Friday, March 29, 2013


In the ongoing debate about reducing the deficit and bending the curve on the national debt, attention will have to be paid to the effectiveness of the safety net that a series of social programs have knitted underneath our social structure to prevent our poorest and weakest from getting lost in the shuffle.

Nobody can argue in good conscience that the richest country in the world cannot afford to take care of those who are incapable of taking care of themselves. If only we can find out without ambiguity who is deserving of being saved by the safety net.

We have a Rubik’s cube of complexity. On one side of the cube we have a plethora of programs, like Social Security, Medicare, Medicaid, food-stamps, welfare, disability, unemployment, you name it. On the other side of the cube you have the authority in charge, the Federal Government with several services like the Social Security Administration, the Veterans Administration, HUD, the Labor Department, the Department of Agriculture; the State, the County, the town, the church. At the bottom you have the conditions requiring the application of the safety net, old age, young age, disability, veteran, unemployment, poverty, homelessness or disaster. Finally at the top of the cube you have the parameters within which the law offers assistance, which can be limited in time, by financial resources available to the applicant or by the degree of seriousness of the conditions requiring the application of the safety net.

To add to the complexity, virtually every aspect of this Rubik’s cube is subject to constant change.
In addition, the money involved in the payout of the safety-net programs is so huge (hundreds of billions per year) that it attracts fraud of all kinds, including fraud perpetrated by highly sophisticated criminal syndicates.

Where is the bureaucracy with the capability and the motivation to manage this complexity for tens of millions of citizens and residents with the result that only the deserving get the benefits and only for as long as they need them?

In a very different time, now forever gone, we had communities. In most instances the churches were the focal points of these communities and they provided the only safety net available. It was a time where we were aware of how our neighbors were faring and who needed help. The problem at the time was that resources were scarce and the distribution of assistance subject to biases and prejudices.

Today these social controls have entirely evaporated. We have to take people at their word and there is no bureaucracy in the world that can consistently apply the appropriate standards to tidal waves of applications and verify. This would be difficult under static circumstances, it is virtually impossible under fast changing conditions for the applicants and beneficiaries.

Case in point is the shift from welfare payments to disability payments. Since the Clinton Welfare Reform the number of families on welfare has declined from 5 million to less than 2 million. But at the same time, the number of low income people on disability has risen from 5 million to 7 million.

Have you ever dealt with the government? Whether it is with the Motor vehicle Department, the IRS, the INS, the Post Office or the Social Security service, the bell curve is in full force and effect: the government employs a small percentage of conscientious, competent and motivated workers; a large percentage of fair to average workers; and a significant percentage of incompetent, de-motivated workers. That is the force that has to solve the Rubik’s cube!

The safety net is failing. It is failing the people it is supposed to protect and it is failing the tax payer.
Good governance requires that public funds are spent wisely and only on legitimate public causes.
Is there any chance that this reasonable requirement can be met?
No sure thing, but it will have to be tried. It will be a test of our constitutional democracy to see if it can forge fundamental changes in the way it operates.

Steps to consider to reconstruct the safety net and make sure it serves only the truly needy:
  •          Centralization of all programs other than Social Security, Veterans Administration and Disaster Relief at the State level
  •          Create a cadre of highly trained and equipped force to manage all aspects of the safety net
  •          Use technology to eliminate identity based fraud
  •          Compel recipients of any type of government assistance to file a semi-annual census of their need for assistance including their financial condition
  •          Diligent law enforcement and heavy penalties (including forfeiture of all future benefits) for fraud and abuse

America has the financial wherewithal to protect its truly needed from the vagaries of life. But it cannot afford, for moral and fiscal reasons, to not administer the assistance with targeted precision.

Tuesday, March 26, 2013



Rhetorical questions are not helpful tools in advancing any discussions but at the eve of the Supreme Court taking up the question of same sex marriage, I have to ask this one:

Why does the Beltway always settle for suboptimal solutions?

The answer -of course – is that decision making in Washington is so much influenced by money, ideology and pressure groups that straight thinking (no pun intended) is hard to come by.

In the case of same sex marriage, I simply cannot imagine why we have not embarked on a course of creating parallel and equally entitled institutions at the Federal level. That is the approach that States have taken by creating the institution of civil unions (although others have gone the marriage route and some have done both).

The institution of a civil union was first created in Denmark in 1989 and is now practiced in many countries and in ten States in the USA.

Would the valid question of discrimination and constitutionality even have come up if same sex couples in every jurisdiction of the United States had been offered the path of a civil union that guarantees – from a public perspective – full legal equality with marriage? This path would have avoided a lot of unnecessary angst and debate and it would have respected the age old sanctity of union of a man and a woman in marriage.

