Monthly Archives: August 2009

Is The Post Office So Bad? Yes, and Try Eating More Kiwi

Posted on by razma766
Reply

Kurt Bouwhuis, Mackinac Center Intern

Here is a great post from The Perfect Substitute

Asks PK:

Maybe I’m living a sheltered life here in central New Jersey, but I don’t find the Post Office a terrible experience — no worse than Fedex or UPS.

Consider, this story from today about USPS’s $1.1 billion loss in the 3rd quarter. The USPS’s primary business is transportation. You give them something, they give it to someone else, oftentimes within a mailbox or two of the address you ask of them. If you are sending a small, light, paper envelope, within the U.S., then you will get a rate of $0.44.

Visit the grocery store and price Kiwifruit, and depending on the time of year, the weather conditions of the growing season, and where you are located relative to major distribution points, you will get quoted a price in the ballpark of 40-50 cents. Consider:

  • Kiwifruit comes from New Zealand. Is there a farther location from you in the world, than New Zealand? What would it cost you to mail something USPS to New Zealand. Heck, what about across town?
  • Like the USPS, kiwifruit must be shipped to very specific points.
  • Unlike the USPS, kiwifruit producers must add the expenses of farming. Along the way, laborers, farmers, distributors, shippers, and retailers of kiwi earn a profit.
  • Kiwifruit requires very delicate shipping conditions. While paper can tolerate extreme conditions and will not spoil, kiwifruit will be ruined if the temperatures they are shipped at do not stay within a range that is much more narrow than that of paper. This is additional cost.
  • Unlike paper, which does not bruise, Kiwi must be handled more delicately, because at the end someone must be willing to buy it.
  • Unlike your postcard, which does not need to ripen, the timing of kiwi shipping is critical. Consumers will only buy the kiwi if it is at the correct stage of ripeness. Too ripe and it will spoil before they can enjoy it. Not ripe enough, and consumers won’t buy them and the grocery will have to incur the added inventory costs until they are acceptable.
  • Unlike your letter to Santa, Kiwifruit must be protected from insects.

After you consider the miracle of 40-50 cent Kiwi, does $.44 for first class mail sound like a bargain? Not only is that an absurdly high price, but they experience massive losses at that price. Why environmentalists are not up in arms over this incredibly inefficient USPS shipping model is a true mystery.

FEE Lectures

Posted on by razma766
Reply

Kurt Bouwhuis, Mackinac Center Intern

The Foundation of Economic Education has posted many of the lectures from summer seminars here

These lectures cover a large range of topics and are all labeled and easy to find.  I attended The History and Liberty Seminar at Northwood University in Midland, MI and learned many things from each and every lecture.

Obama questioned hip-replacement for those terminally ill

Posted on by jskorup
Reply

In an interview in April, President Obama said a hip replacement for his grandma in the final weeks of her life made him wonder whether expensive procedures for those near the end of their life would be a “sustainable model” for health care.

“I don’t know how much that hip replacement cost,” Obama said in the interview. “I would have paid out of pocket for that hip replacement just because she’s my grandmother.”

Well that’s reassuring. But what happens in single-payer systems when the government needs to cut costs? Obama himself in the interview admits, “The chronically ill and those toward the end of their lives are accounting for potentially 80 percent of the total health- care bill out here.”

Obama said “you just get into some very difficult moral issues” when considering whether “to give my grandmother, or everybody else’s aging grandparents or parents, a hip replacement when they’re terminally ill. “

Yes, a moral issue indeed. Except that right now people choose whether or not to get procedures, but what happens when the government does it?

And do you really believe health-care costs won’t skyrocket? As the Wall St. Journal points out today, only five states have a type of universal health care: Maine, Massachusetts, New York, New Jersey and Vermont.

And guess what?

New York, New Jersey and Massachusetts have both community rating and guaranteed issue. And, no surprise, they have the three most expensive individual insurance markets among all 50 states, with premiums roughly two to three times higher than the rest of the country. In 2007, the average annual premium in New Jersey was $5,326 for singles and in New York $12,254 for a family, versus the national average of $2,613 and $5,799, respectively. ObamaCare would impose New York-type rates nationwide.

So when it comes down to it, who do you want picking your insurance?

Misleading Information

Posted on by razma766
Reply

Kurt Bouwhuis, Mackinac Center Intern

“So let me explain what reform will mean for you. Let me start my dispelling the outlandish rumors…” – President Obama

I figured I would use this line from the clip to dispel the outlandish rumor that Obama makes starting at 4:37. He states we have two different approaches when it comes to health care. Our first approach is the status quo. Our second choice is reform. With either of these approaches, we are left with a healthcare system strangled by government through heavy subsidies and regulation.

