December 8, 2010

Social insecurity

An overwhelming majority of our federal budget is spent on what we call social programs. The most famous and far reaching of these programs is Social Security. There are also numerous welfare programs, unemployment insurance, and medicare, medicaid, chip, and even many of our education programs such as the school lunch program that are part of these social programs.

But, what is the purpose of social programs. I think most of us have ideas as to their purpose. Things like "to help the poor" and "to create economic fairness". But perhaps one of the best definitions I have heard I read the other day in an article about what was wrong with privatizing social security. They said that "Investment is about risk; Social Security is about certainty."

With that in mind, lets briefly revisit our overall approach to social programs. Well, we don't have a lot of consistency. We sometimes provide end user services. Often we pay for services provided by the private sector, such as health services. Sometimes, and is Social Security and some forms welfare, we provide cash payments to individuals. Now, social security is supposed to be some form of certainty for those who retire or are disabled, but all that is certain is that those who start poor are guaranteed to stay in their situation under social security, but, at least it is consistent. The real benefit is that those who either were not able to plan for retirement or not able to afford putting money away for retirement have something to provide for them. Similarly, we have unemployment insurance. This is supposedly paid for by employers who are viewed as responsible for the unemployment, but often the benefits received are paid for by the general public.

How about a different approach? What if 20% of what a person earned went into an account that was accessible by that person only. It would be taken out directly from their checks. Ok, sounds like I am back to privatizing social security. Actually, the money in the accounts would not be eligible for investment purposes, apart from the most secure and government backed "investments". Congress would not have any access to the funds in these accounts. In fact, the owners of these accounts would only have access to their accounts by application through some form of social verification system. They would be able to receive payments from those accounts in the event that they became unemployed or retired. The employers would not be left holding the bag. The government and indirectly the people would not be left holding the bag, and everyone would have some security. If someone has worked 15 years, they would have 3 years worth of their average yearly wage available to them.

Implementing such a program would have to be a phase in, but could be done over 10 or 15 years with special carryover programs for current social security recipients.

There are other things that could improve the situation as well. Make the 20% of their wages include 20% of the cost of their benefits. Put the accounts in a national bank (which would replace the Fed), where they can be loaned out to banks, but backed by FDIC without limit. Implement the Fair Tax, only increase they prebates to be equal to twice what a one at the poverty level would pay in taxes every month. Fix the health care system by fixing the FDA and AMA and mandating equal access to care and coverage by combining all coverage groups and prohibiting exclusions, but allowing limitations on specific payouts and by making a publicly accessible symptom, tests, and treatments match database. Make welfare an education grant program, and mandate life skills training in addition to emphasizing practical work skills training. I could go on, but I think I have made my point. Each program needs to be self contained, to a degree, but needs to fit into the overall holistic system. In doing so, all of our social programs can work together to provide what they were intended to provide.

December 2, 2010

Utilities and service

You may have heard about the latest bruhaha with Comcast and L3 communications. There are a lot of other issues related to Comcast's behavior lately, and they are not doing anyone any favors. Comcast is easily identifiable as a Utility. The problems it seems intent on creating have always been issues with utilities.

The solution is simple. Utilities have 2 parts. There is a simple delivery mechanism that is location based, and there is what those delivery mechanisms deliver. In the case of Comcast, they deliver telecommunications services. The easy way to think of it is connectivity and content. I had the privilege of living in Texas recently, and they have a classic example of this solution implemented with their electricity providers. There is one connectivity provider in Texas. It is actually owned and operated by the state. It is prohibited from providing actual content, in this case electricity. It works well. The service is way faster than in other states, and the rates are generally lower. I actually had a slightly higher rate, because I went with an all renewable electricity provider. That was my choice because I was supporting something I believe in.

The same thing needs to be applied to phone service and internet service and cable service, and maybe even natural gas and water and other utilities. The provider of the connectivity needs to be separate from the provider of the content. That way, there is no conflict of interest, and market competition keeps the price of content down and the quality of content up. Only the connectivity provider needs be regulated. For companies like Comcast, the choices would be simple. Provide the connectivity, and be regulated, or provide the content and compete. You can't do both. If necessary, split the company into two, one for the connectivity and the other for the content.

That is the best solution. It could be done at the state level. Then, our rights as consumers would never be infringed by a monopoly connectivity provider that forces us to use their low quality and high cost content.