Rational Capitalist on Facebook

Tuesday, November 13, 2012

Hsieh: 5 Ways To Protect Yourself Against Obamacare

Paul Hsieh, writing for Forbes, advises:
ObamaCare will worsen the current physician shortage. The law will also drive physicians to become hospital employees or to join large Accountable Care Organizations (ACOs), where their treatment decisions will be monitored with mandatory electronic medical records. Government and private insurers will increasingly link payments to adherence to “comparative effectiveness” practice guidelines. Physicians will face significant conflicts-of-interest when their patients might benefit from treatments outside the guidelines, but the physician risks nonpayment (or losing his ACO contract) as a result.
So how can ordinary Americans best protect themselves under ObamaCare? Here are 5 practical recommendations...

Welcome to the Rand Paul evolution - Manu Raju - POLITICO.com

Welcome to the Rand Paul evolution - Manu Raju - POLITICO.com

Thursday, November 8, 2012

Ghate: A Liberal Ayn Rand?

Excellent op-ed from Onkar Ghate urging liberals to adopt Ayn Rand's philosophy of "individualism and independence."  Here is an excerpt:
Any liberal-leaning person today who seeks long-term goals and a new vision, but will not touch the political right because of conservatives' anti-evolution, anti-immigration, anti-abortion platforms, would do well to remember nineteenth-century liberalism. Perhaps the two alternatives confronting us, a government with virtually unlimited power to dictate our personal lives or our economic lives, are both defective. 
For anyone willing to explore this possibility, I can think of no better place to start than with Ayn Rand.

Wednesday, November 7, 2012

Bill Frezza: American Voters Choose Obama To Lead Us - Down The Road To Ruin

Bill Frezza, writing in Forbes, pretty much sums up my feelings.  Here is an excerpt:  
Let the warring tribes we’ve been divided into struggle to redistribute the evaporating wealth of a nation in decline. Let radical egalitarians see what happens when they get the equality of outcome they demand. Let those on the dole try to collect on their precious “right” to free stuff when bureaucratic rationing replaces the market’s invisible hand once the cornucopia of goods and services start running dry. 
Press pundits call business leaders selfish for trying to preserve a free market system that makes it possible to pay for the growing array of entitlements reducing our countrymen to a state of dependency. Angry mobs shake their fists at success claiming the rewards are unfair, foolishly believing you can have one without the other. Treasury officials recklessly borrow from foreign powers hoping our profligacy can go on forever. Politicians think they can extract enough money from the 1 percent to provide an unearned standard of living to the 99%—or at least to as many interest groups as it takes to cobble together an electoral majority looking to consume more and more as they produce less and less. 
Do you want to see what Forward really means, what’s in store for our children, what the end game looks like? Then keep your eyes on Greece, the birthplace of democracy, as it slides into a war of all against all. 
Good luck, America. We are going to need it.

Friday, September 28, 2012

If They Tax Everybody and Everything, You Still Can't Fund the U.S. Government

In the wake of the passage of a 75% "super tax" on the rich in France and calls for higher taxes on the rich during the U.S presidential campaign, I want to post one of my shockingly favorite videos from last year.  Bill Whittle, using analysis by IowaHawk, attempts to "fund" the U.S. federal budget of approximately $3.7 trillion or about $10 billion per day by "eating the rich" or by taxing just about everybody and everything.  To the dismay of leftists everywhere, it simply doesn't add up. For example, he shows that if you take 100% of Exxon Mobil and Walmart 2010 global profits you would fund the U.S. budget for about.... three days.  He goes on to take all the profits of all the Fortune 500 companies, all the major sports leagues, all people making over $250k, etc. with shocking results.  Enjoy:


