Several political candidates are talking about some sort of universal health care. Everyone knows I am for socialized medicine. If we provide free basic education because we believe education is a right everyone has, then how can being healthy not also be a basic right? I would say health is a basic right before education even.

Few would argue the basic premise there; the issue is that it is too expensive; however, all other industrialized nations provide universal healthcare at a total cost less than what we are already spending. In essence, we’re already paying for universal health care…so why don’t we have it?

Let’s run a simple thought experiment (luckily no economists read this page) that models the health care market, and allows us to see why costs might spiral a bit…and mainly points out why more government intervention in our current health care system will raise prices, not reduce them:

Let’s say there are 3 people in the economy and they each have 1 dollar. One is sick and has to go to the hospital. How much can the hospital charge? One dollar. Nothing can cost more than a dollar, because the hospital will go out of business if it charges more (because no one can pay).

Let’s say insurance companies get into the mix and you buy a 1 dollar insurance policy, and of course you potentially get more than that in health care. Now there are two hands in the pot. Your 1 dollar and some amount from the insurer…for the sake of argument let say they are adding an extra dollar on top. How much can hospitals charge now? 2 dollars.

Let’s say the government gets in the mix, and subsidizes health care by 1 dollar. How much can the hospital charge? 3 dollars. Now we are starting to get the picture…

Every dollar added to the total pot to spend on health care expands the total dollar amount that can be charged. You can never charge more than what people can pay. Conversely, the price a market charges for a good/service will always expand to fill the total money in the pot.

Everytime the government says they will pump money into the health care market, they are raising prices because more total money is available to be spent. If there is a tax credit of 30%, in the most simplistic model, prices rise by 30%. The goverment is accomplishing the very opposite of what they’re hoping to do.

On a related note, here is the reason why the goverment may or not pander to universal health care, but nothing will really change: Too much is already invested in the current system. Thousands of jobs and billions of dollars in business revenue would disappear.

Imagine the extreme model (again simplified): Nationalized Health Care.

Nearly the entire health insurance industry (BILLIONS of dollars) could close up shop overnight. What good would private or employer-provided health insurance do if you already had it through the govt? It would be useless. All those jobs, gone. (some could get a job with the govt…but not nearly the same numbers would be needed.)

Employer provided benefits disappear. HR departments would thin out significantly…no more Benefits department. All those jobs, gone. You may think non-health care employers would be all for that, but the US is unique in that you HAVE to have a job to get health care…that sort of forces you to get a job (and keep one). I’m not so sure employers would be for it (although surely some would).

Health Care Consulting/Outsourcing would disappear overnight. I actually worked for nearly 4 years in health care outsourcing. This business is billions of dollars a year…just helping companies sort out all the laws and options, and helping adminstrate (coordination between all the health care providers, the business, payroll, employees, etc). 10,000 plus jobs…gone.

The health care providers (hospitals, doctors, etc) would see prices drop in nationalized healthcare. There might be price controls, health care would no longer be a for profit business, a single payer system (if that happened) would put a natural cap on what could be charged. Overall, health care providers have a profitable and fairly predictable business model right now….fear alone would give them a vested interest in the status quo. (unlike insurance/consulting/outsource though, at least most of these jobs would remain)

Big-pharma would lose too…they are some of the big winners (profit-wise) in the current health care system. Anything that damages their pricing structure is a threat. Drug companies would still exist in a nationalized system; however, they will complain that reduced profits means less money to research new drugs (which may be partially true).

So you see three things here: 1) The vested interest of these multi-billion dollar corporations is to continue the current system…so we’re unlikely to see a change no matter how well-intentioned (<– yeah right) the politicans are, 2) SOOO many people are employed in the health care industry who would almost instantly be put out of work……nothing is going to be done, and 3) All these thousands of people and billions of dollars in revenue is a large part of WHY your healthcare costs so much today…the more hands in the pot, the more it will cost.

I haven’t read/written much about happiness lately; I just read this article and decided I would revisit.

So what did I learn reading that article?  Nothing that I didn’t already know.  Let’s recap some happiness facts in no particular order:

1)  Money makes you happier until you can pay for the basics of food, clothing, shelter.  After that you’re “Keeping up with Joneses“.  (On a side note I would love to meet the Jones family.  They are obviously doing very well if everyone is trying to keep up with them.)  Other countries are happier than the US, and happiness doesn’t correlate strongly to GDP.

