Bernie Sanders’ Last Dance?

With the elections round the corner, it is always tempting to put up a carefully calculated prediction as to which side will hold the banner. There is also an added interest in the case of the democrats. Like in many cases, the Democrats have an extremely strong candidate, Hilary Clinton being challenged by a rising rebel, in this case Bernie Sanders. As always it is a largely amusing idea to envisage the evident and the improbable. While statistics show that in terms of polls Clinton has a majority by a large margin of over 60%, it is indeed remarkable to find an increasing amount of individual support rising for Sanders. In fact in a comparison, it was revealed that Sanders holds a User Rating of 4.5 as opposed to a 3.1 for Clinton. But the probability of a win rests on the polls and Sanders is on an extremely tight leash.

According to Professor Helmut Norpath, the primary elections predict the winner of the presidential elections. The primary elections are therefore the most critical stage of the election process and Sanders is currently under the threat of being dropped out of the presidential race. With just a single win in New Hamshire so far, unless he has a majority over Massachusetts, Minnesota and Vermont at the least, Sanders will be out of the presidential race. Clinton already has a majority of wins in Iowa, Nevada and South Carolina making the probability of an overall triumph highly plausible. However, while the odds are in Clinton’s favor, there have been instances in the American history where the odds have had astounding turns.

Being from Vermont, the majority of the votes of the state are likely to be in favor of Sanders and there are also high chances of him taking over the states of Massachusetts and Minnesota. While Clinton has a large support in most of the southern states, it is possible that Sanders over the course of time has managed to create a positive influence over the public giving him a miraculous win. On mathematical grounds it is of certainty that Clinton will be the one standing at the end of this race, however seeing that the variables are the ever frivolous minds of the people, this might change at any given time.

For Sanders’ it all comes down to winning atleast 4 states among the states of Massachussets, Minnesota, his home state of Vermont, Oklahoma, Colorado. If this doesn’t happen the music will stop for his campaign. He is sure to not to make any dent in the other states as the poll data suggested strong loyalty to Clinton clan in the South. We will analyze the veracity of the infallible statistical model proposed by Prof. Helmut Norpath in the next version of the post. Till we will enjoy arguably Bernie’s last dance.

Affordable Healthcare: Dream or Reality

Healthcare expenditure has been a major cause of concern across the globe. It is hard to compromise on well-being, something that is so dear to an individual and that is exactly the reason why we are willing to go to any lengths to maintain our health. These very lengths also cost us a huge amount of money. But what if there was a way to reduce that very burden? Well the idea to that has been in existence for a while now and it goes by the name Single Payer healthcare.

A single payer health scheme is one under which the healthcare costs are paid for by the government instead of the private insurance companies. This system has become a hot topic of debate after the US presidential candidate, Bernie Sanders proposed ‘Medicare for all’ plan as part of his economic agenda. This plan by Sanders has been backed by an analysis by Gerald Friedman, an economist at the University of Massachusetts at Amherst. Friedman has estimated there to be a total expenditure of $40.9 trillion for the next ten years that is 2017-2026, should this scheme be implemented. It should be noted that in the year 2015, only $4.81 billion dollars was allotted to public health by the government of India. This scheme is thus an expensive and a major change for the United States. The expenses are expected to be paid out with a progressive increase in the taxes in such a way that no one person under any economic stature is burdened. The specifics for this payment would be a 2.2% health care premium paid for by the citizens, a 6.2% healthcare payroll tax paid by the employers and estate tax levied on the wealthiest Americans. The major feature for the plan is that health care would no longer include co-pays, premiums or deductibles.

It is assumed that the plan will be most beneficial to the citizens by reducing their expenses on healthcare as well as on highly expensive insurance. They would have the power to choose their doctors and also to have access to all of the facilities provided by the hospitals. This scheme is also expected to bring down the prices of drugs making them affordable.

