A Fidget Spinner Without a Plan

If you are a parent you certainly know what a fidget spinner is. They are everywhere. A year ago no one had even heard of them. Yet, walk into any gas station and you’ll find them displayed right out in front. What happened? People started buying and companies started supplying without any guidance or plan. Money was to be made! This is the beauty of the free market. It perceives what people want and then others move in to supply that demand.

So why, in any problem related to the public good, do politicians and the media clamor for “a plan?”  Why do they go endlessly in search of a plan that will fix infrastructure, public education, healthcare or whatever needs correction? Why does there always have to be a plan? Why don’t we deal with issues the same way the market dealt with fidget spinners?

Healthcare has been contentious for years. Admittedly, a certain segment of the population was uninsured or un-insurable (albeit it a small one proportionally speaking ). So, the politicians decided to come out with a plan to fix it. The Affordable Care Act (so misnamed!!!…also dubbed “Obamacare”) was forced upon us all so that every person in the U.S. could get insurance. So how come even with a law and a plan, there are still millions without insurance?

One of the key parts of the Obamacare plan was to insure people who had pre-existing conditions. Previously, one of the biggest criticisms about insurance is that if you had cancer no insurance company would cover you. The often unpalatable reality is that this is exactly how insurance works. Insurance is defined as “A practice or arrangement by which a company or government agency provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium.” If you already have the loss (i.e. cancer) it is not an insurable item. This is no different than someone getting into a car accident then attempting to buy auto collision insurance after the fact then demanding damages and/or loss payment from the insurer!

The sales pitch was that with the Obamacare plan, even those with a pre-existing conditions would be covered. However, this is not insurance. Its a subsidy. Someone else must provide the funds to pay for a subsidy which is, essentially, a give-away. Those burdened with that obligation, it turns out, are people who get sick the least and have the least amount of money…the young.

(Lest anyone think I am hard-hearted, such an approach can include provisions for that relatively small number of persons truly destitute or who have pre-existing conditions.  Its simply a scare tactic and red herring to say that if you are opposed to government run healthcare you want to see the poor, sick and elderly die. In fact, if you’re opposed to greedy, lying politicians making personal life decisions for you and others, you’re probably more rational, informed and compassionate than not).

The young, to whom I refer,  are finally beginning to understand their economic predicament as it relates to Obamacare. The  have begun to revolt. Yet, last week,  Congress n its infinite wisdom, refused to repeal Obamacare. Naturally, Obama along with many other Democrats, was elated. Most of the media critiques went like this: “The Republicans hate Obamacare but they have no plan of their own.”

The success of Obamacare rests on the young but they don’t like paying for things they don’t use. Look at the cable business which relies on bundled services. Cable subscriptions are in serious decline because the younger generation hates paying for one hundred channels when they only watch six. They don’t understand why they are paying to watch M.T.V and the History Channel, for example, when they only watch H.B.O. They get it. They only wanto pay for things they use. Well,  Obamacare, like cable TV,  is premised on the notion of bundled services. If they are already unwilling to pay $30.00 a month for HGTV, what makes the proponents of Obamacare think they will pay for healthcare services for people they do not know and services from which they receive no benefit?

The members of the mainstream media are also big proponents of getting the government involved to fix the issue and selling the plan to the public.

Sixty Minutes entire show format revolves around investigating  problems that society can’t solve and then asking why nothing has been done to fix them.  John Stossel, the libertarian pundit on Fox started off as a Left-leaning journalist reporting on the evils of big business just as Sixty Minutes still does. He would do reports on how these entities had failed the public at large and needed to be reined in. Plans and government regulations needed to be expanded to fix whatever the issue was. But as time went on, Stossel realized that he was the one causing the most damage. He came to the conclusion that over time free markets correct and provide the needed product or service at the best price. No amount of reporting he did ever solved the problem.

Perhaps the real fault in government plans is that those elected to Congress who devise them have rarely ever run a business or successfully worked in the private sector. They are novices, at best, and ill-equipped to deal with the realities and practicalities of what it takes to supply goods and services.  The premise that government needs to supply “plans” to fix the problem is a false premise that always results in loss of individual rights and freedoms.

In the real world, individuals faced with a problem in their lives needing a solution tends to figure it out for themselves. No group meetings, no theory, no pilfering of someone else’s financial resources to solve their problem.

Markets aren’t perfect. But history verifies that nothing distributes scarce resources more fairly and efficiently than free markets. We already have government run healthcare at the Department of Veterans Affairs Hospitals and it has failed miserably. Let’s put patients in tandem with their treating physicians in control of healthcare and let freedom work.

 

Steve

sleeclark@gmail.com

 

The Biosphere and Minimum Wage

In the mid 1990’s scientists tried to create a self-sustaining, sealed environment that would produce all necessary food, oxygen and nutrients to sustain life.

Biosphere_2

The project was called Biosphere and massive amounts of time, energy and financial resources went into the project in an effort to succeed. The Biosphere was set up to house a fully enclosed and balanced system of animals, plants, water, minerals, chemicals and other life-sustaining items.

