Dumb Luck

D.C. mayor Adrian Fenty is embroiled in a minor controversy regarding where his kids are attending school. According to the Washington Post:

Fenty (D) has repeatedly declined to discuss how he enrolled his children at Lafayette, one of the District's most coveted elementary schools, rather than West Elementary, his neighborhood school.

It seems many parents also try to get their children into other schools:

About half of all D.C. public school students attend a school outside their neighborhood. Parents seeking an out-of-boundary school enter a lottery in which they can pursue spots at up to five schools.

The controversy centers on whether or not any rules were broken getting his kids into the other school. Frankly, it doesn't matter. What matters is that children of caring parents want to get their kids out of failing schools and into better ones. The mayor may or may not have received special treatment (chances are good he did), but the fact that waiting lists exist means that some people who want to attend better schools are trapped in failing schools. This is the tragedy that results from a monpolized public school system. In a market for education no one would be trapped in any failing school. Those schools would go out of business because caring parents would send their kids elsewhere.

What if the Mayor were unlucky (assuming no favored treatment) and his kids weren't selected? Do you think he would have sent his kids to a failing school because he didn't win the lottery? Of course not, he has money and he would have used it. Getting a good education schouldn't be a matter of luck. School choice is what people with means already have, how about that for the rest of us.

It's stupid to rely on smart people

In a previous life, I worked as a computer programmer and I met a lot of really smart people. They were so smart in fact, that they understood 1/10 of the computer system. The computer system, a fairly sophisticated firewall, is just one of many developed at that company. There are thousands of companies like that one and they all have lots of very smart people who only understand fragments of computer systems. Work one day as a programmer and you will be humbled.

The danger in being smart is that you are relatively smart. You understand lots of simple things, you excel at many more simple things, and people count on you to get simple things right. People don't realize that you are only good at simple things, because what is absolutely simple is relatively difficult (i.e. smart people find it easy, the average person doesn't). The reality is that an extremely smart person is incapable of fully understanding a moderately sophisticated computer program. This should paint a clear picture of the limits on human intelligence. Maybe we'll learn some humility when Big Blue puts the smack down on the next Kasparov.

Society is far more complex than a computer program. What chance does a really really smart person have to figure out society if they can't figure out a computer program? Absolutely none. There is too much information and too little ability to process that information. Humans as a species just aren't that smart.

Here lies the problem with smart people. Because we perceive their intellect to be higher than it really is, we trust them too much. If some idiot came along and proposed a grand scheme to make over society you would laugh him out of the room. But a genius proposes the same stupid idea? Let the genius run with it...he must know something we don't know..he's a genius! Beware of geniuses bringing solutions, they're only human.

Aristocratic arrogance is alive and well

Boy do I wish Hillary had won the nomination. Just think...Bush, Clinton, Bush, Clinton. No, not a broken record, just a broken electorate. What is wrong with us? 300 million citizens and these are the best we can come up with? An editorial on Senator Kennedy's death by Michael Barone piqued my interest.

When he took office, Ted Kennedy's résumé was brief. He'd been expelled from Harvard for cheating on a Spanish exam...

...he drove off a bridge on Chappaquiddick Island off the Massachusetts coast. Ted Kennedy swam away but his passenger, Mary Jo Kopechne, drowned. His failure to notify authorities of the accident removed him for at least a time from any presidential consideration.

Nevertheless, he was re-elected to the Senate and served continuously until his death yesterday.

Let me get this straight, killing someone because of your recklessness doesn't permanently take you out of presidential contention? President, no that would be ridiculous, Senator sure! Am I the only one who is horrified by the nepotism and sense of entitlement in our political system. The Kennedy's are simply one of the most egregious examples, but there is definitely a familial aspect to the nation's political class. A few of the multitudinous examples:

• John F. Kennedy was president, his brother Robert Kennedy a U.S. attorney, his other brother Ted kennedy a Massachusetts Senator.


• Both Vice President Al Gore and his father were senators from Tennessee.


• George W. Bush's father was president, His brother, Jeb Bush, governor of Florida, and his great-grandfather a U.S. senator.


• Bill Clinton was president, Hillary Clinton was Senator and is Secretary of State.


• Colin Powell's son is chairman of the Federal Communications Commission.


