Musk Is A Putin Pawn

The Daily Escape:

Organ Pipe Cactus National Monument, AZ – September 2023 photo by Bob Miller

Back in the 1950s, lefties were often called “fellow travelers” with Communists or the Soviet Union by Republicans.

Here’s a thought experiment: Elon Musk owns Starlink. He helped Ukraine take on the Russians using his constellation of satellites and transmit/receive terminals on the ground. When SpaceX started providing Starlink internet service to Ukraine after Russia’s invasion, it created a lifeline for the country when its communications systems had largely been knocked out.

Musk got great PR for helping America’s plucky little friend in their war against the Russian invaders. But as the war ground on, Kyiv began to fear that Musk was becoming increasingly ambivalent toward assisting them. Then, just as they are on the verge of a decisive blow that might shape the direction of the war, he turned off the network, thereby saving the Russian fleet from a Ukrainian sneak attack. From the WaPo:

“The armed submarine drones were poised to attack the Russian fleet….[but] the drones lost connectivity and washed ashore harmlessly.”

Ukrainian and American officials instantly scrambled to get service restored, appealing to Musk directly. After it was too late to continue the mission, Musk eventually agreed. His reasoning for torpedoing Ukraine’s torpedo mission has been well-reported over the past few days. According to the WaPo, Musk had second thoughts:

“How am I in this war? Musk asked….Starlink was not meant to be involved in wars. It was so people can watch Netflix and chill and get online for school and do peaceful things, not drone strikes.”

Later, when the Sevastopol operation was to begin, Musk remembers this:

“There was an emergency request from government authorities to activate Starlink all the way to Sevastopol. The obvious intent being to sink most of the Russian fleet at anchor….If I had agreed to their request, then SpaceX would be explicitly complicit in a major act of war and conflict escalation.”

Musk says he was afraid of being responsible for a Russian nuclear escalation. Moscow had publicly stoked such fears throughout the Ukraine war, but Western intelligence agencies say there’s no sign they were or are serious. There is zero evidence that tactical nuclear weapons were being prepped for use.

Nothing like what Musk feared happened.

From Timothy Snyder:

“The voiced concern is that Russia could “escalate.”  This argument is a triumph of Russian propaganda. None of Ukraine’s strikes across borders has done anything except reduce Russian capacity. None has led Russia to do things it was not already doing. The notion of “escalation” in this setting is a misunderstanding. In trying to undo Russian logistics, Ukraine is trying to end the war.”

It’s curious that according to Ronan Farrow in a New Yorker article, around this time, Musk held conversations with Vladimir Putin (Musk denies speaking to Putin) – which seems to have had an effect on Musk’s change of position regarding Ukraine.

So this is the thought experiment: Is Musk naïve, or has he become a fellow traveler with Putin? He seems to have not only bought Moscow’s propaganda about nuclear escalation but acted on it. In either case, his “I was for helping Ukraine before I was against it” is a moral failure, and it’s a crime of providing material assistance to ours and Ukraine’s enemy.

He’s a fellow traveler.

We’ll never know if the war has been extended because the Sevastopol attack was aborted. We do know that since then, thousands of Ukrainians have died, and $ billions of Ukrainian assets have been destroyed.

This is a reminder of how Musk has amassed enormous influence through his dizzying pace of innovation that has left his competitors in the dust. It has also left governments (like our own), tip-toeing in their relationships with SpaceX in particular.

Wrongo thinks that US policymakers were happy to tolerate Musk’s early involvement in Ukraine because it saved money and solved an immediate tactical communications problem. But how wise was that in hindsight? There are reasons why diplomacy and international relations are left to elected governments in the West, and not put in the hands of one tech bro.

Rightwing Republicans have been pushing privatization without regulation for decades. Now that Musk has done just that with satellites and SpaceX, politicians and the mainstream media are shocked to find that the Ultra-Wealthy entrepreneurs don’t really believe in democracy.

Who could have known?

And think about it: Russia under Putin started this war. We’re involved because our national security interests in Europe are under attack by the Russian Federation. That constitutes a war, whether we choose to recognize it or not. Musk’s inaction must be viewed through that lens.

Our forces are not engaging in combat with Russian forces; that’s Russian propaganda. But we have history vs. Russia: We fought against Russian fighter pilots in the Korean war. They had advisors on the ground in Vietnam. We fought a Wagner force in Syria when they attacked our troops.

And Wagner isn’t a rogue mercenary organization. They are an irregular Russian force operating outside the norms of international law.

Musk and quite a few House Republicans need to understand the true nature of this war. We didn’t attack Russia. NATO didn’t attack Russia. And Ukraine didn’t attack Russia. Russia attacked Ukraine with a full scale invasion.

While Putin and his thugs are guilty of aggression, many Americans are guilty of being naïve. They fail to understand what failing in this fight will mean.

Whew! That’s enough for this week, it’s time for our Saturday Soother, where we try to find a place of calm and then gather ourselves for another week of polycrisis without end.

We’re aerating the lawns on the fields of Wrong, but only overseeding a small portion of it, since a 50 lb. bag of quality grass seed costs $225 vs. the $75 it was in the before times. Whip Inflation Now!

We’re likely to have thunderstorms for the next few days. So grab a chair by a large south-facing window and watch and listen to Playing For Change’s version of the Grateful Dead’s “Ripple”. It features the Dead’s drummer Bill Kreutzmann along with a host of performers, including the late Jimmy Buffett and David Crosby. Jerry Garcia lent his slide guitar to CSN’s “Teach Your Children” years ago, and Crosby returns the favor here. Time to listen to some feel-good music.

Robert Hunter wrote this song for the Dead in 1970. He was inducted into the Rock and Roll Hall of Fame with the Grateful Dead in 1994 and is the only non-performer to be inducted as a member of a band. Hunter was a lyricist:

 

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The Economic Value Of College Is Collapsing

The Daily Escape:

Thor’s Hammer, Queen’s Garden Trail, Zion NP, UT – September 2023 photo by Michelle Strong

We all believe that college graduates make, on average, a lot more money than high school graduates. Economists call the gap that exists between the incomes of college graduates and high school graduates the college wage premium.

But, Paul Campos points out that in recent decades the growth in the college wage premium has been largely caused by declining wages for high school graduates, because wages for college graduates have been almost completely stagnant. For example, here is the Congressional Research Service’s (CRS) median hourly wage in 1979 and 2019, (40 years apart) for someone with a Bachelors degree (in 2019 dollars):

1979: $26.42

2019: $28.85

But it’s worse than that: Over the last 20 years of that 40 year period, the median hourly compensation of people with four-year college degrees increased by a total of $0.31, or 31 cents, just over a penny per year.

From Campos:

“The flip side of all this is that wages have declined for people who have gone to college but either not gotten a degree, or not gotten more than a two-year associate’s degree, falling from $22.86 in 1979 to $20.00 in 2019. And the decline has been even sharper for those with high school diplomas or less — thus driving up the “degree premium” for several decades’ worth of college graduates whose own compensation has not actually gone up, even as the cost of their degrees has gone through the roof.”