2)  Genetics tell most of the story of your happiness.  Whether you win the lottery or lose an arm in a lawnmower accident….you stay basically as happy as you were before.  (there is some debate on whether you can inch aggregate happiness up in a Bentham-style “greatest happiness of the greatest number”…we’ll see.)

3)   Happiness is generally composed of 1) moment to moment pleasure, 2) engagement with your life (how much you’re into your job, friends, garden, car-club, etc), and 3) a sense of meaning (how much you think what you do matters).  I personally think 2 and 3 are very similar.

4)  IQ, good looks, youth, athleticism, other natural talents, etc…..don’t affect your happiness much.  I’ve seen research that people with high IQs are actually less happy (don’t feel like digging that up).  Also, older people tend to be happier in industrialized nations.

5)  Your relative position in society makes you happier than your absolute position (unless you’re dirt poor).  Better to have 100 bucks when your friend has 50 than have 1000 when your neighbor has 2000.  This makes a pretty good case for government wealth re-distribution.

6)  So what does make you happy?  Spending time with friends/family, marriage (in general), being grateful for stuff and telling others you are grateful for them (gratitude actually has a pretty large effect), doing nice things for others, contributing to something you believe in larger than yourself, getting lost in the moment (even if it is gardening…or drinking).

7)  What doesn’t make you happy?  Spending time alone, buying stuff/anything, chores, crap at work, loss of a loved one, loss of a job, financial troubles.

8)  What are we unsure about with regards to happiness?  It boils down to cause and effect….we don’t know what causes which in many cases (or maybe they’re just correlated).  Happy people do make more money, but does the happiness cause the money or does the money cause the happiness.  Happy people are healthier, but if you are unhealthy and convince yourself to be happy, will your health improve?  Married people are happier.  Does that mean marriage makes you happy or happy people stay married?  Don’t know.

9)  Experiences make you happier than things.  Oddly, a new car will not make you as happy as if you blew the money on a trip through Europe (on a side note I’m not sure experiences have made me any happier…I don’t have the things to compare it to, so I can’t really say.).

10)  The freedom of choice does not make you happier.  Choices can cripple (its called the Tyranny of Choice).  Freedom to do whatever you want causes anxiety.  It increases opportunity costs….so that everything you choose presents an internal analysis of the endless choices you did not make….all that you gave up.  You only get 1 thing…but you gave up hundreds to make that choice.  How do you know you made the best choice?  The more choices there are, the more comparisons you make….the unhappier you are (I call it the Cortez Solution, after Hernando Cortez:  Legend has it when he arrived in the New World he burned the ships that sailed him there to prevent any possibility of retreat…eliminating the possibility of mutiny…of his crew turning around and going home.).

11)  Happiness is not easy to achieve.   Apparently you have to work at it; but if you have to work too hard, then that will make you unhappy in itself, especially if you don’t get there….which brings me to my last point:

12)  The harder you seek “true happiness”, the more you will frustrate yourself by not being able to get there.   Happiness seems to be a by-product, not an end result.  If that is the case….why worry about it at all?

Can I sum any of that up into something that might help people be happy?  Sure:  Spend all your time with friends and family, volunteer for your favorite cause,  be grateful everyday and tell others about it, get hobbies that engross you, do a job you like and uses the things that you are best at (not that pays lots of money).  Stop spending money on stuff.  Don’t watch the news or read pop magazines (which constantly compare you to others).

I think its such an interesting question (obviously), because underlying much of what we do in Western society is this notion of “do what makes you happy”.  My parents said that to me a million times, “I just want you to be happy,” or “You need to do what makes you happy,” or even “Do what’s best for you,” but underlying the idea of “best” is “what makes you happy”….but we really have little idea of how to achieve that, or even if its possible.  Its nonsensical advice if no one knows how to follow it.

In the end, after all these years of trying to learn about how to get to happiness, I don’t think I can affect it much.  I still brood and I’m prone to nostalgia….I think the state of things is sad and that we could scarcely make it better if we tried (which we are and this is what we get).

I do think you can increase general happiness some amount, but what have you achieved?  We still live and die.  What does it matter to the universe if we passed our blip in time slightly happier than if otherwise?  It doesn’t.

Burn your ships and be thankful for it.

Since I took down the history of the website I can’t link to last year’s New Year’s post, but here are my resolutions:

“2007 is going to be the best year ever because I said so. If you do not think 2007 is going to shape up too well….then please don’t talk to me because I am only interested in having the best year ever.

I have made no resolutions this year other than that my life will be the best. I will get a new job this year, and buy a house. That means I will have to buy furniture…..but that’s OK, because the furniture will also be the best ever.”

