Free Markets, Free People

Monthly Archives: October 2010


How did Democrats end up in this situation? Lack of leadership at the top

Gloria Borger, although she apparently doesn’t know it, has described why Obama and the Democrats are looking at the distinct possibility of an electoral avalanche that will sweep them out of the majority in the House in November.  As Borger notes, when Obama took office, it seemed it was a Democratic majority built to last for years.  Now “years” is down to “two”.

She points to one reason that is typical of any politician who wins an election – they read more into their win than is actually there:

Obama was elected as the corrective to the Bush years. Yet when you’re the winner, the temptation is always there to see yourself as something more than just an alternative — something larger, like a paradigm-changer or a transformational political figure. And Obama wanted nothing less than a change from conservatism to his own brand of 21st century activism.

"When you win an election," says political scientist Bill Galston, "you are always inclined to believe you won for the reasons you wanted to win."

In other words, you believe you won for the big stuff, not just because the voters didn’t like the other guy.

Watching Obama’s fading approval numbers and the ever increasing resistance to his agenda, it becomes clear that it was mostly about ‘the other guy’.

But there’s a larger point to be made as to why Obama and the Democrats are in the electoral shape they enjoy today:

Think back to the beginning. There’s an economic crisis, which the public believes Obama inherited. Then there’s his bucket-list of things he wants to get done. He has a choice: Handle the crisis or do the campaign to-do list.

And what does Obama decide? To do both. That is, the economy plus the rest of it — including health care.

"The irony is he didn’t even run on health care," says one Democratic pollster. "In truth, it wasn’t a large part of the general election campaign."

Interesting point.  “He didn’t even run on health care”.  Well he mentioned it, but it wasn’t his signature campaign issue.  But it sure was Nancy Pelosi and the liberal caucus’s number one priority – a wet dream they’d had all their lives.  And so while the economy was melting down and should have been the single dominant issued for the White House (and Congress), Obama allowed himself to be seduced into using all his political capital for something that wasn’t that important to the American people.

Borger attempts to make excuses for Obama that simply don’t ring true and certainly don’t pass the smell test:

Obama became convinced that solving the health care mess was key to solving the nation’s economic problems, especially bringing the deficit under control. In fact, when he first spoke of the importance of health care reform, it was all about "bending the cost curve," a slogan lost on most of the public.

BS.  Any sane person, with even a cursory understanding of economics, knew that the program outlined in the monstrosity that has since become known as ObamaCare had as much of a chance of “bending the cost curve” down as Togo becoming the first nation in the world to land a man on Mars.  Obama’s agenda was hijacked by Pelosi, et al, and he refused to stand up to them and say, “no – it’s the economy stupid”.

Democrats instead quickly passed an ineffective trillion dollar pork laden stimulus bill guaranteed to keep unemployment under 8% (or so they claimed) and then essentially turned away from the nation’s most pressing problem – other than to occasionally give it lip service – to their pet project, health care “reform”.

Borger claims it was Obama’s “ambitious agenda” that did him in and that the agenda “fed into the GOP narrative”.  Unfortunately, at the point this was done, the GOP had no narrative.   They were in a state of disarray and both powerless and voiceless. 

No, the “voice” came out of townhalls.  The “voice” showed up at “Tea Parties”.  The “voice” expressed anger and frustration.

And what the “voice” was saying and continues to say is Obama and the Democrats made the wrong choice when they chose health care reform over working on the economy.

Nothing’s really changed either.  Most of it – the position Democrats are now in – isn’t a result of any GOP narrative.  It isn’t even necessarily because of the bad economy.  It is a result of a poor leader caving into a special interest caucus within his party and putting that caucus’s priorities in front of the people’s priority.

Pretending it was anything else is simply nonsense.  Democrats are facing an electoral avalanche in November because Obama let Pelosi and Reid usurp the leadership role that was his.  And now they get to pay the butcher’s bill.

~McQ


The political class – how did we end up with these people?

Any political junkie worth his salt has at some time or another looked around at the wreckage that was once a proud country and asked, “how in the world did we get here”?

