Archive for July 2017

ACA Repeal Failed … So What?   Leave a comment

Related imageSo the Republican Senate failed to tweak the misnamed Affordable Care Act (ACA) and then they failed to repeal the individual mandate and most of us who are being damaged by this destructive law are frustrated, but let’s be honest – what Congress was proposing wasn’t going to fix Obamacare. It is a deeply flawed law at fundamental levels because it ignores economic realities and anything that affects 1/5th of the US economy must be grounded on firm economic principles. So we shouldn’t be surprised that it’s failing.

We also shouldn’t be surprised that the GOP can’t fix it because they fear a backlash from the public who are being brainwashed to believe they need to prepay approximately 16,000 a year for medical care.

That is how US medical “insurance” works. It is not health insurance as insurance normally works. I have car, house and life insurance. These policies are much less expensive than medical “insurance”. I pay less per month for all three of these policies than I do for my portion of my employer-provided medical insurance. Why do I have those insurances? I mean, my car insurance doesn’t pay to repair my car or put new tires on it. My life insurance is only going to pay out if I die. My house insurance will pay me something if I have a fire or a tree falls on the roof, but it won’t replace the shingles if they wear out and the money for the new kitchen flooring must come out of my pocket. So why do I have these insurances since they don’t act like medical “insurance”? I have them to mitigate my financial liability in the event of a catastrophic event. If I die, if my house catches on fire, if some idiot slides into me at an intersection … but not for everyday expenses.

This is substantially different from how medical “insurance” works under the ACA. It covers day-to-day medical expenses. You can even get reimbursed for some over-the-counter medications. It’s not, truly, insurance. It’s prepayment of a portion of future medical care. I pay about $5000 a year for my portion of my employer-provided medical prepayment, but I have friends who are paying more than $16,000 a year for the same service and I know some people who would be paying nearly $30,000 a year (through the ACA exchanges) but they’ve opted not to participate in the stupidity any longer. Some people would say they are the reason the ACA is failing.

Let’s give them a round of applause!

 

In the Alaska Dispatch News this week, commenters were saying the ACA was required because the insurance and medical care systems were on the verge of collapse in 2009 and without the ACA, none of us would have medical care now. Let’s not get confused here — medical insurance is NOT medical care. I have medical insurance and the cost of it makes it difficult for me to afford medical care. I have never used more than $5000 in a year for medical care. If I had that money, plus the pay raise that would be possible if my employer weren’t paying $20,000 for their portion of my insurance, I would have a huge savings account at the end of 10 years instead of being unable to pay for medical care.

So, I got shouted down on the Dispatch and here’s my response.

Health care was hardly an unfettered, dynamic source of free-market driven innovation before President Obama decided to turn it into a socialistic system. Really! Take a look at history.

 

Repeal of the ACA would make an impressive headline and give the GOP something to crow about, but the short and long-term political consequences of repeal for Republicans would have been worse than doing nothing. After all the promises the ACA made of a medical care nirvana, we would have returned to the less-than-stellar system that existed before the ACA came into effect. The folks who are being crushed by trying to pay for unaffordable health insurance would be relieved not to be going bankrupt, but the problems with US medical care that existed in 2010 will still exist.

The ACA was a foolish legislation that ignored economic reality and it is already failing because of that. Go back to my articles from Economics in One Lesson by Henry Hazlett. Government policies fail because they focus on a temporary benefit for a narrow slice of the population instead of focusing on the long-term consequences of the broad swath of the country. Obamacare gives some Americans a lot for a little, with a lot taken from others in return for very little. Of course, it’s failing.

What evidence do I offer that it is failing? The rapid exit of insurance companies from the ACA exchanges indicates that the system is failing. The 300% increase in premiums in Alaska is further evidence. The 200% increase in premiums in several other states is another sign. The huge deductibles most of us now have on our insurance policies should wake us up. Some of us are woke up, but more of us are still brainwashed to believe this is medical “insurance” when it isn’t.

 

None of the politicians or those who support them are discussing how there is no right to any good or service of any kind. That means there is no right to health care, which didn’t really exist as we know it before the 20th century. In the 19th century, people routinely died of injuries and illnesses. A broken hip was a death sentence. If you got cancer, you were going to die. A sizeable percentage of women died in childbirth. Death was the norm before the 20th century.

Legislation didn’t change that. Trial and error by medical providers experimenting on their patients led to healing advances such that a market was created. In the late 19th and early 20th centuries, consumers began to seek medical care. Doctors were affordable. Churches operated hospitals. Fraternal organizations offered memberships to direct primary care clinics so that even laborers could afford medical care. Politicians then discovered medical care and decided it needed to be regulated.

