American Elephants

Is Free Market Capitalism Morally Superior? Of Course! by The Elephant's Child

Economist Walter Williams has a special genius for explaining complicated things in simple terms. He is a renowned Professor of Economics at George Mason University, and in this interview he takes on the free market. Good video to share with your high school and college students.

The Richest One Percent in the World by The Elephant's Child

                                                                                 (click to enlarge)

If you made as much as $34,000 last year, you are now part of the world’s richest 1%.

World Bank economist Branko Milanovic puts it all in perspective:

The true global middle class, falls far short of owning a home, having a car in a driveway, saving for retirement and sending their kids to college. In fact, people at the world’s true middle — as defined by median income — live on just $1,225 a year. (And, yes, Milanovic’s numbers are adjusted to account for different costs of living across the globe.)

In the grand scheme of things, even the poorest 5% of Americans are better off financially than two thirds of the entire world.

Each one of those little human figures represents one million people. Just something to think about.

(h/t: Neatorama)

Capitalism May Be Messy, But It’s Way Better Than the Alternative. by The Elephant's Child
November 4, 2011, 7:12 am
Filed under: Capitalism, Economy, Freedom, Health Care | Tags: , ,

The Occupy people have been attacking Capitalism as the evil that has made them take out more student loans than they can afford and then refusing them the high level jobs that they feel their education entitles them to. They seem rather fuzzy on just what Capitalism is, but they are quite sure they don’t like it, along with big banks.

“Capitalism” is simply the name that Karl Marx gave to the natural workings of the free market. Governments are established among men to attempt to mess up the natural workings of the free market, or so it would seem. Economics is the study of the use of scarce resources which have alternative uses.  Or you can’t always have what you want. I want a brand new Mercedes-Benz. I can’t have one. The signal that tells me so is the price. But the price is not just an obstacle that keeps me from getting what I want, it is a signal.  There aren’t nearly enough Mercedes so everyone can have one.  How they get distributed is sorted out by price. It forces me to consider how my available funds should be allocated.

Governments, whose nature is to mess up the natural workings of the free market, having power over the laws in society and wanting to get reelected, often stick their noses where they do not belong. Case in point — there is a major and growing shortage of lifesaving drugs, particularly therapies for cancer.

Shortages, according to the Wall Street Journal, have more than tripled since 2005.  By the end of this year, more than 300 products are apt to be back-ordered, in short supply or unavailable. Some are pain medicines, some are emergency drugs but most are what are called “sterile injectables,” mainstays of chemotherapy programs.  This class has mostly been off-patent for decades, but production is complicated, and demanding. George W. Bush and the Republican majority decided that Medicare was “overpaying” for these cancer drugs, and put a 6% cap on price increases in the 2003 drug bill.  These new price controls took effect in 2005 — when the shortages began.

Central planning always produces scarcity. The drugs that are in short supply currently sell for an average $37.88 a dose, and modest price increases could clear the market. The Food and Drug Administration rules cause pointless delays. It can take up to 2½ years to get FDA approval for a generic, so other companies can’t ramp up production if manufacture is delayed or a company cancels a product line because of these disincentives.

This week the Obama administration confronted the problem, but decided to put its executive order in with its “we can’t wait” campaign against House Republicans. All very nice, but the only fix is — something liberals hate— market prices. When prices rise because a product is scarce, that calls forth more production, which eventually helps the price to drop.  That’s what prices do. They are a signal. It is an imperfect signal, but it beats a bunch of politicians.

The real danger is, of course, to patients who don’t receive the drugs they need. The delay is actually killing people. Rather than allow the market to work, Mr. Obama has ordered the Justice Department to crack down on the grey markets that have sprung up to deliver supplies to doctors and hospitals, with the inevitable markup.  This is further interference in the market which will only further distort the market, and leave more patients without the medicines they need.

Mr. Obama’s executive order requires firms to give advance notice when they believe that a drug may become scarce. This is an incentive for hospitals or market middlemen to buy up remaining supplies. The president blames the scarcity of manufacturers on slim profit margins, which misses the point that the problem is government price controls.  Generic makers are choosing to quit a product line rather than invest money to meet ever higher standards.

The problem with ObamaCare and all socialized medicine schemes is that the goal becomes keeping costs down, for those who are running the system; and for the suppliers the goal becomes how to get sufficient reimbursement from the system. This is why administrators proliferate in, for example, NHS in Britain.  You need more watchdogs to control the costs, and the poor patients get lost in the shuffle.

Capitalism is messy, free markets are imperfect, and life really isn’t fair just like your mother said; but capitalism remains the best system ever devised to allow people to fulfill the opportunity that life offers. Or, if you like eating grass and bark, you could try the Peoples’ Republic of Korea.

