dotCommonweal » Blog Archive » SOTU open thread.

David Gibson 01/27/2010 - 10:50 pm subscriber contributor

Great speech; I shouldn’t be surprised. But I am, given the context. Still, Obama keeps appealing to politicians and the public to act like adults. Can that work?

Watching Va. Gov Bob McDonnell’s GOP response, not only do you wonder if he listened to Obama, but what universe he’s living in. Republican health care proposals? Cut the deficit? Smaller government? The Christmas bomber stuff is unconscionable as well. He’s been wired well. So much for a Catholic education. Though maybe that’s what he learned at Pat Robertson’s school…

The official response is always a thankless task, but this one seems much better dressed up and done. They seem to be primping him for higher office. Good choice. Scott Brown may be getting the play today, but McDonnell is a better bet.

Really smart move, trying to put a governor out front. That’s where the GOP talent will be found. But he has just one term in Virginia. Hey, Sarah Palin didn’t even need that.

Grant Gallicho 01/27/2010 - 11:06 pm contributor

Tsk, tsk, Justice Alito: http://www.americablog.com/2010/01/sotu-live-blog.html

Mollie Wilson O'Reilly 01/27/2010 - 11:07 pm contributor

Where were Thomas and Scalia?

Grant Gallicho 01/27/2010 - 11:12 pm contributor

Busy figuring out how to render Obama’s proposed bank tax unconstitutional.

Mollie Wilson O'Reilly 01/27/2010 - 11:17 pm contributor

It occurred to me, during both the speech and the response, that someday we may get a good laugh out of all the internet-pandering in 2010-era politicking. We’ll put all earmark requests online! Some of our health-care ideas are on the internet! We welcome your thoughts on Facebook and Twitter!

Ann Olivier 01/27/2010 - 11:49 pm subscriber

The President said he would not give up on health care reform, but I don’t think he said he would bring it up again before the next go -round of elections. Hmmm

Thomas Jacobs 01/28/2010 - 12:16 am

Just noticed a story on the Times about how Pelosi intends to keep the Health Care bill alive: http://www.nytimes.com/aponline/2010/01/27/us/politics/AP-US-Health-Care-Overhaul.html?_r=1

Anthony Andreass 01/28/2010 - 8:56 am subscriber

Obama at his best. Yet I would bet many people fear that yet again his actions will not live up to his lofty rhetoric.

And his slam at the Supreme Court’s recent ruling? A bit gratuitous I think

Joe Pettit 01/28/2010 - 9:08 am

Regarding the Court and corporations: Does anyone know a downside to proposing a constitutional amendment clarifying that constitutional rights only extend to living, breathing, individual human beings, and not to non-human entities like corporations? The amendment could clarify that corporations only have legislated rights. This strikes me as a populist no brainer, but maybe I am missing something. It is downright bizzare that we are in this situation because corporations get free speach rights.

Nancy Danielson 01/28/2010 - 9:50 am

Would there have been a “bank tax” if restrictions had been placed on the “bail out” money to begin with?

Ken 01/28/2010 - 10:03 am

With all the challenges we face, the President somehow found time for gays in the military.

Amazing.

Grant Gallicho 01/28/2010 - 10:07 am contributor

You mean he found time to utter one sentence about it? Nothing amazing about it.

Margaret O’Brien Steinfels 01/28/2010 - 10:13 am subscriber contributor

Obama used the word “governance” several times. Will the Congress recognize that it’s not just the president who has governance responsibilities? The Republicans sitting on their hands bodes ill for moving ahead, and of course they’ll acuse the Democrats of being partisan when they deploy “reconciliation” to get pieces of the health care bill through.

Totally irrelevant and on another matter: Biden was easier to look at then his predecessor.

Charles L. Ladner 01/28/2010 - 10:18 am subscriber

David, your questioning what universe McDonnell’s living in might equally well be applied to Obama. His speech, like all his speeches was articulate and beautifully delivered, but was dreadfully short on content.

Just like Bush he seems to be terribly self-delusional. How, for instance, can anyone entertain the thought of such huge new spending programs as healthcare and the various other items mentioned in his speech in the face of a $1.4 trillion annual deficit- a deficit which is projected to repeat itself for many years in the future? Doesn’t he know that when the Administration (both Bush and Obama) decided to pour hundreds of billions into the banks, Wall Street and the economic stimulus packages without increasing taxes or radically cutting spending, the entire paradigm shifted.