Opinion polls on this subject are notoriously unreliable. Mostly because they ask the wrong question. There is very little doubt that there is a solid majority in the US for affording same sex couples equal rights before the law with conventional couples. And if this equality can only be obtained through marriage, then ultimately, the equal rights argument will prevail.

No one that I know of has tested the public opinion on offering same sex couples the equal rights through the parallel path of a federally recognized civil union; it has not come up, because that solution is not on the table.
Our tendency to settle for suboptimal solutions in the Beltway is not limited to the matter of equal rights for same sex couples.

The legislative handling of the gun violence in America is going exactly the same way.

The reason for not reaching for the stars but settling for suboptimal solutions is not only found in the money influence and the pressure groups. It is the direct result of our political polarization and the fact that if legislative compromises are found at all, they are based on the lowest common denominator, the politically feasible rather than the strategically desirable. A legislative compromise is only good when it combines the best elements of what one party wants with the best elements of what the other party wants.

Finally, legislation in America is more often than not done reactively, rather than proactively. We don’t jump into action until we have stared disaster in the face. That was true after 9/11, it was true after the bank crisis in 2008 and now after the massacre at Newtown. And in our hurry to be seen doing something we address symptoms of the problem rather than the causes for the problem.

Congress has a lot of work to do. It owes the constituency a rational and effective approach to the reduction of gun violence (although –as David Brooks points out in his NYT column “The killing chain” of March 26 – we may be looking in the wrong places for effective solutions). It will once and for all have to come up with an intelligent approach to immigration. And it will have to find a way to put its fiscal house in order.

With all these vitally important issues to be addressed “suboptimal” does not cut it, but it may be all we will be getting.

Wednesday, March 13, 2013



There is a lot of talk in Washington about a “grand bargain”. There is a lot of talk in Washington, period. In fact, there is a lot more talk than action. And it has been that way for too long.

But if there is serious inclination towards a grand bargain, then the question becomes: “what is truly grand”? Grandeur is – like beauty – in the eye of the beholder. The fear is not misplaced that in the eyes of most members of Congress even a little tinkering in the margin will be considered a great leap forward.
Let’s help them out. The grand bargain required to liberate our economy from the shackles of a burdensome government and –conversely – to liberate government from the tired ideological meddling by election driven politicians - will have to bring a veritable reformation. It will have to bring reform in three critical areas:
  1. Entitlement Reform
  2. Tax Reform
  3. Tort Reform
1. Entitlement reform is required because our demographics have changed to the point that all previous assumptions about the financing of these programs are now obsolete. In fact Congress should not create or revise any entitlement programs – Social Security, Medicare and Medicaid - without building in the requirement that the premises behind the program are reviewed and reset by Congress at set intervals.

The private sector thrives on creative destruction. It throws out the way we have always done it and starts all over again. In the public sector that does not happen nearly enough. The world is changing fast but we assume that we can live with the same decades old programs in perpetuity.

Congress’ prerequisite in any effort to reset entitlements should be to safeguard the programs for the next generation by funding them within the parameters Congress is setting for long term budgets and for the control of the national debt.

Since there is little good news in the demographic direction of our population from a program perspective, it is time to make means-testing a standard feature of our entitlement programs. In fact we should give up on the notion of entitlements. These programs were designed - and should continue to serve - as a safety net. To keep the less fortunate members of our society from falling through the cracks. Not as an unalienable right for every member of society.

2. Tax reform should aim for simplification, transparency and fairness. It should look at personal and corporate taxes. And it should address the question if the time is not right to shift part of the revenue generation from taxing income to taxing consumption. To the extent that income remains to be taxed it should be done in only a few rate steps (looking at payroll taxes and other income taxes combined) and with the fewest possible exemptions while preserving the stimulus of important societal objectives like charitable giving, education, infra-structure investments and research and development.

3. Tort reform speaks for itself. The threat of litigation and the lack of reasonable limitations on awards given by juries in tort cases are holding back growth and innovation in multiple ways. In the first place by the cost and availability of liability insurance for most any kind of productive human endeavor. The fear of being sued is holding otherwise responsible professionals back from experimentation and innovation. And the cost of liability insurance –if available at all – adds significantly to the cost of doing business, which is getting past on to the consumer.
Tort reform is complete if we rid ourselves from the ambulance chasers that interrupt out TV watching pleasure and are a blemish on the legal profession. The money spent in litigation and much of the money spent on liability insurance premium should be redirected to productive use.
But the most compelling reason for tort reform is that we need to rid ourselves from anything that keeps us from reaching for new frontiers in science and productivity.