So how did I do?  Well, predictably it wasn’t the best year ever.  That was 1995 when I went to Groningen.  BUT…the only two concrete goals I made:  1) get a new job, and 2) buy a house.  I sort of met those, just a few weeks late.

I didn’t meet them in 2007.  I close on my house on Jan 14th 2008, and the transition date for the new job that I was wanting is…let me check my email…wow:  It is also Jan 14th 2008.  I am two weeks late on both goals, but came pretty close.  Also, that is quite a coincidence.

So what are my resolutions for 2008?  People don’t keep them anyway.  Mine were a little different though since I could actually go back and read what I said. 

I can’t think of anything.  Since I just met my goals for 2007 I haven’t had time to set my sites on anything else.  I guess I could say, “Do well at my new job, and enjoy living in my own place” but in all honesty those are unmeasurable goals.  “Get a new job and buy a house”…that is concrete.

I could also make smaller goals like “write/record my own song” or “get the deck replaced on my house” or “go through the mixed doubles season without getting my serve broken”…but those aren’t really New Year type of goals.

I’m going to have to think about it, and maybe make my resolutions a few weeks late this year…after all, I was two weeks late meeting last year’s.

Anyone wishing to record their resolutions for review next year at this time, please make a comment so I can check back with you to see how you did.

I have grown tired of asking questions to which I know there are no answers. Perhaps that is adulthood?

I ask more immediate questions these days: What will I do today after work? What will I do today at work? Where will I eat dinner? What kind of beer do I want to buy at the liquor store? Does anyone want to play tennis tonight?

Without the tennis, I think those are the questions Homer Simpson might ask himself each day.

I can’t recall definitively answering too many important type questions…ever. Actually, I guess there are a few:

Does God exist? Don’t know whether s/he exists. Firmly Agnostic. Its hard to prove the non-existence of something. I strongly suspect the Western anthropomorphized God is not real. I am even more certain that religions are invented by people…to ease insecurities, to gather people around common causes. The Bible was written by people. What makes one religion more true than the other? War. Whoever kills people of the other religion…those people are the only ones left to ask the question.

We cannot escape our biology: I believe in the Savanna Principle, and Evolutionary Psychology. Non-politically correct evidence will continue to pile up in the coming decade that our brain’s tendencies are a product of evolution just like our body’s. Women and men’s brains are different. There are reasons for gender stereotypes. Some subgroups are smarter than others. Some are taller. Some run faster. Many very interesting facts about beauty, war, mating, power, and the limitations of human nature will come to light.

Why are we here? To survive and reproduce. You don’t have to believe it…it simply is. If you don’t think that’s true, then you will not be long around to have the argument…the survivors win.

War is inevitable: Peace is not the norm. We go back and forth…tending towards war. Why? Those who are not good at war are not around long enough to worry about peace.

People will figure out a way: There are so many of us alive, it doesn’t even need to have anything to do with intelligence…if people have all possible ideas, then some of them will end up being correct or useful. We just need lots of people and lots of questions.

Power is its own end: Power corrupts; it is self serving. Human nature makes it extremely hard not to follow that path. The best idea is to diffuse and limit power so that not too much of it rests in any one person, since they will certainly abuse it…even if they’re smart…which isn’t always a guarantee.

The Constitution does that, and its brilliant. It limits and diffuses power…in effect, setting up a government that doesn’t have enough power to fuck anything up too badly….and then gives power to the States. The beauty of that is that it sets up a market for government and lets people vote on which rules are the best. Don’t like what’s going on in your state? Move to another one. What sucks is that the central government has taken so much power that the rules aren’t significantly different between states…so you can’t do that. Power corrupts.

Travel the world: It will change you forever and you will be better for it. Don’t read about it; don’t speculate on it; do it. It teaches you that you change someone’s life everyday and that there are so many ways to live and how dare anyone think they know what’s best.

Don’t get caught up in the hedonic treadmill: You can’t win. I don’t play games I can’t win. Human nature dictates you will do it anyway…some things you can’t avoid. Try harder.

History repeats itself: Enough said. Think it hasn’t happened before? It has. Like stereotypes, ignore history at your own peril.

You cannot derive an ought from an is: What is natural is not what is good (this is also called the naturalistic fallacy). I get tired of people trying to draw analogies from nature as a model for what should be. Guess what? Snake bites and shark attacks are natural. The bubonic plague is natural. Antibiotics are not natural. We invented them. No one ate the penicillin fungus and got better. We distilled and concentrated it. Humans…flawed as we are, decide what ought to be. I agree, “ought” is a slippery slope. As soon as you think you know what’s best, you start abusing power.