It started small … with the American Medical Association complaining that doctors who were not part of the primary care clinic system were at a competitive disadvantage to those that were AND, convincing some politicians that doctors in general needed to be regulated by a wise, overseeing organization. Selflessly, the AMA offered itself as the wise director of this ultra important service. Of course, they didn’t have a crystal ball — in 1910, they didn’t foresee the coming of antibiotics let alone the MRI. That’s the problem with regulating any industry. Nobody can see the future. And, so as the future slowly presented itself, the government regulators kept looking back at 1910 medicine and trying to hold that standard, requiring innovation to climb a high regulatory wall before it can come to the marketplace. It takes 12 years of post-secondary education to create a doctor. It costs millions of dollars to bring new medications and treatments to the public and nowadays it’s very hard to test them on animals or people. But the real problem kicked in the Nixon administrations with the certificate of need requirement. That is the regulation that requires medical providers to show if a new facility, addition, or treatment is really needed. That can take years and add millions of dollars to any project or treatment. That boosts the cost of everything medical and often there is a requirement involved that new facilities don’t undercut existing facilities, which does nothing to reduce costs. The high costs and barriers to medical school reduces the number of doctors available to see patients, which means the existing ones don’t have to be concerned about competition, so can charge whatever they want.

All that existed before the ACA became the law of the land. Instead of fixing those problems, Obamacare exacerbated them. The absolute worst way to solve any problem, particularly one involving goods and services created in the marketplace, is to try and legislate it, but that’s exactly what we’ve done with medical care in this country. We had a good “system”, but we have gradually turned it into a nightmare with over-regulation.

I don’t believe that the ACA delayed the comeuppance of the medical care markets in the US. I think it accelerated it. Now the ACA is failing. Forget what the GOP failed to do … I know a half dozen people who have stopped paying for medical insurance. They came to a place where the premiums were higher than their mortgage payment and decided to break the law. Some of them  have mitigated their financial risk by buying a major medical (catastrophic) policy and piling up savings. Others are still scrambling to figure it out, but I trust they’ll work it out. I’m not worried about them. They know what they need to do and they’ll get there soon enough. I expect a lot of people will be going that route in the near-future. I wish I could join them, but I’m stuck in an employer-provided system.

So, the ACA is failing and that will be unfortunate for the people who bought into the “free to you” rhetoric. It’ll probably work out well for the middle class who didn’t qualify for subsidies and were being crushed by premiums. I’m concerned that govenment will insist they have to make it work even when it can’t work. I’m less concerned with the GOP in Congress, but I think President Trump — who has said in the past that he prefers univeral, single-payer medical insurance — will be tempted to slow down the crash with regulatory tinkering. I hope he doesn’t do that because as soon as it fails is when a real and productive conversation about medical care (not insurance) can start.

I don’t have a crystal ball, but I’m going to use my writer’s imagination here.

The ACA fails and the medical insurance industry crash hard. People who have been prepaying $16,000 a year for a few thousand dollars of medical care will now be desperate to mitigate their fianncial risk in the event of a medical crisis. They will rush to the major medical/catastrophic insurance providers. They will take the additional $14,000 and either pile up savings or join a direct primary care network. They will now pay $3000 a year for medical insurance and medical care access which will allow them to pile up savings to pay out-of-pocket expenses or to invest that additional $10,000 a year in something that will actually provide productive value to their lives. Medical care will still be available. A lot of it will be expensive, but as people realize how much it costs to get an MRI, for example, they will begin to demand to know why and the costs will come down. What’s more, people will start taking care of themselves and taking responsibility for their own stupid behaviors. New insurance products will appear. If you’re an extreme athlete, you may be able to get an insurance policy to cover the potential consequences of your stupidity, for example. That would be an insurance policy that couch-potatoes don’t have to buy because they are not flinging themselves off cliffs with snowboards tied to their feet.

Because the American people have become such sheep, in need of the government to tell them what to do on the most basic things, I suspect things won’t work out this well, but I can hope.

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Posted July 31, 2017 by aurorawatcherak in economics, Uncategorized

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Keeping It Simple   2 comments

What Are Your Favorite Blog Plugins?
Write out all the awesome plugins that you are using on your blog. Make a big list of how you use them and why others should also be using them.

WordPress:



Custom Blog:


An InLinkz Link-up

get the InLinkz code

To be perfectly honest, I don’t use a lot of plugins. I’m still using a “free” Word Press blog, which means that I can’t use a lot of the plugins available, but I’m not sure I would even if I could. I am definitely a subscriber to the “Keep it simple, Stupid” school of most things.

Image result for image of a wordpress appWhich is why I have only four plugins I would recommend for every author.

Word Press allows you to link your social media accounts, so that when you post on your blog, it also posts to Facebook, Twitter and other social media sites. This definitely falls under the KISS concept because I don’t have to mess with my other social media accounts. Right now, I’m in rewrite mode for “A Threatening Fragility” and so Twitter is being updated while I’ve taken a hiatus from maintaining it. While I know I’ll drop some in stats because I’m busy elsewhere, I can afford to do that because my blog is still feeding into Twitter.

