Month: May 2017

Killing the Golden Goose: An economic primer in free market capitalism for Elizabeth Warren wing of the Democratic Party

When I was in college, back when Religion and family was still a mainstay of traditional society, I had professors singing the praises of Marxism and decrying the excesses of capitalism. They appealed to the softer side of human nature. They were appalled by the rise of the “corporate culture”. Every corporation was a predator, which disregarded the human being in a never ending quest for profit. Corporations you understand measure their success by profitability. It is their metric to measure their success. They saw the government as the only savior from this corporate plague. The force of government could intervene and by placing its finger on the economic scale insure the net worth of the individual was respected. All praise be to populism as long as it was the bicoastal populism at that time headquartered in the northeastern part of our country. The bi-coastal elite prioritized government entitlement programs over economic productivity.

News flash, Liberals! People in government cannot and will not agree on creation of an entitlement utopia. Government is flawed. It is extremely divided and will be for the foreseeable future.

We live in a country where, the citizens have a diverse system of values and by a slim majority still believe in economic freedom, although thanks to educational brainwashing, they are frequently unable to articulate this precise principle.

The principle of economic democracy, which is the cry of the social justice crowd, is simply a disguise for populist economic tyranny. (Exercise of governmental authority to limit economic freedom. Yes, government by necessity is an exercise of power over the populace,) they advance uniform business practices, which encourage an uninformed consumer, and which are in line with a liberal social agenda. Businesses can either adopt the desired policies and practices or face a prohibition of their business model. There is no room for initiative and product improvement or expansion through increased efficiencies. i.e. Let’s use 1938 wage and hour practices in today’s economy because a portion of the populace choose a union to represent them, so there can be no economic advance beyond this model. The primary method of advancing their economic engineering agenda is the corporate and individual income tax code. Doubt me? How many economic decisions are made solely based upon the tax code. When you start a new employment, think about the number of documents you sign because of the federal tax code.

The federal income tax code is based upon a flawed model. It punishes the very vehicles, which create wealth. Why don’t we tax only individuals (flesh and blood people), when funds are disbursed to them as income (money for their personal use). If income is used in a business for a business purposes, (a means to produce a product or service) it is moving and should be encouraged and not taxed. When it moves to an individual for their personal use, it should be taxable. The rich would pay more because of the progressive tax system. We could retain the capital gains provisions to encourage investment. We would encourage dividends. They are a good income source especially for those, who are too old to actively be employed as well as for those seeking to save for their daily lives. We would no longer view the corporation as a wealth store, which can be raided by liberal lawmakers to advance their entitlement agenda. This removes the hidden tax that plagues consumers of US businesses

Their promotion of their form of economic democracy is killing capitalism. It is akin to death by one thousand cuts. Their policies limit economic expansion and kill wealth creation and ultimately jobs. They assume a one size fits all approach serves the diverse US population. They espouse biblical principles to guilt the populace into complying with their collectivist ideas. Their mantra: corporations are evil and government is the answer to the corporate greed problem.

How do they guilt the populace? They point out that we are the wealthiest country in the world and never acknowledge that our wealth has established a standard of living, which is the envy of much of the world. They point to biblical teachings and claim that government should provide for all. They obviously forget that biblical teachings are directed toward the individual and not the government. Doubt me, see Mathew 22:21. Give to Caesar. Additionally, the free market offers opportunity for the individual through their effort (service) to give to others. We don’t need the government telling us how to best help our fellow man. Our creator gave us free will. If the right of free will is acceptable to him, it is also acceptable to me. There is room for charity. Charity is a voluntary giving versus government, which is enforced and imposed taking for a majority agreed upon endeavor. (Usually a moral compromise) Government was to be used as a last resort and for limited purpose) See the US Constitution enumerated powers provisions.

