The left-wing war on high-tech companies escalates even further

I have posted multiple times (for example, here) about the war that Progressives, Liberals, and others on the Left are waging against high-tech companies.

So far this war has consisted of mere accusations: high-tech companies do not create enough jobs in America; high-tech companies engage in racist and sexist hiring practices (because they hire too many Indian and Chinese men and not enough blacks, Hispanics, and women); high-tech companies do not pay enough in taxes; high-tech workers are driving up rents. But now, this war has escalated into physical threats and actual violence against employees of high-tech companies. As reported on sfgate.com:

For the second time in two weeks, protesters angry with tech-boom gentrification in the Bay Area surrounded and temporarily blocked corporate shuttle buses full of tech workers — both in San Francisco and Oakland. This go-round, however, some activists apparently became destructive.

A window was shattered and tires were slashed on a bus that was picking up Google employees at 7th and Adeline streets near the West Oakland BART Station, according to the Bay Area Council, which represents businesses that run shuttles. The damage was corroborated by photos on Twitter.

I cheer the protestors. Let them rage. There is no surer way to transform naively liberal high-tech workers into law-and-order conservatives than to have a mob of left-wing thugs attack their bus with bricks. Once awakened, these techies will begin to see that their interests are most certainly not aligned with those of the community organizer Obama and the Democratic Party, but rather with the Tea Party. The Left's attacks against "income inequality" and "racist hiring policies in Silicon Valley" directly threaten high-tech entrepreneurialism and are responsible for fomenting the class warfare and violence being directed against well-paid high-tech employees today.

Recall for a moment Mr Obama's famous statement: "If you’ve got a business — you didn’t build that. Somebody else made that happen." The ideology underlying this statement is directly antithetical to the principles on which Silicon Valley has been founded. Here in the Valley, entrepreneurs do risk everything every day to build businesses on their own. It is statements like Mr Obama's that undermine these principles, that infect the populace at large with an entitlement mentality, that directly encourage mobs on the Left to think that society owes them something, and that incite them to violence to defend what they have been persuaded they are owed.

My word of the year

Glitches.

Does this tin-pot dictator understand anything about how a real business works?

As Yuval Levin writes about the Caudillo's latest Obamacare pronunciamentos:

[The Administration] is asking insurers to pay claims for consumers who haven’t paid their premiums, to treat out-of-network doctors and hospitals as though they were in-network, and to pay for prescription drugs not actually covered by the plans they offer. ... To “strongly encourage” insurers to take these kinds of steps (to use the Orwellian phrase of the HHS announcement), and to do it just a couple of weeks before the new system is supposed to start, suggests that the administration’s health experts mapped out how January is shaping up and had a collective heart attack.

Once again, Obama reveals that he has absolutely no understanding about how a business works. Like some tin-pot dictator, he attempts, on incredibly short notice in the midst of the Christmas season, to strong arm insurance companies into doing things that they never never agreed to do and that make no sense to the insurance companies economically. As Allan Einboden, CEO of Scott & White Health Plan, said, in what has to be the understatement of 2013:

In terms of covering things when they haven't paid premiums, that we would be concerned about doing.

Said Karen Ignagni, head of America's Health Insurance Plans:

[W]ith only weeks to go before coverage begins, continued changes to the rules and guidance could exacerbate the challenges associated with helping consumers through the enrollment process.

As WSJ comments:

Officials even encouraged insurers to do something that normally would be anathema: offer coverage to consumers who sign up and pay a few days into the new year, but backdate the policies to Jan. 1. It wasn't clear how many carriers would take up the idea.

First, Obama and the Democrats pass legislation that causes millions of policies -- labeled by the Administration as "junk policies" -- to be canceled. Then, mere weeks before these policies are scheduled to be terminated, the Administration announces that insurance companies may extend these "junk policies." And now, the Administration announces that insurance companies are "strongly encouraged" to provide coverage for which premiums have not been paid.

Where has the rule of law gone? Are there any adults whatsoever at the helm in the White House?

de jure versus de facto: the mirage of Obamacare

Under the terms of the Affordable Care Act, insurers cannot refuse us coverage for a precondition, cannot kick us off a health plan, and cannot impose lifetime limits on coverage. This is the situation de jure.

