Optimization vs. Job Creation

It’s interesting to listen to the President stress over the need to create jobs for the unemployed. Listening to his theories, you would think that job creation would be easy. Just destroy all machines and make humans do the work.

Of course, that’s stupid. And no, he hasn’t said that verbatim, but he has made interesting comments on the tragedies of business optimizations causing companies to cut back their workforce. Companies are finding ways to do what they need without having to pay the wages of human workers. Yeah, tragedy, right?

Consider if all production jobs were done by machines. Farm equipment was so advanced that it is all done automatically. Cars, computers, everything created by machine. What would we do? How would the wealth created by those machines be spread to the rest of the nation?

It’s funny that we seem to discourage such progress, as it destroys jobs. It’s true that it destroys a job. But the products (wealth) are still created.

What this does is it frees up human resources to use for other services. The fact that America has become so efficient is the very reason why we are able to have such an enormous service industry. We spend only 5% of our income on food. Shelter is typically our biggest expense. But all that’s left over is for non-vital services.

We have massage therapists, hair stylists, restaurants, movie stars, military, professional athletes, auto detailing, artists, policemen, and so many other jobs. All of these are non-essential to survival. They are comfort services. They are life improvement services.

This is exactly how we spread wealth. The producers create the wealth, then we spread it by paying for lilfe improving services.

So if a producer becomes more efficient, thus eliminating a job in their process, they have done the nation a great service. They eliminate the need for manpower in the production industry, thus moving the manpower into the service industry. The wealth is the same, but we create more services, we increase the life-improvement industry.

If companies are becoming more efficient, and people are losing their jobs, this is a great thing, so long as we know what is going on and how to deal with it. Unless there is a drought or some kind of disaster, there should not be a shortage of food. As long as we continue to mine and obtain resources, there should be no shortage of shelter or production. So long as we do not shoot ourselves in the foot with idiotic regulation on energy production, there should never be a shortage of energy with the technology we now have.

We are a rich nation. We have a steady supply of affordable life sustaining products. We haven't had a drought in many decades because we have developed technology to free ourselves from weather dependance. All man-hours not necessary to the production of these life sustaining products is used for life improvement. If jobs are being lost due to optimization, that manpower must simply be moved to improve life in other ways. Those without jobs must simply find other ways to improve the life of others.

Armageddon

As I watched world politics unfold of late, a vision of things to come came to my mind. Not really a prophetic vision, but things just kind of clicked and made sense on how things would unravel in fulfillment of the prophecies of old. I wanted to write it down while I still have it in mind.

Over the past 2 decades, this nation has been a moderate nation, the majority of citizens being moderate conservatives or moderate democrats. There were some at the extreme ends, but the majority have been closer to the middle. The smallness of the gap allowed relative peace in political opinion and debate. With the election of a far leftist (who posed as a moderate while campaigning), the nation is becoming divided. There is little middle ground anymore. The leftists criticize any democrat that is not left enough. The conservative ideology is pushing away from the moderate "big tent" philospohy and holding firm to their principles.

The divide between libertarians and equalitarians has become heated. This divide will continue to increase as moderates will begin to choose sides. Ultimately there must either be a civil war or a national division. I foresee a national division in order to prevent war. A new nation will be formed in the Midwest, starting with the secession of Texas for the conservative movement, and the costal and northern states forming a socialist nation.

The new socialist nation will unite with the socialist movement of the rest of the world. Few nations will separate themselves from this uniting movement, maintaining freedom and independence. Obviously the new free nation will remain independent. Israel will also remain independent.

The new independent nation, we’ll call it Zion, since that is what it will ultimately be called, will be economically and technologically unmatched. Its capital will eventually be moved from Texas to Missouri to move away from the borderlines which will have become dangerous. It will keep itself un-allied and independent of the rest of the world, and will be both despised of and the envy of the rest of the world. Yet it will be left alone because its power and military technology will be unmatched. Israel will also be economically successful, but will lack the military strength of Zion.

After a short period of worldwide socialized politics, the world economy will collapse. Nations will blame each other, and war will break out. This is the battle of Armageddon. Ultimately, the economic success of Israel will cause the world to turn its military force toward it. Israel will put up a decent fight (I would suspect Zion will lend its support as well, but I’m not sure, since I think the 2 nations will not be allied), but ultimately would fall except for the divine intervention prophesied of.

A Solution to Illegal Immigration

I was listening to the radio the other day, and the topic was illegal immigration. The hosts were asking for a solution to the problem. Callers were mostly immigrants that pointed out the severity of the difficulties of coming to America legally. They're, of course, right. It is far too difficult to come here legally. We use to be a refuge for those seeking freedom. Not anymore...

Today's problem with illegal immigrants isn't so much a problem with the numbers of incoming immigrants. We have welcomed them in the past with no ill economic effects. It is folly to believe that they are economically detrimental to the nation. The problem is in legislation that causes those who are here illegally to receive services and benfits paid for by taxes to which they do not contribute. Thus, as far as national funding goes, they are leeches, dependants who pull funds from the donors.

There are two parts to my solution. The first is the obvious and logical easing of immigration restrictions. Green cards should be easy to obtain, and citizenship should not be overly expensive, nor tedious and prolonged. Many argue that giving foreign immigrants American jobs takes jobs away from American citizens, and causes money to be sent out of our national economy. These arguments seem logical, but in truth are unfounded and incorrect. I explained some of the folly in a previous post. A full explanation would be a topic for another post.

The second part of my solution is to get rid of minimum wage legislation. I know that seems to be unrelated, but let me spell out the effects of such action. Minimum wage has been proven over and over again to be directly related to higher employment by economists of all political backgrounds. It is feel-good legislation that makes uninformed people feel that their government is looking out for them. But it hurts them. Sure, it will give many people an undeserved raise. But it will unemploy many others.

Markets balance the wages of employees, employers trying to pay as little as possible to keep their costs managable, employees trying to make as much as they can. The freedom of each party causes competition to balance wages to where they ought to be. Employees will accept work that will pay them what they are worth. If the employee believes he or she is worth more, they may choose not to work for that employer and find other employment. Employers must compete for the best employees, keeping them from undercompensating them.

With that understood, there are some jobs that are worth less than the minimum wage. Forcing employers to pay more for that job than markets would dictate raises unduly the costs of that company. Thus the company must either suck it up and absorb the costs, or they must find other ways to accomplish the needed work. These alternative methods typically include getting rid of the employee.

If a person looking for a job is willing to work for $5/hour, who is the government to tell him he can't? Most of these minimum wage jobs are entry-level jobs that teens seek out, both for spending money and more importantly for work experience. People that start at entry level wages don't stay there. They get raises as their experience dictates. If we reduce the number of available entry-level jobs by forcing a minimum wage over the market level, unexperienced job seekers have no place to start, and thus they stay unemployed.

Now what does this have to do with illegal immigration? Illegal immigrants do not fall under minimum wage laws. Those companies that struggle to find alternatives to cut their costs may choose to employ illegals outside the minimum wage laws. Thus illegal immigrants help to keep market balance, but we leave American teenage unemployment at astronomical levels.

If we were to remove the minimim wage laws, employers would no longer have to find alternatives in order to get the job done. With the costs equal, most employers would much prefer to employ English speaking teenagers legally, rather than employ foreign workers illegally. Thus illegal immigrants begin to find competition in their market of cheap employment. The incentives to come to the U.S. for employment drop significantly, while the incentives to learn English and become legal workers increase.

The advantages to abolishing minimum wage legislation are so great that it is amazing that it is not even being considered in Washington. The feel-good benefits are just too great I guess.

Self-Interest and Central Government

Karl Marx was a critical opponent of capitalist injustice, pointing to some of Great Britain’s immoral labor practices of the late 19th century as proof of the failure of capitalism. Instead, he proposed the formation of a centralized government to take care of the people. It was this philosophy that was the foundation of fascism and communism.

The philosophy focused on the call for a rise of the working class in social status. But who really gets helped by a central government?

