THE OBAMA SURPRISE by Michael S. Malone
Be careful what you wish for.
No segment of American industry did more than high tech to elect Barack Obama as President of the United States. The 2008 Obama campaign will go down in history as having made better use of digital technology than any before it. From a hugely powerful website to the reproduction of the “Hope” poster on thousands of Facebook pages to the President’s own ‘tweet’ on election night, Silicon Valley played a crucial role in the success of President Obama . . .and Silicon Valley naturally assumed that the new President would do the same in return.
It hasn’t quite turned out that way. . .
The first surprise to many Valleyites is how innately anti-entrepreneurial the new Administration has turned out to be. Candidate Obama looked like a high tech executive – smart, hip, a gadget freak – and he certainly talked pro-entrepreneur. But the reality of the last six months has been very different. One might have predicted that he would use the best tool in his economic arsenal – new company creation and the millions of new jobs those firms in turn create – to fight this recession. But President Obama has instead appeared to be almost exclusively interested in Big Business as the key to economy recovery.
By comparison, almost every move the new Administration has made regarding entrepreneurship seems to be targeting at destroying it in this country. It has left Sarbanes-Oxley intact, added ever-greater burdens on small business owners, called for increasing capital gains taxes, and is now preparing to pile on cap-and-trade, double taxation on offshore earnings, and a host of other new costs. Even Obamacare seems likely to land unfairly on small companies.
Entrepreneurship has been the single most important contributor to the economic health of this country for at least a century now – and if you were going to systematically destroy that vitality, you couldn’t come up with a better strategy than the one Washington has put in place over the last six months. Indeed, you can make the case that the sole contribution the Obama administration has made to entrepreneurship in America to date is to force all of those millions of unemployed people to desperately set up their own businesses in order to survive.
You might imagine that this would be upsetting to all of those Valley tycoons who played such an important role in underwriting, advising and legitimizing Candidate Obama. But you would be wrong.
What I think is most misunderstood by outsiders is that the electronics industry is not monolithic, and that its players do not all share the same interests. And nowhere is this divide greater than between start-up companies and the giant, well-known corporations – even though the latter, just a few years before, were start-ups themselves.
For example, you may think that the competitive challenge that big tech companies fear most is from other big tech companies. You know: Apple v. Microsoft, HP v. Dell, Cisco v. Juniper, MySpace v. Facebook. But in fact, that isn’t the case. Sure, those are dangerous competitors; but far more threatening is that clever new start-up that seems to appear out of nowhere. That’s the threat that wakes up Fortune 500 tech CEOs at 3 a.m. That little start-up not only competes with you, it can render your entire business – even your entire industry – obsolete and you don’t even see it coming. Think desktop publishing and the printing industry, the iPod and the music industry – and just look at the terror that Twitter seems to be creating at Google and Facebook these days.
The abuses of power of the Executive branch, and of the federal government in general, do not create loyalty, but fear… and so long as the fearful wield the ability to choose, they can reverse the abuses.
For a time.
michael is, sadly, correct…
the level of arrogance by entrepreneurs who (to be fair) honestly believe that you can meaningfully divorce economic freedom from political freedoms is breathtaking….obama will (literally) make them pay an enormous price for that arrogance…
the obamination is a corporatist statist at heart.
This article is a good analysis of the reality of the situation we face. I’m the founder of a high tech start-up that is seeking funding. I started the company two years ago and – timing being what it is – the economy dumped just when we began our search for funding.
The election of Obama turned what was only a moderately bad investment environment due to the economy into a disastrous environment.
Forgetting my situation, consider our nation. Normally, housing, automobiles and technology lead us out of recessions. Prior to Obama’s election, technology was obviously, our best hope for recovery given the plight of the real estate and automobile industry.
Now that Obama is pounding tech into the ground too, where are the jobs going to come from?
Green jobs? Don’t hold your breath. My company is a green energy company and I can guarantee you that the greening of America, such as it will be, will not employ massive numbers of people and all too many of those that are employed will be government regulators.
Michael S. Malone:
A terrific essay.
While the situation you describe has an inherent humorous side, I don’t think anybody out here in the rest of the country is going to be laughing.
If Silicon Valley executives and voters catch on it probably won’t be until it is too late.
I’ll link this into my blog PlumwoodRoad and see if I can get it out to a few more people.
The question is have they learned their lesson or will they repeat the same idiocies in supporting statists and socialists in the past?
Yes, but Obama is really really really sympathetic toward same-sex marriage (even though he’s not going to do much to further it). That fact alone will make all the unicorns dance on rainbows.
Marxism and all of its attendant offshoots (socialism, communism, statism, etc.) are like a Rube Goldberg cartoon-they look good on paper but they don’t work in reality. And the end product of Marxism is that everyone loses. EVERYONE! Ah, if only we had done it bigger. So, I have as much sympathy for anyone in the Valley as I have for the arsonist that, while setting a building on fire, accidentally gets trapped in said building and burns himself up.
@ Cubanbob:
I’m sure you know that those questions you asked answer themselves. We all need to remember that the reason that Pelosi and her gangsters are in the Congress in the first place is because the very wealthy “Valleyites” give very generously to pete stark, george miller, and the rest of what is the Left of the Left. The term Yellow dog democrat is the apt and operative term.
David Jacobson
Cleveland Heights, OH
formerly of Vallejo, CA (in georgie miller’s district)
Well, are all the smartest boys and girls in hi-tech getting a clue yet? Why aren’t they speaking out?
Perhaps they are afraid … and they wouldn’t be wrong.
It’s schadenfreude, sure, but the only silver lining to our current troubles is that so many, oh-so-smart professionals, who bought into this fast-talking smoothie in the White House, are getting hammered worse than the rest of us.
The profitable pre-IPO startup I was at could have gone public while I was there; however, SOX compliance costs meant we had to delay the IPO until revenue reached a much higher level, several more years in the future. Needless to say, the fallout from the real estate bubble popping has perhaps indefinitely delayed such an IPO.
So much for being my own angel investor or my co-workers doing the same with their own ideas.
We are headed to European statism here. Its great if you are a Big Business because your existence is treated as a matter of national survival and assumed to be perpetual. Your competitors are smothered in their cradle by punitive taxation and generous subsidies to you. Look at Europe with its governments picking “winners” in their national industries. Overall, are these names any different than they were 40 years ago? Where are all the entrepreneurs in Europe? Gone to America or the Far East building great businesses.
Only a wilfully blind person could not see that Lightworker is bound and determined to bring about a new corporatist/statist paradigm in America. How will you “control” healthcare costs without controlling the healthcare industry?
Really, folks in Silicon Valley, don’t you know that you are just milch cows in the eyes of this administration? Your job is to produce wealth that can be redistributed to those who risk nothing in the name of “fairness”. Get to your oar in the Obama galley!
“Shrewd” one doesn’t require to be a good liar.
“Well, are all the smartest boys and girls in hi-tech getting a clue yet? Why aren’t they speaking out?”
That is a very easy question to answer. Barack Obama is a man of color—and they don’t want to be perceived as racists.
Is it me or do a lot of people who were all atwitter over Obama fit a certain profile? Namely, highly educated, elite university graduates who suffer from a bipolar disorder of wanting to be socialists while making money in raw capitalist competition where they seek not to overcome their competitors but to drive them out of the industry.
