I have been on this story for awhile — long enough to have monitored the coverage of Friess — and the coverage is, to put it mildly, AWFUL.
Yesterday, in Salon, Robert Reich talked about the plutocrats financing the GOP presidential primary. Friess was identified as:
Freiss, a fund manager based in Jackson Hole, Wyo., gave $669,000 (he had given the Santorum super PAC $331,000 last year, bringing Freiss’ total to $1 million).
Zowie. Well, Reich can be forgiven, as a NOT professional journalist, for not knowing that Friess retired ELEVEN YEARS AGO. But, if it’s any comfort to Reich, his “facts” aren’t any worse than anybody else’s. In the month since Foster made the jump from blogosphere to famestream feedia, there have been lots of stories about Mr. “Aspirin between the knees,” but none that I am aware of has given you any more information than is contained in this paragraph.
How pathetic is that? How bought and owned are your commercial “news” outlets, given a month to cover an important story, when they haven’t dug one micron deeper than the superficial?
Well, screw them. Here’s what any google monkey at any newspaper in the USA might have found in ten minutes of a little deeper scratching. In the middle of the Great Santorum debate on ‘Satan and America’ we might want to consider one more candidate for “Agent of the Devil.”
Here’s Foster’s bio as a speaker at the November 9, 2004 “1st Annual Freedom Dinner at the Fairmont Hotel in Washington, DC. ” given by the Atlas Economic Research Foundation (a Koch-related “think tank” — about whom I’ll be talking more later this week):
Foster Friess is the chairman of Friess Associates, whose flagship Brandywine Fund has appeared on Money magazine’s list of the “World’s Best Mutual Funds” every year since Money began compiling it six years ago. He is well-known for his philanthropic efforts, focusing principally on one-on-one mentoring and entrepreneurial, faith-based urban charities. He has received the Muhammad Ali Humanitarian Award; Hillsdale College’s Adam Smith Award; The Canterbury Medal from the Beckett Fund for Religious Liberty; and The Richard M. DeVos Free Enterprise Award for Exceptional Leadership from the Council for National Policy.
Mission – “Johnny Appleseed” of antiregulation groups
For over two decades, a Virginia-based organization has been quietly working as the Johnny Appleseed of antiregulation groups. With a modest $4 million dollar budget in 2003 and a staff of eight, Atlas Economic Research Foundation is on a mission to populate the world with new “free market” voices. In its 2003 review of activities, quaintly titled its “Investor Report,” Atlas announced it worked with “70 new think-tank entrepreneurs from 37 foreign countries and several states of the U.S.,” including Lithuania, Greece, Mongolia, Ghana, the Philippines, Brazil and Argentina.
The mission of Atlas, according to John Blundell (president from 1987 to 1990), “is to litter the world with free-market think-tanks.”
Named after the Greek god condemned to bear the heavens on his shoulders, Atlas identifies, screens and offers initial support to individuals and groups who want to create local think tanks. “Our ideal ‘intellectual entrepreneur,'” says Atlas, is “someone who communicates effectively with businessmen, academicians and the general public.” By facilitating the establishment of local think tanks, Atlas increases both the reach and local credibility of their “free market” message, thereby having “the most cost-effective impact.”
Since its formation in 1981, Atlas has funneled over $20 million in grants to think tanks that have passed its screening process. Atlas aims, it says, to “increase that amount tenfold in the next decade.” In 2003, a little over $2 million of Atlas’s 2003 budget was passed on to other think tanks. While the large conservative foundations take the approach of making large sustained and often untied grants, Atlas believes less is more, providing new think tanks with only small grants of $5,000 or less. Atlas weans their fledgling projects off this modest annual funding within five years, making exception only for specific innovative projects.
Atlas has cosponsored Heartland Institute events dedicated to the proposition that climate change is not a crisis and has supported organizations such as the John Locke Foundation which has attacked efforts by state elected officials working on climate solutions with the Center for Climate Strategies.