Simple – we allowed a malignant political class to arise and we, for some reason, chose to allow them to handle our affairs of state without close monitoring that is the job of any responsible citizenry.  The bottom line is we’ve been badly represented by that political class and we’re getting very close to “paying the piper” time.

So how did we get here?  Well I’ve been of the opinion that the perks and power that today’s politics promise are so heady and attractive that they draw a particular type person to pursue such positions.   Maybe not as much at local levels, but certainly at state and most definitely at a national level.  And for the most part this personality type is not who we want in those positions.

At one time, holding office was seen as a public duty, a service and temporary in nature.  A person served their time, did their duty – usually at a loss earnings-wise – and then went back to their former life.

Not anymore.  Now we have the Bill Clinton-type personalities whose entire focus in life is to become a politician.  It isn’t about duty or service anymore, it’s about a career and the trappings of power that go with it.  Couple that with a belief that they know better than you what your priorities and responsibilities in life should be and how you should live it, and we end up where we are today.

When the priority changes from being about service to being about a career, the incentives change as well.  Under the first scenario, a politician would consider it his or her duty to be a careful steward and do the people’s business with an understanding that his decisions will effect him and his family too.  He’d also have an incentive, then, to face difficult problems and solve them quickly before they get out of hand.  He’d also be less inclined to worry about the “political” effect of tough decisions since he had no designs on staying in the position of power any longer than necessary to fulfill his obligation to serve.

However, when the focus is on a career in politics, then the focus is decidedly not on the people’s business, but instead on that person’s business – their career.  And maintaining that career and lifestyle and the power that comes with it becomes the first and dominant priority.

Those wishing to get elected and stay elected must be prepared to break every moral rule they have ever known if the ends justify it. Economist Frank Knight notes that those in authority, "would have to do these things whether they wanted to or not: and the probability of the people in power being individuals who would dislike the possession and exercise of power is on a level with the probability that an extremely tender-hearted person would get the job of whipping master in a slave plantation."

That paragraph describes, with exceptions, the dominant political class in charge of our country’s politics today.  It also helps explain why they’re so out of touch with the rest of the country.  Their focus is inward, their constituency is within the party and the beltway, not the populace and they attempt to keep power by throwing out just enough bones to keep the populist dogs at bay.  They ensure reelection through devious device only open to incumbents known as  “constituent services” which in reality means they offer the only remedy to a situation or law they helped create and propagate to those caught up in its consequences.

In other words, all our politics now are about serving special interests and using those special interests to maintain elected office or advance to higher ones.  The issues themselves are somewhat incidental to the process of maintaining or advancing in office.  If it is useful to that end, then we’ll see politicians blather on about fixing this or doing that. 

For the most part, however, not much really gets done.  Oh some money may be thrown at a ”problem” and some bureaucracy set up or a study done.  But no solution is really ever forthcoming.  Look at how long Medicare and Social Security have been identified as future fiscal black holes.  Show me where anyone – anyone – has seriously addressed the real problems we face with them (and no, ObamaCare doesn’t address the Medicare problem, it instead exacerbates it) and taken steps to solve them?  We’ve seen them talked about endlessly.  We’ve seen accusations fly from one side to the other and back.  But when all is said, nothing is done, and the can is once again kicked down the road while politicians point fingers at everyone but themselves.

Meanwhile, those in power stay in power and the only thing that changes is the amount of money you and your family owe due to their profligacy.

Is it any wonder the Tea Parties have arisen?  My only question, looking back over the years, is why did it take so long?

~McQ


About that burned down house — let’s set the record straight

Lots of libs claiming, as Libby Spencer has, that the firefighters who watched a man’s house burn down because he hadn’t paid his fee is representative of the reality of a "conservative/glibertarian free market utopia" (her words, not mine) that we libertarians talk about.

As it turns out, it is nothing of the sort.

It turns out, though, that the fire department in Tennessee was not a private for-profit fire department. It was a government-run fire department. You read that right: the fire department that refused to show up and refused to name a price at which it would show up was run by the government of South Fulton.