It is also popular they say something is a right. I.e. healthcare. Natural rights are not dependent on the services of others to accomplish. Who will you coerce to render care for those who cannot pay? Is it okay to require involuntary servitude to enforce this right? If the populace doesn’t produce enough to cover shortfalls, how is the shortage rationed in the population? The free market allow for rationing through price. It also affords opportunity to increase the country’s wealth thereby raising all. It is pointed out that some will get great amounts more. This is greed! Each person has the responsibility not the requirement to give back. This is free will. It works in this country. Witness our standard of living versus the collective society such as the former USSR.

What about European socialism? Our country has many diverse cultures. Many of the “success stories” surround cultures with a less diverse culture. Perhaps one size fits all is acceptable to their populace, but it cannot be imposed here! We as a people do not subscribe to a single set of values and this country permits one to give back as he or she sees fit and still we have a very high standard of living for all.

What about a minimum wage? Why should we prohibit someone from contributing because they seek less compensation? Is it better to have someone not contribute or to contribute and receive less compensation? Don’t different levels of compensation encourage increase in skill levels in order to increase compensation, if that is what is sought? No say the liberals you should be able to support yourself on a federal minimum wage! Maybe even a family of four without regard to your productivity and without regard to whom you exclude from the workforce by your imposition. “From each according to their ability and from each according to their need.” This is the cry of the Marxist populace clamoring to increase their rightful share of the pie. But who decides need and who decides the ability? This is Marxist utopian idealism, which doesn’t take into consideration differences in religious values, cultural norms or family values and even some might argue differences in work ethics. I refer the reader to the fiction “Atlas Shrugged” by Ayn Rand specifically the chapter about the socialist auto company experiment. Click the link to read a short excerpt. This excerpt is a thought provoking exercise about what happens, when needs exceed ability in a socialistic situation.

h2>Conclusion

Government involves use of force by a political majority over an entire populace. The US federal Constitution promotes a minimal use of this force for limited purposes.

The US population is diverse with different religious and moral values, which are not suited for one size fits all solutions.

Christianity does not demand government intervention. It requires individual action. If you believe in Christianity, then you believe in free will. Exercise of free will requires individuals to do unto others… If our creator saw fit to allow us to choose for ourselves how to live, why should we not respect the individual’s right to choose?

Minimum wage is a flawed one size fits all solution, which sounds good, but fails to account for differences in individual circumstances and discourages growth and economic inclusion by effectively barring some classes of workers from the workforce under the auspices of assisting the poor.

Corporations and businesses are vehicles to creating wealth. They are neither good nor bad; their practices are determined by their ownership. They can be great wealth creating vehicles or hoarders of wealth. Their judgment is left to the populace, who decide by their purchases. Their individual choices aggregate and determine business success. These choices taken together are vastly superior to any political choice made by government officials (Remember, politics is defined as who gets what, when, where and how.)

Healthcare Reform: More than simply redistribution of insurance cost!

1) Accept that life is not fair and government can not make it fair.

2) Accept that markets are efficient allocators of resources, which will reallocate human and capital resources to meet needs and allows for individual freedom and is not dependent on political power to meet those needs.

3) Accept that human systems are not perfect. There is a place for charity. Charity fills in the gaps or fills in during intervals between resource reallocations. Charity maybe individual,familial,or institutional. It is different from governmental programs because it is based upon a voluntary exercise of personal choice and not an exercise of majority power,

4) Accept that insurance companies are not the sole driver of cost. Health insurance is not and should not be equated to healthcare. Access to insurance does not equal good healthcare. Insurance companies are not inherently good nor are they inherently bad. Health insurance itself is not the sole answer to provision of adequate healthcare and it should not be treated as such.

5) Big government solutions are exercises of power and societal promises that even when outdated they are not rolled back and seldom evaluated in light of a changing environment.

How long will we persist in our belief that government can care for individuals from cradle to grave?  We continue to prop up  every failed government progam and deceive the public as to their long term sustainability.