It also allows you to post to Goodreads. Because my blog is not always book-related, I don’t have that plugin for Goodreads set up on my main blog, but reblog book-related articles on Daermad Cycle’s page, which is linked to Goodreads. It’s an extra step that allows me to use the linking feature for Goodreads without annoying readers with political philosophy, economics and Christian themes.

The second recommendation that I have is Grammarly. You can associate this grammar checker with your blog quite easily and it saves all the mess of cutting and pasting from Word to check your blog articles. Again, KISS dictated its use for me. Once I set it up, it works there in the background and I don’t need to think about it much.

Buy links are available for Amazon for Word Press and Facebook. I highly recommend these point-and-click bait buttons. Make it easier for your potential readers to buy your books … give them a one-step portal to your Amazon author page.

Newletter signup. Word Press in association with Mailchimp allows visitors on my blog to sign up for my newsletter … which I only publish every few months. It’s a simple process to sign up and insert the commands and “they” claim that authors need to build a mailing list.

So, that’s it. I’m sure there are dozens, maybe hundreds of plugins one could use and there may be a day when I get around to using a few of them, but these four are the most basic, the simplest and the ones I think give me the most benefit.

There comes a time when authors need to stop playing on their blogs and return to writing their books. I’m there … I really am … but if you have any recommendations for me … you know … comment.

Welcome One Another   Leave a comment

Being a parent is an amazing thing! Nothing I have ever done has given me more joy and rewards than being a parent. Do good to my children and you have my undying gratitude. Hurt one of my children and … mama grizzly. This is true even though they are now adults. My kids never really fought against one another. They were six years apart and a boy and a girl, so there just weren’t a lot of territorial issues. But I’ve observed friends’ kids who fight among themselves all the time. My cousins used to actually leave bruises on each other. I could never manage how I would feel if one of my kids hurt the other. Who would I be mama grizzly to? I suspect I would have taken Kiernan’s side because he was so much younger than his sister. How dare the big person pick on the little person.

Image result for image of christian fellowshipDid you know that God the Father feels the same way I do? He absolutely loves being a parent. He cares about each of His children in the deepest way imaginable. What grieves Him is when one of His children hurts another one of His children. Worse yet, He is deeply grieved when one of His children who has been given much dishonors one who has little.

God will not tolerate divisions and distinctions within His body—the church — because it is His body, the dwelling place of the Most High God and He is serious about defending it, even from itself. In 1 Corinthians 11:17-34, Paul provided three exhortations for us to follow.

Include the Entire Body of Christ in Worship

Now in giving the following instruction I do not praise you, because you come together not for the better but for the worse. For in the first placewhen you come together as a church I hear there are divisions among youand in part I believe it. For there must in fact be divisions among youso that those of you who are approved may be evident. Now when you come together at the same placeyou are not really eating the Lord’s Supper. For when it is time to eateveryone proceeds with his own supperOne is hungry and another becomes drunk. Do you not have houses so that you can eat and drink? Or are you trying to show contempt for the church of God by shaming those who have nothing? What should I say to you? Should I praise you? I will not praise you for this! 1 Corinthians 11:17-22

Let’s remember, that Paul has just concluded his remarks on the role of women in the church with praised mixed with some correction. Now, he rebuked the church at Corinth for being divided. The conjunction “but” (or “now” in the NET translation) serves to contrast the worship events of 11:17-34 with 11:2-16. The equality the Corinthians were misusing in 11:2-16 was resolutely denied when it came to the observance of the Lord’s Supper. This is confirmed by the use of the verb “praise.”7 In 11:2, Paul praised the Corinthians because they remembered him in everything and maintained the teachings he passed on to them, while in in 11:17 he did not praise them on account of their class divisions. Instead, he declared that they gathered together not for the better but for the worse.

Image result for image of the lord's supperThe verb translated here “come together” (sunercomai) is used five times in this passage (11:17, 18, 20, 33, 34). Elsewhere, the verb referred to either coming or going with one or more persons — basically to travel together with someone). Additionally, sunercomai is used in sexual contexts to describe coming together to unite in an intimate relationship. There’s some irony when Paul repeatedly described the Corinthians as coming together in one location, knowing full well that their eating was anything but “together” as a unified body. The ritual that was intended to celebrate the gospel and symbolically act out their oneness in Christ had become an occasion for splitting the church on the basis of status.

What were they doing that Paul disapproved of? Instead of treating one another with brotherly love and acting as the family of God, there are divisions among them. Some had more than enough to eat and drink at the Lord’s Supper while others got insufficient quantities. The “have-nots,” were humiliated by the actions of their counterparts. A situation like that in the Body of Christ deeply grieves God.

“Factions” or “divisions” can have a positive side. They serve to clarify whom God approves as faithful and who He doesn’t. God’s approval (dokimoi) contrasts with what Paul had written earlier about being disapproved (adokimos; 9:27) by God. Mature Christians will become evident in times of crisis.

