So they have adopted a more innocuous-sounding line, blaming Venezuela’s woes primarily on the decline in oil prices. Of course, Venezuela is doing badly, they argue. Any economy that is so dependent on commodity prices would do badly under those circumstances. It has nothing to do with socialism.
It sounds superficially plausible. But do you remember which prominent Chavista said this during the oil price boom:
Of course Venezuela is doing well. Any economy that is so dependent on commodity prices would do well under those circumstances. It has nothing to do with socialism.”
You guessed right: none of them. Oil prices lead a double life in the Chavista-Corbynista mindset. When oil prices skyrocket, the ensuing boom is proof that social works, but when they fall again, the ensuing decline has nothing to do with socialism.
It is true that low oil prices would hurt Venezuela’s economy. But here’s the thing: we don’t currently have low oil prices. We had abnormally high oil prices in the decade leading up to 2014/15. Oil prices have not “collapsed”. They have merely reverted to a level which is more in line with the long-term average. More precisely, they are back (in real terms) to where they were in 2004, about the time when Venezuelamania started. And they are still noticeably higher than they were in the two decades before then.
When Oil Prices Were Peaking
Perhaps more important, though, the problems that we commonly associate with Venezuela, especially shortages of basic essentials like food and medicine, predate the drop in oil prices. Take this description:
…of milk, eggs, sugar and cooking oil there was no sign. Where were they? … Welcome to Venezuela, a booming economy with a difference. Food shortages are plaguing the country at the same time that oil revenues are driving a spending splurge … Milk has all but vanished from shops… eggs and sugar are also a memory.”
…food shortages in Venezuela have not only peaked but they have lasted longer than ever. … Venezuela’s central bank … has been publishing a scarcity index … [It] puts this year’s figure at [a level which] is similar to countries undergoing civil strife or war-like conditions.”
There are a handful of alternative history novels in which the fall of the Berlin Wall never happens, and the German Democratic Republic still exists today. It is a fascinating thought experiment, but the authors all face a problem in creating that backdrop: when the Wall fell, the GDR was not just politically, but also economically finished. How do you get around this, if you want your alternative history to be at least somewhat plausible?
Two authors have found a simple, but seemingly effective solution: in their version, the GDR regime discovers oil reserves just off the Baltic coast. The GDR is soon swamped with petrodollars; it becomes a socialist, Northern European version of Saudi Arabia.
The authors’ thinking must have been: “Let’s just give them oil reserves. Surely oil revenue can make any economy work, even a socialist one.”
I like the idea. But Venezuela’s experience shows that the authors were over-optimistic.
Oil Isn’t Enough
Socialists have always argued that socialism will eventually work, it just needs the right circumstances. They are now effectively saying:
Of course socialism works. All you need is the world’s largest proven oil reserves, the longest oil price boom in history, and the highest oil price level ever recorded in history. That boom must obviously go on forever. Even then, you will have constant shortages of food, medicines and other basic essentials. But on the plus side, you will have Western intellectuals lining up to tell you how lucky you are.”
http://drrichswier.com/wp-content/uploads/venezuela-mural-1400x788-e1503101733469.jpg360640Foundation for Economic Education (FEE)http://drrich.wpengine.com/wp-content/uploads/logo_264x69.pngFoundation for Economic Education (FEE)2017-08-18 20:15:432017-08-19 06:02:57Socialism – Not Oil Prices – Is to Blame for Venezuela's Woes by Kristian Niemietz
A few weeks ago, road and highways minister Nitin Gadkari said that driverless cars would be banned in India in order to “protect jobs.” This kind of fallacious argument is nothing new. For the past year or so, newspapers have frequently published articles arguing that automation is to blame for job losses. Even seemingly intelligent people like Bill Gates have made outlandish suggestions, such as taxing robots, to compensate workers who might lose their jobs as a result.
Bad government policies are the root cause for unemployment.
By doing a superficial analysis, one may indeed say that automation causes job losses. But by digging a bit deeper, one sees that bad government policies are the root cause for unemployment.
Take the case of driverless cars. Driving is not a job that requires specialized skills. Low skilled workers are abundant and also inexpensive to hire. Why, then, is Uber so interested in developing driverless cars? It is because governments around the world have imposed costly regulations, or outright banned Uber to protect the taxi cartels.
Never mind that this creates an immediate job loss for Uber drivers, it also gives Uber an incentive to invest billions in developing driverless cars to circumvent the burdensome regulations. This will ensure that all drivers will lose their jobs in the long run, including the taxi cartels governments are trying to protect.
Lant Pritchett, at the Centre for Global Development, wrote last month of a similar problem in the US. Workers from Central and Latin America could easily work low-wage jobs in the US.But minimum wage laws and immigration restrictions make labor artificially expensive.
Technological progress is distorted when government tries to protect certain industries.
That is precisely why Amazon is pouring billions into drones. In the absence of government intervention, it would be far cheaper to hire low skilled immigrants for delivering parcels. But since government won’t allow that, it is cheaper to use drones. Most delivery jobs in the US will be eliminated in the near future as a result of bad immigration policies. Policies which were, ironically, crafted to save those jobs.
Note the tremendous inefficiency this creates. The world’s scarcest resources, entrepreneurs and scientists, are working to economize the most abundant resources, namely low skilled labor. All of that entrepreneurial and scientific talent is being wasted due to bad government policies. Pritchett rightly laments that this makes it harder for poor people to escape poverty.
Pritchett’s observation is nothing new. In January, I wrote that even Karl Marx understood how technological progress is distorted when government tries to protect certain industries or occupations. A case in point is Indian manufacturing, which the government tried to protect from foreign competition.
Ill-conceived government policies are why low skilled jobs are dying an untimely death.
Countries at a similar level of development have labor intensive manufacturing which makes use of cheap labor. In India, the opposite has happened. Whatever little manufacturing takes place in the country is extremely capital intensive. Why did this happen?
Laws Are Expensive
Before 1991, government imposed extremely high tariffs on imports to encourage domestic manufacturing. Manufacturing grew, but it became more capital intensive over the years, even though cheap labor was abundantly available. The explanation for this lies in India’s complex labor laws.
India has nearly 250 labor laws between the centre and the states. The cost of complying with these labor laws is so high that companies found (and still find) it cheaper to use machines than to hire people, creating the phenomenon of jobless growth.
All of this evidence points to just one culprit, when it comes to unemployment. It is not greedy corporations and it is not automation. Ridiculously ill-conceived government policies are the sole reason that low skilled jobs are dying an untimely death.
Jairaj Devadiga is an economist who illustrates the importance of property rights and freedom through some interesting real-world cases. When he is not doing research, he enjoys reading about medicine, astronomy, computers, and law among other things. Readers may email him at firstname.lastname@example.org with questions, suggestions, feedback etc.
http://drrichswier.com/wp-content/uploads/automation-e1502961957616.jpg416640Foundation for Economic Education (FEE)http://drrich.wpengine.com/wp-content/uploads/logo_264x69.pngFoundation for Economic Education (FEE)2017-08-17 05:28:282017-08-17 05:29:35Government, Not Automation, Destroys Jobs by Jairaj Devadiga
Following the valuable advice of co-blogger David Henderson, I’ve gotten my hands on Milton Friedman on Freedom, a new collection edited by the Hoover Institution. The book will surprise all of us who never properly appreciated the insights and wisdom of Friedman’s political thinking. His own peculiar blend of classical liberalism comes out all the more as subtle and relevant.
Among the several chapters, I did particularly enjoy a 1974 interview with Reason magazine. Friedman was then interviewed by the editorial trio (Tibor Machan, Joe Cobb, Ralph Raico), who were challenging him from what they considered a more consistent libertarian position.
The interview is rich and interesting in many ways. Friedman defends a negative income tax and school vouchers as “devices for enabling the free market to play a larger role.” He admits that the work of E.G. West made him revisit his own rationale for compulsory education (but not to abandon vouchers as a practical policy proposal), and he discusses inflation and the gold standard.
