Hating the Rich

Maybe hating is too strong a word for it.  Maybe being angry or envious is a better description of what’s happening and what various politicians and organizations are vigorously promoting.  But since those same organizations and advocacy groups freely use the words “hate” and “haters,” it’s probably not completely unfair.  In this case the hating is not only selective, but also difficult to justify.

Here is a graphic that has been going around on social media.  It shows the total compensation of health insurance company CEOs.  The caption and comments imply that this is the reason for the sharp increase in Obamacare (ACA) premiums for 2017.  Let’s take one example and see what’s going on.

Let's not quibble over the fact that the information is three years old or that they calculate daily pay based on 341 days in a year.  If these folks have moved on, they were likely replaced by others who were equally well compensated.  Instead take the first gentleman, Joseph Swedish as representative.

He is the CEO of WellPoint, which operates Blue Cross Blue Shield plans in 14 states.  Here is some information from a CNBC report from 2014.  “The company had 37.5 million members at the end of the quarter, up 2 million members from a year earlier.”  Apparently he is doing a good job of growing the company and meeting analysts’ expectations.  But is his pay driving up premiums?

Take the $17 million shown above and divide by the number of customers, 37.5 million, and get 45 cents per customer.  Divide that by 12 to calculate the effect on monthly premiums and we find that if he were paid nothing, each customer might see a 3.8-cent reduction in monthly premiums – 3.8 cents!  (By saving this up for 10 years each customer could afford one trip to Starbucks.)

Maybe it’s the fact that the government forces us to buy health insurance that causes such a negative opinion of these CEOs.  By contrast, we never seem to get upset about the amount paid to the Disney CEO or star athletes.  We never hear people complaining that the ticket prices would be lower if their favorite quarterback made less money.  We give these people our money freely, even line up to do it, in return for a limited amount of entertainment and they also get rich.

Look at the recent Desert Trip concert in Palm Springs.  Most of the 75,000 tickets were gone in less than five hours, with the good seats going for $1599 each.  The promoter is expected to gross $160 million for the three-day event, while paying the headliners up to $7 million each (for showing up and playing for a few hours).  The LA Times reports that these rock stars from the sixties continue to do very well for themselves.  “Since 2000, the Rolling Stones have grossed more than $1.1 billion with their periodic tours, according to Pollstar, the concert-industry-tracking publication. [Paul]  McCartney has racked up $761 million, [Pink Floyd’s Roger] Waters has pulled in $592 million, followed by [Bob] Dylan ($293 million), the Who ($200 million) and [Neil] Young ($153 million).”

We love to hate those one-percenters, the people making a lot more money than we do, but the outrage is selective.  When it’s Mick Jagger, Bob Dylan, Lady Gaga, Peyton Manning, Rory McIlroy, George Clooney, Tom Cruise, or Oprah, then it’s OK.  Making almost $50,000 a day is very impressive, but it pales in comparison to $500,000 - $750,000 for a single speech.  We love the ones who perform for us and hate the ones who help us pay our doctor bills.  Objections to the rich are both very selective and difficult to justify.

Looking For Hope

Last week I wrote an essay called We Are All Doomed, about the apparent inability of Americans to recognize the discrepancies between their words and their actions or to see the connection between those actions and predictable consequences causing them to make the same mistakes over and over.  It was a pretty pessimistic piece of prose.

But that is not my usual tone.  I really do try to hold out hope.  So when I saw the partial headline:  “DUNKIN' DONUTS: People aren't buying doughnuts because…”, my first thought was very encouraging.  Great, people are laying off the donuts due to a rational concern for their health.  They are not obsessing about gluten or organics or artificial ingredients; they are concerned about something real – donuts = calories!  With so many Americans overweight, a downturn in donut sales is good news.  It shows responsibility, a willingness to take some action to correct the situation, and discipline, the ability to forego the temporary pleasures of today in return for a healthier tomorrow.  It also shows some perspective, properly classifying drive-thru donuts and coffee as a luxury.

With this in mind, I followed the link to read the full story.  The full headline on the Business Insider website was, “DUNKIN' DONUTS: People aren't buying doughnuts because they're worried about the election.”  That doesn’t make sense.  You would of think donuts as comfort food.  They should sell more if people feel under stress.

