Voice For Liberty

Tag: Economics

  • How will government run our health care?

    An excerpt from “Why Government Can’t Run a Business” by John Steele Gordon, from the May 21, 2009 Wall Street Journal:

    The Obama administration is bent on becoming a major player in — if not taking over entirely — America’s health-care, automobile and banking industries. Before that happens, it might be a good idea to look at the government’s track record in running economic enterprises. It is terrible.

    In 1913, for instance, thinking it was being overcharged by the steel companies for armor plate for warships, the federal government decided to build its own plant. It estimated that a plant with a 10,000-ton annual capacity could produce armor plate for only 70% of what the steel companies charged.

    When the plant was finally finished, however — three years after World War I had ended — it was millions over budget and able to produce armor plate only at twice what the steel companies charged. It produced one batch and then shut down, never to reopen.

    Or take Medicare. Other than the source of its premiums, Medicare is no different, economically, than a regular health-insurance company. But unlike, say, UnitedHealthcare, it is a bureaucracy-beclotted nightmare, riven with waste and fraud. Last year the Government Accountability Office estimated that no less than one-third of all Medicare disbursements for durable medical equipment, such as wheelchairs and hospital beds, were improper or fraudulent. Medicare was so lax in its oversight that it was approving orthopedic shoes for amputees.

    These examples are not aberrations; they are typical of how governments run enterprises.

  • Road to prosperity for Kansas to be examined in Wichita

    At this Friday’s meeting of the Wichita Pachyderm Club, Dave Trabert, President of the Flint Hills Center for Public Policy, will take a look at the future of government, especially in Kansas.

    I received the following preview from the speaker:

    It’s about being a critical crossroads, with one choice being a smoothly paved road and the other is a bumpy, rutted road. One looks very easy to navigate, but there’s a large price to pay along the way and the destination is Serfdom. The road to Prosperity might be more difficult to travel, but the destination is worth the effort.

    I also try to make the case that we don’t have to be held hostage by “either/or” situations (higher taxes to sustain good services or sacrifice the services); rather, we simply need to find ways to make government more efficient so we can have good services and lower taxes.

    Dave Trabert is President of the Flint Hills Center for Public Policy. Trabert developed his interest in the public policy arena during his 18-year career managing television stations. Most recently he served as general manager of WYTV in Youngstown, Ohio, an area beset with chronic employment issues resulting from a high tax burden, low education attainment and a lack of regionalism. Trabert initiated community discussions, published an extensive white paper on the issue and led a research-driven education campaign focusing on possible solutions for removing job growth barriers. He graduated cum laude from West Liberty State College with a degree in Business Administration and previously managed KAKE-TV in Wichita. Trabert researches and writes on fiscal policy issues.

    All are welcome to attend Pachyderm meetings. Lunch is $10, or you may attend the meeting only for $3.

    At Pachyderm meetings, there’s usually plenty of time for the speaker to take questions from the audience. The meeting starts at noon, although those wishing to order lunch are encouraged to arrive by 11:45. The location is Whiskey Creek Steakhouse at 233 N. Mosley in Old Town. You can view a map of this location by clicking on Google map of 233 N. Mosley.

  • Wichita parks system is not a jobs program

    Harold Schlechtweg, business representative of Service Employees International Union Local 513 in Wichita, makes the case that Wichita needs to keep employing its present park maintenance staff, even though it appears there is a way to get the work done at a lower cost. (Cutting park jobs will hurt city, June 30, 2009 Wichita Eagle)

    The city has a responsibility to its citizens to operate as efficiently as possible. If it is possible to have work such as park maintenance done less expensively, the city should do so. It should have done so long ago.

    Schlechtweg says that if wages and benefits are cut, the community suffers. Let’s remind him who pays the wages and benefits he’s trying to protect: the taxpayers of the city of Wichita. If the city can reduce their taxes and provide the same level of service, Wichitans benefit.

    The idea that it’s good for a city to have highly-paid workers such as those the SEIU represents is highly self-serving. It places the interests of a few union members above that of the entire city.

    If a private enterprise wishes to pay its employees higher wages than is necessary, that’s their privilege. But in the marketplace, companies can’t do that for very long, or they won’t be competitive with other companies.

    The City of Wichita, however, doesn’t operate in a competitive marketplace. If it pays employees too much, it doesn’t suffer very much. Citizens may not even be aware that the city is operating inefficiently until stressful events like the current budget situation expose the situation.

    Since the city doesn’t face the discipline of markets, it’s very important that citizens keep an eye on the city’s spending.

    Schlechtweg’s argument — that the city should keep paying more to maintain parks than it needs to — is ridiculous on its face. It likens city spending to a perpetual motion machine: pour in more taxes to support more spending, and you get more wages and benefits paid to workers. That, in turns, feeds more taxes into the machine. The world doesn’t work that way.