Friedman also speaks on a matter which has likewise been pondered by many of his contemporaries: why intellectuals oppose capitalism.
To these questions, some have replied that the main reason is resentment (intellectuals expect more recognition from the market society than they actually get); some have pointed out that self-interest drives the phenomenon (intellectuals preach government controls and regulation because they’ll be the controllers and regulators); some have taken the charitable view that intellectuals do not understand what the market really is about (as they cherish “projects” and the market is instead an unplanned order).
Friedman rejects the resentment view and proposes a version of the self-interest thesis by looking at the demand-side, so to speak. And it shows – behind the veil of his civility – very little consideration for the tastes of his fellow intellectuals for complex arguments, which seems to me quite a criticism.
Here’s the passage:
REASON: Perhaps we can go back to your comment about intellectuals. What do you think of the thesis put forth by von Mises and Schoeck, that envy motivates many contemporary intellectuals’ opposition to the free market?
FRIEDMAN: Well, I don’t think we’ll get very far by interpreting the intellectuals’ motivation. Their critical attitudes might be attributed to personal resentment and envy but I would say that a more fruitful direction, or a more fundamental one, is that intellectuals are people with something to sell. So the question becomes, what is there a better market for? I think a major reason why intellectuals tend to move towards collectivism is that the collectivist answer is a simple one. If there’s something wrong pass a law and do something about it. If there’s something wrong it’s because of some no-good bum, some devil, evil and wicked – that’s a very simple story to tell. You don’t have to be very smart to write it and you don’t have to be very smart to accept it. On the other hand, the individualistic or libertarian argument is a sophisticated and subtle one. If there’s something wrong with society, if there’s a real social evil, maybe you will make better progress by letting people voluntarily try to eliminate the evil. Therefore, I think, there is in advance a tendency for intellectuals to be attracted to sell the collectivist idea.
REASON: It’s paradoxical but people might then say that you are attributing to the collectivist intellectual a better feeling for the market.
FRIEDMAN: Of course. But while there’s a bigger market for Fords than there is for American Motors products, there is a market for the American Motors products. In the same way, there’s a bigger market for collectivist ideology than there is for individualist ideology. The thing that really baffles me is that the fraction of intellectuals who are collectivists is, I think, even larger than would be justified by the market.
Alberto Mingardi is Director General of Istituto Bruno Leoni, Italy’s free-market think tank.
http://drrichswier.com/wp-content/uploads/light-bulb-mechanical-e1502961194786.jpg337642Foundation for Economic Education (FEE)http://drrich.wpengine.com/wp-content/uploads/logo_264x69.pngFoundation for Economic Education (FEE)2017-08-17 05:16:082017-08-17 05:17:09Why Do So Many Intellectuals Oppose Capitalism? by Alberto Mingardi
A new version of the Boston Dynamics robot Atlas is designed to operate outdoors and inside buildings.
It is specialized for mobile manipulation. It is electrically powered and hydraulically actuated. It uses sensors in its body and legs to balance and LIDAR and stereo sensors in its head to avoid obstacles, assess the terrain, help with navigation and manipulate objects.
This version of Atlas is about 5′ 9″ tall (about a head shorter than the DRC Atlas) and weighs 180 lbs.
In 2010, the small town of Collegedale, Tennessee had the dubious distinction of having the highest prevalence of Type II Diabetes in the world. Without a single endocrinologist in the small town, those suffering from this preventable and treatable form of the disease were unable to gain access to the treatment they needed.
Dealing with this issue firsthand, a local employer who operates a donut manufacturing plant decided to dedicate a portion of his warehouse to be used as a health clinic. By hiring an endocrinologist from Chattanooga to travel to his warehouse a few days a week, his employees were finally able to receive the help they so desperately needed.
The employer reasoned that the prices associated with the hiring of an endocrinologist were actually less costly for the company than the insurance expenses related to the disease.
The donut maker’s free market solution solved the problem of constrained supply of medical professionals for his employees. But this disconnect between supply and demand exists far beyond Collegedale. In fact, the country is experiencing a shortage of doctors in virtually allspecialties and every state, which begs the question, where are all the doctors?
A Choreographed Shortage of Care
Though few Americans realize it, health care is a monopoly. In the early 20th century, the American Medical Association (AMA) lobbied the Federal government to close all schools not approved by its own Council on Medical Education. They unfortunately succeeded and 30 percent of medical schools were closed within 30 years. The number of doctors has been artificially capped ever since.
Even as the US population and its demand for medical services continue to expand dramatically, the number of new doctors educated by “approved” schools and licensed by state boards hasn’t improved. In fact, two-thirds of highly qualified medical school applicants are turned away each year.
Licensing quotas and arbitrary caps set by state boards literally make it illegal to train a single additional candidate in the medical field. Inevitably, where there is a shortage, prices rise for everyone. This results in smaller and poorer markets being shut out altogether. Even if the additional physicians were “B list” doctors from sub par medical schools, smaller towns like Collegedale would still be better off with a “B-” doctor than no doctor at all.
Cartels Protecting Doctors
Both directly or indirectly, the AMA also controls the prices paid to physicians, the licensing of physicians, the accreditation of medical schools, admittance into medical schools, and the payment policies of insurance companies. The AMA runs on membership fees, and its mission is protecting the interests of current doctors, not the American public.
Fewer doctors mean higher salaries, less competition, and more negotiating power for physicians. This is allowed to happen because physicians, like any other group of citizens, are free to associate and express their interests through donations.
What should outrage all US patients is the collusion of our government under the guise of protecting the public interest by requiring licenses and letting a cartel of campaign donors say who can have one.
Not only can the cartel set prices but the taxpayer is also forced to fund the muscle to shut down and jail those caught trying to circumvent the government-protected monopoly.
Like US consumers in all markets, the residents of Collegedale need the freedom to access more health care choices. Allowing lobbyists to block out competition limits everyone’s choices and forces them to pay higher prices for less access to care.
If Americans want real choice, they need to demand that Congress end the AMA’s control of medical school enrollments and licensing. If more Americans could become doctors without first asking the government’s permission, more Americans could receive medical care without the state’s help.
Dr. Laura Williams teaches communication strategy to undergraduates and executives. She is a passionate advocate for critical thinking, individual liberties, and the Oxford Comma.
http://drrichswier.com/wp-content/uploads/COST-OF-HEALTHCARE-e1502664036306.jpg355640Foundation for Economic Education (FEE)http://drrich.wpengine.com/wp-content/uploads/logo_264x69.pngFoundation for Economic Education (FEE)2017-08-13 18:40:452017-08-13 18:40:45The Medical Cartel is Keeping Health Care Costs High by Travis Klavohn & Laura Williams
Kimberly Strassel has a follow up commentary in today’s Wall Street Journal to our post on the WSJ by Jerome Marcus, Esq. on the lack of justice for the languishing Z Street case against the IRS over its patent anti-Israel viewpoint discrimination.
Strassel points out that other cases arising from Tea Party 501.(c)(3) and (c)(4) application have also been stymied by opposition from Department of Justice lawyers leftover from the Obama Administration.
Time for the IRS Swamp to be drained and justice to be achieved.
We had sent the Z Street matter to someone close to President Trump for action to cleanse the IRS of partisan opponents of free speech under our First Amendment . Especially concerning in the Z Street matter was the federal courts up through the appellate levels had ordered the IRS to correct the injustice.
Whether it be pro-Israel Z Street, as a founding board member or many of the Tea Party groups similarly sidelined for adverse and discriminatory treatment, the Trump White House needs to expedite action with the cooperation of the Department of Justice despite their contretemps with Attorney General Sessions over non related matters.
Read what Ms. Strassel has written in her WSJ commentary and share this widely.
Donald Trump promised to drain the swamp, and here’s a seven-month progress report: The Washington bog is still as wide and fetid as ever. Consider that Mr. Trump’s Justice Department has inexplicably continued to defend the IRS’s misdeeds under President Obama.