Here’s a chart from the CRS:

For both high school and no high school diploma categories, wages have fallen in absolute terms. So as college costs have risen, the college wage premium has stayed about the same because wages for the less educated have fallen dramatically.

As the NYT explains, the college wage premium has one important limitation:

“…It can tell you how much college graduates earn, but it doesn’t take into account how much they owe — or how much they spent on college in the first place.”

The NYT explains how a group of economists devised another way to look at the relative value of a college education: The college wealth premium. The wealth premium is the measure of how much more wealth college graduates can expect to accumulate as opposed to those with no more than a high school degree: (emphasis by Wrongo)

“Then the researchers looked at the wealth premium, and a different picture emerged. Older white college graduates, those born before 1980, were, as you might expect, a lot wealthier than their white peers who had only a high school degree. On average, they had accumulated two or three times as much wealth as high school grads of the same race and generation. But younger white college graduates — those born in the 1980s — had only a bit more wealth than white high school graduates born in the same decade, and that small advantage was projected to remain small throughout their lives.”

More: (emphasis by Wrongo)

“When the researchers looked at young Americans who had gone on to get a postgraduate degree, the situation was even more dire. ‘Among families whose head is of any race or ethnicity born in the 1980s and holding a postgraduate degree, the wealth premium is … indistinguishable from zero,’ the authors concluded. ‘Our results suggest that college and postgraduate education may be failing some recent graduates as a financial investment.’”

This means that Millennials with college degrees are earning a good bit more than those without, but they aren’t accumulating any more wealth. We all know why:

“The likely culprit…was cost: the rising expense of college and the student debt that often goes along with it. Carrying debt obviously diminishes your net worth through simple subtraction, but it can also prevent you from taking important wealth-generating steps as a young adult, like buying a house or starting a small business.”

Since 1992, the sticker price has almost doubled for four-year private colleges and more than doubled for four-year public colleges, even after adjusting for inflation. Over the last 15 years, more young Americans have borrowed to cover those rising costs. From the NYT:

“In 2007, total student debt stood at $500 billion. Today it is $1.6 trillion….Among student borrowers who opened their loans between 2010 and 2019, more than half now owe more than what they originally borrowed.”

When you factor debt into the equation, the financial benefit of a college education begins to look very different. The NYT reports on Douglas Webber of the Federal Reserve, who found that the premium now varies much more than it used to:

“The “downside risk” to enrolling in college, he argues, has become “nontrivial.”

When you look at Webber’s data, higher education is a financial gamble that can still sometimes produce a big windfall, but it can also bring financial disaster:

“If your tuition is free and you can be absolutely certain that you’re going to graduate within six years, then you enter college with a 96% chance that your gamble is going to pay off, meaning that your lifetime earnings will be greater than those of a typical high school graduate.”

But going to college isn’t free. If you’re paying $25,000 a year in tuition and expenses, Webber calculates that your chance of coming out ahead drops to about 66%. At $50,000 a year in college costs, your odds are no better than a coin flip: Maybe you’ll wind up with more than the typical high school grad, but you’re just as likely to wind up with less.

Americans can count, so they are aware that college education has become a financial gamble. They understand that going into high five-figures of debt (that doesn’t go away in bankruptcy) in order to earn a 5-figure salary doesn’t make a lot of sense.

In 2009, 70% of that year’s high school graduates went to college. In the fall of 2010, there were more than 18 million US undergraduates. It’s been falling ever since, dipping below 15.5 million undergrads in 2021. The percentage going straight to college is now 62%.

This tracks polling. In 2019, the percentage of young adults who said that a college degree is very important fell to 41% from 74%. About one-third of Americans now say they have a lot of confidence in higher education. Among Gen Z, 45% say that a high school diploma is all you need today to “ensure financial security.” And almost half of American parents say they’d prefer that their children not enroll in a four-year college.

But, education is an essential pillar of our democracy. The rejection of higher education by so many should be extremely concerning for the future of our nation. You should read the NYT article. Here are Wrongo’s conclusions:

  • Colleges and universities are pricing themselves out of the market. Pigs get fat; hogs get slaughtered.
  • Turning higher education into a revenue-maximizing enterprise for the benefit of these institutions is a social disaster.
  • Higher education’s leadership has zero accountability for their role in making a college education so expensive.
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Two Writers Who Speak To What America Needs

The Daily Escape:

Wukoki, Wupatli National Monument, AZ – September 2023 photo by David Erickson

September is underway, and we’re about to have a negotiation about government spending. But that doesn’t mean that the news this month will be any less stupid than last month’s. Also, as the Republican presidential candidates demonstrate every day, we don’t actually know whether the GOP is a dying Party or, the rising single Party of an authoritarian state.

Unless and until the traditional press presents these as the stakes, it is very unclear which it’ll end up being. With this as an introduction, Wrongo wants to introduce two writers who are attempting to break through our chain of bad policies and the bad ideology that threatens our democracy.

First, from Wesley Lowery in the Columbia Journalism Review:

“We find ourselves in a perilous moment. Democracy is under withering assault. Technological advances have empowered propagandists to profit through discontent and disinformation. A coordinated, fifty-year campaign waged by one of our major political parties to denigrate the media and call objective reality into question has reached its logical conclusion: we occupy a nation in which a sizable portion of the public cannot reliably tell fact from fiction. The rise of a powerful nativist movement has provided a test not only of American multiracial democracy, but also of the institutions sworn to protect it.”

Lowery is a Pulitzer Prize-winning reporter. He goes on to say:

“In 2020, I argued that the press had often failed this test by engaging in performative neutrality, paint-by-the-numbers balance, and thoughtless deference to government officials. Too many news organizations were as concerned with projecting impartiality as they were with actually achieving it, prioritizing the perception of their virtue in the minds of a hopelessly polarized audience…”

Lowery also says that news organizations often rely on euphemisms instead of clarity in clear cases of racism (“racially charged,” “racially tinged”) and acts of government violence (“officer-involved shooting”). He says that these editorial decisions are not only journalistic failings, but also moral ones:

“…when the weight of the evidence is clear, it is wrong to conceal the truth. Justified as “objectivity,” they are in fact its distortion.”

Lowery concludes by saying:

“It’s time to set aside silly word games and to rise to the urgent test presented by this moment.”

Second, Bob Lord is a tax attorney and associate fellow at the Institute for Policy Studies. He also serves a senior advisor on tax policy for Patriotic Millionaires. At Inequality.org, he proposes a graduated wealth tax on the rich:

“The United States is experiencing a level of wealth inequality not seen since the original Gilded Age. This yawning gap between rich and poor has unfolded right out in the open, in full public view and with the support of both political parties.

A malignant class of modern robber barons has amassed unthinkably large fortunes. These wealthy have catastrophically impacted our politics. They have weaponized their wealth to co-opt, corrupt, and choke off representative democracy. They have purchased members of Congress and justices of the Supreme Court. They have manipulated their newfound political power to amass ever-larger fortunes.”

