American Elephants

Why is America So Rich? by The Elephant's Child

As I Was Saying: Human Nature 101. A Required Course. by The Elephant's Child

If you accept or tolerate bad behavior you will get more of it.

Headline from Breitbart: “Exclusive—Women Nationwide Cut Up Nordstrom’s Cards, Plan Boycotts After Political Decision to Drop Ivanka Trump Line.”  It would have been cheaper to hire some extra guards.

This is a strange political season. Democrats were absolutely confident that they could expect another four or eight years in charge of the government and the country, with Hillary. Because people seemed to like President Obama they thought it was a home run. They didn’t pay attention to the vast numbers of people who believed the country was going in the wrong direction. Democrats lost not just the White House, but straight down the line to city councils. And they lost to a man with an orange complexion and funny hair who often said rude things.

The latter is probably more important to Progressives because they are more superficial in their thinking. They are unconcerned about the threat from Islamic terrorism, and had no problem with the Obama administration’s refusal to use the term. They are unconcerned with graft and Hillary’s use of an illegal private email server that left top-secret State Department communications open to any enemy who cared to look. Progressives care about control. It is essential that they remain in charge, and they were gobsmacked by the loss of power. They have no bench of promising, well known young candidates.

The University of California, still mopping up after an estimated $100,000 damage, already has one of the organizers speaking out to call the Berkeley Riot “Stunningly Successful” and warns of a repeat if Milo returns to the college. “We are happy with the results,” Ronald Cruz, a former student,  told the Chronicle. “We were able to meet Mr Yiannopoulos’ fascist message with massive resistance.”

I would be surprised if he tries to after his humiliating defeat,” he declared. “But if he wants to be defeated again, he will be if he tries.”

The San Francisco Chronicle reported that the damage to downtown Berkeley was around  $400,000 – $500,000. Pre-orders for Milo’s book Dangerous were soaring at Amazon.

Following the riot in Berkeley, Mayor Jesse Arreguin repeatedly smeared MILO as a “white nationalist” and declared that he would not be welcome back in the city, while several celebrities and news outlets expressed support for the riot, including Hollywood director Judd Apatow, who deleted his tweet shortly after, and Fusion, who smeared MILO as a “Nazi” and praised rioters before also deleting their tweet.

So rioters are welcome in any American city, will not be disturbed in their vandalism. Free speech is not permitted. The usual epithets of Nazi, fascist, Hitler etc. are applied to a speaker, not to the criminal behavior which is completely tolerated—because they’re mad that they lost the election.

Janet Napolitano might take notice that the University of Missouri  lost so many prospective students because of protests and rioting on campus that they have had to shut down dorms and struggle with sharply declining revenue. Parents took their kids and their money elsewhere.

Americans are not accustomed to major businesses playing politics. Donations by participants are expected.  But corporations encouraging their workers to demonstrate or protest against the president? Refusing to do business with the daughter of the President of the United States? Surrendering to political threats? Unacceptable.

When there is a riot and no one stops it, rioters are not put in jail for disturbing the peace — you have given power to the rioters. Next time it will be worse.

The Quotation of the Day: Food for Thought! by The Elephant's Child

From Cafe Hayek:

From page 220 of philosopher Michael Huemer’s powerful 2013 book, The Problem of Political Authority

The general lesson is that if some part of government fails in its function, it will most likely be given greater funding and power.  Of course, the purpose of this is not to reward failure; the thinking would be that more money and power will enable the agency to solve the problem.  But the effect is that government grows when social problems grow, and thus it is not in the government’s interests to solve society’s problems.

Cafe Hayek added:

I recall long ago hearing David Boaz ask rhetorically about this reality: ‘Can you imagine a worse incentive system than one that rewards failure with higher budgets and punishes success with lower budgets?’  I can’t – yet that’s pretty much the prevailing incentive system for governments around the world.

Have you heard Carly Fiorian talking about “Zero-Based Budgeting?” That’s a serious attempt to rectify the situation.

