Tag Archives: Economics

Government is Force: The Uncomfortable Truth People Wish to Avoid.

It stands to reason that where there’s sacrifice, there’s someone collecting sacrificial offerings. Where there’s service, there’s someone being served. The man who speaks to you of sacrifice, speaks of slaves and masters. And intends to be the master.

—Ayn Rand

     Our society speaks of things like social justice as if it were a victimless activity. As though giving to someone deemed “less fortunate” entails only the act giving without the taking. Where then does this magical manna come from if not from another citizen? Clearly it comes from someone who is rich or simply has what some deem to be “too much,” right? Let’s assume it does, is the moral righteousness of theft based on the size of the victim’s bank account? If that is in fact the case, should not most white collar crimes be considered righteous?  Or, for example, if you carjack a Maserati are you not merely taking what is not deserved by the owner of that car?

       The rich are hardly the only ones who are victims of our entitled society; anyone who falls into some sort of minority can find themselves targets of our burgeoning tyranny of democracy. If the limits on individual rights to property are up for a vote, then where do the limits of the state lay? In a society which justifies activity by a majority (more aptly, plurality) opinion, no limits exist; instead, the law is a shifting tide dictated by mob behavior and “popular” ideas. I can take your money, your property, and (more poignantly accurate) your very life as long as I can convince enough of my fellow citizens to direct the government to forcibly remove those things from you at the point of a gun.

          You say that no one is taking another’s life, but only their money; excess money at that? How is it exactly that we earn money? Time! Time of our life spent producing, thinking, building, growing, and teaching; and by endorsing the government confiscation and redistribution of people’s money we are very much endorsing the taking of people’s lives; one hour at a time. You cannot ask another for $10 without considering that the money you ask for represents a portion of their life spent earning (assuming they have earned that money). Likewise, you cannot empower government to separate them from that same $10 by force without considering that government has taken the time that money represents from them.

      The cold reality that people wish to ignore is that if that person gets paid $10/hr. then your government has exercised your desire to steal that hour from them; forcibly take those minutes, those breaths, and those heartbeats from them as if they rightfully belong to you or someone else. That activity relegates that producer to the role of slave and you take on the role of slave owner. What gives us the right to prey on our fellow citizens? Nothing! Still, we try to justify it with absurd notions of social justice and fairness. Those who are comfortable voting the confiscation of other’s money are no different than the pimp on the street corner preying on their hookers or the mobster running a protection scheme on businesses. Try as we may to justify our actions as assistance or some altruistic heroism; we are merely common thieves who ply our trade at the ballot box because we lack the courage to steal from others in person.

 

Why the government cannot fix healthcare.

     There is a significant obstacle facing government in any attempt at “fixing” the costs of medical care:  reality.  Yes, reality, that often loathed principle of life for which we cannot escape yet seem to try tirelessly to ignore.  Obamacare seeks to repair healthcare through government subsidy, an increase in the pool of insured (which may lower the cost of health insurance, but not the cost of medical care), and coercion of providers to lessen their own fees.  However, it apparently fundamentally ignores the two primary factors that actually dictate prices in a market.

        I am writing of supply and demand, which represents Adam Smith’s principle of the “invisible hand” that guides the market and allocates goods in a world of unlimited wants and limited resources; in other words, that is how scarcity is dealt with.  Rationing is an undeniable fact of life and is the basis for all prices.  Government’s attempt to control the health market without addressing scarcity of supply and an overabundance of demand is doomed to failure from the word go.  Additionally, transferring the costs of health care through subsidy does not make it any cheaper, it only transfers those costs from direct medical payments to increased tax liability or to increased deficit spending; and amounts to more of a Chris Angel illusion than a solution.

        What about the fines for those who do not purchase healthcare you might ask?  Well, to state it simply, they are largely irrelevant.  The most recent Congressional Budget Office (CBO) projections show that approximately six million people (and counting) will incur fines of approximately $1500 each (FYI:  that could be you), amounting to somewhere between $8 and $9 billion in revenues to the government.  There are two main problems with using the fines as a way to offset increasing prices.  First, government subsidies for insurance will undoubtedly exceed the fines.  Second, people who did not purchase insurance previously so they could save money will likely pay the fine as opposed to obtaining insurance (which would be significantly more expensive) and still will not pay their bills when they go to the hospital; thus maintaining the “free rider” status quo (in Pelosi parlance).

