Tuesday, September 29, 2009

Why is health insurance so expensive?

The government is to blame and the proof is in Bold.

Excerpts from: The Health-Insurance Market Is Not Free by Anton Batey in Mises Daily

While many commentators have been quick to blame the free market for these costs, health insurance in America is not completely "free." For instance . . . regulations called "guaranteed issues." These force insurance companies to accept all comers, regardless of preexisting conditions. . .Such regulations allow individuals to buy insurance as soon as they need a given type of high-cost care. This is like letting a driver who causes a major accident purchase the insurance after the accident and expect all his car repair bills to be paid.

In an effort to protect themselves, insurance companies would prefer to then charge more to the person who waited until he became sick to buy insurance. However, some people cannot afford these higher payments, so the government has imposed price controls.

There are also "community ratings," which require insurance companies to charge the same amount to all members of a pool. . . These "community rating" laws effectively force insurance companies to finance people with preexisting conditions, and as a result they vastly increase the premiums for healthy people.

With community ratings in effect, an 18-year-old's premium is the same as 60-year-old's. Often, when a young and healthy person sees their premiums rise, he or she drops out of the insurance pool, (an unintended consequence) which then leaves it more full of sick people, again increasing premiums for the remaining members. These community ratings contribute a great deal to the large number of uninsured . . .

Another aspect that keeps insurance prices high is government-mandated coverage. . . in some states, people who don't drink alcohol must purchase coverage for alcoholism, nonsmokers must purchase coverage for anti-smoking programs, non–drug users must purchase coverage for drug-abuse treatment, etc. Some states require consumers to purchase 50 or more types of mandated coverage. Special-interest groups are mainly behind these acts of legislation, which come from people in certain fields who want to expand the market for their services.

Government regulations also prohibit people from buying insurance from companies that are headquartered out of states that have a different set of regulations. This is an obvious barrier to entry, which decreases the supply of competing insurance companies and thus raises the price. As I noted before, each state determines the provisions that insurance companies must abide by. This means that the regulators essentially grant monopolies in each state, since insurance licenses must go through them. The barriers to entry in the health-insurance market are thus appalling. . . the number of health insurance companies has been on a consistent decline because of regulations and barriers to entry.

The current system of employer-provided health insurance traces back to domestic policy during the World War II era. Due to government policy, inflation grew both before and during WWII. As a "remedy," caps on wage increases were imposed by the government. In response, employers began to offer their employees health insurance to soften the blow and attract quality workers.

The federal government did not consider an increase in health benefits a violation of these wage controls, and in 1943 the IRS ruled that health benefits were tax exempt for workers. After the wage caps were abolished, health insurance benefits became seen as the norm and were not eliminated.

So, anyone who claims that the high costs of health insurance originated in the "free market" is either severely mistaken or lying.

If you can't compete, change the scoreboard

Gross Domestic Happiness by Brian Domitrovic in Wall Street Journal

French President Nicolas Sarkozy recently said he wanted the nations of the world to stop using GDP, or gross domestic product, as the main measure of their economic performance. He wants them instead to work up another metric that takes into account not only economic production but such things as environmental quality and even time not spent in traffic—a sort of gross national satisfaction index.

France has excellent reason to suppress GDP statistics. Since 1982, among developed nations, France has been a clear laggard in GDP growth. In the quarter century following 1982, France's GDP growth rate was a mere 2.1% per year in comparison to the U.S.'s 3.3%. Thus the U.S. grew at more than a 50% premium to France per year during that span. When the quarter century elapsed, Americans were one-third richer than the French. . .

France's poor GDP showing over this period was in stark contrast to the 1950s and 1960s, when it had long stretches of GDP growth at 6% per year. By the early 1980s, its GDP per capita was nearly that of the U.S. In other words, France achieved prosperity equal to what was enjoyed in America and then lost it.

There is a clear reason the inflection point was 1982. At that time, France chose not to participate in an international wave and transform its economy with a free-market revolution. In the early 1980s, Margaret Thatcher in Britain and Ronald Reagan in the U.S. shed governmental regulations on the economy, cut taxes, committed to not manipulating their currencies, and encouraged global trade. Their economies boomed, as did the economies of countries that followed their lead, such as South Korea and Taiwan.

In contrast, countries of "old Europe" such as France and Italy that were content to stand pat with an overregulated private sector and tax rates well above 50% were left in the dust. . .

The oldest and most pathetic trick in the book when you lose a contest is to try to move the goal posts. GDP statistics of the past quarter century have shamed France but flattered the U.S., Britain and East Asia. Mr. Sarkozy's gambit to paper over this real difference will be lucky to find any takers.

