Sunday, May 29, 2011

Republicans Vote To Authorize Endless War

A letter to Jason Chaffetz, who represents my district in Congress:

Mr. Chaffetz,

If you come home to tell us that the Democrats don't have a plan, I for one, will consider your conclusion as a ruse.  Republicans hold the purse strings for now, and we can be sure that if the Democrats had a plan, committees with Republican majorities will never let a Democrat plan out of committee.  We all know your plan to end Medicare as we know it, has been pitched as a plan to save it.  It is really a plan to shift the cost of care for our seniors from government to them.  Under your plan, the cost of healthcare will leave little room left for anything else for tomorrow's seniors.  Few have seen it as a plan to divide the vote and pit the young against the old, but that's what it is.

I see also that the ACLU has reported that the latest defense authorization bill will permit "endless war", ostensibly as a way to stimulate the economy.  We know from eight long years of Bush rule, that war doesn't create jobs.

Say what you like, but I will be telling my friends that the Republican plan is a plan to send income upwards.  It's a plan that will permit a further concentration of wealth into the hands of just a few men and women who think they know what's best for us.  You, sir, are going to help create a Banana Republic at the expense of the everyone else.

So I ask you, have you noticed that the United States became the most powerful economy on the planet when the top marginal tax rate was 90%?  Perhaps you could try raising taxes to close the deficit.  Think about that.


Scott Dunn

Saturday, May 07, 2011

CEO pay tops pre-recession levels

The Associated Press is reporting that in 2010, the CEO's of 334 of the corporations listed on the Standard & Poor 500 raked in 24% more than the previous year and more than in 2007, before the Great Recession began.  According to the article, the highest paid executive was Philippe Dauman of Viacom, with $84 million.  The average pay, including all forms of compensation was about $9 million.  Aren't we *still* in a recession?

Why yes, we are, if you're an employee.  Average employee pay increased by only 3%, and topped out at $40,500.  Employees are apparently being told that due the weak job market, they can expect lower pay.  So the board of directors at the largest corporations have no qualm about paying CEOs more money during a very deep recession while at the same time holding the line on wages for employees.  How...consistent.

Top management will be the first to insist that if we just lowered the tax rates, they could create more jobs.  But economists have documented in detail how tax rates are lower than they have ever been in 80 years.  Despite these low tax rates, particularly during the Bush years, we have seen fewer jobs created than when tax rates were much higher.  In fact, we're experiencing an essentially jobless recovery and have been for two years.  We have decades of empirical evidence to show that lower taxes do not lead to more jobs, simply because they are as low as they are ever going to go.

I have a theory about why the economy is growing so slowly.  Currently, the top 10% own more than 85% of all the wealth, you know, like in a Banana Republic. Most of that wealth is socked away in securities like government bonds, stocks and real estate.  The same top 10% have all the money they want and don't really need any more for survival - this is especially true for the top 1%.  At that point, their choices for entertainment become limited.  They may find that competition is too tough, so they sit on their money taking dividends and interest.  With enough money socked away into investments, it becomes a full time job just to manage the funds.  

Are they working?  Are they creating wealth?  Are they asking for tax cuts?  Maybe, probably not, and yes.  They're working if they're managing their funds, but are they helping other people or maximizing their profits?  They're creating wealth if they're actually creating something other people can use.  But given the current conditions, with so much wealth cornered in the top 10%, the name of the game is wealth extraction because there is simply too much competition for wealth creation.  That's because most of the wealth is locked up somewhere, and that's why when the Federal Reserve Bank tries to inject "liquidity" in the market, it does little good, remember, interest rates at the discount window are near historic lows.  When the Fed makes more money available to loosen up the economy, the top 10% is right there at the spigot, capturing as much as they can before it can even get to the middle class.

Members of the top 1% club hate inflation.  That works against their investments and their dividends. If inflation is what we get when there is too much money floating free in the economy, then the opposite is when the money is locked up in long-term investments where it won't create jobs.  Get my drift?  Creating jobs would fuel inflation by putting money into circulation, and that is adverse to the interests of those who would prefer to sit on their money - that top 1% again.

