Free Markets, Free People
You’ve heard of "Flatland"? Well in Davos, we have "Backwardland", where elite politicians are talking about what ails the world. And you’re probably not going to be too surprised by this, but they’ve got it entirely backward.
Poverty and unemployment reared their heads at the World Economic Forum on Thursday, with speakers urging the elite audience to bridge a growing gap between booming multinationals and the jobless poor.
Greek Prime Minister George Papandreou, who also chairs the Socialist International group of center-left parties, said the global crisis had led to an "unsustainable" race to the bottom in labor standards and social protection in developed nations.
"Politically, I believe we are at a turning point where… there are signs in Europe of more nationalism, more racism, anti-Muslim, anti-Semitism, fundamentalisms of all types," he said. "We need to look to a different model."
Maurice Levy, chairman and chief executive of French advertising giant Publicis, said there was "a huge suspicion about CEOs, bankers, corporations."
"People do not understand that these large corporations are doing extremely well, while their lives have not improved and without the support of the people, there is no way we will be able to grow," he told a panel discussion.
"We have been led by greed. We have been led by only the bottom line, the profit and we have sacrificed the workers in order to please the stockholders."
If you’ve wondered why Greece is in the shape it’s in and France isn’t far behind, read this nonsense. Greece didn’t get in the shape it is in because of corporations. It is there because the government overspent on generous benefits such as early retirement and the like. The financial situation of nations isn’t the result of corporate greed or income inequality – it’s because they’ve spent more than they take in, entitlements are out of control, and they’ve provided decades of disincentives to work.
And the nonsense wasn’t confined to Europeans:
Former U.S. President Bill Clinton said tackling income inequalities was essential to future growth and needed to be part of the core of doing business in the 21st century.
The core of doing business in the 21st century is no different than it was in the 17th century. Good product, affordable price, satisfied customers. What Clinton is really saying is that the left intends to use the excuse of “income inequalities” to clamp down on corporations, extort more in taxes (we’ve already discussed who really pays those taxes and how regressive that is, not to mention the fact that at some point, when those taxes can’t be passed along, the corporation goes location shopping or dumps jobs) and generally kill the goose that laid the golden egg.
U.S. economist Nouriel Roubini predicted a backlash against budget cuts in Europe if there was no rapid return to economic growth.
Well yes, but again, with the plan that seems to be afoot, that’s almost assured, isn’t it? What this is, again, is a different approach to collectivizing corporate earnings. Terms like “income inequality” and “social justice” creep into the conversation. And “share” – you remember “share” as in “share your toys, little Johnny”. Well now it is time, say the elites, to “share” what hasn’t been earned by those receiving the “share”.
With unrest in Tunisia and Egypt a major talking point in Davos, Mthuli Ncube, the Tunis-based Chief Economist for the African Development Bank, predicted more trouble ahead if the fruits of growth were not shared more evenly:
"If you are not even creating jobs, not even sharing the economic growth that is coming through, then there will be push-back," he said. "It’s one thing to get good growth going. It is another to share that."
It is indeed – but here’s something that has worked throughout economic history: get good growth going, create jobs with profits and suddenly it is being “shared”. Tax the crap out of anyone or anything that looks like it is making money and you won’t get growth, you won’t create jobs because the profits won’t be there to support either.
Of course what Mthuli Ncube is talking about is “sharing” through government – they’ll take it and dole it out. Oh, and by the way, the unrest in Tunisia wasn’t driven by a backlash to “corporate greed”, it had to do with government greed and oppression.
This is the not so new approach by the left to use the financial crisis as an opportunity to loot corporations and support the welfare states that are in big trouble. Demonization is right around the corner. The real cause of the unrest among those the leftist elite like to use as their pawns has little if anything to do with corporations and a lot to do with the governments most of these boobs represent.
The Democrats are bound and determined to demonize the private health insurance industry and use that demonization as a basis for further control by government. Seizing on one insurance company’s rate increase in California as a reason for government intervention the House has passed a piece of legislation in the House to remove the industry’s anti-trust exemption. That’ll teach ‘em (and by the way, the vote was 406-19 so a whole heck of a lot of Republicans have bought into this again).
The White House, of course, backs the bill claiming:
The repeal of the antitrust exemption in the McCarran-Ferguson Act as it applies to the health insurance industry would give American families and businesses, big and small, more control over their own health care choices by promoting greater insurance competition.