Monday, September 28, 2009

Lap dancing and Wall Street pay

Lap dancers receive performance-related pay. Miserly and overenthusiastic customers aside, they get £20 a lap dance and £200 a half-hour of what I will call “dedicated time”. The more beautiful, charming and determined the dancer, the more lap dances and “time” she will sell, and the more she will earn. By allowing a woman with these qualities to work in his club, (the owner) puts her in the way of potentially large cashflows.

The same goes for investment bankers. Their roles vary, of course, but they can all earn bonuses for their performance. A foreign currency trader, for example, typically is paid a bonus equal to about 15 per cent of the revenue he generates for the bank. The leader of a mergers and acquisition team will make some percentage of the bank’s fee for a successful deal, which can be astronomical. By giving someone a job at an investment bank, its owners are putting him in the way of potentially large cashflows.

But here is one of the many differences between lap dancers and bankers: whereas (the owner) makes his lap dancers pay for the privilege of being put in the way of their bonuses, with a “house fee” of about £100 a night, investment bankers are actually paid to have the chance of earning bonuses in the millions, with base salaries ranging from roughly £50,000 to £200,000.

This is silly. Investment bankers, like lap dancers, should have to pay to go to work. This would settle the issue with which Messrs Brown, Sarkozy and Obama have been struggling, by ensuring that bankers are paid just the right amount and not a penny more (or less).


Government says jail those who don't get health insurance

Sen. John Ensign (R-Nev.) received a handwritten note Thursday from Joint Committee on Taxation Chief of Staff Tom Barthold confirming the penalty for failing to pay the up to $1,900 fee for not buying health insurance. Violators could be charged with a misdemeanor and could face up to a year in jail or a $25,000 penalty, Barthold wrote on JCT letterhead. He signed it "Sincerely, Thomas A. Barthold." The note was a follow-up to Ensign's questioning at the markup.


Anti-smoking propaganda

Exerpts from: Sweet Lies About Kids and Smoking by Steve Chapman

When it comes to cigarettes, the federal government can blow smoke with the best of them. . .

[T]he Food and Drug Administration announced it was prohibiting the sale of cigarettes with candy or fruit flavors. "These flavored cigarettes . . . will break that cycle [of addiction] for the more than 3,600 young people who start smoking daily.". .

You would never know from the government's pronouncements that the nation's three major tobacco companies -- R.J. Reynolds, Philip Morris and Lorillard -- don't even make them. Notorious lines like Warm Winter Toffee and Winter Mocha Mint were removed from the market years ago. The only flavor the major producers use anymore is menthol, which happens to be one the FDA chose not to ban.

Only a few small companies still offer the sort of flavors targeted by the government. According to one maker, Kretek International, these cigarettes account for less than two-tenths of 1 percent of all U.S. sales. . . 87 percent of all high school smokers choose Marlboro, Camel or Newport, which don't come in tutti-frutti flavors. . .

The government's figures on kids who start smoking are equally deceptive. When the assistant HHS secretary says 3,600 youngsters start smoking daily, he's not using those terms in the way most people would. I smoked a couple of cigarettes in my youth, but I never "started smoking," any more than I "started speaking Chinese" the one time I attended a Mandarin class.

It's true that 3,600 kids under the age of 17 try cigarettes for the first time every day, but that doesn't mean they will all become nicotine junkies. Many if not most of the experimenters soon lose interest. By the government's own account, only about 1,000 teens each day become daily smokers. . .

Lost in the government's propaganda is that if the tobacco companies are trying to recruit kids into smoking, they are doing a very poor job at it. Last year, the University of Michigan's Monitoring the Future Survey found that smoking among high school seniors is at the lowest level in the 33 years the project has been keeping track. Among 8th graders, tobacco use is down by two-thirds since the mid-1990s; among 12th-graders, smoking rates have fallen by nearly half. Only 11 percent of 12th-graders smoke every day.

Investors sometimes behave irrationally, and so do regulators

Excerpts from: Taming ‘Animal Spirits’ By Kevin Williamson in National Review.

“Animal spirits” is John Maynard Keynes’s abstraction of all that goes into quotidian economic decision-making beyond the rigorously rational pursuit of self-interest. . .

Animal spirits are indeed at play, and mischievously so, both in the marketplace and among those who seek to govern the marketplace. . .

There is no need to address the problems of that passage beyond cataloguing them: We have lots of government intervention in the economy, but employment levels do swing, financial markets have fallen into chaos, scoundrels do flourish with great exuberance, etc. And neither Adam Smith nor his intellectual heirs believe that economic man is an icy rationalist, or even that he is rational, broadly defined. Ludwig von Mises put the idea into theoretical form, but it has long been understood that man acts rationally in the sense that he takes actions that seem to him sensible in order to achieve a certain end, but that end itself may be irrational, erroneous, or criminal: Scientific researchers act rationally to achieve certain ends; so do serial killers, religious fanatics, drug addicts, and Wall Street traders.

