Economic ignorance makes us poorer

Economics is hard and the benefits of free trade and free markets are often hard to see and taken for granted. Here's a great article to reference the next time some ignorant demagogue starts screaming about "shipping jobs overseas."

"It is easy to see the loss of 200 jobs in a U.S. textile mill that produces men’s T-shirts, but it is not as obvious to see the benefit from the fact that everyone can buy T-shirts for $2 less when they come from China, even though the cotton in the shirts was most likely grown in the United States. Real U.S. disposable income is increased when we spend less to buy foreign-made products because we are spending less to get more - and that increase in real income means that U.S. consumers can spend much more on U.S.-made computer equipment, air travel or whatever. A loss of 200 jobs in one industry can easily translate to the imperceptible gain of 2,000 jobs in 100 other domestic industries as a result of the cost reductions from free trade."

Orlando's moonbat congressman, Alan Grayson, wants to throw even more money down the Medicare rat hole:

"Congressman Alan Grayson, D-Fla., today introduced a bill (H.R. 4789) which would give the option to buy into Medicare to every citizen of the United States. The Public Option Act, also known as the Medicare You Can Buy Into Act, would open up the Medicare network to anyone who can pay for it.

Congressman Grayson said, Obviously, America wants and needs more competition in health coverage, and a public option offers that. But its just as important that we offer people not just another choice, but another kind of choice. A lot of people don't want to be at the mercy of greedy insurance companies that will make money by denying them the care that they need to stay healthy, or to stay alive. We deserve to have a real alternative."

Well, it's easy to compete when you can operate at a perpetual, taxpayer funded loss and are making all the rules. Medicare is not only broke, but suffers from levels of fraud that would put any private insurer out of business, which is the ultimate goal of all these harebrained schemes.

Additionally, the government already accounts for around 50% of the health care system and the losses from its underpayments to doctors and hospitals are shifted to private insurers.


And you would think an industry that's so "greedy" would do a better job of ripping us off:

"According to the most recent Fortune 500 rankings, health insurers are not even among the top-30 United States industries in profit-margin. Health insurers rank 35th, with a profit-margin of just 2.2 percent — less than one-fifth the profit-margin of railroads. None of the ten largest American health insurers made profits of more than 4.5 percent, and two of them lost money. Health insurers’ collective profit-margin is less than one-eighth that of drug companies and less than one-seventh that of companies that sell medical products or equipment. It’s also less than that of medical facilities. Yet when was the last time you heard President Obama rail against greedy hospitals?

The combined profits of America’s ten largest health insurers are $8.3 billion. That’s less than two-thirds of the profits of Wal-Mart alone, less than half of the profits of General Electric alone, and less than one-seventh of what Medicare loses each year to fraud. Health insurers collectively have one-eighth the profit-margin of McDonald’s or Coke, one-ninth that of eBay, and one-fifteenth that of Merck."

Moving more people into a government system will shift more costs to a dwindling private insurance pool, resulting in even higher premiums or destructive losses that will eventually kill the private health care industry. With no one left to stick with these inefficiencies, they will paid for with higher taxes and reduced or denied care.

Then we are left no choice and have to rely on the tender mercies of the anointed in government who proclaim themselves immune from ordinary human failings, as they are possessed with unique wisdom and virtue.

The Conservation of Liberty

Another excellent essay from Doctor Zero. Here's the money quote:

Statists mistakenly believe the economy is a zero-sum game, in which the prosperity of one means the poverty of others. They hold this belief so tightly that it leaves them incapable of processing evidence to the contrary. Even liberals with advanced economic degrees are reduced to babbling idiots in the face of increased Treasury revenue through reduced tax rates. There is one crucial ingredient to prosperity whose supply is fixed: freedom. It is not a “renewable resource.” Every power seized by the government diminishes it. Each tax and subsidy melts down more of our liberty, to be forged into more pipes for a monstrous system of political plumbing. The ominous leaking and shuddering of those pipes heralds the utter failure and collapse of the system.

There’s nothing paranoid about pointing this out. The Tea Party critique of banks and the Fed has far too much documentation to be dismissed as a “conspiracy theory.” The assumption that government is “pure and virtuous” has led us to ruin. The truth is that once it reaches a certain size, it becomes all but incapable of virtuous action. The precious commodity of liberty has diminished so much that any further extraction of it becomes agonizing – a matter of brute force instead of persuasion. You can ask a rich man for a dollar, but you must take it from a pauper. We have all become impoverished in the coin of freedom, and in order to make his health-care scheme work, the President demands our bottom dollar.

California global warming law may lead to job losses, report says

May lead to job losses? Look, you don't have to be an economist to understand that channeling money from efficient to inefficient uses is going to have negative consequences:

"The state's nonpartisan legislative analyst's office examined 2008 economic modeling by the California Air Resources Board and concluded that it "may overstate the number of jobs" attributable to future implementation of the 2006 climate law..."

