Viet-Justice

Brother Grim asks the question of who is better for you, the government or the insurance companies?

Or are you willing to rein in anarcho-capitalism long enough to come up with a solution that works for everyone? People who rail against “Socialized Medicine” live in constant fear of having medical decisions made by government bureaucrats, but would you rather live at the whim of insurance company executives who see you as nothing more than an account ID? Choose your poison folks.

Ironically he cites a life expectancy graph that has Japanese at the longest lived.  First of all, there is no comparing Japanese society to American society.  Diet is typically cited as the reason Japanese people live so long, not the kind of health care they have. As a matter of fact the Japanese system is more privatized than the US according to Professor Naoki Ikegami with 80% of hospitals being truly private with no government subsidy or subsidized workers.  Americans need to drop the burgers for some rice, tofu, and fish.  Then hit the gym more than they do to get the effect of walking everywhere like the French and Japanese do.

On the topic of which is better for you, the government plan or the plan of the big corporate insurance providers, we can take a look at the pros and cons of each.  Brother Grim says that the corporations will treat you like an account ID.  Well the government will treat you like a social security account ID, so there’s no difference with regard to identifying you.  Government is also a less trustworthy due to remarks that ignoring constituents because “they are just people” and the partisan closing of GM and Chrysler dealers.  It would appear that viability of the dealership was not a criteria, but who the owners donated to was.  This shows that government does not look at numbers only when making decisions, which is bad.  You know that the decisions made by government will be to the political benefit of who is in power.  Unlike China where there is only one party, you are at the mercy of your party being out of power when you have to depend on government.  So a government system is automatically stacked against 49% based on the consensus of the popular results of the general election.

How are the corporations superior to the government system?  Both identify you by some number and treat you like a number.  Where does the corporate system have greater benefit?  First, you get to choose which entity you want to go with.  I’m also including HSAs in the mix for young people who want to be self insured.  This lets the population choose which plan suits their lifestyle.  The next area that insurance companies excel at is data.  Actuarial tables and the Statistical Value of Life (SVL) can be used to calculate an appropriate payout.  This is superior to the government solution which relies on humans to make the decisions and puts these decisions in the hands of economists, mathematicians, and programmers.  If the formulas used by an insurance company are under change control and auditable then the consumer knows what circumstances they can expect the insurance company to pay and what circumstances the insured is better left to their fate.

This serves to enhance marginal private benefit by letting the formulas decide for families the appropriate time to stop throwing good money after bad.  There is no single formula for SVL, but many take into account occupation, education, hereditary diseases, current age, and other factors.  There are also general flat rate formulas such as the US DOT’s Treatment of the Economic Value of a Statistical Life.  If you’re in a plane crash you’re worth $6million.  Any way you calculate it, you can determine what is the best solution for your family.

How does this benefit a family?  If you have ever had to serve under medical power of attorney, you know that it is illogical to run a family into bankruptcy expending resources on someone where the computations indicate a lack of equlibrium between cost and benefit.  Americans unwisely bankrupt themselves on spending for end of life care.   If it makes little numerical sense to put grandma’s house on the auction block to pay for 6 months of chemo or dialysis then why do it? Another area is nursing home care which costs approximately $6000 per month according to the 2007 Genworth Cost of Care Survey.  It may may more sense to ship grandma to Portland Oregon or Beijing China where an honorable assisted suicide is legal, rather than wasting the family’s money on a futile effort or worse, allowing the government to seize grandma’s estate to cover her care costs, thus depriving the clan of resources.

That resource could be used to fund the college education of the children of the clan then why undertake such “heroic” measures as the medical care field says.  This leaves fewer resources to pour into a dynasty trust which in turn leaves fewer resources for education and betterment of the clan unit.  In one generation a clan can go from blue collar and poor to white collar through education.  We can also apply the same principals to child care as well.  If a very young child has a terminal disease the parents can always make another one.  This would be logical if the family has more than one child to care for.  With a minimum of $200,000 of child raising expenses, it’s better to reboot early on than spend a ton of money then lose out and have to reboot.

