Filed under: Capitalism, Democrat Corruption, Economy, Progressivism, Statism, Taxes | Tags: Enlightened Self-Interest, Free Market Capitalism, Responding to Incentives
Ten days ago, I wrote a post about how the attempt to redistribute wealth usually ends up redistributing the wealthy instead. When government becomes too eager for ever higher taxes and fees, those who are trying to protect what they have earned often pick up and move out of that government’s jurisdiction.
I was inspired by new French President Francois Hollande’s attempt to raise taxes on France’s wealthy to 75%. Imagine a government that allows you to keep just 25¢ out of every dollar you earn. That’s a pretty powerful incentive to move. The redistributors, however, always assume that people, poor saps, will just obey.
Thanks to U.S. tax rates — Obama’s insistence that ‘the rich’ have not been paying their ‘fair share’—has resulted in the number of Americans who tore up their passports in 2011 and left the country to move permanently overseas, was seven times higher than those who left in 2008. In the first three-quarters of 2012, more than 1,100 Americans renounced their citizenship and made their homes elsewhere, according to the Federal Register. The available data for the fourth quarter of 2012 are not yet available, but on track to surpass the 2011 numbers.
There are 6 million American citizens living abroad and continuing to pay U.S. taxes. Expatriates increasingly abandon their citizenship over taxes. The U.S. is the only industrialized country that requires citizens living abroad to pay income taxes even if their income is generated abroad. The newly passed law concerning the “fiscal cliff”has increased the taxes on individuals earning more than $400,000 a year and married couples earning more than $450,000 to 39.6 percent, up from last year’s rate of 35 percent.
People and businesses respond to incentives. This is a very simple fact of life, yet liberals in particular and politicians in general seldom get it. They are sure that if they just raise your taxes, they will get more money. Doesn’t work that way. Often they get even less revenue.
Works the other way too. When you reduce taxes, particularly on businesses, but on individuals as well — you free people up to grow, attempt, invest, invent and develop to improve their lives and to follow their hopes and dreams. And when people are set free to grow, economies grow as well.
How very odd that Obama cannot grasp this simple basic economic concept. If his hope is to take away from the rich in order to help the poor, he’s wasting his time. The evidence, however, is even less encouraging. Those whom he expects to reward with the revenue garnered from the rich, are his supporters and the unions. That isn’t philanthropy, it’s graft.
(h/t: Gateway Pundit)
Filed under: Capitalism, Domestic Policy, Election 2012, Freedom, Health Care | Tags: Free Market Capitalism, Profit is Not a Bad Word., The Surgery Center
Back during World War II, wages were frozen, so in order to attract and reward employees, employers began offering health insurance as a benefit. And here we are. It seemed like a good idea at the time. Third parties pay the majority of medical bills, so competition is not allowed to fun free. Yet when free enterprise opens up the marketplace, the result is better care for a remarkably lower cost. A third-party payer system is one in which A buys goods or services from B that are paid for by C. Because insurance companies or the government pick up the tab, patients don’t have the normal incentive to choose the best value. In the current situation patients often do not know what procedures cost.
Three years ago, Dr. Keith Smith, co-founder and managing partner of the Surgery Center of Oklahoma took a radical step in the health care industry. He posted a list of prices for 112 common surgical procedures online. He and his partner Dr. Steve Lantier founded the Surgery Center 15 years ago, after they became disillusioned at the way patients were treated at St. Anthony Hospital in Oklahoma City, where the two men worked as anesthesiologists. . They bought the shell of a former surgical center with the aim of creating a for-profit facility that could deliver fist-rate care at a fraction of what traditional hospitals charge.
The Surgery Center demonstrates that you can deliver high quality care at low prices.”In any other industry, tons of attention is devoted to making systems more efficient, but in health care that’s just completely lost,” says Dr. Jason Sigmon, an ear, nose and throat surgeon who regularly performs procedures at both the Surgery center and at the Integris Baptist Medical Center which is run by the non-profit Integris Health, the largest health care provider in Oklahoma.