And here’s the summary of an earlier speech, given at an Atlas event, which outlines some of his “Jesus is my CEO” political philosophy:
In his speech “The Human Face of Economic Liberalism” delivered during an Atlas-sponsored conference, “Communicating the Ideal of Liberty,” held recently in Salt Lake City, Foster Friess, president of Friess and Associates, showed through his personal story a real-life demonstration of the miracle of free market capitalism and economic liberalism. The free enterprise system, he argued, has allowed him to thrive and prosper in a way that could not have happened anywhere else in the world. He also explained in this thoughtful piece the absence of contradiction between one’s religious convictions and his business activities, and shared important tips on how to make business succeed.
And here is that speech:
‘Sunday morning should be half time in the locker room, not just the spiritual high point of the week. ’
The Human Face of Economic Liberalism
by Foster Friess
Thank you for the introduction and for inviting me to speak to you today. It is a pleasure to be among so many friends on the same wavelength, working for the same cause and fighting the good fight to promote the free enterprise system of our country.
The first face of economic liberalism I’d like to show you is my own. This system has allowed me to prosper and thrive in a way that could not have happened anywhere else in the world. My story is a real-life demonstration of the miracle of free market capitalism and economic liberalism.
I grew up in northern Wisconsin. The wealthiest people in our town were the Mobil gas station owner and the undertaker. When I got out of the army, my worldly possessions included a VW bug, an Admiral television, a hide-a-bed, and a washing machine. I had a lovely wife and we had a little baby. My wife sewed all of her and the kids’ clothes and made all of the draperies and anything else we needed. She even cut my hair. Even though she did a good job, the biggest moment in my career was when I could go to a real barber. Coming from such a humble background, I felt like I reached nirvana when my income hit six figures in 1978.
In 1974 I had started my own money management firm after ten years of working for a wealthy family as a securities analyst. Our firm’s profitability has been remarkable and allows us to fund many worthy causes, which I will highlight in a moment. The specialized organizational and management philosophies we employ are fundamental to our success.
To demonstrate the viability of these various techniques let me detail our success for you in quantifiable terms. Michael Dell’s company generates an annual profit per employee of $58,000. Jack Welsh, $51,000 per employee. Bill Gates, $181,000 per employee. The time management procedures and organizational techniques we employ return profits per employee of well over $1 million. An investment of $100,000 in 1974 would be worth today (before taxes) $12.3 million.
I can summarize the keys to our success in eight steps.
Number one is a concept of focus. Our competitors like Putnam and Fidelity have complicated systems that include a different fund for every season. They have a fund for South Korea, and maybe even one for left-handed CEO’s and so on. We know we aren’t going to be all things to all people so we employ one core investment philosophy. We choose well managed, well financed, rapidly growing companies (over 20%) at modest price –to- earnings ratios seldom above 17 to 20 times earnings, then research the dickens out of them. We call customers, suppliers, and competitors and really get to know the dynamics affecting target companies we add to our portfolio.
The second key to our success is in the way we implement decisions. Traditional money management firms appoint a very smart, young person two or three years out of grad school to do the research. They pass the information along to a bunch of gray-hairs on the investment committee who add the stock to their list. Then another group of portfolio manager gray hairs pick from that list and put the stock into their portfolio. Not only is this system inefficient, it takes ownership and responsibility out of the mix. When a stock goes down at the end of the day there’s a lot of cross finger pointing.
We streamlined and consolidated this process by eliminating two people out of the circle. We select the most senior savvy, street-smart people and put them in the trenches charged with responsibility for the entire process. One person does the research, calls the companies, competitors, suppliers and customers and makes the decision to put that stock in the portfolio. The process is completed expediently, professionally, and with a sense of ownership. If a stock goes awry, everyone knows who is accountable and that person is on the phone to take care of the situation. We free our decision making-process and our decision-makers from the tyranny of the committee.
‘we encourage a corporate culture that embraces people who are other-oriented and we expect, promote, and instill a servant/leadership attitude in our executives’
The third technique is our unique way of compensating employees. We reward people who cooperate rather than compete with their team members. Most organizations base an employee’s remuneration on the size and positive returns his portfolio generates. While fiscal performance is naturally a large component of our compensation plan, there are other factors to consider. Teamwork can ultimately mean the difference between success and mediocrity. Rarely is it just one person who is responsible for his own success.
Keeping this in mind, we employ a unique system called “One Hundred Roses.” We divide the assets to be managed among six to seven research teams and provide each person on each team with one hundred roses representing one hundred percentage points. The team members then distributed their roses to those people who most help them to become successful.