All in all, 2008/2009 has not been a good year for the “smart people”. The masters of Wall Street fell for their own ponzi scheme and the brilliant high techies fell for their own demagogue. Turns out being brilliantly educated doesn’t make you all that smart when it comes to falling for scams.
“Yes, but Obama is really really really sympathetic toward same-sex marriage (even though he’s not going to do much to further it). That fact alone will make all the unicorns dance on rainbows.”
Barack Obama’s more astute voters knew that he is a liar! He just wasn’t supposed to lie to them. After all, he graduated from Harvard Law. Obama is an “elite” and therefore an inside member of their group.
“The question is have they learned their lesson or will they repeat the same idiocies in supporting statists and socialists in the past?”
– - – -
They’ve been doing it, off and on, for thousands of years, all over the globe. There’s no more seductive beckoning than “do you want to join our Cool Kids Club?” So, no, there’s been no learning here – the observations are in RAM, nobody ever backs up anything, and they reboot every time a Republican wins office.
My financial well-being and that of hundreds of thousands (or perhaps millions) of others is tied to the energy industry. Obama will likely nationalize or bankrupt traditional energy producers. So I say “great” if Big High Tech gets theirs, too. I am really sorry to hear about the tech startups, though.
We will see if they’ve learned their lesson as the 2010 election cycle approaches.
High Tech? How high tech is it to pay people to register 900K questionable voters?
Anyway…. Hopenchange blah blah blah.
Hey techies, go stand over by the Armenians, the Jews, the anti-war crowd, the CEOs and business owners, the “bi-partisan” weed smokers, the GLBTs and those independents who realize that they have been punked big time by Obama. He won by what, 7 million votes? He’s easily disenfranchised that many in his first sixth months in office. Can’t wait for 2012 when he is voted out.
Centralized planning (read: socialism) of economies and societies is very appealing to executives who spent their lives thinking about and working with microchips instead of people.
In the mid to late 1980s I worked in the semiconductor industry as an engineer (I now teach mathematics in a community college, but that is another story). The 1980s were an era of paranoia about Japan’s semiconductor industry, which (according to the US executives of the time) was a bigger threat to national security than the Soviet Union. Many of my colleagues were decidedly left of center, embraced personal freedom (except the right to disagree with homosexuality, atheism, etc.) and technocratic planning of economies (of which, I gathered, they would be the ones doing the planning instead of the ignorant rabble not in their social circles).
This may sound silly, but many Silicon Valley executives and engineers view government as the Ultimate File Server. A file server is a central computer that controls who gets on the network, what they have access to, and (above all) can monitor what someone is doing. Although they will deny it, their actions make it clear that they are fascists who believe strongly in economic totalitarianism. For all of their brilliance, their knowledge of history is sorely lacking.
In 2010 and beyond most of these same individuals who are queasy about what that have created in the Obama administration will nevertheless once again go to the mat for him and like-minded Democrats. Despite their present disillusionment, they still have faith in the Ultimate File Server as a model for government, in which people are electrons pushed around in useful patterns by a higher intelligence (theirs).
TO: All
RE: Who….
….are the ‘rubes’?
Regards,
Chuck(le)
[We are ALL 'under the bus' now.]
“But if it fails”? Isn’t that what DohBama says on the daily about his ‘plans’? He’s the, “Mistakes happen and we’ll just have to try again if it fails” guru. Amazing that people swallow that load of B.S. hook, line and sinker.
I can’t believe the idiots who say DohBama is a ‘geek’ just because he’s a little computer savvy or is blackberry dependent. Gimme a break. HA! Create a font or twenty, design an operating system GUI, create website [all on your lonesome], make an animated cursor etc. and get back to me Barry the Magic Zero.
Lay Hoo Zay Herrrrrrrrrrrr.
“But if it fails”? Isn’t that what DohBama says on the daily about his ‘plans’? He’s the, “Mistakes happen and we’ll just have to try again if it fails” guru. Amazing that people swallow that load of B.S. hook, line and sinker.
I can’t believe the idiots who say DohBama is a ‘geek’ just because he’s a little computer savvy or is blackberry dependent. Gimme a break. HA! Create a font or twenty, design an operating system GUI, create website [all on your lonesome], make an animated cursor etc. and get back to me Barry the Magic Zero.
Lay Hoo Zay Herrrrrrrrrrrr!
One of the traps that people fall into is hubris. If I’m good at doing X, then I would be good at doing Y, even if I know absolutely nothing about what it takes to do Y. Most of the technical types never really had to delve into economics, history, or political science other than the minimum level they could get away with–like the required undergraduate courses such as Civics 101, in which the ignorant are often fed the opinions and prejudices of the instructor with the label “Absolute Truth” stamped on the package. They believed it. They never delved further into the matter, nor was it required that they do so in the course of their lives that followed after.
So the city kids were told by their kindergarten teacher that bunnies were harmless vegetarians that could be identified as having big ears, fur, and four feet. It does fit the description child, but its actually an African lion, and you really shouldn’t have gotten in the cage with it …
Ignorance can cripple. But believing that you are incapable of being ignorant? That kills.
No shit, Sherlock. Nobody saw that coming.
You Valleyites may also be shocked to learn that eagles swoop down and snatch cute, fuzzy bunnies, and eat them.
What was your first clue that 0bama wasn’t Adam Smith?
Meh, what a load of crap Mike.
People saw what they chose to see and ignored the many voices telling them otherwise. Obama is no surprise to anyone who spent more than 30 seconds actually researching him and thinking about where his positions, ambitions, associations, and message really lie.
Those who swallowed the MSM fluff, gave in to “white guilt”, or some other self delusion are merely getting what they voted for. Sorry, unless we can impeach him we’re stuck with him for at least another 3.5 years and all your whining about your “buyers remorse” isn’t going to change it.
Perhaps if more people pulled their heads from their rectum back in Nov. 2008 we wouldn’t be having this discussion.
I have to confess a perverse admiration for Obama, it is absolutely amazing how so many people can be fooled by this outright fraud and charlatan. And his deceitfulness is so easy to see through.
How can anyone believe a man who says he is not for big government and then passes the biggest increase in government in history?? Or says he isn’t interested in running a car company then does exactly that, firing CEO’s, dictating pay, deciding what kinds of cars will be built?? Do people listen to what Obama is actually saying, or do they just like the sound of his voice??
#15 jkb:your comment on a good year for smart people is right on target. the sad fact is that the roads to the killing fields in Cambodia and the rice paddies adjacient to those roads were littered with the bodies of smart people. they don’t get it to this day and they’ll never get it in the future . they’re bedazzled by the brightness of the great shining asshole in the sky!
You characterize the situation well, JKB. A number of my (elite college) classmates and other acquaintances who went to elite schools have friended me on Facebook. I look at the kneejerk, reactionary left-wing things they put on their Facebook pages, and roll my eyes. Some of them are the kinds of Valleyites that this article describes, but they’re not going to admit they’ve been had anytime soon.
Well so far as I know this is still America and you have freedom of speech. Hell you can insult anyone at anytime, just be prepared for consequences. If I dislike your policies I will let you know about it and if you want to call me a racist or homophobe or anything else it will not change the truth as I know it. It is my opinion and if you do not agree then just say so and tell me why but calling me names is childish and just proves that possibly the fact that I am right and you know it.