Every employee, except for clerical staff, at the Surgery Center is directly involved in patient care. Human resources and building maintenance are the responsibility of the head nurse. No administrative employees. (the top 18 administrative employees at Integris Health in 2010 received an average of $413,000 in compensation). Because bills charged by Integris are paid primarily by insurance companies or the government, the hospital gets away with gouging for its services. A procedure that Dr. Sigmon performed at Integris in October 2010 called a “complex bilateral sinus procedure” which helps patients with chronic nasal infections. The bill, which was strictly for the hospital and does not include Sigmon’s or the anesthesiologist’s fees totaled $33,505. When Sigmon performs the same procedure at the Surgery Center, the all-inclusive price is $4,885.
ObamaCare is, first of all, very badly written law. It assumes that America will simply salute and follow its regulations. But people and businesses respond to incentives. Companies are getting out of the health insurance market and self-funding. Hospitals are reorganizing and Doctor’s groups are reorganizing. Some doctors are establishing “concierge” practices where patients pay a concierge fee to a physician for yearly care. There will be many other responses as ObamaCare begins to take effect.
On the other hand, a new provision buried in ObamaCare effectively prohibits doctors from starting their own hospitals or expanding the hospitals they already own, which has been widely interpreted as a give-away to the American Hospital Association — the way things are done in Chicago politics. The Surgery Center is exempt from this statute, since it is technically not a hospital and does not accept Medicaid or Medicare.
Smith and Lantier believe that market-driven facilities like theirs will thrive and proliferate as consumers catch on to the very costly collusion between Big Government and Big Health Care. Affordable health care is possible.
Filed under: Capitalism, Conservatism, Economy, Election 2012, Foreign Policy, Freedom, National Security, The United States | Tags: Free Market Capitalism, Saving the Safety Net, Serious Solutions
It’s a formidable ticket. There is probably not a better pair to address the enormous problems we face. These are two serious adults, who want to have an adult conversation with America about how to return to the free and prosperous country we know that we can be — once again.
As Iowahawk said: “Paul Ryan represents Obama’s most horrifying nightmare: math.”
The Democrats have already had Paul Ryan throwing Granny off the cliff. It will be an increasingly nasty campaign. Obama is a fierce competitor, and answers to no boundaries of taste or truth. I am still reeling from the president’s promise to do unto the entire country what he did for General Motors. Mitt Romney has a deep knowledge of American business, what business needs to release their energy and restrained power to restore the economy. Paul Ryan has a deep knowledge of federal budgets and what is possible and what is not. We will be in good hands.
Filed under: Capitalism, Democrat Corruption, Economy, Election 2012, Freedom, The United States | Tags: Creative Destruction, Free Market Capitalism, Outsourcing
If you are working hard, doing a good job, and suddenly you are let go—for any reason, it is devastating. Even if you didn’t like your job much, it is still devastating. It is a blow to your sense of self-worth, and it’s accompanied by a great wash of fear. Will you be able to find another job, buy the groceries, pay the rent or mortgage. Scary times.
Politicians take that fear and try to build on it to get you to reject the opposing party. Nasty, but that’s the way things work. President Barack Obama and his Democrat administration are defending the once-discredited theory, now resurgent, that government must act as the economy’s “guide” and use public funds to “stimulate”it. The Republicans, on the other hand, advance the idea that the main source of new growth is the innovative energy of America’s people, and their entrepreneurial spirits. What the economy needs is for government to get out of the way and stop being such a barrier to growth.
“An essential part of the free-market argument is ‘creative destruction,’” notes Guy Sorman in City Journal,” a theory proposed by the great Austrian economist and Harvard University professor Joseph Schumpeter. “If you don’t understand Schumpeter’s insight—expressed most powerfully in his classic 1942 book Capitalism, Socialism and Democracy—you’ll have a hard time understanding why free markets work so well to generate prosperity. Yet creative destruction is a complicated concept, poorly understood by the general public and not always easy to defend.”