There is no longer money available! I can not believe that Obama does not know this, yet curiously he continues in the pursuit of the same destructive path as Bush (who ramped up defense spending and increased medicare benefits without a corresponding increase in revenues). As we may recall, Bush went even further along this path by cutting taxes. One can only wonder when Obama will do so as well.

I suggested that the SOTA was dreadfully short of content. And that because Obama did not even begin to hint at ways to address the single overwhelming problem that all of us face. That, of course is the deficit. The lessons of history are clear. Every great power has fallen because it over extended itself. If we do not begin to seriously examine and reduce defense spending and entitlements, and if we do not increase taxes, then only one outcome is possible. The debt will be liquidated as it was in Germany in the 1920′s and to a lesser extent by the U.S. in the 1970′s by a destructive level of inflation.

It seems to me that all of our leaders-both Democrats and Republicans- are living in a fantasy world. In this sense McDonnell’s speech, in its ignorance was frightening; but so too was Obama’s.

william collier 01/28/2010 - 10:35 am subscriber

Joe P.–

Corporations as “persons” is a legal fiction. Wikipedia has a pretty good history of how corporations acquired some of the legal protections (e.g., due process rights, the right against self-incrimination) that biological persons enjoy.

http://en.wikipedia.org/wiki/Corporate_personhood_debate

Corporations don’t have all of the rights that other legal “persons” enjoy–they can’t vote, for example–but last weeks SC decision greatly expanded their First Amendment rights in what was IMO judicial activism of the worst kind. The SC could have decided the case (Citizens United v. FEC) on much narrower grounds, but the conservative majority last week’s decision (much like the liberal majority in Roe v. Wade) went way beyond the “umpire” role Chief Justice Roberts touted would be the judicial philosophy of his court.

As to your question about what might be done, it’s very unlikely that the legal fiction of corporations as persons would be entirely upended, but SCOTUSblog has some thoughts on what might be done to reverse, or at least weaken, last week’s decision:

“The question now arises whether the enhanced legal stature of corporations will make a difference in other fields of constitutional law. One might suggest that corporations have already benefitted from greater sympathy from the current Court — for example, in constitutional limitations on the size of punitive damages that juries may assess for corporate wrongdoing. And, this Term, there seems to be quite a realistic prospect that the Court, applying the Due Process Clause, may limit the scope of the federal criminal fraud laws when an executive of a corporation is accused of depriving the shareholders of ‘honest services.’

Going further, one might speculate whether it would be worth starting a lawsuit to test some of the restraints that states impose on corporations as conditions in their charters, in an effort to further liberate the corporate form. Or, perhaps, one might anticipate a lawsuit if, as is already being suggested in some quarters, that Congress might respond to the Citizens United ruling by passing a law to require corporations operating in interstate commerce to be federally chartered, and decreeing that, as such, they are not ‘persons’ with constitutional rights.”

http://www.scotusblog.com/2010/01/analysis-the-personhood-of-corporations/

Jim Pauwels 01/28/2010 - 10:43 am subscriber

What is the importance of the SOTU speech, beyond fulfilling a Constitutional requirement and pre-empting network television? Are there any instances of a SOTU changing history or accomplishing anything important?

I admit I went into the telecast last night with very low expectations, not for the loftiness of the rhetoric, but that anything that the President laid out would actually get done. Our system of checks and balances prevents any president from unilaterally executing his plan. If Congress as currently configured can’t get health care done, why should we suppose it can get anything else done?

Jim Pauwels 01/28/2010 - 10:45 am subscriber

“The Republicans sitting on their hands bodes ill for moving ahead”

I thought so, too. He poked fun at them at one point, noting their silence as he extolled about his tax cuts – he looked over to them and said something along the lines of, ‘I thought you’d like that part’.

Jim McK 01/28/2010 - 10:47 am

according to the Congressional Budget Office -– the independent organization that both parties have cited as the official scorekeeper for Congress –- our approach [to health care] would bring down the deficit by as much as $1 trillion over the next two decades.

Why are ‘deficit hawks’ so inattentive? Obama addressed the deficit several times, including in the above remark on health care. The most expensive, deficit increasing policy is to do nothing.

You may disagree with the CBO’s estimate, but that does not mean that the issue is being ignored. Or even that it is not a major issue.

BTW, “doing nothing” is probably the most expensive health care tactic for individuals as well. Keep on smoking, over-eating, etc. and health care costs will skyrocket.

Jim Pauwels 01/28/2010 - 10:51 am subscriber

“Why are ‘deficit hawks’ so inattentive? Obama addressed the deficit several times, including in the above remark on health care. The most expensive, deficit increasing policy is to do nothing.”