Wednesday, September 12, 2012

Obama Apologizes for Free Speech

An anti-Islamic filmmaker must go into hiding and four American diplomats get brutally murdered by Islamic mobs. What is the American government's response? Why an apology, of course:
The Embassy of the United States in Cairo condemns the continuing efforts by misguided individuals to hurt the religious feelings of Muslims—as we condemn efforts to offend believers of all religions. . . . Respect for religious beliefs is a cornerstone of American democracy. We firmly reject the actions by those who abuse the universal right of free speech to hurt the religious beliefs of others.
In other words, Obama's conception of free spech is that it is fine, as long as you don't hurt anyone's feelings.  Of course, free speech is important precisely to protect unpopular or controversial opinions.  The Objective Standard blog gets it right:
A cornerstone of the American republic is the right to peaceably practice religion and to freely express one’s views. For U.S. officials to call for respect for an ideology of violence, and to ignore the rights of Americans, is reprehensible.
(Interestingly, while the Drudge Report headlines gruesome photos of the murders with various links relating to the story, what does the mainstream media consider important about this event?  On the New York Times front page is this headline: "Quick Criticism by Romney Is Itself Criticized" in which Romney is accused of "politicizing an international crisis."  Uh, this is a political crisis and Romney is a politician who is running a political campaign for a political office.  CBS News went with: "Amid criticism, Romney doubles down on criticism of White House's response to Egypt, Libya attacks" In other words, the substance of his criticism is not important, only that he dared to criticize.)

Monday, September 10, 2012

Good Follow Up Refuting Democrats' Auto Bailout Claims

See this op-ed The Democrats' GM Fiction as a good companion piece to my post The Flawed Economic Logic Behind the Government's Auto Bailout. The authors rightly conclude:
The GM bailout was a bad deal for GM’s creditors, for U.S. taxpayers, and, in the long run, for the U.S. automobile industry and our overall national competitiveness. No wonder the Democrats are campaigning on a fictionalized account of it.

Friday, September 7, 2012

The Flawed Economic Logic Behind the Government's Auto Bailout

In a bizarre harangue delivered to the DNC delegates, ex-Michigan governor Jennifer Granholm hysterically chanted that hundreds of thousands of jobs were "saved" by the federal government's bailout of General Motors.  According to her, these jobs were "saved" thanks only to the largess of the Dear Leader and his minions at the State Ministry of Automobiles.  

But can this be true?  Can the government simply loan failing businesses money and "save jobs?" If this is good for the economy, shouldn't the government simply lend money to every failing business in such a way that no one would ever lose their job and there would never be unemployment?  Given the adoring cheers of the DNC delegates, many people believe this to be the case.  

Let's put aside factual questions about her statistics and not even consider the fact that most of GM's recent business is from sales of vehicles to the government paid for with your tax money (!) and consider an even simpler example.

Say there is a restaurant on the corner.  Their menu consists of only one item: a fish and jelly bean sandwich.  Recently, shards of glass and metal were found in the fish by several customers. If this weren't enough, the wait staff is known to be rude, there is no parking, and the fish and jelly bean sandwich costs $48.

Not surprisingly, very few people go to this restaurant.  The business is failing.  This is bad news for the owners, wait staff, cooks, and bus boys.  It's also bad news for the fish and jelly bean distributor as well as the spoon and fork supplier.  It's bad news for their supplier of soap and paper towels as well as the corner gas station that supply the trucks with fuel. If the business fails, they will all be out of a job.

But Harvard Law Genius, Jennifer Granholm, has an idea.  The government will loan the restaurant money.  They can continue to make fish and jelly bean sandwiches.  No one will lose their job and all the secondary suppliers will not lose any business.  No jobs will be lost.  In fact, it can be said that Granholm saved jobs!

It is true that the restaurant will continue in business and these workers will continue working there until the loan runs out, business conditions change, or people start desiring expensive, poisoned, crappy sandwiches.  But what else is being forgotten?

Where did Granholm get the money to lend to the restaurant?

Government obtains money through taxation.  Every dollar that Granholm loaned to the restaurant is a dollar that will not be loaned to some other business or spent on some other product.  Because Granholm has loaned money to the restaurant, that very same money will NOT be loaned to the computer company down the road which needs capital to expand, or the doctor doing life saving research, or a company that needs capital to continue research on a new source of energy.

Instead, capital will be tied up in a fish and jelly bean sandwich restaurant and all the businesses that exist to support it.  While the restaurant continues to make sandwiches no one desires, these other businesses have that much less capital with which to meet the actual demands of consumers for their excellent products.

If we apply this principle to the larger economy, it is easy to see that free markets ensure that capital tends to flow towards profitable enterprises.  Consumers vote with their dollars and capital flows towards the most profitable businesses.  That is how we end up with i-pads, antibiotics, and five star steak restaurants.

