Life

From vikingvista on Cafe Hayek:

“‘aggregate demand’ is not a very good simplification for what makes a real economy tick.

The textbook aggregate demand story ignores how people view the future…”

It ignores how people must individually choose amongst trade-offs whose costs can only be revealed by their integration with the decisions of others in the resource network.

Massive government spending changes the appearance of those costs, causing people to make decisions that in the absence of government spending would be too costly and rationally avoided.

The result is the development of a network that cannot sustain itself without government spending. It also cannot be sustained with government spending, since government spending is necessarily limited.

Government spending can only interfere with economic recovery, because the economy it creates, is one dependent upon government spending.”

Right on! This should be so self evident that any politician who proposes stimulus spending is either lying or has never taken any type of economics course before. Anyone else have some thoughts?

Economics, Political Cafe Hayek, Keynes, Russ Roberts

The New York Times being shown to be inconsistent as usual in their quest to support more government regulation in every aspect of American society, except for their line of business.

Read about that here at Weblog Bahamas

Political

Klavan at http://www.andrewklavan.com/2010/04/29/christian-libertarianism/

Andrew sums up fairly accurately why I believe in the libertarian philosophy as a follower of Christ.

“Over at our much beloved Big Hollywood last week, filmmaker Leigh Scott had some thoughtful and entertaining comments on Kick-Ass, a movi…e he liked and which I haven’t seen. He says it’s a libertarian film and, as a side note, goes on to discuss what he feels are the differences between
libertarian conservatives and Christian conservatives: “A very conservative, religious friend once asked me to explain my views. He was stumped that we agreed on almost everything. But,
when a lot of the social issues came up, I kinda shuffled my feet and looked to the ground. I summarized it this way: He and I could spend all day Saturday agreeing about taxes, the role of government, and foreign policy, yet, on Sunday, he would be in church and I would be
nursing a hangover. Libertarians are the party boys and girls of the conservative
movement.”

Now there’s not only some truth to this but it’s a pretty common point of view. And yet, speaking in a broader sense, I disagree. I believe libertarianism is – or at least should be – the Christian
approach. When Jesus said all that stuff about judge not lest ye be judged, and don’t take the speck from your neighbor’s eye when you should be dealing with the two-by-four stuck in your own, I’m pretty sure he wasn’t just messing with us. I also think he meant something very specific. He did not – could not – have meant that we can’t make moral judgments, can’t say, hey, taking your kids to the park is good – telling them to blow themselves up to kill Jews, not so much. Of course we can. What we can’t judge, as I see it, is another person’s state of grace, his standing with God. (CS Lewis has some terrific stuff about this in The Great Divorce.) Our moral decisions about ourselves can be spiritual. Our moral decisions about other people can only be practical. I try very hard to live by my lights (informed by my understanding of gospel teaching). You want to argue about my ideas with me over a drink, I’m happy to oblige. But I don’t want you to interfere with me as long as I do no harm and, conversely, I don’t want to force anyone to do or love or live as I see fit. All I do ask is that you
don’t try to make me pay my children’s inheritance to clean up the results of your moral choices. Pay for them yourself.

There’s an idea going around that being a libertarian means not only not forcing your spiritual views on others but actually having no spiritual views at all. I would say it’s my strongly held spiritual
beliefs – and my desire to protect them from your interference – that make me want to leave you to yours. I’m a Christian Libertarian.”

Economics, Personal, Political

In response to the following comment from this story on Cafe Hayek by commenter Thomas M. Hermann:

I think you are expressing the biggest problem with the entire debate. It was framed in terms of a comprehensive overhaul or maintaining the status quo that everyone agreed was not acceptable. I blame the Republicans for letting the debate get framed this way.

What the opposition to ObamaCare failed to do was organize an incrementally applied set of reforms that would promote consumer driver health care. Granted, there were various ideas for promoting consumer driven health care thrown against the wall to see what would stick, but nothing coherent and coordinated.

So, the meta-question: Is it possible for those of us that advocate emergent order to centrally plan to counter the central planners and facilitate the conditions for emergent order to occur?

Kind of a contradiction in purpose, isn’t it? Explains to me why we find ourselves in this position, though. Maybe we should double down on emergent order and have faith that the central planners will collapse under their own weight. I’m not sure I’m ready to clean up the resulting mess, though.

Ugh.

Kind of a contradiction in purpose, isn’t it? Explains to me why we find ourselves in this position, though. Maybe we should double down on emergent order and have faith that the central planners will collapse under their own weight. I’m not sure I’m ready to clean up the resulting mess, though.”

That is exactly the conundrum that I ponder quite often. Do I just wait until the socialist system collapses under its own weight, or do I take an active, but hugely underrepresented view of trying to restore and go beyond what the founders of the U.S. setup? This is why I believe that a democratic republic is still a flawed system of government. It will never remain small forever. A great revolution in political thought is necessary to come up with a very bare-bones system (or systems that compete) that protects property rights and nothing more. I don’t have much faith that this will ever happen however because those who “lead” become increasingly more arrogant in their obtained knowledge that this time, humanity can be cajoled into a more respectable version.

