JONATHAN COHN NOVEMBER 8, 2011
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The D.C. Circuit Court of Appeals just issued a decision in the lawsuit against the Affordable Care Act. It looks like a big win for the administration—and, more importantly, for health care reform.
I'll have more to say on this later, after I've read the decision more carefully. But I'll share two quick observations.
The first is the author of the majority opinion: Judge Laurence Silberman, a Reagan appointee and conservative judge. He's now the second well-known, well-regarded conservative jurist at the Circuit level to uphold the law. Judge Jeffrey Sutton, a Bush appointee on the 6th Circuit, was the first. And while one Democratic appointee has voted to strike down the law, that judge, Frank Hull of the 11th Circuit, is not a strong liberal.
The second is that Silberman's opinion is pretty strong. Here one key excerpt:
The mandate, it should be recognized, is indeed somewhat novel, but so too, for all its elegance, is appellants’ argument. No Supreme Court case has ever held or implied that Congress’s Commerce Clause authority is limited to individuals who are presently engaging in an activity involving, or substantially affecting, interstate commerce. ... To be sure, a number of the Supreme Court’s Commerce Clause cases have used the word “activity” to describe behavior that was either regarded as within or without Congress’s authority. But those cases did not purport to limit Congress to reach only existing activities. They were merely identifying the relevant conduct in a descriptive way, because the facts of those cases did not raise the question–presented here–of whether “inactivity” can also be regulated. In short, we do not believe these cases endorse the view that an existing activity is some kind of touchstone or a necessary precursor to Commerce Clause regulation.
In effect, the judges are dismissing the distinction between "activity" and "inactivity" as meaningless. That distinction, of course, is the foundation of the lawsuit. The relevant issue, Silberman goes on to say, is whether the mandate affects commerce that crosses state lines. It clearly does.
Elsewhere, Silberman cites precedents giving Congress broad powers over interstate commerce, including decisions that upheld parts of the New Deal and civil rights laws:
That a direct requirement for most Americans to purchase any product or service seems an intrusive exercise of legislative power surely explains why Congress has not used this authority before–but that seems to us a political judgment rather than a recognition of constitutional limitations. It certainly is an encroachment on individual liberty, but it is no more so than a command that restaurants or hotels are obliged to serve all customers regardless of race, that gravely ill individuals cannot use a substance their doctors described as the only effective palliative for excruciating pain, or that a farmer cannot grow enough wheat to support his own family. The right to be free from federal regulation is not absolute, and yields to the imperative that Congress be free to forge national solutions to national problems, no matter how local–or seemingly passive–their individual origins.
This is precisely the argument many of us have been making: While it's possible to faithfully read the Constitution as prohibiting the requirement that everybody pay for health care, doing so would require junking a bunch of important Supreme Court precedents.
Again, I've only skimmed the decision, so perhaps there's more nuance—and darker omens—than I'm detecting. I'll update this item later. But for now, this seems like a good omen, at least for those of us who believe the Affordable Care Act is a good law.
Update: Here's Elizabeth Wydra, chief counsel at the progressive Constitutional Accountability Center, who (needless to say) knows a lot more about law and the courts than I do:
On the eve of the Supreme Court’s decision whether to review the constitutionality of health care reform legislation, the nation’s second most important court has dealt a devastating blow to the challengers of the Act, delivered by one of the country’s foremost conservative jurists
32 comments
"It looks like a big win for the administration—and, more importantly, for health care reform." Until the Supreme Court speaks, it's like the guy who fell out of a 20 story building, and when they yelled to him at the 15th floor, "How are you doing?" he yelled back "Fine, so far!"
- Nusholtz
November 8, 2011 at 1:40pm
Whoopee! I wish I didn't suspec Nusholz is right though. I think the present Supreme Court is hopelessly corrupt.
- WandreyCer
November 8, 2011 at 1:52pm
I agree, Wandrey. This Republican-leaning, activist supreme court definitely bodes ill for PPACA. I think we'll be lucky if they only strike down the individual mandate clause.
