Small Business Suffers: The Riots, Past and Present



NatalieDubose

Small business owner Natalie Dubose saw her bakery destroyed by looters during the Ferguson riots. Help her out here: http://www.gofundme.com/hsivb8

Several years ago, I wrote an article for The Independent Review on the urban riots of the 1960s (and the Rodney King riot of 1992). Watching the events unfold in Ferguson, it seems those in charge of riot control learned nothing. Once again, the victims were small business owners—many of them African Americans (as was the case in the 1960s). Civil leaders held the police and Guard back, apparently following the same old “it is better to let them loot than shoot” policy. Belatedly, the Guard was posted at the stores that are usually rioted: pharmacies, liquor stores, etc.

Read my Daily Caller essay for a discussion of victims of looting and arson in Ferguson.

The response from law enforcement on Monday night was baffling, given the very realistic expectation of looting. Here is an excerpt from a Reason.com article:

When asked if he had been unprepared on Monday night, Captain Ron Johnson of the Missouri State Highway Patrol said that, “none of us could have imagined last night would be what it was...we’ve never seen anything like this.” I’m guessing the man isn’t getting much sleep these days, but it’s fairly alarming that the on-scene commander of the Highway Patrol wasn’t familiar with, or hadn’t taken any lessons from, past instances of unrest following controversial and racially divisive judicial decisions.

On Tuesday, Governor Nixon announced he was tripling the number of troops responding, and their presence was quite visible. National Guard troops also played a different role than they did the night before, with soldiers actually going into crowds of protestors to make arrests. Troops were also stationed in front of businesses on at-risk roads—something the already looted/burned businesses would have no doubt appreciated the night before.

“Cadillac Tax” Will Hit 38 Percent of Employers in 2018



healthcare_categoryThe “Cadillac tax” is the excise tax on high-value health plans, which goes into effect in 2018. If the value of health benefits exceeds $10,200 for an individual or $27,000 for a family, the excise tax will be 40 percent.

A new report from the American Health Policy Institute breaks down the effect on employers. As well as concluding that the Cadillac tax will hit 38 percent of employers in 2018, it estimates that the average employer-based policy will be subject to the tax by 2031.

There is no doubt the Cadillac tax will put an administrative burden on employers, and reduce the attractiveness of employer-based benefits. On the other hand, as the AHPI report notes, the Cadillac tax will cause employers to increase workers’ wages in exchange for reducing health benefits. Indeed, the Congressional Budget Office anticipates that 75 percent of the revenue due to the Cadillac tax will be from income and payroll taxes due to wage increases, and only 25 percent due to the Cadillac tax itself.

Notwithstanding the tax hike, shifting workers’ income from benefits to money improves their welfare, because workers are free to spend their money on whatever they like. Also, the current exclusion of employer-based benefits from taxable income is a “tax expenditure” of over $785 billion over the next five years.

That is not a subsidy, as some assert, because it only reduces people’s taxes. It doesn’t get paid out to people who do not pay taxes. However, it does create a hole in the Treasury that prevents other tax cuts.

Is it fair to give employees an unlimited tax break if they get health benefits from an employer, but not if they choose their own health insurance? And while a plurality of citizens probably accept that a certain amount of health spending should be tax free, should it be unlimited?

Most free-market health reformers reject this notion, and they include some type of Cadillac tax in their reform plans, in exchange for a fairer tax benefit.

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For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book: Priceless: Curing the Healthcare Crisis, by John C. Goodman.

Will Obamacare Hit Its Enrollment Target?



ObamacareScreenHartWebThe media seems to think that Obamacare’s second open enrollment is going just swimmingly. (How could it be going worse than last year’s?)

Unfortunately, the Obama administration still isn’t counting last year’s sign-ups accurately. Jonathan Cohn of The New Republic has called the administration’s over-counting of Obamacare sign-ups “inexcusable.” And that’s from one of Obamacare’s biggest fans.

What happened is that the administration counted 400,000 dental-only plans as Obamacare plans. On November 10, it announced that 7.1 million people signed up for Obamacare as of the end of October, but that included the dental plans. The correct number is only 6.7 million. And this figure was not disclosed by the administration, but dug out by Republican congressional staffers.

