Next on the Horizon -- Curing Ills or Creating Them

Congress and the President, and I'm not just talking about this Congress and this President, have a very consistent theme. They look for things that are wrong in the United States and they seek to fix them. This is good. In fact, I think it is indisputably good.

That doesn't sound like this author, does it? I almost never praise anyone in my blog. Consider Mark Antony's famous soliloquy from Julius Caesar, Act III, Scene 2 (Friends, Romans, and Countrymen ...).

So, what's the rub here?

Think back to late 1981. The typical American worker was covered by a strong retirement program. Without having statistics at hand, memory tells me that most were covered by defined benefit pension plans, a not insignificant number of which required employee contributions. Virtually none were yet participating in this new type of retirement plan called a "cash or deferred arrangement (CODA)", now known universally as a 401(k) plan (Section 401(k) was added to the Internal Revenue Code by the Revenue Act of 1978).

Well, that's all good, isn't it?

The 1980s saw an era where retirement benefit law was changed nearly every year, sometimes multiple times in a year. Each change was lauded as an improvement. Yet, 30 or so years later, look where we are. Workers who were nearing the retirement zone in the early to mid 80s generally retired early. Many, if not most, were able to live more comfortable lives in retirement than during their working lifetimes. Today, that does not seem to be the case. In fact, when I look at my cadre (those currently in their 50s), those who did not benefit significantly from the irrational stock market run-up during the mid to late 90s (and hold on to a good bit of that money) are talking about never being able to retire.

And, this is despite the 30+ laws passed by various Congresses and signed by various Presidents since the early 80s, each of which was designed to strengthen our private retirement system. Surely, I am not so lacking in command of the English language that the word strengthen is beyond my understanding.

In 2010, two of the more controversial laws in recent times were passed. I refer to the Patient Protection and Affordable Care Act (PPACA, ACA, or ObamaCare) and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). Each was voluminous and each was intended to cure an ill or multiple ills.

Each law has been viewed by many businesses as something that will cost them more money to operate those businesses. Curiously, businesses do not like to see their overhead increase. Perhaps that's not curious at all.

So, what do they do? Those businesses find ways to not increase their costs of doing business. For many, that has meant changing full-time jobs to part-time jobs, thus not requiring health care coverage of those employees under ObamaCare. The more socially-minded among us would consider this to be abhorrent. The more fiscally-minded would consider it a smart business practice. Robert Merton would consider it to be an unintended or unanticipated consequence (Merton wrote the seminal paper, "The Unanticipated Consequences of Purposive Social Action" in 1936).

Let's look at where we are today. Congress seems to get nothing done because the Democrats in the Senate and the Republicans in the House agree on essentially nothing. It's rare that even the Democrat-controlled Senate provides majority support for proposals from the Obama Administration. But, we certainly have ills. The economy has been largely stalled for seemingly (to me, anyway) a dozen years or more. Real wages, on average have declined. The rich get richer and the rest of us don't.

Congress will continue to make proposals. Some will be agreed to in compromise actions. Then, those bills will be scored by the Congressional Budget Office (CBO), a group which by the protocol it must follow will produce a cost or savings from the bill that has no footing in reality. Finally, we will have a new law which will hurt more than it will help and will produce more unanticipated consequences.

Congress has very few members who have run businesses. Neither the President nor the Vice President to my knowledge have ever run businesses. People who have never run businesses tend not to think as people who do run businesses would. As a result, we have unintended consequences.

This is my first rant in a while. I would be pleased if it spurred some discussion. If not, I'm sure I will find something more newsworthy to report on.