What I Think About Obamacare

Better open the windows. It’s gettin’ political. 

I’m going to begin by saying I have not read the entire Patient Protection and Affordable Care Act. If you have, 1. God Bless You. 2. I’d love your opinion on all this.

I have gotten my information and opinion just like we all do, through discussions among friends and family, personal reflection, a few lectures in college, wikipedia, and the media – which we all know is totally level headed and unbiased.

It’s important to establish that, all things aside (mainly the deficit), universal and/or affordable heath care is a good thing. Patient protection is a noble cause that is worth pursuit by our lawmakers until it is fulfilled. Obamacare is extremely ambitious, and attempts to meet this important and lofty goal. I think it’s taken us in the right direction by opening up serious discussions on the subject.

I’ll first try to let you know what I think about the individual side of Obamacare, then we’ll tackle the business side of it.

I think the individual mandate has gone okay so far. People are getting covered. Sure the website failures were embarrassing for the administration, but I really only have two problems with the individual side of Obamacare.

  1. Tax or Penalty? I’ll have neither please. Adding another tax is bad. I don’t dislike the tax because I think most forms of current tax are crippling to society and should be repealed (we might get to this on a later post), but because if you have truly affordable health care that people want to participate in, you shouldn’t need a tax to make people sign up for it. People should want health care because it’s a good idea, not because when you calculate a penalty it’s financially beneficial. It’s cheating by the administration IMO to claim any success when people are forced to sign up. It’s the same as saying “We now have the more insured drivers on the road than ever before.” Yeah, because when you get pulled over you get a ticket if you don’t have insurance. Similarly, you get a ticket when you fill out your tax return for not having health insurance. Moving on.
  2. People shouldn’t lose their insurance. Premiums for individuals are going to go up, that’s just going to happen when you try to expand care to the entire population, but nobody should be forced out of a plan they already like. The number of people who have lost their insurance depends on whether you ask FOX or MSNBC, but it’s happening.  Blame the insurance companies or Obama, I don’t know who. If people are forced out due to higher premiums, and have to check out the marketplace, that sucks, but understandable. Premiums go up. But nobody should completely lose coverage they like. Ever.

Oh the marketplace. I’m not going to talk about technological problems that should be, and hopefully will be, solved. The individual healthcare marketplace by itself is a FANTASTIC idea. It is the most American part of the entire bill. Companies competing for your business when you have access, freedom, and ability to compare plans. YES! COMPETITION! FREEDOM! AMERICA!

I think the marketplace would work beautifully without the last two pitfalls. Let’s get it working so we can see the impact! On to the business side.

By the way things are going, we aren’t going to see the impact of the employer mandate until Obama is out of office, but I can tell you right now it’s not going to be pretty. It’s already an absolutely brutal environment out there for small businesses (FICA taxes alone costs self-employed over 15%. Some industries have a profit margin of 2%. Good luck with that.). This isn’t looking like it’s going to help, no matter how many times you change the definition of “small business.”

I fundamentally disagree with most of the business mandate because it is taking away a fundamental freedom that businesses should have. Obamacare tells businesses it needs to provide a certain amount of health insurance to full time employees and it can only charge those employees a certain amount.

Think about it.

The federal government is telling American businesses: You must provide this service, and you must charge this price. Or we’ll fine you.

I don’t own a business yet, but I don’t think I’d take kindly to the government telling me what I need to provide and what I need to charge for it – regardless of the costs to me.

That’s my main beef with the business mandate, but there’s another nugget that I dislike, but also find a little amusing.

Obamacare places a 40% excise tax on “Cadillac” insurance plans – ones with premiums over $10,200 for individuals and $27,500 for families. Every dollar over that amount costs $1.40. The funny thing about this is – think about it with me – What two groups of employees typically sacrifice salary for better benefits, many times including these Cadillac Plans? Unions and government workers. What two groups of employers almost universally support democrats? Exactly – unions and government workers. Obama threw some of his main supporters under the bus with this 40% excise tax –  which is a big reason he delayed this feature too (union bosses wanted him to put an exemption in for unions, but that’s pretty much blatant political collusion). The problem here is that a huge chunk of the revenue was supposed to come from this excise tax. The other problem is employers just simply stopped providing these plans to avoid the tax. Big problems people.

