Now that I'm too lazy/overwhelmed to update Readers Journal, I'm trying to assemble a few comments today. As always, the diversity of insight and experience is rewarding; we rip into healthcare, gardening, competitive currencies, what else could we do with $100K instead of college? and a host of other goodies.

Chuck D.

RE: Eugene P.'s essay Central Banks and Competitive Currency (September 11, 2009).

I was with him wholeheartedly until he got to the end with his suggestion of the competitive currencies. Here we part company unless I have misunderstood him.

I didn't get a chance to check this with research, but it seems to me we already tried this in the 19th Century United States with state and local banks. It didn't work very well.

The problem is obvious if you think about it for a moment. Let's say I go from Anytown where I live to visit Eugene who happens to live nearby in Neighbor-town. I take along a $50 bank note that has been issued by my bank in Anytown. I do this because not only do I want to visit Eugene, but because he also makes the best widgets in three states and I really need quality widgets like only he makes. So I figure I might as well kill two birds with one stone -- buy some widgets from him as well as socialize with him.

So that's what I do. I get the widgets from him and hand him the $50 note from the Anytown Bank. But now Eugene has a problem. Since he knows it's a local bank, he knows that local banks like this have a small capital base because they don't need to have a big one. But that means that they can easily become insolvent or fail. For all he knows, Anytown Bank may have failed at the point in time I hand him their note, and it is worthless. Or they might have fractionally reserved themselves at 50:1 because the owners who contributed their capital to the bank decided to try to make a ton of money so they all could buy a second home in someplace called The Hamptons, and the bank has suffered what would be some otherwise minor losses that have suddenly rendered Anytown Bank insolvent even though its doors are still open.

In other words, it has become essentially a fiat based note -- it has nothing backing it but my belief (and hopefully Eugene's or I don't get my widgets) that it is actually worth something because I believe so. But if Eugene doesn't buy into this belief because he doesn't know if he can actually redeem the note, neither the transaction nor any benefits it may create in the economy ever happen.

The only other practical choice is for Anytown bank to back the note with something of value that Eugene can redeem the note against and have dome degree of confidence that he will actually get the value the note represents.

Therefore hasn't he hoisted himself on his petard? On the one hand he finds himself still involved with a fiat money system that he has just correctly and rightly decried, and on the other he has to accept a some kind of extrinsic measure of value system like a gold/commodity structure that he also pointed out as flawed. Or am I missing something here?

Lone Cowboy

RE: Experiential Capital and The Will to Work (September 8, 2009): My wife and I call it paying tuition. (I suppose in the school of life) You can read all the books you want, but getting out and DOING something teaches you (usually the hard way) what really works.

I just realized (literally as I was writing this), this is why many people HATE going to work. Because some boss who has never done what they do, or even knows how to do what they do, tells them how to do it. When they have years of hard won knowledge on how to do it correctly and the best way and some yahoo come lately comes in and says "do it this way because I said so". Not because it's better, not because it's worth trying to see if it's better, just because. No hard won knowledge, no skills, but I'm supposed to listen to this person? And there goes care about work (job actually) and doing things the best way and caring about the results.

I grew up in suburbia, grew a little garden, but we never really had much success. Self taught in car mechanics, carpentry, pouring concrete, landscaping, etc. (my dad died when I was young, nobody to teach me formally, had to learn the hard way, by doing). Finally bought a little place on an acre and it was just fixing it up and cleaning it up. Got married to a wonderful women who KNEW things. How to can, how to grow, how to sew, how to fix things. We learned, we learned from others, we learned mostly from doing.

Gardening is one of those things that you simply have to do. Two perfect examples. WE tried a watermelon one year. It's "too cold here" according to the books and even the county extension office. I've enjoyed watermelon every year. It's not a cash crop and it doesn't produce well, but it does produce, all because we tried it. Last year I was helping my neighbor till his garden and I say "what is that strange looking plant?" Oh, that's an artichoke, he replies. "But artichoke doesn't grow here". Well, we've had 20 this year. We planted one this year and despite being a cold wet summer, we've enjoyed artichoke. (which is NOTHING like you buy in the store). Sometimes you just have to try.

