Detailed Abstractions

Well currently, the question is moot as the US government does own 61% of GM stock.  So they are the controlling shareholder, but it seems once again, pundits, journalists, and the rest are acting as if it’s a good thing only because it’s not as bad is it could be.

Via the Economist (here subtitled: An apology is due to Barack Obama: his takeover of GM could have gone horribly wrong, but it has not):

AMERICANS expect much from their president, but they do not think he should run car companies. Fortunately, Barack Obama agrees. This week the American government moved closer to getting rid of its stake in General Motors (GM) when the recently ex-bankrupt firm filed to offer its shares once more to the public…

Which sounds nice in theory, but in reality, the US Treasury through pressure by the Obama administration spent $50 billion dollars to own 61% of the shares.  With roughly 500 million shares available, this means the US government current owns 305 million shares.  At the current stock price today of .375 dollars, their 50 billion dollar investment is worth roughly 115 million dollars.

So even if a theoretical IPO that generates excitement were to happen, in order for the government to recoup $50 billion dollars the stock price will have to increase to $163 dollars a share or by more than 400 times it’s current price.

But of course when it’s not your money you lost, but taxpayers money, I guess that changes the calculus….

The Economist continues:

…Many people thought this bail-out (and a smaller one involving Chrysler, an even sicker firm) unwise. Governments have historically been lousy stewards of industry. Lovers of free markets (including The Economist) feared that Mr Obama might use GM as a political tool: perhaps favouring the unions who donate to Democrats or forcing the firm to build smaller, greener cars than consumers want to buy….

& here’s where it gets more confusing.  After stating the obvious concerns one would normally have when any business starts making decisions based upon politics instead of what’s best for the company (& also what they are legally bound to do, their fiduciary responsibility), they tell us those fears are wrong:

…Mr Obama has been tough from the start. GM had to promise to slim down dramatically—cutting jobs, shuttering factories and shedding brands—to win its lifeline. The firm was forced to declare bankruptcy. Shareholders were wiped out. Top managers were swept aside….

While simultaneously explaining to us how they did in fact make tons of political decisions:

Unions did win some special favours: when Chrysler was divided among its creditors, for example, a union health fund did far better than secured bondholders whose claims should have been senior….

DA posted about how the Obama administration used their leverage and power to bend the law to help the Unions over other creditors who should’ve legally be first in line for any monies (here).

But of course, that wasn’t the only political meddling in GM (the Economist):

Congress has put pressure on GM to build new models in America rather than Asia, and to keep open dealerships in certain electoral districts. But by and large Mr Obama has not used his stakes in GM and Chrysler for political ends….

Then why does the Economist think it’s a good idea?

[President Obama] his goal has been to restore both firms to health and then get out as quickly as possible. GM is now profitable again and Chrysler, managed by Fiat, is making progress. Taxpayers might even turn a profit when GM is sold….

& there we have it.  So long as there wasn’t a huge amount of political intervention and there’s a possibility that the government might recoup all their money…. Thing are good for The Economist.

Of course “good” is being defined by potential future results.  The truth is, the US government buying up private businesses creates far more implications that whether the stock prices rise enough to recoup the money they were given.

Enter Harvard Law School on Corporate Governance and Financial Regulation.  Instead of asserting some win based upon theoretical future value, they asked the more important question (here):

In our paper When the Government Is the Controlling Shareholder, recently made publicly available on SSRN, we analyze the ways in which existing corporate law structures of accountability change when the government is the controlling shareholder, and the extent to which federal “public law” structures substitute for displaced state “private law” norms.

& the implications are vast.  In their full research paper (here), they ask a much more serious and long term question.  Which is, what rights do other shareholders have when the government owns a controlling interest and is forcing companies to make decisions that will not benefit shareholders in the long term?

