Cost vs. Price

One of the big issues with this whole health care debate has been promises from the Democrats that their plan will “lower costs” and “bend the cost curve down”.  To put it bluntly, they are lying, not only about the results, but about what it is they want to change. 

What they are proposing won’t control costs.  What it will do is control pricing.  Those are two very different things.  Cost is what it takes to bring a good or service to the consumer.  Price is what the consumer pays for the good or service.

Let’s say you go into the widget business.  The materials you need to create your widget cost you $10 per widget.  You also hire someone to make these widgets at $10 per hour and it takes them half an hour to make each widget.  To keep the math simple, let’s say that packaging supplies and shipping cost you another $5 per widget.  Your total cost per widget therefore is $20.

Does this mean that you will be selling your widgets for $20?  Maybe if you don’t want to stay in business.  The store at which your widgets are sold needs to make money to keep its lights on and pay its employees, so they tack on $5 per widget.  You of course need to not only pay for the widgets already produced, as well as the labor that produced them, so you figure out you need to make an extra $10 per widget in order to stay in business.  So, the price of your widget comes to $35.

Applying these principles to health care, it’s pretty easy to see that what’s really being proposed are price controls, not cost cutting measures.  All this current legislation does is essentially tell health care and insurance providers how much they can charge for their services.  It does nothing to address the reasons why their rates keep increasing, such as states mandating coverage of certain conditions, under- or non-payment for services rendered, the high cost of bringing new technology and medicines to patients, etc.

We already see thanks to Medicare, Medicaid and laws mandating treatment regardless of ability to pay what disastrous effects price controls have on the medical industry.  Health care providers have to pass along the costs not paid for by these three groups to the rest of us.  Without doing so, they can’t stay in business because they won’t be able to recoup their expenses, much less make enough money to hire new employees, replace old equipment, etc.

If this bill passes, the unintended consequence of it will be that the medical profession in this country will die a slow death.  Hospitals will be faced with cutting staff and/or services in order to stay out of the red.  Current and future doctors will decide on other professions to avoid spending their life in a field that won’t pay the bills.  Medical device and drug companies will stop creating innovative and life-saving products because they will never be able to get back the money they put in to developing them.

Price controls were a documented disaster in communist countries as well as here in the US during the 1970s.  To think they can be some magic elixir for our health care system is not only insane, but could wind up being deadly.

Making It Right

Anyone who knows me can tell you I love me some home improvement shows.  I guess there is something about building, be it remodeling or starting from scratch, that I find fascinating.  Anyway, my favorite show these days is HGTV’s Holmes on Homes, which features contractor Mike Holmes rescuing folks from bad work done on their houses.  His famous line is that no matter what the previous builder did, he will “make it right”.  It struck me the other day that we need a couple hundred Mike Holmes clones sent to DC in order to fix what is becoming a very broken system.

To stick with what will surely be a tortured metaphor, if our government is a house, any outside inspector in his right mind would condemn it without thinking twice.  The foundation, while solidly built, has been neglected for far too long and is starting to crack and crumble in some places.  The plumbing and electrical are both shot to hell and the half-ass job they did covering it up with drywall looks like Stevie Wonder did it with help from Ray Charles.

Every politician promises they’ll go to Washington and fix the problems.  While some actually try and change what’s wrong, most of them never truly believed in fixing things to begin with, or they got there and became so enamoured with the power and prestige they forget what got them elected.

It’s time that we stop rubberstamping the candidate with the most money or the best connections to the state/national/local party and take a good hard look at who really has the guts to admit that the system of laws and regulations we have is broken.  Most of them are unconstitutional, and all of them are written in a language no normal person can understand. 

Before you can rebuild something, you have to assess what works and what doesn’t.  Pushing for Congress to stop writing new laws until the old mess can get sorted out is a good way to start.

