You know you've been in law school too long when...

You start dreaming about lectures you never attended and arguing with professors who you never had. I won't go into the gory detail but I had a very vivid dream of sitting in a class and arguing with Professor Skover about, of all things, the subject of creativity. Wierd.

Tidbit: sore glutes and achy thighs

It was a pretty busy weekend involving a visit by a fraternity brother currently living in California and a super-half marathon.

The visit from the fraternity brother resulted in two late nights and a realization of how old we are, or conversely, how young we once were. Anyway, it was a great break from the doldrums that normally define my weekends and involved drinking, Guitar Hero, and a trip to Cowgirl Inc (a bar whose concept I don't get - if you have seen the movie Coyote Ugly than you have a pretty good idea of the place: packed, full of men staring at women dancing on the bar, and bouncers pushing you around. Some of my friend love the place but I just don't get it.)

Despite late nights on Friday and Saturday, I woke up at 5:45 Sunday morning so that I could run a half marathon at 7 AM. It was an experiment by Nike to allow users of their Nike+ technology (their partnership device with the Apple Ipod) to run a marathon in conjunction with the Women's Marathon in San Francisco. The event was coordinated by the great running store, Road Runner Sports. The store staff hosted the event, mapped out a course, provided us with aid/water stations on the course, and made the marathon seem like more than just a training run. The event, however, wasn't very well publicized and only 6 or 7 people showed up to run Sunday morning. The store manager has said 20 or so signed up. Despite the attendance issue, it was a great event with one little caveat.

I called it a super half marathon because of a mistake by the course planner that made the 13.1 mile course into a 15.1 mile course. So, it was a half marathon plus 2 miles. I had thought something was wrong when I realized before the turn around that I had already ran 6 miles and I still would have to do 6 miles back and run a 2+ miles loop around Greenlake. Regardless, I ran the whole course (I came in 1st by the way) and mentioned to the store manager that I thought the course seemed long. He cheerfully admitted to me the mistake. It was a pretty funny in retrospect. In the end, I managed to do it a little over 2 hours and averaged a 8.25 min/mile pace. Not to bad for my first super half marathon and it came with a Nike t-shirt and Tiffany key chain for my wife.

.com.bust

There was another article in the NYTimes about the resurgence of cash flowing through Silicon Valley (and other location of the high tech economy) flooding over internet start ups that don’t have revenue models to speak of. It poses two possibilities, one a return to the irrational exuberance of the late ‘90s before the .com bust or a sensible investment strategy as capitalists position themselves to be part of the largest market ever known to man.

I for one am an internet optimist. I use this media everyday from blogging here, to researching, to reading the news, or engaging in debate on various forums. The massive amounts of content generated everyday by users in mind boggling. Surely, there has never been a time in our history where the volume of human creation was higher then now with the advent of video, blogs, podcasts, news articles online and the terabytes of data being generated daily. (The quality of these human creations, however, is another topic that I will address later.) The capitalists are right to see this burgeoning phenomenon and recognize the force it has on the economy. To ignore it would be negligent.

The fundamental technology and infrastructure is different then it was in the ‘90s. The speed and capacity of the internet has grown exponentially since the turn of the millennia. Businesses now have the ability to push and pull amazing amounts of data around the net allowing for more and more sophisticated applications that can assist us in enumerable ways. Further, the reach of the net is expanding so that we are no longer tethered to our desks or laptops but can access the net from an increasing variety of advanced and increasing portable devices. Thus, the internet, as the market for information and customers is, indeed, the future.

Despite the existence of this new technology, however, commerce is still, and always will be, the same. Goods and services will always be exchanged for some price and that price economically, remembering back to Econ 101, will be set where the supply and demand curves intersect. I find the concept of commerce, however, best explained in the psychological term of “value perception”. Commerce will always be fueled by perceptions of value. For example, early on in man’s existence, I assume, that someone who had meat but not shelter would value shelter higher than meat. They would search until they came across a person with excess shelter but a grumbling stomach. Then, given the value placed on each good by the other party, they would make an exchange; meat for shelter, shelter for meat. This exchange of value still persists today although facilitated with the exchange of money. For example, I go into McDonald’s with a number of dollars in my pocket. McDonalds has a number of McChicken sandwiches on their shelves. They value the dollar in my pocket more than the McChicken sandwiches on their heat rack and I value the McChicken more than dollar in my pocket and so we make an exchange. If these values were ever equal or switched, we would never engage in commerce. Thus, commerce still depends upon value perceptions (There are a lot of economics behind how value is created and earned and distributed and takes up thousands upon thousands of pages, but for moment I’ll just focus on the high level concept).

The basic problem with the internet is that most of the content is pretty worthless, aka lacking value. When I think of all the sites generating content that I go to on a daily basis; Google, HBO, Blogger, MySpace, Facebook, various podcasting services, etc… I have to question if anything they produce has much value.

In aggregate, I think they do. I go to these sites almost daily and I would not do so if I didn’t enjoy them, if I didn’t place some value on their content. But, if I had to pay for it, would I, what price would I place, where would the supply and demand curve intersect? If Google charged me to blog I would probably stop. If HBO charged me to read and comment I would spend more time studying for law school. If MySpace charged, well, I would just have human interaction again. If I did pay, I would probably only give pennies and thus, if I were the source of income, they would need billions of me to make any sort of profit. Yet, in an increasing bifurcated consumption model generating significant volume is the biggest challenge of all. End the end, all these sites do is generate viewer-ship, they produce hits, and the only consumers who values viewers more than the dollars in it’s pocket are advertisers.

