Media – focus more on the problems needing solving and less on who wins

The main stream media is doing a better job on focusing on the issues, but they still have a bias toward conflict. Who wins and loses based on the airing of an issue or problem is covered way too much for my taste. The end result is problems and their many causes do not get addressed or are oversimplified, so they go unsolved.

The dilemma is we citizens lose. The focus must be on the issues rather than who benefits from whatever hits a news cycle. Substance matters more than image. Here are a few examples to digest.

We have a poverty problem in the US. It is not just a declining middle class. Too many are living beneath paycheck to paycheck or are one paycheck away from being in trouble. The United Nations just released a report that confirms the US has a poverty problem citing numerous examples and numbers. Instead of asking lawmakers what are we doing about it, the media focused on the Trump administration admonishing the UN for the report. The problem exists whether or not it makes Trump look bad, as it took decades to decline to this point. Addressing poverty is more important.

We have a significant and growing debt problem that has been made worse by the Tax law passed in December. The economy was already doing pretty good with a long growth period. Yet, rather than address our debt, we borrowed more from our future. This malfeasance must be highlighted. Yet, most of the focus is on the economy doing well and its impact on the midterm election. Note the economy would have done well without the tax change, but we have a day of reckoning coming that will require more revenue and less spending. What are we going to do about it now, especially with a good economy?

The Affordable Care Act has needed improvements and stabilization for some time. The American public favors this as do lawmakers from both parties. Yet, the media focuses too much on the political  impact of an ACA that could be doing better. Not only has the party in power not helped the ACA, they have sabotaged it making premiums go up even more. As I see it, the President and GOP own the ACA. Letting premiums go up hurts Americans. If the ACA fails, our poverty problem will get even worse and the economy will suffer.

Issues like immigration, climate change, water shortages, tariffs, exiting international agreements, eg, all need to be focused on. We need to drill down on what makes sense in a data driven and reasonable manner. Attempting to resolve issues based on optics of winning or losing won’t solve anything. And, that is what our President and legislators seem to be more interested in.

So, media please start asking our leaders what they plan on doing about these problems and asking them to explain why certain measures don’t seem to be helpful.  And, leaders stop worrying about keeping your job and start doing your job.

Advertisements

Pope is at it again

Last week, Pope Francis again revealed why he is a global leader. Leveraging the biblical teachings that God wants us to take care of our environment, he reiterated his concerns on climate change to oil executives. Per a Wall Street Journal article called “Pope Francis Criticizes Continued Search for Fossil Fuels at Meeting with Oil Executives,” he encouraged oil executives to find ways to leave fossil fuel energy in the ground. Per the WSJ article:

“’Civilization requires energy, but energy use must not destroy civilization!’ he said at a Vatican climate change conference attended by top executives including Exxon Mobil Corp. Chief Executive Darren Woods, BP PLC Chief Executive Bob Dudley and BlackRock Inc. Chief Executive Laurence Fink.

At the conference, co-sponsored by the University of Notre Dame and featuring nearly 20 speakers Friday and Saturday, the pope said that an estimated 1 billion people still lack electricity and noted that access to energy is an essential resource for escaping poverty. But he warned that a failure to reduce the use of fossil fuels would lead to a ‘spiral of extreme climate changes due to a catastrophic rise in global temperatures, harsher environments and increased levels of poverty.’

The poor ‘suffer most from the ravages of global warming,’ he said, through water shortages and extreme weather which in turn drive mass migration, among other ways.
Pope Francis commended oil and gas companies for adopting policies that account for ‘assessment of climate risk’ and he encouraged the practice of environmentally sensitive ‘green finance’ investment strategies. But he warned that ‘markets and technology’ wouldn’t be sufficient to stop climate change, since our ‘current economic system thrives on ever-increasing extraction, consumption and waste.’

Earlier this year, BlackRock’s Mr. Fink in a letter urged chief executives at global companies to ‘make a positive contribution to society.’ The world’s largest asset manager has played a key role behind the scenes in insisting that companies take action to respond to climate change.

Pope Francis’ meeting with oil executives and investors comes almost exactly three years after the publication of his encyclical Laudato Si’, in which he called global warming a major threat to life on the planet and said it is mainly caused by human activity. In that document, which as an encyclical ranks among the highest levels of papal teaching, the pope blamed special interests for blocking policy responses and indicted the market economy for plundering the Earth at the expense of the poor and future generations.”

