Category Archives: Current events

Minimum Wage: Be careful what you wish for, you might just get it

Last Friday a group known as “Fast Food Forward” (tightly affiliated with the SEIU union) led a series of demonstrations in over 100 US cities at fast food restaurants where they called for a near doubling of the federal minimum wage to $15/hour. In further news there were a number of similar demonstrations in which short people demanded to be declared as tall, the overweight demanded to be declared as thin, and the un-athletic to be declared as athletic. Oh, wait, that last bit didn’t actually happen. Sure would have seemed silly if such events had taken place wouldn’t it? Well, if you can see why a “raise the federal minimum height” rally would be silly you’re on the first step to understanding why calls to increase the minimum wage are equally absurd.

A wage is nothing more than a point system used by each of us and applied to all of us that allows us to rate how valuable we find each other’s labor. This value assessment is however tempered by the immutable law of marginal utility: the more there is of something, the less we value any one unit. Water is the most valuable material on the planet (as our day to day survival depends on it) but it sells at a mere 0.7¢ a gallon (from the tap) because of its abundance. Likewise, in any given profession, the more people capable of doing a job, the lower the wage for that job. The wage is lower, you see, not because the buyer (employer) is deciding what it shall be, rather it is the result of the numerous sellers (employees) bidding prices down in order to make the sale. If your wage is lower than you’d like, don’t blame your employer, blame your peers and yourself. You can blame your peers for being willing to work for less than you. You can blame yourself for not improving your skills or productivity so that you can distinguish yourself from your less productive brethren and thereby demand a higher price for your services. To blame your employer for paying you minimum wage when you would prefer to have double that wage is as silly as the shop owner blaming his customers for not buying his wares and opting instead to purchase from his competitor who charges half as much.

If workers latch onto sympathetic politicians (interested in buying votes) who pass laws that raises their wage then the employer is still free to explore all options that might get the job done for a lower price. Minimum wage law does not require employers to buy the product (labor), only that if they do buy the product they must pay at least the floor price. Thus enters the specter of automation: a machine that is economically unviable when competing with low wage rates will suddenly make more economic sense at much higher mandated wage rates. Those looking for a minimum wage increase are going to price themselves right out of the market. The truth of this statement is already evident today in the growing trend of automated self-checkout systems becoming commonplace. In a few years we may find the concept of a human cashier as alien as a full service gas station (and if you don’t know what “full service” at a gas station means, then all I can say is: point made.)

Whenever there is a call to raise the wages of this or that class of worker (whether it be fast food workers, teachers, or police or what have you) there is a major insight that is always lacking by those making the call. They believe that if they get what they desire they will be the ones to enjoy the higher wages. But they are mistaken. It is the more highly skilled and more productive worker that will replace them. The less productive or skilled worker can’t compete with the highly skilled worker if the mandated wage is set at the productivity level of the more skilled worker. Would you buy a Kia or a Mercedes if the minimum car price were mandated to be $70,000? Bonus question: what do you think would then happen to the Kia car company?

Leave my Genes Alone

The aphorism “No good deed goes unpunished” has its counterpart when applied to business, “No good innovation can remain unscathed by the FDA.” To wit: last week the Food and Drug Administration all but ordered the company 23andMe to shut down. Their crime? They have the unmitigated gall to market their Personal Genome Services without having received prior “marketing clearance or approval” from the FDA. Those silly saps at 23andMe forgot they have to kiss the ring of their overlords if they wish to operate a business in this country.

For those unfamiliar, 23andMe sells a $99 genetic testing service wherein a customer submits to them a saliva sample that the company then performs a variety of genetic tests on in order to reveal any potential health concerns (e.g. the presence of genes predisposing one to certain types of cancer or sensitivity to certain drugs, etc.). The tests can also reveal hereditary information to provide one with possible ancestry background as well. All of this is wrapped up in a pretty slick website (that actually works!) that allows the customer to explore his or her results. They’ve basically turned something rather dull and boring (medical testing) into an exciting process of discovery that is actually affordable. With that said, the processes and testing they employ are all well vetted industry standard type testing procedures. They are simply taking existing technology and repackaging it into an easy to understand and affordable package in order to make it available to a much wider cross segment of society.