According to a paper written by Gerald Friedman in 2013, this plan is highly reasonable as all of the costs can be accounted for with the changes in taxes. He states that the United States could save an amount of almost $592 billion by removing the money spent on account of private insurance industry ($476 billion) and by reducing the prices of the drugs to those in European countries (116 billion).

While Sanders and Friedman have laid out many advantages on account of this plan, experts have come to a conclusion that this plan is largely superficial.

Kenneth Thorpe an economist at the Emory University argues that the single payer plan is unrealistically optimistic. It does not accurately measure the expenditures that the country stands to face in the upcoming years. The health expenditure in almost every country has been on the rise with an increase in the expenditure on equipment, medication and also on salaries of the workers. Under the Single Payer system, this would mean that the government would have to take up this task. The government would focus on how best to reduce costs. This very thinking would lead to an imbalance in the economy compared to the way it is today. If the private institutions were to take a hike, it would mean that the salaries that are paid owing to the higher rates would diminish. This in turn would lead to people losing their interest due to lack of motivation. The result of this would be shown through poor services and ultimately a disastrous failure of the plan

The ‘Medicare for all’ plan is planned to be upheld through increase in tax collection. This increase however is not a small sum. The people earning $250,000 to $500,000 annually would be taxed at the rate of 37% and those earning $10 million or more would be charged at 52%. Such heavy taxation was proposed on the basis that the taxpayers would be saving a lot of money in such a health care system with an estimate that the average American family would save $3,855 to $5,173 in annual health care costs. This very savings is what, according to Sanders and Friedman, would fund the Medicare for all plan. However, the plan also implies that the people who have already taken up private insurance would stand at a huge disadvantage as they would have to incur excessive expenditure.

The biggest disadvantage of all includes the fact that the estimates put in by Friedman are based largely on predictions which means that the economy could go either way. This puts the entire scheme in jeopardy. An estimate shows that if the plan does not bring about the expected growth in the health sector, the federal spending could just about increase by another 64% or more.

If we look at this plan in an unbiased manner we can see that it has chances of either transforming a country into an epitome in the field of health care or it could bring the economy come crashing with an immense increase in expenditure which generates no returns. However what really needs to be considered is how such a big change would be carried out. It is a highly challenging task to carry out a change at such a massive scale as the process would imply that you have to depend on the efficiency of many other people to make it a success. Unless the needs of all the people affected by the change are met this plan cannot be a success. However if all that is promised is accounted for, this plan could indeed be a means of economic growth and development of the country.

We can also look at the Single Payer plan with regard to India. According to a study conducted in 2012 on Universal Health India was among 9 countries which were said to have been making progress in terms of Universal Health Care. However the funding model we adopted was that of Private Insurance. Under this model the premiums are paid by the employers, associations, families or individuals thereby ensuring that the risk pertains to their own self. However, the private insurance excludes cases which are expensive and are covered by the country’s health care system.

However, this does not mean that the Indian healthcare system is completely void of the single payer model. The government has implemented many schemes for improving the health conditions of the country. One of the major schemes in this accord is the Rashtriya Swasthya Bhima Yojana which today is seen as ‘India’s flagship platform’ for introducing universal hospital insurance. The scheme offers an amount of Rs. 30000 per beneficiary and is highly prevalent among people below the poverty line and a few above the poverty line. It charges an amount of Rs. 30 for registration and not a single penny more has to be paid by the people below poverty line. However the people above poverty line do have to pay a premium. The problem with this scheme has been that there never is sufficient funding for it to function effectively. Over the years, it has been noted even after the implementation of this scheme health expenditures are still scaling the walls owing to the lack of coverage. The scheme is not being extended to the secondary and tertiary healthcare units. This setback is on part of execution on ground level. The plan is still very promising if carried out well and can also be put into practice on a larger scale.

