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Friday, May 31, 2013

I'm shocked that anyone is shocked by Obamacare's "rate shock"

If car insurance companies were forced to offer insurance on broken cars (or cars with "pre-existing conditions"), would you expect rates to go up?  How can you "mandate" more services for more people and expect costs to go down?  Does anyone think that if you get enough "policy" eggheads with calculators that you can defeat reality? Is 2+2 still equal to 4?

Not surprisingly, Forbes's Avik Roy reports that Obamacare health care premiums are expected to go up by 146% in California, "a problem [that] will be especially acute when the law’s main provisions kick in on January 1, 2014, leading many to worry about health insurance 'rate shock.'"

Of course, I do not believe that lower costs was ever the real intention of Obamacare.  Its proponents knew that it was only a stepping stone to so-called universal care where any vestige of a voluntary private market in health care would be completely eliminated.  Once the effects of this distorted mess are felt in terms of higher costs, worse care, longer lines, rationing, etc. it will lead the government to clamor for even more power to "fix" the problems created by these very policies.  This will lead inexorably to a total government takeover where the real costs of yet another entitlement can be heaped onto the gargantuan pile of government debt funded through even higher taxes or through hidden taxes like inflation that result from the government's printing press.  As doctors leave or never enter the profession, as costs spiral upwards, as care is rationed by government edict, the left will realize its egalitarian dream of everyone being equally miserable or equally dead.

If you are unprincipled enough to think that the government has some magic formula for defeating reality, remember, 2+2 still does equal 4.    

Tuesday, May 28, 2013

Blame the Government, Not Apple, for the "Double Irish Dutch Sandwich"

Say you work your ass off, invent a product that everyone loves, and sell it to millions of people who voluntarily pay you lots of money.  Then, your business gets so big that you hire thousands of people to help meet the demand and distribute your product around the world. You stay constantly aware of the competition and invest billions in research to develop even more products to sell to your adoring customers.  Over the course of years and decades, you enrich yourself, your employees, your customers, and your investors.

Is this an example of good or evil? Should the inventor be publicly celebrated as a hero and role model of the American dream or should he be vilified and threatened?  Evidently, in modern America, it is the latter.                

The U.S. federal government has erected a byzantine tax code nightmare forcing businesses to retain legions of accountants and auditors on a full time basis to comply with and pay a confiscatory 35% corporate tax rate (more than double any other developed country).  Then, when these businesses make perfectly legal efforts to minimize this burden, they are hauled before a Congressional show trial for public haranguing and intimidation.

Recently, Apple CEO Tim Cook testified before the Senate Permanent Subcommittee on Investigations "to defend the company from accusations that it avoids tax payments by shifting profits to offshore subsidiaries in Ireland." Evidently, multi-nationals like Google and Apple "funnel profits through two linked Irish subsidiaries" by making "tax-deductible payments to a Bermudan subsidiary via a Dutch affiliate in a related arrangement known as a 'Double Irish Dutch sandwich.'"

But why do companies go to such incredible lengths to avoid taxation?  Do these companies have the right to minimize taxation and maximize their profits? Addressing the charge that corporations are "hoarding" cash overseas, Cook told the committee:
“Apple has real operations in real places with Apple employees selling real products to real customers.  Our foreign subsidiaries hold 70 percent of our cash because of the very rapid growth of our international business. We use these earnings to fund our foreign operations, such as spending billions of dollars to acquire equipment to make Apple products and to finance construction of Apple retail stores around the world.
True enough, but fortunately, he identified the real culprit, the U.S. tax code:
Under the current U.S. corporate tax system, it would be very expensive to bring that cash back to the United States. Unfortunately, the tax code has not kept up with the digital age. The tax systems handicaps American corporations in relation to our foreign competitors who don’t have such constraints on the free movement of capital.”
The article also quotes Brian White, analyst at Topeka Capital Markets, who chastised the "misguided" kangaroo court: “Although the U.S. Tax Code is written by Congress, we found the complete lack of understanding and inability to grasp simple concepts around how the tax code works as it relates to Apple (and the remainder of corporate America), nothing short of astonishing (and sad).” White specifically exposed  committee members for not understanding the concept of double taxation: “What really astounded us was the inability of Senators such as John McCain and Carl Levin to grasp the concept that Irish subsidiaries such as AOI are responsible for managing Apple’s cash as a holding company but the profits have already been taxed in other countries,” 

Fortunately, Senator Rand Paul got it exactly right when he scolded his colleagues saying:  "I'm offended by the spectacle of dragging in executives from an American company that is not doing anything illegal." He added: "If anyone should be on trial, it should be Congress." Appropriately, he suggested bringing in a "giant mirror" to hold up to Congress for creating a "bizarre and byzantine tax code" that incentivizes corporations to move money and operations overseas.

