Free Markets, Free People

Daily Archives: September 26, 2009

The Republicans are lost

I just watched a video in which House Republican Whip Eric Cantor appeared with one of his Democratic colleagues from Virginia to discuss healthcare. You can watch it here if you like.

Though I can tell you right now that there’s not much point to it. It consists virtually 100% of empty, meaningless politician-speak from both congressmen. Despite some decent attempts on the part of the interviewer to get them to answer some tough questions, they both just dodged them and mumbled platitudes about “educating voters” and “the status quo is unsustainable”.

Educating voters isn’t going to do a damn thing. Voters are sick to death of Washington telling them what to do. Democrats in Congress (and many Republicans) insist that there be a mandate to buy health insurance, and I think they have vastly underestimated the pushback they are getting right now and how much worse it would be if they actually passed it. Any bill with a ghost of chance of passing also has new taxes and new spending, and voters are (1) not fooled by any shell games claiming otherwise, and (2) profoundly sick of both taxes and spending.

Saying “the status quo is unsustainable” is pointless because it says absolutely nothing about whether any of the current proposals would make the system any more sustainable. Given the $47 trillion Medicare and Social Security already has in liabilities, creating another entitlement to increase that amount looks like the silliest possible response.

I expected such empty blathering from the Democrat. Any Democratic member of Congress is caught right now between a hard-left leadership who want government control over when people go to the bathroom and the Blue Dogs who know they’ll be looking for another job if any healthcare bill with a lot of government interference is passed. Not to mention a president who can’t seem to make up his mind on what he’s willing to settle for on healthcare, and whose only strategy is to flap his gums.

But have the Republicans learned nothing from 2006-2009? Has the Tea Party movement made no impact on them? Do they not sense the rising anti-government attitude in voters? Are they so incredibly clueless that they can’t learn the lesson from Reagan’s landslide and the 1994 takeover of Congress?

Look, you idiots: You can win big when you strongly advocate smaller government principles. When you don’t, at best you tread water, and at worst you get your butts kicked.

Watching Cantor pour out the same old politician’s blather was painful. Based on that one video, I never expect to support this guy for anything. And he’s part of the GOP leadership, supposedly the best they’ve got. Well, if he’s one of the best, they’re still as lost as they were in 2006.

I see many signs that 2010 could be a landmark year. Two months ago, I summarized Obama’s failings to that point, and since then he’s racked up scandals with his czars, seen his buddies at ACORN exposed as the criminals many of us thought they were, and had his make-nice efforts toward Iran shown to be naive and pointless.

But absent any Republican leadership on a real change in direction, none of that will make a big difference. Oh, I think the Democrats will lose a fair number of seats in the House in any case, because of depressed turnout among Democrats in marginal districts. The Republicans may well pick up three or four Senate seats too. But without a clear message concerning their desire to trim the size, cost, and intrusiveness of government, they will gain no loyalty or long-term support from those people who have finally reached their agony threshold on big government.

They’ll just drift for two years, using the same strategy that got the Democrats in the White House, which is to hope voters are so sick of the other side they will vote for a change, any change. And, of course, even if that works, they won’t do anything about reducing the size and scope of government, hoping the whole debt mess doesn’t finally reach critical mass on their watch.

With a clear message, I believe the GOP could do a rerun of 1994. But I don’t know a single person among them capable of carrying the banner for that message. It sure as heck is *not* Eric Cantor.

Iran Policy – What Is Going On?

National Review Online does a little review of the run up to the announcement by President Obama at the G20 summit concerning Iran and wonders what is going on. For instance, NRO points to Joe Biden 8 days ago. This was in answer to why the US was pulling its missile defense shield from Poland and the Czech Republic:

“[Biden said] Iran — a key concern for the United States — was not a threat.

“I think we are fully capable and secure dealing with any present or future potential Iranian threat,” he told CNN’s Chris Lawrence in Baghdad, where he is on a brief trip.

“The whole purpose of this exercise we are undertaking is to diminish the prospect of the Iranians destabilizing that region in the world. I am less concerned — much less concerned — about the Iranian potential. They have no potential at this moment, they have no capacity to launch a missile at the United States of America,” he said.

So 8 days ago, Iran was a diminished threat that was much less of a concern than previously.

Suddenly:

President Obama and the leaders of France and Britain blasted Iran’s construction of a previously unacknowledged uranium enrichment facility and demanded Friday that Tehran immediately fulfill its obligations under international law or risk the imposition of harsh new sanctions.

The new Iranian plant, the country’s second uranium enrichment facility, is believed by U.S. officials to be part of a broad effort by Iran’s leadership to pursue the ability to build nuclear weapons. Iran has repeatedly denied having any such goal, insisting that its nuclear program is aimed at generating electricity. U.S. officials said they believe the Qom plant is not yet operational but is intended to produce highly enriched uranium — suitable for nuclear weapons — and will be capable within months of producing enough material for at least one bomb per year.

Says NRO:

Boy, the Obama administration must have just been profoundly misguided and dangerously misinformed about Iran’s capabilities and intentions. Right?

Right – because, as pointed out 8 days ago, the reason the missile defense shield was pulled, per the VP of the US, was because the US considered Iran a much diminished threat. So obviously this is “new” information which has profoundly changed the game and required the US to completely rethink its policy since it has emerged.

Right?

@markknoller US officials say Obama first told of Iran secret nuclear plant during the transition — as President-elect. 9/25 10:28 A.M.

WTF? Mark Knoller of CBS says this was something the administration has known for almost a year? So what was all this nonsense about a diminished Iranian threat as a reason to pull the promised missile shield that the administration had promised the Poles and Czechs a mere 6 months before?