Voters put a Republican in the White House in part to impose some belated accountability on the scandal-laden Obama administration. And the supreme scandal was the IRS’s assault on tea-party groups—a campaign inspired by congressional Democrats, perpetrated by partisan bureaucrats like Lois Lerner, and covered up by Mr. Obama’s political appointees. This abuse stripped the right to political speech from thousands of Americans over two election cycles. To this day, no one has answered for it.
The groups targeted are still doggedly trying to obtain justice through lawsuits that have dragged on for years. They believed Mr. Trump’s election would bring an end to the government obstruction. It hasn’t. “The posture of the DOJ and the IRS under the Trump administration is identical to the posture under the Obama administration,” Mark Meckler, president of Citizens for Sound Governance, tells me. “Nothing has changed.”
Mr. Meckler was one of the founders of Tea Party Patriots. His current organization is funding a class-action suit in Ohio federal court on behalf of groups targeted by the IRS. So far the effort has cost $3 million.
That money is now going to fight Mr. Trump’s administration. In recent months the Justice Department has continued refusing to hand over documents or make witnesses available for depositions. The plaintiffs finally managed to depose Ms. Lerner and another key IRS player, Holly Paz, earlier this summer. But their counsels successfully demanded that the transcripts be kept secret from the public. As former federal employees, Ms. Lerner and Ms. Paz are presumably getting backup from government lawyers.
The suit has slowly ground through discovery and is teed up for trial early next year. Yet in its latest stunt, the Justice Department has asked for summary judgment—arguing that the facts are so far beyond dispute that the judge should dispense with the trial and simply rule now. This is laughable. The judge is unlikely to even consider it, meaning the motion is nothing more than a way to waste further time and sap the plaintiffs’ resources.
To this day, conservative nonprofits are being toyed with by the IRS. The Texas Patriots Tea Party has waited five years for tax-exempt status and has continued to receive round after round of intrusive agency questions, long after the scandal was exposed and the IRS promised reform.
Other litigants are experiencing the same treatment. The IRS is fighting Judicial Watch in a suit over document requests. Government lawyers are hamstringing a suit against the IRS brought by Z Street, a pro-Israel nonprofit—as described last month in an op-ed on these pages.
The problem is that the same old Obama-era lawyers have been left to run these cases in the same old hostile ways. Who are these people? Laura Beckerman, one of the lead lawyers defending the IRS in the Ohio class action, left government only this month. Her LinkedIn profile says she is now pro bono coordinating counsel at Citizens for Responsibility and Ethics in Washington. CREW is among the most liberal outfits in the capital, fanatically devoted to taking down conservatives. That’s the type still calling the shots in Mr. Trump’s bureaucracy.
The Justice Department’s job is to defend the government, but it is also supposed to pursue justice. And there is no question the IRS did wrong. It has been documented by the Treasury Department’s inspector general and admitted by the IRS itself. It’d be one thing if the plaintiffs were demanding a billion-dollar payout, but they aren’t. Their main request is that the IRS come clean on what happened, and the government is resisting with all its power. The real question is why the Justice Department is even fighting this suit, when it ought to be leading a renewed investigation into what happened and how it got covered up.
This stonewalling cannot be laid solely at the feet of IRS Commissioner John Koskinen, another Obama appointee who bizarrely remains in his post. The IRS, as the client, no doubt is calling many of the legal shots. But the Justice Department has the authority in important cases to make the ultimate judgment call on how the government will handle the litigation.
It’s time for some judgment. Senior leaders in the Justice Department may be wary of replacing or redirecting attorneys on the IRS cases, fearing it might provoke another round of media caterwauling. The White House may be wary of canning Mr. Koskinen, thinking it would be cast as another high-profile firing. But Mr. Trump was hired to impose exactly that sort of accountability. If he’s going to get rapped for dramatic moves, it might as well be for doing something that serves justice.
Obama-era lawyers are still obstructing lawsuits to hold the agency accountable.
http://drrichswier.com/wp-content/uploads/TeaPartyIRS-e1502458069772.jpg362636Jerry Gordonhttp://drrich.wpengine.com/wp-content/uploads/logo_264x69.pngJerry Gordon2017-08-11 09:27:562017-08-11 09:27:56Draining the IRS Swamp or Sewer, if you prefer.
During the past seven years, we’ve endured the worst U.S. economic recovery in the known history of recoveries. This is a plain and indisputable fact by the measurements of all economic recoveries. The worst ever.
Did this have something to do with President Barack Obama’s policies? Of course it did. It was no coincidence that the wild expansion of government in both spending and regulation put a damper on business growth and therefore economic growth. That’s a direct causal effect.
This spending and regulatory binge also played a role in income stagnation and, yes, in one of today’s favorite bogeymen: income inequality. The case for this is fairly straightforward to show, but you will be hard-pressed to find it in the mainstream media.
First, let’s be crystal clear that the American economy really has been sick since 2009. From 2010-2016 we had the objectively worst economic expansion in history, which is strange because typically, a deep recession such as the one we had starting in 2008 is followed by an equally powerful expansion. There’s a strong relationship between depth of decline and height of recovery.
Until this time.
President Obama was the first president without a single year of 3 percent real GDP growth while in office. Ever. GDP (Gross Domestic Product) is the only real measurement of the overall growth of the economy. But wait, there’s more. Annual economic growth during 2010-2016 was a full point less than overall growth from 1965-2010. So even including all of the recessions in those decades — including Jimmy Carter’s malaise, the dotcom bust and all the rest — that 45-year period still beat the Obama recovery years. By a long shot.
During the same 2010-2016 period, growth in real personal income and wages also dragged well below the historic average. Income inequality increased during this time. But both of these have been a long-term trend that just ratcheted up during the Obama years.
Weak economies overall drive income inequality because it’s people at the lower ends that are hurt the most. But there are multiple other reasons.
Why was the recovery so bad?
Let’s step back for a second.
There are three factors driving an economy: labor force growth, capital growth and productivity. All three happen during a strong economy. The labor market expanded rapidly during this crummy recovery, so that was not a problem factor. But capital formation — money to invest in startups, expansions, machinery, innovation — grew at half the historical rate and productivity grew at only about one-third of the normal rate.
Capital. Without access to money for investment, there was less innovation, less growth and expansion and fewer new businesses. So existing businesses were somewhat stagnant, and they faced less competition that would have bred innovation to compete. Without that, new markets and industries were not explored and the economy hobbled through a recovery that barely stayed out of recession at several points.
Capital was dramatically restricted through aggressive government laws designed to avoid the kind of subprime real estate bubble and bust in 2007 that led to a near-financial collapse and the recession. The primary law was Dodd-Frank, which mandated higher capital levels for all banks — including community banks, which were not a driver of the subprime crisis.
Further, the law added so many layers of regulations to an already heavily-regulated industry that compliance costs for banks have doubled since Dodd-Frank went into effect. Compliance costs alone are now figured at $70 billion annually — or nearly one-quarter of a bank’s total expenses — according to Federal Financial Analytics.
Banks need a level of regulation. But too much regulation stifles their ability to lend.
And without going into too much detail, the Federal Reserve Board’s money supply policies included loaning money to banks at such a low rate (essentially, 0 percent interest) that banks could invest in guaranteed financial instruments, such as U.S. Treasuries, and make guaranteed money with zero risk. Profits at zero risk are hard to pass up and that policy by the Fed kept billions of dollars out of the hands of business.
The truth is that businesses being able to access money from banks and investors is critical to a strong economy.
Productivity. Productivity can be measured a few different ways. The Bureau of Labor Statistics, however, puts it as:
“Productivity is measured by comparing the amount of goods and services produced with the inputs which were used in production. Labor productivity is the ratio of the output of goods and services to the labor hours devoted to the production of that output.”
During strong economic growth, productivity increases. However, with fewer businesses and the associated lack of innovation and expansion, there were fewer options to be promoted, all of which kept productivity lower. More people wanted jobs, but the jobs they were getting were the same type and level as before, which meant their productivity was about the same.
This, of course, also leads to income stagnation specifically for the lower and working middle class.
More economy-wrecking government
Dodd-Frank deeply restricted businesses’ ability to get investment capital. But it was not alone in throwing anchors around the neck of economic growth.
