My son Brad Meinhardt and I attended Friday's Conference of my Alumni Weekend at the UCLA Anderson Graduate School of Business on the 4th of May. It was tedious, but highly interesting, starting at 0715 with lectures during breakfast, forecast for the Nation, and ending with a reception in the evening. Included was a panel on Healthcare that included players such as insurance, doctors, and hospitals. They said Healthcare is a mess and will likely remain so. I concluded that it would remain so with or without Obamacare. The panel advocated action on obesity/wellness and obesity's skyrocketing costs. Fifty-two percent of healthcare dollars are spent in the last ten weeks of life. Doctors claim they must do the procedures or get sued by relatives. The U.S. is also subsidizing the world by paying three times as much for healthcare devices.

The UCLA Economic Forecasting Unit has an outstanding track record. The head of the unit is Ed Leamer who was there when I graduated in 1975. His portion was entitled "A Desperate Need For Leadership". His report:

Official unemployment of 8.1% is really unchanged at 9% because of discouraged job seekers. There is no improvement and unemployment will remain high.

Economy will grow at 2-3% for the foreseeable future with job creation of 150,000 to 200,000 a month, not enough to reduce unemployment much.

There will be outbreaks of higher interest rates and inflation.

Housing is coming out of the doldrums. The auto sector has nearly recovered. Economic recovery is heavily influenced by these two sectors.

Retail is having its troubles because of on-line/non-taxable sales.

To grow the economy, Ed recommended an increase in exports, the need to bring back manufacturing and the retraining of the workforce. There weren't any specifics on how you do this. He said it will be difficult; that technology has changed the game. His example was the microprocesssor which is more efficient/competent than workers and doesn't talk back. The European Union accounts for 25% of our exports.

Ed Leamer said that since the crash in 2008 there has been no increase in the M1 Money Supply in spite of the record low interest rates. He did not dwell much on why that was so, but one reason he gave was risk aversion by the banks regarding loans. At the same time as the Federal government was stimulating the economy after 2008, the state and local governments were contracting their spending because of deficits. So the overall effect on the economy was muted.

Following his talk, I asked the question, "Commentators have criticized the austerity policy of Europe and advocated a growth policy; how do you do that when you are broke?" Ed jumped to the conclusion that I was talking about Paul Krugman and spent some time ridiculing his ideas. Then he said Europe had to "suck it up and get their houses in order". I assumed that applied to our local, state, and national governments.

The Economic Forecast seemed short on specifics of leadership ideas to fix the abundance of problems. My idea on 'sucking it up and getting the house in order' is to abolish all Defined Benefit Plans for Pensions and Healthcare for all new workers. All workers should contribute toward their benefits now. Defined Benefit Plans are unsustainable. Germany, for example, has good Healthcare and Pension Plans, but the workers contribute dearly. Germany also expanded their exports, but it took a while. Retraining the work force seems like a difficult and very long term solution.

My comments: In simple terms, there are only two ways for a government to combat a recession or depression--increase spending and lower interest rates. President Hoover did just the opposite in the great depression. President Roosevelt reversed both. In 1937, however, when deficit worries caused budget balancing actions and the interest rates went up, the recovery stalled until World War II economic activity took over. The European Union is following Hoover's policies, but the problem is that they are overwhelmed by debt. Can you believe, President Hollande of France wants to lower the retirement age to 60 from Sarkozy's 62? In my opinion, it should be increased to age 65 and everyone should contribute during their working years to pensions and medical care for retirement

As I said before, the Soviet Union collapsed because they were spending 30% of their GDP on defense and were overwhelmed by unsustainable defined benefits for everyone. People had little incentive to work. Europe has not followed suit with defense spending but has gradually become overwhelmed with unsustainable defined benefits for everyone.

Some other factoids:

How to stop truancy--sew a microchip in student's clothes. It is now in use in some schools. Truants are immediately identified and parents called. Do the police still have truancy officers?

One professor reduced Economics to four words, "People respond to incentives".

134 million babies are born each year while only 56 million people die.

Over half of the births in the world are not recorded and half the people in the world have no access to a bank. If they get some money they have to worry about having it stolen and actually pay people to protect it.

