The Decline of the Middle Class

Greed is good. Greed is the only consistent market force.

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To his very great credit, former Federal Reserve Chairman Alan Greenspan, the guru of finance for generations of business school students, admitted before a Congressional committee today that he made a mistake in assuming that alllowing banks to operate absent conflict of interest regulation or oversight would work because of the misapprehension that operating in their self interest would be enough to assure the banks would preserve shareholder interests (AP. 4/23/08). Greenspan told the House Oversight Committee and its chair, Rep. Henry Waxman (D., CA) , that it was "a flaw in the model that I perceived is the critical functioning structure that defines how the world works" (AP, 10/23/08) that banks would fail to protect their equity or their shareholders and would engage in risky practices that would deplete their revenues.

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Originally posted by dolemitejb:
I'm not disputing that, Juan.

Buttercup seems too eager to blame everything on corporate greed, and while that certainly plays a major role in things like the Enron collapse and the housing bubble, it's not the only issue. When government creates a business environment that is ripe for exploiting loopholes, I'm never eager to trust government to solve problems they helped create. There seems to be a general fallacy among the left that the government is capable of making business behave ethically, and that's clearly not true.

That is a great post "dolemitejb",

When all the gov't does is continuously make up rule after rule after rule as they go along, that give execs more rules to look for loop holes to. I simply want someone to show me the FACTUAL EXAMPLE that proves that MORE government intervention ever helped businesses across the country start booming and unemployment start evaporating? EVER?? JUST ONE EXAMPLE OF MORE GOV'T REGS AND INTERVENTION THAT SOLVED AMERICAN CITIZEN'S PROBLEMS?

ps... that is non-military related by the what. That's what the federal gov't is supposed to do "provide for the common defense".. but in terms of the private sector... What has MORE GOV'T interference....oh, I mean intervention... ever gotten us?

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Originally posted by dolemitejb:
I'm not disputing that, Juan.

Buttercup seems too eager to blame everything on corporate greed, and while that certainly plays a major role in things like the Enron collapse and the housing bubble, it's not the only issue. When government creates a business environment that is ripe for exploiting loopholes, I'm never eager to trust government to solve problems they helped create. There seems to be a general fallacy among the left that the government is capable of making business behave ethically, and that's clearly not true.

I don't blame everything on corporate greed, but I think they deserve a lot of the blame. When there's little or no regulation, those in the corporate world have proven they will likely misbehave.

And, again, I don't trust government to solve my problems, either. (I think I've made this particular statement at least 587 times here in Politics.) But I disagree with you in that I believe some reasonable regulation will force a business to behave ethically.

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When there's little or no regulation, those in the corporate world have proven they will likely misbehave....

....I disagree with you in that I believe some reasonable regulation will force a business to behave ethically.

I don't dispute that the government (generally Republicans) have often championed "deregulation" and then given us re-regulation that can favor business interests. That, generally from my experience, is what those in favor of more regulation are referring to when they vilify "deregulation." That is not what I'm talking about.

I understand you "don't trust government to solve my problems," but you do seem willing to let them interfere with the market when you think private companies aren't behaving as they should. This won't work. I've asked for an example of a private business that has really done harm to a significant amount of people without the government being involved. If you know of such an instance, please share with us. Enron is not an example. Energy is a heavily regulated industry. The housing bubble is not an example. Finance is a heavily regulated industry. Health care is not an example. Insurance and medicine are heavily regulated industries. So again, where are these unregulated industries that are destroying the middle class?

You're changing your question to address the answers.

Enron is surly an example of a business that developed a model that was dependent on fraud and deceiving the government in order to extract undeserved revenues from the public.

The failure of the CDS/CDO market is from a complete lack of regulation, but due in part to the implied guarantee of Fannie-Freddie loans that is implied by being a GSE. Companies like AIG were selling insurance on MBS which made the MBS into an asset that companies were using to secure other investments meaning the leverage ratios were huge, all because AIG avoided the word "insurance" in their literature which allowed them to skirt all of the state and federal insurance brokerage laws.