A second major anchor was the Affordable Care Act, a.k.a. Obamacare, which turned out to be neither affordable nor about care. Obamacare added an enormous mandate on businesses to provide an increasingly expensive benefit, and it did so with mountains of paperwork detailing what all must be provided. Even small businesses with 50 employees frequently had to add a full-time position just to understand and comply with this law.
Obamacare’s onerous costs came at precisely the same time that Dodd-Frank and the Fed were making businesses’ access to capital almost impossible — a conflagration of government intrusions.
As the government adds more requirements on employers to offer benefits and comply with regulations, employers have less money left for actual wages. Obamacare was a double-whammy in that it required the extra costs but then also screwed up an already malfunctioning marketplace and prices soared even faster.
And of course the Obama administration was renowned for adding an enormous number of executive branch regulations through the EPA and other administrations. With this understanding, it’s a tribute to the capitalistic drive of Americans that the nation could mount any sort of economic growth at all.
Illegal immigration is a real growth roadblock
This is not hard to understand, just hard for multiculturalists to understand.
Millions of uneducated, unskilled people from Mexico, Honduras, Guatemala, El Salvador, etc. who do not speak English not only take low-end jobs from Americans, but they also depress the wages at the bottom because ridiculously low hourly rates by American standards are still better than anything they can make in their dysfunctional third-world home countries. Obviously, that’s why they came here.
In the past 30 years, the United States has absorbed 40 million foreign-born adults and another 20 million adult children of immigrants — legal and illegal — giving the U.S. an endless stream of low-wage labor. With that massive pool at the bottom, there will be no increase of wages for the foreseeable future. Economics.
Professor George J. Borjas, a highly respected economist at Harvard’s Kennedy School of Government and maybe the world’s foremost expert on the economics of immigration, has found that: “If immigration increases the size of a group by 10 percent, the earnings of native workers in that group fall by 3-4 percent.”
Interestingly, this conceptually works at the top just as it does at the bottom.
So consider this and laugh bitterly if you like: if you really want to close income inequality gap, our immigration policy should be the precise opposite of what it is. We should greatly increase the legal immigration of doctors, lawyers, engineers, MBAs, mathematicians and all but stop immigration at the bottom end. That would drive up incomes at the lower levels for lack of competition — including for newly arrived workers — but it would create wage stagnation at the top end by bringing in competition, and the income gap would close.
Of course, it will never happen. Consider who makes up Congress. Mostly lawyers and some doctors and MBAs who all have children pursuing similar high-end careers. And we have those vested in large-scale immigration in many industries and the Democratic Party. Not going to change.
Minimum wage laws just make it all worse
The solution to the problems offered by big-government progressives is — more government intervention.
The problem is they do not honestly assess the underlying foundational problems, but just see a symptom they perceive as a problem and go after that symptom in a vacuum. The causes listed above are the drivers of low-end wage stagnation. But rather than ratchet back those drivers, they pile another government solution on top of the government-caused problems — one that is already proven to make the problem yet worse.
It’s almost like there is a formula at work.
Nonetheless, the solution now being promulgated is to raise the minimum wage to $15 per hour. #Fightfor15 is the hashtag and rallying cry festooning the protest signs by people wholly unaware that the market might get the wages there if the immigration policy flipped and less money was required on failing benefits programs.
The obvious results of setting the minimum wage where central planners think it ought to be, and not where the market says it is, is that businesses will find ways around it. Legal ways. They will be forced to.
The first option: Automation. Where robotics and self-serve kiosks were too expensive at $8 per hour per worker, they no longer are at $15 per hour. They have now become less expensive than many workers. So companies invest in those, which results in minimum wage workers, and even those above that, being out of work completely. Workers lose jobs. $0 per hour.
The second option: Move. Companies pick up and move operations to a jurisdiction that does not have artificially high wages so they can compete effectively. Workers lose jobs. $0 per hour.
The third option: Downsize. Companies either retrench at a smaller size or go out of business. Workers lose jobs. $0 per hour.
And guess what? This is exactly what has been happening in the uber-progressive city of Seattle, which has adopted the $15-per-hour minimum wage.
The city commissioned a study by economists at the University of Washington and published by the National Bureau of Economic Research. Those study results stunned progressives, but really just found basic economics and common sense at work: Low-wage workers’ incomes actually dropped, substantially, falling an average of $125 per month.
And this was only at a $13 hourly minimum wage, as the Seattle law ramped it up to $15 over a few years. If they allow it to continue, which the marching placard people want, it will continue to worsen the situation for the lowest end workers in Seattle through automation, movement and downsizing.
And the other component that will get worse is the income inequality bogeyman. Anyone want to guess how big government progressives will want to fix that?
http://drrichswier.com/wp-content/uploads/big-government-1-e1502405371882.jpg360640Rod Thomsonhttp://drrich.wpengine.com/wp-content/uploads/logo_264x69.pngRod Thomson2017-08-10 18:48:422017-08-10 18:49:45Flamingly Bad Big Government Drives Low Wages
EL CAJON, Calif. (KGTV)–Store managers from throughout San Diego will gather tomorrow at a Starbucks hiring event for refugees who want to train to be baristas.
The U.S. company announced in January it would hire 10,000 refugees over the next five years. The announcement by CEO Howard Schultz came two days after President Donald Trump issued his first executive order putting a four-month hold on allowing refugees into the U.S.
The world’s largest coffee chain said it would focus initial efforts on markets where refugee need is greatest and there’s a store base to meet the need.
According to state and federal data, San Diego fits the bill.
No other California county has received more refugees during the past decade than San Diego county.
In 2016, San Diego settled 3,100 refugees, along with 520 military interpreters on special immigrant visas.
About 30 Starbucks managers will conduct on-the-spot interviews at the International Rescue Committee***‘s office located at 131 E. Main Street in El Cajon from 11 a.m. to 1:30 p.m. on Tuesday, Aug. 8. Applicants are encouraged to visit Starbucks online career center prior to the event and bring resumes along with them.
Sheesh, the plot thickens…
At Forbesyesterday (Starbuck’s bad dream). The story is about a bogus ad campaign (kinda funny, but fake). But, I learned this:
Starbucks CEO Schultz, right, gives the key to the joint to new CEO Kevin Johnson.
Say what you will about Howard Schultz, and there’s plenty to say. Mr. Schultz, who served as Starbucks CEO until earlier this year, ran the company like a kid in a candy store, opening all the jars and boxes to taste the goodies inside before moving on. He bought a chain of tea shops, Teavana, then shut them down. He bought a chain of bakeries, La Boulange, then shut them down. He weathered the scorn of critics who called the coffee over-roasted and who derided his plan to hire refugees overseas. [San Diego is not overseas!—ed]
It doesn’t hurt to remember that Mr. Schultz is often mentioned as a contender for the democratic presidential nomination in 2020, so there’s a possibility that the latest news is part of an early whisper-campaign to tarnish his image.
Today’s news doesn’t actually involve Mr. Schultz by name but by his commitment to hire 100,000 new employees over the next decade. In the United States, they would be veterans and members of traditionally disadvantaged communities. At the stores outside the US (and Starbucks does business in 27 countries) Starbucks announced that many of the new hires would be refugees.
[Really! Then why are they hiring refugees in California? What about Big Meat and Big Chicken? Won’t Starbucks be competing with them in Cali?—ed]
Go here to see the fake news advertisement (so I won’t get blamed for spreading it).
*** For new readers, the International Rescue Committee is one of the Federal contractors/middlemen/employment agencies/propagandists/lobbyists/community organizers? paid by you to place refugees in your towns and cities listed below. Under the nine major contractors are hundreds of subcontractors.
The contractors income is largely dependent on taxpayer dollars based on the number of refugees admitted to the US, but they also receive myriad grants to service their “New Americans.”
If you are a good-hearted soul and think refugee resettlement is all about humanitarianism, think again! Big businesses/global corporations like Starbucks depend on the free flow of cheap (some call it slave) labor.