Under this system, the person with the largest amount of assets under his purview and the greatest performance is not necessarily the most highly compensated. Many times the person with a lesser quantitative accomplishment receives higher rose allocations due to teammate input and acknowledgement of his or her helpful contributions. Under this system it is common to hear comments such as “this fellow helped me get out of a stock I never would have known was in trouble if he had not told me about some pricing deterioration.
Fourth, we encourage a corporate culture that embraces people who are other-oriented and we expect, promote, and instill a servant/leadership attitude in our executives. We never say to a teammate, “Omar, these are the four people who report to you.” Instead we say, “Omar, these are the four people for whose success you are responsible.” This inverted concept of leadership ensures that our top executives encourage and assist those around them rather than suppressing their advancement out of ego gratification. One’s potential is linked to how well he or she develops the potential of those with whom they work.
Another key factor is emphasizing the distinction between excellence and perfectionism. Perfectionism abhors error, tries to destroy and eradicate it. Excellence embraces error, builds on it, and transforms it.
We believe a so-called ‘bad decision’ is a learning lesson in disguise. We understand that human beings are not perfect. We accept that in order to grow and prosper we need to embrace and share our experience of missteps as “adjustment opportunities.” Encouraging a spirit of acceptance, forgiveness, and the willingness to share these adjustment opportunities makes for a positive and constructive rather than fearful punitive environment.
Instead of focusing on mistakes and beating people up, we forgive and accept missteps so people feel comfortable sharing what they have learned from them. It is not uncommon to see an interoffice e-mail from a teammate letting his colleagues know: “I just had an adjustment opportunity. Here is what I learned. Here is how my experience can benefit us all and how we can adjust our strategy accordingly.”
A reporter once asked a successful investor, “Why are you so successful?” The investor answered, “Good decisions.” The reporter questioned, “And how do you make good decisions?” The investor answered, “Experience.” Finally the reporter asked, “So, how do you get experience?” The investor replied, “Bad decisions.” Embracing adjustment opportunities is one of the most powerful tools for promoting excellence.
The sixth crucial factor is creating a sense of mission. To illustrate how imperative this is to the progress of any company, let me recap a familiar story. A man walks down a city street and sees three workers all performing the same task. He asks them each what they are doing. The first one says, “I’m laying brick.” The second one says, “I’m making $15 an hour.” The third one says, “I’m building a cathedral.”
A sense of vision and a feeling of purpose and contribution to that vision are integral to individual as well as corporate success. When people feel they are building something, whether a monument, a company or a top-performing portfolio, they will exhibit excellence that a person caught up in mundane details or mercenary motives will not.
We make sure our success is shared constructively with our community. We take a large percentage of corporate profits and invest it in various ministries providing necessary community aid. We fund medical vans to provide healthcare services for uninsured people. We hire the homeless to pick up trash and beautify litter-strewn lots providing them with a viable means of employment and restored sense of dignity.
In implementing these projects, we make sure our teammates know that these ministries are possible because of the work they do. They are not just keeping track of trends or researching stocks, rather they have a mission that provides them with a higher sense of purpose and enthusiasm for their work. Sure, I’m the one writing the check, but I wouldn’t have any check to write if it weren’t for the team of people creating the value and generating the profits to make these projects possible.
Seventh on the list and one of the most valuable techniques we utilize is the implementation of voiceless communication. We don’t really want our people talking to each other. We want them focused on speaking with CFO’s, suppliers, customers, competitors, and those who interact with our target investment companies. This is revolutionary. Along that same line of thinking, we do not hold meetings. You should never have a meeting to transfer information or make a decision. We avoid meetings at all costs and when we absolutely have to have them they are held in a room with no chairs. Notice I happen to be standing and I am not quite sure why you are sitting, but I guess I can’t set the rules outside my own office.
By avoiding internal verbal communication and meetings we enable our employees to be more productive in utilizing their time. Some of our competitors have regular Monday morning meetings comprised of thirty people trying to impress each other with their intelligence. All this does is chew up thirty valuable man-hours – the same hours our team invests in calling companies CEO’s, competitors, suppliers and that target company’s customers.