The Obama administration also announced that in 2015 it expects 9.0 million to 9.9 million people to enroll in Obamacare exchanges (which it mischaracterizes as “Marketplaces”). This estimate is a dramatic scaling back of the Congressional Budget Office’s estimate of 13 million, most recently confirmed in April.

Obamacare exchanges signed up 8.1 million people during the first open enrollment, which ended last spring. The figure dropped over 1.4 million by the end of October. So, having lost over 17 percent of beneficiaries from the first open enrollment, the administration expects to add one-third (2.4 million) more people to the diminished number of current beneficiaries.

To put it another way, the Obama administration has to drag the missing 1.4 million back into Obamacare, and then go on another Million Man March to hit the bottom of its target. Wall Street analysts believe that Obamacare enrollment will beat the administration’s target.

We will see.

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For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book: Priceless: Curing the Healthcare Crisis, by John C. Goodman.

Stores to Open on Thanksgiving—Don’t Complain.



open for businessOver the past several weeks, the standard litany of holiday media stories has begun. While there is always some fun in guessing which reporter will get stuck with the “don’t set your house on fire with the deep fryer” segment, other stories are far more troubling.

Around Thanksgiving and the start of the Christmas season, it’s not uncommon to see stories discussing the season’s meaning and the “corrupting influence of capitalism.” Nowhere is this corruption supposedly more apparent than the idea of retailers opening on Thanksgiving Day. Many national retailers like Macy’s, JC Penney, Best Buy, Target, and Toys’R’Us will open at some point on Thursday to kick off their Black Friday sales.

Opponents of retail sales on Thanksgiving claim that “forcing” workers to come in on the holiday is wrong. In fact, the idea of stores opening on Thanksgiving is so heinous that some lawmakers are calling for new rules and regulations regarding work and the holiday. The idea is to “protect” workers from the firms that employ them.

Mike Foley, a Democrat from Ohio and author of one such bill, stated that,

 “Thanksgiving Day is supposed to be a day when we retreat from consumerism....[Y]ou don’t think about the super blockbuster sales at Target....[If retailers take Thanksgiving Day as] an opportunity to make money or get above the black line, so be it. But the fact still remains that they have the responsibility to take care of their workers.”

All right, let’s talk turkey.

It is true that retailers who choose to open on Thanksgiving do so because they see the chance to profit. This desire to profit, however, is neither nefarious nor inherently evil. In fact, profits indicate that everyone in this situation is winning.

Retailers open on Thanksgiving and other holidays because there is a demand for their goods and services. Consumers benefit from having these retailers open their doors as they are able to buy goods and services. If the majority of individuals found it morally or otherwise objectionable to open on Thanksgiving, it would no longer be profitable for retailers to open on the holiday.

But what about the worker? Is she really being extorted by her boss for making her work on Thanksgiving? Hardly. Despite what you may have heard, working on Thanksgiving does not amount to modern day slavery.

In fact, workers may benefit greatly if their employer decides to open on Thanksgiving. They are still paid for their work, and since Thanksgiving is a federal holiday, likely receive overtime. In stark contrast to being a burden on employees, working on holidays may strongly appeal to some workers in need of additional hours and more cash. Working on the holiday may appeal to other workers who either do not have family in the area, or would jump at any chance to avoid seeing their relatives. For those retail employees who strongly prefer to have the day off, it’s not unlikely they can find someone else to take their shift or work out other arrangements to accommodate their personal plans.

Thanksgiving is a day when many of us spend time with friends and family. While we may prefer to be away from work, the same cannot be said for everyone. Calls to ban stores from opening on Thanksgiving may sound appealing. Lawmakers think they are protecting workers and punishing “greedy retailers.” But this view misses the fact that exchange benefits everyone, workers included. Prohibiting retails sales because we would personally object to working on a holiday would harm not just retailers, but consumers and workers as well.

I’ll Take Market Forces Over Government Force Any Day



Surveillance State cloudResponding to their customers’ increasing demand for privacy in the aftermath of revelations by whistle-blowers that the government is capturing and indefinitely storing every conversation, email, location, online transaction, and more, Apple, Google, WhattsApp, and others are developing new encrypted phones and services to thwart this now-universal warrantless spying.

Simultaneously, a bill that would have reined in the National Security Agency (NSA), was blocked in the Senate. The bill would have kept customers’ records securely with phone and internet companies, to be accessed by the government only when asked for, with cause.