The Lord’s Supper was usually part of a meal the early Christians shared together—the “love feast.” In Corinth, instead of sharing their food and drinks, each family was bringing its own and eating what it had brought. The result was that the rich had plenty but the poor had little and suffered embarrassment. Not exactly a picture of Christian love and unity. They were eating their own private meals rather than sharing a meal consecrated to the Lord. Worse, some with plenty of wine to drink were getting drunk and we all know how drunk people act.

Instead of partaking of the Lord’s Supper, the Corinthians devour their food while the poor go hungry. It’s not really the eating that is the issue, so much as the refusing to share food and drink. The grammar suggests that the “devouring” took place during the meal itself. The wealthy members of the Corinthian church were guilty of gluttony and drunkenness while the poor went without. This notion can also be supported from the customary practice at Greco-Roman banquets where wealthy hosts—those with homes large enough to host the communal meal—would have assigned the biggest and best portions of food to the more privileged.

Paul refused to tolerate what was socially acceptable in ancient Corinth. He felt grieved at the behavior of the church and the only appropriate response of the Corinthians was repentance. A meal designed to express unity was being abused in a way that highlighted  the disunity of this church. The cliquish behavior of the Corinthians reflected significant social and economic differences. What should have been an inclusive community meal had become an occasion for simultaneously private meals. This was an affront to Christ and His gospel.

Guess what? The 21st century churches are no more immune to divisions than Corinth was. Take a look around your congregation when you attend church. Does everybody pretty much look like you? Because of American zoning regulations, we often go to churches that are very homogenous. We all make about the same amount of money and often work in very similar industries. Because of our history of doing ethnic ministries as church starts, most congregations speak the same language and have a similar skin color. We struggle to reach out to those who are different from us. Maybe if we go to a “white” church, we feel guilty that there are only Caucasians in the congregation, but many ethnic congregations see absolutely nothing wrong with their ethnic insularity. Paul would have and I can assure you that God does.

Recapture the Significance of the Lord’s Supper

For I received from the Lord what I also passed on to youthat the Lord Jesus on the night in which he was betrayed took bread, and after he had given thanks he broke it and said“This is my bodywhich is for youDo this in remembrance of me.” In the same wayhe also took the cup after suppersaying“This cup is the new covenant in my bloodDo thisevery time you drink it, in remembrance of me.” For every time you eat this bread and drink the cupyou proclaim the Lord’s death until he comes. 1 Corinthians 11:23-26

Paul gave a brief theology of the Lord’s Supper, reminding the Corinthians and us to remember the Lord’s Supper symbolizes Christ’s self-sacrifice on behalf of His people. Twice, Paul urged the Corinthians to remember the death of Christ. By partaking of the bread and the cup, we remember that Jesus Christ took our hell that we might have His heaven. It is His “body on our behalf.” The Lord’s Supper is God’s way of getting us to keep the cross of Christ central in the life of the church. We use the Lord’s Supper to draw close to Jesus in gratitude for what He has done for the entire church through His cross. As we draw near to Him through His Supper, He will draw near to us.

Image result for image of a multicultural church

The new covenant represents God’s declaration of His devotion and commitment, even though the other covenant partner, His people, had not remained faithful. When we partake of the Lord’s Supper, we remember what Jesus has done for us in spite of ourselves. The proclamation of the Lord’s Supper is to show forth the Lord’s death until He comes. The Corinthians were to use the Lord’s Supper as an illustration of the death of Jesus and what it accomplished for their salvation and corporate fellowship. The Corinthians shouldn’t overindulge themselves, despise and shame others, or allow brothers and sisters to go hungry, for all those behaviors are selfish.

Judge Yourselves to Avoid God’s Judgment

For this reasonwhoever eats the bread or drinks the cup of the Lord in an unworthy manner will be guilty of the body and blood of the Lord. A person should examine himself first, and in this way let him eat the bread and drink of the cup. For the one who eats and drinks without careful regard for the body eats and drinks judgment against himself. That is why many of you are weak and sickand quite a few are dead. But if we examined ourselveswe would not be judged. But when we are judged by the Lordwe are disciplined so that we may not be condemned with the world.  1 Corinthians 11:27

The opening word “therefore” (also seen in. 10:12; 11:33) indicates that Paul was resuming his main discussion from 11:22. He was drawing a conclusion from what he had said and giving an explanation to his teaching. Since the Lord’s Supper is a proclamation of Christ’s death (11:23-26), eating and drinking “unworthily” is unconscionable. The word rendered “unworthy manner” is not an adjective describing the condition of the one partaking of communion, but an adverb, describing the manner in which one partakes of the Lord’s Supper. The Corinthians themselves are not unworthy. They’re God’s children. The sin of the Corinthians was that they were observing the Lord Supper in a way that was unworthy of it.

