The musings of a physician who served the community for over six decades
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.
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
... William Penn's Quaker Colonies
plus medicine, economics and politics ... nearly 4,000 articles in all
Try the search box to the left if you don't see what you're looking for on this page.
George R. Fisher, III, M.D.
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.
As 2005 turns into 2006, we watch an upward surge in the price of gold for the first time in three decades. The last time the gold price soared, America had gone off the gold standard completely, ending traditional promises that U.S. dollars could always be exchanged for precious metals at a specific price. A brief flutter of the exchange rate ("the price of gold") under floating-price circumstances was to be expected since it was even conceivable that the price of gold might eventually go down. It didn't, and when things settled out it was roughly true that the price had migrated from about thirty dollars for an ounce of gold to about three hundred dollars an ounce. The conversion price has experienced fluctuations since that time, gradually moving to four hundred dollars an ounce in thirty years. There was a reason to see this as a one-time readjustment. The floating prices of precious metals might drift along independently forever, responding to fashions in gold jewelry and advances in dentistry, but a matter of little interest to anything else. No doubt there would be panics in third-world politics, but anyone one who staked life's savings on predictions of wars and famines in the underdeveloped world was imprudent a nut. A gold bug.
This time, it seems to be different; all is calm. The price of gold now exceeds five hundred dollars an ounce; responsible publications even conjecture it will go to a thousand within five years, perhaps three thousand in fifteen years. You might say wild predictions are thus flying about that our savings will lose ninety percent of their value, but nowadays nobody seems willing to say this is either a crisis or just nutty talk. There is both an absence of alarm that the price of gold is predicting disaster, but also a lack of scorn for dumbbells who would actually believe such a thing. A cynic would say that the columnists in financial magazines all seem to be owners of some gold and are talking up its price. But we were told it didn't matter, so we seem to believe it.
A more reflective view would be that we are experiencing the first real test of the world's new monetary system, at least its first challenge by the marketplace since the convertible link between gold and dollars was officially severed. The value of gold seemingly has little to do with its basic utility for dentists. The value of the dollar seemingly does not attempt to relate to the actual supply in circulation, nor attempt to represent a share of all American assets; those things are too hard to measure. The number of dollars in circulation is governed by watching inflation and unemployment and having the Federal Reserve create more or fewer dollars as needed to keep inflation and unemployment at some steady, pre-determined level. The price of gold is something else, irrelevant to a civilized society. It's all terribly clever, but it ultimately depends on whether those pre-determined levels of inflation or unemployment are well chosen. And whether politicians might tinker with them.
It would, therefore, seem likely that the clearing price between gold and dollars is currently putting a high value on gold for reasons other than a current over-supply of dollars or a world shortage of the metal. We must look elsewhere for the cause of the gold-price panic. The Chinese and the Indians are getting richer; perhaps the value of precious commodities somehow reflects that relativity. Or perhaps we are dealing with political predictions; a civil war in China renewed war between India and Pakistan, a revolution in the Persian Gulf oil kingdoms. Or atomic bomb terrorism directed against the United States. Whatever political upheaval it is that bothers the gold bugs must be pretty big; neither the war in Afghanistan nor the one in Iraq or the combination of both, was enough to stir up gold prices to the present degree.
In a sense, the worst possibility would be: the gold hysteria has no rational basis at all, like the tulip bulb frenzy of several centuries ago. The immediate question gets raised whether a merely intellectualized value for the currency can withstand cataclysmic world events. But if there is no serious threat of world cataclysm, then the remaining question on the poker table becomes whether hysterical financial commentators can topple the dollar system just by mindlessly stampeding. A monetary system which cannot withstand such a trivial threat is not a viable monetary system. The financial world's eggheads would then be in a war with the financial world's green-eyeshade gamblers. It's not entirely safe to predict who will win.
It's a myth that Government debt is a burden on our grandchildren
Wall Street Journal
Myth No. 5: Government debt is a burden on our grandchildren. There's no better way to get people worked up about something than to call on their sympathies for their beloved grandkids. The last thing that I want to do is to burden my own grandchildren with the sins of profligacy. But we should stop feeling guilty -- at least about government debt -- because we are in better shape than conventional wisdom suggests.
