Cato Scholar: Price Controls Didn’t Work for Rome, Won’t Work for U.S.

On February 22, President Obama suggested the federal government should be able to regulate health insurance premiums. Michael Tanner of the Cato Institute claims that idea is hardly new, and hardly primed for success:

In 301 AD, the Roman emperor Diocletian imposed price controls on most commodities and professions in the empire. The penalty for raising prices was death. Yet the controls failed utterly, leading to shortages, more inflation and the near collapse of the imperial economy.

Now, nearly two millennia later, President Obama seems determined to demonstrate how little we’ve learned.

Yesterday, the president proposed giving the federal government the power to regulate insurance premiums. Undoubtedly, this will be politically popular — at least, in the short term. Insurance companies aren’t exactly America’s most loveable industry. Recent premium hikes will result in real hardship for many Americans.

There is, of course, a certain arrogance in the assumption that Obama, Nancy Pelosi and a bevy of government bureaucrats know exactly what something should cost. No doubt, as soon as they finish setting insurance prices, they’ll move on to negotiating Tracy McGrady’s contract renewal…

Insurers unable to charge more for an increasingly expensive product can be expected to trim costs in one of two ways:

  • They can drop their most expensive customers — in this case, the sickest, who consume the most health care. Many companies are already doing this, a major source of dissatisfaction with the health-care system. In fact, the president wants to prohibit companies from doing this.

  • They can cut back on their reimbursement rates to hospitals and physicians. But neither doctors nor hospitals, any more than insurance companies, are willing to operate at a loss. If payments fall below their costs, they’ll simply stop taking patients. One only has to look at government programs like Medicare and Medicaid to see how this works.

     

This health care situation is regretably complex. How do you think we should improve health care costs for Americans?

Indiana Democrat Starts Facebook Movement to Choose Bayh’s Replacement

Sen. Evan Bayh’s surprising move last week to announce he was not running for re-election was stunning, even to many most familiar with Indiana politics. However, the timing of said move (just before the candidate filing deadline) struck some the wrong way, even in his own party. The Democrats’ inability to field a candidate via signatures leaves the ultimate decision to the party’s State Chair and Central Committee. Janette Surrisi, a Democrat in Culver, has started a Facebook group (which has 55 members as of this writing) to rally state Dems in demanding that convention delegates be the ultimate deciders. In an e-mail, she writes:

The people of Indiana deserve to choose the democratic candidate for Evan Bayh’s senate seat. Evan Bayh announced only a day before the deadline to get on the primary ballot that he would not be running for election in 2010. Many speculate that the timing was a political maneuver to make sure that the Indiana Democratic Chairperson and Central Committee could hand pick the candidate of choice for the senate seat and in doing so leave many primary voters in the cold.

To remedy this, we believe that the more than 2,000 Indiana Democratic State Convention Delegates should pick the candidate for Bayh’s seat. Delegates are elected in the primary to go to convention. If not enough candidates are elected to delegate spots, county party chairman can appoint citizens of the party to the position. Currently, democratic delegates pick their Secretary of State, State Auditor, and State Treasurer candidates at convention.

We petition that Dan Parker and the Indiana Democratic Party Central Committee allow the delegates to vote for the democratic senator candidate at convention in June. We believe that the candidate that earns the most votes from the delegates should be named by the Central Committee as the candidate on the ballot for the democrats in November.

This group is dedicated to giving Indiana voters a voice. All voters Democrat, Republican, or Independent deserve to pick their candidates.

Mark Cuban vs. Sen. Franken on Internet Bandwidth

IU grad and Dallas Mavericks owner/billionaire Mark Cuban recently took Sen. Al Franken (Minnesota) to task on his blog regarding Franken’s contention that if a pending $30 billion deal between NBC and Comcast goes through, then they must agree to post their TV shows online so everyone has access – and Franken seems to be pushing for caps on user bandwidth.

