspective of cost, on-line studies reduce the need for bricks-and-mortar.  It’s like Amazon vs. Barnes & Noble.      

While government has been slow to recognize this need (no surprise), for-profit businesses have not.  The leading on-line University of Phoenix, founded in 1976, has grown to a half-million students. 

The Express-News article also reported on a leading non-profit on-line university called Western Governors University (WGU), which was founded by 19 governors more than a decade ago.  Its self-described mission “is to improve quality and expand access to post-secondary educational opportunities by providing a means for individuals to learn independent of time and place and to earn competency-based degrees and other credentials that are credible to both academic institutions and employers.”  WGU has been profiled in Time magazine, and among its corporate sponsors is the Bill & Melinda Gates Foundation. 

I subscribe to the conservative vision that people can decide for themselves what is best for them.  That suggests that government should afford people the opportunity for either a bricks & mortar experience or on-line education.  But I also believe that government shouldn’t do what is already being done effectively by private business.  Based on reports of the high dropout and loan-default rates associated with for-profit on-line universities, I think involvement in on-line education by the public sector is appropriate.

Currently, states are not looking at on-line education as an either/or proposition.  Rather, they are mixing the two ways of learning.  Although a bit of caution is reasonable, America needs to get moving towards its goal of a more educated populace, and on-line education is one of the most promising ideas to achieve our goal.

March 15, 2011

Newt Gingrich in Time magazine

Filed under: Media,People,Politics — Mike Kueber @ 6:59 pm
Tags: , , ,

There is an old saying in show business that there is no such thing as bad publicity.  Unfortunately, that saying doesn’t apply to politics, where bad publicity results in something called baggage. 

Newt Gingrich surprised me this week by showing up in a four-page profile in Time magazine, but the profile does him no favors because it reports on all his baggage – “affair, divorce, scorn from his colleagues.”  The article, written by Michael Crowley, also includes the following descriptions:

  • Skilled showman
  • High-profile agitator
  • Grandiose claims about America’s descent into Barack Obama-imposed socialism
  • A burning ambition of becoming President
  • What he awkwardly calls “a crossroads that we cannot hide from”
  • One of the most divisive figures in politics
  • A flair for the hyperbole
  • He is disliked by roughly half of those who are familiar with him
  • He has a personal life in which he has sought God’s forgiveness
  • Serial flirting… more profiteer than candidate
  • Callista is also his third wife, nearly 23 years his junior and the woman he began seeing while still married to his second wife, Marianne.
  • But he was quickly outmaneuvered by Bill Clinton – in part because he simply couldn’t hold his tongue
  • Gingrich can seem as if he has no filter
  • He felt slighted after being seated at the rear of Air Force One
  • Began to look like the tirade of a spoiled child
  • Failed impeachment campaign against Clinton – which Gingrich, despite his own extramarital affair, had vigorously led
  • Gingrich draws a distinction between his infidelity and Clinton’s perjury
  • The biggest threat to Gingrich’s candidacy is likely to be Gingrich himself
  • He raised eyebrows this month…. A minor snafu
  • Some wondered anew whether Gingrich lacks the self-discipline for the demanding presidential stage
  • Executive function has never been his strong suit

What’s not to like? 

What about the positive side of the ledger?  The article says virtually nothing positive, but it does note that Newt is determined to save America from “secular socialism,” and that probably sounds nice to Republican primary voters.     

Personally, I’m not a Newt fan, and I previously blogged about him being a demagogue, but this profile is clearly unfair and biased.

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