Steel City Cowboy

Wednesday, October 29, 2008

The Steel City Cowboy Tax Plan

I think that one of the major drivers of sector-specific inflation in healthcare and higher education is the near-removal of the need for the consumer to actually pay for the product in a way that registers to the animal part of their brains as payment. Consumer sentiment can act as a heavy downward pressure on pricing, and it almost does not exist in those two sectors.

For people who have health insurance "provided" by their employer, the cost is mostly hidden. Of course, health insurance is provided by your employer just like the Christmas presents that your kid buys your spouse (with your money) are provided by the kid. Employers actually act as resellers for health insurers' plans. You buy that plan in lost wages. In other words, if your employer weren't footing the bill to the tune of $400 per month for each employee on the family plan, they could afford to be paying everyone $400 more per month, give or take. But that cost is hidden from you, because you never had the cash in your hand in the first place. And, the small (but growing) amount that many employers deduct from your paycheck to "pitch in" for the health insurance is almost the same. You don't feel it, because you never had it.

If you were paid that money in actual wages and had to front the cash for the policy yourself, I believe that a whole lot of people would either opt out of the current raft of health insurance offerings or exert enough price pressure that insurance companies would come up with cost savings and innovative plans. But make no mistake -- the real problem is that most people with health insurance through their employer treat a very valuable service as though it were free (or purchased at a significant discount).

What it boils down to is that people are routinely receiving services worth, say, $200 for an "out of pocket" feeling of only around $20. They realize the value of the service, and will be willing to pay more for it up to a certain level. The net effect is that if people are actually even willing to pay $40 for that same service (whose value they perceive at around $200), the providers are of course going to raise their rates accordingly to obtain that payment. And so, a $200 visit rises in price to $400. The market wouldn't actually bear a $400 price, but it will bear a $40 price, which is how most people experience it. And so it happens.

I'm not saying there aren't other inflationary pressures at work in the health care industry. Clearly, rapid advances in diagnosis and treatment do not come for free. And I still haven't been able to decide whose side I fall on in the doctors vs. lawyers malpractice argument, although I certainly lean toward the doctors' side. But the point remains that the divorce of the value of the service from the felt cost by consumers has left things wildly out of balance, distorting the market price.

Taking a look at higher education, there is a similar inflationary pressure. People's out-of-pocket expenses for a college education are pennies on the dollar for the value they believe they are getting. Financial aid packages, including massive amounts of subsidized student loans, have wildly distorted the market in a similar fashion. In it's quest to make higher education affordable, the Federal government has dumped billions of dollars into that market with the result that people feel like they are paying $20,000 for something worth $100,000. So, that same inflationary pressure kicks in. Double that price and people still feel like they're getting a bargain. If we actually had to pay for it out of pocket, it would be a different story. People would opt for colleges and universities with a different price structure that provided more value.

So, how does this relate to taxes? I contend that working Americans face an onerous cumulative tax burden. Why do we put up with it? Because in general, we don't feel it. Our property taxes are paid through escrow accounts in our mortgages and are just perceived as part of our house payment. Our Federal taxes are not only taken out of our paychecks incrementally, but once a year many people feel like the government is "giving" them something when they get their refund check. And so, we tolerate increases in taxes that would never fly if we actually felt them.

My tax plan isn't an argument about flat taxes, national sales taxes or which type of tax calculation method works the best for whatever your social engineering cause du jour might be. It only involves method of payment.

The Steel City Cowboy Officially Endorsed Tax Plan
You pay your taxes to all taxing authorities quarterly. In person. In cash. No exceptions. Do you think we'd care a little more? Feel it a little more? You bet. Would it make a difference to how we feel about the taxation levels that we live under? Of course. I think a lot of people would be outraged when it came time to part with that giant chunk of cash and physically hand it over to a government bureaucrat. There would be tears and fist fights, I'm sure.

Will this ever happen? No. Would I push for it if I were in office? Don't be silly. It's easy to throw stones from a blog, and a lot harder to fix real problems in the real world. But it does serve to highlight how removing the feeling of paying for something, including out taxes, can lead to out-of-control inflation. So go ye, and be aware of how much of your money you pay every year in taxes. Do the math. Add up the total amount you pay in property, income, Social Security, Medicare and sales taxes per year.

