You're hoping for a BAILOUT??

This is interesting and we wonder how much this contributes to the high cost of health insurance in the D.C. area.

We recently recieved an explanation of benefits form from our health insurer, CareFirst (aka Blue Cross).. it said that they had paid a doctor for a visit I had two days before Christmas. Problem was I didn’t see any doctor two days before Christmas and had never seen the doctor indicated on the form.

Spent 30 minutes on hold to tell them they paid a wrong claim. Not sure whether its fraudulent or just a mistake.

The CareFirst response: “Call the doctor yourself and tell him he submitted a false claim.”

Yeah…like we have nothing else to do.

I know, it was only a relatively small amount…but let multiply it by a whole lot. I’m wondering if anyone at CareFirst knows what their front line telephone employees are doing with their money. Hey, we all make mistakes but it would be great if they at least ACTED like it mattered that they were spending money they didn’t need to be spending.

So on Tuesday the President met with a cadre of small banks, begging with them to loan more.

Two things very interesting about this:

1.  As the Washington Post noted, these weren’t just any banks, or even a cross section of small banks from around the country. These were banks from congressional districts where Democrats face tough races this fall. You see…this has nothing to do with economics or what’s good for the American people. EVERYTHING he and the others do in Washington is political. (It was all politics, not economics, when they decided to pull the plug on the dumb idea to tax plastic surgery procedures and switch it to another dumb idea to tax tanning salons.)

But, as Harry Reid defended the bribe paid (with YOUR money) to Nebraska Senator Ben Nelson (hey Senator, here’s what I’ll give you if you vote for health care reform–we are going to treat Nebraska differently from other states and give you a permanent exemption from Nebraska’s share of Medicaid exemption…how’s that?”) …”That’s what legislating is all about.”

How brazen.

How B.S.

2. Back to the bankers. Know what their response was?: “it takes two to tango and right now there is no demand for loans. This is exactly what the small businesses I work with are telling me… ”

a. “too risky to expand”–no telling what the rules will be next year

b. “too expensive to expand”–health care reform will surely increase my costs, cutting into my profits

c. “end of recession? What end of recession?” : until the economy gets going and people are getting back to work no one is buying…so what do I need to borrow money for?

The horse trading continues in the effort to jam “health care reform” down the throats the the American public. Until yesterday the Senate proposal included a 10% tax on cosmetic surgery procedures. Nothing particularly rational about that at all…just picking on cosmetic surgeons, presumably because they “make too much money” and what they do is “unnecessary.”

Problem was that the Democrats need the support of the American Medical Society to get “reform” through. They weren’t getting it as long as the cosmetic surgeons were being unfairly singled out for tax.

So what did the wizards in the Senate do? According to today’s Wall Street Journal, the pulled the ‘ol switcheroo and decided to “un-tax” the cosmetic surgeons and tax tanning salons instead. Presumably what they do is even more “unnecessary” than what cosmetic plastic surgeons do.

I guess the salon tanning industry has a smaller lobbying force!

Here’s the problem with politics. ALL decisions are made for political reasons. There’s not a one of them who understands economics. Virtually everything that comes out of Washington comes out for a bad reason.

You cannot stimulate an economy out of a recession by taxing. The only way to stimulate spending is to reduce taxes across the board. This allows more employers to hire and more employees to go out and buy. Its a simple formula but not achievable when every decision you make is based not on what is rational but on what political favors you are buying.

I just got finished listening to a fascinating CD of a talk that Dan Kennedy gave recently in Philadelphia. It seems that prior to the talk someone had sent a “preemptive complaint letter” asking when Dan was going to “get real” and realize that the economy is “in the tank” and no one is buying anything.

Kennedy then proceeded to absolutely destroy that argument by giving example after example of business who seemed to be deliberately avoiding “making a sale” by their gross ineptitude in their salesmanship. I mean I was howling as I listened to the story about the Cleveland car tire dealership where Dan’s wife was trying to buy $1,200 worth of tires and the sales person “downsold” her right from the start to the point where she got confused about what do to and Dan told her to come home.

