The Washington Times -- A proposal to tax health insurance companies who offer the most expensive coverage plans is gathering support in a key Senate panel as a way to pay for a portion of the health care reform bill.
Sen. John Kerry, Massachusetts Democrat, has put together a proposal to tax the companies that offer so-called "gold-plated" insurance plans...
The idea from Mr. Kerry would tax the insurer instead of the purchaser, which so far seems to be the key to acquiring more political support...
"We're interested in it, not for the sole reason of raising money, although it would do that," Sen. Charles E. Grassley, Iowa Republican and chief GOP negotiator on health care, told Bloomberg. "We're interested in it as a discipline within health care."
Health care analysts say the proposal is politically viable in part because it gives lawmakers a way around the House's proposal to apply a surtax on wealthy Americans.
"There's a certain appeal to it," said Lewis J. Hoch, partner at Blank Rome LLP in Philadelphia. "I think a proposal which has the benefit of generating revenue and furthering the ends of health care reform is a win-win."
The idea is that the most expensive insurance plans drive up health care costs because consumers don't realize the true cost of the health care services they use.
So when all else fails, call your opponents names, pull out the pejoratives, and demonize the minority. It's incredible how politicians are extolled for serving the public good, and yet, the aforementioned is exactly how they operate. You know you're dealing with a bad argument if it refers to health care plans tailored to the needs of different people as 'Cadillac plans' or 'gold-plated.' The whole notion of 'taxing the insurer' is fallacious, because an insurance company is not a living, breathing entity, but instead is composed of individuals who must turn to the market for insurance, too; 'punishing the insurer' is just a nice way of saying punishing a particular group of people for political purposes.
Notice when the free market, composed of the nonviolent, autonomous decisions of free people, fails to tell them what they want to hear, our 'public servants' decide to enforce 'discipline' and 'restraint.'
Last time I checked, a restraint on liberty is called tyranny.
Tuesday, September 8, 2009
Monday, September 7, 2009
Interventionist Chaos
That's how Hayek referred to our 'mixed economy.' He was absolutely correct, as this chart exemplifies:
This is a plot of wages over time for federal and private workers. It's alarming to note that not only have the past two recessions not retarded the growth of federal wages as compared to private wages, but also, as it stands today, the average federal employee earns almost $30,000 more than the average private employee.
This is a plot of wages over time for federal and private workers. It's alarming to note that not only have the past two recessions not retarded the growth of federal wages as compared to private wages, but also, as it stands today, the average federal employee earns almost $30,000 more than the average private employee. This is chaotic because the market, which uses prices to communicate information about all sorts of things, is made less efficient by the presence of an 800 lb gorilla named Uncle Sam. There is little coherence in turbulent times between federal employment (among many other things that the government does) and actual market conditions; the consequence is that the recession will manifest itself in other ways, chiefly, by further decreasing wages in the private sector, lengthening the duration of the recession, postponing credit market recovery, etc., etc.
I do believe these circumstances would be sharply mitigated if the state was not in charge of the money supply and delimiting what is and isn't money. Consider that state and local governments can't balloon their agencies and doles, without a more or less severe bite-back by the tax payers. Whereas the federal government can conceal its counter-fitting by inflationary stealth, state and local government finance operates in the open.
The situation is all the more chaotic, because many people look at the above graph or those like it and draw the conclusion that the government can do things that the private sector can't, that magnanimous legislators can somehow beat economic law and make us all better off. Thus, as has been the trend over the past 200 years, we become ever more entrenched in statism and bureaucracy. A mixed economy as a stable system is just false.
Friday, September 4, 2009
Perspicacious Pelosi
I'd say this video illustrates the fact that many of our elected leaders feel themselves and their decisions above that of the common man. It is somehow not O.K. for private individuals who own private property to engage in the same practices that our magnanimous leaders indulge in.
Wake up, electorate.
Thanks, Mark Perry.