• Sen. Mitch McConnell's wife, Elaine Chao, was secretary of Labor.


• Supreme Court Chief Justice William Rehnquist's daughter, Janet, was inspector-general of the Department of Health and Human Services.


• Congressmen John Dingell, Charles Gonzalez, Jim Duncan, and Harold Ford have all held the same seats their fathers held.


• The fathers of Nancy Pelosi, Jon Kyl, Chris Dodd, and Bob Bennett were all Congressman.


• Sen. Frank Murkowski, R-Alaska, gave up his Senate seat to become his state's governor and appointed his daughter to fill his position.


• Senator Carl Levin and his brother Congressman Sander Levin.


• Kwame Kilpatrick is the son of Congresswoman Carolyn Cheeks Kilpatrick.


• Senators Robert F. Bennett and Mark Pryor are both the sons of senators.


• Olympia J. Snowe is the wife of former Maine Governor John R. McKernan.


• Former Massachusetts Governor Mitt Romney is the son of George Romney, a former Michigan governor.


• Senator Elizabeth Dole, wife of Senator Bob Dole.

There are loads more examples on http://prorev.com/family.htm. Something seems wrong when so few families completely dominate our political landscape. For gods sake, high school elections in Mississippi have more diversity. For change we can believe in, how about we start with the last name.

Replacing the welfare state

Charles Murray thinks we should replace the welfare state by giving people money directly and I agree. A few excerpts from a Wall Street Journal article describing the "Plan":

The place to start is a blindingly obvious economic reality that no one seems to notice: This country is awash in money. America is so wealthy that enabling everyone to have a decent standard of living is easy. We cannot do it by fiddling with the entitlement and welfare systems--they constitute a Gordian Knot that cannot be untied. But we can cut the knot. We can scrap the structure of the welfare state.

Instead of sending taxes to Washington, straining them through bureaucracies and converting what remains into a muddle of services, subsidies, in-kind support and cash hedged with restrictions and exceptions, just collect the taxes, divide them up, and send the money back in cash grants to all American adults. Make the grant large enough so that the poor won't be poor, everyone will have enough for a comfortable retirement, and everyone will be able to afford health care. We're rich enough to do it.

...

For now, let me turn to a larger question: Assuming that the technical questions have answers, do we want a system in which the government divests itself of responsibility for the human needs that gave rise to the welfare state in the first place? I think the reasons for answering "yes" go far beyond the Plan's effects on poverty, retirement and health care. Those issues affect comparatively small minorities of the population. The more profound problem facing the world's most advanced societies is how their peoples are to live meaningful lives in an age of plenty and security.

Medicare and Social Security = Wrong and Wronger

Both the left and the right should agree to do something about these hideous programs and here's why:

These are regressive taxes - Every working American (and non-American) pays social security and medicare taxes regardless of how small there income is. Currently, you pay 6.20% on the first $106,800 of income for social security. You also pay 1.45% on every dollar of income with no cap. Not only do you pay this amount, but your employer matches these contributions. This makes the effective tax paid 15.30% on the first $106,800 and 2.90% on every dollar after that. It doesn't matter whether you make $1,000, $10,000 or even $100,000 per year, you pay exactly the same rate. Isn't our tax system supposed to be progressive? These taxes certainly are not and should be opposed on that ground alone.

There is no income cap on receiving benefits - One justification for redistribution of wealth is to help the less fortunate. This at least has some moral ground to stand on. It is incomprehensible to redistribute wealth from those that do not have it to those that have it. This Robin Hood in reverse craziness is exactly the case in Social Security and Medicare. It doesn't matter if you make tens of millions of dollars, you receive social security like everyone else. This rich person is receiving taxes paid by someone far less fortunate. This is absurd and immoral.

These are hidden taxes - There's only one reason you only see what you pay into social security on your paycheck: to trick you into thinking you are paying less in taxes. The reality is that YOU, not your employer, pay the full tax. The vast majority of us (those with incomes less than $106,800) pay an outrageously high 15.30% of our income into these redistribution taxes. Why doesn't your employer actually pay this tax? Let's think about it. You own a company and need to hire someone, the only thing that matters is the employee's total cost. That cost consists of their wage and taxes. The fact that an employer hires you means that your compensation must be worth both the wage and taxes. The employer is completely indifferent as to how that compensation is distributed. He pays $100/hour for your labor. It doesn't matter if you receive the entire $100 or you receive $70 and the government receives $30, the cost to him is the same. Make no mistake, you bear the full cost of taxes paid by the employer on your behalf.