So what is the FDA’s beef with them? It’s basically semantics. You see, when either the FDA or EPA gets involved with business then all common sense goes out the window. Water becomes an insecticide and aspirin a dangerous drug. A fanciful example will help illustrate: screwdrivers are used to turn screws, and so they can be sold to turn screws, no problem. But if you now decide a screwdriver can also be used to poke holes in things or to act as a tool to pry something open and you wish to market it as a “device for poking holes or prying”, then you are now guilty of selling a “mislabeled and misbranded” product because you have not engaged ABC federal agency to plead for approval of this new application of existing technology. You will need to submit studies and analysis demonstrating that the screwdriver can indeed do these things.

That’s basically the hole 23andMe has fallen into. The FDA is concerned that they are marketing a process in a new and therefore unapproved way and they are also concerned that consumers of this service are incredibly and remarkably stupid. The FDA believes that if someone gets a false positive from one of 23andMe’s PGA tests that naturally that someone will simply take immediate and drastic actions without any kind of follow up testing or consultation with their physician. If a woman finds she has the breast cancer gene, well, she’ll just get a double mastectomy, no questions asked. If someone finds out they are prone to blood clots, they’ll just go out and start eating rat poison (the blood thinning agent warfarin is found in rat poison) in order to self medicate. Yes, as absurd as these concerns are, this is what the FDA is trying to protect us from. Of course never mind that 23andMe has very large and obvious warnings on their site that one should always consult with one’s physician before taking any steps based on test results.

So, at the height of concern in this country about rising medical costs a company steps up to the plate, provides a low cost non-invasive test that affords the customer the ability to proactively manage their health thereby preventing future costs. And how are they rewarded? The FDA valiantly steps in to all but put them out of business by forbidding them from marketing their product. Smart. Really smart. It is through actions such as these that the FDA has caused and will continue to cause far more pain, suffering and death then they have ever prevented.

Obamacare Kills the Family Farm

Obamacare is poised to put the family farm out of business. Although not directly applicable to the food industry, it has spawned sibling legislation whose ends are aligned with the Obamacare mandate of lowering health care costs for the nation – by any means necessary. Toward that end the “Food Safety and Modernization Act” was passed in 2011 which has now spawned a new round of FDA rulemaking known as proposed rule “Current Good Manufacturing Practice and Hazard Analysis and Risk-Based Preventive Controls for Human Food.” The primary stated goal of this proposed rule (according to the FDA) is to “reduc(e) the public health burden of foodborne illness associated with contaminated produce.”  A worthwhile goal, I’ll grant that. However setting aside for now the question of constitutionality of a federal agency laying down rules to govern activity that is wholly intrastate in nature, there are a number of problems with both the implementation, results and costs associated with this end goal.

Some of the more absurd components of this proposed rule include (a) WEEKLY testing of water “before it touches the surface of any fruit”, (b) where manure has been spread one must wait 9 MONTHS before harvesting, and (c) the maintenance of DAILY clipboards of records of every event that takes places on the farm related to food production. As with any regulation there is a cost involved. Irrespective of the industry it is always the large entity that has the advantage relative to its smaller competitors in terms of bearing the additional costs of new regulation. Therefore it should come as no surprise that this proposed rule would have the effect of putting many small farmers out of business (there are exemptions for “small” farmers, however these merely delay the timeframe of implementation). But don’t take my word for it, you can read the comments of such farmers themselves at the FDA’s comment site.

Now at this point the progressive may be protesting, “But, but, this rule will save lives and if some small farms must be sacrificed to achieve that goal then as long as the greater good is being served this is an unfortunate side-effect.” Although seeing as how most progressive types are proponents of buying locally grown produce (itself not a bad concept) I imagine their heads will explode when they realize this “greater good” will have the net effect of putting so many small farmers out of business it will all but kill the “buy local produce” industry.