The biggest stadium in the country is the Michigan stadium in Ann Arbor. It holds 109,901 people, I assume not counting the football teams and staffs. If I put you in charge of their lives, telling them how to live, where to work, what to buy and what not to buy, how to order their time when not working, how would you do? Obviously. Silly question.
For me it is an illustration of the free market. All those different people with their different beliefs, different histories, different hopes and dreams will— because they are free people, sort themselves out and mostly manage their lives quite efficiently. And that’s only 110,000 people. Our country holds over 330 million. Why don’t they all try to use the telephone at the same time, or all arrive at the same stoplight at once? Why does a nice restaurant have roughly the same number of customers most nights? Why doesn’t everybody turn up on Friday night? Millions of people making their own self-concerned decisions and it mostly all works just fine with no direction. There is a kind of wisdom in all those separate decisions.
Our politicians, on the other hand, are quite sure that they can make it all better with lots of rules and regulations. We can tolerate a good many, but the wisdom of government does not trump the wisdom of the people as a whole. They are just not smart enough to know how to regulate so many; or to regulate American businesses and tell them how many to hire and how many to fire and where to do business.
Schumpeter’s insight was that in a capitalist economy the old must constantly give way to the new. Production technologies in a free economy improve constantly. New products and services appear constantly. The electronics industry is an exemplar. Seems like you no sooner buy the newest new thing when it has been superseded by something newer with better features. Not many typewriters these days.
The upside is that America actually leads the world in manufacturing. We produce 21 percent of global manufactured products. China comes after at 15 percent. Manufacturing supports an estimated 17 million jobs in the United States, about one in six private sector jobs. In the current campaign there are lots of accusations about outsourcing, which is assumed to be a very bad thing and to destroy jobs. But is it? In 2010, for every $1 that American companies invested abroad, other countries invested $2 in America and American jobs. The total stock of foreign investment in the U.S. came to $4 trillion. That represents a lot of jobs.
Outsourcing is based on an unpleasant truth: Certain types of operations, such as call centers, for example, or unskilled product assembly, are simply too costly for companies to do in the United States. By having those jobs performed overseas, companies are able to preserve their resources for the things those companies do best, their “core competencies.”
Big manufacturers are building new plants here. BMW is adding 300 new jobs in its South Carolina plant this year, and Airbus recently announced it will employ 1,000 workers at a new plant in Alabama. Both South Carolina and Alabama are right-to-work states.
Multinational corporations still employ more Americans. U.S. multinationals employ 22.9 million Americans — more than twice as many people as they employ in China, Mexico and all other countries combined. Foreign-owned multinational corporations employ 5.5 million people in the United States. Insourced businesses are a tremendous boon for the U.S. economy. Jobs brought to America by foreign-based companies—account for nearly 5 percent of private-sector employment. These businesses buy more than $1.8 trillion in goods and services from local suppliers and small businesses in the areas where they locate.
All very reassuring, but not very meaningful to those who have lost their jobs. There is a downside to “creative destruction.” But in a May 2012 paper, researchers at the London School of Economics Center for Economic Performance examined 58 U.S. manufacturing industries from 2000 to 2007 and found that the cost savings and productivity increases from shifting some work overseas enabled enough new domestic hiring to offset any jobs lost abroad.
Economic policy is not about preserving every single job that exists at any cost, but must be about creating general prosperity.
There is a lot that policymakers could do to improve the situation. The Index of Economic Freedom, produced by the Heritage Foundation and The Wall Street Journal reveals America’s competitive disadvantages. Hong Kong, ranked No. 1 in the Index has an economy that is growing at an astounding 7 percent. The U.S. GDP growth in the first quarter of 2012 was only 1.9 percent. Hong Kong has a zero tariff rate. Their corporate tax rate is only 16.5 percent, compare to our corporate rate of 35 percent. Their regulatory environment is highly supportive of business efficiency. Here at home, 106 major federal regulations have added more than $46 billion in new costs for Americans. This is four times the number and five times the cost of George W. Bush’ s major regulations. Hundreds more regulations are winding through the regulatory pipeline as a result of Dodd-Frank and ObamaCare that will take full effect in 2014.