Then, let's say that as a crazy rough figure, the government is overpaid by half. If you cut out the bullshit, the government could perform it's essential functions on exactly half of what it's taking in right now (and really, why should it do any more?). That's just a wild-assed guess, so don't hold me to the 1/2 figure. Anyway, slash that total dollar amount you paid in taxes last year in half. Now give that back to yourself. What could you have done with that money?

Maybe invested in a residential property, or even a beach house for yourself. Maybe a new car. Maybe get to some of that maintenance you've deferred on your house. What! you say? I'm crazy? Not really. We're talking beach house kind of money here. Or, if you don't have a house yet, then "first home" kind of money. But don't worry about it -- I'm sure the government puts your money to better use than you ever could.

Wednesday, October 22, 2008

Multi-Tiered Relational Republic

There are approximately 110 million households in the United States of America. 169 million registered voters.

One of the huge problems with our electoral system, as expressed by Dilbert creator Scott Adams, is that as voters right now, we don't have any way of actually evaluating the candidates for whom we can vote. We simply don't have the tools. We're guessing and hoping at best, and it shows.

A lament I often hear on righty blogs this year, and from sides during the past several election cycles is "This is the best we get to choose from?" And they're right. The system of institutions, economics and evolved party structure in place lead to the induction of candidates that no one would have picked under any other set of conditions. It is also a fact that an electoral victory, when not influenced by existing views of party affiliation and uncontrollable external events like terrorist attacks or economic collapses, hinges upon a very specific set of sales skills known as campaigning, which skills are not necessarily related to the set required for the position once obtained.

The blogger on “Drumwasters Rants” states that he believes there will be an American civil war sometime within the next fifteen to twenty years (I completely disagree), and solicits advice for the upcoming Constitutional Conventions of the breakaway groups of states. As I've been brainstorming lately about political ideas that are way off the farm, I have one at the ready.

I'm going to suggest a system that would alleviate the first problem mentioned above, in which people have no way of evaluating a candidate, and which could serve to alleviate the later problems in the chain. Now, I'm not suggesting this as a viable alternative right now -- I haven't completely thought it through or gamed it out. There are probably some significant weaknesses involved, and areas for corruption of the system that I haven't noticed.

The Multi-Tiered Relational Republic

First off, the three branches stay. We still have Executive, Legislative and Judicial (which IS NOT a separation of powers, by the way -- they are concurrent entities with overlapping powers, so when one steps on the others' toes a bit it is not a Constitutional crisis as many claim). Under my plan, we still have a chief executive, a bicameral legislature and an independent judiciary. That's been working out pretty well, so why change it?

It is in the actual election process that the Multi-Tiered Relational Republic differs. The MTRR operates under the assumption that people only have a real chance at evaluating the suitability of other people in a face to face fashion (cf. the insistence of employers on that little thing called a job interview). Clearly, we neither expect a candidate for the chief executive position nor even one for a legislative district to be able to have face time with each voter in their constituency. And how can we be expected to be able to directly vote for someone that we not only don't know, but have no way of evaluating properly?

For the sake of round numbers, let's say that there are 180 million voters. If we are going to say that a candidate can be reasonably expected to spend an hour or two a year with each of their constituents individually, we can rough it out to say that each candidate should have a constituency of around 300 people. 300. That's it. So what happens is this: as a constituent, you might be visited by two or three people in the course of a year, each running for the position as your Tier 1 representative. With 180 million voters, that makes 600,000 Tier 1 slots.

These Tier 1 Reps in turn actually meet and hang with each of the several people running for the Tier 2 slots. There are 2,000 Tier 2 slots. Each of these 2,000 Tier 2 Reps has as their direct constituency 300 Tier 1 Reps.