Yes, that’s right, it was a government run fire department.  We libertarians are always proposing government do more, aren’t we?  To Spencer’s credit she mentions that factoid a little further on in her post . But she’s already poisoned the well by then. You’re left to think this is what a "for profit" or "subscription", or to use the words the left usually spits out when saying them, "free market" form of fire service might look like.

Not really.

As David Henderson points out, in the "free market" version, it is very likely the fire service would show up and charge you appropriately:

You would think at some price, the fire department would show up. After all, a private for-profit fire company could make some good money doing so and, by charging high enough, could limit the incentive for people not to pay in advance for protection.

Standing by is not logical for a company which gains its earnings by doing that sort of work and, at the time of the fire, it’s a seller’s market isn’t it?  But you don’t get paid unless you put the fire out. 

And there are examples of exactly what we’re talking about. Henderson links to one that provides services in rural Arizona.  Here’s a portion of what it says under “services”:

Service Models:

There are four different models Rural/ Metro Fire uses to provide fire protection services. Descriptions are listed below. If you are unsure which service model Rural/ Metro Fire uses to protect your home or property, please call customer service so that we can let you know.

Fire Service Accounts – In select unincorporated county areas where taxes do not pay for a Fire Department, residents are responsible for setting up an account directly with Rural/ Metro Fire Department to provide fire protection services. Annual fees are based on the square footage of the enclosed property. For more information on a Fire Services Account call your area’s customer service department.

Now you have a choice here, don’t you? Sign up and be protected or blow it off and take your chances. And while I’m not here to defend a government run fire department in Tennessee, it’s the same choice the man there had.  He chose to blow it off and paid the consequences for his decision, didn’t he?  But we know invoking personal responsibility is simply passé, especially if the person involved in the rant thinks they can pin something on the right? 

Anyway, the probable difference is in a “pay for service” libertarian situation, it is more likely that the fire service chief on the scene and home owner would have quickly reached agreement on a price to save his home.  There’s an incentive for the “pay for play bunch” to reach that agreement.

However, government is more about bureaucracy and rules than it is incentive.  If the fire chief on the scene was a government worker he would most likely have no power to make such a decision.  And the fire fighters in question would have absolutely no incentive to fight the fire and every incentive not too – after all, this guy was a deadbeat and their rules said no pay, no play and they saw no reason to break the rules and risk their lives for someone who hadn’t thought enough of them or their service to subscribe.

So in reality, this wasn’t some libertarian fantasy gone awry.  It was a government driven decision with a pretty drastic consequence.  Apparently the government had not been able to imagine a contingency where this might happen, or, if they did, they seemingly had no plan to address it.  Most would call that “inept governance”, not a failure of libertarianism.

Oh, and the “county mayor” of Obion County TN? A Democrat:

Benny McGuire is announcing his candidacy for re-election to the office of Obion County mayor in the May 4 Democratic primary. McGuire said the last 31⁄2 years have been very busy and have been productive for the entire county.

Hmmm … how inconvenient.

~McQ


“You can keep your plan…”

…for as long as your health care plan exists, anyway. Which, for retirees of the 3M corporation, it no longer will. It seems that the passage of Obamacare has prompted 3M to join the rush for the door in terms of providing health care coverage.

As we’ve noted repeatedly here, the claims that you could keep your health care plan and physician could not possibly be true, as the “reform” package set up perverse incentives. What we are seeing is precisely what we predicted. Corporations and insurers are responding to Obamacare’s  incentives by getting out of the health insurance business. Because that’s what the law’s incentives urge them to do.

It really is one of the most basic principles of economics: people respond to incentives.


Quote of the day – health care version

Got a huge chuckle out of Steven Levitt’s opening sentence at the Freakanomics blog:

Many economists view the health-care bill passed in the U.S. earlier this year as falling somewhere between “a complete waste of time” and “actually making the situation worse.”

Indeed.  In fact, I’d have to go with the “actually making the situation worse” determination, given what we’ve seen this past couple of weeks as more and more companies react to the impact of the legislation.

The context of Levitt’s remark is a story by Delia Lloyd talking about the UK going in precisely the opposite way.  Yes, a country which has had socialized medicine for over 60 years is looking at taking steps for a more market-based health care system, with the belief it will improve the British system.