The RSBY could be extended to include the entire population of the country, in which case the government would be funding the healthcare of all its citizens thereby making it inclusive in the Single payer model of universal healthcare. Let us do the math here. The current population of India on an estimate is 1.31 billion people which is around 131crores. Considering the minimal amount as is in play, Ceteris Paribas, the total amount needed would be 39,30,000 crores which is 118 times the budget which was allocated for healthcare in the union budget for 2015-16(Rs. 33150 crore). While this amount might be shockingly large, one should also consider the kind of potential revenues can come. With better health conditions, India will have a larger working population which would ensure more taxpayers and also more revenue. For all this to be possible many more ground breaking changes have to be made in more than just the health sector.

Thus, while a Single payer model of healthcare is a possibility in India as well as the United States, there are many more aspects that need to be reflected upon before its effective, efficient and successful implementation. It is not impossible and definitely not a far-fetched dream. It is a budding idea meant to be turned into a reality.

Recruiting People

A topic like this has been dealt with by many people in the past & I wouldn’t be the first person to write about it. I am just sharing the experience, I have had in recruiting people.

Red Flags for Interns

1) Short tenures at various firms

2) Having interesting titles with numerous clubs in colleges

3) Horrible Listening Skills

4) Communication Skills aren’t a necessity if they are very good technically, but neglecting point 3 is suicidal in the normal functioning regardless of the task.

5) Name dropper

6) If one is interested in something, one has to know the field from ground up. Not most of the field, but one should have surveyed the field enough to know where the frontiers are.

7) Martyrs without a cause (Over enthusiasm)

8) People who give advice in the first meeting within 5 minutes

9) Ad-Hominem Logicians

10) People who don’t do homework


Few Good Men

1) Hunger to do good work

2) On point, all the time

3) Calm demeanor

4) Clean Slate

5) Quick Learner

6) Educated World view



Entrepreneurial Musings: Indian Scenario

I have started a company with modest operational capacity till now. I am at the last leg of the university still. I went to the incubation center for assistance on the aspect of setting up the company and provide infrastructure facilities. I had discussion with the person in charge after excessive delays of couple of days. On that very day, the assistant in this incubation center told me on my request she would send the requisite details of the whole thing. That was Monday. She told me that she would mail me that very day. She didn’t for some reason. I waited patiently for couple of days & voila, No reply. I wrote to her on wednesday and then there was no reply until monday again.  I went and met her again this time in her office. She gave some reasons for not sending the requisite details. She sent me on a monday. So that’s 7 working days just to give me details about their facilities. This would have been over within minutes, had she cared a little about other’s time.

Now we wonder why we don’t have entrepreneurs churning out in record numbers from the university set up. I understand that people who take risks need to be tested for their patience & perserverance, but to do it just for the sake of it seems absurd and self-destructive.

Wake up fellas, You ain’t helping anyone if all you want to do is delay progress & sit on it. This is quite similar to the old days of the License Raj. Just that this seems like privatised License Raj. Hope these things are mere exaggeration & delays in the future won’t be a whole working week.

Proposals for change in the Indian Educational System

I have a slightly different approach.

This might not suit savant like people. But for everyone else, should work fine.

All people have to have mandatory Basic learning and training up till the age of 15 or grade 9. This would constitute the learning that we have in place right now with huge changes in the way instruction is given. Teachers ought to be mere facilitators than sermon-preachers.

If there are sermon-preaching like classes, this has to be done by the people who are the best in that subject and posted as videos. So that there is uniformity in standards of teaching. Class teachers should merely reinforce what is being taught in the video along with monitoring the work done by students which would entail going through their answers in great detail and giving pointers for improving the quality of each answer. Be it writing i.e., language prose or research oriented writing/Mathematical writing.

In class 10, students should take a mandatory year off and join an organisation of their choice. This would improve social skills which they acquire while working in teams. This quality is usually neglected or frowned upon by the Indian education system.

Activities that 15 year olds can engage for a year.

