I recently wrote my first high level reaction to the recent election in Election Reflection. It seems I have a lot more thoughts bouncing around in my head, some deeper than others, and I need to figure out a way to get them out. I keep waiting until I have time to write some Grand Canonical Blog, but GCBs take a lot of time and energy and I have neither so instead I’m going to just puke out some random ideas every now and then. All of the ideas waltzing in my brain have a common theme: I think we have entered into a very dangerous and unstable equilibrium in this country with a large group of takers voting over and over for a much smaller group of payers to pay for more and more goodies for them while simultaneously disdaining the payers instead of thanking them. I don’t see how that can last.
I want to start today’s mental regurgitation with a story that happened to me during my time at that great bastion of capitalism and free markets, the Harvard Business School. When I was a student at HBS, our class was given the opportunity to vote, as a class, on whether we would be allowed to disclose our grades to prospective employers when we were looking for jobs. I need to pause and explain the HBS grading system. It is a forced curve where the top 10-15% of any particular class gets a grade of 1. About 5% gets a grade of 3, which is essentially a failing grade. Everyone else, 80-85% of the class, gets a grade of 2. To summarize, most everyone gets the same grade, but for the few insane students who want to work their arses off to be in the top 10-15%. If you are in the top 5% of the class at graduation, you earn the honor of Baker Scholar. I did, so you will understand my bias.
Back to the vote. As you can see from the system I just outlined, grades are a non-differentiating factor in hiring decisions for about 85% of HBS students. For 10-15% (those that have a preponderance of 1’s on their transcript), it is tremendously beneficial to disclose grades to employers. We voted. The 2’s won. In the final analysis, it was about 20% of the class in favor of disclosure and 80% in favor of hiding our grades from employers. But wait, don’t free markets require full information disclosure to function properly? Of course they do! And, seriously, isn’t the Hahvahd Bidness School the single #1 defender of free markets on the face of planet Earth? I thought so. But, there you have it, when given the choice of voting for free markets or their personal interests at the expense free markets, the HBS majority voted against free markets (and the minority of top performers in that market) so as to defend their personal benefit. And, as a side note, it was very common for students to slack off in all their classes, knowing that there was no particular benefit to working harder than the next guy. Seriously, pause and reread that sentence in the context of our current tax code.
The exact same situation has evolved in the United States as fewer and fewer top performers are asked to pay more and more taxes so others can take more and more for themselves. The important distinction in the real world is that, in the long run, even the takers get screwed by their own system. If you doubt me, please Google “unemployment rate, United States” and, as I pointed out last week, if you want to see the long-term implications, Google “unemployment rate, France.” I am going to explore the unsustainable payer/taker problem in a lot more detail (maybe, possibly, depends on my time and energy) in the coming weeks/months, but for today, I just want to share one little story that is such a great microcosm of the bigger problem, I just had to get it down on paper.
I stopped at the Corner Bakery today to pick up lunch for my daughter. Behind me in line were a mother, grandmother, and child. I am guessing the mom was late 30s, grandma was mid 60s and the boy was about 9 or 10. Both mother and grandmother were obese (I am guessing BMIs in the low 40s)*. The child was perfectly thin; in fact, he was very fit and athletic looking, with soccer shorts, a tee shirt and sneakers. As we waited, the mom said to the kid, “If you weren’t such a finicky eater, I could have made a meat sandwich** for you at home.” The young boy replied, “But, I don’t like meat.” The mother snapped back, “Well, you’re going to have to start to eat more things because you are way too skinny.” The grandmother piled on with her concurrence. I turned my head around again to confirm what I had seen before. This kid was a specimen of healthy physique. The mom then proceeded to buy 6 cookies, each about 6 inches in diameter.
Now, let me tie these two stories together in my payer/taker model. Based on the location (Montgomery County, Maryland – voted 72% for Obama) and a variety of demographic factors, there is a near 100% probability these folks supported Obama and, thus, implicitly voted for Obamacare. So, when you boil it down, here’s what you have. They are obese, they are encouraging their next generation to be obese, yet they expect me to pay their super sized medical bills, which inevitably accompany obesity, from now til they all die. Any serious analysis of Obamacare makes it clear we are on a path to socialized medicine. Private insurance cannot survive under Obama’s plan and he’s made it clear he has no interest in its survival. Therefore, all healthcare will soon be the ward of the state and the small minority of us who pay all of the taxes for the country will soon be paying for all healthcare too. So, here you have people who cavalierly don’t take care of themselves and encourage their children to be obese. And, all they have to do is vote for Obama and I pay for it. Unsustainable.
In closing, I told my wife this story and she said the real story is the size of the cookie (and the size of portions in McDonald’s or most any restaurant in the United States). This is her crusade, not mine so I encouraged her to blog about it. But, in respect of her opinion, here’s my quick take on that. We can’t legislate what people eat, despite what uber-tool Michael Bloomberg may think. We are a free country and I’m a big fan of personal choice. I know liberals aren’t and we’ll have to agree to disagree on that. But, with personal choice comes personal responsibility. If you choose to eat two 6 inch cookies for lunch, you should be responsible for your medical bills, not me. All that said, in the name of compromise, I am willing to deal here. I would go for some type of government intervention into the front end of healthcare (e.g., diet and exercise) in exchange for lower taxes and greater economic prosperity for everyone. It would have to be incentive-based not mandated, but maybe we can find a deal here that works for everyone. I’ll think about it and puke something out later.
* I don’t want to appear insensitive to the challenges of obesity. I have several family members who have battled weight problems their entire lives. However, I draw a distinction between battling weight problems and deliberately trying to become fat.
**I have never even heard the term “meat sandwich.” Not “ham sandwich” or “turkey sandwich.” Just meat sandwich. WTF?