Firing Your Insurance Company

A lot has been made of Mitt Romney's "I like to fire people" quote, but most of it is off base. In context, he said,

“I want individuals to have their own insurance. That means the insurance company will have an incentive to keep you healthy. It also means that if you don’t like what they do, you can fire them. I like being able to fire people who provide services to me. You know, if someone doesn’t give me the good service I need, I want to say, ‘You know, I’m going to go get somebody else to provide that service to me.’ ”

I agree with that sentiment, though I wouldn't state it with such dickish Trump-like bluster. But Romney's statement was made to discredit the new health care law and on that score he's wrong. In fact, the new law brings us closer to being able to fire our health care providers than the system we currently have.

Right now very few Americans are in a position to fire their health insurance company.

First off, the vast majority of Americans have no real choice for health insurance, because it's provided by their employer. You might get to pick from a limited set of options, but your company decides what those options are, and if you don't like them, the only way to fire your health insurance provider is to quit your job.

But Mitt doesn't get this, because he's a business owner and has never seen how health insurance works from the employee's viewpoint. Of course Mitt can fire his health insurance provider if their service sucks -- he's the boss. His employees have no such luxury.

And Mitt is also wrong if he thinks that the insurance company has an incentive to keep you healthy: the insurer's only incentive is to make their costs be less than the premiums the employer is paying them, while providing just enough medical care to shut the employees up.


In employer-based health insurance Employer A pays Insurance Company B to pay Medical Services Company C to provide health care to Person D. The amount of overhead and paperwork is insane, and there's no incentive for anyone to get anything right. The biggest incentive is for insurance companies to deny and delay medical care to employees who may not be working for the employer in six months or a year, or for employers who may not renew their contract.

People who pay for their own health insurance can ostensibly fire their provider. But practically speaking, it is all but impossible for anyone over 40 to fire their insurance provider. Insurance companies can turn you down for preexisting conditions, and everyone over 40 has preexisting conditions.The companies also have lifetime limits on coverage, and your insurance provider can fire you if you get too expensive for them. Since the downturn started in 2007-2008, there are literally millions of 40+-year-old Americans who have lost their jobs and health insurance, and can't get private insurance even if they can pay for it, because of preexisting conditions. If 40-year-olds can't get insurance, they're going to be in a lot worse shape by the time they're old enough to get on Medicare, and that will cost a lot more.

A lot of this is changing under the new law, and we'll have more protections and a greater ability to retain and switch coverage. Is it perfect? Nope; it's based on Mitt Romney's Massachusetts plan, after all. It could have been better, but the Republicans in Congress categorically refused to work with the Democrats. The Republicans' self-proclaimed goal was to make Barack Obama a one-term president, and they have done everything they can to torpedo the health care initiative.

In the long run, employers have no business paying for employee's health insurance. It's just an accident of American corporate history that it works this way. It's an unfair burden on companies, and it's a huge competitive disadvantage for American business. Everyone should be responsible for their own health care, just as they are for other necessities like food and shelter.

Yes, such a transition would be messy: it would require everyone who gets health care benefits to get an equivalent raise, and a subsidy for people who can't afford it. In addition, industries that cause health problems should also pay more taxes to counter those effects: that is, fast-food chains, and soda, alcoholic beverage and cigarette companies. There will be many sticking points. Companies will short-change employees, and over time employees will complain that their salaries aren't rising fast enough to cover the constantly-increasing cost of health care. And the right will oppose government subsidies for those who will never be able afford to pay for their own health care because they're stuck in part-time jobs like store clerks, bus-boys, hotel maids and cashiers. Millions of Americans are stuck in minimum-wage jobs that are totally necessary for our country to function, but jobs that will never pay well enough to allow someone to buy their own health care, a car or a house.

Our system is the most expensive in the world, but the aggregate quality of outcomes across all America is inferior to most of the developed world. Under our private insurance model annual cost increases have outstripped the rate of inflation by up to five or ten times, and for decades private insurers have totally failed to achieve the only service they supposedly provide: contain rising costs.

Mitt Romney and the Raiders

The Republican Party is in a tizzy over the criticisms some of Mitt Romney's opponents are hurling at him. They say he's a corporate raider, while his defenders say he's the perfect example of capitalism at its finest.

But as in all things, there are good capitalists and there are bad capitalists. Just because this is a free country doesn't mean everything you can legally do is moral and ethical, or good for the United States in the long run.

So let's look at a few different kinds of capitalists and see where Mitt fits.

The prototypical American capitalist is one or two entrepreneurs with an idea who start a company their own money or raise money for the venture by selling shares of stock to investors. As the company makes a profit the owners and investors recoup their investment by receiving dividends, or by selling shares of the stock when the company goes public. People like Henry Ford, Bill Gates, and Steve Jobs are generally thought of as the heroes of capitalism for creating new wealth in exactly this fashion.