I can’t say I feel any sympathy for those bitten while playing with snakes – they have enabled tremendous harm to be done to the United States.
we’re really screwed if the great shining asshole in the sky goes into food production. step up to the table boys, we’re serving steak tonight…. ummm good isn’t boys. seconds anyone?
In regards to my first comment, perhaps I should add the following. Just as people who majored in fields such as Computer Science and Engineering were not required to pick up much of anything about history, especially as it applies to political theories and their implementation, so it is with science for people with Journalism degrees, most of whom never took more that the minimum Science for Dummies courses that were required for them to get their degrees.
Do you ever laugh at the “science” or “tech” articles that these people produce? If so, you have good reason to do so. Now consider the other side of the coin: is your depth of knowledge about economics and history any better than their understanding of science?
Their is no shame attached to being ignorant, that adjective fits us all. There is cause for shame when you don’t want to do anything about it.
The worst part is that, assuming the One gets booted after four years, the economy will still be a wreck and everybody with talent will have opened a company somewhere else. We will have to import the products they create.
An important thing that is missing in this article is what the nature of the tech business these day.
Most think of tech companies as small scrappy companies started in a garage by some college friends and filled with entrepreneurs cranking out code or innovating new designs. You know like Apple, Google, Twitter, etc.
But this is only one segment of the tech industry.
The other side, the less sexy more profitable side is populated by huge multinational corporations with hundreds of billion of dollars of sales annually. Companies you probably haven’t even heard of.
Take the examples of Oracle, EDS/HP, and EMC. Not really household names.
You can’t buy their software at Amazon or Best Buy. But their clients ARE Amazon, Best Buy. And Boeing, Wal Mart, ATT, United Health Care and most importantly GOVERNMENTS.
For example when national health care comes, guess who going to make huge amounts of money? Oracle, EDS/HP, and EMC. All that health care data will have to be recieved, stored and manipulated, and that’s why these companies do, design software and systems that receive, store and manipulate data – huge amounts of data.
We’re not talking about an Excel spreadsheet or Quickbooks. We’re talking about the databases of the CIA, IRS, Bank of America, your state government, even this very website’s host.
Are they afraid some upstart company is going to take their business away with innovative lower cost products?
Nope. You can go in to one of their customers and say, “I can do this better, faster and at a 99% discount.” Sounds attractive, but Wal Mart isn’t going to bring down their entire system and rip out billions of dollars of equipment to try something new.
No they will strangle your start-up and your only hope is to be bought out.
These guys want a guy like Obama in the White House, because he’ll create a climate where they can have to opportunity to control their markets and in turn make a lot of money.
The guys who own and manage companies like Oracle, EDS/HP, and EMC aren’t just smart. They’re smart predatory and ruthless. Just like Obama.
The next hi-tech revolution may be very simple, stiff rope and lamp post. What say you, boyzzz!
#22 Houdini – You really think speech here is free? If you don’t toe the party line, they demonize you, vilify you, attack your kids (Palin), or get you fired (Carrie Prejean). The Statists don’t let you disagree. It’s inherent to the concept of Statism.
I know someone who is a top commercial real estate broker in the Valley. He was saying that one the industrial parks that houses start-ups the turn-over has been moribund. Normally by this time of the year there 20 deals would have been made. To date there are zero. He was also saying that CEOs are walking out of deals, just because they are completely uncertain about the near and medium term business climate. If you drive around the valley (Santa Clara, San Jose, Milpitas, Cupertino, etc.) you’ll see TONS of office buildings with for lease signs. I’ve heard, too, that financing is more difficult to get, which also puts the brakes on the usual go-go-go environment here in the valley.
In short: the valley is experiencing a type of paralysis due to the highly uncertain business climate. Not all of that is Obama: Sacramento certainly has not been a friend to business. Still, many of the people I’ve talked to have no idea what the next thing to come from Washington will be, and that’s affecting their decisions, making them more cautious.
I live in Washington State. Lots of tech people here. Lots. They all got re-educated in college. They buy this fuzzy one-world nonsense. They believe AGW is real. And they won’t listen unless you are at least as “educated” as they are. It’s about credentials. I have this problem with my brother. He’s a good guy, but his ego is fragile. He relies on his credentials to get through the day. Funny thing is, he’s really competent, but it’s not enough for him. Status is sooo important. He who has the best credentials wins.
Is this a surprise? I never understood why entrepreneurs lined up to support a statist candidate. His speech at the 2004 Dem national convention made it clear that he had socialist tendencies. I still see Obama stickers all over the Valley. Not everyone has gotten the message.
That said, driving on 280 a couple of weeks ago, I saw a BMW wagon with a handmade Obama sign in its rear window. I rolled my eyes, thinking it was going to be an example of brainwashed child art, instead it read:
Oh
Boy
Another
Massive
Appropriation
Now that’s creativity I can believe in.
And Balmer said that many of them will become very, very unemployed if 0bama goes ahead with his tax plans.
Remember the old billboards from 1970? “Last one out of Seattle, turn off the lights”.
Are you still glad that you voted for Obama?
“It’s about credentials.”
These credentials are often phonier than a three dollar bill. Even the hard sciences often demand that one becomes an intellectual whore. As for the softer disciplines—they have become almost a total joke. And these people, on a gut level are very well aware of their moral corruption. A postmodernist intellectual climate is just an excuse to lower standards. You can get away with virtually anything if everything is deemed relative.
“It hasn’t worked out that way. President Obama has proven to be not only shrewder than these tech execs thought, but also far more dogmatic and old-fashioned in his world-view than they ever imagined.”
I do not believe that Obama is shrewd when it comes to technology, although he is shrewd at abusing it for political purposes. He primarily usestechnology for an old-fashioned purpose: to create a large network of followers. Also, by associating himself with technology, he hopes to be perceived as a youthful and hip “guru”.
A closer examination would probably reveal that Obama is rather superficial when it comes to the use of technology. For example, his health care proposal relies heavily on the concept of electronic medical records. While people instinctively believe that these records would be efficient, the more likely reality is that electronic records will not save money, and they would be quite inefficient for a long period of time. This policy would probably cost a ton of money to design and implement, and even more money to maintain, which is why IBM, Microsoft, and GE are giddy that Obama is extolling the benefits, while blind to the consequences. The tech companies interests are well served because of Obama’s superficial understanding of technology.
Want to drive them absolutely crazy? Next time you see one of them wimpering about how they got thrown under the bus with the rest of “The One’s” cast offs, just ask,
“So how’s that Obama-thing workin’ out for ya?”
Excellent essay!
“No doubt right now somebody in the White House is looking at the low levels of union membership in high tech and vowing to do something about it.”
This is exactly what I was thinking as I read the piece and lo and behold, there it was. This is what is near and dear to Obama’s heart.
Silcon Valley and High Tech entrepreneurs are what I call Lifestyle Republicans. They subordinate their economic interests to lifestyle issues like abortion on demand, gay marriage and environment. Their underlying assumption is that no government policy will hurt them enough for economics issues to become primary. They didn’t take Socialism seriously after the end of the Cold War. I first observed this phenomenon in 2000 when Al Gore got a rip roaring reception at the Microsoft Campus. Here was the embodiment of the government who tried to destroy their livelihood and they cheered him because he said what they wanted to hear on social issues.
Anyone who voted for Obama is getting what they asked for. The rest of us are just getting screwed.