Now about those tax cuts.  We see Private Ryan asking for tax cuts in the House, with a request to lop 10% off the top marginal tax rate of 35%.  His justification is that cutting taxes will create jobs.  But, as mentioned before, cutting taxes for people who already have money is like offering a drink to a man who already owns a bar.  Giving tax cuts to the to the top 10% doesn't mean they will spend more money.  As Robert Reich is so fond of saying, "they've already spent all the money they want to spend." It is worth noting that American became the greatest economic power on Earth when the top marginal income tax rate was at 90%.  

I'm not exactly sure what the solution is, but I know for sure it isn't tax cuts as the Republicans propose.  Democrats and Republicans worked together to give us budget surpluses by 1992.  We can do it again without having to gut the government or send the middle class packing.  The extreme concentration of wealth has set all of us against each other.  With fairer taxation we could put more money into circulation to rebuild the economy, and help us all to cooperate together, again.

Friday, May 06, 2011

A letter to Orrin Hatch: Patent trolls

Mr. Hatch,

I read with some displeasure, this article about a patent lawsuit against users of Linux:  The article points to a lawsuit instigated by "Bedrock Computer Technologies" (BCT), wherein they prevailed against Google despite the prior art that should have invalidated the asserted patent.  The prior art in question was in the source code for Linux dating back to 1997.  Of course, BCT prevailed in a jury trial in the Eastern District of Texas, aka, "The Rocket Docket."  Apparently, the jury refused to even consider the prior art, probably because it didn't come from the USPTO.

Which brings me to my next point.  I see that Microsoft has just argued before the SCOTUS, in i4i v. Microsoft, their position that burden of proof in patent cases is lopsided, and that the burden of proof for defendants should be reduced to give them a fighting chance against trivial patents that should never have issued anyway.  There needs to be an effective check on the power of the USPTO and apparently there is none.

Since patents are essentially a social contract for innovation, patent owners should not be given so much power so as to chill other innovators.  Google is one of the most innovative companies in the world and should not have to worry about patent lawsuits where prior art is so obvious and evident as in the case linked to above.  Worse, the patent is on an algorithm which is nothing more than *math*, and the last I heard, you can't patent math!

I also think it's time for a "loser pays" patent court system to keep the trolls out of the business.  If their patents aren't worth the paper they're printed on, they should not be so bold as to sue on a patent covered in prior art just so they can get an easy settlement.  If they really want it, they should be made to work for it, and suffer the consequences if they lose.  This would take all fun out of litigation for patent trolls.

I think it is very likely that patent troll victims are signing settlements that waive their right for a refund if the patent is later found to be invalid.  The law should say that this right cannot be waived.  This will further chill out the trolls and encourage innovation *and* execution, for no matter how good a patent is, execution is where the money is made.

I'll leave you with one last thought: A patented idea will create fewer jobs than a free idea by virtue of the fact that more people can use it.  Reducing the number of silly patents that are issued by the USPTO would go a long way towards creating jobs in America.

Thank you for reading this far.

Scott Dunn

Tuesday, May 03, 2011

Medicare - The 55 and Older Plan

I see that Michelle Bachmann believes that everyone over 55 gets to keep their Medicare benefits but everyone else should be "weaned off".  She is of course, referring to The Ryan budget plan, which seems nice until we take a close look at what it means.  First, the Congressional Budget Office estimates that the "plan" would cost an additional $34 trillion in expenses to everyone who gets to take part in the "voucher" program.  As noted by Dean Baker, this is 3 times the estimated shortfall for Social Security.

So let's look at it from the perspective of taxation.  It is a well understood principle that those who pay taxes should be the ones who receive the benefits from the taxes paid.  For example, gasoline taxes are using to pay for the roads.  Taking the taxes collected and using it for something else is very bad public policy.

Most pundits are proclaiming the Ryan plan as the end of Medicare.  If the Republican Plan is to end Medicare and turn it into a voucher program, then we need to see if the plan will provide the same value as before.  As Baker and many other economists have shown before, it does not.  And if they really want to wean everybody else off the Medicare idea, then they need to stop collecting taxes for the Medicare program and let everybody else plan for the eventual demise of the program with their own money in their own retirement account.

