Thursday, September 17, 2009

Socialism, Virtue, Ethics, and What Works

In my Foundations of Economics class this semester, we are talking a bit about one of the fundamental differences between socialism and capitalism --- namely, ownership of private property, or more broadly, ownership of natural resources. The stakes are high because individuals definitely tend to be richer or poorer due to their greater or lesser ownership of scarce resources.

Given the evident "change" in America (change that we can believe in, we are told) toward more socialistic modes of using scarce resources --- most notably for health care --- close examination and careful thinking about privately owned property ought to be front and center in the debate.

To a person, all individuals are quite certain that they own themselves privately, which means they also take themselves to own their own labor. I observe that most individuals, if not all, will agree that the creators of capital (machines, tools, equipment, technology --- the produced means of production) usually do, and usually should own the capital goods they create.

But what about ownership of natural resources, the scarce resource called "land" in economics? Who does and who should own natural resources, the first category of scarce resources in the trio --- land, labor, and capital --- that are the foundation for production of the consumer goods and services that we all want?

In a socialist society, property is said to be owned communally. In a capitalist society, property is said to be owned privately by individuals. As it happens, Aristotle wrote about the good, the bad, and the ugly related to these two radically different forms of social organization and interaction. I offer here a quick read that touches many of the major arguments offered by Aristotle.

Putting aside the legal definitions of what it means to "own" property, I will offer that whoever controls the property and thereby benefits from using the property can be meaningfully said to own the property. This definition of "own" highlights the fact that regardless of legal definitions, some "one" always owns scarce resources.

I emphasize the oneness of ownership to draw attention to the fact that only individuals make choices; social choice is impossible, since there is no social mind to make the choice. Individuals certainly may choose in a social context --- that's what voting is, but that's also what buying a loaf of bread at the supermarket is, too.

So, even if property or other scarce resources are said to be owned communally, they are not controlled communally, nor are the benefits of using natural resources shared equally, just as a matter of observational fact. Communal ownership of property typically obscures information about the true owner. For example, who is it that really owns all the "public" land out in the western United States?

Communal or social ownership of resources has consequences. Aristotle recognized that simple truth and wrote about it sometime around 350 BC. Read his thoughts here. Control of (that is to say, ownership of) resources through political institutions, such as Congress and the bureaucracy, definitely has important consequences. Those consequences center on whether resources will be used in ways that promote virtue, ethical outcomes, and efficiency.

If we look around the world, through both time and location, history shows us clearly and abundantly the consequences of socialism and other hybrids that embrace socialistic principles. It really isn't difficult to figure out what to expect from a single-payer health care system. It also isn't difficult to figure out what to expect from financial markets controlled by political institutions, such as Congress and bureaucrats.

Are the people clamoring for socialized health care and financial markets controlled ever more tightly by the Federal Reserve (the most opaque and secretive organization in the government)? BHO and his supporters seem to think so. If they are right, then we shall have both. But if and when we do have them, they will have us. Read Aristotle; he was a smart guy.

Friday, September 11, 2009

When Is an Untruth Not a Lie?

You lie! Oops, no one is supposed to call the POTUS a liar. Not civil, you know. But what should we call it, then, when our president spouts untruths from the bully pulpit?

Read here for an account of BHO's pronouncements about Medicare in the big speech. If you like Medicare, the health care plan cooked up by the Democrats in Congress and endorsed by BHO will just send you into a dither of ecstatic moaning.

Thursday, September 10, 2009

Anatomy of an Economic Ignoramus

I'm posting this mostly for my Foundations of Economics students who read this blog, but I suspect that it could be interesting reading for lots of folks. Read it here.

Much of what the avatar "Che" offers up as economic wisdom in this piece is widely believed by people who ought to know better, just based on their own life experiences. Sadly, the sort of economic wisdom sported by "Che" in the article I offer here seems to match up pretty well with a majority of America's politicians --- the majority that got elected last November.

At least that's a charitable interpretation of those politicians' thoughts, speech, and votes so far. An alternative explanation would be that those pols are not really that ignorant; they're just that duplicitous. But that would be a truly uncharitable hypothesis, wouldn't it?