Theory and practice tell us that the optimal amount of public debt that maximizes the welfare of new generations of entrants into the workforce is two times gross national income, or GDP. This assumes 1% population growth, 2% productivity growth, 4% real after-tax return on investments, and that people work to age 63 and live to age 85. Currently, privately held public debt is about 0.3 times GDP, and if we include our Social Security obligations, it is 1.6 times GDP. In either case, we could argue that we have too little debt.
What's going on here? There are not enough productive assets -- tangible and intangible assets alike -- to meet the investment needs of our forthcoming retirees. The problem is that the rate of return on investment -- creating more productive assets -- decreases as the stock of these assets increases. An excessive stock of these productive assets leads to inefficiencies.
W.P. Carey School
Total savings by everyone is equal to the sum of productive assets and government debt, and if there is an imbalance in this equation it does not mean we have too little or too many productive assets. The fix comes from getting the proper amount of government debt. When people did not enjoy long retirements and population growth was rapid, the optimal amount of government debt was zero. However, the world has changed, and we in fact require some government debt if we care about our grandchildren and their grandchildren.
If we should worry about our grandchildren, we shouldn't about the amount of debt we are leaving them. We may even have to increase that debt a bit to ensure that we are adequately prepared for our own retirements.
* * *
There are at least three lessons here. First: Context matters. Take what you read in the paper with many grains of historical salt. Second: Current data often provide poor guidance for effective policymaking. To make forward-looking policies you have to understand the past. Finally: Establish good rules, change them infrequently and judiciously, and turn the people loose upon the economy. Booms will follow.
Mr. Prescott is a senior monetary adviser at the Federal Reserve Bank of Minneapolis and professor of economics at the W.P. Carey School of Business at Arizona State University. He is a co-recipient of the 2004 Nobel Prize in economics.
The Global Interdependence Center (GIC) holds an annual monetary conference of considerable eminence, and this year it was held on the grounds of Drexel University. A featured speaker was Henry Kaufman, who has long been the voice of Salomon Brothers, a New York investment bank. Since one of the main activities of that firm has long been bond trading, what Mr. Kaufman has to say about the current credit situation is of considerable interest. Wasting no time with preliminaries, he dove right into the topic, which is characteristic of speakers with too little time to say what's on their mind.
Securitization has, in his opinion, been excessive. Computers have provided increased interconnectivity, increased speed, and consequently lack of transparency in the credit markets. Consequently, senior managers and directors lost track of events and therefore failed to restrain risk-taking. Especially, SIVs (hidden subsidiary corporations) increased risk without restraint. Excessive management compensation has had the effect of relaxing management control, and there has been too much credit floating around. The capital was chasing investment instead of the other way around. But in addition, the architecture of the system is at fault, and the problems just happened to hit subprime mortgages first. Short term money was supporting long-term obligations, which can be described as a conflict between the amount of risk and the duration it was at risk. No one who actually needs a bail-out should be allowed to have one.
No one who actually needs a bailout should be allowed to have one.
That's all pretty succinct, and likely contains a lot of wisdom. But it was a quick preamble, after which the highly practiced speaker slowed down for the real point. The Federal Reserve, charged with maintaining stability, was timid and sluggish in recognizing the magnitude of the situation. There was the main focus on restraining inflation and increasing Fed transparency while neglecting regulation. He didn't say so directly, but one gathers he approves of regulation, disapproves of transparency, and is somewhat dovish about inflation. In other words, he is joining if he did not initiate, a gathering political chorus demanding more government regulation and less reliance on the market place to structure the economy.
So it comes down to this. Since the Federal Reserve is too preoccupied regulating small banks, it has been outmaneuvered by the big ones. What's needed is to form a new regulatory agency in charge of big banks and investment banks, with big-picture management of the institutions that really matter. He didn't make any suggestions about who should be the first chairman.