But the de facto situation is something quite different: premiums are higher, doctor networks are limited, deductibles are unaffordable, and (now we are being told) important classes of drugs are not fully covered.

So, it turns out in the real world that the wonderful health insurance plans peddled to us by Obama and the rest of the Dems aren't so wonderful and unlimited after all. The American people are finding out, as Nancy Pelosi said they would, what is in the law.

If, de facto, an individual finds premiums and deductibles too high or cannot see his doctor or cannot afford the drugs the doctor prescribes for him, it hardly matters if, de jure, he has a right to "health insurance."

The insurance companies have a million different knobs and levers that they can operate to dial down their costs and subvert all the lofty promises of Obamacare. Obama has been duped. This should come as no surprise, given the fact that the insurance companies underwrite insurance policies and process claims every day, whereas people like Obama, Harry Reid, and Nancy Pelosi are rank amateurs in the insurance business (as they are in the website development business) and really have no idea what they are doing.

What it's beginning to look like is that the status quo ante Obamacare has not changed at all. The promise of Obamacare is a mirage. Even if millions of people sign up on healthcare.gov, the insurance policies being sold there will turn out to be no better (in their own way) than the policies that were available in the individual market before Obamacare, and which the Democrats so roundly criticized as "junk policies" over the last couple of months. And again, this should come as no surprise, since the terms of the policies in the individual marketplace before Obamacare were dictated by economic reality, and President Obama, as much as he may think he can do things like stop the rise of the oceans, cannot suspend economic reality. There simply ain't no free lunch. People, like Obama, who think otherwise are just idiots.

Years from now there will still be millions of people who, de facto, will not be insured (or adequately insured), regardless of the situation de jure.

If you like your doctor (and you're willing to pay higher premiums than you did before), you can keep your doctor. Period.

In a previous blog post I pointed out that Ezra Klein was recommending that Democrats run in the 2014 mid-term elections on the argument that "the cancellations, reduced networks, higher premiums, and increased deductibles that you are experiencing in your health insurance are how Obamacare, brought to you exclusively by Democrats, is supposed to work."

This morning in an exchange with Chris Wallace on Fox News Sunday, Ezekiel Emanuel, one of the architects of Obamacare, adduced another argument that Democrats will be able to use in the 2014 mid-term elections, namely, "if you like your doctor, and you're willing to pay higher premiums than you did before, you can keep him:"

EMANUEL: [I]f you want to pay more for an insurance company that covers your doctor, you can do that. This is a matter of choice. We know in all sorts of places you pay more for certain -- for a wider range of choices or wider range of benefits. The issue isn't the selective networks. People keep saying, 'Oh, the problem is you're going to have a selective network.'

WALLACE: Well, if you lose your doctor or lose your hospital --

EMANUEL: Let me just say something. People are going to have a choice as to whether they want to pay a certain amount for a selective network or pay more for a broader network.

WALLACE: Which means your premiums will probably go up.

EMANUEL: They get that choice. That's a choice you've always made.

WALLACE: Which means your premium may go up over what you were paying so that, in other words --

EMANUEL: No one guaranteed you that your premium wouldn't increase. Premiums have been going up.

WALLACE: The president guaranteed me I could keep my doctor.

EMANUEL: And if you want to, you can pay for it.

Also, Mr Emanuel's claim that "No one guaranteed you that your premium wouldn't increase." is a direct contradiction of Mr Obama's assurance that Obamacare would lower the premiums of the typical family by $2500 a year:

In an Obama administration, we’ll lower premiums by up to $2,500 for a typical family per year. And we’ll do it by investing in disease prevention, not just disease management; by investing in a paperless health care system to reduce administrative costs; and by covering every single American and making sure that they can take their health care with them if they lose their job. … And we won’t do all this twenty years from now, or ten years from now. We’ll do it by the end of my first term as president of the United States.

As I said in the previous blog post: watching the Dems run in the 2014 elections on arguments like these is going to be fun.

An idiot's argument in favor of raising the minimum wage

On the CNNMoney site, Stephen Gandel tries to make the argument that WalMart can "easily pay more without tanking the stock." Mr Gandel bases his argument on an elaborate "scientific" analysis that he himself developed and that he claims was "peer-reviewed" by the economists Sendhil Mullainathan of MIT and Charles Lee of Stanford.