With the US President announcing his intention to leave the Paris Climate Change Accord, other global leaders, like Pope Francis are continuing the push. Ironically, Exxon Mobil’s shareholders voted (the day before Trump’s announcement to leave the Accord) to obligate the company leadership to inform them of what they are doing to address climate change. Fortunately, US cities, states and businesses are picking up the baton dropped by the President. The US has passed the tipping point on renewable energy, in spite of the President and his EPA head’s efforts.

Pope Francis should be commended for leading the charge. Taking care of the least of us has been a mantra of this leader. I recognize he is not perfect, but is concern for people and the environment is meritorious. And, unlike Messrs. Trump and Pruitt, the pope is a scientist, with a Masters in Chemistry and has worked as a chemist.

A few more Sunday sermonettes

Happy Sunday. No, I won’t be preaching this morning, but I will be trying my best to speak a few truths.

It easy to blame someone else or some other entity for your troubles. The European Union is not perfect, but has helped many countries through hard times. When they are helpful, country leaders pat themselves on the back. When times are tough, it is nice to have a scapegoat. Relationships are hard work, but countries need to think hard if they want a divorce from the EU before they have the “what do we do now moment?”

Speaking of relationships, the man in the White House tends to have transactional ones. A pundit said he counts few friends saying he touts a “me against the world” mindset. If he keeps on ticking off our allies, this description will be very apt. Unfortunately he will drag the US down with him.

Two of the worst terms in America are RINO and DINO. They mean Republican (or Democrat) in Name Only. They are used by tribal party members as an insult to someone who is not towing the party line. As an unaffiliated voter who has been a member of both parties, I find these labels offensive. We pledge allegiance to the country, not some party. If someone uses this term, do yourself a favor and pay attention to what the target of their labeling is saying. It likely has more veracity than the claimant’s argument.

The United Nations came out with a report Friday defining how Trump’s policies are detrimental to the poor in America. America has a poverty problem that predates Trump. Too many are living paycheck to paycheck and some are even beneath that. This President and Congress’ solution is to give a huge tax break to wealthy people and companies. And, if the repeal of the Affordable Care Act went through, it would have been even worse. America has fallen in the global ranks on upward socio-economic mobility. It matters more to whom you were born than merit in getting ahead.

On a positive note, Costco raised its minimum wage from $13 to $14 an hour and Walmart increased theirs from $9 to $11 an hour. And more states and cities are making planned and new increases. These are steps in the right direction. It would have been nice for Congress to have increased the minimum wage along with the tax decrease which impacts corporations annually. It would have helped pay for some of the lost tax revenue if companies had to increase pay for those in greatest need, plus this money would be spent as they need it more than the 1% group.

Thanks for letting me preach. Any Amens or rebuttals? Other truisms?

Keep these trends in the back of your mind

It is easy to get distracted with today’s news, where “he said what about that” gets way too much press. Here are few other trends that we should keep in the back of our minds. Some are more pressing than others:

  • Drug companies make money by inventing a recurring need and marketing a drug you need to take the rest of your life. Mind you, there are plenty of good reasons to invent new drugs to help, but there are a series of runaway trains being advertised daily. One trend I noticed is the “add-on” drug. What I mean by this is you may be taking a recurring drug for a condition that works just fine. But, the company or even another company comes up with a supplemental drug that makes that drug a little better. Or, in the case of opioids causing constipation, there is a drug to help you with that. Suggestion: Speak with your doctor and do some research.
  • Your data will never be fully protected and safe online. We should do everything in our power to limit what is out there, but hackers are way too sophisticated and diligent. I applaud the security folks greatly, as they are tasked with a hard job. And, as I mentioned in an earlier blog, some apps like Facebook make money selling access to your information. Unless they change that model, your data will be exposed. Suggestion: Know what data you have out there and decide if you want to limit any of it. Do not use wi-fi in public places to do sensitive financial transactions (banking, credit cards, etc.). A security person said using a hotel’s wi-fi is like picking up a croissant off the floor and eating it. Change your passwords every so often, but make sure you can remember them.
  • Bottled water is a threat to our environment and your wallet. There are floating islands of plastic in the ocean as big as some states. If you must buy water, then recycle. Then there is that cost thing. Much cheaper is buying a filtered water pitcher and keeping it filled in the refrigerator. Some major named water sellers simple use purified tap water with additives. So, why not cut out the middle man. Suggestion: Check out how much you spend on bottled water or even soft drinks each month. Filtered refrigerated water (either from your door or pitcher) will save you money and the environment. Plus, if you reduce the number of soft drinks by drinking water, it will do the above, plus improve your health.
  • An authoritarian type leader tends to use a lot of false bravado. It is my view that the amount of bravado is highly correlated with the amount of lying. Think Trump, al Assad, Putin, Kim, Duterte, Maduro, etc. Suggestion:  Take everything said by these people with a grain of salt. I assume their comments are untrue and work back from there. Plus, do your homework and don’t be made out to be a fool. As Mark Twain said, “It is easier to fool someone than to convince them he has been fooled.”
  • Speaking of correlation, larger family sizes are highly correlated with a propensity toward poverty (this one is not just my impression). I read again this morning the solution to poverty is smaller family sizes, yet the source also denies the need for family planning funding. Another variation is there are too many single parent families. Again, family planning helps, but also marriage counseling with 1/2 of marriages ending in divorce. Suggestion: We need to avoid stating obvious problems as if that statement will solve them. We must do something about the problems. Data reveals states that have robust family planning funding have fewer unwanted pregnancies, fewer healthcare costs, fewer STDs and less poverty.