The greatest threat to the middle class is from unrestrained growth in health care expenses, and I believe that is due to insurance companies not being motivated to control costs since they can always raise premiums, especially when they have huge monopolies like exist in AlObama. Why does BCBS control 85% of the insurance in AlObama, and why do we allow that to continue???

My question has not changed. I'm not giving Enron executives or Wall Street executives a pass. They deserve every bit of the blame they get. I'm simply stating that those are not good examples of a lack of regulation, as they are in demonstrably, heavily regulated industries. If you want to make a case for regulation, you have to start with unregulated industries and then prove regulation made the customers of those industries better off.

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Originally posted by Ronnie P.:
Let me guess the solution is higher taxes and more government regulations......

No, the answer is tax CUTS and NO regulations.

Insurance companies do not control costs, have no incentive to control cost, and CANNOT control costs.

Insurance companies can "leverage" somewhat in the amount they will pay for a particular service. The medical service provider can always reject that offer and therefore not be covered by that Insurance Company, so there is some negotiating to be done there, or both lose.

Medical costs are what must be contained, the Insurance mark up will take care of itself through competitive market.

Everyone is biyching about Insurance cost when it should be Medical costs. They are NOT one in the same. Fix MEDICAL and you fixed Insurance, plain and simple.

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Originally posted by LE89:
Insurance companies do not control costs, have no incentive to control cost, and CANNOT control costs.

Insurance companies can "leverage" somewhat in the amount they will pay for a particular service. The medical service provider can always reject that offer and therefore not be covered by that Insurance Company, so there is some negotiating to be done there, or both lose.

Medical costs are what must be contained, the Insurance mark up will take care of itself through competitive market.

Everyone is biyching about Insurance cost when it should be Medical costs. They are NOT one in the same. Fix MEDICAL and you fixed Insurance, plain and simple.

The insurance company is the "customer" in the transaction. The patient has no interest or concern about costs. Without the patient being part of the equation, there will be no downward pressure on costs. I like the idea of forcing employers to pay employees their insurance benefit dollars, and then the patient gets to write a check to the insurance company.

I disagree. The "customer" is the patient. The insurance company is acting on the behalf of the "customer" ie: the patient.

I do agree , however that the patient should have some more responsibility in his choices of how he gets his care. In most cases, it would save him money.
For several years, when I worked for the Bank, we (the patients) were paid by the insurance company directly, and we were responsible for the entire bill. It had it's good points, and some bad ones. Personally , I prefer it the way it is now, and my bet is that it is less costly to everybody concerned, but times have changed with EFTS, etc.

As far as controlling medical cost, I think that can or worms has been opened and we can't get all them worms back in that can again.
To tell (or actually re-tell ) an actual story of my past,
In 1976, I accidentally ran my hand thru a glass door, and cut my wrist and arm really bad. My wife drove me to Baptist Memorial Hospital in downtown Memphis to the ER.
Turns out I had cut ligaments going to my fingers. Luckily , BMH had a "hand specialist" on staff and there at the time who sewed for 2 hours on my wrist, pulling ligaments to see which finger moved etc, and sewing the correct one back to the right one in my arm.
This was during the time I discussed above where I had to pay the entire bill and get re-imbursed from the ins co. When I finally got to check out , the bill came to $18.00 for the use of the ER and $18.oo for the dr. Yes, that's $36.00 total.
Of course that was in 1976 dollars, and of course before Reagan deregulated the medical industry. (back then it was not a "for profit" thing, although BMH was the largest private hospital in the world).
Just something to think about when you Reaganites talk about de-regulation and how wonderful it is.

To me the customer is usually the person pulling out their wallet in any transaction. We are all customers in some chain.

Anyway, insured medical costs will NEVER be more than insurance coverage costs, reversely insurance coverage cost will NEVER be less than insured medical cost. You CANNOT possibly lower Insurance Cost, without lowering Medical Cost.

There isn't much need to tinker with the garden hose while the house is burning down.