Sunlight Foundation exposes the Obama-PhRMA deal of 2009

http://www.npr.org/templates/story/story.php?storyId=123889454

http://blog.sunlightfoundation.com/2010/02/12/the-legacy-of-billy-tauzin-the-white-house-phrma-deal/

We know that part of Obama's 2009 health care strategy was to avoid the Clinton mistakes (the private sector wasn't sufficiently included and greased, so it spent big bucks on ads to dissuade the public and pressure Congress against Hillarycare). So instead, the "transparent administration" made secret deals with various groups to preempt dissent and get them on board for health care reform. Hospitals, doctors, and the AARP won enough concessions and guarantees, so they signed on. The pharma industry (and its PhRMA lobbying group) was a key piece of the puzzle and needed to be assuaged. PhRMA is one of the biggest lobby groups in DC and responsible for the famous "Harry and Louise" ads during the Clinton years, so Obama wanted to avoid a repeat.

The deal leaked (we'll get into the reasons for this soon), and we soon discovered what a scam it was for consumers:
http://worldaffairs-manwnoname.blogspot.com/2009/08/health-care-overhaul.html

So in order to appease PhRMA and appear to be a victory for the people, Obama touted $80B in cost savings over 10 years. But in actuality, the other concessions in favor of pharma would total much more (Sunlight estimates $220B). Some have described it as a "windfall", since the millions of new customers required to purchase individual insurance (subsidized by the government or not) under Obamacare would invariably purchase more drugs. In addition, PhRMA got guarantees that Washington wouldn't tighten Medicare drug reimbursements (and would in fact expand them by closing a loophole), or permit re-importation of the exact same damn drugs from other developed, trustworthy nations at lower cost (e.g. the same pill in Canada may cost 30% less than in the US because their government actually cares about its citizens, so why can't Canada sell it back to Americans? Isn't that just market economics?). I find this shocking because as a Senator, Obama voted twice to amend Medicare drug laws to permit the very price negotiation and foreign drug re-importation components that he agreed to exclude from Obamacare! Maybe his Senate votes were just out of principle (since he knew Bush would veto any changes anyway), and as president he primarily wants to get some sort of bill passed that will cover the uninsured, not necessarily fix our expensive, broken system. But it's not good leadership to cover the uninsured at ludicrous cost to the rest of us through excessive industry concessions.

http://worldaffairs-manwnoname.blogspot.com/2009/12/importing-foreign-drugs.html

One condition that Obama's people insisted on was that PhRMA spend $100-150M on pro-health-care advertising. So not only would that powerful body refrain from attacking Obamacare, they would actually help sell it. Ironically, they brought back the same Harry and Louise actors to do a pro-reform commercial, I guess now that they are older and poorer from lost 401(k) value and soaring health costs vs. 1994 (http://www.youtube.com/watch?v=yz7iMJpQ2FQ). The company that PhRMA used to produce the ads is run by Obama's head campaign adviser David Axelrod's son (and Axelrod has major financial interests there). Change we can believe in? Of course they'd say that there was no quid-pro-quo, and they picked the company because it's one of the best. But Obama should know that even if it was all ethical and legit, it looks fishy. It's almost as bad as Anthem Blue Cross' horrible, callous timing to announce an up to 39% premium increase on some CA customers, during heated health care reform discussions last fall.  

So what happened to the deal and how do we even know about it? Obama and PhRMA agreed that health care negotiations would go through Max Baucus and his Senate committee, since Baucus was a pharma guy who could maintain control. But Henry Waxman (who has a much chillier relationship with pharma) was working on a rival bill to Baucus', without all the lucrative pharma concessions. PhRMA got concerned that Washington would pull a fast one, so PhRMA's head Billy Tauzin, a cancer survivor and former Louisiana Congressman (who flipped from the Dem to GOP side), snitched to the LA Times (maybe to get back at the White House), and later Obama's people had to admit that the deal existed. PhRMA and the CEOs of major drug companies still want health reform to pass (because it will be great for them in present form), so it's ironic that Tauzin's paranoia possibly compromised the entire reform effort.

Tauzin's background: he helped Bush's Medicare Modernization Act narrowly pass in 2003, which was the biggest change to Medicare in the program's history and more expensive than our Middle East wars (the GOP really cares about deficits and the size of government). It was a huge boon to pharma because it permitted drugs to be partially covered by Medicare (under "part D", as in DUMB), and prohibited government negotiation of cheaper drug prices with companies (which is what the government is supposed to do, and actually does for vets through the VA health system!). Don't get me wrong, I do think truly needy seniors deserve assistance with their prescriptions (if the drugs are really necessary for reasonable quality of life), but it should be through price negotiations and not corrupt subsidies that hurt taxpayers. Otherwise the bargaining power of Medicare is wasted. And for his effort, Tauzin became the new CEO of PhRMA with a $2.5M salary. Anyway, now that the health bill looks doomed and PhRMA wasted $100M plus on ads, Tauzin looks like a goat and recently decided to step down. Hollywood couldn't make this stuff up.