More from Lord:

“In well-functioning democracies, tax systems serve as a firewall against undue wealth accumulation. By that yardstick, our contemporary US tax system has failed spectacularly….Our nation’s current tax practices allow and even encourage obscene fortunes to metastasize while saddling working people with all the costs of that metastasizing.”

Lord along with the Patriotic Millionaires propose new legislation, called the Oligarch Act (Oppose Limitless Inequality Growth and Reverse Community Harms). It is being brought forward by Rep. Barbara Lee (D-CA) and Summer Lee (D-PA). The Lees have developed a graduated wealth tax tied directly to the highest wealth in America. The Oligarch Act propose a set of tax rates that escalate as a taxpayer’s wealth escalates:

  • A 2% annual tax on wealth between 1,000 and 10,000 times the median household wealth.
  • A 4% tax on wealth between 10,000 and 100,000 times the median household wealth.
  • A 6% tax on wealth between 100,000 and 1,000,000 times the median household wealth.
  • An 8% tax on wealth exceeding 1,000,000 times the median household wealth.

Per the US Census Bureau, the median household wealth in 2021 was $166,900. So the first tier 2% wealth tax would kick in at $166,900,000, and so on.

This would affect only very high levels of household wealth. To put that in perspective, according to the Federal Reserve, the wealth level that puts you into the top 0.1% of households in 2019 Q3 was $38,233,372. So if enacted, this Act would touch a really small number of outrageously wealthy households. Also, their taxable amount would be peanuts by their own standards.

The legislation would also require at least a 30% IRS audit rate on households affected by the new wealth tax. One recent estimate indicated that the richest Americans dodge taxes on more than 20% of their earnings, costing the federal government around $175 billion in revenue each year.

The immediate argument is that this tax will never pass as long as the filibuster is intact. And here’s how the work of both authors comes together. We see the “it will never pass” objection from journalists and pundits who try to appear savvy in the ways of DC. On any cable news show, someone is sure to jump up to say it.

The paradox is that if you look at the Congressional Record and flip to the special orders section and extensions of remarks, you’ll notice they’re filled with speeches and statements on behalf of recently introduced bills which the sponsors know will never pass as written. So why do they do it?

Because the point of introducing a bill is not just to pass it in the current session of Congress. It never has been. There is a tradition going back to the earliest days of Congress of introducing bills to make arguments and advance debate. Many famous members of Congress (think Ted Kennedy, Thaddeus Stevens, John Quincy Adams) sponsored or backed multiple bills they knew were not going to become laws.

They did it because they knew that debates over bills that will become laws don’t occur in a vacuum. They happen in the greater context of the debate in Congress over issues which are influenced by every other bill under consideration. And of course, you’ve gotta start somewhere.

Jumping to the conclusion “it will never pass” isn’t being savvy, it’s a sign you’ve missed the point. And it’s a sign of the vapidity of so many journalists and pundits that it’s the first thing out if their mouths. It’s never a good idea to take cues from the stuffed shirts on Fox, CNN and Meet The Press.

This graduated wealth tax is a good start and sets a precedent: There is an amount of wealth that is ruinous to democracy. Taxing it is a necessary condition for preserving democratic governance.

It is true that Congress, as it is presently constructed, will not pass this, or other badly needed legislation. A genuine revolution in thinking will be required. Both Wesley Lowery and Bob Love point us toward fresh thinking about how we start dealing with what we consider to be intractable problems.

Wrongo still has hope for the younger generations who are suffering the consequences of all this government sanctioned selfishness.

Change is coming.

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Labor Day Thoughts

The Daily Escape:

Hatch Chili festival, Hatch, NM – September 2023 photo by Eddie Gomez

“If we weren’t all crazy, we’d all…go…insane…” – RIP Jimmy Buffett

Wrongo was sad to learn that singer-songwriter Jimmy Buffett died on Labor Day weekend. Wrongo isn’t a Parrothead, yet like most people, he will sing along whenever “Come Monday”, “Margaritaville”, or “Son of a Son of a Sailor” pops up on the car radio.

Labor Day kind of means the end of summer, and back to school for kids and their parents. Having Monday off is great. But what exactly are we celebrating? One answer is that knowledge workers have won the tug-of-war over work from home (WFH).

The NYT’s Sunday Business section has an article “All That Empty Office Space Belongs to Someone”. They ask the question: “What happens if the nearly 100 million square feet of workplace real estate stays empty”? They’re only talking about NYC real estate. The article quotes a real estate executive Eric Gural, whose family company, GFP Real Estate, owns and manages more than 55 properties and 13 million square feet, or about 2% of the city’s office real estate, about what happens next:

“Rents will be lower. Occupancy will be lower. We won’t be as profitable. The worst part about that is that it might affect some of the philanthropy we do.”

That’s kinda tone deaf. Why would a worker want to rush back to the office so Gural’s family can keep up with their philanthropy?

Among Wrongo’s six kids, most spend at least a few days in the office each week. Some are in the office every day. The problem generally isn’t that everyone hates the office. Mostly they hate how office work has changed during the past 20 years: Open floor plans, with people squeezed together into pods.

Then there’s the commute. Few office workers can afford to live in NYC or even a subway ride away. The average one-way commute in New York takes 40.8 minutes. That’s far longer than the US average of 26.4 minutes. That average time means that many, many commuters to NYC are in a car, train or bus for much longer than 41 minutes each way.

This means that people had a major lifestyle change when they started to WFH. No more getting up with the birds to sit on a train for an hour or more, and then stand on a 90° subway platform BEFORE they even get to their desk!

WFH also was family positive since most kids had remote schooling, which the WFH parents could supervise. At the same time, childcare also cratered. So the pinch on parents to be in attendance 24/7 for their young kids was clearly helped by WFH.

Nothing will solve the commute problems for those who live outside of Manhattan, not even giving everyone a private office. Maybe if companies offered to pay for commuting costs and childcare, people would come back. How about it, corporate America?

Another big labor issue is how long it has taken for women to return to the workforce. In the years leading up to the pandemic, women’s labor force participation rates were rising faster than that of men. Several factors were driving it, in particular the female-dominated industries, such as health care and caregiving were among the fastest-growing industries. Also, women’s educational attainment has risen substantially.

That ended during the pandemic. But CNN has reported that the labor force participation rate for women in their prime working age hit an all-time high in June of 77.8%. Prime working age is defined as 25-54. It was the third consecutive month that women between the ages of 25 and 54 have set a record high for labor force participation.

Women are doing much better in the labor market, and clearly, the pandemic’s “she-cession” is over. Yet, barriers remain: Notably, they’re still making far less than men. In 2022, women in the US earned about 82 cents for every dollar a man earned, according to a Pew Research Center report released in March. That’s a big leap from the 65 cents that women earned in 1982. But it’s barely moved from the 80 cents they were earning in 2002, and certainly hasn’t kept up with inflation.

