Boomers: The Selfish Generation

An acquaintance of mine recently called the Baby Boomers the most selfish of generations.  Certainly this is true so far. They will be the generation that burned up the fossil fuels by driving SUVs to work everyday with only a single passenger.  They will be the generation that straddles future generations with mountains of debt.  Do we (the Boomers) have an obligation to paying off this debt?  I say yes.  I worked for private companies for most of my career.  But when I look at the companies I worked for I realize that without the government deficit military spending our company would not have existed.  Reagan financed my job through deficit spending.  The company I worked for helped pay for most of the other jobs in town.

The reason I live a comfortable lifestyle now is because it was financed through debt to be paid by future generations.

Most Boomer jobs were financed through government debt which made them (us) prosperous. Now the debt is starting to really impact the economy but the Boomers are refusing to pay back what they borrowed and complaining about high taxes (taxed enough already).  I believe in paying my debts but neither liberals nor conservatives are willing to raise taxes to pay off the deficit.  The most selfish generation (Boomers) would have to commit to paying higher taxes to pay off the deficit.

Good luck with that.

Oh, and I heard someone say that we should pay off the debt by lowering taxes.  Reagan proved that theory was bogus.  It won't work.  Boomers and future generations will have to work harder, pay higher taxes and retire later.  The Xs and Millenials should not let the Boomers get away with screwing them over.

Recently others have been noticing the same thing:

Are the Boomers Screwing the Millenials?

The Screwed Generation

This will not end well...

On the Deficit

The deficit will be one of the major problems facing the United States as China becomes the largest economy in the world.  The US has been acting like an irresponsible teenager with a credit card who has run up a big debt and wants to just pay the minimum balance.  The US should make it a priority to pay off the deficit.  Yes, this will be painful but it is needed.

Many in the TEA party are calling for this but the main idea of the TEA part (Taxed Enough Already) is flawed.  Paying off the deficit will require us to increase taxes.  It will also require cutting back on expenditures especially the military.  We will also have to cut back on government spending for social security and medicare as unpopular as that sounds.  The least painful way to do this is to increase the retirement age.

Both democratic and republican administrations have voted for the huge deficit we are faced with now. It will be up to all Americans to accept the responsibility to pay off this deficit.  The Baby Boomers have been the most selfish of all generations.  If we fail to pay off this deficit then future generations will look back at us as the most irresponsible of generations.

On Corporate America

I think if your company still has its first CEO he or she is probably doing a good job.  By the time you get to the third CEO of a company they are most likely a crony of the board of directors.  They come in and looking at the costs of the company, see that employees are one of the major ongoing capital expenditures, so they have a layoff that makes them look good.  After a couple of years they leave with a golden parachute taking millions in bonuses.   Those bonuses could probably have provided the salaries for all the people who got laid off.

The most important societal contribution of a corporation is to provide employment for its employees.  Making a profit for its investors has very little benefit for society.  Many companies lose sight of the significance of paying their employees a good wage.  They just see it as a capital expense.  What they often fail to realize is that by paying their employees a good wage they will earn enough money to buy the company's products or buy products from someone else that can then afford to buy the company's products.

It may seem at first that outsourcing or offshoring make economic sense for a company because the can get the work done cheaper in another country.  This may be true if only a few companies do this.  If all the companies do this and the primary market for the product is in the US then the consumers will eventually no longer have enough money to buy the products anymore.  If everyone outsources work then the US loses in the long run.

On Taxes

I hear a lot of complaints about taxes:  Taxed Enough Already!  This statement is ridiculous.  Taxes are lower now than they have been for 30 years.  Besides we get many benefits from our taxes including roads, public education and social services.  The spending of these public dollars is open to public scrutiny so the dollars are rarely wasted.

There is no direct public oversight on the behavior of companies.  Even investors have become disembodied mutual funds with money drawn from 401k accounts so that nobody has any real oversight over a particular company.

Compare this to corporations where they routinely waste money.  Much of this money is wasted on executive salaries.  Corporate CEOs are receiving most of their salaries as capital gains.  Since the capital gains tax was lowered this results in corporate executives paying a much lower percentage of their income in capital gains than most American workers.