Paul didn’t command the Corinthians to examine themselves to see whether or not they are Christians, or even to see if they have sin in their lives, but to see if they are properly discerning the body of Christ. One who treats fellow believers poorly fails to discern that they are members of Christ’s church, His body. One may also fail to discern the significance of Christ’s death since by His death He created a people; and therefore one who mistreats fellow believers at the Lord’s Supper reveals that he or she has little understanding of why Christ died. If you are not in fellowship with another believer, you should strive to resolve the schism in your relationship before you partake of the Lord’s Supper. In Matthew 5:23-24, Jesus told His disciples not to worship God until you have first reconciled with your brother. Fortunately, Paul provided a supplementary note … “If possible, so far as it depends on you, be at peace with all men” (Romans 12:18). It’s not always possible to attain this, but God’s goal is that there not be any outstanding balance in your fellowship bank account. Instead, we are to pursue peace.

It always amazes me that people still believe God doesn’t judge us and doesn’t want us to judge ourselves. What Bible are they reading? Not the same one I read. Here in 1 Corinthians the judgement is physical and progressive: weakness, sickness, death. The word “weak” refers to illness of any kind (depression, anxiety could be included) while the term “sick” refers to weakness and on-going poor health. The verb “sleep” refers to the death of a believer. Paul was dealing with illness as a physical divine judgment; but not all illness is a judgment. These verses apply only if and when the problems of weakness, sickness, and death are problems resulting from divine discipline because of unconfessed sin.

Paul clearly stated that the Corinthians would not be judged if they judge themselves. Our goal must be to judge the sin in our own lives before God must expose it. We must humble ourselves before we are humbled or humiliated. I don’t know about you, but I have enough issues in my life to keep me busy.

But we humans are so good at judging others. Some of us look down on people who listen to worldly music, watch R-rated movies, drink alcohol, dance, play cards, spend money on things we wouldn’t buy. The ability to see sin in others and ignore it in your own heart is one of the distinguishing characteristics of a Pharisee, and being a Pharisee is so easy. It’s great to make rules to guide our own behavior, but when we extend those rules to everyone around us, we’re in danger of becoming pharisaical.

The verbs “judged” and “disciplined” are both present tense verbs indicating on-going activity. This suggests that the goal of God’s discipline is remedial. It’s not a punishment. It’s meant for our good, not for a pound of flesh. God disciplines us because He is a loving Father (Hebrews 12:5-11) Who desperately wants our good.

Scripture speaks of three levels of God’s chastening, or discipline:

  • Internal Chastening. God deals with us in our hearts and nobody knows it is happening except us. If God is disciplining you at this moment, that is the best way to have your problem solved. If you and I can come to the place that God puts His finger on something, and we say, “Thank you, Lord, for loving me this much,” then we are judging yourself. If this level of discipline is not effective, God moves to…
  • External Chastening. The consequences of our sin become obvious because God’s discipline goes public. This is where Jonah ran from the Lord, and God chastened him. He was not weak or sick. He was swallowed by the fish. Had Jonah not surrendered to God’s will the second time, God had another plan. If this second level of discipline fails, God will up the ante.
  • Terminal Chastening. In this level, God calls the believer home prematurely.

 

Welcome One Another

So thenmy brothers and sisters, when you come together to eatwait for one another. If anyone is hungrylet him eat at homeso that when you assemble it does not lead to judgmentI will give directions about other matters when I come. 1 Corinthians 11:33-34

Instead of some gorging themselves while others go hungry, each should share what they have, and all should eat together. In this way the Corinthians would have reflected the unity of the body (“they judge rightly,” 11:29), and averted the judgment of God.

The phrase (ekdechomai) translated “wait for one another” really means something more like “welcome one another.” When used in relation to people, it usually means “to take or receive from another” or “to entertain”. And this makes logical sense. Taking your turn would not solve the problem in the Corinthian church of that poor being without food. The rich “waiting” for the poor to arrive and then partaking together will not remedy this difficulty. Paul was saying “care for one another by showing hospitality to one another! Receive each other as equal members of the body of Christ.” If the Corinthians are just there to indulge their appetites, Paul advised them to stay home. If the church’s gathering is to be meaningful it has to be an expression of real fellowship, which includes sharing.

 

Stay Tuned for the Cover Reveal   2 comments

A Threatening Fragility, the third book in the Transformation Project series, will head to the beta readers next week. It should be published this fall. Soon, the cover will be ready for preview.

I recently took a couple of weeks mostly off social media to complete the working draft of the book. I reached a point where I recognized that maintaining my Twitter page was costing me time I needed to finish the book.

This book’s journey has been a more complicated than previous novels. When I published Objects in View (Book 2 of the same series) almost a year ago, I planned to turn my attention to the 3rd book in my fantasy series, Daermad Cycle, but I struggled to keep my attention on the project. I’m writing it and what I am producing is good, but I’ve had trouble concentrating on my stated primary project. I’ve written two short stories and revisited a literary fiction in my back catalog. Eventually, A Threatening Fragility won first place in this multi-pronged writing exploration. The point is to produce quality books, not to follow some predetermined publication schedule that risks causing writer’s block, which might impact my ability to produce quality books. This is the biggest advantage of being an independent author. My publishing cooperative doesn’t hold me to the same conditions a traditional publisher might.