For some years now I’ve been observing the hyper rich/statist nexus forming, and felt like a crackpot for even thinking that this meant that the uber-wealthy were joining forces with those who wanted to sabotage free market capitalism for the sole purpose of consolidating their wealth and eliminating competition.
It’s a sad day when crackpot notions become reality.
14th century Europe anyone?
If you look very closely Obamas intentions are the same as Mugabes plan for the white farmers of Rhodesia (oops, Zimbabwe)
The trick is to look at what he is actually doing not the noise coming out of his mouth. All the smart guys apparently were taken in by the campaign flim flam. And the grovelers around him are so convincing how could anyone doubt?
I hope Silicon Valley has a plan.
Come to think of it, maybe it’s worth it if it drives all of those Microsofties out and pinkens Washington State.
In years past, when Boeing had massive layoffs, many involuntarily ousted Boeing engineers would start high-tech companies. I don’t think this will happen if Microsoft has big layoffs for two reasons: 1) the general business environment will be very, extremely sucky for anyone trying to start any kind of business, and 2) software people don’t have the technological breadth that aerospace people do.
This could get ugly. They might all become hippies and move to Vashon Island. Retch.
Microsoft employees have their act together regarding the hard sciences. There is zilch doubt about this. Many of these people can do advance math problems in their head. The problem is that they are illiterates when it comes to the softer disciplines. They spend very little time thinking about these matters. These arrogant individuals are also inclined to embrace fascist and other progressive doctrines—that say they should be running the world!
Haifa.
Dude. Advanced math and hard science aren’t the same thing. Look at all the perpetual motion machines that are being embraced by “hi-tech” investors. They know lots of applied math, but they’re as clueless as Boris when it comes to thermodynamics.
Lots of sophisticated fools and their money will be separated over energy snake oil over the next 5 years. Just watch.
“have they learned their lesson or will they repeat the same idiocies in supporting statists and socialists ”
Unfortunately, all data points to the latter. After all, these are the same sort of folks that flee MA or CA for VA or AZ because of high taxes and then promptly start voting in Democrats who will raise taxes in their new home states based on feel-good emotionalism. After all, if you want Peace&tm; all you have to do is visualize it really hard.
Surprise – Obama still favored by over 60% of Americans. Still hated by the wingnuts
“Because it was the best strategy to crush the start-ups”
A lot of smart people in tech and in Silicon Valley are from overseas, so can readily return to Taiwan, India, China, etc. and set up their start up. This too will impact the US economy in the long run.
Obama turned against the high tech industry? He’s already turned against the auto-industry (and rewarded the unions lest we forget), against Wall-Street, against high-income Americans (I like to refer to this group as the “job creators”), against white men (we all are know privy to the information that Hispanic women make better decisions right?), Republicans as a whole (roughly half the country) and America as a nation (remember how he apologized for our “arrogance” overseas?).
Oh wait, I almost forgot Christians, Jews, small businesses, etc, etc.
He sure is a multi-tasker isn’t he? Soon we’ll be able to add on the health-care industry but that’s just too depressing to contemplate until the ink is dry on the royal proclamation.
Well, the chickens indeed have come home to roost.
While many in the tech industry were enthralled, entranced, enamored etc with Obama, not all were fooled. My own two techies- hailing from Caltech & MIT- were most definitely not taken in by Obama’s syrupy words.
While the big boys thought Obama would be The One to crush the start ups, surely they did not envision that his ax would eviscerate them too.
It takes a certain mindset to ignore which way the hatchet falls, as long as it doesn’t fall their way. IF these otherwise smart techies had looked deeper, not just focusing on their own pieces of the pie, they would have realized that Obama was simply incapable of nurturing ANY capital initiatives.
After all, a laundry list of his mentors revealed that they were ALL marxist, socialist in outlook. Now, if one surrounds oneself with people who are true believers, avowed anti-capitalists, what did these techies think would happen?
Just because one is smart enough to invent things, to think outside the box in the technology arena does not necessarily translate into plain, old fashioned common sense.
Buyer, or in this case the voter, should have been more aware.
Just wait till they pay for Obamacare. 13,000 per family of 4 and they can’t get around it by making the workers contractors. Criminal penalties.
On behalf of Western Canada I welcome all American entrepreneurs to our low tax pro business provinces. The future is north. (Besides with all the global warming it will be too hot south of the 49th.)
Good piece. I’ve worked in tech and Silicon Valley (don’t live there) 26 years. O will go wherever the money is – matters not one whit that it was earned from brilliant innovation that “changed the world”. It’s his.
The other thing that continues to amaze me is that California has one of the world’s largest economic engines in its own backyard and seems to be hell-bent on destroying it.
4. Dr. Dean. — yep. That whole green jobs thing is BS.
9 and 10 — the all DO think they are smarter than anyone else and are arrogant. That same arrogance also makes them think that it isn’t their problem. I talk to them every day and NO ONE says anything. Their ignorance of how free enterprise works is astounding – even though they are in the middle of the most entrepreneurial area of the world. I can’t tell you how many times I’m asked to write stuff that they think is as natural as night following day that I KNOW would make at least half their customers in the rest of the country think they’ve totally lost it.
12. Teleprompter — milk cows — yep.
14. David Thomson — yes again — Silicon Valley is PC run amok.
15. JKB — yes again. I’ve met uncounted MBAs and assorted “elites” with degrees out the yin-yang who couldn’t implement their way out of a paper bag.
26 West Wright — I got a rope.
28 — Totally right
33- -you nailed it. And most of them weren’t alive at the end of the Cold War.
I live and work in Silicone Valley for a large digital printing company, and I can tell you things are not rosy in nerdland. Commercial real estate is in the toilet, and layoffs are everywhere. I’m enjoying watching the housing slide downhill. Nerds are political nincompoops anyway; all tech and no wisdom, so they never really make the connection between government and their best interests. Panzerkardinal is right, many of the big tech firms intend to be on the government gravy train, and use their political clout to cut off any competition; trouble is, that’s how you become obsolete fast.
You don’t understand, the left are leeches, parasites, which is probably why the neo New Left is so simpatico with Islam and that whole wretched of the earth gig. The West went to the moon while the middle east was satisfied herding goats and sheep and blowing up Western art–gee, if it were not for the Arab slave trade and Western seafaring technology Obama would not even be here. I guess Marx was right, capitalists do produce their grave diggers.
Hah! they thought they were voting for a black Clinton and they got a black Chavez. Hahaha. Reap what you sow rubes.
Fritz (66):
Fix your socialist health-care system and it sounds really attractive. (What are Canadians going to do when Obama “fixes” the U.S. health-care system and they can’t come down south for cancer and heart treatment any more?)
Silicone Valley? Wow. Nipples as far as the eye can see. I could do a number all over the place there…
I find it amusing to think back on how Obama gave an insider’s viewpoint of rural Pennsylvania voters to the Silicon Valley elite… but somehow his audience that night failed to wonder what Obama might have to say to the Washington elite about the tech-rubes in Silicon Valley! He is slick enough to have a snide put-down for any group, and tailor it to any audience, to make them feel like they are special, and getting the “real” Obama. The real Obama is a shape-shifter.
43. Marc Malone: - …they won’t listen unless you are at least as “educated” as they are.
What one must realize is that this is a form of psychic self-defense aimed at preserving a morally adolescent worldview. What’s really at work there is a refusal to listen unless you are at least as indoctrinated as they are.
