May 062013
 

Dr. Beth Haynes of the Benjamin Rush Society has a nice OpEd in the Huffington Post, “Almost All Americans Lack Health Insurance“.

She adds much-needed conceptual clarity in the discussion over health policy by discussing the nature of genuine insurance, as opposed to our current system. From her piece:

What is insurance? Think about your auto, life and homeowner’s insurance. Each of these is designed as a means to pay for unexpected, unpredictable, very expensive occurrences outside of the control of the policyholder. Insurance is a means of financially protecting people from the risk of unlikely but high-cost events. To build up sufficient funds, the insured pays a premium calculated on their specific chance of experiencing a covered event. Insurance companies can only stay solvent if what they take in as premiums is greater than what they pay out in claims (plus business expenses and a competitive profit).

So what is it we have that we call health insurance but isn’t? We have the prepayment of medical expenses. We expect our “insurance” to cover predictable, relatively inexpensive events like health maintenance checks, minor illnesses and injuries — and to pay for them with minimal out of pocket spending. Under Obamacare, these expectations will be mandated by law. The new law actually makes it illegal for insurance companies to charge individuals premiums equal to their risk of making claims. It’s like having a law requiring homeowner’s insurance to pay for lawn care, house painting and water heater replacement, while at the same time prohibiting the companies from operating an actuarially sound business.

Instead of genuine insurance, we are moving towards a system of bad pre-paid care.

For more details, read the full text of “Almost All Americans Lack Health Insurance“.

And by the way, under Dr. Haynes’ leadership, the Benjamin Rush Society has been sponsoring an excellent series of debates on important health policy issues. Go check out their website for details and videos!


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Interest Rates and Hard Currency

 Posted by on 2 May 2013 at 10:00 am  Economics, Free Society
May 022013
 

Just before my March radio discussion of how government control encourages short-range thinking, Tim Lee sent me the following example, which I blog with his permission:

The Federal Reserve has taken control of the future by dictating interest rates. The capital budgeting decision essentially depends on an interest rate tied to reality, an interest rate that connects actual savings to loanable funds. The now vs. later decision involves a discounting of future cash flows using an interest rate that functions as a reference. Whether it makes sense to build a factory or not depends ultimately on the specific interest rate at which capital can be borrowed. But since the Fed arbitrarily sets interest rates, that means business owners have been denied the basis on which to plan. Moreover, since the practice of driving interest rates below the natural rate has the consequence of generating the boom/bust cycle, an added level of uncertainty is added that not even the Fed can predict.

A restoration of the gold standard and naturally determined interest rates is required to make long range planning possible.

This article discusses the economic crisis and how interest rate manipulation caused it: Interest-Rate Targeting During the Great Moderation by Roger W. Garrison

That’s an excellent example, unfortunately. (FYI: I’ve not read the article in question, and I don’t have the technical background in economics to judge it.)

On a related topic: Objectivists and other free-market advocates often talk of the need to return to a gold standard. That seems wrong to me. Yes, our current system of fiat currency should be replaced by hard currency. (By “hard currency,” I mean commodity-backed currency, not merely stable currency.) However, that need not entail the gold standard.

In a truly free market, the government might choose to accept only gold-backed currency, but that choice shouldn’t be imposed on anyone else. Banks might choose to issue silver-backed or platinum-backed currency. Heck, a bank in a free market could issue currency backed by any fungible good, from crude oil to large eggs. The best option, it seems to me, would be money issued by banks backed by a “basket of commodities.” That would help stabilize prices in cases of major changes in the supply or demand of a single commodity.

So, for those of you who advocate for the gold standard: What do you mean by that? Do you mean that the government would issue legal tender backed only by gold? If so, how is that consistent with free market banking? If not, then why advocate for a “gold standard” rather than hard currency?

I’m not being snotty here. I’m not any kind of expert in economics, and I want to know if I’m missing something!


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Aug 232012
 

My latest OpEd is now up at Forbes, “If You Want Human Progress To Stop, Institute A Maximum Income“.