Some of this seems a little "inside baseball" (man, I loathe that phrase… how ’bout "inside ice dancing" in honor of the Winter Olympics?), but I’m sure our savvy readers will glean more from it than I. Anyway, it’s a relevant and interesting topic, and in his usual calm, sober way, Cuban drops the hammer on the former NBC employee. An excerpt:

According to the LA Times, “In written questions to Comcast and NBC Universal regarding their $30-billion proposed marriage, Sen. Franken — who has been one of the harshest critics of the deal — wants Comcast and NBC Universal to promise that it will put all its television shows online. He also wants assurances that shows that the companies put online be made available to every one and not just people who get their Internet service through Comcast.”

Also in the Times article: “As Franken notes in his questions to the two companies, “The Internet is the future of the media business.”"

Lets start with the first request that all NBC Universal/Comcast shows should be delivered over the internet.  Someone needs to explain to Sen. Franken that TV shows delivered over the internet consume bandwidth. A lot of bandwidth.  There are  reasons why Youtube limits the size of files that users can upload to it. The first is that video is the ultimate bandwidth pig.  The 2nd  reason is that bandwidth is not unlimited or elastic.  The more bandwidth that is consumed, the more bandwidth that must be added to maintain existing levels of service. That costs a lot of money.   Think that might push up internet rates to consumers ?

I get that no one really cares if Comcast has to spend money on capital improvements to add bandwidth to the home.  They should. Its pretty damn stupid to push consumption in a direction that will raise internet rates  to receive the same content for which there is already a phenomenal digital network in place to deliver that content.

Think about it for a minute Senator Franken. Comcast, and every large TV Provider has a digital network in place that can and does deliver gigabits of tv content perfectly,  every second of every day, to any TV set in any  home that is connected to their network. It works. Well.  What you are asking Sen Franken, is that Comcast duplicate the delivery of theirs and NBCUniversals shows on a network, the internet,  that is not, and has never been designed to handle the delivery of huge volumes of video and tv shows.

What you are forcing them to do is not only going to impact Comcast, its going to push ANY internet provider  on which NBCUniversal/Comcast owned shows are delivered to deal with the increased bandwidth needs your request requires. Increased bandwidth needs to the home means more money spent on infrastructure needed to support that delivery, which in turn is going to mean  HIGHER INTERNET RATES and/or caps on internet bandwidth consumption for consumers .   Did you even think through what would happen if NBCUniversal/Comcast was required to simulcast  the Olympics over the internet ?

What do you think? Who’s right here?

Federal Spending Now … and Then

Discussion of President Obama’s proposed fiscal 2011 budget has focused on several numbers: $3.8 trillion in spending and $1.3 trillion as the deficit.

Much has changed, of course, over the last 40-plus years but look at the share of the total budget for some of the top programs in 2011 compared to 1968 (middle of the Vietnam War and just the beginning of the Medicare program).

Program: Fiscal 2011; Fiscal 1968

Defense: 19.6%; 46%

Social Security: 19.0%; 13.3%

Medicare: 13.0%; 2.6%

Medicaid: 7.8%; 1.1%

Food stamps: 2.0%; 0%

Housing subsidies: 1.7%; 0% 

Supp. Security Income: 1.3%; 0%

Low-income tax credit: 1.2%; 0%

Pick different years and you would undoubtedly find other interesting comparisons.

Worst Winter Olympic PR Scandals of All-Time

Think you have PR problems? At least you don’t have corrupt judges and a drunken skier on your hands.

Business Insider recently took a look at the worst Winter Olympics PR disasters of all time. Lowlights include the Harding/Kerrigan debacle, Denver refusing to host the games after being awarded them in the 1970s, and a couple are unfortunately from the 2010 Olympics in Vancouver. A snippet:

NBC: The network that prevents you from watching the Olympics.

In the age of Twitter, 24/7 real-time online news coverage, and real-time everything, NBC still thinks it’s 1976, and that the best way to cover the Olympics is via tape delay.

Actually, that’s the worst way to cover the Olympics. For instance, by the time NBC got around to airing Bode Miller’s downhill run last night, everyone already knew that he came in third place.
 