The rest of the audience will probably be long dead after Henry Kaufman's image continues to shine, but nevertheless, there are some awkward features to this analysis and proposal. It fails to put enough emphasis on the blistering speed with which new schemes have been devised which really do benefit mankind even though the driving motive behind them may have been the purest sort of greed. The efficiency of the financial industry has been enhanced in a thousand ways, causing the cost of transactions to drop appreciably. The increased velocity, while it may have been motivated by a desire to cash in before others compete for it, is well known to increase the effective amount of money in circulation. The market finds itself with the tuna problem: to slow down is to die. One can even suspect that the excessive management compensation does not identify the buccaneer, it often represents the bribes engineered by young geniuses and intended to be offered to the older has-beens to get out of the road. Surely, the managers who have come up through the ranks are in a better position to ask questions and impose prudent restraints, than a new cadre of Washington bureaucrats who only hear of a gimmick after it has been run off the road.
It's easier to see what's the matter with this proposal than to identify what is better. The young cowboys at the computer screens of Wall Street are already better paid than the highest level of Washington, and their future aspirations are to become zillionaires in just a few more months. Someone fresh from these combat zones indeed knows what's going on, but he isn't going to give it up to become a regulator. So, Washington will instead recruit their brightest most idealistic classmates from the same Ivy League colleges, and train them in the most esoteric economic theory, They will be brilliant and attractive, idealistic and energetic, But they won't learn what's going on until that thing no longer matters and a new unsuspected one has taken its place. The only people who have a chance of controlling this zoo have been bribed to keep out of the way by astonishing compensation packages. If it's reform and regulation we need, here is the place to begin. Let's wait a bit to see what this thumping crash will do to get their attention.
Inflation Protection. Let's imagine the typical individual has reached the point where he is writing his will at the age of 90. He has followed our advice, created an HSA, dutifully funded it, and reached the point where his medical expenses are mostly behind him, but -- he has a meaningful amount of money left in the HSA. The existing legislation is pretty relaxed about that, allowing him to convert his HSA into an IRA, and follow its rules for inheritance. That's fine because it has created an incentive all these years, to save just a little extra money in the HSA for contingencies; after paying taxes, he can spend it as he pleases.
The Escrow Fund. It may be fine, but it eventually comes to an end in the face of terminal care costs; at that point, the future is damned. Since most people never know for certain which episode will be the last, indifference to insured costs is fairly general. There needs to be additional restraint against medical cost inflation. We propose that a compartment of Medical Savings Accounts be designated as a single-purpose escrow fund, adhering to the model of buying a life membership in a club, except in this case, it can only buy lifetime health coverage from Medicare. Annually, his fund manager transfers a sum to the individual escrow fund, calculated to reach a buyout price for Medicare coverage at some later age, and assuming the investment income achieves a stated goal. The individual may borrow against the escrow to pay current medical expenses and may need a subsidy to do so, but the escrow may not be spent down. (It continues to generate investment return to the fund which in normal circumstances would exceed the loan interest). At any time he has enough money, our Medicare subscriber can make a voluntary deal with Medicare as follows: If he will turn his escrow fund over to Medicare at his death, then Medicare will no longer collect his full Medicare premiums, starting today. That's a good offer or a bad one, depending on his life expectancy and how much is in the escrow fund; as of today's rules that would typically be several thousand dollars. That's a bad deal for the government if there is inflation. However, for individuals at any age down to age 26, it would seemingly always have made a better deal if he had only made it a year or two earlier. If it had been offered at age 65, it would have made a tremendously better deal than at age 90, because so many more premiums would lie ahead. And before that, if the deal were offered to a working person it could extend to skipping the 6% Medicare payroll tax deductions, which could be a stupendous deal. So let's go back and make a counter-offer using this inflation restraint. It's called the accordion plan, where both the government and the individual must agree on the best year to clinch it, depending on how everything is going. Unfortunately, any system like this requires an unimpeachable monitor.