What are some trends you are seeing? Please offer a suggestion as well.

Thoughts for Thursday

Here are a few random thoughts on a rainy Thursday, with more rain to come in the days ahead.

A retired ambassador said recently, the US strength is more than its military, it is its relationships with allies. What concerns me is we are devaluing our allied relationships. This is echoed by the European Union Chairman Dean Tusk. Tusk said the EU must be more united than ever before to deal with what he called Trump’s “capricious assertiveness”. My question is this how we want to be viewed by our friends?

Another retired ambassador to Israel said while he agreed with the move of the US embassy to Jerusalem, the US administration made two mistakes. It should have been announced in the context of moving toward a two state solution. In essence, the US placed little obligation on Israel for this move. Also, celebrating the opening on the anniversary of Israel is an insult to Palestinians. This date is not viewed favorably, so the celebration rubbed salt in a wound.

Assuming the role of ambassador for the disenfranchised in the US, a huge opportunity missed occurred during the rushed tax bill which hugely favored companies and the wealthy. I favored some relief on the corporate tax rate, but we went way too far and are negatively impacting our huge and growing debt. The additional opportunity missed I am referencing is not imposing a requirement on companies to provide raises. One way of doing this would have been a concurrent increase in the US minimum wage moving it from $7.25 to a living wage of above $10 per hour. Token one-time bonuses are actually the barest minimum of what could be done with an annual tax break – how about a raise instead? More income to people in need is accretive to the economy.

Finally, I have seen footage of conservative news sources highlighting Venezuela’s problems as an indictment of socialism. While I am a capitalist, I also recognize our country is a mixture of both. Social Security, Medicare, Medicaid, unemployment benefits, and bankruptcy laws are all forms of socialism. We also have other restrictions to prevent unfettered capitalism. Venezuela’s problems are due to corruption and mismanagement that can be traced even back to the popular Chavez. His successor, Maduro, has shown a level of incompetence that is quite visible to all.

That is all for this Thursday. Please share your thoughts.

US CEO Pay has reached epic differential

As reported in The Guardian today, US CEOs now make in pay 339 times the pay of the average worker according to a Bloomberg study of 225 companies. In retail companies, the ratio is 977 to 1 on average. Let that sink in a little.

A quote from the article entitled “‘CEOs don’t want this released’: US study lays bare extreme pay-ratio problem” by Edward Helmore is very revealing:

“According to a recent Bloomberg analysis of 22 major world economies, the average CEO-worker pay gap in the US far outpaces that of other industrialized nations. The average US CEO makes more than four times his or her counterpart in the other countries analyzed.”

Some people may push back and opine that US CEOs may be worth 4X that of their non-US industrialized nation counterparts. If that were true, it would mean US company performance is 4X that of non-US companies and there would be a huge flight of capital to the US.

In my years as a consultant, I have seen CEO pay ratchet up over time, rewarding CEOs with stock grants and options. What happens is a competitive totem pole exercise, where the competitive pay analyses are upward elastic and downward inelastic (they go up more easily than they go down) over time.

I have also observed the 80/20 rule applies to CEOs as well, with 20% of the CEOs earning their keep. I have worked with egalitarian CEOs, benevolent dictator CEOs and some of the greediest SOBs you will ever meet. Seeing CEOs who realize the teamwork involved in the company making money is admirable. On the converse, seeing CEOs who are imperialistic is off putting. As I write this, I am thinking of the handfuls I worked with and some who were notorious over the years for their greed.