Other details: PhRMA spent $28M on lobbying in 2009 (and spent $390 over 3 years), and the whole industry spent $100M. PhRMA pays 165 lobbyists and outside consultants, of which 137 of them used to work in government.

How unemployment is destroying a generation (or two)

http://www.theatlantic.com/doc/201003/jobless-america-future


http://www.npr.org/templates/story/story.php?storyId=123974560

http://online.wsj.com/article/SB122455219391652725.html



The current US unemployment situation is most drastically affecting white Midwest manufacturing workers and "trophy kids" from the Millennial Generation, which we've already discussed a bit: http://worldaffairs-manwnoname.blogspot.com/2009/02/welcome-to-recession-spoiled-brats.html



Self-esteem without basis encourages laziness rather than hard work... The ability to persevere and keep going [is] a much better predictor of life outcomes than self-esteem...There’s an element of entitlement—[Millennials] expect people to figure things out for them.

- Jean Twenge, psychology prof. at SDSU



It's foolish to generalize an entire generation, but new graduates born between 1980 and 1991 grew up with comfort, security, and high expectations. As suburban Boomers had fewer kids and bigger incomes, they doted on their children and taught them to believe that they were special and destined for great things of their choosing. But with that mindset, if things don't go well for them, it can't be their fault, right? They're perfect; what are Harvard and Google smoking to reject them? Something must be wrong when 74-79% of Millennials surveyed thought of themselves as physically attractive and very intelligent. It can't be all grade inflation and TV. More Millennials think that they will have postgraduate degrees and high-paying jobs versus previous generations too. Maybe even scarier, more Millennials think that they will be able to earn a living as entertainers and artists versus their predecessors. Good luck.



But it's not all their fault; sometimes "society" and timing are to blame too. Studies of the 1980 and 1990 recessions showed that for every 1% the unemployment rate rises, new graduate salaries drop 7%. So similarly skilled people who entered the job market during a boom may enjoy 25% higher pay than those who entered during a bust, which will haunt them their entire careers (by cursing them to a lower baseline). The number of graduating seniors given job offers was down 21% from 2008 to 2009. An American's first job has huge impact on his or her career potential too. Recent graduates stuck with a less glamorous job out of desperation are handicapped for future promotions or job transitions, because employers write them off as low achievers (in general, but of course there are exceptions with a few truly talented young workers getting ahead). So maybe the Millennials who shun boring, subsistence jobs and prefer to spend a year or two "finding themselves" and living off their parents are on to something (and the clingy, enabling Boomer parents are complicit in this for another precious opportunity to dote and feel life in their homes again). But they can't wait too long, as the younger crops of grads with more current skills, more fire in their bellies from spending their teen years in a recession, and no "gaps in employment" will be breathing down their necks.



Here's more reason to feel for the Millennials: studies have shown that prolonged unemployment during the post-high-school-to-age-30 years increases the risk for lifetime alcohol abuse, poor health, and depression, even when controlling for people's psychological background, exposure to alcohol, and socioeconomic situation. So maybe all those years of being praised as wonderful (when they were always just average) makes the let-down of "you're not even good enough to get a job" all the more bitter. This is another reason why it may do more harm than good for parents to coddle and overly inflate their kid's self esteem.



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“A man is not a man without work.”

“During the Depression I lost something. Maybe you call it self-respect, but in losing it I also lost the respect of my children, and I am afraid I am losing my wife.”

“I still love him, but he doesn’t seem as ‘big’ a man.”

Quotes from people who lived through unemployment during the 1930s.



And now for the older folks: 3/4 of recent job losses were incurred by men, since male-dominated construction, manufacturing, and finance have had the most layoffs, while female-oriented service, health, and education jobs have fared better. For the first time ever, women may comprise the majority of the US workforce by mid-2010. But unless the woman earns significantly more in a non-traditional household, an unemployed father/husband has disasterous effects on the family. Besides their financial contributions, men are less likely to help with household work while unemployed (maybe in rebellion against their loss of manhood from unemployment), and being out of work affects them more psychologically (self worth, mood, treatment of others, turning to destructive behaviors).



Only a death is more traumatic to a family than male unemployment. The likelihood of divorce increases drastically when the man is out of work, especially for over 6 months, which is now the average duration of American unemployment (the longest period since the Bureau of Labor Statistics started the measurement in 1948). All the divorces and unstable households will have terrible impacts on the children and America' future. Despite some arguments that children can still excel from single-parent homes (like Obama), statistics show the opposite. And more unmarried, unemployed men on the streets causes social problems. Married men are less likely to be involved with gangs, crime, and drugs, since they are spending more time doing wholesome family activites (in theory). This point applies more to poor blacks than whites or Latinos, but all races are affected. People are still having kids at normal rates (which is expensive and can negatively impact work performance), but fewer people are deciding to marry during this recession too (as in the past), which makes sense due to the exorbitant costs of the "ideal marriage" played up by the wedding industry, and shifting priorities during hard times.