Over time, the cost of starting many businesses has become a significant hurdle, so a more recent business development model is the venture capitalist. Using their own money, or pooling the money of investors, venture capitalists search for small businesses with great ideas that are going nowhere because they don't have the resources or business acumen. A lot of high-tech startups have been formed this way over the last 20 years. Venture capitalists often help the solitary inventor who lacks management skills hook up with professionals who can make the company grow and create new wealth.

As companies compete in the marketplace based on the strengths of their products and services, there will be winners and losers. If one company stumbles by making bad or over-priced products, or becomes bloated and inefficient, the poorly-run company may go out of business, or it may be taken over by a better-run competitor. That's just how capitalism works.


But it shows one of the weaknesses of capitalism. Over time these good capitalists can turn into bad capitalists if they are a bit too successful and develop a monopoly position, either by a single company or multiple companies making deals to split up the market. Monopolies rest on their laurels, become arrogant and lose their entrepreneurial spark. Their customers suffer from bad products and poor service. The companies maintain their monopoly by buying up potential competitors or litigating them out of existence. In short, large companies need to be watched, and that's what Teddy Roosevelt's trust-busting was all about.

Besides entrepreneurs and venture capitalists, there's another type of capitalist: the corporate takeover artist, personified by Gordon Gekko in the movie Wall Street. You know, the "greed is good" guy.

These raiders borrow money from investors and banks, promising large returns. They look for companies that are having trouble and snap them up at bargain prices. Sometimes they break the company up and sell the business units for more than they paid, or they dissolve the company to acquire real estate holdings or pension funds and cash them out. Sometimes they restructure the company, firing excess employees, or getting rid of the unprofitable parts and refocusing the business, over time making the company more profitable. Some of this is good, some of it is bad.

But since it's easier to take over a company that's in trouble, raiders often take over the poor performers. Using that acquisition as leverage to get more loans, the raider can then take over the better performers in an industry, turning the whole idea of capitalism upside down. Then the raiders pull the money out of the merged company to make their profit, often leaving the company with huge debt. After the raider is gone, the company quickly goes bankrupt. Everyone loses: employees lose their jobs, customers lose the service or product support, distributors lose a product line, retail outlets lose things to sell, suppliers aren't paid for their goods. Everyone, that is, except the corporate raiders.

The difference between corporate raiders and real capitalists is that raiders don't create new ideas or new wealth. This perversion of capitalism is not good for the economy or the United States, and it's what Mitt Romney practiced at Bain. Romney's brand of capitalism concentrates more money in the hands of fewer people, while contributing nothing new. Guys like Romney think of the economy as a zero-sum game and work to take a bigger piece of the pie, while real capitalists create new business and new money to make the pie bigger.

Our intellectual property and incorporation laws were created to reward people for developing new ideas. The "financialization" of the US economy has destroyed that idea, and instead now rewards raiders, bean-counting bankers, stock brokers, wheeler-dealers and hedge fund managers who get rich by betting that companies will fail, rather than working hard to create new products and services.

Romney's brand of capitalism also puts the United States at risk for takeovers by foreign interests, especially if Republicans make good on their promise to eliminate corporate regulations. What if, instead of investing in US Treasury bills, the Chinese decide to go after American corporations through a series of shell corporations? The only thing preventing this are those "job-killing" regulations that Republicans have pledged to repeal. We know we don't want the Red Army owning Boeing, General Dynamics and Lockheed. But do we really want Beijing calling the shots in the boardrooms at Walmart, IBM, Apple, GM, American Airlines, and John Deere?


What if those companies were secretly controlled by foreign interests, and they secretly contributed to Super PACs that spent hundreds of millions of dollars trying to influence American elections?


It makes you ask: who's really buying Mitt Romney's election?

For All You Anti-Statists...the Perfect Home!

Manufacturing Imprisonment

Last night I was flipping around the New Hampshire primary coverage and saw one of Ron Paul's spokespeople talking about his candidate's second place finish. The question was put to him as to why Dr. Paul is getting so many votes.

"Well, people are tired of having their freedoms taken away," the young man answered.

Uh...what?

Where? Which ones? I'd like to know exactly what freedoms are being taken away because I think this speaks to the very crux of why right wingers vote the way they do.

Honestly, it seems to me that these "freedoms being taken away" don't actually exist and are made up for an all too willing audience...an audience made up of people that if one spends just a few moments quizzing them about their personal lives, it becomes very apparent that the problem isn't the government but themselves and the choices they have made. Ironic, for a group that espouses individual responsibility yet blames the government for everything. But that's their weird blame thing again...

I find it terribly frightening that many Paul supporters (as well as other conservatives and libertarians) have manufactured a reality in which Americans are a small step away (if not there already, in some minds) from the former Soviet Union. What's more frustrating is that their arrogance somehow translates into derisive comments towards "unbelievers" and it is really us (meaning mentally stable people) that are being naive. These people should not be running anything at all because, to put it bluntly, they aren't right in the head. The world is moving at an ever increasing rate towards free markets and trade. Cuba, for crying out loud, is selling private property. The writing is on the wall for centrally planned economies: they are doomed. And it's only a matter of time.