The fallacy implicit in the conventional argument for more robust financial regulation is that animal spirits — the whole menagerie of greed, panic, pride, thrill-seeking, irrational exuberance — distort only profit-seeking activity. But they are at least as likely to distort efforts to regulate profit-seeking activity. In truth, the animal spirits of regulators probably are more dangerous than those of Wall Street sharks: Competition and the possibility of economic loss constrain players in the marketplace, but actors in the political realm have the power to compel conformity and uniformity among those under their jurisdiction. The entire economy is yoked to their animal spirits, and the housing bubble was a consequence of that fact. We have bred an especially dangerous hybrid creature in the “too big to fail” private corporation, the bastard offspring of a union between Wall Street’s animal spirits and Washington’s.


Friday, September 25, 2009

Somethings are just clever

From 4-Block World by Tom McMahon


Thursday, September 24, 2009

Chili vs. U.S.A.- Chili Wins!

In 1975, of 72 countries, Chile was No 71 in economic freedom, today it is #4, ahead of the U.S.

Chile’s historic rate of economic growth (averaged 7% a year, 84-98)

Poverty went (from 45% to 15%)

How did this happen?

The exceptional political circumstances of this period have obscured the fact that from 1975 to 1989 a true revolution took place in Chile, involving a radical, comprehensive, and sustained move toward economic and political freedom (from a starting point where there was neither one nor the other). Several radical libertarian reforms set the country on a path toward rapid development; but it also brought democracy, restored limited government, and established the rule of law.

The Los Angeles Times said:

In the early 1970s, Chile was one of the first economies in the developing world to test such concepts as deregulation of industries, privatization of state companies, freeing of prices from government control, and opening of the home market to imports. In 1981, Chile privatized its social-security system. Many of those ideas ultimately spread throughout Latin America and to the rest of the world. They are behind the reformation of Eastern Europe and the states of the former Soviet Union today… which demonstrates, once again, the awesome power of ideas.

Don't tell me that prosperity can't occur in the far reaches of the undeveloped globe.

Market principles work, case closed. So to the economic leftists, if you really care and want to feel well of yourself, how about going cognitive and demand market principles around the globe instead of promoting smug ideologies that keep people in poverty.

Source: Jose Pinera writing at Cato.org

Hayek and state health care

"Because there is no clear line between sickness and health, and where you stand on the continuum is bound up with individual choice, the more medical services are provided by the State as a part of welfare, the more the programs reinforce the conditions that bring about the need to make use of them." -Frederick Hayek

Thus, shortages in health care will be brought about by the very government who promised to increase efficiencies in health care, which will cause unnecessary deaths.

In short, government run health care will potentially kill you.

Wednesday, September 23, 2009

taxpayer dollars to Acorn- any ties to the President?

John Fund writing on WSJ.com, from National Review

Only one of the five television networks that interviewed President Obama for their Sunday shows bothered to ask him about Acorn, the left-wing community organizing group whose federal funding was cut off last week by an overwhelming vote in Congress.

"Frankly, it's not something I've followed closely," Mr. Obama claimed. . . .

Mr. Obama took great pains to act as if he barely knew about Acorn. In fact, his association goes back almost 20 years. In 1991, he took time off from his law firm to run a voter-registration drive for Project Vote, an Acorn partner that was soon fully absorbed under the Acorn umbrella. The drive registered 135,000 voters and was considered a major factor in the upset victory of Democrat Carol Moseley Braun over incumbent Democratic Senator Alan Dixon in the 1992 Democratic Senate primary.

Mr. Obama's success made him a hot commodity on the community organizing circuit. He became a top trainer at Acorn's Chicago conferences. In 1995, he became Acorn's attorney, participating in a landmark case to force the state of Illinois to implement the federal Motor Voter Law. That law's loose voter registration requirements would later be exploited by Acorn employees in an effort to flood voter rolls with fake names.

In 1996, Mr. Obama filled out a questionnaire listing key supporters for his campaign for the Illinois Senate. He put Acorn first (it was not an alphabetical list).

Political-behavioral economics and President Obama

Excerpts from Barack Obama, College Administrator, By Victor Davis Hanson

If you are confused by the first nine months of the Obama administration, take solace that there is at least a pattern. The president, you see, thinks America is a university and that he is our campus president. Keep that in mind, and almost everything else makes sense.

Obama went to Occidental, Columbia, and Harvard without much of a break, taught at the University of Chicago, and then surrounded himself with academics, first in his stint at community organizing and then when he went into politics. It shows. In his limited experience, those who went to Yale or Harvard are special people, and the Ivy League environment has been replicated in the culture of the White House.