- GSpinks
November 8, 2011 at 3:11pm
Scalia and Kennedy will both vote to uphold the mandate, making the tally at least 6-3. Remember, you read it here! For an analysis of Scalia's views on the matter, see http://beeryblog.wordpress.com/2011/07/02/national-health-care-litigation-will-test-scalias-intellectual-honesty/
- dsimon
November 8, 2011 at 4:27pm
Congress found that without the mandate, uninsured individuals, in the aggregate, would consume costly health care services and pass on those costs to other market participants. Without the mandate, in Congress’s view, other reforms–namely prohibitions on denying health insurance coverage to individuals with pre-existing medical conditions (the “guaranteed issue requirement”) or using an individual’s medical history to justify higher insurance premiums (the “community rating requirement”)–would increase average premiums, exacerbate adverse selection problems, and discourage individuals from obtaining coverage until they were sick. I have not read one Republican refute any of these basic facts. Personally, I would have preferred that it was tax and rebate, as we do with mortgage interest deductions, to address the issue of free riders, but essentially government is not forcing anyone to buy insurance, you can choose not to buy insurance and pay the fine, or tax (The Fourth Circuit is of the view that “any tax” includes any exaction collected by the IRS, even if Congress called it a “penalty.” and I agree with them) In addition, government will provide subsidies to those who can not afford to purchase health insurance on their own. So what libertarians are advocating is to be free riders, to stiff hard working Americans by delusionly stating that no, they will never get sick or that they have the financial wherewithal to fund all medical contigencies, both of which are lies. I think it will be 7-2 in favor with Thomas and Kennedy voting against oh, and since I never mentioned it, personally I agree that the plaintiffs hold no standing as per this: Some have suggested that the Anti-Injunction Act doesnot apply because these suits have been brought so far in advance of the mandate’s 2014 effective date. But there is no “early-bird special” exception to the Anti-Injunction Act…. If Congress wants the courts to decide the individual mandate suits now, Congress can always remove the jurisdictional limit; the Anti-Injunction Act’s jurisdictional bar is statutory, not constitutional. Absent such congressional action, however, we must adhere to the statutory constraints on our jurisdiction no matter how much the parties might want us to jump the jurisdictional rails and decide this case now. So lets wait until the mandate comes into affect.
- blackton
November 8, 2011 at 7:03pm
blackton: "I have not read one Republican refute any of these basic facts." That's because the policy consequences don't matter. What matters is freedom. Jonathan Chait wrote about this towards the end of his article "The Rise of Republican Nihilism," http://www.tnr.com/article/politics/the-rise-republican-nihilism. Even if we'd be better off with the mandate, it's still a bad thing because it impinges on freedom (like the freedom to get sick, go bankrupt and die). The standing issue is a serious one. It will be interesting to see how, or if, the Court deals with it.
- dsimon
November 8, 2011 at 7:19pm
You guys seem to ignore the fact that Ben Nelson and, since everyone loves a free rider, a few other Democrats would have killed the bill if it was called a tax or could be construed as such at the time. I still don't know how Democrats hid the Medicare tax hikes on the rich so well, actually. Maybe that's part of why the bill was so long. Various aspects of the process behind the ACA were terrible. But several elements were a textbook example of how to count to 60, if I may adapt Justice Brennan's famed statement.
- chaitless
November 8, 2011 at 10:11pm
"A mandate means that in some fashion, everybody will be forced to buy health insurance. ... But I believe the problem is not that folks are trying to avoid getting health care. The problem is they can't afford it. And that's why my plan emphasizes lowering costs." Who said that? A Republican? No, the Democratic candidate in 2008 who opposed the mandate. And who might that be? A former constitutional law professor. Nino is a seasoned politician, so don't be surprised if the lead in the NYT article on the oral arguments includes Nino's reminder that Obama once strongly opposed the mandate and, indeed, vigorously attacked his Democratic opponent in campaign ads for supporting the mandate. And what would be the political consequences if Nino prevails upon the other Justices and ACA is declared unconstitutional? No more HCR as a monumental accomplishment to run on in 2012 and a Democratic base that would abandon Obama in droves as the result of Nino's reminder of Obama's feckless approach to HCR. The stakes couldn't be higher, and Nino knows it.
