Free Markets, Free People

Reason


Wonder why health care insurance costs so much?

Well, how about government mandates?

 

 

If government wants to lower the cost of health care, there’s an immediate means of doing so.  Health insurance should be like a Chinese restaurant menu – pick one from column A and two from column B.  But if you don’t want acupuncture coverage or massage therapy or, in fact, have a uterus, why in the world should you forced to buy coverage for all of that?

~McQ

Twitter: @McQandO


Economic ignorance and the desire for “social justice” drives much of the left’s nonsensical arguments

I was reading something by Matt Welch at Reason and he inspired some thought about OWS and the left.

Welch takes a bit of nonsense in Salon.com called “The New Declaration of Independence” on and he cites a rather long passage from the article.   In it are these few paragraphs:

For the young, higher education was said to be a ticket to class mobility, or at least a secure career. Instead, middle-class students have taken on billions of dollars of inescapable debt during a prolonged jobs crisis. Lower-income students are blatantly ripped off by usurious scam artists working for educationally dubious for-profit schools. Even those seeking to join the professional class, through medical school or law school, find themselves with mountains of debt and dwindling job prospects. The rapidly rising cost of higher education pushes bright students into lucrative but socially destructive fields, like finance. [...]

For millions of middle-class and striving blue-collar American families, the promise of homeownership as the world’s safest investment became another money-making bubble for Wall Street that remains Main Street’s intractable mess. Those members of the middle class unfortunate enough to do as an industry of wise men counseled them and invest in the stock market and real estate have seen the fruits of a lifetime’s worth of labor evaporate in multiple busts and crashes that the wise men always escape from economically intact. [...]

It is not in the national interest to force the impoverished to become wage slaves to pay off insurmountable debts owned to payday lenders and hugely profitable bankers. [...]

Every other rich nation on earth heavily subsidizes higher education. We force mere kids to mortgage their futures, then ensure that the debt follows them the rest of their lives, regardless of their living circumstances. [...]

Even millions of homeowners who "did everything right" find themselves underwater, or illegally foreclosed upon by banks running roughshod over the rights of homeowners by robo-signing fraudulent foreclosure documents by the thousands.

Welch does a very good job of firing with all guns on this nonsense.

Which is why phrases like "wage slaves," "inescapable debt," and "force" "force" "force" leave me feeling like a brother from another planet. Adult human beings have agency, the ability (even responsibility!) to run their own cost/benefit analyses and choose accordingly. You could go to a state school (or community college) instead of an over-inflated prestige mill. You could pay for a 10-year-old car in cash, instead of a new one on installments. You could try to make it in Minneapolis before living the dream in Williamsburg. You could stare into the face of a no-money-down, adjustable rate 30-year mortgage at the tail end of a housing-price run-up and conclude "Maybe that one’s not for me." You could even choose to turn down a bad if high-paying job when you’re living below the poverty line. If we indeed live in a "candid world," let us state bluntly that offloading 100% of the blame for your own mountain of debt on a group of Greedy McBanksters who "forced" you to "play by the rules" is more than a little pathetic.

Of course, he’s entirely correct as far as he goes.  And, to his credit, he touches on the real problem. The “mountain of debt” chosen by those who have taken on such enormous debt in exchange for what many times turns out to be a useless degree costs so much because government subsidizes it through its loans.

While the choices Welch points to are an entirely reasonable response to the “woe is me, I made bad choices and want you to bail me out” crowd, that crowd still doesn’t understand that without the government, not the “greedy bankers”, higher education would be much more reasonable than it is.  Right now, colleges and universities don’t have to compete for a student’s dollars.   They simply state the price and you either pay or you don’t go.    Imagine having to compete to get those hard earned or even borrowed dollars.

So the emphasis on banks and the greedy is misplaced in the case of college loans.   If anyone is the greedy one’s it is schools.  And they’re just naturally taking advantage of the results of the government distorting the market.

And that’s not the only protest that’s misplaced.  Michael Bloomberg got in hot water yesterday for saying that the housing crisis was the fault of government.  In fact it was.

Did bankers have something to do with it?  Well yes, but it wasn’t their program and its enforcement that inspired the problem.  Bloomberg points to the real problem:

"I hear your complaints," Bloomberg said. "Some of them are totally unfounded. It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp. Now, I’m not saying I’m sure that was terrible policy, because a lot of those people who got homes still have them and they wouldn’t have gotten them without that.

"But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody. And now we want to go vilify the banks because it’s one target, it’s easy to blame them and congress certainly isn’t going to blame themselves. At the same time, Congress is trying to pressure banks to loosen their lending standards to make more loans. This is exactly the same speech they criticized them for."

Investors Business Daily goes into some detail about all of that, pointing out that it was indeed government enforcing government policy that led to the housing bubble.  But understanding that requires a little research:

Rewind to 1994. That year, the federal government declared war on an enemy — the racist lender — who officials claimed was to blame for differences in homeownership rate, and launched what would prove the costliest social crusade in U.S. history.

