Category Archives: Economics

Animal’s Daily Single-Payer News

Hello, Nurse!

National treasure John Stossel has weighed in on the single-payer health care issue, and as always, it’s worth the read.  Excerpt:

America needs single-payer health care, say progressives. That’s a system where government pays doctors and hospitals, and no sick person has to worry about having enough money to pay for care. After all, they say, “Health care is a “right!”

“Who pays for it?” asks Chris Pope, “And that’s really not a rights question.”

Pope studies health care systems for the Manhattan Institute. In my newest video, Pope explains that although many Americans think that Canada and most of Europe have single-payer systems, that’s not really true.

“In Germany, employers provide most of the health care … just as they do in the United States,” he says. France and Switzerland also offer multiple options, public and private, and most people buy private health insurance. Some of the Swiss government subsidies are similar to those of Obamacare.

But Canada, England, Norway, Cuba and a few other countries do have genuine single-payer. I’m constantly told that it works well — people get good care and never have to worry about a bill. They spend less on health care and live longer.

Pope says that claim is naive.

Yes, the claim is naive, yes, Pope and Stossel debunk it; but what isn’t mentioned here is the moral issue.  Namely – how is another person’s health care my responsibility?  Stossel discusses a few ways to improve the funding of health care, and let’s be clear about one thing, the issue with health care in the United States today isn’t how we deliver care, it’s how we pay for care.

But what he doesn’t discuss is why the government should pay for health care.  Something can’t be a “right” if your exercising of that “right” requires that the government, through the use of force, to confiscate a portion of your wealth/property to pay for it.  (And yes, the use of force; try not paying your taxes and see how long it takes them to send men with guns out looking for you.)

In other words, your exercising of a “right” that you can’t afford on your own requires me to labor on your behalf.  I have no choice in this equation; for that portion of the year I am simply required to labor on your behalf, with no recompense for me.

There’s a word for that.

Rule Five All Politics is Local Friday

This bright morning finds Mrs. Animal and yr. obdt. back in sunny Colorado, where moments from now loyal sidekick Rat and I will climb into the inestimable Rojito and go afield to do battle with antlered ungulates.  As mentioned earlier, watch for some more Teutonic totty as placeholders whilst we are afield; normal news posts should resume a week from today.

But for now, here’s some Colorado news.  We have a gubernatorial election this year, and as is often the case, the Democrat candidate, one Jared Polis, is having trouble explaining how he would pay for his ambitious agenda for our fair state.  Excerpt:

Republican state Treasurer Walker Stapleton’s clear goal was to call U.S. Rep. Jared Polis “radical and extreme” as many times as possible in their hour-long gubernatorial debate Monday night at Colorado State University-Pueblo.

Polis, the Boulder Democrat, didn’t bristle at the steady barrage from Stapleton, but neither did he answer it with what the GOP candidate demanded— details on how Polis intends to pay for an ambitious agenda that includes affordable health care, free pre-school and kindergarten classes.

Polis, who is a multi-millionaire from starting and selling companies, said he would work as governor to lower prescription drug prices, find other solutions in providing better care and could even work with President Trump.

“The time for name-calling is passed,” he told Stapleton, who clearly didn’t think so.

“If you will tell these people how you will pay for it, I’ll stop calling you a radical,” Stapleton shot back.

Polis denied he was either radical or extreme, saying Oklahoma provides free pre-school to students “And if Oklahoma can do it, we can do it.”

Now, to be fair, Colorado has changed politically in the thirty years I’ve lived here, but it hasn’t been Californicated to the point (yet) where a Ocasio-Cortez or Pelosi could be elected to statewide office.  Our current governor, John Hickenlooper, is as close to a moderate Democrat as you’ll find these days.  And, while I’d prefer to see Walker Stapleton win this fall, smart money in our increasingly-purple state tells me we’ll probably be dealing with Jared Polis for the next four to eight years.

But moderate (hopefully) though he may be, Jared Polis still has one failing common to Democrats and, to be fair, to plenty of Republican as well – he has a lot of big ideas, but honestly very little idea how much they will cost or how he plans to pay for them.

But here’s the catch:  Colorado’s Constitution demands the state’s budget be balanced.

Wouldn’t it be nice to have something like that at the Imperial level?  Don’t  hold your breath, though, until Congress votes to tighten up those vote-buying purse strings.

Animal’s Daily Crushing Debt News

Thanks to our friends at Pirate’s Cove for the linkback!

