The musings of a physician who served the community for over six decades
367 Topics
Downtown A discussion about downtown area in Philadelphia and connections from today with its historical past.
West of Broad A collection of articles about the area west of Broad Street, Philadelphia, Pennsylvania.
Delaware (State of) Originally the "lower counties" of Pennsylvania, and thus one of three Quaker colonies founded by William Penn, Delaware has developed its own set of traditions and history.
Religious Philadelphia William Penn wanted a colony with religious freedom. A considerable number, if not the majority, of American religious denominations were founded in this city. The main misconception about religious Philadelphia is that it is Quaker-dominated. But the broader misconception is that it is not Quaker-dominated.
Particular Sights to See:Center City Taxi drivers tell tourists that Center City is a "shining city on a hill". During the Industrial Era, the city almost urbanized out to the county line, and then retreated. Right now, the urban center is surrounded by a semi-deserted ring of former factories.
Philadelphia's Middle Urban Ring Philadelphia grew rapidly for seventy years after the Civil War, then gradually lost population. Skyscrapers drain population upwards, suburbs beckon outwards. The result: a ring around center city, mixed prosperous and dilapidated. Future in doubt.
Historical Motor Excursion North of Philadelphia The narrow waist of New Jersey was the upper border of William Penn's vast land holdings, and the outer edge of Quaker influence. In 1776-77, Lord Howe made this strip the main highway of his attempt to subjugate the Colonies.
Land Tour Around Delaware Bay Start in Philadelphia, take two days to tour around Delaware Bay. Down the New Jersey side to Cape May, ferry over to Lewes, tour up to Dover and New Castle, visit Winterthur, Longwood Gardens, Brandywine Battlefield and art museum, then back to Philadelphia. Try it!
Tourist Trips Around Philadelphia and the Quaker Colonies The states of Pennsylvania, Delaware, and southern New Jersey all belonged to William Penn the Quaker. He was the largest private landholder in American history. Using explicit directions, comprehensive touring of the Quaker Colonies takes seven full days. Local residents would need a couple dozen one-day trips to get up to speed.
Touring Philadelphia's Western Regions Philadelpia County had two hundred farms in 1950, but is now thickly settled in all directions. Western regions along the Schuylkill are still spread out somewhat; with many historic estates.
Up the King's High Way New Jersey has a narrow waistline, with New York harbor at one end, and Delaware Bay on the other. Traffic and history travelled the Kings Highway along this path between New York and Philadelphia.
Arch Street: from Sixth to Second When the large meeting house at Fourth and Arch was built, many Quakers moved their houses to the area. At that time, "North of Market" implied the Quaker region of town.
Up Market Street to Sixth and Walnut Millions of eye patients have been asked to read the passage from Franklin's autobiography, "I walked up Market Street, etc." which is commonly printed on eye-test cards. Here's your chance to do it.
Sixth and Walnut over to Broad and Sansom In 1751, the Pennsylvania Hospital at 8th and Spruce was 'way out in the country. Now it is in the center of a city, but the area still remains dominated by medical institutions.
Montgomery and Bucks Counties The Philadelphia metropolitan region has five Pennsylvania counties, four New Jersey counties, one northern county in the state of Delaware. Here are the four Pennsylvania suburban ones.
Northern Overland Escape Path of the Philadelphia Tories 1 of 1 (16) Grievances provoking the American Revolutionary War left many Philadelphians unprovoked. Loyalists often fled to Canada, especially Kingston, Ontario. Decades later the flow of dissidents reversed, Canadian anti-royalists taking refuge south of the border.
City Hall to Chestnut Hill There are lots of ways to go from City Hall to Chestnut Hill, including the train from Suburban Station, or from 11th and Market. This tour imagines your driving your car out the Ben Franklin Parkway to Kelly Drive, and then up the Wissahickon.
Philadelphia Reflections is a history of the area around Philadelphia, PA
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Philadelphia Revelations
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George R. Fisher, III, M.D.