Jim McK – I agree with you.

I really think that the ability to reason is endangered in the electorate. People are more motivated by emotion than truth.

Their emotion tells them that Democrats are spendthrifts. so they refuse to accept that a Democrat can reign in the deficit (despite evidence to the contrary).

ed gleason 01/28/2010 - 10:58 am

One lack I noted was an admonition to voters who have good health coverage[ like me] to think and vote for those who lack health insurance, I believe that this was not emphasized enough in the Massachusetts election where 98% are already covered and Brown’s saying why pay for the other states. The national Republican attack on health care reform resonated to the vast majority of the already insured by scaring them saying ‘what they have now will be at risk including Medicare’. Not true but effective and difficult to refute,,

william collier 01/28/2010 - 10:59 am subscriber

I thought there were times in last evening’s speech when the tension between the Republicans and the Democrats approached that of the IED-defusing tension in “The Hurt Locker.” (Okay, I’m exaggerating…a little.) The rest of the President’s week doesn’t get any easier; he’ll likely have a very tough room to play when he meets with the House Republicans at their retreat in Maryland.

Sean Hannaway 01/28/2010 - 11:01 am

Joe

I think you are missing something. Corporations are simply collections of individuals. In fact, many churches are also corporations. Would you extend this limitation on free speech rights to them? To the Audobon Society?

The idea that this will “open the flood gates” is ridiculous. If this was such an important issue for corporations, if they were chomping at the bit to make these kinds of expenditures, they would have taken action years ago. The FEC was hoisted by their own petard when they went after some film makers using this restriction. Had they left well enough alone, nothing would have changed.

In typical fashion, liberals feel that they must control what people hear because they are too dense to sort things out for themselves. You don’t think that people will be able to understand that when Exxon goes after a candidate who’s against off shore drilling that they are doing it because of their economic interests?

Besides – the president’s assertion that the decision permits foreign corporations to influence elections is patently false. I think that’s what caused Alito’s reaction. Whoever put that in the speech is either completely ignorant or a liar.

Sean Hannaway 01/28/2010 - 11:02 am

Ed

Ok – how do you eliminate $500million from medicare and not affect it?

Mollie Wilson O'Reilly 01/28/2010 - 11:53 am contributor

So here’s a frivolous response. I noticed that the increasing (though still disproportionately small) number of women in Congress makes for a much more colorful chamber, clothing-wise. In future decades I presume we’ll see even more congresswomen. What will that do to the dress code? Will it push the men’s suits in a more colorful direction as well, or will the women’s suits get darker and more sober? (Chuck Grassley obviously likes a little color in his getup.) I think we’re moving slowly away from the gender-conscious standards of protocol that say women in government must (for example) be greeted by their male colleagues with a kiss on the cheek instead of just a handshake. So perhaps someday they’ll be wearing dull colors too.

william collier 01/28/2010 - 12:00 pm subscriber

Sean–

If corporations are, as you say, “simply collections of individuals,” then there should be votes by a corporation’s shareholders before large sums of money are expended for political purposes. You know that won’t happen, however, and that decisions about such expenditures will instead be made by corporate executives and directors. Open the expenditure decision up to all shareholders and there will be real exercise of First Amendment rights.

Adeodatus 01/28/2010 - 12:18 pm

“If corporations are, as you say, “simply collections of individuals,” then there should be votes by a corporation’s shareholders before large sums of money are expended for political purposes.”

Why should there be a vote? Presumably if a shareholder disagrees with a corporation’s political goals, he or she will weigh his options and either sell or keep the stock. This is a decision many people, myself included, make every day. For example, I don’t invest or do business with companies that donate, or match employee donations to Planned Parenthood.

Sean Hannaway 01/28/2010 - 1:17 pm

William

And shareholders can vote with their feet.

Jim Pauwels 01/28/2010 - 1:34 pm subscriber

Mollie – did you notice a yellow theme among the Democratic women last night?

The President still doesn’t have his tie colors quite right. Last year’s tie clashed dreadfully with the background – it was a big distraction. This year it was almost there, but just missed. The shades of red he chooses are the problem – they don’t quite blend with red in the American flag hanging behind him.

MAT 01/28/2010 - 1:36 pm

“If corporations are, as you say, “simply collections of individuals,” then there should be votes by a corporation’s shareholders before large sums of money are expended for political purposes. ”

I agree with you and am not a big fan of unions myself either, but the union members do elect their representatives I believe. There was a ballot initiative in CA to allow union members more control over the use of their dues but I believe it was defeated.

unagidon 01/28/2010 - 2:08 pm

“And shareholders can vote with their feet.”