Study: Government Run Healthcare Denies Twice as Many Claims as Private Market by American Elephant

Once again, the truth is exactly the opposite of what Democrats claim. For months they have been telling us that we need government run care to protect people from big, bad insurance companies denying their claims.

The problem is that medicare denies nearly twice as many claims as the private market:

According to the American Medical Association’s National Health Insurer Report Card for 2008, the government’s health plan, Medicare, denied medical claims at nearly double the average for private insurers: Medicare denied 6.85% of claims. The highest private insurance denier was Aetna @ 6.8%, followed by Anthem Blue Cross @ 3.44, with an average denial rate of medical claims by private insurers of 3.88%

In its 2009 National Health Insurer Report Card, the AMA reports that Medicare denied only 4% of claims—a big improvement, but outpaced better still by the private insurers. The prior year’s high private denier, Aetna, reduced denials to 1.81%—an astounding 75% improvement—with similar declines by all other private insurers, to average only 2.79%.

Maybe there’s something to be said for the need to keep your customers satisfied in order to make that profit after all.

(h/t Say Anything via Hot Air)

Free Enterprise, Capitalism, Free Markets, Free Trade and Other Unfashionable Notions. by The Elephant's Child
December 5, 2009, 2:59 am
Filed under: Capitalism, Economy, Taxes | Tags: , , ,

The United States lost another 11,000 jobs last month, and everyone is celebrating because 11,000 is fewer jobs lost than in September, and the smallest monthly number since the recession began.  I guess that if you are grasping at straws you grab onto anything that floats.

Democrats are really concerned about the unemployment situation.  People vote their pocketbooks and mid-term elections are coming next year. If you include those who involuntarily have only part-time work and those who want a job but have stopped looking, the under-employment rate is 17.5 percent, a postwar peak.  When everyone is really concerned it is important to look as if you are doing something, so the President held a “Jobs Summit.

He invited union people and environmentalists, liberal economists from academia, some high-tech companies and Wall-Street types, but not the U.S. Chamber of Commerce nor the National Federation of Independent Business.  Liberals labor under the illusion that jobs are created largely by the government.

They are still dreaming of non-existent “green jobs,” though so far all the green-job money is going to China, where wind turbines are being manufactured.  We have all sorts of businesses in the private sector here who replace windows, install insulation, caulk doors and windows, but they are mostly hurting for business, in spite of government rebates.

Government does not create jobs.  Government takes taxpayer money and gives it to people for performing a task.  No product is created, and less money goes back into the economy than was taken from taxpayers. The ‘multiplier-effect’ doesn’t seem to work.

Jobs are created by the private sector, and mostly by small business. (Not mom-and-pop small business or free-lance small business, but growing businesses with 15-50 or so employees) hoping to get bigger.

Businesses will hire when they feel some confidence that they can succeed in their endeavors.  Right now, all they see in the near future is uncertainty.  Taxes are going up, but how much is unknown.  Health care reform is claimed to save money, but anyone who has been paying attention knows that it will cost in the trillions.  The government is intent on cap-and-trade in spite of the revelations of ClimateGate, which will also cost the economy trillions of dollars.  Credit for small business has dried up and there is uncertainty about new financial regulation, more bank failures and bailouts.

No administration going back as far as Teddy Roosevelt  has had a cabinet with so little experience in the private sector.   It is no wonder that they simply have no idea how jobs are created.  They are notably unenthusiastic about capitalism and  free enterprise, which they blame for most everything that they cannot blame on Bush.The President says he will have a plan by next Tuesday.  Congress is wondering about spending the rest of the TARP money, the remainder of the stimulus funds that are not being saved for just before the election, or leftover bailout money.  Quite a bit of that is supposed to be our money, but once the government get their hands on it it is government money.

My bet is that the plan will not include tax-relief  for business, health care reform will neither be dropped nor scaled back, and there will be continued war on coal companies and  subsidies for uneconomic wind farms and solar arrays will continue or increase.  Freedom is not really on the table.

A Much-Needed Reminder. by The Elephant's Child
February 9, 2009, 2:55 am
Filed under: Economy, Socialism | Tags: , ,

(h/t: PowerLine)

Happy Birthday Ronnie! by American Elephant
February 6, 2009, 10:38 am
Filed under: Conservatism, Freedom, History, Socialism | Tags: , ,

First Lady Nancy Reagan suprises President Ronald Reagan on his birthday.

Today would be the 98th birthday of President Ronald Wilson Reagan, the man responsible for the longest period of peace and economic growth in American history.