Normally, shareholders have legal rights at the state level where officers of any company are held legally liable to their fiduciary responsibility:

In the handling of money and when one acts as a corporate or individual trustee, there is a fiduciary responsibility owed to the principal party. It is defined as a relationship imposed by law where someone has voluntarily agreed to act in the capacity of a “caretaker” of another’s rights, assets and/or well being. The fiduciary owes an obligation to carry out the responsibilities with the utmost degree of “good faith, honesty, integrity, loyalty and undivided service of the beneficiaries interest.” The good faith has been interpreted to impose an obligation to act reasonably in order to avoid negligent handling of the beneficiary’s interests as well the duty not to favor ANYONE ELSE’S INTEREST (INCLUDING THE TRUSTEES OWN INTEREST) over that of the beneficiary. Further, if the agent should find him/herself in a position of conflicting interests, the agent must disclose the dual agency (acting for two parties at the same time) or risk being accused of constructive fraud in regards to both or either principals….

What this is for, is so shareholders can be protected.  If a company you own shares in decides to willfully make decisions which are counter to this responsibility, shareholders can sue for compensatory damages.

But what if the main decision maker is the federal government?  Even though the Economist seems to be ok with this, though recent history shows this is an incredibly naive position to take (from the full report):

Even though government investment started less than three years ago, there are already troubling anecdotes….

For instance, after the government purchased 71% of AIG and AIG gave 165 million dollars in bonuses which were contractually guaranteed, the “owners” responded with threats.  Senators and Congressmembers bemoaned this.  Told us it was unethical for AIG to follow their contractual obligations because the government owns them.  Even President Obama:

….urged Congress to draft legislation that sends “a strong signal to the executives who run these firms that such compensation will not be tolerated.”

As if Senators, Congressmen, and the President have any idea what pay should be in the first place… (DA post here), but they went further (from the full report):

Barney Frank, chairman of the House Financial Services Committee pushed the idea of suing AIG….

Since they have majority ownership:

[Barney Frank] “I still believe that we have a right legally to recover this, because we can assert our ownership rights and say, yes, you may have a contractual right to a bonus but your rotten performance means you should forfeit it”…

Additionally:

…”senior Treasury officials have been meeting several times a week all spring to review, one by one, the payments to the company’s executives. But the time-consuming discussions have never been resolved whether any of the executives should get paid.”  Now, even routine bonuses are pre-cleared with Kenneth Feinberg, the “compensation czar.”

& what of the bank bailouts?

…bailout recipients faced mounting pressure from the President and Congress to increase lending.  President Obama said he would “hold banks ‘fully accountable’ for the assistance they recieved and that they ‘will have to clearly demonstrate how taxpayer dollars result in more lending for the American taxpayer’”…

What about foreclosures, from people who can’t pay their mortgages?

Rep. Barney Frank “acknowledged that struggling homeowners [weren't] getting help as fast as many in Congress had hoped”, and urged bank executives to put in place a foreclosure moratorium until the government could implement mitigation programs.

These same people who also went after GM & Chrysler for closing too many dealerships.  And then there’s Citigroup, Bank of America, etc, etc, etc. (DA post here).

But this is Harvard, so they talk about ways other countries have handled this.  For instance, the UK started another government agency.  Theoretically it’s independent of politics, with a sole goal to find businesses which need to be saved and to save them.

Which of course is an entire other conversation…. why anyone believes the government can make the bad decision of buying a failing private company and solve the conflict of interest by simply building another government agency is…. well, it’s stupid.

It would be like having an entire corrupt police force arguing that the solution to the corruption is to merely hire more cops.

& therein lies the true problem.  When the press, politicians, and us normal voters, refuse to look into the future to see the true implications of such actions, we end up with answers like “since our [government's] original plan didn’t work, it must only be because we didn’t go far enough.”

I would submit to those willing to critically contemplate, that the decision itself was wrong & all these implications were obvious, known, and serve as further proof that politics and business don’t mix.

More importantly however, they fail in their analysis on a fundamental level.  True critical thinking can never rely on results as proof of anything.  Because it’s always possible to make a bad decision, and have positive results in spite of it.  It’s also completely possible that you make the most perfect decision ever, but it still fails.

So no – the question isn’t really whether the government made a good investment, whether taxpayers will actually recoup the $50 billion spent, or whether GM ultimately succeeds in the long run.

The question should be- should we have done it regardless of the answer to any of those questions?

& I would proffer the answer is easy: no.  The long range implications of such dangerous behavior isn’t worth saving one single car company.