All this has been going on in predominantly white communities from the Rust Belt to Buffalo even before the recession began. And the jobs lost there will never come back, despite what the politicians may promise and what the people may hope for. If they want to return to the workforce, they may need complete retraining, which is expensive, time consuming, and maybe not practical for many of them. Plus they will be competing with more qualified and experienced urban folks for new jobs. We've already seen the effects of this phenomena in urban black blue-collar communities in the 1970s. As the jobs left, those African Americans had difficulty transitioning to other employment, due to cultural and racial barriers. A macho steel worker can't become a courteous customer service rep overnight. So instead of joining the urban service sector as women and immigrants did, blacks languished and turned to depression and crime. I don't know if Rust Belt white communities are heading down that same path, but it's possible.



And on a societal level, recessions and tough times can make people meaner, less progressive, and less tolerant (against those who get blamed for the harships of the masses, namely immigrants). Politicians say that they draw inspiration from the American spirit of good people helping each other, working together to deal with hardships, and getting back to basic values. Like those Allstate commercials and whatnot. In some cases, recessions do make people more compassionate and grounded, as class tensions and wealth gaps shrink. But in the current recession, the rich-poor gap has actually increased (thanks, Goldman Sachs). Anger against the rich (and by extension, our leaders) has spiked, as we've seen with the Tea Parties and populist backlash. White lower-income Americans are increasingly feeling left out of the American promise (blacks and Indians are saying, "Welcome to our world!"), and are raging against that.



To close, I'll leave you with this statement from The Atlantic's Ron Peck:



In The Moral Consequences of Economic Growth, the economic historian Benjamin Friedman argues that both inside and outside the U.S., lengthy periods of economic stagnation or decline have almost always left society more mean-spirited and less inclusive, and have usually stopped or reversed the advance of rights and freedoms. A high level of national wealth, Friedman writes, “is no bar to a society’s retreat into rigidity and intolerance once enough of its citizens lose the sense that they are getting ahead.” When material progress falters, Friedman concludes, people become more jealous of their status relative to others. Anti-immigrant sentiment typically increases, as does conflict between races and classes; concern for the poor tends to decline.

Vancouver Olympics discussion

Well sadly, to the IOC and their corporate backers, these athletes are just expendable meat. Especially a nobody from Georgia doing the luge. Not that I think it's right to have such little safety precaution, but this is the luge we're talking about. It's dangerous by nature, like ski jumping. What are they going to do, pad the whole ski jump landing strip with bubble wrap? These stupid winter sports have risk, and still the athletes want to do it. What can we do? Their motto is higher, faster, stronger, whatever. They want to blaze down an ice track at 90 mph with no body protection. But as M said, it would be safer if the track was out in an open snow field with no solid objects to crash into. 

Of course bad press like this may eat into their profits and perceptions of the Olympics, or maybe they actually like the buzz it's generating. Let's be honest; would we have watched the luge if the death didn't take place? Heck I may not even watch the luge now since NBC are Nazis with event scheduling, and frankly the event is not too interesting to me. But for "human interest", I am sure they will replay luge on prime time, as well as every Georgian athlete, even if they suck. But man, can you imagine what is going through the other lugers' heads when they run the track?

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It was on youtube and has been taken down.  It was a 480P Television feed; you hear a hollow metallic thud, then the cry of the coach.  To me the guy is dead instantly and the coach knew he was gone but they say he passed at the hospital.  F1 has an unwritten rule where no driver dies on the track and I think luge may have the same.

I never considered this sport very dangerous b/c of the lack of deaths.  I think it comes down to track design but we'll see what they blame it on.

Expendable meat is right Tim but it's everywhere.  In a bid to increase ratings Nascar has changed the rules to allow bump drafting, and larger restrictor-plates for Daytona.  Which means more high speed crashes in a sport riddled with deaths.  

I'm not surprised when it comes from Nascar but the IOC needs re-evaluate themselves.  They have some new downhill ski sport where multiple athletes race together.  It sounds and is dangerous, with risk increasing when multiple racers jockey for position.  I heard a news report on NPR talking about the dangers of it.  While they were conducting an interview at a qualification event a crash occurred and a guy was paralyzed. 

If you hang the chance of a gold someone will take on the challenge no matter what the risk.  IOC can't wash their hands of this.

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Yeah certainly it's not just the Olympics - pro sports are our Roman Coliseum. Even NFL, as the players get bigger and stronger, they are hitting each other so hard that concussions are a big deal now even with better equipment tech. And some big lineman always passes out during summer training camp - especially at the college/HS levels.


