Fiatch

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Who was Charles Ponzi?
Who’s really running Ponzi schemes?

China, India, and Brazil are on the move.

Please read this piece, follow its links, and then forward it to friends.

The Austrians get it.

You probably thought that payments such as unemployment benefits were provided via some sort of trust fund, right?  After all, the government commands under the muzzle of a gun that you contribute to this program, and government officials are so bright, capable, and selfless, correct?

Think again.

Florida has borrowed $45 million to pay the unemployed and officials estimate that it will borrow $1.2 billion by the end of the year for such payments.

Florida is the 19th state to borrow money to keep unemployment benefits flowing after the trust fund ran dry.

There is no trust.  There is no fund.  It’s just more theft present (taxes) and theft future (debt and/or inflation).

It’s often hard for the victim to admit to being conned.  Think again.

HT Robert Wenzel

[photo source]

“Senator Edward Kennedy” via The Austrian Economists includes (emphasis added):

Americans like heroes and to many people Senator Kennedy was one. It is not the place to judge the deep motives for his actions, I leave that to others. The reaction to his death is telling, however, of the situation in which the country stands – I mean as far as the battle of ideas is concerned. For a country that was founded on the precept that political power is dangerous as it can lead to corruption and totalitarianism, it is strange that its politicians are often revered as gods. I do not know if Senator Kennedy was ignorant of the teachings of economics, but his lifelong fight in favor of universal health care and various other socialistic legislations paved the way to impoverishment and social disaster. Like many in politics, he stood for ideas that seemed noble and beautiful to the ignorant mind, but were truly destructive of the social order.

Instead of worshiping politicians, we should wake up to the current situation.

And closes with:

With all this said, I pray that Senator Kennedy’s soul may rest in peace.

The Rise and Fall of the Dollar: 1800-2009

HT Mises.org

I highly recommend you read the entire “How American Health Care Killed My Father.”

Check this sample:

“All of the actors in health care—from doctors to insurers to pharmaceutical companies—work in a heavily regulated, massively subsidized industry full of structural distortions. They all want to serve patients well. But they also all behave rationally in response to the economic incentives those distortions create. Accidentally, but relentlessly, America has built a health-care system with incentives that inexorably generate terrible and perverse results. Incentives that emphasize health care over any other aspect of health and well-being. That emphasize treatment over prevention. That disguise true costs. That favor complexity, and discourage transparent competition based on price or quality. That result in a generational pyramid scheme rather than sustainable financing. And that—most important—remove consumers from our irreplaceable role as the ultimate ensurer of value.”

Many elected officials would likely characterize this point of view as originating from an evil-mongering, hijacking, racist, terrorist, Brooks Brothers Brigade.  However:

“I’m a Democrat, and have long been concerned about America’s lack of a health safety net. But based on my own work experience, I also believe that unless we fix the problems at the foundation of our health system—largely problems of incentives—our reforms won’t do much good, and may do harm. To achieve maximum coverage at acceptable cost with acceptable quality, health care will need to become subject to the same forces that have boosted efficiency and value throughout the economy. We will need to reduce, rather than expand, the role of insurance; focus the government’s role exclusively on things that only government can do (protect the poor, cover us against true catastrophe, enforce safety standards, and ensure provider competition); overcome our addiction to Ponzi-scheme financing, hidden subsidies, manipulated prices, and undisclosed results; and rely more on ourselves, the consumers, as the ultimate guarantors of good service, reasonable prices, and sensible trade-offs between health-care spending and spending on all the other good things money can buy.

“These ideas stand well outside the emerging political consensus about reform. So before exploring alternative policies, let’s reexamine our basic assumptions about health care—what it actually is, how it’s financed, its accountability to patients, and finally its relationship to the eternal laws of supply and demand.”

“Incentives? Reforms that harm? Same forces that have boosted efficiency and value? Focus the government’s role only on…? Ponzi-scheme financing? Rely more on ourselves? Reexamine our assumptions?”  This man thinks like an Austrian economist whether or not he recognizes it. 

Later, he writes:

“The housing bubble offers some important lessons for health-care policy. The claim that something—whether housing or health care—is an undersupplied social good is commonly used to justify government intervention, and policy makers have long striven to make housing more affordable. But by making housing investments eligible for special tax benefits and subsidized borrowing rates, the government has stimulated not only the construction of more houses but also the willingness of people to borrow and spend more on houses than they otherwise would have. The result is now tragically clear.

“As with housing, directing so much of society’s resources to health care is stimulating the provision of vastly more care. Along the way, it’s also distorting demand, raising prices, and making us all poorer by crowding out other, possibly more beneficial, uses for the resources now air-dropped onto the island of health care.”

Austrian.  And totally correct.

Please make sure you read about our fixation on health insurance in light of WWII-era wage freezes, tax changes in 1954, Medicare / Medicaid in 1965 — and the disastrous effects that have naturally flowed from such distorting government interventions into the marketplace.