For the record, despite my issues with NBC’s lack of live coverage, this has by far been the most enjoyable Olympiad for me. Discussing this with friends recently, we decided the Winter Olympics are so much fun because these are events we don’t see otherwise. While curling is enjoying unprecedented recognition, I’ve personally found a new love for downhill skiing, Snocross and even ice hockey. Most importantly, it’s been great to see Canada and its famously welcoming people garner some well-earned recognition for the nation’s gorgeous West Coast.

Ivy Tech President Tom Snyder Discusses Your Tax Money at Work

For Tom Snyder’s Economic Club of Indiana speech Tuesday, it was largely a story of numbers (along with some video clips of Ivy Tech graduates telling their personal success stories).

Before going into the details of Ivy Tech’s growth, Snyder shared one statistic that affects all Indiana taxpayers – you are paying half of Ivy Tech students’ tuition. For that reason, Hoosiers need to know what’s happening with the community college, Snyder notes.

The school has seen an enrollment increase of more than 40,000 students since 2008. No longer can high school students decide between college and a high-paying factory job. Employers are calling for everyone to have some postsecondary education – whether it’s a four-year or two-year degree, Snyder states.

He offered this profile of the Ivy Tech student body:

  • Average age is 27
  • 25% are single mothers
  • 60% receive financial aid
  • 10,000 students are on food stamps
  • 25% transfer to a four-year school
  • 25,000 are enrolled at the Indianapolis campus (that’s more students than at Ball State University, Snyder asserts.)

Noting the high number of students who need remediation in math and English, Snyder turned to the audience to prove his point. Through an interactive demonstration, audience members took a five-question quiz based on math placement tests.

The audience used small remote control buzzers to answer questions such as: What is the smallest prime number? (Answer: 2) On most questions, about 60% or less answered correctly.

Snyder reminded the audience that while half of the tuition at Ivy Tech is covered by taxpayers, all of it is covered at the K-12 level. He shared his five steps to success in educating Indiana:

  1. Children are prepared for kindergarten
  2. Third grade students are reading at third grade level
  3. Students decide to go to college while in the eighth grade
  4. Students take math during their senior year of high school (helping prevent the need for remediation)
  5. Graduates continue on to earn a post K-12 credentials

Snyder concludes education is a shared responsibility; everyone is an educator.

After all, you’re footing the bill.

TechPoint Awards Honor Tech-Driven Companies, Nominations Due March 8

Indiana’s life sciences and health care technology companies are among those that may be eligible for recognition at the upcoming Mira Awards, presented by TechPoint:

TechPoint, the Central Indiana Corporate Partnership’s technology and entrepreneurship initiative, is now accepting nominations for its 2010 Mira Awards.

The annual Mira Awards put a well-deserved spotlight on the state’s most successful technology-driven companies, in industries like information technology, advanced manufacturing, the life sciences, and logistics. Mira Awards are also presented in categories like health care technology, new media innovation and corporate IT (recognizing the achievements of the internal technology departments of our leading companies). 

Mira is the largest and most prominent awards program of its kind in Indiana; finalists and winners receive significant publicity and valuable exposure to the high-tech and business communities at large.  Visit http://techpoint.org/Mira/ for more information – nominations are due March 8.

Marketing Blogger: Fire Your Social Media Director

Interesting concept from B2B marketing expert Paul Dunay. He says businesses should take a holistic approach to social media, not assign it to just one person — and effectively get rid of their social media directors. (Although the Chamber probably shouldn’t, since theirs is a really nice guy with a mortgage.) No, in all seriousness, I have plenty of other duties to keep me busy. And I would argue, as he does, that it still makes sense to have one person monitoring the entire social media operation, even if many people are using it. At any rate, the point is to get you thinking about getting people at all levels involved. It relates to a Smaller Indiana conference I recently attended where a speaker relayed that one large international company has no marketing department, because it feels everyone who interacts with people outside the business are, in effect, marketers:

At a recent ANA conference I was interviewing Brian Wallace VP of Digital Marketing and Media for RIM when I heard him say “2 years from now- if I still have a Director of Social Media – I should be fired!” and after thinking about that I can’t help but agree with him.