The more things (like Presidents) change, the more things stay the same.  Like, say, the Imperial debt.  That does change, because it always increases.  Excerpt:

The federal debt increased by $1,271,158,167,126.72 in fiscal 2018, according to data released today by the Treasury.

The total federal debt started the fiscal year at $20,244,900,016,053.51 according to the Treasury, and finished the fiscal year at $21,516,058,183,180.23.

The federal fiscal year runs from October 1 through September 30.

The $1,271,158,167,126.72 in debt accumulated in fiscal 2018 made fiscal 2018 the eighth fiscal year in the last eleven in which the debt increased by at least one trillion dollars.

The $1,271,158,167,126.72 increase in the federal debt was also the sixth largest fiscal-year debt increase in the history of the United States.

Holy crap.

One of my recurring fantasies about being President (not one of the ones that results in my waking up screaming) is submitting to Congress a budget that involves reducing the Imperial government to pre-Civil War levels, and happily vetoing any budget that spends a penny more than I proposed.

But I’m not President and I’m not likely to be.

Congressional varmints of both parties pay lip service to fiscal sanity, but do little about it.  The Republicans preach spending restraint but are content to tiny decreases in the rate of growth; the Democrats ignore the Laffer curve and shout for tax increases.  Meanwhile we continue to mortgage our grandchildren’s futures.

Again, were I President, my retort with every aforementioned veto would be:  “Fuck you.  Cut spending.”  It would be nice if President Trump showed some such inclinations.

Rule Five Why Socialism Fails Friday

Every time.  Every time socialism is tried, it fails.  You regularly here cries of “that wasn’t real socialism” or “we just need the right Top Men!” but that doesn’t change the fact that socialism fails every fucking time it’s tried.  And here’s why.  Excerpt:

The new “democratic socialists” want to make their followers believe that one could redistribute wealth and income and socialize a large part of the economy without harming production and productivity. They claim that a comprehensive control of the economy by the government would bring more justice and more prosperity. The democratic socialists want more planning and less market. Yet this postulate ignores that socialism does not fail by accident or circumstance. Socialism fails because it suffers from four fundamental design defects.

  • First, socialism eradicates private property and markets and thus eliminates rational calculation.
  • Second, socialism allows soft budgets, so there is no mechanism in place to discard inefficient production methods.
  • Third, abolishing private property and replacing it by the state distorts the incentives.
  • Four, the socialist system with its absence of private property and of free markets inhibits the economic coordination of the system of division of labor and capital.

The Importance of Market Prices

Socialism cannot bring prosperity because it destroys the market functions of private property. Under socialism, private ownership of the means of production no longer exists, and thus there are no market prices for capital goods available. Institutionally, socialism consists in abolishing the market economy and replacing it with a planned economy. By doing away with private property of the means of production, one wipes-out market information and valuation. Even if the socialist administration puts price tags on the consumer goods, and the people may own consumer goods, there is no economic orientation about the relative scarcity of capital goods.

I have one word for you:  Venezuela.

Some folks like to point out the various Scandanavian nations as evidence that the right Top Men can run a socialist nation and not crash into grinding poverty.  They don’t point out that:

  1. Personal taxes are generally sky-high, sometimes approaching 50% of income earned, while…
  2. Business taxes are generally on the low side, encouraging business growth and investment, because…
  3. Much of those state’s revenues come from extraction, mostly from North Sea oil and gas.

What works in Norway won’t work in the United States, in any case.  While there is an extraction boom in the U.S. right now, the fees and taxes from that won’t begin to cover our massive Imperial budget – and wouldn’t, even if that budget were trimmed to a more appropriate less batshit-insane level.

But in fact, we need look no further than the first bullet in the excerpt above for a reason to reject socialism.  Prosperous societies can only exist when private property rights are rigorously protected, and indeed, government really only has two legitimate reasons to exist:  To keep other people from hurting us or taking our stuff.

Socialist governments invariably do both of these things; they invariably hurt people and take their stuff.  And that’s why proponents of socialism need to be hounded to the ends of the earth.

Rule Five Airline Prices Friday

In the Imperial City, two liberal Senators are proposing to bring back price controls for the airlines – a stupid, stupid, stupid, stupid, stupid, stupid idea.  Excerpt:

If you care about keeping airline prices low, buckle up. Legislation introduced in the U.S. Senate would impose strict government price controls on airlines, disrupting the industry and endangering billions of dollars in consumer welfare.