Obituary
George R. Fisher, III, M.D.
Age: 97 of Philadelphia, formerly of Haddonfield
Dr. George Ross Fisher of Philadelphia died on March 9, 2023, surrounded by his loving family.
Born in 1925 in Erie, Pennsylvania, to two teachers, George and Margaret Fisher, he grew up in Pittsburgh, later attending The Lawrenceville School and Yale University (graduating early because of the war). He was very proud of the fact that he was the only person who ever graduated from Yale with a Bachelor of Science in English Literature. He attended Columbia University’s College of Physicians and Surgeons where he met the love of his life, fellow medical student, and future renowned Philadelphia radiologist Mary Stuart Blakely. While dating, they entertained themselves by dressing up in evening attire and crashing fancy Manhattan weddings. They married in 1950 and were each other’s true loves, mutual admirers, and life partners until Mary Stuart passed away in 2006. A Columbia faculty member wrote of him, “This young man’s personality is way off the beaten track, and cannot be evaluated by the customary methods.”
After training at the Pennsylvania Hospital in Philadelphia where he was Chief Resident in Medicine, and spending a year at the NIH, he opened a practice in Endocrinology on Spruce Street where he practiced for sixty years. He also consulted regularly for the employees of Strawbridge and Clothier as well as the Hospital for the Mentally Retarded at Stockley, Delaware. He was beloved by his patients, his guiding philosophy being the adage, “Listen to your patient – he’s telling you his diagnosis.” His patients also told him their stories which gave him an education in all things Philadelphia, the city he passionately loved and which he went on to chronicle in this online blog. Many of these blogs were adapted into a history-oriented tour book, Philadelphia Revelations: Twenty Tours of the Delaware Valley.
He was a true Renaissance Man, interested in everything and everyone, remembering everything he read or heard in complete detail, and endowed with a penetrating intellect which cut to the heart of whatever was being discussed, whether it be medicine, history, literature, economics, investments, politics, science or even lawn care for his home in Haddonfield, NJ where he and his wife raised their four children. He was an “early adopter.” Memories of his children from the 1960s include being taken to visit his colleagues working on the UNIVAC computer at Penn; the air-mail version of the London Economist on the dining room table; and his work on developing a proprietary medical office software using Fortran. His dedication to patients and to his profession extended to his many years representing Pennsylvania to the American Medical Association.
After retiring from his practice in 2003, he started his pioneering “just-in-time” Ross & Perry publishing company, which printed more than 300 new and reprint titles, ranging from Flight Manual for the SR-71 Blackbird Spy Plane (his best seller!) to Terse Verse, a collection of a hundred mostly humorous haikus. He authored four books. In 2013 at age 88, he ran as a Republican for New Jersey Assemblyman for the 6th district (he lost).
A gregarious extrovert, he loved meeting his fellow Philadelphians well into his nineties at the Shakespeare Society, the Global Interdependence Center, the College of Physicians, the Right Angle Club, the Union League, the Haddonfield 65 Club, and the Franklin Inn. He faithfully attended Quaker Meeting in Haddonfield NJ for over 60 years. Later in life he was fortunate to be joined in his life, travels, and adventures by his dear friend Dr. Janice Gordon.
He passed away peacefully, held in the Light and surrounded by his family as they sang to him and read aloud the love letters that he and his wife penned throughout their courtship. In addition to his children – George, Miriam, Margaret, and Stuart – he leaves his three children-in-law, eight grandchildren, three great-grandchildren, and his younger brother, John.
A memorial service, followed by a reception, will be held at the Friends Meeting in Haddonfield New Jersey on April 1 at one in the afternoon. Memorial contributions may be sent to Haddonfield Friends Meeting, 47 Friends Avenue, Haddonfield, NJ 08033.