As much hooplah we’ve heard about Obamacare, I don’t think repeal is an option. People have already signed up and benefitted. Heck, I have benefitted. I’m able to free load off my parents’ insurance for another two years. Sweet deal. Thanks Obama. Seriously.

What we need to do is enhance the marketplace and make it work like, you know, a marketplace. When companies are competing fairly for our business, we all win. Significant changes need to be made on the employer side. I’m not sure if I even understand why the employers were messed with in the first place. Everyone who had insurance through their employer seemed happy. If you didn’t have it offered to you, well okay, go to the new fantastic fully functional marketplace and provide yourself and your family with a plan that works for you. Any time fines are involved, employers know they can charge a premium because you’re forced to buy. (Get it? Charge a premium? har har har political puns har har).

There are many other sides of this to consider, from doctors, to the baby boomers, to pre-existing conditions, but I just wanted to shine a little light on a few of the aspects.

In conclusion, real dialogue needs to happen in Washington to fix this law, and I truly believe it is fixable. Republicans needs to stop talking about defunding, and start talking about rewriting. Democrats are beginning to sense some major unintended consequences, and will deal before the midterm to keep seats.  If the president can change the law with a stroke of a pen, I hope congress shows the ability to with a stroke of good dialogue.

What will happen? I have no idea.

In conclusion, there are fantastic intentions, and some very good parts about Obamacare. We just simply need to alter what needs altering, and empower what needs empowering. If it were up to me, I’d drop the fines, enhance the marketplace, scale back employer mandates, and take baby steps. Which still may leave a funding problem, but we can get there people.

I know you have opinions on this one folks. Where did I go wrong? Please tell me. This civil dialogue is what keeps America going. But as of now, that’s what I think I think.

The Great Missouri Brewery Buyout(s)

So Boulevard just got acquired by Duvel, another Belgian brewer. And I just finished reading my second book on the Budweiser-InBev deal.

Sounds like a perfect time to blog.

Everyone’s first thought is to compare the two transactions. However, that’s a little naive for the following reasons:

  • Budweiser had been an American Icon for over a hundred and fifty years, and had been the largest brewery in the world for most of those years. Boulevard has been a Kansas City icon for almost 25 years now and is the 12th-largest craft brewery in America.
  • The 60-year-old founder of Boulevard said it was an “easy decision” and intends to remain with the new holding company in a big way for years to come. August Busch IV, CEO of AB at the time, was betrayed by the board (and his dad) after months of fighting off the takeover,  is no longer even a board member of the company his family ran for a hundred years, and has a major drug problem (allegedly).
  • InBev paid $52 billion for Anheuser-Busch. Billion. With a B. Mark it down as the largest cash transaction in history. Although numbers haven’t been released, the Boulevard deal will probably be more in the ballpark of the $40 million ABInBev paid for Goose Island in 2011. I can see it being about $100 Million, still about .2% of the AB-InBev deal. The actual amount probably won’t be released, though, as both companies are private.
  • No jobs will be lost in Kansas City (for the time being). About 6,000 jobs were lost nationwide in the years after the InBev deal. Budweiser needed to shed fat for a while, but it’s still undoubtedly a major blow to St. Louis and the entire country.
  • The InBev deal can be best described as a hostile takeover of a public corporation. The Boulevard deal seems more like a partnership between independent brewers for market expansion purposes.

Okay, great. So what do you think about this whole thing, David?

Glad you asked.

The Missourian in me is upset, the businessman in me is understanding, and the beer-lover in me is excited.

Yet another reason to make Missourians (especially Kansas Citians) upset. What company HQ’d in Missouri am I most proud of as a  right now? Express Scripts – meh. HR Block – whatever. Monsanto – sure. Scottrade – why not. Edward Jones – great. All amazing companies, but nobody you can brag about and really take pride in. It’s a big blow to morale for the state in my opinion. Yes, Boulevard isn’t leaving Kansas City. However, the next time I crack a Wheat open I’ll wonder how many cents are going to Belgium.

Business is Business. Deals get done. People get bought out. It’s hard to do any business without emotion, but when you have iconic brands at stake it’s even more difficult. As the soon-to-be CPA and future CEO of an amazingly creative start-up, it’s important to realize how the business cycle works. This deals looks amazing  for all parties involved. Boulevard gets ahold of an extensive distribution network otherwise unavailable. Organic expansion can be very difficult especially for an industry that involves  perishable and highly scientific goods. It’s overall a smart business deal for everyone involved (assuming a fair price).