In this piece, I discuss the importance of making a moral defense of those who have earned wealth honestly, not just an economic defense.

Here is the opening:

Suppose a young medical researcher, Dr. Smith, discovered a safe, reliable vaccine for breast cancer. If a woman took a single pill at age 30, she’d never develop breast cancer. But the pill costs $1,000. How many American women would take that deal?

Most women would likely jump at the opportunity. For $1,000, a woman would be forever spared the expense and inconvenience of future annual mammograms. She’d never have to worry about her doctor calling to say, “Your mammogram showed a suspicious spot; please come in for a biopsy.” The 12% of women who would have developed breast cancer during their lifetimes would be spared the pain and risks of surgery, chemotherapy, and radiation therapy.

Each woman would gain an enormous value in terms of money saved, peace of mind, and potential added years of life, far exceeding the $1,000 cost. Roughly 2 million American women turn 30 each year. Assuming Dr. Smith made a 10% profit from each sale, he would earn $200 million a year. Most people would regard that as a completely fair outcome.

But not Hamilton Nolan…

(Read the full text of “If You Want Human Progress To Stop, Institute A Maximum Income“.)

I’m also delighted to announce that Forbes has invited me to be a regular contributor, after my prior guest OpEds.  My focus will be primarily on health care, economics, and related issues, from a free-market perspective.

You can find my earlier Forbes OpEds here:

The Federal Government’s War On Medical Innovation” (8/8/2012)

Is President Obama’s Prostate Gland More Important Than Yours?” (7/5/2012)

The Dangerous Synergy Between The Nanny State And Universal Health Care” (6/18/2012)

Just Who Should Control Your Healthcare Spending?” (5/15/2012)

I’d like to thank all my regular readers for their support and encouragement — it means a great deal to me.

And thank you all for circulating my work by Facebook, Twitter, blogging, and e-mail!


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The Forbes website has published my latest OpEd, “Just Who Should Control Your Healthcare Spending?

The theme is that America needs market-based health reforms such as Health Savings Accounts which reduce costs while preserving quality medical care, not government-mandated “bundled payments” which will harm patients and literally set a price on human life.

Here is the opening:

What simple health care reform has reduced medical costs by up to 30%, while preserving quality of care? Hint: It’s not government price controls or mandatory health insurance. Rather, it’s letting patients decide how to spend their own health care dollars…

(Read the full text of “Just Who Should Control Your Healthcare Spending?“, May 15, 2012.)

I’m honored to appear on the Forbes website, and I’d like to thank readers who have shared this piece via Facebook, Twitter, blogging, e-mail, etc.

[Cross-posted from the FIRM blog.]


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Jan 192012
 

The 1/17/2012 edition of Real Clear Markets has just published my latest OpEd, “Why Is Creating Value Good, Profits Bad?

It’s not directly related to health care policy, but rather the broader theme of defending the virtue of the profit motive in a free, capitalistic society. (I do use insurance as an example of how value is created). Here is the opening:

“Profit” is a dirty word. Profit-seeking businessmen are stock villains in Hollywood movies. “Occupy Wall Street” protestors demand, “People not profits” (whatever that means). Companies reporting healthy profits are automatically assumed to be exploiting customers and can only atone for this by “giving back” to their communities. “Making a profit” has an unsavory, morally suspect taint.

Yet simultaneously, Americans have a far more positive view of the concept of “creating value.” The mainstream press lauds visionary businessmen who “create value,” such as the late Steve Jobs of Apple. The business literature routinely emphasizes the importance of “creating value.” So many organizations wish to be seen as “creating value” that it has become a business cliche, like “best practices” and “thinking outside the box.”

But in a free society, “creating value” and “making a profit” are just two sides of the same coin…

(Read the full text of “Why Is Creating Value Good, Profits Bad?“)

Those who earn honest profits by creating value should be proud of this fact.

I’d like to thank attorney-blogger Doug Mataconis for providing the Tweet which I cited later in the OpEd, as well as pointing me towards the Wall Street Journal piece on Bain Capital that I cited.


