North Korea has been grabbing headlines as usual, and the nation’s recent actions have been described as erratic or irrational. Some speculators have suggested that the leader’s advancing age and failing health has inspired him to the ultimate confrontation, but he is probably instead trying to secure his legacy and the ascendancy of his chosen heir.

Defensive Paranoia

Understanding North Korea’s fear of invasion requires a look back on the last few thousand years of the region’s history. Before the Korean war split the peninsula in two, the Korean kingdoms had been invaded by Japan, China, Mongolia – just about any neighboring state has made some attempt at capturing the Korean provinces.

This 19th century cartoon depicts Korea as a fish being hunted simultaneously by China, Japan, and Russia.

For the Southern Republic, U.S. intervention in the cold war was an assurance of territorial integrity.  North Korea similarly enjoyed Soviet protection, but the collapse of the U.S.S.R. left North Korea on its own and in need of a defensive deturrant.  While many think of China as North Korea’s natural ally, the relationship between the two is actually rather strained as there are some debates over the historical boundaries that seperate the two cultures and their derivative states.

As iron and uranium are the primary natural resources available in North Korea, it should not be a surprise that these have been utilized as defense.  Iron-clad ships originated in Korea, so it should not be a surprise that they have retained the desire to stay cutting edge in their military options.  Failure to do so has historically meant a loss of sovereignty and paying tribute to foreign powers.

Nuclear Sabre Rattling

With a domestic supply of uranium and a history that promotes defensive paranoia, it was probably inevitable that North Korea would develop nuclear weapons.  Recently announced tests may have proven a partially-functional bomb, but the actual potency of Pyong’yang’s arsenal is unknown.  Kim Jong Il, of course, would like everyone to think they have full nuclear capabilities.  Chances are, the intent is to create a defensive deterrent.  While North Korea controls a large army and long rang bombing capacity, they have no hope in a direct war against either neighbor.  A fight with China or a U.S. backed South Korea would be extremely bloody and destructive on both sides, but even scenario would end with the defeat of North Korea through attrition.

Legacy and Inheritance

A few months ago, the missile launches, bomb tests, and threatening announcements were gaining momentum.  Some people thought he was trying to challenge Obama as a new president, and others suggested he was simply out of his mind.

What didn’t get a lot of coverage before North Korea faded to the back of the news again, was that Kim Jong Il had named one of his sons as a successor.  And suddenly after naming an heir, the rocket launches and nuclear bragging seemed to quiet down.  So what I see is a public display of power for the purpose of securing a legacy – not the behavior of someone who wants to commit national suicide.

Indeed, the latest announcement was that Kim Jong Il would be re-opening the contested border with South Korea.  After decades of seperation, the reclusive state will be allowing travel along the Korean peninsula.  Tourism and family reunions are expected to be on the top of the agenda as Koreans seek to reconnect with their own kin and cultural history.

Cultural Momentum Favors Unification

To paraphrase Lao Tzu, a storm or movement that appears suddenly cannot last for long.  Conversely, a thousand years of shared language and history is unlikely to remain divided because of fifty years of seperation.  Indeed, Korea has spent periods longer than this under outside control.

Kim Jong Il’s heir is his youngest son, a twenty-something with a decent education and a reputation for partying.  He may not have the ability or even the interest in keeping the North isolated, and he may realize that the corporate world even more favorable to building family fotures than the current dictatorship.  With the borders opening, trade is almost certain to follow.  So while I don’t believe the new leader will give up his clan’s prominent position, I do think he will be more open to tolerating a more open and competitive system.  Of course, all I can do is speculate baselessly, as the heir’s own words and actions will define the ultimate course of Korean politics.  But I will say, that despite all of the saber rattling and threats being exchanged, the actual chance of a military confrontation are falling quickly.

How do you know its the weekend?  Well recently, the best sign is that news is popping up about bank failures.  See, there’s this trend in politics and all types of public relations that really bad news should come out on a Friday afternoon or Saturday.  As someone who runs websites and has access to all kind of traffic stats, I can attest that these are times that people aren’t sitting around reading the news. In fact, the busiest times for news consumption are the hours you’d think people are supposed to be working…

Anyway, the FDIC and Federal Reserve know how to play the public relations game, too.   In the modern economy, appearances are just as important as realities – so what better time to announce failure than when no one is listening?