Even by FDA’s own best estimates this rule would potentially reduce the incidence of food borne illness by 2-5% (i.e. save no more than 67 lives per year or about $14 million per life). And while I would gladly spend $14 million to save the life of a loved one, I don’t have $14 million nor do I (or anyone) have the right to use government to fleece my neighbors pockets for that $14 million on the off chance it might save a life I care deeply about.

The emotional response of “we can’t put a value on a human life” runs afoul of the economic law of diminishing returns. Whenever a brand new type of regulation was introduced (pollution, car safety, etc) we witnessed massive improvements – because nothing existed before that (not that such regulation was necessary however, seeing as how these types of regulations were merely a response to prior government induced market distortions). As a hypothetical example, seeing that $1 billion in regulatory costs reduces deaths from 1 million to 1 thousand legislators naturally will assume even tighter regulations costing another $1 billion will do the trick – but it doesn’t work like that. Those new regulations reduce deaths to only 900, another billion to 850 and so on. The low hanging fruit was picked with the initial round of regulation; the minuscule amount of fruit at the top takes exponentially more effort to pick.

Ok, fine, you may say, a human life should not have a dollar value attached – we should spend and spend to stop all deaths. Although publicly we may profess such sentiments, our actions speak very differently. If our safety were paramount to the exclusion of all monetary and non-monetary costs then we would either choose to drive at 1 mph at all times or spend hundreds of thousands of dollars to drive a military grade armored tank. But we don’t do that because safety is a luxury and we can only afford luxuries to the extent we have produced above more than the bare essentials. This, by the way, is why human conditions were so much less safe years ago and are so in third world countries today – not due to any lack of government oversight but rather due to lower productivity, which puts luxuries (such as safety) out of reach. So although we are bound by our productive capacity when determining how much we personally want to spend on safety, government knows no such bounds. Whether it might cost $100 billion or $100 trillion to potentially save one life is of no concern to those that bear none of the costs.

Marietta Braves?

Unless you are a baseball fan or local politics wonk you may have missed the big news last week: the Atlanta Braves will be leaving Atlanta for greener fields in Cobb County beginning with the 2017 season (speculation has already begun whether they will change their name to the Marietta Braves). This move has created a teachable moment concerning bureaucrats who credulously believe they can derive a net benefit by subsidizing the profits of private business via the public tax trough.

The particulars of this prospective Braves relocation are rather interesting in light of the epidemic of head-in-the-sand disease that is sweeping through Cobb County government. The Braves have released an infographic that details the massive extent to which Cobb County will be bribing, err, supporting them. The Cliff Notes version is this: Cobb will cover 45% of the overall $672 million cost of the project through a mix of new and increased taxes amounting to $18 million per year over the next 16 years. This tax expense will however be offset by increased local retail spending that will bring in an (estimated) whopping additional $89 thousand per year in sales tax revenue. I don’t know, maybe I’m being unfair: Would you pay $180 a year for the opportunity to possibly earn as much as a cool 89¢? The math for this deal just does not work. Cobb County would have to realize an ADDITIONAL $1.8 billion in retail sales just to break even. Given that the current total amount of retail sales in Cobb County is $2.1 billion that seems a bit of stretch to imagine that a mere baseball team could nearly double the entire retail economic output of the county.

There is nothing wrong with the Braves relocating to wherever they desire. However, they should bear 100% of the cost of their relocation speculation. It’s lose-lose for the taxpayer. If the move goes well for the Braves then the taxpayer has paid for something the Braves could have paid for themselves. If the move goes poorly then the Braves are shielded from the effects of that bad decision via the taxpayer picking up nearly half the tab. Some will invariably argue that the local community should bear some of the costs to lure the Braves to their neck of the woods because the local community will indirectly benefit. To accept such a flawed argument one must also accept the premise that Walmart should likewise demand to be subsidized by other businesses nearby because those businesses will derive increased traffic owing to the “anchor” location of the Walmart. Everything each one of us does will conceivably benefit someone else indirectly. This argument, taken to its logical conclusion, demands that we should all attempt to extort money from our neighbors before we do anything.