Yet they will not let go of their paranoia. Why? Are they so afraid of change that they can't accept that many of their stated wishes have come true?

Now, I get that some Paul supporters are young and male so there's the adolescent power fantasy thing at work. That's not so much loony as it is hormones and brains not fully developed leading to a latching on to something that aids them in their rebellion against "Dad." Yeah, my freedoms are being taken away, fucker! But the rest? There's no excuse for them whatsoever.

Folks, the world is becoming a better place, not worse.  We don't have the time to play make believe and pretend that our government is becoming a statist regime that is on the cusp of taking away our guns and sending people to re-education camps. We have serious problems to confront as we face a rapidly changing world and, quite frankly, many of these folks need to stop spending so much time living in their fantasy world and join us in reality.

Setting aside the anger, hate and fear is tough, I know. But think of how much time we would save...

Ah, Gip...

Impressive!

Just in time for the presidential election this year, some fine folks have created a site devoted exclusively to the president's achievements since taking office.  This is a fairly impressive list that offers links after each one to explore the accomplishment further.

The Economy section is replete with items and one in particular caught my eye. This link is an excellent summary of how the president's policies have helped the economy. Some of the charts and graphs may look familiar as I have put them up in various posts here and there but this organizes them all in one central location. We can clearly see the GDP growth, private sector job gains, public sector job loss (good for you libertarian folks who want to shrink the size of government:)) and just how large of a hole we were in.

The last point is very important because there are many out there who continually harp on how the stimulus didn't work. It's goal wasn't to magically turn us back to the prosperity of the 1990s. Given the depth of the problem, which certainly required a greater period of analysis than just a few months, its goal was to prevent another Great Depression. It did that. Pay close attention to Part III of the report as it shows the estimates of what would've happened had there been no recovery act.

From now until Election Day, I will be referring to this site frequently as we explore why and how the president has done a good job and should be re-elected.

Verbatim!

Tracking the President

Gallup Tracking has a very cool app that I have been using for the past few months. I highly recommend picking it up for your smart phone if you are interested in seeing the latest polls. Of course, I have been following the president's numbers very closely and for a while there, it was pretty much the same. He'd get up to 44 or 45 percent and then drop back down to 41 or 42.

But then a few weeks ago, he shot up to 47 and his disapproval went down to 45. At first  I thought it was an aberration because it dropped again and toggled between 42 and 44. But then he shot back up and has now been toggling between 45 and 47 approval with his disapproval falling at the same time. In other words, he's been trending higher for the past couple of weeks and it seems to be sticking.

These are the same numbers that Rasmussen has had him at for the last several months but, even though they have been more positive for the president in comparison to Gallup, I still don't trust their polling because of how they do their sampling. So, I think it's a safe bet to say that 45 percent of this country approves of the job the president is doing. Not all that impressive but not as bad as it was a couple of months ago.

And it's important to note that are probably 2-4 percent of the "disapprove" folks that are teed off because he isn't liberal enough which means they are still going to vote for him. That puts him the upper 40s and from there it's all going to come down to the independents and who the choice is for the GOP. As I have said before, if it's "Not Romney," then the president wins by a large margin. If it is Romney, it's going to depend on less than a dozen key states.

Hmm...

The Issue of Fault

Today, I find myself, as I often do on Sundays, in a reflective mood. Actually, for the past week, I've been ruminating on the issue of fault and trying to figure out how conservatives, generally speaking, really have their head up their collective asses when it comes to that age old question, "Who's to blame?" If someone is poor and struggling to make end's meet, it's their fault. As GOP presidential hopeful Rick Santorum said recently, "People die in America because people die in America. And people make poor decisions with respect to their health and their healthcare. And they don’t go to the emergency room or they don’t go to the doctor when they need to."

So, when someone gets sick or simply can't pay bills, it's all their fault. They made stupid choices which led them to that point, so fuck 'em. Or, it's somehow the fault of the government. The nanny state has led them to believe that they will be cared for or some federal program has been an impediment in their lives and they are forced into submission with the result being a negative outcome.

In sum, the fault is with the person or the government.

Yet the collection of individuals (family, friends, community) or the people that make up the various private concerns that have a direct relation to a person's life are NEVER EVER at fault. Even though health care firms, insurance companies, gas and electric companies, groceries, restaurants, and other organizations have a direct impact on our lives, they are never at fault. It's as if individuals operate in a vacuum. And, regardless of the evidence gathered thus far, climate change is not the fault of mankind. It's simply a natural part of the earth's cycle and we are not to blame whatsoever.

In sum, large collections of people are never at fault (unless it's the federal government) and should never take the blame for bad things that happen.