We promoted the value of this procedure to our team by asking everyone to stand together in a room, read a page out of Business Week, and raise their hands when finished. We timed the interval until the last person held their hand up, then we asked one person to read the same page out loud and timed that. Our experiment demonstrated it would take 66% longer to read something out loud than visually.
Afterwards, we coined a phrase that the eyes are faster than the ears but the tongue is faster than the pen. In other words, you can read something faster than you can listen to it but you can say something faster than you can write it. Our goal is to provide all your information to you in written form. We do this by dictating all information to a bank of transcribers made up of at-home mothers. From anywhere in the world I can pick up my cell phone and dictate a message to one of our transcribers. Within less than a minute my message hits the email or fax of anybody in the world I want to reach. This system has increased our productivity exponentially.
Our internal communication is based on faxes and e-mails. When I need to make a trip, even though my secretary is sitting right outside my door, I fax the relevant facts to her and she in return provides me the details of the schedule. The whole interchange takes a very brief amount of time. While face-to-face contact produces in a day just 20-25 interactions on average, this system allows us to conduct over 150 interactions in a given day. Utilizing this communication system with the 70-80 employees that make up our team has produced a massive increase in productivity.
You may wonder how we address the social interaction aspect in the workplace. We believe that Friess Associates does not exist to meet the social needs of our employees. If you want to socialize, join a bowling league or play bridge with friends. Our purpose is to make money for our clients. Our employees understand this vision and are passionate about implementing ways to increase the productivity and profitability of the firm and that of our clients.
The last but most powerful and fundamental reason for our success is the spiritual value system we embrace. This set of values subtly influences and colors everything we do from management philosophy to interacting with clients. I was raised a Lutheran. When I was a young boy we all went to church. We all received gold stars for our Sunday school assignments. It was a very simple life with a spiritual focus. However, once I reached college age my spiritual development took a back seat to my physical and mental development. I can’t name one church I stepped foot in during that time – a lot of bars yes, but no churches.
By 1978, I was in the midst of an extremely unfulfilling phase. My wife and I burned out five sets of counselors and our marriage was very close to divorce. My relationship with my children was strained and my job was in a rut. You know the definition of a rut – it is a grave with the ends cut out. Thankfully someone introduced me to spiritual concepts based on Judeo-Christian traditions passed down for hundreds of years.
These concepts provided me with new solutions to issues with which I was struggling. I embraced them wholeheartedly and they began to have a strong influence on my life. My relationships improved and my marriage was saved. My wife and I now celebrate 84 years of marriage, 42 a piece. I got out of my career rut and applied this spiritual value system to how our company functioned. I immersed myself in the teachings of Jesus, Moses, Matthew, Luke and John as well as other biblical figures.
These people espoused the virtues of kindness, integrity, forgiveness, empathy, and service to others. Obviously these values are critical if you are going to implement a corporate culture with an overriding sense of mission—-if you choose to create a place that is accepting and forgiving and notes the distinction between excellence and perfectionism and if you want to promote an institution that not only serves the needs of clients but the community as a whole. I applied these values to every area of my business and personal life and as a result, all areas thrived.
These Christian principles are as effective and powerful as they are timeless. World leaders past and present recognize this fact. Franklin Delano Roosevelt, four times elected President of the United States, emphasized the importance of these principles in a 1935 radio address. He said, “We cannot read the history of our rise and development as a nation without reckoning with the place the Bible has occupied in shaping the advances of the republic. Where we have been the truest and most consistent in obeying its precepts we have obtained the greatest measure of contentment and prosperity.”
Great Britain’s Prime Minister, Margaret Thatcher also acknowledged the importance of these teachings when on a visit to the United States a few years ago she gave a speech saying that what makes this country unique is the incorporation of the Ten Commandments into our culture, and we must never, ever lose that.
In today’s society these ideas are sometimes considered radical. There are people who do not appreciate the fact that many Americans believe God blesses us and that we have a unique opportunity and spiritual responsibility because of the freedoms we enjoy. At the Democratic convention, Senator Kerry’s reference to Abraham Lincoln’s statement that “It’s not so important that God is on our side as it is that we are on God’s side” was seen by many to be a repudiation of President Bush’s faith.
Growing up in the United States I was influenced more by the Bible than any other religious work and these teachings form part of the fabric that has created the governmental systems and liberties we all enjoy.
