Saturday, February 8, 2014

Obamacare...Doing more harm than good?


There has been much speculation and debate regarding the Affordable Care Act, commonly known as Obamacare.  It was signed into law during President Obama's first term on March 23rd, 2010.  The goals of it include healthcare covering more people than ever before. Of course, it is designed to help lower individual's cost of healthcare as well as the governments spending on Medicare.  Along with other requirements, businesses which employ 50 or more will be mandated to provide healthcare to ALL employees or pay a penalty of $2,000 per employee.

My first question is: WHERE IS THE MONEY GOING TO COME FROM? Many companies are having to completely redesign their healthcare policies and believe me, there is no simple solution.  In fact, the employer mandate portion of this law was actually postponed one year to January 1st, 2015 because companies didn't have a clue of how to implement it.

Let me explain.  They will have to provide healthcare to all employees, which they may not have been doing up until now, and this creates an IMMENSE administrative burden.  The money has to come from somewhere, and I don't know if the insurance providers will be of much help.  Here are a couple scenarios:

1) Employers will reduce each employee's paycheck by a couple bucks in order to provide them all with healthcare benefits.  In it's report last week, nonpartisan Congressional Budge Office predicted that the workforce's compensation will decrease by 1% because of the ACA.  Thats $70 billion per year!

2) Employers will trim a couple (not really just a couple) "unnecessary" jobs in order to pay for the healthcare benefits.

3) For small businesses, they will just trim jobs until they only have 50 employees and then they do not have to take part in this mandate at all! The Motley Fool explains it nicely: 


For example, a small business with 54 full-time workers could decide that eliminating five jobs makes more economic sense than paying significantly more for health coverage or penalties. Another alternative that businesses could take is to keep employees but reduce their hours to less than 30 per week so that the workers won't be counted as full-time.

Either way, some people will remain unhappy.  Some healthier individuals who treat their body as temples may prefer to be paid a higher salary rather than be given health insurance.  Employers may be unhappy with the fact they have to provide healthcare to workers they don't even intend on keeping for too long.  For example, many companies utilize the services of temps  or temporary contractors.  They need the contractors to work on certain projects that mostly always have a start and end date.  Large corporations who need these types of workers usually have contracts with staffing firms -- they source and pay the temp workers so that they large corporation doesn't need to.  However, these temps still need to be provided with healthcare, according to the ACA. Now it just gets even more confusing.

Staffing firms may have to up the margin for their contracts with large corporations or even pay the temps less. One major consequence is that it will offset the market value of job positions, especially in the tech world where it is very easy to acquire talent overseas in India.  Wait a second...isn't this something our government does not want to support? Oh well, I sincerely hope there are better alternatives that will turn up in the course of the next year.  I wish all employers good luck... they're gonna need it.







Saturday, February 1, 2014

Malcolm Gladwell and The Public Intellectual


With all the modern issues pundits and wise savants taking advantage of our beloved Internet, public intellectualism has evolved into a dais for freedom of speech and democracy.  There are vast and almost immeasurable amounts of blog posts and articles written every day that are used as voices of change.  Is this how its supposed to be? There are some conflicting views that we will visit. Scholars such as John Donatich hold a popular belief that a limited few, ones that are in the upper echelons of society, relatively speaking, are public intellectuals who serve a purpose to enlighten the rest of us.  Another scholar, Stephen Mack, challenges this view:

Any argument for the public intellectual that, like Donatich’s, rests the assumption that common citizens are forever childlike and must be led by a class of experts is politically corrosive and historically dangerous.

Mack argues that this belief is wrong because it influences the intellectuals to involve in extra effort to keep their work popular and to really, protect their own reputations as revered public intellectuals.  Red flag! Now if there is anything I remembered from psychology class in high school, it is the naturalistic notion of the self-serving bias.  Mack is correct in saying that there shouldn’t be a select class to determine what the common folk need to know because they may have alternate agendas that most probably involve self-preservation.

Back to the huge collections of blogs and articles written to share thoughts with readers all over the world.  Someone interesting that I bring up is well-known and slightly eccentric writer Malcolm Gladwell.  He has written five best-selling books, was discovered when working at the Washington Post, currently writes for the New Yorker, has done much public speaking including a TED talk, and to top it off, was on Time’s list of 100 most influential people in year 2005!

Wow… seems like a lot.  If you are familiar with Gladwell, you’ll know that he likes to showcase correlations between the most peculiar and unexpected events.  He works like a detective and starts off with data that doesn’t seem to add up in his mind.  In his first book, The Tipping Point, Gladwell points out that many years ago, in the early 90’s, New York City was incredibly dangerous.  However, when looking closer he noticed something else when studying the numbers:
           
In 1992, there were 2,154 murders in New York City and 626,182 serious crimes with the weight of those crimes falling hardest in places like Brownsville and East New York. But then something strange happened. At some mysterious and critical point, the crime rate began to turn. It tipped.  Within five years, murders had dropped 64.3 percent to 770 and total crimes had fallen by almost half to 355,893.

Gladwell goes on to explain that if one asked the New York police department, they would tell you that the extreme drop in crime was because the “city’s policing strategies dramatically improved.” Criminologists would attribute the drop to the downturn of the crack drug trade or to aging of the population.  He even talked to economists who told him that it could be due to the improvement in the economy that allowed more individuals to find jobs instead of getting into trouble on the streets.  This still did not sit well with Gladwell. Since policing strategies, narcotics control, and the improvement in the economy are all gradual changes and cannot account for the sharp decline in crime.  He came to the conclusion that this very enigma was a result of the Tipping Point: 
           
Ideas and products and messages and behaviors spread just like viruses do… It wasn't that some huge percentage of would-be murderers suddenly sat up in 1993 and decided to commit any more crimes… Somehow a large number of people in New York got “infected” with an anti crime virus in a short time… The name given to that one dramatic moment in an epidemic when everything can change all at once is the Tipping Point.