Beware of the Jedi Mind Trick: Don’t let people fool you with a) statistics, b) research, c) expertness d) The Aiken Solution, e) repetition, or f) any other poppycock that people use to try to persuade you. Stated another way: Be a Skeptic.

Reality is subjective: This has terrifically confusing side-effects, the most important of which is: two people with different opinions can be right about the same thing. That is a tough one to get through for most people.

Not to say everything comes down to opinion; some things are simply wrong. Other things aren’t though: For instance, let’s say I just got a new job. That’s great…for me. Perhaps the guy/gall I beat out was trying to feed the family…maybe not such a good thing then. The answer to the questions “Was it good thing that Elliott got the job? ” is not answerable in a traditional sense.

Many, many things on very large scales come down to this simple kind of distinction. Which is right? Same as before: Those who survive and reproduce and can write a not-so-flattering history about the other group.

Common Logical Fallacies: The study of logic, especially as it relates to human psychology is useful. Once we learn a) the tricks people use to trick us, and b) the common traps the brain falls into….the better off we’ll be. Reality catches up with you sooner or later in most instances. I could write another post on all of these.

Anything that can happen, will: This is a fun one too. People ask about genetically engineered humans, franken-foods, and self-replicating nano-robots…its all going to happen. We will do everything that becomes possible, because there is always someone willing…reality TV has proven that.

The Best of All Possible Worlds? Pangloss was wrong…and right. The world simply is. It is neither the best, nor otherwise. We decide. I have written extensively in the past about Happiness, and whether or not humanity has any use for it (although I assure you I have a use for it).

Any decision is better than no decision: There is a bit of game theory in this one. If you make no decision you will only get what other people want for you. If you make decisions, then you have a better chance of doing something that is good for you. You also stand the chance of making a wrong decision, but I think you stand less of a chance than if you leave it up to other people. Firm decisions are gold, and other people can coalesce around them.

People are neither good nor bad by nature: The brain is a mess of conflicting systems, and they don’t always agree. You can save a child from a burning building one day and rob a liquor store the next. Although people generally know what is right, they do not always do so. They more consistently act in accordance with the situation. Put a good man in a bad spot, and he’ll do what he needs to…morals be damned.

People matter: Don’t get distracted by achievements, or money, or sex, cars, houses, status, jobs, etc….people matter in the end. They witness your life and give it weight. Without them your life doesn’t exist. Without them there is no sex, job, money, status. People matter. We are a consensus of ourselves. The sole witnesses of a billion frantic lonely consciousnesses on a small rock on the edge of a normal galaxy in an unimaginably large universe. Period.

There is life on other planets: Religion? Please. We’ll be so fucking happy to find intelligent life on other planets it will change everything we do…and then we’ll go to war with them.

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Ok…that’s enough. I could go on, but I won’t. Now that all that is out of the way I can get back to the important questions: What will I do today after work? What will I do today at work? Where will I eat dinner? What kind of beer do I want to buy at the liquor store? Does anyone want to play tennis tonight?

What do you know that is true?

Or more to the point: does it make sense for me?

In a word, No.

I’ll explain why: A 150 to 200k dollar mortgage ends up between $1000 and $1200 bucks a month. Then you add on internet, gas, power, maintenance, cable, insurance, etc, etc, etc. The price is getting up there past $1500 bucks a month…not cheap for one person (me).

Currently, I pay a ridiculously low rent of about $500…that includes power, gas, internet, etc.

You can run the numbers on that as many times and as creatively as you like: Its a better financial decision for me to stay where I am…period.

But what about the tax write-off? After its all said and done that may lower my monthly payment by 100 to 150 bucks…no where making up the difference. Additionally, the vaunted tax break on mortgage interest really is no tax break at all, but simply avoids double taxation. How? Easy…you still pay tax on the value of the asset (property taxes). If you paid tax income tax on the mortgage interest and paid property taxes, you’d be taxed twice on the same thing. There is no real tax break for homes….simply the lack of being double taxed.

Additionally, even the mortgage interest you do write off is only eligible once you pass the standard deduction. If you can’t reach that, then there is no deduction at all.

But what about the equity? You don’t really get any in the first 5 years. Most of it is interest. There isn’t much difference between rent and interest.

