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Sunday, September 06, 2009


Labor Day Weekend Edition

Item: Obama offensive aims to revive agenda, rebuild popularity: This week, President Obama goes before a joint session of Congress and in front of national TV cameras to finally put some meat on the bones of his health care proposal in the form of a more specific list of just what it is the administration favors. Up to this point, it has been left to Congressional committees to draft the bills while the administration alternately endorses and then disowns various elements of the plans, depending on the latest poll results. Since this strategy has not been working, the time has come for the Obama people to actually define their plan.

Unfortunately for the President and his supporters, the whole enterprise rests on a false premise, namely that there is some combination of planks that can ultimately win majority support, and that most people want change in the first place. The fact is that most people are insured through their employer, that they like it that way (since it minimizes their cost), and that they have learned to buck the managed care system and find a way to receive the medical treatments they agree to with their doctors.

No matter how you slice it, the Dems' plan is to provide some kind of public approach that necessarily brings everyone under its umbrella (eventually) so as to provide universal (and mediocre) coverage to all and maintain some kind of cost structure. We all know that means rationing, and we also know that some rationing occurs under the present system. But having ceded medicare and medicaid to the public sector (with their limited outlays to doctors and providers), the private sector and its workers have drawn the line and said we want to retain what we have. Though this leaves several million uninsured folks out of the system at least temporarily, the majority of the working public does not care enough to consider changing the system. They are satisfied that the uninsured can get health care through the emergency rooms, at the non-profit hospitals, and that many need only sign up for medicaid.

The number of uninsured that you hear quoted, some 45 million, consists mainly of illegal aliens, young people who opt out of insured plans for which they are eligible, and people between jobs. The solution that would be acceptable would be a lower cost approach to bringing all of these people into the system, but that would take away a major issue for the Dems without accomplishing their real goal of expanding public sector (unionized) jobs. So it won't happen, and neither will tort reform, which has the potential to take real costs out of the system by obviating the need for defensive medicine.

More and more, it looks like Dems will settle for no action this year, and seek to "blame" Republicans for that in 2010. That may turn out to be blame Republicans will welcome.

President Obama also plans to address school children this week, and while that should be non-controversial, it is anything but because of the teachers' guide the administration is putting out in conjunction with the aired message that turns out to be fairly political. This strikes a sensitive spot with conservative leaning parents who already suspect unionized teachers of being partisan in their approach to discussing politics in class. So it has become yet another irritant hurting Obama poll numbers, as if he needed another.

Item: College football season begins and with it a spirited near upset by Navy of highly ranked Ohio State, and a great road win to start the season for Alabama at Virginia Tech. Also, a big road upset for BYU at Oklahoma. My reaction of course is, so what, since college football has nothing to do with college, especially at the Division 1A level where it is big business as well as a cheap farm system for the NFL. The "student athletes" are highly exploited, having little opportunity to keep up academically if they are even inclined, and the NCAA enforces its arcane and overly complex rules unevenly, punishing the mediocre programs for trying to move up the ladder and making sure that athletes receive little or nothing of value for their participation.

The industry also feeds the country's notorious gambling habit. It amazes me that my friends are happy to bet the opening week, giving 20 or more points on games between two teams both with 0-0 records. If one must bet that week, wouldn't it make sense to take the points on every home dog? Just a thought. But I don't bet sports.

One other point about colleges. I have more than a few bones to pick with them, including my own alma mater, and those annoyances came foremost to mind as the 2008-09 annual giving season ended last June 30. I did give to my daughter's school, but really, why would I or anyone support schools where there are speech codes, curriculum with ridiculous or highly politicized courses, where costs, especially for faculty are completely out of control and passed on to the few families paying full tuition (or worse, borrowing it), and where investment managers blew off tens of millions of endowment dollars investing in hedge funds, Madoff, and other questionable areas.

One of the ideas that selective schools trumpet that really rankles me is the concept of "need blind admissions." The idea that the admissions staff should select a freshman class while shielding its eyes from the ability of students to pay strikes me as the most irresponsible business practice I've ever heard of. Now I agree that there is a place for scholarship students at any college, but wouldn't it make sense to budget accordingly? That is, shouldn't you shoot for a certain percentage of scholarship students and a certain percentage of paying students so as to know what your revenue might be? And what's wrong with favoring legacy students (children of donating alumni), especially paying ones, to fill out out the pool of non-scholarship students?

Somehow, if a surplus of scholarship kids get picked, the alumni are called upon to make up the lost revenue through donations even as their own kids get turned down. This is madness! I know a classmate whose daughter did not get into our alma mater despite her obvious qualifications; so the school lost both a paying student and a regular alumnus contributor.

Strong letter to the College President to follow.