Someday, books will be written about who discovered what, and sold what, to make S & P futures suddenly go up and down 300 points in ten minutes on August 17, 2007, soon followed by violent volatility in many other markets. Confusion reigned for a few days, but within a week there was general agreement about the difficulty: the "spread" of interest rates between risky loans and very safe ones had been too narrow for months, and was reverting back to normal. Risk had been mispriced; a risky loan was just as risky as it ever was, as everyone should have realized. If the risky borrower was unwilling to pay higher interest rates, why would any lender bother with him? Since this had been obvious all along, why had lenders temporarily believed otherwise, charging rates scarcely higher for dodgy loans than for well-secured ones?
Alan Greenspan
Alan Greenspan (in 1996) had called this question a conundrum, but it's getting easier to understand. The emergence of prosperity in one decade among 200 million impoverished Chinese had resulted in wealth which found its way into international markets, much like a gold rush or the discovery of oil. Sudden huge wealth often cannot be easily assimilated, hence was available to loan at cheaper rates. The globalization of world finance has vastly improved the speed of markets to absorb money gluts, but in this case, had the unfortunate effect of spreading it out into less sophisticated corners of the world economy. It particularly affected residential mortgages, which proved to be the weakest link in the chain of lending and borrowing. Ten years of low-interest rates pushed up the prices of existing homes, tempting builders to overcharge for new construction, and inexperienced buyers to pay those inflated prices with cheap mortgages. Between them, Congress and the banks had devised ways to exploit this situation, making the collapse worse when it came. The interest on home mortgages was preferentially tax deductible, so it became the favorite way to borrow. Banks made it easier to refinance at a lower rate as the spread gradually narrowed. To make it even easier, reverse mortgages converted home ownership into an ATM machine with tax deductibility. Because home prices were steadily rising, banks were willing to reduce down payments, on the assumption that home equity would soon rise to represent the amount formerly required as a down payment. As it would have, perhaps, if homeowners had not promptly drained it out the back door of reverse mortgages. Second homes became a cheaper way to have a vacation; steadily rising prices encouraged outright speculation, called flipping. Congress reinsured mortgages, eventually most of them, through FNMA, and then pressured Fannie Mae to insist on spreading the joys of home ownership to people who could not afford the no-down-payment houses they were romanced into buying. Investment banks offered to buy the mortgages from the local originating banks in order to package them into securitized bundles, which thus deprived the originating banks of any incentive to reject eager buyers, no matter how dubious their credit standing. What is more, this process provided a conduit for spreading bad credit risk into the equity markets, including the equity of the banking system itself, and creating the temptation for hedge funds to start runs on the banks in novel forms. There once was a time when customers lined up at the back door to make withdrawals in a bank run. Since investment banks obtain their deposits by borrowing wholesale, they simplified the process of starting a bank run when the speculative process reversed. Which it did on August 17, 2007, possibly not spontaneously, but certainly inevitably.
Home mortgages were once loans for thirty years; even now, they extend for many years. Homeowners stay in one house for an average of seven years. For legal reasons going back two hundred years, they are non-recourse loans, meaning the house alone is at risk to the mortgage lender, who may normally not pursue the homeowner for assets other than the foreclosure, even if the other assets are considerable. In a housing bubble, this creates a special hazard for lenders during the inevitable decline of house prices back to normal. As house prices fall, as they should and will, many homeowners will find it is cheaper to walk away from a foreclosure than to pay off the mortgage. It has been calculated that potentially as many as 50% of mortgages might eventually find themselves in this squeeze. The situation differs from a car loan, for example. Every new car is worth 20% less than the sale price, immediately after the sale. But this does not tempt car buyers to walk away from their loan, because the car loan is a recourse loan. The uncomfortable prospect is that financial reverses alone might not be the reason homeowners submit to foreclosure. If this particular antisocial behavior loses its stigma, a very large proportion of mortgages could be foreclosed on owners who are perfectly able to pay them off.