1) Join the army.
2) Internships in different private organisations.
3) Work for a political party as an assistant.
4) Work for a world organisations which work on global challenges.
5) Join an NGO.
6) Work as an intern in Movie making, Writing, Stand up comedy

Advantages of engaging in the above course of action.

1) People would look forward to be 15 year olds without any grades attached to them. Usually people when they meet others in society or the world, they have already been through a board education process. That becomes a marker to attach themselves with. This way, there will be homogenisation of the population without them being judgemental about each other. We make the ‘other’, more ‘human’.
2) A lot of class baggage can be destroyed this way.
3) This will channel the rebellious nature of a teenager into productive work.
4) This will help youth weave themselves to the fabric of the country and the world at large based on real life experiences as opposed to second hand account of someone’s background.
5) Making the ‘other’, more human makes it hard to hate the ‘other’. Reduces communal tension.
6) Most of the activities would be with people you have never met beforeprerably with people of different backgrounds. Diversity is promoted.
7) 15-year olds tend less to be couch potatoes as a result of this.
8) Brain washing 16 year olds after a year of this is harder because they have an year of experience to prove otherwise.

After a year of this, 16 year olds would know or would be better informed about the world around them. This would happen not from teachers who didn’t know better to be teachers themselves, but from fellow youth.

There should be a detailed dissertation at the end of this one year in which every student will document their experience and show how their experience is helping the world to be a better place.

There should also be a mission statement as part of this dissertation which would document a plan of action for the next 60 years. I know it sounds a little presumptuous. But doing this activity even if none of them manifest in reality will give them a blueprint for their dreams and is a great way for them to introspect about their lives.

Once the curiosity in a 16 year old has been triggered, You should allow them to follow their hearts. They will know what they have to do after this. There is no real need to patronise them anymore.

15 year olds in 2015 have far more information at their disposal than a 15 year old in 2000 or 1985. We ought to let them run with it. This is precisely what it means to unleash human potential This is probably the most feasible and yet most disruptive of ideas. It is feasible because you only change the logistics of one year from the present system.

All the reports(individual dissertations) are made available publicly on the internet. Sure, they can be social groups of similar experiences or complementary experiences.

Once they get back to their respective course of training/study, they will connect with 100s or 1000s who underwent similar experiences and people who are ahead in their course of achieving their dreams will help others who are lagging behind through forums/social networks.

This way you eliminate the bad teachers all together and make them redundant. There will be a lot opposition for this idea.

Any idea worth its salt, will surely face enormous opposition from stakeholders of the present system. More the opposition from these people, more sure you can be of the path to be righteous.

This will revolutionise a lot of things and lot of other problems will find easy solution as result of this.

What this idea does in essence is, ‘it provides the logistical backbone for social co-operation and collective consciousness in a world connected by a nervous system called the internet’.

European Debt Crisis

The key crisis is in terms of some countries which are part of Euro currency having a hard time dealing with their high debt levels.

The reason above thing has occured is because of the formation of Euro currency and ECB which dictates the monetary policy for the entire Euro region with totally non-relational, out of tune sovereign fiscal policies of its member states. Since the Euro was formed, the monetary policy tools(buying bonds inturn setting the interest rates) available to a country are not available to member countries. Weaker the country, more important the availability of these tools. So the weaker countries are in a bit of quandry where in they are threatening to pull out of Euro if the favourable terms of credit are not agreed to by the ECB.

Hence the key cause is having a single monetary policy with heterogenous fiscal policy which is good for each state in itself, but not good for the whole Euro, atleast as it stands now. As Germany is the major stake holder in the Euro, it faces the brunt of being the caregiver for these other economies whose productivity levels are not at par with other countries. This exacerbates the situation further.

Mario Draghi is as good an economist as any. Ideas pursued are all right. But getting people to agree to the credit provisions is proving to be a pain.

At some point, countries like Greece will have to swallow the bitter pill. They are kicking the can down the road. They need a major overhaul immediately. Delay will only make it worse for Greece.