I admit that I have a lot of beloved theories about modern capitalism, but this one is probably my favorite.

Joint stock companies by design separate ownership from control. The control that the “owners” (stockholders) has is pure fiction, except in those very rare occasions where the stockholders are the company management.

But it’s a moot point. Most people’s stock holdings are via some managment company. The vast majority of small stock holders don’t even know what stocks they own.

william collier 01/28/2010 - 2:18 pm subscriber

Sean and Augustine of Hippo’s Son– :)

The reality is that shareholders have very little say in what a corporation decides to do, politically or otherwise. How many corporate recommendations voted on at shareholders’ meetings ever get defeated? I don’t have numbers, but I doubt that many get voted down. Most shareholders care about one thing only: am I making money or not? Their loyalty to a company usually extends only so far as their profit and loss statements. That’s why I think “simply collections of individuals” is a misnomer. Power, including financial power, is concentrated in the hands of very few, who, as a result of the recent SC decision, will be able to exert substantial financial and political influence. And I include unions in the mix, too. They may have more representation, but there is also a concentration of power in the hands of a small upper echelon.

MAT 01/28/2010 - 3:04 pm

“Joint stock companies by design separate ownership from control. The control that the “owners” (stockholders) has is pure fiction, except in those very rare occasions where the stockholders are the company management. ”

Not separated, governed. The stockholders control the company through the board which they elect and vest with the power to, inter alia, appoint, oversee, and fire management. Where I work we routinely accumulate ownership interests in C-Corps, both public ones and private, in order to replace some or all of the directors to fire management teams we do not want and appoint our own.

Joe Pettit 01/28/2010 - 3:09 pm

William: I agree that corporations are legal fictions. However, that fiction is now established by the SC and I see nothing short of a constitutional amendment that can fix that.

Sean: I am not saying corporations or associations should have no rights, just not constituionally garuanteed rights. Whatever rights they had would be given by law and restricted by law as well.

I am off to a weekend of skiing, so I am not sure how much I will be able to get back to this. Thanks for the feedback.

MAT 01/28/2010 - 3:10 pm

“Most shareholders care about one thing only: am I making money or not? Their loyalty to a company usually extends only so far as their profit and loss statements.”

So isn’t the problem then the individual shareholders’ passivity? Or as unagidon mentions, their proxy designees, as the case may be?

unagidon 01/28/2010 - 3:15 pm

“Not separated, governed. The stockholders control the company through the board which they elect and vest with the power to, inter alia, appoint, oversee, and fire management. Where I work we routinely accumulate ownership interests in C-Corps, both public ones and private, in order to replace some or all of the directors to fire management teams we do not want and appoint our own.”

No, not governed, separated. You seem to work for a company that’s in the business of doing what you say. Sean is talking about general shareholders in the context of a general myth that stockholders “own the company” the way Charlie down the street from me owns his hot dog stand. If stockholders nominated the board members they “elect” it might be a different story. But the elections are mostly ratifications of decisions that chairman and/or president has already made and the boards are almost always packed with friendly faces, if not members of management (or both).

Bob Nunz 01/28/2010 - 3:19 pm

The extent to which the discussion/divide here on the SC decision and Salito’s reaction underscores the problem that the speech sought to address, I thought directly and well. viz. the downplaying our partisan/ideological I’m right stuff and getting on withe people’s business!

unagidon 01/28/2010 - 3:20 pm

“So isn’t the problem then the individual shareholders’ passivity? Or as unagidon mentions, their proxy designees, as the case may be?”

Another valuable part of the myth. Yes it is true that by and large they are passive. But their passivity is often if not always viewed as active support for the board, because, you know, “the stockholders can always walk”.

When you own a share of stock, you in fact just own a share of stock. The stock has a market value and also gives you some limited liquidation rights if the company folds. That’s ALL you have. Someone or some group holding a majority of shares can in theory turn the board over and replace it and the board can then in theory replace the corporate management. But in practice unless you are a private equity company yourself, this is as likely to happen as the cop putting his ticket book away because you remind him that you pay his salary.

Sean Hannaway 01/28/2010 - 4:08 pm

Probably part of the reason for shareholder passivity is that the corporation doesn’t do anything to alienate stockholders – oh, like support candidates they don’t like.