Barney Frank and Chris Dodd
For all these reasons, house prices are the main bubble in an economy overstimulated by cheap money, and mortgage financing is at the root of a banking crisis. The banking system itself is precarious because it too responded to the temptation of abundant credit at abnormally low-interest rates. The process took the form of over-leveraging in order to magnify profits in a competitive market. Greed was not the only motivation; corporate raiders in the form of Private Equity could swoop down on any company unwise enough to accumulate internal cash. The new owner would then substitute debt for cash, and the prudent company (under new management, of course) was no better off than if it had itself over-leveraged. The Federal Reserve limits commercial banks to loaning thirteen times their stockholder equity, but investment banks had the foolhardiness to borrow thirty times equity. A decline of only three percent in the value of their loans wipes them out. The Federal Reserve Bank of New York, by the way, is leveraged at over a hundred times its equity. The Fed can print money to pay its debts, of course, but the result is a falling value of the dollar in international exchange and ultimately, world inflation. No one predicts the half-way point in this decline to be sooner than two years, which means a recession lasting at least four years. The first two efforts of public officials to halt the decline, the purchase of toxic debt and direct lending to banks, have been abandoned as failures, and the Barney Frank/ Chris Dodd offer for Congress to repurchase mortgages was simply pathetic, with only two hundred responses when over two million were anticipated. If the public loses faith in the ability of the government to do anything about the matter, prices can be expected to overshoot on the downside, not just return to normal. House prices do need to decline, but slowly enough to avoid a panic. And American banks and businesses need to reduce the extent of their borrowing, but without measures which impair the ability of new businesses to make loans, or the ability of shaky businesses like the Detroit auto industry, to survive.
In closing, a word is needed to explain why the foreclosure of $100 billion of California and Florida bungalows should threaten a collapse in the trillions. Economists have fallen into the habit of equating interest rates with risk; the more risk, the higher the interest rates become. That's true, but the risk is not the only factor affecting interest rates. Since they are essentially the rent paid for the use of someone else's money, interest rates respond to the supply of money interest rates, just as supply and demand of rental housing affect rents. The flood of liquidity from developing countries into the world economy pushed interest rates down, but somehow that was taken to imply that risk had decreased. When interest rates go up again, for whatever reason, the money will effectively evaporate. The best example of this relationship is in the bond market. When interest rates go up, the principal value of existing bonds declines. With interest rates of 5% as an example, bond prices go up and down twenty times as much as the interest rate, but in the opposite direction. To repeat: when general interest rates rise, money in the economy disappears about twenty times as fast. That's a succinct description of what started to happen, when the prevailing risk premium returned to its normal higher level, on August 17, 2007.
In the case of the American Constitution, the initial problem was to induce thirteen sovereign states to surrender their hard-won independence to a voluntary union, without excessive discord. Once the summary document was ratified by the states, designing a host of transition steps became the foremost next problem. The dominant need at that moment was to prevent a victory massacre. The new Union must not humble once-sovereign states into becoming mere minorities, as Montesquieu had predicted was the fate of Republics which grew too large. Nor must the states regret and then revoke their union as Madison feared after he had been forced to agree to so many compromises. As history unfolded, America soon endured several decades of romantic near-anarchy, followed by a Civil War, two World Wars, many economic and monetary upheavals, and eventually the unknown perils of globalization. When we finally looked around, we found our Constitution had survived two centuries, while everyone else's Republic lasted less than a decade. Some of its many flaws were anticipated by wise debate, others were only corrected when they started to cause trouble. Still, many tolerable flaws were never corrected.
Great innovations command attention to their theory, but final judgments rest on the outcome.