Their theory is that if people have to shop for insurance in their old age and pay for it with their vouchers and any money they have left over, then the lack of money will provide economic incentive to reduce the price of coverage.  Experience with the auto industry has shown that even without a voucher program, rates will continue to go up due to inflation.  Experience with people who don't even have Medicare show that heatlth care insurance rates continue to rise faster than inflation even without government insurance or vouchers to help them.  What makes Republicans sincerely believe that the elimination of Medicare will reduce the cost of health care given past experience despite the mounting evidence before them?

Instead, the Republicans seem to be intent on eliminating the Medicare program to remove what is most likely the only brake on health care costs that we have.  They seem to recognize that Medicare is a "single payer plan", and that such plans are reviled among conservatives.  Getting rid of the plan would score serious points with the Tea Party now, wouldn't it?  Or would it?  We don't see them talking about ending the Veterans Administration health plan now, do we?  Why is privatization good for Medicare but not VA health care?

Now about that $34 trillion of increased costs that future seniors would have to pay for their insurance.  Future seniors would get a voucher to purchase private health insurance instead of health insurance through the government.  The assumption is that "competition" among insurers would actually bring costs down where the government could not. This is the privatization of Medicare that pundits have been talking about.  Republicans seem to be missing something very obvious in their quest to reduce healthcare costs.  The United States has one of the most highly privatized health care systems in the world, yet we pay more than 3 times the cost per person as other OECD countries.

The trend then, is that privatization has increased the costs of health care in this country, not the reverse.  Why?  Private insurers have to pay for marketing, advertising, overhead, litigation, campaign contributions and lobbying.  For what?  To ensure that their executives are among the highest paid in the world?  Medicare doesn't have to do all that.  Medicare uses empirical evidence to set rates and to determine the best possible treatment.  Private insurance seems to find what works and uses that information to deny coverage to those who need it the most.  The private insurance and Republican message seems to be, "get well soon, or die."  Just ask any cancer patient who has ever had to fight for treatment.

So before they send us off the cliff without a parachute, we need to consider some other alternatives for reducing costs.  There is a lot of talk about competition.  Well how about globalization of health care?  Globalization has worked well for cars, electronics, clothing and tech support.  Why not health care?

The noted economist, Dean Baker, has articulated the solution rather nicely.  By setting up international mutual agreements to trade medical professionals, we can expose our health care system to international competition. This will help to control the costs imposed by health care providers working here while providing ourselves with a broader base of professionals to choose from.  There is also the phenomenon of "medical tourism".  We could allow citizens here to use their "vouchers" to purchase health care in countries that have more efficient systems, further exposing our health care system to international competition.  Remember, all other OECD countries are spending 66% less than we do with better outcomes and longer life expectancies.

Another point, and I'll make this the final one, is that of patents and copyrights in health care.  Few are willing to discuss the chilling effect of patents and copyrights on medical research, devices and techniques.  Fewer still are willing to discuss all the government funded research that leads to patents that eventually impose significant costs to the health care system.  Patents on drugs and medical devices impose very significant costs on health care with drugs and devices that sell for several thousand percent more than the marginal cost to produce them due to patent royalties.

A partial solution to this problem is compulsory licensing of the patent at reasonable and non-discriminatory pricing for patented products that resulted from government funding.  Such a policy would have a ripple effect across the health care industry, forcing pricing down, and allowing greater access to the drugs and devices so desperately needed by our aging population.  The complete elimination of patents for drugs and medical devices would eliminate the rent-seeking behavior that we have all seen from patentees.  That behavior imposes additional costs in the form of litigation, threats of litigation and the inhibition of research and development.  A good recent example of this behavior can be seen as exhibited by the owners of the BRCA1 and BRCA2 breast cancer gene patents.

In summary, there is a lot we could be doing before we even consider the privatization of Medicare.

Sunday, May 01, 2011

Life with Linux

I've been using Linux since the summer of 2007, and so far, I've enjoy the trip.  I've managed to get through all the bumps, too.  Today, I'd like to share with you my experience upgrading from Ubuntu 10.10 Maverick Meerkat to 11.04 Natty Narwhal.  They are the same operating system based on Linux, but the desktop interface is very different from 10.10 to 11.04.