I’m an R&D engineer at a large (sector-leading) semiconductor company in Silicon Valley (with mfg plants in China, etc.). I’ve done my best to don my noise-cancelling headphones and continue working while my cube neighbors spent large chunks of their working days foaming at the mouth in communal Bushitler rants because I like my job and this employer’s work environment is no worse than the next (here in The Valley). But at our next-to-last (first post-inauguration) quarterly “all hands” employee meeting, we were treated to the company founder and 20-year CEO (a) eagerly predicting that the (then anticipated) “Stimulus Package” would if passed send our corporate results back toward normal/positive by the end of 2009 (if not sooner), and (b) closing out the meeting happily chanting “Yes We Can, Yes We Can, …” while shaking his fist toward the audience.
While I nearly puked, I was also perplexed: this “captain of industry” is absolutely and demonstrably NOT an idiot (witness the long-term success of “his company”). But OTOH his views are IMHO crackpot-level. For me, it’s a weird case of “I hope he’s right” (I love my job (aside from the fruitcake politics of most of my peers) so I don’t want to see my employer in a tailspin) but I have zero confidence that the CEO is anything more than a fellow traveler blindly following in The Messiah’s footsteps, kissing the ground he trod upon, hollering “amen” at each utterance of the Great One.
The answer may in fact be given in this article and the following comments: he probably hopes that in the Obama New Country/World Order, big companies like his will become eternal market-leaders, prevented from failing. And with all the upstart competition squashed in-cradle courtesy of the World Order of Obama, the big will get even bigger. Of course, none of that will assure that my job won’t be outsourced to Belarus, Bang’lr, or elsewhere…
the wingnuts are sure in a tizzy today! Mirabile visu!
I did not vote for Mr. O and did not want him to win. I am on the poverty line so it kinda makes me chuckle that all those high tone deep pockets with martinis in hand wanted this faker to win and did all they could to get him in office and now he and his comrades are picking their pockets clean. I hate to see the Obamamites destroying this nation. The only thing that makes me feel better these days is watching the faces drop on those fools who supported Obie all the way. They are all soooo surprised, stunned! O my, they were all suckered big time! Welcome to hell.
What stupid suckers you Obamamaniacs are.
Mr. Malone writes, “But President Obama has instead appeared to be almost exclusively interested in Big Business as the key to economy recovery.”
I say, isn’t it as plain as the nose on anyone’s face that Obama could care less about economic recovery? This guy is doing every thing he can to make sure there is NO RECOVERY. He’s strictly about ramrodding as much society destoyin’ stuff down our throats before 2010…it’s the Alinsky way. Then, the Democrat majorities in congress are toast but we’re left with the hugest pile of stinking feces for a generation or more. Finally, Obama is run out of town on a rail in 2012…if we last that long.
I’m not a tech guy. I didn’t study engineering or computer science, but I do understand finance and economics – and the depth of my knowledge of these things is light years ahead of Obonga.
What will kill small companies, startups, venture capital, and entrepreneurship will be a seemingly obscure thing called hurdle rates. A hurdle rate is an interest rate at which future cash flows are discounted to the present (a NPV – Net Present Value). If it is a positive figure, then the new product, acquisition, or investment in long term capital equipment will make economic sense. Typically, a range of hurdle rates are used in a spreadsheet, with probabilities assigned to the values within the range.
Another term for hurdle rate is cost of capital. The higher it is, the harder it is to bleed success from the investment. Typically, huge companies have a lower cost of capital, assuming that they have stable and growing free cash flow and are managed well.
I do this for a living, so I hope you give me the benefit of the doubt with what I am about to say. Everything that Obonga is doing right now and proposes to do in the future will significantly raise the cost of capital FOR EVERYONE. It will hit small companies much harder. In fact, it already has had a depressing effect on the private sector of the U.S. economy. The threat of greatly increased taxes of all kinds raises systemic, industry, and financial risk for everyone. Furthermore, when inflation builds in, as it may be starting to do already via energy costs, it will raise the cost of capital (hurdle rates). Already, money is flowing more towards precious metals and natural resources than it is towards equities of other sectors. The dollar is in great danger, and already our government’s debt paper is being discounted more steeply (yields are creeping up).
We will be coming out of this recession very, very weakly. Next year unemployment may be over ten percent. My in-house economist thinks that by 2012 it still will not have fallen under nine percent. On top of it all, inflation will be a problem. If you throw in cap and tax and socialized medicine, the government’s take of GDP will top 50%. Followers of F. Hayek’s work have written papers that I agree with: once government takes more than about 25% of GDP, an economy stops growing and begins to contract.
What I find astounding right now is that our universities are still enclaves where you have economists who still believe in the Keynesian Multiplier, when that hypothesis has been proven time and time again as a failure. The rational expectations model has been proven to be more descriptive of economic behavior, and yet the graduates of the Ivies still kick it to the curb. Geithner, a Dartmouth grad, one of those elites who is a neo-Keynesian. Obonga is a big believer in the Keynesian Multiplier (at least insofar as he understands it in a general way).
I’ve pretty much seen it all in my lifetime so far. I was an economics major in college. I was an aspiring young academic Marxist and Jesuit seminarian for awhile. Eventually I broke with Marxism and shortly later got my M.B.A. My university education was not obtained at an elite school (but a strong state university), which means I am not an upper tier talent. Yet, I could learn from reality.
Why can’t these people in the elite schools and biggest corporations learn from reality? What the hell is their problem?
Dude, we tried to tell you what Obama was. Now we’re stuck with him.
Shadow, there are some more kiddies just like you over at the Daily Kos. They will like you and not be mean to you. Hurry along now before you miss them!
Those who predict bigger, more fascistic corporations: This sounds like some major anti-trust suits in the making. I also see a situation rife with SOX violations.
What will Obama’s DOJ do? Turn a blind eye? Or bite the hand that’s fed them?
If these corporations in fact fatten on government business and the devouring of erstwhile competitors, all that money will be taxed heavily. Will those companies also be forced to “hire American” and “buy green” suppliers? Will they penalized if they try to offshore? Will their CEOs be subject to salary caps?
That’s when we’ll know how skilled Obama is. He’s got to sicken but not kill the goose that lays the golden egg.
Well, that’s just based on what I’ve read here and I’m no expert. It’s certainly food for thought.
@78 fred: - Why can’t these people in the elite schools and biggest corporations learn from reality? What the hell is their problem?
It’s actually pretty straightforward, fred. And fairly well-researched. Their problem is a lack of moral maturity (as opposed to intellectual, chronological, physical, etc.). All the evidence in the world will not convince someone who discounts that evidence because it isn’t “fair”.
Doesn’t matter, they’ll vote for him again in 2012, cuz the alternative (voting Republican) is too scary to imagine.
Schadenfreude. (Love that word)
Kinda weird when your post shows up 8 hours later. What’s up with that, home slice? Were you partying, dude?
Most of us have to learn the hard way. And if we scored high grades for 16 years of school with people telling us we were so smart we might entertain delusions of our own greatness. So our tech people bump into reality and get badly bruised. I’ve suffered a few such shocks, and I’m not all that bright, just youthfully arrogant at 57. However, even I can see that this short blip, so gloriously labeled The Age of Obama, is the culmination of decades of delusion among progressives and former progressives. The later of which will soon be a mushrooming demographic, growing faster than the immigrant Muslim population of France. Our so very clever betters have gleefully taken charge of the sandbox and, golleee, and Holy Moses, it ain’t working out like it’s supposed to. What’s with all these unforeseen consequences? All the King’s horses and all the King’s Harvard, Yale, Columbia, Princeton, Stanford, professors…
Schadenfreude. (Hate that word, sooo pretentious, elitist, overused)
#61 The Shadow – Well, the lefties finally show up!