These three reforms are required to address the deficiencies in the current modus operandi. But more than that, they are required to keep the US economy competitive in the global environment.
A grand bargain is required for the good of the nation. And it will only truly be “grand” if it addresses each of the three reforms advocated herein.

The common thread connecting the three reforms should be the objective to: A) Create optimal conditions for economic growth; and B) Assure that implementation is within the financial means of the nation for all current generations

If this can be accomplished we can speak of the second reformation.

Tuesday, March 12, 2013


We learn to live in denial of so many things even if we do not realize it all the time. Until some of it hits home, like it did with me just recently.
Living in denial of death must be one of the most common errors in human life. And it is unfortunately not reserved for the young.
The father-in-law of one of my children was killed in an accident by a drunk driver at the age of seventy. He was a small business owner of a sizeable number of Laundromats in the town where we live, a business that kept him fully engaged. Maybe too fully engaged. The tragedy of his premature death is getting compounded for his children by the fact that he had neglected to prepare for the inevitable day that he would no longer be there. With that day coming unexpectedly soon the emotional and physical damage is great.

In addition to the emotional trauma of his demise, his children (his wife had preceded him in death) now have to deal with sorting through decades worth of files just to find out what is there and what isn’t there. It is certain to be a very frustrating, time consuming, depressing and expensive process to get his estate sorted out and probated.

If you read this and realize that you too are delinquent in making your end-of life arrangements, I implore you to drag your feet no longer and do what you have to do now, without further delay.
What is it that you have to do?

  •  If you are a business owner, it is your responsibility to have an unambiguous plan for the continuity of the business, even though that might ultimately result in a sale or a liquidation of it. The plan must be documented (in writing) and shared with all important insiders like other shareholders, the Board of Directors, the corporate attorney and accountant.
  • You have to have selected an attorney specializing in family law; and you have to have followed counsel on creating a will and testament, a living will, a durable power of attorney and other similar documents your attorney will prescribe for your wishes and circumstances.
  • You have to create a file with any and all access information pertaining to your electronic files (usernames, passwords etc), your accounts, your insurance policies and the title documents of real estate, cars, boats and other titled property.
  • You have to share the existence and location of the files and the name and contact information of your attorney and accountant with some of your closest confidants, preferably those persons who will most likely be first informed of your death.
Is all of this obvious to you? You’re still not o.k. until have acted upon this advice and you have put everything mentioned in here in place.

Have you been dragging your heels? You have known all along that you needed to do this –all of this – but you have been pushing it off? Don’t wait until it hits home and spare your loved ones the double agony of having to deal with your passing and with your failure to put your house in order!

© 2013 Castnet Corp. All rights reserved.

Friday, March 1, 2013


You don’t have to look back all the way to the first appearance of mankind on earth to marvel at the progress made in human creativity and problem solving capability. Just check how people lived in this country a mere 400 years ago – a blip on the radar screen of time – and compare it with how we live our lives today and think about all the human creativity and problem solving that was brought to bear to get here from there.

When the development of nuclear weaponry and missile technology was determined to be required to beat the Axis in WWII, it was done and it saved the world not only from fascism but later on also from communism.

When John F. Kennedy announced this nation’s determination to put a man on the moon it got accomplished in an astonishingly short time.

All this innovation proves what we like to believe but not always practice: that human ingenuity knows of no borders or limits. It just needs to be directed towards the right purpose.
These days the pace of innovation is happening on an exponential scale. Not much changed in the world in more than a millennium between the fall of the Roman Empire and the Renaissance in a manner that had an appreciable effect on people’s daily lives. Now, by advances in technology - from medical technology, nano technology, artificial intelligence to communications technology and astronomy - the way we live changes faster than ever before.

While up to World War I most innovation originated in Europe, the United States has since become the lead horse in the technology race and should be concerned with staying in the lead in the face of global competition. What is required and what is at stake?

What’s at stake is the leadership role of the United States in the world and the sustainability of the global pace of innovation. It is not impossible, but hard to see, that the pace of innovation can be sustained if we in the United States don’t challenge ourselves to stay in the lead and take the steps that will enable us to do that.

What’s required is 1) world class education and 2) motivation of the largest possible component of the population together with 3) proper resource allocation and 4) the collective will (determination) to make it happen. We need a “refuse to lose” attitude to pervade all social strata. Our nation should be concerned about bigger things than who wins the Super Bowl, the Stanley Cup, the World Series or the NBA Championship. This means that we have to get better at educating people and putting them at work in circumstances and positions where they sense that they can make a difference and, in fact, make a contribution to the sustainability of our leadership position. What’s required, in addition, is a clear articulation of some overarching national objectives and a popular buy-in of these objectives. That is the role and responsibility of government. The execution of the plan for reaching these objectives can safely be left in the hands of the private sector.