Note how baffled the administration is by sinking polls, tea parties, town halls, and, in general, “them” — the vast middle class, which, as we learned during the campaign, clings to guns and Bibles, and which has now been written off as blinkered, racist, and xenophobic. The earlier characterization of rural Pennsylvania has been expanded to include all of Middle America.

For many in the academic community who have not worked with their hands, run businesses, or ventured far off campus, Middle America is an exotic place inhabited by aborigines who bowl, don’t eat arugula, and need to be reminded to inflate their tires. They are an emotional lot, of some value on campus for their ability to “fix” broken things like pipes and windows, but otherwise wisely ignored. . .

It is the role of the university, from a proper distance, to help them, by making sophisticated, selfless decisions on health care and the environment that the unwashed cannot grasp are really in their own interest — deluded as they are by Wal-Mart consumerism, Elmer Gantry evangelicalism, and Sarah Palin momism. The tragic burden of an academic is to help the oppressed, but blind, majority.

In the world of the university, a Van Jones — fake name, fake accent, fake underclass pedigree, fake almost everything — is a dime a dozen. Ward Churchill fabricated everything from his degree to his ancestry, and was given tenure, high pay, and awards for his beads, buckskin, and Native American–like locks. The “authentic” outbursts of Van Jones about white polluters and white mass-murderers are standard campus fare. In universities, such over-the-top rhetoric and pseudo-Marxist histrionics are simply career moves, used to scare timid academics and win release time, faculty-adjudicated grants, or exemption from normal tenure scrutiny. . .

Obama did not vet Jones before hiring him because he saw nothing unusual (much less offensive) about him, in the way that Bill Ayers likewise was typical, not an aberration, on a campus. Just as there are few conservatives, so too there are felt to be few who should be considered radicals in universities. Instead everyone is considered properly left, and even fringe expressions are considered normal calibrations within a shared spectrum. The proper question is not “Why are there so many extremists in the administration?” but rather “What’s so extreme?”

Some people are surprised that the administration is hardly transparent and, in fact, downright intolerant of dissent. Critics are slurred as racists and Nazis — usually without the fingerprints of those who orchestrated the smear campaign from higher up. . .

That reluctance to engage in truly diverse argumentation again reveals the influence of the academic world on Team Obama. We can have an Eric Holder–type “conversation” (a good campusese word), but only if held on the basis of the attorney general’s one-way notion of racial redress.

On most campuses, referenda in the academic senate (“votes of conscience”) on gay marriage or the war in Iraq are as lopsided as Saddam’s old plebiscites. Speech codes curb free expression. Groupthink is the norm. Dissent on tenure decisions, questioning of diversity, or skepticism about the devolution in the definition of sexual harassment — all that can be met with defamation. The wolf cry of “racist” is a standard careerist gambit. Given the exalted liberal ends, why quibble over the means?

Some wonder where Obama got the idea that constant exposure results in persuasion. But that too comes from the talk-is-everything mindset of a university president. . .

Obama has simply emulated the worldview and style of a college administrator. So he thinks that reframing the same old empty banalities with new rhetorical flourishes and signs of fresh commitment and empathy will automatically result in new faculty converts. There is no there there in health-care reform, but opponents can be either bullied, shamed, or mesmerized into thinking there is.

Czars are a university favorite. Among the frequent topics of the daily university executive communiqu├ęs are the formulaic “My team now includes . . . ,” “I have just appointed . . . ,” “Under my direction . . . ” (that first-person overload is, of course, another Obama characteristic), followed by announcement of a new “special” appointment: . . .

One of the most disturbing characteristics of the new administration is a particular sort of whining or petulance. Dissatisfaction arises over even favorable press coverage — as we saw last weekend, when Obama serially trashed the obsequious media that he had hogged all day.

Feelings of being underappreciated by the public for all one’s self-sacrificial efforts are common university traits. . .Michelle Obama during the campaign summed up best her husband’s wounded-fawn sense of sacrifice when she said, “Barack is one of the smartest people you will ever encounter who will deign to enter this messy thing called politics.”

University administrators worship private money, and then among themselves scoff at the capitalism that created it. Campus elites, looking at a benefactor, are fascinated how someone — no brighter than they are — made so much money, even as they are repelled by a system that allows those other than themselves to have pulled it off. No wonder that Obama seems enchanted by a Warren Buffett, even as he trashes the very landscape that created Berkshire Hathaway’s riches. No president has raised more money from Wall Street or has given it more protection from accountability — while at the same time demagoguing it as selfish and greedy.

Many of the former Professor Obama’s problems so far hinge on his administration’s inability to judge public opinion, its own self-righteous sense of self, its non-stop sermonizing, and its suspicion of sincere dissent.