Why Liberal Governance Never, Never Works! by The Elephant's Child

There are strange gaps in Liberal thinking or understanding.  Take ‘Profit,’ for example. They seem to think profit is somehow bad, or at least ‘unfair,’ and business really shouldn’t be insisting on making a profit — without any understanding that the only reason for a business to exist is to make a profit.

And they really, really don’t get what happens when a business does not make a profit. Much was made in the last election that in Mitt Romney’s successful career of creating businesses, he sometimes cut back on employees, or closed parts of businesses and people lost their jobs. Obviously mean.

President Obama, from his first days in office, has promoted infrastructure, and crumbling roads and bridges as the source of bountiful new jobs, without the slightest understanding of the planning, zoning, environmental impact studies, and legal hurdles before the drafting and engineering would ever take place. An important project could take five, or as long as ten  years  or more, before actual construction ever began. Remember when he sheepishly admitted that perhaps there really weren’t any shovel-ready jobs.

Much has been made of the fact that the construction jobs involved in the Keystone XL pipeline are “temporary.” Yes. All construction jobs are temporary, and a worker who has learned new skills on one job can take them on to a better position at the next job.

Economist Allan Meltzer, in a recent essay, pointed out that the Federal Reserve tried to resolve real economic problems by printing money, which is not possible. The Obama administration insisted on imposing costly regulations on firms and industries. They supported stronger labor unions. They opposed tax reduction — and then they didn’t understand why the recovery was the slowest in history.

By creating enormous uncertainty in businesses about what new regulations might be imposed next, they limited expansion and start-ups as business hunkered down to wait it out.

The minimum wage, which is meant to be a starter wage for beginners, is regularly attacked by Liberals as not being enough to support a family. A raw beginner does not have the skills to be worth even a minimum wage. If they learn quickly how to make change, respond politely to customers, learn where things are and how to use them and can do so without much supervision, they begin to be worth the beginners wage. When they become skillful, see and pick up things dropped on the flood, notice, without being told, when customers need attention or tables need to be cleaned, have learned to be friendly to unpleasant customers, they have skills that can be taken on the next higher paying job. People aren’t supposed to stay in entry-level jobs, that’s why they are called “entry-level.” They are not intended to support a family. You are supposed to climb the ladder of success by learning.

When extra costs are imposed on a business, something has to give. Their prices can be raised, some employees can be laid off, the product or service can be cut back (see 1 inch narrower toilet tissue), or some part of the business can be automated. (See self-service gas stations, self-service hardware and grocery check stands, and Bank ATMs). Robots of one kind or another are replacing jobs once done by fallible human beings, who demand time off, sick leave and more benefits.

Every action taken by government creates incentives of one kind or another. ObamaCare is full of incentives, most of which seem never to have occurred to the politicians who devised the health care insurance in the back rooms of Congress. The Democrats have been surprised or astonished to find out what has been caused by the incentives they created, and they still mostly don’t understand.

An easy example is the Medicare Drug Benefit. Deplored by Republicans as too costly (statins have been very successful in helping seniors to avoid costly heart surgery, for example). Democrats were outraged by the  “donut hole” which  provided a  major incentive for seniors to use a generic drug instead of a named and more costly prescription of equal quality. The Drug benefit has been a shining example of  a bill that did not cost more than projections. Democrats have stripped out the “donut hole” incentive as “unfair,” so costs will go up, astonishing Democrats.

Many prominent Democrats have never done anything else but politics, Chuck Schumer, Harry Reid, Nancy Pelosi and Joe Biden come to mind. Those who bring other skills, doctors, military service, or simply the ability to read a balance sheet can be valuable. Making laws is about more than making speeches and appearing on TV.

“If You Like Your Job…” ObamaCare Will Increase Unemployment by The Elephant's Child

The Congressional Budget Office says that ObamaCare will increase unemployment. There are 7.8 million Americans working part-time who want full-time work. Mr. Obama changed the subject to raising the minimum wage.

On Tuesday no less than the Congressional Budget Office reported that the health law is causing Americans to work less or not at all, in a remarkable intellectual turnabout for the budget shop that Democrats cited repeatedly when selling ObamaCare. Now CBO—full of liberal-leaning economists—says the economy will lose the equivalent of two million full-time workers by 2017 and 2.5 million over the next decade, a threefold increase over its prior estimate.