Now we are on the verge of ushering into permanency unsustainable government health insurance for some unknown number of additional insured’s at the expense of all.  The true costs of this program cannot be determined.  (Congressional Budget Office (CBO)projections have proven themselves inaccurate.  See initial Medicare cost estimates as one example and Obamacare projections as a second example of inaccuracies) Democrats argue that the system would be sustainable with just a little more income redistribution and single payor solution just like the unsustainable medicare program.   (Perhaps the Democrats should campaign on a new more robust second coming of the VA Health system.)  The solvency of the Medicare trust fund is only guaranteed at 100% to 2024.

It is argued that this is the best system available because it removes the profit motive of the private sector. Please consider this.  There are already non profit options available in the insurance universe and when a government solution is adopted, it is seldom evaluated to determine its cost effectiveness or its sustainability.  Only a crisis precipitates second look at a program, then the program is reinvigorated with additional taxpayer funds, but never seriously scrutinized for efficiency and effectiveness.

Never is there consideration given to the lost opportunity cost, when adopting such  programs.  What do I mean by this?  Programs are adopted institutionalizing payment structures and distribution techniques available at the time of adoption,   This means a fee for service structure will be perpetualized in any health insurance solution.  Innovative cost and life saving measures will not be pursued, as long as a government subsidized consumer base is guaranteed to insurers and health care providers.

Insurance principles are supposedly built into the healthcare system except in instances, where the outcome is disliked by the citizenry or seen as “unfair”  e.g. Insurance is about many paying a small amount (premium) for protection against unlikely risk.  If the cost (risk)is guaranteed, it is no longer insurance.  It is redistribution.

Life is not fair and we can not wish and make it so, nor can we design a human insurance system to handle all circumstances without creating staggering insurance premium increases.  We refuse to allow those with chronic preexisting conditions to pay more in premium as required in the private insurance market,(even if the chronically ill potential insured’s have the ability to pay more) so we mandate acceptance at prescribed rate despite the built in additional cost of insuring these individuals.  This guarantee increases premium for all and prices many out of the market or provides coverage with obscene deductibles.

We demonstrate our distaste for the economic facts by characterizing any, who oppose this type of (health insurance) socialism as discriminators or haters, who wish others to go away and die.  Be honest!  This is a small group of individuals.  Most will be absorbed into a group plan through employment.  Some have the ability to pay increased premium or will be self paying.   Some will be treated in poverty programs and some may need charitable assistance.  Finally as a last resort, some may need assistance from a non insurance health assistance fund.  Why demand change to the entire health insurance industry to cover these relative few.  Please be honest and admit some of these individuals simply are not insurable for the same rate as the general population.  We may not like it, but it is not discrimination and it is an economic fact

We ignore the insurance principle of adverse selection, which states those most in need of benefits will flock to secure them especially, when available at an artificially low cost, while the young and healthy will simply assume the risk and move forward without coverage.   We attempt to overcome this hurdle by an employer mandate and an individual non insurance penalty.  The mandate so repulsive to many, so we push back compliance dates and minimize repugnant penalties in a dishonest effort to avoid electoral consequences. The penalty is so minor that many simply opt to pay it.  Meanwhile many potential insureds wait and upon receiving a diagnosis of cancer, diabetes (insert your chronic ailment here), then secure coverage post diagnosis and guaranteed future costs are spread over a small individual state market unfit to absorb the these extensive costs.  There is no urgency to sign up prior to need, when acceptance post diagnosis is guaranteed at the same cost.  Cost is distributed to the individual state market place raising the cost for everyone in that subgroup of insureds.

