Category Archives: Current events

Who shall steer us then?

This week the Republican Party will be carrying out their well-scripted coronation of Mitt Romney as the party’s presidential nominee. Sadly, those in control of the party are either moles for the Obama campaign or are criminally inept. They have done everything in their power to suppress any possibility of Ron Paul’s name going into the nomination ring at the convention (in case you’re not aware, he never officially dropped out of the race and technically can be nominated were it not for recent RNC shenanigans).

What is the result? The nomination of a candidate who is more like Obama than unlike him. Yes, their rhetoric may be different, but both are in stark agreement on many issues: the war on drugs, the war on terror, bailouts for big banks (TARP), increasing government spending, and government managed socialized healthcare (Obamacare v Romneycare) to name just a few. So while the American people watch the cleverly orchestrated marionette show between Mitt and Barry, little do they realize there is only one manipulator controlling the strings: the elite party bosses of the centralized state (D’s and R’s are two sides of the same coin). In that respect I suppose it should not be surprising that Ron Paul was ignored and shut out of the process at every turn. He represented an opportunity for a meaningful choice between the two major parties. Why would the party push a candidate who is nearly identical to the opposition rather than a candidate that can offer a real alternative in the market place of ideas? If I’m trying to sell a product I don’t do it by copying my competition and then claiming the product is different because mine comes in a red box and theirs comes in a blue box.

Libertarians don’t want to pilot the ship, they want to dock it so people are free to come and go as they please.

Of course one could make the same argument against the Democrats. Their candidate claimed to stand in stark contrast to the policies of Bush yet he furthers Bush-era policies: bank bailouts, DEA raids of state-legal marijuana dispensaries, Guantanamo, and strong support of the PATRIOT Act and the NDAA. The Democrats are becoming war hawks and pawns of the military industrial complex (NDAA support) while the Republicans are becoming socialists (Romneycare, Medicare Part D, No Child Left Behind). Both parties are merging into the single Bureaucratic State Party. This “BS” Party is a monopoly that suppresses all outside dissent and rigs the rules to prevent you, the voter, from even hearing about other options. For example, the Commission on Presidential Debates (a non-profit organization literally controlled by the Democratic and Republican parties) has a “15% rule” that prevents Libertarian Party presidential candidate Gov. Gary Johnson from being on the debate stage with Romney and Obama this fall. The media, rather than acting in its regulatory role as part of the Fourth Estate, is willingly involved in the suppression of dissenting opinions by not even placing Gov. Johnson (or any other party’s candidates) in any polls used as the metric for the magical 15% threshold.

So again I ask, why would both parties be so aligned across so many issues while feigning the appearance of difference in order to give the populace the illusion of choice? Because the goal of both parties is power. Their policy alignments all have one thing in common: expansion or maintenance of government power. The bureaucrats write rules that validate the existence of more bureaucrats. The parties may fight over who is steering the ship, but what they both agree on is that the people must never ever leave the ship. If the people find out they can live on land and take care of themselves, then there won’t be much need for a ship and her crew, will there? Libertarians don’t want to pilot the ship, they want to dock it so people are free to come and go as they please. It’s all about choice. You may not agree with Gov. Gary Johnson, but fairness in the political process is a very basic American principal. There is no legitimate reason to establish rules that suppress ideas that fall outside of the 3×5 card of approved political opinion. Let the voters hear all sides and make up their own minds.

Breaking Bad

I’m old enough that I now find most entertainment to be fairly derivative and predictable. However the TV series “Breaking Bad” is a welcome exception. If you are not familiar with it but enjoy solidly unpredictable drama you owe it to yourself to look into it. The August 12 episode’s ending left the audience in a state of numbed denial [spoiler alert: stop here if you have not seen the episode yet]. The main characters have just clandestinely robbed a train of a key chemical needed to prepare crystal meth when a young boy on a motorbike happens them upon. Without a word one of them pulls out a gun and simply dispatches the boy as blithely as one would a troublesome fly. Why? Because the boy might say something which could lead to their arrest.