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Dubai: Slave Society

 Posted by on 11 January 2012 at 8:00 am  Culture, Economics, Ethics, Law, Middle East, Slavery
Jan 112012
 

Last week, I ran across a fascinating article on the society and economy of Dubai: The dark side of Dubai by Johann Hari. (It’s from 2009, but no less interesting because of that.)

The whole shining metropolis — recently featured in MI4 — is built on a horrifying foundation of slave labor:

Sahinal Monir, a slim 24-year-old from the deltas of Bangladesh. “To get you here, they tell you Dubai is heaven. Then you get here and realise it is hell,” he says. Four years ago, an employment agent arrived in Sahinal’s village in Southern Bangladesh. He told the men of the village that there was a place where they could earn 40,000 takka a month (£400) just for working nine-to-five on construction projects. It was a place where they would be given great accommodation, great food, and treated well. All they had to do was pay an up-front fee of 220,000 takka (£2,300) for the work visa – a fee they’d pay off in the first six months, easy. So Sahinal sold his family land, and took out a loan from the local lender, to head to this paradise.

As soon as he arrived at Dubai airport, his passport was taken from him by his construction company. He has not seen it since. He was told brusquely that from now on he would be working 14-hour days in the desert heat – where western tourists are advised not to stay outside for even five minutes in summer, when it hits 55 degrees – for 500 dirhams a month (£90), less than a quarter of the wage he was promised. If you don’t like it, the company told him, go home. “But how can I go home? You have my passport, and I have no money for the ticket,” he said. “Well, then you’d better get to work,” they replied.

Sahinal was in a panic. His family back home – his son, daughter, wife and parents – were waiting for money, excited that their boy had finally made it. But he was going to have to work for more than two years just to pay for the cost of getting here – and all to earn less than he did in Bangladesh.

Then, at the air-conditioned luxury of the mall:

I approach a blonde 17-year-old Dutch girl wandering around in hotpants, oblivious to the swarms of men gaping at her. “I love it here!” she says. “The heat, the malls, the beach!” Does it ever bother you that it’s a slave society? She puts her head down, just as Sohinal did. “I try not to see,” she says. Even at 17, she has learned not to look, and not to ask; that, she senses, is a transgression too far.

That kind of evasion is bad enough. Even worse is the evasion required by the Westerners who actively participate in this slavery:

…one theme unites every expat I speak to: their joy at having staff to do the work that would clog their lives up Back Home. Everyone, it seems, has a maid. The maids used to be predominantly Filipino, but with the recession, Filipinos have been judged to be too expensive, so a nice Ethiopian servant girl is the latest fashionable accessory.

It is an open secret that once you hire a maid, you have absolute power over her. You take her passport – everyone does; you decide when to pay her, and when – if ever – she can take a break; and you decide who she talks to. She speaks no Arabic. She cannot escape.

In a Burger King, a Filipino girl tells me it is “terrifying” for her to wander the malls in Dubai because Filipino maids or nannies always sneak away from the family they are with and beg her for help. “They say – ‘Please, I am being held prisoner, they don’t let me call home, they make me work every waking hour seven days a week.’ At first I would say – my God, I will tell the consulate, where are you staying? But they never know their address, and the consulate isn’t interested. I avoid them now. I keep thinking about a woman who told me she hadn’t eaten any fruit in four years. They think I have power because I can walk around on my own, but I’m powerless.”

The only hostel for women in Dubai – a filthy private villa on the brink of being repossessed – is filled with escaped maids. Mela Matari, a 25-year-old Ethiopian woman with a drooping smile, tells me what happened to her – and thousands like her. She was promised a paradise in the sands by an agency, so she left her four year-old daughter at home and headed here to earn money for a better future. “But they paid me half what they promised. I was put with an Australian family – four children – and Madam made me work from 6am to 1am every day, with no day off. I was exhausted and pleaded for a break, but they just shouted: ‘You came here to work, not sleep!’ Then one day I just couldn’t go on, and Madam beat me. She beat me with her fists and kicked me. My ear still hurts. They wouldn’t give me my wages: they said they’d pay me at the end of the two years. What could I do? I didn’t know anybody here. I was terrified.”

