Pop Economy!

This Persevering Actress Managed To Overcome An Unfortunate Handicap.

As any schoolboy will tell you, sometimes when you stretch your hand under the blouse you’ve been ogling all night, you find out to your disappointment that it’s been padded.  The same can be said of the “botax” itself: when piloted previously in New Jersey, it delivered a mere A-cup worth of revenue instead of the C-cup which had been projected.

Besides the economic sag, the new law brought controversy: some customers chose to leave New Jersey for their procedures, while others charged discrimination on the basis that middle-class women were being unfairly targeted.  Said Joseph Cryan, the Assemblyman who first proposed the tax and now wants it repealed, “We essentially discouraged the business from happening at all.”  I hate to think this was a revelation: taxing an activity discourages people from engaging in it, and will tend to depress the revenues received from the tax.  Mr. Cryan continued, “It was a real education.”  Not Belmont Abbey College’s finest hour.

According to the American Society of Plastic Surgeons, 90% of cosmetic surgery recipients are women, but the Senators who dreamt up the “botax” don’t view it as discriminatory.  Even Sen. Barbara Boxer’s office came to its defense, insisting that men chose “more and more” to get cosmetic surgery, while complaining that the comparison to their use [and therefore, a tax] of Viagra was ill-considered and inappropriate.

Since the New Jersey law– as will the proposed federal law– distinguishes between elective (taxed) and medically-necessary (untaxed) procedures, determining which is which can be nettlesome.  Pat McMenamin, a surgeon in Sacramento, said “cosmetic surgery can be as much about mental health as it is about physical well-being” and went on to describe a young patient who was practically suicidal about his nose.  Another surgeon described the minefield of HIPAA privacy violations which might occur in revealing medical decisions and rationale to the IRS.

All things considered, I’m underwhelmed by what we at PopEconomy! are calling the Tit Tax (although my fiancee strongly encourages me to stop using that term).  Ironically, while amendments I thought would surely pass (re-importation of prescription drugs) have failed, and amendments that must die for the greater good (CLASS Act) have survived, this moronic thing seems to have flown under the radar.

I would tax these. Hard.

If you are vain, or know someone who is, then this story might affect you.  Personally, I’m against the latest proposal to tax breast implants, tummy tucks, wrinkle-smoothing injections and other elective cosmetic surgeries if for no other reason than because some smarmy columnist had the bright idea to coin it the “Botax” and now we all have to live with that smug pun.  Second, we seem to have reached a point in society where they’re just making up s*** to tax.  And lest you think I’m being cynical, I quote from Senator Harry Reid’s spokesman, Jim Manley, as to the origins of such a random tax, “We needed money to make the bill work.”

I have to say, the cosmetic surgeons aren’t exactly putting up a compelling fight.  Their argument is basically that the point of the Democratic proposal is to hit ”wealthy, suburban Republican women” the hardest but the Senators misunderstand that those aren’t the surgeons’ primary clientele.  Rather, one should pity the “many newly jobless women [who] look for ways to make themselves more marketable to prospective employers…They’re competing with people 10 to 15 years younger than them and they want to look better.”  So says Dr. Phil Haeck, president-elect of the American Society of Plastic Surgeons.  These are, after all, challenging economic times, and “These women come in, they’ve lost their jobs, they don’t have the money for a facelift.”

It makes me sad to think that someone who just lost her job might be able to scrape together $5,000 from her rainy-day fund to afford a facelift ($5,031 average cost: link opens directly to a .pdf) but somehow couldn’t possibly scrounge up another $250 if pressed; but it makes me even sadder that a newly-unemployed individual with $5,000 in his or her pocket would think his or her next best move in life would be to walk past the job re-training office and instead seek out the nearest plastic surgeon.

The good news is that the original plan was for a 10% tax, so we can all breathe a sigh of relief that the measure currently being debated is only 5%.  It would provide an exemption for deformities and injuries, but does include procedures such as face lifts, liposuction, cosmetic implants, and teeth-whitening (from what I can tell, 90% of all internet advertising is for teeth-whitening, so if you wanted to tax something, tax those freaking ads!).  I’m unimpressed with the amount projected to be raised: $6 Billion over 10 years.  At just $600M per year, that barely makes a blip on our Official Ledger here at PopEconomy! but I give them points for trying. 

