Category Archives: Big government is the problem

Don’t blame people, blame the system Mitt

Poor Mitt Romney – apparently no one ever taught him the first rule of politics: always assume you are being recorded. The issue at hand though is not so much his ham-fisted point making, but rather that he, like so many other politicians, decries the effects of government policies while ignoring the underlying causes.

What government gives in benefits they take away in choice.

Both the left and the right work their constituencies into a lather by heaping denigration upon individuals rather than upon the system that fosters the behavior they impugn. When government intervenes they not only give but take as well. What they give in benefits they take away in choice. Government programs crowd out or eliminate private markets that would permit the individual to take personal responsibility. For example, Social Security participation is mandated by law. We cannot opt out. After being robbed of 12.4% of our income whom but the wealthiest has anything left for private retirement? Social Security offers supplemental income for children with disabilities (to help pay for care). There currently exists no private insurance market for disability/long term care for those under 18. Likewise, there is no private market for unemployment insurance. Is this surprising? Why opt to pay for something that is already “free.” Private disability insurance for adults exists however only a minority of workers have such coverage. It offers little to lower wage workers relative to the “free” offerings of Social Security disability. People are not stupid. You can’t blame them for choosing “free” over “not free” given the choice. And you certainly can’t blame them when there is no choice at all. The solution is to fix the system, not the people. Phasing out government monopolized programs like social security, unemployment insurance, and welfare would give people back their natural incentive to look out for themselves. They would purchase their own individual (a) disability policy, (b) unemployment policy and (c) save for their own retirement. Elimination of the taxes that pay for these programs would permit higher wages thus offsetting or eliminating net costs. These changes alone would mean the private market would cover 99% of what people are currently receiving as government “handouts.” Private charity would easily handle the 1% of cases where extreme bad luck has left some unable to care for themselves. And even if you believe in the government “safety net” concept, surely it should be for the bottom 1%, not the bottom 50%.

The left is no more immune to this chicanery then the right. They decry the evil one-percenters and crony-capitalists without addressing what created them. Their outrage is the moral equivalent of leaving all the windows and doors of your house wide open while on vacation and then being surprised that someone robbed you. Maybe hunting down the robbers and putting them in jail will make you feel better, but wouldn’t it make sense to just lock your house? The solution to combat cronyism and corporate welfare is to simply eliminate government authority in the arenas that the large corporations are controlling. End the bailouts, the money printing, fractional-reserve lending and bogus deposit “insurance”, the tariffs, the competition-eliminating regulations, the subsidies and the mandates. All of these are mechanisms by which government helps big business to the detriment of everyone else. Big banks and big business are big and powerful because of government standing behind them like the kid on the playground who has the big bully backing them up.

The left and the right have something to learn from Mitt’s gaffe: don’t blame people for simply using the bad tools government gives them. Destroy the bad tools.

You didn’t put that fire out

Nestled deep within President Obama’s infamous “you didn’t build that” speech is a subtle statist sentiment that has escaped the slings and arrows of his detractors. Perhaps because, being statist themselves, they agree with it. He says:

“The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together.  There are some things, just like fighting fires, we don’t do on our own.  I mean, imagine if everybody had their own fire service.  That would be a hard way to organize fighting fires.”

There are two flaws in this statement, the first philosophical, the second practical. The philosophical flaw is the implication that a necessary condition for success is human cooperation (true) that is facilitated by government action (false). This notion rests on the faulty premise that absent government coercion certain types of cooperation are simply not possible. To underscore this sentiment he utilizes what many statists consider to be the “slam dunk” example against privately supplied “public goods”: fire fighting. Alas, he has picked just about the most easily debunked example.  This one is almost too easy to dispense with. Here goes:

To the statist the question is this: We want to protect our homes from fire, but how shall we pay for this service? If your house is burning down you aren’t going to compare prices, therefore market failure is implied. In fact some have made the most ironic of arguments against privatization of such services by citing the recent example of a public fire department that allowed a house to burn due to lack of fee payment. The irony lies within their straw man argument that mischaracterizes the distortions of normal market incentives inherent in a public monopoly as being examples of flaws in putative private market.

To understand how any private market works requires an understanding of incentives. Who has an incentive to prevent property destruction? The owner and the insurer. In a private system insurers would REQUIRE homeowners to purchase fire protection (if not outright inclusion of such costs in the premium). Because the insurer wants to be reasonably confident that these companies are competent, the insurer will have a vested interest in auditing and regulating these fire companies to be sure they know what they’re doing. And the fire companies will welcome such regulation because meeting the insurer’s standards will ensure they are on the insurer’s short list of approved fire mitigation vendors. The mutually beneficial incentive structure of the relationships ensures their continued maintenance. No outside compulsion or force is necessary. The homeowner is protected from fire and loss, the insurer is protected from loss and the fire company receives remuneration for their valuable service to both parties.