Everyone is concerned about the national debt but know one wants to do anything about it.  At one time I thought the republicans were interested in fiscal responsibility.  Reagan proved this was not the case.  He just ran up the debt spending money on building up the military rather than on social or scientific programs.

So now we are faced with a massive debt and neither the democrats nor the republicans are willing to raise taxes to deal with it.  The solution will have to involve raising taxes as well as adjusting entitlements.  People will not be able to retire at age 65 and go on without working.  Retirement age will have to be increased.  Taxes will have to be increased particularly on corporate executive salaries.  Military spending must decrease substantially.  We should not be considered the police force of the world.

The Right's Fascination with Extremism

The problem with the right is that they think if they are more extremist they will get more of the vote.  This actually worked for them for a while.  They had to create the sense that the "mainstream media" was left oriented so that a far right agenda propagated by Fox News would be considered centrist.  This worked for them in the 2004 election with Bush.  People have gotten smarter and the in particular the left have found their voice on the internet but it has left the country polarized.

All of the republican candidates for president are too extreme to get elected.  Americans have become disillusioned with the TEA Party.  Why should they care if a bunch of upper middle class Americans think their taxes are too high?  Their agenda primarily only benefits the super wealthy.  If the right were really smart they would move more to the center and find a centrist candidate.

Obama has been a great president because he stuck to his primary goals but has remained centrist on most other fronts.  To me the most important achievements of Barack Obama have been to end military involvement in Iraq, capture or kill Osama bin Laden by increasing our military efforts in Afghanistan, and reform healthcare.  Not only that but he inherited an economy that was headed for disaster and salvaged it (as well as possible), pressured BP to fix the oil leak in the Gulf of Mexico, and reformed the credit industry.

On Education

I have trouble understanding why the right usually seem to be anti-education.  This does not make sense to me, but inevitably when a right wing administration is elected they seem to attack public education.  As an example consider the case of Wisconsin.  A republican governor, assembly and senate are elected and the first thing they do is cut the education budget.  They also pass legislation designed to eliminate many public sector unions which causes massive protests.  Of course people who see their rights being taken away react angrily.  What is even sadder though, is the $1 billion dollar cut to public education.  Education is an investment that takes years to be realized.  The affects will be felt in the future not in the present.

Some news articles have stated that the destruction of the unions will enable school districts to do more with less.  The rule of economics (there ain't no free lunch) implies that by reducing teacher wages and job security, the teaching profession will become a less attractive career choice.  The best students will no longer consider teaching.  People will choose teaching as a last resort.  In the end the quality of education will suffer, the quality of the students performance will decrease, and when these students enter the workplace they will lack the skills necessary to compete with workers around the globe.

Another disturbing aspect of this trend is the support of Charter schools.  These schools are great for the few who  can attend them.  This sets the precedence for parallel education systems, one for the wealthy and one for the poor.  I have had conversations with people who feel they should not have to pay any taxes to support education at all.  They don't have any children in school any more so, why should they be obligated to pay taxes?  Public education is the one method for people to escape poverty in the US.  Without it the trap of poverty becomes complete, and the consequences will be dire.

US Healthcare

The US healthcare system is broken.  More and more people I know are no longer able to obtain health insurance.  The cost of healthcare is soaring out of control.  More small businesses are able to supply health insurance to their employees.  Meanwhile the hospitals in our area are all expanding and adding new advanced capabilities.  What's going on here?

First of all let's get some historical perspective.  Hospitals used to be run similar to charitable organizations.  Many of them were sponsored by religious organizations and established to help people in the region.  Then president Nixon signed legislation that established HMOs.  After this hospitals began to operate much more like for profit organizations.  One problem with this is that in most parts of the country there are probably only a few major healthcare providers.  This gives them essentially an oligopoly.  These large hospitals are mostly interested in competing for patients with the best insurance coverage.  If a patient has great health insurance they can go to an advanced hospital and receive the best healthcare technology can provide.