The U.S. Senate’s version of the bill to reauthorize the Federal Aviation Administration (FAA) contains a provision by Sens. Ed Markey (D-MA) and Richard Blumenthal (D-CT) called the FAIR Fees Act. It establishes “standards for assessing whether baggage, seat selection, same day change, and other fees are reasonable and proportional to the costs of the services provided.”

At first blush, this proposal might appear to be pro-consumer. After all, what’s wrong with mandating “reasonable fees” and protecting flyers?

But despite the innocuous-sounding language, FAIR Fees would interfere with the successful business model that has slashed airfares and boosted consumer welfare. There is no shred of evidence to justify onerous rate regulation in a sector as competitive as the U.S. airline industry. As history has shown again and again, government bureaucrats are incapable of setting prices better than the market.

Ironically, the U.S. airline industry is one of the best-known historical examples of the federal government’s harmful attempts to manipulate market prices. From before World War II to the late 1970s, federal agencies tightly regulated America’s airlines, setting fares, routes, and schedules. The results were disastrous — artificially inflating prices, stifling competition, and mis-allocating resources.

Hint for Senators Markey and Blumenthal – this is what price controls always do.

Remember the Seventies?  The “gasoline shortages?”  There were no shortages.  While OPEC did screw around some with supply, the main problem was President Nixon’s imposition of price controls on gasoline and raw petroleum.  (Add this to a bunch of stupid economic wage and price controls imposed by the ill-fated Nixon Administration, which led to the economic malaise of the late Seventies – a malaise broken by the Reagan Presidency.)

Fixing an artificial price cap on any commodity will always – always – have bad consequences.  In the case of the airlines, we’ll return to what air travel was in the regulated Seventies; fewer routes, fewer flights, less service and the airlines will still find even more ways to pass rising costs onto passengers.

Now, honestly:  This bill is going nowhere.  In the current Republican-led Senate, it will never see a floor vote.  If by some fluke the Democrats do take control of Congress, passage is still not likely, and certainly not by enough of a margin to overcome a Trump veto.  This is pure and simple election-year grandstanding by a couple of Congressional economic illiterates.  (But I repeat myself.)

But it would be nice, just for once, to see a little common sense in the halls of Congress.  Just once.  That’s all I ask.

Animal’s Daily Social Security News

John Stossel describes the coming collapse of that famous third rail of American politics, Social Security.  Excerpt:

This summer, interviewing people for my new video about Social Security’s coming bankruptcy, was the first time I had heard the majority of such a group say they were aware there is a problem. One said, “We’re already at a trillion dollars (deficit) … (I)t’s almost like a big Ponzi scheme.”

Actually, more like a pyramid scheme. Ponzi schemes secretly take your money. But the Social Security trick is written into the law — there for anyone who bothers to look.

Social Security isn’t the only hard choice ahead of us. Medicare will run out of money in just eight years. At that point, benefits will automatically be cut. Social Security hits its wall in 15 years.

Amazingly, as we approach this disaster, Democrats say — spend even more.

Sen. Elizabeth Warren, D-Mass., proudly announced, “Nearly every Democrat in the United States Senate has voted in favor of expanding Social Security.”

How would they pay for it? “Raise taxes on the wealthy!” is the usual answer.

I tried that on Boccia: “Just raise taxes on the rich!”

“There isn’t enough money, even that the rich would have,” she countered, “to pay for the $200 trillion in unfunded liabilities.”

There’s an obvious answer, but it’s not one that anyone in either major political party is willing to implement.

Here is the U.S. Constitution.  Note the Tenth Amendment, which states:

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

So, the if the Constitution does not explicitly allow the Imperial government to do something, the Tenth Amendment prohibits it.  Not that this has stopped the Imperial government from using the Constitution from asswipe since about 1900, but still.

The answer?  Privatize Social Security.  Do away, at last, with the insolvent shell game that is wrecking the Imperial budget.  As a stepping stone, I’d be willing to negotiate a deal where the FICA withholding is still extracted (at figurative gunpoint) but that it goes into an actual personal account managed by the taxpayer.

Chile, as Mr. Stossel points out, saved their version of Social Security by doing just that.  Why can’t we do it here?

The ideal answer would be for the Imperial government to stop the endless expansion of Imperial power and actually, you know, read the Constitution and abide by it (and it’s important to note that nothing in the Constitution prevents the several states from setting up their own versions of Social Security) but that’s probably too much to hope for.