First, if we are to use the power of government to help out the less fortunate then let's do so. Social Security and Medicare both fail on this account and should be modified to align them with our basic sense of morality. Second, it's bad public policy to implement hidden taxes. This hides the true cost of government and distorts incentives. Government services cost money and we should make those costs transparent so everyone can make informed decisions. Our current system is designed specifically to hide those costs. This is immoral.

Don't you know you're supposed to bow?

Someone needs to teach the public some manners according to the NY Times:

We are all familiar with the right to bear arms and the noisome extremes indulged by its zealots. But is there no sense of simple respect due the nation’s elected leader when he ventures forth among the citizenry?

How is bringing a gun a sign of disrespect? Perhaps they meant to say:

We are all familiar with the right to question the government at town halls and the noisome extremes indulged by its zealots. But is there no sense of simple respect due to the nation's leader when he ventures forth among the citizenry?

The NY Times problem is that they see every gun owning American as a time bomb ready to explode. In their distorted view, owning a gun is an implicit threat to your fellow man and it follows that guns at Obama's town halls are a threat on his life. Of course nothing happened... but it could have:

That is hardly reassuring, especially this summer when so many protestors seem to consider primal rage a reasoned political statement.
...
When Mr. Obama held a town hall meeting in Portsmouth on Aug. 11, gun-packing protestors were also there. As the television cameras zoomed in, one man preened as if in the O.K. Corral, his holstered gun strapped proudly to his thigh. What’s next? Citizens strolling in helmets and camouflage flak jackets?

Of course, gun toting zealots must be the protestors, no reasonable person would own a gun. And isn't it clear they were looking for a shootout, just like at the O.K. Corral. Yeah, that's a fair characterization of law abiding citizens.

Who competes with whom?

In today's NY Times, Paul Krugman states:

Clearly, investors believe that co-ops would offer little real competition to private insurers.

Mr. Krugman see's only two players in this game: Private companies and the government. Apparently private companies don't compete with each other.

What the health care debate is really about

From today's WSJ:

All these concerns are real and matter. But the larger point is that Democrats aren't proposing a subsidy to enable people to get the care they need. Rather they want to shift decision-making authority from the American citizen to the government bureaucrat.

These proposals are yet another manifestation of the no-growth, redistributionist mindset, combined with an elitist, authoritarian philosophy of government. To buy into them and ignore the reality they've produced elsewhere is to love humanity more than human beings, and value utopian ideals of equity over the tremendous individual costs they inflict.

In these proposals, human beings aren't individuals with freedom to contract as they see fit and make their own best judgments, but interchangeable widgets for whom rules should be fashioned and enforced based on age, or quality of life, or some other metric. Bureaucrats would evaluate whether one is young enough to warrant a pacemaker or a hip, or sufficiently long gone from a hospital to justify readmission. Medicine would become a one-size-fits-all bureaucracy, not an art, in which the physician would face real risks for deciding that the bureaucratically approved "effective treatment" isn't what works in a particular case.

It makes no sense to try to achieve a bipartisan consensus when the fundamentals underlying the Democratic approach are so contrary to the entire foundational idea of who we are as Americans. We're the country that believes that individuals have the right not to have their decisions interfered with, and that individuals are best able to make those decisions that most affect their life and happiness. Nothing could be more central to that than the ability to control one's own health and the health options of loved ones.

There is much that needs reforming in health care, and everyone wants to make sure that those who are genuinely uninsured because of pre-existing conditions, for example, have access to coverage and care. But the Democratic proposals use those real problems as a stalking horse to achieve very different goals. Would-be Republican deal-brokers should stand aside. They need to understand how the rest of us see this: That this is not just about the normal compromise of politics, but the core of what America is and will be.

Once the left's health-care vision is in place, it will be almost impossible to undo. If this takeover isn't worth resisting, what is?

Corporations Don't Pay Taxes

The correct question is: why do corporations pay taxes? I'll get to that later.