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Benjamin Franklin advised we leave some of the details to later generations, but one might think there are permissible limits to vagueness. The Constitution says very little about the Presidency and the Judicial Branch, nothing at all about the Federal Reserve, or the bureaucracy which has since grown to astounding size in all three branches. Political parties, gerrymandering, and immigration. Of course, the Constitution also says nothing about health care or computers or the environment; perhaps it shouldn't. Or perhaps an unmentioned difficult topic is better than a misguided one. Gouverneur Morris, who actually edited the language of the Constitution, denounced it utterly during the War of 1812 and probably was already feeling uncomfortable when he refused to participate in The Federalist Papers . Madison's two best friends, John Randolph, and George Mason, attended the Convention but refused to sign its conclusions, as Patrick Henry and Thomas Jefferson almost certainly would also have done. On the other hand, Alexander Hamilton and Robert Morris came to the Convention preferring a King to a President, but in time became enthusiasts for a republic. Just where John Dickinson stood, is very hard to say. Those who wrote the Constitution often showed less veneration for its theory, than subsequent generations have expressed for its results. Understanding very little of why the Constitution works, modern Americans are content that it does so, and are fiercely reluctant about changes. The European Union is now similarly inflexible about the Peace of Westphalia (1648), suggesting that innovative Constitutions may merely amount to courageous anticipations of radically changed circumstances.
President Franklin Roosevelt
One cornerstone of the Constitution illustrates the main point. After agreeing on the separation of powers, the Convention further agreed that each separated branch must be able to defend itself. In the case of the states, their power must be carefully reduced, then someone must recognize when to stop. If the states did it themselves, it would be ideal. Therefore, after removing a few powers for exclusive use by the national government, the distinctive features of neighboring states were left to competition between them. More distant states, acting in Congress but motivated to avoid decisions which might end up cramping their own style, could set the limits. The delicate balance of separated powers was severely upset in 1937 by President Franklin Roosevelt, whose Court-packing proposal was a power play to transfer control of commerce from the states to the Executive Branch. In spite of his winning a landslide electoral victory a few months earlier, Roosevelt was humiliated and severely rebuked by the overwhelming refusal of Congress to support him in this judicial matter. The proposal to permit him to add more U.S. Supreme Court justices, one by one until he achieved a majority, was never heard again.
Taxes Disproportionately
Although some of the same issues were raised by the Obama Presidency seventy years later, other more serious issues about the regulation of interstate commerce have been slowly growing for over a century. Enforcement of rough uniformity between the states rests on the ability of citizens to move their state of residence. If a state raises its taxes disproportionately or changes its regulation to the dissatisfaction of its residents, the affected residents head toward a more benign state. However, this threat was established in a day when it required a citizen to feel so aggrieved, he might angrily sell his farm and move his family in wagons to a distant region. People who felt as strongly as that was usually motivated by feelings of religious persecution since otherwise waiting a year or two for a new election might provide a more practical remedy. However, spanning the nation by railroads in the 19th Century was followed by trucks and autos in the 20th, and then the jet airplane. While moving residence to a different state is still not a trivial decision, it is now far more easily accomplished than in the day of James Madison. A large proportion of the American population can change states in less than an hour if they must, in spite of a myriad of entanglements like driver's licenses, school enrollments, and employment contracts. The upshot of this reduction in the transportation penalty is to diminish the power of states to tax and regulate as they please. States rights are weaker since the states have less popular mandate to resist federal control. It only remains for some state grievance to become great enough to test the present power balance; we will then be able to see how far we have come.
High Gasoline Taxes of Europe
Since it was primarily the automobile which challenged states rights and states powers, it is natural to suppose some state politicians have already pondered what to do about the auto. The extraordinarily high gasoline taxes of Europe have been explained away for a century as an effort to reduce state expenditures for highways. But they might easily be motivated by a wish to retard invading armies or to restrain import imbalances without rude diplomatic conversations. But they also might, might possibly, respond to legislative hostility to the automobile, with its unwelcome threat to hanging on to local populations, banking reserves, and political power.
It helps to remember the British colonies of North America were once a maritime coastal settlement. The thirteen original states had only recently been coastal provinces, well aware of obstructions to trade which nations impose on each other. Consequently, they could readily design effective restraints to mercantilism within the new Union. Two centuries later, repeated interstate quarrels provided fresh viewpoints on old international problems. As globalization currently becomes the central revolution in trade affairs of a changing world, America is no beginner in managing the intrigues of international commerce. Or to conciliating nation states, formerly well served by nation-state principles of the Treaty of Westphalia, but this makes them all the more reluctant to give some of them up.