What would be the benefits of this private system over the current system? The amount the homeowner pays will be related to risk. Riskier homeowners pay more, less risky ones pay less. Our current system simply assumes expensive homes are somehow inherently more likely to catch fire than inexpensive homes. This is absurd on its face.  In a private system costs will be driven downward as each party tries to minimize risk. Owners suffer fewer losses, insurers pay fewer claims and fire companies decrease their capital overhead and operate more efficiently. In our current monopoly system, fire prevention technology may help the owner and the insurer however it has minimal to no impact on the budget of public fire departments. Because there is no price feedback in the public system, resources may be under or over allocated due to budgets driven by bureaucrats rather than customers.

So, the President is wrong. If we all had our own fire service it would work just fine. It is indeed possible to cooperate without the gentle fist of government.

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.

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).

Will you still pay me, when I’m sixty-four?

The mainstream media likes to occasionally publicize statistics demonstrating an ever-widening income/wealth gap. This is usually either in response to some left-wing talking head (Obama) mentioning it in a speech, or, it is simply a slow news day and nothing whips the masses into a frenzy like giving them the impression they are somehow being cheated out of their “fair share” of the economic pie, “yeah, let’s stick it to those evil rich people!” Yeah, grandma and grandpa are pretty evil, aren’t they? That’s the little tidbit they leave out of these numbers, although it is one that should be obvious: old people have lived longer than the rest of us, therefore they’ve had more to time to accumulate wealth and the work experience that allows them to demand higher wages. Duh. If the relative proportion of the aged in this country were constant the effect of age on relative changes in income distribution would be nil. But, the proportion of the aged is not constant, it is increasing. The “baby boomers”, the largest single age demographic in this country, are getting older. What do we get when we put those two together? We see a growing demographic that is increasingly earning and accruing more and more wealth. And how would we expect an increasing proportion of increasingly wealthy elderly to effect wealth distribution statistics? That’s right…a growing statistical disparity when people are lumped into wealth brackets that ignore age.

I’m not suggesting age is the sole contributor to changes in wealth/income disparities (increased productivity being another important factor) but it is obviously a major influence considering the overall “greying” of America (see US Census site and compare 1990 v 2025). And it is not merely the size of the group. The financial savvy of today’s “elderly” coupled with an increasingly productive economy have led to a poverty rate among those 65 and older one-third of what it was in 1967 (11% down from 33%). This is HALF the rate for those under 35 (22%). Bear in mind Social Security had been paying the elderly benefits since 1937, so it apparently wasn’t all that effective if the poverty rate was still 33% after 30 years of operation. We as a society need to shed the idea that old=poor and that Social Security is the only thing that stands in the way of grandma turning tricks for her next meal.

So what is the point? It is not to pick on the “age challenged”, but rather to point out that social benefits and tax policy based merely on age, race, or gender make no sense. They are inherently discriminatory insofar as such policies assume ALL in some demographic must be poor or disadvantaged in some way. If we must* have a government run social safety net or constituency-pandering tax breaks they should be means tested at the individual level, not group level. In other words, property tax breaks for the elderly: bad, but, property tax breaks based on income, good. Social Security based on age: bad, but Social Security based on need, good (I’ll leave it as an exercise to the reader as to how one should objectively define an inherently subjective concept like “need” – Warning, your head may explode).

We are a nation of individuals, not groups. We owe it to ourselves to evaluate need at the individual level, not the “group” level, else every self-entitled special interest group lobby will bankrupt this country as each group jockeys to live at the expense of every other group.

 

* Just not to leave anyone with the wrong impression here, I do not believe government is the most efficient vehicle by which assistance and charity can be distributed to those that truly need it, therefore I am in no way advocating a government run “safety-net”. I am merely suggesting that since it is politically unlikely that we will as a society unburden ourselves with the ponzi-esque social safety net we have established, the least we can do is force the government to run it more efficiently and effectively. Private charities do a fine job of that now and could do so much more were the government to get out of the way, lower the tax burden on the “wealthy” so they could give even more and allow the efficiencies of the market (good charities survive, bad ones go away) to provide needed help.

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

Crackle, SNAP, Pop(ular) goes the entitlements!

Do “food stamps” mitigate hunger among the American poor? No. Although with a name like “food stamps” one can be forgiven for falling into the trap of believing so. Following the current cutesy trend that apparently requires government programs have clever acronyms that describe their purpose (PATRIOT Act, HIRE Act, etc.) it has been renamed SNAP (get it, “snap” your fingers and food appears courtesy of the US taxpayer!) But I digress. Why do they not help? Three reasons: (a) fungibility & marginal utility, (b) socialized costs and (c) dehumanization through dependency.