ObamaCare’s complex design includes new subsidies, new taxes and new mandates. For low wage, lower-skilled or discouraged workers ObamaCare offers incentives that can force them to trade jobs for entitlement benefits. The CBO concludes that ObamaCare will encourage people to supply less labor by working fewer hours to qualify for more benefits. The incentives suggest watching carefully the overtime, a promotion or training in hopes of higher future earnings — it might boost you into another category with less or no subsidy. The question becomes how many people can the nation support on entitlements? I thought the numbers were already too high.

The CBO’s job-loss prediction doe not include the impact of ObamaCare’s employer mandate, which requires businesses with 50 or more full-time employees to offer insurance or pay a $2,000 penalty for each worker beyond 30 employees. The mandate has been delayed by executive order for a year. so it won’t take effect till 2015, which probably means the CBO is vastly underestimating job losses.

The White House, of course, denies everything. “Claims that the Affordable Care Act hurts jobs are simply belied by the facts in the CBO report,” the White House, in the person of Jay Carney, declared. The White House seems to mean that the report is positive because”individuals will be empowered to make choices about their own lives and livelihoods” and “have the opportunity to pursue their dreams.” Didn’t Nancy Pelosi suggest that they would have more time to do art or crafts or maybe music?

Incentives matter. People respond to incentives. And there’s nothing in the act that encourages businesses to hire more workers and be more competitive. Like “if you like your doctor,” it may include “If you like your  job…” The law is a job destroyer that is taking away rungs from the ladder of upward economic mobility.

Fickle Foreign Policy, Increased Risk. by The Elephant's Child

I rely a good deal on Richard Epstein’s take on President Obama. Epstein knew Obama at the University of Chicago, and through Epstein’s next-door neighbor, who is one of Obama’s best friends. Epstein’s description of Obama was simply a clear-eyed assessment of the man, but not pejorative. It was a fair assessment. One particular thing he said has stuck with me. He says that Obama does not change his mind. If he once believed something, he still believes it today.

Early on, Obama expressed his idea that the crisis and trouble in the Middle East was entirely due to Israel’s refusal to make peace with the Palestinians, and if the Israelis are forced to make peace, return land to Palestine, and give Palestinians the “right of return” then there would be peace in the entire Middle East — Obama’s great accomplishment.

This seems a remarkably strange take on a group who teach their little children to hate Israel, bomb Israeli cities and houses, and grow up to be suicide bombers. But that is clearly the marching orders Obama has given to Kerry.  “In a short time, John Kerry has managed to make the Israelis and the Arabs hate him almost as much as American do. And he did it in the traditional way by saying stupid and ugly things.”

The State Department hastened to say that Kerry didn’t really mean that, “Today’s status quo absolutely to a certainty, I promise you 100 percent, cannot be maintained. It’s not sustainable. It’s illusionary.” That’s what he said at the Munich Security Conference. But that same status quo has been maintained for two decades.

How odd that you seldom see mention in the press of the Palestinian children needing complicated heart surgery or other advanced medical treatment, and the Israelis step in and save lives. Syrians bring their badly wounded people to the Israeli border in hopes that the Israelis will save them. Obama clearly has no interest in foreign policy, and wants America to pull back and let others cope with it. He has no understanding of the nature of the world.

Angelo M. Codevilla is professor emeritus of international relations at Boston University and a fellow of the Claremont Institute.  He is the author of To Make and Keep Peace Among Ourselves And With All Nations to be published by the Hoover Institution Press. His article for The Federalist: “Obama’s Unserious Foreign Policy And America’s Permanent War Footing,” is really worth your time. The subtitle”Fickle foreign policy, increased risk”sums it up.

He ended the war in Iraq, and is ending the war in Afghanistan. In Syria, he is supporting the good guys. He has put al Qaeda “on the path to defeat, and is doing the same to all similar folk. He is ridding Syria of Chemical weapons, while American diplomacy is at work settling the Arab-Israeli war – the key to a larger peace. He asked Americans to believe that Obama is moving the country “off a permanent war footing.” How, he gave no hint. It is difficult to imagine foreign nations, friend and foe alike, taking any of this seriously. Or Americans for that matter.