When this mechanism is disturbed or overridden through government intervention, based not on profits but political pull and the bribery of politicians like Jennifer Granholm, we end up with a market full of fish and jelly bean sandwich restaurants or worse - enormous, inefficient, capital sucking companies that make crappy cars.

Why Does the Unemployment Rate Not Count the Unemployed?

This article discusses a peculiar aspect of the recently released Bureau of Labor statistics unemployment report:
Despite the fact that fewer Americans were employed in August than July, the unemployment rate ticked down from 8.3 in July to 8.1. That is because so many people dropped out of the labor force and stopped looking for work. The unemployment rate is the percentage of people in the labor force (meaning they had a job or were actively looking for one) who did not have a job.
In other words, from August to July less people were employed, but the unemployment rate went down. That's because when someone drops out of the civilian labor force, as defined by the Bureau of Labor Statistics, they are no longer counted in the unemployment rate. So, according to the BLS, if everyone in the United States stopped working and stopped looking for work, the unemployment rate would be a heavenly 0%.

Unfortunately, the article reports that this participation rate has been trending lower and lower.

The Bureau of Labor Statistic also reported that in August the labor force participation rate (the percentage of the people in the civilian non-institutionalized population who either had a job or were actively looking for one) dropped to a 30-year low of 63.5 percent, down from 63.7 percent in July. The last time the labor force participation rate was as low as 63.5 percent was in September 1981.
If you want more accurate measurements, I suggest going to www.shadowstats.com where John Williams diligently tracks both official and unofficial economic statistics. According to his broadest measure of unemployment, the current rate is about 23%!

And, this is not even taking into account a more important conceptual issue related to employment that I blogged about here in which the government counts as employed those engaged in complying with or enforcing arbitrary and counter productive government taxes and regulations.  Given actual statistics plus my definition of "real employment", the unemployment rate surely must be well over 50%.

Thursday, August 2, 2012

The Absurd Concept of "Austerity"

Once again, modern intellectuals, particularly the modern economists, have offered up a ridiculous false alternative.  To stave off government debt defaults, cascading bank defaults, and economic collapse we are told by the likes of Paul Krugman and George Soros that what Europe needs is more government debt, higher taxes, or outright money printing to pay the bills. On the not insane side, are those who rightly urge governments to cut their deficits by decreasing spending, raising the bar of eligibility on various entitlements, cutting services, and so on, an approach which they have absurdly dubbed "austerity."

In other words, according to these experts, you can either have the idyllic welfare state built on confiscatory taxation, deficit spending, and inflation, OR you can live a harsh meager subsistence known as "austerity."  Take your pick....

But are these really the only alternatives?

Say a man starts a business and concludes he only has two choices: 1) lay around, not work, and hope that profits fall from the sky thus enabling a luxurious lifestyle or 2) live a harsh life of meager subsistence.   Is his thinking correct? Is he right to think that his only alternatives are magic or "austerity?"  What if he attempted to actually be productive and rise as far as his abilities take him? Of course, such an approach might lead to a fabulous lifestyle or it could lead to austerity if he fails or chooses to live simply.

The important point is that reality offers man a choice.  Either he can work and be productive and generate real wealth, or he can do virtually nothing and live meagerly and/or die.  One can borrow from another but the bill must be paid eventually or there will be real consequences. This is not an arbitrary opinion, it is an acknowledgment of the nature of reality.  

Characterizing the alternative to massive budget deficits and welfare statism as "austerity" implies that freedom and sound money lead to a dark, cold world of privation and misery, when in fact the opposite is true.  As centuries of theory and practice unequivocally demonstrate, economic freedom, low taxes, and sound money lead to productivity and wealth creation to the benefit of anyone who is willing to work at any level. Furthermore, increasing wealth enables the productive to be charitable to those who are less fortunate.  On the other hand, welfare statism, government budget deficits, and intervention in the economy stifles wealth creation by impeding or destroying capital and thwarting the progress of businessmen and entrepreneurs leading to stagnation, misery, and malaise.  

The pain or temporary "austerity" associated with the transition from a socialist welfare state to even a moderate welfare state in the form of government layoffs and decreases in welfare spending are the fault of socialists and anyone else who thought they could have their cake and eat it too. It can only be thought of as austerity or pain in the sense that side effects from chemotherapy to cure cancer are painful.