Livinglies's Weblog

1. INSURANCE IS NOT EXACTLY WHAT THEY ARE SELLING: When I was a defense attorney for traveler’s insurance, I learned that insurance companies have a vested interest in keeping verdicts high. Even I found this incomprehensible. But once explained, it was clear: a higher verdict meant higher demand for insurance and higher prices for premiums. This produced much higher gross revenues and profits since the real actuarial risk was much lower than what was being sold to people and businesses. And that increases the value of the primary product of nearly every public company and many private ones — the value of its common shares that trade or could be traded on the open market.
   1. The decision to let a case go to trial, knowing that it will result in a negative verdict of notable size, means that the press will carry it (frequently front page) and scare the hell out of anyone who is in that line of activity or work.
   2. The solution, of course, would be a return to the actual realities that were discovered and utilized by two Scotsmen for pension benefits in the early 1800s — that nobody can predict when a specific event will occur.
   3. Still, anyone can accurately predict how many such events will occur in any given time period.
   4. The risk is known but concealed and then sold as something that favors the seller while keeping the buyer in the dark.
   5. In a free market, this would be corrected. But we are way past that because the U.S. government has been so unwilling or incapable of enforcing the basic rules of fairness and balance in the marketplace —  despite a panoply of laws, rules, regulations, and case decisions that would make it easy to do if the government only wanted to do the right thing.
   6. The current practice of paying off innovators (who have a better and less expensive product or service) to stay out of the marketplace is another example of the failure of government regulation to address anti-competitive strategies.
   7. And remember that anti-competitive strategies equal anti-consumer practices. In these issues, The European Union seems to be far ahead of the United States, although still not as effective as necessary to level the playing field to allow free market forces to do their work as the invisible hand governing supply and demand.
2. DRUG WARS ARE HIGHLY PROFITABLE FOR BOTH SIDES AND DAMAGING TO EVERYONE ELSE: Both drug cartels and those who support law enforcement and prisons make a lot of money because of the illegality of the product. If we were to learn the lesson of prohibition, we would do far better by regulating the industry rather than “banning” it without effect. Drug cartels oppose this because such action would drop the price of what are now illegal drugs to nearly zero. There would be no business to conduct. It is equally opposed by law enforcement who want to keep their jobs and vendors in the money. If nobody is arrested, the whole thing collapses. Meanwhile, the public would save hundreds of billions of dollars and thousands of lives if the product was shifted from criminal to regulated. People could still be placed in prison for violating regulations, but the marketplace for illicit drugs would cease to exist. In turn, this fuels violence, making me people flee for their lives in the form of migration and, specifically immigration to the U.S.
3. PRESCRIPTION DRUG PRICES ARE FAR ABOVE THIER VALUE, PUTTING CONSUMERS AT RISK: Everyone except consumers wants high drug prices for thousands of middlemen and insurance companies to make fortunes on top of the revenue paid to the manufacturer and the pharmacist for dispensing the product.  Some of the real players create faux players so that they can share in the bounty of being a middleman. Mark Cuban, a billionaire disrupter, is changing that and is having a partially beneficial effect. The price of CostPlus drugs is about 1/10th that at a pharmacy. People continue to die and go to the ER where services and healthcare prices are at a premium because they cannot afford the “retail” price of the drug.
   1. This is because of an inversion. In effect, the wholesale price exceeds the retail price in a free market. The wholesale price now accounts for 65%-75% of the cost of every medication. Whole ale is more expensive than retail, as Mark Cuban is demonstrating on a daily basis.
   2. But the response is that for those insured, the co-pay charged to the consumer is around the same price that Cuban’s company will charge. The rest is paid by insurance on some unknown formula to all the middlemen.
   3. You would think that the point of drug manufacturing was to get needed medication to people who require it. But the real business of drug manufacturing is the distribution with increasing layers of revenue, profit, and jobs such that a $0.50 drug will cost $300.
4. FORECLOSURES ARE NOT ABOUT REDUCING OR PAYING OFF A LOAN ACCOUNT: Lastly, just because I don’t want to make this article too long, is the fact that foreclosures are not seeking resolution for an unpaid debt. The original transaction and the ending foreclosure are both counterintuitive schemes.
   1. Once again, the seller is hiding behind several curtains and a few doors.
   2. Once again, they are selling something that is not accurately described.
   3. In foreclosures, nobody seeks to make a creditor “whole.”
   4. The entire purpose of foreclosures can be summed up like this: foreclosures stimulate and foster the myth that “loans” are being created and sold to provide extra revenue to the magicians who made it look like a loan.
      1. If you look at the general ledger of any of the participants, there will be no evidence of a loan account — the key component of an unpaid loan. This is of special importance at the time someone pretends to invoke the statutory scheme for foreclosure to satisfy an “outstanding” debt — i.e., a loan account — that does not exist.
      2. The government is once again complicit.
      3. By adopting the attitude that what is good for business is good for the country (i.e., the general welfare and consumer demographies), the government is expressly abandoning the general welfare, consumers and homeowners in particular. It is also undermining free markets, competition, and prices for everything that would be lower.
      4. In a free market, this could not happen. The fact that it does happen is a testament to the conclusion that no such free market is operating.

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