If you’re a fan of Daermad Cycle, it’s likely you’ll need to wait until sometime in 2018 for Fount of Wraiths, but it will be good. Like fine wine, fine fantasy takes time.

If you’re a fan of the Transformation series, you can soon find out if Cai survives the Army’s search for him, if Shane kicks Rob’s butt for drugging him, if the farmers can hang onto their crops, and who is going to win the presidential wrestling match. Things are turning dark on the Kansas prairie. Come see how the people of Emmaus cope. For those unfamiliar with the series, it could be termed a libertarian apocalyptic. I don’t look for government to rescue people if society goes off the rails, but I believe powerfully in people being the heroes in their own story … individuals cooperating with other individuals to find their way to a better place. I also believe that human beings are varied in their skills and ability to cope. People who are nice in times of plenty may become evil when pressed by starvation or imbued with power. Come see how that works out in the book when it publishes sometime this fall.

 

Peril of Perfectionism   4 comments

Don’t let the perfect get in the way of the good. That’s an old saying that has never been truer than today.

Environmental activists tend to be perfectionists. They want air quality to be completely free of all pollutants. That sounds like a worthy goal until you realize that it is unachievable.

Image result for image of container ship

Seriously. If we want to have warm homes, be able to travel and make things for consumption, we have to burn fossil fuels to power things. Currently, renewables make up less than 10% of the energy available and that’s with massive government investment well above the return on the dollar. Fossil fuels may be replaced someday by nuclear electric powering hydrogen fuel cells, but we’re nowhere near that dream right now.

And, then there are the forest fires. I woke up to completely natural air quality contamination on Sunday morning, but that’s another topic for another day.

While some activists want to eliminate all fossil fuels use in the name of air quality, it is not possible without major disruption to our quality of life, jobs and economy. That’s the “perfect” getting in the way of the good.

The United States has made major environmental improvements over the last 40 years. That’s a net good for all Americans and we certainly don’t want to backslide now, but many environmentalists refuse to see the good that has already been done and to recognize that clearing the air completely is not possible.

Consider this example of positive change. Totem Ocean Trailer Express (TOTE) hauls more than 35% of all goods consumed in Alaska. That makes them a vital part of the Alaska economy. When they lost a barge in a storm last winter, our grocery store shelves looked pretty barren for the next month while they strove to replace the lost stock. If they failed to sail at all, Alaskans would go hungry.

In 2012, TOTE announced plans to convert its maritime fleet to operate on cleaner-burning liquefied natural gas (LNG). The fuel switch on its East Coast ships operating in the Caribbean is complete. Now, TOTE Alaska Maritime is focusing on the transition of its vessels operating between Tacoma and Anchorage.

In 2014, TOTE inked an agreement with Puget Sound Energy (PSE), Washington’s largest supplier of electricity and natural gas, to furnish LNG for its ships, but now its LNG conversion has hit a roadblock.

Activists are attempting to block construction of PSE’s $300 million LNG plant on Tacoma’s Tide Flats. If they succeed, they will put Washington’s ports at a competitive disadvantage with Los Angeles and Vancouver, B.C., ports which are currently adding LNG facilities.

“By switching from diesel to LNG, maritime vessels at the port will reduce their greenhouse gas emissions into Tacoma’s air by more than 30 percent and dangerous particulate (smoke) emissions by more than 90 percent,” Puget Sound Energy Vice President Andy Wappler pointed out in The News Tribune in Tacoma.

The Environmental Protection Agency calculated there are 23 million people with port-related jobs and seaports account for 26% of the U.S. economy. There are an additional 39 million Americans who live in proximity to ports.

LNG processing reduces greenhouses gases and eliminates other air contaminants. During conversion from natural gas to LNG, CO2 and other pollutants are removed. LNG is simply the same natural gas many Americans use in our homes and businesses, only purified and refrigerated to minus 260 degrees, where it turns into a liquid. It is not explosive or even particularly flammable in its liquid state.

When warmed, it’s the same fuel folks use in their stoves and furnaces, and requires the same safety precautions. LNG storage tanks are not pressurized, so cannot blow up if there is a breach.

The tank PSE plans to install in Tacoma is “designed to withstand a once-in-every-2,450-year earthquake (compared to our highway bridges, which are designed to a 1,000-year-earthquake standard),” Wappler contends.

PSE’s new facility doesn’t just benefit TOTE and other shippers. Wappler figures it will save its natural gas customers between $50 million and $100 million over 10 years compared to the cost of increasing pipeline capacity into the region.

There is one other environmental benefit. TOTE’s relationship with Alaskans for Litter Prevention and Recycling brings tons of recycled material to Tacoma for processing.

Grace Greene, TOTE’s Alaska general manager, told Alaska Business Monthly magazine there are other partners who contribute to the project, “but we’re probably one of the top three contributors, to the tune of more than $1 million every year.” Recycling has never really taken off in Alasaka because of the cost of shipping refuse to the Lower 48 for processing. TOTE is improving that situation and perhaps reducing the amount of trash Alaskan landfills collect.