Rule Five Economic Illiteracy Friday

Thanks once again to The Other McCain for the Rule Five links!

The daffy old socialist from Vermont is once more up to his usual shenanigans, this time proposing a universal health care scheme estimated to cost more than the entire Imperial budget.  Excerpt:

Not only has Sanders’ office not done its own serious accounting for the Senator’s signature policy objective, the maligned “Koch-funded” piece of propaganda…closely reflected other academic estimates of single payer’s price tag.  Indeed, in our post yesterday, we cited a study by the left-leaning Urban Institute that ran the math and came up with a nearly identical cost projection — via the Washington Post:

The government’s price tag would be astonishing. When Sen. Bernie Sanders (I-Vt.) proposed a “Medicare for all” health plan in his presidential campaign, the nonpartisan Urban Institute figured that it would raise government spending by $32 trillion over 10 years, requiring a tax increase so huge that even the democratic socialist Mr. Sanders did not propose anything close to it.

When right-leaning and left-leaning think tanks produce strikingly similar calculations, perhaps we should sit up, pay attention, and take the results seriously. As for the “savings” canard, the Urban Institute analysis guesstimated that BernieCare would increase overall costs by more than $6 trillion over a decade, so how can Sanders claim that the Mercatus numbers point to a multi-trillion-dollar decrease?  Economist Brian Riedl of the Manhattan Institute, an expert on these matters, explains the context: “The claims of lower total economy-wide health savings only [materialize] because Blahous charitably accepted the Bernie assumption that we can lower all payment rates to Medicare payment rates,” Riedl tells me.

Here’s the conclusion:

When Blahous applied his institutional knowledge to the math, Sanders’ fanciful savings evaporated, and a higher tab of roughly $4 trillion over ten years emerged.  And notice — again — the relatively similar projections from both Blahous and the Urban Institute.  Riedl also notes that both entities’ analysis align closely with extrapolations from state-level estimates from Vermont and California, where single-payer schemes were abandoned by left-wing legislatures due to totally untenable costs.  We mentioned in our breakdown of Ocasio Cortez’s magical thinking that she did not propose anything even remotely approaching a plan to pay for all of this.

Well, there’s are a couple of obvious answers:

  1. We’ll just add a bunch of zeroes to the currency, and it will all work out.  (The Venezuela solution.)
  2. We’ll just borrow the money!  (The U.S. Congress solution.)

The usual answer to this involves the iron fist of government being employed to slash prices at gunpoint.  That results in fewer providers entering into medical career fields; it results in fewer facilities, it results in fewer companies manufacturing devices and drugs; it results in rationing.  See the formerly-Great Britian’s National Health Service for an example.

Our own Colorado voted down a single-payer solution.  California’s loony legislature abandoned a similar initiative after seeing the numbers.  Ditto for Vermont.  And, to be honest, the daffy old socialist from Vermont’s idea isn’t going anywhere at the Imperial level, either.  He will keep on campaigning for it; his self-awareness is so low that he’s handing the GOP a gift every time he speaks on the topic.

Not that that’s anything new for him.

Animal’s Daily Iran Currency Plunge News

This came in over the counter from a regular reader; it seems the threat of renewed sanctions is causing Iran’s currency to take a nose-dive.  Excerpt:

Iran’s currency traded at a fresh record-low of 119,000 to the dollar on Tuesday, a loss of nearly two-thirds of its value since the start of the year as US sanctions loom.

The Iranian rial has been crashing in recent days as the country anxiously awaits the reimposition of full US sanctions, starting on August 6.

It hit 100,000 to the dollar for the first time on Sunday and continued its decline, losing 18 percent of its value in less than two days.

On January 1, the dollar was worth 42,900 rials.

The government has been in crisis mode, replacing its central bank chief last week.

The central bank issued a statement on Monday, blaming the currency volatility on the “enemies’ conspiracy” and vowing fresh counter-measures “in the coming days”.

And it couldn’t happen to a nicer bunch of mullahs.

We could argue the sense of our foreign policy re: Iran all day, but that last statement is the one that caught my eye:  Iran is ‘vowing fresh countermeasures “in the coming days.”

Uh huh.