In looking at this ridiculous dichotomy, I'm wondering...why are conservatives/libertarians so pro-collective? They continually speak of the supporting individual rights and freedoms yet fervently shit all over them. Down on your luck? Tough shit. It was probably some dumb ass decision you made. No hand outs here, buster. Pull yourself up by your bootstraps. And don't go blamin' the rising cost of (insert organization here) for your problems. You are on your own...unless, of course, it's the federal government. Because they are forcing you at gunpoint to do their bidding.

But do not, under any circumstances, blame yourself as a part of the human race for climate change. They are all a bunch of liberals using a pseudo-science rooted in apocryphal religion to hoodwink you into government spending beyond their means. Even though the effects of greenhouse gases warming the earth can be shown in any 8th grade science class, it's not your fault.

Folks, I don't get it. As is usually the case, the right has the issue of fault completely FUBAR. While I do agree that people (especially in this country), have a great deal of control over their lives and do, in fact, make poor choices that lead to negative outcomes, they aren't entirely to blame on their own. This is especially true when it comes to the issue of health care. And if they get laid off from their job, that may also be the fault of the company in general and poor decision making by upper management-a collection of people. It's a combination of both individual fault and the impediments that arise as a result of the institutions (both public and private) that we have in our society.

So, shouldn't those same institutions, which likely helped to cause the problems in the first place, also be expected to to help people?

Positively Brilliant!

Meanwhile, on the Western Front

With all the attention focused on the Republican race for the nomination in the midwest and east, two articles about corporations from the Wild West caught my attention last week.

The first is a story by Kelly Carr and Brian Grow of Reuters about a house on a residential street in Cheyenne, Wyoming, where more than 2,000 corporations are registered. These aren't real corporations: they're shell companies like the ones in the Cayman Islands that drug dealers and the mafia use to launder their money. Lax incorporation laws allow people to register their companies in Wyoming and keep the identities of the principles secret so that the money can't be tracked.

Wyoming Corporate Services, as this capitol of crony capitalism calls itself, offers a full menu of deceptive incorporation strategies, including "shelf" corporations. These companies sit "on the shelf" engaging in what appear to be legitimate financial transactions to make them seem like honest, reliable companies. And then someone with a nefarious purpose comes along and buys this phony corporation to give themselves an air or respectability and a fake history. It's all a big fraud, but it's apparently legal.

According to the Reuters article, the company's website boasts:

A corporation is a legal person created by state statute that can be used as a fall guy, a servant, a good friend or a decoy. A person you control... yet cannot be held accountable for its actions. Imagine the possibilities!

I searched WCS's website and couldn't find that exact quote, but perusing their list of services and braggadocio about why Wyoming is so much better for incorporation than Nevada, the quote aptly describes their intent. And the thing is, it's completely true: this is exactly why corporations exist. They almost completely remove personal responsibility and personal financial risk from anyone doing business.

The protections of incorporation are in general a public good, allowing people to take risks creating new jobs without risking their entire future. But Wyoming law allows criminals to hide billions of dollars of illegal income, and for otherwise upstanding citizens to avoid paying billions in taxes. All of which means that the rest of us have to pay that much more to make up the difference.

The second story was from next door: the Montana Supreme Court ruled that Montana's corporate campaign contribution law was constitutional. In a 5-2 opinion, the majority upheld that the 1912 initiative Montana voters passed banning corporate contributions to political candidates and parties.

Echoing what I've long been saying, Justice James C. Nelson wrote:

Corporations are not persons. Human beings are persons, and it is an affront to the inviolable dignity of our species that courts have created a legal fiction which forces people — human beings — to share fundamental, natural rights with soulless creatures of government.

Worse still, while corporations and human beings share many of the same rights under the law, they clearly are not bound equally to the same codes of good conduct, decency and morality, and they are not held equally accountable for their sins. Indeed, it is truly ironic that the death penalty and hell are reserved only to natural persons.

Montana has history on its side in this corporate dogfight. In the early 20th century the "Copper Kings" ran the state. The mining companies bought most every judge and politician in Montana. At a time when US senators were selected by state legislators, banker and mining executive William A. Clark bribed the
Montana legislature to elect him to the US Senate. However, the Senate refused to seat Clark in 1899 because of the bribery scheme, and the incident was the impetus for the passage of the 17th Amendment providing for direct election of senators. Clark was reputed to have said, "I never bought a man who wasn't for sale." Still, he campaigned again and served one term in the Senate, prompting Mark Twain to write:

He is as rotten a human being as can be found anywhere under the flag; he is a shame to the American nation, and no one has helped to send him to the Senate who did not know that his proper place was the penitentiary, with a ball and chain on his legs. To my mind he is the most disgusting creature that the republic has produced since Tweed's time.

The Montana ruling will almost certainly collide with the US Supreme Court's Citizens United decision, which allowed for the public flaying of Newt Gingrich in Iowa by Mitt Romney's Super PAC. Romney's PAC, Restore Our Future, is run by former Romney campaign aides, according to an article in the Washington Post. (Jon Huntsman's Super PAC is mostly financed by his father.)