Anyone can make a predictive model say anything they want by changing the underlying assumptions to produce the desired result. But the real purpose of these predictions by the so-called smart people is to convince us to suspend common sense.

"The report came in response to a query from Sen. Dave Cogdill (R-Modesto), a critic of the law. Released by Cogdill on Monday, the report emphasized that job effects are "difficult to accurately predict . . . with gains in some occupations (including so-called green jobs) and losses in others (primarily involving fossil fuel-related energy production)."

Gee, no kidding. If we were to dictate that all farmers stop using tractors and go back to horse drawn plows, there would certainly be an increase in jobs for blacksmiths and plow makers, along with a decrease in energy usage. But farming will now be less efficient and productive as it will take more time and money to grow the same amount of produce. That has the net effect of killing jobs as capital that would have been used by the farmer to save, invest and spend in the larger economy is now being wasted on an inefficient technology.

The same holds true for alternative energy. Wind and solar are grossly inefficient as compared to fossil fuels, and the free market would never use them without a combination of government force and taxpayer funded subsidies. The only real increase in jobs is for the non productive bureaucrats that will now be needed to administer these stupid schemes.

"Asked about the legislative analyst report, Gov. Arnold Schwarzenegger cited new solar facilities and biofuel plants in the state and said, "I'm absolutely convinced that AB 32 will create more jobs than kill jobs."

I'm sure you are, Arnold. That's why you should have stuck to acting.

Health Care a Right?

With his usual clarity, Walter Williams breaks down the real difference between negative and positive rights:

"...Say a person, let's call him Harry, suffers from diabetes and he has no means to pay a laboratory for blood work, a doctor for treatment and a pharmacy for medication. Does Harry have a right to XYZ lab's and Dr. Jones' services and a prescription from a pharmacist? And, if those services are not provided without charge, should Harry be able to call for criminal sanctions against those persons for violating his rights to health care?

You say, "Williams, that would come very close to slavery if one person had the right to force someone to serve him without pay." You're right.

Suppose instead of Harry being able to force a lab, doctor and pharmacy to provide services without pay, Congress uses its taxing power to take a couple of hundred dollars out of the paycheck of some American to give to Harry so that he could pay the lab, doctor and pharmacist. Would there be any difference in principle, namely forcibly using one person to serve the purposes of another?...

...True rights, such as those in our Constitution, or those considered to be natural or human rights, exist simultaneously among people. That means exercise of a right by one person does not diminish those held by another. In other words, my rights to speech or travel impose no obligations on another except those of noninterference.

If we apply ideas behind rights to health care to my rights to speech or travel, my free speech rights would require government-imposed obligations on others to provide me with an auditorium, television studio or radio station. My right to travel freely would require government-imposed obligations on others to provide me with airfare and hotel accommodations.

For Congress to guarantee a right to health care, or any other good or service, whether a person can afford it or not, it must diminish someone else's rights, namely their rights to their earnings...

America's Richest Counties That You Pay For

Forbes has ranked the 25 richest counties based on median household incomes for 2008, according to the U.S. Census Bureau. Browse through the slide show and you will notice that 12 of the 25 are Virginia and Maryland counties surrounding Washington DC. Those two states have a combined population of around 13 million people in a country of over 300 million.

This illustrates just how much money is now inefficiently spent by industries, interest groups and assorted parasites to either protect themselves, gain advantages or just get taxpayer cash.

The federal government produces nothing and everything of value it has is artificially created through the force of law. Money spent for tribute to an overbearing government is money that wont be used to create jobs and wealth in the private sector. Instead it is used to enhance the wealth and power of the governing elite at the expense of the taxpayer. In short, we are funding the destruction of our liberties and our economic well being.

Obama’s Bank Tax – The Victim is YOU!

This isn't news to anyone with a rudimentary understanding of economics, which is why most Americans don't get it:

"As ABC News reports, the CBO wrote a letter yesterday to Sen. Chuck Grassley (R-IA) in which it highlighted that the American people will bear the true brunt of the President’s proposal. From the CBO’s letter:

[T]he ultimate cost of a tax or fee is not necessarily borne by the entity that writes the check to the government.

The cost of the proposed fee would ultimately be borne to varying degrees by an institution’s customers, employees, and investors.

Customers would probably absorb some of the cost in the form of higher borrowing rates and other charges, although competition from financial institutions not subject to the fee would limit the extent to which the cost could be passed to borrowers. Employees might bear some of the cost by accepting some reduction in their compensation, including income from bonuses, if they did not have better employment opportunities available to them. Investors could bear some of the cost in the form of lower prices of their stock if the fee reduced the institution’s future profits.

Obama promised not to raise taxes on anyone not guilty of the sin of earning more than $250,000. But what all too many don't realize is that any tax on anyone is ultimately a tax on everyone.