Monday, September 21, 2009

totalitarian taxation

Indent, from today's Wall Street Journal

What is a tax?

Appearing on ABC's "This Week," Mr. Obama was asked by host George Stephanopoulos about the "individual mandate." Under Max Baucus's Senate bill that Mr. Obama supports, everyone would be required to buy health insurance or else pay a penalty as high as $3,800 a year. Mr. Stephanopoulos posed the obvious question about this kind of coercion when "the government is forcing people to spend money, fining you if you don't [buy insurance]. . . . How is that not a tax?"

"Well, hold on a second, George," Mr. Obama replied. "Here's what's happening. You and I are both paying $900, on average—our families—in higher premiums because of uncompensated care. Now what I've said is that if you can't afford health insurance, you certainly shouldn't be punished for that. That's just piling on. If, on the other hand, we're giving tax credits, we've set up an exchange, you are now part of a big pool, we've driven down the costs, we've done everything we can and you actually can afford health insurance, but you've just decided, you know what, I want to take my chances. And then you get hit by a bus and you and I have to pay for the emergency room care, that's . . ."

"That may be," Mr. Stephanopoulos responded, "but it's still a tax increase." (In fact, uncompensated care accounts for about only 2.2% of national health spending today, but that's another subject.)

Mr. Obama: "No. That's not true, George. The—for us to say that you've got to take a responsibility to get health insurance is absolutely not a tax increase. What it's saying is, is that we're not going to have other people carrying your burdens for you anymore . . ." In other words, like parents talking to their children, this levy—don't call it a tax—is for your own good.

So let me get this straight, Mr. President, if you decide something is "good" for me, then you will mandate it, and if I still disagree, you will use the power of the federal government to punish me monetarily. And what if I refuse to pay? This sounds very much like "do goodism" at best and totalitarianism at worst.

What do the words freedom mean to you, Mr. President?

Who do you think you are?

Friday, September 18, 2009

Who would be in the "Third" Continental Congress?

Here is a fun mental exercise.

If we were to convene a third Continental Congress to re-write the Constitution in order to stop the abuses of the current federal government, what 50 Americans would be best suited to act in the spirit of the founding fathers to meet such a momentous challenge? Here are my ideas, in no particular order. Please offer yours by posting comments.

1. Thomas Sowell, economist
2. Walter Williams, economist
3. Tom Coburn, senator
4. Sarah Palin, governor
5. Charles Barkley, NBA
6. Dennis Miller, comedian
7. James Dobson, religious leader
8. Michelle Malkin, columnist
9. Peggy Noonan, former Reagan speech writer, columnist
10. Marrianne Jennings, columnist
11. Larry Elder, columnist
12. Shelby Steele, author
13. Donald Trump, developer
14. Lou Holtz, football coach
15. Alan Keyes, scholar
16. James Q. Wilson, scholar
17. James McWhorter, scholar/linguistics
18. Steven Carter,scholar ,Yale
19. Steven Pinker, scholar, MIT
20. Neil Armstrong, astranaut
21. Ted Nugent, rock singer,hunter
22. Rush Limbaugh, radio personality
23. Newt Gingrich, former Speaker of the House
24. Barbara Bush, Wife of 41st President
25. H.Lee.Scott Jr.-Former CEO. Walmart
26. Art Laffer, economist
27. Jack Welch, former head GE
28. Rudi Gulianni, former mayor, NY
29. Larry Kudlow, economist
30. Emily Robinson, American

Other Nominees:

31. Ron Paul
32. John Stossel
33. Bill Gates

Wednesday, September 16, 2009

Is racism a factor in the healthcare debate?

The question of racism is being suggested as a significant factor regarding the opposition to President Obama's health care reform agenda and other issues. Lets look at the facts:

129,391,000 votes total for President
in 2008

16,820,830 blacks voted in election

16,147,200 blacks voted for Obama (13% of voters, 96% for Obama)

Popular vote for Obama 69,457,000 or 52%


53,310,000 votes for Obama from non-black voters

Furthermore, 4% of blacks voted for a white candidate while 41% of non-blacks voted for a black candidate. It could be concluded that blacks were far more concerned about the color of who they voted for than non-blacks. Yet, the racism charge is most often thrown, for understandable albeit wrong reasons, at non-blacks.

No one would argue that deplorable racism does not exist in every corner of the globe among every ethnic group. The question is: at what level?

Based on statistics that indicate real behaviors that deal with deeply held cognitive beliefs, racism was not the cause that elected Barack Obama to be President of the United States.

If so, how can it now be racism that is the cause for opposition to health care reform and other issues?

Lastly, when charges of racism are used in careless ways, does it not diminish the
needed outrage when real episodes of racism do occur?