So much for expecting foreigners to help us. They remain grateful to America for winning World War II, but that was seventy years ago. Forget about reserve currencies, a declining surplus of gold bars, the Marshall Plan, Truman Plan, and all that. After seventy years of thanking us, foreigners quite rightly expect us to pay for our own health care without monetary subsidies from them. Or protectionist trade policies, either.
To begin with healthcare basics, lifetime medical costs over the past century have progressively migrated toward the end of life, and the end of life has itself moved later. Lifetime earnings remain concentrated near the middle of life, so a gap widens. Collectively, the population accumulates wealth during its working years, spending its savings for healthcare after it retires. If lifetime health costs could be pre-paid and funneled into savings, with the savings professionally invested, a large proportion of medical costs might be paid out of investment income. It could be called the difference between pre-payment, and insurance, except whole life insurance, employs the same principle. Considerably expanded, this insight could markedly reduce the cost of healthcare, making it more affordable without changing it. Because medical care is undisrupted, the hidden cost of disrupting it might vanish, too. It creates what the Japanese call a virtuous cycle. (It wouldn't hurt to read this last paragraph a second time.)
If lifetime health costs could be pre-paid and funneled into savings, with the savings professionally invested, a large proportion of medical costs might be paid out of investment income.
The average American healthcare costs we are discussing are in the neighborhood of $10,000 a year, surely somewhat less for younger peopleFootnote . They are about double that for the last year of life, somewhat less than that for the first year of life. Medicare is about 50% paid for by subscribers, 50% subsidized by additions to the national debt. Ignoring inflation and tax effects, the net average real lifetime health cost at such rates would be at most $800,000, of which $400,000 would be additions to the national debt. Remember, projecting healthcare costs seventy years in advance is a very hazy business. We certainly hope these projections prove to be a gross over-estimate, but to remain on the safe side the proposal here is to make a lifetime investment to cover only the first and last years of life because the heavy costs of birth and death affect 100% of the population. The projected cost of these two benefits would be $30,000, from which $15,000 could possibly be subtracted as the national debt, or else subtracted as double-counting the cost-shifted expenses of indigents. Meanwhile, removal of the first-and-last year costs would reduce annual costs by about 4%, or $30,000 lifetime. So it seems safe to start with a $ 15,000-lifetime goal, which could be achieved by investing $8 at birth at 7% tax-free return. That's right, eight bucks. Different assumptions produce different answers; the only purpose of the example is to demonstrate easy feasibility of the approach. Multiply the initial contribution by five or ten times, and you reach the same conclusion.
Scientific advances during the last century greatly changed the shape of two curves, of lifetime income and lifetime medical expenses; future advances will surely do the same. The life expectancy of Americans roughly lengthened by thirty years and continues to increase. The logic of compound interest demands that money at 7% will double in ten years; the longer you live, the more times it will double; that's pretty old stuff. What is new and unique is the way adding three extra doublings helps the virtuous cycle, maybe changes it significantly, because 2,4,8,16,32 keeps getting a lot bigger at the far end. Three more doublings make the difference between 32 and 256, and that's a drastic difference.
But, whoa, on the other hand, the longer you keep money in a bank, the more opportunity there is for financial crashes, inflation, "moral hazard", mismanagement, changes in political philosophy, wars and a thousand other things. Eighty years is a long time from now; who says the money will be there when you need it? And even if all the 19th Century nightmares are merely pipe dreams, an awful lot of Americans remain mistrustful of financial institutions. Presidents Jefferson, Jackson, Van Buren and an equal number of nearly-successful candidates for president were even in favor of abolishing banks. A large and possibly growing number of Americans distrust the Federal Reserve, and with some reason. After all, a dollar in 1913 when the Federal Reserve was founded, is now worth a penny. Pause for a moment, reader. You have now heard both sides of the argument, the opportunity and the risk. Everything from here on details. At some point in the next century, investing a few dollars at birth will generate enough income to pay for both being born and dying, the two medical conditions which are 100% certain. It might even generate enough to pay for lifetime medical care, and more, but that isn't the point. What matters is for us to have the wit, and the courage, to take advantage of something which sort of crept up on us.