- rayward
November 9, 2011 at 7:34am
See, what's overlooked is that there's TWO parts to Obama's mandate. Sure, if you think the Private Market will solve all problems, then mandate that everyone buy from the private market, then the private insurers have all the incentive in the world to jack up prices. They then have a captive market. BUT, if you add to that the second part -- create a minimal cost Government-supplied non-profit "insurer of last resort" -- then the private insurers can jack prices up all they want, everyone will buy their mandatory insurance from the Government. That is the big difference between Romney-care and Obama-care. That is why Obama-care has the chance to dramatically lower cost of insurance in America while expanding coverage. But the Tea-Partiers are too busy tar-and-feathering Romney to care about that.
- AllanL5
November 9, 2011 at 8:07am
The highest indicator of negative health care outcomes is income level. Diabetes, obesity, asthma and heart disease, our most expensive and preventable disease class (aside from smoking), are highly correlated with income levels. This is why conservatives so vehemently oppose PPACA because it is one of these "subsidies" to lower income levels. The individual mandate is just smoke and mirrors, they are hell bent against using their public dollars for the benefit of others. Not to mention lower economic statuses have a high correlation with race, which also begs for conservative opposition. Scalia will strike down the PPACA because of this. Kennedy too. The PPACA is doomed, unless Clarence Thomas is put in abeyance for his extreme conflicts of interest (wife pouring millions and organizing against PPACA, etc. Although he also gave the majority opinion in ruling for not labeling GMO's in food, in no doubt a service to his former employer and largest GMO producer Monsanto. Hopelessly corrupt!). The remarkable statistic is that nearly everyone agrees with the central tenets of the PPACA. In Massachusetts, it has worked as far as insuring everyone, and it is not destroying the state or individual liberty in any way. I personally don't believe any kind of health reform will work unless we discontinue subsidizing commodity crops and thus the abundance of cheap calories that are wreaking havoc on Americans. The Tea Party won't cut those subsidies though, in another blanket corruption indicator of our political system. And people wonder why there's anger on the streets.
- RedState
November 9, 2011 at 9:59am
Listen up RedState: swallow your own medicine. Diseases such as diabetes, obesity, etc. should be tracked back to their real cause, i.e, false attribution to high fat diet, when the real cause is high carbohydrates, with high glycemic levels in the blood, wrongly compensated by high levels of insulin from the pancreas. Complementing those, high tax indulgences of Big Pharma, and subsidies to the American Heart Association: for selling statins to lower blood cholesterol, and SSRI anti-depressants to restrain appetite; etc. The American Heart Association and Big Pharma tacitly collude to rip off the public by selling unneeded drugs to solve a false problem, while they literally feed people foods that are the worst for them. Democrats and Republicans tacitly collude to subsidize Big Pharma and the AHA to do their dirty work for them. Republicans hypocritically defend Big Pharma, while Dems hypocritically support the AHA. If Congress will slash those subsidies and retract those incentives, no money would have to be spent to subsidize health insurance (another scam and ripoff) to treat diabetes, obesity and the rest.
- Tgossard
November 9, 2011 at 11:31am
Tgossard: Thanks. I'm no doctor, but I'm maybe 90% sure that within my lifetime people will look back on the use of statins to combat high cholesterol with roughly the same view as the practice of bloodletting to combat the flu.