At election time, you and I get to cast a ballot for our Tier 1 Rep, all of which candidates we've personally met, quizzed to our satisfaction and evaluated, and for our Tier 2 Rep as well. We may or may not have met the Tier 2 Rep candidates (900,000 voters per Tier 2 Rep), and the odds are that we won't. However, each of the Tier 1 candidates that we've met personally HAVE met the Tier 2 candidates. So, our votes for Tier 1 call the winner for Tier 1 Rep, and our votes for Tier 2 are counted at a fraction of their value and paired with the direct ballots of the Tier 1 Reps who are balloting for Tier 2. The most effective split would have to be determined by modeling and experimentation, i.e., Tier 2 Reps are elected by weighting the constituent votes at 30% and the Tier 1 votes at 70%.

So, you get to directly elect the Tier of Reps that you have actually met, and also have an indirect, though not insignificant, influence on the election of the second Tier of Reps whom you met indirectly through your Tier 1 Rep.

The Tier 2 Reps do the same thing with the Chief Executive. They cast direct ballots for the CE, who has met and spent time with each Tier 2 Rep. Tier 1 Reps cast indirect ballots for the CE, in the exact same fashion as the previous level.

So, the main objection most people have at this point is that regular constituents do not directly vote for the Chief Executive. And my response is: so what? Voting for someone you have no way of evaluating is worse than useless -- it is constrained to the effects of wanton manipulation. I would much rather vote for someone I've met and had some private time with than someone whom I can only judge by how well they give a tele-prompted speech or the position papers on their websites that were focused-grouped and written by marketing surrogates. In fact, under the MTRR, when it's Election time, you will know someone who knows someone who knows the CE.

Now, I went to an Ivy League school, and, even though I'm not aware of all my connections, the odds are pretty good that right now I know someone who knows someone who knows one of the Presidential candidates. But in truth, I don't know what those connections might be, so they are useless to me. Even if I did, the connection is probably of low value, as it's most likely through people I just met once at some party or get together and over whom I have no influence.

But under the MTRR, I know someone who will take my phone call, who can call someone who will take their phone call who could get face time with the CE. And not just me, who went Ivy. Every elector has that relationship. Every. Single. One.

And that, my friends, kicks ass.

The thing that we are most evolved to do as humans in society is to evaluate the other humans with whom we live. And our current electoral system does worse than just throw that ability out -- it warps it and plays it to its own ends.

So, how do we determine who gets represented by whom? Randomization, within geographical limits. In fact, the 600,000 Tier 1 slots are not even set in stone. They change each election. The 300 people in the constituency for Tier 1 slot #598,092 will probably not be the same people in this election as in the next. So there is, in effect, no incumbency. As a Rep, you cannot go back to the same people who elected you last time and say "Look what I got you!" All you have is your resume, so to speak. "Here's how I stuck to my guns for my last group of 300. I did what I said I'd do," which at Tier 1 is pretty much to vote for the Tier 2 slot. And so on up the chain.

And what would your conversation with your Tier 1 rep sound like? You could talk about policy views, scope of government, your own personal financial situation. Whatever floats your boat. You could also say “So, tell me about the Tier 2 Reps who are going for your vote. You've met them. What do you think of them? What do they think about the Chief Executive candidates (who they've actually spent some time with!)?” While you're evaluating them, you're asking them for their personal evaluation of the people up the chain, and asking who they're thinking of voting for, and it's all based on personal relationships.

Now, that's just for the Executive branch. For the legislature, you add a second track of candidates and modify the numbers a bit. We give the Senate back to the States, as originally conceived in the Constitution. It was a body that represented the interests of the governments of the States, and I think that worked reasonably well. So, we only need to elect one House. Let's keep it around 500. We only do two Tiers here, so we need to adjust the constituency sizes. This is where modeling and simulation would play a hand, but I'll just ballpark the Tier 1 size at 360,000 slots, or 500 constituents per Tier 1 Rep. Then, each Tier 2 Rep, who are the actual legislature, are each directly elected by 720 Tier 2 Reps, and indirectly elected by you and the other 360,000 people in your current Tier 2 "district."