Remember politics is who gets what, when and how.  The market is the result of billions maybe trillions of choices made by individual consumers and families.  Each consumer or group of consumers acting in what they believe to be their best interest.  If a need arises, it is in the interest of someone or group to fill the need or the need maybe altruistically filled by voluntary giving.  (that’s right voluntary as opposed to entitled receipt.  Witness such charitable organizations as St. Jude’s Hospital, American Cancer Society and numerous other charitable non profit and individual healthcare benefactors.)  The private company or group in the private market is  rewarded for their risk taking by reaping a profit.  (not evil in fact frequently is distributed to shareholders including workers, who invest their savings in companies and insurance products.) Government planning and action can not better decide allocation of resources.  I would argue it never will be able to accumulate and weigh the number of variables necessary to replace the market.

Government muddles through! Merriam Webster’s Dictionary defines muddling through as to achieve a degree of success without much planning or effort.  (Doubt me?  Consider many in government service positions are career employees (carryover employees, not true believers), which means during any administration they may not agree with the agency activities or even the  stated goals of any department or agency.  How much effort and planning should you expect from this group.  Then consider Congress, which seldom agrees on the means to accomplish any single objective and may not even agree as to the goal itself)  The result of all this cognitive dissidence is government muddles through its tasks and inefficiently utilizes resources and seldom, if ever accomplishes its stated purpose.  This is hardly an acceptable replacement model for any market, let alone something as important as the health insurance market.

So what is the answer?

1) Accept that life is not fair and government can not make it fair.

2) Accept that markets are efficient allocators of resources, which will reallocate human and capital resources to meet needs and allows for individual freedom and is not dependent on political power to meet those needs.

3) Accept that human systems are not perfect. There is a place for charity. Charity fills in the gaps or fills in during intervals between resource reallocations.  Charity maybe individual,familial,or institutional. It is different from governmental programs because it is based upon a voluntary exercise of personal choice and not an exercise of majority power,

4) Accept that insurance companies are not the sole driver of cost. Health insurance is not and should not be equated to healthcare.  Access to insurance does not equal good healthcare.  Insurance companies are not inherently good nor are they inherently bad. Health insurance itself is not the sole answer to provision of adequate healthcare and it should not be treated as such.

5) Big government solutions are exercises of power and societal promises that even when outdated they are not rolled back and seldom evaluated in light of a changing environment.

Conclusion

Repeal of Obamacare is a necessary first step. We can always tinker at the edges of the system and provide means for those, who fall through the cracks in the system. (While writing this blog entry, I was watching a news reporter state that preexisting conditions handled in high risk pools totaled 115,000 policies. This is not an unmanageable number and gives credance to the idea that many with chronic health conditions are covered under the existing group plans or covered under existing poverty programs or medicare for seniors. If there is a requirement to immediately address an unfulfilled need i.e. preexisting conditions. There is more likely to be a better solution, if it is addressed as an individual issue. You can more easily identify the scope of the problem and limit the solution. The issue is not better addressed in all encompassing comprehensive legislation. (What about a deal?) Some Democrats maybe moved to lend support to gain this coverage, since the signature Obamacare legislation would be lost to them.

If there is no essential benefits package, perhaps there will be no need to keep children on their parents plan well into adulthood and if there is such a need perhaps a small adjustment in premium could produce the same result without a permanent unpaid governmental mandate. Some individuals could secure catastrophic coverage and choose to self insure by savings for some smaller medical expenses rather then pay into a massive one size fits all government mandate.

 
Educate the public that the majority of Obamacare’s insurance increase stems from the welfare healthcare expansion. That is medicaid. Is this how we want to cover these folks long term?  Remember this expansion was accomplished by a massive federal assumption of the expansion cost. This can not be permanent. Medicaid expansion merely kicks the can down the road with no road map to permanently assist this group to get permanent healthcare. The need for help for this group should be realistically assessed. Perhaps funding could be sunsetted as innovative healthcare delivery models are advanced to provide more affordable care.

Demand your state governments remove impediments to healthcare delivery. Examine professional licensing requirements. Examine state medical curriculum. Make certain they address healthcare needs and are not merely justification for professional fee increases!  Modify your tort laws to decrease malpractice insurance expenses.