Out of state tution at UCLA Anderson School is now $56,000 per year. State funding has nearly disappeared. Our class entering in 1973 was 451 full-time students, including 19 from the Air Force Academy, two from the Naval Academy and one from West Point. The classes now are about 350 students. If I remember correctly, the Air Force paid about $4,000 per year for my out-of-state tuition. Of course, the entire Air Force Academy only cost $140 million in the late 1950s, including overruns. Now, an F-22 Fighter Jet costs $143 million, or was it 413 million.

The conference was followed on the week-end by news from the European front. Francois Hollande won the presidency of France and advocates a growth policy by stimulus spending and higher taxes. Those two ideas seems somewhat opposed to each other, particularly when France's debt is humungous and France appears to be the next basket case after Italy succumbs. Greek threw out the 'austerity parliment'. France has the world's fifth largest economy behind the U.S., China, Japan, and Germany.

Countries debt as a percentage of their Gross Domestic Product (source Wikipedia 2011):

As best I can deterimine, from 2001 through 2008, U.S. debt increased about 4.6 Trillion; from 2009 through March 31, 2012, U.S. debt increased about 5.1 Trillion.

I don't understand why Spain is in a Great Depression with 25% unemployment. Their debt load is relatively low. The G-8 conference seems to have pushed the Germans/European Union to do some stimulus spending. Keynes said save in good times and spend in bad; you see the problem there, governments rarely save. Milton Friedman said its all about the interest rates and the money supply, particularly M1 and M2; unfortunately it doesn't seem to be that simple. These will be interesting economic times.

California has the world's eighth largest economy and an official unemployment rate of 11.1%. Today's has a cartoon of California as the skeleton of a cow picked clean to the bones and lying in the desert. From a higher education system that was the envy of the world in the 50's, 60's, and 70's, it has deteriorated to one that is hardly funded by the state and the students can't afford. The current projected deficit is 16 billion in a 90 billion budget. Governor Gerry Brown wants to raise taxes and rarely mentions retiree pension and medical care reform. And it would probably not matter with the Democratic Legislature.

We may have slow growth for quite a while, but the long-term prospects look good with our bountiful supplies of Natural Gas and recently discovered, estimated, two trillion barrels of Oil Reserves. North Dakota has full employment, Montana is doing well, and Kansas farmers are getting rich. So sorry I only asked for 30 years of mineral rights when we sold our farm to my brother in 1973. I doubt he will share.

Don't know if you noticed, but a recent, exhaustive study stated unequivocally that prostate cancer surgery does not save lives.

On May 21, 2012, the U.S. Preventive Task Force, a government advisory panel, ruled that PSA tests were not needed, regardless of age. The task force maintains that PSA tests do more harm than good. The task force maintains that medical procedures arising from the tests could have serious downsides, including blood clots, heart attacks, strokes and possibly death. Other complications include impotence and urinary incontinence. Of 1,000 men who are screened, at most, one man will avoid a prostate cancer death. Two to three will have blood clots, heart attack, stroke or even death from treatment of the prostate cancer. One in 3,000 men screened will die of surgical complication from the treatment.

None of the task force members were urologists. Urologists do prostate cancer surgery. The guru of prostate surgery, Dr. Patrick Walsh of John Hopkins University, does not agree with the recommendation, pointing to a 16% decline of men who had metastatic prostate cancer to bone since 1990. The National Cancer Institute estimates that in 2012, almost 250,000 new cases will be diagnosed and more than 28,000 prostate cancer deaths will occur.

By comparison in 2010, 31,513 people in the U.S. died from gun-related deaths and over 200,000 received non-fatal injuries from gunshots. Doonesbury's cartoon said that 270,000 have died in the U.S. from guns since 9/11.

My informed opinion is that if you have a history of family members that have died of prostate cancer before the age of 65, you should get the PSA periodically. If you don't have it at age 65, I think the PSA test every five years should be adequate. The age at which your father or brothers were diagnosed can guide your PSA requirements. I keep thinking of John MaCartney (class of '60) who was diagnosed at about age 60-61 and died at age 60-62. When I went through MDAnderson, the guy ahead of me was only 49. It seems that if you get it before age 65, it tends to be fast-growing. I was diagnosed at age 72 and was projected to live to 82 if I did nothing. The Loma Linda Proton Chief told me, however, that the last two years would have been bad.

On a lighter note, I have two sound-bites for the situation: