This is the archive for Politics.
- Day 337 – “Cash for Caulkers” ??
When I first heard of this, I thought someone misspelled “Clunkers”… then I read on and realized this is another CfC-named program the government is putting on. I am sure you remember Cash for Clunkers, the $3 billion transfer program that destroyed wealth, right? Well, here is a new one- Cash for Caulkers, a “stimulus” program that plans to retrofit energy inefficient houses to make them more energy efficient, while providing jobs at the same time.
Read some of the details. I do not think this program is in effect yet, but since the president held his jobs summit today, I think this will likely come along soon. I found this by looking for something to write about for my last Austrian economics paper. I think my last paper is going to be an Austrian critique of this.
- Day 326 – Stats on ‘U.S. Consumerism’
I often hear individuals on the news or read articles that lament about “U.S. consumerism.”
Today, during a discuss about an economics article with a friend, the question of consumerism came up. After the discussion, as I browsed my bookshelf, I spotted my Pocket World in Figures 2009 edition by The Economist, and thought, “I wonder what the stats show about how ‘consumerist’ the U.S. is compared to other countries?”
Here are some interesting results I found. Take from them what you will:
-The U.S. is not 1st, but 9th in the rankings of highest GDP per head and highest purchasing power per head.
-The U.S. is 12th in the human development index.
-The U.S. is the 3rd least trade dependent nation in terms of trade as a percent of GDP.
-The U.S. is the 2nd largest world exporter.
-On the lists of top consumers in different commodities markets, the U.S. only topped 5/21 lists. (Cocoa, coarse grains, coffee, natural gas, and oil)
-The U.S. is 20th in color televisions per 100 households.
-The U.S. is not even in the top 48 countries for mobile phone subscribers per 100 people.
-The U.S. is 15th in CD players per 100 households.
-The U.S. is 6th in computers per 100 people.
-The U.S. is 24th in daily teenager computer use.
-The U.S. is 16th in number of cars per 1,000 people.
-The U.S. is 5th in music downloads per head.
I am starting to doubt that the U.S. is the dark pit of consumerism in the world today that it is frequently portrayed as. It looks to me like the U.S. is definitely not the ‘consumerist’ country. I am not disputing that it is there, but it is definitely not as serious as other places.
- Day 225 – “Pre-existing Conditions”
I was thinking about all the nonsense coming out in the health care reform debates about insurance companies denying coverage based on pre-existing conditions. I want to question what will happen if insurance companies can no longer pick who they insure based on this.
Before I begin, I want to remind you to put your emotions aside while you read this, and remember that I think that having health problems is a terrible thing, and I feel for those who have health problems and have problems getting insurance coverage. I am just arguing that using government force is not the way to fix this, and might actually make things worse.
Also, before I begin, this is from HealthReform.gov: “Under health insurance reform, insurance companies will be prohibited from refusing coverage because of someone’s medical history or health risk.”
Now, to what I wanted to say:
Insurance companies are in the business of taking on risk and providing compensation for some sort of specified loss. Those firms’ livelihood depend on their ability to calculate risk and gamble on it. Look at, for example, housing insurance in known high-risk flood areas. Most insurance companies will not insure homes in these areas. The companies know the home will likely be washed away in a flood and, if they choose to insure it, they will have to rebuild it every few years. Insuring homes like this frequently would probably bankrupt a company. Remember, insurance companies are gambling. They look at the amount of risk they are taking on and make decisions on who and what to cover based on how much and how often they will have to pay out.
If you are playing poker and know you will not win the hand, do you fold or call? If you are concerned about your money, you fold, obviously. If you are concerned with giving money to someone else at the table, you call. This is just a hunch, but I am pretty sure insurance companies are concerned with their own assets. They are not insuring you because they want to help you…if this was the case, they should just hand out money to everyone around. They are insuring you in order to make money by providing a service to you. If they think that insuring you is not a good investment, they will not do it. They do not make money by paying out more in claims than they can possibly bring in. They avoid paying out more in claims than they being in by rationally selecting who they will insure. (If you think insurance companies should be there to help you instead of make money, get in contact with me. I would like to explain some things to you.)
How does an insurer rationally select (in the case of health insurance) who it will insure? A lottery system is a bad plan, as it will just provide a smaller, but very similar sample of the general populous. Instead, insurance companies look at health history, lifestyle, etc, and calculate the risk of insuring someone. Frequently, these companies decline to insure people with pre-existing conditions, or people with lifestyles which will likely lead to health problems. Or, if it does insure these people, it weeds out more of them in another way: price. Typically, health insurance premiums are higher for smokers, because smokers are more likely to have health issues. This works in two ways: it discourages smokers from seeking out health insurance from these firms (and causes some to stop smoking), and the firms get more money from the smokers it does cover, so it does not lose as much money. Either way, it keeps more money in the firms’ accounts. The more they can select who they cover, the less they have to pay out. This keeps them in business.
To take it into other areas of insurance: Why do insurance premiums go up (or your coverage dropped) if you frequently get speeding tickets, DUIs, and get in accidents? The insurance companies know you are a higher risk, so adjust accordingly. Should the insurance company be forced to provide car insurance to known DUI offenders? I think not. Should insurance companies be forced to cover homes they know will be wiped out by floods roughly every three years? I think not. Why, then, should insurance companies be forced to cover people with conditions that make them a high risk for making future insurance claims? (I want it to be known here that I am not equating people with medical conditions with DUI offenders or houses that need rebuilt every three years. Look beyond the particulars here to the underlying components here.)
Now, what will happen if these firms are no longer allowed to select based on if someone has pre-existing condition? I see two things happening. The first is that premiums will sky-rocket. The second is that, over time, insurance companies will stop providing health care insurance all together. Medical/health insurance will give them huge losses, so they will drop that all together and stick to insuring other things. Should this happen, only one provider of health care coverage would be left: the government. It bothers me to think about that, but I am pretty sure that is what would happen. Back to the flood plain example: who provides low cost home insurance in known flood plains? The government. Other insurance companies can’t afford it. Only the government can because it is taking the money from your pockets at the point of a gun. This is what I dislike the most. If you are okay with the government taking your wealth, we have a lot more to talk about. Please contact me.
The current health care reform may not look like a government take over, but I fear that it might be in the near future. A take over of the health insurance industry is not explicitly written into the reform bill, it does not have to be. If the government makes providing health insurance no longer profitable, it will no longer happen privately.
I would like to point out that there have been a lot of particulars brought up by individuals in the government in order to get people upset about firms selecting on the basis of pre-existing conditions. Here is a quote from HealthReform.gov: “But a pre-existing condition does not have to be a serious disease like cancer or heart disease. Even relatively minor conditions like hay fever, asthma, or previous sports injuries can trigger high premiums or denials of coverage.” I am not in the health insurance industry, but some of these ‘conditions’ seem a little harsh to limit covering someone because of. I am not advocating, however, that the government regulate these companies and force them to stop their selecting practices. There are other ways of getting the company to change its ways. Stop buying insurance from them. Threaten to stop buying from them. Picket them. Send them millions of letters. Just don’t use force to get them to change. Providing insurance should be a voluntary thing, on both ends, not a forced thing.
- Day 220 – Philosophical vs Utilitarian Arguments
Brad and I drove up to his house on Chautauqua Lake this morning. On the way, we discussed some of the recent health care issues taking place in this country. (We also discussed various other things, but that is not the topic of this post.) While discussing the arguments against the health care reforms and how effective these arguments are, I was reminded of the importance of using philosophical arguments to win these types of battles.
Though utilitarian arguments are useful for certain situations, I think individuals defending liberty ought to seldom use them. Most utilitarian arguments are single-use, since they are special tailored to each situation. If you are going for a one time, quick win, utilitarian arguments can be very useful and the statistical evidence can be easily shown to everyone. Defenders of liberty, however, need to focus their arguments a little more long-term. The downside to using utilitarian arguments is that, because they are tailored to each situation, one might need many additional arguments in the future for all the new situations that arise. “You’ve won the battle, but not the war” seems to fit this–a utilitarian argument shows why one should support/oppose X but usually says little to nothing about all situations similar to X but with different particulars.