The WFH movement helped women as well: Home-based work allowed for more flexibility in hours, and that helped improve access to childcare with schedules that allowed for easier drop-offs and pick-ups.

We should remember what else Labor Day is about. If you enjoy not having to work weekends, or having a 40-hour work week, or having sick days and paid time off, you can thank labor leaders. Thousands of Americans have marched, protested and participated in strikes in order to create fairer, more equitable labor laws and workplaces — and many are still doing that today.

So have a cookout. Go to the big box stores and spend because it helps the economy.

Here’s your Monday Wake Up Call, America! The challenge during the next year is whether the currently hot jobs market will cool off sooner than inflation. It seems likely that the Fed will be able to cool inflation without plunging the economy into a recession. If so, the jobs market will continue to offer average Americans a shot at a better life.

To help you wake up, let’s celebrate Jimmy Buffett’s life. From the Rolling Stone in 2018:

“WHILE PRESIDENT TRUMP took shots at Democrats in conservative Pensacola, Florida on Saturday, Jimmy Buffett hurled musical insults at Republicans in West Palm Beach during a Democratic campaign rally for US Sen. Bill Nelson and gubernatorial candidate and Tallahassee Mayor Andrew Gillum.

While singing his hit ‘Come Monday’ at the ‘Get Out the Vote’ rally, Buffett tweaked its lyrics to make a dig at Trump changing ‘Come Monday’ to ‘Come Tuesday, things will change. Come Tuesday, we’re making a change. It’s been two insane years and it’s time to switch gears.’”

Buffett long supported Democrats. So have a margarita, and toast ol’ Jimmy. Here’s his laid-back cover of CSN&Y’s “Southern Cross”, performed live at the Newport Folk Festival in 2018:

Note the Parrothead regalia in the audience. Anyone else think he looks like Biden?

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Why The Polls Are Wrong

The Daily Escape:

Belle, a water taxi in Camden, ME – September 2023 photo by Daniel F. Dishner

Happy Saturday, hopefully, you are getting a great start to a restful Labor Day weekend! This past week, we had friends from Los Angeles stop by the Mansion of Wrong. We had a few bottles of a delightful wine, and the question that never goes away came up again: “Why is Biden doing so badly in the polls?”

There really isn’t a good answer. The economy is doing fine, much better than the pundits expected it would be in the third quarter of 2023. But as Dan Pfeiffer points out:

“…somehow — against all common sense — the 2024 election between a competent President and an incompetent criminal — will be incredibly close. The Real Clear Politics polling average has Biden up by only 1.4%. Biden won the popular vote in 2020 by 4.5%. Given the strong Republican lean of the Electoral College, a Biden popular vote win of this size would likely mean that Trump ends up with 270 electoral votes.”

Now, Wrongo never relies on Real Clear Politics’ average of polls, but they’re not alone in offering up grim polling data, and the one thing Trump beats Biden on in surveys is running the economy, a very scary number :

While the actual economic numbers are good, people mostly look at how much money is in their pockets, asking: “What can I buy, given what I’m earning”? The August jobs report showed continued solid gains in aggregate pay for nonsupervisory workers even after inflation is taken into account. From the Bondad blog:

“Average Hourly Earnings for Production and Nonsupervisory Personnel increased $.06, or +0.2%, to $29.00, a YoY gain of +4.5%….”

YoY is year over year. By comparison, the most recent Consumer Price Index for July was 3.3%. Pay increases have been outpacing overall CPI inflation this year. So wages are creeping up, inflation is almost under control, and there’s no recession on the horizon.

A helpful statistic is that spending on pleasure boats is near previous highs, Axios reports:

“Why it matters: You don’t buy a boat unless you’re feeling fairly confident the economic wind is at your back. So this is a good sign for the economy. The ongoing boat-buying binge — which began during COVID shutdowns — is another strike against the once dominant “looming recession” narrative.”

One million used boats sold in the last 12 months! One guess as to who’s buying all of these boats: It isn’t the antifa-BLM Marxist globalists from big cities and blue states. Florida and Texas are in the top three states in revenues from boating.

And you won’t buy a boat unless you’re fairly confident that the economic wind is at your back. That means despite what people are telling pollsters, people are feeling pretty good about the economy.

Pfeiffer notes that all isn’t lost. As of now, Biden is in better shape politically than Obama was at this juncture. August of 2011 was the first (and only) time Obama’s approval dropped below 40%, and he was losing to a generic Republican. More:

“The primary reason for the statistical tie in the race is that Trump is holding onto more of his 2020 vote than Biden. In a NYT poll, 91% of Trump’s 2020 voters are supporting him again while only 87% percent of Biden’s voters plan to vote for him in 2024.”

More:

“Among Biden’s 2020 voters, only 77% percent of Democrats in the poll have a favorable opinion of Biden, compared to 80% of Republicans for Trump.”

But Pfeiffer says we shouldn’t panic, because convincing people who have already voted for Biden to vote for him again is doable, and easier than convincing a Trumper to vote for Biden. But despite that, given the Reddish tilt to the Electoral College, we should assume that 2024, like the 2020 presidential election, will depend on a number of voters smaller than the number of attendees at a Taylor Swift concert.

A second point we talked about was Biden’s age. There are two referendums that will be a part of the 2024 presidential election. First, on Trump and his 91 counts. Second, on Biden’s age and whether he seems up to the task going forward.

It’s one thing for Biden to tell us about all that his administration has accomplished in 3 years. His results should be pitched to turn his vulnerability as an older person into a perception of wisdom. He needs to convince voters that the country is on a good path and that Biden, our captain, with his age and experience, has steered us to where we’re starting to see success.

Charlie Sykes suggests the pitch should sound like this:

“We’ve done the hard work. We took the punches. We had a plan and now it’s starting to turn around. So the question is, as we come back, who do you want in charge for the next four years?”

And when Republicans spew their litany of racial hatred, and class warfare, Biden should be saying:

“Working folks like you need cheaper prescription drugs, you need to be able to spend more time with your family by getting better wages for your labor…”

Ultimately 2024 will be about voter turnout. Convincing younger voters and those who aren’t fired up about Biden to come out to the polls will decide America’s fate.

Now take a beat and forget about the many crises we face. Let’s focus instead on our Saturday Soother. We’re expecting beautiful weather in the northeast, and much of our time will be spent outside. So join Wrongo in pulling up a comfy chair in the shade and spend a few minutes watching this lovely video of a Loon family swimming on a lake in a thunderstorm. It’s guaranteed to improve your outlook. You may want to bookmark this video to use whenever our politics are driving you nuts:

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Biden’s Plan To Cut Drug Prices

The Daily Escape:

Mars on left, Earth on right – image by alofeed

The Biden administration released its list of 10 prescription medicines that will be subject to the first-ever price negotiations by Medicare. This is a big deal because Medicare covers 66 million older Americans, people who routinely take very expensive drugs.