It’s not hard to find evidence of what to do to help the economy to grow. What’s hard is to act on the evidence.
Filed under: Capitalism, Economy, Freedom, Politics, Taxes, The Constitution | Tags: Free Market Capitalism, Small Government, The Wisdom of Ordinary People
Here’s the Big Problem. Does the Government have a Revenue Problem or a Spending Problem? The Obama administration will firmly state that they have a revenue problem. They need more money. Obama believes that all good things come from a government where wise and dedicated people (his administration) can best decide how funds should be appropriated, what those funds should accomplish, and who should get them.
He believes that good ideas come from government, good things are built by government, and good things are done for the people by — government. That’s why they have all those wise and superior people with superior educations in government offices to do a superior job of spending your money.He especially believes that the wealth that exists in society should be distributed more fairly. What was it he said “At some point you have enough money.” Or something like that. Buffet Rule and all that. Warren Buffett doesn’t pay enough taxes and his secretary pays too much. And that will fix what?
Republicans believe that the government spends way too much money, and they don’t spend it well. They waste way too much of it. The country is far better off when people keep more of their own money. People have good ideas, start businesses that no one dreamed of, they hire workers and make an economy grow. Entrepreneurs create jobs, government does not. There are 69 different welfare programs administered by different departments and overseen by different committees that may all do pretty much the same thing, who knows? The poor remain poor.
The Obama administration for 3 12 years has spent lavishly on everything on which they wanted to spend. They have spent the highest amount of any government in world history. They have spent more than all previous administrations put together, and they still want to spend more — on another stimulus and more clean energy. They have a Spending Problem.
Filed under: Capitalism, Conservatism, Economy, Freedom, Politics | Tags: Anti-Big government, Free Market Capitalism, John Stossel
A brief but charming interview with John Stossel at the Heritage Foundation, wherein he explains the difficulty in explaining ideas like “the Buffet Rule” and Bastiat’s Broken-Window Theory.
Filed under: Capitalism, Economy, Energy, Freedom | Tags: Catastrophes Caused by Government, Effective World Government?, Free Market Capitalism
hu–bris n.Overbearing pride or presumption; arrogance.
Headline from Scientific American: “Effective World Government Will Be Needed to Stave Off Climate Catastrophe.”
The author says:
Almost six years ago, I was the editor of a single-topic issue on energy for Scientific American that included an article by Princeton University’s Robert Socolow that set out a well-reasoned plan for how to keep atmospheric carbon dioxideconcentrations below a planet-livable threshold of 560 ppm. The issue came replete with technical solutions that ranged from a hydrogen economy to space-based solar.
(um— greenhouses keep their atmospheric carbon dioxide at 1,000 ppm. planet remains livable, plants grow more enthusiastically).If I had it to do over, I’d approach the issue planning differently, my fellow editors permitting. I would scale back on the nuclear fusion and clean coal, instead devoting at least half of the available space for feature articles on psychology, sociology, economics and political science.
The problem to be fixed, you see, is all the damned people. They’re not cooperating. We need a “constitutional moment” at the upcoming 2012 U,N,Conference on Sustainable Development in Rio in June to reform world politics and government. Among the proposals: a call to replace the largely ineffective U.N. Commission on Sustainable Development with a council that reports to the U.N. General Assembly, an attempt to better handle emerging issues related to water climate, energy and food security.
To be effective, a new set of institutions would have to be imbued with heavy-handed, transnational enforcement powers. There would have to be consideration of some way of embracing head-in-the-cloud answers to social problems that are usually dismissed by policymakers as academic naiveté. In principle, species-wide alteration in basic human behaviors would be a sine qua non, but that kind of pronouncement also profoundly strains credibility in the chaos of the political sphere.