Where are your pals Sheeeeeeeeeeesh, Vino, et al.? Making an early weekend of it and you were left with the duty ….?
It never ceases to amaze me that those who voted for BO are surprised by his actions.
The Shadow Doesn’t Know: Obama is personally still popular (although trending downward), but his policies are opposed by increasingly larger majorities. In time, the failure of his lunatic ecomonics will out and his popularity will submerge for good. When that happens, The (Arrogant) One–so accustomed to unquestioned adulation–will have an aneurysm. Even the MSM will transition from “What would Obama do,” to “What a petulant little prick.”
This will be VERY entertaining. Almost worth the price of completely f**cking up the country and global economy for the next two generations.
The DJIA companies want Obama to take over their health care expenses and gin up some dumb projects for a Green Earth (which Thomas Friedman in all seriousness calls a “wonderful hoax” even if there is no manmade global warming).
But the biggest losers are going to be all the liberal doctors and Wall Street execs who poured money into his campaign. BHO is the piper, and will require the dancers to pay.
Weren’t you paying attention? When he promised free abortions to all, he was talking about business startups. No corporation should be punished with competition. It’s a CEO’s choice to terminate those pesky little rugrat startups.
There may be a bright side to Obamanomics and Government Assisted Industrialization.
Those small entrepreneurial industries and technologies that survive the next few years will be absolute dynamos when our government returns to a state on somewhat normal operation in the Post Obama decades. Recalling the maxim that, “What doesn’t kill me will only make me stronger”, things are looking better and better.
@91. PD Quig: - … Obama is personally still popular (although trending downward), but his policies are opposed by increasingly larger majorities.
Precisely. And it can’t be overstated, because it reveals an extremely dangerous phenomenon. That phenomenon has two aspects.
First, BHO’s popularity would evaporate in a heartbeat if the entrenched, Fifth Column media stopped showering him with adulation on a minute-by-minute basis, fantasizing that he’s the best thing since JFK. In other times this was clearly recognized as what it is: state propaganda.
Second, as we see in these numbers, the public has separated their assessment of BHO from their assessment of his policies. Essentially, he is not being held accountable in the public’s mind for what he’s actually doing. This is a form of doublethink we haven’t seen in America since Carter was allowed to almost bankrupt us.
Finally, the best metric for the public’s assessment of BHO – the approval index – has dropped like a stone since the day of his coronation. This trend will continue as long as unemployment continues to rise and the economy continues to falter in violation of the predictions on which BHO’s – the so-called “Stimulus” – was based.
Obama’s “Recovery Act” – complete with its very own seal – is a boondoggle of unprecedented proportions.
FDR’s National Recovery Act had its own seal too (can you spot the homage in BHO’s version?). That Act was struck down by the Supreme Court as the unconstitutional overreach of federal authority it was. It appears that this generation is beginning to see why.
#80
Could it be that the elite support intentionally raising the “cost of capital” in order destroy capitalism itself?
It must be easier to bend big business to your will than all those pesky entrepreneurs.
Anyway . . . good comment. You made me look up Keynesian Multiplier.
Michael S. Malone has written a brilliant article here. And I don’t mean to take away from it by anything I might say, but much of why the techies backed Obama is pure stupidity. I’d like to say that it’s arrogance, and its blood brother, ignorance, but it isn’t. It’s stupidity. A simple example will explain:
I recently got a wild-eyed liberal to read Orwell’s “Animal Farm,” which, need I say, is one of the most important books ever written. Now, this guy is reallllly well-read – really, really, really well-read. He hadn’t even heard of it! He hadn’t even heard of it!!!! But, since his first BA is in sculpture, and, now at age 30, he’s getting a second one in Ed. – he wants to be a primary school teacher when he grows up – I can’t be surprised. (Oh, by the way, his Ed. concentration is in history. You should have known.)
Well, after he read it, and we discussed it, I said to him: “That little book sums it all up. Socialism/communism just doesn’t work. There will always be those who rise to power and become the pigs.” He replied to me with what he thought was a knowing look in his eye and a voice meant to soothe my fears – as if he and and all his liberal buddies had things under control: “Ahh, but they let it get corrupt.”
The Merriam-Webster defines stupid as: “given to unintelligent decisions or acts.” Yes, the sculptor and the techies in Mr. Malone’s article are stupid. They have the facts – the answers, the thousands of years of history (Plato was probably the first communist) – staring them straight in the eye, but they still decide to believe that pigs only exist in barnyards and slaughter houses.
95, that thought crossed my mind, too. Microsoft and Apple were founded in the abominable ’70s. Intel grew by leaps and bounds during that awful decade. But the real growth happened in the ’80s. The number of IPOs during this current awful era will be low, but we’ll probably see that made up for when it’s over.
Until then, these companies are going to have to stay small and plan. It might be over in 4 years, or 20. Of course by then, the entire industry may have up and moved offshore. The US may end up losing “tech” entirely, just like we’ve lost consumer electronics, and are rapidly losing automotive.
And for the record, “green” isn’t going to be the next “tech”. But that’s a whole other discussion.
I use to read/post on an astronomy site that was anti Big Mac/pro BHO. The author was certain that BHO would be the better choice for NASA and for space exploration in general. I wonder how he feels now. I’m sure rationalization, that most obvious side effect of Liberal Derangement has set in.
I hit the site initially because it was on one of those “10 best” lists. It was liberalism disguised as scientific inquiry but a good look into the world of astronomy nonetheless. But then the dude started in on Texas creationists. Not that I have a horse in that race but he would not let go. Dogmatic.
#80
Your questions: “Why can’t these people in the elite schools and biggest corporations learn from reality? What the hell is their problem?”
The answer: The Merriam-Webster defines stupid as: “given to unintelligent decisions or acts.”
Time to rouse the rabble.
Why should anyone be surprised? Obama has no known (proven) business experience, no concept of what it takes to run a company or even work in a company. remember? His claimed majors are history (of which he is obaminably (sic) ignorant, and economics (read as Karl Marx and Saul Alinsky). Remember that the Marxist concept is to destroy the middle class, the backbone of American business, and replace it with a blue collar dictatorship, and if it doesn’t work, never mind. The Statists will have the power, and they will keep it if they can, by any and every means possible.
Looks sorta like history repeating itself within a few years.
Remember the dot com boom and the “New Economy”? Nothing you could do or say at that time could convince all the airheads that income had to exceed outgo—–or else.
When the crunch came, it was all Bush’s fault of course, especially his tax cuts for the rich. Any later difficulties were war-related and Bush Derangement Syndrome was by far the leading growth sector of American society.
Then comes Barack the Magic Obama who will take all the good people to nirvana.
In short, wishful thinking continues. One of two things look like what will happen next.
One: wishful thinking gets dashed on the rocks of reality and some realistic humility starts to guide or:
Two: “Krisstalnicht”. Those who did NOT vote for Obama are targeted for his failures
and the contest gets downright physical.
Stay tuned. These are intersting times.