After the shock of witnessing the senseless onscreen (albeit fictional) death of a young innocent wore off I came to realize why this scene was so disturbing: this type of violence occurs routinely. The boy’s death is iconic of the reprehensible loss of civilian life in wars. In “traditional” wars civilians usually know where the front line is and can avoid it. Today that is impossible. The wars on “terror” and drugs occur on a global battlefield from which there is no escape. Innocence is no defense: you are just one street address typo away from no-knock raid carried out by machine gun festooned goons.

Apropos to the “preventive” murder depicted, the US repeatedly goes to war upon the same principal of “potential threat neutralization” (Spain-1898, Korea-1950, Vietnam-1965, Iraq-2003). Unsurprisingly the neocons and chicken hawks are now rattling their swords to do the same to other countries (Iran, Syria). We as a nation are engaging in the same onscreen behavior as the thieves in “Breaking Bad”: shooting first for fear of what might happen. This behavior is reprehensible at the individual level and at the national level. The moral validity of actions does not change based on the numbers that simultaneously engage in those actions.

The moral validity of actions does not change based on the numbers that simultaneously engage in those actions.

For parents there is no greater fear than contemplating the untimely death of your child. So consider what kind of a country would inflict on foreign parents our most horrid nightmare. The US has killed both directly (drone strikes) and indirectly (sanctions) hundreds of thousands of children through the cold indifference of our leaders. Former Secretary of State Madeline Albright in a 1996 interview with 60 Minutes stated that “we think the price is worth it” when asked if the confirmed deaths of half a million Iraqi children due to UN sanctions was “worth it” in relation to the goals of those sanctions. The Bush administration fares no better: he (and Congress) restarted the Iraq war (of which even low estimates are 100,000 Iraqi civilian casualties and authorized the use of torture. Likewise Obama has failed to live up to his 2009 Nobel Peace Price. He acts as a remote executioner via the deployment of the “judge, jury, and executioner” drone strikes that have killed countless civilians who are written off as “collateral damage.” Ah, yes, the ends always justify the means. Wake up America. We have “broken bad” and are now the “bad guys.” Would we tolerate Chinese drone strikes of Americans because China deemed them to be a potential “threat” ?

In terms of this country’s meddling, interventionist, blow-back prone foreign policy it doesn’t matter whether Obama or Romney wins; they will both continue our current wars and will have no qualms about starting new ones. If you are tired of the endless wars (drug and terror) and have no more desire for the blood of innocents to be on your hands by way of voting for the “lesser of two evils” (“hmmm… who should I vote for, Hitler or Stalin…”) then consider the alternative that the media is so afraid you might hear about they won’t even include him in national polls: Libertarian Party candidate for president Gary Johnson. 

Who counts the votes?

“Voting is every citizen’s constitutional right.” The operative word in this uncontroversial statement is “citizen.” In order to validate one’s right to vote one must verify that one is an eligible* citizen (*over 18 and not a felon). To claim verification is an undue barrier to this right would be to likewise claim that a member of a health club should not have to substantiate that they are in fact, you know, members of such club. If you walk into a club and try to use the facilities would you not expect to be challenged with a request to prove that you are entitled to use such facilities? Then why is the idea of demanding that voters demonstrate their eligibility to vote seen as an outrageous request? The typical response is to trot out some sob story about how some poor person can’t afford the bus fair across town to pick up their free ID. Please, there is always some pathetic excuse that betrays the complainer to be someone that can’t be bothered to expend even the slightest effort in securing this supposedly sacrosanct right.

The next complaint is that voter ID laws are a solution in search of a problem, citing various studies that show extremely limited cases of fraud. Absence of evidence is not evidence of absence. Uncovering voter fraud is like finding a cockroach… for every one you see there are a million more you don’t see. In person voter fraud by its very nature is all but impossible to determine objectively after the fact. It would be like determining the crime rate in a city by asking people if they have broken the law. Unsurprisingly crime rates would be much lower if measured that way. Voter ID is a simple precaution to prevent possible fraud. Car theft is pretty rare, but I’ll bet you still lock your car in public? Why? Because it is a trivial preventive step in the same way voter ID is a trivial preventative.