Wow that "skiing motocross" sounds ridiculous. Are they trying to one-up the X-Games? But as you said, the fact that deaths are so rare in the Olympics shows they must be doing something right safety-wise. At least no one got gatted during biathalon. 

 

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I hope that the Olympic committee takes this Georgia death and changes things so we do not see this in future Olympic games.  Obviously, safety measures must be higher, especially in the fastest track in the world where turns go up to 95 miles per hour and athletes get concussions in practice.  Additionally, maybe we should consider trials for countries to get into the Olympic games in the first place.  I think it is a nice gesture that every country is represented in the games but if these "athletes" cannot compete with the major countries, why do we even consider them?  I understand that a death in the games is a very small percentage.  However, we should not be mourning an athlete in the opening ceremonies - Georgia, Ghana, and other small countries without snow that cannot come close to competing to larger countries like the US, Canada, etc. it is a waste of time for them to be in the Olympics.  Let them watch the Olympics at the homes, practice, and treat it as a challenge to get into the olympics if their is a trial - there should be expectations.

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That's a good suggestion and well put. The "Olympic spirit" of all-inclusiveness, fair play, and such is BS. The elite 10 or so nations win 95% of the medals and world records, and only rich nations can host the Games (which are bad for the environment and maybe even bad financially - look at Greece). As you said, the token Ghana or Jamaica athletes in Vancouver may be heartwarming, but it's kind of a farce. The rich nations spend many times more on training and equipment, plus they scout for the best athletes (or even give immigrants citizenship to get on the team), so really they just bought themselves glory. Where's the sportsmanship in that?


Kind of a funny bitching piece on pro sport from C Hitchens: http://www.newsweek.com/id/233007


And my original bitching from 2008: http://worldaffairs-manwnoname.blogspot.com/2008/05/why-olympics-suck.html 

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I dunno dude; seems a little cynical to say that the Olympic Spirit is "BS"...  All the athletes compete on the same field regardless of how they got there and (short of boxing in Korea) there's no paying for performance once the games begin.


Also, I'm pretty sure there are trials and qualifying rounds well before competition and I have a hard time believing that any nation would send an athlete who is not performing at the same level.


PS:  I think the most alarming thing is that NBC showed the video (without sound) on network tv (in prime-time no less!)...  I thought real death was a media taboo, like "Faces of Death" or "Blood on the Asphault" or something; frankly, I was shocked and dumbfounded that the incident was shown.

 

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Yeah, NBC probably decided between the ratings spike that the footage would generate, and the possible backlash from their decision that may cost ad dollars. And I guess by their estimate, the former was better for the bottom line? Well, they showed Oscar Grant getting shot by BART cops on the evening news too.


Come on, by no means are the rich nations' athletes of the same caliber as the poor nations (in general). I remember in the Nagano games, North Korean speed skaters were using obsolete skates vs. athletes from G8 nations, and of course got their ass kicked. In Sydney, I saw a female sprinter from Vietnam. She didn't even have a uniform with the national colors (literally, it looked like she was wearing a Dri-Fit top and jogging shorts that you get on sale at Big 5), while the US and UK had the fancy Nikes and spandex low-drag body suits. They put her in the outside lane (for the slowest runner), and finished the race many yards behind the winner. Of course these are just anecdotes, but the medal counts tell the story.


There is indirect pay for performance. The top athletes get the endorsement deals, and their national sports programs get corporate sponsors. No one wants to invest in a loser. I am not sure if the US Olympic Team is publicly funded, but I am sure they also depend on private money, donated equipment, travel grants, etc. And the Olympics are not "amateur" competition anymore if Agassi, LeBron, and Ovechkin participate.

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I still think you're buying into something of a fallacy; you've heard the expression "talent is common, discipline is rare", haven't you?  You point speaks more to poor nations not having the means to identify and develop talent than it does to any predictive capacity that a correlation between a nation and its level of sponsorship might hold.


BTW, I think the fact that poorer nations still send athletes makes the Olympics what it is in terms of spirit (i.e. heartwarming rather than a farce); you honestly don't find the effort of athletes from said countries inspiring?

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I would not call is inspiring, more like a waste of our time as larger nations - i think we should have two Olympics going on at the same time, kind of like NCAA basketball does during March with the good teams that make it into the March madness tourney, and the shit teams that don't make it and have to compete against each other in the NIT


We can have a NIT like Olympics for all these poorer countries so they won't feel left out, and then they can still win some medals...even though they wont really mean anything.

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I think discipline and talent are both rare, but at least you can teach discipline (usually).