Of course, that’s just my two synapses firing…. they could always be misfiring

Over at HBR Amar Bhidé has written an article discussing the housing market and subsequent crash (very interesting – entire thing here) and proposes that among the causes of the crash, a sort of self restriction had taken the market from a vibrant one to one controlled by centralized authority:

The modern economy creates and spreads unprecedented prosperity by drawing on the resourcefulness and enterprise of the many, not by blindly following the dictates of a few. Individuals today make and act on their own judgments to a degree that would have been unimaginable to our forebears….

In recent times, though, a new form of centralized control has taken root—one that is the work not of old-fashioned autocrats, committees, or rule books but of statistical models and algorithms. These mechanistic decision-making technologies have value under certain circumstances, but when misused or overused they can be every bit as dysfunctional as a Muscovite politburo….

His argument is one we’ve heard from the military and other agencies as well – what they needed was more human intelligence on the ground, not more technical complexity from high.

He continues:

…Consider what has just happened in the financial sector: A host of lending officers used to make boots-on-the-ground, case-by-case examinations of borrowers’ creditworthiness. Unfortunately, those individuals were replaced by a small number of very similar statistical models created by financial wizards and disseminated by Wall Street firms, rating agencies, and government-sponsored mortgage lenders. This centralization and robotization of credit flourished as banks were freed from many regulatory limits on their activities and regulators embraced top-down, mechanistic capital requirements. The result was an epic financial crisis and the near-collapse of the global economy. Finance suffered from a judgment deficit, and all of us are paying the price….

Even going so far as to invoke Hayek to make the case:

The great twentieth-century thinker Friedrich Hayek made the classic argument for decentralized choice in his essay “The Use of Knowledge in Society.” The stability of the economy depends on constant adjustments to small changes, he believed—“B stepping in at once when A fails to deliver.” No single individual has the knowledge to make those adjustments; rather, it is widely dispersed across many individuals. But information about “the circumstances of the fleeting moment” cannot be quickly and accurately communicated to a central planner. Therefore, individuals who have on-the-spot knowledge must be allowed to figure out what to do….

Adaptation to changes—the focus of Hayek’s article—is only part of the story. The success of the modern economy also depends on innovation. As it happens, decentralization beats central planning here, too. Innovations are unprecedented, one-of-a-kind developments. Even incremental ones require imagination. An innovator cannot simply rely on historical patterns in placing bets on future opportunities. Knowing what has worked before and what hasn’t is but a starting point. Innovation also requires considerable trial and error. Unforeseen technical problems—or customers not doing what they had told market researchers they would—demand recalibrations that combine on-the-spot observations and historical knowledge with leaps of imagination….

Of course like most writers who seem to espouse the virtues of decentralization, he still thinks some things need centralized control which don’t:

Technologically advanced societies couldn’t function without some centralized control, of course. Governments need to regulate how businesses drill for oil, develop genetically modified crops, and pick the paints they use in toys, for instance….

Either way, he goes on to argue that the financial industry, using mathematical formulas and statistical models, embraced a sort of top-down control giving rise to “Mechanistic Decision Making” & “Robotic Finance”.

This basic line of reasoning isn’t exactly new.  Wired had an article in February of 2009 (here) about the risk formula which killed Wall Street.  The formula worked well for 5 years as investors used it as a way to measure pooled risk in MBSs (mortgage backed securities), but the formula:

…still hadn’t solved all the problems of mortgage-pool risk. Some things, like falling house prices, affect a large number of people at once. If home values in your neighborhood decline and you lose some of your equity, there’s a good chance your neighbors will lose theirs as well. If, as a result, you default on your mortgage, there’s a higher probability they will default, too….

Now while both articles point to specific issues which helped the collapse, like most they conveniently left out all discussion in reference to the government’s role in perverting the incentives, but together I think they present an interesting challenge to those of us who believe in decentralization as a good (DA post on decentralization here).

& that is – can there be mechanisms put into place which actually help foster decentralized control since our history, both long term and recent, seems to indicate humans have a tendency towards centralized control at certain levels of complexity.

We see this through various disciplines such as anthropology, archeology, and history, that over the past 10,000 years or so, humans made a mass migration from the nomadic lifestyle which was practiced for nearly 200,0000 years, to villages, towns, and cities.