Legal System in India and the United States

United States of America has the most representative form of democracy which accommodates peoples will to live the way they want under the common constitution. Its a lot of bottom up approach.

Parliamentary democracy is good for the leaders in charge. Its a job with life time tenure for the politicians.  Not so good for the people themselves.

The three branches of the government, the executive, the legislation, the judiciary play their parts according to their roles in each of the systems.

In India, laws are made by the central government and legislation. Judiciarymerely interprets it. State governments only have sovereign authority on certain fiscal matters which is also dictated and allocated by the center. So India is lot more controlled by the government.

India is this way because when the rules were made, Unification of India was of the prime importance than individual liberties of citizens. Now India has matured to a point where we can go for a representative sort of government like in the USA.

USA, right from the beginning had Individual Liberties at the heart of its national ideals. This was the case to a such an extent that they even have the second amendment which states that the state shall pass no laws preventing the citizens from baring arms. This was done to prevent the government becoming too tyrannical in the course of its existence. So when the government does become tyrannical, citizens can form militia and fight the government with muskets.

Different Ideals serve different purposes.

Also I might add, States in the USA are very different in terms of culture. The priorities of people of Massachusetts will align much closely to European folks  as opposed to folks in, lets say, Texas or Alabama.

So they prefer to even have criminal laws different  in different states. What might be legal in some state may not be legal in some other state.

India has one set of rules. They apply to everybody equally in terms of criminal law and vary in civil law with respect to religion. Why that is the case is whole another question.

But these are the differences.

What could the federal reserve have done to prevent or lessen the effects of the financial crisis?

They pretty much did all they could. Still Fed and Treasury could have done a few more things.

1) They could have muscled Lehmann into merging with a Retail bank with sufficient deposits few months after Bear Sterns was consumed by JP Morgan. Since discount window operated by the Fed is open to deposit taking banks, this could have prevented Lehmann from going under and the drop from the edge of the cliff for the whole economy could have been more gradual.

2)Meaningless defeat in passing Troubled Asset Relief Program(TARP), the first time it was presented in the house of representatives. Republican bill defeated by republican congressmen in a moment like that was uncalled for. It was passed eventually after a few days, but in September-October 2008 period, everyday situation was becoming more dire than before.
Of course Fed had no role in this one except to persuade the congress to act.

3) The stress tests could have been conducted in 2007, but this is asking too much. No one knew mortgage crisis would translate into banking crisis. Considering the fact that some people refuted a national bubble being in existence in the mortgage market even though it was evident in the beginning of 2007. Its highly unlikely anyone at the fed would have felt compelled to conduct stress test by this time.

Also, Fed has dual contradictory roles. On one hand, it is the regulator of banks and on the other it has to maintain stability in the marketplace. Even though mandate only says controlling inflation and keeping unemployment down, stability also facilitates the two mandates.

Stability entails running a PR campaign telling everyone that everything is fine as financial markets run on  confidence game.
Regulation entails investigating retail deposit taking banks. Both these can be at loggerheads with each other.

Considering all this, Fed scorecard is still an A  for the courageous and insanely ‘out of the box thinking’ steps they did take because we dont want to fathom the situations that could have arisen as a result of being otherwise.

Would Basel II rules on risk based reserves for lending have prevented the global banking crises?

Not really.

Crisis was a result of a)unsustainable mortgage market growth and b)high leverage in investment banks who were permitted to do proprietary trading for themselves. c) Rating shopping from credit agencies d)Too few insurance companies taking on unbelievable amount of risk on their balance sheets.

Had we had Basel 2 we would had retail banks with deposits maintaining higher capital requirements. This doesnt stop investment banks indulging in proprietary trading on their account.

Even if we somehow take care of overly levered institutions from indulging in proprietary trading that doesnt stop unsustainable mortgage market. This would have made the crisis less severe that is it.