Well, I think poorer nations have other priorities besides luge and hammer throw. Feed, vaccinate, and educate people first. Of course if a poor nation is blessed with a super athlete like Drogba or Pacquiao (roids allegations and all), then by all means develop and market him or her as an inspirational figure. But the majority of poor nations' Olympians fail miserably, so what did the nation and the athlete get for their investment and trouble? Some cool memories? Though as you said, maybe all nations have a similar chance of producing geniuses, super athletes, etc., but the poorer nations lack the infrastructure to identify, develop, and provide the resources needed for those great ones to realize their potential.


It is a sign that a nation has arrived if it can afford to train athletes to reach the highest levels (like Korea's emergence from the Seoul Games to now). Only rarely do poor nations have great (relatively) athletic programs, like Cuba or Ukraine, and it's probably due to the fact that they invest disproportionately in sport for national pride.


Yeah maybe the NCAA tourney-NIT idea isn't such a bad thing. What is the point of Canada's womens hockey team blowing out Bulgaria 82-0 (it really happened), or the Dream Team killing Angola 90-30? Is that inspirational? Is that the Olympic spirit? Of course the Angolans were just so thrilled and proud to be on the same court as Magic Johnson so it didn't matter to them, but that shows the different expectations. Some athletes are just happy to be there; others want and think they can get a medal.


But for all the money that rich nations invest in Olympic sports, Bahamas and Jamaica have way more medals per capita than the US, China, UK, and Japan. Of course this is because they stick to the sports they are competitive in. They don't just send some Joe Blow with no chance and no experience to do 5000 M speed skating.

 

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That's all true, but on the other hand, I think it's a bit rich to criticize developing countries from participating in the Olympics as wasteful. Sure the money would better spent on vaccines, etc. than on sports, but think of the U.S. How much money do we blow a year on all sports combined (probably at least in the tens of billions)? If you narrow it down to simple government waste on things not related to our most pressing problems, the size of waste is similarly massive - is it really necessary for the government to sponsor state fairs, street parades, statues, parks, NASA etc when there are people who barely have enough to eat in our country?


It's easy to be judgmental about the poor/developing world and what they "should" spend money on, but the fact of the matter is that they have the same desires for entertainment, distraction, failings, etc that we do. There are plenty of people in our own country that would rather buy a big screen TV than buy healthcare or contribute to their retirement fund.


If all that a little entertainment and national pride costs them is a few thousand k, then I say let them have it. America spends way more than that on penis-waving competitions, so proportion wise it's probably even about the same percent of national expenditure. It sucks that it's true, but America, China, the Soviet Union when it was around, and other major countries have made being part of the Olympics a sign that you've "made it" in the world - that you can be on the international stage as equals. So I don't think it's fair to criticize the poor countries for feeling the need to be part of the game the rich countries set up - that's our bad, not theirs.


And as far as only allowing internationally competitive (like top 20 in the world) to participate in the Olympics, I think, would be an even worse idea. The Olympics are already mostly a rich man's game, what a middle finger to the developing world that would be - saying we have this ultra-cool sporting event that all the best nations participate in but you can only participate in it if you're willing to blow half of your poor country's GDP training your athletes. I definitely agree that it's a bad idea to let athletes that will embarrass themselves at the event (letting those participate is basically noblesse oblige). But as long as they're at least moderately competitive, I don't see why they can't participate. They get knocked out in the first heat or whatever so they don't get in the way of the big countries, and it gives their home nation a cheap bit of national pride and unity. And sometimes it changes the face of a sport - witness the Jamaican bobsled team.


The Olympics, even from the start, have been explicitly political. To not see the political impact and the amount of ill-will that it would generate in the developing world if we limited admission would be short-sided, I think.

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Well first of all, the Jamaican bobsled team was all hype played up by Disney, and did next to nothing to advance winter sports interest in the Caribbean (in contrast, Usain Bolt did much more for an already track-crazy nation). Nothing garners interest like a (well marketed) winner. For the record, Cool Runnings (ya mon) crashed in their int'l debut, and failed to qualify for the last 2 Games. Their best result was 14th in Lillehammer though, ahead of the US. It was the equivalent of the US mens soccer team getting to the quarter-finals at the depleted Korea-Japan World Cup: a temporary high that really didn't have a long-term soccer effect on our nation and culture.


Of course it would be terribly undemocratic and undiplomatic to have parallel rich man-poor man Olympics. But that's basically what we have now, except that the IOC charges a fee for poor nations to come to the rich man's table and get humiliated. So why not just cut the crap? For that matter, I wish there was a "second tier" World Cup, where the runner-up nations could get a chance, since a Euro-heavy field of 64 is quite limited (in club soccer, they have the equivalent with the Champions League and lesser UEFA Cup, like the NCAA-NIT).