And this year alone, there’s been 77 banks achieving failure status.  Ouch.  The good news is, the FDIC is insuring all those deposits up to $250,000.  The bad news is, the FDIC now needs to come up with some more money in order to do so.

Reuters analyzes the assets and recent expenses of the FDIC here and figures they’ve got a few billion left to cover the growing losses.  Other writers are less optimistic in their FDIC analysis.  The real question to ask is, how bad off were these failed banks?  In a world where regulations and accounting rules shift on a whim, it might be impossible to answer that question even if you had full access to all the books.

Of course, the FDIC funds its insurance operations with a small fee from the banks with insured deposits.  And this means they can’t just increase the fee directly, because it would contribute to even more banks going out of business.  Really, the last thing the banks need is for their fees to go up.  So what is the FDIC ultimately backed by?  That would be the “full faith and credit of the U.S. government” and that means Congress will be sure to raise someone’s taxes or beg the capital markets to buy more of our debt. The “sound” banks will acquire competition and increase their market share, even if they’d be bankrupt too had it not been for TARP & discount window action.

If we get through this crisis without seriously reforming the high profits and public risks of the finance and banking sectors, we’re going to be in for a “recovery” that’s as bad or worse as the crisis itself.

Just six months after taking office, there is a clear trend across multiple polling firms:  Obama is losing popularity.  While a majority of likely voters still approve of the job the president is doing, the rating has dropped more than ten points from post-election highs.  Its doubtful that many McCain voters ever supported Obama at all, so who is he losing popularity with, exactly?

On healthcare, Obama seems to take criticism from both sides.  Republicans and insurance industry lobbyists are working overtime to convince voters Obama wants to go too far toward socialism, and to the left there are complaints that Obamacare fails to guarantee coverage to everyone.  In addition, Obama is being blamed for the fact that Congress has stalled out on the terrible “compromise” legislation.  I think, at the very least, there needs to be a public health insurance option, but a more ideal system would provide every American with basic preventative and catastrophic care.  Some industries lend themselves to competitive markets:  medicine and banking simply don’t seem to be among them.

On foreign policy, Obama is also fending off charges that his policies are too Bush-like.  Despite the much-celebrated “withdrawal” of U.S. troops out of Iraqi cities, the timetable for this plan hasn’t changed a bit since Bush was in charge.  In Pakistan, U.S. bombing campaigns have accelerated despite high civilian casualties, and comments recently made by Hillary Clinton suggest this may be the next front in the ground war against that abstract enemy known as “terrorism.”

On the environment, the much publicized carbon tax brings a whole new type of profit to financial firms like Goldman Sachs and JP Morgan, but there’s little evidence that its an effective way to clean up our toxic messes.  Carbon dioxide remains a proxy for real environmental outrage, while the administration approves permits for mountaintop removal and logging in our largest temperate rain forest.

On the economy, there’s been a lot of money spent and no real moves to correct the reckless behaviors that brought us to the brink.  In fact, its more like protecting the instigators from the consequences of their financial mistakes.  From Paulson to Geithner, Goldman remains in charge of the Treasury – and Obama has made headlines by appointing even more GS alumni to high ranking posts.

Strategically speaking, Obama’s centrist path seems like a safe way to get re-elected.  A divided Republican party offers little real competition to perpetuating the status quo under a slightly different rhetorical spin.  Instead, Obama’s greatest vulnerability may be from progressives, civil libertarians, and economic populists who were expecting a bit more change than this.

Bloomberg reports the top TARP inspector will testify that federal financial system bailout liabilities could be as high as $24 trillion, drastically surpassing the $700 billion specifically authorized under the actual TARP legislation.  Of course, the Treasury is defending their involvement, stressing that these numbers are theoretical maximums rather than spent dollars.  Assuming the assets behind the banks’ balance sheets are worth more than zero, the actual cost to tax payers should be significantly lower.

Fear and Foolishness

In time, it is likely that the TARP program and associated financial bailouts will be viewed as similar to the war in Iraq:  a series of expensive lies rushed through in a climate of public fear.  The official line of supporters at the time was that a failure to act decisively would result in some sort of apocalypse.    Instead of asking if we had gone too far, people were still asking if we had gone far enough.  Well, $24 trillion later, how is your view of the economy?  Mine still sucks…

Congress is a Small Fish

Essential to understanding this story is recognizing which government institutions are shelling out the cash.  Congress specifically authorized $700 billion dollars, but much larger guarantees and asset insurance has been provided by the Federal Reserve and the Treasury Department.  You’d think decisions about our dollars would be made by our elected representatives, but they’ve outsourced their responsibilities to opaque and insulated departments.

