Monthly Archives: August 2009

What Is the Foundation Of Your Economic Beliefs?

Posted on by razma766
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Kurt Bouwhuis, Mackinac Center intern

Here is a great piece I found online that explains the importance of morals when holding and pursuing economic beliefs.  It is a little long but well worth the time.

By Bill Frezza

What is the moral foundation of your economic beliefs? Do economic beliefs even require a moral foundation?

Do you find it natural to accept the varied religious beliefs of others even if they contradict your own? On the other hand, are you often at odds with people who espouse different economic beliefs and policies? Why, especially if the former forms the foundation for the latter?

Would you ever use the ballot box to force others to practice your religion or make them pay to build you a church? Why do you find it easy to do this with your economic beliefs, compelling others to foot the bill for the public policies you promote?

Do you believe that wealth is prima facie evidence of thievery? Of privilege? Do you think wealth can only be created off the backs of the poor? Is there a fixed amount of wealth in the world for all to share? If so, where did it come from and how has mankind been getting richer for the past 200 years? And if the poor wish to escape exploitation by the rich, why do they keep sneaking in to our country rather than out?

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Profit is BAD – Sharing is GOOD

Posted on by razma766
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Kurt Bouwhuis, Mackinac Center Intern

Here is a video I found on Michigan Liberal this morning that is rather interesting.  Although I enjoyed the graphics and short duration, it is a bit misleading and completely leaves out the notion of unintended consequences or the effects of current government regulations on our health care industry.  Aside from disregarding the complex web of government regulations that shape the industry we have today, the clip assures us that eliminating profits is a good idea.

The creator of this short clip suggests that profit is an added expense that could be used to provide more people with health care.  It seems plausible, but what purpose does profit serve? Aside from encouraging entrepreneurship and risk taking, it tells producers what people want. For example, suppose I am a the CEO of a medical insurance company with low deductibles. Additionally, suppose a new competitor enters the market and offers a high deductible insurance at a lower cost. Some consumers will likely choose to buy less of my insurance and more of the other insurance. These consumer choices become translated into a loss my insurance company and a profit for the new competitor. This economic activity is dynamic and guides the production of goods and the elimination of others.  Unfortunately, it is impossible to eliminate profits without eliminating the vital role it plays in conveying information between producers and consumers.

In the clip, Medicare is said to be a model program – The problem is, the future obligations are trillions of dollars in the red.

The “rationing” by private insurance companies could easily be reduced by competition (that is currently being restricted by government regulation).  If a company chooses to ration too much, a consumer could easily choose another company.  If government chooses to ration, consumers will have no choice but to stick with the government monopoly.

As a funny side note, the clip tells us to imagine what the world would be like with private fire insurance.  It is quite an easy world to imagine here in the United States because we have private fire insurance.  We do, however, have public fire protection.

Health Care – In a Nutshell

Posted on by razma766
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nutshell

Kurt Bouwhuis, Mackinac Center Intern

I initially found this post at Cafe Hayek.  Do not miss this superb article from the Atlantic by David Goldhill.  Here is an excerpt:

Indeed, I suspect that our collective search for villains—for someone to blame—has distracted us and our political leaders from addressing the fundamental causes of our nation’s health-care crisis. All of the actors in health care—from doctors to insurers to pharmaceutical companies—work in a heavily regulated, massively subsidized industry full of structural distortions. They all want to serve patients well. But they also all behave rationally in response to the economic incentives those distortions create. Accidentally, but relentlessly, America has built a health-care system with incentives that inexorably generate terrible and perverse results. Incentives that emphasize health care over any other aspect of health and well-being. That emphasize treatment over prevention. That disguise true costs. That favor complexity, and discourage transparent competition based on price or quality. That result in a generational pyramid scheme rather than sustainable financing. And that—most important—remove consumers from our irreplaceable role as the ultimate ensurer

A Jubilee for Liberty!

Posted on by ewreynolds
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Two hundred and fifty years ago, someone was born who was destined to liberate millions, fated to beg for liberty before the most powerful in the world and created to ban slavery throughout the most expansive empire the world has yet seen.  Read more on Landmarks of Liberty.

E. Wesley – Mackinac Center Intern

Deficit Spending Does Not “Save” Economies

Posted on by razma766
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Kurt Bouwhuis, Mackinac Center Intern

Here is a great letter to the editor by Don Boudreaux concerning deficit spending.

24 August 2009

Editor, Washington Post
1150 15th St., NW
Washington, DC 20071

Dear Editor:

E.J. Dionne alleges that Uncle Sam’s massive deficit spending during the past year helped save the economy from a “cataclysmic” failure (“Why We Didn’t Crash,” August 24).  This claim is fishy.