Using agricultural knowledge to help spur this transition, humans also started growing in population.  As more land became developed and could support more people, villages and towns grew into large cities & states.

With the advent of these new societal structures, came new power structures.  In nomadic communities, authority is handled from a tribal point of view.

This means that people don’t really have positions of authority which is spelled out by any specific power structure.  Their authority comes from their ability to influence.  So elders with specific knowledge are sought after for wisdom and help, without a formal power structure of say a judicial system.

With the growth of society, came the growth of power structures as they became necessary to handle the population explosion.  Things such as basic sanitation and clean water were large public work projects which required the control of enough resources (labor mostly) which heretofore had been impossible.

These beginning power structures, would eventually evolve into the world in which most of us find ourselves today: a world in which more of our daily lives are coming under scrutiny from centralized power structures.

& we’ve seen what these power structures are capable of doing, both good and bad.  While it allowed for greater sharing of knowledge through vibrant cities which pooled resources in denser areas, it also allowed for the pooling of resources for war.

Either way, in this case the centralized authority we can normally blame was there in multiple areas, but for this specific factor it was self imposed.

Indeed in looking at human history, it seems given some level of complexity we seek out centralized forms of control.  It might seem today as if humans would never pick governments and politicians as idiotic and with as much power as they have today, but these were gradual changes over generations.

Taken with the most recent example of self selected centralization, it may be we need to consider the possibility that humans tend towards this direction with or without institutions directly promoting centralized control.

More thoughts on complexity here

The campaign is in full gear, each side trying their best to paint the other side as evil itself…. enter the President (here via Politico):

MENOMONEE FALLS, Wis. – President Obama, playing off the slogan of his 2008 campaign, mocked Republicans Monday as the party of “No, we can’t” and skewered Senate Minority Leader Mitch McConnell for saying he wishes the GOP “had been able to obstruct more” of Democrats’ agenda.

“Obstruct more? Is that even possible?” Obama said with a laugh during a fundraiser for Tom Barrett, Democratic gubernatorial candidate in Wisconsin. “So apparently that’s their plan for the future: ‘No we can’t.’ Clean energy: ‘No we can’t.’ Health care: ‘No we can’t.’ Wall Street reform: ‘No we can’t.’ ”…

First, I’ve written about this before (here).  The short version is just by using critical thinking one should come to the conclusion that obstruction isn’t necessarily a bad thing.  It depends upon what is being obstructed and why.

But honestly, this whole stupid argument just needs to die.

The facts are:  We have a President whose own party controls the Whitehouse, Congress, & the Senate….

Yet it’s someone else’s fault they are unable to manage being the party in power.

It would be as if Microsoft’s CEO went on TV to give an interview and complained that it was AOL’s fault they lacked success.

With all due respect Mr. President, a prior president set some precedent with the phrase “The buck stops here.”  Maybe it’s time to start contemplating that more seriously.

What’s going on around the web?

Jon Stewart on the “Mosque @ Ground Zero” (here).  Well worth the 6 minutes and highly illuminating.  While all news reports seem to state the same “Mosque @ Ground Zero” it’s more appropriate to say the truth:  it’s an Islamic Cultural Center close to ground zero – not on it.

Maybe it’s just me, but there seems to be a lot of faux outrage on this one.

@ ScienceBlogs.Com they have a bizarre reading of what they are calling a bizarre reading (here):

CNSNews, formerly the Christian News Service, has the most bizarre way to frame Judge Walker’s Prop 8 ruling that I’ve seen yet:

U.S. District Judge Vaughn R. Walker, who ruled last week that a voter-approved amendment to California’s constitution that limited marriage to the union of one man and one woman violated the Fourteenth Amendment of the U.S. Constitution, based that ruling in part on his finding that a child does not need and has no right to a mother. Nor, he found, does a child have a need or a right to a father….

But if you go to the full article on CNSNews, they are specifically disputing claims the judge used in “finding of fact” papers, which ultimately were then used as justification for his ruling.

So while I probably don’t agree with CNSNews 99% of the time, they didn’t frame anything.  They didn’t make any assertions.  A judge, wrote papers which are now considered legal facts (as if a jury had made the same decision) & CNSNews responded directly to those papers.