We have two major health care providers in our region.  They are competing for the patients who have the best insurance.  In many ways their services are duplicated with advanced computer controlled operating rooms and surgical robots with 3D tracking systems.  This is some very advanced technology for a small community.  As long as you have great health insurance you don't have to worry too much...

So let's take a look at the health insurance in the US.  My high school economics teach used the following example to explain insurance.  Suppose I offer to give every student 5 extra credit points but one student at random will lose 50 points.  Will you accept this offer?  Of course no one wanted to risk losing 50 points so we wouldn't.  Then he told us the catch.  We could have pooled the points together and taken the average of the points.  As long as there were more than 10 students we would average out to have bonus points.  The more people who are participating the better insurance works.

This is an OK example for a high school class but lets make it more realistic.  First of all you are getting any extra credit you are paying money to the insurance company.  The insurance company is a for profit organization.  If they insure people who are likely to get sick then they won't make as much money.  So they hire the top mathematicians called actuaries to calculate who is most likely higher risk.  Any high risk people are deemed uninsurable and they are not allowed to participate.  If you have a pre-existing condition then coverage for that condition is considered un-covered by insurance.  This all results in the insurance system breaking down.  The insurance companies are really only interested in selling insurance to the people who don't need it.

Many young people who are at a much lower risk for health problems go without insurance.  Once they experience a health problem they are going to find that they are either uninsurable or that the pre-existing condition is not covered.  The other problem this creates is that there are many people who are participating in the risk but not participating in insurance.  If they are treated at a hospital and incur large expenses that they can't pay then the hospital passes on those costs to other patients.  So basically it results in the insured paying for the uninsured.  The insured are paying the cost for the uninsured.  As more and more people are considered uninsurable, insurance costs increase and more people can no longer afford insurance.  This creates the spiral that will eventually bring an end to the current system as insurance and health care costs spiral out of control.

Wait there's more.  The baby boom represents a large aging population.  As people get older they will require more health coverage.  Many baby boomers have had employer supplied health insurance during their careers.  As they enter retirement they will be relying on Medicare and Medicaid, tax payer supplied health coverage.  The smaller population of younger people will be required to support this large aging population in retirement.  The younger population is not going to like this.

The increasing costs of insurance also blocks technical innovation.  It is very difficult for a small start up company to compete with large companies in attracting employees because it they can't afford to provide health insurance to their employees.

So what would a possible solution look like?  Many other countries have government run health care institutions and their populations are highly satisfied with their health care.  I never hear about protests in England, France or Canada trying to privatize health care.  They protest other things but not this.  In fact they realize just how ridiculous our system is.  I think it would be good to have a health care system in the US that rivaled Canada's.

When President Obama was elected I did not believe he would be able to pass the much needed health care reform bill.  Many democrats effectively sacrificed their careers supporting this bill.  The bill takes care of several of the serious problems surrounding our current healthcare system.  One of the most important provisions is the ability for anyone to obtain insurance.

The main provision that most people are opposed to is the one that requires everyone to have insurance.  This is really important for the entire system to work but this is probably the main reason the bill is controversial.  People don't like to be told by the government that they have to pay for something.  A public option would probably have been better.

Who is opposed to this bill?  Obviously insurance companies would have to insure high risk patients again and this may reduce their profits.  Hospitals and insurance companies see this as a move towards government control of the healthcare system.

This is what is needed (even though it won't get done, at least not until the situation gets much worse):  Medicare, medicaid should be paid out of general tax revenues.  Basic medical coverage should be provided out of general tax revenues.  This will result in an increase in taxes but corporations and individuals will no longer have to pay anything for health insurance.  Local hospitals must be brought under government supervision and health facilities will be added only as needed.  For example if you have an PET machine and it is not fully utilized you don't need to have a second one.  Most health coverage will be provided through these government controlled organizations.  We need to provide basic health coverage to all of our citizens.

For more information see the following discussion: http://lorenzlammens.com/2009/09/05/a-historic-perspective-on-health-care-reform/