Fungibility means that any given unit of something is indistinguishable from any other unit of the same material. For example, grain, silver or dollars are fungible, however diamonds or tires are not (as they vary in quality). Marginal utility is the concept that given some good, as one procures more of said good one values each subsequent unit less. So if you have a small amount of water, you value it highly as you must satisfy your most urgent needs first (thirst). But, as you gain access to more water you may then opt to “waste” it on less urgent needs, e.g. washing your car. Ok, so with that little economics lesson out of the way, how does this relate to food stamps? The food stamp money is fungible with regular money. In other words food stamps are no different than cash. Why? Absent food stamps the marginal value of the money recipients possess is very high and they will spend it on the most urgent needs (food) first. People in poverty aren’t going to NOT buy food and instead buy sneakers, movie tickets and haircuts. That would just be stupid. If we then give them money earmarked for food, they will still buy food (with food stamp money) AND NOW other (less urgent) goods with the money they used to spend on food. We are just playing a shell game, pretending this money is for this and that money is for that. It’s all just mixed together. Fungibilty is the reason some recipients can afford fancy nails and cell phones.

A secondary issue is that of socialized costs. Because the program exists people are willing to work for less than they would absent the program because they know they can count on it. If I know I need $15k/year to survive but I know the government will give me $5k/year in food stamps, then I’m going to be a lot more willing to work for $10k/year. So the employer pays less because the employee is willing to accept the lower wage BECAUSE OF the program. Then the government taxes the employer and hands the money over to the employee as food stamps. So in the end both end up with the same amount of money. So what did we accomplish here? Why not just cut out the middleman (the government) and pass the savings onto everyone? Once again we are just playing a shell game where the only beneficiary is the government.

The state is our shepherd, we (the sheeple) shall not want.

The final issue is the social harm the program engenders through the promotion of an entitlement mentality (literally – the government is running ads trying to get people to join the SNAP rolls). This mentality dehumanizes the recipient by promoting the idea they are merely wards of the state who cannot survive without suckling at the state’s communal teat. The state is our shepherd, we (the sheeple) shall not want. Inherent to the structure of any entitlement program is an economic feedback incentive that promotes attachment. The more money you make the less benefits you qualify for. I think U2 captured the idea well, “running to stand still.” Why expend great effort to obtain that which you can obtain from no effort at all?

I know politicians mean well, but their complete ignorance of basic economics and incentives creates problems bigger than the ones they were trying to solve. Just because something seems intuitively obvious (state sponsored welfare helps people) doesn’t mean it is correct. The notion that the sun revolved around the earth was intuitively obvious for centuries until someone took the time to apply some thought to the question. Big problems require deliberate, contemplative analysis, not thoughtless, knee-jerk, feel-good solutions.

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. 

Are those pumpkins next to that tree?

Democracy is sometimes described as “the tyranny of the majority over the minority” (e.g. two wolves and a sheep voting on what’s for dinner), however a more appropriate description might be “the tyranny of the uninformed over the informed.” Georgia’s new license plate is but just one mundane case in support of this secondary meaning.

To be fair, it is an attractive design… for a t-shirt. But it’s not going on a t-shirt, it’s going on a moving object and its sole purpose is to rapidly convey information to an observer (e.g. plate number and state). At this it fails miserably. I recently observed a new stationary plate not more than 30 feet away while filling my car with gas and I simply could not make out the number even after staring for some time (yes, my vision is fine). The plate is simply too busy. There is too much color and too many contrasting objects. These design elements while “pretty” do nothing but serve to camouflage the numbers. Sometimes “less is more” (think Apple’s simple package designs vs Microsoft’s “where is Waldo” package designs). Fortunately there is a “plain” tag, although it is not much better due to a dark colored peach in the background obscuring the two central numbers. The only designs that came close to being appropriately designed for the task were tags #1 and #8 and possibly #4.

Georgia is not alone. In the past decade many states have updated their plates to more colorfully busy designs that look great on a magazine cover but are utterly unreadable from more than 6 feet away. This plate beautification trend is symptomatic of a larger dysfunctional political process wherein it is believed that uninformed popular opinion can never be wrong. Rather than choosing politicians who possess the requisite abilities for proper job execution (fiscal discipline, faithfulness to the constitution) we choose them based on superficial qualities (i.e. attractiveness, personality, pandering ability or sometimes whether or not they have a D or R next to their name). The result is a political class that for the most part doesn’t understand what the purpose of government is. Likewise, by employing uninformed popular opinion in its decision making process, government has managed to fumble even the simple task of choosing a plate that succeeds at just one function (legibility) by turning it into a popularity contest that seems more suited to choosing a design for a t-shirt.

And it gets even better. The final design wasn’t even chosen by the people, although it was winnowed down to the top three through a biased on-line voting scheme. The final design was chosen by none other than Governor Nathan Deal. Reminds me of that commercial…”you wouldn’t want your doctor doing your job (cut to doctor playing instrument or running jackhammer), so why are you doing his.” Do you really want your governor acting as an untrained art director, going simply on his gut of what looks “nice” versus actually having someone with training in the field of design who understands the actual task of a license plate: being legible from a distance. Perhaps the governor should decide what books are read in our state run schools based on the cover design?

Having people vote on the final license plate design is not like having them vote on the Peachtree Road Race t-shirt. Rather, it is more like having them vote on which model of police cruiser should be purchased or how thick the asphalt should be on a new road. Hopefully our government buildings won’t someday be engineered by uninformed popular opinion… unfortunately our laws are driven by the same misguided process. Perhaps that explains the mess we are in.