Digging holes with short shovels

Pay the most for being sound and healthy

By Doug Thompson

Consumer spending needs to go way up, I hear. The economy depends on people ignoring their long-term self interest. To function, our economy demands people buy stuff now.

Meanwhile, the credit card I use most will have an interest rate increase from 6.99 to 9.99 on Nov. 30. It will go up again when interest rates get up off the floor. Oh, interest on cash advances will charge a blood-sucking 23 percent-plus.

Our government and the finance sector are so obviously in cahoots, I have to wonder: Why can’t they row the boat in the same direction?

Hey, I know things aren’t so simple. Credit card companies overreached during the boom times. They need to charge their good customers more to pay for the bad ones. That’s familiar. I’ve been doing the same thing with health and car insurance for decades. The difference is that the credit card companies chose to extend credit far beyond what any reasonable lender would do. Hospitals never sold anything to a lot of people who show up at the emergency room needing life-or-death treatment.

About $1,500 a year of my health insurance goes to pay for people who where never insured. Now about 5 percent of my interest will go to payoff people who weren’t as responsible as I was. They just checked the “yes” box when they got junk mail offering them thousands upon thousands of dollars of credit.

I shouldn’t complain too much. I paid this credit card off. I intend to keep it paid off, Lord willing and the creeks don’t rise. Any big purchases in the future, however, are going to have to wait until I can save all the money. Oh well. Somebody will just have to stay unemployed a while longer.

The American economy clearly depends on just about everybody digging themselves a deeper hole. At the same time, the finance sector is forced to make up for its ghastly recent — and continuing — irresponsibility by handing us shovels with shorter handles.

There’s no quick fix to this until the economy recovers enough to issue credit cards to people who are so careless about their own long-term well being that they shouldn’t be allowed to eat with a sharp knife.

You know, I think our finance sector and our health care system have exactly the same problem: Fee-based service. After all, the big bonuses that make up 60 percent or so of investment professional’s income are nothing but fees for performance — in getting short term profits.

The more tests and treatments — or loans you take out — the more they profit. Whether all this does you any good is immaterial.

Think about it. If you’re healthy — either in body or finance — you don’t make the system any money. Oh, you might make your health insurance company a lot of money. But the people who deliver the goods — prescriptions, treatments, tests — don’t make any money unless somebody gets the treatment.

Looking at things that way, I guess you do pay if you’re healthy. That’s the beauty of the system. You just pay for the procedures done on somebody who don’t have insurance. In finance, you pay for people who got overextended.

What a racket.

Don’t blame them. Many of those folks don’t have a job.

Charlie Cook’s the best pundit in America. I highly recommend his article this week, which is better than the one I highly recommended to friends last week. It’s at www.cookpolitical.com. It says, in part:

“What if someone told you that 17 percent of American adults — one out of every six civilians — is unemployed, working part-time but seeking a full-time job, or would like to be employed but has given up the search? That would make the current 9.8 percent unemployment number pale in comparison, right?

“People with graduate degrees who work part-time at Starbucks mainly for the health care benefits don’t show up in the traditional unemployment figures. They show up in the U-6 count” (from the Bureau of Labor Statistics.)

“It’s difficult to look at that U-6 chart and not feel a bit sick.”

Yes, it is.