The only way for real reform of how the US admits refugees is to remove these contractors/Leftwing activists/big business head hunters from the process.
http://drrichswier.com/wp-content/uploads/StarbiesRefugees-e1502232519135.jpg356640Ann Corcoranhttp://drrich.wpengine.com/wp-content/uploads/logo_264x69.pngAnn Corcoran2017-08-08 18:48:482017-08-20 15:54:26Starbucks interviewing refugees in California for jobs as baristas
Second, many people get a warm and fuzzy feeling when they file their taxes because of the expectation that they will get a sizable refund, even though that payment from the IRS is simply a reflection of having paid too much tax during the prior year.
About three-quarters typically get money back, with refunds so far this year averaging almost $3,000. For many, it will be the single biggest payment they receive all year. …the fact that so many people are getting paid by the IRS, and not the other way around, takes some of the edge off a day when they’re trying to stoke public anger at the tax system. “The fact that people are looking forward to tax time rubs me the wrong way,” said Dan Mitchell, a tax expert at the libertarian Cato Institute. “I would like them to be upset.”
I also have a good idea of why the problem exists.
It’s withholding. And it started back during World War II. Here’s some background.
During the war, tax rates went up, and a broader number of people were expected to pay them. Professor Anuj Desai from the University of Wisconsin Law School said there was a saying that income tax went from “a class tax to a mass tax.” …“The thought was that if we withhold a little bit every bit every paycheck, people won’t have to worry about the problem of coming up with a huge chunk of money,” Desai said. But withholding is also a remarkably efficient way for the government to raise money, and policymakers knew that. …“You could never have the taxes that were levied during World War II without withholding. It was absolutely essential for that purpose,” economist Milton Friedman said in an interview… Friedman worked with the Treasury Department at the time withholding was introduced. Withholding stuck around after the war, much to Friedman’s chagrin. “Unfortunately, once you got it installed, it’s almost impossible to get rid of it,” Friedman said. “It’s too useful to the people in power.”
Jeffrey Tucker of the Foundation for Economic Education elaborates.
The problem is…the withholding tax. Instead of being collected directly from the payer, the government collects them “at the source,” which is to say that they are collected from the institution that pays wages and salaries — on behalf of the taxpayer. …one of the most amazingly brilliant innovations of the modern state. This tinkering with the system — the creation of the institution called withholding — has created an illusion that paying taxes is really about getting free money! When the check arrives from the government a month or so later, the taxpayer is actually tempted to think: wow, this is really great! A pillaging has been spun to look like a gift. …Withholding dramatically changed the psychology of paying taxes. It almost feels like you aren’t paying any at all. The worker gets used to how much after-tax income she makes and adapts to it quickly. Then when tax time arrives, there is no more to pay. Instead you file and find yourself on the receiving end of what seems like an unexpected gift of a check from government. Yet in reality your refund is nothing more than the belated return of a zero-interest loan you were forced to provide the government.
Every time I talk to somehow who is happy about a refund, I ask them whether they will give me an interest-free loan instead. After all, I’d be happy to collect money from them all year long and then return it the following April.
But I’m digressing.
Jeffrey points out how the political dynamics of tax day would change in the absence of withholding.
If we really wanted to make a wonderful change in favor of transparency and decency, one that would mark a shift in people’s perceptions of the costs of government, the withholding tax could just be repealed completely. …every taxpayer would pay the full amount owed to the government every April 15 and otherwise receive full compensation the rest of the year. Such a seemingly small change would have a dramatic effect on public perceptions of taxation and government. Even from the age of 16, every citizen would have a more pungent reminder of the costs of government. We would no longer live the illusion that we can all get something for nothing and that government isn’t really expensive after all.
The overwhelming majority of Americans pay their taxes by having them extracted from their paychecks before they ever see the money. Operating under the fiction that the government is giving you money as opposed to returning what it has already taken is damaging to the psyche of the nation’s taxpayers. …Withholding was originally mandated as a wartime step, but its continuation since then disguises the property rights involved, essentially offers the government an interest free loan, and shields taxpayers from the ramifications of federal spending. The country would be better off if everyone experienced what entrepreneurs and business owners do: writing the most sizable checks every year to the government, and watching that hard-earned money walk out the door.
By the way, this isn’t merely impractical libertarian fantasy.
There’s a real-world example of a tax system where people actually write checks to the government and are much more aware of the cost of the public sector. It’s called Hong Kong, which is – not coincidentally – an economic success story in large part because of a good fiscal system.
And I would argue that good fiscal system exists because taxpayers are directly sensitive to the cost of government (it also helps that there’s a spending cap in Hong Kong).
Let’s close with some government propaganda. This Disney cartoon was produced before withholding. As you can see the government basically had to make the case that people should set aside money out of their paychecks so they would have enough money to make periodic tax payments.
This was a plausible case when seeking to finance a war against National Socialism and Japanese imperialism. It wouldn’t be nearly as persuasive today when the government seems to specialize in financing waste, fraud, and abuse.
P.S. At the bottom of this column, you can watch a much better cartoon from the 1940s.
Daniel J. Mitchell is a senior fellow at the Cato Institute who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review.
http://drrichswier.com/wp-content/uploads/tax-forms-1-e1502051906418.jpg356640Foundation for Economic Education (FEE)http://drrich.wpengine.com/wp-content/uploads/logo_264x69.pngFoundation for Economic Education (FEE)2017-08-06 16:42:492017-08-06 16:42:49Tax Withholding Is Miracle-Grow for Government by Daniel J. Mitchell
As the debate continues to rage in Washington, D.C., and around the country regarding the fate of Obamacare, one elegantly simple concept that would have a dramatic impact on healthcare costs is being drowned out by inflammatory rhetoric.
The One Area of Health Care That’s Defying Massive Inflation
Out-of-pocket payment (OPP) by consumers for routine medical care would transform the system from one dominated by third party payers toward a model that would put consumers in charge of their healthcare dollars, and for the first time unleash market disciplines into the equation.
After all, we can all only imagine what our grocery carts would look like, not to mention our restaurant tabs, if a third party was paying for our food. Unfortunately, out-of-pocket payments have steadily trended down over the last 60 years and now account for only 10.5% of healthcare expenditures.
It is both stunning and disconcerting that the myriad of benefits that flow from a competitive, market driven system have never, in any substantial way, penetrated the healthcare and medical services arena. However, one striking exception to this competitive wet blanket is the $15 billion cosmetic surgery industry, the poster child for out of pocket payments, where innovation and price disinflation have been hallmarks for decades. Examples abound.
As Mark Perry has pointed out on his brilliant economic blog, Carpe Diem, over the past 19 years, the 20 most popular cosmetic procedures have increased at a rate 32% below the consumer price index (CPI) and 68% below the rate of medical services inflation.
Thus, the backbone of a productive reform plan must include a move away from third parties and employers controlling health care dollars toward individuals holding sway over their medical purse strings.
This would mean that the “employer contribution” that currently is used to fund corporate group policies would transition to an increase in an employee’s compensation, which would be funneled tax-free into a robust health savings account (HSA) that the employee would control for routine medical expenses.
As Michael Cannon of the Cato Institute has pointed out, “The employer contribution for health care is part of a worker’s earnings and averages $13,000 per family. Yet the tax code gives control over that money to employers rather than the workers who earned it.”
Importantly, this HSA would be paired with a high-deductible catastrophic policy and also be valid in the individual marketplace. Additionally, this would go a long way in helping to solve the portability issue that some employees face when changing jobs or careers.Essential to making these individual plans more attractive and affordable would be the abolition of both the “community rating” and “essential health benefits” mandates currently embedded in Obamacare policies. These concepts make a mockery of a legitimate, actuarially sound insurance market by shifting costs from older and sicker people to younger and healthier people, thus promoting adverse selection.
Without these constraints, families could focus on basic and affordable policies that would better match their needs and also begin building a “rainy day health fund” via their HSA accounts.
Regarding both Medicaid and pre-existing conditions, a strong dose of old fashioned, Tenth Amendment-oriented federalism is long overdue in dealing with these issues.