Upon further reading, I found that it was common these days for CEOs to blame the election for financial shortfalls.  In fact the news was not so bad for Dunkin’.  They reported profits and US same-store sales higher than analysts’ expectations, but total revenue was lower.  And they will not open as many new stores this year as originally planned.  More donuts were sold, but not enough donuts to make management happy.  This supports my comfort-food theory better than the election excuse, but it’s not unusual for CEOs to take credit for good news while blaming some outside force for falling short – looking good in a strong economy and pointing fingers in a poor one, for example.

In this case, the CEO blamed “changes in gas prices, changes in food stamp regulations, and…the presidential election."  Taken one at a time: 

First, this graph from the US Energy Information Administration (EIA) shows gas prices lower this year than several prior years.

Second, it is hard to believe that such a significant portion of their business came from food stamp recipients to affect their overall results.  But if new regulations discouraged people who are having trouble feeding their families from buying donuts, that’s not necessarily a bad thing.

Finally, “last year, researchers at Princeton and Chicago found that election uncertainty affects consumers' outlook, but not their immediate spending.”

That’s three strikes for the CEO, but unfortunately, not much support for my original hope that responsibility, discipline and perspective are making a comeback based on information from the quick-service donut business.

One More Time: Dietary Supplements (2)

This is another in my “one more time” series.  See also: One More Time Gluten-free, GMOs, Social Security, and Dietary Supplements – this is the second one-more-time for supplements.  But I can‘t drop some of these subjects because erroneous information I have pointed out before and supporting information for what I have already posted keeps coming up in the news and on ads, even some political ads.

These all fall into the same category – hype and bold promises.  The purpose of these news flashes and promotions is not to make you smarter, but to get you to buy, vote or keep tuning in.  They generally have no scruples about fooling you, as long as they can do it legally.  They rely on trigger words that often can get you acting without thinking or investigating the validity of their claims – in some cases, keeping you coasting along on planted beliefs instead of facts for a very long time. The government usually steps in with consumer protection programs for the blatant lies, but against the subtler forms of misinformation there is no protection except your own critical thinking.

My previous posts on supplements warned about several aspects of using them:  the fact that they are not tested in the same way as prescription drugs either for effectiveness or side effects;  that there is no guarantee of purity – because many come from big companies that have a reputation to preserve, they are probably better than drugs bought on the street corner, but some independent lab tests have found instances of foreign matter, ingredients not listed on the label and an absence of ingredients that are listed on the label; and the makers are not legally allowed to say they cure or improve any condition without solid experimental evidence.  Some claim to have such evidence, but it is not replicated by independent tests.  Most rely on endorsements from “satisfied customers,” celebrities or TV doctors.

A couple of recent news items brought up the issue again.  This headline, “Herbal and dietary supplements tied to liver damage”, got my attention.  Today, twenty percent of chemical-induced liver damage cases come from herbal and dietary supplements, double the number from 10 years ago.  If supplements are “overused, or used in combination with other supplements, or used for very prolonged periods or in combination with conventional medications, they may become harmful."  These problems arise because packages usually give no guidance and people don’t often tell their doctors what they are taking.  Although steroids are a bulk of the problem, other supplements can cause liver damage as well.

The study concludes with a couple of warnings. 

• First, of course there is also a risk with prescription drugs; but when they are detected, the pills are pulled from the market.  As long as you are getting what you think you are getting and are careful about possible interactions, supplements are generally safe.  But “many supplements have no proven benefit, only a potential risk.”  

• Second, they remind us, “There is no miracle in a bottle that will build muscle, detoxify your system, cure cancer, or cause rapid, long lasting weight loss. At best it is a waste of money. At worst you could die." 

On a related note, the U.S. Food and Drug Administration (FDA) is warning that homeopathic teething tablets and gels may pose a risk to infants and children.  They have been associated with “seizures, difficulty breathing, lethargy, excessive sleepiness, muscle weakness, skin flushing, constipation, difficulty urinating, or agitation” in babies.  Parents should stop using them and dispose of the products immediately.

The similarity between these stories is that homeopathic products are available without a prescription, are only tested after someone reports a problem, and in the case of the teething gel, the FDA “is not aware of any proven health benefit.”

All this is important information, available with very little research.  Unfortunately, Americans tend to skip the research, instead taking the word of relatives and friends or reacting to those trigger words based on fads and myths.  Lack of critical thinking in this and many other areas often leads to the outcome described above:  At best a waste of money, at worst you could get sick or die.