Adam Smith said, “Aggressively pursue your own self interests, and in the process you will pursue the interest and needs of others.” This has been the dominant theme of success driving people in our society. I maintain that at an earlier time in our history a different message was prevalent. Another man, a humble carpenter who lived 2000 years ago said, “Aggressively pursue meeting the needs of others, die to self, and in so doing your needs will be met.” The miracle of my life, the prosperity I have achieved and the ministries I’ve been able to fund are a direct result of merging these two themes.
‘That brings me to some of the other faces of economic liberalism. Some are not our friends. Look at Senator Sarbanes who created a horrendous destructive force to free enterprise with his Sarbanes-Oxley bill.’
I do not believe that economic liberalism and liberty in and of themselves provide freedom. Consider the fact that the Ten Commandments are the first place where the concept of ‘private property’ is developed. The admonition, “Thou shall not steal,” implies individual ownership. The concept of liberty is based on not the freedom to do whatever we want to do, but the freedom to do what we ought. Lord Acton said it well, “Liberty in and of itself is not necessarily a virtue, but it permits virtue, or liberty can permit evil, depending on the people who are implementing that liberty.” Even with liberty it is our value systems that determine whether our society and culture are good or evil.
A survey showed that two thirds of Republicans attend church and two thirds of Democrats do not. As we look at the economic policies of these two parties, there is, in my mind, a clear link between religious values and the political concepts underlying the two parties.
In our society, politics is plagued by the disease of envy and class warfare. This is not part of the Judeo/Christian value system. Mother Theresa said it well, “We should not believe in class conflict, but instead in class encounter where the rich save the poor and the poor save the rich.”
That brings me to some of the other faces of economic liberalism. Some are not our friends. Look at Senator Sarbanes who created a horrendous destructive force to free enterprise with his Sarbanes-Oxley bill. This bill has probably done more damage to economic liberalism than any legislation in recent years. A Financial Executives International Organization survey of 224 public companies with average revenues of $2.5 billion estimates that these corporations will now spend over $3 million each to comply with Sarbanes-Oxley regulations compared to the original January estimate of $2 million.
That’s close to $700 billion in overall increased costs and a 40% increase alone in external auditing fees. One East Coast utility company told us they’re going to spend $5 million a year to comply. What have we gotten in return for this legislation? Hardly anything. If you look at the new regulations, all of Enron’s corporate audit committee members would have been classified as independent directors. Under Sarbanes-Oxley, an executive, for example, would have to report his transaction two days after he makes it rather than 10 days after the quarter. Is that worth a $700 billion hit to the economy? This is simply a welfare benefit for accountants and lawyers and certainly doesn’t help the free enterprise system.
‘What if Bill Gates didn’t have to pay any income tax? How would that help the economy and those people making less than $50,000?’
Let’s look at another human face of economic liberalism – that of Bill Gates. What if Bill Gates didn’t have to pay any income tax? How would that help the economy and those people making less than $50,000? Would we be better or worse off if he could keep that money to invest in new products and new ideas? We all know the answer; people in lower economic brackets would be the ultimate beneficiaries of the employment he would create, the inventions he would inspire, the productive increase he’d bring to our culture and our society. How do we articulate this concept to a person who is riddled by class warfare rhetoric and the disease of envy?
Every American, regardless of income, gender, race and nationality should be able to keep seventy five percent of what they make. We need to dispense with all the bureaucracy involved in hiring people. If we could provide jobs to unemployed people, perhaps as a gardener, maid or chauffeur without having to deal with the tangled mess of social security withholding, workman’s compensation, or insurance issues, the country’s unemployment figures would be greatly reduced.
Liberals will say that providing jobs without subsidized benefits is a form of slavery. Tell that to someone who wants to work and needs a job. I recently had a discussion on this topic with a left- wing Senator. He told me, “There’s no way we’re going to help the rich people.” We have got to get rid of the negative force of envy if we are to heal our country, stimulate the economy, and move ahead.
I want to shift now to another, if less famous, human face. The face of Ricky Thompson, a 15-year-old African American boy living in a Detroit ghetto. His dad is in jail and his mother is on cocaine. Ricky is the head of the household. He does not sleep well due to the almost nightly drive-by shootings in his neighborhood. Yet, an exhausted Ricky gets up well before school in order to feed his four siblings. After his chores are done, he gets on the bus, transfers twice, arrives at school and falls asleep.
