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Posted by on March 9, 2011 in Uncategorized



To create an integrated health care system across the domains of discovery, development and delivery so that there is constant innovation and rapid availability of integrated solutions that will eradicate disease and preserve health. The last half of the 20th century has witnessed astounding progress in science and technology that is elucidating the genetic and molecular mechanisms responsible for disease. These discoveries are transforming medicine, enabling the development of rational interventions that can be tailored to the needs of each individual patient and will predictably achieve the desired outcome of restoring and preserving health.


The pipeline of the biopharmaceutical industry in the USA is rich in new innovations which will dramatically improve the quality of life and increase life expectation. In addition, the innovations are potentially the drivers of a new era of higher growth and prosperity for Americans. Obamacare will put this opportunity in jeopardy.


Obamanomics: The double dip and two economists

Arthur Laffer and Robert B Reich are poles apart. The former personifies the sublime and the latter the supercilious. I can read Arthur Laffer and learn something new from every one of his articles. He writes infrequently but every single article is timed to address a major issue. This time he has discussed the prospect of an economic train-wreck of 2011—a catastrophic double dip recession likely to be precipitated by Obamanomics. Robert Reich, on the other hand, publishes often in a variety of journals and most of it is old ideological fluff rewritten as a new article. In the current mood in the country, he sticks his neck out to defend the indefensible—the tax and spend policies of the Obama administration.

Robert Reich’s latest article, “The Necessity of Obamanomics” published in Wall Street Journal regurgitates tired old Keynesian nostrums. The hubris is palpable from the very first sentence, “Alright class, here’s your assignment….”. This is quickly followed by a cliché, “as long as the private sector is deleveraging the public sector has to borrow and spend in order to keep the economy moving forward”.  Really. Japan has been stimulating its economy for the last twenty years with nothing to show except stagnation and now near bankruptcy. Over a dozen rounds of stimulus have yielded insanities like their own “bridge to nowhere” which one Japanese joked is used for “bungee jumping”. He dismisses concerns of rising debt and considers it manageable as long as government entitlements costs are controlled.  The fiscal concerns of “mad-as-hell” tea partiers get a short shrift.

In the very same issue of the Wall Street Journal, another article on electronics retailer, hhgregg, describes its rapid expansion, despite the recession, constrained only by the supply of appliances. It is taking advantage of inexpensive retail real estate to expand and grab the space left empty by the now defunct Circuit City. hhgregg is already expanding to absorb the job losses suffered due to Circuit City’s bankruptcy without any help from the stimulus. 

The recovery this time has been less than vigorous with growth rates close to half of what they generally are at this stage of the cycle. Given the spectacular growth in productivity over the last two years, the recovery in profits could have been faster than normal and would have propelled higher levels of investment. The thorn is the package of anti-business policies of this administration.

Art Laffer singles out the key issue as the uncertainty in the business environment. The numerous tax concessions and tax increases, the fiddling with major sectors of the economy create uncertainty whether these measures are eventually enacted or not. Capital is shy like a cat and will not commit till the macroeconomic environment is more predictable. The growth rate in 2010, according to Laffer, will be decent and the rate of unemployment will decline modestly. Many businesses will pre-pone capital expenditures to take advantage of the tax benefits that will expire in 2011. The lop-sided growth with faster expansion in manufacturing and much slower in services industries is a clear indicator that growth is being driven by the need to stock up inventories.

All hell will break lose in 2011 when profits are squeezed by higher taxes. Business is also going to be hit with health costs maintaining their rising trajectory. The double dip recession is a near certainty as the economically illiterate loons in Washington run amuck. Unless the much maligned tea partiers intervene to remove these irresponsible creeps.


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A Retired California Official tells the inside story of Public Unions in the State

A retired correctional officer, Rod Ferroggiaro reacted to my post on California State's Bankruptcy and he had interesting remarks on how the public unions in California have evolved into a special interest group ripping off the public. His comments are an eye-opener.

 I spent most of my career at San Quentin but also worked in Tracy (D.V.I) and Ione (Mule Creek State Prison) California. As a member of The California Correctional Peace Officer Association (CCPOA), I speak from experience when I relate how this union, along with the other government employee unions are leading our state down the path of destruction. It seems not that long ago that working in California’s prisons was a job although always dangerous was a workplace where you felt proud, a workplace filled with a can do attitude not unlike elite military units, officers and management worked as a team we led the nation in professalism and education. During the mid 1980s, our state prison population exploded. Prisons were built all over our state thousands of new officers were hired and the prison unions coffers overflowed, CCPOA became a force to be reckoned with in our states politics , anyone who stood up against them was crushed , state officials soon learned to fear them if they wanted to stay in office. Moral in our prisons soon took a turn for the worst no longer was management (Sergeants-Lieutenants) a position strived for by officers. Large numbers of top paying high echelon positions have been created that were never needed. Discipline has become almost nonexistent, Sick abuse is now the norm and since its all on the taxpayer’s dime, no one wants to stand up against this powerful union. An example of sick use abuse would be when the Oakland Raiders play at home San Quentin cannot man enough positions to run the prison in a normal way they have had to modify their programs. Now that our state has reached the breaking point we should pull our heads out of the sand, we badly need to expose these unions for what they are political powerhouses who employ a fleet of lawyers who have plenty of money to spend on misleading television advertisements, these people are not used to opposition most Wardens hide under their desks at the first sign of conflict. Lawmakers have no stomach to tackle the union thugs our only hope is the people of California wakening up and demanding a stop of this fraud, Waste and abuse.