        Another important aspect to consider is that, as fines to employers are cheaper overall than actually carrying insurance, there is likely to be an increase in the number of uninsured, which previously were covered at work and thus more people receiving subsidies for insurance, or incurring fines for that matter (once again, this could be you).  This does not even factor in the likelihood that those employers who are on or near the threshold requiring them to provide insurance or pay the fine, which would result in a loss in income for the business owner (and thus a decrease in “revenues” to the federal government), will cut back employees (unemployment), trim some back to part-time (under-employment), or be hesitant of growing their business (an even more stagnant job market).

        All of these negatives…and pricing has not even been addressed.  Ironically, the only potential part of Obamacare that might affect pricing, the Independent Payment Advisory Board (IPAB) (or, death panels in Palin parlance), is denied to be a rationing board.  If it is a rationing panel, we have a bureaucratically operated health lottery for old people (and, at some point, probably poor people through Medicaid); if it is not, the disparity between supply and demand will remain, or worsen, and costs will not change (downward anyway)…or will they?  It is actually irrelevant if Democrats are right and it is not a rationing panel; if it is a rationing panel prices will be curbed by decreased access (i.e.-less people getting care, which I thought they were trying to remedy…?).  However, pricing will be affected if they are absolutely correct and it is not a rationing panel, but a direct price controlling board:  overall costs will likely stay the same at best.  Now, if a price ceiling is imposed, that will restrict the number of providers wishing to enter the market (hospitals, doctors, nurses, etc.) and reduce the number of manufacturers wishing to develop and produce goods for health care (medical equipment, drugs, etc.).  We can remedy this, though, so all is not lost; let us reduce the obstacles to entry into those markets making it cheaper and easier to get “qualified” providers and manufacturers.  Do not begin rejoicing yet, that means the guy who was previously going to go into golf course management (with a 17 on his ACT) can now, for just a few dollars and years more, become a doctor.  Scared yet?  By this action we have reduced pricing by reducing quality (and probably increasing mortality) This must not be the case though as we have been assured quality will not suffer, so that must not be the plan either, right?

        There are three ways you can actually reduce the cost (and thus pricing) in healthcare:  1) increase supply through a reduction in obstacles to entry into the market (accomplished through reduced admission requirements into med school, increasing maximum entry quotas into med school, and establishing more med schools, etc. etc.); 2) we can reduce demand by letting more people die without care (Kevorkian care, anyone?  I do not think any of us like the sound of that…); 3) freeze the development of new technology in medical care (technology gets cheaper over time, particularly when you remove the need to mark-up to cover future research and development).  In fact, if we would have frozen medical technology one hundred years ago, costs would be next to nothing now; of course, bleeding would still be the primary cure for most ills.  On the “bright side” this would have maintained the “promised” costs of Social Security by freezing mortality for people to a point in which almost nobody would have lived long enough to collect it.

        Another fallacy proposed by both parties is that reducing fraud in Medicare will reduce the overall cost; however, this will only reduce the cost to government as pricing will have to increase to individuals to cover lost fraudulent revenues to providers.  This amounts to another cost sleight of hand, the alternate equivalent to that of subsidizing insurance.  Ultimately, if we are all dedicated to reducing the cost of healthcare, which would you choose?  Rationing does exist in the market, and that will not be eliminated through the government control of it unless quality or technology is influenced to address pricing.  Collectively, we must decide whether we will pay more for more — or wish to pay less for less; that is an undeniable fact of life in any market.  Whether you are a Republican or Democrat is irrelevant because neither is being honest about the problem because the voting public values fantasy over facts; ultimately, there is no solution that maintains technology and quality of service, increases access, and reduces costs.