How do we deliver the promises of economic liberalism to Ricky? What is going to determine his success? Contrary to current prevailing wisdom, tripling teacher’s salaries or reducing classroom size to ten isn’t going to impact Ricky’s life as much as one caring adult. The solution is mentoring. The difference between an at-risk child who makes it and one who doesn’t is often simply one caring adult. Individuals in the community can create a support system to replace the guidance Ricky’s incarcerated father and cocaine-using mother can’t provide. How does mentoring happen? I believe it should come through the Christian community. Ronald Reagan’s favorite Bible verse was II Chronicles 7:14: “When people who are called by my name will humble themselves and turn from their evil ways, then I will hear their prayers and heal their land.”
We have too many churches in our country that are simply hymn-singing country clubs and holy huddles. There is not enough active participation in mentoring troubled youth, supporting the institution of marriage and family, or dealing with the incredible cost of divorce on our society. The statistics of what happens to kids of divorce is unbelievable in terms of drug usage and school drop out.
Sunday morning should be half time in the locker room, not just the spiritual high point of the week. Church should be the place where we are trained to love and serve people and meet their needs. Too often it is a place to pretend we are pious while hiding from our commitment to serve. We need to get people out of the woodwork and into the network so that we can make a difference in Ricky Thompson’s life. If we don’t solve problems like Ricky’s we have lost a massive national resource.
A mentor can change a child’s life. Perhaps you can be the one to make that change happen. How gratifying to sit in your rocking chair some day and look back on your life and realize you saved a life from prison, drug addiction or despondency. Encourage mentoring wherever you can.
There are other ways to help lift people up. Providing our children with a more effective educational system is a start. All across the country programs are progressing to provide parents the right to choose the environment and the delivery system of education that they want, not what is forced upon them by top down decision. When someone moves into a new town, he’s not assigned a grocery store, a gas station, and a dentist to use but is given freedom to migrate beyond his geographical area to make choices. Education should be no different.
Equal opportunity scholarships, previously called vouchers are a necessity for the future of all of our children. Charter schools offer enormous possibilities and more parental control and influence and attention to the consumer rather than to the provider of education.
President Bush’s “No Child Left Behind” program should be changed to, “No Child Moved Ahead Before His Time.” Grade levels based on age should be eliminated. Instead we should implement learning levels based on individual competence. Learning levels would provide extra attention for those who are struggling while unleashing the potential of those ready to move ahead.
I have friends who home-school their five children. One night in a discussion of their education techniques my friend Clinton asked his wife, “Mary Lee, why don’t we give the children report cards like the public and private schools do?” Mary Lee responded, “Well, we could do that, but they’d all get A’s.” Thinking his wife was exhibiting maternal favoritism, Clinton was astounded when she added “The reason they would get all A’s is that we would not let them move on until they get the current lesson.” This is the way education should be run. Some people think it is undignified to hold a child back in grade. But where is the dignity when that child gets out of school and can’t read or write or fill out a job application and suffers repeated rejection when applying for a job?
In addition to traditional education, we must do a better job of providing our children with vocational training. Not every child is going to attend college or become an attorney, brain surgeon or banker. We need to ensure that by the age of 18 every child has an employable skill whether repairing a carburetor, unbending a dented fender, or running a fork-lift truck.
The next item on the agenda is healthcare. Our health care system with the government involvement through Medicaid and Medicare is spiraling toward deterioration. Doctors are leaving in droves because of liability issues. In places like California and Mississippi various constitutions were amended and caps put on non-economic damages. In Wyoming those changes have not yet been enacted. As a result, only one insurance company remains for the physicians of my state. We all know the system needs to be changed.
If we want to return the market’s driving forces to our healthcare system, the solution is simple – change one line in the IRS code so that companies can no longer deduct healthcare benefits from their tax bill, but employees can.
For example, let’s say duPont Company sends $5,460 to Aetna to cover each of us as employees. With the deductibility gone they now send that money into each of our health savings accounts (which they can deduct), which I would rename, “Spend It or Keep It” health care plan. This structure already is in place in a minimal way and approved by the IRS, thanks to the work of John Goodman and others like him. But it needs to be expanded.