Sure the Olympians from poor nations are "heroes" back home, and if that is worth the money for "inspiration", heck it's better than buying more AK-47s and government palaces. You know me, I am 100X more critical of anything stupid that rich nations do vs. the poor. But due to their wealth, the rich have a bigger margin for error. We can afford to be more profligate and corrupt (well not really, but we kick the can down the road and pass our problems onto the poor). Bill Gates can waste 80% of his take-home pay on leisure, and still live much more comfortably than I, even if I only spend 10%. But he can, and the onus is on me to manage my lesser resources.


But you are totally right; it's an outrage that we spend billions on F-35s, partially-publicly-financed stadiums, and subsidies for Goldman Sachs' new corporate HQ in NYC while our social safety net and infrastructure crumble, and infant mortality is at Second World rates. This is especially shameful because we supposedly have a "functional democracy" where the people have the power to rectify social injustices and improper appropriations. In countries like Georgia, the people have no idea or say on how their taxes are spent - whether it be on sports or not.


In a perfect world, the Olympics and climate change policy would be similar. The rich nations would subsidize the participation of the poor nations, to make a more equal playing field where everyone benefits. Maybe there could even be a training budget cap or proportional participation based on population size (since I am so tired of nations sweeping medals in some events). The current Olympics are MLB when they should be NFL. Sport is like the casino for the poor. A losing proposition economically, but is romanticized because it gives people a shred of hope that they can defy the daunting statistics and beat the house. Though despite all that, I do not think that the poor nations are adversarial towards the rich, and the Olympics are way more political for the rich nations, as you said. You don't hear about Mexico and Kazakhstan bitching about figure stating judges and other foul play (and just today, the Koreans are mad at the Chinese for pulling a Bellichick: http://sports.yahoo.com/olympics/vancouver/blog/fourth_place_medal/post/China-gets-in-the-head-of-South-Korean-speedskat?urn=oly,219613). The poor are just happy to be there, so there is kind of a touching innocence to that (or it could be read as pathetic naivete). Rich nations (and their unfortunate satellites) do the majority of the boycotting, and the only notable exception was when 26 African nations boycotted the '76 Montreal Games to protest New Zealand's rugby ties to apartheid South Africa (bit of a stretch IMO, since South Africa was already banned by the IOC at the time, but it's their right).


For that matter, don't you think it's also a slap in the face to the Third World that the vast majority of Olympic judges and IOC officials come from the G20? And looking past the Olympics, there is much worse economic apartheid and condescension in the WTO and such. 

How Goldman Sachs made all their recent loot

http://www.pbs.org/newshour/bb/business/jan-june10/goldmansachs_02-11.html
http://www.pbs.org/newshour/bb/business/jan-june10/goldmansachs_02-12.html

NOMI PRINS, former managing director, Goldman Sachs: First, of course, they received $10 billion in TARP money. Even though, a year later, they can say, "Well, we didn't really need it," They really needed it.

And look what they did with it!

Goldman's CEO recently testified on the Hill about his company's record profits and big bonuses from 2009, when many Americans were suffering terribly. He basically said that they did it without government help, and that they are just a kickass operation that "allocates capital" and grows wealth for millions of people out there. They are "important" to the economy. While that is probably true, it also glosses over some inconvenient details of how they got there.

Goldman is basically a hedge fund that applied for bank status in order to get TARP funds, and the government went along. Only 10% of their revenue comes from i-banking, and 75% came from trading (mostly commodities and currencies). So we can't really buy the "we're nice guys who lend money so you can make money" story. And they did so well in trading partially due to "front running" of clients. Say Goldman thinks oil is undervalued, so they buy up a crap load of it (where they get the funds to do this will surprise you too - I'll explain soon). Then they consult their clients to do the same, of course AFTER they have gotten in at a lower price. So by their sheer size and the reach of their advising, they can move global markets in their favor. Technically this is illegal, but it's hard to prove and enforce. And in their case, it's amazingly profitable.

In addition, they were selling risky mortgage-backed securities to pension funds while they were taking out huge insurance policies with AIG and others to protect against losses from those securities. Pension fund managers were much less savvy, and just wanted to get in on this seemingly booming market. Goldman gave them the green light, and they trusted them. Of course their greed blinded them from questioning why brainy Goldman would want to sell something solid and profitable to another party. But instead, they sold a suicidal guy a gun, and then took out a life insurance policy on him. Most people now agree that Goldman's political connections and heavy pressuring of Washington helped them decide to bail out AIG. This allowed AIG to pay Goldman the $13B it owed on the policies, which Goldman then used in 2009 to make huge bucks off a troubled market.

Goldman was traditionally a trading house, but applied to become a bank-holding company in order to gain access to TARP funds. They claim that they didn't need to for survival, but were pressured to do so by the government (to help disguise to the public which banks were the most distressed, all the banks too some money). They quickly paid back their $10B TARP loans in order to unfetter themselves from government regulations (especially bonus limits). But as a "bank", they had access to basically limitless Federal Reserve credit at near zero interest rate (0.1-0.3% at most). And their debt was insured by the FDIC. What a deal. And here's the best part - Goldman used taxpayer money to buy Treasury bonds that paid out 3.5-4%. So with zero risk, Goldman transferred huge sums of money from the Fed to Treasury, and the government paid them a commission for it.