More importantly, Paul implied a moral argument by calling on the Senate to stop "harassing" Apple, which he called one of "America's greatest success stories."  He added:  "Instead of doing the right thing, we drag businessmen and women in here to berate them for trying to maximize their profits for shareholders. Apple has done more to enrich people's lives than politicians will ever do."

I agree with Senator Paul, but, I would go further and point to the philosophy underlying the U.S. tax code.  What really should be on trial is a moral code that holds production and rational profit seeking as a vice and not a virtue.  When the idea that pursuing your own rational long term self-interest is regarded as a virtue, companies like Apple and Google will be brought to Congress, not for threats and harassment, but for medals of honor.

Thursday, May 23, 2013

Obamacare: Free and Worth Every Penny

Writing for PJ Media, Paul Hsieh details how support for Obamacare is waning as the country, to quote Nance Pelosi, "finds out what's in it." In fact, he notes, the federal government is planning on spending billions of your tax dollars in a PR effort to "promote Obamacare to the public." The Hill reports that even a variety of pro-Obama unions are breaking ranks publicly warning "that unless there are changes, the results could be catastrophic." A recent poll found that a majority of Americans want to go back to the pre-Obamacare system.

But did Americans need to get to the brink of full implementation before realizing that this law would have disastrous outcomes?  Or, more generally, at one point did anyone think that there is such thing as a free lunch?

In fact, nothing is free, particularly health care.  Those who demand "free" health care want one of two things (or both): either they want the doctor to work for free or they want some other person to work longer hours to pay the doctor on their behalf.  If doctors are forced to work for free or below their market value, most, at least the good ones, will stop working and there will be doctor shortages leading to higher prices, poorer quality, and waiting lines.  If third parties are forced to pay, besides the immorality of forcing an innocent person to pay for another's service, the blank check on care artificially increases demand leading to higher prices for those who do actually pay which, in turn, leads to rationing and poorer quality as the government attempts to control costs.      

I am sorry, but despite liberal intellectuals' candy dreams and rainbow wishes, there is no way around this logic.  Most of the bureaucracy, red tape, and draconian regulations embedded in this law are attempts to circumvent reality by getting doctors to take less and getting third parties to pay more which will only exacerbate the negative effects of these very policies.  Even thousands of pages of regulations can not change the nature of reality.

If a restoration of a fully voluntary, free market in medicine is politically unattainable in the short run, I agree with those who believe we should do no further harm and at least go back to the severely flawed pre-Obamacare system.  To that end, I agree with Hsieh who concludes:
ObamaCare won’t go down without a tough political fight. But Americans have the ultimate weapon on their side — their ability to say “no.” Don’t buy into the coming PR campaign. Don’t encourage people to sign up for the government-run insurance “exchanges.” Circulate articles and blog posts critiquing the health law. Support state governors who refuse to cooperate with federal mandates. But most importantly, don’t be a willing accomplice to a health law you don’t support.

Friday, May 17, 2013

Lesson of the Scandal: Tyranny is an Essential Feature of Socialism

I recently heard a television pundit lament the likely outcome of his own prediction that the liberally biased media, after a temporary fit of outrage over the egregious scandals engulfing the Obama administration, will return to its sycophantic posture just in time for the next election cycle. While I agree with this prediction, the more important question is why? Why is it unlikely that these scandals will transform the American political landscape in some meaningful way? Is there a more fundamental lesson to be drawn from these scandals that could change the political system?

The reason that the American left will continue supporting Obama and his ilk is that the liberal media, along with the vast majority of modern intellectuals, make no connection between the scandals erupting in Washington and the political ideology that they support. In other words, they might object to the Obama administration's seeming corruption or ineptness in managing the executive branch, but they do not object to the policies that he supports. As always, the left will observe corruption and tyranny associated with socialism but will simply hope that the next regime do better. They will conclude that while not always good in practice, socialism is good in theory, and urge the crusade to continue. If this is the lesson broadly accepted, then nothing in America will fundamentally change.