I won't bother to reproduce the argument here since it is so idiotic (as I will demonstrate below) and you can read it for yourself. I only want to quote Mr Gandel's conclusions:

Wal-Mart paid its top executives and board members $66.7 million last year. The rest of the money has to be split among Wal-Mart's remaining roughly 2.2 million employees. Of those, about 1.4 million work in the U.S. Assume that Wal-Mart spends about 2/3 of that on the salaries of its U.S. employees, because salaries are generally higher here. That leaves $66.6 billion for the U.S. workers, or $47,593 [sic]. The Bureau of Labor Statistics estimates that 30% of the average U.S. workers' total compensation is spent on benefits.

That means the average Wal-Mart employee's take home pay should be $33,315. Wal-Mart doesn't say what its actual average salary is. But Payscale estimated it to be just over $22,000 at the end of last year.

The conventional wisdom, of course, is that if Wal-Mart were to hand out raises, its stock would tank. That may not be true. When Google (GOOG) announced a 10% raise for its employees three years ago, the stock dropped a bit but mostly recovered within a year. And Google's stock is 60% higher now than it was before the raise.

So, Mr Gandel concludes that "the average Wal-Mart employee's take home pay should be $33,315," whereas it now stands at a mere $22,000. According to this argument, then, Wal-Mart should increase the pay of each American Wal-Mart employee by $11,315 per year. Now, as Mr Gandel himself notes, Wal-Mart has 1.4 million American employees. To give an $11,315 a year raise to 1.4 million employees would cost Wal-Mart an additional $15.841 billion per year. According to Yahoo!, Wal-Mart has 3.26 billion shares outstanding. So, the additional wage expense would amount to about $4.86 per share. Wal-Mart's current earnings per share -- again, according to Yahoo! -- are $5.20. So, we are being asked to believe that Wal-Mart could essentially wipe out its entire earnings per share and this would have no impact whatsoever on its share price. This is what passes for economic argument in our society today.

But wait, there's more! Mr Gandel notes that Google's share price even went up after they gave a 10% raise to their employees. First of all, let it be noted that there is an enormous difference between a 10% raise and the 50% raise (from $22,000 to 33,315) that Mr Gandel is recommending for Wal-Mart employees. More to the point, Google's decision to give its employees a raise was presumably dictated by the highly competitive market for knowledge-workers (in particular, software engineers) in Silicon Valley. Google made the determination that it could more easily hire and retain workers (and keep them from going to competitors) if it paid them more. To compare highly skilled and highly sought after software engineers in Silicon Valley to unskilled shelf stockers at Wal-Mart is ludicrous.

Moreover, if there is any lesson to be learned from Google's actions, it is that a competitive, meritocratic marketplace ensures that salaries are adjusted to the correct level: if a company's pay is too low, employees will go elsewhere; if a company can find abundant labor, it does not need to pay exorbitant salaries. If we apply this calculus to workers at Wal-Mart, we can conclude that management might actually be paying its employees too much since management is not having any problem hiring and retaining employees at the current wage being paid. Comparing Google and Wal-Mart employees reveals only that the minimum wage is a completely artificial construct that has nothing to do with market forces, but has been instituted by politicians seeking to curry favor with low income voters. The minimum wage is not really a wage for work done at all, but rather merely another form of enervating, humiliating social welfare.

And, yes, if all this sounds like Social Darwinism, I proudly plead guilty.

Poll numbers in favor of an increase in minimum wage are misleading

Over the last several days, much ado has been made about polls that show overwhelming support for an increase in the minimum wage. For example, Jennifer Kirby in the New Republic writes:

Fast-food workers across the U.S. are striking Thursday to demand higher wages, and it turns out they're not alone in believing the federal minimum wage of $7.25 an hour is much too low. A majority of Americans—71 percent—support hiking the minimum to $10, according to the 2013 American Values Survey by the Public Religion Research Institute. Democrats overwhelmingly support an increase, and even a majority of Republicans do. The minimum wage “is that rare issue where there is bipartisan and cross-religious support,” says Dan Cox, PRRI's research director. Except for the Tea Party, that is.

Those dastardly tea baggers!

But, the results of these polls are misleading. If instead of asking "Do you support raising the minimum wage? pollsters had asked "Do you support raising prices at McDonald's and Walmart?" (which is what the result of raising the minimum wage would be), presumably the results would be quite different, especially among the poor, who are among the most frequent customers of McDonald's and WalMart.