Buying Out of Medicare. The average person over age 65 is haunted by the possibility that his living expenses will someday exceed his income, so he likes to have as much of his anticipated expenses pre-paid as possible. (He likes to be offered life membership in a club, for example.) So, he proposes to Medicare that they do the arithmetic and tells him at what age they think he could stop paying payroll taxes and/or Medicare premiums to Medicare and pay them into his escrow fund so that he becomes paid-up and no longer cares about medical cost inflation. And if there is no point in time when the two are clearly equal, then how much would he have to supplement the escrow fund from his savings to reach the goal. Since the law of large numbers enables Medicare to predict its average costs with greater precision than the individual can predict his own, a difference between the two prices represents the individual's fear that he might incur substantially higher than average costs. Half of the Medicare beneficiaries will, and half won't, but any individual's actual chances are largely a lottery. So, a substantial number of people would take the deal on terms favorable to Medicare. This isn't exactly the proposal we plan to make, but it illustrates the principle.
Part of the secret of the current proposal is that the individual can have the advantage (and bear the risks) of investing in the equity of private companies, whereas we would squirm if the government owned a big chunk of American private business. Notice for example how quickly the government sold back the stock of General Motors after it had bailed it out. Private individuals might indeed make 10% return on index funds of the entire U.S. stock market, given a 90-year horizon, (and under the discipline that you can't buy high and sell low, because we won't let you sell other than for medical costs). Furthermore, the government can't sell it for you, because you own it independently. This deal would fall apart if inflation unbalanced it, but the value of stocks and the cost of medical care will respond to inflation at about the same rate, providing you wait long enough and use big enough numbers. Nevertheless, it would only seem prudent to appoint an independent agency to monitor and control matters, particularly because stockbrokers are not considered to be fiduciaries, putting the client's interest ahead of their own. In spite of that fact, most people would be astonished at how fast a fund will grow at 10%. Medicare can't get such investment income, because in 1965 it was decided to use the "pay as you go" system, but it is clear that Medicare would sustain much higher debts if we abruptly cut off its payroll tax and premium income. So this process should require each individual to take at least ten years to switch completely, holding each person's "paid up" goal as ransom if he participates in reckless medical spending, and delaying the government's acquiring the escrow if they permit such spending. We are apparently never going back to using gold bars to frustrate government-endorsed inflation of the currency, so we have to devise other self-balancing restraints like this one.
In these days of burdensome health insurance costs, it is useful to consider how health insurance might emulate what is normally done with "whole-life" life insurance. Most life insurance clients to understand that total premiums amount to less than the face value of the policy, while considerably more than the face value is often paid out to the beneficiary. The apparently miraculous appearance of extra money is accounted for, by the ability of the insurance company to invest the premiums until they are needed for benefits. True, life insurance has also prospered from the stretching of longevity by improved healthcare, but that windfall also applies to health insurance. In both cases, improved longevity is hoped-for but not guaranteed, and adds to the safety reserves. The issues to be pondered are how to set final rates so far in advance. Or, if you wait to see how costs actually develop, how to give a useful benefit to someone who by that time is already dead. The life insurance companies have devised their way of managing this awkwardness, which requires public trust in the good faith of their counterparty. Results vary between companies, but in the long run, it doesn't pay to cheat.
The Need for Transparency and the Image of Fair and Square. Transition from an old system to a new one is a familiar problem for legislators. In our case, it may actually facilitate matters by restraining the impulse to take on too much difficulty, all at once. Every citizen is covered for hospital costs in Medicare Part A, and the great majority are covered for physician and outpatient costs by Medicare Part B. Part C is only partial and voluntary, Part D is still on trial. For this discussion, we need not describe the varying ways that Medicare Part A, B, C, and D collect premiums or the historical reasons why they differ. It should be emphasized early, however, that overall direct income falls short of covering overall Medicare benefit costs by 50%, so Medicare is 50% subsidized, and therefore not nearly as stable as the public assumes. It would help a lot, for example, if debt just stops being called an asset on the balance sheets. Everybody enjoys getting a dollar for fifty cents, so the program is more popular than it would be if euphemistic revenue descriptions were discontinued. It is particularly worrisome, that the popular alternative of a "single-payer system" implies simply extending Medicare to persons of all ages. But it also implies extending the 50% hidden tax subsidy to all ages so single-payer consolidation would add an even more unsustainable burden to the national deficit. This apparently irrelevant comment helps explain why the public expected Obamacare to be cheaper than it proved to be, and adds considerably to the urgency to find other revenue sources during a protracted economic recession, for what are proving to be unexpectedly high prices. Hence, the need for more subsidy than was anticipated. The consequent income redistribution is widely resented. Time and again we return to George Washington's central maxim as president: honesty is the best policy.