Even if you disagree with CNSNews, I think the judge is the one who framed the debate, they just followed it by responding directly to them.

In Psychology news, apparently they’re running out of problems.   Even as the DSM has grown from 182 disorders and 34 pages long in 1968,  to 297 disorders in 886 pages in 1994 (via Wiki here), it’s not big enough.

Speakers on Sunday at the 118th Annual Convention of the American Psychological Association have a new scourge to talk about:  super heroes in comic books (via EScienceNews here):

Watching superheroes beat up villains may not be the best image for boys to see if society wants to promote kinder, less stereotypical male behaviors, according to psychologists who spoke Sunday at the 118th Annual Convention of the American Psychological Association. “There is a big difference in the movie superhero of today and the comic book superhero of yesterday,” said psychologist Sharon Lamb, PhD, distinguished professor of mental health at University of Massachusetts-Boston. “Today’s superhero is too much like an action hero who participates in non-stop violence; he’s aggressive, sarcastic and rarely speaks to the virtue of doing good for humanity. When not in superhero costume, these men, like Ironman, exploit women, flaunt bling and convey their manhood with high-powered guns.”

The comic book heroes of the past did fight criminals, she said, “but these were heroes boys could look up to and learn from because outside of their costumes, they were real people with real problems and many vulnerabilities,” she said….

Even if I were to accept the idea that everything they are stating is true in that a) today’s superheroes are giving superheroes a bad name & that b) this affects some percentage of readers – the numbers are still too low in my estimation to warrant further research.

I mean really, what exactly is the percentage of population who routinely read comic books?

& out of all of them, not all will be effected in the same way, while most will not be impacted either way (other than knowing the comic book material itself).

My point is that while figures aren’t easy to come by, we’re probably talking about less than 1 percent of the population who routinely read comic books and only a very small percentage of them will ever be overly effected by it.

Maybe it’s just mean, but seems like a waste of time and research money.

Side note: for a better understanding of the pressing issues facing pyschology today, there is a great article via FAQs.org via The Skeptic Magazine here.

Lastly, will Israel attack Iran (debate via The Atlantic here):

In the few days since the current issue of The Atlantic came out, Jeffrey Goldberg’s cover story, “The Point of No Return,” has already prompted sharp thoughts, big feelings, and intense discussion. Among the early responses, we’ve seen a quick, widespread recognition of scope of Goldberg’s reporting and the depth of his analysis. Fred Kaplan comments over at Slate….

I don’t always concur with Mr. Goldberg, but his analysis is spot on.  The question isn’t whether Israel will do it, but when (assuming Iran continues forward with their ambitions).  The possible results of Israel having a neighboring country whose leaders have consistently espoused the complete removal of Israel and all Jews from the area, puts them at a risk level where the alternatives are limited.

To put it another way – Israel’s government, the US government, the Russian government…. all of them have the primary responsibility of keeping their nation secure & a nuclear Iran not only makes Israel quite a bit less safe, but increases the risks of a nuclear bomb being released to a degree which is simply too high for Israel to ignore.

Well, the verdict is in. The Republicans are being cast as the party of no.  The party without ideas.  The party of obstruction.

Please make no mistake about it, this marketing push isn’t really about obstruction, but about the upcoming elections.  Just as President Clinton did brilliantly prior the 1996 elections when he cast all Republicans as following Newt Gingrich and obstructing spending laws, the Obama administration is moving forward in much the same pattern.

This is possible because the White House, regardless of occupant, has historically been able to control the news cycle.  In my opinion, this should be an indictment on journalism as a whole when alternatives which exist aren’t being reported, but simply put:  when the President talks, news happens.  When your normal representative talks, you’re lucky if you even hear about it.

It worked during the Clinton Administration on spending, it worked during the Bush (43) Administration on the Patriot Act, & it certainly might work again this time. Irregardless, the campaign is back and in high gear (here via USA Today):

…”Too often, the Republican leadership in the United States Senate chooses to filibuster our recovery and obstruct our progress,” Obama said. “And that has very real consequences.”…

Or here via NY Times blog, here via WaPo, & on and on and on…

From a critical point of view however, obstructionist should not automatically be a pejorative.   Without analyzing what exactly is being obstructed, this is little more than name calling.