Markets?  Pricing signals?  Competition? 

Nah, our Congress just rejected all of that – couldn’t be a good thing.

[/sarc]

Why are we always 60 years late and a dollar short?

~McQ


MSNBC – it can’t be the message

Yup, nothing like a new tag line, finally admitting your bias and a marketing campaign to boost your viewership.  Guaranteed, by gosh:

MSNBC, once the also-ran but now the No. 2 cable news channel, has a new tagline that embraces its progressive political identity.

The tagline, “Lean Forward,” will be publicly announced Tuesday, opening a planned two-year advertising campaign intended to raise awareness of the channel among viewers, advertisers and distributors.

The tagline “defines us and defines our competition,” said Phil Griffin, the president of MSNBC, his implication being that the Fox News Channel, which is No. 1 in cable news and a home for conservatives, is leaning backward.

Really?  That’s the best MSNBC could come up with?  Is it sending tingles up Chris Matthew’s leg?

Talk about lame.

Apparently the brainiacs at MSNBC think that saying “lean forward” and advertising it will make all the difference in the world.

Research, you see, told them they were the least known of the three cable networks (I could have told them that for free).  Obviously then, it’s a marketing problem, no?

Ms. [Sharon] Otterman’s [the chief marketing officer for MSNBC] lesson from that research: “All we have to do is tell our story to more people.”

She added in an interview, “It’s not that the look is changing. It’s not that the programming is changing. It’s that we’re going out and telling people about it now.”

Yesirree – because in reality:

“It’s not that the look is changing. It’s not that the programming is changing. It’s that we’re going out and telling people about it now.”

Uh, yeah.  It couldn’t be the message or the programming, could it?  It has to be that they’re just not getting the word out there effectively.

Lord – they sound like the Democrats.

~McQ


Death Panels? What death panels?

Rationing?  Never.  “Death panels?”  No such thing! When government runs your health care they won’t act like those evil insurance companies that deny you treatment.  Wasn’t that the promise?

A controversial new policy by the Arizona Health Care Cost Containment System depriving hepatitis C patients coverage for liver transplants is effectively a death sentence that, left unchecked, could have far-reaching consequences for millions of Americans afflicted with chronic viral hepatitis, the National Viral Hepatitis Roundtable (NVHR) said today.  

The new coverage exclusion governing liver transplants took effect Friday as part of broader Medicaid coverage changes made by the state of Arizona in response to budgetary pressures.

I’m not here to call for unlimited spending or every procedure to be okayed. I understand budget constraints.

However, critics have said that the sort of rationing and denial of care that is demonstrated above was an inevitable outcome of government taking over health care.  Those that referred to this type rationing as “death panels” were denigrated and demonized. 

Now I understand that while Medicaid is a government run program, it is a state run program that is subsidized by the Federal government to some extent.

But ObamaCare has pushed new mandates down on the states by expanding coverage and the states are faced with making literal life and death decisions concerning the affordability of care for those in their system.  This is only one of many “death panel” decisions that are going to eventually effect the lives of millions.

All foretold and inevitable. 

In other ObamaCare news more of the foretold and inevitable:

3M Co., citing new federal health laws, said Monday it won’t cover retirees with its corporate health-insurance plan starting in 2013.

Instead, the company will direct retirees to Medicare-backed insurance programs, and will provide reimbursement for that coverage. It’ll also reimburse retirees who are too young for Medicare; the company didn’t provide further details.

Apparently after reviewing the law 3M concluded that even with a subsidy offered in the legislation, it was more costly to keep the coverage than abandon it:

Maplewood-based 3M (NYSE: MMM) is one of the first large companies to indicate that it won’t tap a large federal-government reimbursement program created by Congress as part of the health insurance reform package, The Wall Street Journal reported. The rebate program was meant to encourage employers to keep in place their health-insurance plans for retirees.

Obviously, by 3M’s reading of the law, the “federal-government reimbursement program” didn’t offset the cost of keeping retirees in the system.  As you see more and more of these stories pop up – and you will – you have to begin to wonder if this isn’t a deficiency by ignorance or design – a bug or a feature.