How To Recycle the Income
Terminal Care is Mostly Medicare
Go With the Flow. To return to the point, almost everybody now dies with terminal expenses covered by Medicare. The medical industry waits for about six months, and eventually gets paid for its services by Medicare, incompletely perhaps, but for the most part. From this is derived the insurance shorthand concept of the "last year of Life costs" which largely represents terminal illness. Along with the obstetrical costs of being born, these two costs are the only two we can safely assume will continue forever. Everything else is like the Federal Reserve's Quantitative Easing. We can be certain it will stop, but we have no idea how long it will take. While we can perceive that medical progress is largely a matter of removing diseases from the list, the allied perception is that younger people are always going to be somewhat healthier than older ones. There will be exceptions like HIV/AIDS, but the perception is probably permanent. Since progressively older people are supported by savings and wealth transfers, the concept of investing the savings of younger people in order to sustain them when they get older, seems a dependable one. It also seems safe to assume that people will resent it less if it is their own money, rather than drawn from a public pool. That is, savings will be resented less than taxes, incentives will be resented less than coercion, and the final outcome will be the accumulation of more savings within private hands than within national treasuries.
Now add the idealized extra specifics: if subscribers by contribution, gift or subsidy create a Health Savings Account early in life, and Medicare can be induced to reduce its own premiums out of recognition of equivalent reserves in the funds, the future payment of (at least) last-year-of-life costs could be assured -- and current premiums for Medicare could be accordingly reduced, putting the money back in people's pockets. In this way, Medicare and the subscriber would adjust to the benefits of a major new revenue source, the investment proceeds of the Health Savings Accounts. A whole bundle of uncertainties absolutely do remain -- the zig-zag of interest rates, the volatility of the stock market, the elimination of some diseases, the creation of expensive new treatments, the actual longevity of the population, and the constant menace of inflation -- but one certainty survives. To a significant degree, a new source of income would effectively lower the cost of health care, even though it may not have paid for all of it precisely. No rationing, no income redistribution, no great change in how medicine is practiced. The opportunity seems too attractive to dismiss, but it must be continuously and openly monitored.
Income is fairly predictable,
Future Costs are not.
Balancing the Books
Simplify. Since the ultimate outcome is uncertain and will surely vary from predicted, adequate provision must be made for both the possibility of surplus and deficiency. Because of possible surplus, residuals should be allowed to pass through inheritance, or to be spent for non-medical purposes, or both, as incentives to compliance rather than circumvention. Because of potential shortfalls, some process for early detection and freezing of shortfalls should also be created, leading to subsidies, and restitution of subsidies, under defined circumstances. To the maximum degree feasible, the "accordion" principle should be employed, whereby benefits are expanded or contracted to reflect surplus and deficiency in the individual Health Savings Account, and indirectly, the growing success or failure of the scheme. Furthermore, the use of average costs rather than specific ones is encouraged, thus making it easier to deal with average lifetime health costs. In a computer age, it is almost as easy to report 300 million individual accounts as to measure by average performance, but it leads to intolerable public confusion about what is happening to the program. If achievable, a transformation from annual bills to lifetime costs would allow the elimination of pre-existing condition exclusions almost without effort, since lifetime liability would remain unlinked to HSA balances, and even largely unaffected by individual catastrophic illness if pooling is added. It might require considerable research, however, to detect the creation of unforeseen loopholes to game the system. Ultimately, that is a gigantic undertaking. The more we can simplify it with self-enforcing incentives, the more likely we can perform the essentials well, side-stepping all the work and aggravation of playing cops and robbers.
