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  Said Joseph Cryan, the Assemblyman who first proposed the tax and now wants it repealed, “We essentially discouraged the business from happening at all.”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.

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.)

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!

This product strengthens the father-son bond. Presumably, some people have a problem with this.

Obama signed a new tobacco bill into law this week aimed at keeping kids from taking up the habit (Altria, RAI), and could there be a better posterchild than the President?  But nowhere in the press coverage did I find hard numbers telling me what it would save America economically.  Luckily, the folks at ProtectTheTruth.org have given us a clue: researchers from the Johns Hopkins Bloomberg School of Public Health (as published in the AJPM, 2/12/09) ran a cost-utility analysis on the national truth® campaign to prevent teen smoking.  They found that the $324M spent on the program between 2000 and 2002 recouped $1.9B in medical costs averted for society.

Bolstered by these findings, the ProtectTheTruth Commission believes that if the truth® campaign were to continue “for another five years (2009-2014) with similar effectiveness, there will be up to 500,000 fewer youth smokers with savings of up to $9.0 billion in future medical costs.”  Good enough for me– it’s going into the ledger!

But it got me thinking, this thing’s a cash cow– the more we put in, the more we recoup!  The only conceivable limit is Read the rest of this entry »

Factoid: with $250 Billion you could build 1,497 "New Comiskey Parks" or buy 6.3M pairs of "mom jeans".

“The federal government would reap about $250 billion a year if it treated healthcare benefits given to employees like wages and taxed them.”  If you receive employer-provided health insurance (not that you do, right? AFLAC sells ducks as far as I know) then this is probably of interest to you.  Technically this is something which is just “on the table, it’s an option,” according to Senate Finance Committee Chairman Max Baucus (D-MT), and it does skew a little more heavily towards the “Economy” side than the “Pop” side which I favor on this site.  Still, a boy can dream, can’t he?  I’ll keep an eye on this story as it develops and if it looks like it’s going down, I’ll remove it from the ledger.  We’re raising money hand-over-fist at this site anyway, and hardly need to tax healthcare benefits to raise a paltry $1.1T!  Washington, are you paying attention?

Medicare is so deep underwater AARP believes at the very bottom they'll find a treasure chest.

“If we could develop a care plan to support patients when they return home, we could save $17.4 billion in one year.”  The kernel of this story comes from a study which found that more than 20% of New York seniors were re-hospitalized within 30 days of discharge between 2003 and 2004. On the face of it you’d think they’re off to a good start because re-admissions seem like a preventable form of waste.  The problem here is that further scrutiny of the story unveils a classic AARP agenda of broadened Medicare benefits, including an expansion of the Part D Prescription Drug program.  This for a program which is already staggeringly underwater to the tune of $89 Trillion (with the letter T) in unfunded liabilities.  Even Pop Economy! can’t find that much scratch in the seat cushions.

Energy is an unpopular product with few customers, so it's unfortunately not possible to make money selling it legally.

“Tax evasion by the rich costs the rest of us more than $40B a year.” Although promoted as a plan to crackdown on tax-dodging corporations, wealthy individuals also hide millions in accounts from Switzerland to the Caribbean.  Obama’s proposal is is said to save between $40B and $70B, but I’ve quoted on the conservative side, since the proposed rules also account for hiring 800 new IRS agents and that’s going to offset some of our Pop Economy! savings.

Update: According to this August 20th report, the U.S. and Switzerland have reached an agreement in which banking giant UBS has agreed to turn over to the IRS details on some 4,400 accountholders suspected of hiding undisclosed assets (out of an estimated 52,000 depositors who are likely in compliance).  The key now is amnesty: “The IRS long has had a policy that certain tax evaders who come forward before they are contacted by the agency usually can avoid jail time as long as they agree to pay back taxes, interest and hefty penalties,” which is why they are expecting a stampede!