Could the process be easier and more streamlined? Yes, of course. For example, why do we register to vote in one process and then provide an unrelated ID to vote? We should be able to present the voter registration card (a card that every voter currently gets when they register) as proof of eligibility. Problem solved.

Unfortunately voter fraud is all too common in American elections. Jimmy Carter was the victim of such a severe case of fraud in 1962 (that by some miracle of persistence he was able to prove and eventually had the results reversed in his favor) that it is believed this is the primary reason his Carter Center now takes a keen interest in worldwide election monitoring. If someone wants to steal an election it is much easier to manipulate the vote count rather than the vote itself. That doesn’t mean we should leave the door open and make it easy for in person fraud to occur, but it does inform us as to where we can most effectively allocate resources to prevent fraud. The weak link in the chain is the human link. Sure the vote is 40 to 60, but if that information is relayed by me calling Bob on the phone or sending him an email, then I can tell him any number I want. Don’t think it goes on today? Think again.  I personally witnessed this type of fraud (vote total relay) myself this past spring (a recount was done which negated the attempted fraud). To paraphrase Joseph Stalin, “It’s not who votes that counts, it’s who counts the votes.”

Hey man, you owe me!

President Obama’s now infamous “You didn’t build that” speech offered up two worldviews that betray his social-collectivist tendencies. The President engaged in a non-sequitur fallacy in his effort to establish the validity of two falsehoods by invoking a truism that is best embodied in the quote of Isaac Newton, “If I have seen further, it is by standing on the shoulders of giants.” That is to say, we owe our entire standard of living to the countless billions that came before us. Each new innovation relies on the tools and knowledge of prior generations. No one builds anything in a vacuum. The President falsely presumes that societal advancement is necessarily impossible without government involvement (e.g. building roads and schools). This presumption rests on the notion that absent government it would simply never occur to the simpletons in society to build a road, a bridge, a school, or to pursue research. We are but helpless babes that require the gentle guidance of our wise overlords.

Upon the (false) precept that government must play an integral role in society he now presumes this establishes a basis to conclude that society (the people) are morally obligated to pay government whenever, however and in whatever arbitrary amount deemed appropriate by government. More abstractly he is saying that because party A did something for party B then it is permissible for party A to unilaterally impose an open ended arbitrary obligation onto party B in perpetuity. This is little different than a drug dealer who showers gifts on a kid for a few years and then expects that kid to return the favors by doing anything that is asked: “Hey man, you owe me!”

The President’s fatal conceit is in believing that because government plays a tangential role in producing some societal goods it must then follow that government has the right to erect a barrier to the collective goods of society that may only be breached by accepting the necessity of an arbitrary debt obligation (taxes) to that gatekeeper (government). We do not owe any particular group or individual in society anything as a consequence of something they did or are doing. If that were so then perhaps we should pay taxes to GE as well for all the things they have produced that benefit society.

The only barrier to society’s goods is a natural one: our ability to produce goods or services that society values. If we desire to take something out of society’s pot of goods, we must first deposit something equivalent to the value that we wish to withdraw. Money is merely a claim ticket to the value put in the pot; it gives us the right to withdraw that value later (which is why counterfeiters and thieves are reviled, they withdraw without putting anything in). Conspicuous consumption must be preceded by conspicuous production. Taxes represent confiscation of our withdrawal rights that are diverted to government favored industries or classes of individuals. Government puts nothing in the pot; it simply forces us to pay for things we don’t want or to overpay for things we might want. Government’s limited role in society cannot justify arbitrary taxation with specious appeals to “fair share” (an objective definition for which you will have as much success in extracting from a progressive as you will in nailing Jello to a wall.)