On the legislative side, then, the candidates have more people to meet and consequently need to work harder to do so. You power is diminished a little by this, as you are one of five hundred to your Tier 1 Legislative Rep, instead of one or three hundred. However, Tier 2 is as high as it goes on the Legislative side, so you know someone who will take your calls who knows your Legislator. In fact, everyone in the district does.

Does your Tier 2 guy (or gal) do something ludicrous? Call your Tier 1, who has actually hung out with you, and read them the riot act about why they voted for Tier 2 guy (or gal), if in fact they did, which reminds me of the final rule:

Constituents vote in private. All other Tiers vote in public. No secret ballot for elected electors.

Once again, I'm not sure what the ramifications of an electoral system like this would be. Certainly, corruption is robust and money will always attempt to route itself anywhere it can multiply. I think that it would lead to more personal accountability and better choices of candidates up-ticket.

Tuesday, October 21, 2008

Simple Voting Procedures

Can someone explain to me why we can't have some very simple voting rules and procedures in this country?

1. A single voting day, with absentee ballots available.
2. Positive photo ID at the polls that matches registration information.
3. Inked finger a la the Iraqis.
4. Verifiable, re-countable voting trail.

First, my opinion on voting. It's important. At the same time, it's not for everybody. Don't know the issues and how the candidates stand on them? Stay home. Only thinking about voting because you like someone's smile or how they dress? Stay home. Please. I completely disagree with the exhortations of popular media outlets that "Everyone should vote!" They want you to go out and vote, regardless of anything else. That's ridiculous. Back to the points.

Having a single voting day cuts down on the ability of groups to game the system. When you have an extended voting period like several states now do, you allow campaigns to test various schemes for trucking people to the polls, inviting on-the-fly discovery and fine tuning of voters fraud methods. The get-out-the-vote efforts of campaigns are physically limited by having one day on which to vote. This means that people who really care will vote. People who only care enough to vote if someone browbeats them into it and agrees to pick them up in a van and run them through the McDonald's drive through on the way to the polls -- probably shouldn't be exercising their right to vote. Voting on a single day limits their influence. When we expand that time to two weeks, as we see now, these borderline illegal get-out-the-vote efforts (buying people prizes to vote is illegal, yet it happens all the time) have a much greater effect.

Do you see what this turns into? I know that you're going to be GOTVing the seniors in my region, taking them to McDonald's, so I call them on the same day and offer a ride to the polls but say we're stopping at the Denny's buffet. That's certainly more attractive. And when you call, they say they're already getting a ride from those nice McCain/Palin people. Maybe they won't vote that way, but that ride is certainly a persuadable moment. So what do you do? Escalate the bribery? The abuse is already happening, and expanding the voting period will only multiply the problem.

Next, positive ID. This is basic. I can't believe it isn't the standard. Arguably our most important individual interaction with the government, and it requires nothing but your say so as to who you are. That's crazy. I realize that a certain percentage of the population does not have ID, but it is really necessary to prevent fraud. The obvious solution is that anyone who does not have, for example, a driver's license or military-issued ID can go through the photo license process for free to obtain a valid (non-driving) identification card. And if a certain political party thinks that their constituency will be harder hit than others, they can focus their GOTV efforts on helping these people obtain ID. Yes, people could get fake ID's and still try to vote illegally, but we're talking a difference in barrier to entry for fraud that on the orders of magnitude scale.

On to inked fingers. Once again, a simple measure to combat vote fraud. There is almost no cost involved, it's pathetically easy to implement and incredibly effective. Want to completely eliminate multiple votes for a single voter? This is how you do it.

Finally, the verifiable, re-countable vote trail. Regardless of whether you use paper votes or electronic, you should be able to go back later (ideally via the Internet for convenience), enter a code (a hash for you techs) and see your actual anonymized vote in order to verify that it was recorded how you cast it. Also, the votes should not just be dumped into a tally pile and destroyed, like some electronic systems that only maintain the running totals. Each and every vote should be examinable after the fact and available for a by-hand recount if necessary.

It's bad enough that we end up voting for candidates who are determined by a primary process that we have little or nothing to do with. To to not even be able to trust the final election process, though, when easy and obvious remedies are at hand, is ridiculous.