Rip Van Winkle, Washington Irving's 1820 tale attributed to old Diedrich Knickerbocker, tells of a rather lazy New York Dutchman named Rip who resided in the Catskills. He drank too much at the bowling alley one afternoon, sat down under a tree, probably about 1770 or so, and slept for 20 years. When he woke, everything had changed. There was a new George presiding over a new nation. His beloved dog and his feared wife were both dead. His old house was in shambles, the familiar tavern gone, and his trusty flintlock was rusted. His beard was too long and his clothes were out of date, and he didn't know where he was. But as he soon learned, not much had changed after all.
The same is true for someone who might have taken a long nap around 1980 and woke up 20 or 30 years later. The Cold War is over, and Russia was again an ally, joint-venturing in space. Yuppies had matured and their kids were now X, Y, or Z generation, their eyes glued to hand-held gizmos with images of people interacting. Sex was openly discussed — even demonstrated — on television, which now came on a flat screen rather than in a big box. Typewriters had disappeared, replaced by laptop computers, and the old wall telephone had been replaced by some kind of ubiquitous cellular gadget named for a berry that also played awful noise called rap, sent e-mails, and took photographs. It was a computerized world; all communication was preceded by www.somethingorother.com.
Our sleeper would wonder what the heck had happened. The World Trade Center was gone, and thousands of high-rises in every major American city had taken its place. Autos had ballooned in size to become SUVs, which jammed 10-lane freeways, and everything was owned by foreigners and made in China. What world was this?
As our sleeper wandered around, however, he would quickly learn that while there were changes, ultimately things were pretty much the same. Republicans were still arguing with Democrats, politicians made promises they never intended to keep, the "military industrial complex" of which President Eisenhower had warned was still calling the shots, OPEC was still in charge of raising and lowering oil prices, and politicians who had lost elections were saying, "I told you so!" Plus, there were some new worries: something called "global warming," and terrorism.
It only took Old Rip a week or so to become acclimated to his new world. Irving tells us that "some always pretended to doubt the reality of it," adding that "the changes in states and empires made but little impression on Rip; but there was one species of despotism under which he had long groaned, and that was "petticoat government."
Predictions for the Balance of the Decade
Whether the United States will achieve "petticoat government" in the next election remains unpredictable — who would have predicted a petticoat Speaker of the House? As of 2007, there aren't any Texans running for President yet, so it's a safe bet that a non-Texan — perhaps even a non-Southerner — will win next year. But those are easy predictions. What are the tough ones? First, this old Rip suspects that, regardless of elections, wars, and technology advances, not much will really change.
Universal Medical. We will hear far too much about this over the next two years, but in the long run hardly anything will change. There are simply too many self-interest groups that make too much money off the current system to anticipate that a bunch of Washington politicians will make progress moving the United States to any sort of rational universal health-care system. Besides, despite Michael Moore's Sicko, there are disadvantages to many of the universal programs. Sure, necessary service may be cheap and immediate, but non-emergency patients may have to wait a few months for whatever they want. Free? Hardly. There are taxes, after all. Do we believe for one minute that our great inventors of things like computerized anatomical tomography or magnetic imaging machines are going to invest zillions designing such wonderful gizmos if, as in many "universal" medicine nations (including Canada) there is only one or two CAT or MRI machines in a town, whereas in the U.S. there is one in practically every doctor's office? Do we think the pharmaceutical industry will come up with more miracle drugs if they have to sell them to the government at wholesale? If so, hey, buddy, I've got a bridge for sale — cheap!
McCarran-Ferguson. Don't look for a repeal of this 1944 law any time soon. This is the legislation that exempts the insurance industry from federal anti-trust prosecution as long as the states maintain regulation. It is the reason we have different insurance rules in each state. Congress has been rumbling about abolishing the insurance regulatory system for decades, and so far the only actual change has been in the health insurance field, where ERISA-related employer group insurance has become subject to the federal courts — and that was due to judicial, not legislative, action. While Congressmen stew and fuss about state regulation following Hurricane Katrina, the only property/casualty coverage remaining under federal jurisdiction is the National Flood Insurance Program, and that is administered by the Federal Emergency Management Administration — FEMA — for gosh sakes!
Flood Insurance. Well, yes, we will see some changes in this area, this old Rip suspects. What went wrong after Katrina that got all those congressmen — especially those from the South — all steamed up about having federal regulation (and they were the so-called "states' rights" guys!) was the way the property/casualty insurance industry handled hurricane claims. In flood insurance, for those unfamiliar with it, only about one-third of the NFIP coverage is written by agents directly for the NFIP. The bulk of the coverage is written by what are called "Write Your Own" (WYO) insurers — the same companies that sell insureds their homeowners' coverages, either directly or through local insurance agents. It seems that somewhere along the line, FEMA approved having these insurers adjust the flood claims along with their own windstorm claims. One adjuster could handle both, wind for his employer, and flood, for a fee, for the NFIP. It saved money. But after Katrina, the accusations were that the property insurers' adjusters were declaring all the damages due to flood at tax-payer expense, with very little attributed to wind. Well, it sounded to some of those in Washington like a bit of a conflict of interest, and, as all good lawyers know, that is a cardinal sin. So look for serious changes in the way hurricane claims are handled in the next big loss by WYO insurers.
