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What a Free Market Health Care System Might Look Like

Posted on August 15, 2019 at 4:20 PM Comments comments (0)

by Dr. Larry Fedewa

(August 10, 2019)

This week's column is an updated reprint of a piece I wrote a couple of years ago when the backlash against "Obamacare" first inspired Republicans to talk about "repeal and replace". Since they are still talking and since the Dems are now also talking about health care alternatives - especially federal takeover of all health care - the topic remains open for new ideas. I have approached the topic from the perspective of a clean sheet of paper. Why try to build a system on the bones of a failed system, a system no one likes? Why not instead build a new system on a foundation of goals which everyone accepts and agrees with? This is my answer to that question.

The starting point for a discussion of a national health care system should be setting our goals. I believe that American health care should be:

1. High quality and state-of-the-art

2. Available to all

3. Affordable

4. Abundant

5. Well-funded

What are the principal obstacles to these goals?

a. The shortage of medical personnel.

This shortage has two facets:

1) not enough medical professionals are produced in the first place, and

2) too many drop out before their time.

There are whole areas of inner cities and rural America, for example, which have no physicians at all. Why? Because our medical schools do not graduate enough doctors to serve the population of the United States. Why not? Lack of intelligent students? Lack of students who are motivated to give their lives in service to humanity?

Not at all. The reason is lack of money! Medical education is so lengthy and so costly in this country that very few students can afford to go to medical school. This situation has created a national crisis.

One very good use of taxpayer funds would be to offer medical and nursing school students free tuition, open to all qualified applicants. We do it for the military, why not for doctors and nurses? The cost would be minuscule compared to the Department of Defense or agricultural subsidies.

This policy would have a massive return on public investment. More doctors would increase coverage of the population (perhaps there should be a requirement for a graduate M.D. and R.N. to spend two years in a "no-doctor zone"). More doctors would increase competition for the patient dollar. More could devote themselves to research. New people, new ideas, new openness to change. The quality of care would go up, and the cost would go down - a mantra we have been hearing a lot lately. This program would also assure continuing support for U.S. medical technology which is already the envy of the world.


b. Inadequate funding

So how do we provide for adequate funding? Where does the $3 trillion we now spend go? The money flow starts with the employers who pay the insurance companies out of profits. It then goes mainly to the vast bureaucracies in the insurance companies which distribute the money, the government which oversees the money, and the hospitals and practitioners who must respond to the companies and the government.

Health care expenditures in the USA are approximately as follows: (Source: National Health Expenditures 2017 Highlights - CMS data)

- Medicaid $581.9 billion

- Medicare $705.6 billion

From these sources are paid:

- Practitioners = 20% - $700 billion

- Hospitals = 33% - $1.1 trillion

Only about one-fifth of the $3.5 trillion spent on healthcare gets to the practitioners. So how can this labyrinth be simplified?

1) It is a drag on the efficiency of the economic system by vastly increasing the cost of starting and staying in a business, and

2) it is a drag on the healthcare system by removing from individuals the responsibility of seeing to their own health needs.

c. Insurance Companies and Government

A patient-centered system also reduces the role of federal and state governments (61% of health expenditures). The patient doesn't need the insurance company or the government. If both the government and the insurance companies were completely eliminated from the system, nearly two-thirds of the cost of American health care would be gone. Of course, there will always be some need for both, so assume that half of that cost would be gone. At today's rates, that would be about $2+ trillion. This is a gross number, but it shows the potential.

1) There is still a place for insurance companies in this system, although dramatically reduced. The most obvious place is for catastrophic insurance. A safety net for when something very expensive happens to someone in the family - or the church, or the credit union, or whatever assembly of people the individual chooses to participate with. And this brings us to the role of governments.

2) The first federal government act should be to lift all interstate commerce restrictions on insurance companies, so that they are free and invited to offer policies in any or all the states they wish without the necessity of creating a separate bureaucracy for every state they enter.

3) The second federal reform should be the creation of a program for financial aid to qualified students in the medical professions. My suggestion would be a free education in exchange for a period of service in under-served areas of practice as determined by a federal government body, such as, CDC or NIH or HHS (CMS).