Thursday, September 3, 2009
Gold and What to Do With It
For a more or less elementary analysis on whether to invest in gold, I would say there are two broad considerations to be had:1) Gold prices have multiplied within the past ten years, but the demand has especially grown since '08, and this is understandable, given the Fed's wickedly accommodative policies to "prevent a meltdown," and the general uncertainty/lack of confidence in the dollar that goes with the U.S. recession. I cannot help but be reminded of housing prices, and how they at one time multiplied year over year, too. I'm not making any direct comparisons, but I am versed in bubble economics to some degree. All I'm saying is that the stuff might not hit the fan as many people believe it will, leaving a lot of investors with surplus gold on their hands. With Bernanke's reappointment, and with seemingly everything that this administration does almost blowing up in its face (the precipitous drop in approval ratings hasn't been seen since the '60s), there could be extra political pressure on the Fed (yes, I said it)to tighten its wallet, I guarantee it. Regardless, rates will be targeted upwards eventually, either late this year or early next. For gold to "double" again, that is, break $2000/oz, I would imagine the Fed would have to keep its target (0%-.25%) for much longer or cook up some other kind of cockamamie idea.
2) Let us not forget about the $9 trillion debt over the next ten years, and that's just a prediction by the borrowers themselves. When the Fed does tighten, it will be at the same time that the spending in Washington really picks up, and I can't say specifically what will happen in particular sectors. However, if you've ever heard of the concept of "crowding out," I believe it's a fait accompli here. Interest rates will be especially prone to increasing in these ripe circumstances, and lending in the private sector will be adversely affected. That has negative implications for employment and the ability of businesses to pay back their debts; thus, I also believe that another recession, sooner rather than later, is not unreasonable. This would, of course, put pressure on other currencies and gold.
So, what do we conclude from this? I have no idea. I think this situation is much more unique than what some would have you believe, when they say to "look at the 1970s" or "remember 2001." I think there is some time yet to watch the tide of events, specifically, the health care debate, and the 2010 elections, among many other things. I wouldn't turn all my assets into gold just yet, but as a professor told me not too long ago, a %10 assets-in-gold insurance policy never hurt anybody in times like these.
Chart and other information can be found at Goldprice.org.
Ideas MUST be important if...
Lord Keynes said so:
"The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. Not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good and evil."
-J. M. Keynes, The General Theory of Employment, Interest, and Money, pp. 383-84.
With that, I agree with Peter Boettke here that someone will rise up and meet the challenges of the day, whether it be today, or tomorrow, or 428 years from now. And ideas are the way to go about it. Let us remember that ideas are not fixed relative to specific issues and concepts, but instead ideas are just as much influenced by time and place. This precludes the notion that the pool of ideas is fixed and once we're out of heroes, we're out of luck. No way.
Digressing a bit, when our more mainstream friends ostensibly are "for" the free market, but then turn around and write columns about how public vouchers for private schooling is a good idea, they're actually undermining the very cause they claim to support. Statism on the rocks with a splash of 7-UP is still statism. To substitute some mild form of statism to move in the general direction of freedom is a dangerous game; what if your idea does help the cause of publicly funded education? Who have you really helped, in the long run?
Advocating a particular policy specifically for the short term, as is characteristic of politicians, is exactly what we must divorce ourselves from. Hayek said it best, but let me paraphrase: Society's ethical principles are relatively fixed in the long-run; however, we must set forth to demonstrate to our peers that such principles are often in tumultuous conflict, and will not remain static; the pursuit of such contradictory goals will harm even greater values. So, in trying to realize semi-statism, we are only shooting ourselves in the foot, maybe blowing it off completely.
My point is, consistent ideas change the flow of events. Today, half-hearted apologists for Uncle Sam aren't ebbing the tide of things, but make it only worse. The men garnished with the most support are always those who are committed to a firm set of principles relative to their time. It is how this country was founded, it is how political philosophers and economists go down in the history books, and it is why we can turn on the radio every day from noon to three, expecting to hear one of the greatest voices of today. I believe this is the consequence of consistent ideas.
"The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. Not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good and evil."
-J. M. Keynes, The General Theory of Employment, Interest, and Money, pp. 383-84.
With that, I agree with Peter Boettke here that someone will rise up and meet the challenges of the day, whether it be today, or tomorrow, or 428 years from now. And ideas are the way to go about it. Let us remember that ideas are not fixed relative to specific issues and concepts, but instead ideas are just as much influenced by time and place. This precludes the notion that the pool of ideas is fixed and once we're out of heroes, we're out of luck. No way.
