Wednesday, November 30, 2016

Can the South Dakota Constitution check the Tyranny of the Majority?

South Dakotan voters, in their infinitesimal wisdom, have in recent years passed laws that prevent poor people from working unless they can convince employers that their labor is worth at least some minimum wage per hour and from borrowing small sums for short terms unless they can convince lenders that their credit is good enough to merit a negative interest rate (the interest rate cap recently established is so low that lenders will actually lose money by lending no matter how punctual borrowers are about repaying).

Here is what I had to say about the matter on KCPO's "The Facts" on 27 November 2016:

In other words, the tyranny of the majority is in full force thanks to South Dakota's carefree system of ballot measures. In case you are unfamiliar with the term, the "tyranny of the majority" refers to two wolves and a sheep voting on what is for dinner! The term is generally attributed to Alexis DeToqueville, who wrote over a dozen pages about it in his masterful tome Democracy in America:

If you accept that one man vested with omnipotence can abuse it against his adversaries, why not accept the same thing for a majority? ... What is most repugnant to me in America is not the extreme freedom that reigns there, it is the lack of a guarantee against tyranny.

Well, South Dakotans, ALL South Dakotans whether in a majority of all or a minority of one, are supposed to be protected from tyranny by the state constitution, particularly its bill of rights (Article 6), and especially Sections 1 and 27. They read:

§ 1.   Inherent rights. All men are born equally free and independent, and have certain inherent rights, among which are those of enjoying and defending life and liberty, of acquiring and protecting property and the pursuit of happiness. To secure these rights governments are instituted among men, deriving their just powers from the consent of the governed.

§ 27.   Maintenance of free government--Fundamental principles. The blessings of a free government can only be maintained by a firm adherence to justice, moderation, temperance, frugality and virtue and by frequent recurrence to fundamental principles.

How can either of those constitutional rights be reconciled with laws that force people, against their will, from entering into contracts (employment, credit) that they feel to be in their own best interests? I do not think they can, so the minimum wage and usury laws need to be struck down, now, and as harshly as possible. And in the future, measures that are patently unconstitutional should not even be allowed on the ballot. As a general rule, ballot measures should deal with the government's powers, politics, etc. NOT with the regulation of individuals, especially in matters economic. That is clearly a "fundamental principle" as the only early ballot measures that dealt with socioeconomic matters was Prohibition and it was an even bigger disaster at the state level than at the national one.

Wednesday, November 09, 2016

South Dakota Voters Overwhelmingly Approve Loan Sharks

Yesterday (11/8/16), three out of four voters in South Dakota approved a measure inviting loan sharks into the Coyote State by approving Initiated Measure 21, which caps interest rates on short-term loans at 36 percent per annum and imposes Arkansasian limits on work arounds.

This is what happens when initiated measures are twisted away from their original intent, which was to check government power, not to extend a tyranny of the majority over economic policy.

Replacing, not just repealing, Obamacare

Trump has promised to repeal Obamacare. To prevent its reinstatement down the line, or its replacement with something even worse, however, he ought at the same time to introduce a new system. I made the following proposal in Fubarnomics and think it still our best alternative:

1) make it illegal for employers to offer health insurance and for insurers to offer group health policies, i.e. all policies become INDIVIDUAL. This way job loss does not mean loss of benefits/uninsured status.
2) allow the creation of federally-chartered MUTUAL LIFE/HEALTH INSURERS that will offer individual variable premium policies throughout the NATION that cover life, own occ. disability, and health insurance in a single policy, with the payoffs tied to premium payments (i.e., savings) and actual claims. So holding premiums constant, somebody healthy who dies in an accident at 45 gets a big life insurance payout while somebody disabled at 25 gets none and somebody with average health insurance claims gets a medium life insurance payout. (Simple concept, somewhat tricky actuarially but I've never, ever met a dumb actuary and I know about a dozen of them. Can't say that for any other profession.)
3) randomly assign uninsured Americans to the mutual insurers so there is no serious adverse selection.
4) going forward, mandate pre-testing in utero coverage so there is no serious adverse selection. Any mother who does not start a policy for her embryo/fetus before it is tested or born shall pay a substantial fine and the baby shall be randomly assigned to a mutual insurer.
5) policies can never be cancelled and can never lapse but will lose value over time if premium payments stop.

If these ideas do not make sense to you, you don't understand insurance or behavioral finance and you should bone up or shut up. The proposals are designed to:

A) limit uninsured individuals by breaking the tie to employment and not allowing cancellation or lapses
B) limit adverse selection through random assignment and in utero coverage
C) encourage young, healthy people to make premium payments by compensating them with more life/disability insurance
D) make elderly patients face the trade off between extending life via expensive medical treatment vs. leaving assets to their heirs
E) keep costs low through the mutual form (i.e., ownership by insureds not stockholders) & competition & creation of a large, powerful interest group (mutual insurers and their policyholders) interested in finding ways of reducing medical expenses
F) bond insurers to pay for healthcare via the life insurance tie in: they will rationally spend money to save someone's life to prevent a life insurance payout.
G) if income redistribution is desired by the electorate, it can happen through government premium payments on behalf of the poor, veterans, or other subsidized groups

This morning, Friday, 3/24/2017, I emailed the Wall Street Journal's Jerry Seib about his article in today's WSJ called "The Big Health Fix Bruises Ryan and Trump" the following:

Mr. Seib,

Why won't anyone in the "mainstream media" mention health insurance deregulation as a solution?

Everyone assumes that government intervention is necessary but there are entrepreneurs ready to make the whole system much more efficient if only they are allowed to.

We don't have crises in chewing gum manufacturing or even in closely allied insurance products like life because we allow markets to function in those realms. Health insurance was developing nicely in the U.S. until it was rocked by the Depression, then distorted by the tax incentives for work-related group insurance. It could work nicely again if only the government would allow entrepreneurs to test their ideas in the marketplace unimpeded by the onerous regulations currently imposed on the industry with the consent of both parties.

Bob W.

I have yet to receive a response. Go figure!

How to Stop Michele Obama from becoming POTUS in 2020 or 2024

Democratic party leaders are already planning to re-take the White House in 2020 or 2024 (depending on how Trump's first term goes), by using their largest remaining asset, Michele Obama. The easiest way to stop her is to clarify that the 22A includes SPOUSES. It was passed right after World War II, in response to FDR's unprecedented 4 terms (the 4th cut short by his death), when nobody believed that a woman could become president. Well, that ship has sailed so we have to make sure that we do not turn into a banana republic and subvert our own Constitution thru such a ruse as spousal succession. I think Michele would make a fine president but this isn't about her per se, it is about preserving de facto term limitations for POTUS. I think the American people sense that HRC was overstepping by trying to serve a third term, which is why her own party rejected her in 2008 and the national elector sent her home in 2016. Granted the discussion was personal, about her lying and being part of the establishment, rather than on the principle of term limitations. But now that the smoke is clear, we should act. (I'd like to include parents-children and siblings as well but that is more of a stretch than husband-wife as the former do not share a bed.)

We should also consider creating a new body, sort of like a grand jury, that vets people BEFORE they are allowed on presidential ballots regarding age, non-spousal relationship to a 2 term prez, and birth. I'm thinking 105 people drawn randomly from the population, 2 from each state, the District, and PR, plus one at large to preside and break any ties. This is so we do not ever have the embarrassment of electing someone ineligible.