(I will have to decide whether or not to enter this item into the Ledger, since the “Tit Tax” is specifically proposed to offset the cost of HealthCare Reform, whereas I am attempting to pay down the Federal Deficit.  I am also aware, lest anyone point it out before I do, that you can’t necessarily straight-line these costs over 10 years.  In other words, it’s not particularly accurate to state that the “Tit Tax” will raise exactly $600M each and every year for 10 years.  It may start very small, and accelerate, or vice-versa.  The CBO will have that level of detail, and I haven’t seen it yet for this section of the Bill.  If you want to go that deep, you can find them at www.cbo.gov.  But really, come on.  Relax.  Scroll up and look at those boobs again.  Isn’t that a better use of your time?)

Farscape is the Best. Show. Ever. This is a minor character named Furlough, which matters to me because that's today's Post topic and that's how my mind works.

Have you heard? We’re in a budget crisis. States are trying to creatively save money, and the latest craze involves “furloughing” their employees several days per month in an effort to reduce wage costs. (Perhaps it was lost on them that the last time anyone used the term “furlough” in the public eye, it went over like a lead balloon.)  Nevertheless, some 19 states have imposed furloughs in the last year or are considering them.

Take California, for example, our nation’s basket case.  Three days per month, some 200,000 state workers take a forced day off.  In theory, this saves $1.3 Billion in state wage costs.  The problem is that all those workers now have $1.3 Billion less to pour back into California’s stagnant economy.  One state employee indicated that his staples will continue to be met (mortage, food) but “it’s cut my disposable income…down by about 50 percent.”  His cutbacks hurt local businesses, but they also cost the state money in lost taxes.

Here’s the real kicker: how do you calculate the lost efficiency of a truck spilling wine cork lubricant all over a Northern California freeway on a “furlough day”?  There was a 2-hour delay in sending out a clean-up crew, and it took 12 hours to clean up.  How do you calculate the cost to the private sector of people taking more time off work to wait in longer lines at the DMV because of their furlough-shortened hours?  (Actually, we at Pop Economy! revel in calculating such costs, but that’s beside the point…)

John Sullivan of San Fransisco State University has analyzed furloughs at private firms and concluded that layoffs yield superior results.  On the other hand, if and when the economy recovers, furloughing means you still have your workers “at the ready”.   Before we leave the topic, it’s instructive to learn from history.

Several years ago, the French Government set out to reduce their double-digit unemployment by lowering the maximum workweek from 39-hours to 35.  Right on the surface, you can see where they’re going: each worker has instantly shared a new 4-hour per week job to fill.  However, the premise was wrong: that there’s a fixed number of jobs in the French economy, which can be rationed.   Consider another historical example: unless you’ve been living under a rock, you know that Mexico City is one of the most polluted cities in the world, trapped under a dome of fetid gray smog.  What to do?  In the 1990’s the government legislated that cars stay off the streets 1 day/week on a rotating basis based on license plate. (Fewer cars on the road = less air pollution)  So how did the “car furlough” work?  Well, people who had two cars were able to game the system by always being able to drive on any given day, as were people who chose to buy a 2nd car just for that purpose.  The net result was that the law produced an increase in car and truck traffic, and therefore, emissions.  It was later repealed.

I cannot make a Ledger entry for State Furloughs at this time, since we just don’t know whether they save money or cost money.  As you can see, we have to be careful of “unintended consequences”.  This is expertly described in the essay on my Links page, “What is Seen and Not Seen” by Frederic Basquiat.  (Incidentally, both examples cited above are from the excellent book, Naked Economics, by Charles Wheelan.)

This is either a genetically-engineered protein with the potential to save millions of lives, or the molecular structure of a highly toxic nerve agent-- so help me I've lost my notes and can't remember which.

They say we share more DNA in common with other species than with each other.  If there’s any chance it means I’m not related to this guy, I’m all in favor.  Having said that, you need to patent your own double-helix my friends, because personalized medicine is the wave of the future.  According to this Special Report from Genetic Engineering and Biotechnology News (did you get your copy yet this month?) the cost-saving potential of just three demonstration projects might exceed $6.2 Billion per year.