Entrepreneurs start companies in order to make a profit. They make a profit by selling products or services at a price above their cost of production. For instance, they make a widget for $5 and sell that same widget for $10.

Price, while amorphous and confusing, is not arbitrary. It is very easy to determine the minimum price for any product, especially the aforementioned widget. It must be at least $5 because anything less means a loss on every sale. How do you determine the maximum price, that's a little harder. The maximum price is the maximum amount someone is willing to pay for the widget. Any entrepreneur worth his salt is going to charge the most possible to make the largest profit. You may think this means everyone is getting ripped off, not so. Only in extreme circumstances is an entrepreneur able to charge far above his actual cost of production. Competition whittles away at profits to the point where the price cannot go any lower. This is the situation for most prices.

Now my point. We know that the price charged must be at least the cost of production. We also know that there isn't very much slack in the maximum price because competition has eroded excess profits. Finally, we know that the business only exists to generate profits. Drum roll please...Corporate taxes are a cost of production. They are already included in the price and they are always passed on to the consumer.

This brings us full circle to our original question. Why do corporations pay taxes? The answer is that even though the consumer is the one being taxed, they are not aware of it. This is an easy way for government to take more of what you earn and for you not to protest.

Think about it like this. We have two functionally equivalent taxing schemes. The first scheme is to tax the widget after you buy it. The second scheme is to tax the widget before you buy it. Which scheme causes more outrage? The first, because the second scheme hides the tax from the consumer. The effect of the tax is seen in the form of higher prices but the cause it not clear. Most people do not deduce that higher prices are a result of the embedded tax. They attribute it to greed or some other evil motive. While it is true that people may be greedy, I can assure you of one thing: greed by itself is most definitely cheaper than the combination of greed and taxes. The first scheme would make the embedded tax transparent and while the rhetoric of government praises transparency, it's actions are not so clear.

Honest liberalism, can you say oxymoron?

Liberalism as it's advocated is always couched in euphemistic language. Never is it sold as it is, because the true belief of many liberals is so appalling to common sense, it would be rejected out of hand. I have the utmost respect for any politician, doubly so for a liberal politician (Russ Feingold stands out among the crowd), who is outright about his intentions. Unfortunately the health care debate is yet another example of misrepresentation on the part of it's advocates. From Mr. Obama's fact check web site:

Linda Douglass of the White House Office of Health Reform debunks the myth that reform will force you out of your current insurance plan or force you to change doctors. To the contrary, reform will expand your choices, not eliminate them.

The idea is to expand choices, right? That's the picture painted and it's a flat out lie. It is only there for politically pragmatic purposes. Let's hear what liberals actually want. From today's Wall Street Journal:

Some liberals were honest, or used to be honest, about where all this would lead. Barney Frank noted the main reason Democrats were not backing a total government takeover: "We don't have the votes for it. I wish we did. I think if we had a good public option it would lead to single payer." Then there's Mr. Obama's now famous 2003 remarks: "I happen to be a proponent of a single payer universal health-care program. . . . But as all of you know, we may not get there immediately."

Make absolutely no mistake, their goal is nationalized health care. That's what they have stated in the past and that's what they point to as the way ahead. Don't believe anything to the contrary, including nonsense such as, "you can keep what you have." That's true today, let's keep it that way.

Discrimination, really?

Liberals use of the term "discrimination" in the health care debate is disingenuous to say the least. They use the word in an attempt to paint perfectly rational business decisions in ominous moral overtones. As if "discriminating" against pre-existing conditions is the same as racial discrimination. If that were the case we should be outraged that insurance companies "discriminate" against people who want homeowners insurance after their house has burned down.

A rather ironic example from the White House's website for fact checking:

...eliminate discrimination in purchasing health insurance so families won't be turned down if a parent or child has a pre-existing disability or other health condition.

Paul Krugman in today's New York Times:

...insurers can’t discriminate based on medical history or pre-existing conditions...

More health care myths exposed

Charles Krauthammer has a good op-ed piece debunking the myth that preventative medicine "saves" any money. From the article (emphasis mine):

This inconvenient truth comes, once again, from the CBO. In an Aug. 7 letter to Rep. Nathan Deal, CBO Director Doug Elmendorf writes: "Researchers who have examined the effects of preventive care generally find that the added costs of widespread use of preventive services tend to exceed the savings from averted illness."