While bold in scope, the project ended in failure.  Mainly because keeping the system in balance could not be achieved. There was always something interfering with the ecological balance. Ants and cockroaches ran wild because there were not enough predators to eat them. Some vines grew wild thereby killing off other plants. There was too much nitrogen in the air, not enough oxygen, and the water became polluted.

The scientists worked tirelessly to get the ecology back into alignment; but, in the end, they realized the enclosed Biosphere could never support life..human or otherwise. Two of the scientist, Cohen and Tilman, concluded “No one yet knows how to engineer systems that provide humans with the life supporting systems that natural ecosystems produce.”

The U.S economy is like an ecological system wherein various commercial entities (organisms) around the globe compete and work to produce goods and services (plants, water systems and fauna) to bring to the marketplace (a balanced biosphere). Price changes are signals that are transmitted throughout the system. Entities react to those signals, adapting and adjusting to maintain or re-establish economic balance and then evolve.

Price of gas too high? Car companies build smaller cars to compensate. Price of sugar too high? Consumers will use more honey in their diet as a sweetener. These signals are continually sent out within the global system whereby humans react and adjust their behavior accordingly. Both humans and markets are way too complex to understand and regulate with certainty.

Yet, we have politicians trying to do it none-the-less.

For example, in California, if I have a job that needs to get done and would like to pay someone $6.00 an hour to do that job…I can’t. The law does not allow me to pay an amount below the minimum wage. Even if I find somebody who chooses to work at that rate, and who  desperately needs the money, the job must go undone.  Despite the fact that both parties are willing to meet at this price, the government will not allow the transaction to occur.

If, then  I am forced by law to pay a higher wage for that same job to be done, I will have to pass the additional cost on to the consumer who will ultimately buy my finished product. However, consumers of my finished product have a ceiling of how much they will pay. If my price exceeds that ceiling, my product goes unsold. The inevitable end result of that is my company goes out of business.

Overall, small jobs get left undone and businesses close. People move away from the geographic region in search of jobs and better quality of life after properties values drop. Just like the ecosystem where the wild vines grew and killed all the helpful plants, regulations, laws and taxes have the same net effect…strangling and cutting off otherwise healthy business environments. And “minimum wage” jobs? They are the first to go when employers are forced to pay a wage that is  harmful to their business. All that discussion about a minimum wage not being a “living wage” is a canard. Only 2.5% of all minimum wage earners are over age 21.  It isn’t meant to be a living wage. Its meant to be a starter wage for teens and unskilled workers to enter the workforce and move on to an education or skilled job.

In the Biosphere experiment, the scientist came to the conclusion that it was virtually impossible to regulate an ecosystem. It was too complex. But our politicians, in their hubris and ignorance, think they can control the economy by way of laws and regulations. They tend to look at markets as inputs and outputs rather than complex adaptive systems which, when left alone, will find their own balance.

This artificial intrusion by government has lead to disastrous consequences:

  • In 1998, as a result if the Asian Crisis and failure of Long Term Capital Management, the Federal Reserve slashed rates and saw a gush of money flow into the technology sector only to see it crash and burn in 2000.
  • In 2001, after the Twin Tower bombings and subsequent military actions decimated the economy, the Federal Reserve slashed rates yet again. This money promptly moved into Real Estate causing the financial meltdown of 2008.
  • In 2008, the banking sector crashed and the U.S. government slashed rates again then went on  a massive spending spree to jump-start the economy. We are still waiting to see the full consequences of those decisions; but, I predict the next crisis will be one of the largest ever recorded in history. Perhaps the bursting of the student loan or auto loan bubbles.

The intrusions have left us all worse off than we started.

Take a look at healthcare. Unhappy with the state of  healthcare, President Obama embarked on a plan to nationalize all health care because he knew better then everybody else what was needed.

President Obama is a lawyer by training and a community activist by job experience.  Yet with no formal qualifications whatsoever in the medical space, he decided to impose a healthcare plan that affects 300 million people. Once he saw the infeasability and likely real-time effects of his plan, he and his minions approached media outlets with knowingly false and misleading statements about the plan to deceive the American populace into supporting it.

Where is healthcare as a result? Its where the Biosphere is. It is a failed system that is, itself, on financial life-support!

Democrat leaders (especially Progressive Democrat leaders) believe they know what is best for everyone in every situation and stop at nothing to ram these untruths down our throats. Democrat ideologues and sycophants could care less whether they are lied to as long as “their party wins.” There is no search for meaning. There is no search for truth. The game is all about power, even if the implementation of that power does more harm than good. The economy, like an ecology, is a complex adaptive system wired to self-regulate if only specific political humans, cloaked in the garb of Democrats, stay out of the way.

Did you know that the Progressive Democrat Party in the U.S. was born from the Fabian Socialist Party in Europe who’s mascot and symbol was…wait for it…a wolf in sheep’s clothing. You can’t make this stuff up!

fabianHumanity is a dynamic system not a machine to be manipulated by constraints and levers. We are so complex and unpredictable and that it is virtually impossible to map our behavior; so, let us be free.

Personally,  I favor liberty, opportunity and free markets. We need to start looking for talented people who do the same and are willing to take us where we want to go…not where they think we belong.

Steve & Carole

sleeclark@gmail.com