Gingrich complained bitterly about the "independent" ad campaigns, claiming that he'd been "Romney-boated." This was an implicit acknowledgment that the Swift Boat campaign against John Kerry in 2004 was just a dirty, lying political trick. Which has always been common knowledge, but few Republicans will admit the truth of it to this day. John McCain suffered the same treatment by George Bush's campaign in 2000, prompting him to sponsor the campaign finance reform laws the Supreme Court struck down.

The combination of uncontrolled secretive shell corporations and unlimited secret corporate donations to "independent" political campaigns -- especially in judicial elections -- is a recipe for disaster. Citizens United is making it impossible for the average voter to tell the truth from the lies repeated on the airwaves so often they become a mantra.

Rick Santorum May Not Like All the Attention He's About to Get

An article by Jake Tapper at ABC News shows why Rick Santorum is unfit to serve as president:

I pointed out that Democrats say that one of the reasons Santorum lost in 2006 was because they say he’s more conservative than mainstream America. One issue was Santorum’s opposition to the Supreme Court’s 1965 ruling that invalidated a Connecticut law banning contraception. Santorum said he still feels that a state should be able to make such laws. 

“The state has a right to do that, I have never questioned that the state has a right to do that. It is not a constitutional right, the state has the right to pass whatever statues they have. That is the thing I have said about the activism of the Supreme Court, they are creating rights, and they should be left up to the people to decide,” he said. 

“You shouldn’t create constitutional rights when states do dumb things,” Santorum said. “Let the people decide if the states are doing dumb things get rid of the legislature and replace them as opposed to creating constitutional laws that have consequences that were before them.”

So, his argument for allowing states to ban contraception is that the Constitution doesn't ban stupidity?

The Supreme Court's 1965 decision in Griswold vs. Connecticut overturned a law banning contraception. This decision was one of the first to outline a right to privacy in the Constitution. It drew upon the Ninth Amendment, which states:

The enumeration in the Constitution of certain rights shall not be construed to deny or disparage others retained by the people.

The intent of this is obvious: there are many rights so basic that no one would think there would be a need to write them down. Those inalienable rights obviously include the most intimate decisions people make in their marriage: whether they have sex, what kind of sex they have and whether they have children.

This amendment also shows the Founders' foresight. They knew that times change, and that the Constitution shouldn't be used as a hammer to destroy current and future freedoms and rights.

The majority (7-2) of the court also argued that privacy is protected by the Due Process Clause of the 14th amendment. It would also seem that the Equal Protection Clause and the Commerce Clause also bear on the  issue, since contraceptives are manufactured in other states and countries and people could cross state lines to buy them. If you can buy guns this way, why not contraceptives?

The Fourth Amendment definitely implies a right to privacy, even though it doesn't explicitly mention the word:

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

This is practically the dictionary definition of what privacy means.

In Rick Santorum's ideal universe, lack of children would be probable cause to raid your home and search for condoms and birth control pills. He says that we need to pump out more children so that Social Security doesn't go bust. If elected president will Santorum institute a medal of honor for women who bear eight children, along the lines of the Mutterehrenkreuz of Nazi Germany? Heck, if lots of children are important, why aren't Catholic nuns and priests getting busy? They are shirking their duty!

In 1960 many people thought John F. Kennedy couldn't be president because his Catholicism would dictate his decisions. Kennedy went out of his way to reassure the American people that this wouldn't be the case. But Santorum is going out of his way to tell us that his religion will dictate every facet of his administration.

If you think religion mixed with politics is a good thing, read a little history, especially the reigns of King Henry VIII, Queen Mary and Queen Elizabeth I. For good measure, read about the Huguenots in France. In those days Protestants and Catholics murdered each other by the thousands. And it's still going on today in Iraq, with Sunnis and Shiites going at it. If you think that only Muslims murder each other over religion these days, you need only look to Northern Ireland, where Catholics and Protestants were still killing each other only 15 years ago.

And if you think it can't happen here, just look at the string of religiously motivated murders of doctors in America, as recently as 2009 when George Tiller was gunned down in a Kansas church.

With all this abortion and contraception posturing by Santorum, the irony is that his wife Karen had a second-trimester abortion in 1996 in order to save her life. I don't criticize him for the abortion, just for wanting to prevent other people from having the same option.

This fact which has not gone unnoticed by the Paul campaign, and I expect things will start to get very ugly very soon.

Frack in Haste...

The United States is enjoying a renaissance of natural gas exploration with the increased use of hydraulic fracturing (fracking) to extract the gas. There is now a glut of natural gas (methane) on the American market, and prices are way down from what they were a few years ago.

Thus, natural gas is becoming a bigger component of our energy future. It's more efficient and cleaner than coal, producing less CO2 and other toxic waste products like mercury and ash. It's a lot easier to distribute and is much more flexible: it can be used to heat homes, power vehicles and even as a fuel for high-efficiency fuel cells. Because natural gas-fired power plants can be turned on and off almost instantly, they are a necessary adjunct for wind- and solar-generated electricity to balance load. Finally, methane can be produced by biological processes, which means it could eventually become a renewable energy source. So, methane-based technology has great potential.