How can that be? If you prevent somebody from getting a heart attack, aren't you necessarily saving money? The fallacy here is confusing the individual with society. For the individual, catching something early generally reduces later spending for that condition. But, explains Elmendorf, we don't know in advance which patients are going to develop costly illnesses. To avert one case, "it is usually necessary to provide preventive care to many patients, most of whom would not have suffered that illness anyway." And this costs society money that would not have been spent otherwise.

Think of it this way. Assume that a screening test for disease X costs $500 and finding it early averts $10,000 of costly treatment at a later stage. Are you saving money? Well, if one in 10 of those who are screened tests positive, society is saving $5,000. But if only one in 100 would get that disease, society is shelling out $40,000 more than it would without the preventive care.

That's a hypothetical case. What's the real-life actuality? In Obamaworld, as explained by the president in his Tuesday town hall, if we pour money into primary care for diabetics instead of giving surgeons "$30,000, $40,000, $50,000" for a later amputation — a whopper that misrepresents the surgeon's fee by a factor of at least 30 — "that will save us money." Back on Earth, a rigorous study in the journal Circulation found that for cardiovascular diseases and diabetes, "if all the recommended prevention activities were applied with 100 percent success," the prevention would cost almost 10 times as much as the savings, increasing the country's total medical bill by 162 percent. That's because prevention applied to large populations is very expensive, as shown by another report Elmendorf cites, a definitive review in the New England Journal of Medicine of hundreds of studies that found that more than 80 percent of preventive measures added to medical costs.

If this is not clear, think of it this way. There are thousands of diseases that you may develop and thousands of tests that can tell if you have one of them. There are tons of activities which can prevent all those potential diseases. Unfortunately, the costs of all those tests and preventative activities are far greater than the costs of any one of those diseases.

Another thing I am surprised he didn't mention is that development of disease is highly correlated with age. The reality is that at some point in our lives we will all get a major disease and die. Preventative measures cannot stop this, they can only delay it. Those end of life diseases, which account for 80% of medical care, will always happen. Until we can figure out that Highlander trick and become immortal, I wouldn't hold my breath for any "savings".

A few health care suggestions

There are tons of alternative ideas out there for health care but let me list a few. I am no health care expert but I believe these are some common sense solutions to some of the major problems.

Problem #1:
46 Million people do not have health insurance. A breakdown of those 46 million from the American Spectator website:

• 9.7 million of the uninsured are not citizens of the United States
• 14 million of the uninsured were eligible for Medicaid and SCHIP
• 17.6 million of the uninsured had annual incomes of more than $50,000 and 9.1 million earned more than $75,000.

When all of these factors are put together, the 2003 BlueCross BlueShield study determined that 8.2 million Americans are actually without coverage for the long haul, because they are too poor to purchase health care but earn too much to qualify for government assistance.

Solution:
Two proposals. The first is to expand Medicaid and SCHIP to cover those that are too poor to afford insurance. The second proposal is to give poor people a check to buy their own insurance. If we choose to give non-citizens health care it should be done in the same manner.

The problem is more difficult for people who can afford insurance but refuse to buy it. In one sense we could just say tough luck, you should have known better and been more responsible. Note that if these people get sick and go to the emergency room they will get treated (it's legally mandated) so their luck would not be as tough as one would think. We could mandate that they get coverage, but this makes people who don't get coverage criminals (something I disagree with). I say we allow the states to make this determination. This creates an environment for health care experimentation where we could objectively see which solution works the best.

Problem #2:
Health care costs are rising - some of that is a result of better medical care and greater affluence (i.e. you pay more because you get more and the richer you are the more discretionary income you are willing to pay for health care).

Solution :
Tort Reform. Defensive medicine causes costs to rise because physicians are afraid of being sued. They take every precaution, even ones that aren't really necessary to defend themselves from malpractice lawsuits. Additionally the payouts for malpractice are inherently random which makes malpractice insurance very costly. Texas is a good example of what tort reform can accomplish and Europe also has a much more rational system for malpractice lawsuits.