4) A third federal reform which would dramatically reduce national health care costs is tort reform. Everyone makes mistakes, including medical practitioners and hospitals. It is the federal government's role to protect both the treatment sector and the patient. But the current practice of unlimited liability has led to "defensive medicine," that is, exhaustive tests and treatments used far beyond medical purposes. These extras are done to provide a defense against the inevitable lawsuit in case anything goes wrong. This uber caution has become a major cost driver in American medicine. Congress should set reasonable and realistic limits on the monies which can be given to the victims of everything from malfeasance to honest mistakes. No more windfalls for injury lawyers.

d. Universal Coverage

The larger issue is care for the poor and the other under-served members of our nation. The concept of universal care is a noble and worthwhile goal. But socialized medicine is not the only or even the best way to achieve universal care. We have government

programs to feed the hungry; to provide health care for the elderly;

to protect the innocent. We can provide health care access to the poor and the under-served, whether because of poverty or location. We can also do better than the COBRA coverage for those who lose their jobs.

It is very tempting to design a system in which no government plays a major role. However, the most efficient way to care for the poor would seem to be a State-run program which levies a small per capita fee on each pool of insured to be placed in a designated fund, administered by the State, for the benefit of qualified citizens. A model for such a program might be the Medicaid programs in each State. Another model is the Uninsured Driver programs administered by the states.

e. Medicare

We have now discussed the entire healthcare cycle without mentioning Medicare. There is a moral and legal mandate involved in Medicare which does not exist elsewhere. Medicare works reasonably well as a medical insurance system for those who contributed to it all their working lives. The most prudent and honorable way to approach Medicare would seem to be to leave it alone for those to whom commitments were made, even while moving the system slowly toward a patient-centered system for those just starting out, with free choices developed for those in mid-career. The pressure of the free market system we have been describing here will undoubtedly alter and reform Medicare as the new system matures in due course.


So here is what a free market system might look like. It would fulfill all our goals for an American system that is:

1. State-of-the-art;

2. Available to all in need;

3. Affordable;

4. Abundant; and

5. Well-financed.

To get there, we need to:

1. increase the supply of medical practitioners,

2. create a patient-centered system by letting the patient spend his or her own money on healthcare;

3. create state-sponsored safety nets for the poor and underserved.

These proposals, of course, seem radical today, even in America's free market culture. But sometimes the most obvious solution is indeed the best. The fact is that the employer-based system we have today was initiated because the elite of another day needed a quick way to exempt health care costs from federal taxes. No one thought that this simple IRS rule would hamper businesses forever. So, let's change that!


© 2019 Richfield Press LLC. All rights reserved.

Civilian Gun Culture is a Dysfunctional Mess

Posted on August 6, 2019 at 3:40 PM Comments comments (0)

By Michael E. Diamond


The U.S. military has a lot of guns, but not a lot of non-combat fatalities. Why is this? Because of common sense military regulations. That’s why, like many other military veterans, I view America’s civilian gun culture as dysfunctional.


Today, Americans mourn yet another tragic mass shooting, this one in a Texas high school. It has been a mere three months since 17 teens lost their lives at Marjory Stoneman Douglas High School in Florida. Much has been made of U.S. gun control laws — or lack thereof. But instead of listening to politicians battle across the partisan divide, we should be listening to the men and women who work with guns the most.


Most Americans would be surprised, for example, at how little time military personnel in particular spend with their weapons over the course of a career. Apart from firing on highly structured firing ranges or routine maintenance, access to your weapon on base is rare. Military Police provide security, so soldiers move about the base unarmed. There’s a reason for this: In the military, anything that reduces accidents, homicides or suicides isn’t put up for a vote. It’s a requirement.


The military’s strict rules on weapon and ammunition access can apply to wartime as well, as my own experience demonstrates. In 1991, I was a military intelligence officer in the U.S. Army Reserve. My unit was mobilized and sent to Fort Bragg, N.C. Shortly before boarding a plane to Saudi Arabia I was issued my M16 along with several magazines of live ammunition.


Although I had fired countless live rounds over the years on various military weapons ranges, it’s a different feeling when you’re issued live ammunition before heading to a combat zone. This time it was real.


After a 16-hour trip — most of which I spent sitting on the hood of a truck with my back against the windshield trying to stay warm — we emerged into the intense desert heat. Because of the ear-splitting noise of departing jets we quickly inserted hearing protection, and then surrendered our ammunition.


That’s right. Once we arrived in an operational war zone, one of the first things the U.S. Army did was take our ammunition away.


