The protestors in Madison make, on average, three times what a typical taxpayer makes and have a benefit package for retirement and health care that the average Wisconsin citizen can only dream about. This is as if Marie Antoinette was out demonstrating in the streets of Paris for more champagne.
Students, of course, join in. There is no more privileged part of American society than college students, especially at elite schools like University of Wisconsin. The children of the average taxpayer in Wisconsin can't afford to attend University of Wisconsin, even if they could get in. But households headed by two public employees with income in the $ 200,000 plus area can certainly afford it .... and more, so long as taxpayers and bondholders are willing to pay for this largesse.
It is truly astounding that the wealthiest folks in Wisconsin, which, as a group, are the public employees, have such a "public be damned" attitude. Not since JP Morgan has the country witnessed such contempt for the average citizen as it evidenced by the demonstrators in Madison, Wisconsin.
Sabtu, 05 Maret 2011
Palin is Right on Track
Sarah Palin is drawing attention to the real policy issues that the country faces by redirecting our attention to the entitlements and social security in particular. Social security is easy to fix, only courage is required. We need only tax social security to recoup it from higher income tax payers and move the age of retirement out (a similar strategy solves the problems of the enormous unfunded liabililties of state and local government pension plans).
Palin is not distracted, as Obama and the Congress seem to be, by worrying about the current $ 60 billion spat between House Republicans and the Obama White House. $ 60 billion isn't even two weeks of the current deficit at the federal level (not to mention the horrendous situation in state budgets). Palin was right when she referred to "death panels" in Obamacare and she is right to redirect our attention to social security and the health care entitlements.
Check out Paul Johnson's take on Sarah Palin in today's lead editorial in the Wall Street Journal. Palin, like Reagan and Thatcher before her, has had to to deal with the media hate mongers, but has maintained her focus and vision. If you want to see how the press treated Ronald Reagan, go to archives of the NY Times in the 1970s and you will read about Reagan characterized in essentially the same terms as Palin is today. Something about Sarah Palin's courage and forthrightness strikes a raw nerve with the left and with the most arrogant of the right (Peggy Noonan, George Will, Charles Krauthammer, etc.). America doesn't need more arrogance. What America needs is more people that are forthright about our debt situation, forthright about the need for free markets and less interested in demagoguery. In short, America needs more Sarah Palins.
Palin is not distracted, as Obama and the Congress seem to be, by worrying about the current $ 60 billion spat between House Republicans and the Obama White House. $ 60 billion isn't even two weeks of the current deficit at the federal level (not to mention the horrendous situation in state budgets). Palin was right when she referred to "death panels" in Obamacare and she is right to redirect our attention to social security and the health care entitlements.
Check out Paul Johnson's take on Sarah Palin in today's lead editorial in the Wall Street Journal. Palin, like Reagan and Thatcher before her, has had to to deal with the media hate mongers, but has maintained her focus and vision. If you want to see how the press treated Ronald Reagan, go to archives of the NY Times in the 1970s and you will read about Reagan characterized in essentially the same terms as Palin is today. Something about Sarah Palin's courage and forthrightness strikes a raw nerve with the left and with the most arrogant of the right (Peggy Noonan, George Will, Charles Krauthammer, etc.). America doesn't need more arrogance. What America needs is more people that are forthright about our debt situation, forthright about the need for free markets and less interested in demagoguery. In short, America needs more Sarah Palins.
Health Care -- First Principles
Americans are now facing the staggering first glimpses of sticker shock associated with Obamacare. Insurance companies are ratcheting up fees to meet the new burdens of Obamacare and hospitals are doing the same. There is really no limit to where these costs are headed. Even absent Obamacare, health insurance costs would be rising, but, with Obamacare, they are escalating out of sight. Meanwhile more and more doctors and hospitals are backing away from servicing medicare and medicaid patients, which replaces expensive health care with no health care. These are the fruits of Obama's ambitious health care vision and we are just at the beginning of this nightmare.
What is wrong with this picture?
First and foremost, health care should be expensive if it is important. Consumers of the service should pay a lot to get it. That principle underlies any reasonable allocation of a scarce resource. You can't promise inexpensive luxuries on a grand scale. The numbers will never add up. So, even if you are unlucky and your genes lead to an expensive-to-treat disease, you should not have a free ride financially.
Second, it is important to recognize the role of incentives in the provision of health care. Any system of provision of health services that does not require patients to pay for the bulk of their own health care means that patients will be less likely to take steps necessary to prevent future health problems. Why are older Americans among the most obese humans on the planet? The reason is that Americans see no connection between their own financial situation and how obese they are. They assume that other people (the government) will finance their future health care woes, so why worry? Why do low income Americans smoke in such large numbers? Because they assume that they will not be paying for the resultant health care problems (and they are right)! By taking away the financial burden of future health care costs (or convincing the public that you are taking away the financial burden of future health care costs), you are eliminating the incentives for individuals to take actions that improve their future health care. Some folks may do the right thing anyway, absent any financial incentives, but it very obvious that most do not.