But this natural gas renaissance is starting to look like the dark ages for some. People who live near fracking operations have had their well water contaminated by methane and carcinogenic chemicals, and many earthquakes have occurred in these areas.


The other day an earthquake occurred in Ohio near a fracking operation. The biggest earthquake ever recorded in Oklahoma occurred Nov. 5 near a fracking operation. Another series of earthquakes occurred in England, and the company says fracking was the cause.

That fracking causes earthquakes is now a well-established fact. Scientists have even developed a model that predicts the size of the earthquakes caused by fracking: basically, the more fluid you inject into the earth, the bigger the quake.

Earthquakes are a relatively new concern with fracking. The best-known problems occur when methane or fracking fluids get into the aquifer and contaminate well water. Sometimes the methane reaches such high concentrations that water coming out of a faucet will burn (as shown in Gasland).

Fracking typically involves injecting huge quantities of fracking fluids into shale beds at high temperature and pressure. The shale breaks up and releases the methane. The fracking fluids consist of water and sand, and the fracking companies' "trade-secret-protected" mix of chemicals, which often include carcinogens like benzene, ethylbenzene, toluene, xylene, and naphthalene. Many people who live near fracking operations blame their unusually high incidence of cancer and other diseases on fracking.

Fracking companies continue to insist that fracking is completely safe, and doesn't contaminate ground water. However, it's already been proved that fracking has contaminated ground water in some cases in Wyoming.

An article in Scientific American entitled "The Truth about Fracking" goes into the subject at length. (Note: Scientific American gets a ton of ad revenue from Shell Oil and car companies, so they're probably giving their sponsors a fair shake editorially.)

The frackers' argument is that fracking is completely safe because natural gas beds are far below aquifers, often separated by thousands of feet of rock. Their contention is that it's impossible for fracking fluids to contaminate aquifers because there's just no way to get there.

The problem with this argument is that it ignores practical realities. Fracking involves punching a hole through the earth into a shale bed, much like an oil well. Just like an oil well, a fracking well needs to be cemented. But fracking wells frequently pass right through an aquifer. If the cementing job is done poorly there will be leaks, like the bad cement job on the oil well in the Gulf of Mexico. That caused millions of gallons of crude oil to spill into the ocean. When fracking fluids are injected into a poorly cemented well, the high pressure can force toxic fluids and methane into the aquifer.

But there are causes other than bad cementing: fracking often occurs in areas that have already been drilled for oil or natural gas, often for more than a century. Many of the older wells have cement jobs that have failed, and the oldest wells have no cementing at all. Fracking fluids and methane can find their way up through the older wells, many of which no one even knows are there.

Additionally, vertical faults occur in the earth naturally. These aren't a problem normally, because the methane is bound in the shale and won't seep into the aquifer. But when fracking fluids are injected and the shale is broken up, the fluids and the methane can travel up through the natural faults, poisoning well water.

And sometimes, as was the case in Wyoming, the shale beds are shallow and the aquifers are deep and fracking occurs right in the aquifer.

It isn't fracking that causes the contamination, these frackers say, it's a problem caused by someone else doing a bad cementing job, not sealing old oil wells properly, or that they just didn't know that there was an old well or a vertical fault. They can't be blamed for their ignorance.

Now they're saying that fracking didn't cause the Ohio earthquake:

The brine wastewater comes from drilling operations that use the so-called fracking process to extract gas from underground shale. But Ohio Department of Natural Resources Director Jim Zehringer said during a news teleconference that fracking is not causing the quakes. 

"The seismic events are not a direct result of fracking," he said.

That is, the earthquake was caused by injecting used fracking fluids into the ground. They do this to get rid of the highly toxic fluids, because they can't dump them in a river, or spray them onto the land. And they don't want to spend the money to actually purify the contaminated water.

The companies are still insisting that fracking is completely safe and doesn't cause earthquakes or well water contamination. Instead they blame bad cementing, unknowable geology and drilling history, or fracking fluid disposal. Therefore they shouldn't be held responsible for poisoned water, cancers and earthquakes.

That's like the guy who says fracking, in the Battlestar Galactica sense, doesn't cause pregnancy. It's the broken condom, the woman's fault for not using a diaphragm, or the sperm's fault for traveling an unknown and circuitous path through the cervix and uterus, or the egg's fault for appearing at the wrong time. Therefore he shouldn't be responsible for child support.

To say that fracking doesn't cause earthquakes or aquifer contamination is the worst kind of lying by technicality. If they weren't fracking, there would be no earthquakes and poisoned groundwater.

Fracking should be limited to areas where it's safe and won't contaminate groudwater. Fracking fluids should not contain carcinogens and should be uniquely tagged so we can determine the source of contamination. Frackers should be required to post bonds before drilling to cover potential damages, because they'll just declare bankruptcy if  they screw up. Used fracking fluids should be purified so the cleaned water can be safely returned to the environment without having to inject it deep into the earth where it can never be used again, and incidentally cause earthquakes.