We were in a location where small-arms engagement with enemy forces was unlikely, so, as far as the Army was concerned, there was no need for a bunch of wound-up soldiers to be walking around with live rounds. Even without any ammunition, before entering a building every soldier had to demonstrate his or her weapon was empty by pointing it down toward a barrel of sand and pulling the trigger, causing it to make the “click” sound of an empty weapon (hopefully).


Eventually, my unit moved north toward Kuwait, where we were re-issued ammunition just before the start of the ground war. Several weeks later, after successfully completing our mission in Kuwait City, we were re-routed to northern Iraq to address the Kurdish refugee crisis. On arrival, we once again surrendered our ammunition.


These military safety requirements are a stark contrast to civilian U.S. gun laws. Where the military requires background checks before a service member is allowed anywhere near a live weapon, the majority of U.S. states allow private gun sales without a background check. Where military personnel are trained to take a weapon away from a soldier who poses an extreme risk to himself or others, most states do not have laws enabling law enforcement or loved ones to do the same.


Compared to the weapons training that military and law enforcement personnel undergo, the training required of civilian gun owners is a joke — if it exists at all.


Before I was sent out to use it, I had to prove an intimate familiarity with my weapon— how it worked, its maximum effective range in meters, how to load and unload it safely, how to disassemble and reassemble it, how to clean it, clear jams, sight it and fire it accurately. So it’s hard for me to fathom how easy it is for almost any civilian to walk out of a gun retailer carrying a new weapon without a clue about so many of these standards.


And where military and law enforcement undergo extensive training on how to make the right shooting decision quickly while under extreme stress, civilians receive no such training, contributing to avoidable deaths arising from poor decisions and petty disputes. In this context, the National Rifle Association’s favorite slogan about good guys with guns defeating bad guys with guns is more naive myth than solution.


It’s crucial that veterans now bring our voice and experience to the national conversation about reasonable gun reform. As a group, we understand guns and appreciate that responsible gun ownership is an important part of American life — but we also understand that a safe environment is achieved through training and regulation.


We fought to protect our country, yet see our fellow citizens being gunned down in schools, churches, restaurants and concert venues at a rate unseen anywhere else in the developed world. More Americans have been killed by guns since 1968 than in all of the wars in U.S. history. It’s ridiculous and tragic.


As a veteran, I am often asked what lessons the civilian world can learn from the military. There are many insights each can gain from the other. When it comes to guns, however, the greater wisdom lies with the military. It maintains a high-functioning gun environment because it remains serious about background checks, training and accountability.


It is time for the civilian world to do the same.


Michael E. Diamond served as a military intelligence officer in the United States Army Reserve for seven years.

1979 Disco Demolition Night

Posted on July 15, 2019 at 3:20 PM Comments comments (1)

Gary Norris Gray BASN Staff Reporter

This was written in 2007 alot has changed in Chicago since 1979. Major League Baseball now has franchises in the states of Florida and Arizona.There have been six new presidents, the Cubs and the White Sox both won the World Series at least once. The Chicago Bulls three peated twice at NBA Champions and Michael Jordan played baseball for the Barons in-between. Many African American musicians never forgot what happened at Comiskey Park July 12, 1979.

OAKLAND, CA —It was the end of an era. The presidency of Jimmy Carter and the dominance of the Democratic Party ended in Washington, D.C.The American and Iranian governments were at odds with each other. Diplomatic communications were strained that summer. It led to the American Embassy Hostage Crisis in Tehran, November 1979.


The New York City Commission finished their report on the massive blackout that affected the city the previous summer. Immense structural failure claimed to be the reason for the blackout.


The last of the American Civil Rights Movements started to be heard throughout America.


The Disabled Civil Rights Movement had it’s genesis in Berkeley, California. This movement (Chrome Power) created a mass migration of Disabled Americans west to this progressive Northern California town.


In 1979, the sports world moved quickly into the 80’s. The Seattle Supersonics defeated the Washington Bullets four games to one. This was one of the lowest rated televised series broadcast in National Basketball Association history at that time.


The League and CBS-Columbian broadcasted playoff games on delayed tape. West coast basketball fans turned their TV's off during the Five O’clock news so that they could not hear the 3rd or 4th quarter score.


That same year, the Montreal Canadians beat my beloved New York Rangers four games to one in the Stanley Cup Finals. Not many watched this series because the league was re-negotiating a contract with three major networks.