Get Started. The two quickest ways to induce large numbers of people to create Health Savings Accounts would be to add a permanent rollover feature to Flexible Spending Accounts, which currently contain a use-it-or-lose-it feature. Because of the cost to employers, it would be a useful opportunity to remind them of the inequity they have enjoyed from seventy years of Henry Kaiser tax exemption. And the second accelerant would be to eliminate the income tax discrimination against it, by allowing health insurance premiums to qualify for purchase by Health Savings Accounts, and thus to become tax-deductible like almost everybody else's health insurance.
IT was spoken hurriedly, and I don't remember who said it. But the gist was that Philadelphia had been the richest city in the world in 1900. In the World, mind you. I can scarcely believe that, but the way it stuck with me shows it had some substance. Rather than comparing Philadelphia with London, New York City, or Paris, I must now compare that exuberance with the dirty, dejected, defeated old wreck of a Philadelphia I first encountered in 1948. Baltimore, Newark and a dozen old American cities sort of crumbled into dust after 1929, but Philadelphia briefly seemed to be picking up in 1948. Richardson Dilworth was getting ready to run for Mayor, and the town's newspapers even enjoyed the idea of a Philadelphia revival. But then the Pennsylvania Railroad collapsed, and after that, we just struggled along, neither dying nor recovering. Some of both, perhaps, but more dying than recovering, and making it credible to believe that Philadelphia just never did recover from the 1929 crash. Just think of that; from top to bottom in thirty years. There just had to be some better explanation than bad management of one railroad.
Until recently, I had accepted the general wisdom that stock market crashes are followed by depressions. Perhaps I am a little slow, but there never seemed to be any question of that analysis, since all major crashes really were followed by recessions, going back to 1792 when Philadelphia had the first American version, and the first financier villain, someone named William Duer. Or maybe it was Robert Morris. Or maybe it was Thomas Mifflin, but in any event, it was someone very rich who did something very reprehensible which toppled the stock market and plunged the rest of us poor victims into protracted suffering. In other scenes of carnage, it had been John Bull, or William Whitney, or Nicholas Biddle. Or J.P. Morgan, that monster. In the 2007 crash, it wasn't so much one villain as one company, Goldman Sachs, or maybe Lehman Brothers. Since the recent crash was so recent, and news coverage so rapid, it might be easier to trace out who the villain was. But there was no one real villain, and even if we found one, it was hard to see why a few days of choked markets would still be causing unemployment seven years later. No one seemed to know, or at least no one wanted to tell me, why stock market crashes cause depressions. They are certainly followed by depressions.
And then suddenly I realized, or maybe someone just broke the news to me, that I had it all backward. Market crashes don't cause depressions, depressions cause market crashes. First, the markets get overheated, everyone gets uneasy, but everyone is making the most money in his life. Suddenly, someone sells out, like shouting "fire" in a crowded theater, and everyone tries to get out the door at the same time. The catastrophe makes everyone see that stocks or real estate, bonds or tulip bulbs, had become ridiculously overpriced, so nobody will buy them at any price. But let's not get down into the weeds of market technicality; prices got disconnected from real values. We overproduced something or even everything, and things wouldn't improve until somebody needed something he had stopped needing, several years earlier. Maybe there were villains, there are always plenty of villains. But we wanted somebody to blame because otherwise, everybody has to take some blame. We needed, in short, a scapegoat.