The employees, formerly covered by that Aetna health care plan, now form a voluntary health care cooperative, not dissimilar to the mandatory ones that First Lady Hilary Clinton promoted. This cooperative could join in with other cooperatives from other companies, service clubs and churches to form more efficient purchasing groups.
The cooperative then hires someone in our group to coordinate with vendors and insurance providers, negotiate costs and services for the group, and provide preventative healthcare information. Members of the group would have a vested interest in their medical costs, and competition would thrive as a result. This plan functions much like an IRA account. As people fully understand that in conserving their healthcare costs by taking charge of their health they can build up this reservoir of assets. Under this system, our healthcare plans would be completely portable like all the other services we choose. When we change jobs, we don’t renegotiate our home mortgage or car insurance. Why should healthcare be any different?
Right now our country doesn’t have health insurance. It has prepaid health care. By divorcing health insurance from prepaid healthcare we can unleash the free market system to provide solutions that benefit both provider and recipient while eliminating much of the bureaucracy. If our auto insurance was like our health “insurance” we would be reimbursed for headlights, wiper blades, tires and even gas fillups.
Decades ago when the Judeo/Christian ethic was more prevalent there were private solutions to healthcare. Many hospitals were started out of a religious motivation to serve one’s fellow man. Only in recent decades has medicine shifted dramatically from a ministry to an industry.
There’s a massive difference between healthcare and health insurance. We ought to concentrate first and foremost making sure everyone has health care and then think about insurance and other mechanisms to pay for that care. For political reasons, too many people are preoccupied with health insurance. My wife and I have provided at a quarter of a million dollars per unit medical vans equipped with volunteer physicians to six different cities around the country. These vans provide free medical care to those who cannot afford insurance.
There are many people without health insurance but they still receive healthcare. In 2002, AARP estimated thirty eight billion dollars was spent in uncompensated healthcare. In the border states of California and Texas, it is estimated that over one billion dollars has been provided in uncompensated health care to people who are undocumented visitors to our country. The law states that if a person comes to an emergency room and needs trauma care, they must receive it.
Who are some of these uninsured people? Just look at the face of Dan Riggen. A young man, 21 years old appears on television in one of the supposedly unbiased, informative programs Dan Rather is noted for. Mr. Riggen tells how he’s just been rescued from a hotel fire and has incurred a million dollars worth of medical bills. He sits with his mother in her beautifully decorated living room. From all appearances, mother and son look well fed and healthy.
Yet Dan is held up to the viewing public as an example of how the system is broken because this family has no health insurance to pay for their care. Instead of demonstrating an example of a man who had no health insurance yet he got a million dollars worth of healthcare because he needed it, the liberal media chooses to point to him and say the system has failed.
In Maryvale, an economically deprived area of Phoenix, there are 400 babies born every month. All Maryvale mothers have access to hospitals to deliver their babies. Only 40 percent of these women have insurance from private or state sources yet all of their babies are born in the hospital. Ninety four percent of these babies receive “well baby care visits” after delivery. Sixty five percent of mothers report satisfaction that they received sufficient care when baby was sick. Another twenty five percent report their babies were healthy and did not need additional care.
Of the remaining ten percent, lack of transportation, no child-care, or not being able to make the appointment rather than “no insurance” are the reasons they do not receive medical attention. How are these women and their children cared for? One back up opportunity is a medical van, financed by private funds and operated by The Church of the Nazarene that sees one hundred patients a day in fifty weeks of operation equaling five thousand visits.
Again, let me emphasize that there’s a vast difference between health insurance and health care. Health care is available. If it isn’t in your area, get some of your rich friends to sponsor a mobile medical van.
Another human face I want you to visualize is that of a Pfizer scientist in a white lab coat working late night hours to develop medicines that improve our health and our lives.
When legislators in the Senate and Congress complain about “obscene pharmaceutical profits,” where are the voices who say, “Wait a minute, we have a vested interest to increase the profits of pharmaceutical companies.” Ask any employee with for LTV, Lukens Steel or Braniff Airlines what it’s like to work for a company gasping its last financial breath. We should encourage the pharmaceutical companies to turn a profit so they can continue to improve our lives. Just think about what the pharmaceutical companies have given us.