As this goes on, you can’t help but feel it is more the latter than the former as such actions by companies move us closer and closer to a single payer system.  And when that inevitably happens, it will be characterized as the fault of greedy corporations and, of course, “market failure”.

Fair warning.

(HT: Rod F)

~McQ


ObamaCare – proving the critics right daily

In the middle of last week the buzz was all about McDonalds possibly dropping its health care coverage for its employees because of a requirement called the “medical loss ratio” which mandates that insurance companies spend 80 to 85% of the premium on health care.  Because of the McDonalds business model, that’s not possible.

Not to worry we’re told, the administration will work it out with McDonalds.  No word on how those businesses in the same boat but that don’t enjoy the political heft of McDonalds will fare.

Earlier in the week we were alerted to the fact that Harvard Pilgrim Health Care will be dropping coverage on about 22,000 senior citizens in the Northeast.  Again, thanks to ObamaCare, the promise that if you liked your insurance, “you could keep it” was clobbered by the reality of the law.

Last Friday, two new developments foretold by the critics came to pass.

The first is that the Principal Financial Group has made the decision to stop offering health care insurance as a direct result of the new law:

At the Principal Financial Group, the company’s decision reflected its assessment of its ability to compete in the environment created by the new law. “Now scale really matters,” said Daniel J. Houston, a senior executive at Principal, which is headquartered in Des Moines. “We don’t have a significant concentration in any one market.”

The decision will affect approximately 840,000 Americans.  Principal’s insurance product was mostly offered through employers.  It’s assessment of the law and what it would cost the company gave it no choice but to quite offering the product.

“If you like your insurance, you can keep it.”

Finally, another problem that critics of the sweeping health care law said was as inevitable as Principal’s decision.  A report today says ObamaCare will worsen the doctor shortage:

The U.S. healthcare reform law will worsen a shortage of physicians as millions of newly insured patients seek care, the Association of American Medical Colleges said on Thursday.

The group’s Center for Workforce Studies released new estimates that showed shortages would be 50 percent worse in 2015 than forecast.

"While previous projections showed a baseline shortage of 39,600 doctors in 2015, current estimates bring that number closer to 63,000, with a worsening of shortages through 2025," the group said in a statement.

Legislation passed by Congress is always criticized by some faction or another.  Rarely, however, is it ever 100% correct.  But in the case of ObamaCare, that may change.  Thus far almost every criticism and warning leveled by the opposition to this monstrosity has been shown to be true.  Unfortunately we’re just now beginning to see its impact. 

Stay tuned for more and more of the critics arguments to be proven right as we wend our way into this almighty mess created by Congress and the President.  Today’s news is reason enough to jettison the entire mess as soon as the numbers line up correctly in Congress and the right person is in the White House.  Hopefully we’ll only have to wait a couple of years for that all to be in place.

Read more at the Washington Examiner: http://www.washingtonexaminer.com/opinion/blogs/Examiner-Opinion-Zone/bruce-mcquain-ObamaCare-is-proving-the-critics-right-daily-104181874.html#ixzz11Q1umhRD


Progress by fiat

The Obama administration is considering requiring US car makers to meet a CAFE requirement of 62 MPG by 2025. That is, of course how progress usually works: A beneficent, wise, all-knowing, government authority makes a decree, and the world magically changes to accommodate the desires of our political overlords.

Of course, it’s perfectly possible to make 62 MPG cars now. They just have to have tiny engines, and be extremely small and light. Who wouldn’t want that?

On the other hand, maybe steam-powered vehicles will make a big comeback.


Economic Calendar: 10/04/10

Pending sales of existing homes rose 4.5% last month. They’re still 18% lower than the same month last year, however.

Factory orders declined for the third time in for months. Orders decreased by 0.5% to $408.94 billion, the Commerce Department reported. The decline was led by a 1.5% decrease in durable goods orders.

However, capital good orders rose more than expected. Orders for non-military capital goods, excluding aircraft, rose by 5.1%.