Government’s Olympic Journey

For an Olympics host city the games are akin to a credit card financed trip to Vegas: lots of wagering on someone else’s dime and hoping for the best. The poster child for poorly executed games was Montreal, 1976. Those games were 800% over-budget – residents are STILL paying off the bonds. On average most cities do a poor job (an average of 170% over budget for the past 50 years). However being over-budget doesn’t necessarily mean the effort was for naught. Atlanta was 147% over budget (1) but was actually one of the success stories (spending a “mere” $2 billion compared to the nearly $15 billion spent on the current London Olympics). In fact most of the games since 1984 have been financial successes. What was special about 1984? The games were held in that good ol’ bastion of capitalism, the United States (Los Angeles). After the financial debacle of Montreal, Californians were wise enough to reject tax increases to cover the cost of the games. This forced the US Olympic Committee to turn to the private sector. The 1984 games were almost entirely privately funded and made frugal use of existing venues. They were the first games to be highly marketed and although criticized at the time for the “unseemliness” of such a sacred event being commercialized, the games turned a profit and that commercialization model has been used ever since.

Events like the Olympics are putatively part of the assumed economic development mandate that some believe is a role government should play. Although I dispute the need for government to play such a role (insomuch as they can play a role by simply getting out of the way) I do agree that the Olympics are about one thing: money. I do not say this as a cynic, but as an observer of human interactions. Money is simply the physical embodiment of humans producing things that other humans want. These people want to consume (watch) sporting events and those people want to produce (participate in) sporting events. Thus the act of facilitating both parties coming together has value. There is no more of a reason for governments to be involved in the Olympics than there is for it to run oil production or mining operations. It’s not that in theory government couldn’t do a good job on its own and actually make money, it’s simply that this has never happened, so why do we keep hoping “this time will be different.” Only the privately “outsourced” games have been successful (as happened in Atlanta and Los Angeles). Which begs the question: if the partial privatization has led to success, why not make the games a wholly private affair? The IOC (International Olympic Committee) could simply rent existing venues from private owners. The IOC would invest profits from the games into programs that foster youth and amateur athletics worldwide thus ensuring a steady supply of future Olympians. Private business would build new venues only where it was profitable. If there were no profits then the private investors would lose their money, not the taxpayer. Businesses that would be positively impacted would come together to form a consortium that would fund infrastructure improvements thereby unburdening the taxpayer from such expenses. In short, those that stand to gain economically from Olympic games should be the ones to (voluntarily) foot the bill. Government has started on the right path by privatizing part of the games, now it needs to complete the journey and stop socializing the costs (taxes) in order to benefit the few (private investors).

Needs and Wants

The TSPLOST frenzy has moved into high gear as we approach the July 31 election. The “pro” side makes some compelling arguments. Compelling that is until you actually think about them.

Needs and wants: It is argued that all projects are beneficial. Ok, I’ll bite. Every project is beneficial. But, just because some proposal IS beneficial in some tangential way, it does not then logically follow that it MUST be funded. Finishing out my basement, remodeling the kitchen and buying a new car are all beneficial for me…but does that necessarily mean I MUST do these things? No, I prioritize those things that are most important. The “pro” side seems to mistake wants for needs. Needs are limited, wants are unlimited; therein lies the danger of confusing the two.

Broad, low taxes are easier to hide than narrow, high taxes: We are told we need more revenue because motor fuel tax receipts have fallen over the last few decades (due to increased fuel efficiency). So why is the obvious solution of raising the motor fuel tax not on the table? Because it is politically unfeasible to add 30¢ of tax to a gallon of gas (currently 47¢ total or 29¢ of GA tax). However, it apparently is politically feasible to slip in a 1¢ tax on every dollar of every sale (except for motor fuel and automobiles, of course, the two things that, you know, are actually correlated to road use).