I will give him the benefit of the doubt and assume he forgot to mention the third approach – Freedom. Allowing individuals to voluntarily associate in the absence of government coercion. Removing government from healthcare would get rid of political decision making, which is heavily influenced by special interests, and allow for competition to drive costs down (like in most other markets).

It appears to me that no one really understands health care reform. John Stewart has some good evidence.

Medical Coverage Like A Game Show

Posted on by razma766
Reply

Kurt Bouwhuis, Mackinac Center Intern

In less than 90 seconds the new video highlights the upside-down priorities of Oregons Medicaid system. Lobbying groups have used the political process to push coverage for special-interest causes like substance abuse and weight loss treatment ahead of treatments for some kinds of cancer on the priority list.

Enjoy!

Is Profit Healthy?

Posted on by razma766
Reply

Kurt Bouwhuis, Mackinac Center Intern

Here is a letter I recently sent to the Midland Daily News:

Fran Hamburg stated in a recent letter that: “The primary mission of insurance companies is not to improve overall health care but to make a profit” (Indebted?, Aug. 5).  I agree!  What is often overlooked, however, is in their pursuit of profit, companies do great things for society.

I, for example, am sitting in a chair typing on my laptop in an air conditioned place where I have access to food, clean drinking water, lights, etc…  All these things are provided to me not because the producers personally know me and want me to feel good, but rather, because the producers are themselves seeking a wage or profit.  This point was clearly articulated by Adam Smith in The Wealth of Nations in 1776 when he said: “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own self-interest.”

Fran then stated: “It would seem reasonable to expect that eliminating an extra layer of administration and profit taking would save money.”  It seems plausible at first, 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 profitable producer of horse buggies.  Additionally, suppose an entrepreneur creates a new invention coined the automobile to compete directly with horse buggies.  Consumers will likely choose to buy less horse buggies and more automobiles.  These consumer choices become translated into a loss for horse buggy producers and a profit for automobile producers.  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.  The health care industry is a trophy example – Lobbyist and insurance companies have used government to shield themselves from competition resulting in massive amounts of regulation and 23% of all federal spending being spent on Medicare and Medicaid alone.

Everyone has their favorite horse to beat. Mine is not dead.

Posted on by razma766
Reply

Basic CMYKKurt Bouwhuis, Mackinac Center Intern

Here is some text from Michigan Liberal today that is rather disturbing:

“There is literally no way that [health care] can be fixed within the private sector … in fact, it is the private sector and the approach to lax regulation given to it that has caused things to fail.  I speak of people with no insurance; I also speak of people with health insurance who find their premiums rising so quickly because health care corporations have turned the concept into a giant, hostage cash register that they have time paying for what used to be a perk of the job and their home mortgages.” – Eric Baerren

The first statement in bold leads me to believe that the author of this post has a closed mind.  How could anyone make the claim that there is no possible way for people to voluntarily associate with one another and benefit in the absence of government coercion.  This must be based on the assumption that our current health care industry is a private one.

There is no evidence for either of these claims.  The health care system in the United States is extremely regulated and receives massive government funding through medicare and medicaid.  In fact, 23% of all federal spending goes towards medicare and medicaid. It would be just as easy for me to state that there is no way that government could possibly have the answer to the health care problem.  I could also blame government for the people with no insurance, health insurance premiums rising, etc…

These claims, however, would be meaningless unless I back them up with logic or empirical evidence.  Either way, I think there are far too many factors for any single individual to just claim that it is impossible for one plan to work and assume that their own plan is flawless.

America’s Forgotten General

Posted on by ewreynolds
Reply

He was faster than Washington at forming a patriot army… He kept America alive through Valley Forge… He drove the British out of three states.  While Washington had help from France at Yorktown, he was truly alone.  August 7th marks the birth of perhaps America’s greatest general.  Read more on Landmarks of Liberty.

E. Wesley — Mackinac Center Intern

Private Law in Iceland

Posted on by razma766
1

Kurt Bouwhuis, Mackinac Center Intern

I recently read a piece by Roderick T. Long titled “The Decline and Fall of Private Law in Iceland.”  The piece does a great job of explaining the structure of the private legal system of Iceland during the Free Commonwealth period (930-1262).  I also read “Medieval Iceland and the Absence of Government” by Thomas Whiston, which offered a number of additional insights.   Both pieces help convey the message that a unique private law system can utilize market mechanisms, rather than a governmental monopoly of power, to provide the incentives to cooperate and maintain order.