2008 Presidential election data

Popular vote: 69,457,000 Obama, 59,934,814 McCain
Electoral vote: 365-173

Obama increasd vote percentages across the board

Obama 52% of the popular vote

Obama 95 more Electoral votes than he needed to win

Obama scored with 96% of black voters/13% of electorate

Obama won two-thirds of Hispanics

Obama won more than two-thirds of voters aged 18 to 29.

Obama Roman Catholic vote, 53%

Obama won among independents

Obama divided the suburban vote.

Obama improved by 17 points with families earning over $200,000 a year

Data source: Wall Street Journal

The greatest man -you have never heard of

Exerpts from The Man Who Defused the 'Population Bomb' by Gregg Easterbrook, Wall Street Journal.

Norman Borlaug arguably the greatest American of the 20th century died late Saturday after 95 richly accomplished years. The very personification of human goodness, Borlaug saved more lives than anyone who has ever lived.

Borlaug won the Nobel Peace Prize in 1970 for his work ending the India-Pakistan food shortage of the mid-1960s. He spent most of his life in impoverished nations, patiently teaching poor farmers in India, Mexico, South America, Africa and elsewhere the Green Revolution agricultural techniques that have prevented the global famines widely predicted when the world population began to skyrocket following World War II.

In 1999, the Atlantic Monthly estimated that Borlaug's efforts combined with those of the many developing-world agriculture-extension agents he trained and the crop-research facilities he founded in poor nations saved the lives of one billion human beings. . .

Borlaug helped develop some of the principles of Green Revolution agriculture on which the world now relies including hybrid crops selectively bred for vigor, and "shuttle breeding," a technique for accelerating the movement of disease immunity between strains of crops. He also helped develop cereals that were insensitive to the number of hours of light in a day, and could therefore be grown in many climates. . .

In 1950, . . . the world produced 692 million tons of grain for 2.2 billion people. By 1992, with Borlaug's concepts common, production was 1.9 billion tons of grain for 5.6 billion men and women: 2.8 times the food for 2.2 times the people. Global grain yields more than doubled during the period, from half a ton per acre to 1.1 tons; yields of rice and other foodstuffs improved similarly. Hunger declined in sync: From 1965 to 2005, global per capita food consumption rose to 2,798 calories daily from 2,063, with most of the increase in developing nations. In 2006, the United Nations Food and Agriculture Organization declared that malnutrition stands "at the lowest level in human history," despite the global population having trebled in a single century.

In the mid-1960s, India and Pakistan were exceptions to the trend toward more efficient food production; subsistence cultivation of rice remained the rule, and famine struck. In 1965, Borlaug arranged for a convoy of 35 trucks to carry high-yield seeds . . . for shipment to India and Pakistan. He and a coterie of Mexican assistants accompanied the seeds. They arrived to discover that war had broken out between the two nations. Sometimes working within sight of artillery flashes, Borlaug and his assistants sowed the Subcontinent's first crop of high-yield grain. . . within three years of Borlaug's arrival, Pakistan was self-sufficient in wheat production; within six years, India was self-sufficient in the production of all cereals. (Paul Ehrlich gained celebrity for his 1968 book "The Population Bomb," in which he claimed that global starvation was inevitable for the 1970s and it was "a fantasy" that India would "ever" feed itself. )

After his triumph in India and Pakistan and his Nobel Peace Prize, Borlaug turned to raising crop yields in other poor nations especially in Africa, the one place in the world where population is rising faster than farm production and the last outpost of subsistence agriculture.

At that point, Borlaug became the target of critics who denounced him because Green Revolution farming requires some pesticide and lots of fertilizer. Trendy environmentalism was catching on, and affluent environmentalists began to say it was "inappropriate" for Africans to have tractors or use modern farming techniques. Borlaug told me a decade ago that most Western environmentalists "have never experienced the physical sensation of hunger. They do their lobbying from comfortable office suites in Washington or Brussels. If they lived just one month amid the misery of the developing world, as I have for 50 years, they'd be crying out for tractors and fertilizer and irrigation canals and be outraged that fashionable elitists in wealthy nations were trying to deny them these things."

Environmentalist criticism of Borlaug and his work was puzzling on two fronts. First, absent high-yield agriculture, the world would by now be deforested. The 1950 global grain output of 692 million tons and the 2006 output of 2.3 billion tons came from about the same number of acres three times as much food using little additional land.

"Without high-yield agriculture," Borlaug said, "increases in food output would have been realized through drastic expansion of acres under cultivation, losses of pristine land a hundred times greater than all losses to urban and suburban expansion." Environmentalist criticism was doubly puzzling because in almost every developing nation where high-yield agriculture has been introduced, population growth has slowed as education becomes more important to family success than muscle power. . .