Politicians, like everyone else, are looking to do what’s best for themselves. Self-interest is the driving force of all decisions. Even those who choose to put others above themselves do so because the satisfaction of sacrifice is greater than the sacrifice. Those of faith make decisions on the hope of future rewards. Those who act out of love do so because the emotional impact of not acting would be greater than the personal consequences of acting. All our decisions are founded in our understanding of how that decision will affect ourselves.

Politicians toot their own horn, make lovely speeches about how noble they are with their policies to help others, and scratch each other’s backs behind the scenes to get what they want. It’s getting hard to find a politician that isn’t getting benefits beyond the permissibility of law from those looking for a political favor. Everyone’s just trying to maximize their self-interests.

So I find it very interesting that so many would be willing to put all their eggs into the politicians’ basket. Who would a central government really help? Theoretically, it helps the working class, the proletariat. But Marx’s theory fails to account for politicians personal self-interest. If politicians could completely remove decisions based on self-interest from their politics, Marxist theory could potentially hold water. But the law of self-interest has proven itself over and over again throughout history. It is this law that has led to the well-know Lord Acton observation that power corrupts, and absolute power corrupts absolutely.

If central government planners, then, are in it for their own interests, who do their policies help? Obviously themselves, and those for whom they are providing the favors. It is akin to a market exchange. Companies or individuals exchange a service that a politician wants for a political service that that company or individual wants. It’s a favor for a political policy change. Each party is benefitted in the exchange. However, unlike a normal market exchange, these policy changes are at the expense of the third party, who is not a participant of the exchange. Giving one special interest group a political favor is always at the expense of another group (usually the general public).

The founders of this nation were well on the right track in understanding that government was a necessary evil, and must be designed with limited power. For when the power of the government exceeds the power of the people, that government always results in tyrannical rule, governing for the governor’s sake at the expense of the people. It’s the law of self-interest.

Foreign Trade

In the past, I’ve thought much like most politicians with respect to foreign trade. Export more and import less. Thus the money coming is greater than the money leaving, and therefore the nation as a whole becomes richer. It seems logical.

But as I’ve thought and studied more on the concept, I’ve realized that I’ve been wrong. The export more, import less concept is bad policy, and hurts us economically.

To understand this, it helps to do a quick study of money. Money is an IOU, a representation of value, but it has no value of itself. It’s paper. Just small slips of paper. But it represents the value of real goods and services. We use money so that we do not have to exchange actual goods, one for another, but instead exchange a good for its value, which we can use to exchange for another good of our own choosing.

So, when we export, we are selling our goods in exchange for their goods. When we import, they sell their goods in exchange for ours. Imports and exports are the same thing. The difference is only the timing of the receipt of those goods. When we export, they get our goods, and we get promissory notes of money that are good to purchase their goods at a time of our choosing. When we import, we get their goods, and they get our IOUs.

Having their money doesn’t make us richer if we never buy anything with it. It is buying power, but if we were to bury it and never use it, all we’ve done is given up goods in exchange for useless paper. So we see that trading goods for money is simply trading goods for goods later on.

Thus foreign trade is precisely making exchanges of goods for goods. Imports are the goods we want, exports are the price. Now with this understanding, is it better for us to export more goods than we import, or import more than we export? Would we rather pay more for less, or less for more? It’s pretty obvious that our policy should be to try to import the most for the least amount of exports.

Complexities arise with the future value of the foreign currency, where a nation may choose to hold a currency in the hopes of the value of the currency increasing in relation to their own. But this is no different than a simple currency exchange for investment at the time of transaction. The principle noted above still holds true, it just adds to the complexity of the decision of when to buy.

Let's start treating foreign trade as a benefit our lives, rather than a threat to our industry.

My Nation's Health Care System

Consider the scenario of the formation of a new nation, a free nation, much like they did over 2 centuries ago. How would you establish your health care system in your new nation, starting from scratch?

In my nation, government would be given no power to touch the health system, and checks would be placed to ensure that they do not usurp such power.

Instead the health care system will be established completely by private industry. Hospitals will be run for profit, doctors will give their services for a fee, and insurance will be allowed to exist, so long as there are those who wish to use their services. It would be up to the private citizens to create ideas by which to optimize their health care performance and affordability.

I would, as part of the nation, contribute my own opinions of course. Here are a few ideas:

1. Financial institutions may decide to provide health care savings accounts. These will serve much like our current insurance plans, except that your total coverage depends on your contributions. The financial institutions would then be able to invest those funds as they saw fit, and grow your account at a rate agreed upon, much like normal savings. The rate could be higher or lower than a traditional savings account depending on the frequency of withdrawals from the account, as agreed upon between the consumer and the bank. But from these accounts, most medical needs may be paid for. Contributions to and interest gained from these accounts would be untaxed.
2. Catastrophic insurance would probably still be a good idea. I would suspect that most would choose to participate in a high deductible insurance plan that would only cover emergency room visits and high cost operations. Many would likely choose to withdraw from this system once they achieve a sufficient balance in their savings account to pay for emergency situations themselves.
3. Medical needs loans would be a good service for banks to provide. They would make loans available for those who don’t have enough yet in their savings account to cover needed medical services at a reasonable interest rate. Banks would, of course, not be required to give these loans, so they would only give them out to those they believe would be able to pay them back.
4. In order to give medical access to those at the bottom of the social curve, untaxed charitable institutions may be established to collect funds both for medical research funding, and more importantly to assist those unable to cover their own costs. These institutions would be very transparent (as required of any untaxed establishment), and would be wise to be careful on how they use their funds. They would do well to investigate the situations of those petitioning aide, and would perhaps even give their assistance in the form of a interest-free bridge loan to less deperate petitioners. Donors would then be able to choose which institution to donate to based on the performance of the charity.
5. Hospitals, clinics, and/or individual doctors may choose to charge their patients a small percentage extra in order to collect funds to provide care to those who can’t afford it. Some medical consumers may choose to opt for another doctor or opt out of the contribution, but I believe that many would instead choose to go to these particular care takers, provided they can afford it, so that they can help their fellowman. I would suspect that it would become a draw for patients, and become popular practice among medical institutions.
6. Rating systems would be established (by private businesses, i.e. Consumer Reports), where medical consumers would rate their experience, the costs of their care, wait times, etc. so that others may choose appropriately where they want to go to seek care. This would establish a very competitive industry.
7. The drug industry should be nearly unregulated. The only main regulation I might give them would be to require transparency in their studies and techniques. Consumers should be fully aware of the risks and rewards and success statistics of their product. Ideally the consumer would demand it of them, but I would be open to a possible government mandate. Other than that, these companies are free to research the best way to provide medications, supplements, and other such products to consumers. A lightly regulated drug industry should be able to pursue and obtain the profits needed to accelerate growth and research.
8. Malpractice/Tort law would, of course, be significantly reduced and simplified. Doctors who err would be given reasonable leeway for the procedures they perform. Mistakes due to malpractice would cause the cost of the procedure to be reimbursed, along with the costs of procedures required to fix the issues caused by the mistake. Excessive awards and Tort law abuse would be done away with.

I like my nation’s system a lot more.

You're Welcome To Your Disinformed Opinion

A friend of mine just gave me a criticizing blow, informing me that I was close-minded to others’ opinions, and that I felt that I was always right and was stubborn on those feelings. She’s right, of course, as you all well know. But we are all stubborn in our true beliefs. If we are not stubborn in our opinion, it is because we are unsure and not fully convinced of our conclusions, and thus we are open to the convincing otherwise.

What she was trying to point out was that my political views were my opinion, and that others have opinions that I should at least hear out with an open mind. My opinion is not necessarily right for another.

Here’s where I get a little fired up. While I believe fully in what I believe, like all others do, I will in fact listen to the opinions of others. But I will not sit idle or quiet when a person’s opinion is that my opinion should be taken from me. I heard the clips of Bill Maher, liberal commentator and talk show host, explaining that his opinion was that people are stupid, and need to be dragged kicking and screaming to what was best for them (in this case, universal health care). Now, Bill Maher is welcome to his opinion, but when his opinion is that his opinions should be forced down my throat, I will fight that opinion with all I have. It is offensive, destructive, and in fact logically stupid.