Apple well knows that if it doesn’t produce a phone that will keep your conversations and transactions private, one of its competitors will take market share by developing and selling you one that will.

Your Senator, on the other hand? As has been pointed out by minds better than mine, the issues comprising a political platform are so many—a vast goulash of everything from foreign policy to hometown potholes—and your vote so insignificant, that the odds of your Senator knowing or having to care that you oppose NSA spying is negligible.

The government, needless to say, likes having all of our private information and communications in its hands, to be perused when and as it wishes, and it should be no surprise that its power to do so remains untouched by our “representatives” elected as its “check.”

In order to forestall encrypted phones actually making it into customers’ hands, Justice’s second-in-command is trying to play on stupid voters’ fears:

A child would die, he said, because police wouldn’t be able to scour a suspect’s phone,

Apple CEO Tim Cook responded:

Look, if law enforcement wants something, they should go to the user and get it. It’s not for me to do that.

Our Founders meant for our government to have to work to catch and prove suspected criminals guilty: it’s what keeps government on-task and relatively honest.

And, yes, the Founders meant this to apply to issues of national security, in which they, too, trusted market forces over government force.

Article I, Section 8 of the U.S. Constitution provides for Congress to issue Letters of Marque and Reprisal for the capture and bringing to justice suspected enemy combatants. Under this provision, “privateers,” essentially, entrepreneurs akin to bounty hunters, could at their own risk seek out, capture, and bring suspects to justice.

As Thomas Jefferson said:

“Every possible encouragement should be given to privateering in time of war.”

In the aftermath of the 9/11 attacks, we and others proposed this as the best means of quickly restoring Americans’ security: privateers, bonded to ensure that they follow the accepted international law, including the humane treatment of those who were taken prisoner, would be set the task of capturing bin Laden.

Plausible? Recall, for example, Ross Perot’s successful use of private forces to retrieve his employees from the clutches of fundamentalist Muslims in Iran in 1979—as contrasted with the debacle of the U.S. military’s attempt to rescue its government employees.

How much sooner, then, would bin Laden have been apprehended, and at what tremendous show of American ingenuity, had privateers been allowed to operate? The decade that it took the U.S. military to find him—or days or weeks?

And at what savings of innocent lives, destroyed countries, “blow-back”?

So think about upon whom you would rather depend for your safety and security: private providers competing to create and market innovative new means of keeping you safe and secure; or political rulers who get more power and more money the less secure you feel—and invoke the specter of dead children as their favored marketing tool?

Are government functionaries right? Are we stupid? If not, let’s demonstrate it by wising up and withdrawing our consent. Ultimately, that’s all movements like the Fall of the Berlin Wall and today’s Hong Kong protests are. Speak out against NSA spying, opt out of TSA’s naked scanners, demand and buy encrypted phones, networks, and apps. Tell your friends and colleagues that the government is not here to help them, it’s here to help itself, and back it up with stories showing this to be so. We have plenty, and there is no lack of others, especially in our Information Age—at least as long as we resist “net neutrality“.

Students Won’t Be Collateral Damage in California Big Spenders’ Showdown



imagesThere’s a showdown brewing in California’s not-so-OK Corral—make that the UC Corral—and students are fed up with being the ones caught in the crossfire.

It started back in 2012 when Gov. Jerry Brown threatened to slash state funding for California’s ten University of California campuses unless his Proposition 30  (also known as the “Millionaire’s Tax”) passed. The UC Regents fired back, complaining that slashing funds would compel them to hike tuition some 20 percent mid-year—about $2,400.

The massive tax hike passed by more than 55 percent, and Sacramento’s coffers are brimming at $108 billion, with another $3 billion surplus projected for next year. In return, UC officials froze tuition—until this week, that is.

The UC Regents, led by UC President Janet Napolitano, say their share’s not big enough, and they want more of the spoils. So they voted to hike tuition 5 percent annually over the next five years unless they get more state funding.

This latest political skirmish amounts to two big-government spenders squaring off about which pet projects deserve more funding from hard-working taxpayers—while (disingenuously) claiming that all this contention is about students.