No sale.

As Dan points out the executives of this car tire company will be blaming the recession or blaming the radio ads that actually got Dan’s wife to go to the store but it was really the crappy sales person at the front desk who is either untrained or unwilling to learn how to sell tires.

In another story that Dan wrote recently he told of going to a men’s clothing store and picking out about $600 worth of slacks. When he went to check out he told them he needed them hemmed and they told him “great” you can pick them up in 30 days!!!

As Dan puts it, he just dropped the pants on the counter and walked out…what’s really instructive is that as he walked out not one of the salespeople who were standing around tried to stop him, attempted to make sure the pants could get hemmed in a day or two or did anything to save a $600 sale. They’ll blame the recession, too.

If money isn’t’ coming to your business its not because of the recession. People are definitely spending money on something and if its not you you must figure out why.

Are you like the tire dealer or the men’s clothes store?

By the way…if you are reading this and you aren’t getting Dan’s No. B.S. Marketing newsletter and you are running a business you are making a huge mistake. You have a choice. Will your 2010 be “more of the same” or will you increase revenues and profits and makes your goals?

Do yourself a favor and at least watch the video I have for you here.

Interesting editorial in this morning’s Wall Street Journal.

Here’s the issue:

President Obama is attacking the banks, encouraging them to “lend more.”  He says (to banks) “you are making too much money and “you guys caused the problems.”

In my discussions with small business owners, its not “bank lending” that is at the core of their issues but its

1. how can I get more customers in the door — I’d be fine if I could get that fixed; and

2. I’m not sure what the rules will be next year (i.e. will health care costs and/or increased taxes affect my bottom line)  so I’m not going to risk a bunch this year on increased marketing and/or hiring.

So I wonder….if you are a small business owner….which is it for you?

If its “none of the above,” then maybe you are having a break out year and will share what you have done.

Petula Dvorak has a column in the Washington Post today. She argues that “paid sick leave would be good medicine for the workforce.”  What she is referring to is “mandatory paid sick leave.”

Compelled by force of the government. No choice.

She recounts a number of sad instances of hardship falling on employees who become ill or who must stay at home to care for someone else who is ill in their family. She argues for passage of the “Healthy Families Act.”

Here’s why she is dead wrong on this issue. It may well be a good idea for an employer to have an employee stay at home but still get paid. If it is a good idea the only one in any position to judge the idea is the employer. If the employer believes this to be in his or her rational self-interest than the employer and employee can agree to these terms.

It is not the place of government to use its heavy hand to force this agreement, however. Such a law makes the employer a slave to the employee. This is immoral.

I wonder what she would think about this law: let’s create a law that says when things get really busy in the workplace that the employer can compel the employee to work for free. I’ll bet she wouldn’t go for that.

Again, no one argues that sickness or injury or 100 other things don’t cause hardship. No one argues that it isn’t a good idea for an employer to pay an employee for staying home. That’s a decision a rationalemployer can make and I can envision a situation where that is the right decision. However, it is no place for government intervention and regulation. Especially in a bad economy. A crazy law such as the Healthy Family Act would be one more unnecessary, unwarranted and harmful tax on the small-business owner.

What happens in America if you become wildly successful? What happens if a product or service of yours becomes so good that so many people want it that becomes the dominant player in the market place?

In some cases the government comes after you to get you to “share the wealth.”

This is going on with the Monsanto corporation now. Monsanto is an agricultural company. It helps farmers become successful. When farmers are successful food is delivered to your dinner table.

Essentially, through genetic engineering, Monsanto has developed a technology that allows plants to stand up to and thrive amidst a powerful herbicide. This technology allows farmers to use the weed killer “Roundup” even after the crops have started to come up. This saves the farmers work and enables them to cultivate more land. “Roundup” itself kills just about all weeds and us saves farmers is step of tilling the earth. This makes the cost of producing the crop lower.