Solution:
Increase competition by allowing people to buy insurance across state lines. For some reason insurance cannot be bought across state lines. This limits competition by definition. Imagine if Wal Mart is lowering prices and wants to sell merchandise in Michigan. Michigan says no because they already have K-Mart. Of course that means that whatever competition Wal Mart would have provided to K-Mart cannot happen.

Additionally, many states mandate different minimum coverage for insurance companies. If a state government requires lots of coverage that people don't want, people have no choice. If the state says that to offer insurance requires mental health coverage then as a consumer you have to buy a policy with mental health coverage even if you don't need it. Allowing people to purchase insurance across state lines would allow states to compete by offering only the coverage that people desire. This would include letting people only purchase catastrophic coverage which would be especially desirable for young people (see problem #1).

Solution:
Take away the tax deduction that employers get for providing health care to their employees. Employees getting coverage through their employers is a historical accident due to wage and price controls during WWII. When you get health care from your employer this limits competition. You have to take the one plan your employer gives you with the exact coverage that is mandated in that coverage whether you need it or not. If you as an individual purchased health care, you could buy coverage which more closely matched your needs thereby reducing your premiums.

Individuals paying for their own health care with their own money have a greater incentive to shop around for the best deal. The new market created would foster more competition competing for everyone's health care dollar.

Also, you would not have to worry about losing your coverage when you switched jobs because the two would not be linked. Just like car insurance and every other kind of insurance. We as a nation are very satisfied with these other types of insurance.

None of these suggestions requires massive government intervention. They actually allow the private market to work better. If people cannot afford basic health care then we can give them money to buy some. There are other great ideas out there if you look (read the Wall Street Journal) and something is wrong when you hear all this talk about health care and none of the common sense ideas presented here are even mentioned.

Something sounds fishy to me

This weekends Wall Street Journal has an old interview of President Obama on health care

The President: I don't know how much that hip replacement cost. I would have paid out of pocket for that hip replacement just because she's my grandmother. Whether, sort of in the aggregate, society making those decisions to give my grandmother, or everybody else's aging grandparents or parents, a hip replacement when they're terminally ill is a sustainable model, is a very difficult question. If somebody told me that my grandmother couldn't have a hip replacement and she had to lie there in misery in the waning days of her life—that would be pretty upsetting.

Mr. Leonhardt: And it's going to be hard for people who don't have the option of paying for it.

The President: So that's where I think you just get into some very difficult moral issues. But that's also a huge driver of cost, right? I mean, the chronically ill and those toward the end of their lives are accounting for potentially 80 percent of the total health care bill out here.

Mr. Leonhardt: So how do you—how do we deal with it?

The President: Well, I think that there is going to have to be a conversation that is guided by doctors, scientists, ethicists. And then there is going to have to be a very difficult democratic conversation that takes place. It is very difficult to imagine the country making those decisions just through the normal political channels. And that's part of why you have to have some independent group that can give you guidance. It's not determinative, but I think has to be able to give you some guidance. And that's part of what I suspect you'll see emerging out of the various health care conversations that are taking place on the Hill right now.

Who, given the choice, wouldn't give their grandmother surgery? Not you nor I and clearly not Mr. Obama. And since no one would voluntarily deny service to their grandmother only one conclusion can be drawn. The independent group's guidance must be determinative, otherwise, what's the point?

Everyone needs to feel the pain

I have a suggestion that would do wonders for our democracy: give everyone $10,000 at the beginning of the tax year and then tax them on that $10,000 at the end of the tax year. I'm not just a nice guy giving away money, I'm a man with a plan. I want to inflict pain on Americans. I want them to feel the sting of paying for the services they demand. I want their skin in the game.

Everyone one of us adapts to the present. It takes just a short while to become accustomed to our new surroundings and reevaluate our baseline. It's human nature. When we are given $10,000 we will naturally tend to think of it as our own. Quickly, we will forget where it came from or what attachments came with it. Like a lost puppy you found, you won't want to give it back.

Eventually, the boy who owns the puppy will come along. He will ask for Rex back and you will protest. You say, "His name is Scruffy". Alas, you will unwillingly give him back because your mother makes you and it will hurt. You formed a bond and that bond has been broken. You won't think of all the good times you had. Good times that wouldn't have occurred had Rex, er, Scruffy not been in your life. That would be rational. It would be rational to weigh the good and bad and see which way the scale tips. As all good behavioral economists know, we are not rational.