I started with an online upgrade through the Synaptics Package Manager.  Synaptics prompted me with an opportunity to upgrade my system as soon as it became available on April 27th.  I discovered that trying to upgrade on the first day was a bad idea, even on a fast connection.  So I waited until Friday and ran it late that night.  Then I saw download speeds often approaching 2.2 mbs, but averaging around 1.4 mbs.  That took about 30 minutes for the download to complete.

Then the packages were unpacked and installed.  Synaptics will provide a good progress indicator showing how much has been done, how far there is to go and prompting for any input required.  That took about an hour.  There were about 1800 packages to download and install.

Once all the packages are installed, a clean up operation runs to detect software that is no longer needed or supported, and then the user is provided with an option to remove them or keep them.  I removed them.  When the cleanup completed, I was prompted to reboot my computer.  This is always the most exciting part because I've been waiting for the reveal of the new experience.

On reboot, I was presented with this: grub>.  This is a problem that I had not encountered in any previous upgrades.  After doing some research I found the documentation I needed.  that I could use a live CD to reinstall GRUB so that the bootloader could find the operating system and the kernel needed to start up properly.  Then entire operation (sans downloading the live CD) took about 15 minutes and some cautious typing to do.

First, I booted my computer to the GNOME desktop with the latest live CD for Ubuntu.  Then I started a terminal.  Setting that aside, I opened the hard drive to locate the UUID number.  The UUID is assigned to a partition when formated and makes different hard drives easier to distinguish.  Once I had the UUID displayed, I could enter the following command inserting the UUID where "XXX" appears:

sudo grub-setup -d /media/XXXX/boot/grub /dev/sda

This command reinstalled GRUB with the proper settings to the correct folder.  I used sudo to assume root privileges when I run the command that follows. "grub-setup -d runs the setup and the path that follows tells where to do the install.  "/dev/sda" names the drive.  In Windows, drive C is the boot drive and if you look at the drive through the BIOS of your computer, it will usually be SATA 0.  In Linux, drives are numbered a, b, c, and the drive letter isn't as important as the UUID.  Linux will map the UUID to the drive letter as need, but when GRUB looks for the files needed to boot, it goes by the UUID.

Then I rebooted my computer.  As the computer booted, I watched as the BIOS loaded and instead of getting "grub>", I got a blank splash screen, which I think I'm going to change later on, and then the login prompt for my desktop.  What a relief.  Documentation is king.  The lesson in this story?  Make sure you have a live CD ready to go before you do an upgrade.  You just might need this.

Some of you might also be familiar with GNOME.  GNOME looks a lot like Windows and has some similarities to the Mac interface as well. There is something like a start menu, icons on your desktop, and when you open folders, you get square windows with icons therein.  While Unity offers that, one big difference is the Launcher.  The Launcher usually stays hidden until you need it.  But when you need it, just move your mouse over to where it will appear.  Mine is on the left side so when I move my mouse over there, the Launcher slides into view from the left and allows me to pick the application I want with my mouse.

I can customize the applications that appear there by right-clicking on one at a time and clearing the check next to "Show in Launcher."  If I want to add items to the Launcher, I click on the Ubuntu button at the top-left corner of my screen, search for the application I want, then drag the icon for that application to the Launcher to the position I want it to appear.

So far, I'm enjoying the new experience of using the Launcher and I'm planning on test driving it for a couple of weeks. If, in the end, I find that I don't like it, I can still go back to GNOME and use that as my default.

If you don't have Linux installed, but want to try it out, you can download the Live CD and boot from it to test it out.  You can get it here.  Remember, when you run the live CD, you can test it out without making any changes to Windows on your hard drive.  When you're done, just reboot the computer by clicking on the power button in the upper-right hand corner of your screen and selecting "restart".  During restart, the CD will eject and you will be prompted to press Enter.

If you want to install Ubuntu over Windows or Linux, be sure you have backed up all your data.  Ubuntu will import your users and their data into new folders during the install, but you must follow the prompts closely to do that.  If you want to try an install, it is best to do it on a spare computer first.  That's how I got started.

I hope you find this information useful and look forward to your comments.