web analytics

Archive for October, 2012

The US Anti Doping Agency on October 10 made public hundreds of pages of documents of evidence including financial payments, emails, scientific data and laboratory test results that further prove the use, possession and distribution of performance enhancing drugs (PEDs) by Lance Armstrong and the US Postal Service team that won seven Tour De France crowns. Included was testimony given by eleven of his teammates that Armstrong and the other riders used steroids and growth hormones. Further, they performed transfusions of their own blood in a well organized program to enhance their performance over the grueling three week event. Despite hundreds of tests performed in and out of competition over many years, these men evaded detection. How did they do that?

History of Performance Enhancing Drug usage

Doping in sport is not a new phenomenon. Ancient Olympians were reputed to eat a lizard meat that provided a special edge. The popularity of endurance sports at the turn of the 20th century gave rise to open usage of various substances, including cocaine, that might keep competitors upright. In the modern Olympics, the winner of the 1904 marathon was given brandy and strychnine by his coach during the race. During World War II, US soldiers and airmen were routinely given amphetamines in order to better endure long hours in combat operations.

Steroid usage in sports was first utilized by East German weightlifters in the late 1940s and was later expanded to swimmers and track and field athletes. Following widespread calls for action,  the International Olympic Committee finally banned PEDs in 1967. Enforcement was inconsistent until athletes, sports governing bodies and international organizations formed the World Anti Doping Agency (WADA) in 1999 to codify what substances were to be banned and to administer uniform testing methodologies for possible violations.  As the creators of PEDs continue to improve their sophistication, potency and transparency, WADA and its constituencies also innovate new ways to detect these drugs. It publishes an updated “Prohibited List” annually. Because WADA is unable to anticipate all possible new developments, the first page of the list states

“Any pharmacological substance which is not addressed by any of the subsequent sections of the List and with no current approval by any governmental regulatory health authority for human therapeutic use (e.g drugs under pre clinical or clinical development or discontinued, designer drugs, substances approved only for veterinary use) is prohibited at all times.”

What drugs/procedures are prohibited and why?

The drugs taken by athletes differ widely based on the performance needs of the sport. Erythropoietin (EPO) is largely taken by endurance athletes who seek a higher level of red blood cells, which leads to more oxygenated blood, and a higher VO2 max, which increases the body’s ability to transport oxygen to the blood during exercise. EPO has become popular among athletes who choose to juice because it has a low degree of detectability when compared to other methods of doping such as blood transfusions. EPO is believed to have been widely used by athletes in the 1990s, in large part because there was not a way to directly test for the drug until 2002.  EPO is very dangerous because it increases the viscosity of blood, leading to seizures and heart attacks, and has been linked to the deaths of 18 pro cyclists in the last fifteen years.

In sports which physical strength is favored, athletes have resorted to anabolic steroids, known for their ability to increase physical strength and muscle mass. The drugs mimic the effect of naturally occurring  testosterone in the body.  Anabolic steroids were developed as a solution to the extensive side effects of testosterone use, although they are far from completely safe. Their many negative side effects in men include, but are not limited to, acne, impaired liver function, impotency, breast formation (gynecomastia), erectile dysfunction and baldness.

Athletes seeking to avoid testing positive for doping use various methods to cheat on the drug tests. The most common methods include urine replacement, diuretics (which are used to cleanse the body before having to provide samples) and blood transfusions, which also increase the blood’s oxygen carrying capacity (in turn increasing endurance without the presence of drugs that could trigger a positive test result.)

Some Other Considerations

Despite the health problem brought by PEDs, some athletes point to the already dangerous environment in sports like football and martial arts and wonder if there is a double standard. Health concerns brought by the aggressive nature of these sports is deemed acceptable but PEDs are not. They point out that protective headgear results in both more dangerous and greater numbers of head and neck injuries in football than if no helmets were used.

Many top athletes also believe the doping rules are somewhat arbitrary. Changes in diet such as consuming whole grains or eating gluten free are acceptable choices while the sweetener Stevia (found in energy drinks) was once prohibited. Ill athletes are generally loathe to take anything more than aspirin because decongestants and asthma medications require specific WADA waivers. Sleeping in a hyperbaric chamber to increase the supply of oxygen in the blood is acceptable, though not accessible to most, while low cost drugs to achieve the same effect are banned.

The Morality Issues

The world governing body of professional cycling, the UCI, recently stripped Lance Armstrong of his record seven Tour de France titles. The UCI decided that no winners would be declared for those years because the use of PEDs was so pervasive that it was likely that anyone near the top of the standings was similarly tainted. Lance won those races by spending countless hours training and six or seven hours on the saddle most days of those Tours. If he had not “juiced” with PEDs, it is almost certain that he would not have crossed the finish line a winner. If he wanted to win, he had to juice. Because everyone else was too. He could simply have walked away, and refused to participate. Every elite athlete has a precious window of time in which to potentially dominate. This was his time. So is he guilty or is he a victim of circumstance? Don’t the governing bodies have an obligation to provide for a “level playing field” so that athletes who abide by the prohibitions have a reasonable chance to win?