Item: Governor Paterson aide Clemmie Harris found to have no NY nexus. Mr. Harris, who makes a high five figure salary on the staff of the Governor, has a Pennsylvania home address, and has been living at NY taxpayer expense out of motels and the Governor's mansion while doing some kind of work for the Governor. He is, of course, an old friend of Dave. When asked how he came to be registered to vote in PA rather than NY, he said that he wanted to vote for Obama in a battleground state rather than in a sure state. As if that was a valid excuse. While we're at it, can I change my registration to a battleground state too? I am sure I could obtain an absentee ballot and I hate to waste my vote in NY.

It's bad enough that this creature is stealing from the all but bankrupt citizens of NY, but in addition, he went on to promise to register in NY! What the press failed to ask is whether he will withdraw his PA registration when he does. Probably they thought such a question might be insulting, but I would not have worried about that. My expectation is that he will vote in person in one place and by absentee ballot in the other. As my Dad you used to joke, on Election Day, vote early and often. And people wonder why conservatives worry about voter fraud.

Thursday night, I had the very good fortune to see Counting Crows, with special guest Spearhead and Augustana in Central Park. The nearly 4 hour show delighted the sold out crowd, where kids, parents, and the youth of America danced and sang along with Crows' front man and composer Adam Duritz as he and the great band (usually featuring four guitars!) ran through about 14 of their great songs and joined with the guest bands as well. It was just a perfect evening and Adam actually seemed supremely happy for once in his life. Can't wait to see the Crows again.

It was an interesting week for stock market followers. The market swoon on Tuesday surely had many worried that the historically awful month of September would lead to Armageddon (again) but somehow, the market rallied back Thursday and Friday to end the week with a manageable loss. For the Musings portfolio, it was at best a mixed performance. On Monday, we looked prescient, selling 200 shares of BAMM for 13.85, a great price for shares purchased 6/3/03 at 2.37. But on Wednesday, we had a brain fart, blindly following the zero buy formula to buy a thousand shares of Bank of Granite (GRAN) at 2.00 even while the FDIC was preparing to begin a 60 day period of close supervision for management. The stock ended the week at 1.49 and I am reevaluating what to do with the shares. This is not a stock for readers to buy without the most rigorous research. Finally, on Friday, we received our money for the Axsys Technology takeover for our remaining 300 shares. The takeover was at 54. We paid 17 on 3/29/06, a great recommendation from our full service broker!

Yet another reason to enjoy Labor Day, a longer posting from the Redwaver!

Here is, in my opinion, an interesting piece from the WSJ. In my opinion public schools do not teach morality and civics today and that is a shame.
As always, Hail Freedonia !
Rufus T. Firefly

Manhattan Institute fellow Steve Malanga writing in the Institute's City Journal:

The genius of America in the early nineteenth century, Tocqueville thought, was that it pursued "productive industry" without a descent into lethal materialism. Behind America's balancing act, the pioneering French social thinker noted, lay a common set of civic virtues that celebrated not merely hard work but also thrift, integrity, self-reliance, and modesty—virtues that grew out of the pervasiveness of religion, which Tocqueville called "the first of [America's] political institutions, . . . imparting morality" to American democracy and free markets. Some 75 years later, sociologist Max Weber dubbed the qualities that Tocqueville observed the "Protestant ethic" and considered them the cornerstone of successful capitalism. Like Tocqueville, Weber saw that ethic most fully realized in America, where it pervaded the society. Preached by luminaries like Benjamin Franklin, taught in public schools, embodied in popular novels, repeated in self-improvement books, and transmitted to immigrants, that ethic undergirded and promoted America's economic success.

What would Tocqueville or Weber think of America today? In place of thrift, they would find a nation of debtors, staggering beneath loans obtained under false pretenses. In place of a steady, patient accumulation of wealth, they would find bankers and financiers with such a short-term perspective that they never pause to consider the consequences or risks of selling securities they don't understand. In place of a country where all a man asks of government is "not to be disturbed in his toil," as Tocqueville put it, they would find a nation of rent-seekers demanding government subsidies to purchase homes, start new ventures, or bail out old ones. They would find what Tocqueville described as the "fatal circle" of materialism—the cycle of acquisition and gratification that drives people back to ever more frenetic acquisition and that ultimately undermines prosperous democracies.

And they would understand why. After flourishing for three centuries in America, the Protestant ethic began to disintegrate, with key elements slowly disappearing from modern American society, vanishing from schools, from business, from popular culture, and leaving us with an economic system unmoored from the restraints of civic virtue. Not even Adam Smith—who was a moral philosopher, after all—imagined capitalism operating in such an ethical vacuum. Bailout plans, new regulatory schemes, and monetary policy moves won't be enough to spur a robust, long-term revival of American economic opportunity without some renewal of what was once understood as the work ethic—not just hard work but also a set of accompanying virtues, whose crucial role in the development and sustaining of free markets too few now recall.
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