The opinions of today are not about whether this or that is best for me. They’re about whether I am free to my opinion and ability to do what I believe is best for me, or if I should be forced to believe and do what another believes is best for me.

You are very welcome to your opinion, and I will listen to it. But when your opinion is to force me against mine, I will take your opinion on for what it is. Wrong.

Producers vs. Consumers

Governments of most European nations, and now rapidly increasingly our own, have a strong tendency to protect producers rather than consumers. Their argument is that producers are consumers. Thus if our producers do well, they consume more, and ultimately all are benefitted.

This is the concept that has resulted in the government policies that include protectionism, stimulus, corporate regulations, union support laws, pay regulations like minimum wage, and many other policies. These policies are meant to give benefits to workers, those who produce our products. If the workers get paid more, they will spend more, thus other industries are benefitted.

But what’s rarely noted is that by given added benefits to the producers, we take those benefits from the consumers. Consumers would benefit from buying cheaper tires from China. But that hurts the local producers, so we pass laws to protect the local workers at the expense of the consumer. Union members are given great pay and benefits. But as a result, their services cost much more to the consumer. We give entry level workers a pay raise when we raise the minimum wage, but this results in either fewer workers or higher prices. The consumer again pays the bill.

So what’s the big deal? Producers are consumers and vice versa. What does it matter which one side we protect?

The reason is that actual wealth is in what is consumed, not produced. This was a concept originally presented by Adam Smith, the mind from which the founders based their economic policies. We typically measure our wealth by what we produce. But it’s a fallacious measurement. If I were to produce a million cars that break down within days, nobody will buy them. So what wealth have I produced? Sure, I created the product, but it’s of no value to the consumer. If I baked a cow pie pie, who would buy it? What’s the value of it? Nobody would eat it, so my work was for nothing, and the product is worthless. This is why it is what is consumed that measures actual wealth.

Now with this conclusion, we realize that it is the consumer that we must protect, not the producer. If the producer is not producing a product that consumers wish to consume, they are creating a worthless product. What good is it to protect that worthless product and continue to produce it? Saving worthless jobs only continues to drain wealth from society. Why would it be good policy to force pay producers more for their work, thus causing the price to increase? The consumers must either pay more for that product, thus retaining less to spend elsewhere, or they will choose not to purchase the product anymore. What good does it do to create protectionist policies in order to artificially make products not held in high value more valuable? If we could only block out the sun, we would create and save so many candlemaking jobs (http://bastiat.org/en/petition.html)!

It’s that people are willing to pay for a product that gives it value. It is consumers to decide what society wants and needs. It is consumers who drive the need for useful invention (as opposed to invention for the sake of invention… of what value is a doohickey that does nothing useful?). It is consumers who create the wealth of the world.

Stop protecting the producers. You're hurting the real wealth producers, the consumers!

The Original Socialist

Understandably, this post will appear to have a few holes in the argument. I have left these holes unfilled intentionally because they are concepts that are too deep and complex to share at this time.

We have learned in Sunday School of the War in Heaven, which was incited at the choosing of the Plan of Salvation as we know it and Christ as the Savior of the world. But what (not who) incited that war?

The debate in pre-mortality, we are taught, was over agency. The presented plan entailed the allowance of individual beings to choose their actions based on their understanding of their own self-interest. They were to make their own decisions, and learn by experience. They were given agency, or freedom to choose and act for themselves.

The opposing movement, apparently led by Lucifer, was to deny agency. The question I never hear asked is: how was this idea to be implemented? I think we tend to think that we would have been robots, and all our actions would be predetermined, not having any thought or choice. I think we imagine our bodies being controlled, essentially being limbs of an imaginary body with God as the controlling mind. But I think this is nonsensical.

I think Lucifer’s plan was socialism. They weren’t going to control all our movements. We weren’t going to be mindless drones. We were going to be governed in a way that we would all be equal and closely monitored. Any missteps would be quickly corrected by the church organization. Any opposing ideas would be squashed. It would be the utopian society that so many social idealists covet.

So why wouldn’t Lucifer’s plan have worked? It’s a compelling argument for achieving maximum obedience, as well as providing an environment that would allow for a great deal of instruction. It would be indoctrination, but in this case the indoctrination would be in the truth.

Here’s my conclusion. Satan’s plan would have worked. If it was a simple debate of it working or not, God could have squashed the debate with a simple explanation of the fallacy of the opposing plan. But He didn’t, because He couldn’t. It would have worked, we would have all been obedient and progressed in our education. But the con is that we would not have learned to become what we were living. We cannot become when we are compelled. We can accustom ourselves. We can even begin to do because we understand and believe it and thus are no longer compelled. But the progress is retarded.

Freedom unleashes the most important part of our existence: our intelligence. When we are all pursuing our own self-interest, we use our intelligence to best achieve our desires. Thus our development is accelerated at a high rate according to the level of our intelligence, and our ability to choose our own actions allows us to become what we wish to be as soon as we choose to do so. The con? We are also able to choose contrary to our own self-interest. Thus we could retard our progression, and potentially even take steps back.

To our limited intelligence, the list of the pros and cons undoubtedly made the decision difficult. Many of us, particularly those of lesser intelligence, apparently couldn’t see the advantage to freedom. In fact, socialism typically does present more advantages to those of least ability. But most of us either understood the advantages of freedom or we trusted in the judgment of our Father. But those who felt that socialism was the better way apparently felt strong enough for it to start a civil war when it was rejected, resulting in the banishment of a third of our people.

It’s quite interesting that this is the same social dispute we face in the world today. We see the historical evidence of the successes (along with the failures) of free societies, and we’ve seen the utter failures of socialism. Yet we continue the debate, and socialism appears to be winning.

I am led to believe that those proponents of a socialist utopia are taught the concept by the original socialist.

O Say What Is Truth?

I've thought about this question for a long time, especially in this last year, to little avail.

What is truth?

D&C 93 gives a lot of insight. Verse 24 gives us a basic definition of truth: And truth is knowledge of things as they are, and as they were, and as they are to come; It's a great definition, clear and simple, but doesn't really touch some of the deeper and more complete understandings of what it is.

After a discussion a year ago in institute class, it donned on me that truth is the spiritual equivalent of light in the temporal sphere. Light is our guidance, our revealer, the thing that shows us what is here, behind us, or ahead. It allows us to know what is around us so that we may choose which way to go or what to do. I discussed it here (http://mark-thinkdeep.blogspot.com/2008/10/light-and-truth.html).

But there was one verse that has always stuck in my side like a thorn. I just could not fully understand it. Same section, verse 30:

All truth is independent in that shpere in which God has placed it, to act for itself, as all intelligence also; otherwise there is no existence.

That is one of the most deep verses I'd ever read. I've read it over and over again, trying to understand it. I understand that truth is eternal, like intelligence. I can understand that all truth is placed in a sphere, which is where relative truth comes into play. Something is true under these circumstances. That is the sphere in which it is placed. Absolute truths are in an eternal sphere. I guess that makes sense.

"Independent." Okay, now you're confusing me. Does that mean that no other truth can infringe on a truth that is inside its own sphere? Or does it mean truth does not belong to God or anyone, and exists independently? Or does it mean that it actually has freedoms to choose?

And here's the really weird part: "...to act for itself". What?? Truth can act for itself? How can an absolute truth act? Does this mean it can change? Does it have agency?

Today in institute we discussed truth, and it left me to mull over these questions for a good long while. I even asked the teacher and the class what they thought. We didn't make any progress (in fact we may have made ourselves dumber from the discussion). But I continued to pour my mind on the question while the class moved on. And then it came to me. If it's true, I'll be happy to give credit where credit is due. It feels right to me. If it's not, well... we all know how odd my mind is.