One day, after yet another beating, Mela ran out onto the streets, and asked – in broken English – how to find the Ethiopian consulate. After walking for two days, she found it, but they told her she had to get her passport back from Madam. “Well, how could I?” she asks. She has been in this hostel for six months. She has spoken to her daughter twice. “I lost my country, I lost my daughter, I lost everything,” she says.

As she says this, I remember a stray sentence I heard back at Double Decker. I asked a British woman called Hermione Frayling what the best thing about Dubai was. “Oh, the servant class!” she trilled. “You do nothing. They’ll do anything!”

The psychological contortions required to willingly relocate to a slave society, then actively participate in such slavery, is just mind-boggling. As one woman was quoted in the article, “All the people who couldn’t succeed in their own countries end up here, and suddenly they’re rich and promoted way above their abilities and bragging about how great they are. I’ve never met so many incompetent people in such senior positions anywhere in the world.” That mentality — delusional and incompetent yet ambitious — seems to be fertile ground for embracing the practice of slavery.

I’ve already quoted too much of the article, but so much else in it is deeply fascinating — and heartbreaking. So go read the whole article. You won’t be sorry to know what “exploitation of the workers” and “environmental destruction” really means.

Finally, my friend Kirez posted the following comment on Facebook, which I’m including here with his permission:

I recall reading this article when it was published. I witnessed many of these labor camps firsthand; it was a horrifying experience.

It’s not easy to see if you’re there simply as a tourist. But even when I wasn’t exploring where I wasn’t supposed to be, if I simply went into a grocery near one of these labor camps where the pakistanis and indians and burmese in large groups would go to buy their groceries, the racism (in these places even more than most others) was so palpable, it seemed a theatre spectacle: I would walk into a store, where gangs of pakistanis or indians were trudging along, and the (Indian) owners of the stores would come running, falling over themselves, bowing to me and calling me sir, and offering to help me with my shopping and finding me special products or deals… for no reason whatsoever except that I was white and had honored their store with my presence.

I first noticed the workers when I was acting as a tourist, and went out to the construction sites of the islands to look at the buildings (I saw a lot of really bad construction practices… not only safety issues, which were normal, but severely faulty lack of fortification and structural issues, like neglecting rebar through cinderblock walls, etc.) I saw buses full of pakistani workers coming to and from the work sites. I knew the city (Dubai) pretty well, but these workers didn’t live in the city; the buses went out of the city into the desert. At first I simply watched the buses coming and going and felt very sorry for the workers, because the heat was overbearing for us in an air conditioned luxury car… and I could see them slumped against windows, sleeping, in the burning sunshine. These images burned into my mind, and caused me to start noticing the shanty towns in the desert outside the city. Eventually I would visit several; later I would meet the workers as they worked on projects where I was working — later I even hired some workers to build pullup bars, squat racks, jump boxes and other equipment for me.

The cases of abuse were innumerable; it seemed to be the norm.

But I was overworked with my own projects… in a final, ultimately painful and frustrating insult to my powerlessness there, I learned that the mysterious traffic of men to the apartment underneath ours was explained by the slavery of a 9-year-old girl. They had kept her very effectively hidden from me for months, while I had watched men come to the apartment in singles or couples at all hours of the night, but I never saw them leave with bundles, never smelled anything, never saw weapons… I didn’t get it. I had only 72 hours left in the country when a pakistani tried to steal some of my exercise equipment (outside — this attempted theft was very unusual), and the woman who kept the girl, downstairs, came running out of her apartment to tell me, in arabic, that they were stealing my equipment… and the 9-year-old girl appeared in the door she had left open. I then got to watch local police detectives bumble the investigation, while I was completing my work, packing my household, selling my possessions and preparing to depart.

Wow.