    Schlechtweg writes: “The bottom line is that workers’ wages and benefits are not the problem.” Unfortunately for the workers he represents, paying more than necessary to get a job done is a problem for Wichita’s taxpayers. If Wichita can save money at the expense of apparently over-paid workers, the city needs to do so, and now.

  • Decisions made through politics leads to conflict

    A column by economist Walter E. Williams (Why we’re a divided nation) strongly makes the case for more decision-making by free markets rather than by the government through the political process.

    When decisions are made through free markets, Williams says, both parties win, because in a free market, parties enter into only those transactions that benefit them.

    When decisions are made for us by the government, however, it is almost always the case that one party’s gain is someone else’s loss. Therefore, there is conflict. The more decisions made through politics, the more potential for conflict. Coalitions arise in order to try to get more from the government, and the most effective coalitions “are those with a proven record of being the most divisive — those based on race, ethnicity, religion and region.”

    The column concludes with this: “The best thing the president and Congress can do to heal our country is to reduce the impact of government on our lives. Doing so will not only produce a less divided country and greater economic efficiency but bear greater faith and allegiance to the vision of America held by our founders — a country of limited government.”

    I’ve mentioned many columns by Walter Williams that I thought were important. This column is certainly one of his best, as it very simply, in one short page, shows us a major fault in our current system of making decisions through politics rather than through markets.

  • It’s time to audit the Federal Reserve Bank

    I received a press release from the Libertarian Party of Kansas announcing their support for legislation introduced by U.S. Representative Ron Paul that would “audit the centralized/privatized banks that make up the Federal Reserve System.”

    “The secretive FR [Federal Reserve] is a monetary oligarchy and an unelected monopoly that has control of credit, interest, volume and value of our currency. Until the people regain control of their money, bankers and not the government, will control the situation and our property,” says Al Terwelp, Vice Chair of the Libertarian Party of Kansas. “We must have the ability to search for the truth in FR practices and once it is found only then can we exercise justice for all. Without openness, our Republic’s existence is in jeopardy, for every dollar, every citizen, every issue of monetary, social and foreign policy is connected to the hegemony that is the Federal Reserve.”

    Personally, I find that most people have no idea of what the Federal Reserve does, or that it creates money out of thin air. It doesn’t even have to print it, as all it has to do is make some computerized ledger entries, and there’s new some money.

    Rep. Paul’s bill that would requre the audit of the Fed, HR 1207, has 237 co-sponsors in the House, including Kansas’ Tiahrt, Moran, and Jenkins. Rep. Dennis Moore of Johnson County is not a sponsor.

    Rep. Paul has a resource page with much information about the legislation and the need for it at Audit the Federal Reserve: HR 1207 and S 604.

  • Prices ration scarce goods

    When something is in in short supply, something must decide who gets the good, and who doesn’t. One way is for government to decide, and the other way is for people to decide cooperatively, through the price mechanism.

    I’ve reported on how Walter E. Williams explains the difference in my post Prices Ration Scarce Goods. Here’s Williams himself explaining in a video just five minutes long.

  • Kansas loses private sector jobs as government grows

    Today the Flint Hills Center for Public Policy reports on the rapid growth in government jobs in Kansas. This is taking place at a time when the private sector is rapidly shedding jobs.

    Kansas continues to lose jobs in the private sector as the number of government employees grows. According to the U.S. Bureau of Labor Statistics (BLS), Kansas lost another 10,500 private sector jobs in April but added 800 state and local government jobs.

    Over the past 12 months Kansas added 2,300 local and 100 state government jobs; during the same period the state lost 26,500 private sector jobs. BLS includes public school administrators in local government totals. Teachers are included in private sector totals.

    The complete report is at Kansas loses private sector jobs as government grows, or it may be read below.

    The shift of job growth from the private sector to government has been a problem in Kansas for some time. See the posts Kansas Continues to Suffer from Job Growth Deficit and Kansas Governor Kathleen Sebelius and Kansas Jobs.

    (This is a Scribd document. Click on the rectangle at the right of the document’s title bar to get a full-screen view.)

  • Maybe props are stimulus, too

    The Kansas Meadowlark wonders about construction equipment moved into place apparently just for effect: Tax dollars for props for Biden’s visit to Overland Park? Wasteful spending for Biden to avoid?

    By the way, why was it necessary for our former governor Kathleen Sebelius, now Secretary of the Department of Health and Human Services, to travel to Kansas for this event? Doesn’t she have national health care to plan for, or at least swine flu to stomp out?

  • Articles of Interest

    Global warming alarmist James Hansen, inflation, Facebook, paygo deception.