The theory here is as CMO’s appoint a head of social media in their organizations, it fosters silo-like behavior and departmentalizes social which by definition runs counter to the behavior within the organization you are trying to instill!

As the “lightning rod” for all things social at Avaya – I have tried not to accept the mantle of being the head of social media and instead be more of a caretaker of social activity across the company. I agree you need someone to know what is going on across the company socially but you should not confine social to just a few select people.

My social media team has grown from 7 people at the start to now over 75 people as part of a “virtual cross discipline team” that meets weekly about social activity. And I often wonder how will I push the barriers of that team out – to be more like 15,000 people acting socially in a coordinated, passionate way about our brand. Said differently how do we make social part of the very DNA of the firm?

Ideally, I think you need to treat the role of the Director of Social Media as a way to activate the entire organization socially and then when that’s complete – move on to something else. What’s your view?

Turnaround on International Trade

The Small Business & Entrepreneurship Council contends recent developments in international trade are actually promising for the U.S., despite a decline in recent years:

Two stories are to be found in the latest trade numbers issued by the U.S. Bureau of Economic Analysis. One is bad. The other offers hope.

The first story is about a historic decline in trade for 2009 overall. U.S. exports decline by 15 percent – from $1.83 trillion in 2008 to $1.55 trillion in 2009. The story on imports was even more striking – a 23 percent decline from $2.52 trillion in 2008 to $1.93 trillion in 2009.

These trade numbers go along with the reality that the U.S. economy in 2009 experienced its sharpest one-year decline in more than six decades.

The second story is that this dramatic decline in trade, which specifically ran from July 2008 through May 2009, has since reversed course. Exports hit bottom in April, and subsequently climbed for eight straight months. Meanwhile, imports bottomed in May, and have increased in six of the past seven months, including for four consecutive months.

Export and import levels have still not climbed back to where they were in mid-2008, but exports (seasonally adjusted) were up by 17 percent in December 2009 versus April 2009, and imports were up by 23 percent from May to December.

Again, it is important to understand that rising imports mean expanded sales by and opportunities for U.S. firms, while increasing imports signals at least some life in the domestic economy, that is, consumers and businesses are buying more imported consumer and capital goods and services.

If you’re an optimist seeking hopeful signs in this tough economy and harsh policy climate, then trade is the place to look. Now all we need is for the President to follow up with his pro-trade rhetoric in the State of the Union with pro-trade policy actions.

Rallying Cry: Stop the EPA

We reported last week on the efforts of several states (Texas being the latest to file suit) to stop Environmental Protection Agency regulation of greenhouse gases. The reasons are many, including devastating impacts on the economy.

Add a few more powerful players to the mix — Mississippi Gov. Haley Barbour and a leading Senate committee member. Both want to employ the Congressional Review Act. Here is an explanation:

Barbour is floating a draft letter to governors at their winter meeting asking Congress to use the Congressional Review Act to reject EPA’s endangerment finding. That finding cites climate change as a risk to public health and welfare, which the agency is using as justification for pursuing regulations.

"In addition to placing heavy administrative burdens on state environmental quality agencies, regulating greenhouse gases through the Clean Air Act will be costly to consumers and hurt the U.S. economy, resulting in job losses," according to Barbour’s draft.

This echoes an effort by Senate Energy and Natural Resources ranking member Lisa Murkowski, who is expected to call for a vote on a resolution in March to use the Congressional Review Act to block EPA, spokesman Robert Dillon said.

She needs 51 votes and has 40 co-sponsors for her disapproval resolution, including three Democrats led by Senate Agriculture Chairwoman Blanche Lincoln.

Murkowski’s effort, and those by Energy and Commerce ranking member Joe Barton and others in the House, are not expected to be successful, given Democratic control of Congress and opposition from the president, who could veto a resolution even if it gets through both chambers.

But it continues to raise the argument that efforts by the Obama administration and Democratic congressional leaders to limit U.S. greenhouse gases are serious threats to the economy heading into this fall’s elections.