On the bottom end of this exercise are efforts to flatten pay for the average worker. Over time companies will use a variety of rationales and tactics to put lids on pay increases. The salary increase budget may be limited because of the uncertainty in the economy, the company is having some hardship or the company expects to have hardship. Sometimes concurrent with the salary budget, groups of people are laid off. Why is the timing an issue? By moving on lower performers, people whose salary increases would have kept the average percentage increase down are removed from the equation meaning better performers will now get lesser increases.

Coupling this with pressure on not increasing the minimum wage and to diminish the power of labor unions (that is another story), these ratios result. I respect greatly the need for incentives to help reward successful CEOs, but we must not forget who helped them earn those numbers.

We have a poverty problem in this country. We have a middle class where too many are living paycheck to paycheck. Yet, our leaders passed a tax law that benefits CEOs, their companies and the wealthy by a large margin. It would have been nice to have at least obligated the pass through of salary increases or an increase in the minimum wage to a living wage. So, do not expect this ratio to measurably decrease any time soon.

That healthcare thing

In more than a few surveys, the majority of Americans have noted that healthcare is a key dinner table issue. In several surveys, shoring up and stabilizing the Affordable Care Act (ACA) is preferred by a smaller, but still majority of Americans, than its repeal.

With a background of being a former benefits actuary, consultant and manager of benefits, here are a few facts and observations that I encourage you to research and verify.

– The ACA borrows from a Republican idea implemented by Governor Mitt Romney in Massachusetts which was advocated by de facto Tea Party leader Senator Jim DeMint for the whole country. Some elements can be found in a healthcare idea of Senator Bob Dole when he ran for President in 1996. These are reasons Republicans had a hard time with other ideas to repeal and replace it.

– The ACA is designed to require employer and public plans to offer certain minimum level benefits. The non-employer benefits are delivered through healthcare exchanges of policies and the expansion of Medicaid for people near or in poverty (32 states and the District of Columbia elected to do this).

– The biggest benefits of the ACA are guaranteed issue and renewability of coverage and the premium subsidy for people with incomes up to 4 x poverty limit. If you or a child has a preexisting condition, guaranteed issue and renewability are huge benefits.

– The botched roll out of the online exchanges sits at the feet of President Obama. For this to be such an important issue, it deserved better planning. The online exchanges are doing much better now, but you don’t get a second chance for a first impression. And, this poor roll out was used as fodder to nay-say the program, even though the problems were fixed.

– The ACA has experienced higher premiums due to adverse selection (pent-up demand and more high risk than better risk customers), but it is frustrating that the Republican Senators and President have masked their role in making premiums even higher. Senator Marco Rubio led an effort to strip 89% of the funding to insurers for initial adverse selection a couple of years ago and President Trump stripped out funding for co-pays and deductibles for lower paid people last year. Both of these changes cause premiums to increase even more than they otherwise would have.

– The lack of expansion of Medicaid in 18 states means the ACA is still not fully implemented. Per The Commonwealth Fund, this implementation would help people, rural hospitals and state economies. GOP Presidential candidate John Kasich called Medicaid expansion a no-brainer when he did it in Ohio as Governor.

The ACA is not perfect, but it is working OK. It could work even better if it were stabilized and improved. Taking away the mandate will be harmful and cause premiums to go up even more. What troubles me in our zero-sum game of politics is we are foregoing improving an imperfect law, which we have done countless times before on major changes. The way I see it, Congress and the President own this law now. If it fails, people should look to them asking why did they let it happen. This impacts people.

I have mentioned before several changes to consider. National healthcare is not going to happen in our country as it is too political and the healthcare industrial complex is strong. Yet, I advocate expanding Medicare in a targeted way down to age 62 (or maybe 55). Unlike the more complex Medicaid, Medicare actually works pretty well and strips out the profit load embedded in insurance premiums. This will reduce exchange premiums and Medicare premiums, as it makes both audiences younger on average.

I think we need to reconstitute the adverse selection and co-pay subsidies to insurers. The federal government needs to repay insurers they stiffed and invite insurers who left back into the exchanges. I would also recommend the remaining states expand Medicaid and I would add back the mandate for coverage, even though this feature is unpopular. If there are areas where competition is not significant, select use of Medicare (or Medicaid) could be deployed in those counties.

There are other changes that should be considered, but we need to shore this thing up. Congress and Mr. President, the ball is in your court as well as the legislatures for those eighteen states.