Often it is said America lacks heroes who can provide constructive examples to the young. Here was such a hero. Yet though streets and buildings are named for Norman Borlaug throughout the developing world, most Americans don't even know his name.

Tuesday, September 15, 2009


From Practical Economics

The idea that businesses need to be protected from foreign competition is an ongoing debate. National pride and a belief in self-sufficiency along with a competitive nature drive economic thinking towards protectionism. Although absolutely necessary in areas that are vital to national defense and security, protectionist policies are in direct opposition to free markets and the trading of scarce resources economically.

Building a wall around oneself as the Chinese once did might protect a nation from attack, but the economic costs are huge. With all of this said, trade practices need to be fair and the terms should not give an advantage to one trading partner.

Saving jobs at home with protectionist policies costs efficiencies in productivity lowering quality and raises prices. The result, capital that could be spent more efficiently is lost causing economic growth to be compromised.

Competition through free trade practices, whether at home or abroad creates the incentives that guide people to be more efficient, inventive and productive. Government mandated protectionist policies inhibit freedom by removing choices for individuals and stunting the human spirit. Protectionist policies are a renunciation of market capitalism and economic freedom in favor of economic despotism, mediocrity, and egalitarianism.

The exercise of freedom is not an easy undertaking and one can quickly fall prey to the protectionist lure. But understanding and placing trust in the principles and practices of market capitalism is the surest path to prosperity for all nations.

Regulation and attempts to discredit economics

From John Cochrane's How did Paul Krugman get it so wrong. From Von Mises.org, with thanks to Chris Izenour.

Question: Should the government increase regulation?

"the behavioral view gives us a new and stronger argument against regulation and control. Regulators are just as human and irrational as market participants. If bankers are, in Krugman’s words, “idiots,” then so must be the typical treasury secretary, fed chairman, and regulatory staff. They act alone or in committees, where behavioral biases are much better documented than in market settings. They are still easily captured by industries, and face politically distorted incentives."

Question: Should we discredit all economic theory because as a social science we can never be absolute in our answers and analysis?

"All economic models are simplified to exhibit one point; we all understand the real world is more complicated"
To say an economist is wrong simply by saying he is not 100% correct is to ignore empirically accepted and historically relevant economic theory. To do so is an evasion of the obvious in an attempt for non-empirical rhetorical wins. This is shallow and unreasoned behavior at best, disingenuous and obnoxious at worse.

Economists simplify to explain, teach and explain efficiency. Just because there are exceptions to the laws of a discipline does not mean the discipline can be causally dismissed as wrong. Do we throw out the English language because there are exceptions to the rules- I before e except after c?

Monday, September 14, 2009

Freedom and mandatory healthcare insurance

Excerpt from National Review

The president has another reason for favoring compulsion. He seeks regulations on the insurance industry that will not work unless people are forced to buy its products. If insurers have to charge the same price to all comers regardless of their health status, healthy people will have no reason to sign up. They will instead wait until they get sick and get charged the same rate. But if only sick people buy insurance, premiums will skyrocket. Insurance markets will collapse.

An order for all people to buy insurance would not so much prevent that collapse as disguise it. Once insurance companies have to sell policies to sick people and healthy people at the same rates — or to put it another way, once people are no longer allowed to buy insurance policies that give them a discount for being healthy — those policies are no longer insurance against the risk of getting sick. What “insurance companies” would instead be selling is a share of the nation’s medical resources. Viewed from this angle, the same need for compulsion presents itself. If you think that you are likely to cost less than your share of the nation’s medical expenses, and you have freedom, you may reject this bad deal. But if only the people who expect they will have higher than average medical expenses take the deal, again, the system becomes untenable. The president wants insurance to be structured in a way that cannot arise in conditions of freedom. Hence those conditions must be revoked.


Friday, September 11, 2009

President Obama for "social justice."

President Obama said he was committed to “social justice” in his speech to Congress this week. What exactly is, “social justice?” and what can the American people expect as the result of Obama’s desire to achieve it. To answer this assertion, Thomas Sowell has offered some clear analysis into the meaning of the code words “social justice.”

“Today’s “progressives” want to expand political control of incomes even more. They call it “social justice” but you could call it Rumpelstiltskin and it would still mean politicians deciding how much money each of us can be allowed to have.” Thomas Sowell, A Dangerous Obsession, December, 2006.

