…well, here are people who flip ships.
(via MaxedOutMama)
Business
What Is Not Seen
A few months ago the Senate Democrats here in the State of Wisconsin floated a plan to provide universal health care for all residents of the state. The first question most will ask is “who is going to pay?” The answer is that the plan ($15bb worth) will be funded through a payroll tax.
The plan is dead in the water as the Republicans who control our State Assembly are having nothing of it, but in the next election there is the distinct possibility that the Democrats will win back the Assembly, and will then control the Governor’s chair, the Senate and the Assembly.
Health Care and Fixed Costs
There are many health care plans being proposed to “fix” the growth in medical costs in the United States. Each of these plans has different elements but I haven’t really seen the particular linked issue addressed that I am going to speak of in this blog post.
I make a point of reviewing my medical bills. When you have surgery, for example, you receive an itemized bill. In that bill you can see services from each provider and also the cost for the room, medicine, etc… Frequently the costs seem far out of line from reality (outside the walls of medicine); a room could cost hundreds or thousands of dollars a night; an aspirin or readily available over-the-counter medicine could cost many dollars per pill.
The real issue is that the medical industry is primarily a “fixed cost” business, with very low “marginal costs”. For example, if you look at the Northwestern Hospital facility downtown, a vast series of interconnected buildings, and asked yourself this question:
“How would costs vary on a given day if the facility was full of patients vs. having NO patients?”
The answer is that the costs for that day would be virtually identical whether or not the hospital had patients. You still need to pay for the facility, the doctors, the electricity, and all the support workers and nurses. Virtually the only “variable” costs that would be avoided are the cost of medicines and food, but the medicines are inventoried and they need to hold stocks in advance and the food must be purchased based on planned demand and the spare food would just be thrown away (the costs would be pretty much the same).
Local Governments vs Industry
Here’s an article about the attempt of Waukegan (IL) to drive out two companies that have been there for years: National Gypsum, which operates a wallboard plant, and Lafarge, which has a cement distribution center. The city wants to use the lakefront property for condos, restaurants, boating, and boutiques. It is attempting to use legislation to bar commercial vessels from the harbor, thereby cutting off NG’s source of supply and forcing it to close.
Steve Rogers, who manages the plant, points out that the workers are “not going to get an $18- to $20-an-hour job making mocha frappuccinos” if they lose their jobs at NG.
Most likely, the people pushing the redevelopment are very concerned about “working people” and are supportive of keeping manufacturing in the US. In theory.
This article reminded me of a post I did a couple of years ago regarding similar events in Seattle.
More at ShopFloor.org, including a link to an interesting video titled Made in Berkeley… apparently, artists and light industries have found common ground in the zoning wars of that city.
A Great Journalist / Writer – Michael Lewis
Recently on my travels to and from San Diego I had a few hours of uninterrupted time and I chose to read some interesting paperbacks. I usually pick something like a business book or a military history book but this time I decided to liven it up a bit and pick two books by Michael Lewis, one titled “Moneyball” about baseball and “The Blind Side” about football.
I remembered Michael Lewis from reading “Liar’s Poker” in the 90’s about Salomon Brothers, the famous trading firm. The name of the book was from a game that traders would play involving betting on the digits on US currencies, a game that could be played for big stakes.
Liar’s Poker is a fascinating book about a period of time when Salomon was essentially the “king of the world” to borrow a phrase from the highest grossing movie ever. If you are interested in what is happening in the sub-prime market with collateralized debt obligations (CDO’s) or the “securitization” of debt this is a great place to start since Salomon basically invented and popularized the practice for home mortgages.
One interesting element of the book is that Michael Lewis actually was a bond salesman in real life, and this enabled his book to be far more “real” than it would be if written in an interview type format. This was his first book; I think at the time he started out planning to get into finance and then decided to write a book; in retrospect you could also see him going into this business as a writing opportunity. To contrast this with other journalists that we take swipes at from time to time, Lewis clearly understood his material as only a true “insider” could.