Footnote The data used here are rounded-off and approximated 2011 data obtained from HHS reports. It is intended that a later edition of this book will contain an appendix of actual 2013 statistics, the last year before the Affordable Care Act became operational.
We regularly used 7% interest rates in this discussion for the convenience of doing math in your head. Periodically, we warn the average investor probably won't achieve 7% consistently, although average results are not far from it. We are not on any gold or other monetary standard, where in the past the prevailing interest rate could emerge from the ratio of gold supply to population as a surrogate for the current economy. It must be mentioned, however, that America holds seven or eight thousand tons of gold in Fort Knox, as a sort of unofficial gold standard in reserve. Officially, our Federal Reserve adjusts the money supply to a 3% annual growth target, which is an expedient which works most of the time. Right now is not one of those times, and the Fed is plainly unable to achieve a stated 2% inflation target. The reason for this is not entirely clear, although many suspects we have issued so much debt the interest-rate "price" was depressed. So it is somewhat unclear what our normal interest rate should be, or even when rates will level off. All of our assumptions of 7% must eventually be adjusted to the real rate, but we aren't entirely clear what that should be. Like the Federal Reserve, we must operate on the assumption that present relative values will persist in the economy. They may not.
The upheavals of Greece, Brexit, and the 2016 Presidential elections are a hint others see this untethered interest rate as an opportunity to change it to their advantage. Generally, debtors favor lower interest rates, and all governments are debtors. Conservatives generally adopt the posture that absolute rates do not matter, what matters is to maintain stable interest rates for the present duration of your main assets. However, this pressures a shortening of the duration of loans, which have gone from a formerly typical thirty years to ten. Carried too far, this makes capitalism impossible and picks up supporters who favor that inclination.
Based on these two paragraphs, we favor the purchase of common stock in some form, over debt in some form, as an investment for Health Savings and Retirement Funds. The bond market is so much larger than the stock market, this situation probably will not change much. Even if the economy is destroyed, and the stock market will then be destroyed, stocks are likely to be destroyed last. Cowboys and bandits may dabble in derivatives or active investing, but the ordinary investor is urged to consider total market index funds without high fees as their safest long-term haven. Buy and hold, but don't buy and forget. Two or four times in a lifetime, you may have to be prepared to do something else.
Lifetime Health Savings Accounts generate surprising amounts of money, and therefore solve lots of problems. However, they leave three problems unsolved, all of them having to do with the administrative agent. The first is trusting some stranger to hold most of your assets for a century, acting supposedly on your behalf in the meantime. The second is to obtain a fair return on your investment, which is to say, you must not overpay for honest service. The remaining problem is a transition from an old system to a better one, for hundreds of millions of different ages, different-wealth, different health. It seems to me Senator Cruz' proposal might ease all three issues, although it lacks details.
The Federal government could seem like an ideal immortal to handle long-term deposits until you look at its record. Watering the currency, shaving the edges of gold coins, and spending money earmarked for one thing, but spent on another, are things which pepper a history more attuned to getting votes than providing service. The motor vehicle office is a symbol of it. In a century, the Federal Reserve has turned a dollar into a penny of value and bought a lot of battleships with money held in trust for pensions. Politicians constantly accuse banks of stealing, but their own record is no better. Private institutions are expected to hold money for a century, but the person in front of you will probably retire, quit or retire in twenty years, to be replaced by a succession of strangers. Mergers, corporate raiders, and outright bandits teach the only generality you can trust is diversification, not consolidation. Insurance is a mixed blessing. In six corporate embezzlements I have been forced to watch, all six were overlooked by management who were easily satisfied with the insurance benefits. What that means is the insurance premiums are too high, mostly designed to save the directors from embarrassment.