To a rational person giving the government back it's own money would be a non issue. Thankfully, that wouldn't be the case. People would be sensitive to how much they had to give back and it would make them understand the pain of their brothers. Those the politicians like to decry as the rich, also known as taxpayers.

There is one last thing necessary to make my plan complete. That money must be taxed at the highest tax rate available so that the interests of those very few are not sacrificed to those of the many. (Evil laugh goes here)

Obama's Townhall Meeting

The president's remarks at last nights town hall meeting:

But let's face it, now is the hard part -- because the history is clear -- every time we come close to passing health insurance reform, the special interests fight back with everything they've got. They use their influence. They use their political allies to scare and mislead the American people. They start running ads. This is what they always do.

Mr. President, I can't speak for all the other special interests but I can speak for this one. You are misleading the American people. Your proposals don't pass the common sense test and all you use are scare tactics. For example:

We can't let them do it again. Not this time. Not now. Because for all the scare tactics out there, what is truly scary -- what is truly risky -- is if we do nothing. If we let this moment pass -- if we keep the system the way it is right now -- we will continue to see 14,000 Americans lose their health insurance every day. Your premiums will continue to skyrocket. They have gone up three times faster than your wages and they will keep on going up.

Our deficit will continue to grow because Medicare and Medicaid are on an unsustainable path. Medicare is slated to go into the red in about eight to 10 years. I don't know if people are aware of that. If I was a senior citizen, the thing I'd be worried about right now is Medicare starts running out of money because we haven't done anything to make sure that we're getting a good bang for our buck when it comes to health care. And insurance companies will continue to profit by discriminating against people for the simple crime of being sick. Now, that's not a future I want for my children. It's not a future that I want for the United States of America.

You are not trying to scare senior citizens? What other intention could you have with these remarks? Here's a dumb question, if the government programs of Medicare and Medicaid are going bankrupt as you say then why push for a public option? How about this, figure out how to fix Medicare and Medicaid, show the American people an example of government efficiency and then propose the public option. Or maybe you can start with the postal service.

Now, I recognize, though, you make a legitimate -- you raise a legitimate concern. People say, well, how can a private company compete against the government? And my answer is that if the private insurance companies are providing a good bargain, and if the public option has to be self-sustaining -- meaning taxpayers aren't subsidizing it, but it has to run on charging premiums and providing good services and a good network of doctors, just like any other private insurer would do -- then I think private insurers should be able to compete. They do it all the time.

I mean, if you think about -- if you think about it, UPS and FedEx are doing just fine, right? No, they are. It's the Post Office that's always having problems.

At any rate, debate the merits of your plan and stop attacking other people. Frankly, you don't sound presidential.

Right, it's a great question. First of all, I said I won't sign a bill that adds to the deficit or the national debt. Okay? So this will have to be paid for. That, by the way, is in contrast to the prescription drug bill that was passed that cost hundreds of billions of dollars, by the previous administration and previous Congress, that was not paid for at all, and that was a major contributor to our current national debt.

That's why you will forgive me if sometimes I chuckle a little bit when I hear all these folks saying, "oh, big-spending Obama" -- when I'm proposing something that will be paid for and they signed into law something that wasn't, and they had no problem with it. Same people, same folks. And they say with a straight face how we've got to be fiscally responsible.

At least Mr. Obama ended on a positive note.

But I want everybody to understand, though, the status quo is not working for you. (Applause.) The status quo is not working for you. And if we can set up a system, which I believe we can, that gives you options, just like members of Congress has options; that gives a little bit of help to people who currently are working hard every day but they don't have health care insurance on the job; and most importantly, if we can make sure that you, all of you who have insurance, which is probably 80 or 90 percent of you, that you are not going to be dropped because of a preexisting condition, or because you lose your job, or because you change your job -- that you're actually going to get what you paid for, that you're not going to find out when you're sick that you got cheated, that you're not going to hit a lifetime cap where you thought you were paying for insurance but after a certain amount suddenly you're paying out of pocket and bankrupting yourself and your family -- if we can set up a system that gives you some security, that's worth a lot.