Third, by setting up a system that will eventually require cost controls on hospitals, doctors and other health care providers, you guarantee a reduction in the supply in the quantity and quality of these services. If you want good health care, those who work in the industry must have financial incentives. These incentives are broadly under attack with current belt tightening in medicare and medicaid and the clear direction of Obamacare.
Only the free market supplemented with charity and a public safety net of modest proportions for the indigent can supply a truly efficient and quality health care system. The systems in Europe and other developed countries are notorious for inefficiencies and rationed care. The best health care in the world is to be found in the USA for those that can afford it. Medicare, medicaid and Obamacare will guarantee that fewer and fewer Americans will be able to afford good health care. Only a free market in health care and a free market in health care insurance can produce top quality, affordable health care for all Americans.
What is wrong with this picture?
First and foremost, health care should be expensive if it is important. Consumers of the service should pay a lot to get it. That principle underlies any reasonable allocation of a scarce resource. You can't promise inexpensive luxuries on a grand scale. The numbers will never add up. So, even if you are unlucky and your genes lead to an expensive-to-treat disease, you should not have a free ride financially.
Second, it is important to recognize the role of incentives in the provision of health care. Any system of provision of health services that does not require patients to pay for the bulk of their own health care means that patients will be less likely to take steps necessary to prevent future health problems. Why are older Americans among the most obese humans on the planet? The reason is that Americans see no connection between their own financial situation and how obese they are. They assume that other people (the government) will finance their future health care woes, so why worry? Why do low income Americans smoke in such large numbers? Because they assume that they will not be paying for the resultant health care problems (and they are right)! By taking away the financial burden of future health care costs (or convincing the public that you are taking away the financial burden of future health care costs), you are eliminating the incentives for individuals to take actions that improve their future health care. Some folks may do the right thing anyway, absent any financial incentives, but it very obvious that most do not.
Third, by setting up a system that will eventually require cost controls on hospitals, doctors and other health care providers, you guarantee a reduction in the supply in the quantity and quality of these services. If you want good health care, those who work in the industry must have financial incentives. These incentives are broadly under attack with current belt tightening in medicare and medicaid and the clear direction of Obamacare.
Only the free market supplemented with charity and a public safety net of modest proportions for the indigent can supply a truly efficient and quality health care system. The systems in Europe and other developed countries are notorious for inefficiencies and rationed care. The best health care in the world is to be found in the USA for those that can afford it. Medicare, medicaid and Obamacare will guarantee that fewer and fewer Americans will be able to afford good health care. Only a free market in health care and a free market in health care insurance can produce top quality, affordable health care for all Americans.
Jumat, 04 Maret 2011
The New Normal on Unemployment
The pundits cheered today's unemployment rate, which was reported to be 8.9 percent. After adjustments for January, net job creation was an anemic 180,000 -- a pitiful number for this stage of an economic recovery. The fact that a number this bad was greeted with applause says a lot about how low expectations for the economy have become since the Obama presidency began. Obama was quick to note that 1.5 million jobs have been added since last year -- an abysmal record for the second year of a recovery by any standard. If Obama is proud of this number, he must have given up hope for any kind of serious growth in employment levels or economic recovery.
To create jobs, it is crucial to make labor affordable. Everything the Obama Administration and its Congressional allies have done so far has made labor much more expensive. That's the failed European strategy, an area of the world that thinks that double digit unemployment is perfectly acceptable. Young folks in Europe have no real future -- the rich get richer and the young have lost hope. Most European children stay in their families' homes until they reach mid 30s. The wealthiest families in Europe are the same families that dominated European wealth 50 years ago. There is no economic mobility in Europe. Is that where we are headed?
Don't forget that in the "bad old days," that Obama doesn't want to see returned, unemployment dipped below 4 percent at times and was typically below 6 percent during the preceding 25 years. Gee, we certainly don't want to return to that, do we?
Booms and busts are part of life. Trying to eliminate busts by the heavy hand of government with bailouts, excessive regulations and payoffs to public employee supporters is absurd policy. But, it is the Obama way. What Obama means by "investments" is to spend money to reward his supporters. That's basically what the stimulus package was all about. Obama's proposed budget proposes more of the same.
Lets go back to booms and busts. They were certainly a lot better than this. The opportunities that were abundant in the 1980s and 1990s have vanished with the new normal of the Obama era. We need to go back to the bad old days.
To create jobs, it is crucial to make labor affordable. Everything the Obama Administration and its Congressional allies have done so far has made labor much more expensive. That's the failed European strategy, an area of the world that thinks that double digit unemployment is perfectly acceptable. Young folks in Europe have no real future -- the rich get richer and the young have lost hope. Most European children stay in their families' homes until they reach mid 30s. The wealthiest families in Europe are the same families that dominated European wealth 50 years ago. There is no economic mobility in Europe. Is that where we are headed?
Don't forget that in the "bad old days," that Obama doesn't want to see returned, unemployment dipped below 4 percent at times and was typically below 6 percent during the preceding 25 years. Gee, we certainly don't want to return to that, do we?