As with everything humans do or build there are associated risks, but total risk avoidance is impossible. Why strive for the perfect and reject the good getting better?

The Folly of the Horizon Air Pilot Shortage   Leave a comment

Supposedly robots are going to take over our jobs pretty soon, but there are six million job openings in the US, and large companies in a range of industries claim they are running short of humans to perform labor, so maybe the truth is that robots aren’t quite ready to take all of our jobs. American companies don’t have a shortage of people. Their problem rests with wages, benefits, and training, and that’s a problem they could fix, but haven’t.

Horizon Air is a prime example. A regional airline and subsidiary of Alaska Air Group, Horizon services the Pacific Northwest including Alaska. The Seattle Times reports it’s “cutting its flight schedule this summer because of a severe shortage of pilots for its Q400 turboprop planes. The shortage became a crisis this summer when Horizon was forced to cancel more than 318 flights because it didn’t have enough pilots to fly all its planes. That represents 6.2% of the flights Horizon runs between Seattle and places like Boise, Spokane, and Portland.

Let that sink in a moment. Horizon’s bread and butter is flights between Seattle and smaller airports like Boise and Spokane and Nome, Alaska. Flying these routes isn’t a side business for Horizon. That’s it’s only business. Canceling flights damages their brand and their company’s long-term prospects — it alienates and annoys customers who have already purchased tickets. It also hits short-term profits. If you’re in the business of moving people from Point A to Point B, the more you can move the better. You’ve already committed to pay the overhead of planes, insurance, gate slots at airports, maintenance, and ground crews. You should want passenger volume to be as high as it can be. This is the equivalent of Starbucks deciding not to open several hundred existing stores because it doesn’t have enough managers.

Recognize that Horizon Air isn’t some fly-by-night operation unable to cope with the mysterious ways of the marketplace. It’s a unit of Alaska Air Group, a publicly held company that has a market capitalization of $11 billion and chalked up $1.7 billion in revenue and $99 million in net income in its most recent quarter. That’s a big balance sheet, representing vast resources, stock, borrowing capacity, and access to all kinds of services. While not considered one of the majors yet, Alaska Airlines is an up-and-comer who is pushing the major airlines to either do better or get out of the way. So, what’s going on?

alaska airlines horizon air

There’s a metaphor in a big airline intentionally grounding flights because it can’t find pilots. Horizon (and other companies in this situation) are paying the price for a decade or more of corporate sickness surrounding wages. Here’s an economics lesson.

Labor is a commodity … just like gasoline or sugar. It’s subject to the laws of supply and demand.

When labor is in abundant supply and lots of people with the needed skills are looking for jobs, but openings are few, companies don’t have to pay as much to fill positions.  That’s where we were from 2008 to 2012 … a lot of hungry people, not that many openings, so the companies could set whatever wage they wanted and workers would take it because they needed to make some money rather than make no money.

Conversely, when labor is in short supply and few people with the needed skills are seeking work, but there’s lots of openings, companies have to pay a lot more to fill positions. That’s the reality of airlines in the last few years. The number of people flying has increased, but a lot of Baby Boomer pilots have retired, so now the pilots who are still working are in demand and they know it, and expect to be paid more.

So why aren’t businesses adapting? Maybe a lot of business managers never took Economics. They’ve become accustomed to thinking they can have all the labor they want, with all the skills they need, without having to pay much for it. They no longer want to offer good benefits or long-term job security or they refuse to fund the training needed for pilots to qualify to fly new aircraft.

We’ve been hearing complaints about a pilot shortage for a few years now. The problem seems particularly acute at regional airlines, which often pay exceedingly low wages for jobs that require training and education that can cost up to $100,000. To weather its current problems, Horizon will pay some pilots overtime to fly extra hours. Of course, there are FAA rules against flying too many hours in a given day, so that’s a temporary fix at best.

I happen to know several Alaska Airlines pilots (I have a friend who caters to them), who have privately told me what the problem is and it doesn’t just affect Alaska/Horizon. The airlines have become tightwads who don’t understand supply and demand. If Alaska Air Group wants to fix the problem, they need to:

  • offer higher wages to people who already have jobs so they will leave their jobs to work for the other airline
  • offer existing employees better long-term incentives — profit-sharing, stock options, pensions and other benefits that will encourage them to stay
  • Recruit new employees by offering to train them or pay back the loans they incur while getting the training, or offer to split flight school tuition in exchange for a long-term commitment to the airline

Coping with a shortage of skilled workers by shuttering a portion of your operations doesn’t seem like much of a solution. Of course, this affects me because Alaska Air Group provides the majority of air travel in and out of Alaska. So work it out, guys. Don’t allow your great customer service to deteriorate because you’re stuck in a business model from nearly a decade ago.