Everything is Rationed

In today's health care debate there is a lot of talk about rationing. If the government takes over they will "ration". The insurance companies are "rationing", deciding what kind of procedures a patient will have. I got news for you, everything is rationed. Not just health care, EVERYTHING! According to Answers.com rationing is a:

Method for limiting the purchase or usage of an item when the quantity demanded of the item exceeds the quantity available at a specific price.

The key thing to take away from this definition is that the quantity demanded exceeds the quantity available (I'll get to price later). When this condition holds there is no alternative but to invent mechanisms to determine who gets the limited supply of goods. A simple example:
100 people want apples
There are only 50 apples
If this is the situation then one thing is clear, someone won't get as many apples as he wants. For you extra nerdy folks out there, it's the reverse pigeonhole principle (100 pigeonholes, 50 pigeons, some boxes will be empty). There are only two solutions to this problem: One is to increase the number of apples so that everyone who wants one can get one; another is to reduce how many apples are desired (I vote for shooting people).

Let's focus on the demand side since that's where rationing comes into play. Rationing is a general term for the method we choose for determining who gets the 50 apples. We could use their ages, how good looking they are, if they go to church, if they don't go to church, how hungry they are, or any other criteria to determine who gets an apple. When government rations it chooses the criteria and it makes the decisions. Now here's the important point, the free market rations too. The free market causes people to self ration based on price. People who have the money and are willing to pay for an apple, get an apple, otherwise they don't.

Rationing is a result not of the government or the free market but of the real situation. There is excess demand compared to supply. The fact that a price on something exists implies that something is limited in supply. Prices are the free market's mechanism which causes people to self ration. People reduce their demand in proportion with the price. What happens when you don't allow the price to fluctuate? Self rationing is replaced by another kind of rationing. A shortage is a form of rationing known as first come, first serve. Another form of rationing is explicit rationing by the government determining who is deserving and who is not. There are many other variations on this theme.

Rationing in and of itself is neither a good thing or a bad thing. The pricing mechanism of the free market is by far the most efficient mechanism for rationing. We should work within that system, not try to destroy it.

It's a sign

Almost eight years ago The Twin Towers were knocked down...how long before they get back up? Today's NY Times editorial reports that once again the rebuilding of Ground Zero is stalling. Why? In a word: Government.

The Twin Towers were targeted because they were a symbol of America's greatness. That greatness born of the free market. The free market is nothing more than a reflection upon man. It's profits and losses are signals telling man what he should do. The free market, more than anything, drives man to do. The free market would not, could not, let prime real estate go to waste. Someone out there, looking to make a profit, would gobble up the land and rebuild it. They wouldn't do it for the public good but for themselves. In their brazen act of selfishness they are guided by that free hand which benefits us all. In a short time, the symbol of the free market would be restored. That symbol, the embodiment of the machine that created it.

The government on the other hand is not motivated by profits and losses. With the scar of the nation still fresh, one thing is clear: government, is not motivated. Nothing happens while bureaucrats argue over the symbol they want to project and who will project it. They don't pay a price for waiting. No missed opportunity, no greed to motivate them. One day maybe, the anger of a nation will motivate them. That day is not today. This is the effectiveness of government. Eight years and we still have a hole.

Capitalism and Equality

Their are only two way to see things: The way you want them to be and the way they are. No matter how much we want it to be different, people operate in their own self interest. Morals and Rights are a result of pragmatism. Equality is a pragmatic concept.

If we go back into history we see far more gender inequality than we do today. Why? Because in the past physical prowess equaled economic prowess. The economies of the past were either hunter gatherer or agrarian based. Both of these rewarded brawn more than brain power. Because men are typically bigger and stronger than women (it's genetics, don't shoot the messenger) they were more valuable in economic terms than women. This leads to a society which treats women as inferior. As societies move away from economies based on brute strength to those based on knowledge, the inherent economic advantage men have deteriorates. This leads to societies that treat women as equals. It is not because people are better in any absolute moral sense, but from pragmatic self interest.

If you want to promote the cause of equality, it is not enough to decry inequality. You must accept the causes of inequality and change the structures that support it. To look at prejudiced man as simply an immoral being is too simplistic. That immoral man cannot be both the cause and the solution. That man is an actor playing his part in an environment. He will not change unless the environment changes. We need to change the environment to promote his good and mitigate his evil.