What of the future? In London last July, Oscar Pistorius of South Africa became the first double amputee to run in an Olympic track event after winning a court appeal against the IAAF (track and field’s world governing body). The IAAF had maintained that his carbon fiber prosthetic legs gave Pistorius an unfair advantage over other athletes.

The reasons for the ban on PEDs are primarily the health risks of usage and the desire for equality of opportunity for athletes. In the coming years sports governing bodies will be forced to deal with genetic enhancements and other mechanical changes to the human body. Authorities will be hard pressed to decide what regulations to enforce when changes made by athletes are both permanent and not health risks. Violators of any standards will almost always be one step ahead of the testers, and regulatory bodies would do well to use a light touch rather than a heavy hand. The moral issues are far from straightforward, and there will be many valid opinions as to what is right or wrong. What do you think? How far would you go to be a champion?

The mismatch between federal government revenues (taxes) and spending has resulted in $1 trillion+ deficits for the last four years. Left unaddressed, the US could become another Greece in the next 10 or 12 years; unable to sustain existing benefits and services for its citizens. Democrats favor balancing the equation by increasing taxes while Republicans have opposed most tax increases and demand spending reductions. This has led to an impasse and multiple calls for reform of the US Tax Code, which has become 73,000+ pages long and has not seen major revisions since 1986. The Simpson Bowles Commission and other would be reformers advocate a simplified structure with 3 tax brackets and a great reduction in deductions.

In order to see where such changes would need to come from, Diogenes examined the major deductions and credits taken by US taxpayers to discover which are the most unfair, or unjust. Below is a chart showing the magnitude of each of these “tax expenditures”.

Employer Paid Health Insurance

The largest single deduction, that taken for employer provided insurance plans, should be the first deduction to be eliminated. The amounts companies (or government) spend on these plans should become ordinary income for everyone. All Americans should be given a deduction of up to about $10,000 for direct health insurance spending. While this would cost revenue, there is no public policy benefit to forcing the 30% of Americans who are self employed or self insured to pay for their health insurance with after tax dollars.

Municipal Bond Interest & State and Local Income Taxes

Not shown on the chart are an estimated $120 billion in interest payments on about $3 trillion in municipal bonds, which are generally not subject to federal taxes. Many wealthy citizens avoid tax on substantial portions of their income with these deductions. The Alternative Minimum Tax (AMT) was originally enacted to force these few to pay their “fair share”, but because of the “Fiscal Cliff“, the number of Americans subject to the AMT absent Congressional action before January will rise from about 4 million to over 25 million.

This deduction should also be eliminated. There is simply no justification to reduce federal revenues to provide support for the local and state projects that these bonds finance. Similarly, the $54 billion in deductions for state and local income taxes should not be deductible from federal taxes. Why do all taxpayers have to subsidize the profligate states (California, Illinois, Massachusetts)? We could broaden the tax base and lower marginal tax rates. The real effect of this deduction is subsidize the high-tax-rate states at the expense of all other taxpayers. People deserve the governments they get. Those who don’t like the policies in Illinois and don’t live there don’t deserve to be forced to pay for a part of the results.

Mortgage Interest Deduction

“Subsidizing housing finance is especially problematic, as home building clearly over expanded in the early 2000s and needed to contract. If public policy subsidized a good into excess supply, further subsidies aren’t the cure. The Fed has merely delayed adjustment in the housing and financial sectors by continuing to direct credit to them.” (Gerald O’Driscoll, WSJ 8/31)

The mortgage interest deduction is also socially unjust, as it disadvantages minorities and the poor. Only 43% of minorities and 65% of whites are able to take advantage of it. Furthermore, it has failed to achieve it’s public policy purchase of increasing home ownership. The rate of home ownership in the US trails many other countries which provide no tax advantages to home owners. By subsidizing housing finance, the US government has also absorbed about $160 billion in losses at Fannie Mae and Freddie Mac (so far).

Deduction of Charitable Contributions

Americans have a long history of being among the most charitable people on Earth. But why does government need to support this generosity with over $50 billion in tax deductions? Wouldn’t we still give? And if I am an atheist, why do I need to taxably support contributions to your church?

How Do We Decide Which Deduction and Credits To Eliminate?

We have just identified over $325 billion in tax deductions that should be immediately eliminated in the tax code. However, one can only imagine the howls of protest from lobbying groups whose determined efforts have resulted in these distortions to an equitable tax code.

The AMT and various code reform attempts including Simpson Bowles suggested that deductions be phased out as income increases. However, this again results in continuing complexity within the tax code. A reform proposed last week by Republican Presidential candidate Mitt Romney is to enact tax simplification by limiting any taxpayer’s total deductions to an amount that would result in revenue neutrality after enactment of across the board rate cuts. He has suggested that the number would be between $17,000 and $50,000. The genius of this proposal is that it would protect the deductions of the middle class. It would limit benefits to high income earners even as it cuts their rates to spur investment activities.