Farmers like the new technology that Monsanto produced and they buy it. Monsanto licenses the technology to hundreds of independent seed companies and to its major competitors but apparently that is not enough for some. They want the “heavy hand of the government” to force  Monsanto to make its product available to its competitors at a lower price.

One of its competitors, DuPont, argued that “Monsanto has abused its unlawfully acquired monopoly power to block competition, thwart innovation and extract from farmers unjustified price increases of over 100% in recent years.”

Unjustified? As measured by who? Who but the buyer of a product has the right to determine whether the product is priced appropriately? And if that buyer believes the product is priced too high the buyer has a choice-don’t buy.

This whole approach to successful companies is nuts. Monsanto devoted its own time, energy and money to the development of its product. Others could have chosen to do the same but they did not. Now Monsanto should be allowed to reap the benefit of its hard work. If the price that Monsanto charges for its technology is “too high” then fewer will purchase it and, with demand shrinking, the price will come down. Farmers can, after all, choose to not use its product.

Some group calling itself the “American Antitrust Institute” has, according to press reports, broadened the antitrust case against Monsanto and called for legal enforcement, citing “an almost intractable situation for competition.” In other words, you did so well nobody else can beat you, so let’s have the government slow you down.

If a company is “rewarded” for innovation and risk-taking by having the government come in and force it to share what it has earned then companies will hesitate to innovate. Innovation, creativity and risk-taking is what America was built on.

The Washington Post had another one of those articles over the weekend where they try to blame everything on the recession. It seems that “the recession” has given many people yet one more excuse for their own poor decision-making.

This time the story portrayed a woman, Daverna White, who supposedly “took a chance on the American dream” [of home ownership] but failed, leaving she and her four children homeless. The Post introduced the article as

“as the recession shows signs of easing and the economy begins to recover, the families most affected by it, such as Daverna White’s, are starting to recover, too.”

Please note: no one can rejoice in the fact that this woman and her four children do not have home. Problem was, this lady’s story had absolutely nothing to do with the recession. It had virtually nothing to do with losing “her home.” It was, if the facts reported by the Post are correct, nothing short of attempted theft gone bad.

According to the article Ms. White makes about $15,000 a year and relied on food stamps from time to time. She ran a small daycare business out of the house that she rented. Nothing wrong with that and all credit to her for trying to better her life.

Somehow, she got it into her mind that she could buy a house that cost $698,000. She was college-educated. She knew better.

She got hooked up with a mortgage loan officer, identified as Wendy Zhang, who offered her this deal: she could buy this house and have it 100% financed. Zhang would give her $27,000 to deposit into her bank account to make it look like she had resources to buy the house. Zhang would also create paperwork that showed that White had $163,320 in annual income.  Zhang agreed to pay her first two months mortgage. White knew that her monthly payments would be $5635 and she knew that she couldn’t afford it. She even called a friend before signing the papers and her friend told her “don’t sign.”

She signed. This was no “gamble on the American dream.” This was, pure and simply, an attempt to obtain a house by false pretenses.

Not surprisingly, White lost the home to foreclosure several months later. The Washington Post reporter even went so far as to describe the day that the bank threw all of the family’s belongings out onto the front lawn, including a copy of Napoleon Hill’s book, “Think and Grow Rich.”

Too bad Mrs. White didn’t read the chapter in Think and Grow Rich about “accurate thinking.”

The Washington Post recently profiled several young and very wealthy people who felt “guilty” about their wealth. These folks, members of The Resource Generation, had achieved their wealth not by work for earnings or trade but by sheer luck-inheritance. The article focused on their “emotional difficulties” as the “grappled” with their wealth.

About 10% of the wealthiest in America got that way through inheritance and that number is dwindling every year. It seems that oftentimes when wealth is passed from a generation of producers to a generation of non-producers, it vanishes. Imagine that.

Some of the young people profiled by the Post lack a fundamental understanding of both reality and economics. One had a startling lack of a moral compass.