Until recently it was illegal for Medicare to negotiate prices with drug companies. But the Inflation Reduction Act (IRA), passed last August, gives Medicare that power. It also forces companies to pay a rebate to Medicare if their drug prices rise faster than inflation. The Congressional Budget Office estimates that price-capping measures will reduce Medicare expenses (and the federal deficit) by $96 billion by 2031.

The list includes drugs for diabetes, arthritis, and Crohn’s disease, and could sharply lower medical costs for patients. Reuters says that the US Centers for Medicare & Medicaid Services (CMS) spent $50.5 billion between June 1, 2022 and May 31, 2023 on these 10 drugs. That was about 20% of the total cost of drugs in the Medicare prescription drug program known as Part D.

The WaPo had an opinion piece by David Goldhill, CEO of SesameCare.com, a digital marketplace for discounted health services: (brackets and emphasis by Wrongo)

“The pharmaceutical industry earns almost 50% of its worldwide revenue here [the US], as do medical information-technology firms. [Medical] Device makers earn 40% of their money in the US. And this understates things, because US revenue is generated from higher prices, so margins are greater. If the US accounts for half of a company’s revenue, it probably contributes at least 75% of its profits.”

This has always been the business plan for Big Pharma: Make your money in the US and take whatever scraps of profit you can get in other markets.

That market subsidy is paid by American taxpayers generally (through the funding of Medicare) and by US pill-takers specifically when they pay higher co-pay prices for the drugs that help with their chronic conditions. The Economist points out that prescription medicines in America cost two to three times more on average than in other wealthy countries:

The blue dots are the price paid in the US for brand name drugs. The grey dots are prices paid in the various countries for all US drugs sold in those countries. The comparison of brand name to generics shows how much greater the cost is to an American.  It also follows that US patients’ out-of-pocket expenses, (the slice of drug costs not covered by insurance), are among the highest in the world.

It’s understandable why Biden’s move to start negotiations on some of the most expensive drugs has been fiercely opposed by the pharmaceutical industry. Essentially, high US drugs costs underwrite what amounts to a subsidy for buyers of the same drug sold when it’s outside the US.

Many of the Big Pharma have jumped on the legal bandwagon, challenging price-setting provisions in the IRA. More from the Economist:

“Since the law’s passage over 50 companies have blamed the IRA in earnings calls for clouding their prospects.”

A quick primer on drugs. Most medicines are either small-molecule drugs or large-molecule drugs. The former are the kind of pills that line our medicine cabinets. Large-molecule drugs, (also called biologics), are more complex and must be injected. The IRA grants biologics 13 years of pricing freedom after a drug is approved, while small-molecule drugs get only nine years post-approval before they must face Medicare’s bean counters. The industry estimates that small-molecule brands could lose between 25% and 40% in overall revenue due to the earlier cap on prices.

PhRMA, the pharma Industry’s lobbyist argues (and Republicans back them) that high US prices reflect the high cost of drug development. The pharmaceutical manufacturers are, of course, suing to stop the price negotiations. They say that allowing the government to negotiate lower bulk prices for drugs will stifle innovation, and will cut funds for research.

One thing that Big Pharma wants to avoid showing us is that they rely on smaller, more agile biotech firms for ideas. Between 2015 and 2021, 65% of the 138 new drugs launched by Big Pharma originated mostly from smaller firms. So, while innovation isn’t totally gone from the big firms, what they’re mostly doing is marketing the intellectual property of small pharmaceutical firms.

It didn’t take long for Republicans to jump on the decision to allow Medicare to negotiate drug prices. From Politico:

“Piggybacking on the pharmaceutical industry’s strategy, Republicans are working to persuade Americans that the Biden plan will stifle innovation and lead to price controls.”

Politico quotes Joel White, a Republican health care strategist:

“The price control is a huge departure from where we have been as a country….It gets politicians and bureaucrats right into your medicine cabinet.”

Politico says that the GOP effort to reframe the drug price debate may hurt them, since they plan largely to run on inflation, while the Biden plan will lower drug prices. Also they quote a new poll from the Kaiser Family Foundation (KFF) that shows 58% of independent voters trust Democrats to lower drug costs compared with 39% of Republicans.

Our politicians and pundits have bleated at us for years about being an “exceptional nation” – but what we really are is exceptionally gullible. As long as the large healthcare and pharmaceutical companies insist on standing between American consumers and their health needs, maximizing their profit will always come first.

We also continue to elect leaders who lobby for keeping corporations unleashed so that they can make as much profit as possible, while saying that the “market” will decide where the public good is prioritized. This keeps us hopelessly mired in a grossly expensive, and often ineffective healthcare system.

We continue to let ourselves be convinced by corporations and our politicians that reforming healthcare is impossible. That the solutions and methodologies used by other developed nations are substandard, and/or somehow immoral.

The Hill reported that the 14 leading US drug companies paid out more in stock buybacks and dividends from 2016 to 2020 than they spent on research and development. Those firms spent $577 billion from 2016 to 2020 on stock buybacks and dividends, $56 billion more than the $521 billion they spent on R&D. So, it’s oblivious how Big Pharma could easily fund their R&D with lower drugs prices.

It is also useful to remember that America has more healthcare billionaires AND healthcare bankruptcies than any other country. Those two things are inextricably linked.

As long as the pharmaceutical companies can maximize profits by buying politicians rather than by charging higher prices in other countries – the American people are the ones who will continue to get screwed.

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Henry Kissinger’s Reputation

The Daily Escape:

Sunset, Flaming Gorge Reservoir Recreation Area, UT – August 2023 photo by Doreen Lawrence. The Gorge is the largest reservoir on the Green River.

Welcome to your Monday wakeup call! Wrongo has lived a long life, but he’s still 20 years younger than Henry Kissinger. Kissinger turned 100 in May. When Wrongo was in his late teens, he was protesting against the war in Vietnam. At that point, Kissinger was already a foreign policy advisor to the failed presidential campaigns of Nelson Rockefeller.

He would go on to become Nixon’s national security adviser and Secretary of State, a crucial figure overseeing the conflicts in Vietnam, Cambodia and Laos, that many say included war crimes. Kissinger was never indicted, but Anthony Bourdain wrote the following about Kissinger in his 2001 book “A Cook’s Tour”:

“Once you’ve been to Cambodia, you’ll never stop wanting to beat Henry Kissinger to death with your bare hands. You will never again be able to open a newspaper and read about that treacherous, prevaricating, murderous scumbag sitting down for a nice chat with Charlie Rose or attending some black-tie affair for a new glossy magazine without choking. Witness what Henry did in Cambodia—the fruits of his genius for statesmanship—and you will never understand why he’s not sitting in the dock at The Hague next to Milošević. While Henry continues to nibble nori rolls and remaki at A-list parties, Cambodia, the neutral nation he secretly and illegally bombed, invaded, undermined, and then threw to the dogs, is still trying to raise itself up on its one remaining leg.”

But unlike other possible US war criminals like Reagan and Nixon, Kissinger has never needed to rehabilitate his reputation. As Rebecca Gordon says:

“….despite his murderous rap sheet, the media and political establishment has always fawned over him.”