“Others who share a similarly secular view are often driven to personify "society" in order to re-introduce concepts of moral responsibility and justice into the cosmos, seeking to rectify the tragic misfortunes of individuals and groups through collective action in the name of "social justice." (7 p.5)

“In its pursuit of justice for a segment of society, in disregard of the consequences for society as a whole, what is called "social justice" might more accurately be called anti-social justice, since what consistently gets ignored or dismissed are precisely the costs to society.” (7 p.10)

“I never cease to be amazed at how often people throw around the lofty phrase "social justice" without the slightest effort to define it. It cannot be defined because it is an attitude masquerading as a principle. “Thomas Sowell, Random Thoughts, August 2, 2005

“Implicit in much discussion of a need to rectify social inequities is the notion that some segments of society, through no fault of their own, lack things which others receive as windfalls gains, through no virtue of their own. True as this may be, the knowledge required to sort this out intellectually, much less rectify it politically, is staggering and superhuman.” (7 p.13)

In short, “social justice” is the belief in re-distributing the outcomes of life, primarily through income, so that everyone has an equal share. It is a lofty sounding phrase used in lieu of actually stating what is being promoted, that being a command approach to government and the economy with power concentrated in the hands of a few who believe they can engineer utopia.

Obviously, President Obama believes he holds the requisite knowledge to understand the entirety of the cosmos and has the capacity to engineer it to adhere to his wishes in the creation of perfection.

That is stunning ignorance or arrogance. Either way, it should bring alarm to anyone who believes in and understands freedom and liberty under the constraints of human nature and scarcity.

Source: (7) Sowell, Thomas (1999). The quest for cosmic justice. New York, NY: The Free Press: A Division of Simon & Schuster Inc.

Thursday, September 10, 2009

12 promises Obamacare can't keep

President Obama's healthcare promises are a delusion or illusion, depending on your point of view

Promise 1. Pre-existing conditions can’t be denied.
Reality: Increased premiums for private insurance, or lower cost premiums for government insurance- with taxpayers subsidizing the difference in higher taxes. Incentives will force people to take the least costly government option.

Promise 2. Caps on out of pocket expenses
Reality: Increased premiums for private insurance, or lower cost premiums for government insurance with taxpayers subsidizing the difference in higher taxes. Incentives will force people to take the least costly government option

Promise 3. Portability
Reality: Plans will have to be fungible/interchangeable and uniform. Thus, the government will have to define by law all plans, thus taking competition and efficiencies of targeting a plan to meet a person’s needs out of the equation. A “one size fits all” plan will prevail. Incentives will force people to take the least costly government option

Promise 4. Keep coverage if you want
Reality: Yes- companies will make keeping the company policy prohibitively expensive so that you will opt out. Incentives will force people to take the least costly government option

Promise 5. Businesses will pay an 8% health care tax
Reality: If 8% of payroll is less expensive then the healthcare businesses now provide, they will just pay the tax and drop employee coverage. Incentives will then draw people to take the least costly government option

Promise 6. Everyone must have insurance
Reality: People will be fined or taxed if they don’t want insurance. All people in America will then need insurance including illegal immigrants. Taxpayers will pick up the cost in higher taxes or deficits. Those who can’t afford insurance or who will not apply for fear of being deported will be put on the government plan as the incentives will force people to take the least costly government option

Promise 7. Tax credits if you can’t afford insurance
Reality: Taxpayers will subsidize those who can’t pay. Incentives will force people to take the least costly government option

Promise 8. Government care the last resort
Reality: With taxpayer subsidizing the government program and no profit margin to worry about, the government policy will be the lowest in numerical cost to individuals but the highest in “care costs” as well as the hidden costs of higher taxes, deficits, and prices. Incentives will force people to take the least costly government option

Promise 9. No increase in costs
Reality: Where is the $900 Billion coming from? Higher taxes, less benefits, higher deficits, higher inflation? Incentives will force people to take the least costly government option so the pricetag will continue to grow.

Promise 10. Cut waste currently in system
Reality:If the government had the incentives to cut waste and fraud on Medicaid/Medicare, they would have done so already. The government has no profit motive to be efficient. Incentives will force people to take the least costly government option where they can most easily get away with fraud.

Promise 11. Government option will be self sustaining
Reality: To make it “affordable” the premiums will have to be kept below equilibrium or the market rate, thus it will end up paying out more than it takes in and will have to be subsidized by the taxpayers. Since others are picking up the tab, incentives will force people to take the least costly government option.

Promise 12. “more will die”
Reality: Yes more will die, but it will be through government inefficiencies and a lessening of economic growth, not poor health care. The promise of utopia where everyone has all their needs met creates incentives that will force people to take the least costly government option.

At the end of the day, the Obamacare proposals to reform healthcare ignore the basics of scarcity, incentives, and free market capitalism. What you hear is not what you are going to get.

The real agenda is a government takeover of healthcare. The package outlined by the President is a clever way of being"honest" while selling you something you do not want. Once you agree, it will be too late and once the government shoves it foot in your door, it will never leave.