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 War on Small Business

One of my favorite TV personalities is John Stossel who has a show on Fox that highlights current consumer issues with his libertarian bent. He usually takes a look at a current issue and then breaks down how that issue is being handled by the free market and how the government is handling that issue through its regulatory arm.

In his previous life as a reporter for ABC, John Stossel would go around looking at how business owners would try to take advantage of the little guy and then do a report on the damage being wrought by this business. His main aim was to heighten a concern in the hopes that the politicians would take note and create a new law to stop this type of abuse. He has since repented of his ways, and he understands the damage he wrought by continually asking the government for new laws. He know believes that the free market will eventually regulate these endeavors and for the most part government intervention is not needed.

Small Business Owner

 

 

 

 

 

For example, one of the many cries during the financial crisis that occurred in 2008 was that the financial crisis took place was because there was not enough regulations in the financial industry. The media critics and the pundits all declared that our financial institutions had gotten so large they were deemed “Too Big To Fail” and because of that, these institutions had to be bailed out or else the whole economy would have collapsed. Subsequently, many banks were taken over, shut down and merged (Bear Stearns, Lehman Brothers, Wachovia, etc.) The result of these closings has made the existing banks bigger than ever. In addition, the banks have had to deal with a tremendous amount of new regulations. Believe it or not, the existing banks like these new regulations because they know that the smaller banks don’t have the time or the money to comply with these new laws and are then forced to get out of the business. Which in turn, has made the largest banks bigger than they were before the crisis.

The ideal situation would have been to break up all the bigger financial institutions and then lessened the regulatory burdens so that smaller institutions could have gotten into the business. It would have been a good way to disperse risk as money would have moved out of some of the major money centers and into smaller regional banks- which would have reduced some of the concentration of wealth. Instead, what we have now are super huge banks and now they really are “too big to fail”.

Maybe that was the intention of the government all along to concentrate the wealth and power in a few hands. It is easier for the government to monitor and regulate a handful of institutions than a smorgasbord of banks dispersed throughout the country. I believe the following is happening not only in banking but in all industries- the move to burden the small operator so much that they are forced to merge or sell to bigger companies or close shop altogether. In my opinion, the federal government is engaged in a deliberate scheme to force consolidation in the business sector so that it only has a handful of companies to monitor and regulate, rather than deal with the millions of small , tough minded entrepreneurs. The big business heavy regulated economy is how Europe and socialist states are run and it is the direction we are heading.

For example take a look at Obamacare. “The number of medical codes that must be used to document patients and secure payments for insurers will go from 45,000 to 160,000.”(Dan Kennedy) I would gather that the very large medical centers that have large staffs will be able to process the additional work flow at a lower costs because they can transfer the work to a greater percentage of people. The small practice will have to endure 4x the amount of work and complexity, compliance and related costs which they will not be able to pass down to their patients thus drain the compensation of the doctors and their practice. As a result of this, expect to see a wave of mergers and mega hospitals come into being. This will remove choice and retard access for people looking for medical care.

Part of the reason we have not seen the bounce back in the economy since 2008 has been the difficulties that the entrepreneur has faced and Obama’s move to consolidate the business sector. However, America has always been a resilient country and the entrepreneur has always been the backbone of this country, all we need now is a political class to empower these people and not hinder them.

Steven Clark