Kissinger is remembered for his initiative to open diplomatic relations between the US and China in 1972, though full normalization of relations with China would not occur until 1979.

Kissinger’s second innovation was inventing the for-profit third act of a public service career. Before him, former foreign policy principals usually wrote a memoir, gave the occasional foreign policy speech, and maybe became head of a nonprofit.

But Kissinger pioneered a for-profit third act in 1982 when he and Brent Scowcroft founded Kissinger Associates (with the help of a loan from the international banking firm of E.M. Warburg, Pincus) to offer advisory services to corporate clients. Kissinger’s prime selling point was that he had access to the corridors of power, not only in Washington, but in Beijing and Moscow.

Wrongo started out being a fanboy, having read Kissinger’s 1957 book “Nuclear Weapons and Foreign Policy” while in high school. It criticized the Eisenhower Administration’s “massive retaliation” nuclear doctrine. It also caused much controversy at the time by proposing the use of tactical nuclear weapons on a regular basis to win wars. Once Wrongo was running a tactical nuclear missile base in the mid-1960s, he was no longer a fan.

Wrongo met Kissinger in the mid-1980s at an event hosted by David Rockefeller at his Pocantico Hills estate. HK was walking his dog, a particularly obstreperous Golden Retriever. Wrongo asked “What’s the dog’s name?” Kissinger replied: “Madman”.  Could there be a more perfect name for a Kissinger family pet?

Kissinger provided advice, both formal and informal, to every president from Eisenhower to Trump (though apparently, not yet to Biden). His fingers are all over the foreign policies of both major Parties. And in all those years, no “serious” American news outlet ever reminded the world of Kissinger’s long history of bloody intervention in other countries.

In fact, as his hundredth birthday approached, he was fawned over in an interview with PBS NewsHour anchor Judy Woodruff. From Rebecca Gordon:

“Fortunately, other institutions have not been so deferential. In preparation for Kissinger’s 100th, the National Security Archive, a center of investigative journalism, assembled a dossier of some of its most important holdings on his legacy.”

A third thing that Kissinger is associated with is the use of the concept of “Realpolitik” in foreign policy. It means conducting diplomatic policies based primarily on considerations of the reality on the ground, rather than strictly following ideology or moral and ethical premises.

Realpolitik has come to mean something quite different in the US: It is associated not with “what is” but with “what ought to be” on the ground. In Kissinger’s realpolitik, actions are good only when they sustain and advance American strategic power. Any concern for human beings that stand in the way, or for the law and the Constitution, are not legitimate.

More from Gordon:

“That is the realpolitik of Henry Alfred Kissinger, an ethical system that rejects ethics as unreal. It should not surprise anyone that such a worldview would engender in a man with his level of influence a history of crimes against law and humanity.”

The idea that the only “realistic” choices for generations of America’s leaders require privileging American global power over any other consideration has led us to our current state — a dying empire whose citizens live in an ever-more dangerous world.

Wrongo knew about Kissinger while in high school 60 years ago. There are thousands of Boomers who worked around him in government and the military who have clear personal memories of his actions. The late Christopher Hitchens wrote “The Trial of Henry Kissinger” which examines his alleged war crimes. These link Kissinger to war casualties in Vietnam and Cambodia, massacres in Bangladesh and Timor, and assassinations in Chile and Cyprus.

Not surprisingly, there are a number of countries HK’s had to avoid visiting in his “retirement” lest he be taken into custody on war-crimes charges.

And yet, he was Hilary Clinton’s foreign policy guru. He remains a respected political elder. It is as if we, as a nation, regularly put any of our memories older than last week down the memory hole to be incinerated. Of course, if nobody remembers anything inconvenient, then no one can be guilty of anything.

A thought game: Which living person gets sent into Hell first? Who should go second? Wrongo will start. First, Kissinger. Second, Dick Cheney. Your turn.

Time to wake up America! Some of our politicians deserve trials. To help you wake up, listen to the late Peter Tosh’s 1969 tune “You Can’t Blame The Youth”:

Sample Lyrics:

So, you can’t blame the youth of today
You can’t fool the youth
You can’t blame the youth
You can’t fool the youth

[Verse 3]
All these great men were doin’
Robbin’, a rapin’, kidnappin’ and killin’
So called great men were doin’
Robbin’, rapin’, kidnappin’

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The Coming $73 Trillion Wealth Transfer

The Daily Escape:

We’ve been on Cape Cod for a few days visiting daughter Kelly. Here’s a sunset photo taken this week at Campground beach, Cape Cod, MA – August 2023 iPhone photo by Wrongo. Smoke from Canadian wildfires made the sunset colors more vibrant.

Welcome to our Saturday Soother! But first, let’s talk about the coming generational transfer of wealth that’s underway as the wealthiest generation (the boomers) retire. According to Ben Carlson, 10,000 baby boomers will be retiring every day between now and the end of this decade.

The first boomers were born in 1946, meaning they’re 77 and on the fast track to 80 years old. Fortune Magazine pegs the wealth transfer from boomers to their kids at $73 trillion (with another $12 trillion going to charity). That means the boomers have $85 trillion in personal wealth!

That sounds great, since so many in our younger generations really could use a little help right now. But fewer people than you might expect will actually receive a sizable inheritance. This is due to the fact that the top 10% of America’s wealthy own something like 90% of the stock market. The concentration of today’s wealth will lead to fewer people benefiting from the generational handoff.

Here’s a chart from the NYT:

According to the NYT, ultra-high net worth households — people with $5 million to $20 million in liquid net worth — make up 1.5% of the population but will constitute 42% of the money that gets passed down in the years ahead. Many of them are boomers. From the NYT:

“A key reason there are such large soon-to-be-inherited sums is the uneven way boomers superbly benefited from price growth in the financial and housing markets. The average price of a US house has risen about 500% since 1983, when most baby boomers were in their 20s and 30s, prime years for household formation.

As US corporations have grown into global behemoths, those deeply invested in the stock market have found even bigger returns: The stock market, as measured by the benchmark S&P 500 index, is up by more than 2,800% since the beginning of 1983…”

Those rates of growth in financial and real estate assets will probably never be seen again. We’re passing a slow growth economy on to the next generations, while their own salaries and savings are having trouble keeping up with inflation.

Some worry that retiring baby boomers will crash the stock market by spending down their portfolios in retirement, leaving nothing to inherit. While it could happen, it’s unlikely that it will. The inequality of stock ownership means few people in the top 10% will never come close to spending all of their wealth in retirement.

So the wealth transfer will be more of a stream than a tsunami. Given the longevity of the wealthy, the money is going to be passed down slowly over time. A married couple that is retiring today has a 50% chance of at least one spouse living into their 90s.

Wrongo sees more and more people in the younger generations talking about how much they need help from their parents right now rather than decades down the road. The challenge is that parents need to be sure that if they make early transfers of wealth, that they keep enough on hand to maintain themselves securely in their advancing old age.