But will it do what the White House says it will do. Most likely not:
The Congressional Budget Office concludes that repeal “would have no significant effects on either the federal budget or the premiums that private insurers charged for health insurance.” University of Pennsylvania economist Scott Harrington says, “This is just barking up the wrong tree…It might sound good, but I can think of very few things …that would be less consequential for consumers of health insurance.” Professor Austin Frakt of Boston University notes, “Repeal of the exemption is popular, but like a lot of things done in anger, it isn’t particularly wise and won’t be very effective.”
In essence this is a political temper tantrum of the type where bad law is usually made. It’s not clear that this particular law will have negative effect, but it is apparently not going to do what the White House claims. But it will accomplish one thing – increase the power of the federal government.
To understand that, a little background concerning the exemption might be informative:
In 1944, the Supreme Court overturned prior case law and held that the antitrust laws should apply to insurance.
Congress responded with the McCarran-Ferguson Act, which created a limited exemption from federal antitrust law for the “business of insurance.” To qualify for the exemption, each state had to engage in oversight of its insurance market. States responded by creating insurance commissioners and regulating insurer conduct.
The logic of the exemption was that prior to 1944, insurance had been regulated by the states anyway. No one felt any compelling need for intrusion by the federal government, or to allow private litigants to bring federal antitrust suits against insurers. In addition, insurers — particularly smaller insurers —can more accurately price risk if they can share information on their actuarial experience. The exemption created a safety zone for insurers to share information free from the threat of private antitrust suits.
McCarran-Ferguson still left insurers subject to state regulatory oversight and federal antitrust scrutiny for matters that don’t involve “the business of insurance.” Contrary to Sen. Reid’s claim, the federal government already scrutinizes mergers for anticompetitive consequences, and has brought several challenges.
The point of the exemption was to actually help make the industry more competitive. Sharing “actuarial experience” will now be an anti-trust violation. Additionally, private litigants will now be able to bring federal anti-trust suits against insurers – if this passes the Senate.
So when the White House continues, saying:
The repeal also will outlaw existing, anti-competitive health insurance practices like price fixing, bid rigging, and market allocation that drive up costs for all Americans. Health insurance reform should be built on a strong commitment to competition in all health care markets, including health insurance.
It’s describing what was formerly considered to be “the business of insurance.” Now it is “price fixing” and “bid rigging”. And most disingenuous of all is the claim it will spur competition.
So what will this do?
Insurers fear that losing the exemption would force them to deal with an additional (federal) regulator and expose them to private federal antitrust suits. State insurance commissioners also want to keep the exemption, because they prefer to remain the dominant regulator. On the other hand, federal antitrust authorities want to scrap the exemption because they don’t like exemptions — although they don’t seem to be claiming that repeal would result in greater competition.
Then the point of the bill is to increase what? Federal regulation. More federal control of the private health insurance industry that states have always regulated. This isn’t about competition, “bid rigging” or “price fixing”. This is about gathering more power at the federal level.
The excuse is this “greedy” insurance company in California (btw, the health insurance industry’s profit margin is 35th among all industries at 2.2%) that is raising premiums.
But what most don’t seem to understand is there are different types of greed. And one of them is a greed for power. That greed has been on display for years, and intensely so for the last year, within the federal government. This bill is nothing more than another manifestation of that greed.
One of the reasons we’ve reached a tipping point between freedom and welfare statism is because much of the country pays no taxes and increasingly the burden of taxes is being shifted to a smaller and smaller percentage of the population. Now I’m not a tax advocate by any stretch. But it is obvious we’re not going to be able to avoid them, especially with this new crowd in town who wants to tax just about everything.
But back to the point – if you’re not paying taxes, but the government is taxing others to your benefit, why wouldn’t you want more stuff? Oh I know the moral argument and I agree with it. What I’m describing is a dynamic which plays on human greed. It’s funny, we hear politicians talk about the “greed” of Wall Street, or the “greed” of big oil or the “greed” of big pharma.
But what is never discussed is the “greed” of those who don’t pay taxes but demand more benefits paid for by others. Or how politicians have “incentivized” that greed.
How ridiculous has it gotten?
Yes, that’s right – the top 1% pay more taxes than the bottom 95%. And the plan is to have them pay even more as this health care boondoggle comes on line.
So the next time you hear your favorite “progressive” begin their “greed” or “fairness” nonsense, show them this chart. If that doesn’t shut them up, nothing will.