As I said, the law wasn’t shot down because GE or Exxon or Boeing went to court to get it shot down. There is no evidence that they have any strong interest in doing it or they would have been trying to do it – oh, sometime in the last half century.

Again, there is nothing in this discussion to indicate why corporations as opposed to any other entity ought to be muzzled. What are we afraid of? So long as the identity of the people or company spending the money is known, I can make up my own mind. The entire objection is based on a voter as victim mentality – a dope who will do whatever he is told.

Oh, now I get it, that’s Obama’s base!

Charles L. Ladner 01/28/2010 - 4:29 pm subscriber

Jim Mck

I can not find any reference among the CBO reports that asserts that the healthcare plan will produce a $1.0 trillion savings. Would be so kind as give me the specific reference?

As to the numbers themselves; you pointed out that the $1.0 trillion savings would occur over the next 20 years. Let’s see that works out to $50.0 billion per year, but isn’t the projected deficit for next year alone $1.4 trillion? And what about the following 19 years? It seems to me that the math doesn’t work. In fact a hoped for $50.0 billion out a near certain $1.4 trillion is little more than a rounding error.

My disapointment with Obama is that he has tunnel vision regarding both healthcare and an admirable, but now unrealistic, progressive agenda. He just doesn’t get it. As of September 2008, the world changed. The old progressive ideas are no longer feasible. There is no money to pay for them unless taxes are raised and the defense budget is seriously addressed. And so far, Obama shows no inclination to do either.

unagidon 01/28/2010 - 4:47 pm

“Probably part of the reason for shareholder passivity is that the corporation doesn’t do anything to alienate stockholders – oh, like support candidates they don’t like.”

Unless it’s a screw up big enough to get into the national news, shareholders have no idea who a company is supporting, even if a company is doing it openly.

If you don’t think corporations didn’t like the law before it was overturned, you must not work for one.

unagidon 01/28/2010 - 4:52 pm

“My disapointment with Obama is that he has tunnel vision regarding both healthcare and an admirable, but now unrealistic, progressive agenda. He just doesn’t get it. As of September 2008, the world changed. The old progressive ideas are no longer feasible. There is no money to pay for them unless taxes are raised and the defense budget is seriously addressed. And so far, Obama shows no inclination to do either.”

One might see now that the theories that Bush et al bankrupted the country in order to eliminate future funding for government programs may not have been misplaced.

But yes. We are responsible for 50 percent of the world’s defense expenditures for reasons that are never made very clear, and this alone is why we can’t afford a decent health care system and every other developed country can.

Ken 01/28/2010 - 4:55 pm

While President Obama delivered his usual good oratory, something seemed to be missing.

I do not think Mr. Obama fully understands current public sentiment, and I think he honestly does not the error he made regarding health care reform. I do not think he understands his party’s political predicament.

Also, for whatever reason, President Obama has far too many people in his circle that are way too far to the left politically, and that is not helping him. That Axelrod seems more like a leftist street protest leader than a presidential adviser.

We will know more about the public’s sentiment come this November.

Grant Gallicho 01/28/2010 - 5:38 pm contributor

That Axelrod used to be a political reporter for the Chicago Tribune.

Ken 01/28/2010 - 5:42 pm

Thanks Grant – interesting. As I said, Axelrod seems more like a old leftist rabble rouser than anything else.

Andrew P Savarese 01/28/2010 - 6:16 pm subscriber

I thought the speech was exquisite oratory, and wonderful ideals. I think Obama is good president trying to do his best. The problem is that he has a Congress that is inept, inert, and insidious. I agree with Unagidon 100%. We shouldn’t have one soldier out of the 50 states. That would cut the deficit.

Andrew P Savarese 01/28/2010 - 6:17 pm subscriber

Obama may be the best speaking president since JFK.

Ken 01/28/2010 - 7:35 pm

You are correct Andrew; he is a very good speaker.

However he made a mistake by publicly chastising the supreme court, and his wish-list of leftist goals was nonsensical. Also he seems a bit grouchy somehow, or defensive, like he did not see why people are not unquestioningly on board with his plans.

The bloom is definitely off the rose; honeymoon over.

Jean Raber 01/28/2010 - 8:44 pm subscriber

Factcheck.org has its analysis of the speech up. Always worth a look-see.

http://factcheck.org/2010/01/obamas-state-of-the-union-address/

Sean Hannaway 01/28/2010 - 9:28 pm

Unagidon

If the law was such a hinderance to corporations why did the never, I mean never, do anything to challenge it? The left is claiming that they will now dump millions on election campaigns when they never spent a dime on having the law overturned. I don’t work for a corporation, but I have to deal with them every day, and they generally put their money where it does them good. If this was important to them the would have done something during the past two generations to do something about it.