In fact, both from a philosophical and practical standpoint, they should never have come under the purview of the federal government and are best left to the individual states where diverse, vibrant, and innovative solutions could be implemented. This could include the establishment of reinsurance programs and high-risk pools for those with pre-existing conditions, and the phasing out of the open-ended federal entitlement status of Medicaid through a multi-year block grant program.
A Patient-Centered System
The current third party payment/community rating model for delivering healthcare is unsustainable and rapidly headed for the dreaded “death spiral,” which occurs when an escalation of sick people flock to the exchanges for insurance, while an increasing number of healthy people choose to leave the market. In fact, Aetna CEO Mark Bertolini has recently acknowledged as much.
Make no mistake, Obamacare was designed to invariably lead to a government-run, single-payer model, with its global budgeting, rationing of care, and long wait times for vital procedures in tow.
Without swift and decisive intervention with a system based on patient-centered choice and market mechanisms, the end result will be a Veterans Affairs (VA)-like model that would combine the worst aspects of government inefficiencies and substandard care.
A quick glance at the dismal state of Great Britain’s National Health Service (NHS), Canada’s single payer scheme, or our own insolvent Medicare and Medicaid plans provides Americans with an acutely unpleasant hint of what is in store if a single-payer model does indeed transpire.
Mr. Bowen joined Bowen, Hanes & Company, Inc. in 1986. As the firm’s Chief Investment Officer and economic strategist, Mr. Bowen is responsible for the formulation and implementation of the firm’s economic and investment strategies.
http://drrichswier.com/wp-content/uploads/doctor-patient-e1501878455528.jpg371640Foundation for Economic Education (FEE)http://drrich.wpengine.com/wp-content/uploads/logo_264x69.pngFoundation for Economic Education (FEE)2017-08-04 16:27:512017-08-04 16:28:02This is How You Make Health Care Affordable by Jay Bowen
Is it outlandish to say that the welfare of Americans should come before the welfare of potential immigrants in the actions of the American government?
No. Of course not.
It is reasonable, rational and what almost every other country does without all the name-calling we get from the progressive left in this country. Some European countries recently tried magnanimity over the protection and welfare of their citizens and their citizens have paid a steep and deadly price. Wrong choice.
America has been increasingly throwing the door open to wrong legal immigration in the front door, while leaving the back door unlocked for massive illegal immigration. The result has been a predictable stew: of the diminishment of American culture that was, and amazingly still is, the envy of the world; of overburdened public facilities (including hospitals and schools); of stagnant incomes; and of a growing entitlement mentality for many of those sneaking in the back door.
While the ruling amalgam of coastal elites, big businesses and Washington smarmies have enjoyed this arrangement for various reasons, most Americans have witnessed the damage in real life. This was the first and biggest issue that President Trump tapped into and that propelled his election.
He has slowly started delivering on locking the back door: Building the wall to stop the endless flow of illegal immigrants.
On Wednesday, Trump unveiled his immigration reform for the front door with U.S. Senators Tom Cotton and Dave Perdue, entitled the Reforming American Immigration for Strong Employment (RAISE) Act.
The devil is always in the details of this sort of legislation, but it is promising on the surface and it keeps another Trump promise. For all of his personal peccadilloes, the man does seem to be keeping his promises, and that’s good for the American people.
Of course the problem will be the faux Republicans in the Senate and getting past a Democratic filibuster. That will require 60 votes, but if they do, they should have to do it the old-fashioned Mr-Smith-Goes-To-Washington way — stand there and keep talking constantly.
Rightly done immigration is necessary
Immigration is a powerful engine for economic growth, but wrong immigration has been a recipe for low wages at the bottom and middle parts of the income scale, high governmental costs and faster growing wages at the top end of the scale.
And there is wrong immigration. We’ve been practicing it for decades and are reaping the results.
The unofficial, bipartisan policy of the Washington smarties the past 30 years or so has been a de facto open border with Mexico that allows somewhere between 11 million and 20 million illegal immigrants to sneak in here and work, live and enjoy the benefits of this country without assimilation or legal contribution. Talk about cultural appropriation!
However, they are allowed to keep sneaking in with a wink and a nod because politicians have opposed enforcing U.S. immigration laws — largely for their own personal, political futures. Sure, we have some fencing and a Border Patrol and we do stop some and send them back — about 250,000 annually. But even those come right back again and eventually get through. President Obama made it much easier by enacting “catch and release,” meaning we did not send them back at all, but released them into America with a promise to show up at a court date in the future. Needless to say, they didn’t, and no one expected them to anyway. It was more flouting of American law.
In the rest of the picture, we have legal immigration that takes many years and is an arduous and expensive journey. But because we are controlling it, we are getting immigrants that as a batch are more capable of not only improving their own lives, but those of other Americans.
In 2014, 29 percent of the 36.7 million immigrants ages 25 and older had a bachelor’s degree or higher, compared to 30 percent of native-born adults. While that lines up nicely with the existing American population, the bottom end still does not: 30 percent of immigrants lacked a high school diploma or GED certificate compared to 10 percent of native-born Americans.
What this overall picture shows is that we allow — legally and illegally — millions of low-end workers into the country, and that has enormous consequences for low- and middle-income Americans and eventually for economic growth. That is what is being fixed in this reform.
The “compassion” deceit
The conceit of quasi open borders is that we are a “compassionate” nation. Well yes, that is indisputable by nearly every definition of charity — at home and around the world. Of course in this case, compassion emanates from people who will never be negatively impacted by wrong immigration but will most often gain from it personally. So it’s a bit lame.
In the meantime, while letting millions of poor, unskilled, illiterate immigrants into our country may play as showing compassion toward them, it is demonstrably not showing compassion toward tens of millions of poor Americans.
Consider: Millions of uneducated, unskilled and illiterate immigrants from south of the border come to America seeking a better life — or for many, just income to send money back “home.” The economics is undeniable: Their very presence not only blocks many Americans trying to get a foothold in the workforce, but also depresses the low end of wages for those jobs.
The canard of jobs “Americans won’t do” are actually only jobs Americans won’t do at the prevailing wagesset by wrong and illegal immigration. Without all those immigrants — legal or illegal, but most are illegal — low end wages would inevitably rise to meet demand. Perhaps a lot. And that would push up middle incomes as well.
Professor George Borjas, at the Harvard Kennedy School of Government, writes: “Wage trends over the past half-century suggest that a 10 percent increase in the number of workers with a particular set of skills probably lowers the wage of that group by at least 3 percent.”
That is invaluable information and explains part of wage stagnation while also explaining the big social bogeyman in American politics: income inequality. And it is due to both illegal immigration and wrong legal immigration.
The RAISE Act reforms some errors
Americans have long admired and desired merit-based systems. They understand that too often that is not the case — in unionized schools, certainly in Congress, in the welfare system.
But the remnants of rugged American individualism know that is still the right path forward. And Trump and the Senators’ plan does just that by creating a more merit-based legal immigration system.
The RAISE Act would dramatically reduce low-skilled immigration (which we already have far too much of) while overhauling the system for skilled immigration and cutting low-skilled immigration by more than 40 percent immediately. That may be more than is necessary, but those are quibbles in the big picture.
It ends the absurd “diversity” lottery to get more immigrants from countries that do not send as many — mostly from Africa. And crucially important, it eliminates most of the abused system of preferences for family members — aside from spouses, minor children and elderly parents who need care. So no more brothers, sisters, parents, aunts, uncles, cousins, the butcher, baker and candlestick maker being allowed to come in because of one person here — legally or illegally.
The RAISE Act creates a system for those seeking green cards to be awarded on the basis of employment via a new point system similar to those used in other Western countries, such as Canada and Australia. Points are earned by level of education, English fluency (yes!), their age, the salary they’ve been offered, and, if an applicant wants to bring a spouse, the spouse’s education, age, and language skills also. Further, immigrants allowed entry through the point system would not be eligible for welfare benefits for five years.