Follow the money: SEIU just wants to harvest more union dues from increased minimum wage

What's behind the sudden push to increase the minimum wage for jobs in fast food restaurants like McDonald's and retailers like WalMart? Supporters argue that a “living wage” is needed by those who work in these jobs over the long term and for whom these jobs are the sole means of support.

The problem with this argument is that most workers who hold these positions do not remain in these jobs for long nor is this job usually the worker's sole means of support. In other words, a minimum wage job is usually not a career choice, but rather a temporary, part-time position, often filled by students on the way to higher paying jobs. Furthermore, the students who work part-time in these jobs are often merely supplementing other family income.

In reality, the effort to increase the minimum wage is only part of a larger effort to unionize the various workplaces where that wage is paid. Big labor unions, like the Service Employees Union International (SEIU), are behind this effort. And the SEIU’s motive is not to benefit workers, but rather to increase the number of dues paying members and the amount of dues they pay, so that the SEIU will have the money to run its political operations in support of bought-and-paid-for politicians like Obama.

The SEIU is not concerned with the long-term welfare of people working at McDonald's or WalMart. Rather, the SEIU's game plan can be described as follows:

1. increase the minimum wage, so that when the workplace is unionized, higher dues can be collected;
2. unionize the workplace (the prime targets are those employers with enormous labor pools, such as McDonald's and WalMart);
3. coerce the collection of the higher dues from whatever warm bodies happen to be passing through the minimum wage jobs at any given time;
4. use those harvested dues to advance their leftist political agenda.

Which is to say: the effort to raise the minimum wage is just a fundraising effort by which the Democratic Party and its allies seek to skim funds from the general public to run their political machine.

The SEIU and Obama salivate at the thought of hundreds of thousands of employees of WalMart and McDonald's funneling dues to the Democratic Party. The effort to increase the minimum wage is not a spontaneous, grass roots uprising of downtrodden workers seeking to better their condition. Rather it is an "astroturf" effort, carefully organized and orchestrated by the community organizer Obama and Big Labor with the collusion of their media lackeys like Paul Krugman.

To understand the true nature of this movement, all you have to do is follow the money. It is the SEIU and the Democratic Party who will benefit over the long run from an increase in the minimum wage and the unionization of the workplaces in which that wage is paid, not the part-time student worker passing through the minimum wage job.

Raising minimum wage will only hurt the poor

President Obama called on Congress today to increase the minimum wage. Earlier this week Paul Krugman also called for an increase. Tomorrow there will be demonstrations across America organized by the Service Employees International Union (SEIU) and the union-backed advocacy group Fast Food Forward in support of raising the minimum wage for workers in fast food restaurants. Gee, I wonder if there is some coordination of message going on between Obama, Krugman, and the union thugs.

We are assured by Mr Krugman that absolutely no economic harm will result from raising the minimum wage:

[T]here are strong reasons to believe that the kind of minimum wage increase the president is proposing would have overwhelmingly positive effects. ... [T]he great preponderance of the evidence ... points to little if any negative effect of minimum wage increases on employment.

This is yet another case where you should believe your common sense rather than the Nobel laureate.

Just ask yourself: Who eats at fast food restaurants? One of the largest groups of customers is, of course, people who don't have much money, that is, the poor. If the minimum wage for workers in fast food restaurants is raised, the restaurants will simply pass this increase in wage expense along to their customers. So, the end result of raising the minimum wage for workers in these restaurants will be to make eating there more expensive for the poor.

Exactly the same analysis applies to raising the minimum wage in WalMart. Who shops at WalMart? Many poor people do. WalMart will pass along the cost of an increased minimum wage to its customers, namely, the poor. So, raising the minimum wage for WalMart employees will simply increase the cost of goods for the poor.

At best, an increase in minimum wage will result in a wash, since those who receive an increase in the minimum wage will likely also be patrons of the establishments where the wage was raised.

The economic bromides being peddled by Obama and company would be laughable if they weren't so tragic. Mr Obama's time in office has been characterized by stagnant economic growth brought about by the misguided Keynesian economic policies of his administration and the Fed. This economic malaise has been particularly damaging to the poor, who have fallen farther and farther behind while the 1% have grown richer and richer on the back of Keynesian stimulus. And yet, Mr Obama continues to try to sell the American people on economic policies that just hurt the poor and have no impact on the rich. After all, it is not the rich who eat Big Macs and shop at WalMart.