- Tristan
November 9, 2011 at 11:43am
Dsimon writes: " What matters is freedom" Absolutely. Social security is a perfect example. Consider a 2 parent household, each making $26K. There are 3 options: 1) Force the husband and wife to pre-pay his retirement to the gov ($320K over his lifetime). They will receive benefits of $420K. 2) Force the husband and wife to pre-pay their retirement ($320K) into a private fund split between stocks and tbills. They will receive benefit of $975K 3) Allow the person to save if they want. While we can debate on whether or not 3) is viable, it's clear that option 1 (what we have today) is not good for a family making $50K/year. It is ripping them off big time. Redstate writes: " The individual mandate is just smoke and mirrors, they are hell bent against using their public dollars for the benefit of others." This is the problem you create when the government is put in the middle as the arbitrator and decider. Corruption is sky high in the government. It is not in the private sector. Accountability is zilch in the government. It is much higher in the private sector. When people do wrong in the private sector, they go to jail. They do not in the public sector. We've just watched Obama take $800B in stimulus funds, and direct a huge chunk of that to unions. Not a little slice, but a huge slice. Will this all play out again with health care? Of course it will. We'll pay more than ever, and get even less than we get today. The promise of "costs going down" are already proving to lies. In our town, they just put a bond issue up to keep the pool and library open. Without it, the pool and library will close. Now, the issue is not the $620K it will cost to keep both running. The bond issue will generate nearly $10M in new tax revenue by increasing the sales tax. This money is going to pensions. The city has massive unfunded pensions and they are doing all they can to plug those holes. And they do it by holding the library hostage. They (as usual) over promised and mismanaged. And now the tax payer has to pay for it. Complete BS. And you are signing up to have that same game to be played with health care. No thanks. At least if Aetna screws me I can take my business elsewhere.
- seattleeng
November 9, 2011 at 12:26pm
Seattle - "...Force the husband and wife to pre-pay their retirement ($320K) into a private fund split between stocks and tbills. They will receive benefit of $975K" I'm curious how you came to that figure, and how you would eliminate the risk of catastrophic loss for soon-to-be retirees if the markets collapse. Thanks in advance.
- Tristan
November 9, 2011 at 1:23pm
"This is the problem you create when the government is put in the middle as the arbitrator and decider. Corruption is sky high in the government. It is not in the private sector. Accountability is zilch in the government. It is much higher in the private sector. When people do wrong in the private sector, they go to jail. They do not in the public sector." That's funny because I see examples of when the Government goes the 'private sector' route and contracts out to private engineering firms to "manage" projects that were once handled in-house. What happens? Inefficiency, waste, fraud and mismanagement of taxpayer money. The private contractor adds their management fee of 10% to any public project, mismanages the project resulting in higher project overruns, scope creep, and then tries to legitimize the waste as "market factors" or blames everyone but themselves. General contractors add 10-15% to their bids to account for the 'Manager" factor, A/E firms end up financing the design costs because the "manager" fails at their task and refuse to pay for services rendered. Only after wasting millions of dollars in construction cost, management and design fees, and time, does the Government fire the private contractor. This isn't to say the Government isn't at fault but the implied perfection of private contractors when interfacing with government doesn't always lead to the best bang for the tax payer's buck. Keep in mind with ACA, the Government isn't providing the medical services nor are they acting as the "insurer" per se. They act as the negotiator and set up a frame-work for state run insurance exchanges to operate. In fact if they made the mandate automatic enrollment into some form of 'Medicare for All' for basic medical services deal with an opt-out I'm sure plenty of folks would opt to stay in. You'd have plenty opt out and buy private insurance. But at least we would know that every working person in America has some level of health insurance. And while Seattle's examples of SS tend to paint a dismal picture regarding the ROI for SS, it does perform better than say your local savings account at the bank and it's essentially "locked away" until you need it. You can't cash it out like an IRA or 401K. It's the third leg on the stool of financial stability. Could it be better? Heck yeah. Could it be more flexible? Yes. But keep in mind not every person has the ability to consistently save every month if given the choice. Most folks who are automatically enrolled in savings/retirement accounts opt to stay in not opt out. Why? Because the choice of saving has been made automatically every month. It's not a decision that has to be weighed every month.
- singlspeed
November 9, 2011 at 3:56pm
Also, re SS: young people don't think they'll ever get old. I was the same, resented paying SS taxes. LOL.
- Sophia
November 9, 2011 at 9:13pm
As to this decision, hooray. I think it correctly cuts to the chase, which is, just about any law impacts "freedom," including Civil Rights laws; some govern freedom of behavior, such as robbing banks; and some very bad laws really hurt people, such as those forbidding effective pain medications. Anyway, the duty of the Supreme Court will now be to correctly uphold this wise decision.
