Free Lunch

David Cay Johnston, “Free Lunch” (How The Wealthies Americans Enrich Themselves At Government Expense—And Stick You With The Bill), The Penguin Press, 2007, Pages 293
If you’re concerned about congressional earmarks, backdated stock options, hedge fund tax breaks, abuse of eminent domain, subsidies to sports teams, K Street lobbyists, the state of our health-care system, to say nothing of the huge gap between rich and poor, this book will not make you feel any better about any of them. Additionally, if a Walmart or Cabella’s or a similar big-box store is coming to your area, be sure to read the section of this book dealing with subsidies and how they impact each local taxpayer .

Much of this book is a reinforcement and expansion of this authors 2003 book “Perfectly Legal” which I reported on in my 2/11/09 blog.

Notes:
Pg. 11: Of each dollar people earned in 2005, the top 10 percent got 48.5 cents. That was the top tenth’s greatest share of the income pie since 1929, just before the Roaring Twenties collapsed into the Great Depression. This growing concentration of income at the top is nothing like that found in Canada, Europe, Japan, Australia, and New Zealand. Instead it resembles the distribution of income found in there other major countries: Brazil, Mexico, and Russia. In 2005, the top tenth of 1 percent (300,000 people) had nearly as much income as all 150 million Americans who make up the economic lower half of our population.

Pg. 40: After President Nixon’s visit to China in 1972, American oil companies sought to explore there. Right off they asked the Chinese to enact a corporate income tax. The Chinese were bewildered. You have to read this section to understand the oil companies motivation which is much the same motivation of companies moving off-shore today.

PG. 49: In the next decade or two, as many as 40 million American jobs will be at risk of moving overseas, according to an analysis by a leading supporter of free trade. Trade is no longer confined to products you can ship in a box, like automobiles. It now extends to any service that can be performed electronically, like accounting.

Pg. 81: Respected economists have intensively studied subsides for commercial sports teams. Three decades of published research all points to one conclusion: subsidies for commercial sports teams never produce a net gain for society. They are just a government-sponsored transfer of wealth from the many to the few.

Pg. 110: Influencing government is one of the fastest growing industries in America. In 1975, Washington lobbyists collected less than $100 million in fees. Had their fees grown at the same rate as the economy, lobbyists would have taken in about $250 million by 2006. In reality, they took in 10 times that—more than $2.5 billion.

Pg. 136: Having police respond to burglar alarms may seem to be an appropriate public service. But only one in five residences has an alarm. This means everyone is paying for a benefit that four out of five people do not receive. Also, almost three decades of studies show that virtually all alarms are false. In many cities 99 percent of alarms prove to be false. Seldom do responding police ever catch anyone even when the alarm is not false: the average burglary takes less than five minutes; police on average arrive 40 minutes after learning of an alarm. The cost to the public to check out false alarms by the police is $1.9 billion. So long as Tyco and other big alarm companies can stick the taxpayers with their labor costs, they have an incentive to become more efficient by designing better alarms and better ways to detect false alarms.

Title insurance for homeowners needs an overhaul. For example of a good system: In Iowa there is no private title insurance. Instead, the state government runs the program. The cost is $500 on purchases of homes valued up to $500,000 and $90 for refinancing. As the state improves the quality of its records, the number of claims should dwindle, allowing lower fees in the future.

Pg. 209: If health care as a business worked, it would be a success story to embrace. If it resulted in lower costs, more and better care, and longer lives, it would be just what the doctor ordered. The American system provides superb acute care, trauma care, and access to the highest technology. But by every other objective measure—cost per capita, health status, longevity, costs of paperwork, and economic pollution—the uniquely American approach to health care is a complete failure. We pay more, enjoy shorter lives, and are drowning in infuriating make-work, filing clams and making appeals, while distorting the whole economy because one giant component is a commercial activity. In America we ration health care through contracts that limit care and exclude coverage—and by having tens of millions of people go without any insurance at all. No other modern country regards health care as an insurance business—it is treated as a service like the police, education, and lifeguards are a service.

Pg. 213: The idea of health care as a tax-free fringe benefit began with Roosevelt and the economic controls of WWI. But the drive to make health care into a part of corporate America through government giveaways began with the Nixon Era. Nixon signed into law a requirement that large employers offer a prepaid group health care plan, a health maintenance organization, or HMO, to their workers if they offered any health plan.