Which is why the revolution of commerce some have promised with the internet has failed to occur. The internet, thus far, has only managed to provide an audience for advertisers, this is not revolutionary* (*the internet has also done great things at providing a new forum for traditional transactions – think Ebay or Costco.com, a new sales channel, yes, but hardly a great new economic society). Ultimately, this just means that customers who were previously spending money on traditional sources of viewers like television, radio and print are just moving to this money to new, more profitable forums. More profitable, yes; more efficient, perhaps; larger markets, possibly; yet, in a rational world this does not explain why Google is a $600 stock with revenues 1/36th of IBMs or why Facebook should be a billion dollar acquisition.

The resurgence of companies without revenue models and the millions pouring into them is and is not troubling. The internet is a powerful media that will be the most important marketplace during my lifetime. Companies involved in creating and expanding this new market need to grow and foster new capabilities and if investors ignore them is at their and our own collective peril. Yet, commerce is still commerce. It will always be driven by value exchanges and so far the only value the current crop of internet companies seems to know how to create is for advertisers. I have no doubt, that somewhere, there is a revolutionary who will un-tap a new source of value from the internet, but I also have some fear that if this current bubble of exuberance bursts that this revolutionary might crushed by the stampeding investors out of the marketplace.

The $2000 bag of saline.

Over on HBO, like other places in cyberspace or the local coffee shop, there is a good deal of discussion around the issue of health care. Between the unveiling on Hilary-Care redux bringing the topic back into the presidential race or the recent veto by President Bush of S-CHIP, it seems to be forefront in our collective minds right now. The debate rages between those who believe that our system of health care is the greatest in the world and the intrusion of government will only ruin it to those that believe that we are mired in some sort of dark age of humor treatments and leeching and that we need government to swoop in and safe us all. The truth is, we are somewhere in between. Our medical system is still the best in the world in some respects, high end surgery and expensive cancer treatment, and bottom of the pack in others, ER care and primary care services.

Of course, this debate is rather remote for most of us who have insurance and are healthy. It isn’t until you get sick and have to interact with health care system that you can see that there truly is a problem.

Recently, my wife got sick. Nothing life threatening, just a simple flu that had her bed ridden for a week where she was unable to go to work, eat much of anything, and left her in a general state of misery. After about 6 or 7 days of dealing with it, she finally gave in and decided to seek assistance from our much vaunted medical establishment. We made an appointment and went to see a doctor at one of the various Swedish operated medical centers around Seattle. Having insurance, we went to the upstairs clinic with an expansive waiting room littered with the latest magazines and a separate play area for the tykes. We didn’t wait long before we saw a fresh young doctor who, after 10 minutes, decided that the case might be serious and he sent us down the ER for tests. We left the posh upper floor of the hospital where the clinic resided next to a state-of the-art heart institute with plush leather chairs, new carpet smell, and crisp metal signage to the bowel of the hospital. The ER was quite the contrast. It was old, dingy, there was a faint smell of urine in the waiting room, and the all the signs were simple printed pieces of paper. Here in the ER, we waited for three hours before being seen by a nurse and subsequently, a few hours later, a doctor. The treatment cumulated in a saline IV, a couple tablets of potassium, and a prescription.

The whole ordeal took about 8 hours. Of course, about 20 minutes of that was spent with doctors, about 30 minutes with a nurse, and the rest was just waiting. So, over 7 hours of waiting for 50 minutes of healthcare. We recently got our bill and before insurance that total was over $2,000. Of course we pay only a fraction of that, around $600, but I’m puzzled by those that say that our system of healthcare is okay when it takes 8 hours and $2000 to administer an IV of saline. I ask how much lower could their standards be? Do they really fear government that much that they would choose this over upsetting the status quo?

Of course, I’m sure there is a lot more to this $2,000 bill than simply the IV and the 50 minutes of labor we saw. There are behind the scenes tests, administration, and the Dr and staffs do work on patient files, etc… And, as we were setting in a bed in the hallway since all the rooms were full, we could see that nurses and doctors spent a lot of time dealing with a computer problem as they all stared puzzled at the digital board (a 60 inch plasma on the wall that listed all the patients in the ER, etc.) and said, “Can someone call the EPIC people, the system isn’t working right.” Of course, the computer isn’t a patent, but I’m sure the patients were charged for the time. And then, of course, there are overhead expenses baked into the bill and the fact that bill is marked up to cover non-payments and shortcoming from the Medicare system. In fact, that $2,000 bill probably really doesn’t have any connection to cost realities of treatment at all.

Regardless of how academic the $2000 bill is, it doesn’t really matter because the hospital knew it would probably never see that much anyway when it created the invoice. It knows that when it sends it to my insurance carrier or to Medicare that the bill will be negotiated down (usually subject to previous negotiated terms between the carriers) to a lower amount. In fact, the only person who would ever have to pay the full $2000 is someone who had no coverage at all and, in all likelihood, would be the person in the system the least likely to be able to afford it. As it was, the insurance company paid their portion, the hospital reduced the total bill by a similar portion, and we were charged the difference, the $600 bucks.

Now, for us, $600 bucks isn’t pocket change, but we can pay it without any change in our daily lives, but what about those who are not so fortunate. I can only imagine someone who lives pay check to pay check that probably doesn’t get sick day and how they would be in a similar situation (if she had health insurance). They might be faced with a $600 dollar bills in addition to a week from work without pay and now they have to make a choice between the mortgage and their hospital bill. Something as simple as a bag of saline could throw a life, already on the edge, into havoc. This is our vaunted health care system, should something not be done?