But, we can’t really blame those in charge over in Cobb County for making such absurdly wrong-headed decisions; they are simply following precedent. Those who can think, think, those you can’t, follow precedent. Local (and national) governments have been hooked to the same economic voodoo for decades. They wish/hope/believe that if they offer up financial support to a private business looking to relocate within their territorial boundaries that the potential increased economic activity will provide a net benefit to them and their constituents. Unfortunately wishing for something doesn’t make it so. In fact there has never been a situation where such subsidization has bore net economic fruit. So why do governments keep making the same mistake over and over? Because government has no feedback mechanism to correct their mistakes. There is no profit and loss test. If they subsidize some boondoggle and it doesn’t pan out (a loss), oh well, the taxpayers will still have to continue paying for it for years after the private entity they were subsidizing is gone and those elected officials have left office. Government legally can’t go out of business, so they are free to make the same mistakes over and over. The people may “vote the bums out”, but the institution remains. The aphorism “Those who fail to learn from history are doomed to repeat it” is nowhere more true than with government.

Where’s the beef? Sorry, it’s been banned.

This past week the FDA proposed an outright ban on artificial trans fats in prepared foods.  Trans fats occur naturally and artificial ones have been used for decades in foods. As a foodstuff they are safe insofar as they don’t make you sick upon ingestion and have known physiological benefits in proper amounts (and known harms if consumed to excess, which is the case with all food components). The FDA is not banning some new dangerous unknown substance. They are banning something that has, in large part, already been voluntarily reduced in the past few years to the point that average US consumption of trans fats is now half of what the American Heart Association recommends as being safe. So if it’s already hardly used, where’s the harm in a ban you might say? Setting aside the ethics of the ban, the direct type of harm that can be envisioned would be a situation wherein the use of trans fat solves a problem for which there is no good substitute. Furthermore any substitutes might very well themselves be more harmful than the trans fat. That’s called “unintended consequences” and occurs with every single government mandate ever issued.

Some examples where trans fats are used include cake frosting, microwave popcorn, frozen pizzas and various fried foods. These are mere treats, things eaten a handful of times in a month if even that (how many cakes have you eaten in the last month?). But given the government’s penchant for quixotic battles against virtually riskless activities (trillions of dollars spent fighting terrorism even though jaywalking kills more people each year than terrorism) it should come as no surprise that Uncle Sam would relish the role of micromanaging the minutiae of our lives (“exactly how many calories are in the candy bar sir?”).

Lifelong dependency of the citizen ensures eternal power for the state.

 

There is nothing wrong with the FDA educating the public about the healthiness or lack thereof of certain kinds of foods (although forcing the public to pay for such education through taxation rests on ethically dubious ground). However, the outright banning of this or that substance crosses a line. The metric upon which prohibitions have been based (such as drug prohibition, however ill conceived) is one of “imminent harm”, i.e. if someone is about to jump off a bridge we can plainly see their free will is immediately deleterious to their own well being therefore one could argue intervention is justified. However, the bar has been moved from “imminent” to “eventually possible” i.e. should we tear the bridge down so as to make it impossible for anyone to ever jump off it? Should we now ban every conceivably risky activity?  If so, that’s going to be a mighty long list! Nearly every action in our daily lives carriers some level of inherent risk.

The FDA’s justification for this ban is a mere estimate (i.e. best guess) that it will result in 20,000 fewer heart attacks and 7,000 fewer deaths each year. The rationale is of course the “Greater Good” argument. This ban will naturally lead to lower health care costs for the nation. Why stop there? Perhaps the FDA could implement other policies that have the net effect of lowering health care costs. Perhaps they could ban foods that naturally contain trans or saturated fats (all meat, cheese and dairy). Next they could ban all foods that are not considered to be “healthy” (according to the whim of whoever happens to be in power at the FDA). These directives would surely save more lives, so how can one object? Eventually the government could require all citizens join a gym and exercise each day… because this would lead to fewer deaths each year… so how can one object? Oh, and what of those that refuse to do their quota of exercise? Well, we’ll just levy a fine, err, I mean tax on those that refuse the directive of the collective.

This trans fat ban is just the first step in sacrificing the individual on the altar of the collective state. If you agree to take what the collective offers (free or subsidized health insurance), then you must submit to having your life directed by that same collective. Children accept the care of their parents and thus are obligated to follow their rules. Likewise government demands we follow their rules because they view us as but children. Lifelong dependency of the citizen ensures eternal power for the state.

Lost in translation

Like millions of Americans you probably have received a letter like this (see below) from your health insurance provider (for both individual or group plans). As the farmer said to the pigs about to be slaughtered, “We’re going to be transitioning you to an environment free of worldly concerns.” Reading between the lines can often be critical to our own well-being, therefore, in that vein I shall endeavor to offer a translation of the following:

 Dear Subscriber:

The federal Affordable Care Act (“ACA”) has been changing how Americans get their health care coverage. The next big step begins in 2014. For many individuals like you with coverage through their employers, it includes important changes to coverage.

 ACA requires us to make significant changes to our health benefit plan designs. We have redesigned our entire employer portfolio to include new health benefit plans that comply with 2014 ACA requirements.

 There is nothing for you to do at this time. Your employer’s existing policy will continue until your next renewal. We are unable to renew your employer’s existing plan in 2014, but your employer can purchase any of our new plans with the 2014 ACA requirements for your coverage.

 We value you as a member and look forward to a long-standing relationship with you.

Sincerely

Health Insurance Company

 

Dear person-now-required-to-buy-our-product-under-penalty-of-law,

Obamacare has transformed a government manipulated healthcare market into a government controlled healthcare market. Unadulterated fascism rears its ugly head once again in America in 2014 (fascism = state control of a putative private market). For those of you who already get insurance through your employer, the paltry level of choice you used to have will be whittled down to next to nothing.

Obamacare requires us to add on coverage options we formerly begged you to buy but now you are forced to buy, therefore we have the perfect excuse to inflate premiums as high as possible. Apparently Nancy Pelosi thinks you are too stupid to make your own decisions when it comes to buying health insurance, therefore she has empowered bureaucrats to make those decisions for you. Do not fret gentle citizen; you will be well cared for in Obama’s gentle bosom.

You are helpless to avoid this, so sit back and enjoy the ride. You have a few months left to see your doctor before multi-hour waiting room camp-outs and month long waiting lists for medical procedures turn the US into Canada 2.0. We are unable to renew your employer’s existing plan in 2014, but that’s just fine with us because we’re content to get in bed with the government and be more tightly regulated if it means we will be guaranteed a steady stream of customers and profit. Crony capitalism and fascism is what made this country great after all!

We value you as our cash cow and look forward to milking this relationship for all its worth until either the federal government collapses under its own weight or the American public becomes so irate that they finally elect people that will remove all government influences from the medical market so that prices can naturally fall until medical insurance is no more costly than auto-insurance.

Sincerely

Health Insurance Company (a wholly owned subsidiary of the Federal Government, Inc.)

One Banana, Two Banana …

As the political pundits and state apologists breathed a sigh of relief over last week’s deal in Congress to end the government “shutdown” a subtle wrinkle in this deal went largely unnoticed. But this wrinkle, like the proverbial butterfly whose flapping wings results in a hurricane, sets the stage for the transformation of the American Empire into a banana republic and with it the ultimate collapse of that empire. How could this go unnoticed? As with all new government initiatives it is cloaked in the innocence of being “temporary.” As the astute observer of history Milton Friedman once observed, “there is nothing so permanent as a temporary government program.”

The deal that was rushed through Congress last week is, like Obamacare, now withering under the light of public scrutiny of those very details our overlords wished to keep hidden. Although laced with several “special deals” in order to buy the votes of particular congressmen, this deal carries with it something far more sinister than the usual run of the mill horse trading. It carries with it the “temporary suspension” of the debt limit until February 7, 2014. What does that mean in practical terms? Quite simply that the US Treasury may issue an unlimited amount of debt between now and February 7. They could issue treasury bonds for tens of trillions of dollars if they wished and it would all be nice and legal. Now is it likely they will do that? Not really. That is not the source of the hidden danger. The real danger lies in the fact that this “temporary” suspension of the debt limit will never end. This is because through procedural gamesmanship this component of the deal was added in such a way that it will take a two-thirds (!) majority of both the house and senate to reverse it. Considering both sides of the aisle are too craven to face the hard choice of reducing spending or increasing taxes you can lay down good money on the fact that they will never vote against something that would require them to ultimately face that quandary of a decision.

So although there will still technically be a debt-limit on the books, it will for all intents and purposes not exist since all who are bound by it have agreed to simply ignore it. Once this new reality becomes the status quo there will be absolutely NOTHING holding back Congress from spending as much as they desire. As they further inflate the currency through more and more debt creation, prices will rise year after year. This will further devalue the purchasing power of the dollar. Eventually, one day soon the United States’ largest creditors (foreign governments) will decide the US dollar is simply not an asset worth holding (would you continue to own a stock whose price dropped every year?) and will cease buying US Treasury debt and will also begin selling the debt they do own (further plunging the value of the dollar). Once that happens it will be declared a “crisis” by those in power who will once again clamor for a “temporary” suspension of even the most tenuous of rules that support the façade of separation between Fed and State. Currently it is illegal for the Federal Reserve to directly purchase US Treasury bonds (although they can do so indirectly through “the market”). However if no one is willing to buy our debt that leaves just one customer standing: the customer that has the legal monopolistic right to create counterfeit money out of thin air – the Federal Reserve. Once the Federal Reserve is “temporarily” permitted to begin buying US Treasury debt, that will be the last nail in the coffin of the American Empire. History has taught us clearly time and time again that once a government starts printing its own currency with no restraints of any kind, hyperinflation is not very far behind.

Perhaps this might seem like hyperbole to some, however if we combine the lessons of history along with our current government’s unwillingness to cut spending and face the economic failures of their socialist inroads into our economy (i.e. subsidization of ANY economic activity) there is simply no other plausible outcome. So get ready, the roller coaster is poised to plunge straight into the ground. And it all begins not with a “bang” but a mere unnoticed whimper.

The Giving Tree of Debt

It’s that special time of year once again – The Giving Tree in Washington DC sheds its last few monetary leaves as fall approaches. The congressional summer recess has left the tree starving for the one thing it needs to flourish and produce those precious greenbacks: BS. As the pontificating blowhards in Congress resume their duties there is once again a renewed hope that The Giving Tree will be restored to health via the abundance of manure spewed forth by inept congressmen and a credulous media who act merely as an amplifier for Washington inspired propaganda.

That’s right, it’s time to raise the debt ceiling. I could write an entire book on what is wrong with the system (although there is little need to do so as Tom Woods’ “Nullification” leaves no stone unturned in that endeavor) and why we are in the mess we’re in. However, space constraints compel me to simply address the two most salient points of disinformation making the rounds of the mainstream media outlets.

Fallacy 1: We have to raise the debt ceiling because we as a country are legally committed to making good on all financial obligations made by our government. It’s like agreeing to pay your credit card bill after you charged the goods on it.

FALSE: No, no, no (sound of head banging desk). It is not at all comparable to agreeing to pay your credit card bill (i.e. committing to purchases AFTER funds are secured). The more apt example would be signing a contract to buy a house BEFORE you have secured the ability to pay for it and then going to the bank and demanding a loan because you “have made a commitment buy the house.”  Clearly, the only result of raising one’s credit limit every time one goes over said limit would be to instill an overriding sense of restraint and fiscal responsibility. Even if one subscribes to the flimsy moral precept that one has a duty to repay financial obligations made by total strangers who happen to reside in the same geographical region as yourself, one must agree shifting the burden of that repayment onto one’s children is the act of a coward. If you believe we have this obligation, fine, then don’t use debt to pay for it, use taxes – raise them through the roof. Because were the present generation to bear the full financial burden of the government programs they pine for they would quickly come to realize they are not so necessary after all.