For example, according to the study’s authors “Genomic Health’s Oncotype Dx is a test with compelling cost-saving potential. It is used to predict chemotherapy benefit for patients who have node-negative, estrogen receptor positive (node-, ER+) breast cancer. By averting unnecessary chemotherapy, the test has been shown to save about $2,000 per patient. Extending this cost savings to the roughly 100,000 new cases of node-, ER+ breast cancer in the U.S. each year, this test could save the U.S. healthcare system up to approximately $200 million a year.”

The report continues, “Genentech/Roche’s Avastin costs $50–$100,000 per year of treatment but works in fewer than 50% of patients. Given that Avastin may generate $12 billion in peak sales, this low rate of efficacy translates into billions of dollars in misdirected healthcare spending. A test for Avastin response, such as that in discovery by BG Medicine, could save the system as much as $6 billion per year if all nonresponders could be removed from the treatment pool. Assuming that a test of this sort is introduced at the beginning of 2013 and is 100% adopted, cumulative savings of $40 billion could be realized by 2019.  This scenario, in which a drug with high sales but low efficacy is targeted by diagnostics companies, may become a pattern in the near future, multiplying cost savings.”

Candy Corn is universally despised, and yet...does anything so singularly symbolize the attraction and revulsion we feel towards the unholy conversion of corn into high fructose corn syrup into food we cannot resist?

They want to tax your soda, dear reader.  (Incidentally, depending on where in the United States you are reading this, you are upset with me for calling your favorite beverage “soda”, since you call it either “pop” if you live in the Northwest, or simply “Coke” [KO] if you live in the Southeast.)  This is a problem for you because you drink so damn much of it, but it’s great for our PopEconomy! because of the money we can raise.

Based upon the expert recommendations of the Arkansas Surgeon General and NY City Health Commissioner, in part, a proposal was released through the New England Journal of Medicine to levy a 1-cent per ounce national tax on sodas and other sweetened beverages.  Their studies demonstrated the benefits of such a tax would include revenue (obviously) while also discouraging people from consuming extra calories; they cited studies which showed that women who drank sugar-sweetened beverages were at greater risk of obesity and diabetes.

Although they’d hoped to slip this tax into the larger healthcare reform Bills floating around, that opportunity slipped through their grasp when the White House rejected a soda tax initiative mid-September.  (33 states individually levy fairly small sales taxes on soft drinks, roughly on the order of 5-cents per $1.  The national proposal above goes beyond that in the range of around 12-cents per $1).

So what are we talking in real numbers, and why am I not giving up so easily?  The authors claim such a national sales tax would reap $15 Billion in its first year, not to mention a yearly 2-pound weight loss for soda drinkers.  They envision plowing the money back into child nutrition and obesity prevention programs, which I find absolutely precious.

The historical footnote to all of this is what’s interesting: unless you’ve been living under a rock you’ve heard the reverse-engineering for what seeded our national obesity epidemic in the first place: protectionist trade policies begat the switch from cane and beet sugars to corn (embargos and tariffs + subsidies) begat the rise of high fructose corn syrup begat this.  Although it’s a remarkable story, there may be something apocryphal to it, as this article from Slate debunks the notion that HFCS (as we in the sugar trade call it) is any less natural or unhealthy than glucose or sucrose, or for that matter much less “high” than good ol’ fructose.  The one fallacy they gloss over as it pertains to our purposes is hypothesizing what would happen if there were abundant sugar available everywhere, when in fact we DO still impose a Cuban embargo and DO still subsidize US corn farmers: whether the author believes its cost is trivial to the price of the can of soda, HFCS is still cheaper on a relative basis.

Them Duke Boys Never Paid a Traffic Ticket, Depriving Hazzard County of Desperately Needed Rickety-Bridge and Ramp Repair Funds.

The old saw goes that if we outlaw guns, one day only criminals will own guns, and that’s why this story affects you, dear reader.  According to a recent story in The Washington Examiner, D.C Police Chief Cathy Lanier has denounced those “cowardly” Apple iPhone users for taking advantage of an app which circumvents both speed traps and red-light cameras.