One, Burke Stansbury, inherited $1 million from his grandfather who created the wealth through building businesses and investing in real estate. Stansbury expressed the view that he “resists” the privilege [of wealth] and denies it because of the inequalities that exist in society. He protested against Costco who wanted to build a store in the Mexican city. Apparently the store would involve cutting down trees and, as he put it, “displacing a sacred community.” At meetings, he vents about politics and what he views as an insulated upper-class and he supports increasing estate and capital gains taxes.

Stansbury probably should have stayed enrolled at Georgetown University and taken more classes. Probably should have read How Capitalism Will Save Us: Why Free People and Free Markets Are the Best Answer in Today’s Economy or Money, Greed, and God: Why Capitalism Is the Solution and Not the Problem

He assumes, incorrectly, that his wealth (or anyone else’s) makes someone else poor. That’s like saying that one’s health make someone else sick.

He also fails to realize that when Costco went to build a store in Mexico that store would’ve created jobs and wealth not only for the employees but for the producers of goods that would’ve been sold in the store. The store also would have raised the quality of life for its customers by providing a place where they could trade the dollars that they earned by work for products that they deemed valuable. Stopping a store for the sake of trees in a poverty-stricken area makes no sense on any level. Finally, he missed the lesson where they taught that nowhere in the history of the world has wealth been created or the plight of people been improved by increasing taxes.

I’ve got a better idea for Stansbury. Take that million dollars you have and create something. Start a business. Risk your capital. Employ people. Create a product or service that someone else values and then let them trade with you. The only formula for creating wealth and eradicating poverty and hunger in the world is to take your gifts and talents and produce something. Then teach others how to take their gifts and talents and produce something.

Then there’s Janelle Treibitz. This part-time waitress told the Post that “I definitely feel like I am at war between my desires instilled in me to eat out at nice restaurants and my better sense and principles” and yet, amazingly, she told the Post reporter that earlier this year she broke her finger and didn’t have insurance. She went to a hospital and got an x-ray and gave the hospital a fake name and walked out. She actually asked this question:

“is that okay that I’m doing that–taking resources because I am refusing to take money from my parents?”

Apparently her struggles with her “better sense and principles” don’t include her proclivity to engage in theft of medical services. (I have an idea for her “fancy restaurants” moral dilemma: pick one she really likes and that would satisfy her desires, make a reservation under a false name, and then skip out when the waiter isn’t looking. There, she can have her cake and steal it too.)

So I guess for Ms. Treibitz the options for dealing with others don’t include being honest, honoring your debts and working to repay them. I’ll make it even simpler: the answer to your question ma’am is that your hospital bill has nothing to do with your parents’ money.

No one should begrudge these individuals and their wealth. They got lucky by birth and their luck doesn’t make any of us unlucky or less wealthy ourselves. (I did notice that none of them had renounced their inheritance or immediately handed it all over to any other entity!) Their refusal to understand both reality and economics, in spite of their immense wealth and opportunity for great universities and private schools, is indeed startling.

The Montgomery County, Maryland Council has voted to require restaurants to post calorie counts of foods they sell. Once again, we have government passing “feel-good legislation” which supposedly is going to save people from themselves while at the same time is increasing the cost of doing business for the business owner. Increased costs for the business — increased costs for consumers.

First, do they have any objective evidence that someone who marches into a 7-Eleven looking for the chocolate covered cream filled pastry is going to be dissuaded when he learns it’s packing 1200 calories? Even if there was such evidence why should the role of government to protect the consumer from himself? It’s his responsibility to take care of his own health.

Next, this “problem” is something that should be solved by the market if the market wants it solved. So, if you go into 7-Eleven looking for the 1200 calorie donut but wanting to know whether you should choose the 1000 calorie doughnut and that information is not available you simply say to the business owner “hey, I’m going to stop shopping here until you tell me which donut has 1200 calories.” If enough consumers “vote with their wallets” problem solved.

It is shocking that government spends so much time and money trying to solve other people’s problems when it can’t get the big things like traffic, education, protection from criminals right.