Political, healthcare freedom, liberty, Obamacare

For the past three mornings I have woken up to Morning Edition on my local NPR station talking with some “experts” about the banking and medical industries in the U.S. I find it absolutely ridiculous how easily these experts speak of providing the correct incentives and punishments to these two industries to shape things for more efficiency and fairness. Who do they think they are, omniscient gods? The U.S. medical industry is over a $1 trillion industry annually and the billions, if not trillions of transactions are extremely complex and not able to fit under a one-size-fits-all command-and-control solution. I find it arrogant and very disingenuous to suggest that a small group of politicians (aka lawyers) can correctly design or even guide these industries into “what they should be.”

NPR, in general, has had a lot of recent programs talking to these types of people and the interviewers do not seem to press their guests as to why they are more capable than your average citizen in designing something that is not able to be designed. To think otherwise is to be part of an elite group of people who have their heads in the clouds. Or should I remind everyone that industry design on a national scale was tried many times with one of the most egregious examples being the U.S.S.R. It didn’t work, it still doesn’t work, and the U.S. is not any smarter or different. This type of thinking and action only takes away the freedoms of which the U.S. was founded on when the founders tried to escape from the design-crazy Europe. The government and their elite co-conspirators are going to lead the U.S. into a country that can no longer do anything. It won’t be fair, it will prop up certain minority groups who have the most money to lobby, and it will turn into a country of stagnation, low wages, little freedom, and a VERY powerful political class.

NPR, if it so desires to be comprehensive in its coverage of the healthcare debate, should also have reports questioning on whether the government is even capable of fixing rising healthcare costs. Investigate and report on the fact that most politicians are not trained in any of the industries that they seek to legislate and thus direct. Why not investigate from other experts like Prof. Russ Roberts of George Mason University whether staying out of the medical industry is a better idea? Maybe the politicians need to undo past mistaken legislation that gives skewed incentives to companies to provide health insurance only. Why not get rid of the entirely unfair laws that restricts U.S. citizens from buying health insurance across state lines? NPR is a somewhat tax-funded media source. As a tax-payer, I would like to see this kind of reporting. Please prove me wrong that publicly funded media is not an outlet for bigger government and government-favored solutions only. I want to hear all sides – government and the opposite of government.

Political design, elite, experts, healthcare, Morning Edition, NPR, politicians

From the website Cafe Hayek, Donald Boudreaux writes:

My old and very dear friend Kerry “Over the Hump” Dugas prompts me to post this letter that I sent to the New York Times on 12 December 2004:

John Horgan asks “How do you denounce dogmatism in others without succumbing to it yourself?” (“Keeping the Faith, in My Doubt,” Dec. 12).  The answer is to abandon the government-knows-best creeds of modern “liberals” and conservatives, and to join the likes of Milton Friedman, John Stossel, and your own columnist Virginia Postrel in championing individual liberty.

Champions of liberty tolerate the blooming of countless flowers – some beautiful, some horrid, many ordinary, but each growing in its own way, obliged by law only to avoid interfering with others.  Champions of liberty understand that our world’s complexity is best met, not with clever central plans, but with unleashing as much creative human energy as possible.

The phrase “Let the market handle it” is shorthand for “Because any one person’s or group’s ideas are too likely flawed and certainly incomplete, let anyone who wishes have a crack at identifying and solving problems – and let each person choose which solution seems best to him or her.”  Only by rejecting the rule of experts and scolds can we avoid dogmatism.

Sincerely,
Donald J. Boudreaux

Do you agree with Don? Personally, I love that last paragraph that explains what people mean by the phrase “let the market handle it.” I think that we who uphold this view need to use this explanation more than the short phrase so that we don’t sound naive and dogmatic.

Economics, Political Cafe Hayek, dogmatism, Don Boudreaux, market

A must read if you’re at all confused (or if you agree) by Bernanke’s Washington Post op-ed piece from this past weekend on the future of the Federal Reserve and his role in it. Maybe, just maybe, this time the Senate will put the Fed in it’s place. The real answer would be to get rid of the Fed and get the government out of the money business altogether.

Read Bernanke’s piece here: http://www.washingtonpost.com/wp-dyn/content/article/2009/11/27/AR2009112702322.html

Professor Higg’s response: http://www.independent.org/blog/?p=4214

As usual, post your comments for me below.

Economics, Financial, Political, Uncategorized

NY Times’s coverage on the healthcare bill comparing the House and the Senate’s proposed bills.