What might some of these national objectives look like? I would argue that:
a)      Creating the circumstances whereby most, if not all, of our residents can lead healthy lives for at least 90% of a lengthening lifespan and productive lives for at least 70 % of the same lifespan;
b)      Defense against climate change and/or protecting people and property from the adverse consequences of climate change;
would make a good place to start. Let’s look at these a little closer.

With respect to the first objective:
We are not running on all cylinders. Innovation and creativity comes from too few of us. It would be in the national interest and a tremendous boost to our chances to maintain world leadership if we were able to mobilize each and every resident to be productive citizens. That requires making sure that they have unfettered access to education and that they are in a mental and physical condition fit for peak performance for most all of their adult life. Today we have too few producers and too many consumers. Since humans, by nature, will always be facing a limited lifespan –thank goodness! Can you imagine what the world would look like if we just kept procreating and none of us ever went away? - medical research should be focused on keeping people in a positive frame of mind, pain free, fit and productive, accepting the fact that one day we all must die from something. Healthcare that aims to achieve just that is a political and sociological imperative. It deserves an all out scientific, technological and political effort and commitment.

With respect to the second objective:
Too many people see the issue of climate change as a politically motivated, ideological matter. It is, however, beyond doubt that icecaps are melting around the globe and glaciers are retreating. What we are arguing about is, if and to what extent human intervention is driving this phenomenon. Winning or losing that argument is of little interest to people who stand to lose their livelihood if not their lives as a result of climate change.
Climate changes are older than mankind. But never before in history have as many people and as much private property been threatened by the effects of climate change. Close to home, where beach erosion already challenges the desire to live at the ocean’s edge, just imagine the consequences of the sea water level rising a few feet or hurricanes increasing in frequency and intensity. We are burdening the earth with many more people - and all they bring to bear - than ever before. History’s way of dealing with that is by correcting the situation by cataclysmic events, wars, plagues, meteorite impacts, earthquakes and you name it. That’s not how we like to solve our problems in this day and age. Our challenge is to create conditions under which the earth can accept the burden and people can go on with their lives. Technology will have to be the answer. Any technology that the United States can develop that will serve to:
ü Deal with world shortage of accessible fresh and clean water;
ü Solve the nuclear waste issue or make it manageable;
ü Make clean coal an affordable reality;
ü Mitigate if not eliminate the risks associated with the recovery of fossil fuels and gas;
ü Make other alternative energy sources an affordable reality;
ü Lessen the environmental impact of any other kind of human activity;

will have great global commercial value and enhance both the prestige and the world ranking of the United States. Herein lays the key. We should embrace the challenge presented by the current wave of global warming rather than arguing if it is even happening. We should embrace the challenge to find ways to sequester CO2 from our emissions even if we are only half certain that these emissions are causing the apparent climate change. And we should embrace the challenge to find economically feasible alternatives for fossil fuels. Which nation is better equipped than the USA to find solutions for these problems? If we don’t find them some other nation will and we lose the opportunity to maintain our leadership of nations. Conversely, if we do find technological solutions for the challenges presented by climate change and the need for greater human productivity, these solutions will be very marketable all over the world and enhance not only our economic prospects but also our prestige in the world.

Technology should also provide the answer in the raging debate about (illegal) immigration. The United States needs immigrants as much as it has ever needed them. If some hot-heads actually found a practical way to send all illegal immigrants home, our economy would be in desperate straights. The issue is not keeping immigrants out. The issue is keeping undesirables out and knowing who’s in the country. The technology exists to give every resident of the United States a bio-metric identity card that establishes a forge-proof identity. Sorry for all the students who now buy their beers with fake ID cards. There is a lot more security in a bio-metric identity card than in the biggest wall or largest electric fence we can build along our borders as a symbol of misunderstood interests.

Technology should finally serve to bring our business and service levels to the next level.  Let’s face it. Most of us already work as hard as we humanly can and we may assume that we are about as smart as we will ever be. Progress in any field will have to come from two sources: participation by a higher percentage of the population and new and better ways of doing things, i.e. technology.

The democratic systems are ideal to foster ingenuity and creativity, because they allow equal opportunity to all to think for themselves and find their own way rather than a path that may be laid out for them by their government. Democratic systems also make education more freely available to all who care for it. This is why so much innovation has come from private enterprise in the United States. There is no good reason for us to lose that edge. We can only defeat ourselves. Science and Technology are the answer in addition to maintaining a society where the quality of life for virtually all is better than anywhere else in the world. Because innovation and ingenuity still need to be nurtured.