Of course there were many more lucrative investments out there in 2009 than T-bonds, so Goldman also used Fed cash to make money in other markets. With the security of government backing, Goldman raised a ton of private capital ($28B in 2009) versus other Wall Street players, and they did it at an interest rate only 1-1.5% higher than what the US government borrows at. So basically that means people think Goldman is as meager of a borrowing risk as the USA. And really, is there a difference at this point?

I know some Goldman supporters will say they deserve it, because it was all more-or-less legal. They were smart and they exploited loopholes and panic. They are in the cutthroat business of wealth maximizing, and make no apologies for doing their job. This is their MO; they beat competitors by finding new and "clever" ways of making money. Blame the system and the government (comprised of many ex-Goldman folks and others with an interest in Goldman's success). Well I do also. Drug dealers and weapons traffickers are also innovative businessmen who make big money. Maybe making money isn't a sin by itself, but what depths do you sink to do so?

Like Enron, they're the smartest assholes in the room. But I'm sure that one day they will get Enron-ed too. Pride cometh before the fall.

The economic effects of layoffs

http://www.newsweek.com/id/233131

Amazingly, an un-trivialized, un-sensationalized Newsweek cover story written by an academic. The author cites several studies that have shown the supposed benefits of corporate layoffs may not hold water. Sure layoffs help the bottom line (temporarily), but also eat into sales, and a company's stock value actually suffers. So it's a net neutral or even negative proposition. And no company ever rebounded from a major layoff to take more market share and greatly increase revenues. In fact it's often just a postponement of losses or the opposite effect, as rivals smell blood in the water and use the opportunity to snatch up talent. Clearly a trend exists that successful companies with good management have fewer layoffs. Southwest, Aflac, and Microsoft have had zero until 2009, while bumbling Delta and GM seem to engage in the practice regularly. And how can we forget Circuit City's Waterloo, when they decided to cut costs by laying off the subset of their sales staff making the highest salaries? Of course those people were also their best workers, so they slaughtered their milk cow for meat while Best Buy swept in to fill the void.

And what about all those socialist European nations with labor laws making it much harder to sack workers? Their labor force must be a lot lazier than America's, right? Well it turns out that worker productivity is actually better in nations with stronger layoff restrictions, like France and Sweden. What a revelation that workers who feel disrespected by aloof management and are terrified of losing their jobs (and health insurance) won't be as dedicated to the company and as focused on doing great work. Economically, America seems to have the tendency to motivate people with the stick rather than carrot. And of course there are the negative externalities of layoffs, such as mental and physical illness, destructive behavior, and reduced spending.

Everyone and their mother knows this, except it seems for the managers who sign the pink slips. They continue the destructive habit because middle managers believe that layoffs can help their careers. If they show their VP that they cut head count and still maintained or improved productivity (by whatever BS metrics they pull out of their asses), it shows they're a great leaders and deserve a bonus (paid for by their laid off staff). As is typical with America, the greed and ambition of a few end up hurting the organization as a whole and many innocent people along the way.

Layoffs just trigger a downward spiral anyway. Management decides to reduce the workforce to save money, but morale and productivity also suffer. Probably the layoffs were not conducted very sensitively, so it puts everyone on edge and many good employees quit even if their jobs were not in danger. The collective human capital of the company suffers, and sales follow. The bottom lines looks bad again, so management decides on another round of layoffs, and so it goes. The bottom line is dictated by costs AND revenues. Maybe instead of the kneejerk layoff reaction, struggling companies could actually figure out how to develop their workers to get the most out of them, which will result in better worker satisfaction, performance, and ultimately earnings. Isn't that real leadership? Any jerk can fire someone, but can you inspire them to do better?

On that note, has anyone seen "Up in the Air"?

Attack on the USS Liberty

I saw a bumper sticker that read "Remember the USS Liberty", and had no idea what it was referring to. I looked it up online and was surprised to find out that Israel fired on a US surveillance vessel during the Six-Day War in 1967, killing 34 and wounding 171 Americans on board. For the record, the only other nations/groups that officially attacked a US vessel since WWII are Iran, Iraq, North Korea (they captured the USS Pueblo and still have it), Al Qaeda or similar terrorists (USS Cole), and maybe North Vietnam if you believe the Tonkin Gulf Incident's official report. So that's pretty much the Axis of Evil plus Israel.