The numbers are a bit sketchy from the article, since it indicates that $1 Billion was generated for DC during fiscal years 2005 to 2008 from photo radar tickets, which is on the order of $250 Million a year if we include all 4 years.  But one sentence later it says that Montgomery County expects to raise just $29 Million from red light and speed cameras this year, which is smaller by nearly 10x an order of magnitude.  Before I can extrapolate this data to the entire USA I’ll need to fact-check this!  Fortunately, I’ve located a useful– if inappropriately named– site devoted almost entirely to photo enforcement: The Newspaper.

Leaving aside for the moment the incontrovertible evidence that these cameras neither reduce accidents nor have an appreciable impact on speeding, most of us realize they are “sin tax” cash cows.  The Newspaper.com hints at some tantalizing revenue figures.  Albuquerque, NM: “All together, the city collected $10,611,397 in revenue and handed over $2,844,920 to Redflex [an Australian vendor who dominates this market]. This left the city with between $5.8 and $7.8 million in net profit. The precise figure is not known as officials charged as photo enforcement expenses a number of part and full-time police officer salaries as well as the entire administrative hearing office budget. The audit report sidestepped the question of whether the ticketing program has had any beneficial effect on traffic accidents.”  Washington, DC: “Since 1999, [photo] cameras have issued 3,732,234 tickets worth $283 million (as of 3/31/09)”.

And for the entire state of AZ: “Governor Janet Napolitano announced on Friday her expectation that the state’s new freeway speed cameras would generate $90 million in net profit for fiscal year 2009, plus $34 million for the private companies selected to operate the program. In the following year, what the state labels “non tax increase revenue generation” will jump to $120 million, plus $45 million more for the ticket vendors, for a total of $165 million. After 2010 revenue is expected to exceed this amount significantly as the program grows beyond 100 fixed and mobile speed cameras and high occupancy vehicle lane (HOV) ticketing cameras are brought online. The state currently faces a $1.3 billion deficit. “This budget shortfall is an opportunity to make government more efficient and effective,” Napolitano said in a statement touting a budget that “does not raise taxes.”

So I think PopEconomy! has enough to work with… Read the rest of this entry »

Paper crossword puzzles such as this specimen went extinct in 2009, but some survive in digital captivity

If you’ve ever played Wii Big Brain Academy [NTDOY], then you’re ready for the Big Show now because the kind folks at Post Science Corporation put out a press release last week boldly proclaiming, “Another way to pay for healthcare reform– projected savings of $100+ Billion.”  How could I pass that up!  It turns out I actually recognize the name Posit Science since I once worked with a company who ran a pilot with one of their products (and made similar claims).  Their specialty is computerized brain fitness exercises: “More than 30 articles in leading science and medical journals show that in randomized controlled trials the company’s patented technologies significantly increase processing speed, improve memory and attention and enhance quality of life.”

Based upon a trial funded by the National Institutes of Health, the company most recently studied over 2,800 seniors aged 65+, divided into 3 groups (and a control group), employing just ten hours of brain fitness training over 6 weeks, then followed for 5 years.  One year after receiving the training, participants healthcare costs were predicted to be $244 less per patient than in the control group.  A full 5 years out, even with no further follow-up training, costs were still lower by about $143 per patient per year.

“Our results have important health policy relevance,” said Frederic Wolinsky, PhD, of the University of Iowa who was lead author on the article. “The reduced costs were equal to about three-to-four percent of annual healthcare costs for Medicare patients at the time of the study.”  As the number of Medicare enrollees grows from 44 million to 61 million over the next 10 years, this represents more than $100 Billion in savings, and hence the number Posit Science is crowing about.

In terms of our Official Ledger, I’m not gonna worry to much about those later years right now…let’s just figure that in the first year there’s 44 million Medicare enrollees each saving $244 per year in healthcare costs.  I’ll credit $10,004,000,000 to the Ledger.  There’s just one thing that’s gnawing at me…oh yeah.  The Brain Fitness program retails for $395 per person.  Looks like we’re going to have to make this one up on the back end…

Youth in Asia: Does your healthcare plan cover it?