The whole global-warming/sustainability has fallen into such disrepute that the true believers are getting quite desperate. The largely ineffective U.N. will have to get really “heavy handed”with “trans-national” enforcement to scare the people enough that they will continue to fork over their money and their support. Unexpectedly, all the wind farms and solar arrays, electric cars haven’t eliminated any carbon dioxide. Cap-and-trade is dead as a dodo. Carbon sequestration is over. The Carbon market is out of business.
“Those who claim to care about a livable climate for the future,”says Master Resource, “should strive to understand the mechanisms by which industrial capitalism has already created the most livable climate in history.”
The mass-production of sturdy, weather-proof buildings … the universal availability of heating and air conditioning … the ability to flee the most vicious storms through modern transportation … the protection from drought through modern irrigation … the protection from disease through modern sanitation–all of these have led to a 99 percent reduction in the number of climate-related deaths over the last century.
It has been enormous hubris that has led some scientists to assume that they can duplicate, in a computer program — even very large computers — the nature of worldwide climate. The climate programs cannot successfully “predict” today’s climate, let alone 50 and 100 years into the future. Meteorologists can predict the weather by studying weather patterns, and get it right, maybe for the rest of the week, and they don’t always get that right.
Politicians are elected on their ability to impress a crowd, and be generally what my father use to call “glad-handers”— amiable, glib, likeable and able to give an effective speech. Some rely on props like Grecian columns and special logos, others rely on flags and bunting. This is no indication of their understanding of science, history, world affairs or economics. And it is unfortunately often absent. Those marble halls and the attention of “the Media”is inclined to imbue politicians with hubris — presumption and arrogance.
There are very few things that government can do well, and protecting us from changing climate is not one of them. It was only 40 years ago that the panic was about a new ice age, and “nuclear winter.” Our government’s record of trying to force us into a “clean energy economy ” is rife with fraud, waste and debt, and the worst of crony capitalism.
Individuals, on the basis of profit and loss calculations, do pretty well at deciding what changes they need to make in their businesses and in their personal lives to adjust to the situation. They require only freedom to solve big problems. Think the settling of North America, the settlement of the American West, the transition from a horse and buggy society to the internal combustion engine. We didn’t need the federal government to ban horses, nor to license wagon trains. The Greenies grew fat and comfortable on the bounty of taxpayer money that flowed to them. Now those funds are drying up, and they are in a major panic as to how to keep the funds flowing.
In their overweening arrogance, they think they are smarter than you are, and they should be able to set the terms and direction for your life. “Effective World Government” is an oxymoron.
Resist.
Filed under: Capitalism, Economy, Politics, The United States | Tags: Economist Jeffrey Miron, Explaining the Dismal Science, Free Market Capitalism
Here’s Harvard economist Jeffrey Miron, explaining three myths of Capitalism.
Filed under: Capitalism, Economy, Freedom, Health Care, The Constitution | Tags: Constitutional Government, Free Market Capitalism, The Tea Party
The Democrats are obviously terrified by the Tea Party. We have Maxine Waters charmingly shouting that the Tea Part can go to hell, and she wants to help them get there. Democrats have called them “terrorists,” “extortionists,’ “racists,” the real enemy,” yet the movement is one of ordinary citizens who think the federal government should stop creating massive debt, and should rein it in by cutting spending. I guess to a big-spending liberal, that must seem extremely threatening. If you believe that you get votes by spending money on giving voters goodies, then people who believe in free market capitalism and a government of the people, not of bureaucrats must seem really scary.
Fifty-six percent of the economists surveyed by the National Association for Business Economics believe that the federal deficit should be reduced primarily or only through spending cuts. Another 37 percent favored equal parts spending cuts and tax increases and the remaining 7 percent thought it should be done through tax increases. So it would seem that the Tea Party is fairly mainstream after all.
Tea Party people seem to know American history well, have read and studied the Constitution, and to be clear on what the government is allowed to do and what it is not allowed to do.
Here’s Sunny again. She cracks me up!