This can only be done by families having honest discussions around very awkward subjects. Talking about it can be helpful. It may be possible to work something out where some of the inheritance is parsed out slowly so the parents can enjoy seeing the kids (or grandkids) use some of the money while they’re still here.

Enough! It’s time for our Saturday Soother, where we ignore the also-ran candidate show that the Republicans put on in Wisconsin, and where we also ignore the perp walk in Atlanta. Instead, let’s focus on clearing our heads for next week’s outrages.

To help clear your head, grab a comfy chair by a window, and pour a mug of cold brew over ice. Now, watch and listen to Beethoven’s “Septet, op. 20”. It had its first performance in 1800 and was one of Beethoven’s most popular works during his lifetime, much to the composer’s dismay! He ultimately wished he had never written the piece.

Today we listen to the first movement, “Adagio – Allegro con brio” played in 2014 by the WDR Symphony Orchestra in Cologne, Germany. The WDR is a German radio orchestra:

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Homeschoolers Want Your Tax Dollars

The Daily Escape:

Rich Mountain Fire Tower, Marshall, NC – August 2023 photo by Michael Morris. This photo has a painterly quality to it.

Americans’ interest in homeschooling has soared in recent years. Migrating from mainstream education to homeschooling tracks with the rising fears among parents that schools are failing their children.

For parents frustrated with their child’s public school education, the pandemic provided another reason to give homeschooling a try. Homeschooling has become a significant element in education in the US. According to the National Home Education Research Institute (NHERI), there are 3.7 million homeschooled students in the US, about 6.7% of the school-age children in K-12. The popularity of homeschooling is growing rapidly, with an annual growth rate of 10.1% between 2016 and 2021.

Home schooling is legal in all 50 states, with the highest number of homeschoolers in North Carolina, Florida, and Georgia. About 10% of states have strict laws regulating homeschooling: New York, Vermont, Rhode Island, Massachusetts, and Pennsylvania. Another 18 states have no to low regulation, while 11 states provide complete freedom to parents regarding homeschooling. In New Jersey, parents do not have to let anyone know about their decision to homeschool their children. They don’t even have to produce any kind of proof at any time, explaining that their kids were homeschooled. Here’s a view of homeschooling regulation in the US:

Source: HSLDA

In many states, there is little oversight of homeschooling. And for many, what regulations do exist were adopted in the 1980s, when homeschooling was almost exclusively provided by a family member at home. Now, with the number of homeschool students soaring, much of the educating is now being provided by third parties.

The WaPo reports that there is an emergence of “microschools” provided by for-profit companies, such as Prenda which provide online courses and syllabi to the microschools. Last year, Prenda served about 2,000 students across several states by connecting homeschool families with microschools that host students, often but not exclusively in homes. The local educator is called a “guide” for students who study math and reading online while depending on the “guide” for other subjects. Families pay Prenda $2,199 per year, plus additional fees set by the guides, which can range from $2,800 to $8,000 per child although there is often a multi-child discount.

Many similar options to Prenda are transforming home schooling in America. More from WaPo:

“Demand is surging: Hundreds of thousands of children have begun homeschooling in the last three years, an unprecedented spike that generated a huge new market. In New Hampshire, for instance, the number of homeschoolers doubled during the pandemic, and even today it remains 40% above pre-covid totals.”

More:

“For many years, homeschooling has conjured images of parents and children working together at the kitchen table. The new world of homeschooling often looks very different: pods, co-ops, microschools and hybrid schools, often outside the home, as well as real-time and recorded virtual instruction. For a growing number of students, education now exists somewhere on a continuum between school and home, in person and online, professional and amateur.”

Still more:

“Microschools sometimes provide all-day supervision, allowing parents to work full time while sending their children to “home school.” Hybrid schools let students split their days between school and home. Co-ops, once entirely parent run, might employ a professional educator.”

All of this is adding to the conundrum of how K-12 education is financed in the US. The WaPo says that about a dozen states allow families to use taxpayer funds for home-school expenses. Education Savings Accounts, or ESAs, direct thousands of dollars to families that opt out of public school, whether the destination is a private school or their own homes.

Nonprofits, including school-choice advocates, are directing millions of dollars in charitable giving toward homeschool organizations, linking two powerful but traditionally separate movements into one interest group that seeks to move taxpayer money away from the local public school system into private hands.

In the past, homeschoolers and school-choice activists didn’t see themselves as aligned. The latter group wanted taxpayer money to pay for charter, private and religious schools, whereas homeschoolers looked to limit any government involvement.

But since the pandemic, they found themselves in common cause. Historically, homeschool advocates have been wary of any government money or involvement, for fear it would lead to rules and regulations.

But many school-choice advocates incorporate support for homeschoolers into their advocacy work, including for school vouchers that give these families tax dollars to pay education costs. Where they used to be a defensive constituency, today they have become partners.

And venture capitalists have invested tens of millions of dollars in new businesses to serve what they see as a growing, and potentially huge market. One entrant is Outschool, an online marketplace for classes, which has raised $255 million since 2015. This year, Outschool has delivered 500,000 live learning sessions to more than 150,000 students globally.

WaPo says Prenda has raised about $45 million. Primer, another microschool company formed to serve homeschoolers, has raised about $19 million, though its campuses are becoming more like tiny private schools, an example of the fuzzy line between traditional and home schooling. WaPo spoke to Michael Moe, founder of GSV, a venture capital firm in the Silicon Valley, who has invested in several education technology start-ups: (brackets by Wrongo)

“The mega trend of [school] choice is wildly important to us…All these shifts create opportunities for companies providing solutions that allow parents and communities to take more control of the learning.”

That’s “venture capitalspeak” for more privatizing of the commons in search of higher financial returns.

Vouchers that once paid only for tuition at private and parochial school can now, in some places, be used for homeschoolers. Most sweeping are Education Savings Accounts, or ESAs, which allow families to claim state tax dollars to use at their own discretion for any education expense.

This increasingly means taxpayer money is following the student out of the public school. It flows to whatever a family chooses. That can include things like Prenda’s fees, online classes or home-school curriculum, as well as tuition at private schools.

In Detroit, a program called Engaged Detroit , is a cooperative that’s part of a network specifically to serve Black families looking for schooling options in response to the pandemic. Among Engaged Detroit’s backers is the VELA Education Fund, which has made more than 2,400 grants totaling more than $28 million since 2019. VELA’s primary funders are longtime advocates for school choice: the Walton Family Foundation and the Charles Koch foundation, Stand Together.

There are pluses and minuses to homeschooling. There are situations where it’s appropriate to homeschool, but the loose oversight and lack of expertise might mean that some homeschooled kids are going to be at risk. When parents say they don’t trust the trained/educated teachers in their public school, but instead want their kids to get the viewpoints of only one or two specific people, the kids are entering a small world. Later in life, they’ll have to adjust to a larger reality.

Wrongo is fully aware of the weaknesses of our public school systems. It’s possible that SOME of these small private schools that they say are “home schools”, are teaching those kids better than some public schools do. So Wrongo is ok if kids learn there. But there should be no problem with requiring these kids to take end-of-year minimum standards tests, proving that they learned the base-level material in each subject.