Fallacy 2: If we don’t raise the debt limit then the US government will be in default and (insert scare tactic) that would undermine confidence and collapse the financial markets.

FALSE: This is the same line of fallacious reasoning employed by Obama when he compared the only possible outcome of not raising the debt limit to being equivalent to a homeowner simply deciding to not pay his mortgage. So apparently the concept of prioritization has never occurred to Obama? Naturally if one has a pay cut or loses their job their first instinct is to cease their mortgage payments so that they can continue paying their cable bill and manicurist. Duh, no, you prioritize and pay your food, housing and utilities first, then you cut off all non-essentials remaining. So if the projected 2014 budget were $1 we see that the government now collects 84¢ in taxes and can pay out 67¢ to fully fund all debt interest, Social Security, Medicare, Medicaid and defense payments. Yes, the remaining 33¢ of spending would have to be economized over the 17¢ of remaining revenue, but the point is it would not be the “essential” obligations that for some bizarre reason are perennially assumed would hit the chopping block first.

Continuing to give the addict money because you’re afraid he won’t buy food provides him no incentive to end the addiction because it insulates him from having to make the choice between the addiction or eating. With the money he can have both. Without it, a choice must be made.

Barricading Liberty

“We’ve been told to make life as difficult for people as we can” said a National Park Service Ranger in Washington, DC recently. The revelation of this directive has only served to add more color to the canvas of a feckless presidency. What sort of leader seeks to augment, rather than minimize, the impact of a deleterious event upon those he putatively serves?

“We’ve been told to make life as difficult for people as we can”

The behavior of the Obama administration during this current government “shutdown” is reprehensible and petty. The deliberate closures of a number of “public” parks – un-manned, un-ticketed, open air parks mind you – says more about Obama than any of his self-serving oratory. These are the actions of a petulant, spoiled child. He’s not getting what he wants (unconstrained limitless federal spending) so rather than leading (engaging in and brokering a meaningful dialog between both sides) he’s lashing out at the very citizenry he is supposedly serving by using them as pawns in a game of Congressional chess. Obama and his minions are well aware that most of what the federal government does on a daily basis does not impact the public in any obvious manner. The longer the shutdown continues unnoticed by John Q. Public, the weaker his position becomes. Therefore, to strengthen his hand he must make the public squirm as much as possible, even if that means spending additional funds to pay people to barricade open-air facilities that cost nothing to keep open (bike lanes, children’s playgrounds, unmanned parking lots, etc). Even virtual resources such as websites and Twitter accounts have gone dark despite the fact that they are either free or already paid for. But the “shutdown” of public resources was not sufficient. They are now deliberately blocking access to private businesses as well because they happen to be leasing government owned buildings. These businesses make the government money (leases). They do not cost them money (Pigash Inn in North Carolina is just one example). That’s like quitting your job because you ran out of money – it simply defies all rationality! And then there is poor George Washington; he must surely be spinning in his grave because even his house (Mt. Vernon Museum) was shut down by Mr. Obama! Why? The parking lot for the facility is jointly owned by the Mount Vernon Ladies Association (the private owners of the Mt. Vernon facility) and the National Parker Service (NPS), so apparently the NPS felt it necessary to barricade an un-ticketed and un-manned parking lot that the NPS bears no daily cost to operate. How long will it be until Obama orders all US interstate highways shutdown as well?

These actions have revealed an essential truth of a state run society: there is no “public” property. There is only the property of the Royal Court – the federal government that is – and the king (Obama) may do whatsoever he pleases with his property. If he doesn’t get what he wants, then just as a petulant child would, he will pick up his ball and go home. Or rather, he’s going to barricade off the playground so no one else can play either.