- Sophia
November 9, 2011 at 9:17pm
seattleeng: "Social security is a perfect example...." We've been through this before as seattleeng completely misrepresents how SS works. And SS has admitted before that his/her hypothetical is not how SS works. Current workers are not paying for their own retirement. Current revenues go to current beneficiaries. It's an intergenerational pay-as-you-go compact, not a mandatory individual retirement system, and so it's simply incorrect to analyze it the way seattleeng does. As for the claim that putting government "in the middle" is inherently detrimental, that makes it hard to explain why all of our peer nations spend a third less to half as much as we do on health care overall, cover everyone, and get comparable outcomes. Administrative costs in private insurance are a disaster. "At least if Aetna screws me I can take my business elsewhere." Yeah, to another insurance company who can screw its customers. If they're all doing it, there's no place to go. And none of them will insure you if you have a preexisting condition, so good luck if you or a family member has any significant issue. Look, I like markets. But I'm not going to ignore what seem to be to be clear evidence that they don't work in certain situations--like health care. "When people do wrong in the private sector, they go to jail." Tell that to those who nearly tanked the global economy. They certainly did "wrong." Some of them walked away with eight figure bonuses.
- dsimon
November 10, 2011 at 12:30am
seattleeng: "The promise of 'costs going down' are already proving to lies." That's a real shock, given that most of the important measures of the ACA relating to costs haven't gone into effect: the exchanges, the pilot programs. So the continuing rise of health care costs must be due to the ACA, since the cost components haven't been implemented (and won't be implemented for another few years). The logic is inescapable. Plus we've seen what a great job the private market does in holding down health care costs....
- dsimon
November 10, 2011 at 1:47am
dsimon writes: "We've been through this before as seattleeng completely misrepresents how SS works. And SS has admitted before that his/her hypothetical is not how SS works." How it works is irrelevent. SS administration themselves publishes ROI figures. The ROI figures are horrid. This ROI cheats a $50K earner out of $500,000 of lifetime income. Do you disagree that a $50K earner that diverted his money to stocks and tbills instead of SS would have earned $500K more? "Yeah, to another insurance company who can screw its customers. If they're all doing it, there's no place to go. " But they aren't all doing it. An insurance company like United Health care has 70M customers, and $4.6B in profit. That is $65/profit per person. I can assure you that like a Walmart or Costco, they are doing more than the government could ever do to drive prices down. "Tell that to those who nearly tanked the global economy. They certainly did "wrong." Some of them walked away with eight figure bonuses. Define wrong? I agree it was wrong, and you agree it was wrong. But it wasn't illegal then, and it isn't illegal now. And nobody of import has gone to jail. And it's happening again. Thus, if any wrong was done, it was and is being done by government in their failure to correct bad behaviors. As I've noted before, there were 3 players in all this: The banks, the public and government. The banks and people acted as I'd expect: Banks loaned taxpayer money as fast as they could, enjoying fat profits. People borrowed as fast as they could, using their house as an ATM. The one entity that did NOT act as they should was the government. Again reinforcing my point that gov corruption goes unpunished.
- seattleeng
November 10, 2011 at 11:29am
Dsimon writes: "Plus we've seen what a great job the private market does in holding down health care costs...." No, you have not. You've seen rising health care costs and you attribute them to greed. But in fact it's the nature of the beast: Healthcare is still a very one on one activity, and with more technology being made available every year and zero penalty for the consumer to consume more, the risings costs are perfectly explicable. Even if profit were completely removed from the equation costs would continue to rise. They keys to reducing costs: 1) Dramatically reduce the amount of 1:1 interaction needed (this is why electronics fall in price...if a craftsman had to build each processor for your PC, nobody could afford one). 2) Limit the availability of new technology until it has demonstrated a very strong ROI. This is why most countries don't do pap smears, colonoscopy and mamograms. 3) Make the consumer accountable for their first $1000 spent in any year in health care. After that, lessen the cost through ramping subsidies.