Yes, all of these things will make fracked gas cost more. The price of fracked gas should reflect its total cost to society, so that its costs can be better compared to other sources of energy. Right now fracking is another example of companies making private profit with a socialized risk. (Because mineral rights and land ownership are frequently decoupled, many people whose land is being fracked aren't even getting paid for it.)

In many states there has been a big push to get fracking as fast as possible, without making annoying regulations to prevent people from getting cancer. Some of these frackers claim to have a hundred years of natural gas reserves. If that's the case, then what's the rush? Why not take the time to do this right?

But some are questioning the size of the claims of U.S. reserves. There may be only a half to a fifth as much gas in the ground as these frackers are claiming. But why would they lie?

In addition to the uncertainty about shale gas resources and productivity, there are other lingering questions. For one thing, on an averaged annual basis, shale gas has been unprofitable since 2008. Wildcatters—those who explore and sink the first wells in a new location—have been taking on a great deal of debt and risk to discover the plays and produce them at a loss, in hopes that larger, well-funded players will buy them out later. It’s not clear that this gamble will ever pay off.

In other words, these frackers have every incentive to cut corners and lie about the size of their reserves in order to cash in quick and leave someone else holding an empty bag.

But just because we need natural gas doesn't mean we should let these frackers rape our land, poison our water, and turn the very earth beneath our feet into jello.

We should take the time to develop our natural gas reserves the right way. Technology will continue to develop and we may be able to develop fields safely in the future that we'd only screw up if we tried to exploit them now.

If we frack in haste, we won't be able to repent at leisure.

In The Bubble

Seriously, what planet do these people live on?

Iowa Post Mortem

I think the results last night in Iowa speak volumes. The GOP is split into three distinct groups. First, you have the business wing/old guard who support Mitt Romney, the winner by a mere 8 votes. Then you have Rick Santorum who represents the conservative evangelical and came in second. Finally, the libertarian wing, represented by Ron Paul who came in third but managed to garner 28, 219 votes (around 3,000 less than Romney and Santorum). I honestly thought that Paul would pull it out considering the lack of campaigning Romney has done in Iowa. If he had won, though, the Iowa Caucuses would've become less relevant and more of a joke. I certainly wouldn't want that as most of my in laws live there and I have grown quite fond of the Hawkeye state.

This split tells me that the right is going to have some serious problems on its hand in the future. Taken alone, each of these wings can't mount a national election capable of beating most Democrats. And they don't seem to function well together with the libertarian wing despising the old guard as much as they do the Democrats. This libertarian wing is also filled with young people who don't much like social conservatism either and they're honest about it as opposed to the old guard who snickers behind their backs at how useful the conservative Christians are as puppets. Yet, they all need each other in order to be a party. It's this sort of dysfunction that usually erodes families to the point of very serious problems.

I still say the Mittster is going to be the nominee but it won't be easy. Two thirds of the base simply don't like him. But they are at least united in their hatred of Blackie McHitler who is on a mission to steal their luggage so at least that's something.

A True Gem

Krugman's recent piece on debt is a true gem and, more or less, torpedoes much of the doom and gloom we hear from conservatives and libertarians these days. He makes several key points which are worthy of highlighting.

First there is the central question of who owns our debt. Ask someone on the street and their first answer will likely be China. Of course, this is what the media and right wing pundits have conditioned them to believe but it's simply not true. In fact, the majority of our debt is owned by...us. Here is how it all breaks down.

Hong Kong: $121.9 billion (0.9 percent)
Caribbean banking centers: $148.3 (1 percent)
Taiwan: $153.4 billion (1.1 percent)
Brazil: $211.4 billion (1.5 percent)
Oil exporting countries: $229.8 billion (1.6 percent)
Mutual funds: $300.5 billion (2 percent)
Commercial banks: $301.8 billion (2.1 percent)
State, local and federal retirement funds: $320.9 billion (2.2 percent)
Money market mutual funds: $337.7 billion (2.4 percent)
United Kingdom: $346.5 billion (2.4 percent)
Private pension funds: $504.7 billion (3.5 percent)
State and local governments: $506.1 billion (3.5 percent)
Japan: $912.4 billion (6.4 percent)
U.S. households: $959.4 billion (6.6 percent)
China: $1.16 trillion (8 percent)
The U.S. Treasury: $1.63 trillion (11.3 percent)
Social Security trust fund: $2.67 trillion (19 percent)

So America owes foreigners about $4.5 trillion in debt. But America owes America $9.8 trillion.


Even the issue of foreigners holding our debt is offset by US claims on foreigners. Here's a chart that Krugman provides.

The blue line represents income from assets abroad and the red line represents payments on foreign owned assets. Since these assets often take the form of subsidiary US corporations, they often give a higher rate of return than do our liabilities as foreigners tend to put their money in safe, low yield assets, as Krugman notes.