We’ll just have to wait until this fall for the answer, but I am betting that this will be a non-issue, Maybe a few races will have corporate money, but I bet it is evenly spent. Will the left be so agitated about it when GE puts its money behing Obama?

Like I said – I have at least a little confidence in the voters. Why don’t you?

Antonio Manetti 01/28/2010 - 9:39 pm subscriber

We are responsible for 50 percent of the world’s defense expenditures for reasons that are never made very clear, and this alone is why we can’t afford a decent health care system and every other developed country can.

I also wonder if the pricing for medical technology and drugs in this country effectively subsidizes lower prices for the same commodities sold in foreign markets.

Jim McK 01/28/2010 - 10:13 pm

Charles,

The trillion dollar figure is from the CBO via the President. Perhaps you could write the White House if you do not understand it?

My point was that the president did address deficits in his speech. And there are other examples, explicit and implicit. You are welcome to believe that he is wrong about everything he says on the subject, but I think it is unfair to say he does not address the subject.

As an aside, if things changed in 2001, there should be no reason to trot out Ross Perot’s rhetoric about deficits and their urgency.

Ann Olivier 01/28/2010 - 10:32 pm subscriber

Sean –

The issue never was that corporations should not be muzzled. Their Board Chairmen can write all lobbying letters he wants, just like real persons. The real issue is that these so-called “individuals”, the “corporations”, can easily afford MORE than ONE VOICE EACH, viz., the dozens and hundreds of lobbyists who do research and speak to the Congresspersons and to the ad writers who carry their messages to the public and urge them to write their legislators. True, it’s possible for rich real individuals to hire lobbyists through voluntary organizations. But most ndividuals are not rich, so the system is badly skewed.
One voice plus dozens more do not equal one, individual voice.

unagidon 01/28/2010 - 10:37 pm contributor

“If the law was such a hinderance to corporations why did the never, I mean never, do anything to challenge it? The left is claiming that they will now dump millions on election campaigns when they never spent a dime on having the law overturned.”

In general, corporations don’t whine. They adapt. They found ways around the law. Now that the law has swung back into their favor they will adapt again.

As for not trusting the voters, I wonder if you noticed that I have not commented on what the Supreme Court did one way or another. There was a reason for this. It is a discussion we could have. But first I had to address the frankly shocking ignorance of you and a few others about how the economy actually works. And this isn’t the first time. In business, before we try to do anything else, we usually make some effort to see how things are actually working on the ground. Then we make our plan. THEN we head out for some drinks and talk about the theory of capitalism.

unagidon 01/28/2010 - 10:43 pm contributor

“I also wonder if the pricing for medical technology and drugs in this country effectively subsidizes lower prices for the same commodities sold in foreign markets.”

I think that it is well known that it does this. The big push of the major pharmaceutical companies to make sure that we can’t import drugs from countries isn’t because they are afraid that a Canadian druggist isn’t going to substitute Tic-Tacs for our anti-biotics before he mails the package.

But another thing that is going on, and this is from your local insurance company executive, is that doctors and hospitals now look at drugs and things like implants as profit centers. They used to be priced as a pass-through since the service you got from the doctor you paid for in his fee. Now they add on a sort of vending cost which is often quite a high percentage of the price you pay them.

Antonio Manetti 01/29/2010 - 1:32 am subscriber

But another thing that is going on, and this is from your local insurance company executive, is that doctors and hospitals now look at drugs and things like implants as profit centers. They used to be priced as a pass-through since the service you got from the doctor you paid for in his fee. Now they add on a sort of vending cost which is often quite a high percentage of the price you pay them.

Sweet! I wonder what the annual return on capital is for such deals. I’ll bet it’s outrageous.

Sean Hannaway 01/29/2010 - 7:13 am

Unagidon

Enlighten me – how does the economy work?

I understand the nature of stock ownership, and I understand what little power individuals may have, but I also understand, in the aggregate that their individual decisions have incredible influence. This is something you don’t ever credit. We are all just pawns in a big game.

I will bet you a six-pack that the ruling will have virtually no influence. You are right, coprorations don’t whine, but they also don’t hesitate to litigate if the issue is important enough to them, and this isn’t.