Almost a year earlier in October of 1978, the New York Yankees repeated as World Series Champions beating the Los Angeles Dodgers four games to two. It was the highest rated series televised at that time. Number 44, Reggie Jackson cemented his place in the baseball sun with two great World Series years.


Basketball and hockey were struggling while baseball seemed to be doing fairly well on both coasts. However, they had difficulties attracting younger fans in the Midwest except in the St. Louis area. This phenomenon grew in the 90’s and the turn of the century.


Sports executives tried everything to get fans to the stadium or ball park. Bill Veeck, owner of the Chicago White Sox, was a well known maverick. Veeck tried something new to get young people back to Comiskey Park, located on the south side of Chicago.


On July 12, 1979, Veeck, his son Mike, and Steve Dahl, a 24-year-old disc-jockey from Chicago’s radio station WLUP (also known as “the LOOP”) created “Disco Demolition Night.”


Comiskey Park seated about 55,000 people, but on this night 85-90,000 fans showed up to attend this promotion. Many tried to enter by climbing through or up the outside walls of the stadium. These young people did this with the help of their friends inside the park.


The Chicago Police Department finally blocked the streets leading to the stadium. Something that local police should have done hours earlier. This late police action prevented late comers from even getting near the Stadium. Watching WGN-TV the White Sox baseball television network, fans wanted to join in the fun.


The ticket exchange plan was for White Sox fans to bring old disco 45’s or LP records to the park in exchange for the reduced admission price of 98 cents.


The records were destroyed in between games of a doubleheader against the Detroit Tigers.There was a subtle racial overtone to this promotion. Something that the demolition promoters deny to this day. Steve Wonder, Marvin Gaye and Motown records were found on the field hours later.


Remember Disco was a basically African American music genre that swept the nation in the middle 70’s. It reached its peak in 1976-1977 and was led by the Bee Gees, a white group from Australia. The group had several hits that year, mainly Disco tunes from the movie soundtrack of the 1977 hit movie “Saturday Night Fever”.


It seemed that white middle class America had enough and wanted disco music to end.


Everyone knows when you make it on the big movie screen; the political, social, or economic movement is just about over. That is exactly what happened, there was a complete backlash.


Radio Stations throughout America changed their music format from disco to hard rock, rock and roll, old school, soft Rhythm and Blues or news talk radio. Quiet Storms came on the radio from Philadelphia to Oakland after 7pm


“Saturday Night Fever”, starring a young John Travolta, hit the theaters in the fall of ’77. This movie was a disco movie about a troubled teenager’s life in New York City.


This movie was the straw that broke the camels back and led white America into a revolt against disco music. Many people wanted to see disco records destroyed. The music industry kidnapped the new art form and made it mechanical


The stage was set as thousands of fans filled Comiskey Park to overflow capacity. The majority of the crowd were very young and white. There were reports of fans under the influence of alcohol and other hard drugs.


When the first game came to a close an unruly crowd began to use their old records as frisbees. This naturally led to fans throwing firecrackers and drinks on the field. With each passing second, Comiskey Park became a time bomb ready to explode.


It created a very dangerous situation for the players on the field. The Tigers did not want to continue the game. The Detroit Tigers won the first game of the doubleheader 4-1. But the question was would they start the second game.


Both teams ran to the clubhouse to get away from the hysteria at Comiskey and to rest for the second game 45 mins. later.


The White Sox and Tigers did not return to the field for the next game.


Veeck and Chicago announcer Harry Caray tried to get this unruly crowd back into their seats with announcements, but it was too late. The genie was out of the bottle and the fans destroyed the field with bonfires, bricks, broken glass, records, and burning turf.


Disc-jockey Dahl dressed in Army fatigues kept yelling, “Disco Sucks!” while circling the field in a rented jeep. He stirred up a crowd which did not need prodding.


When the time for demolition came, the explosion was bigger than the promoters expected and it resulted in ripping a big gaping hole in the outfield grass. Thousands of fans jumped over the seating rails and onto the field to join the mayhem, burning banners, and throwing objects.


The batting cages were even destroyed in the melee. Fans were drinking in the dugouts, and making out in the outfield. It was pure bedlam.


Order was somewhat restored an hour and half later when a battalion of the Chicago Police Department encircling the field and escorting the crowd politely off the field. It was reported that there were 39 arrests and 17 injuries.