Whether he has any business experience is beside the point. As a matter of political orientation and doctrine, the democrats, as a group, are hostile to small business. Don’t you remember Hillary Clinton’s comment about “undercapitalized business”?
http://gfreitag.tripod.com/Health_Care_Plan.html
This isn’t accidental bumbling; this is being true to their beliefs. There’s no room in their utopia for small businesses. This isn’t Stalin’s economic model of state-run industry, this is Hitler’s model of state-sanctioned private business. The conceit of these Silicon Valley companies is in assuming that they’d make the cut.
83. The problem with that idea is that Obama doesn’t know how to do that. He only knows how to be a fascist dictator.
new utopian,
In response to your friends “Ahh, but they let it get corrupt.” statement you should have explained to him that in Marxist states those in charge are not subject to the checks and balances that safeguard democracies. In fact, in totalitarian systems their leaders have absolute power. And, as everyone should know, absolute power corrupts absolutely.
<>
You’re right, but the problem is that these guys never see this coming. They imagine that all they have to do is pass another law: that will solve the problem, by making all the business come their way. If the start-ups all go overseas to India or wherever, some idiot on the left will begin demagoguing the issue, campaigning on the “bring the jobs back to America, where we can tax them into bankruptcy” platform, and he’ll probably get elected, too. And the nerdy fools will never understand what’s going on around them, because they’re too smart to *not* understand, and too dumb to ask the questions that would enlighten them. At this point the whole situation is amazing.
Why can’t these people in the elite schools and biggest corporations learn from reality? What the hell is their problem?
The big corporations want to get bigger, the Ivies want bigger endowments (which geneerally come from where?) and O wants big government.
To me that seems to serve their collective purpose.
108, yup. There’s a weird chauvinistic (if not downright racist) attitude among the left that we have a birthright to lead in tech. In reality, a partial list of countries that are ready and willing to eat our lunch include:
Brazil
China
India
Israel
Korea
Russia, and all of the old Warsaw pact countries
Old Europe
Singapore
Etc.
I don’t want to hear these dolts wondering in ten years where their lunch went. Yes, they can.
I wonder what about radical Muslim Marxists was so hard for Silicon Vallet to understand. It’s turned out exactly as advertised, you just chose not to listen. Hate does that, next time, lose the hate, use the mind.
#51 — Here was the embodiment of the government who tried to destroy their livelihood and they cheered him because he said what they wanted to hear on social issues.
DING DING DING.
We have a winner.
It is *not* the GOP that people vote against (otherwise perceived as a vote “for” the left) but the social conservatives. Al Gore is a great deal less scary than a party headed by vermin like Rush Limbaugh.
Obama succeeded in circles he otherwise ought to have lost in because people voted AGAINST Palin.
They wanted Change ….and they’re gettin it …. why are they surprised ??
One other reason that the corporate world in general supported Teh One:
About a half-century ago, health care as an employer-provided benefit seemed like a good idea, because of the tax advantage, and because of the advantage of the employer buying in a pool. So they made a deal with Mr. Satan, and soon this became the standard deal for most corporations.
Many moons go by. Costs rise with every moon. Eventually, what was a fringe benefit becomes a significant cost item. So the big guys want out of their deal with Mr. Satan.
Mr. Messiah comes along, and promises to take them off the hook with government-provided health care. Mr. Messiah will buy Mr. Satan out. Somehow, with Mr. Messiah promising to remove such a large cost item from their balance sheet, Mr. Big decides to overlook all those demons Mr. Messiah hangs out with.
Meet the new devil. Same as the old devil. Only more diabolical.
@112. Self-hating Boomer: - Many moons go by. Costs rise with every moon.
SO true, it’s not funny.
Currently, employers can deduct the cost of providing insurance coverage for their employees. The proposals I’ve seen are going to penalize employers who do not provide coverage, but the penalty will cost less than the cost of buying coverage for their employees. Now, will this penalty they have to pay to the government be able to be deducted? The other proposal I’ve seen will require people to buy individual policies on their own. The problem with that is currently the cost of buying individual policies is far higher than group plans’ costs.
fred, I see the silliness of all this is causing an itch. I know the feeling.
The sole purpose of insurance is to manage financial risk.
So, the question comes down to this: does the government have the authority to dictate to me how to manage my own financial risk with respect to health care costs? The obvious answer – at least when the limits imposed by the U.S. Constitution are the determinant – is an unequivocal No.
The red herring upon which socialized medicine is based is the false assumption that if I can’t afford health care, either the State (that is, the taxpayers) will be forced to pay the cost or the health care provider must eat the expense of providing care.
The reason this is a red herring is that, unless one is extremely reckless or unlucky, it’s only true for a tiny percentage of the health care one receives during a lifetime. That would be the care which falls under EMTALA statutes, which require that critical emergency care be provided regardless of the patient’s insured status or ability to pay. The remaining – vast majority – of other commodity medical care costs impose no burden on society. Clearly, these non-critical costs shouldn’t be used as a justification to force an individual (or an employer) to insure against the expense, but that is exactly the “rationale” behind Massachusetts’ mandatory insurance law, which was the test case – notably promoted and signed by Mitt Romney – for Obamacare.
Note who benefits when the individual (or their employer) is forced by State or federal statute to purchase comprehensive health care insurance:
1. The State, which is free to direct taxpayer funds for other purposes.
2. The medical establishment, which is now guaranteed payment.
3. The comprehensive health care insurance industry, which is making a killing while health care consumers and health care providers (to a lesser extent) provide their profits.
Conspicuously missing from the above list is the consumer/taxpayer/patient.
As we’re currently conditioned, the story goes that “everyone” benefits by virtue of being insured against medical costs. But the problem with this thinking is that there’s a significant portion of health care that is required, i.e., it is not a risk – it’s guaranteed. You WILL need an annual physical. You WILL need a colonoscopy when you reach a certain age. You WILL need diabetes medication if your blood sugar level can’t be controlled adequately through diet. Etc. None of these expenses is a “risk” in the conventional sense. These are a cost of living – like food, housing, clothing, transportation and education. No one living in a nation founded on the concepts of individual liberty and individual responsibility should expect someone else to pay for this cost of living. But that is exactly what comprehensive health care insurance does. That is exactly what socialized medicine does.
As currently implemented, comprehensive health care insurance is nothing more than a massive Ponzi scheme – essentially, it is social security in real time. The economic model behind this mechanism has confounded price controls on health care, resulting in skyrocketing costs which have increased at multiples of inflation for decades. This has created a vicious cycle: costs keep increasing due to the open-loop pricing mechanism and thus fewer and fewer people are able to afford health care without insurance. Diabolical, really.
The solution to all this is NOT government-mandated comprehensive health care insurance. Unless Obama and the Dems think they have the authority to dictate physicians’ fees, hospital administrators’ salaries and pharmaceutical companies’ drug prices, that will do nothing but amplify the problem and bankrupt us.
We need to go back to what worked just fine before comprehensive insurance caused health care costs to skyrocket: out-of-pocket payment for all commodity health care and catastrophic (aka “major medical”) insurance policies for the real risk associated with health care needed for accidents, sudden major illness, emergency surgery, etc. And we need to get employers OUT of the business of providing insurance as a benefit.
goy,
I’m glad that I have medical insurance, because, starting at age 45, I had osteoarthritis in both my hips and have had to get hip replacements, first in 2000 and then the other hip in 2006. I’ve had four right knee scopes and am probably facing a knee replacement down the road some day.