How much should we spend on roads?: Another argument is that we are spending $1 per year on roads and since this is not “working” the only solution is to spend $2 a year. In this “more is better” argument how does one ever determine “ok, this is enough.” Why not $3? $8? By what non-arbitrary method can anyone determine the ideal amount? Some say define it as a % of the economy or of tax revenue. Oh, please. Do you buy food based on what percentage it is of your total income? (“ahh yes, I better be sure I spend 5% of my pay on food this week!”). No, nobody does that. Pulling arbitrary percentages out of thin air does not provide a rational basis for determining the proper cost of anything. Ok, so how can we know the proper amount? The same way other scarce resources are allocated in a market economy: prices. If we had a mostly private road system prices would rationally allocate monetary resources where they are most needed (just as it does for other goods – prices inform us that it makes more sense to build homes out of wood than out of titanium). Heavily used roads would receive more attention (due to higher toll receipts) than lightly travelled roads.

Jobs: This argument is more of the same old Keynesian fallacies about government spending creating jobs. $18 billion in increased taxes merely removes $18 billion worth of some jobs in order to create $18 billion in other jobs. Moving money from my left pocket to my right pocket does not increase my wealth. The Keynesians are quite fond of this resource shuffle that suggests moving checkers around the board increases the number of checkers. For example, they use this argument to claim that new roads foster growth of new businesses (the “if you build it, they will come” argument). Businesses do come, however they are simply diverted from where they would have otherwise gone. Moving stuff is not the same as creating stuff.

A permanent tax to maintain a permanent bubble: For those old enough to remember Carnac the Magnificent  – the answer is: “Politicians plead to prevent a crisis of massive unemployment in heavy construction.” The question: “What will the news headline be in 2022 when the TSPLOST is up for renewal?” This tax is the quintessential government bubble: turn on the tax spigot to fill the tub but once that spigot is turned off the tub quickly drains. Anyone who threatens to turn off that spigot is vilified as anti-<insert locality> and anti-job.

The pro side insists, “We must DO something!” Yes, we must. Perhaps that “something” should be to force those in government to reprioritize expenditures with the money they already get. Maybe we’re “short” on funds due to massive mismanagement. Should we reward those that have already squandered our money with even more money, because this time, this time they promise to get it right?

On July 31, vote NO on TSPLOST.

Cui bono?

I recently saw a pro-TSPLOST bumper sticker on a truck. I thought “that’s odd, why would average Joe Citizen be so impassioned about infrastructure policy that they would feel the need to advertise it on their vehicle.” Then as I passed the truck the reason became all too clear: a bright blue logo signified that this truck was owned by a road construction firm. Yes my friends, that company is a “rent seeker.” Rent seeking is that process that distinguishes the market entrepreneur (one who must compete in the free market for paying customers) from the political entrepreneur (one who gains an advantage over his competitors by lobbying the government to pass laws favorable to his line of work, such as regulations, licensing laws, or outright government purchasing.) The construction company in question sees the potential $18 billion that will be raised and they want their share of that pie.  If you want to evaluate the merits of any newly proposed program, simply ask “cui bono” (to whose benefit). If the answer comes back in the form of concentrated benefits (construction firms and those selling right of way) and diffuse costs (“it’s only a penny!”) spread among the taxpayers, then chances are it is a political boondoggle that will accomplish little at a greatly inflated cost and should be promptly voted down.

The TSPLOST is being sold to the public the same way every new government expenditure is sold to the citizenry: through FUD (fear, uncertainty, doubt). The fear of what will happen if we don’t pass it (roads will crumble, bridges will fall, kittens and babies will be slaughtered!) comes first, then uncertainty surrounding our future (how else can we build and maintain roads?) and ultimately the third leg of doubt is brought to bear (there’s no way anything else can work). The tenuous justifications for “regional” projects are laughably juvenile in their simplicity. The Project Sheets for the Constrained Project list were apparently assembled from the “TSPLOST” template found in Microsoft Word; only the titles and locations have changed. Miraculously all the projects “could assist in having a positive impact on the economic vitality for this region”, “improve access to jobs”, and “improve travel times for drivers.” Sounds grand, however these descriptions were used to describe the two projects for Morgan county: a 1 mile driveway (Stanton Springs parkway) extension and widening of a lightly travelled rural highway (441 south of I-20). Someone please explain to me how widening a road will enhance access to jobs? Is there some impenetrable Great Wall of Georgia that these new wider roads are going to get us around?  The sad part is that for Morgan county the two projects aren’t even fully funded by TSPLOST. The county will come up $24 million short after 10 years (see spreadsheet). Naturally we’ll need to extend the TSPLOST for ANOTHER 10 years when it comes time for renewal in 2022 else we will have to raise property taxes to make up for the shortfall.