I just don’t understand how someone could not take a look at this comparison and wonder a few things:

1. Total cost: “About $1.052 trillion. Expected to reduce deficits by $139 billion.” for the House version. “$849 billion. Expected to reduce projected federal budget deficits by $130 billion.” for the Senate version. How is this not double speak? When has a government program ever not cost more than it originally was expected to, by at least double? When has a government program ever worked as drafted? How does spending $1 trillion ever reduce the deficit? And how will continued spending ever reduce the deficit in the future? Please ask these questions to yourself and I suggest that you be highly suspicious of these bills. Why does a healthcare reform bill have to cost anything? Why can’t it get rid of existing government regulation and actually reduce the deficit immediately if that’s such an important target?
2. “36 million people would gain coverage, leaving 18 million uninsured.” – House, “31 million people would gain coverage, leaving 23 million uninsured.” – Senate. First off, why are there tens of millions of people left uninsured under both of these plans? If you’re going for universal coverage, why are any left out? Utter failure. Second, healthcare is a scarce resource and no, not everyone can have access to all of the medical coverage that they need all of the time. It just won’t happen, this is not Star Trek with a replicator that can create anything out of generic energy. Are you prepared to have bureaucrats decide who gets what treatment instead of you and your doctor deciding? Yes, insurance companies currently suck, but as even This American Life mentioned in a recent podcast, the government created this insurance company nightmare in two very important ways: first, during WWII, the federal government declared the need for almost all of the country’s resources needed to go towards the war effort. They declared that no company may raise wages or may hire new workers with the incentive of higher wages. So how do you attract top talent then? Yes, you start giving fringe benefits like health insurance and other non-liquid benefits. Follow this with the federal government again messing things up by declaring that any company that provides health insurance to their employees will no have to pay any taxes on the worth of that coverage. This declaration made health insurance offered by companies explode. Before that time, it was about 20% of U.S. companies. After that time, it jumped to around 70%. So why are we giving the government more power to make more awful decisions about our healthcare market?

Please ask yourself these questions and also examine the other insane things the bills propose.

Economics, Political, healthcare

Click to watch video of interview with Indiana Governor Mitch Daniels

I think Mitch is right on in this video. The only thing I disagree with him on would be accepting Federal money. But I don’t blame him for doing it. He is absolutely right about health reform and that our budgetary debt in the U.S. is the single most important issue outstanding today. It is a shame that it is not part of the Obama administration’s priority however.

Economics, Political, healthcare healthcare, Mitch Daniels

From a comment left on the Cafe Hayek page:

“You are defending the most wasteful and inefficient system in the world.”

What do you expect to happen to a market when:

1) Roughly 50% of all the market’s participants on the purchasing side are relieved of any financial responsibility for their purchases, thereby destroying any incentive to shop for the best value for the dollars being spent or to consider the most cost-effective way of dealing with their condition — and also thereby reducing any incentive to compete among doctors and hospitals.

2) The agency — Medicare and Medicaid — that assumes the financial responsibility for this 50% has access to unlimited government funds (i.e. taxpayer dollars or government debt) and thus has no incentive to police for fraud — no incentive to care what anything costs — and no incentive to tole.

3) That same agency — though it has no actual incentive to police for fraud or to care what anything wants — is nonetheless run by power-hungry bureaucrats who, in the name of “cost control”, push off on the providers (the doctors) over 130,000 pages of Medicare rules and regulations — rules so onerous and complicated that doctors that accept Medicare patients report that they must spend at least ONE FULL DAY per week on nothing but Medicare paperwork and must employ, on average, two additional clerical assistance to help in complying with those rules.

4) Another agency, state governments, gives in to special interest lobbying and forces ALL insurance policies sold by insurance companies in that state to include benefits such as alcohol rehabilitation programs, mental health programs, maternity benefits, etc, and demands that ALL such policies are sold at the same price — which means that those that want these benefits get them primarily at the expense of those who don’t want them.

And if you think you can just buy a cheaper policy from another state — a policy that is cheaper because it doesn’t contain certain benefits you know you’ll never use — well, tough luck, because the states with these mandates generally have laws prohibiting you from purchasing from other states.

5) Another agency, the FDA, adds millions to the costs of new drugs by spending years approving drugs after drug companies have already spent years on double-blind studies proving the drugs work.

6) That same agency — which has zero experience in manufacturing and generally employs people that know nothing about manufacturing — nevertheless promulgates a vast set of regulations known as “Good Manufacturing Practices” that forces those manufacturing medical devices to create thousands of pages of written procedures, audits, etc., thereby driving up the costs of all manner of medical devices.

This massive set of regulations, in addition to driving up the costs of existing manufacturers, also constitutes a huge “barrier to entry” to any new firms that might wish to compete with existing firms, thereby reducing the competition in the field of medical device production.

7) Still yet another agency — the tort court system and the trial lawyers — forces doctors to carry malpractice insurance policies whose premiums may exceed $100, 000 a year — as well as forcing doctors to run numerous medical tests not because they think the patient needs it or has asked for it, but simply to practice what is known as “defensive medicine”.

If you think the economic effect of this tort system is small, ask yourself why the trial lawyer’s professional groups give millions in campaign contributions every election to Democrats sympathetic to the current tort rules.

Still yet another agency, the Federal Reserve, continuously inflates a fiat currency thereby guaranteeing an ongoing, constant decrease in the value of everyone’s dollars.

How, in the face of this onslaught, can you expect anything BUT rapidly rising costs?

And why on earth — in the face of all the evidence that these government interventions are economically disastrous and unsustainable — would anyone think we can put 40 million more people into the system at no additional cost?

How is more of the same poison going to make us well instead of killing us off?

Economics, Political, healthcare free market, healthcare, Life expectancy, non-free market, obama