    The Man Who Cried Doom
    NASA’s James Hansen is the least-muzzled climate alarmist in America

    NASA’s James Hansen was one of the first to warn of the “impending doom” of global warming. How has his message fared over the last 20 years? Here’s what other scientists have said about Hansen: “Hansen’s testimony in 1988 was ‘a huge embarrassment’ to NASA, and he remains skeptical of Hansen’s predictions. … describes Hansen’s belief in a man-made global-warming catastrophe as ‘almost religious’ and says he ‘never understood how [Hansen] got such a strong voice’ in the debate. … puts Hansen ‘at the extreme end of global warming alarmism.’ … Hansen got caught with his hand in the cookie jar in 2007, when Stephen McIntyre, the man who debunked the infamous “hockey stick” graph showing stable Northern Hemisphere surface temperatures for most of the last millennia before a sharp upturn, found a flaw in Hansen’s numbers.”

    The full article from the Weekly Standard is at The Man Who Cried Doom.

    Get Ready for Inflation and Higher Interest Rates
    The unprecedented expansion of the money supply could make the ’70s look benign.

    Arthur Laffer, writing in the Wall Street Journal, warns of inflation and other trouble ahead. The chart of the growth of the money supply looks a lot like Al Gore’s “hockey stick” chart of global temperatures. That chart, we know now, was in error. The chart of the rapid growth of the money supply, unfortunately, is true. Here’s some of what Laffer wrote:

    But as bad as the fiscal picture is, panic-driven monetary policies portend to have even more dire consequences. We can expect rapidly rising prices and much, much higher interest rates over the next four or five years, and a concomitant deleterious impact on output and employment not unlike the late 1970s.

    About eight months ago, starting in early September 2008, the Bernanke Fed did an abrupt about-face and radically increased the monetary base … The percentage increase in the monetary base is the largest increase in the past 50 years by a factor of 10. It is so far outside the realm of our prior experiential base that historical comparisons are rendered difficult if not meaningless.

    Now the Fed can, and I believe should, do what it must to mitigate the inevitable consequences of its unwarranted increase in the monetary base. It should contract the monetary base back to where it otherwise would have been, plus a slight increase geared toward economic expansion. … Alas, I doubt very much that the Fed will do what is necessary to guard against future inflation and higher interest rates. If the Fed were to reduce the monetary base by $1 trillion, it would need to sell a net $1 trillion in bonds. This would put the Fed in direct competition with Treasury’s planned issuance of about $2 trillion worth of bonds over the coming 12 months. Failed auctions would become the norm and bond prices would tumble, reflecting a massive oversupply of government bonds.

    Get your Facebook vanity name tonight

    “Soon you will be able to have a username. Starting on Friday, June 12th, at 11:01pm in your time zone, you’ll be able to choose a username for your Facebook account to easily direct friends, family, and coworkers to your profile.” Facebook’s blog post Coming Soon: Facebook Usernames explains more.

    So the cyberspace land rush is on, at least at 11:01 pm tonight for the Central time zone in America. With some 200 million Facebook users, it probably won’t be easy for most people to be successful in grabbing their own name for their Facebook profile.

    The ‘Paygo’ Coverup
    The Obama pattern: Spend, repent, spend again, repent.

    A Wall Street journal editorial tells how President Obama is promoting “paygo” budgeting.

    Paygo is “very simple,” the President claimed. “Congress can only spend a dollar if it saves a dollar elsewhere.”

    That’s what Democrats also promised in 2006, with Nancy Pelosi vowing that “the first thing” House Democrats would do if they took Congress was reimpose paygo rules that “Republicans had let lapse.” By 2008, Speaker Pelosi had let those rules lapse no fewer than 12 times, to make way for $400 billion in deficit spending. Mr. Obama repeated the paygo pledge during his 2008 campaign, and instead we have witnessed the greatest peacetime spending binge in U.S. history. As a share of GDP, spending will hit an astonishing 28.5% in fiscal 2009, with the deficit hitting 13% and projected to stay at 4% to 5% for years to come.

    The truth is that paygo is the kind of budget gimmick that gives gimmickry a bad name. As Mr. Obama knows but won’t tell voters, paygo only applies to new or expanded entitlement programs, not to existing programs such as Medicare … Mr. Obama’s new proposal includes even more loopholes …

    The real game here is that the President is trying to give Democrats in Congress political cover for the health-care blowout and tax-increase votes that he knows are coming. The polls are showing that Mr. Obama’s spending plans are far less popular than the President himself, and Democrats in swing districts are getting nervous. The paygo ruse gives Blue Dog Democrats cover to say they voted for “fiscal discipline,” even as they vote to pass the greatest entitlement expansion in modern history. The Blue Dogs always play this double game.

    The main political question now is when Americans will start to figure out Mr. Obama’s pattern of spend, repent and repeat. The President is still sailing along on his charm and the fact that Americans are cheering for an economic recovery. But eventually they’ll see that he isn’t telling them the truth, and when they do, the very Blue Dogs he’s trying to protect will pay the price. And they’ll deserve what they get.