In fact, foreigners ceased taking Obama seriously long ago. That is one reason why so much of the world is moving in directions that do not augur well for America.

Do read the whole thing.

The Total Absurdity of ObamaCare, Explained. by The Elephant's Child

Another comment on changing times: In 2012 and in 2013, roughly $34 billion went into venture capital deals in the United States. The cities were what you would expect, Silicon Valley, Boston, Austin, Seattle, New York and Los Angeles. Innovation is fast and varied.

One sector that is seeing a rapid drop in investment is in healthcare and devices. ObamaCare has a big medical device tax buried in it, and money has pulled back from taking a risk in healthcare while ObamaCare gets sorted out. Once again, it is all about incentives. When you tax something, you will get less of it. What Obama is taxing is not “devices” — but innovation.

What this appears to relate to is a vague idea that insurance companies are greedy rip-offs, doctors get paid way too much and hospitals charge outrageous amounts for an aspirin — which seems to be the impetus behind ObamaCare. That is, a bunch of people, with no qualifications for the job, have devised regulations — the impact of which they do not understand — for a business, the workings of which they do not understand in the slightest.

Next time you are in a doctor’s office or in the hospital, assuming it’s routine, look around and count up the “devices,” from the stethoscope around the doctor’s neck, to the examination table, the sink, the thermometer and blood pressure monitor to the $1 million CT scanner or the $4 million radiation machine. Take a serious look at one of the Stryker hospital beds.

Consider the absurdity of developing a new government-run health care plan — because health care costs too much, (a health care plan that actually increases cost and decreases care), that increases the cost of everything used by the medical profession with a tax on each item — and then expects costs to go down in the future because of medical innovation.

Hospitals across the country are engaged in cutting costs wherever they can. This will have the inevitable effect of gradually diminishing quality and care. The incentives for the medical establishment become how to get adequately paid for their services. The incentive for the government is reducing costs in a system in which they have guaranteed a rising spiral of expense.

Pay Attention to The Bitter Truths About NHS — And Our Future? by The Elephant's Child

I refer frequently to Britain’s National Health Service, which is the oldest of the “single payer” health care plans, initiated right after World War II, when Labour returned to power. When Obama’s health care advisers began talking about health care, they all expressed their admiration for NHS. In devising a health care plan, they talked a lot about how the big costs all came from old people in their final years. And they talked about things like life years and useful life, and did a lot of comparing a vigorous young person with many life years ahead — contrasting it with useless old people.

Well, I had this strange idea that that’s what the practice of medicine was all about, caring for people and their health problems throughout their lives, from every kid’s broken arm to the failing health of someone who has lived a long and valuable life. The Inuit supposedly left their old people to die out on the ice when they were no longer useful, and there have been tribes who eat their enemies as well. Are we still struggling to find an ethical way to deal with life?

Britain still has private health care for those who can afford it. The NHS provides care that is free at the point of service, and just what every liberal wants as their most cherished goal. But it doesn’t work. The incentive for the people immediately becomes to use as much as they want because it has no (visible) cost. This inevitably drives costs up sharply. The incentive for the government immediately becomes to control costs. The government who hires, fires and pays for the medical establishment, cannot do much about the people whom they urged to use all the medical care they want, but they can put a lot of pressure on the medical establishment to cut costs.

Escalating problems and the inevitable results should be obvious to the dimmest intelligence, but  politics and ideology get in the way. Not everyone believes in incentives, in spite of  overwhelming evidence that they are what moves events.

Can’t have people piling up waiting to get into the emergency room, ordered to fix that, hospitals took to holding people in ambulances so admissions would be spread out more equally. Cut costs more, and pretty soon hospitals were saving money by keeping the same sheets on the bed. When all the incentives become to cut costs, the old folks don’t get clean sheets or fresh water, and start dying of dehydration and starvation in the hospital.