The approach is also appealing because it would make more income subject to taxation—which boosts revenue—while reducing opposition from taxpayers who want to preserve specific deductions. One benefit for politicians is that capping deductions wouldn’t produce the same intense opposition they would get if they tried to eliminate just a few specific deductions. And Congress could continue to sell their fiscal favors to special interests secure in the knowledge that they wouldn’t be hurting the country (much).

When Americans are asked what the most important issues are in this presidential election, they cite jobs and the economy. By any objective measure, the Obama presidency has been one of poor economic growth. No matter what hand a President is dealt, at some point, he owns the record. Since Mr. Obama is poised to be re-elected, some other factors must determine who we choose to vote for.

Do we want to vote for someone who looks like us?

In the 2008 heyday of hope and change, strong minority turnout helped push Mr. Obama to victory, especially in such swing states as Virginia and New Mexico. But as another election approaches, the minority thrill is gone. According to the Census Bureau, Hispanic voter registration has fallen 5% across the U.S., to about 11 million. Black registration is down by 7%

About 40% of whites who voted in 2008 crossed the racial divide and voted for a black man, while only 4% of blacks who voted did so for a white man. Most of Hilary Clinton’s supporters in the Democratic presidential primaries in 2008 were women, and for many, that was her greatest asset. We remain racially polarized on a political level in 2012, as the following chart shows. Each candidate’s total support among voters is broken down by race.

If we are ever to become a truly multicultural society, we need to make choices based on issues rather than appearance, race, ethnicity or gender. But how de we do that when so many voters are either incapable or don’t care to understand the issues and have no concept of macroeconomics? It’s almost perverse that we make naturalized citizens learn about our constitution and pass a civics test before earning their passports. Only about a quarter of the native born electorate could pass these tests. Is it any wonder how poor a job public education is doing in science and math compared to the rest of the world when in our public schools we don’t even properly teach our children their future rights and obligations as citizens?

Do we want to elect someone who promises to look out for us even if we doubt the ability to deliver?

President Obama has consistently promised that he would make the economy fairer and more level. Somehow his policies have had the opposite effect. The most recent report by the Census Bureau indicates that annual household income fell in 2011 for the fourth straight year. Between 2009 and 2011, income for the middle fifth of the population declined 1%, while income for the top fifth increased 4%. Seniors, dependent on their savings saw interest rates fall by over 31% (Jan. 23, 2009 to date), while inflation further reduced the value of their savings by 9%.

President Obama promised to create jobs. Since January 2009 the civilian labor-force participation rate has fallen by 2.2 percentage points, representing a loss of over five million jobs. His policies, though, have juiced the stock market. An investor willing and able to take risks profited by over 65% if he bought stocks tracking the Dow at President Obama’s inauguration.  The administration’s policies are hurting the poor more than they are hurting the workers and net taxpayers of America, i.e., the millionaires and billionaires.

Do we chose ideology over prosperity?

Without doubt, some of what comes out of the Republican Party with regards to social issues is simply hateful and fighting the tide of history. Opposition to gay marriage and “legitimate” rape are only two dark examples. The president’s economic policies have clearly hurt most Americans, whereas the policies advocated by the Republicans at least have a chance to improve the economy, and yet the Republicans are behind in the election race. Is it possible that America has reached a tipping point and finally prefers the “social equality” espoused by Democrats (equal shares of the pie) instead of unequal shares of a growing pie, also/known/as capitalism? Mr. Romney inelegantly makes the case that the “takers” in the 47% of Americans who do not pay income taxes, are now poised to overwhelm the “makers” he seeks to represent. Mr. Romney may know more about economics than Mr. Obama, but the public thinks he doesn’t understand the economic problems of average Americans.

Do we choose to vote for someone we want to spend time with?

As we approach the first presidential debate this evening, how will Americans decide who wins? Most of the audience will have long ago decided who they will vote for, if they vote (less than 60% of eligible voters will cast ballots.) Will any of the few truly undecideds in the electorate be swayed by the arguments that can be communicated within this rigid time frame?

Apart from their purely show-business aspect, do the debates in any significant way enhance our appreciation of the minds or the characters of the presidential candidates? Mostly the debates will show how quickly the candidates can organize and regurgitate sound bites and parry attacks without becoming flustered. A fast response has little to do with genuine thought, which requires brooding over a subject, laboriously working through its complications. Quickness of response, so central to the debater, is a useful  but minor skill that has little to do with handling difficult questions and serious problems.

In the final analysis, Americans usually vote in presidential elections for the candidate with the greater empathy, or likability. The clear exception here would be Richard Nixon, who it seems nobody liked very much. In this election, it’s not even close. Mr. Romney is another rich old white man, and Mr. Obama is seriously cool!