I think the best way to keep costs down is to take a higher deductible – as high as you can afford to go. Our family deductible is $1,500.
fred, higher deductible = catastrophic / major medical. You’re right about keeping the costs down, but that only works on the individual level. It doesn’t address the much larger problem that is bankrupting the country on overpriced health care and unnecessary insurance.
You’re conditioned to be glad to have insurance because others contribute to the health care you receive, easing the burden and providing somewhat of a “free lunch”. All of us are conditioned in this way. That prospect was a boon when we were only talking about major medical expenses. But then comprehensive insurance came along and destroyed the provider-consumer relationship that kept prices under control. This started us down a slippery slope that very few people seem willing to recognize.
Functionally, comprehensive insurance does two dangerous things.
First, it spreads the cost for every dime spent on every aspect of health care over all members in a plan – right down to vitamins that are covered by some policies (with Dr. Rx). This effectively hides the actual cost of care from the consumer. Many insurance companies don’t even send out EOBs anymore. In those cases the patient never has any idea how much their health care actually cost. They’ve been trained not to care.
Second, when insurance companies set prices for health care goods and services instead of the market, any control the consumer (patient) had over the cost of their health care is destroyed. Insurance companies act, in effect, as a proxy monopoly that prevents consumer “feedback” from doing what it does in every other market – keep the costs down.
With these two factors in play, it’s no surprise that since comprehensive insurance became popular, health care costs have skyrocketed at multiple times the rate of inflation. There’s nothing closing the loop to keep the costs down, as there is with all other commodity goods and services.
The problem is that insurance companies have numerous conflicts of interest here. Any increase in health care costs also increases their cash flow (read: bottom line). The cost of any operational inefficiencies are simply passed on to plan members. The cost of their opulent corporate properties and forays into real estate speculation are also passed on to plan members. Worst of all, long-term increases in health care costs work solely to their benefit because those increases raise the financial risk attached to receiving health care. This artificially increases the demand for insurance to manage that risk. And it’s insurance they’re selling at a profit, not health care.
Essentially, this creates an open-loop economic system: costs increase constantly due to little resistance. The result is that fewer and fewer people can afford even quotidian health care without spreading the costs out over thousands of others in the plan. And note well: it’s not just health care costs that constantly increase, but the cost of insurance as well, as any small business owner will be happy to tell you.
The crime here is that if not for the skyrocketing costs – caused for the most part by comp. insurance – most care would be no more expensive than other commodities, and critical / specialized care would cost far, far less. Why? Because the market would determine prices, not a proxy with clear conflicts of interest.
Specialist MDs would be forced to accept what their services are worth to the market, not the hyperinflated, six- and seven-figure incomes they’ve come to “deserve” after umpty-ump years in medical school. Hospital administrators would be forced to accept the nominal salaries available to other career bureaucrats because the market would determine the value of their services, NOT their legal staff’s ability to haggle with insurance companies for a higher rate for services. Pharmaceutical companies could not charge $300 per month for a “sleep-aid” drug because the market would never support it. And health insurance CEOs and their inefficient operations would be sucking a lot less of the nation’s economic lifeblood from its veins because – just as with all the other nominal costs of living – with reduced risk due to lowered health care costs, the market would have little use for their product.
But most importantly, with truly affordable health care, brought about by getting the costs under control instead of invariably wailing about “how to cover the costs”, the health care issue could no longer be used by government as a stick to beat employers and taxpayers over the head with. Without a radical course correction off of this slippery slope, that’s what’s coming.
Right now, comp. insurance is nothing less than “optional” socialized medicine. BHO wants to take away the “optional” part, the same way Romney did, and force employers and individuals to purchase it from the government instead of a corporation. Instead of allowing the market to determine the prices of health care goods and services, BHO and his ilk want to empower the federal government to do that. This is why there’s no serious federal interest in tort reform. This is why there’s no serious federal interest in examining the monopolistic mechanism formed by comp. insurance companies. This is why there’s no serious federal interest in looking at whether or not it’s responsible to allow direct-to-consumer prescription drug advertising (i.e., for products that can only be purchased with a Dr’s Rx), which artificially inflates the demand for drugs. ALL of these things keep the costs of health care high, which is exactly what serves an overweening government’s interest best.
Remember, what the government is pushing is “affordable health care insurance“. This is very different from actual, affordable health care, and they damn well know it.
Long ago there was one telephone company in the USA – AT&T and its Bell subsidiaries. It was a privately owned monopoly corporation regulated by the federal government and state public utility commissions. Every device connected to the Public Switched Telephone Network was manufactured by Western Electric, another AT&T subsidiary. Virtually every non-management position was a union gig. Working for AT&T meant having a job for life.
In 1968 the FCC allowed the first outsider to connect their equipment to the PSTN. In 1984 the US Congress broke AT&T up into separate companies. Since then competition and innovation have been fierce, quite a few companies have failed, and many union jobs have been lost.
It sure looks like we’re headed back to that business model. Nice work if you can get it.
goy,
Buying insurance, for me, makes sense because of the poor genetics in my family (well, Dad’s side, because he’s already had one hip replacement and is facing another; it hit me much earlier than Dad). I follow your argument, and on a rational level it makes sense, but if you were me you would do exactly as I have done. All my surgeries, together, have totalled well over $100G, and that’s not including tests, medications, follow up, rehab, etc. And I forgot to mention the fall on the ice in my driveway I took back in ’02 where I tore my right shoulder’s labrum 160 degrees around and the surgery for it. BTW, I have Meniere’s Disease, and I had to go through a brain MRI with dye, and other tests, to confirm exactly what I had.
So, am one unlucky individual and without insurance the college fund for the kids would be wiped out. So, financially, buying health insurance is the responsible thing to do. At least in my experience it has.
fred, you’re missing the point. And you’re confusing catastrophic, major medical plans (which are the type of plans that are intended for your situation) with comprehensive health care insurance. That, of course, is exactly the confusion the insurance industry has been promoting for decades.
I have done exactly what you’ve done because, right now, there’s no viable alternative. The system is broken and getting more broken, as I tried to point out.
#107. Hughie
Hi, I did mention many of the points that you brought up, but I left out the rest of our conversation for the dramatic effect I was trying to convey – for better or worse.
Thanks
First they came for the banking industry, and I didn’t speak up because I didn’t work for the banking industry…
Then they came for the auto industry, and I didn’t speak up because I didn’t work for the auto industry…
Then they came for the oil industry, and I didn’t speak up because I didn’t work for the oil industry…
Then they came for the chemical industry, and I did nothing because I didn’t work for the chemical industry…
Then they came for the coal industry, and I didn’t speak up because I didn’t work for the coal industry…
Then they came for the health care industry, and I didn’t speak up because I didn’t work for the health care industry…
[...]
Then when they came for the silicon industry, and there was no one left to speak up for me.
I voted in my first Presidential election in 1960. It didn’t make much difference who I voted for, both candidates having the best interest of the country at heart. It obviously isn’t that way anymore.
So I guess I’m saying that all who follow me into a voting booth had better know something about whom they are voting for.
Mike, this is a great piece. I love the humor you threw in! Kept it nice and chewy. I just posted this on Twitter so many more folks can sink their teeth into it.
Cheers,
~ Paula