The other thing that makes the doom and gloom crowd predict that we will all be thrown into a boiling pit of sewage is running debt to GDP of 100 percent (as we likely will for the next few years). Yet this chart says otherwise.

Look at all those years of 100 percent (and much higher) debt to GDP in the UK. Are they in a boiling pit of sewage? No. It makes you wonder how much of their current shift towards austerity is politically based as opposed to reality based. I certainly wonder that here although in our case it's more about "winning the argument" and "proving the Democrats wrong."

So, as Krugman aptly notes, nobody understands debt. Those who say that the government should just "live within its means like ordinary Americans do" don't understand that people owe their debt to a bank. American owes its debt to itself which is a very different thing.


First, families have to pay back their debt. Governments don’t — all they need to do is ensure that debt grows more slowly than their tax base. The debt from World War II was never repaid; it just became increasingly irrelevant as the U.S. economy grew, and with it the income subject to taxation. 

Second — and this is the point almost nobody seems to get — an over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves. This was clearly true of the debt incurred to win World War II. Taxpayers were on the hook for a debt that was significantly bigger, as a percentage of G.D.P., than debt today; but that debt was also owned by taxpayers, such as all the people who bought savings bonds. So the debt didn’t make postwar America poorer. In particular, the debt didn’t prevent the postwar generation from experiencing the biggest rise in incomes and living standards in our nation’s history.

Exactly right.

Where he is exactly wrong, though, is with this line.

So yes, debt matters. But right now, other things matter more. We need more, not less, government spending to get us out of our unemployment trap. And the wrongheaded, ill-informed obsession with debt is standing in the way.

Spend more than we are now? Or much more? How much? Where? This seems too vague and doesn't make much sense considering the unemployment has dropped in the last few months without increased spending. While I don't think we need the Draconian cuts called for by many on the right, we also don't need increased spending. In fact, we could cut spending in the Big Three (Defense, Social Security, Medicare) in a number of ways that won't erode employment as much as Krugman thinks and do quite a bit to reduce our long term debt and deficit. Throw in the end of subsides and tax cuts on the wealthy and things look even better. So, on this point, I simply can't agree with him.

But he is right about everything else. The next time a conservative or libertarian friend starts foaming at the mouth about our debt and how it's going to destroy us, show them this information, tell them to stop reading right wing blogs, and take a fucking chill pill.

Iowa Caucuses Today

It's caucus day today in Iowa and, even though Mitt Romney has pulled ahead in some polls. I'm still saying the Ron Paul wins it. It looks like Rick Santorum (?) has surged late in the game and might make a decent showing as well. I also think that Bachmann is going to have some sort of psychotic meltdown in the next week or so and really embarrass the Republicans. She's not well in the head and losing is going to send her into a weird place.

I'll be post an update later tonight with the results.

Will He Win?

As we look ahead to this election year, one of the first questions that arises is will the president win re-election?  More importantly, do his accomplishments demonstrate that he deserves to win re-election? On this latter question, I say yes and this list (along with some other things I will be talking about over the next year) is why he has been a good president and should be elected to a second term.

I'll be talking about some of those 159 achievements over the course of the year and why they are significant but let's take a look at that first question: will he win? At this point, I really don't know.

I'd like to be optimistic and say that he will win considering the clown show that is currently going on with the GOP primaries. But I'm not sure I have that much faith in American's ability to overcome their fear and apathy, the two things that are currently working against the president. Of course, it certainly depends on the GOP nominee. For me, this simply comes down to Romney and not Romney.

First, let's take a look at the 2012 Electoral Map The interactive function allows you to click on the states and assign the votes to either party. Now imagine that any candidate besides Romney is the nominee. By my calculations, Obama wins 232 and Not Romney wins 184, leaving Nevada, Colorado, Arizona, New Mexico, Iowa, Wisconsin,  Ohio, Virginia, North Carolina, and Florida as tossups. Likely a few of these will go Obama but I'm being conservative here. In looking at these numbers, all the president needs is 38 votes and he has it. This could come from winning the western states, Iowa and Wisconsin. Or the last two and Virginia and North Carolina while losing all the western states as well as Florida and Ohio. Obviously, he will not lose this many states so if it is Not Romney, the president wins handily.

But if the nominee is Romney, the map gets tougher for the president. Now, he has 196 and Romney has 195 with the Mittster taking Arizona out of tossup and winning it as well as putting Pennsylvania and Michigan into the tossup column. So, we're looking at 11 states that are going to be tighter than a frog's ass and where, I believe, the election is going to be won or lost. At this point in time, either candidate could win any of these states. Of course, I'm not taking into consideration conservative distrust/apathy towards Mitt Romney which will likely affect voter turnout in some of these states. But I am confident that the completely irrational hatred that people have towards the president will drive them to the polls.

Reset the map and tell me what you think. How will this all play out?

New Year's Day