So I was playing on Twitter…

*Names have been changed to either protect privacy or because I forgot them.  Or both*

This past Saturday was going along like any other, consisting of horse stall cleaning and football watching, when something on Twitter caught my attention.  It was a call for lawyers to go to Massachusetts to handle any legal issues that might come up in the Coakley/Brown Senate race.  I sent in my info, exchanged a few emails, argued with my parents for a while, and next thing I knew it was Monday morning and I was on an 8AM flight to Boston. 

After walking about 300 miles across the Charlotte airport, I caught my connecting flight to Beantown, and I first asked myself what the hell I was doing when our pilot informed us there was a problem with the left engine starter valve.  After a little delay, we managed to get off the ground and make it safely to Boston. 

When I stepped outside, I am greeted by a howling wind and the sight of a snow bank taller than me.  Sparking up a Camel Light, I was not only questioning my purpose, but also my very sanity.  I’m a Southern guy.  I have thin blood.  I hate weather under 60 degrees.  Here I was, in the aftermath of a snowstorm in the Northeast, freezing my tail off and wondering if things would get better or worse.

When I get to the hotel to check-in, I see a very friendly and easy on the eyes receptionist.  After some pointless flirting, I get directions to my room and recommended a good place to grab a bite to eat.  Dropping off my bags in my room, I head downstairs to check-in with the Brown legal team to see what I’ve volunteered myself into the next day.  Which led to this exchange:

Me: “Hi, I’m Chris Connolly, I’m here for my assignment for tomorrow.”

Brown Lawyer Lady: “Hi Chris.  Thanks for volunteering.  Take these info packets while I look up your assignment.”

Me: “A reading assignment?  Awesome.  This looks like a great way to spend the afternoon.”

BLL: (polite laughter) “It’s not too bad, just basic stuff on Mass. voting laws… OK, you are going to be a poll watcher tomorrow.  You need to be downstairs in the lobby at 6AM to check-in with the group leader and catch your ride to the polling place you’ve been assigned.”

Me: “Sounds great… wait?  6?  As in 6 in the morning 6?”

BLL: Nods affirmatively and probably asking herself who thought it was a good idea to let me come here.

Me: “Sounds like fun… maybe I just won’t go to bed tonight!” Translation: I am not a morning person and I’m seriously considering going back to the airport.

So I grab my packet and I head off to the restaurant to speed read and grab some food and a drink or two before our conference call.  Of course it started late, and of course when it was opened up for questions, there were some great ones.  If they were any sign of their lawyering skills, I thought for sure we’d get trounced if things ended up going to a recount.  I will say I was impressed with myself for managing to pay attention the whole time.  Well, maybe I spaced out once.  Okay, twice…

I head outside to grab a smoke before going to bed.  I had to relight the thing twice, that’s how windy it was.  I go to the desk to get a 5AM wake-up call.  Hot Receptionist isn’t there.  The lady who takes my request looks at me like I am crazy, then expresses her condolences.  I thank her and head to my room, where what should have been a nice night’s sleep turns into maybe 3.5 hours, interrupted by tossing, turning, nervousness and excitement. 

Next up: Election Day…

Tips for flying solo

The other night I realized that finding a job at a law firm may not happen.  One of the side effects of the great Economic Apocalypse of 2007-present is it has destroyed the Law Inc. system that had dominated the field for a long time.  That destruction has trickled down to just about every aspect of the legal business, except for law schools conning people to saddle themselves with debt just to struggle to find a job when they graduate.  Anyway, since I wasn’t one of the top people in my class, or promised a job by family or friends when I graduated, I’m pretty sure continuing to send out resumes is not the best use of my time.