Finally,

InBev wanted Anheuser-Busch because of the brand. Duvel wants Boulevard because of the beer. 

How exciting is this for craft brewers in America? Over are the days of American beers being called “piss water” (I’ve studied abroad, that’s what foreigners call Coors, Miller, and Bud). Craft brewers in America are gaining respect overseas from Belgians, Czechs, Germans, and everyone. Boulevard isn’t even delivered to half of the country currently, and yet…

A Boulevard Wheat being poured out of a European tap is no longer a question of if, it’s a question of when.

That’s pretty exciting as a Missourian, businessman, beer-lover, and American American.

That’s what I think I think.

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Edit: Friend Pete Radakovich encouraged me to check out the letter from the founder on Boulevard’s website. And I encourage you to as well.

Don’t Buy This Jacket

Never in the history of my recollection has there ever been an advertising campaign where a company deliberately told target customers not to buy the very product they are advertising for. Patagonia did just that.

patagonia

In their Cyber Monday campaign from a few years ago, Patagonia posted “Don’t Buy This Jacket”  ads on their website and in magazines as part of their Common Threads Initiative. Why am I telling you about this now? Well, it came back to my mind when I participated in the initiative last week by buying a Patagonia vest of Craig’s List.

The  Common Threads Initiative is a pledge Patagonia is taking to reduce, repair, reuse, and recycle Patagonia gear, therefore “re imagining a world where they only take what nature can replace.” Thus far, they have repaired over 26,000 pieces of gear, reused over 41,000 pieces (sold through Common Threads eBay storefront), and recycled over 56 tons of worn out Patagonia clothes. They want customers look on eBay first, then if you want a high quality new jacket, go ahead and buy one.

I didn’t realize my love of thrift stores and deals was helping the environment, but good for me right? I’ve bought countless items from Goodwill, Salvation Army, eBay, and Craig’s List just trying to find interesting stuff save a buck. 2 of my 3 pieces of Patagonia were bought used (saved over $100 in doing so).

This isn’t about me though, it’s about businesses having initiatives and goals that don’t necessarily show up on the income statement. Nowadays consumers want to feel good and proud that what they are purchasing is helping others. It’s a status symbol. Look at Toms. People wear those ugly shoes (IMO), because it makes them feel good about a costly purchase, and tells the world that they have aided in providing shoes to poor kids in Africa.

When a business can effectively portray that what they are selling does help the environment or those in need, it usually ends up pumping the income statement as well. Here’s how Patagonia’s founder, Yvon Chouinard, put it in Inc. Magazine, “I know it sounds crazy, but every time I have made a decision that is best for the planet, I made money. Our customers know that—and they want to be part of that environmental commitment.”

Either they want to be part of the commitment, or people just love doing thing that they are told not to. Right, parents?

Either way, well done, Yvon.

That is what I Think I Think.

Greed, the 1%, and… Plato?

There’s been a viral video going around the internet in the past few weeks,

Amazing infographics aside, this video is very powerful, and is just the next step in a debate that has been going on for months if not years. Unfortunately, it doesn’t look like this debate is going away.

This video is very convincing. Because the 1% has so much, we are all worse off, even the already uber-wealthy, right? That makes complete logical sense. The more the wealthy have, the less there is to go around. Well, I think we need to ask a number of questions before jumping to that conclusion.

Firstly, we must define wealth. Wealth, according to Webster’s, is “abundance of valuable possessions or resources ” firstly. But for our purposes, we are going to use the next definition which is, “All property that has money value or exchangeable value.”

So the graphics in this video are cool, but stacking up money to represent the 1%’s wealth is misleading. Wealth isn’t just cash money. Wealth is any property that has money value. The bills in my wallet, the bed in my room, and the beer in my hand all are examples of wealth. Let’s use an example to demonstrate wealth that’s close to home, Stan Kroenke.

Most of you probably know, but Kroenke grew up right here in Columbia, Missouri. He got his BA, BS, and MBA all from Mizzou, and he made a fortune developing real estate in Columbia even before marrying into the Walton Family (receiving a significant inheritance).  Now, he owns the Denver Nuggets, St. Louis Rams, Colorado Avalanche, Colorado Rapids, and is the majority shareholder for Arsenal Football Club (English Premier League). He also owns biggest ranch in Canada. Kroenke’s net worth is over $5 Billion. He is the #92 Forbes wealthiest person in America. He is the 1%.