It’s an interesting idea if you ask me.  There are some other perspectives on this: Economist Steven Levitt reevaluates this mystery and comes to the conclusion that it has much to do with Roe vs. Wade and abortion being legalized in the 70’s.  The number of unwanted births significantly decreased and as a result, crime rates dropped:

The homicide rate of young males (especially young Black males) temporarily skyrocketed in the late 1980s, especially in urban centers like Los Angeles, New York City, and Washington, DC, before returning to regular levels soon thereafter. These young males who were hitting their peak crime years were born right around the time abortion was legalized.

Was Gladwell or Levitt correct on this topic? Who knows… Perhaps they both are in their own way.  What both these intellectuals did is they challenged the way people think of things. 

Gladwell writes about a wide array of topics ranging from professional hockey players to plane crashes.  For example, in his book Outliers, Gladwell provides the reader with a player roster of the 2007 Medicine Hat Tigers, which gives the players’ information such as height/weight, position, hometown, and birthdate.  Seems completely random right? He then continues to explain that if one takes a closer look at the roster, they will notice something incredibly strange: a whopping 70 percent of the players were born in January, February, March, or April.  This could not just happen by chance, and Gladwell attributes it to the cutoff date for little boys' hockey leagues:
           
It’s simply that in Canada the eligibility cutoff for age-class hockey is January 1.  A boy who turns ten on January 2, then, could be playing alongside someone who doesn’t turn ten until the end of the year – and at that age, in preadolescence, a twelve month gap in age represents an enormous difference in physical maturity… Coaches start to select players for the all star teams at the age of nine or ten, and of course they are more likely to view as talented the bigger and more coordinated players, who have had the benefit of critical extra months of maturity.  And what happens when a player gets chosen for a rep squad? He gets better coaching, and his teammates are better, and he plays fifty or seventy-five games a season instead of twenty games a season like those left in the “house league”… and from there [the player is more likely to get] into the big leagues.

And just like that Gladwell showed his millions of readers that success isn’t completely based off hard work and self-merit.  He explains in Outliers, that this cut off system has the same effect on baseball players in America. Not what you would expect, right? He included in his book another bizarre story relating plane crashes to the pilots' background culture growing up.  After providing data and figures involving large scale plane crashes all over the world, Gladwell pointed out that in addition to technical problems of the aircraft and bad weather, there was another correlation to the crashes: culture.  He brings up Hofstede’s dimensions and explains why factors such as uncertainty avoidance, and power-distance affect how the pilots make decisions when flying a plane.  National Geographic published an article on it’s website citing Gladwell’s work:

Gladwell argued that in Colombia, as in Korea, cultural norms tended to dictate that people avoid directly questioning authority. To Gladwell, this may have explained why Korean Air Flight 801 crashed into a hill while on approach to an airport in Guam in 1997, killing 223 people. In addition to a series of misfortunes, including bad weather, an offline warning system, and outdated charts, the co-pilot was afraid to question the poor judgment of the pilot, wrote Gladwell—a fatal mistake.

Although experts in fields such as crime, hockey, baseball, and aviation may prefer to provide alternate explanations for some of these events, it is important that Malcolm Gladwell wrote what he did.  He was merely trying to show that events in general, have a wide variety of causes and it is our duty to dig a little deeper.

Is this what public intellectualism should be like?  Should children be dismayed if they weren’t born at the most opportune or advantageous times of the year in order to be professional hockey players? Should discourse of “non-experts” be widely read and trusted? Does work like Gladwell’s deserve to be a catalyst for change?  Is there a standard for how and what evidence is used in coming to conclusions?  The answer to all these questions can be disputed over and over again by hundreds of scholars. 

What I do know is that Malcolm Gladwell is doing what Mack mentioned in his blog article: “prod, poke, and pester the powerful institutions” that seem to be ordinary to most of us.  Do keep in mind that Gladwell received a one million dollar advance to start writing his book The Tipping Point.  However this does not concur with Donatich’s view because Malcolm Gladwell is not part of the select class of experts that should dominate public intellectualism.  In fact, there are many skeptics of Gladwell’s cases and many believe that he may not be the most evidentially sound writer.  I would urge people to not linger on the fact that Gladwell received a hefty advance because most people do have alternate agendas of why they are writing what they are writing.  I do not necessarily think that this is the self-serving bias that Mack discussed.  Some facts we will never know. That doesn’t mean that we should undermine the work.  If it has substance, we should tune in.

Gladwell prods, pesters, and pokes you until that “ohhhhh” moment jumps out and smacks you in the face.  You can't help but question conventional wisdom.  By showcasing the correlations between random and unexpected events, Gladwell simply “keeps the pot boiling” as Mack would say.  Although some of Gladwell’s spiels and cock-and-bull tales may seem like a little bit of a stretch sometimes, they still provide some substance to that simmering pot, perhaps even causing it to boil.  The key word here is “public” and everyone knows to take public stuff with a grain of salt.  Mack puts it nicely: “The measure of public intellectual work is not whether the people are listening, but whether they’re hearing things worth talking about.”