I would remind people of that, especially now as Barack Obama and Democrats are launching all out war on the conservative, free-market principles he championed that gave us that prosperity. Trying to blame capitalism for the failure of the financial markets that were really destroyed by liberal command and control policies. Trying to convince Americans that the reason our economy has faltered is because we did not cede enough liberty and power to government.

But we’ve heard all these failed arguments before. Ronald Reagan certainly did.

I hope you will take a moment on his birthday to listen to this speech Reagan gave to the 1964 Republican National Convention, as Barry Goldwater faced Lyndon Johnson in the general election. The similarities to the fights we face today are striking.

And now we must fight the same battles all over again. I hope all Republicans, especially our leaders, will draw inspiration from Reagan’s words, stand up for conservative principles — and get out there and win one for the Gipper!

(h/t Gay Patriot)

A few words about greed on Wall Street. by The Elephant's Child

One word that has been popping up in the campaign with frequency is GREED.  They talk about “greed” on Wall Street, and the “greed” of investment bankers.  Did you ever notice that no one speaks of the “greed of Congress?  I didn’t think so.

What is it that money managers do on Wall Street, and investment bankers and ordinary bankers? They try to earn money for their clients and for themselves, just like Earl and Betty do in their little appliance repair store down on Main Street.  Or Joe the plumber does when he hopes to save up and buy a business.  That’s what business is, working to earn a profit so that lives are nurtured and improved with the gain.  No profit, no business, at least not for long.  Frankly, it is fairly hard to earn a profit consistently.

But this should be of concern only if you work for a business, own a business or buy things from a business. But isn’t “greed” something different?  You mean that if you or I earn a profit or make money on something, it is just an exchange, but if someone on Wall Street earns a profit or makes money it is greed?

Then there must be  dividing line, but we don’t know where it is.  Is it $10,000, $100,000, or $1,000,000? Below the line, it’s O.K. and if you earn more than that, it’s greed?  Do you see how silly this is? This is “class warfare”.  Politicians want to point to that fellow over there, and say — envy him, look upon him with rage and contempt, hate him — because he is greedy — for making a profit.

That’s not how America works. Capitalism works. If people have the opportunity to work hard and try to reach the goals that they dream of, they can do it, if they are not burdened with fees and taxes and regulations imposed on them by a (greedy) Congress that didn’t do one thing to earn that money except demand that you give it to them.

So when politicians start talking about “greed”, at least recognize just what is going on.  And set your internal monitor so a little alarm goes off.

Speaker Pelosi’s Improbable Pronouncements. by The Elephant's Child

Democrat Nancy Pelosi, Speaker of the House, appeared on Meet The Press yesterday. Mr. Brokaw inquired about the Democrat Congress’s very low approval poll numbers. She admitted that the oil companies and the administration all ranked higher than Congress in those polls. “BUT the point is this. People—” she said,”we have to look after the consumer, we have to increase the supply of energy. And the President, even as recently as yesterday, said if you drill offshore, you’re going to bring down the price at the pump. It simply is not true.”

Many economists and professors have pointed out that the President is right, and Ms. Pelosi doesn’t know what she’s talking about. Professor Don M. Chance, a professor of finance at Louisiana State University said:

Thus, the current price of any storable commodity will be affected by expectations of future supply because producers use those expectations to determine when to bring their product to market.

Oil is an excellent example because it has a long storage life. Every drop of oil consumned is on the market for only a small fraction of the millions of years of its life.

If producers expect increased supply in the future, the incentive to bring oil to market later is reduced.

Ms Pelosi went on to say that “Well the fact of the matter is — and the President knows this — if you drill offshore today , you won’t have any impact at the price at (sic) the pump for 10 years, and then it’s 2 cents. We can move much quickly (sic) by releasing oil from the strategic petroleum reserve and having an impact at the pump in 10 days, in 10 days.(sic)”

There are offshore oil rigs that have been sitting off the coast of California, idle since Democrats put a block on drilling decades ago. With restrictions lifted, they could potentially be producing in 3 years, because they know where the oil is.

The significantly explored areas are the central and western parts of the U.S. Gulf of Mexico. Demand all over the world is such that drilling companies are pulling rigs out of the U.S. Gulf. Larry Dickerson, CEO of Diamond Offshore Drilling, says that there are probably 30% fewer rigs working than there were 3 years ago. The rigs that they have are booked up quite a bit in advance, so they would have to build new rigs or relocate rigs here. While that was going on, oil company customers would be doing the seismic exploration, so he estimates four or five years to start producing oil. Not exactly what Ms. Pelosi claims.