He later writes:

“Cost control is a feature of decentralized, competitive markets, not of centralized bureaucracy—a matter of incentives, not mandates. What’s more, cost control is dynamic. Even the simplest business faces constant variation in its costs for labor, facilities, and capital; to compete, management must react quickly, efficiently, and, most often, prospectively. By contrast, government bureaucracies set regulations and reimbursement rates through carefully evaluated and broadly applied rules. These bureaucracies first must notice market changes and resource misallocations, and then (sometimes subject to political considerations) issue additional regulations or change reimbursement rates to address each problem retrospectively.

“As a result, strange distortions crop up constantly in health care.”

“Incentives, not mandates. Dynamic… constant variation.  Distortions.”  Austrian.  And totally correct.

He continues to rock the mike:

“In competitive markets, high profits serve an important social purpose: encouraging capital to flow to the production of a service not adequately supplied. But as long as our government shovels ever-greater resources into health care with one hand, while with the other restricting competition that would ensure those resources are used efficiently, sustained high profits will be the rule.

“Health care is an exceptionally heavily regulated industry. Health-insurance companies are regulated by states, which limits interstate competition. And many of the materials, machines, and even software programs used by health-care facilities must be licensed by state or federal authorities, or approved for use by Medicare; these requirements form large barriers to entry for both new facilities and new vendors that could equip and supply them.

“Many health-care regulations are justified as safety precautions. But many also result from attempts to redress the distortions that our system of financing health care has created. And whatever their purpose, almost all of these regulations can be shaped over time by the powerful institutions that dominate the health-care landscape, and that are often looking to protect themselves from competition.”

Please read the above section again. Please allow the notion to enter your mind that powerful, connected, private enterprises use government access, regulation, and force to protect themselves from markets, from competition, from capitalism.  What we have here is not capitalism.  It is nowhere close.  The government should get the out of the way and stop doing so much horrendous damage.

“The net effect of the endless layers of health-care regulation is to stifle competition in the classic economic sense. What we have instead is a noncompetitive system where services and reimbursement are negotiated above consumers’ heads by large private and government institutions. And the primary goal of any large noncompetitive institution is not cost control or product innovation or customer service: it’s maintenance of the status quo.”

This article then details and praises the value and utility of the price mechanism in a way that would make Hayek proud.  It also discusses moral hazard, transparency, dynamism, technology, and other vital concepts.  In addition, it addresses health and health care in a proper context.  This article is deeply personal and also wonderfully informative regarding the larger issues.  Read it please, and pass it on.

Guest: “We’ve just been Cheneyed by a guy named Barack Obama who said he’d never do this… Every line was crossed….”

Host: “He’s such a charming liar, though.”

via Robert Murphy’s “Principled Leftists Realizing that Bush + Eloquence = Obama”

The grand bipartisan project — centralize vast federal power over everything — continues, but the going is thankfully getting tougher for the corrupt and corrupting:

Guest: What if the people out there screaming and breaking up the discussion at town meetings are correct?  What if we have a situation in which you have secret meetings being held by the President — the absolute fascist nightmare — because fascism is defined as government combining with corporate powers to impose their profit-making regime on you.

What if, indeed.

I keep asking:

• What builds trust?  What destroys it?
• What store of value is safe?
• What if the ideas of the Austrian economists are correct?
• What happens next?  What most concentrates power?
• Why do we still pretend?
• What are you willing to do with your voice?

The answers to these questions take shape as individuals act and events unfold.  I find it significant, and perhaps a little hopeful, that tiny signs are emerging from both the right and left (so-called) that folks are realizing that:

1. The ongoing, damaging, dangerous power grab has nothing to do Republican versus Democrat because both parties are on board.
2. The current regime is a corporatist, fascist nightmare.  This federal power grab does not represent capitalism.
3. It is time for each individual to wake up, engage, learn, and take action with a healthy distrust if not disregard for lying politicians and their media proxies.

Not all is lost.

Listen to Robert Higgs’ “The Welfare State and the Promise of Protection” via Mises.org.

Dr. Ron Paul spoke with Lew Rockwell on the ever-advancing federal power.

“More people died from the innoculation than they did from the flu” is both a direct tragedy and also a sadly apt metaphor for all this corporatist government intrusion.

HT C4L

Cato asks “Cash for Clunkers: Dumbest Program Ever?” and answers:

Farm subsidies are unjust. Trade restrictions are counter-productive. Energy regulations have done great damage. Housing policies helped cause the financial crisis. But for pure dumbness, Cash for Clunkers takes the cake.

How folks respond to this crisis reveals who understands and values markets and liberty and who does not.  Centralized command is a horrible way to (mis)manage health care, automobiles, housing, banking, agriculture, and on and on.  Centralized command is not safe for work.

[photo source]

Enjoy Israel Kirzner’s lecture from the FEE Advanced Austrian Economics seminar.

HT Austrian Economists

All this “death panel” talk strikes me as side-show theater.  Regardless, I am surprised that so many Americans seem to want to insert the federal government between themselves and the health-care system.  It’s naive and likely hazardous to your health.