Legal system’s structure:

  • There was no public property during the era of the Vikings in Iceland, all property was privately owned.
  • Legislative power was vested in the General Assembly (Made up of Chieftains)
  • Legislators were Chieftains representing Assemblymen (Assemblymen tended to be the head of the household).
  • Every Icelander was attached to a Chieftain, either directly, by being an Assemblyman, or indirectly, by belonging to a household headed by an Assemblyman.
  • A Chieftaincy was private property, which could be bought and sold.
  • One permanent official in the system was the “logsogumadr” or law-speaker. His duties included the memorization of laws, the provision of advice on legislative issues, and the recitation of all legislative acts one time while in office
  • Representation was determined by choice rather than by place of residence; an Assemblyman could transfer his allegiance (and attendant fees) at will from one Chieftain to another without moving to a new district. Hence competition among Chieftains served to keep them in line.  The ability to switch legal systems with out moving, is key to a decentralized system. It creates secession down the level of the individual, making all governance structures formed truly voluntary.

Legal system’s mechanisms:

  • The General Assembly passed laws, but had no executive authority
  • Law enforcement was up to the individual, with the help of his friends, family, and Chieftain
  • Disputes were resolved either through private arbitration or through the court system administered by the General Assembly.
  • Wrongdoers were required to pay financial restitution to their victims; those who refused were denied all legal protection in the future (and thus, e.g., could be killed with impunity).
  • The claim to such compensation was itself a marketable commodity; a person too weak to enforce his claim could sell it to someone more powerful. This served to prevent the powerful from preying on the weak. Foreigners were scandalized by this “land without a king”; but Iceland’s system appears to have kept the peace at least as well as those of its monarchical neighbors.

In short, it is possible to have a system in which individuals can evade the Hobbesian jungle and live in a cililized society in the absence of government.

* The information above has been paraphrased from the two articles linked at the beginning of the article.

A Knight for Liberty Is Condemned

Posted on by ewreynolds
Reply

William_Wallace_Statue_,_Aberdeen2

August 5th, 1305: A hero of his country is betrayed, and marches to his execution.  His last defense is simple and true: “I can not be a traitor…”  Grieved beyond words, a whole nation rises up for its independence and a declaration of grievances is published.  Read more on Landmarks of Liberty.

E. Wesley- Mackinac Center Intern

Think Before You Take Action

Posted on by razma766
Reply

Kurt Bouwhuis, Mackinac Center Intern

Here’s a letter I sent to the Midland Daily News today.

Dan Foster recently stated that decreasing our consumption of foreign oil by increasing fuel efficiency and utilizing alternative energies “…will improve our national security, revive our economy and clean the air” (Take Action, Aug 3).  Although I wish this assertion were entirely true, I find it hard to believe that such a beneficial venture would pass by entrepreneurs unnoticed.

First off, artificially decreasing the importation of oil from abroad would likely worsen our national security, not improve it.  If a foreign nation is generating wealth by trading with the United States, that same foreign nation would have no incentive to attack the source of its prosperity.  If, on the other hand, trade was cut off for political reasons – there would likely be conflict proving Frédéric Bastiat’s point – “If goods don’t cross borders, soldiers will.”

Second, if reducing the consumption of oil truly helps “revive the economy” – Why not pass a law banning the use of oil in all automobiles?  This would really stimulate the economy!  It would divert resources from the productive sectors of the economy and place them in the automotive sector.

Lastly, I do agree with Dan that a decrease in the consumption of oil leaves the air cleaner.  Unfortunately, since air is owned by no one, it is impossible for any individual to place a value on slightly cleaner air for society.  In fact, any commodity not owned privately will become victim to what Garrett Hardin called tragedy of the commons.  Pollution of the air is a perfect example.

In short, the reason we use oil to fuel our automobiles is to give individuals what they want – Cheap transportation.  If an individual truly shared Dan’s desire for fuel efficiency, they would pony up the extra dough to purchase the same hybrid he just purchased.  A well functioning economy should fulfill the desires of each unique individual consumer, not the desires of one individual.

Kurt Bouwhuis

Four Biases

Posted on by razma766
Reply

Kurt Bouwhuis, Mackinac Center Intern

A few weeks ago, I attended a lecture at the Young Scholars Colloquium (FEE seminar) where I heard Bryan Caplan speak on his book, “The Myth of The Rational Voter.”

During his lecture, Bryan mentioned four biases that help explain the ideology of a typical American.  They are listed below:

  1. Anti-market bias – Capitalists a greedy profit seeking individuals who make money at the expense of everyone else.
  2. Anti-foreign bias – Foreigners are bad because they make cheap things, take our jobs, act different from us, drain our budget, etc…
  3. Make-work bias – Valuing employment over output.  Losing jobs is bad, even if it is caused by innovation.  Around 150 years ago, the overwhelming majority of the nation worked as farmers.  Now only 3% of Americans are farmers.  Imagine what our nation would look like today if we valued employment over output.
  4. Pessimistic bias – The American economy is constantly in decline, and the future is going to be bad.

Understanding these biases are crucial to effectively communicating with the public.