Filed under: Capitalism, Economy, Education, Freedom | Tags: Capitalism, Free Markets / Free People, How Does an Economy Work?
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.
Filed under: Capitalism, Economy, Energy, Freedom, The United States | Tags: Capitalism, Free Markets/Free People, The World's Rich & Poor
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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.
Filed under: Capitalism, Economy, Freedom, Health Care | Tags: Capitalism, How Prices Work, Shortage of Cancer Drugs
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.
Filed under: Capitalism, Economy, Taxes | Tags: "Jobs Summit", Capitalism, The Free Market, Unemployment
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.