Bruce's Blog: Wiener Financial Management

News & Notes

Please Ignore This Article on Email Disclaimers

 

Nothing in this article should be relied upon as being of any value.  If you find any tax advice contained in this article, then you do not have to pay taxes in 2011.  This article is meant solely for the intended recipient, his or her family, and their friends, co-workers, and heirs. 

Such is the inanity of many disclaimers tacked onto the bottom of emails in an apparently vain effort to limit liability or impose confidentiality.  One online wag describes disclaimers as poorly worded legal gibberish written by overzealous lawyers in a futile effort to enforce binding contracts to protect their careless mistakes.

The more sober Economist states: "They are assumed to be a wise precaution.  But they are mostly, legally speaking, pointless.  Lawyers and experts on internet policy say no court case has ever turned on the presence or absence of such an automatic e-mail footer in America, the most litigious of the rich countries.  Many disclaimers are, in effect, seeking to impose a contractual obligation unilaterally, and thus are probably unenforceable." 

Wishing you limited liability, complete confidentiality, and an enjoyable summer.


Words of Wisdom

Notice: Unless you are named "Arnold P. Fasnock", you may read only the "odd numbered words" (every other word beginning with the first) of the message above.  If you have violated that, then you hereby owe the sender 10 GBP [British Pounds] for each even numbered word you have read.  -- From "Stupid Disclaimers" site

News & Notes

What are the French Complaining About Now?

 

As surely as the seasons change, the French find a reason to take to the streets in protest.  This time they are up in arms over the proposed increase in the retirement age for full pension benefits from 60 to 62.  In the United States, the retirement age is now between 65 and 66, depending on your date of birth; it increases to age 67 if you were born in 1960 or thereafter.

A bit of historical perspective is in order.  As The Economist notes: "When Otto von Bismarck introduced the first pension for workers over 70 in 1889, the life expectancy of a Prussian was 45... By 1935, when America set up its Social Security System, the official pension age was 65 – three years beyond the lifespan of the typical American."

The original state-sponsored plans were clearly for those few who lived beyond their normal life expectancy. Today, pensions are more generous and cover the average person for a much longer period of time.

According to the Organization for Economic Cooperation and Development (OECD), the average age for a pension in 30 of the most developed countries is 63 for men and 62 for women. But the average life expectancy in OECD countries has risen rapidly to around 82 years. And it continues to grow.

The result is that governments are facing ever growing pension liabilities as its citizens have the "audacity" to live longer. Generous benefits appear unsustainable for countries already facing severe budget problems.

The workers in France may have to postpone retirement for a couple of years comforted only by a 35 hour work week and over a month of paid vacation.  C'est la vie.

Words of Wisdom

Boy, those French. They have a different word for everything.
-- Steve Martin

News & Notes

A Contrarian View of
Health Care Reform

Imagine an America in which more than 40 percent of a family's income goes to a vital necessity.  It is not health care today, it was food in the year 1900.  At that time, over half the American work-force was engaged in agriculture, which consisted of numerous inefficient farms with low crop yields.  The high cost of food kept us a basically poor country.

Today, food accounts for only a small portion of our budget and labor force.  How did the United States achieve such a dramatic turnaround?  In a brilliant article in the New Yorker, surgeon and author Atul Gawande describes how the federal government did not impose a grand solution by decree.  Instead, the government created a series of pilot programs that showed farmers -- who held a deep-seated fear of change -- better farming techniques from local representatives of the Department of Agriculture.

Our dysfunctional health care system is now strangling our country in the same way that agriculture did over one hundred years ago.  Gawande's article details how "health-care spending will essentially devour all our future wage increases and economic growth."

In an op-ed piece in the Washington Post, columnist Ruth Marcus complains that current health care reform legislation focuses solely on expanding coverage and does nothing to curb these rising costs.  Gawande disagrees.

Gawande contends that there is no over-arching technical solution to spiraling health care costs.  "Nobody has found a master switch that you can flip to make the problem go away."  Gawande states that "much like farming, medicine involves hundreds of thousands of local entities across the country ... [providing] complex services for thousands of ... medical issues... The history of American agriculture suggests that you can have transformation without a master plan, without knowing all the answers up front."

Gawande points out that the current Senate bill authorizes a multitude of programs to test different ways of curbing costs and increasing quality.  "Government has a crucial role to play here -- not in running the system but guiding it, by looking for the best strategies and practices and finding ways to get them adopted, county by county."

The debate over health care reform is heated. No single approach has garnered complete support.  Gawande has an interesting take on the complexity of the problem and his article is definitely worth reading.  While the cost of not getting health care reform right is high, the cost of inaction will likely be unbearable.

Words of Wisdom

My doctor gave me two weeks to live.  I hope they're in August.
-- Ronnie Shakes

News & Notes

Health Care Reform and Our Antipathy to Change

Writing in today's Washington Post about the problems of enacting health care reform, Michael Kinsley states: "Americans are in total agreement that the current situation is intolerable in all areas and that change -- big, immediate change -- is essential.  But as soon as change might actually happen -- as soon as we leave the abstract for the particular -- we panic."

Kinsley cannot seem to get his arms around why this is the case, beyond the obvious reason that there is serious disagreement over the details of reform.  The only explanation he can come up with is that we really don't want reform in the first place.  Not a very satisfying answer.

A more cogent response to the same conundrum is set forth by James Surowiecki in this week's New Yorker.  He agrees with Kinsley's thesis: "In theory, the public overwhelmingly supports reform ... [but] when it comes to actually making fundamental change, people go all wobbly."  Surowiecki argues that the public's skittishness about overhauling the system reflects the "deep-seated psycological biases that make people resistant to change."

We are all susceptible to the "endowment effect" -- we overvalue things that we own.  Thus, people who have health insurance will place a high value on it, even if it is flawed.

The endowment effect is compounded by the "status quo bias."  People are inclined to keep things the way they are.  Beyond inertia, Surowiecki suggests, we also seek to avoid loss.  The unknown is a scary place.  "Even people who aren't all that happy with the current system, then, are still likely to feel anxious about whatever will replace it."  (I recommend the article for examples of the studies underlying these conepts.)

The issues in health care reform are complex and emotions are running high.  It is useful to understand our hesistancy to embrace change when major shifts in policy are on the table and we all feel that we have something to gain or lose.

Words of Wisdom

I don't deserve this award, but I have arthritis and I don't deserve that either.
-- Jack Benny, Comedian