Stan Kroenke doesn’t have $5 Billion sitting in a bank account at Boone County National Bank on Broadway. His wealth is spread all over the world. His wealth is employing people in Columbia. His wealth is bringing in tax revenue in Denver. His wealth is helping hooligans in England have a team to be passionate about. I’m jealous as hell that Stan has all that, but I’m glad he does.

I’m glad he has the money to donate to Mizzou to make the best on-campus basketball facility in college basketball. I’m glad he has the money to help develop three Walmarts in Columbia. If there were only two, they’d be overcrowded. I’m glad he has the money do develop the shopping commons where I saved 50% off ski gear at Dick’s Sporting Goods. In a small way, Stan Kroenke’s wealth has made my life better. If he wants to own a dozen houses and private jets, more power to him.

Wealth creates more wealth. It’s just how it goes, if you’re smart with it. The 1% is very smart, very lucky, and yes, very greedy. But to quote Gordon Gecko, “Greed, for lack of a better word, is good. Greed fuels us.”

Back to the video. The implication that wealth is shared and not created is flat wrong. Wealth is not a zero-sum game. Land, on the other hand, is a zero-sum game. The more land somebody own in Missouri, the less there is for the rest of us. If I buy 1,000 acres between Columbia and Kansas City, that’s simply less that there is for the rest of us. Wealth is not like that. There is not a set number of wealth available in the United States. Wealth is like…. coats. If I love coats and want to buy one every day for the rest of my life, that doesn’t mean there is any less for anyone else. Supply and demand takes its course and more coats are created. Just like wealth. Wealth is not shared, it is created. Just because Stan Kroenke has created massive amounts of wealth for himself doesn’t mean there is any less for any of us. We must create our own means to get coats, and we must create our own means to get wealth.

Unfortunately, it is disturbing the greed of the 1%. But like I said, wealth creates more wealth, and eventually you get the 1% that owns a lot of the wealth in our country. This simply happened because of the market we operate in. I don’t think it’s necessarily a bad thing, but it’s the way it is.

Where does Plato factor into all this? Well, Plato had theories that are amazingly applicable to today’s world. Plato believed that as wealth increased, so does greed. I agree with this, and I also believe that some people’s greed needs to be regulated. Look at all the white collar crime out there, (Including another Mizzou guy – Ken Lay of Enron). Plato believed this greed of the wealthy needed to be regulated by another class of citizens: The Guardians. These people will defend the general public from domestic and foreign threats. In order to do this well, defense must be their sole occupation. They must not hold two jobs. In fact, they must live a strict lifestyle so that they will never even be tempted by greed. Qualifications for the position of guardian include physical prowess, fierceness toward the enemies of the state, and gentleness toward the citizens of the state.

Sound to me like the government is our guardians. It’s unreasonable to make our officials do not hold just one job (at least not throughout their life). They do not live a strict lifestyle, and they certainly are tempted by greed. Fierce towards enemies, gentle towards citizens. I like to think Plato is not necessarily a fan of big government and big regulation, but smart government and smart regulation. I agree with this view of Plato’s guardian theory.

I think one smart regulation we can do is controlling CEO’s compensation. This goes along with the last part of the video. I don’t think that the CEO is working “380x harder than the average worker.” This is just what happens in a free market. To understand CEO compensation, one must understand how businesses work. The CEO doesn’t sit around with all the executives saying, “Hmm, I think I deserve another million, mark it down.” CEO compensation is decided by the Board of Directors, a group people that may or may not be paid, and may or may not have any historical connection to the company. The Board is voted on by the shareholders. If you go buy 2 shares of Facebook stock, you get a vote on the Board. It’s how the game works. It’s not “how hard their working”, it’s what their worth. Albert Pujols doesn’t work 500x harder than I do. But his work is worth 500x more than mine is. Or at least the Angels think so. It’s a fact in our market that people don’t get paid how “hard they work,” but rather what their worth.  Even still, I do think executive compensation could use some regulation. But this doesn’t mean the average worker is going to get paid more, or that more jobs will be created. The day the US government tells business who to hire and what to pay all of them is the day I lose faith in the entire American economy. It will crumble.

So, after three very long tangents, I hope you have a little understanding of what wealth is, where wealth comes from, and why we shouldn’t blame the 1% for creating it for all of us.

1,000 words later, that is what I think I think.