Which raises a final point. It has been suggested TSPLOST will save money through reduced property taxes, however that math does not work. It was stated that county officials “hope” to lower taxes by 1 mil. Using the median home value in Morgan county (US Census) of $169,400 we find that would be savings of about $67. Using the median household income in Morgan county (same source) of $46,000 and the fact that people on average spend about 36% of income on sales taxable goods (food will be taxed under TSPLOST), that translates into an increased sales tax burden of about $165 per year or a net increase of $100 on average. Everyone that would like to reach into their pocket at Christmas and hand over $100 to the government, please raise your hand. Yeah, that’s what I thought. Property tax savings is a red herring. For the overwhelming majority of residents there will be a net increase in taxes. Who benefits? The public or the politically well connected?

On July 31, vote NO on TSPLOST.

Needs of the many?

Shortly after the Supreme Court’s ruling on the PPACA (Obamacare) case came down last Thursday the world of Facebook exploded in a firestorm of cross fired epithets both praising and decrying the ruling. Frankly I’m just a bit burnt out on it all, as it would seem everything that could be said has been said ad nauseam (and yet I’m writing this article!) I think both sides believe or hope their words can persuade those on the other side, but for the most part it is a futile exercise. The Facebook community and its ilk are no different than Congress or the President; everyone is just talking past each other and no one is listening. In order to persuade you must listen and understand why they hold their beliefs or ideology, otherwise for the most part they will just hear your words but not understand the meaning. My goal in writing these articles has always been to inform and thus persuade. I’d like to think I’ve done a good job at this however I recognize the reality that I’m likely preaching to the choir while being ignored by the congregation.

If you have read this far and you are a pro-Obamacare person then congratulations for being willing to have an open mind. In order for me to have a ghost of a chance of possibly having you consider that socialized healthcare is perhaps not the best route to help people in need, I need your help. I need to understand why you support Obamacare. Please consider the following questions and feel free to respond at the contact info below.

1. Is healthcare a right? If so, why?

2. If healthcare is a right then is there any moral distinction between securing a negative right (i.e. a right secured only through the inaction of others) vs. securing a positive right, such as healthcare (i.e. a right secured only through the action of others)? Stated differently, is it moral to compel other individuals to act on one’s behalf under threat of state sanctions because one’s needs are deemed greater than those from whom the compulsion is placed upon? I believe all major world religions teach to receive help one must ask, not demand?

3. If you believe the needs of some outweigh the rights of others, then do the ends justify the means? If you agree that normally positive rights are by definition amoral, then are violations of morality justified if it might save a human life? (i.e. progressive taxation is theft but is it justified because it might be used for some useful purpose)?

4. If the ends should not justify the means (as this premise can justify any action), then do you believe that with healthcare we can make an exception because people’s lives are on the line? If yes, then why is it ok to violate some rights (property, contract, liberty) but it is not ok to violate other rights (life, privacy) in pursuit of possibly saving a life? Or is it? Would it be ok to euthanize a healthy person if their organs could save the lives of 10 people? Clearly the greater good is served by this action, so why is this wrong yet theft to possibly save a life is perfectly fine? Both involve a “taking” of property.