As an example, if say in the 1940s Congress was actively trying to “obstruct” the intermittent of thousands of innocent Japanese-Americans, this would not only be a moral good, but any thoughts to compromise solely to be seen as a non-obstructionist would be wrong.  What would be a compromised alternative?  House arrest?

Additionally, we have to be on the lookout for the differences between the marketing of bills and their actual language.  Think of the new health care legislation.  President Obama’s promises of more health care for all at cheaper prices, simply don’t seem to be fulfilled by the 2500 page law passed… or maybe they are being fulfilled, but like the Patriot Act, no one really knows what the new legislation actually means (here via Cato):

…The Patient Protection and Affordable Care Act represents the most significant transformation of the American health care system since Medicare and Medicaid. It will fundamentally change nearly every aspect of health care, from insurance to the final delivery of care.

The length and complexity of the legislation, combined with a debate that often generated more heat than light, has led to massive confusion about the law’s likely impact….

Or on yesterday’s Meet The Press Rep. Van Hollen stated (transcripts here via MSNBC):

…The frustration is there are lots of important bills to push for jobs that are sitting over in the Senate.  But it’s not the fault of the Democratic leadership in the Senate.  I mean, frankly, you know, John Cornyn and his allies have been trying to block a whole lot of very important jobs measures.  We in fact sent a piece of legislation over very recently that would remove these perverse tax incentives to ship American jobs overseas, that give American corporations a bonus if they ship American jobs overseas….

Just like health care, the basic idea that our representatives are working on private job creation incentives is a good one.  But just like the Obama Administration’s promises on health care, Rep. Van Hollen is selling us a job creation bill which has little chance of actually creating jobs.

To translate – what they mean by “removing incentives” is to increase taxes on businesses who outsource.  Now, some may want this to happen for various reasons, but the economics are pretty straight forward.  Tax increases have never increased jobs & forcing a tax such as this could actually result in companies simply moving their head quarters as well.

To be fair, there are bills I don’t believe the Republicans should block, for instance the extension on unemployment benefits (though it seems likely to pass soon: here via The Hill).

Yes, the point isn’t that the Republicans are doing the right thing and the Democrats are failing at every single step, the point is only intended to remind us of the old saying about representative governance:

The people will get the government they deserve.

& so long as we allow marketing campaigns to have more force in elections than critical analysis does, we will likely continue to be disappointed.

During a school assembly for students enlisting in the Marine Corps, two teachers disrupted the assembly by protesting the war (here):

…For the fifth consecutive year, school resource officer Nick Pasquarosa recognized those seniors who had enlisted in the military. “While Nick was speaking, one faculty member held up a sign saying “End war” and another female teacher stood beside her,” said Assistant Principal Ann Knell. “The two faculty members sat down and did not clap during a school-wide standing ovation for those students.”….

It’s truly unbelievable we have such dolts teaching our children.  I guess it’s sort of analogous to the blind leading the blind, but in this case the students knew better than the teachers so it’s more like… the blind leading the seeing?

Please don’t misunderstand – I could care less about their actual stance and more about the time, place, manner, and assumptions with which they decided upon this course of action.

First, it’s well known that public schools are NOT bastions of free speech, nor are they paragons of oppression either.  But through time and court precedent, educators should (and most likely do) know that the primary responsibility to the children is education.  So any free speech that disrupts that process can be prevented and/or punished.

For instance, if I went to school with a pro-drug message, I would be sent home.  If I wore a blank arm band in memory of fallen soldiers, I would likely still be sent home, but ultimately win.

Second, and in my opinion more importantly, is the arrogance with which the teachers acted.  Keep in mind, that this is their employer giving an assembly which they believe brings value to their students (clients).  Yet they still protested?  I use the term arrogance, because I think we can safely say they assumed, and possibly correctly so, that they will not be fired.

This is what really gets me.  Not only did they believe they were in the right to disrupt a school proceeding, but they seem to believe it’s about freedom.  When in reality, if any company in the world decided to gather its employees to spotlight process X, a protest would certainly be met with immediate firings.  This would also be true in a private school setting.