The level of economic literacy in the United States is abysmally low, despite a variety of programs in the schools that were supposed to raise it. The college where I teach does not require even one course in economics of all its graduates, even though hardly anything else will have such a profound influence on their future lives as economics will. Go figure.

And even though the state of Virginia has a law that says all college students must complete a program in personal finance, that law is widely ignored. I doubt if even one college or university in Virginia requires such a course of its graduates. Go figure.

Wednesday, September 9, 2009

How Can You Tell He's Lying (excuse me, dissembling)?

BHO speaks; read about it here. Here's his bluster and threat to those who disagree with his ill-formed, socialist ideas on health care:
"I will not waste time with those who have made the calculation that it's better politics to kill this plan than improve it.…If you misrepresent what's in the plan, we will call you out. And I will not accept the status quo as a solution, not this time, not now."
Okay; fair enough; and we will call you out, Mr. President, when you misrepresent what's in the plan. Let's start with what you said in your big speech.

BHO says the cost of "the plan" will be $900 billion over 10 years. Simply incorrect. Either BHO is ignorant or he's lying with purpose. Martin Feldstein has a grip on the truth; read it here. You can decide for yourself whether Feldstein or the President is lying or ignorant. For goodness sake, the Pork Barrel Pla ... excuse me, stimulus plan cost $900 billion.

BHO knows full well that the cost of "the plan" would exceed $900 billion by an order of magnitude. But that really isn't the point; talking about the cost of "the plan" is just BHO's marketing hoopla.

BHO says "the plan" would not cover illegal immigrants. He was called a liar to his face with that remark. You will read elsewhere why. We have bigger fish to fry here and now in this post.

Of course health care has a cost. The real question is whether the private sector or the public sector will deliver the health care we want at the least cost. By the way, no one is arguing that the status quo is what we want. But BHO says it's either "the plan" or the status quo, and the status quo isn't acceptable. We all agree that the status quo isn't acceptable, but a large majoirty of Americans agree that BHO's socialist "plan" isn't either.

The real issues at stake in the health care debate are much more fundamental than what BHO pronounces the cost will be. If you like Amtrak, you'll love socialized medicine. If you like the U.S. Postal Service, you'll drool over socialized medicine. If you like Fannie Mae and Freddie Mac, why you'll be simply ecstatic about socialized medicine. If you like the Fed's monopoly control and manipulation of the banking system (resulting in the boom-recession cycle we've just experienced), you'll love socialized medicine. Do I really have to go on with more examples? See how many more you can think of in one minute.

According to "the plan" BHO is pushing, most individuals will be required to purchase health insurance, but the cost will be mitigated with generous tax credits. Are you feeling your liberty melt away? You should be. What else will we the people be required to do?

BHO decried "partisan spectacle" that hardened "the disdain many Americans have toward their own government." You betcha we have disdain toward our own government. Could it be because BHO and his House and Senate socialists are not paying attention to the Americans who elected them?

Those citizens calling members of congress out in the town hall meetings aren't right-wing, partisan "plants"; they're just citizens who are fed up with the arrogance of a would-be king and his court. The 2010 congressional elections can't get here soon enough.

Here's a thought. Instead of threatening opposing ideas with bluster, Mr. President, how about debating the arguments on their merits. You can start by telling us which part of Professor Friedman's analysis and proposals for health care are incorrect. It's all here for you and everyone else to read. Have you read it Mr. President?

Finally, and most importantly, my father-in-law sent me the essay posted here. It will take you a few minutes to read, but it may be well worth your time. Last night's big speech was uniformly maddening to lovers of liberty and uniformly joyous for socialists of all flavors. How can you tell he's lying? You know the answer already.

Tuesday, September 8, 2009

Will The Supreme Court Uphold the Constitution?

Theodore Olson writes here about a little-discussed Supreme Court case that goes straight to the foundation of liberty and voluntary exchange among humans.

McCain-Feingold campaign finance law abridged free speech. That alone was reason enough for lovers of liberty to reject McCain a few months ago. Will the Supremes awaken from their long slumber, or will they continue to allow Congress and the Executive to subvert the Constitution?