I understand the desire to help others; all of us on both sides of the debate want to help those in need, we merely disagree on the best course toward achieving that end. If you’re willing to look at the history (see  these articles) you will see that it is government, through regulation and subsidization (Medicare) that has caused prices to spiral out of control. Prior to 1965 (Medicare established) healthcare prices were stable and low and those in need were never turned away owing to the charitable nature of the American citizenry and her doctors. To suggest those in need were not helped is to slander the American people as implicit in the charge is that we are an uncharitable bunch that can only do “good” when forced to do so by our government.

RIP United States of America 7/4/1776 – 6/28/2012 – Obamacare upheld

Below is the body of a letter I sent to my employees today informing them of what they can expect now that Obamacare has been upheld as “constitutional”

All

Today June 28, 2012 the United States of America ceased to be a constitutional republic and is now a fully democratic fascist* oligarchy in which a tyrannical majority elect conceited tyrants that impose their will on all.

What does this mean for you as an employee? It means quite simply that health insurance rates will continue to skyrocket year over year at a 25% clip and that our only recourse is to continue raising deductible’s on the few policies we are even allowed to offer in order to keep premiums anywhere near close to affordable. To prepare for this you will be well advised to begin setting aside 10% of your gross income each paycheck into a separate account to build up a fund to cover the very high deductibles you will need to maintain in order to have some semblance of being able to afford coverage.

This is not a requirement – I am merely offering you my suggestion as to the most logical course of action to protect your own self interest given that government mandates and subsidies do nothing but drive cost of out of control (housing, healthcare, tuition – oddly all 3 have out of control costs and oddly government meddles in all 3, a coincidence? I think not). This is not opinion, this is simple economic fact that those in power simply refuse to believe, preferring to close their eyes, stamp their feet and repeat the mantra “yes we can, yes we can, yes we can” –

it is no different than jumping out of an airplane sans parachute and willing yourself not to crash into the earth… until you actually hit the earth you might believe it is working… but then reality hits you all at once.

Long term (I’m thinking 2020-2030), the government will take over healthcare and we will move to a single payer system after the “private” market becomes entirely too expensive, so naturally the government must step in to save us all.

“Gee thanks for those crutches there, oh right, you’re the one that broke my legs”.

But at least by then you will have saved up enough for medical coverage so you might still be able to afford “private” health coverage on a for cash basis so as to avoid the several month waiting list to actually even see a doctor.

Unfortunately when government steps in to take over it will likely put us and other small employers out of business as I foresee the government simply mandating that employers contribute $40-$50k/year per employee for health insurance that would go to the government – that’s in ADDITION to pay, therefore in order to recoup the cost we would have to double or triple prices and those high prices will severely if not all but eliminate the market for us… whose going to buy a $75 bottle of Marine Buffer?

So start sharpening those resumes for the eventual government job we’re all going to have, because there won’t be any others around. Think I’m overstating the case here – just look at Greece… we’re getting a preview of what is to come to us in 10-15 years… that’s how all socialist/communist/fascist countries end up. We are well on the way on the road to serfdom ( http://goo.gl/m05az )

Greg

* please look up “fascist” for yourself… it does not mean “nazi” as so many seem to believe these days – it is a form of socialism in which there is putative private ownership of business however government directs most aspects of how business is permitted to operate, thus government truly controls the business infrastructure while maintaining the illusion it is otherwise

Carrots are good for your health (insurance)

The Supreme Court is expected to deliver its decision this week on the PPACA (“Obamacare”) so while we wait with baited breath I thought I might offer an alternate approach to achieving the goals of the “Shared Responsibility Payment” (“the mandate”), which is the core issue of the court’s upcoming decision. The mandate is structured as a disincentive (“stick”) against not buying health insurance. Constitutional issues notwithstanding, the mandate is just about the worst method to achieve that goal. The penalty by 2016 would be a mere $695/year or 2.5% of household income (whichever is greater). Considering that an individual policy costs anywhere from $3-$6k/year it is more costly to pay the fine than to buy insurance only for those who earn more than $180k/year (3.7% of taxpayers ). In other words, the mandate incentivizes 96% of taxpayers to drop their insurance in order to realize a financial gain. If the Supreme Court does not overturn the PPACA on constitutional grounds then, they should overturn it on sheer stupidity grounds.