Ken 01/29/2010 - 10:23 am

President Obama mentioned controlling the deficit and someone on this thread mentioned cutting military spending to fund healthcare reform. We could take a fair bite out of our deficit it by bringing troops home from Europe and the Mediterranean. The cold war is over and the Russians are in no mood for rolling their tanks toward the Atlantic.

We spend tons of money on Europe-based military. We still have in Germany, and we also have bases in Spain, Italy, Bulgaria, Portugal, Greece, Turkey, the UK, Greenland, the Netherlands, even Australia for God’s sake. Why would we need to pay to house and feed troops in all these areas?

We have on-going serious and long term obligations in Korea and Japan, but in tight times like this we do not need to waste money housing troops in Europe and other non-hot spots. European Union military can work with the UN to handle any problems that might arise in these areas. I doubt however, that anything will happen in Spain, the Netherlands or in Australia.

France already left NATO and it is probably time we consider a similar move.

unagidon 01/29/2010 - 10:30 am

“Enlighten me – how does the economy work?

I understand the nature of stock ownership, and I understand what little power individuals may have, but I also understand, in the aggregate that their individual decisions have incredible influence. This is something you don’t ever credit. We are all just pawns in a big game.”

You can be a pawn if you want. The key statement you make is “in the aggregate”. There is the random aggregation of the market, which the worshippers of capitalism talk about like it’s some sort of special wise mind. And then there is the aggregation that comes from political organization. This may or may not happen, and usually doesn’t, because the system, while it allows this to happen, also stacks everything against it.

And this is the rub. The big corporations marshall vast resources and they are already politically organized in the aggregate. But a corporation is only a fictitious individual. It isn’t a real one. It is controlled by real ones however, who can hide behind the corporation and channels its resources into their political hobby horses without them having to organize in the way that (let’s be honest) the other stockholders have to.

I know the theories of free market anti-regulation. Why regulate a baby furniture company? A factory owner would never build as crib that could kill a baby or the market will punish the business. But in fact, kids are killed all the time even with regulations. The market may ultimately react in the “right” way, but the market is a 3 million ton brontosaurus with a walnut sized brain. It takes time for the impulese to travel to the tiny brain and longer for the brontosaurus to turn around. In the meantime the damage is done. In theory the market may seem wise, but the market can ONLY react. (THAT’S how the economy works.) We can live in a reactive world, but I don’t think that it’s conservative to believe this is the way it must be. It’s simply stupid. But we have this dangerously diseased idea that we can’t act with any political wisdom any more. Government just has to get out of the way. I spar with you about how business and the economy works because we have become too bound with general theories about how smart the market is, but the market simply does not work the way people claim it does. I am definitely NOT trying to say “I am smart and you are not” or “I am a businessman and you are not”. But I am saying that we need to talk about how things really work and not how they theoretically work in some sort of libertarian economic theory. As an old business colleague of mine used to say “Where are all the rich economists?”

Charles L. Ladner 01/29/2010 - 10:48 am subscriber

Good post. I can’t resist recalling Keynes observations with presented with the argument that in the long run the market always works to fairly regulate behavior. His comment was someting like ‘true, in the long run the market does always work, but in the long run we are all dead!’

Paul Schlachter 01/29/2010 - 11:47 am subscriber

To quote Lloyd Bentsen, I saw and heard Jack Kennedy speak in real time. Other readers remember him as well. His SOTU’s were just as underwhelming as Obama’s. As with Bush 43, Kennedy was helped politically by his own “trifecta” moment with the missiles of October, two weeks before midterm elections. But I prefer that my president build political capital in less threatening ways, not by taking the nation to the brink as happened then as well as in late 2001.

As Howard Zinn of happy memory said of Obama, he will not sponsor real sea change in the way our society works unless a massive outpouring of people demands it. Kennedy came out publicly for civil rights after that monumental concentration of people in the Mall, which happened during his third year in office. I’m sure the Bull Connor video helped to galvanize many, including probably my father and sister who marched in DC. Other more focused marches have come and gone, relegated to back pages. But this one has to be so large that all my readers will be there by my side, so multipartisan that our media cannot ignore or define it. The SOTU on Wednesday highlighted business as usual, working around the edges, fearing to disturb the more outraged among us, and that may be all we’ll be hearing and doing for a while.

MAT 01/29/2010 - 2:43 pm

“Sean is talking about general shareholders in the context of a general myth that stockholders “own the company” the way Charlie down the street from me owns his hot dog stand. If stockholders nominated the board members they “elect” it might be a different story.”