Months ago I posted some thoughts on what love is (http://mark-thinkdeep.blogspot.com/2008/12/what-is-love.html). I believe it is a connection in some unseen network that our spirit creates with another intelligence, which allows free flowing spiritual communication. But with this verse pointing out the connection between truth and intelligence, I realized that the key word to understanding this verse was not truth, but knowledge (it's in verse 24 and 28, not 30, but it's the key).

What does it mean to know?

This is what I realized tonight. Knowledge of truth is the equivalent to love of another intelligence. When you learn something, there is a connection formed between your intelligence and a truth. That truth, and entity to itself, independent in its own sphere, can bind itself to us when our soul is in a state or lifestyle in which that truth will fit. That bond strengthens as we build our lifestyle around it.

So truth can act for itself, binding itself to whomever it can and will. Perhaps a truth heard my call tonight and bound itself to me. A teacher, then, would be a matchmaker of sorts, bringing together intelligence and truth. The Spirit, having access to all truths in all their spheres, would be the ultimate teacher.

Truth is the governing entity of the universe. It commands and gives direction to intelligence of all levels. It rules over its domain or sphere. It binds itself to intelligence as it may, to command within its sphere of authority, or to guide those outside of that sphere. It is eternal and unchanging, although not necessarily static.

It makes me wonder, then, if truth is intelligence in its ultimate and perfected state?

The Root of the Health Care Issues

With the continued debate on health care reform, our political leaders continue to try to convince us what exactly is causing the high costs of health care. Those on the left insist it is the corrupt insurance companies that are at fault. Those on the right declare TORT law and government regulations to be the main culprit. Both these arguments are largely true, and are contributors to the market imbalance, resulting in high costs.

The ends of the debate, the proposed political solutions, are indicative of these theories of the politicians of each party. Democrats want a single-payer system, thus eliminating insurance companies and rationing care by government control. Republicans want the free market to dictate the rationing.

But what is never discussed in this political debate is the root of the problem, which is the imbalance of the supply and demand for health services. Simply put, there are not enough doctors to meet the demand for health care. As a result, there is a shortage of health care, and health care must thus be rationed by one way or another.

Here’s where the debate comes in. How do we ration care? Who gets it? Liberals think everyone should get it, but as a result everyone has to wait longer for it and get less. Conservatives do not want this necessary reduction of care that would come from a universal system, and thus believe that money should continue to be the rationer.

This debate rages heatedly, but it could easily be completely avoided and prevented. How? Balance the supply of doctors to match the demand for care, thus eliminating the need for rationing. How could we do this? Destroy the unionistic monopoly that is the American Medical Association (AMA).

First, give nurses and nurse practitioners the power to sell their skills. The AMA currently holds nurses and nurse practitioners under their thumb. They cannot do many things that they are trained to do, or they can only do them with doctor supervision. This is economically stupid, reducing the value of these professionals, and shortening the supply of those services. Giving them the ability to perform the services they know how to do would greatly increase the health care supply and allow these services to be performed at a much lower cost. (Article 1, article 2)

Second, get rid of AMA licensure requirements. If doctors want to be licensed by the AMA, great. They can put that on their résumé when selling their service to consumers. But consumers should be allowed to choose the skilled servicemen of their choosing based on the performance, skills, and affordability of their services. They should not be forced to choose a doctor that meets the criteria that a doctors association wants them to meet. Forcing doctors to meet such high standards forces the value of the professionals to be vastly greater than the market requires. Thus prices to hire such professionals becomes ridiculously high.

Milton Friedman, a Nobel Prize winning economist, argued to the AMA at the Mayo Clinic in 1978 for “no licensure of physicians,” because it would “reduce and eliminate the monopoly power of the American Medical Association. That monopoly power is derived almost entirely from the fact that the practice of medicine is an activity which can be engaged in by only those who have licenses from government. And the control over that licensure procedure is what has enabled the AMA to exercise its monopoly power for these many decades.” (link)

In no other service industry are such standards required. We are free to choose journeyman workers, who are relatively new and inexperienced, and expect a less perfect but acceptable performance, or we can choose a more expensive master serviceman, who is very skilled and does a great job, but costs much more. We choose according to our needs and our ability to pay.

But we don’t allow such liberty when it comes to our own health. It’s understandable. Mistakes in the health industry can be devastating, so people think it’s a good idea to have government prevent low quality care. But it is still our life, our health, and our freedom to choose what we want to do. Mandating who we will allow to give us care is entirely socialist in nature, and is not granted by the Constitution. Life and the pursuit of happiness are individual rights, not government mandates. Let us choose the care we want from whom we want.

Remove the monopoly of the AMA, and we will see the supply quickly meet the demand, and prices will cliff dive. It’s time to clear capitalism’s name, and blame monopolistic socialism for the health care problems of today.

Corporate America

Corporate America is frequently demonized by both sides of the political spectrum, but even more so on the left. They call foul that the big boys don’t let the little guys compete, and put them out of business. They cry out against their labor practices, resorting to sweat shops for their cheap labor. They cry against the leaders of those corporations for their ridiculous salaries, while others are barely scraping by.

I guess they’re totally oblivious of just how much big corporate business has done for them.

I find it interesting that so many are intent on saving the little guys. I assume it is because they themselves are a little guy. But while the little guys provide us with valuable products and services, it is the big guys that make the valuable products and services cheap.

Should we count the mainstream items that we own and use that were made affordable because of corporate business? Cars, computers, television, appliances. What about food? http://mjperry.blogspot.com/2009/07/spending-on-food-at-all-time-historical.html.

Consider we take away the advanced business model that has enabled large corporate businesses to provide our products at an incredibly cheap price. Consider all our products are instead produced by local small businesses. What would happen? The streamline process of corporations would be gone, and the expenses of product development would be huge. Costs of production would be large. Very little money, if any, would be able to be invested in development and product improvement. And the price of the products would skyrocket, as those increased expenses would be passed to the consumer.

It is often brought up that corporations outsource jobs, removing American jobs, and furthermore they pay pittance to foreign employees. Sure, they go to other countries who will work for much less to provide the same service as their American counterpart. I discussed the fallacy of this argument in the previous post. And unless they are a government entity driving actual slave labor, the argument of sweat shops is bogus. The workers choose to work there. I lived in Honduras. The factory jobs there were coveted. Yes, they got paid almost nothing compared to our standard of living, but for them it was good pay.

So let’s ask this question. Which is better for America: to produce the most products for the cheapest price, or to keep the most jobs? Answer: to produce more products. That is the wealth of the nation. From that production (GDP) comes the wealth to purchase all the services that we use. All our car and home maintenance services, health care services, fine dining, massages, entertainment, etc. All these services are made possible only because the wealth of the national production is enough to pay for them. Interestingly, these services are jobs, ultimately made possible by the products produced.

So why do we demonize the corporate businesses that create the most product at the smallest expense? These are the businesses that create the wealth of the country. These are the businesses that made owning a car possible to even the lowest class. These are the businesses that made food little more than an afterthought on our budgets. These are the businesses that transformed computers from rooms full of machines to tiny devices that we all can afford.

Corporate America is what transformed the world from wood fire stoves and horse and buggy transportation to where we are now. If you want to kill Corporate America, be prepared to make a return to the dark ages.

Buy American! Or not...

The economic field calls “Buy Local” or “Buy American” policies protectionism. Politicians have taken on the mantle of protecting domestic businesses by discouraging foreign trade through taxes and tariffs. They try to encourage citizens to keep their business local with rally cries of patriotism.

Don’t buy into it. They’re killing our economy.

I’ll admit, it sounds logical. If you buy American products, the money stays in America, and thus the nation keeps the wealth. If local businesses grow because of our support, the economy grows with them, and all are benefitted from it. I used to think this way.

But the logic doesn’t hold up to proven results. When your logic doesn’t match your results, check your premises.

If buying local is in fact sound economics, then the more local you keep your business, the better. Helping local businesses helps the local economy, which helps your local business. Driving this concept even more local, helping your neighborhood businesses helps your business. Well shoot, let’s go all the way with the concept and just do everything ourselves. We’ll farm the food, collect the resources, and build all our products ourselves. We’ll be our own doctors and teach our own kids. We’ll keep all our business within the fence of our own property, thus promoting our own business.