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In Sunday’s Philosophy in Action Webcast, I took an early look at the 2012 election, then surveyed four GOP candidates — Mitt Romney, Newt Gingrich, Ron Paul, and Gary Johnson. I’ve posted all five questions as videos, and so here they are!

The first question was:

What’s your view of the upcoming 2012 election? By what standards do you judge the presidential candidates?

My answer, in brief:

In a presidential candidate, I’m not looking for either John Galt or “Anyone But Obama.” I’m looking for someone who will do more good than harm to the cause of liberty in America.

Here’s the video of my full answer:

The second question was:

Should I support Mitt Romney for US President? What’s the proper evaluation of his principles and record on the budget and the debt, health care, foreign policy, immigration, the drug war, abortion, and gay marriage? Does Romney deserve the vote of advocates of individual rights in the primary or the general election?

My answer, in brief:

Mitt Romney is a smooth talker, but his proposal reveal that he has no understanding of individual rights or the economic problems facing America. He’s no better than Obama – and likely worse, because the opposition will vanish. I cannot recommend voting for him in the primary or the general election.

Here’s the video of my full answer:

The third question was:

Should I support Newt Gingrinch for US President? What’s the proper evaluation of his principles and record on the budget and the debt, health care, foreign policy, immigration, the drug war, abortion, and gay marriage? Does Gingrinch deserve the vote of advocates of individual rights in the primary or the general election?

My answer, in brief:

Newt Gingrich is explicitly theocratic, and a major threat to the separation of church and state. He advocates and practices “active governance,” meaning right-wing social engineering, not liberty. Like Obama, he is enamored of bold transformative ideas, which could be okay or horrible for liberty. I cannot recommend voting for him in the primary or the general election.

Here’s the video of my full answer:

The fourth question was:

Should I support Ron Paul for US President? What’s the proper evaluation of his principles and record on the budget and the debt, health care, foreign policy, immigration, the drug war, abortion, and gay marriage? Does Paul deserve the vote of advocates of individual rights in the primary or the general election?

My answer, in brief:

Ron Paul is not even libertarian, but a neo-confederate conservative Christian, albeit with some grasp of basic economics. He’s a rationalist, driven by ideology, and not open to facts. He would be very dangerous to elect as president, not just for actual policies, but as a supposed advocate of liberty. I cannot recommend voting for him in the primary or the general election.

Here’s the video of my full answer:

The fifth question was:

Should I support Gary Johnson for US President? What’s the proper evaluation of his principles and record on the budget and the debt, health care, foreign policy, immigration, the drug war, abortion, and gay marriage? Does Johnson deserve the vote of advocates of individual rights in the primary or the general election? Also, should supporters of Gary Johnson vote for him on a Libertarian Party ticket?

My answer, in brief:

Gary Johnson is not John Galt. However, he’s fundamentally oriented toward facts, plus he has good basic principles about liberty. Alas, he was shut out from the race by the media and the establishment GOP. I recommend voting for him in the primary, as well as in the general election, if he runs as the Libertarian Party candidate. I still reject the Libertarian Party, but a protest vote can be delimited to endorse him and not the party.

Here’s the video of my full answer:

If you enjoyed these video, please “like” them on YouTube and share them with friends in e-mail and social media! You can also throw a bit of extra love in our tip jar.

All posted webcast videos can be found in the Webcast Archives and on my YouTube channel.


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Real World Effects of ObamaCare

 Posted by on 14 December 2011 at 8:00 am  Economics, Health Care
Dec 142011
 

One of my friends posted the following to Facebook, and she has graciously given me her permission to repost it here. She has asked that I refer to her as “Dr. Monica H.”:

In Which I Detail How Obamacare Will Work for Me

Currently, I am a college professor at 3 campuses in the Denver area. I prefer not having administrative duties and would rather focus on teaching and research. Until we move (this is complicated), finding a FT job isn’t likely, but I’m basically happy. I make what a full time faculty member makes, but that means I don’t get healthcare because my work is split at multiple institutions, 2 of them community colleges. So I am responsible for my own healthcare, but I am OK with that, since I don’t really use the traditional healthcare system for anything but very serious emergencies. I am not a big fan of medicine as it is practiced in this country, so I do most of my own lab testing and “alternative” treatment.