First, let’s look at Proposition 30. Technically dubbed “The Schools and Local Public Safety Protection Act of 2012,” college students statewide staged protests in support of the measure—only to learn after its passage that it would actually do little to keep tuition and other out-of-pocket costs down.

Subsequent analyses have also indicated that Proposition 30’s main goal is helping keep Gov. Brown’s big government, big union regime solvent—not about keeping a college education affordable.

For a variety of reasons, the Proposition 30 personal income tax (PIT) funds exceeded initial projections (p. 21). Yet California’s Legislative Analyst’s Office (LAO) notes that given the growth of high-earners’ incomes, PIT revenues would have increased anyway, making the seven-year tax increase fiscally unnecessary (p. 23).

Proposition 30 also never guaranteed funding to California universities, although the governor’s budget did include $250 million for the UC system for 2013-14. What’s more, Proposition 30 actually isn’t about education at all. According to an analysis of the final 2014-15 budget by the California Senate Republican Caucus:

The Administration says that all Proposition 30 revenue goes into a special account used entirely to fund education, which is true. However, what it fails to say is that these special funds offset state General Fund that would have to be spent to meet the Proposition 98 guarantee even if Proposition 30 revenue did not exist, thereby freeing up that same amount of General Fund for non-education uses. It is a classic shell game. (p. 16)

So where’s the money going? The Caucus report explains that:

...the Governor continues to direct much of it toward other priorities, e.g., to eliminate state employee work furlough days and fund salary and benefit increases ($650 million), increase pension contributions for PERS and CalSTRS ($600 million), to grow health and human services spending (about $800 million), and build a reserve ($1.6 billion). (p. 16)

But California universities aren’t hapless victims here, either.

A host of uncompetitive practices and habits have made them far too dependent on government. When government funding falls short of hoped-for funding levels, officials stick students with the bill. The UC system is a case in point, as the Wall Street Journal’s Allysia Finley explains:

Ms. Napolitano says that the UCs have cut their budgets to the bone, yet her own office includes nearly 2,000 employees—a quarter of whom make six-figure salaries. An associate vice president of federal government relations earns $273,375 a year, plus $55,857 in retirement and health benefits, according to the state controller’s office. Thirty professors at UC Santa Cruz rake in more than $200,000 in pay, and most faculty can retire at 60 and receive a pension equal to 75% of their final salary. More than 2,100 retirees in the university retirement system collected six-figure pensions in 2011.

Neither the UCs nor their employees contributed to their retirement fund for 20 years; the assumption was that they could ride the booming stock market. Now the fund is $10 billion in the hole.

Bureaucratic bloat is nothing new in higher education, but the failure of lavishly paid, taxpayer-subsidized employees to save for their own retirement and expecting students and taxpayers to do it for them is a problem squarely of Gov. Brown’s own making, since he’s the poster person of unionized labor retiring on someone else’s dime. UC Prez Napolitano is not much better since she’s shaking down students for the same reason—just on a smaller scale.

Here we have a perfect storm of perverse incentives that no punitive tax increases, kick-the-can-down-the-road tuition-freeze schemes, or political pandering can weather. The reason is simple: none of these ploys addresses the root cause of out-of-control college costs. And politicians like Brown and Napolitano know it. As Finley continues:

‘We just know for a fact that if you can always get more money, you will look to the money rather than to alternative spending practices,” California Gov. Jerry Brown explained two years ago in an interview with University of California students. This inadvertent moment of candor occurred while the governor was campaigning for a giant tax hike (Prop. 30) that has now put him in a jam.

And that, in a nutshell, is why no amount of money will ever be enough to keep monopolistic, unaccountable bureaucracies solvent—whether we’re talking about the halls of government of the Ivory Tower. Finley speculates that:

Perhaps what most angers Mr. Brown and his fellow Democrats in Sacramento is that the regents have exposed the cynicism of the politicians’ own campaign to raise taxes and made it much harder for them to rally students to do so again.

Based on the reaction of several UC students before the vote, she’s right. One student comment pretty much sums it up, as UCSB’s Noah Brennan-Greenbaum reported in the Daily Nexis:

Sebastian Cano, a student at UC Davis, said he feels the Regents... “have failed in your mission to provide affordable education for many of our students who want to provide a better future for themselves... we are planning on organizing boycotts on all the Regents’ private businesses...We would also like to organize a recall against Mr. Governor over there.”