This system is obviously better for the United States and for all Americans — except maybe the wealthy and powerful who have benefited most from the current system. Whether that gives it any chance in Congress is doubtful.
In my former career, I administered the acquisition of healthcare coverage for more than 5,000 employees at a cost of more than $30 million annually. It was one of the fastest growing components of our budget and competed directly with our ability to provide raises to our employees. So I dug into the associated dynamics, looking for strategic leverage to keep some downward pressure on cost growth.
I have some educated sense for this issue. And the problem is not what political leaders have been talking about.
Obamacare or Trumpcare? I don’t care what you call it; only the naïve or those afflicted with partisan bias believe that either has anything to do with better healthcare. Whether it is the Democratic approach or the putative Republican attempt, there is one thing that is so clear that it is hard for me to understand why it is not talked about more.
Insurance is not healthcare
This 10-year conversation is about the movement of money to the benefit of one interest group or another – it is definitively not about my healthcare.
Both “solutions” are nothing more than attempts to increase the amount of federal influence over the movement of money within one sixth of the U.S. economy, the maintenance of the status quo as to how that money flows (at best) and efforts on behalf of a variety of interests to advance the status quo — that is, the flow of money — on their behalf.
If this were about actual healthcare, the patient and the service provider would be the chief interest being served and talked about. That is the system that would be targeted for reforming to the best results. But they are rarely discussed except in some rhetorical fashion that suits the politics of the blabbering head that spews the rhetoric.
Special interests drive the healthcare laws
The real interests that gain from the healthcare laws, in their rough order of influence, are as follows:
The health insurance industry
The pharmaceutical industry
The hospital industry
Medical equipment manufacturers
The federal health system (Medicare and Medicaid)
(With Obamacare) the State Medicare oligarchy
Those elevated to the status of poor by Obamacare’s Medicare expansion
The interests that are hurt by the healthcare laws, from least to most:
Safety net Medicare patients
The employed but uninsured public dependent on the private market
Workers insured through their employer
Limited space keeps me from commenting on each of these interests so I’ll just pick a few as examples.
At the top of the heap sits the insurance industry, hiding behind their self-produced rhetoric of risk associated with instability in the system. Not only did they benefit from Obamacare’s requirement that everyone must buy insurance, but in 2009 their industry lobbying arm created enough fear in the political realm that they leveraged a $165 billion subsidy from the Obama administration. No appropriation was ever made by Congress, and to date, this administrative act of appropriation has been declared illegal by the courts.
Note that all you hear on TV is “instability” in the system and the need to maintain an insurance industry subsidy — working hard to include in law what is currently judged illegal. Their talking points, emanating from the mouths of Congressmen and Senators, once again lead the debate and harken for the need for the feds to further mine the taxpayer wallet and remove risk from insurance companies; making them the big winners.
After all it is easier to “sell” you a product with less concern as to a buyer’s normal demand for quality for his/her dollar spent, when someone else, in this case the federal government, creates a product and demands its use without ever having to pay for it. The only worse situation would be if the feds actually paid for a product — with other people’s money in the form of taxes — that they would never use themselves as a consumer. In economic transactional terms, that is called a third party system, but we would know it as the single-payer proposal.
The most value laden economic transaction is when you buy something for yourself with your own dollar. In that way you consciously make the decision between the quality of the purchase and the dollar spent. These third-party purchasing transactions, read as “single payer,” always produce the least value for the highest cost in any economic transaction. But they do produce some degree of certainty for those interests capable of positioning themselves correctly within the flow of cash.
Broken Medicaid is the example of single payer
Another lunacy created by Obamacare, and now wanting to be protected jealously by state governors who hungrily ate the poison apple, is the expansion of Medicaid.
Here you have what is supposed to be a safety net system, which is indeed structured as a safety net system, trying to become a system of normal healthcare access for an expanded group of consumers who have now been declared “in need.”
The craziness is that — aside from the taxpayer who is paying for this system out of general revenues, unlike Medicare which is supported by a specific tax — the person getting hurt the most is the truly indigent patient who has no other recourse than to use Medicaid.
Medicaid is such a broken system that over half of the doctors in the country will not take Medicaid patients. Adding more patients to an already broken system only ensures that those most in need will be those most hurt. All that the Medicaid bureaucrats can be glad for is that there is another broken federal healthcare system, the Veterans Administration, which sucks up all of the outrage oxygen when it comes to poor patient treatment.
Despite this track record, the Medicaid budget for the U.S has risen from 2% of the federal budget in the early 90s to almost 10% today — a 400% rise. It is often suggested that Medicare works well, and is a good example of a single payer system. Proponents of single payer don’t want to admit that the real model would be Medicaid.
How to know when it is about healthcare
You will know when there is a serious healthcare discussion when patent protection and generic drug time-to-market is seriously discussed. When tort reform is seriously advanced as a necessary component of healthcare reform.
When Medicaid decision making is granted to the states — where healthcare is most efficient and most constitutionally accomplished. When efforts like Health Savings and Health Savings Retirement Accounts are supported by tax credits. When healthcare benefits provided by employers are taxed if tax credits are not given for the Health Savings Accounts. When the days of the $300 aspirin disappear because more first-party purchase transactions keep the system transparent.
Why do you think that it costs dramatically less in inflation adjusted dollars for cosmetic services or veterinary services than it did 30 years ago? Simple, because they cannot hide behind the market-killing fog of second- and third-party transactions as means of obfuscating the corruption in the healthcare pricing system.
When those with preexisting conditions are supported by all of us, through risk pools managed by the states, possibly funded by taxes on employer provided healthcare benefits, you’ll know we’re really talking about healthcare for Americans.
The more that we move toward a direct relationship between the doctor and patient, the better the system will be.
The rhetoric and fear mongering that you hear screaming at you from your TV, radio and newspaper are nothing more than talking points from special interests seeking to prop up their position in this complex system. They are fighting tooth and nail to maintain themselves — not you — as a winner in the movement of almost $3 trillion.
ABOUT JIM LEY
Jim Ley has more than 35 years in public service, the last 25 of which were in top level administrative positions in two of the more dynamic counties in the U.S. Jim served two terms as President of the National Association of County administrators and was a leading “small government” voice in the profession. His administrative focus has been on financial sustainability and accountability to the taxpayer.
Related Healthcare Articles in The Revolutionary Act
http://drrichswier.com/wp-content/uploads/healthcare-e1490133291415.jpg385640Rod Thomsonhttp://drrich.wpengine.com/wp-content/uploads/logo_264x69.pngRod Thomson2017-08-01 18:38:222017-08-01 18:38:22Healthcare Debate Gets it All Wrong by Jim Ley
In June, Ripl, a social media marketing company, published a study concluding that social media is ranked the most effective way to “attract new customers and connect with current ones” by American small businesses. While skeptics have long criticized social media’s effectiveness and return on investment (ROI), the plethora of evidence proving the values of social media for small businesses has begun to change the discussion.
Many businesses in the US have realized this and begun using social media to further their product and brand. But in places like Cuba, small business owners are denied the ability to do so.
Only 16% Can Get Online
The Cuban government has had a long history of regulating and restricting the internet. In their yearly “Freedom on the Net” report, Freedom House concluded that high prices, extensive government regulation, and slow connectivity are all preventing Cuban citizens from accessing online content. To worsen the blow, most Cuban citizens only have access to the “intranet,” a web space controlled by the government, and not the wide open internet most of us know and love.
While unregulated access to the internet would provide an endless list of advantages for the Cuban people, social media business development would be one of the biggest.
The Cuban government regulates social media via both access control and content control. Access control refers to the ability Cuban citizens have to log onto the internet: limited broadband, restricted WiFi, and other infrastructure shortcomings prevent most of the population from accessing the web. In a recent poll conducted by Bendixen & Amandi International, only 16 percent of Cubans said they could use the internet. A majority of those people only have access at work and school. If someone who lives in Cuba can actually log onto the internet, they face the second level of regulation: content control.
Most social media sites cannot be accessed through the intranet. Of the 16 percent of Cubans who can get online, only 40 percent said they had access to social media platforms. To appease the public, the government has made fake websites that mimic the look and feel of social platforms.