Environmental organizations have a mystic belief in “alternative energy”. Wind, solar, and biofuels. Natural. Not “dirty”. Not nuclear. They make a huge assumption that if we just contribute enough money, these sources that contribute only a minuscule bit of energy will suddenly be able to take over the entire job of supplying American energy. That is wishful thinking. And as these organizations are a huge source of Democrat money, Congressional Democrats cannot afford to do other than follow their demands.

The Left always believes in giving taxpayers’ money to their pet causes. They think of it as government money, or their money, to do with whatever seems noble. Trouble is their ‘noble’ causes seldom seem to work. But Democrats are interested in intentions, not results.

They never seem to understand that if the price of gas is so high that people are interested in alternates, the free market will produce all sorts of folks tinkering in their garages to produce new engines, new batteries, new fuels, new cars.

That is what the Capitalism that they so despise does.

Subsidies, on the other hand, entice people hoping to make a quick buck. England has all sorts of problems with wind farms being put in places where the wind supply is doubtful, simply because the subsidies pay for it. In Japan, when subsidies were removed activity in solar power ceased; because there were not investors willing to risk their money in the hope of future profit.

Speaker Pelosi actually had the nerve to claim that big oil, needed to pay “royalties” to the American people, Big oil pays three times as much in taxes as they receive in profits. If they lease land on which to drill, they bid at auction, enormous sums. If they secure the lease, they pay rent every year. If they cannot find oil on the land that they leased, tough luck, rent continues until the lease term is up. At the end of the lease, it reverts to the government.

American corporations are more highly taxed than their counterparts around the world. U.S. corporations pay 39% in taxes. Their counterparts in Ireland pay 11%. There is a clue here to the reason why U.S. corporations move their business offshore.

The late Walter Wriston, former CEO of CitiBank, said in The Twilight of Soverignty:

Capital will go where it is wanted and stay where it is well treated. It will flee from manipulation or onerous regulation of its value or use and no government power can restrain it for long.

Perhaps if we embroidered little samplers with this quotation, and sent them to members of Congress…Nah!

What is victory in Iraq? by The Elephant's Child

From the President’s strategy for victory in Iraq:


As the central front in the global war on terror, success in Iraq is an essential element in the long war against the ideology that breeds international terrorism. Unlike past wars, however, victory in Iraq will not come come in the form of an enemy’s surrender, or be signaled by a single particular event — there will be no Battleship Missouri, no Appomattox. The ultimate victory will be achieved in stages, and we expect:

In the short term:

An Iraq that is making steady progress in fighting terrorists and neutralizing the insurgency, meeting political milestones; building democratic institutions; standing up robust security forces to gather intelligence, destroy terrorist networks, and maintain security; and tackling key economic reforms to lay the foundation for a sound economy.

In the medium term:

An Iraq that is in the lead defeating terrorists and insurgents and providing its own security, with a constitutional, elected government in place, providing an inspiring example to reformers in the region, nd well on its way to achieving its economic potential.

In the longer term:

An Iraq that has defeated the terrorists and neutralized the insurgency.
An Iraq that is peaceful, united, stable, democratic, and secure, where Iraqis have the institutions and resources they need to govern themselves justly and provide security for their country.
An Iraq that is a partner in the global war on terror and the fight against the proliferation of weapons of mass destruction, integrated into the international community, an engine for regional economic growth, and proving the fruits of democratic governance to the region.

Not mentioned in the President’s strategy — Kuwait, invaded by Saddam Hussein’s Iraq, is opening an embassy in Iraq. Or, if you are not impressed by that:

Kentucky Fried Chicken has opened in Falluja.

So there!

The food police strike again! by The Elephant's Child
April 28, 2008, 3:53 pm
Filed under: Uncategorized | Tags: , , , ,

When the socialist state orders school children to eat the foods that the state considers healthy, guess what happens? Little capitalist kids erupt all over British schools.

After a tip from a head teacher at a Dorset secondary who broke up a “seriously big smuggling operation” run by a schoolboy, the Times has uncovered several similar contraband schemes. The head, who did not want to identify his school, was convinced that the switch to a healthy menu and the policy of keeping pupils on the premises at lunchtime had created an opening for entrepreneurs.
He became suspicious when he noticed two 14 year-old boys approaching the school weighed down with Lidl carrier bags. “The thin wiry creatures, in full uniform but with shortened ties, shirts hanging out , were walking a heavily laden bicycle. The bags were dripping off the bike’s handlebars, crossbars and saddle like a scene from some desperate endeavour on foot and mule to reach a lost city in the Peruvian mountains,” he said.

I don’t know why anyone is surprised. Any mother who has tried desperately to get her kids to eat their vegetables knows a thing or two about kids that oblivious administrators apparently miss. Read the whole thing, it’s pretty funny.


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