Our soil is terrible here in Colorado, you have to amend it. But you try telling people that and it's like "oh, it's always been this way". But then they ask "why is your garden so productive?" Ummm, because we amend it, a lot and work it and weed it and turn it every year. Oh, but that's work....

We started raising chickens. Read the books, built a coop and got some chickens. Learned on the go and figured it out. We now have tons of chickens. We tried pigs. The first set were too small, got diseases, and we learned the hard way (BTW, all those expressions "squeal like a pig, etc have a real basis in reality that you simply can't know til you try). The pigs finally finished (late) and we had them butchered and while we certainly didn't make any money we had AMAZING pork. Now, we know those tricks, what works, what doesn't, what to look for, etc. But we had to pay to learn.

I think that statement is true in everything, if you want to know how to do something, really know how to do something, well, go do it. Getting your hands dirty is the only way to really learn something from computer programming to driving a car to plumbing to carpentry to animal husbandry. Once you know and can talk the basics, then others who are truly experienced will teach you the little tricks that make it all so "easy". But you can't just jump to that level til you have earned your internship. There's a reason people aren't master plumbers right off the bat.

It takes work to do anything well. Too bad we as a nation have lost that work ethic. Half of life is just showing up and nowadays you can't even get people to do that.

RE: Is Higher Education Worth a Lifetime of Debt? (August 26, 2009) and University Degrees, Social Capital and Debt (September 3, 2009), I had a couple of additional thoughts on the costs of education:

I never got to the question of cash value of a 4-year degrees, though I found myself thinking of it soon after I sent you the letter, as in: so does this mean I'd tell a kid to take on 50K of debt to get a degree? Turns out the question has many possible answers, though some of the simplest variations have to do with price (which varies with one's own subjective scale of money) - I might say it was worth 50K but not 100K, or maybe 50K from school A but 100K from school B. It would also matter who the kid was, whether they were brainy or jocky, male or female (stay any feminist outrage please), advantaged or disadvantaged, etc.

The more interesting questions that arose, though, were different. One was: would you take on 50K in debt to send your kid to college? What if that debt were easily serviceable? What if it wasn't? What if money were no object - what if one was a memeber of "the Plutocracy", for instance? What if one wasn't (but still had means)? I reckon the social-capital elements of the decision weigh differently (heavier, it seems to me).

Even more interesting are the issues that arise in response to question: well, what are the alternatives? The immediate alternatives seem pretty dismal or just difficult. A decent trade school is an option, but many commercial programs are expensive and over-promoted. It's not difficult to run up a 50K debt getting a degree in graphic design, auto mechanics, etc., and a post-gaduate job might only pay 30K a year. If debt-avoidance is the goal, this isn't a slam dunk. The military is another option. For a lot of young guys, I think this is an attractive option for lots of guy-related reasons, but unless I thought my buddy or my kid was particularly suited to the institution I'd be awfully reluctant to put him at the disposal of our lame-brained political establishment.

A crappy service job at $8 an hour is no solution. Construction or other trade apprenticeships might be fulfilling, but might also be difficult to come by. As a kid, I'd want to know how I was going to stay connected to my social cohort; as a parent I'd want to avoid my kid getting dead-ended. Both seem to be solved by college. With a cutural void for single young people on one side and being blown up by jihadis on the other it still seems a no-brainer. (The obvious social alternative is to make higher and trade education cheap or free for anyone with some motivation as they do in many other civilized countries (and as we used to do in times gone by), but here we're dealing with individual money and choices.)

Still, there's another fantasy worth exercising: what if one had the same time and money to spend differently? What would you do for your kid if you were willing to support them for 4 years or $100- or $200,000 (whichever came first) with the aim of ensuring them a livelihood and a social matrix? What would you do for yourself (as a nineteen-year-old) to do the same thing? The variables seem to change radically, and seem to become socially constrained rather than financially constrained.

Can you hire a tutor in xyx, or do people look at you weird? Could you start a business, or would you not be able to get a credit line from a bank because you were too young (or a credit card for the same reason)? What do you tell your friends you are doing? How do you even stay in touch with them if they are in school and you are not? How many supposedly talent-hungry large corporations will hire you on the basis of your self-representation and maybe a portfolio? And if you were designing a program for someone else - be it your kid or your friends' kids, what do you do? It's rather problematic, but also quite exciting. I'd be interested to know what your own ideas might be.