There Goes the Neighborhood

The only thing that seems to have been accomplished was keeping the banks who owned all the bad mortgages in business.  And that’s good right?  I mean, who else would foreclose on my neighbors when they lost their jobs?  On my short street alone, we’ve got two homes that have so long been abandoned by their bank owners that they’ve been stripped of everything valuable and slated for demolition.  Another one must be getting close to worthless:  They’re asking $29,000 for a 2 bedroom.

This surge in vacancy won’t be limited to my subprime hood, next year will be the collapse of the jumbos and ARMs.  Expect the next wave of carnage to wash up in the $500,000 housing range.

In the meantime, I’m trying to figure out how much it will cost me to buy the street.  Its in a really nice location, despite the property owners’ (banks’) lack of upkeep.

Between the recent federal tax increase in April and the state tax hike that went into effect earlier this July, cigarette prices have nearly doubled in just three months.  At the start of 2009, I could pick up a carton of smokes for about $28 after tax – and the current cost is closer to $48.

Of course, my recent trip to Ireland helped me realize how good we still have it.

The first day we arrived, Aisling’s uncle wanted to take us for a drink and a meal at the neighborhood pub.  Oddly enough, smoking wasn’t allowed in the pubs (or anywhere really), so I joined the crew of outcasts enjoying nicotine in the windy rain.

A younger guy approached me, flashing a 10 Euro bill (about $15) and begged me to buy him some cigarettes.  I tried to decline – even insisted that I had literally just walked off the plane and didn’t want to get in to trouble.  I didn’t ask his age, but he had the persistance of a slightly-underage addict that I could relate to all too well from my days of loitering around the convenient store and waiting for someone willing to acquire a pack of Marlboros.

Well fine, I couldn’t get rid of this guy so I offered to sell him a pack of cigs I brought with me from the states.  I originally paid about $32 for the carton, so I figured a fair price would be at cost.  When I asked for 2 Euro in return, he looked shocked – but in a way that he didn’t want to miss the opportunity.

He exclaimed “Stay right here, I’m going to get change!” and he dashed into the pub.  A few moments later he handed me 2 Euro and seemed to display a brief moment of guilt.  “Are you sure you only want 2 Euro?”

“Yeah, sure, that’s all I paid so its only fair.”  Of course, I never thought to ask how much they cost on that side of the pond.

A few days later, the few packs I brought started running low.  We were still staying in Dublin at that point, so that corner pub was the closest shop.  I fished a few coins out of my pocket and walked up to the bar to order a whiskey, a coke, and a pack of Marlboro Lights.

“14 Euro”

“What?!”

“That’s the price:  8.50 eu for the cigarettes, and 5.50 for the mixed drink.”

And at that moment, I realized I was willing to pay about 13 US Dollars for a single pack of smokes – and maybe our sin taxes aren’t so bad.

In Northern Ireland, the tax is a little bit lighter.  Packs are sold for about 7 euro ($10-11) or you can buy loose tobacco and 20 rolling papers for about $4.  No wonder everyone was rolling their own smokes…

Economically Regressive, Medically Progressive?

By definition, cigarette taxes are regressive – people with lower incomes end up spending a higher percentage of their wealth on the tax itself.  Rich people don’t really smoke more cigarettes than anyone else who smokes, they just spend a much smaller part of their income on the fix.

At the same time, sin taxes are popular because they may theoretically bolster progressive goals like reducing illness and funding for medical care.  Gas taxes sort of work the same way:  They’re a heavier burden on the working poor but they theoretically accomplish the goals of reducing consumption and funding environmental cleanup.  Then again, I remember when they told us the lottery was going to fund education and college scholarships.  That lasted a few years before they finally decided to slash the scholarship budget and transfer the lottery proceeds to the general fund.

So I’m a bit mixed on it all.  I certainly don’t enjoy spending near $50 for a carton of cigarettes but there are probably worse ways the state could try to raise revenue.  At least they haven’t put a sales tax on food yet – that would be an incredibly destructive and regressive tax.