So, I’ve decided to take a chance on solo practice.  Since I am just starting out and have no clue what I’m doing, I’ve procured a couple of “how-to” books, but I also went to Twitter and asked the Hunter Thompson of the legal world, Philadelphia Lawyer, if he had any advice for someone dumb/stubborn enough to try to make it on their own.  He graciously gave me these 18 tips, which I’ve decided to pass along here (and also so I have them in one place & won’t lose them):

1. Don’t listen to unemployed lawyers on websites saying you’ll fail if you try. If you can sell, you can do it.

2. Don’t pay for build out first. Run office out of home to create $ base and build out as you get clients.

3. Focus on low end stuff. You won’t get complex cases or deals as a young solo.

4. Target a suburban market. You can’t succeed as a young solo in a big city. Overhead’s too high.

5. Take PI cases, even if you can’t do them. You can refer them out and get 1/3 of the trial lawyer’s fee.

6. Don’t be a snob. A software company isn’t hiring a solo. Work the family/friends/local community stuff.

7. Don’t ask for huge retainers. Small businessman/individuals will balk. Do installments.

8. Hang out with lawyers. Yeah, it sucks. But it gets the best referrals. Join the local bar/do social stuff.

9. Feed other lawyers cases. The soft dollar up front gets you stuff down the road.

10. Learn to do commercial work. I can’t say it enough. Be able to crunch #s like an accountant. Cash follows cash.

11. Hire an internet marketing group ($2-500 month) to blast your name to the top of Google searches in your area.

12. Stay away from family law. Unless it’s divorce, dead end. You’ll eat tons of lost man hours playing psychiatrist.

13. Get close to people in construction/comm r/e development. Those industries throw off tons of work.

14. Avoid debt collection work everybody offers. Need huge firm to work that model, particularly in a credit crunch.

15. Vet cases by likelihood of collection. Best claim isn’t crap if the target’s judgment proof.

16. Learn post-judgment law. Nobody pays faster than a guy who needs to avoid execution process. And it’s easy.

17. Join a church. Instant network and trust. I know atheists who’ve done it for business.

18. Don’t join museum boards, Rotary or the United Way. Every other lawyer there’s looking for business. Dry wells.

Thanks to PL for the advice.  Oh, and buy the man’s book, which is now out in paperback.  It’s worth it, I promise.

Stop Apologizing, Start Doing!

This morning I stumbled across two articles that got me thinking about what the GOP needs to do to take advantage of the backlash against Obama and the Democrats.  Jonah Goldberg’s article focuses on the idea of changing the message, in part by admitting that the party abandoned its small government & anti-corruption principles.  Kimberly Strassel’s article in the WSJ takes a look at the “Young Guns II” strategy being implemented by the House Republicans to recruit young, energetic and conservative (especially on the economic front) candidates for the midterm elections.

While Goldberg touches a little on the “who can lead the re-branding?” question, (and in my mind gets it wrong using Paul “Please don’t remind anyone I voted for TARP” Ryan as an example) I don’t think the answer will be found in just one officeholder or candidate.  The answer is a unified group of conservative/libertarian candidates who are willing to stand on their principles and exert pressure on the older generation to fall in line or get out of the way.

The way they can go about doing this is rather simple.  First things first, leaders in Congress and within the party need to hold a large press conference and essentially say that the party let its principles wilt in favor of power.  At the same time, they need to make it clear that this is the last time they will address the issue and from now on they will be focused solely on winning back the trust of the American people.  The GOP has to realize that while they are poised for big gains in November, they will be picking at scabs if they continue to do mea culpas in the weeks and months before the election.

The other part of this equation is letting the public know that they’ve learned their lesson because they’re recruiting candidates based on principle, not how deep their pockets are or who they know.  Guys like Sean Duffy and Marco Rubio should be at the forefront of the debate.  They are the ones who are going to decide the success or failure of the party in the future, not Newt Gingrich.

You and I also play a role in this rebirth.  We let the party get away with a lot in the past decade, and the only time we made them pay a price was when we decided to stay home on election days.  We have to be more proactive if we’re going to keep the party on the straight and narrow.  Don’t give money to the RNC or the NRCCC or NRSCC, give it directly to the candidates who truly believe in the principles of limited government, personal freedom and strong national defense.  After you they’re elected, hold their feet to the fire and demand that they stay principled or they will face a primary challenge. 

It’s time the party stop wallowing in apologies and start being the forward-thinking “party of ideas” it was in the ’80s and ’90s.