Asks NRO:

Astonishingly incompetent, perilously naive, or deliberately dishonest? Which is it?

I’d suggest all three. And I think that will become alarmingly apparent as this crisis continues to unfold.

I’ll also toss this out there as well – it was saved for a forum in which the President would have the attention of the world focus on him (a much tighter focus than the UN) and staged to maximize that. All politics all the time. He wanted the non-binding non-proliferation resolution from the security council before he took on Iran.  Meanwhile Joe Biden’s (and the DoD’s) credibility is left twisting in the wind.

So now the staging has been accomplished and the spotlight turned on the President. That’s the easy part. The usual talking the talk, something at which he’s quite good. Now comes the hard part – walking the walk – something he’s yet to demonstrate he’s capable of doing.

Oh – and where in the world is Hillary Clinton?

~McQ

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The Lure Of Price Controls

It is a dream all central planners have – the ability to change the laws of economics to the extent that the planner can decide on what a “fair price” might be and market dynamics will adjust themselves to the price and all will be unicorns and rainbows.

Of course we know from our experience with that application in various areas that the market doesn’t adjust to price and it is never unicorns and rainbows when price controls are applied. In fact price controls consistently spawn pretty predictable market reactions and, depending on how vast the price controls are, have the ability to bring down whole economies, or at least put them into a shambles. The latest price control paradise is Zimbabwe where a wheelbarrow full of Zimbabwean currency may be enough to buy an egg in the morning but not in the afternoon.

I bring this up because there’s a growing call for lawmakers to consider price controls for health care insurance, as demonstrated yesterday in the LA Times.

In the drive to bring health coverage to almost every American, lawmakers have largely rejected restrictions on how much insurers can charge, sparking fears that consumers will continue to face the skyrocketing premium increases of recent years.

The legislators’ reluctance to control premium costs comes despite the fact that they intend to require virtually all Americans to get health insurance, an unprecedented mandate — long sought by insurance companies — that would mark the first time the federal government has compelled consumers to buy a single industry’s product, effectively creating a captive market.

Nancy Pelosi has articulated the price control “dream” for health insurance – “a cap on what you pay and no limit on what you get back” if I recall correctly. Of course what she doesn’t say is not even Medicare does that and it has about 43 trillion in unfunded liabilities at this point. But understand that at the bottom of Pelosi’s statement is the reality of imposing price controls – you can’t have a “cap” on what you pay without them.

Thomas Sowell touches on the real intent that sort of Pelosi-talk:

Liberals especially tend to think up all sorts of good things we want — a “living wage,” “affordable housing,” “universal health care,” and an ever-expanding wish-list of things that everyone should receive as “rights” — with little or no awareness of the economic repercussions of turning that wish list into laws.

He then provides a little primer about price control:

Prices are perhaps the most misunderstood thing in economics. Whenever prices are “too high” — whether these are prices of medicines or of gasoline or all sorts of other things — many people think the answer is for the government to force those prices down.

[...]

Prices are not just arbitrary numbers plucked out of the air or numbers dependent on whether sellers are “greedy” or not. In the competition of the marketplace, prices are signals that convey underlying realities about relative scarcities and relative costs of production.

Those underlying realities are not changed in the slightest by price controls. You might as well try to deal with someone’s fever by putting the thermometer in cold water to lower the reading.

What most who believe they can thwart the laws of economics and use price controls never seem to understand is that economic law requires the price mechanism in order to properly allocate goods. Without it, some other mechanism must take its place. Those are usually found in forms of evasion. One evasion is deterioration of quality. The old saw “you get what you pay for” is never more true than under price controls. The time allocated to a doctor visit might get shorter and shorter in order for the doctor to see enough patients to meet his and his practice’s financial needs. That could also mean he can’t afford the newest equipment or diagnostic tools. Consider what price controls would mean to a pharmaceutical company and its incentive to create new and better drugs.  Or a medical implements company, etc.

Another evasion may be alternate markets – you pay a physician a yearly fee and don’t use the price controlled system in place – that has already begun in anticipation of this.  Doctor’s networks are springing up all over the country. Of course with a mandatory insurance requirement, you’d still have to pay into the price controlled system. But that sort of evasion takes doctors out of the price controlled market and creates another shortage with which that market has to contend.

And, of course, there’s queuing. If the price imposed is low, the tendency for those paying is to use it more frequently. There’s no penalty for doing so. That leads to a shortage (in the case of medicine, doctors still only have 24 hours in a day and can still see only a finite number of patients during that time) of available appointments and thus it extends the time before you can see a physician.

Some would call these “unintended consequences” of price controls. But they’re certainly not unknown consequences. They’re consequences on display all over the world in systems which do, in fact, impose such price controls.

Sowell concludes:

Costs don’t go away because you refuse to pay them, any more than gravity goes away if you refuse to acknowledge it. You usually pay more in different ways, through taxes as well as prices, and by deterioration in quality when political processes replace economic process.

But the lure of the free lunch goes on.

With the same disastrous results it has always had.  Yet our would-be central planners seem obvious to the fact.  That’s one reason government debt is at the horrendous level it is today and headed for even higher levels.

~McQ

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Solve the 43 Trillion Dollar Problem First

Of course, they can’t fix it except by drastically cutting spending or drastically raising taxes, or both – so this is not something that will be “fixed”. They run the program completely, determine the benefits and the rates they’ll pay and they blame private insurance for the growing cost problems in health care? Yeah, let’s give them the rest since they’ve done so well with this portion of it.

~McQ

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