In the meantime, I’ve had to dust off the corn cob pipe to save some cash.  While the price of pipe tobacco has also doubled in the last few months, it is still the only way to get a nic-fix for less than $20 a week.  Of course – it could be a whole lot worse.

The recent Congressional debates over healthcare reform have been a model in special interest lobbying and out of touch representation.  Big money in the medical industry is using its influence to make false claims about how expensive public healthcare is or how effective our current American medical system is in keeping people healthy.

If you’ve been reading my sites and posts before, you might be a little bit confused as I usually argue toward the libertarian end of things and now I’m suddenly calling for a public health system.  And yes, I might be a little biased against government solutions and market interventions, but we can’t let ideology blind us to the facts.

Fact #1:  U.S. Spends more of its GDP on healthcare

The CDC published the 2006 data on health care as a percent of GDP, and its clear that the American version of private for-profit care comes with a higher price tag than comparable medical care in similar nations.  In 2008, things were even worse:  17.6 cents on every dollar generated were spent on medical care.  If the GDP continues to decline and nothing is done about costs, we will soon spend more than 20% of our GDP on this one expense.

Fact #2:  Americans are not Healthier

The CIA World Factbook ranks America at #50 for life expectancy:  this is well behind most of the European and Asian nations that we’re outspending.  And despite all of the money we’re spending and the attempts to subsidize private profits in the sector, we still have tens of millions of people who can’t get access to the preventative treatments they need to stay healthy and employed.

Fact #3:  The Status Quo is Bad for Business

Unless you’re in the insurance or pharma industries, the current system is a dead weight on your company’s bottom line.  Employees who do get coverage from their jobs are costing a lot of money to their employers, and the annual rise in costs cuts into the same HR budget that would have funded your raise or the assistant you’ve been hoping for.

Workers who don’t have coverage are in an even worse spot, because they often can’t afford to buy insurance.  Rather than get treated and tested early, they end up struggling through sickness and eventually showing up at the emergency room in need of urgent care.  Of course, that care still has to be paid for – and its still going to come out of the pockets of taxpayers and insurance indirectly.

The Illusion of Competition

We Americans take great pride in the concept of free markets, but what exactly does that mean?  One thing implied by a free market economic sector is the presence of competition – something we don’t really have in our for-profit medical system.

If you’re seriously injured in an accident and need emergency surgery, you don’t have time to research your hospital choices.  You’re not exactly in a good position to argue with the ambulance driver, either.  Likewise, people don’t usually turn down employment because the medical benefits are too expensive or purchased from an unreliable provider.

Yet that’s not it:  There are also strict laws, inspired by lobbyists, that prevent insurance from being sold across a national market.  State mandates help fragment the insurance market-place, and this generally leaves fewer alternatives based on location.

Healthcare, like roads, is something that everyone needs.  There are inherent limitations to how much competition can exist in these markets.

Single-Payer Makes Sense:  A Public Option is Minimally Acceptable

American healthcare doesn’t demonstrate the cost savings expected of a free market, and the result lags behind nations with public systems.  The current model leaves little incentive for early (and often cheap) cures, because there is a lot of profit to be made on patients with chronic illnesses and chronic pain.  Instead, surgery is a big ticket item, and some are often oversold.

It is also important to remember that a public single-payer system does not mean the total elimination of private insurance options.  Just because everyone would be covered for basic necessities does not mean that affluent individuals couldn’t find extra insurance.  In France, a vast majority of the population still carries private insurance supplements.

If a single-payer system is too radical of a change for the American public, the minimum acceptable choice is a competing public insurance option.  If provided at cost, this federal insurance plan would force the private insurance industry to cut costs and provide better care.

Conversely, any attempt at universal healthcare that does not include public competition will simply subsidize the insurance companies even more – and mostly at the expense of the lower working class.  Some proposals have amounted to forcing everyone who works at McDonalds and Wal-Mart to buy their own insurance – and while it sounds absurd, it would be great business news for the stock owners of private medical companies.  Of course, the stock owners’ club includes more than a few members of Congress so the chances of this happening are higher than I’d like to admit.

The bottom line is this:  We need to slash healthcare costs and all indications are that a non-profit public competitor is the way to go.  We need to stop asking if we can afford universal coverage and start asking if we can afford to go without it any longer.