During the Six-Day War, Israel threatened to attack any unidentified vessel near its coastline. The US did not take a side during the war, but the Sixth Fleet was in the Mediterranean in case of escalation, and the Liberty (a refitted former Liberty ship that supplied the UK during WWII) was monitoring electronic communications 14 miles off the Israeli coast near El Arish. It had no missiles or heavy guns, but just a few deck machine guns for defense. Apparently the US Navy and State Department informed Israel of the Liberty's location and identity prior to the attack, but during a shift change at the Israeli war room, they mistakenly changed the ship's status to "unknown".

Israeli aircraft buzzed the ship EIGHT times, and their pilots should have been close enough to observe the Liberty's hull markings (the ship's unique ID code was "GTR") and ensign (US flag flying high on a mast). The weather was perfectly clear, and Arab ships have Arabic markings on their bows and different colored flags, so they couldn't have confused it for the enemy. But instead, warplanes opened fire with cannons, rockets, and bombs. There were no warning shots. Apparently Yitzhak Rabin (the IDF chief of staff at the time) thought the ship could be Soviet (Egypt's ally) and sought to neutralize it. He dispatched 3 nearby torpedo boats as well. Smoke from the air strike made it difficult for the Liberty and Israeli ships to signal each other by Morse code, so the captain of the Liberty ordered his machine gunners to open fire, as the torpedo boats were assuming an aggressive approach. He quickly canceled the order, but it was too late, as the Israeli sailors concluded it must have been an Egyptian freighter and fired five torpedoes, with one striking the Liberty, creating a 40-foot hole, and causing the majority of the casualties reported. Some American witnesses stated that the Israeli boats strafed the Liberty while rescue crews were trying to save people and extinguish fires, but that claim is in dispute. Amazingly the ship didn't sink, and fled the area under its own power.

Both nations launched inquiries and officially concluded that it was a friendly fire mistake. Israel later paid $7M to the families of the victims, and another $6M to the US government for damage to the ship. Total US aid to Israel in 1967 was $48M, so really they just gave some of it back. The families of the victims, Joint Chiefs chairman, and Secretary of State at the time Dean Rusk all felt that the Israeli explanation and US investigation were inadequate. Rusk said, "I was never satisfied with the Israeli explanation. Their sustained attack to disable and sink Liberty precluded an assault by accident or some trigger-happy local commander."

Israel said that its pilots were exhausted from fighting the Arab nations and were not totally alert, so maybe that's why they failed to ID the vessel. Well Israel started the war and their victory was never in doubt, so it's not like they needed to fly all those sorties and tire themselves out. And they could have radioed the ship, or Washington, to confirm before they attacked, especially because there was no imminent threat from a 30-year-old converted freighter.

Others have alleged that the attack was deliberate - but what would Israel have to gain by attacking its chief benefactor? Several theories exist in books and a BBC documentary on the incident. At the time, Israel was transferring forces from the Sinai to break the ceasefire and invade Syria's Golan Heights. If the US observed this, radioed Washington, and the information was intercepted by the Soviets, they would have notified Egypt that Israel's southwestern border was exposed. In addition, there is some evidence that the Liberty was escorted by a Polaris nuclear submarine, with orders to take out Israel's long-range missile sites if they prepared to attack an Arab capital (since doing so would probably trigger a Soviet counter-attack, and then the end of the world). So the Liberty strike could have been a warning for the US to back off. In a more remote possibility, the attack could have been launched to prevent the US from discovering a nearby mass slaughter of Egyptian POWs by the IDF (the bodies were later discovered in 1995). And lastly, there could have been a secret conspiracy between Washington and Tel Aviv to fake a Tonkin Gulf-like incident. They would blame the Liberty's attack on Egypt, which would give the US justification to enter the war on Israel's side. In fact, carrier-based warplanes from the Sixth Fleet did scramble after the Liberty was hit and assumed a direct course towards Cairo, but they were quickly recalled. But how could they cover up Israeli involvement when the IDF used Dassault Mirages to attack the Liberty (no other state in the region had them), and the torpedo boats were clearly marked as Israeli too? Strangely, the Anti-Defamation League has been one of the primary voices to refute claims of deliberate Israeli attack. That group is dedicated to civil rights and stopping anti-Semitism. How is that related to the Liberty attack?

We may never fully know what happened that day, and even as recently as 2003 and 2007 there were non-governmental inquiries and reporting by major US papers (possibly to commemorate the anniversary, but we were distracted by the War on Terror and presidential elections). The veterans of the attack still want justice, but maybe the cover story is the truth. After all, Israel didn't fully sink the ship to kill all witnesses, and instead immediately sent rescue personnel to help. But maybe the conspirators planned for that contingency too. I'll close with this peculiarity: the Liberty's captain was later issued the Medal of Honor, which is supposed to award bravery in the face of the "enemy". That was the first and only time the medal was given in a supposed friendly fire incident.

http://en.wikipedia.org/wiki/USS_Liberty_incident