The lesson that should be drawn from these scandals is that socialism is bad in theory and therefore bad in practice. Tyranny and corruption are an essential feature of socialism, and whether it is Obama, Chavez, Castro, Kim Jong-il, Pol Pot, Mao, Stalin, or Hitler - statism requires force to be initiated against innocent people and only misery, oppression, and stagnation can result. The power to seize control of industry, tax and redistribute the income of producers, control prices, inflate the money supply and stifle dissent by controlling the media, thwarting the ability to assemble or preventing the ability to flee the borders necessitates the threat of violence.

Is it surprising to anyone that an administration that upholds an ideology that calls for coercion and violence against innocent individuals would commit acts of coercion and violence against innocent people?

America was founded upon the principle that the proper role of government in a free society is the protection of individual rights, that is, the protection of individual life and property from the initiation of physical force by criminals or foreign enemies. A government confined to this function leads to a society based on voluntary trade and cooperation where individuals selfishly pursue their own happiness while respecting the rights of other to do the same. When a government goes beyond this function and seeks to redistribute wealth or regulate the actions of individuals in the name of altruism and sacrifice, it must, by definition, use the threat of physical violence (fines and/or imprisonment) to coerce individuals to act against their own independent judgement. Once the principle of individual rights is abandoned and the government is enabled to initiate force against its own citizens, the only question becomes the degree of violence the state is willing to perpetrate.

Historically, the American government has been relatively constrained whereas other countries have taken socialism much more seriously - the degree of horror being directly proportional to the level of statist controls. While America does not yet have only one state media-propaganda outlet and a system of gulags to imprison and torture dissenters, the level of government control sought by the Obama administration has been a giant leap in that direction.

In a free society, the president would have very little to do, except in times of war, and elections at the local level would be far more significant to the every day lives of individuals. Under socialism, the executive and legislative central planners have the power of life and death over everyone in the country. This is one reason why national elections have taken on a preposterously distorted significance in our lives. In fact, tax and regulatory policies do affect critical areas of our lives from our income to our health care. For this reason, re-election of the regime (if they even bother holding an election) is vital, and central planners make careers in government serving their masters under the infamous credo: "the ends justifies the means." The recent scandals serve as excellent examples.

The Obama administration used the IRS as a means to attack and stymie its political opposition. The very person in charge of the exemption policies, Sarah Hall Ingram, was given bonuses and then promoted to an even more powerful position as the new head of the IRS enforcement wing of Obamacare - yet another program with life and death power.  But the IRS itself is an agency designated with the task of enforcing the legalized theft of income from every American citizen.  It is assigned the task of pouring through the minutia of every person's life, to "wait upon ladies at their toilett," to exact tolls for the very act of earning a living.  Is anyone shocked that such an agency would be used for "political" purposes?  

The Benghazi cover-up was necessary to protect the president before the election in two ways. First, it was necessary to cover-up the incompetence of the administration in protecting our consulate or for even having one that area in the first place. Second, the presence of Al Qaeda contradicted Obama's entire fantasy-land narrative surrounding Islamic terrorism. According to Obama, we are not at war with an ideology we are at war with a handful of "terrorists" who have hijacked an otherwise peaceful religion. The supposed killing of Bid Laden was equivalent to catching a bank robber - problem solved. The presence of a pre-meditated attack by a group motivated by Islam contradicts this premise, and so the idea of a spontaneous eruption of violence was crafted to fool the American public.

The broad usage of phone taps on the AP, all supposedly to find a national security "leak," is part of a pattern of press intimidation under this administration from day one designed to chill any opposition to its political programs.

While these scandals are egregious examples of a federal government run amok, Americans must understand that the abuse of government power will continue as long as we give the government the power to abuse. More fundamentally, we must reject the tragically flawed idea that socialism and the morality of self-sacrifice upon which it is based is somehow "good in theory." 

Wednesday, May 1, 2013

Dems Warn Climate Change Could Drive Women to Prostitution

According to The Hill: "Several House Democrats are calling on Congress to recognize that climate change is hurting women more than men, and could even drive poor women to 'transactional sex' for survival."

But, actually, that's good.  Recall the shortage of prostitutes in Bulgarian brothels that was blamed on climate change.  If these Democrats are right, climate change could help alleviate it!