The hot dog stand and General Electric are governed the same way. In the extreme, if someone wanted to buy 100% of the common voting stock of GE, that person could govern it identically to the hot dog stand. They could nominate and elect whoever they want. The only difference is that, obviously by definition, an OPMI does not have voting control on an individual basis.

unagidon 01/29/2010 - 2:53 pm

“The hot dog stand and General Electric are governed the same way. In the extreme, if someone wanted to buy 100% of the common voting stock of GE, that person could govern it identically to the hot dog stand. They could nominate and elect whoever they want. The only difference is that, obviously by definition, an OPMI does not have voting control on an individual basis.”

Not at all. They COULD be governed in the same way. But the thing is, in reality they are not. Nor are they ever.

This is a problem in any political discourse, especially when people start appealing to their “principles” without looking at what is happening on the ground. A “democratic” election is held in Iran, so the president has been “democratically” elected. The stockholders of a major corporation have a “vote” (directly or through a proxy) and therefore as owners they are “managing” the company.

Antonio Manetti 01/29/2010 - 4:29 pm subscriber

It’s well known that power vests in the managers and *not* in the stockhoilders.

A somewhat dated but still incisive analyses can be found in James Burnham’s “The Managerial Revolution”.

Here’s what one Amazon reviewer had to say:

Burnham’s Managerial Revolution was published in 1940, almost 20 years before J.K. Galbraith’s more famous The New Industrial State (1958), but contains most of the important ideas concerning the rise of a managerial class with loyalties more to its own class than to the owners of the enterprise (capital, shareholders), which later made Galbraith famous. Other than the fact that Burnham (once a leftist philosophy professor who broke with the left over Stalin’s crimes) was a conservative, there is no rational explanation why this is not the famous book and Galbraith an epigonal footnote. Dated of course, but Burham was insightful and prescient. Especially in view of recent evidence of members of the new managerial class looting their companies despite attempts to align their interests more closely with the owners (stockholders) through stock incentive schemes….

Charles L. Ladner 01/29/2010 - 5:01 pm subscriber

Antonio, an earlier and well researched book regarding the impotence of shareholders is “The Modern Corporation” by Adolf Berle and Gardner Means, published in 1930. Berle’s later book “Power Without Property” published, I think, in the mid ’50′s continues this theme. Berle and Means along with the works of Burnham are the classic texts of the genre. I don’t know that Galbraith added much other than a style of writing more acceptable to the general public.

Ann Olivier 01/29/2010 - 11:25 pm subscriber

Unagidon –

Keynes was a very rich man and ultimately became a philanthropist, supporting the arts. He made his money trading in the financial markets.

I’m not sure whether I’ve recommended the new Robert Skidelskybook, “Keynes: The Master Returns.” To my non-economist’s mind this is an excellent analysis of the melt-down using Keynesian principles. Skidelsky also shows that Keynes himself was very much an empiricist, inventing ad hoc theories in response to what was happeningvon the ground. Skidelsky also shows how Keynes was even more a moralist than an economist.

(Skidelsky is the author of the great three-volume biography of Keynes which allso explains a great deal of English social history including the influence of that fascinating bunch, Bloomsbury, the
Cambridge Apostles, not to mention Keynes’ close friend, Wittgenstein.)

unagidon 01/30/2010 - 10:11 am

Keynes IS interesting, especially for an economist. But one of the things he is famous for is that he wasn’t A rich economist, he was THE rich economist.

Ann Olivier 01/30/2010 - 9:07 pm subscriber

Ha! :-)

Bob Nunz 01/31/2010 - 3:46 pm

1) I liked Paul Volker’s op-ed in theNYT today. I find a lopt of stuff here old hat ideology.
2) On criticizing the SC publicly, do we also condemn Sandra Day O’Connor for publicly critiquing an awful decsion -and salito had a terrible record on defending teh little guy -which fits right in with the Obama critique here.

Jim Pauwels 02/01/2010 - 12:06 pm subscriber

David Ricardo grew wealthy by (iir) exporting British wool to Portugal, and having the ships return to Britain loaded with port.

The average annual salary for a PhD in economics in the US is about $116K. Those who teach in universities and write textbooks are not, as a rule, the same ones who study the functioning of the markets for Goldman Sachs and Morgan Stanley. Some economists, it’s safe to say, have grown wealthy, and their research has enabled many other people to accumulate great wealth. For example, Fischer Black and Myron Scholes are economists who collaborated to create the Black-Scholes pricing model for stock options. Many traders in Chicago and investors all over the world have prospered as a result of their work, including the Ricketts family, who just spent about $900 million to purchase the Chicago Cubs.

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