Mashable reported that the Cuban government created “its own versions of Wikipedia and Facebook” called Ecured, and Social Red. While larger social media sites like Twitter and Facebook are not banned from the country, they cannot be accessed on the small “intranets” that only some Cubans can access. The replacement platforms do not provide the social connections the Cuban people need to expand their small businesses online domestically and internationally.
While the Cuban government claims it wants to expand economic opportunity for Cuban citizens, there has been hardly any effort to remove content control and increase access.
Over 37 percent of Cubans want to start their own business within the next five years. Putting aside the innumerable benefits an open social media system would have for Cuban politics, journalism, human rights, and free speech, access to social media would spark the economic growth the Cuban people want.
Social media platforms are helping Cubans get around restricted internet access.
Cuban entrepreneurs who recognize the value social media plays in their small business development are using sites like Trip Advisor and AirBnB. Since the government has given them permission to operate in Cuba, businesses can list their products for potential tourists to view.
Due to restricted infrastructure, accessing the internet to create a listing on TripAdvisor or AirBnB is extremely difficult, which means business owners have to go to lengthy extents purchasing VPNs, traveling long distances etc., to connect to the web.
Dr. Joseph L. Scarpaci, Executive Director at the Center for the Study of Cuban Culture and Economy, argues that these social media platforms are helping Cubans get around restricted internet access, business regulations, and a general inability to communicate with potential customers domestically and internationally. Scarpaci says,
Today, with the advent of Internet sites like Trip Advisor, some Cuban entrepreneurs are attempting to overcome these obstacles using social media that is hosted on servers located abroad.”
An example of this is an app developed by Cuban entrepreneurs called A la Mesa which functions a lot like OpenTable, a popular US-based app used to find and make reservations at local restaurants. A la Mesa offers a directory and reviews of local Cuban restaurants.
To bypass the Cuban government’s access limitations, the A la Mesa app provides services that do not require internet access like downloadable lists of local restaurants and distributes content that may be censored via email. With social media, A la Mesa’s business owners, and others throughout Cuba could create pages to advertise their content, connect with other businesses, and sell products remotely.
If the Cuban government wants to foster small business growth, they need to allow more access to social media platforms. There is a huge hunger for growth in Cuba. The people are driven, excited, and entrepreneurial; the problem is Cuban citizens don’t have access to the tools they need to expand and market their small businesses.
While expanding access to social media will not remove heavy restrictions on business property ownership or free speech, it will give those 37 percent of Cubans who want to start their own business a platform to reach potential consumers, and further economic development.
Sarah Odessa Blow is a Communications Fellow at the TechFreedom Institute. She attends Liberty University, where she is pursuing a BS in Business Communications and Marketing.
http://drrichswier.com/wp-content/uploads/Wifi-Parque-Calixto-García-Holguín-e1501441541788.jpg400640Foundation for Economic Education (FEE)http://drrich.wpengine.com/wp-content/uploads/logo_264x69.pngFoundation for Economic Education (FEE)2017-07-30 15:05:502017-07-30 15:10:17Let Social Media Boost the Cuban Economy by Sarah Odessa Blow
The United Nations holds its fall general assembly in September. This is when ‘diplomats’ from all over the world come to New York for really what amounts to one big party on the town.
Here we learn that to save money, the Trump Administration will be limiting the number of State Department and other DC bureaucrats who will be attending the confab on the taxpayers’ dime.It is also a time when the UN has an opportunity to bash America (except for when Obama was prezsident).
Not mentioned here, but just a reminder to readers, September will be the time of Trump’s big test on the UN/US Refugee Admissions Program because according to the Kennedy/Carter Refugee Act of 1980, the President submits his annual ‘determination’ for the upcoming fiscal year to Congress.
Just about the time Trump speaks to the UN, he will have determined how many refugees will be admitted in the year beginning October 1 for FY18, and from what regions of the world they will come.
The State Department plans to scale back its diplomatic presence at this year’s annual United Nations gathering of world leaders in September as a cost-saving initiative, according to four well-placed diplomatic sources. [Those leakers again?—ed]
For more than seven decades, American presidents from Harry Truman to Ronald Reagan to Barack Obama have attended the fall U.N. General Assembly general debate in New York to project their vision of American foreign policy to the world. They have been accompanied by a growing entourage of American diplomats, lawyers and technical experts who negotiate a wide range of issues, from nuclear arms treaties to climate change pacts and conflicts.
But the ranks of professional diplomats, aides and officials who attend the event to promote American policy priorities on a range of issues will be thinned out.For now, it remains unclear precisely how large of a cut in U.S. staff is envisioned, but two officials said the State Department is seeking to keep a ceiling down to about 300 people, including everyone from the president to support staff who schedule meetings and copy speeches.President Donald Trump does plan to address other world leaders at the U.N. General Assembly, and he will be accompanied by other top advisers, including his son-in-law, Jared Kushner, and his daughter Ivanka Trump, who stopped by U.N. headquarters Friday for a private lunch with U.N. Secretary-General Antonio Guterres.
The diplomatic culling is being enforced by Tillerson, the former ExxonMobil chief who has shown little interest in U.N. diplomacy during his first six months on the job. It comes at a time when the White House is seeking as much as a 30 percent cut in U.S. funding to the State Department and even deeper cuts in U.N. operations.
Will Donald Trump seek to cut the State Department budget by 30%? Will he cut even deeper in to the pile of money we give the UN? And, will he cut refugee numbers and seek to abolish or reform the UN/US Refugee Admissions Program?
Answers will come in September!
Your job is to let the President know what you think on a daily basis! Click here.
Surprise, surprise. A brand new report says states with term-limited legislatures are outperforming their career politician counterparts.
According to George Mason University’s “Ranking the States by Fiscal Condition 2017” report, 8 of the 15 fiscally strongest states have legislative term limits. When one considers that only 15 out of 50 states have legislative term limits, this means citizen lawmakers are providing a quality of leadership disproportionately better than their peers.
The report’s criteria included five separate measures of solvency, which is a state’s ability to pay its short-term and long-term bills.
Florida, which has more term limits than any other state, was ranked as number one fiscally healthy state in America. For any state, the presence of term limits more than doubled the odds of receiving an elite ranking. None of the five worst-ranked states have legislative term limits.
So, what can we take away from this? First, this report dismantles the clichés that self-seeking politicians have always used to oppose term limits. For years they’ve warned that term limits would lead to inexperience which would produce fiscal ruin. This report proves the opposite is true – that term limits states do better than those run by prehistoric politicians.
As U.S. Term Limits has noted for years, real life experience – like running a business or being a teacher – gives lawmakers a better perspective than the political experience of cutting deals with lobbyists and raising cash for re-election. Career politicians are at best ineffective and at their worst, corrupt.
For evidence of this, look no further than the state ranked 49 on this list, Illinois. Illinois, which has no term limits, just made Representative Michael Madigan the longest serving legislative leader in American history. Madigan has been House Speaker for 32 of the last 34 years.
But Madigan’s vast experience has only plunged his state into fiscal calamity. Just last month, ratings agencies Moody’s and S&P dropped the state’s bonds to BBB-, the lowest rating ever for a state. The raters said if Illinois doesn’t do something about its $200 billion in long-term debt, the bonds will be downgraded to junk.
Madigan has been able to get himself and other careerist politicians re-elected in perpetuity, but he hasn’t lifted a finger to solve the state’s fiscal woes. And therein lies the problem with having no term limits.
Individuals elected under a term limits system know their job is not to build political empires. It’s to get in, solve problems, then return to private life.
If these rankings are any indication, term limits are doing a great job.
http://drrichswier.com/wp-content/uploads/trump-term-limits.jpg359640Philip Blumelhttp://drrich.wpengine.com/wp-content/uploads/logo_264x69.pngPhilip Blumel2017-07-26 07:55:302017-07-26 07:55:30STUDY: Term Limited States Ranked Best Fiscally as Career Politicos Flop