Third Time’s the Charm?   Leave a comment

Image result for image of Alaska legislatureAlaska legislators have called themselves back into a third special session to address the state capital budget. Governor Bill Walker called the previous two special sessions after the Legislature utterly failed to get anything done during the 90-day regular session. He expressed reluctance to call legislators back into session (which is extremely expensive) until they were in substantial agreement on the capital budget, but a tentative deal has been struck on the measure that appropriates funds mainly for state construction.

The House-Senate conference committee on the capital budget is set for 1 p.m with only one item listed on the agenda, though others items could be added. Both the House and Senate passed different versions of SB 23 but reconciliation between
the two must be agreed on, enacted and signed by the governor. The bill should have been in effect July 1, which is the start of Alaska’s fiscal year, and some road and facilities projects have affected by delays of state money to match federal funds. The Legislature must act quickly to minimize those losses.

However, disagreement on key areas in SB 23 are focused on issues not related to construction. One is over funds appropriated for payments on past oil tax credit liability, which totals over $700 million. The Senate approved $288 million for this and the House $57 million.

Another disagreement is over money for the state gas corporation, Alaska Gasline Development Corp., which is now leading the big Alaska LNG Project. In its version of the capital budget the Senate cut $50 million from AGDC’s available funds, which now total about $80 million. In its version of the capital budget the House left AGDC’s funding intact. AGDC, a critical and long-term project for the state, will like be dinged in the final compromise although a $50 million cut seems unlikely. If too much money is taken out the corporation’s ability to continue the Federal Energy Regulatory Commission (FERC) license application process will be in jeopardy. There has been a huge investment
in this project to date and keeping the regulatory process on track is necessary to retain that value. The LNG pipeline project is a big priority for the governor and the lower cost fuel is critical for Interior communities, but the Senate is very skeptical of the near-term viability of any large LNG export project, though aware that a smaller in-state-only line will not lower heating and electrical generation costs for Interior residents.

The final potential area of uncertainty is the language in the House version of SB 23
that would fund an extra $750 million for Permanent Fund dividends. Lawmakers have already approved $750 million in the operating budget, which has been signed by the governor and is now in effect. This is sufficient for a $1,100 PFD check this year. The House proposes adding $750 million to that through the capital budget, to bring the PFD up to about $2,000. The House added the extra money late in its own capital budget version and it was connected to political maneuvering, so the lower figure is likely to prevail. There is broad consensus and unpopular consensus in both the House and Senate that the PFD does need to be capped. This not being an election year, Legislators appear to be gambling that Alaskans won’t punish them in the polls next year.
Image result for image of alaska oil wellHB 111 basically finished what HB 247 attempted to do last year in winding
down the state’s costly oil exploration and development tax credit program. HB 247 set up a three-year phase-out, but did not deal with how Net Operating Losses, or NOLs,
were treated for tax purposes. HB 111 put curbs on the NOLs, totally ending the cash payments and restricting NOLs to deductions against future production income with 10 percent annual reductions beginning in seven years for losses on producing properties and 10 years for losses on non-producing properties. It would take several years before the allowable deductions are reduced to zero.

Significantly, the bill prevents NOLs from being taken so as to allow the required minimum tax to be taken below 3 percent of gross value. This would represent an immediate tax increase for companies with NOLs that are also producers (mainly Caelus Energy and possibly Eni) but the extent depends on the company’s tax situation, which is confidential. ExxonMobil and BP may have a tax exposure because these companies might have large past-year NOLs because of their massive Point
Thomson investments. Major producers are not otherwise affected.

Which is my whole reason for posting this article. The major producers are large multinational corporations and yet this bill does nothing to reduce the tax welfare that Alaska pays to these companies. Iraq pays $2 a barrel to BP in production credits. Alaska will still be paying 10 times that much. But, the Legislature spent the entire regular session fighting about whether to impose an income tax on Alaska residents while giving money to huge corporations for producing our oil. At one point last year, the State was paying more in production credits than it was receiving in revenue. Thank goodness for savings.

So the outcome of HB 111 is that the tax burden on the more competitive smaller companies will increase, but the major producers will be held harmless. This is why I hate government, because it will always side with whomever can line its pockets best regardless of whether that company is producing (like Caelus Energy) or sitting on leases (like BP). When will we get around to rewarding actual production? That’s right … never because that’s not what the Legislature is all about. It’s about maintaining a relationship with multinationals who have no intentions of producing those leases until the State is completely desperate and willing to give away the moon to get a trickle of income.

Remember this next year, folks! Remember and vote them all out. Don’t replace them with someone of the same party because that just keeps the established relationships inheritable. No, instead, vote third party and send a message that we are no longer playing the same stupid games that we’ve played for 40 years. The libertarians don’t owe any oil companies because, not having been in power, the oil companies haven’t gotten around to bribing them yet, and being by and large business people, they might actually have some understanding of economics so that they will think to reward the producers and put the non-producers (those sitting on leases) on notice that they’d better get busy or get lost.

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