Higher Taxes. This, too, will come to pass. As said in the Midwest, "You betcha!" Voodoo economics always seems to get us into a national financial pickle. In the 1980s, it was the savings and loan industry. That didn't help the banking industry much. In 2000 came the bursting dot.com bubble and now, with the evaporation of the real estate boom, the banks are in trouble again. Netbank, the first Internet bank, just went bankrupt. For years, it was showing the highest interest rate on its certificates of deposit. Guess where the money went? And so all those rich guys who got richer in the 21st century (some from tax savings, and some — like those at Enron, Health South, Tyco, and WorldCom — from fraud and deceit, a few from increased stock value, and a bunch from hedge funds) will, the old Rip predicts, make election year noise and get still richer. The rich get richer, everyone else gets children.
Immigration. The prediction here is that, while a higher and longer wall may be erected along our border and the number of vigilantes will increase, ultimately very little will be done to stem the waves of illegal immigrants from Mexico and the rest of Latin America. As noted a few months ago by me in this column, when one runs the figures, there are probably more unemployed Americans now than in the heart of the Great Depression in the 1930s. Back then it was primarily the men who were counted as unemployed, not the millions of women who lived and worked at home. Twelve percent of perhaps 60 million employment-aged men was a heck of a lot less than five percent of perhaps the 200 million employment-age men and women in today's labor market. But in the 1930s at least the unemployed sought work, and would do anything, no matter how hard, for a dollar. Today… .
A Steinbeck Era. This old Rip is a John Steinbeck fan. Having recently been in California I again visited Cannery Row in Monterey, the Salinas Valley, the Steinbeck Museum and all the old haunts of the wonderful characters in Steinbeck's books. In 1954 (as a 13-year-old geek) he traveled the old Route 66 between Missouri and California with his parents, the same road traveled by the Joad family in The Grapes of Wrath. The Joads were willing to work the great agricultural valleys of California — the Sacramento, the San Joaquin, the Salinas — for day labor wages, picking fruit and vegetables. Those fields are still producing crops, and nobody has yet figured out how to harvest them over the Internet, so it still takes hard, back-straining labor to bring in the goods for our dinner. I do not see the vast unemployed in the ghettos of New York, Atlanta, Chicago, Detroit, or Los Angeles traveling West or North to pick crops like the Joads. The prediction is that we won't see it in the next two years, either. So watch for even more illegals who are willing to do that work.
Airline Travel. My wife and I have collected enough frequent flyer points to take a trip to Europe. But we can't. First, we can't afford the Euros at the current exchange rate, and secondly, where could we go that Americans may not be terrorist targets? We Yanks are not very popular right now. But the two of us have traveled a bit across this great nation. When the flight attendant suggests that those at windows lower their shades so those who want to watch the movie can see better, mine stays up a bit so I can see where we are. Believe it or not, even from 30,000 feet anyone familiar with maps can figure out the towns and rivers and canyons if it's not cloudy. Most probably don't give a hoot – they are engrossed in their laptops or Gooseberry's or I-phones or whatever – and wouldn't know if they were seeing Oklahoma or Montana if they did look down. The point here is that airline travel has gotten awful, and this old rip predicts that it will get far worse before it improves. In the 1980s travel was fun; today it is an unwelcome burden, made even worse by the requirements of the TSA. (In San Jose I got lectured because I had a small bottle of "white-out"– every writer's friend — in my briefcase. Didn't I know I was to put it in a baggie! Gosh! I'd forgotten it was there! The modern jet has aircraft seats designed for tiny tourists, not a typical American male. When flying to New York City, prepare to be late. Why? Because the FAA's flight control system is outdated and the new one won't be ready for years. That's not just a prediction, it's a fact. Why not help out Amtrak and take the train instead? I can at least predict that the Bush Administration will not free up some of the highway tax fund money to supply Amtrak with more intercity coaches or high-speed rail that would alleviate pressure on the airports. Instead, it will go to private contractors to build more highways.
The Infrastructure. When the I-35 bridge collapsed in Minneapolis this summer (as my editor knows – he got the call) CNN Headline News tried to contact me as I had written about bridge collapses in Claims last year. Thank goodness I missed that call! Who wants to be put in the frying pan by Nancy Grace, even if it's supposed to be a friendly interview! I can predict that that won't happen again! But any old Rip can also predict that an even greater number of infrastructure disasters will occur in the next two years and the following decades. Every city in the country is already experiencing collapse of their water and sewer systems, many built more than a century ago. In New York and Atlanta, water mains are constantly breaking, flooding the streets and tying up traffic. There isn't enough money to replace those systems – barely enough to repair them – and the growth in population is constantly adding new pressures on the feeble pipes and tunnels. Private enterprise, the railroads, the electric and gas industry, the food chain, seem to function pretty well. They fix or replace their infrastructure themselves. But the public infrastructure — roads, waterways, levees, dams, bridges, tunnels, pipelines, city transit, etc. — are all virtually on the edge of collapse. As with public school systems, taxpayers say, "If it ain't broke, don't fix it!" But it is broke, and fixing won't work any more. The systems are worn out and need replacement. That costs taxpayers money. Nah! Let's let our kids pay for it.
Old Rip's Predictions
This old Rip thinks it's likely that we'll see more "fixing" than renewing when it comes to schools, infrastructure, aviation control systems, flood control, and the nation's medical care system. Ultimately little will change, except that taxes will go up. Regardless of who is elected next year, taxes will go up. Like Rip Van Winkle, we'll wonder what happened to our world, but also like old Rip, we'll learn to live with it. Happy New Year.
Ken Brownlee, CPCU, is a former adjuster and risk manager based in Atlanta, Ga. He now authors and edits claim-adjusting textbooks.
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