The strategy here is of course plain to see. If he can’t pressure Congress, then he can pressure the public by taking away those things the federal government has so graciously bequeathed to the “people”. If the people value them, then they should rightly be mad at Congress for forcing their poor king to take away their goodies. Fortunately most people are not this blind to his manipulative strategy. In perhaps the best publicized exampled, the day the shutdown began the NPS barricaded the WWII memorial in Washington DC, preventing numerous veterans from visiting the site. However, the veterans were not so easily intimidated. These dauntless men pushed the barriers aside and again demonstrated their strength of character. Character that, ironically, is honored by the very memorial this President strove to separate them from. By fighting the will of past and present tyrants they have set an example for us all. If we value our liberty, then we have a duty to overturn both the barricades to liberty and those that would erect them.

Counting, Government Style

As Obamacare looms nigh small employers such as myself who are near the margins of the 50 employee threshold of being an “applicable large employer for Section 4980H” have found it necessary to waste time and money just trying to figure out if we have reached that threshold or not (and yes, we already provide health insurance). At face value it seems like this should be simple enough: just count. But as with most things generated via government bureaucracy nothing is ever as simple as it seems. The statute is filled with ambiguous and undefined terms such as “stability period”, “measurement period”, “standard measurement period”, “upcoming stability period”, “safe harbor”, and so on. I’m actually trying to comply with this nightmare of a law but even our accountants admit some of the questions simply can’t be answered yet. Typical government: “Here, comply with this” – “Ok, how do I do that?” – “We haven’t decided yet, but don’t worry, if you get it wrong we’ll let you know with a fine.”

For example, there are two calculations that must be done. The first determines how many full time employees there are and the second determines how many “full time equivalent” employees there are. However a full time employee is only eligible to be measured as such if they are considered to be an “ongoing employee” (meaning they are employed for at least one “measurement period”). But… if they become full time during the measurement period or otherwise have a status change then there is a whole different set of rules for counting them – except those rules have not yet been issued (insert picture of chimpanzee with pencil scratching his head).

Assuming we have figured out who the “ongoing employees” are, we are now ready to determine if they are part time or full time. This calculation procedure all too predictably betrays the fact that whoever came up with it clearly has never worked in the private sector. They are laboring under the delusion that employees are paid on a calendar monthly basis as opposed to a weekly or biweekly basis (perhaps because governments reserve to themselves the exclusive right to pay monthly – that practice is illegal for private employers). “Fine”, you may say, there are 4 weeks in a month, what’s the big deal? Well, in fact, no, there are not 4 weeks in a month – there are up to 4.42 weeks in a month. So we cannot simply add up 4 weeks of payroll hours for a part time employee and divide by 120 to see if they exceed an average of 30 hours per week (the newly defined “full time” standard under Obamacare). No, rather than simply using data we already have (weekly or biweekly hours worked) for each employee, instead we must now warehouse up to 7-times more data by saving daily hours details. Although all employers already track daily punches, smaller employers store this massive amount of raw data off-line after getting the totals for payroll. Why waste resources if there is nothing to be gained by storing the number “8” five times vs storing the number “40” one time. The storage space is not the central issue however, it’s that we must incur a cost to reprogram payroll systems – in short wasting money to rebuild something we already had.

With monthly hour data in hand, we can now count up the employees that exceed 130 hours and count them as “full-time”. For all other employees we total up the lesser of actual hours worked or 120 and then divide that sum by 120 to get the “full time equivalents”. This means, in short, that two part time employees working 60 hours in a month will count as one full time employee. This calculation subtly explains the incentive behind large employers (such as Trader Joe’s or Kroger) who already fall under Obamacare but who are nevertheless cutting back their part time employee’s hours to below 30. This allows them to reduce their potential fine exposure. For example, in the case of Kroger, if all of their 340,000 employees work at least 30 hours, then they will be counted 340,000 full-time employees. However, if this same number of employees works only 29 hours per week, then they would be equivalent to 328,666 employees or a net potential savings of $23-34 million in Obamacare fines. That’s nothing to sneeze it at, but if you do at least you’ll be covered under Obamacare.