But what about the small amount of equity you would gain? Yes…I would get a small amount. But I currently get another kind of equity each month paying rent that is very useful: Cash. The difference between my mortgage and rent ($1500 minus $500)….about $1000 bucks a month…is mine. I build a thousand bucks of equity every month by not buying a house. (In reality I spend some, but not all, of that. If I bought a house I would have to change my spending habits…which isn’t all bad).

But houses are good investments? A) Uhh…..not in my situation. B) I’m tired of hearing that “home values always go up”. The Titanic was unsinkable. The world was flat. Yeah, yeah, yeah. The fact is that they are dropping now. Yes…this very quarter.

But they go up in the long run? Uhh….in the long run we’re all dead. In the medium run though…not always. In Japan the market has been depressed for over a decade. In economics there is the concept of “no money left on the table”. If houses ALWAYS went up; everyone would buy them…thus driving up the prices. At some point the price becomes overinflated….and it must drop. That time might be now…or it might not, but to say “home values always go up”….that just isn’t true. In finance there is also the concept that “past performance is not an indicator of future performance”. I don’t care if housing has ALWAYS gone up in the past. That doesn’t mean it always will in the future.

Here are some other myths vs realities about home ownership.

Regardless, I’ve been looking pretty hard for something. I’ve seen just about every home and townhouse in the Smyrna area at this point. Why?

Well….if I’m staying in Atlanta, which seems to be the case since I’ve gotten a job I want….then I might actually LIKE to have a house. It may not be the best financial decision, but it is not a bad decision if that is what I want, and I can afford it.

I will say to those who buy a house because it is a “good investment”…you are speculating. If you’re going to speculate, you might as well buy stocks, or start a business, or even gamble. If you buy a house, fix it up, and try to sell it…you are speculating. You are running a small business. Nothing wrong with that…but lets call a spade a spade.

Buying a home is about wanting a home, and making a commitment to a place. If you start talking about doing it for the purpose of making money…then I hope you know about homes…because its the same concept as knowing about stocks, or a particular industry. The only thing that makes real estate speculating less risky than other types of investing is that there is less volatility. Home prices go up a little, or down a little…they don’t peak and trough nearly as quickly as stock prices (as a general rule).

Home buying also does not have the upside of stocks, or owning a business. A home remains a home, and the land remains much the same. The demand is much the same (unless there is a large, immediate influx of people with money to the region)…and the supply is much the same (it takes time to increase supply and it will never fluctuate wildly, unless there is an earthquake).

Stocks/owning your own business though…those can go from zero to a million bucks a month rather quickly. The building and real estate that the business sits on…its value will remain much the same, much as your house will; however, the value of the business, because it performs some other function that can increase in value (the service it provides)….can really appreciate quickly.

The price of a home can only appreciate as quickly as more people move to the area that have money (which increases demand)…or you happen to own a house that has features that are in vogue (which increases demand). Increases of supply (building more houses) decrease the value of your home.

But home prices do appreciate, right? Yes. For two main reasons (yes, this is a simplified explanation): 1) Inflation. Home prices largely track inflation. Since that runs at 3.5% a year or so…your home price does increase. But that is an illusory gain. 2) Increase in GDP: The economy itself (mostly productivity) grows at 3% or so a year. As total wealth increases, people are more able to afford homes. (You can argue, that its JUST inflation that matters. With a fixed money supply (notes in circulation), economic growth actually produces deflation, which would cause your home value to drop..even though it was actually worth the same amount in absolute terms.)

If homes aren’t really good investments, then why is everyone so high on them? 1) You can live in them. You can’t live in a stock certificate as an investment. That is hard to beat. 2) They tend to work out as investments. The reason being that they FORCE you to save money on the tail end of the loan when you’re building equity. Most people wouldn’t save any money otherwise, so it seems to work out for them. If they’d been more financially disciplined and invested the extra cash in the stock market…they might have come out ahead. But because no one does that, its useless to talk about. Home ownership IS a good investment for most people, because it is their ONLY significant outlay of cash that has any chance of appreciating…and it usually does…a little bit.

Lastly, yes….on the tail end of your loan, when you get to that point…its a good idea. You are essentially not paying ANY rent anymore. All the mortgage value goes to equity.

So…..will I buy a house? Yes…mostly likely, because I want one. It won’t be my best financial decision though. That would be to live in my parent’s house, never buy anything, save everything, invest heavily in the market, and wait to retire in a Central American country. I’d be living on the beach in Panama like a king (maids and all) by my early 40s…..and never work another day for the rest of my life.