- seattleeng
November 10, 2011 at 11:35am
seattleng: "Define wrong? I agree it was wrong, and you agree it was wrong. But it wasn't illegal then, and it isn't illegal now." You were the one who said if people did "wrong" in the private sector, they went to jail. I never said what they did was illegal. You agree that what people did in the financial sector was wrong. But they're not in jail. So perhaps you should retract your statement. "SS administration themselves publishes ROI figures. The ROI figures are horrid." So what? SS is not, not, not an IRA. It is not in any way an investment. So the ROI figures are not relevant regardless of who publishes them because it is neither how SS operates or is supposed to operate. It's no different from plenty of private pay-as-you-go retirement programs. "The banks and people acted as I'd expect: Banks loaned taxpayer money as fast as they could, enjoying fat profits. People borrowed as fast as they could, using their house as an ATM." Define acting "as they should." Companies, who have a duty to shareholders, "should" not have taken actions that damaged long-term shareholder value. (Indeed, if such action was to be expected, why didn't it happen before? There was plenty of money to be made in subprime regardless of whatever the government did or didn't do before.) Families, who have duties to their children and their own long-term interests, "should" not have put their homes at such risk. Yes, it may be understandable that people get distracted by short-term greed, but that doesn't mean that they're acting as they "should." "You've seen rising health care costs and you attribute them to greed." Where did I attribute rising health care costs to greed? I stated only that the private market did not do a good job holding down costs. It's well-established that public programs have done a better job holding down costs (which are still increasing, but at a lower rate) than private ones. Moreover, The fact that other countries get comparable results while paying a third less to half as much is unrefuted. That their administrative costs are a fraction of ours is unrefuted. The error of attributing rising costs to ACA provisions that haven't even gone into effect is unrefuted. "Healthcare is still a very one on one activity, and with more technology being made available every year and zero penalty for the consumer to consume more, the risings costs are perfectly explicable." Classic example of the free market fallacy when it comes to health care. You can make colonoscopies free with zero penalty for consuming more, and what will I do? Say "Thanks, I'll have five!"? There are plenty of disincentives to seeing your doctor. It's already tremendously inconvenient, and I don't want to spend half a day doing so if I don't need to. There are already plenty of disincentives for expensive surgery; it's time-consuming and painful. People in France don't see their doctors substantially more than we do. The market for health care simply doesn't operate the way it does for most other goods and services. Read T.R. Reid's The Healing Of America to break through some of this free market fundamentalism. Then perhaps we can have a discussion. Until then, I think further debate is futile.
- dsimon
November 10, 2011 at 12:18pm
dsimon writes: "So perhaps you should retract your statement." What is wrong to you and I need not be wrong to a business. They are allowed to act in their own self interest. Even if 99.9999% of the country believes a business is doing something wrong, if it is not illegal, they opinion of 99.999% is irrelevant. The business has the right to do as they wish if it is not illegal. I think GE selling to Iran is wrong. It is not illegal. GE does not think it is wrong. Therefore, they sell to Iran. However, the beliefs of government should--more often than not--align with the sensibilities of the people. dsimon writes: "You were the one who said if people did "wrong" in the private sector, they went to jail" "Wrong" in the private sector means breaking a law. "Wrong" in the public sector means putting your own interests ahead of the people. See the difference? Yes, it's a higher standard.
- seattleeng
November 10, 2011 at 1:23pm
Seattle says "The business has the right to do as they wish if it is not illegal" and "What is wrong to you and I need not be wrong to a business. They are allowed to act in their own self interest." Well before corporations were gifted 'personhood' by SCOTUS such a statement would have been looked upon as unethical. It's funny when I see people defend the market as both benign, altruistic and selfish all at once. Usually it goes along these lines "the business sells a product and responds to the customer's desires / demands". Once upon it was that way. You can still find small businesses that operate that way. Not just legally but ethically. You don't find corporations acting this way much. They have no interest in pleasing the customer. It isn't really in their best interest. Their goal is to extract as much profit from the transaction regardless if the customer is happy or not. The corporations' only responsibility these days is to the 'shareholder' and the SCOTUS has done it's best to ensure that corporations actually have more legal rights and protection than the average American citizen. As to acting in their self-interest. That's fine until that business does harm and then their "rights" end. But that doesn't always happen now does it? Selling to Iran is illegal for American companies, GE did business with Iran through other means to get around the 'legal' issues with regards to the sanctions that the US put on Iran. So technically GE broke the law, knew they were doing so and went through great means to hide it. Coca-Cola does the same thing. But because of paperwork they're not "technically" doing business with Iran and Syria. Your statement that the beliefs of the government should align with the sensibilities of the people is spot on. So what are your solutions to removing the sullying of 'our' sensibilities with the actions of corporations that, by and large, tend to steer US government policies solely for their benefit and profit? To remove the corruption of government you dislike means addressing the intertwining of corporate interests with government policy. You think if I send a letter to Jim Vitter he'll stop working to give tax breaks to BP or do you think if BP writes a letter to Vitter for more tax breaks, Vitter will do his best work to make sure that BP keeps getting tax breaks? Who holds more sway behinds closed doors? The average citizen, small business owner or the multi-million/billion dollar corporation that hides their profits off-shore to avoid taxes, writes laws to explicitly benefit their activities and act in unethical ways? Companies like GE, BP, Apple, Union Carbide, Halliburton, Coca-Cola, and Ford are just a few that come to mind. I'd really like to know the honest answer on how you would fix the corruption in government? And I'd also like to know where you draw the line when it comes to businesses acting responsibly and ethically, beyond rewarding shareholders?