The Tigers refused to take the field for game number two, forcing the White Sox to forfeit game two of the double hitter.


The quick patch up job on the outfield grass was uneven and players throughout the American League complained about it for the remainder of the 1979 season.


ESPN, The Evil Empire, The Mouse, The RAT, or what ever people call it these days aired a series two years ago called “Sports and the Influence of Music,” on their Sunday morning news show, “Outside the Lines’.


The incident at Comiskey Park with it’s racial overtones was an ugly episode in sports and baseball history. ESPN however never addressed this issue during the broadcast. The Sports network omitted glaring facts about the incident.


The ESPN broadcast stated that the incident was a lighthearted protest by young people. The network never addressed how dangerous this situation could have been, nor did they report that 95% of the instigators were young and white. This was a legal riot and the Chicago Police Department just stood around and watched.


The incident cast disparagements on African American music and dance. Not a single individual from the adjacent African American community in the City of Chicago was interviewed. The question should be asked, what kind of journalism was this?


Many of the participants in this riot were granted interviews, with red eyes, smiling red faces, and garbled slurred speech. ESPN tried to portray the incident as a walk in the park by misguided youth. Now imagine if these party people were African-American it would have been a different story.


The truth is if young African Americans had been in that unruly crowd 32 years ago it would have been a riot. 90% of the offenders would have landed in Chicago’s city jails and the Cities National Guard would have surrounded the stadium. Tear gas and batons would have been used. Politeness a thing of the past.


It would have made national news.


But instead, this incident was a joke to most major news agencies in 1979.


ESPN and their sister stations continue to insinuate this kind of racial innuendoes and hidden racial commentary by rehashing and glorifying this deplorable part of baseball history.


This kind of yellow journalism continues to notify African Americans that we Black Americans have a long way to go in race relations in the United States — no matter whoever resides at 1600 Pennsylvania Avenue.


Happy Anniversary Chicago


Gary Norris Gray - Writer, Author, Historian, Gibbs Magazine-Oakland, California and New England Informer- Boston, Mass. THE GRAYLINE:- The Analects of A Black Disabled Man, The Gray Leopard Cove,  and The Batchelor Pad Network, Disabled Community Activist. Email [email protected]


Copyrighted Gary Norris Gray @ Gray Leopard Prod

America First and Internationalism

Posted on July 14, 2019 at 7:30 PM Comments comments (0)

Can these policies co-exist?

By Dr. Larry Fedewa (July 14, 2019)



There has been a strain of missionary zeal in American foreign policy since the colonial days and it raises its head every once in a while even today. Perhaps it is the shadow of our Puritan heritage . On the one hand, the moral dilemma of slavery has poisoned our national conscience since the beginning and still haunts us today even after we suffered an estimated 650,000 casualties in the most costly war in our history in an effort to right this wrong. On the other hand, Americans have felt constrained to "save the world for democracy" through the foreign wars of the 20th century and the challenges of Islamic terrorism in our own time.


The belief that "America is the last, best hope for freedom", as President Reagan put it, has formed one of the foundations of our foreign policy for the past 100 years. That belief carried us into two world wars and all the nearly constant stream of wars ever since, in Asia, Europe and the Middle East. It has defined "America's place in the world order" as the advocate and defender of personal freedom and at least some form of social justice. It has also established the USA as the underwriter of all these efforts in both blood and treasure.


The doctrine of "America first" is seen by the foreign policy establishment both here and abroad not as a modification but rather as a rejection of America's mission in world history. Properly understood, however, America first is not a rejection of this internationalism because it also assumes that every other country will - and does - put its own interests first. In this calculus, the issue becomes "what is America's interest?" The conclusion of the Trump doctrine is that America has a national debt of $22 Trillion and can no longer afford to bear the nearly entire cost of the elaborate military structure which we created during the Cold War. This does not seem unreasonable in view of the fact that the members of our alliances in Europe and Asia are in general wealthy enough to support their own defense.


The rub is that most of these countries are governed by some form of socialism and thus their costs are very high compared to the USA. Many have significant national debts of their own. This in addition to the fact that no one wants to give up a free ride voluntarily. So what leverage does the USA have to counter this resistance? The obvious threat is that freeloaders will no longer be welcome in the alliance. As far as we know, no one has suggested such an action, but the fact is that this is an implicit sanction. The Joe Biden's of the world - along with many others - consider this approach heresy. It goes against the received wisdom of the post-war policies which won the Cold War.