A Harvard study by Dr. David Cutler shows a 50% reduction in deaths when people take tissue plasminogen activase (TPA) after their first heart attack. Stroke victims once relegated to the horrors of paralysis and diminished motor function now can anticipate a potential reversal of symptoms due to the administration of TPA. In the 80’s a diagnosis of HIV was a near death sentence, but with protease inhibitors, the death rate has dropped dramatically. Thanks to the pharmaceutical industry we have access to cholesterol and blood pressure lowering drugs — pain medication for crippling osteoarthritis — products that slow the progress of Alzheimer’s symptoms. The list goes on and on.
Not only do the pharmaceutical companies provide us with these life saving technologies, they funnel economic support to the economy through the advertising and marketing industries. The drug industry spends roughly a billion dollars of marketing costs for every billion and a half dollars R&D. If you take Pfizer as an example, its marketing costs as a percentage of revenue and rank them among the top six or seven consumer companies like Coca-Cola, Pepsi and Proctor & Gamble, Pfizer’s expenditures would be right in the middle.
This marketing has a valuable humanistic side effect. Twenty five percent of the people who go to the doctor when they’ve seen a direct consumer pharmaceutical ad on television are diagnosed with an unrelated and previously unknown condition. This public awareness shouldn’t be jeopardized.
There are people in our society who would prefer to dramatically reduce drug prices and embrace price controls by in effect importing price controls from Canada. Even if you choose to ignore the potential health risk of counterfeit drugs manufactured in Pakistan and imported into the U. S. from Canada, just look just at the potential damage to our economic health of these price controls. A study from Wharton showed that in countries where price controls are in place, 75% of the drugs never get launched. In Canada, new products often are introduced 12 months later than in the U. S. This delay in bringing products to market significantly slows medical breakthroughs from reaching the consumer.
The research process can cost nearly a billion dollars on the journey to that life-saving, health-improving pharmaceutical. Only three out of 10 drugs recoup the average research and development costs spent on them according to a Duke University study. Pfizer, last year, spent $7 billion on research and development. Would we all benefit if their profits shrank so that research and development is reduced to $1 billion?
A National Institution of Health study showed that 92% of the 47 to 50 drugs responsible for $500 million a year in sales were spawned by the pharmaceutical industry as opposed to National Institute of Health or university research expenditures. In this most recent year the pharmaceutical industry spent $33 billion and the NIH spent $27 billion.
We take aspirin when we have a headache, cold medicine when we’re feeling sick. I’ll bet that most of you in this room know someone whose life was saved or made easier by the health miracles provided by the pharmaceutical industry. Drug companies are saving lives. They are not the enemy.
I hope the techniques and suggestions I’ve outlined will help your organizations as they have ours. I encourage you to develop a sense of focus and create a sense of cooperativeness in your organization. Fill your companies with people who are other oriented and instill in them a sense of mission. Impart to your employees a vision for productivity and provide them with organizational tools that empower help them to be more productive. Embrace the concept of excellence rather than perfectionism. Explore and adopt value systems that support all of these techniques. Then use your resulting profits to benefit the community. Utilize the think tanks you support to continue making improvements in the regulations and structure of our healthcare, educational systems, and regulatory environment. We have much to do if we want to restore the economic liberalism that made our country great. Part of doing that is to make sure we encourage people of faith to become active in the process.
In parting, I will leave you with one more story that illustrates the importance of keeping your eye on the big picture and everything in your life in perspective. Sherlock Holmes and Watson are camping out on a very important case. At 3:00 in the morning Sherlock wakes up and shakes Watson. Sherlock whispers, “Watson, look up there at the stars, what do they tell you?” Watson answers him, “Well, astronomically it looks like there are billions of stars and galaxies and universes up there. Astrologically it seems like Jupiter might be now coming into Virgo. Theologically it seems like all is well with God. What might it mean to you, sir?” Sherlock Holmes replies, “Watson, you fool, someone has stolen our tent.”
Yeah. Foster and his buddies stole our tent, as bettors who contributed nothing whatsoever to an economy they’ve bled white.
Now, at least, you know what’s going on under his $300 haircut.