- singlspeed
November 10, 2011 at 4:08pm
seattleeng, here is what you wrote: "When people do wrong in the private sector, they go to jail." Then regarding those in the financial industry who almost destroyed the global economy: "I agree it was wrong, and you agree it was wrong." But they're not in jail. So what you wrote was simply incorrect. You try to get out of this by (somewhat arbitrarily) defining wrong as "illegal." If you meant "illegal," all you had to do was say so. But if that's what you mean, then you have to retract your second sentence ("I agree it was wrong") because evidently you don't think they did anything illegal and therefore not "wrong." (And there are many people who think that illegal fraud was committed, and those who committed it have not even been prosecuted, much less jailed.) I note for the last time that all the other statements that I said were unrefuted are still unrefuted.
- dsimon
November 10, 2011 at 8:47pm
Singlespeed, corps have always had this ability. The supremes granted nothing new with their decision. That corps are able to influence gov is the fault of gov, not corps. Gov attracts shady, sleazy people who operate without fear of jail. They operate without fear of anything. Biz, on the other hand, is always afraid of jail. Especially with sarbox, where even mid-level managers can be put in jail (and have been put in jail) for following orders. There are HR people (who are also moms with young kids) in jail right now in california for back-dating stock options at the request of higher ups. That is how silly this has become. And yet leaders in congress accept zero responsibility for the banking mess. Citizens should have demanded the heads of 10% of congress for this mistake. And at a minimum had them stripped of retirement benefits.
- seattleeng
November 11, 2011 at 1:31pm
dsimon, of course I meant illegal when it comes to businesses. How would someone be put in jail for doing something that wasn't illegal? Do you really believe that if someone does something wrong but not illegal they should go to jail? You haven't refuted my SS numbers, so I'll assume you accept that modern SS screws the $50K worker out of $500K in revenue over a lifetime.
- seattleeng
November 11, 2011 at 1:39pm
seattleeng: "dsimon, of course I meant illegal when it comes to businesses." Then you must retract your statement that ""I agree it was wrong, and you agree it was wrong." You can't have it both ways. Moreover, there are certainly things people do that are "wrong" (such as putting short-term profits over long-term success) but not illegal. "Do you really believe that if someone does something wrong but not illegal they should go to jail?" No, and I never wrote that. I'm just trying to reconcile your own statements. You wrote that if people do something wrong in the private sector, then they go to jail. You wrote that people in the financial sector did things that were wrong. But they're not in jail. Now you write that you meant "illegal." So I assume that you no longer think that what those in the financial sector did were "wrong." That's a rather arbitrary way of defining "wrong," but it would clear up the otherwise obvious conflict. "You haven't refuted my SS numbers, so I'll assume you accept that modern SS screws the $50K worker out of $500K in revenue over a lifetime." No, I don't accept your statement, because as I have written before (which you have not refuted) you have misdescribed how SS works. It doesn't "screw" me out of revenue in any other way that paying for defense programs I don't like screws me out of revenue. It's a way for present workers to pay for some degree of income security for present retirees. It's not an individual investment program, so it's simply wrong to look at it through that lens.