There are strange reactions among our "allies". For example, the purpose of NATO is the defense of Europe against possible invasion by Russia. To support that policy, the USA has stationed 10,000 troops and billions of dollars' worth of equipment in Germany - mostly funded by US taxpayers - since 1946. Germany now imports about 40% of its natural gas and 30% of its coal from Russia. To augment this supply chain, Germany has agreed to let Russia build the Nord Stream Pipeline for natural gas. This will increase the dependence of Germany on Russia for natural gas - extent unknown. The impact of this move is that, in case of war - or the threat of war - Germany might well be held hostage by the shut-off of all Russian energy exports. This in direct defiance of US objections. This act calls into question the very essence of NATO.


Another example is the French entertaining a proposal to "go it alone", and drop out of NATO, thus reviving Charles De Gaulle's longtime refusal to join NATO in the first place. Along with the UK, Germany and France are the largest members of NATO. President Trump has been widely criticized by the establishment for alienating our allies. But, if the Germans and the French are willing to dump NATO, one wonders why we are spending all this money to keep it going?


The bottom line is simply this: every country takes actions based on its perception of its own interests. For the Americans to do the same thing is only common sense. It is time that America faces reality and acts in the interests of the American people - not the so-called mission to save the world for freedom or any other such idealistic, and unrealistic, goal - no matter how worthy it sounds. Time to put America first!

© 2019 Richfield Press, LLC. All rights reserved.

The Wealth Gap (continued): Back to basics

Posted on April 8, 2019 at 7:15 PM Comments comments (0)

he middle class share of American wealth has gone to the very rich

By Dr. Larry Fedewa (April 8, 2019)

For the past three weeks, The Dr. Larry Show

( at 646-929-0130; 7 -8 pm every Wednesday) has been discussing the "wealth gap" in 2019 America. Now, it's time to get back to basics.

Q. What is the "wealth gap"?

A. This term refers to the present and growing concentration of financial assets (cash, stock, real estate, intellectual properties such as patents, copyrights, and royalties, etc.), and all forms of passive income to the control of fewer and fewer people (1% of the population) while the middle-class controls less and less of the nation's wealth. The word, "wealth", is used instead of "income", because the value of assets is frequently allowed to appreciate untouched ( e.g. to avoid taxable income). Money comes and goes in the form of income; assets are for long-term welfare.

Q. Is there really a wealth gap in America? Surely there will always be differences in wealth.

A. The changes in the proportion of the nation's wealth held by individuals over time are clearly traceable statistically. This trend can and has been analyzed by experts for decades. Currently, nearly 80% of America's wealth is held by 1% of the U.S. population.

Q. Why is that important?

A. There are two answers to this question: economic and philosophical.

a. Economic

The economic answer is that American capitalism depends on the American consumer market, which constitutes 68% of Gross National Product (GDP). The more money Americans spend on consumer goods and services, the more prosperous the country becomes. And, the more money available to the masses of American consumers, the more they can and will buy. But there is a limit to how much any individual or family will spend on consumer items - after all how many suits or cars can one person use?

After these expenditures are made by the 1%, their remaining funds are invested in other instruments, mostly for passive income (equities, pension funds, real estate, etc.). To the extent that the super-rich control all the country's wealth, therefore, to that extent there is a limit to the growth or even the stability of the consumer market and GDP.

When the consumer market begins to decline, other segments of the economy also react and the slow-down descends into recession. The only way out of this cycle is to get more money into the hands of the middle class. If nothing is done to accomplish this goal, the result could be a gradual descent into a modern form of feudalism, where everyone works for one of a few employers. They will be the masters and the rest of us the serfs. There will no longer be a capitalism to create opportunities and personal freedoms. Another potential outcome could be a socialist system where the everyone would depend on the government instead on a handful of employers. This would be an expansion of some present trends.

B. Philosophical

The philosophical justification for a widening (rather than a narrowing) of wealth distribution has to do with the preservation and growth of the capitalist economy.

1) The United States of America is the most prosperous and advanced civilization in the history of the human race. This statement is not above controversy, but overall a reasonable case can be made. The major reason for the prosperity is our practice of a modified capitalism, particularly as it is relevant to our "free" market system.