        But, before we tinker with the most technologically advanced healthcare system in the world, perhaps we should try out these theories on the bubble gum market which will at least not result in the death of people so that politicians may try to “muddle through” to a solution which is patently unrealistic.  If the new “Obamagum” plan worked as they say Obamacare will, gum prices will go down (as will the overall cost of gum nationally), more people will be chewing gum, and there will be vastly better increases in gum technology.  If they are wrong, gum will not increase in quantity (relative to the increase in demand), variety of flavors and manufacturers will decrease, and the overall cost of gum and the gum market will increase.  Sounds like a safer experiment to me.  Please, let us refrain from killing people to just to prove that central planning and socialism still does not work!  Fair enough?

Poverty: are we treating the disease or just the symptom?

Poverty is an all important topic in America today.  In fact, there has been considerable conversation about it since LBJ declared “war on poverty” in 1964; however, beyond the typical rhetoric that poverty is bad and people cannot be left to die in the street nothing is really seriously discussed.  If one argues that entitlements are ineffective, inefficient, and just plain theft they are castigated as being hateful, greedy, or insensitive.  But, with all the spending which has taken place over the last 50 years, what do we really have to show for it?  Are we spending money trying to cure the symptom instead of the disease?  It seems likely with government’s proclivity towards throwing good money at bad “solutions” that we are ultimately ignoring that which causes poverty; all so feelings are spared and political cover is well preserved.

Entitlements are necessary?  Let us look at the numbers.  President Lyndon B. Johnson, in all his glory, declares war on poverty in 1964.  In 1968, the first publication of a poverty report by the Census Bureau is published; at the time the poverty rate is approximately 13% and the beginning estimate from 1950 is 22%. Good work LBJ?  Not so fast, Scooter.  The poverty rate had been descending steadily before the “war on poverty” began and continued its descent until a trough in 1969.  However, if you just cannot help but want to give LBJ credit for some of that decline, fair enough—from the time the “war” was declared to the trough saw a reduction from a level of approximately 17% down to the 12% level.  Hoorah for government spending!!!!!  So, after 50 years of enormous and blossoming entitlement spending to eliminate poverty what is the poverty rate now?  Drum roll, please—more than 15%.  Hmmmm…that was rather anti-climactic wasn’t it?

I have it!  Maybe poverty is up, but I bet all this socialism has closed the income gap!  Wrong again, Scooter! Since the late 1960s, income inequality has been rising quite impressively. So, why is it that after trillions of dollars having been spent in the name of poverty; are the poverty numbers really not improved since about 1967? Could it be that in our fervor over poverty we have misdiagnosed the condition? I suspect that, outside of some people who are legitimately (yes, I said it) handicapped, people often continue to be poor for the same reason rich people tend to get richer: they keep doing precisely what it was that made them that way in the first place.

Our society not only accepts less effort and apathy with regard to personal responsibility; we incentivize it.  If bad behavior is without consequence, you can be assured it will be repeated; if you give out cash prizes for it, it will really be repeated.  Don’t believe me? Test it out on your kids.  Every time your child hits another child, give them a candy bar or some other reward; I bet your kid will be hitting other children with lightning speed and efficiency in no time at all! Reverse your reward system and dis-incentivize that behavior and it will (perhaps less quickly) disappear…unless your child is a sociopath then you should have just taken my word for it.  In essence, that is what we have done as a nation; we have told people that not trying is good enough…that working on excuses can be equally or more profitable than actual production.  We have lied to ourselves and to those who feed at the government trough trapping them in a slavish-type relationship with government.  There is no success in a lack of effort nor can this situation continue in perpetuity.

Sadly, by subsidizing a lack of effort we relegate those who truly cannot earn for themselves to a life of poverty and squalor.  Handicapped people often live in poor conditions, so lazy people can comfortably watch Jerry Springer and Maury Povich.  But, we all know that is not the real reason…the real reason is so the aristocrats that loom over us from D.C. can continue to earn votes in exchange for other’s wealth.  Yet, as long as they have “good intentions” their failures, waste, lies, and theft will be excused.  Unfortunately, those in the ruling class do not have to live out the consequences of their actions; that is suffered most severely by the poor they claim to champion.  This makes the leaders we choose the most despicable kind of parasite.