Fairy Tales and Fraud

 The amount of media attention that the 29 year old barista turned freshman Congresswoman Alexandra Ocasio Cortez has garnished since beating establishment Democrat Joe Crowley has been astonishing.  No other politician in memory has gotten as much exposure this quickly, with a gaggle of reporters hanging on every word, as AOC exhorts and pontificate America into revolutionary change, and hectors her opponents.   Her bold proposals include a 70% tax rate on the “tippy tops” and the elimination of ICE.   Her outlandish ideas have drawn responses from such figures as Alan Greenspan.   Her reasoning, rhetoric, and demeanor is more like a 12 year old than a 29 year old, yet here she is, confidently grabbing the bullhorn and telling America that she knows how to remake the American economy. 

AOC released her blueprint for her Green New Deal plan and within hours, several leading Democrats endorsed it.   After claiming that the world is going to end in 12 years due to climate change, her Green New Deal includes such radical ideas such as rebuilding every single building in the U.S.,  getting rid of cows (due to flatulence), building enough rail to make air travel unnecessary and providing guaranteed income for anyone unable or unwilling to work.   Under the Green New Deal, AOC envisions that of planes, trains and automobiles, Americans only get to keep one.  She brushes aside criticism with inane and senseless comments such as, “We have to invent things that haven’t been invented yet,” and “you just pay for it.”

Several Democratic leaders such as Cory Booker and Kamala Harris rushed to embrace the Green New Deal.  Liberal commentators such as Jessica Tarloff, could not defend ANY of its specifics but praised its “spirit.”

Republicans roundly ridiculed it, and even some sober Democrats distanced themselves from it.  Less filtered commentators were more blunt.  Ben Stein flatly opined, “She [AOC] doesn’t know her a**hole from her elbow.”

The advent of AOC echoes of another attractive young woman that burst onto the scene, with a bold “vision,” claiming she would change the world--- Elizabeth Holmes.   Like AOC, Holmes was pretty, energetic, brimming with confidence.   And like AOC, Holmes had charisma and charm.    Holmes was able to convince respected figures such as General Mattis, George Shultz, and a number of Walgreens executives of her entrepreneurial acumen.  Holmes and AOC both share an inflated sense of their own historical significance.  Carreyrou said of Holmes, “What Elizabeth had just said confirmed their armchair psychoanalysis of their boss: she saw herself as a world historical figure.  A modern day Marie Curie.”

Holmes dropped out of Stanford after her freshman year to start Theranos, and similar to AOC, had little real world experience and insufficient scientific background to undertake a truly rigorous scientific and engineering leadership role.   Like AOC, the MSM gushed over her.  So eager was the press to anoint this little starlet, all but one (John Carreyrou) failed to ask fundamental questions about the device’s efficacy.   The adoration of AOC is quite unprecedented, given her singular lack of achievement, yet Netflix is wiling to pay $10 million for a documentary on a woman whose New Green Deal would not be deemed substantive enough to win a grade school science project.

The profile and grandiose visions of these two women are hauntingly similar.

Holmes hurt a lot of people with her fraud—a vision that was unanchored by any reality:  investors, creditors, employees, and the reputations of some executives at Walgreens.  One employee even committed suicide as a result of her actions.   But the scale of the damage she wrought was limited.  Her investors lost $700 million and creditors a few hundred million more.  All her employees will eventually be re-employed.  AOC seeks to put at risk the entire U.S. economy, commandeering trillions of dollars of resources and the well-being of over 300 million people.

After the Theranos case, do we really want to wager Western Civilization on AOC’s vision and ability?

I leave you with a contrasting vision—that of Janis Powers.  Powers, a health care consultant, has just written an intriguing book, Health Care: Meet the American Dream, in which she proposes a major overhaul of the health care system that takes government and health insurance companies out of the business and replaces them with the Dream Plan, the cornerstone of which is the LHCP, an investment account used to pay for an individual’s health care. She envisions using genetic testing and other data points to assist in estimating the costs of an individual’s health care needs.

Powers supplements her plan with her podcasts (The Powers Report) that I highly recommend.  The undergirding of her approach, which she puts right out front in her first podcast, is her conviction that any successful transformation of the health care system must meet two criteria: (a) financial viability, and (2) behavioral incentive alignment.

I intend to re-read and study more closely Powers’s proposal.  But from the outset, Powers, unlike AOC is anchored in reality.  The two criteria that Powers puts forward in order to overhaul the health care system are completely absent in AOC’s Green New Deal.  And, unlike AOC, Powers has deep first hand experience in the health care delivery system.  AOC has limited experience and most of that has been in mixing and serving drinks, and not in energy or the economics of energy.  Powers does not take a fanciful approach, but rather a hard and realistic look and an enormously complex problem.

Is Powers’s proposal viable?  I don’t know, but it is worth examining.  It will require close scrutiny and modeling. I suspect it comes down to the math.  It is an ambitious and visionary approach, but unlike AOC’s Green New Deal, it is grounded in reality and spun out with specificity.

Powers understands that bold proposals are bounded by math (finance), science, and human nature.  If you don’t recognize those boundaries, it’s either fairy tale or fraud.