Digressing a bit, when our more mainstream friends ostensibly are "for" the free market, but then turn around and write columns about how public vouchers for private schooling is a good idea, they're actually undermining the very cause they claim to support. Statism on the rocks with a splash of 7-UP is still statism. To substitute some mild form of statism to move in the general direction of freedom is a dangerous game; what if your idea does help the cause of publicly funded education? Who have you really helped, in the long run?
Advocating a particular policy specifically for the short term, as is characteristic of politicians, is exactly what we must divorce ourselves from. Hayek said it best, but let me paraphrase: Society's ethical principles are relatively fixed in the long-run; however, we must set forth to demonstrate to our peers that such principles are often in tumultuous conflict, and will not remain static; the pursuit of such contradictory goals will harm even greater values. So, in trying to realize semi-statism, we are only shooting ourselves in the foot, maybe blowing it off completely.
My point is, consistent ideas change the flow of events. Today, half-hearted apologists for Uncle Sam aren't ebbing the tide of things, but make it only worse. The men garnished with the most support are always those who are committed to a firm set of principles relative to their time. It is how this country was founded, it is how political philosophers and economists go down in the history books, and it is why we can turn on the radio every day from noon to three, expecting to hear one of the greatest voices of today. I believe this is the consequence of consistent ideas.
Tuesday, September 1, 2009
Elasticity of Substitution...
... means nothing more than that as the price of a particular good changes, the consumption of other goods change as well. If two goods are very much like each other, it is likely that if the price of one good were to increase, consumption of the good whose price remained the same will rise. This makes sense, considering that we usually like possessing more money to less, no?
Consumer product regulation is no different. Regulating the heck out of something, such as requiring licensing or specific safety features, increases the cost of consuming that something, whether that cost be in terms of money, or time, or complexity, for the consumer. Thus, the consumer will choose other items to attain an end. If the particular regulation aimed at increasing consumer safety, but in the process increased the costs of using a particular item so much as to encourage the use of other, less safe products, then at the end of the day all we have is a bunch of fat n' happy bureaucrats at the expense of consumer well-being.
Think of regulating ladders, by requiring ever-more advanced safety features that raises the cost of production, which decreases the supply of ladders on the market, which increases the sale price of ladders. It is likely that consumers will choose not to buy expensive ladders and instead opt to use chairs and watermelons and footballs to stand on to change the light bulb. Are we safer at the end of the day? I'd argue, no.
I would call such an analysis paradoxical, but it isn't, not at all. This is completely reasonable and should surprise nobody. But, I think that's the trick about economics. Many people don't consider it easy, because those same people might look at the issues with blind eyes. Emotion, that is, tends to play a far larger role concerning economic issues than more "objective" sciences, such as physics or biology.
That's why I really appreciate lecturers who can make economics entertaining. Art Carden did that this summer, at Mises University. His Mises page, with his lectures in MP3 format, are here. Making economics entertaining is among the many ways to get otherwise emotional people to see what "good intentions" result in.
Consumer product regulation is no different. Regulating the heck out of something, such as requiring licensing or specific safety features, increases the cost of consuming that something, whether that cost be in terms of money, or time, or complexity, for the consumer. Thus, the consumer will choose other items to attain an end. If the particular regulation aimed at increasing consumer safety, but in the process increased the costs of using a particular item so much as to encourage the use of other, less safe products, then at the end of the day all we have is a bunch of fat n' happy bureaucrats at the expense of consumer well-being.
Think of regulating ladders, by requiring ever-more advanced safety features that raises the cost of production, which decreases the supply of ladders on the market, which increases the sale price of ladders. It is likely that consumers will choose not to buy expensive ladders and instead opt to use chairs and watermelons and footballs to stand on to change the light bulb. Are we safer at the end of the day? I'd argue, no.
I would call such an analysis paradoxical, but it isn't, not at all. This is completely reasonable and should surprise nobody. But, I think that's the trick about economics. Many people don't consider it easy, because those same people might look at the issues with blind eyes. Emotion, that is, tends to play a far larger role concerning economic issues than more "objective" sciences, such as physics or biology.
That's why I really appreciate lecturers who can make economics entertaining. Art Carden did that this summer, at Mises University. His Mises page, with his lectures in MP3 format, are here. Making economics entertaining is among the many ways to get otherwise emotional people to see what "good intentions" result in.
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