All right, I know that sounds stupid, but that’s the theory that is being promoted. Buying local for the sake of buying local promotes the less efficient businesses at the expense of the more productive businesses. What if I, living in Utah, could only buy Utah products. That means no oranges from Florida, no steaks from Nebraska, no grapes from California. Where would I get my clothing from?? Utah doesn’t have the climate to grow oranges or cotton. So I’d have to do without? Or at least they would be really expensive and low quality.

Economics teach us that market specialization allows for far more productive output than localized comprehensive production. In other words, places that have the natural and human resources to focus on one certain product can typically produce a product at a much better value than someone else can. Americans produce good products that go out to the rest of the world. The rest of the world produces products that we buy for a great value. We each produce products at the best value and trade them for each other’s products.

If Americans want to protect their economy, they should remove foreign trade barriers. Foreign trade barriers prevent us from getting things at the best value. If we’re worried that the rest of the world is better at producing things than we are, then we’re not the America that brought the world out of the economic dark ages. America has always produced the most final product, but we collect the resources for those products from other nations. It’s okay to depend on other countries, just like we depend on the Midwest for our food, and states like Texas and California for our cotton. Kansas doesn’t have a very large tuna production, yet many Topekans enjoy a tuna fish sandwich every now and then just the same. Free trade, without government tariffs or subsidies, ensures we get a fair trade from the most efficient companies. This is good business, and effective economics.

Protectionism forces us to pay more for less. As a result, our own costs, both in personal life and business, grow, and we are less able to be productive and efficient. And that hurts our economy. Yes, American producers will go out of business, but that is what was called by Adam Smith (the father of capitalism) “creative destruction”, allowing those human resources to be moved to more productive industries.

Buy American, so long as American is the best value. Otherwise, buy Chinese, Mexican, or whatever it may be.

Compromise

When you compromise between food and poison, poison always wins.

Modern politicians frequently discuss the need to compromise between their values and the values of the other side of the spectrum, resulting in a lot of “bi-partisan” legislation. But this is a game that has been played by the proponents of totalitarian government, a trick to move the country toward what they want. It’s a trick that has worked very well for big-government advocates in the last couple of decades.

It is pounded into our heads from a young age that when we disagree on something, it is best to find middle ground, and find a solution that will work for both sides. Then, when you complain that you’re right, and the other person is wrong, you are told that each person needs to sacrifice some of what they want to reach a compromise.

This is fine when you’re choosing between two equally good options. But when you’re choosing between right and wrong, good and evil, a compromise is always a victory for evil, a corruption of good.

This is how the modern political system works. We started free and self-reliant. Nearly every new policy introduced is designed to reduce that freedom, and take away our self-reliance. Those who love freedom cry out against such usurpations of personal liberties, but the totalitarians clamor even louder that at least we should compromise. So a middle of the road bill is passed which, instead of moving us from freedom to tyranny, moves us only partly there. The next bill moves us even further away from when we were once free. And so it goes. Nobody introduces bills to kill government programs, and reduce government involvement. All bills are government involvement. So compromising on bills is simply moving toward totalitarianism slowly, but much more surely.

If we want to win our liberty back, we must first stop allowing our politicians to compromise away our freedoms little by little. We must stand for what is right, and not back down another inch. For if a virtuous man compromises his values, he loses his virtue and evil wins.

Any victory for poison is death.

Representation

As ingenious as the American government was when it was organized by the US Constitution in 1787, there is one glaring defect that has caused a huge lack of representation, and misrepresentation of a large percentage of the nation.

When the nation was organized, it was organized to protect the opposing views of individual states and communities. Each state was given equal representation in the senate, and each community was given equal representation, relative to its population, in the House. But the founders failed to foresee the eventual melting pot of political opinions in all parts of the nation. In the early days of the nation, citizens would live where they chose to live, choosing to settle in communities that held their own values. They each had a trade that they contributed to their community, and often would learn new trades as needed. They were very self-reliant, so moving to a new locale wasn’t a significant issue.

Today, however, citizens of the nation relocate almost solely due to business. They move to where their job takes them, not where the communities have policies they like. Only a very select few are able to pick up their belongings and move to another community of their choosing without serious financial repercussions. As a result, each community is comprised of citizens of very opposing views.

Yet the system of representation is such that each community has a single national representative to bring forward the concerns and values of that community. As a result, the minority of each community is completely unrepresented. In most communities, a 60-40 vote split is a landslide. But that’s a whole 40% of its citizens being unrepresented!

We have a huge underrepresentation issue now, where the nation is virtually split down the middle politically, yet one party has control of all branches of government. This is hugely unfair to half the people of the nation. And if the party in power becomes over-zealous in making the changes they want, the unrepresented will not likely sit idle, and political warfare will intensify and become dangerous. We see this happening today.

To solve the issue, we must fix the representation problem. I would propose, first of all, increasing the number of representatives, giving more comprehensive coverage of all constituents. Secondly, and more importantly, I think we need to go to some system that represents the ratios of political opinions within communities. For example, instead of having 1 representative per every 10,000 citizens, where he/she would represent only ~55% of those people, we should instead have 10 representatives to cover 100,000. The top 10 voted candidates would get the positions. Thus 6 would represent the majority views, and 4 would represent the minority. Or it may be 5 and 5 if the vote is close. Independent voters could finally get representation. The overall coverage would represent the true comprehensive views of all the people, not just the views of the majority.

Finally, I think that we need to be careful what we allow to pass into law by just a simple majority. This is too akin to mob rule, where the majority forces its will on the minority. We must take care that policies passed by the majority do not discriminate against the minority, regardless of what kind of minority it is (racial, political, financial, etc).

Doing Your Part

I just heard a commercial on the radio on doing your part to stimulate the economy. One man says, "I don't really need the money... I just figure I'm doing my part". "If you have the means, buy something, and we'll all do our part to stimulate the economy", they pled. Here's where my understanding of economics and theirs differs.

Allow me to illustrate with an example and some assumed numbers.

Let's say I have $100 just sitting there, not doing anything. I decide to follow their advice, to go out and buy something I don't really need in order to do my part to stimulate the economy. So I go our and buy a couple of video games at $50 each. Now, I'm not much into video games, but they're fun every once in a while, particularly when I have friends over. Normally I wouldn't pay more than $20-30 for a video game, since I don't play them much. But I want to help the economy after all.

Now, because I bought those games, the software company that wrote the games, and companies that distributed and sold them made a profit. How big of a profit? Well, with all the overhead, employee salaries, taxes, and general costs of production, let's say it's $15 profit per game distributed among all services needed to produce and distribute the game.

Okay, now let's see the overall affect of my spending on the total economy. The value of the games to me is < $60, since that's all I'm really (typically) willing to spend on them. I don't play the games enough for me to really value the games at full price. I wouldn't have bought them except for the call to action by the government. The value of my original $100 to me is, of course, $100. So I've just lost $40 of value in the transaction. The total profit for the companies is $30, so their costs were $70. So overall the economic gain is -$10, because the consumer value of the porduct is $10 less than the cost of production.

Spending monehy on stuff you don't need (or want enough to buy it of your own accord) is not "doing your part". It is destroying wealth. Stuffing that money in a mattress would have better for the economy. And saving that $100 for something I value at or above $100 would do far more for the economy than spending it.

Maybe we should be socialists?

John Adams once explained that “our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.”

It is clear and well documented in history that the free market capitalist system is far and away the best system for economic progress and social happiness. I’ve written several posts explaining particular aspects of this observation, and it remains true.

However, as Benjamin Franklin warned, “only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters.” If a people cannot govern themselves in an acceptable manner, they must be governed.

It leaves me to ponder, where are we now? Our nation continues to decline morally, despite the fight of many good people. So at what point are we no longer moral and disciplined enough to govern ourselves?