At President Clinton’s direction, no fewer than 10 federal agencies issued a chilling ultimatum to banks and mortgage lenders to ease credit for lower-income minorities or face investigations for lending discrimination and suffer the related adverse publicity. They also were threatened with denial of access to the all-important secondary mortgage market and stiff fines, along with other penalties.

The threat was codified in a 20-page "Policy Statement on Discrimination in Lending" and entered into the Federal Register on April 15, 1994, by the Interagency Task Force on Fair Lending. Clinton set up the little-known body to coordinate an unprecedented crackdown on alleged bank redlining.

The edict — completely overlooked by the Financial Crisis Inquiry Commission and the mainstream media — was signed by then-HUD Secretary Henry Cisneros, Attorney General Janet Reno, Comptroller of the Currency Eugene Ludwig and Federal Reserve Chairman Alan Greenspan, along with the heads of six other financial regulatory agencies.

"The agencies will not tolerate lending discrimination in any form," the document warned financial institutions.

Ludwig at the time stated the ruling would be used by the agencies as a fair-lending enforcement "tool," and would apply to "all lenders" — including banks and thrifts, credit unions, mortgage brokers and finance companies.

Again you have the government intruding in the market in the name of social justice and being threatened by that government to modify their practices and make bad loans.  And that’s just what they did.  The IBD chart in the article cited tells the story.  Government policy required bad loan practices be used to comply with the law.

The point, of course, is that government has most of the blame for creating the two problems that Salon.com is going on about.   And, one can only assume, it is ignorance of market dynamics or more broad ignorance of economics in general that has them using this nonsensical argument that ignores the real core of the problem.  You have to do that if your intent is to use government as the instrument of “social justice”, even when it is government coming to the “rescue” of a problem government created.

But then, that shouldn’t really come as a surprise.  What has become evident to me, in general as I watch most of the left, is that Econ 101 was never a subject that was required for a journalism degree or most other liberal arts degrees that are so favored on that side of the spectrum.  And it is ignorance (or blatant disingenuousness, take your pick) that drives such clueless arguments as that which Salon (and OWS) is pushing.  However, you have to do that if your intent is to use government as the instrument of “social justice”, even when it is government coming to the “rescue” of a problem government created.

~McQ

Twitter: @McQandO


Federal government: It is not a revenue problem, it is a spending problem

Nick Gillespie and Reason do a good job of dispelling the myth that our problem is a revenue problem, the nonsense that always prompts the “tax the rich” mantra.

Taxes aren’t the problem, never have been – it is a spending problem.  We’re spending more than we take in.  Cut that difference and you cut the deficit to nothing.  Cut it enough and you begin to work down the debt.

 

Taxing the rich at a higher rate might make the class warriors on the left feel good, but it does nothing to address the real problem.

Spending addiction – something Michael alludes too below.  What we have are the addicted trying to handle their own addiction, and essentially their solution has nothing to do with the problem.

Big surprise.

~McQ


The Fantasy Of BaucusCare’s Savings

There are a number of people dancing in the street because there’s finally a bill in existence that the CBO says will reduce the deficit. Not by much, but that’s really irrelevant – it does the job that meets one of President Obama’s primary goals.

Of course the plan, authored by Sen. Max Baucus, has also come under fire from both the right and left for various aspects each doesn’t like. But that CBO endorsement, well, they’re pretty happy about that.

However, a close examination of that endorsement should warn everyone with an understanding of politicians and Congressional history off of the plan.

Let me explain. While the CBO does indeed say this plan will reduce the deficit, it makes it very clear that such a reduction is contingent upon some very unlikely happenstance.

First the savings:

[T]he Chairman’s proposal would reduce the federal deficit by $16 billion in 2019, CBO and JCT estimate. After that, the added revenues and cost savings are projected to grow more rapidly than the cost of the coverage expansion. Consequently, CBO expects that the proposal, if enacted, would reduce federal budget deficits over the ensuing decade relative to those projected under current law, with a total effect during that decade that is in a broad range around one-half percent of GDP….

Now that which is very, very unlikely:

These projections assume that the proposals are enacted and remain unchanged throughout the next two decades, which is often not the case for major legislation. For example, the sustainable growth rate (SGR) mechanism governing Medicare’s payments to physicians has frequently been modified (either through legislation or administrative action) to avoid reductions in those payments. The projected savings for the Chairman’s proposal reflect the cumulative impact of a number of specifications that would constrain payment rates for providers of Medicare services. The long-term budgetary impact could be quite different if those provisions were ultimately changed or not fully implemented.

The Baucus plan, just like the House plan, derives the majority of its “savings” in cuts in Medicare spending. However, as Peter Suderman at Reason’s Hit & Run explains, the likelyhood of those cuts ever being made, at least to the point necessary to reduce the deficit, is poor at best. Why?

Because of the mechanism the bill uses to make them:

It’s true that the Baucus plan, which creates a commission to figure out how to cut Medicare costs, sets up a slightly more robust framework for cost-cutting than currently exists. But that commission still only gets to make recommendations, and Congress still has the power to block them.

To review – in order to meet the CBO numbers, the bill must be enacted and remain unmodified for two decades. And, Congress must enact the Medicare cuts to the level required of the bill to achieve those reductions.

I ask you – what would you bet on either of those things actually ever coming to pass?