2) The American experiment of capitalism has been successful because it has found an answer to the most fundamental challenge of human governance, namely, what motivation will ensure that masses of people will work hard, produce unheard-of innovations, and do so in peace without either violence or coercion? The only system of governance which has produced such a standard of living is free market capitalism, which finds the civilizing motivation to be this: Challenging every American to be responsible for the welfare of self and family. No other system has been found to accomplish this necessity - not tribalism, tyranny, religion, socialism or communism.

3) Therefore, American capitalism is worth preserving because it works. It has enabled America to become the envy of the world. But its success and preservation depends on many other factors. Chief among these is the willingness of the population to abide by the conventions of social justice which are available to each citizen. It is this reliance which transcends the need for violence and rebellion. It is thus critical to the well-being of the republic that those in the law enforcement and intelligence forces of our country who have abused the FISA court and their own authority be indicted and punished to restore confidence in our national institutions.

4) But the most fundamental requirement of capitalism is a distribution of wealth which is in truth and perception fair and appropriately rewarding to the masses of citizens who live their lives in peace and prosperity.

Q. How do we measure "fair" and "appropriate"?

A. The most obvious measure of the validity of the distribution of wealth is a sound currency. Financial analyst Porter Stansberry makes a convincing argument that the basis for the shift of wealth from the middle class to the 1% which has occurred since 1971 is due to the decoupling of the dollar from the gold standard which was started in the 1933 by Franklin Roosevelt and completed by Richard Nixon in 1971.

With no basis in external value, the dollar ceased to be restricted by any force at all (the proverbial basket of currencies- most of which depend on the dollar in

the first place has not proven meaningful). The Federal Reserve has seen fit to print as many dollars as the time called for. This practice has resulted in a core inflation rate of 3.96% per year for a total of 502.65% between 1971 and 2018. American wages are approximately the same today as they were in 1970 - which means a reduction of 500% purchasing power - so the 2018 dollar is now worth 20 cents' . The 1% have been able to amass billions of these dollars at the expense of the middle class, using cheap (or interest-free) money to acquire immense accumulations of assets.

Q. How to fix the problem?

A. A return to the gold standard seems out of reach at present. What is needed is an effective means of increasing the wealth of the middle class without violating free market principles. Theoretically, a labor shortage should result in higher wages. This is happening already at the lower levels of employment. The average minimum wage has increased approximately 3% in the past year. This is a step in the right direction.

A much more dramatic step has been taken by the companies which have profit-sharing plans, using either cash or (more commonly) stock or options. This is an excellent use of the masses of their own stock which has been re-purchased by many public companies in the past five years, using zero interest funds. Government tax policies can be used to encourage this practice.

Another force for change could be organized Labor, enforcing demands for profit-sharing in addition to wages. This strategy is well established in some industries. Unfortunately, it has not been widespread enough to protect workers as a whole from wage stagnation and asset starvation. In all, however, providing workers with "skin in the game" is by far the best way to protect our precious heritage and secure our children's future.

Q. When?

A. Today! Time is running out. The middle class is restless. Continual erosion of middle America's standard of living is responsible for the election of Donald Trump but also of the recent upswing in support of socialism. Things could get out of control if new hopes cannot be sustained.

© 2019 Richfield Press, LCC. All rights reserved.

If feudalism our future?

Posted on April 3, 2019 at 10:00 PM Comments comments (0)

If we don't close the wealth gap, capitalism will disappear

By Dr. Larry Fedewa (March 30, 2019)



"American capitalism is now in crisis because most financial assets, most ownership of stock, and most capital income from dividends and interest and capital gains are concentrated in the top 1%, 5%, and 10% of the population. As these levels of concentration approach 80%, our society could soon arrive at the level of ownership that English lords and ladies had of all English land before the American Revolution." (Blast and Freeman, FORTUNE, April 17, 2014). That system was essentially medieval feudalism, with serfs and masters.

Henry Ford understood the fundamental dynamic of capitalism, namely, that sharing profits with employees gives them more money with which to buy his products, which in turn increases profits, and that increases everyone's wealth. This simple fact has been forgotten by the American business culture. The very purpose of capitalism is to increase the wealth of the entire nation and so to give everyone a stake in diligently pursuing a peaceful, productive life.

Excessive concentration of wealth defeats this purpose at its foundation by depriving the vast majority of the population of the means to enhance their standard of living. Without this motivation, that population will eventually turn to violence and revolution to regain its hope for a better life.