We’re not there yet. There are far too many good people in our nation to put such chains on their, and our nation’s, progress. But we are getting closer and closer, and one can see why so many people are indeed hopeful for such a system. Their individual moral systems have failed them, and they have become poor stewards of themselves. Thus they look to be governed. Total government, after all, would likely be a better system than an immoral anarchy. For anarchy ends in terror rule, where the strongest and most fearsome prey on the weak.

If our moral decline continues, there are only three possible outcomes. We could convert to a nanny state to maintain moral order. We might fall to anarchy and terror rule. Or we may end in revolution causing a national division, where the moral self-governors break off from the morally weak and create an independent free state again capable of individual self-government.

Obviously the best option is to break the moral decline and return to strong core values. Only this can preserve our nation and its liberty as it was designed. Otherwise we are doomed to destruction one way or another.

Feelings and Thought

I really enjoy art. Visual, musical, dramatic, etc. I didn’t used to. What’s interesting is that my interest in art grew with my interest in knowledge and thinking. I find that interesting because art supposedly speaks to the heart, rather than the mind. But I’m now realizing that that isn’t the case. In fact, it seems that some of the most artistically interested people are also some of the most intelligent.

As I considered this observation, I came to a very interesting conclusion: that the heart and mind are actually one and the same.

Cultures, for centuries, have separated the thoughts of logic from the feelings of emotion. We treat them as separate systems, independent of each other. Those of a logical mind are seemingly devoid of emotion, and those of emotional thought are lacking in reason.

It seems common knowledge today that the “heart” is what we typically refer to more scientifically as the right brain. Logic, on the other hand, is associated with the left hemisphere of the brain. But they are the same mind, and are inseparably connected. And as considered this I came to a very interesting and revealing conclusion. Feelings are thoughts.

Those that claim they can’t help how they feel are deceiving and excusing themselves. They can control their feelings just as they can control their thoughts. But many choose to let their feelings (and thoughts) run free, with no check from reason and wisdom. True, there’s a chemical element to emotion, but the chemical production is caused by the mind and the thoughts of it. There are some cases where there is an improper chemical production and balance, which can cause issues for them, but for most this is not the case.

Emotional thinkers, devoid of logical understanding, are simply (and bluntly) stupid people, apparently incapable of reason. They excuse their stupidity by expressing their emotions, and calling for them to be recognized as valid thought. But here is their error, an error seemingly made by the whole of society: emotion is not devoid of reason at all. Emotion is, in fact, founded on reason, for feelings are built by understanding. Let me illustrate this with an example. If a friend says something to you that seems offensive, your initial emotion is anger. But when your friend explains the comment and its true and full intentions, and you realize the comment was innocent, your emotions are calmed. There are a great many other examples of this. It is very clear that one’s feelings are based entirely on their understanding of things as they are and their logical conclusions formed from that understanding. We see, then, that if one does not understand things as they are, the emotion they feel is false and weak.

Those with illogical emotions have no true emotion. Their emotion fluctuates with any and every change of events. They live a frustrating life of confusion and instability. The feelings that they so much depend on for their decisions are the very destruction of their happiness.

It is those who understand their emotions that appreciate them. It is those who have control of their feelings that really feel. They are they who’s emotions are profound, strong and unwavering. They are they, and only they, who could truly feel and appreciate the beauty of art.

Empathy

The controversy surrounding President Obama’s criteria for a Supreme Court selection, along with the controversial resulting pick in Sonya Sotomayor, has given me reason to put some thoughts together on the subject of empathy and its role in our society.

I find it interesting that Christian zealots are taught most vehemently to be empathetic, yet they, as conservatives, tend to be less politically empathetic than their liberal counterparts. This seems to be hypocrisy, but it is not.

The growing trend toward political empathy is a frightening one to me. What is empathy’s role in our society?

Empathy is, and must be, a personal emotion. Each member of society can and should be empathetic toward others in a worse situation than themselves. Government, however, must not! Justice, they say, is blind. Justice and empathy cannot be had together in a court of law. In Sunday School we learn that without a Mediator, justice and mercy together would be impossible. This is very true in civil law as well.

So what’s wrong with mercy? Well, the answer is simply that it robs justice, for the law demands repayment and just punishment. A church can be merciful, people can and should be empathetic. A government must only be just. Who is the government to be unjust in favor of one citizen as opposed to another? When a judge has any bias in judgment, one party is unfairly punished. What do circumstances have to do with justice? If we play the pity card and tug on the heart strings in order to make an unjust decision, we have lost our law. Any unfairness is unacceptable for a government. Not only is the constitution trampled by denying the protection of the rights of one citizen in favor of another, but we run the risk of inciting a emotional response that could result in riots, and even civil war. We cannot allow our law to be merely a guideline.

On that same note, legislation also cannot be based on empathy. Legislators must govern with cold hearts. This sounds cruel, and is a very unpopular view in modern culture. But it is absolutely correct and necessary for freedom. Legislation must be based on logic and logic alone. No emotion should enter any decision made by congress. For when we govern with empathy, we govern with inequality and bias.

For example, it is often said that the one has plenty, while the other has none, therefore it is just to take from the one and give to the other. There is nothing just about it. The possessions of one, if obtained legally, are earned with effort. There is nothing just about forcing one to forfeit the fruits of his or her labors for the benefit of the other. That is a form of slavery, and it is unacceptable. If the one chooses to give to the other, that is his or her prerogative.

This is easy to see from a strictly logical sense, but it becomes a cloudy issue when we allow emotion to enter the equation. It is sad to see one fail. But government with emotion always ends in favoritism and a loss of freedom. Logic demands that legislation must be for the good of all, or not at all. It must not be for the good of the chosen at the expense of the unchosen.

Empathy must be left to the hearts of the people, and must have no place in public service. If we continue down this road, our empathetic government will be the destruction of our country. Liberty and justice for some.

Slowing Progress in the Name of Jobs

Intelligence simply laughs at the notion. And yet, it is a concept that is becoming more and more popular among Americans. It is the idea that we must impede progress in order to save, or even create, jobs.

It sounds ridiculous. It is ridiculous. But the idea grows with unemployment. It’s understandable. People who are more concerned about the individual than economic progress see simply that unemployment numbers are rising. People are losing jobs, and thus are suffering. Steps must be taken to stop the loss of jobs and create jobs for those who have lost their jobs already.

The interesting thing is that, in order to save or create jobs immediately, long-term progress is necessarily damaged.

Let’s use a couple of contemporary examples. The American auto industry is collapsing because their high costs, inefficient process, and unreasonable employee benefits have destroyed the profit margin in their auto sales. They are unable to raise prices (which is good for the consumer) because their domestic competitors have good profit margins on their sales at the current prices.

So what are the options? Option 1 is to do nothing. One possible result of this is that the company restructures out of necessity, streamlines their operation, and becomes competitive, thus saving most jobs, although probably losing some. The second possible result is that the company is unable to recover, and goes out of business. Jobs are lost, and unemployment spikes.

The second option is to try to level the competition by giving them an unfair advantage. This could be done by price fixing, unjustly burdening the successful companies to level the playing field, or giving the failing company a handout that is not given to other competing companies. This favoritism will save the jobs of those employed at that company, but it destroys the progress of that industry.

It is argued that maintaining level competition promotes innovation and efficiency. The logic makes sense at first look, but is fatally and fundamentally flawed. The flaw is in the word maintaining. Where is the incentive of hard work and innovation if your business is protected from being defeated? Why would an Olympian push his or her limits if they were all given a gold medal? And why would a company seek to gain a competitive advantage if, by doing so, they are burdened by legislation to nullify that advantage?

In the first option, jobs are lost, but those jobs were inefficient jobs. The man-hours were not optimized, and therefore they can and should be used more productively elsewhere. Imagine if, in order to protect the jobs of coachmen and coach makers, the new automobile technology was squashed by legislation. Imagine if, in order to protect paper companies, computers were price fixed out of existence.

If my engineering job was outsourced to India, would that be fair to me? Should we not protect our jobs from being outsourced? If someone else can do the same job as I can for a much cheaper price, regardless of where, would it be fair to force people to pay my overpriced wages for my services in order to protect me from unemployment? What does that do to the consumer of those services? Is it not more unfair to the consumer that has to pay for the overpriced service? Would they not be able to produce more if they did not waste their funds on my overpriced salary? Isn’t their business impeded by any protection of my job? So who is more important?