California college students versus Big Labor’s big leaders. Now that’s a showdown worth watching.

 

Right-to-Try Laws Now in 5 States



21096315_SAfter this month’s elections, the number of states that have “right to try” laws for experimental drugs has hit five. One in ten states: Not bad for an effort run out of one think tank in Arizona.

However, I have seen no evidence that any manufacturer of an experimental drug is taking advantage of these laws to supply medicines to desperately ill patients in these states. This is understandable: Doling out the medicines to needy patients threatens the sanctity of clinical trials and, therefore, FDA approval.

Congress needs to reform the rules governing the Food and Drug Administration to make use of more real-world evidence in approving new medicines (as described in a recent book by Peter Huber, The Cure in the Code). This is statistically challenging and not to be undertaken lightly. Nevertheless, if more states pass “right to try” laws, I expect that Congress will see the necessity of taking action to relieve the pain of patients suffering needlessly from FDA’s regulatory burden.

The Anachronistic 1979 Oil Export Ban



3734158_SPolitical pressure is building to repeal the 1979 ban on U.S. exports of crude oil to the rest of the world. I blogged on that issue recently in Inside Sources, which was picked up by Orangeburg, South Carolina’s Times and Democrat. Other blogs on that policy issue are forthcoming.

Several reasons for lifting the export ban are evident to anyone who grasps the benefits of free international trade, but the most compelling of those is that the United States now produces more crude oil than it has the capacity to refine, while the refining capacities of other nations exceed their domestic oil supplies. The potential gains from trade could not be more obvious to anyone who has taken Econ 101.

President Jimmy Carter signed the Export Administration Act in 1979, a time when OPEC ruled the global crude oil market. Now that the United States is the world’s leading oil producer, it makes no sense to ban exports of crude oil to nations other than Canada, which is required to process all U.S. crude into gasoline and heating oil and to consume all of it in what some people other than me refer to as our 51st state.

World prices will be lower and less volatile if we can participate directly in the international oil marketplace.

Always Look on the Bright Side of Life



rationaloptimistThe twenty-first century will be a magnificent time to be alive. Dare be an optimist.” —Matt Ridley

On November 12, 2014, the world watched with excitement as another historic human achievement unfolded: After a decade-long journey that covered 4 billion miles in space, the first human spacecraft landed on a comet. This remarkable event is just the latest in the story of human progress and advancement.

In the modern era, when new cycles are driven by “if it bleeds, it leads” and naysayers continue to insist that things are getting worse, it is easy to lose heart and think we are living a world descending into violence, stagnation, bigotry, and [insert your choice of social ill]. Too often, pessimistic voices and sensationalism drown out sober thinking. Dartmouth College economics professor Douglas Irwin noted in the Wall Street Journal earlier this month of another major humanitarian accomplishment that did not make the headlines:

The World Bank reported on Oct. 9 that the share of the world population living in extreme poverty had fallen to 15% in 2011 from 36% in 1990. Earlier this year, the International Labor Office reported that the number of workers in the world earning less than $1.25 a day has fallen to 375 million 2013 from 811 million in 1991.

Such stunning news seems to have escaped public notice, but it means something extraordinary: The past 25 years have witnessed the greatest reduction in global poverty in the history of the world.

A careful review of facts shows that public perception is often out of sync with reality, particularly when long-term trends are taken into account. Matt Ridley’s excellent book The Rational Optimist tells the uplifting side of the story. In his remarkable synthesis of history, evolutionary biology, anthropology, and economics, Ridley presents a very strong case that life is getting better, at an accelerating rate, for all peoples across the world. More than any other factor, Ridley credits the emergence of trade and specialization as the main drivers of cultural advance and material progress. As a result of exchange and the division of labor, innovation was facilitated and encouraged. The best ideas were able to come together to “meet and mate.”