Although libertarians are opposed to any government intervention in any market, IF it seems a foregone conclusion that our overlords will simply not stop until they’ve “done” something about healthcare then I suppose it is my duty to point out how to properly incentivize behavior. Incentives (“carrots”) work much better than disincentives (“sticks”). My solution uses our existing legal framework: contracts and government enforcement thereof.

Referees don’t make the rules, they just enforce them.

Health insurance should operate like life insurance. With life insurance you purchase a policy for X number of years. In so doing you enter into a contractual relationship with the insurer whereby you promise to pay them $X dollars per year for Y years and they promise to not cancel the policy regardless of changes to your health. If they break that contractual promise, then the government steps in and forces them to live up to their end of the bargain (lawsuit).

So in the case of health insurance there should be a “term-health policy” whereby you contract with the insurer for X number of years (typically one’s expected lifetime) and the insurer provides you a price structure that is guaranteed for the life of the policy. The “carrot” here is that the longer the term, the better the rate, so rates would be much lower than they are today. Pretty simple: you promise to pay for a long time, they give you a low rate and promise to not cancel. If either party breaks their promise then the government steps in and enforces the terms of the contract.

So, how would this work in practice? Consider the following: If you cancel a policy there would be penalties, however (and here is the key) if you later want to reinstate coverage you would be required to bring your premium payments current by paying all the premiums you would have otherwise paid during the lapse in coverage OR you could obtain a brand new policy with premiums that reflect your current health status and shorter term period, so they would be exponentially higher.* This “discount-incentive/payback-disincentive” system eliminates the free rider problem because (a) in general people prefer to pay less now rather than more later and (b) you gain nothing by not carrying insurance and only trying to get it when sick. By removing government regulation we would see market driven solutions like this one, where the only limit is human imagination rather than bureaucratic fiat. Insurers should be permitted to figure out the best way to incentivize people to maintain their polices IF they must be straddled with the legal requirement that they may not deny coverage.** Those insurers that figure out the best methods will be copied thus improving compliance over time. However insurance companies often seem as inept as the government (bureaucracy is the same everywhere!) so I thought they could use a nudge in the right direction.

We, free individuals in a free market, should make the rules amongst ourselves (contracts) – it is government’s job only to enforce, not make, those rules. Referees don’t make the rules, they just enforce them.

* If an insurer went out of business the law could specify that as long as you had a policy in place it could be transferred to a new insurer irrespective of your current health condition. A more free market approach however would be to take out insurance against the insolvency of your own health insurer, so if they do go out of business your policy would provide you a lump sum payment to establish a new policy elsewhere. In such a system the insolvency premium would reflect the relative risk of your health insurer, i.e. a new upstart carrier might offer really low rates but carry a high risk premium and thus the cost of the health premium + insolvency premium might be the same as a more established carrier. Because those insurers insuring against insolvency have a vested interest in not paying claims they will be the ones to “regulate” the solvency of the health insurers through auditing and such. The insurers would permit this regulation because they will know that few people would buy their health policies if no other carriers will issue insolvency policies that cover them.

**In order to transition to this new system, we should dismantle Medicare (which currently covers wealthy old people) and Medicaid and use those funds to establish a new temporary program that would subsidize the premiums of the unhealthy AND destitute, i.e. those that truly need help as opposed to those whom the premium might merely be inconvenient or difficult. In the long run the “pre-existing condition” issue would go away as the market would incentivize parents to purchase life-term health insurance for their children at birth (these policies would be so inexpensive even the “poor” could afford them). The parents would pay the premiums until age 18 at which point the child would “inherit” the policy with an excellent rate. They would have a huge incentive to never cancel as “lifer” policies would be the ones with the lowest overall cost since they have the longest guaranteed term.