It is businesses that produce jobs. Jobs don’t produce businesses. If a business becomes successful and grows, jobs are created. If a business is hampered and fails, jobs are lost. Thus we must protect businesses, not the employees (except from improper professional conduct). I hate hearing the governments steps toward empowering the unions. Union power is the demise of business. And if a union’s business fails, they have no power and no job.
If a business is not paying you your market value, leave. Find a new job. Your market value is what businesses are willing to pay for your work. If you can’t find another job, your market value is probably less than you thought. If your service has dropped in demand, must we force people to pay for it? Do we make people pay for something they don’t want? Or should you learn a new skill that is higher in demand?

You are responsible for your own market value. If you want to be worth more, make yourself worth more. It’s not anyone else’s duty nor right to artificially set your market value. Price fixing has never ended well. Ever.

Health Care

I was discussing the issues of national health care with a friend the other night. While I understood the basics of the issue, it wasn’t until I did some more pensative consideration that I started to grasp the entirety of the issue.

The current system we have has led the way in medical advances worldwide. The medical business is quite profitable, and new medicines are constantly being developed, new procedures are being implemented, and research is ongoing for cures for some of our biggest plagues.

Yet there’s a large cry for reform. And rightly so.

The current system consists of a largely flawed insurance system. The idea is that all members of an insurance program pool their funds together, and from that pool each uses an appropriated amount for their own medical expenses. Thus all have access to a large amount of money for their medical expenses if needed. This, of course, is banking on not many needing large medical expenses.

This concept is okay, although very collectivist in nature. It does not allow for an accounting of the differences in individual market values of health related costs. What I mean by that is that the actual value of any one medical procedure or medicine is however much a person would personally be willing to pay for that procedure or medicine. With insurance, that market value is thrown out, and people claim their rights to access the pool of funds for whatever procedure they feel they would like. While some might be willing to live with a little discomfort if they had to pay for the procedure themselves to fix the problem, now they don’t worry about it and go ahead with the procedure anyway. The value of health is artificially inflated by the system, since the demand is elevated due to universal accessibility to coverage.

Another large issue with the current insurance system is that the pool of funds is reduced in size by management fees of the insurance companies. The profits of insurance companies comes from the money that members of the group pooled together for their own health coverage. With profits in mind, insurance companies are often found to avoid allowing access to the pool of money they are given charge of. Requested medical procedures are declined by insurance companies, forcing the insurance member to pony up the funds himself or do without. This, of course defeats the purpose of having insurance in the first place.

This is what universal health care is intended to fix. By placing the management of the pool of funds in the hands of the government, we (supposedly) remove the profiteering incentives for denying coverage for needed medical procedures. The system remains the same, but all are part of the same insurance group, run by the government.
This new system, while providing a solution to the issues of providing care for the poor and potentially reducing the pool management costs, comes with it some very significant issue as well.

First, should one who is contributing less to the pool have access to a greater part of the funds for a large procedure? I’ve already pointed out the collapse of fair-market values when you can pay for something with someone else’s money. So if the poor have access to full health coverage, and the rich still have their full coverage, total cost of health care have immediately doubled (assuming # rich = # poor).

Taxes must necessarily increase significantly in order to provide such coverage. And as I’ve explained in previous posts, taxes remove capital from the wealth-creating private sector and give it to the wealth-consuming public sector in exchange for services forced on the private citizens, whether they want the service or not. The transfer of funds into public use would be detrimental to private sector business, as capital would become significantly less available for investment in production.

If we are to attempt to keep our taxes reasonable, the system must necessarily become as the insurance companies and deny coverage to those who need expensive procedures. This is precisely what current proponents of the universal system are promoting. Christopher Dodd proposed that elderly and those with issues needing expensive procedures be required to accept their fate rather than become a leach on the system. Also, new and experimental medical procedures would be stopped, as the risks and costs are too high. Thus medical progress is halted, and we are simply exchanging one life for another. It is left to the government to decide which life is more valuable to them.
Finally the drive for medical excellence is removed with the removal of free-market competition. Regulations, processes, and other requirements will dictate the procedures of obtaining medical attention. We will not have choices, and therefore medical staffs have no incentive to be better than another. Waiting lines in current universal health systems are astronomical. Costs for medicines are absurd (they’re absurd here too, due to the current system and government intervention, but it really can get worse, believe it or not).

If we want to fix the health care system, trading one set of issues for a larger set of issues is not the way to go. Let’s not socialize medicine.

The best way that I can see to improve national health care is to drive the medical industries to provide better care at more affordable costs. By drive I do not mean to regulate them, for we have learned from experience (well, some of us have learned) that market regulations cause market imbalance and a loss of fair trade, resulting in a loss of wealth. Instead, we should remove the regulations and programs currently in place, and let market competition drive down the costs of medical practices.

Insurance should be an available option, if people choose to pool their money together, but most people may instead consider creating their own medical saving accounts to be available for their possible needs. Accounts from deceased will be allocated to their children/friends as indicated by their will, after costs of death have been covered. Some may consider insurance plans that would provide catastrophic coverage. But these plans will be relatively expensive, and short in demand. This would result in a drop in prices as needed to raise the demand. The freedom to choose your own medicines and procedures as you see fit (per doctors approval and recommendation) will create a much stronger market competition in those fields than presently exists. People will choose options that are satisfactory, but affordable. More expensive procedures will fight for market share and drive their costs down. New ideas will produce more efficient practices. And those who once couldn’t afford care would soon find that sufficient care would now be possible.

This is the way the American markets have worked for centuries. It has proven to be the most effective system in the world throughout all history. Amazing inventions that in the past would be available to only the extremely rich, such as the automobile, are common staples for even the poorest class. Put the free-market system to work on a market that has been imbalanced and inflated due to regulations and unnecessary costs, and see how affordable health care can become.

The Great Depression

Don't Push Buttons

The great misconception of modern economics is that it is the study of how to manipulate an economy, be it micro or macro, local, national, or worldwide. When this happens, push this button. When this happens, pull this lever.

While it is true that pulling the lever changes the economy in some way, the misconception is that the outcome is predictable. The economy is not a system. It is a living entity. Because it is a sum of individual motives, desires, and personalities or all its participants, we can understand it only as far as we can fully understand each individual.

“The man of system... is apt to be very wise in his own conceit; and is
often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to
the great interests, or to the strong prejudices which may oppose it. He
seems to imagine that he can arrange the different members of a great society
with as much ease as the hand arranges the different pieces upon a
chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a
principle of motion of its own, altogether different from that which the
legislature might chuse to impress upon it. If those two principles coincide and
act in the same direction, the game of human society will go on easily and
harmoniously, and is very likely to be happy and successful. If they are
opposite or different, the game will go on miserably, and the society must be at
all times in the highest degree of disorder.” -- Adam Smith, Theory of Moral
Sentiments

Once we have fully mastered psychology and neural science in such a way that we can perfectly predict the actions and reactions of all individuals, and can sum all actions and reactions together in a way that we can accurately predict the reactions to others’ reactions, and we can factor in a perfect understanding of nature and all disasters that will come about in the future, including accidents… In other words, once we are God, then will we be able to accurately push buttons and pull levers to manipulate the economy correctly.

Until then economics is and must be simply the study of the economy.

Collective Economics

I keep writing stuff but never posting it. I don't have the time in the evenings that I used to. But I have a collection of thoughts and ideas to post so I'll try to start posting them. Here's one I wrote last week:

They make sense. They sound right. They seem good... even Christian. But why are the ideas that “we’re all in this together” and “we can only make economic progress if we work together” wrong?

Isn’t working together supposed to help us be more efficient and successful? Well, this may be true in certain situations, but in social economics, the idea of too many cooks in the kitchen is more correct.