If economies are buoyed by massive deficit spending, then it’s difficult to explain why the economy tanked in the first place.  When George W. Bush became President in 2001, Uncle Sam’s budget was in surplus by $128 billion.  Starting in 2002, however, and continuing until today, Uncle Sam has been on a budget-busting spending spree.  From 2002 through 2007 (the year before the economy started to crash), Washington’s cumulative budget deficits amounted to $1.68 TRILLION dollars.  (The deficit for 2008 added another $458.6 billion to this fat figure.)  Moreover, total spending by the federal government was, in inflation-adjusted dollars, 25 percent higher in 2007 than it was in 2001.

One can always argue that these deficits were ill-timed or too small.  But an argument at least equally compelling is that deficit spending in fact does not keep economies humming along smoothly.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Fairfax, VA 22030

The union plan to repopulate Detroit: Viagra

Posted on by jskorup
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-Jarrett Skorup

Detroit Mayor Dave Bing is clearly doing his best to clean up Detroit. Some of his newest reforms are to drop Viagra, weight loss drugs, fertility treatment and smoking cessation from drug coverage for all employees. He also wants to stop covering their kids’ health care after age 22 rather than 25.

Seem simple enough? It never is.

The unions are fighting back, saying that preventive medicine saves lives (this claim is dubious at best) and, more interestingly, that Viagra is a necessity.

“We want to repopulate Detroit, don’t we?” asked John Riehl, president of AFSCME Local 207, which represents water department employees.

Just one question: Is there any possible cuts that any of the unions will allow?

The Clunked and the Uncluncked

Posted on by razma766
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Kurt Bouwhuis, Mackinac Center Interm

An article titled “The argument against clunkers goes clunk!” contained the image above and concluded with the following text:

“What’s the lesson here? Stimulating the demand side has an immediate impact on a sluggish economy. Now, can we finally put to rest the discredited idea that the best way to grow the economy is by cutting taxes on the wealthy and praying that the benefits will some day trickle down to the rest of us?”

If this program is truly as beneficial as the author of this piece claims, why not up the ante?  Instead of $2 billion, why not $2 trillion!?  This all goes back to the basic economic principle of opportunity cost.  Frédéric Bastiat describes this principle best in his short piece “The Seen and the Unseen.”

Far too often are the seen effects the central focus of analysis while the unseen effects are totally disregarded.  In this instance, the $3 billion used to “stimulate” the car industry has destroyed at least $3 billion in productive capacity from other sectors of the economy.

Hat-tip to Eric Imhoff

Who does your congressman lobby for?

Posted on by jskorup
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-Jarrett Skorup

The Foreign Lobbyist Influence Tracker is a website that documents who every Congressman and Senator lobbies for from other countries. It’s worth a look.

Filings under the Foreign Agent Registration Act provide far more detail on how lobbyists interact with government officials than those required by the Lobbying Disclosure Act; they contain information on efforts by foreign governments and organizations to influence U.S. policy on trade, taxation, foreign aid, appropriations, human rights and national security.

Since May 2007 the Justice Department has maintained a Web site that posts image files [pdf]of FARA disclosures online, but none of that information is available in a digitized format. Thus, it is impossible, for example, to see how many times the office of an individual member of Congress has been contacted. With the Foreign Lobbyist Influence Tracker, you can now find out with ease by selecting any member’s name from the pull-down list.

Unenlightened

Posted on by razma766
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Here is a great letter to the editor by Don Boudreaux.

Don
http://www.cafehayek.com/
http://marketcorrection.powerblogs.com/
………………………………….

19 August 2009

Editor, Washington Post
1150 15th St., NW
Washington, DC 20071

Dear Editor:

Using gentle humor, Kathleen Parker explains why those “Progressives’” now boycotting Whole Foods should be more tolerant of WF’s CEO John Mackey’s contribution to the current conversation on government’s role in supplying health care (“Whole-Grain Health Reform,” August 19).

Indeed so.  These allegedly enlightened Americans should take the advice of a truly enlightened thinker who lived two centuries ago and kept one of the most famous salons of her day, Madame de Stael.  This liberal lady insisted that a conversation without interruption is dead – that interruption is the life of conversation.*

Those who wish to punish persons who express dissenting opinions are uninterested in learning.  Their minds are closed, making them and those who represent them an especially dangerous bunch to trust with the task of reforming America’s health-care markets.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Fairfax, VA 22030

* See Will and Ariel Durant, The Age of Napoleon (1975), page 649.