So let's ask the question again: what caused the great depression of the thirties? And the best answer to come back was the First World War. Philadelphia was the arsenal of democracy, the maker of ships and gunpowder and uniforms. The great transatlantic ocean port, the embarkation point. If we weren't sending troops we were sending tanks and airplanes. The duPonts were sending gunpowder to France, a way of paying back Beaumarchais for sending gunpowder from France to the Battle of Trenton. After their wars were over, one Frenchman went back to making wristwatches and writing plays, and the other munition maker swore off gunpowder and concentrated on nylon stockings. That's far too simple. Philadelphia had expanded and expanded to exploit its wartime advantages. When the war was over the boom was over, but the Roaring Twenties roared. They built mansions, clear out to Paoli and beyond. Movies were written about our hero, who left their jewelry in the vaults of the Girard Bank after the opera while they went back to the horse country at four in the morning. It seems a virtual certainty that no one who acted like that knew what every MBA from Temple now knows: real estate is just about the only link for ordinary people between interest rates and consumption. All assets contribute somewhat to the "Wealth Effect", but real estate is usually the only channel the average person can find, as a way to translate major assets into consumer goods. And since a stock market crash will lower interest rates, the ensuing low cost of mortgages stimulates a real estate boom. Office buildings in the city, mansions in the horse country. But then the city loses its postwar boom and soon loses a million or more population. Result: empty office buildings, empty mansions. Along Spruce and Pine Streets, people moved out of the grand houses and into the servants' houses in the back alleys. Easier to heat.
A friend of mine, whose occupation is locating real estate for businesses, tells me the startling news that land around Philadelphia is too expensive for factories. It seemed hardly credible that real estate could seem so hard to sell, with "For Sale" signs lining the curbs, and yet seem too overpriced for a company to locate here. Suburban Philadelphia house prices were depressed during the Depression so that a seven bedroom Main Line house couldn't find a buyer, but the land was still too expensive for a factory, and anyway, the zoning wouldn't permit a business. Our suburban and exurban land got chopped up into residential real estate, streets were built, sewer lines were extended for miles, trees and ornamentals were planted. Schools and shopping centers were built, maybe some museums and hospitals. But none of that was attractive for a business, and you can't attract an executive to residential real estate without a place to go to work. The features attractive to his wife were not enough to attract him and his business. He wants cheap open land to build factories and vast parking spaces for employees. He doesn't want to get fifty miles away from the port that made Philadelphia prosperous. And he particularly doesn't want to spend his time going to protest meetings about smoke and pollution or go to court to defend his ownership of what someone else polluted, a century earlier. He particularly doesn't want to go to Planned Parenthood meetings with his wife, in order to be hassled about carbon fuels or greenhouse gases in China. Sorry, he's going to build his new plant in North Carolina. And the residential real estate couldn't be made cheap enough for that purpose without tearing down the house, and the schools, and maybe the shopping center. Once the land becomes dedicated, you have to choose: either a nice suburb or a place favorable for a business.
A former President of a Federal Reserve Bank located a thousand miles from Philadelphia was recently here for a conference, and at loose ends for someone to chat with. To my astonishment, he exploded with rage when he contemplated Mr. Obama's refusal to sign permission to build a pipeline from Canada to the Gulf of Mexico. To him, it was obvious that the main thing holding back the American economy was a refusal of American businesses to invest in new plants and equipment. The banks were stuffed with money, but the business refused to borrow it. The Federal Reserve was powerless to stimulate an economy that didn't want to expand, forever pointing to uncertainties of expanding in the face of a regulatory authority which seemed determined to thwart them, to browbeat and humiliate them in front of the TV. It isn't personal, it is serious; because the quarrel is ultimately about important economics. A dollar in 1913 when the Federal Reserve was created, is now worth a penny, and there is every indication of administration eagerness to see the present dollar only worth a penny, far sooner than a century from now. The man speaking was obviously sincere and deeply upset, and what seemed to bother him most was the perception that "the environmentalists" are equally sincere, and thus equally unready to give an inch. The economist regarded the argument of the environmentalists as irrelevant to what was really important, just as surely as the environmentalists were heedless of any legitimacy in the arguments for savaging wildlife. Neither side saw this in terms of the city versus suburbs, or agriculture versus commuters. Neither seemed to acknowledge that a city based on concentric rings had to break the ring pattern in order to maintain a harmonious balance between living well and making a living. That is until the two sides recognize they are talking about the same problem on some level, it will be a dialogue of the deaf, offering no possible resolution except war to the death. It's become a religious conflict, with both sides heedless of things vital to the other side.
They say the main function of real estate brokers is to maintain high prices for property values. But in the long run, if a region isn't prosperous, its residential property will lose value, not gain it.
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.