The corporate alternative provides us with a logical and auditable solution that doesn’t put families in the poor house, and maximizes marginal private benefit without the introduction of subsidies, taxes, and dead weight loss.  It also benefits the individual by creating the positive externality of reducing marginal social benefit that a government plan would introduce, thereby reducing competition for resources and enabling the individual to obtain said scarce resources in a more accessible fashion.

For those looking for the hottest new investment deal there are now Sharia compliant ETFs on the market to meet your investing needs.  Javelin Exchange Traded Shares launched its first fund at the beginning of July catering to the Islamic market.

The Dow Jones Islamic Market International Index Fund (JVS) seeks performance that corresponds to a benchmark index that measures investment return on “Shari’ah compliant securities. JETS notes that certain businesses are incompatible with Islamic law and therefore excluded from the fund. These sectors include alcohol, conventional financial services (banking, insurance, etc.), casinos, firearms, and pork-related products.

That last part doesn’t sound very fun.  To many people investing is not fun, so let’s get down to basics.  The JVS fund opened up on July 1, 2009.  The opening price per share was $399.99.  In less than a week the fund as fallen down to $38.85 per share.  Sharia doesn’t appear to be a good investment.

The stock market works through good old supply and demand.  Let’s take a look at the JVS fund in depth and see what it looks like.

This looks very pitiful.  There were only 100 shares of the Sharia fund traded today.  It’s not that popular compared to other picks.  Let’s take a look at the Level II screen to see how many shares are for sale.  A Level II Quote lets you see all the buyers and sellers along with their prices.

The Ask price is what a seller wants to get rid of his shares.  If you’re a buyer you typically buy from a seller at the Ask price.  Here we have someone with 800 shares of the Sharia fund and they are Asking $399.99 for each share.  If you want to buy 1000 shares, you’re out of luck because there are only 800 shares for sale right now.

The Bid or Offer price is what a Buyer is offering to take the stock off someone’s hands.  There is a buyer out there and he’s wanting to buy 800 share of the Sharia fund, but he’s only willing to pay $0.15 for each share.  He obviously doesn’t think these things are worth that much.

What this means is, if you want to buy some Sharia fund shares you can put an order in to buy at the Ask price of $399.99 per share.  You could set your Bid price lower than the Ask price to see if the seller will lower his price.  If you Bid price is higher than the currently listed $0.15 your order will appear above the one pictured.  This goes on and on until both parties enter the same price for the stock if you don’t offer the Ask price up front.  But it gets even better folks.  Let’s say that you bought 800 shares of the Sharia fund for $399.99 and now you decide you don’t want them.  There’s a buyer out there offering $0.15 per share.  You can either lose $399.84 per share and take him up on his offer price, or you can name your price and it will appear in the Ask column.  Then you hope and pray to Allah that someone will buy those shares at your Ask price.

Now let’s look at a more exciting example, the Direxion 3x Daily Financial Bear (FAZ)

This fund also has a good example in it to illustrate price moves with a volume of over 185 Million shares traded today.  There are a total of 22400 shares for sale between the NASDAQ and PACX at 5.07.  What happens if someone buys all those shares from these two sellers?  The price next price listed is 5.08 with 3500 shares.  That is what happens behind the scenes when a stock price goes up.  Unfortunately the Sharia fund is unlikely to go up since it only has one seller who will probably never close a deal at $399.99.

This fund (FAZ) is not Sharia compliant.  This is a fund that performs opposite to the traditional financial sector we all know and love to hate (Citigroup, AIG, Bank of America, etc).  This is a 3x short fund so it basically means when the stock market goes down, this thing goes up at 3x the rate.  If the banking sector is down 5%, this fund goes up 15%.  And that’s how you make money when the market is going down.  Unlike the Sharia fund.  This puppy has had over 185 million shares traded today.  The Sharia fund on the other hand only traded 100 shares today.  Finance is hot, Sharia is not.

If you aren’t feeling very Sharia, then the Vice Fund (VICEX) might be worth taking a look at.  It is a traditional mutual fund and not an ETF.  The fund managers invest in tobacco, alcohol, and casino companies.  In a recession vice companies tend to do better than regular companies . I don’t own any VICEX shares, but it may be something worth researching if you don’t find the Sharia funds to be that profitable or fun.