This is going to be fun

Ezra Klein writes:

There are the insurance cancellations, of course, but there also [are] going to be people who happily buy new insurance only to find their doctor isn't covered, and there will be people who end up paying higher premiums in the new market, and there will be employers who raise deductibles to keep from paying the 2018 tax on high-value insurance plans, and so on.

Unlike HealthCare.gov's technical problems, most of these issues will be part of the law working as it's supposed to work rather than the law failing to work as it's supposed to work. ... Obamacare is now moving from unexpected problems that threaten the law to predictable disruptions that are, in many cases, intended by the law. And the Obama administration will have three full years to create millions, and perhaps tens of millions, of winners who are getting insurance or protection through the law.

Seriously, Ezra?

I am going to love watching Democrats run on the argument "the cancellations, reduced networks, higher premiums, and increased deductibles that you are experiencing in your health insurance are how Obamacare, brought to you exclusively by Democrats, is supposed to work."

As for the tens of millions of winners from Obamacare, most of them already voted for Obama and the Democrats the last time around. The problem is going to be the tens of millions of losers from Obamacare, the predominantly young, middle-class or affluent, healthy, and well-educated voters, many of them independents, who cast their ballots for Obama and the Democrats before, but will abandon ship once they realize that they are footing the bill for all the winners.

Yes, watching Democrats run on Obamacare is going to be fun.

Healthcare.gov working (except for that pesky back end)

In an opinion piece in USA Today, HHS Secretary Kathleen Sebelius writes:

So we've been working 24/7 to make improvements, and more consumers are successfully shopping online and enrolling in a health plan each week. As a result, today's user experience on HealthCare.gov is a dramatic improvement over where it was on Oct. 1. The site is running faster, it's responding quicker and it can handle larger amounts of traffic.

Yet, according to the Washington Post, Henry Chao, deputy CIO and deputy director of the Centers for Medicare and Medicaid Services' Office of Information Services, testified during a hearing before the Oversight and Investigations Subcommittee of the House Energy and Commerce Committee on Tuesday:

[H]is team has yet to complete 30 to 40 percent of the overall project. ... Chao said the Centers for Medicare and Medicaid Services is [sic] still working on a number of “back office” aspects of the project, including a system to send payments to insurance companies.

And WSJ reports:

Insurers and some states are continuing to look for ways to bypass the balky technology underpinning the health-care law despite the Obama administration's claim Sunday that it had made "dramatic progress" in fixing the federal insurance website. Federal officials said they had largely succeeded in repairing parts of the site that had most snarled users in the two months since its troubled launch, but acknowledged they only had begun to make headway on the biggest underlying problems: the system's ability to verify users' identities and accurately transmit enrollment data to insurers. ... Our favorite line in the report is the HHS boast that "the team is operating with private sector velocity and effectiveness." That sure is a remarkable two-month turnaround for the same team that took three and half years to botch the initial launch at a cost of more than $1 billion, according to an analysis by Bloomberg Government.

A while back, I wrote:

When customers fill in data, click on buttons, and so on, in the Obamacare portal, backend business processes will be set in motion. It is one thing for software to capture data in a form, send that data over a wire, and store that data as a transaction in a database. It is quite another thing for the backend business processes to make sense of and reconcile all this data, to take appropriate actions based on the data, and, to operate in such a way that all the transactions taken together aggregate and add up to a net benefit to users. In short, once a user has enrolled in a policy, the entire lifetime of that policy, including premium billing over the long term, must be administered in a consistent, auditable way.

A system is hardly complete if the back office functionality required to verify identities, forward applications to the insurance companies, and make payments is not working. Who does Kathleen Sebelius think she's fooling? A system that is "running faster" and "responds quicker," but doesn't know who you are, sends your data down the bit bucket, or doesn't make payments to the insurance companies, is, by Silicon Valley "private sector" standards, not yet working.

More to the point: even when the software engineers get the back office functionality up and running (after maybe another year and another several billion dollars more in consulting fees), the perverted incentives created by Obamacare (cover the sick and poor at the expense of the young, affluent, and healthy) will still doom Obamacare and the Democratic Party.