ObamaCare incentives are just the same. We are just taking our first stumbling steps down the same long road to perdition. Nobody has even experienced actual ObamaCare yet. So far it’s all just the incredible fiasco of the rollout. The exposure of Obama’s lies about the law is just the surface. Everybody’s insurance is getting cancelled, if not this year — just wait until next year. Premiums are drastically higher, deductibles reach levels that almost make insurance useless. People don’t know if they are actually enrolled. They don’t know if their doctor will still be available to them, or who will be in their physician network. They don’t know if the drugs they need will be in the formulary. All is uncertainty. Much of the details of enrollment and payment have not yet been written.

A panicky HHS is just making up new ObamaCare ‘laws’ on the spot. They’re extending deadlines for making payment for coverage, requiring insurers to accept premium payments, changing due dates, ‘strongly encouraging”  insurance companies, HHS won’t release real numbers, and those numbers include those who haven’t paid anyway. Glenn Reynolds asks: “Where, exactly, do they get the authority for all these exemptions, waivers, and extensions?” Good question.

Please read this article from yesterday’s Telegraph, and do read the whole thing. This is the state to which the NHS has fallen, and it is our future if we don’t fight to stop it. See the related articles listed in the column. They are not just talking about dirty sheets, they are talking about lives lost unnecessarily.  Unnecessarily!

Milton Friedman: “Incentives for Immoral Behavior” by The Elephant's Child

Incentives matter. When you get the incentives wrong, you can expect things to go wrong. Sometimes people even end up dead.

Even Unions Blast Hidden Fees in ObamaCare by The Elephant's Child

There are all kind of little-noticed fees hiding here and there in the thousands of pages of the  Affordable Care Act. Should be titled ‘unaffordable care.’ The federal health care law will charge employers $63 for each person they insure next year. This is one of the clearest cost increases companies face when the law takes full effect.

Companies and other plan providers will together pay $25 billion over three years to create a fund for insurance companies to offset the cost of covering people with high medical bills. The fees will hit most large U.S. employers, and several have been lobbying to change the levy because it subsidizes individually purchased policies that will not cover their workers at all.

Insurance companies which helped to put the fee into the law, say the fee is essential to prevent rates from skyrocketing when insurers get an influx of patients with pre-existing conditions. This is all part of the plan to cover 30 million people with pre-existing conditions, who are expected to need far more care. Employers didn’t notice the fee and have been caught by surprise. They are understandably upset about it. $63 multiplied by large numbers of workers soon adds up to a big cost.

Boeing, for example, expects the fee will apply to about 405,000 workers and dependents it insures, costing the Chicago-based airplane company an estimated $25 million in 2014 alone. Some benefits experts expect that employers will at least partially pass on the $63 to workers.

The president of an insurer trade group, America’s Health Insurance Plans, claims that those with pre-existing conditions had been going to the emergency room. raising costs for everyone. A representative of an organization of emergency room physicians said some time ago that most visits to emergency rooms were by people with insurance, not the uninsured. HHS claims the high-risk program will lower the premiums for people who buy plans through the individual insurance market between 10% and 15%.

History offers clues — most federal programs come in costing vastly more than original estimates, often doubling and tripling, if not more. When insurance offers “free” care, people use more of it. Folks who would normally go to bed with a decongestant and a hot water bottle with a miserable cold, will, when it’s free go to the doctor’s office instead.  Mothers, alarmed when their kid seems to be sick,  rush off to the emergency room when it is free. Free is apt to trump common sense. Democrats don’t seem to understand incentives at all.

Secretary Kathleen Sebelius has been generous with exemptions so far, but now that the law is about to go into full force, multiemployer insurance plans which are run jointly by unions and employers found that federal regulators told the plans the lacked the authority to exclude them from the levy. SEIU is also squawking. “The funds would be bearing additional costs without gaining any additional protections,” said the director of the Benefit and Pension Funds.

Every time this kind of thing comes up, I always return to the vision of Nancy Pelosi announcing smugly “We’ll have to pass the law so we can find out what’s in it.”  Uh huh. Surprise!

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