Booms and busts are part of life. Trying to eliminate busts by the heavy hand of government with bailouts, excessive regulations and payoffs to public employee supporters is absurd policy. But, it is the Obama way. What Obama means by "investments" is to spend money to reward his supporters. That's basically what the stimulus package was all about. Obama's proposed budget proposes more of the same.
Lets go back to booms and busts. They were certainly a lot better than this. The opportunities that were abundant in the 1980s and 1990s have vanished with the new normal of the Obama era. We need to go back to the bad old days.
Jumat, 25 Februari 2011
Can't Pretend Much Longer -- Inflation is Here
Noticed food prices lately? Or perhaps the price of gas at the pump has caught your attention. You probably didn't know that raw cotton is up 180 percent since a year ago. Guess where that will take clothing prices. Think deflation is our problem, think again. Inflation is here.
US monetary policy and US debt policy hinge on the assumption of deflation. So much for those policies. Be prepared for major increases in treasury rates which means a dramatic and unanticipated increased in annual federal fiscal deficits. Things are going to get a lot worse quickly.
Bernanke and Obama are going to reap the results that their policies have sowed. A return to the Carter days -- stagflation is back. The stock and bond markets will struggle from here.
US monetary policy and US debt policy hinge on the assumption of deflation. So much for those policies. Be prepared for major increases in treasury rates which means a dramatic and unanticipated increased in annual federal fiscal deficits. Things are going to get a lot worse quickly.
Bernanke and Obama are going to reap the results that their policies have sowed. A return to the Carter days -- stagflation is back. The stock and bond markets will struggle from here.
Rabu, 23 Februari 2011
What Happened to Robin Hood?
In Madison, thousands of high income folks are busy demonstrating in the hopes that lower and middle income taxpayers will pay higher taxes to keep these rich folks riding high. The average teacher in Wisconsin makes between two and three times the all-in compensation of the average Wisconsin taxpayer, so, by all means, lets raise taxes and make the gap even higher. To show their concern for their students, the Wisconsin teachers have taken to calling in sick while they are demonstrating in the state capital for even more money.
Meanwhile, the state faces an immediate $ 3.6 billion shortfall and will be forced to begin laying off teachers next week. Why don't the demonstrating teachers care about the pending layoffs? Because the ones demonstrating will not be the ones laid off. The ones laid off will be the most recently hired teachers with the least seniority and these teachers aren't paid as well or have as much seniority as the ones wreaking havoc in Madison. The rich teachers are protected by seniority rules.
Just imagine a couple both of whom have been school teachers in Wisconsin for twenty years and have a combined compensation exceeding $ 250,000 annually. These are the people demonstrating. These are the people that are not showing up in the classroom even though paid (handsomely) to do so.
Where is Robin Hood? He needs to ride in and support the taxpayer against these rich folks who are robbing the public treasury and not showing up for work.
Student demonstrators, as usual, are supporting the relatively affluent against the interests of the average citizen. No change there.
Meanwhile, the state faces an immediate $ 3.6 billion shortfall and will be forced to begin laying off teachers next week. Why don't the demonstrating teachers care about the pending layoffs? Because the ones demonstrating will not be the ones laid off. The ones laid off will be the most recently hired teachers with the least seniority and these teachers aren't paid as well or have as much seniority as the ones wreaking havoc in Madison. The rich teachers are protected by seniority rules.
Just imagine a couple both of whom have been school teachers in Wisconsin for twenty years and have a combined compensation exceeding $ 250,000 annually. These are the people demonstrating. These are the people that are not showing up in the classroom even though paid (handsomely) to do so.
Where is Robin Hood? He needs to ride in and support the taxpayer against these rich folks who are robbing the public treasury and not showing up for work.
Student demonstrators, as usual, are supporting the relatively affluent against the interests of the average citizen. No change there.
Rabu, 16 Februari 2011
Bernanke is a Political Hack
Ben Bernanke is likely the worst Fed Chairman in US history and that's saying something. We have had some really bad ones, but none like this guy. He has now purchased nearly $ 400 billion of his $ 900 billion QE2 buying spree. If he doesn't buy, who will? That's a question that is getting asked a lot lately.
Now Ben has opined on the Dodd-Frank bill, probably the second worst piece of legislation in American history (Obamacare is the winner of the gold). Ben likes the Dodd-Frank bill, otherwise known as FinReg. FinReg is one of the key contributors to our high unemployment rates. So, I guess it is having an impact. It is certainly not irrelevant. The mountain of new rules, regulations and prohibitions have done their job. They have stifled credit creation and muzzled the financial system.
Ben and Obama have a lot in common. Their policies are both significant contributors to our current stagnation and high unemployment.
Now Ben has opined on the Dodd-Frank bill, probably the second worst piece of legislation in American history (Obamacare is the winner of the gold). Ben likes the Dodd-Frank bill, otherwise known as FinReg. FinReg is one of the key contributors to our high unemployment rates. So, I guess it is having an impact. It is certainly not irrelevant. The mountain of new rules, regulations and prohibitions have done their job. They have stifled credit creation and muzzled the financial system.
Ben and Obama have a lot in common. Their policies are both significant contributors to our current stagnation and high unemployment.
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