Without some testing, society has no idea if these kids learned anything. The lack of oversight, particularly in those situations where taxpayer money was diverted to homeschooling, seems well—Wrong.

The literature is clear: Some homeschooled children have attended Ivy League schools and won national spelling bees. Some have also been the victims of child abuse. Some are taught using the classics of ancient Greece, others with Nazi propaganda.

Many parents say home education empowers them to withdraw from schools that fail their children. Or they want to provide instruction that better reflects their personal values. But should the rest of us pay for those individual decisions?

Time to wake up America! Homeschooling may offer certain advantages, but also comes with a set of disadvantages that should also be considered. And it’s clear that those who would privatize K-12 education want to take funding from the public school systems wherever they can.

To help you wake up, listen to Steely Dan’s “My Old School” from their 1973 album “Countdown to Ecstasy”. Steely Dan always used outside musicians, and on the record, they had the late Skunk Baxter on guitar and four (!) saxophones. But Steely Dan didn’t like to tour. Today, we’re going to see a rare video of a Steely Dan live performance on “The Midnight Special” where Skunk had a blistering solo for the song’s finale:

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Rural Hospitals Are No Longer Providing Maternity Care

The Daily Escape:

Perseid meteor shower, from Mt. Evans, CO – August 13, 2023 photo by Paul Blais Photography

Welcome to our Saturday Soother, but first, Wrongo intends to spin you up before eventually letting you slow down.

There’s a crisis in rural healthcare in America. Rural hospitals are closing at a rapid rate. Our county (Litchfield) in Connecticut has one of three remaining hospitals that are designated as rural in the state (Sharon Hospital).

A problem for rural hospitals is that many are closing down their labor and delivery services in order to try and remain economically viable. WSHU, a CT-based NPR affiliate, has covered the impact of these closures to Connecticut. They quote Peiyin Hung, a researcher on maternal and rural health at the University of South Carolina:

“My team has been tracking nationwide, hospital-based obstetric unit closures since 2008 up to 2022,…. Almost 300 hospitals closed their OB units.”

WSHU points out that more than 60% of those closures were in rural areas. Why are so many hospital groups moving away from delivering babies in rural locations?

WSHU quotes Dr. Robert Roose, chief medical officer at Johnson Memorial, a hospital in rural Stafford Springs, CT that closed its obstetric unit. He said that it’s a safety issue. Hospitals with fewer than 200 deliveries a year, like Johnson Memorial, are considered low-volume birthing centers:

“There is a clear and critically important correlation between volume and quality of services provided when it pertains to labor and delivery and maternity care…”.

Three years ago, Hartford HealthCare’s Windham Hospital in Willimantic, CT stopped delivering babies, citing the same concern.

Also, malpractice insurance rates go up for low birth-volume hospitals because insurers feel the risk is higher if doctors aren’t getting sufficient practice with birthing. Hung says another problem is the level of reimbursement:

“Medicaid…pays half as much on average [as] private insurance pays for labor and delivery across the country”.

That’s important because about four in 10 of all Connecticut deliveries are covered by Medicaid. Simply put, delivering babies doesn’t pencil out for many rural hospitals.

There are other factors: Rural America’s demographics skew older. Young families in general prefer living in the suburbs or exurban areas. Couple that with America’s lower birth rate and rural hospitals really can’t maintain the birthing volume they need to remain economically viable.

The Center for Healthcare Quality and Payment Reform, (CHQPR) a Pittsburg-based health policy group published “A Crisis in Rural Maternity Care in the United States” which shows the problem:

“Fewer than half (45%) of the rural hospitals in the US currently offer labor and delivery services, and in 9 states, less than one-third do. Over the past decade, more than 200 rural hospitals across the country have stopped delivering babies”.

More:

“Hundreds of additional communities are at risk of losing maternity care because of the financial challenges rural hospitals are facing….More than 1/3 of the rural hospitals that still have labor & delivery services have been losing money on patient services, so their ability to continue delivering maternity care is at risk.”

CHQPR reports that more than half of small rural maternity care hospitals lost money in 2021-22.

They suggest that a primary reason rural hospitals are losing money is that private insurance plans pay them less than what it costs to deliver many of the services they offer patients, not only maternity care. They point out that while rural hospitals are losing money on uninsured patients and Medicaid patients, the losses from private payers have the biggest impact on their overall profit margins.

CHQPR suggests that a potential solution is to require that health insurance payments actually cover the cost of rural maternity care. With more than 40% of births (on average) in rural communities paid for by private health plans, having the private insurers pay more would help keep rural maternity care viable:

“Payment amounts must be higher in communities that have difficulty attracting staff, and payments must also be higher in communities with smaller numbers of births to ensure that revenues cover the fixed costs.”

This means that the fee-for-service model isn’t working in low-volume hospitals. Rural hospitals are only paid when they actually provide a service, but a small hospital has proportionally higher overheads than larger hospitals, since they must be staffed and ready to deliver a baby at all times, even if there are no deliveries at all. Read CHQPR’s report “A Better Way to Pay Rural Hospitals”.

Back to Connecticut, Sharon Hospital has proposed closing its labor and delivery unit. There will be a public hearing to consider the closure later this year. But Sharon is about an hour from its affiliated hospital (Danbury Hospital) that has a fully-staffed labor and delivery facility. Sharon may actually be closer to two other unaffiliated hospitals in New York state than it is to its own parent facility.

It’s now time for our Saturday Soother. Litchfield County is having beautiful weather this weekend. We’re taking advantage of it by going to a live Baroque music concert, and possibly heading off to the annual fair in a local town.

To help you relax and zone out from all of the Trump indictment analysis, grab a chair outside in the shade and watch and listen to “Gortoz a Ran” (I’m Waiting) sung by Denez Prigent and Lisa Gerrard. The language in the song is Breton, spoken in Brittany, France. It is closely related to Cornish and Welsh, and all three are Celtic tongues. When the Angles, Saxons and Jutes invaded Britain in the fifth century (400-500 AD), many of the Britons in Cornwall, Devon, and the West Country fled across the English Channel to France. Because of the influx of Britons, the region became known as Brittany.

Most of the images in the video are of Scotland, England, Wales, and Brittany. Lisa Gerrard isn’t singing in any language; she’s just vocalizing. The Uilleann pipes, an Irish instrument, are heard at 3:50:

Lyrics: English Translation

I was waiting, waiting for a long time
In the dark shadow of grey towers
In the dark shadow of grey towers

In the dark shadow of rain towers
You will see me waiting forever
You will see me waiting forever

One day it will come back
Over the lands, over the seas

The blue wind will return
And take back with it my wounded heart

I will be pulled away by its breath
Far away in the stream, wherever it wishes

Wherever it wishes, far away from this world
Between the sea and the stars

The song describes waiting, possibly forever: Aren’t we all waiting? What are we waiting for? For whom are we waiting? Happy Saturday!

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