I am working on a section on education for "Survival+" right now so it is in my mind.

I would say the role of college now is to prove you can show up for 4 years. That is non-trivial. That's why online "degrees" are generally viewed as worthless because they don't prove you can show up for any length of time and persevere in some fashion.

So in that sense, as society gets flakier then some benchmark of perseverance has value. But a cheap state school does the job as well as a high-cost one.

As for what to do with the $100K rather than "invest" it in college--hmm. Perhaps the hardest part IMO is finding something you feel is important and interesting enough to devote huge chunks of your life to doing. That implies logging a variety of jobs and experiences. So I guess I would design a 'curriculum' of free apprenticeships or internships in a variety of fields--science, finance, healthcare, education, agriculture, a wide range. After 4 years of working in say 8 fields, the young person will have a better idea of what interests them than they will after 4 years of college. The two are not exclusive of course--both have value.

Last night, I was Googling away randomly when it occurred to me to try a search for "insurance is the problem". I was pretty sure that I alone had mustered the stones to identify this basic truth of our times, but lo and behold, there are a few who've beaten me to it (some more accurately than others). Your discussion of the "impossible" healthcare solution left me in awe. The "Impossible" Healthcare Solution: Go Back to Cash (July 29, 2009).

I know you're probably outraged at the suggestion that "modern safety nets" of insurance and entitlements are the cause of our ills, but follow this idea through:

No, I'm not outraged at all, but the hoi polloi cringe at the thought of having to pay for their own "entitled" consumption. Entitled . . . I'd like to throttle whoever came up with that concept. Moreover, I'm not so sure that all insurances, save for authentic catastrophic insurances (which, after all, is the whole idea of insurance, to my mind) shouldn't be banned. But I don't see where a government ought to have the authority to arbitrarily ban terrible things. It'd be better for the government to simply stay out of it altogether, and concentrate on doing (or trying to do) the mundane things that are government's responsibility – things like deciding basic justice, providing for a currency, delivering mail. Paternalistic "coverage" breeds irresponsibility. Moreover, having some sort of magical coverage whets John Q.'s appetite for making sure he's getting his fair slice of the pie, and ideally, for making sure that he's getting more than his entitled dollar's worth. What's the point of havin' it if ya don't use it aggressively? Well, I don't plan on needing multiple organ transplants anytime soon, but in the event that such a need were to befall me, I guess I wouldn't mind there being someone to help defray some of the cost. I don't plan to need stitches anytime soon, either, but if that were to happen, I'd like to think that I could fund a few minutes of the medic's time out of my own meager pocket. Yes, it might take most of my day's wages to pay for those few minutes, but still, I ought to be able to write the check.

Your choice of childbirth as an example was a masterstroke. I recall my parents telling me that Dr. Kirtley's professional fee for officiating at my birth was $25, and they thought it'd been money well spent. I don't think they had ever tallied what the whole bill came to, but I'm sure it was nothing outlandish. In 1958, people paid out-of-pocket for that kind of thing, and it may have stung a little, but bearing children doesn't qualify as an insurable catastrophe, no more than a light bulb burning out qualifies.

My father was a small-town pharmacist. Practically everyone paid green money for their medications. Prescription costs might range for $1 to $5, with a rare high-powered antibiotic running $10 or so (non-refillable). Insulin, as I recall, was $2 for a vial containing about 10ml (not sure how long that would last the patient; I'm guessing close to a week). In his 40 years of being a small-town pharmacist, he fill about 110,000 new prescriptions. That number may have been based on his predecessor's numbering system, though; I'm guessing it was, because I don't recall averaging eight new prescriptions a day. But today, I wouldn't be surprised if just one of the busy pharmacies in this same small town fills 100,000 new prescriptions a year. The town's about the same size, and I don't think folks are all that much sicker than they used to be. The difference lies partly in our mindset that it's good to take a lot of pills, and partly in the fact that we go to the doctor when we don't truly need to go (not like it costs anything, you know) and the doctor almost feels compelled to prescribe something to treat the complaint. And it's not like the medicine costs anything, either.