But never fear. My healthcare “problem” will be solved in 2014 when Obamacare kicks in. That’s because the college has been told by the Feds that they must provide community college instructors who work more than 3/4 time (that’s me) with health insurance. That would be me. I’m going to get health insurance! Yay, right?

How will the college respond to this? Likely by hiring more very part time instructors and taking work away from current instructors that teach nearly a full-time load. This is not speculation: I expect this to gradually be implemented over the coming 2 years, as detailed in an email I just received from the administration. This will be so they don’t have to pay the insurance mandated by the federal government. I won’t simply be able to spread out my work over 4-5 community colleges in response, because the new regulations apply to all community colleges in Colorado as a whole. In other words, the state won’t view, say, Front Range CC and CC of Denver as two separate institutions when it comes to health insurance. It will view them as one. That means instead of teaching 4-5 classes per semester, I’ll be limited to 1. The number of instructors will probably triple, depending on the department.

Yep, I’m sure on a salary 1/4 to 1/5 what I make now, I’ll be ever so capable of paying for mandated insurance! Thanks, Obama!

A very practical example of the types of unanticipated effects of such legislation. For those of you who wonder why I’m no longer all that excited about the government thinking it knows best for me and every aspect of my life, this is why.

First, I very much appreciate this sort of “in the trenches” real-world report of how ObamaCare is hurting Americans. I hope more of our elected officials take heed of what their policies are doing to their constituents.

Second, many on the Left actively want Americans to be frustrated with private insurance industry under ObamaCare. That way they can say, “See, we tried it the ‘free market’ way and it failed; that’s why we need a government ‘single-payer’ system”. (Of course, the failure would be due to government policies that destroyed the free market, not the free market itself.)

Finally, these perverse effects of ObamaCare will affect many people all across the economic spectrum by making it harder for employers to offer full-time jobs to willing employees. For more details, see the following from James Sherk of The Heritage Foundation: “Obamacare Will Price Less Skilled Workers Out of Full-Time Jobs“.

Here’s a critical image:

[Crossposted from FIRM blog.]


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Nov 072011
 

The 11/6/2011 PJ Media has published my latest OpEd, “In Praise of Capitalist Inequality“.

My theme is that the economic inequality that the “Occupy Wall Street” protestors oppose is not something to be condemned, but to be celebrated. Here is the opening:

For several weeks now, the Occupy Wall Street protestors in New York City and around the country have been demanding “economic justice,” which includes a mishmash of leftist goals including universal health care, forgiveness of student loan debt, and higher taxes on the wealthy. To the extent the OWS protestors have a unifying theme, it’s that capitalism is bad and that redistributing wealth to reduce “inequality” is good.

The Irish socialist playwright George Bernard Shaw once wrote, “A government that robs Peter to pay Paul can always depend on the support of Paul.” The Occupy Wall Street protestors demanding government redistribution of wealth from the richest Americans (“the 1%”) to themselves (“the 99%”) would certainly agree. But as some of them are starting to learn, if their ideas were actually put into practice they’d end up being the Peters, not the Pauls.

Already, some of the OWS protestors are finding their ideas coming back to bite them…

And as to the dirty little secret that motivates many who want to “redistribute” (i.e., steal) others’ wealth, read the full text of “In Praise of Capitalist Inequality“.

I was especially glad to be able to include extended quotes from both Ayn Rand and regular NoodleFood commenter William Stoddard in my piece.


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Aug 252011
 

The 8/25/2011 American Thinker published my short piece: “Thank You, Steve Jobs“.

He became wealthy offering value for value. In the end, we and his customers (and his employees and the people who wrote iPad apps, etc.) all won. This is why free market capitalism is a wonderful, moral system.

On a related note, Glenn Reynolds of Instapundit has a nice interview with former BB&T CEO John Allison on how the government caused the financial crisis and why capitalism is the only moral economic system:


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