Take, as an example, a case presented by economist Russ Roberts of George Mason University. Suppose you are at a restaurant with 9 other businessmen that you don’t know. You take a look at the menu and you see the 9oz house steak for $15. It sounds pretty good, but you keep scanning the menu, and a little lower is a 12 oz prime rib for $25. The house steak sounded good, but the prime rib sounds amazing! Well, after re-reading the description of the prime rib a few times, you overcome the temptation and decide $25 is too much to spend on dinner, so you’ll go with the house steak. Now consider that the guys start talking, and you all decide to get whatever you want and split the bill evenly. Prime Rib it is!

What just happened here?

After determining that you were willing to pay $15 for a house steak, you then saw a better steak for $25. After some consideration, you determined that, while the prime rib was worth more to you than the house steak, it wasn’t quite worth $25 to you. Let’s say, for the argument, that you valued the prime rib at $20. So you wouldn’t spend $25, but you would have spent $20 for it. Well, with the new arrangement, the price to you all of a sudden came down. The $10 difference between steaks is split between all, thus it is only $1 to you. Now it is below your $20 threshold, so to you it’s a good deal.

The prime rib was worth $20 to you, but the group paid $25 so you could have it. The group has wasted $5.

Now consider that the case above implied an assumption that the remaining persons in the party order what they would have ordered if they were to pay for it all themselves. But, of course, all are now ordering the more expensive items. Of course, all are going to take advantage of the arrangement, for if they don’t take advantage of it, they are taken advantage of. So now the whole group has now spent much more than they would have been willing to by themselves.

The net effect is that demand is artificially inflated. They all got what they wanted at a higher price than they were really willing to pay. So the market is imbalanced, money is wasted, and economic progress is hampered. And ultimately they each had to pay more for their dishes individually than they wanted, which defeats the purpose of the idea in the first place.

This is exactly how universal health care works. We all pay for it, but now that we all have coverage, we all want more service than we would have if it we had to pay for it ourselves. Demand is inflated, prices soar, waiting lines grow, and the costs for these services becomes unsustainable.

Do not fall for the idea of collective economic improvement. Economic progress is produced by individual self-interest alone, for collective self-interest does not have the motivational influence for any individual, nor the frugality required for collective progress. “Working together” for economic progress works against the individual. And since we’re all a collection of individuals, ultimately it works against the collective.

Socialism -- A Political Monopoly

In economics, it has proven time and again that less regulation equals higher performance. However, it has also been shown that some well-targeted and specific regulation can improve economic output. The principle of these rare improving regulations is those intended for the elimination of monopolies, maintaining good competition. When companies grow so big and powerful that they can simply buy out any competition, it leaves that company with free reign on the market, and can fix prices at unfair market values. And whenever any product is set at an improper market price (high or low), it causes problems.

Now consider government. The government was originally structured to give most power to the individual states, allowing them to select their own policies according to the will of the citizens of that state. You essentially get a free-market type of competition between states. Citizens of any state has the right to move from that state if he/she doesn't like the policies of that state. Businesses can start in or move to the state that they feel gives them the best chance to succeed. As a result, states become required to establish policies that are good for businesses, and good for all taxpaying citizens, if they are to keep them there.

For example, if a state has beautiful scenery that brings flocks of people to it, the state will necessarily enact policies to preserve that scenery. However, if that same state cannot afford to maintain that scenery with all the new people coming in, it has a problem. So it raises taxes to pay for the maintenence. If the value of the location is worth the increase in costs, people will stay. Otherwise, they will relocate to a state with less scenery, but more affordable. Thus we see the free market concepts are just as applicable in politics as well.

Recent studies (http://www.pacificresearch.org/docLib/20080909_Economic_Freedom_Index_2008.pdf) show that American migratory patterns are indeed showing trends that indicate policy preferences. A clear trend of Americans are relocating from states with more business taxes and regulations to states with more freedom. People are voting on policies by relocation.

But what will happen if the federal government usurps the power of the individual states in a socialist system? We then have a monopoly on our hands. All policies, whether we like them or not, are essentially forced on us. Removing the competition between states removes the checks on tyrannical policies that unfairly treat any group of citizens of the nation. Businesses that may be crushed by over-regulation and over-taxation cannot escape the fate of collapse by relocating unless they move outside of the U.S. Citizens being treated unjustly by discriminatory policies cannot escape those oppresive policies without escaping the nation.

Political competition is important, necessary, just like it is in financial markets. We must fight to maintain a system that will promote competition between policy makers that will ensure the best policies for all.

Misdirected Frustration

I read an article today about a bank that was given $1.6 billion from the bailouts and was throwing parties and sponsoring golf tournaments. The article pointed out the extravegance of these expenditures, and it really was pretty ridiculous, until they point out the following:

"And here's what's absolutely amazing: The United States Government flat out gave Northern Trust the $1.6 billion in bailout money, and the bank didn't even request it!"

Excuse me? The government forced this money on them?

But the article goes on: "Perhaps we're missing something, but money is money. How can they spend like this when they're using taxpayer's money, whether they asked for it or not? And where the heck is Congress in all of this? Is there any oversight or accountability?"

I see... So, the government forces banks to take bailout money (and it's been reported that the government is keeping banks quiet over the fact that they are being forced to take this money), and the media is reporting on the ridiculous use of their funds.

So, let me ask, what if this bank didn't receive bailout money? Would it be okay for them to then advertise with parties and golf tournaments, touting themselves as a bank that is still doing well while others are failing? It seems like a decent strategy to me. But it backfires as the government forces this taxpayer money on them, the news spins the spending as wasting taxpayers money, thus the advertising is turned to bad publicity.

I don't think I would go so far as to claim that this writer is trying to destroy this bank, but that is what he/she in fact is doing. Obama and the government, on the other hand, I will say straight out, are indeed trying to destroy the banks. They are intentionally forcing them quietly into situations from which they won't be able to recover, which will ultimately lead to nationalization. Smart move, President. But the nation will end up hating you for it in the end.

http://community2.myfoxboston.com/_Chicagos-Northern-Trust-Party-Tiffany-Bags-Free-for-Women-an-Cheryl-Crow-Earth-Wind-Fire-an-CHICAGO-On-the-Taxpayers/blog/196305/71243.html?b=

Charity and Government

Not my own thoughts, but echo my thoughts well:

Charity is one of the great responsibilities of freedom. But, in order for us to be responsible - and therefore free - that responsibility must be personal.

There is no virtue in compulsory government charity, and there is no virtue in advocating it. A politician who portrays himself as "caring" and "sensitive" because he wants to expand the government's charitable programs is merely saying that he's willing to try to do good with other people's money. Well, who isn't? And a voter who takes pride in supporting such programs is telling us that he'll do good with his own money - if a gun is held to his head.

When government quits being something we use only in an emergency and becomes the principal source of aid and assistance in our society, then the size, expense and power of government are greatly increased. The decision that politicians are wiser, kinder and more honest than we are and that they, not we, should control the dispensation of eleemosynary goods and services is, in itself, a diminishment of the individual and proof that we're jerks.

Government charity causes other problems. If responsibility is removed from friends, family and self, social ties are weakened. We don't have to look after our parents; they've got their Social Security check and are down in Atlantic City with it right no w. Parents don't have to look after their kids; Head Start, a high school guidance counselor and AmeriCorps take care of that. Our kids don't have to look after themselves; if they become addicted to drugs, there's methadone, and if they get knocked up, t here's always AFDC. The neighbors, meanwhile, aren't going to get involved; if they step outside, they'll be cut down by the 9mm crossfire from the drug wars between the gangs all the other neighbors belong to.

Making charity part of the political system confuses the mission of government. Charity is, by its nature, approximate and imprecise. Are you guiding the old lady across the street or are you just jerking her around? It's hard to know when enough charity has been given. Parents want to give children every material advantage but don't want a pack of spoiled brats. There are no exact rules of charity. But a government in a free society must obey exact rules or that government's power is arbitrary and freedom is lost. This is why government works best when it is given limited and well-defined tasks to perform.

- P.J. O'Rourke
http://www.buildfreedom.com/tribute/o'rourke/explain.html