Iran’s nutbars-in-charge are always vowing fresh countermeasures.  They are a paranoid bunch, and rant as they will, they just plain have no cards to play here.  The U.S., largely in part to eased restrictions and (more so) technical advances on drilling, is far less dependent on Middle Eastern oil than we used to be.  I have a funny feeling President Trump’s response to Iranian threats is going to be on the order of “knock yourselves out, cupcakes.”

Personally I’ll settle for not sending them any more pallets of U.S. currency.

The Iranian theocracy is dying at any rate.  They have an increasingly restive younger generation, their birthrate is declining, and they have bad economic problems even without Western sanctions.  Theocracies are, happily, a governing model destined for history’s trash heap.  In the case of Iran, it can’t happen soon enough.

Rule Five Fundamental Misunderstandings Friday

This guy has a serious, fundamental misunderstanding of what capitalism is.  Excerpts, with my comments, follows:

But the fact is, capitalism moves and energizes the modern world.

Sort of.  Unfettered, laissez-faire capitalism is not actually practiced anywhere in the modern world.  What we do have is a combination of cronyism and mercantilism.

And what capitalism values, our world does more of; what it doesn’t, we do less of.

Yes, this is true.  And that’s precisely how it should be.

Many of us feel like the activities of a normal life are becoming harder and harder to accomplish.

So, how many is many?  That’s a content-free assertion.  “Many” is very relative.  Three can be “many.”  I wouldn’t want to have three people standing on my tongue.  That would be too many.

So the question becomes: In a system where capitalism is a prime determinant of value, how can we preserve what we truly value as humans, what matters to us beyond money?

With free trade and free markets, obviously – in other words, capitalism.  And, as I’ve said before and will say again, there really is no “-ism” in laissez-faire capitalism; there is no underlying ideology other than liberty.  An honest free-market system consists of nothing more than free people deciding, freely, for themselves what to do with their money, their talents, skills and resources.

Here’s where the author, one Andrew Yang, goes off the rails, in defining his “reformed” capitalism:

Human capitalism would have a few core tenets:
1. Humanity is more important than money.

Again, a content-free statement.  That means precisely nothing; you can’t quantify it or even define it.

2. The unit of an economy is each person, not each dollar.

See above.

3. Markets exist to serve our common goals and values.

This is real dinger.  Yang seems to be of the stripe that “people should be free to make choices, as long as the choices are ones I approve of.”

There are no common goals or values.  Only individuals have goals and values, and those may vary widely.  You can’t define common goals or values and assign them without the iron hand of government telling people what to do.  Quis custodiet ipsos custodes applies here; there is no way to have markets “serve our common goals and values” without someone in power deciding what those common goals and values are, and imposing those goals and values on the population as a whole.

There’s only one answer to such a suggestion:  Fuck off, slaver.

Animal’s Daily Venezuelan Meltdown News

Barter has taken over, as the wreckers and kulaks in the Worker’s Paradise of Venezuela are exploring every possible alternative to the train wreck that is that nation’s “official” economy.  Excerpt:

“There is no cash here, only barter,” said Mileidy Lovera, 30, walking along the shore with a cooler of fish that her husband had caught. She hoped to exchange it for food to feed her four children, or medicine to treat her son’s epilepsy.

In the hyperinflationary South American country, where bank notes are as difficult to find as chronically scarce food and medicine, Venezuelans are increasingly relying on to barter for basic transactions.

Payment for even the cheapest of goods and services would require unwieldy piles of banknotes, and there simply are not enough of those in circulation.

But it seems the problem is just that the government is not printing money fast enough:

Economists say the central bank has not printed bills fast enough to keep up with inflation, which according to the opposition-run congress, reached an annual rate of almost 25,000 percent in May.

Once one of Latin America’s wealthiest countries, Venezuela’s economic collapse under President Nicolas Maduro’s government drove nearly one million people – 3 percent of the population – to emigrate between 2015 and 2017.

Maduro, reelected to a fresh six-year term in May in elections condemned by the United States, blames spiraling consumer prices and constant shortages of food and medicine on an “economic war” led by the opposition and Washington.

The economic meltdown in Venezuela is due to one thing:  Socialism.  Socialist systems always end in this kind of a meltdown; even in a country as enormous, as rich in resources as the once and former Soviet Union, was perpetually in the “stand-in-line-for-beets” economic stage. With socialism, it is always steak yesterday and steak tomorrow, but never steak today.

Mark Twain is reputed to have once said “History seldom repeats, but it often rhymes.”  We’re seeing it rhyme now, in the colossal socialist failure that is Venezuela.