~McQ


Here’s A Pro-Business City

Yeah, you probably thought immediately, “he’s being facetious and talking about New York city”. Ah, you got me. From Jacob Sullum at Reason:

Vince Nastri III paid $9,000 for the coffee machine he installed in his lower Manhattan tobacco shop. Now it could cost him thousands of dollars more. The city’s health department is threatening him with fines, saying he is operating a “food-service establishment” without a permit, even though the coffee is free. Nastri could apply for a permit, but then his customers would no longer be allowed to smoke.

Damned if he does, no coffee if he doesn’t. Tell me, since when did it become any government’s job to decide whether or not you could offer free coffee to customers of your establishment if you chose to do so?

And does this mean that lawyer’s and doctor’s offices which offer free coffee to clients and patients are “operating a food-service establishment without a permit”, or is this really just a bit of selective targeting and enforcement to harass an out of favor business?

Well, unless I see a lot of citations in the coming months citing business establishments of all types and sizes who provide coffee to their employees or customers as “operating a food establishment without a permit”, I’ll have to conclude its the latter.

~McQ


Death Of An Era?

That’s what Nick Gillespie at Reason hopes the death of Ted Kennedy signals.

Gillespie says that when all the lionizing of Kennedy is said and done, a little perusal of what he has been responsible for during his tenure is called for. And, while doing that, we should ponder the effect on our national culture those pieces of legislation have had. After making that analysis, freedom loving people should vow, “never again”.

The legislation for which he will be remembered is precisely the sort of top-down, centralized legislation that needs to be jettisoned in the 21st century. Like Sen. Robert Byrd (D-W.V.) and the recently deposed Sen. Ted Stevens (R-Alaska), Kennedy was in fact a man out of time, a bridge back to the past rather than a guide to the future. His mind-set was very much of a piece with a best-and-the-brightest, centralized mentality that has never served America well over the long haul.

Bigger was better, and government at every level but especially at the highest level, had to lead the way. In an increasingly flat, dispersed, networked world in which power, information, knowledge, purchasing power, and more was rapidly decentralizing, Kennedy was all for sitting at the top of a pyramid and directing activity. In this way, he was of his time and place, a post-war America that figured that all the kinks of everyday life had been mastered by a few experts in government, business, and culture. All you needed to do was have the right guys twirling the dials up and down. As thoughtful observers of all political stripes have noted, this sort of thinking was at best delusional, at worst destructive. And it was always massively expensive.

We are, at this very moment in time, confronting both the cost and the damage wrought by the Kennedy legacy. And the administration in place is, hopefully, the dying gasp of that sort of 20th century thinking brought forward by political impetus alone.

The real message of the August townhalls is that the American people have had enough of that sort of thinking and that sort of legislating. What you’re hearing and seeing are a people beginning to understand and reject the Byrds, Stevens, Kennedys, Obamas and Pelosis of the political world because the price, both literally and figuratively, has become much too high in terms of the their money and their liberty.

Ted Kennedy did what he believed was right and good for America. He was, as Gillespie says, a man of his time. As with all men, his time has passed. It is also time to bury his legacy because just like him, its time has passed as well.

~McQ


Paid ‘Volunteerism’ – An Oxymoron

Nick Gillespie at Reason is none too impressed with the new Edward M. Kennedy Serve America Act just signed into law.

At a mere 5.7 billion dollars +200 mil in “stimulus” funds – and yes I’m being facetious (and don’t worry, they’re saving 100 mil among the administration cabinet) – we get legislation that:

reauthorizes and expands national service programs administered by the Corporation for National and Community Service, a federal agency created in 1993. The Corporation engages four million Americans in result-driven service each year, including 75,000 AmeriCorps members, 492,000 Senior Corps volunteers, 1.1 million Learn and Serve America students, and 2.2 million additional community volunteers mobilized and managed through the agency’s programs.

Or an expansion of the Community Organizer’s Full Employment Act if you really want to come clean about it.

Paid “volunteerism”. Is that government’s job?

And as Gillespie points out, the language under which this is organized – and I use the term loosely – is rife with opportunities for urban entrepreneurs to “benefit” mightily from things which will be extremely hard to measure (even though it claims, in the language, to have it covered):

The Serve America Act, which goes into effect on October 1, would increase and enhance opportunities for Americans of all ages to serve by increasing AmeriCorps from 75,000 to 250,000 positions over the next eight years, while increasing opportunities for students and older Americans to serve. It will strengthen America’s civic infrastructure through social innovation, volunteer mobilization, and building nonprofit capacity. The new law is also designed to strengthen the management, cost-effectiveness and accountability of national service programs by increasing flexibility, consolidating funding streams, and introducing more competition.

Ye gods – what could go wrong with that?

And this, as Gillespie points out, in the face of attempts to limit charitable tax breaks for the income class which makes most of those donations and are the engine for much of the charitable giving. Make sense?

Well, it does if your entire focus is to see how dependent on government you can make the population, certainly. This is another example of a liberal wet dream.

But what you should keep in mind is it was begun under Clinton and survived 8 years of a Republican administration.

Tell me – whose fault is that?

~McQ