Around 100,000 years ago, when humans began sharing a “collective brain,” “culture suddenly became cumulative, and the great headlong experiment of human economic ‘progress’ began.” In Ridley’s view, “the cumulative accretion of knowledge by specialists that allows each of us to consume more and more different things by each producing fewer and fewer is ...the central story of humanity.” Looking back at the grand enterprise of human history, disease retreated, poverty declined, violence fell, freedom expanded, and individual happiness increased. Fast forward to modern day, even when accounting for the hundreds of millions who still haven’t experienced all the benefits, what people enjoy today weren’t available to the most powerful and wealthy from the past:

[T]his generation of human beings has access to more calories, watts, lumen hours, square feet, gigabytes, megahertz, light-years, nanometers, bushels per acre, miles per gallon, food miles, air miles and, of course, dollars than any that went before. They have more Velcro, vaccines, vitamins, shoes, singers, soap operas, mango slicers, sexual partners, tennis rackets, guided missiles and anything else they could even imagine needing.

One can only wish this side of the story were better known. But luckily, as another hallmark of the Digital Age, virtual libraries of information, ranging from classic works of literature to complete economic treatises to the latest scientific research, is freely available to anyone with access to a computer and Internet. Many top universities now offer free online courses taught by renowned professors. Education and self-edification have never been easier.

Building upon the work of Matt Ridley, the Cato Institute project, HumanProgress.org, is another great resource that documents improvements in human well-being and advancements in technological and scientific progress that make the world an increasingly better place to live. This multi-disciplinary endeavor brings together a wide array of evidence from academic institutions and international organizations that shows positive trends in numerous categories.

Consider the following:

Health:

Wealth:

Violence:

  • War is increasingly rare and less deadly.
  • Rape and homicide have been on the continual decline and are presently at historic lows.
  • Capital punishment is being used by fewer and fewer states.

Workplace:

Increased tolerance & equality:

As we celebrate Thanksgiving this year with our family and friends, we have much to be thankful for. Earlier this week, I purchased $4.99 rotisserie chicken from Costco. I couldn’t help but feel grateful and marvel that what I do for granted is possible only under globalization and the twenty-first century market economy. For most of human history, obtaining enough food just to barely survive was the primary aim of everyday life for many people. Life was, as described by Thomas Hobbes, “nasty, brutish, and short.” But thanks to the adoption of specialization and exchange, the massive boost provided by the Industrial Revolution, and the widespread embrace of Enlightenment ideals, the course of human civilization was forever altered in a direction that brought liberation and allowed people reach their full potential.

Yes, sailing was not smooth in the past two centuries. Liberalism declined, statism resurged, two world wars were fought, democide and many other unspeakable atrocities were carried out by totalitarian regimes. Their enduring consequences still pose many challenges for us today. Obviously, there still remains much more to be accomplished.

But in our short time on Earth, we humans learned to master nature, overcame the worst tyrannies, and generated wealth and prosperity beyond our ancestors’ imagination. Our species is resilient, resourceful, and innovative. I, too, consider myself a rational optimist and hold high hopes for human civilization in building a bright future.

Your Kaiser Permanente Doctor Will See You Now—At Target



indexI am a pretty severe critic of hospitals. Nevertheless, I like innovation wherever we find it happening, and it is happening in some large systems:

In a move that reflects the increasing wave of consumer-driven healthcare, Target Corporation is teaming up with Kaiser Permanente to open four in-store Target Clinics in Southern California, taking a host of services directly to thousands of customers.

The clinics opened at Target stores in Vista, San Diego and Fontana, and a fourth clinic will open in West Fullerton Dec. 6. They will be staffed by nurse practitioners from Kaiser.

While Target has maintained clinics for the past 10 years at a number of stores, the partnership will allow for a much broader array of services than it typically offered at retail outlets. Expanded services include telemedicine consultations, prescription reviews, pediatric primary care visits, OB-GYN services, vaccinations and flu shots, pediatric and adolescent care and management of chronic illnesses like diabetes and high blood pressure, according to John Holcomb, vice president of healthcare for Target. (Dan Verel, MEDCity News)

I have not been to one of these Targets, but I saw something similar in Charlottesville, Virginia, last weekend. I went to the Walmart and saw one of those convenient clinics that we like (because of their transparent pricing and—well—convenience). However, it was not operated by a national chain of convenient clinics, but Augusta Health, an integrated health system based in the Shenandoah Valley. Like other convenient clinics, it offered a range of services for listed, reasonable prices. I learned that Augusta Health had teamed up with Walmart in the Shenandoah Valley in 2011.

I also like independent physicians. However, when those physicians gripe about convenient clinics and try to block their expansion, they let an opportunity go by—one that large health systems are learning to exploit.