Yet these teachers are claiming a right to do this and that it’s a teaching moment.  I would submit to them they should use it as a learning moment it should be instead instead of arrogantly attempting to parlay this into a “teaching” opportunity.

For some, it might be very disconcerting news to learn that internal documents from the Obama administration predicted the exact opposite of what they were publicly selling (here):

Internal administration documents reveal that up to 51% of employers may have to relinquish their current health care coverage because of ObamaCare….

Publicly however…. in speech after speech we were told things like, you won’t have to give up your existing coverage even while internal documents predicted:

…The “midrange estimate is that 66% of small employer plans and 45% of large employer plans will relinquish their grandfathered status by the end of 2013,” according to the document.

In the worst-case scenario, 69% of employers — 80% of smaller firms — would lose that status, exposing them to far more provisions under the new health law….

I’m unsure what the machinations coming will be from the White House – something along of the lines of this was only one report taken out of context – likely enough to allow true believers to sigh and continue to support this president.

Either way – this really doesn’t change much in the way of the facts pertaining to health care reform.  The bill is going to be a disaster for the US & if these policies are allowed to fully mature, this will go down in history as a major mistake that the public should’ve prevented.

It wasn’t all that difficult to see what they were selling couldn’t possibly contend with reality.  When people were told by their leaders that this reform would increase demand, increase regulations, and yet still decrease costs they could’ve easily spotted it for the scam it was.

Instead, the average citizen plodded along and by default told their leaders not to stop this.  They told them in polls they hated it, but didn’t want it prevented.  They tell them in polls today they hate it, but don’t want it repealed.  They told them when few wrote – please stop this.

No – the only thing this “new” information tells us is that the government’s own reports confirmed what many independent sources were saying & this administration, cloaked in the mantle of transparency, hide this information from the public and told a completely different story about the legislation when asked.

Maybe this will move some fence sitters against Obamacare and maybe this can be used as motivation to push back some of the legislation, but the truth is we the people failed the day the law was signed.

Over @ Columbia Journalism Review, Greg Marx, has written a piece to let us all know that the 1994 political movement led by Newt Gingrich, the Contract with America, didn’t really do anything (read whole thing here).  The problem is, they have no real evidence to back up their claim and the evidence they use is either pure speculation or actually can be used as evidence to the contrary.

As a side note – I wish both the Republicans and the Democrats get new leadership which actively seeks to expand real freedoms and that would include replacing Mr. Gingrich.  My goal here is not to defend Mr. Gingrich, but to highlight suspect journalism.

My reply (with some minor edits):

Using Media Matters for proof puts your entire publication at risk. They are well known as being a highly partisan outfit and the research you pointed to in order to prove your point is no different.

The basic question being asked is: Did the contract with America affect the 1994 election?

Those people, like Media Matters, who wish to devalue Mr. Gingrich’s contribution point to one basic fact: only 30% of the voters knew. One thing they point to talks about exit polls, which does lend some credence to their argument, but everything else they point to lends absolutely no credible evidence to their answer.

Simply put, if 30% of the voters are aware of some political push, you’ve done something quite difficult. Most voters don’t know anything about politics, they only know about the most recent dust-up. Most voters in 2008 still thought Republicans were in charge of both houses of Congress.

Most voters don’t study things like Contract with America, or any of the other things non-profit groups might ask a candidate to sign, like tax groups asking for signatures against raising taxes. Most voters have no idea how many promises their candidates made and to whom they were made.

This does not mean that those who did know where not affected. & when elections have been very close historically, it seems odd you’d make the claim that 30% of the voting public knowing about a completely political movement meant nothing.

Maybe back out of the politics of it and think of it as a product sale. Republicans and Democrats are selling a product – themselves. Neither group knows exactly which advertisements, which communication strategies, and which campaign pushes help their vote totals, but they know they all help.

As the axiom is marketing goes: “I know 1/2 the money I spend on marketing works, I just don’t know which 1/2″

Lastly, even though you have no idea which 1/2 is working, if any CEO could get 30% of their potential client base to know specifics about an organizational push…. just wow. They’d live and die a very, very wealthy person and be sought out by every book writer and researcher to figure out just how that was possible.

For Columbia & Media Matters though – it’s just overblown.