According to a July 23^rd CNN.com [TWX] article, a whopping $76 Million could be saved each year if half the people who die from cancer annually had end-of-life conversations with their doctors. (They were quoting from a 3/09 study by the Archives of Internal Medicine, which found that such individuals incurred 36% lower healthcare costs during the final week of life.)  By bridging the disconnect between patient and doctor, such conversations—particulary when held early on—can drastically improve one’s quality of life and lower the cost of care.  It can mean the difference between dying in a hospital, running up bills in the tens or hundreds of thousands of dollars, or choosing “comfort care” at home.  It can mean the difference between “full-scale lifesaving efforts” and “do not resuscitate orders”.  We at Pop Economy! are not surprised by this revelation, considering that nearly 30% of Medicare’s costs are devoted to beneficiaries during their last year of life; a number which has not changed much in the last decade. 

So imagine a proposal which would pay physicians to “counsel elderly or terminally ill patients about what medical interventions they would prefer near the end of life and how to prepare instructions such as living wills.  Under the plan, Medicare would reimburse doctors for one session every five years to confer with a patient about his or her wishes and how to ensure those preferences are followed. The counseling sessions would be voluntary.”  (The Seattle Times, 8/1/09)  Sounds like a pretty innocuous idea, right? 

No—it’s a terrible idea!  It’s been described as “guiding you in how to die,” “an ORDER from the Government to end your life,” promoting “death care,” and, in the words of anti-abortion leader Randall Terry, an attempt to “kill granny.”  House Minority Leader John Boehner, R-OH, and GOP policy-committee Chairman Thaddeus McCotter, R-MI, said they object to the idea because it “may start us down a treacherous path toward government-encouraged euthanasia.”  I hate to think these distinguished gentlemen get their information from Pop Economy! but if they do, I am happy to educate them that Living Wills and Advance Directives do exactly the opposite of that which they fear: they restore choice, dignity, and sovereignty to the individual so that doctors, family, and the State must subordinate themselves to one’s own personal beliefs and final wishes.  However, their ignorance is our gain: we’ll post $76 Million in savings to our Ledger.

Update: Although we were equipped to discuss this issue sensibly way back on July 23rd, unless you’ve been living under a rock you may have noticed the country is in the middle of a Civil War right now over the Alaskan word for doctor: “death panel”.  If you need some comic relief from the angry mobs, I suggest you hop on over to Comedy Central’s take on things [VIA].  It’s a debate between “private death panels” and a “public option death panel”.  Something for everyone!

In the Guinness Book of World Records for the most durable motorcycle frames.

While this is not an update to the Pop Economy! Ledger per se, it has come to our attention courtesy of the July 21st edition of USA Today that you can now be charged with criminal neglect and your kids taken from you and put in foster care if they get too fat.  It’s not so much that I care about the children, but I need my readers to remain un-incarcerated with free wi-fi if this blog is to thrive.

According to the article, one of the problems the State grapples with is that the health problems tied to childhood obesity don’t become chronic until adulthood, which makes it difficult to charge the parents with neglect.  They sound frustrated by this.  Since it’s pretty clear where we’re headed as a society in terms of both obesity and incarceration rates, I’m not sure why we don’t simply cut to the chase and lock-up the both the parents and their newborns as they emerge from the delivery room. (Sigh)

Fortunately, the story may have a happy ending for Jerry Gray, the 14-yr old’s mother.  Showing true American spirit and resilience, the victim is fighting for her son’s health!  She has signed an exclusive deal with a documentary film company.

Update: In an update to my update, I’ve come across a great piece of reading at Time Magazine [TWX], “Why Exercise Won’t Make You Thin,” in which it is postulated that “If you’re more physically active, you’re going to get hungry and eat more.”  Seems common-sensical when you stop and think about it, but most people reach the counterintuitive conclusion: we believe we can burn more than we consume.  Trouble is, in the real world it works out just the opposite.  “In their 18-month study…when kids start to exercise, they end up eating more– not just a little more, but an average of 100 calories more than they had just burned.”  The article is full of fun factoids like that, and it’s worth reading before we start basing public policy on wishful thinking.