Chicago Boyz

If you liked Ken’s recent excellent post here on health insurance, you should also take a look at his solo blog. He has some great posts up — such as this one, this one and this one on education.

So they convicted Martha Stewart. That’s a shame. The case should never have been brought. We are supposed to believe that a woman who is worth hundreds of millions risked everything to avoid fifty grand in stock losses. It’s simply unbelievable, and it begs the question of what fiduciary duty she had to Imclone shareholders (none). The judge earlier threw out the serious fraud charge, so Stewart was convicted mainly of making false statements to investigators when she was not under oath.

The prosecutors got lucky here. They had a weak case, were essentially making up law, and the jury bought it. I hope that other prosecutors won’t be emboldened to engage in more of these persecutions.

One of the likely problems here was the quality of the jurors. What kind of person was so ignorant that he didn’t already know a lot about this highly publicized case before he was called? This is a systematic problem. It’s difficult to find intelligent people who are willing to put their lives on hold during what’s likely to be a long trial.

I was once called for jury duty and assigned to a notorious criminal case for which everyone expected a lengthy trial. I can tell you that once the prospective jurors learned which case they were on, almost every one of them wanted to be excused. To my relief, I was excused (after waiting two days to be interviewed) because I had a strong opinion about the case. The prospective jurors who had not been excused by the time I left did not strike me as the kinds of people I would want to have on my jury if I were a defendant.

Yes, jury service is important, but how many able people are willing to take a several-week forced vacation in exchange for fifteen dollars a day? We effectively force jurors to subsidize our legal system, and the more a juror’s time is worth the more he pays to serve. Perhaps it would be better to pay jurors an amount that comes closer to compensating them for their time — if they are intelligent people, maybe $200 a day as a start. It would be expensive, and there are many individuals for whom such an amount wouldn’t be nearly enough, but it might improve the quality of jury decisions, particularly in complex and white-collar cases.

There is no way, under the current system, for someone like Martha Stewart to be tried by a jury of her peers. Would such a jury, or at least a jury of people who are somewhat sophisticated about business and financial matters, have convicted her? I doubt it. And even if they might have done so, she still deserved better than to have the facts of her case evaluated by people who probably lack significant experience in these areas.

Leave it to a VC guy to make a good point succinct. Excellent article over at Ventureblog about outsourcing. The article is a little old, but good nonetheless.

“there are two ways to make a car — you can either make it in Detroit or grow it in Iowa. You already know how to make it in Detroit. You get a bunch of iron ore, smelt it into steel, and have an assembly line of robots and workers shape it into a finished vehicle.

To grow it in Iowa, you plant car seeds in the ground (also known as “wheat”), wait until they sprout, and harvest them. Take the harvest and put it into a big boat marked “to Japan” and let it sail off. A few months later a brand new car comes back.”

We are told that, prior to the current enlightened age, one of the ways that evil corporations would rip off their workers was the Company Store. Instead of giving you money, they’d operate a Company Store and give you goods. Problem was, without real money, you couldn’t go to a competing store that might give you a better deal unless you switched jobs. You’d have to put up with whatever inferior, overpriced merchandise they felt like stocking.

Kind of a bummer, right? It’s a good thing that our Corporate Overlords saw the light and quit that nonsense.

Or did they?

The Company Store isn’t gone, it’s just been reduced in scope. Now the Company Store mainly offers health insurance and retirement investments. But, in the areas where the Company Store reigns supreme, the same problems keep cropping up.

You can’t switch health plans without switching jobs. The insurance company’s customers is your employer, not you. The insurance company doesn’t have any reason to keep you happy (it just has to keep you from getting so unhappy you’ll switch jobs in order to get rid of its policy), and it shows every time you have to deal with it.

Oddly enough, while its customer service is busy treating you like the non-customer you are, the plan itself winds up paying for things that make no sense whatsoever from an insurance standpoint. This is because a company insurance plan functions partly as a tax-dodge to spend pre-tax dollars on routine maintenance that it would never make sense to buy actual insurance for. If not for tax rules, you would never buy an insurance policy that covers routine checkups you know with absolute certainty that you’re going to get; you know you’re going to end up paying the full cost of the checkups plus a markup for the insurance company.

Also, since company health plans must offer the same rate to every worker, your company gets hit with the cost differential when it brings in older or less healthy workers. Giving companies a direct financial incentive to engage in age discrimination doesn’t strike me as an especially good idea. Setting things up so that their costs, and their profits, are affected by unhealthy things you do in your off time is also just asking for trouble.

And, since all policies must cover the same things, you get stuck buying coverages you don’t want, and can’t specify coverages you do want. Lawmakers have also taken to piling on coverages that must be included in all group plans, such as birth control pills (!).

And, of course, it would be nice if periods of unemployment had no impact on your health insurance other than by way of your ability to pay the premium. Business creation would be more common if getting off of someone else’s payroll didn’t impact your health plan.

Now we’re told that the only way that we can get employers out of the loop is to bring government into the loop. Apparently, individuals can’t just buy healthcare on their own, someone (either the employer or the government) has to “give” it to them (with their own money, of course).

This is, of course, nonsense. The standard objections to individual insurance purchases are:

Read more

Good article by Thomas Sowell on Ralph Nader.