About 20 years ago, I had to get some ear drops, and I had impression that the pharmacist was a bit floored when I chose the branded neosporin, and then was doubly floored when I peeled off a crisp $20 with which to pay for it. In contrast: I have this pal who was born with spina bifida, and in addition to the paraplegia, he has (and always has had) all manner of kidney and bladder issues. He currently relies on something called Levaquin® to keep himself free of pseudomonas infections. Levaquin has no generic equivalent in the U.S., and his "co-pay" was running about $80 a month for 30 tablets. Johnson & Johnson seem to think that their tablets are worth $15-20 each. And then a month or so ago, Anthem advised him that they could no longer participate to the same degree as they had been. They weren't leaving him high and dry, but they were having to change the rules on the "co-pay", and he wasn't sure where he was going to find the extra thousands that would be needed to keep his ureters pseudomonas-free.

This is when my pal approached me, and I once again managed to perform a miracle for him – Levaquin may have no generic equivalent in the U.S., but its patent protection appears to be less ironclad in India (and that's about all I should say about that).

Something magical would happen to prices: they would drop to what people could afford to pay cash. Yes, those wonderful folks in the pharmaceutical industry could list their drugs for $10,000 a dose, but few would be buyers. . .

No kidding. McDonald's could try charging $10,000 for a Big Mac and they wouldn't have to worry much about billions being served. I'm sure the development of [you name it: aspirin, penicillin, levofloxacin, whatever] cost a pretty penny. Since cost currently isn't really an object, you spend whatever it takes to get what you're looking for, and if you succeed, the rewards are very worthwhile. I don't, however, think that R&D would screech to a halt if the pharmaceutical manufacturers (or their vendors, or anyone else) realized that they needed to sharpen their pencils because Joe Sixpack would actually have to pay Joe dollars for the new miracle drug. No, it might not be cheap, but it'd be within Joe's reach, and not restricted to the likes of Bill Gates and Warren Buffett.

My simple solution of banning nanny health insurance (or all nanny coverages, for that matter) might not work as well as I envision. Much like the building contractors who follow hurricanes, tornadoes, and hailstorms, I could see a new medical specialty developing, one featuring physicians who cater to patients who are deathly and complexly ill. Hemorrhoids? Sorry, find someone else. I only take patients whose conditions are sufficiently severe that their provider-with-deep-pockets becomes my target. Oh, and the patient's malady, too, I suppose. Although I'm pretty sure they're circling the drain and there's not much that anyone can do, but I can do it profitably, by God.

Okay, I think I've rambled on enough here. Again, I sincerely applaud your thoughtful efforts. You strike me as a thoughtful and interesting fellow, and your interests have a wide range. The structure of your writing, too, is rare and admirable. On teh Intarweb, we see lots of half-wits, and even more non-wits. A fully-witted scribe is an uncommon delight, and you qualify.

Re: Eric's essay, Experiential Capital and The Will to Work (September 8, 2009): I have to say that on the positive side of the issue, gardening is the most popular recreational activity in the country. Who knows how violent our society might be without that influence?

Locally, the county jail has a couple of acres of gardens that the inmates tend along with 7 large greenhouses and they hold two plant sales a year that are mobbed. Their stuff is nursery quality and so cheap. Talk about a win-win--for the inmates, for the customers, for the county as a whole.

Two things to add on this labor day: 1) Work, paid work, is a tremendous boost to self-esteem. I have seen this over and over again with people I know. It is immediate feedback from the real world. And now we see how the opposite, being without work, affects people. They become depressed, despondent. You don't become a "better" or happier person by trying, but you can by doing the best you can at a job.

2) And the same is true more or less for gardening. In fact, if I were a therapist, it would be one of my main prescriptions for mental health. Psychotherapy is so fruitless in focusing on the "cause" of our maladies, as if knowledge produces change. Beside, most people already fundamentally, deep down, know why they're not happy. Action produces change, replacing one bad emotional habit with a better one. Besides decent work and gardening, taking walks (for Bhuddists, a form of meditation), laughing frequently, saying "Thank you" and "I love you," often, playing sports and games, various hobbies and crafts, all must be considered vastly superior to a couch or chair.

Thank you, readers, for sharing your experiences and insights.

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