So, how did this situation come about? There were at least two stimulants: inflation and digitalization. A very convincing analysis of the problem has been supplied by Porter Stansberry, a financial futurist of sorts. He traces the steadily advancing discrepancy between the 1% and the rest of us to inflation. His chart showing the rate of inflation compared to the rate of distribution of wealth from 1971 (the year Nixon took the US off the gold standard) to the present is very illustrative.

His principal thesis is that a sound (i.e. gold-backed) currency forces a wide distribution of buying power, because it reflects the advance or decline of a culture's productivity. For example, a "strong" dollar buys as much for the middle-class workman as it does for a billionaire. But it takes a much higher percentage of "weak" dollars to buy that workman's necessities. The elite buyer has in fact many more dollars to spend even though such purchases are only a small portion of his overall income. His wealth therefore provides him with an ever-higher standard of living, while the workman sinks ever closer to poverty. Since the workman made a major contribution to the production of the item which was then sold for a profit, the capitalist philosophy would dictate that he share in the resulting profits. If he doesn't, he gets angry.

Stansberry sees the violent revolution as having already begun -- citing the recent wave of violence and terrorism. But his solution is very discouraging -- he predicts an "American Jubilee" like those held every 50 years or so in the Bible. In modern terms, that is a collapse of the current economic structure and its replacement by a new normal. He expects a much more catastrophic event than 2007-8. His advice: head for the 50 or so enclaves of the rich and powerful which will be heavily armed. IOW, a new French Revolution.

In his impassioned plea for raising the minimum wage, billionaire Nick Hanauer uses the striking image of the deprived masses picking up their pitchforks to overcome the elite. ("Pitchfork Economics") He too cites the Henry Ford mantra. His solution, however correct, was originally too narrow - the minimum wage is but one factor in a much more complex economy.

An obvious temptation for undercutting the buying power of the middle class has been the digital revolution, which has contributed so monumentally to the productivity increase we have experienced in the past generation. Among its many advances has been the communications revolution, especially the internet, which has enabled workers from developing countries to participate in the US job market. Distances offer no obstacles in today's world. Competition for jobs today has become worldwide. The result has been catastrophic for America's workers.

Corporate chieftains took one look at the wage advantage of foreign workers in Asia and Latin America and fell into their arms. There was no thought of the harm they were doing to their own compatriots, and eventually to themselves, as they gleefully set about the destruction of American capitalism. It has taken one of their own, in the person of Donald J. Trump, to wage a mighty counter-offensive to this movement through his trade and tariff policies. But that also is not enough.

How can we rescue our unique American capitalist system from its current path to feudalism? The key is to institute compensation programs for middle class workers which allow them to share in the prosperity their productivity has helped to create by implementing the labor-saving technologies invented by the elite.

For the answer, we can look to companies which have structured their employee compensation to reflect the employees' contributions to profits. Three such corporations are Southwest Airlines, Federal Express, and Walmart. Each has developed a profit-sharing system which not only reflects the proportionate contributions of ownership, management and labor to the profitability of the total enterprise, but they have also avoided the potential clash between employees and shareholders by issuing part of the workers' bonuses in the form of shares or options. Thus the two groups have overlapping memberships.

A pioneer in this movement was Sam Walton, the founder of Walmart. When he took the company public, he simultaneously provided his employees with highly discounted stock options. The result over time was a company of millionaires, which also became for a time the largest retailer in the world. No matter the current labor relation problems of the company, no one can dispute the legacy of the founder.

The last piece of this puzzle is the Labor movement. The American Labor movement succeeded from the 1930's to the 1960's in winning for its members significant benefits in what might be called "lifestyle" features, such as, worker safety, pensions, health care, and wages. Since the 1970's, however, these benefits have become more or less standard at least in big companies. In other words, Labor won.

Since then Labor seems to have lost not only its way, but also its membership. I suggest that Labor adopt a new cause, "Luxury Benefits": recapturing for its members their rightful share of the immense financial rewards our country has earned. It is no secret that the captains of industry are not going to hand over significant portions of their wealth to their employees without a fight - even if it is in their long-term interest to do so. Someone is going to have to help them "see the light". Nobody is as equipped by history, organization and numbers to undertake this 21st century fight as organized Labor.

(To be continued next week.)

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