In this way, most sane people eventually come to the conclusion the only person you can trust is yourself, and protections will probably only make you careless. Somewhere, this cost is built into the system, and it is hard to say how much it costs. The ancient Quaker doctrine is only a variant of it, "The way to make sure you have enough, is to have too much." Working backward from present longevity, the average person needs to save for retirement, tax-free, about 3% of average income, for about fifty years. And he needs to compound those savings at an average of 6-7% per year, so the first fifteen years are the crucial ones. That goal should accumulate enough to pay for a lifetime of healthcare, plus thirty years of retirement, plus a Quaker cushion of too much. But it needs to reckon with a general obligation of 10% unemployable, plus a one-time transition cost which might be as much a 50% of one lifetime's accumulation. There are other variables, like Korean bombs and Wall Street crashes, minus cures for cancer and automation, but we simply cannot predict all that. It's bad enough without such variables, implying the American public gets serious sooner than its history suggests. Let's project a doubling of savings, or 6% for fifty years, average savings including hardship cases. Actuaries can arrive at more precise calculations, but this is close enough to know it will be a struggle but achievable.
The struggle part is to navigate the jiggles of a continuation of the 12% average annual rise of the stock market over the past century smoothed out for annual volatility, and to assume we can wrench 6% from the finance industry out of limiting inflation to 3% inflation and their own retention factor to 1% . The first step in that process is to transfer the 3% inflation risk to where it belongs, with the customer, not his agent, by isolating and constraining storage costs. Another step is to see what we can wrench from the undeveloped 80% of the world becoming developed, minus the part they can wrench from us. That is profit growth averaging 3% per year for a century. There will be bumps on this road, you can be sure.
The other industry with which the customer must contend is the insurance industry. Their profit is also the customer's loss. It may turn out that the services of the insurance industry are quite fair, and any lessening of producer profit will eventually lead to shortages of their consumer product. But the European taunts at our costs, plus staggering glimpses of insurance reserves, suggest transaction costs plus insurance costs are appreciably overpriced and have been so for decades. Perhaps they are over-regulated, perhaps overpaid, but it seems likely a percent or two can be squeezed away. It is a certainty they over-insure the risks. We should be earning interest on what we now pay interest for, only ensuring what we cannot afford to spend. That may well imply we should spend less on some things, and our problem is to identify which ones they are. To some extent, this is a universal struggle. But most of its excess would surface after a two-year study by impartial experts.
The alternative to this steady grind is to create a market-place and then let the competitors wring the wet washcloth of costs on their own terms. What does the customer care about the technical details, he knows what he wants and for a while will be satisfied with it. The profit margin of a healthcare supermarket defines the cost of doing things that way, providing the signals for change of emphasis when the environment inevitably changes. The chances are good this approach will prove cheaper than continuing down the present path, hoping for a miracle without knowing where it might come from: funds administrators, investment administrators, insurance administrators, hospital administrators, or government administrators. Essentially, we have specialized ourselves into this mess, and the agents have themselves prospered excessively from the design. Whether they were always good at math or not, individuals have been given thirty years of new longevity to cope with the mess their institutional specialist agents have created.
109 Volumes
Philadephia: America's Capital, 1774-1800 The Continental Congress met in Philadelphia from 1774 to 1788. Next, the new republic had its capital here from 1790 to 1800. Thoroughly Quaker Philadelphia was in the center of the founding twenty-five years when, and where, the enduring political institutions of America emerged.
Philadelphia: Decline and Fall (1900-2060) The world's richest industrial city in 1900, was defeated and dejected by 1950. Why? Digby Baltzell blamed it on the Quakers. Others blame the Erie Canal, and Andrew Jackson, or maybe Martin van Buren. Some say the city-county consolidation of 1858. Others blame the unions. We rather favor the decline of family business and the rise of the modern corporation in its place.