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Posted by on January 13, 2010 in California Economy, Democrats


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A New Era Begins

The Election of 2008 marks a turning point in the history of the USA just as the 1933 election did. President Franklin D Roosevelt steered the USA to a socialist direction with greater regulation, redistribution of wealth and expanded Government. The first crisis of the house that Roosevelt built happened in the late 1970s with stagflation. President Ronald Reagan changed course by deregulation of industries, greater stress on monetary policy rather than Keynesian fiscal policies and lower rates of taxation for business. His tenure, however, left issues of government spending largely unresolved which was reflected in large fiscal deficits in his time. Newt Gingrich’s Contract with America was the first to confront spiralling government expenditures by lowering welfare expenditures by encouraging more people to seek employment and did so with a great deal of success. As a result, America enjoyed a brief period of fiscal surpluses in the late 1990s. Despite these leaps in the quality of governance, the legacy of the Roosevelt era continued to lurk in the background. Housing, education, health care and social security still mired in the past. Unfunded liabilities in health care and social security exceed $50 trillion dollars. The hidden costs of gaurantees of housing came to surface with the meltdown in the real estate sector in recent years. As government unions expanded their influence in the education and civil services sector, their wages increased and so did the fiscal deficits. California state’s parlous state of finances is indicative of where the USA is headed–towards bankruptcy. The Tea Party movement and shifting voting behavior of independents is indicative the current angst and the desire for a new kind of leadership. The need is pressing as the economy continues to stagnate and will continue to be in a quagmire till the larger issues of entitlements and social sector reform are not addressed. Increasing costs of entitlements also raise the cost of doing business in the USA. The slow pace of economic recovery is undermining the confidence in the dollar and bring the day of a possible collapse of the financial edifice closer. This Blog will discuss the larger issues of the emergence of this new era in the history of the USA.


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Individual Mandate for healthcare: the flawed comparison with auto-insurance

In the make-belief world of the current administration, supercilious comparisons are made to justify its proposed programs which have no basis whatsoever in reality. Fallacies abound and seem logical to the unsuspecting. One clear example is the justification for an individual mandate for health care. “Just like compulsory auto-insurance is mandatory, so also for health care”. Yeah, that seems like a straightforward and reasonable justification.

It goes a step further. An auto accident could cause damage to another person who probably does not bear any responsibility for it. Such a person needs compensation for the harm caused to him. The person who caused the accident will be able to pay only if he or she has an insurance plan. Similarly, the administration argues, everyone needs to have a health insurance plan to pay for their care rather than end up in an emergency room where they cannot be denied care. That society would otherwise pay for their care.

First, the individual mandate for auto-insurance does not require drivers to pay for comprehensive insurance. They only need to pay for the minimum level of liability coverage. The individual mandate for health insurance, proposed in the conceptual plans, are required to meet the standards of coverage that the Government requires each person to have which would now include pre-existing conditions. The comparable auto-insurance would include not only comprehensive coverage but also costs of repair and maintenance including oil change!

Just like a person whose auto-liability insurance includes only the minimum coverage will have to pay out-of-pocket for any amount in excess of it, the individual mandate can at the most require a minimum level of health coverage.

A more efficient alternative to individual mandate is   health savings plans. For those with very low incomes, the government could provide vouchers to fund the accounts. This would be akin to earned income credits. For emergency care, the expense could be paid over an extended period of time to cover the deductibles. The rest would be covered from the insurance plan.  


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The Sophistry on Medicare: The case against Government takeover

What the Democrats lack in governance, they make up in sophistry. The issue of Medicare and Government takeover is just one example. They sneer at the apparent hypocrisy of Republicans who have taken on the role of opposing cuts in Medicare. “If you are against Government takeover, why are you supporting a government program like Medicare or even Medicaid? Similarly, the Democrats chide the elderly for opposing government takeover while insisting on retaining their own government health program.

Given an option, the Republicans are inclined to offer choice and private services to the elderly. The Medicare Advantage program was launched for precisely that reason. And the Democrats are viscerally opposed to Medicare Advantage. Better still, the Republicans would be inclined to simply offer vouchers to low income or retired folks which they can use to pay for privately delivered services.

The Medicare program has already been paid for by the elderly—it is now their turn to benefit from the investments they have already committed. That the Democrats are now considering the reallocation of funds from Medicare to their universal care experiments is only confirmation that the government cannot be trusted to comply with social contracts. When public finances are mismanaged, governments will be inclined to raid cash hordes.

The rationale for Medicare and Medicaid or for children’s programs for healthcare was not that Government provision of health is generally better than private delivery. Instead, the premise was that private markets fail to function when the elderly, the low income folks and children don’t have the purchasing power to buy health care.

With advances in knowledge about the health care business, its time to look at alternatives. The elderly can take care of their health needs if they are able to save money in their health care accounts over their working life. The poor and children of low-income households can pay for their health care with vouchers.

The Democrats are looking to make cuts somewhere to pay for universal access because they refuse to institute incentives which will help to cut costs. Resources are scarce and increasing demand for health care can only be fulfilled by supply side reforms including competition in the health care industry. The Democratic program cannot possibly increase access so they will only redistribute resources from one group to another without improving the overall system.   



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