Voluntary exchange and interaction is the only principle for social interaction that generates ever-growing wealth for an ever-growing population. The evidence of history couldn't be clearer or louder. Voluntary exchange is also the only moral principle for social interaction. Coercion of any kind is immoral.

Without free speech, voluntary exchange and interaction are retarded enormously. Regardless of whatever good intent McCain and Feingold may have had (I'll not judge their motives, though others might), limiting free speech is simply too high a price to pay.

Let's hope the Supremes get it right this time.

Where Will The Real Stuff Come From --- Really?

Martin Feldstein writes here about the utter disparity between BHO's pronouncements about Obamacare and the real economics of socialized health care. Feldstein notes,

The deficits projected for the next decade and beyond are unprecedented. According to an assessment released in March by the Congressional Budget Office (CBO), the president's budget implies that deficits will average 5.2% of GDP over the next decade and will be 5.5% of GDP in 2019. Without the president's proposals, the budget office forecasts a 2019 deficit of only 2% of GDP.

The CBO's deficit projections are based on the optimistic assumptions that the economy will grow at a healthy 3% pace with no recessions during the next decade; that there will be no new spending programs after this year's budget; and that the rising national debt will increase the rate of interest on government bonds by less than 1%. More realistic assumptions would imply a 2019 deficit of more than 8% of GDP and a government debt of more than 100% of GDP.

BHO and the starry-eyed folks who support the House bill evidently believe they can tax and borrow to provide the so-called "public option" for health care. They forget that health care must be produced by real people using real resources. It really isn't about the money.

Higher taxes to finance Obamacare will definitely mean diverting scarce resources into health care and away from whatever else private citizens would have used their income to buy. Increased federal debt will mean diverting scarce resources into health care and away from whatever plant and equipment businesses would have put in place instead.

The economic maxim, "there ain't no such thing as a free lunch," remains true quite regardless of BHO's dissembling pronouncements. One grows weary of all the arguments that run in terms of money and financing. Think of the diversion of real resources that must take place to produce more health care. That's the real stuff.

Do we want to produce more health care each year? Maybe we do, but public opinion is making it evident that we do not want to be coerced into it. The real issue isn't whether more health care is a good thing. The real issue is whether BHO and his supporters get to force all of the rest of us to do their bidding.

I know readers of this blog may be tired of the repeated reference, but once again, I urge you to read Milton Friedman's article about health care reform here.

Voluntary exchange for health care, which is the foundation of all successful economies, has two attributes to recommend it. First, it works; second, it's moral. Coercion of the many by the few is neither moral nor will it work.

Friday, September 4, 2009

The Chickens Are Coming Home to Roost

This from the WSJ, 9-4-2009. Read the entire thoughtful article here.
Unlike the federal government, states cannot deny reality by borrowing without limit. The Obama administration's "stimulus" package in effect shared the use of Uncle Sam's printing press for two years. But after that money runs out, the states will be back where they were. Even if Congress goes for a second round of stimulus funding, driven by the political panic of bankrupt Democratic governors, it would only postpone the reckoning.
Will America be forced to relearn what happens when its government runs the printing press to finance spending? That's exactly what happened in the decade of the 70s and on into the early 80s. It may already be too late to avoid repeating the double-digit inflation that ensued in America due to deficit financing of the Vietnam War.

No, it won't ever get as bad in the United States as it is in Zimbabwe. Fortunately, we the people will turn the morons out of office before then. Hey, 2010 isn't that far away. Spendthrifts are already looking over their shoulders.

Wednesday, September 2, 2009

What Obama Wants

David Axelrod announced today that BHO is considering making a speech to tell us what he really wants done with health care. Well thank goodness. Unless I learn what BHO really wants, how could I possibly think about the issue.

Who besides Axelrod and BHO himself thinks America elected a king last year? Okay, maybe a bunch of Democrats think that, but who else? The arrogance is a bit off-putting, don't you think. How about talking about the real issues, instead of insulting everyone with half a brain?