- dsimon
November 12, 2011 at 10:45am
OK, then I'll re-state: "If someone does something illegal in the private sector, they go to jail" What does that change in this discussion? Isn't that statement obvious? How SS works is irrelevant. Every dollar spent, even for defense, can and should have a return associated with it. Programs that are not giving society a decent return should be retired. You seem to be saying that even if someone pays in $400,000 to SS and gets just $100K back, or $50K and $10K, that it's still better than nothing, and thus it shoudl be kept. What I'm saying is EVERYONE does better if you expect more and hold these programs to better metrics. Your thinking is why welfare is such a mess right now. $1.50 is taken from someone that earns $100K, and then $0.60 is given to someone that doesn't work. The gap between the $1.50 and the $0.60 is what is sad here. Again, if the gov were more efficient, there'd be twice as much to help. Of half as much taken. What a waste. Even sadder is that people put up with this.
- seattleeng
November 12, 2011 at 12:37pm
seattleeng: "What does that change in this discussion? Isn't that statement obvious?" Not the way you had put it. The clarification helps, though there is still the problem, as I noted, that there is plenty that can be "wrong" without being "illegal." Plus there are lots of people who do things that are illegal and never go to jail (lack of proof, lack of resources to prosecute, people just never find out about it, plea bargains that result in fines but no jail time, etc.). So the claim is still wrong, even if "wrong" means "illegal." "You seem to be saying that even if someone pays in $400,000 to SS and gets just $100K back, or $50K and $10K, that it's still better than nothing, and thus it shoudl be kept." No, I'm saying that SS is simply not a program where you get something "back." It's a program to prevent poverty among the elderly. If we don't think that result is worth it, then we can vote to end it. But that's no different from paying for defense programs, school programs, or any other programs one cares to name that some people think provide a societal benefit. So the measure is whether that societal result is worth it right now, not "what would I have gotten 30 years later if I had invested my tax dollars instead?" If you think there should be a mandatory retirement savings program, you can put one forward. But that's a whole other issue. And proponents would have to explain how we'd transition from the present system without leaving many current retirees in dire circumstances (the cost, I believe would be in the trillions, and was one of the major failings of Bush's privatization proposal), and how those with low incomes could possibly save enough to support themselves when they can no longer work.
- dsimon
November 13, 2011 at 10:05am
dsimon, how is it nobody of significance has gone to jail for the mortgage meltdown? You think in that case there is no evidence, lack of resources, lack of proof? Re: retirement, I have put a plan forward. It's called saving 20% of everything I make after taxes. And the plan has been in place for several decades. And it has worked very well. Yes, there was stuff I did without. While my friends were buying really nice cars, I was buying a pretty nice car.
- seattleeng
November 13, 2011 at 1:10pm
seattleeng: "how is it nobody of significance has gone to jail for the mortgage meltdown? You think in that case there is no evidence, lack of resources, lack of proof?" First, you said that if people did wrong in the private sector, they went to jail. OK, say it means "illegal." My claim was not limited to the financial sector. I bet there is a lot of behavior that never gets caught, just as there are a lot of robberies where perpetrators never get apprehended. Second, I bet there is a lot of insider trading that never gets reported, much less prosecuted. Do you think that everyone who does illegal insider trading goes to jail? So yes, there are illegal activities where people don't go to jail. Third, some illegal activity is hard to prove. You have to show that people knew they were committing fraud and not just mistaken as to values of certain assets. So even regarding the current financial calamity, it can be very hard to prove fraud beyond a reasonable doubt. And from what I've heard it may also take a huge amount of resources to pour through financial data and office memorandums and emails to prove these things even when they are provable. Regarding retirement, you didn't address either questions I brought up: how to transition from the present pay-as-you-go system to an individual retirement system without a dramatic tax hike, or how those who have low income jobs and are living paycheck to paycheck can possibly save enough to every retire. But I'm used to such issue avoidance by now. Nor does my description of how SS actually works and should be evaluated seem to be disputed. But I'm used to that by now too.
- dsimon
November 14, 2011 at 5:25pm