Philosophical arguments, on the other hand, strike at the root of the issue. If one can convince others that X is wrong on philosophical grounds, other arguments in the future on issues with similar foundations can be avoided. Instead of convincing people that your position on a single issue is correct, you can convince them that your philosophical outlook is correct and it will cover a whole range of issues.
As for arguing against the proposed healthcare reform, instead of attacking it as costly and poorly designed, defenders of liberty should try to convince people using one of these arguments or something similar:
Using coercion to justify and fulfill one’s preferences is wrong.
Stealing money from individuals to support other individuals is wrong.
Of course, there are many other ways to argue against the proposed health care reform. Here is a good article I recently read from the Center for a Stateless Society on a market anarchist approach to health care.
- Day 97 – Soft Despotism, Democracy’s Drift
Tonight I had the privilege of going to a lecture and panel discussion of Dr. Rahe, Dr. Birzer, Dr. Morrisey, and Dr. Arnn on democracy’s drift into soft despotism. The talk was centered upon Dr. Rahe’s recently published book, Soft Despotism, Democracy’s Drift: Montesquieu, Rousseau, Tocqueville, and the Modern Prospect. (Timely, because the 250 year anniversary of Tocqueville’s death is next Thursday.) The talk and all of the speakers were excellent. I purchased the book and I will comment on it once I read it (which will most likely not be until this summer).
At the book signing afterwards, Dr. Rahe made an interesting comment to me that I have to think about for a while. He said that for freedom to work in America, social conservatives need to be libertarian, and libertarians need to be socially conservative. I think he is making a great point there, but I need to think through the short justification he provided me. Look for my thoughts on this later in the year when I have more free time to write. This comment really intrigued me, so I intend to think about it in the coming months.
- Day 96 – Snow, Exams, and Political Essays
What do all of these things have in common? My day today!
First of all, the outcome of the snowstorm in the photos I posted last night was about 4 inches of wet, heavy snow on top of everything. We had several large tree branches fall around campus due to the weight of the snow. It was a sunny day, though, so it was beautiful! Surprisingly, the snow is still on the ground, even though it was in the high 30s today. Everything will freeze again tonight, though, since it will be in the 20s.
I have two exams coming up; one Tuesday in microeconomics, one Wednesday in poly-econ. I am spending my evening studying for them, as well as a quiz I have in Calc II tomorrow.
As for political essays, you should read Patri Friedman’s essay at the Cato Institute, titled Beyond Folk Activism. (I am in the acknowledgements at the end, because I was part of the editing team!) It is a great essay outlining the dangers of folk activism and focusing on realistic activism and alternatives to folk activism.
Also worthy of reading, Detroit businessmen had enough of government fiat and created a private currency that is being used around Detroit! I need to go there and find some before the government tries to shut it down. (Unfortunately, though, it is backed by U.S. currency, so is subject to the same dangers. Maybe they will eventually back it with gold or silver.)
- Day 84 – Abolish the Postal System’s Monopoly
As I was going through my daily list of blogs that I read, I stumbled upon an article by Jacob Hornberger advocating an end on the postal monopoly. This caught my attention because I argued for the very same thing in my AP Government class in high school. Of course, many of my fellow students thought that idea was lunacy (which it probably the same thing they thought of me, as I frequently brought up similar ideas…).
Simply put, the government monopoly on first class mail is a clear use of coercion to prop up an inefficient business and keep out competition, thus keeping prices at a predetermined level instead of at a competitive market rate. This is unacceptable, incompatible with a free society, and an inefficient use of resources. Advocates of the postal monopoly claim that without the monopoly, the USPS could not run. They go on to argue that without the USPS, there would not be universal letter delivery. This argument is simply false, and was proven wrong all the way back in 1844 when Lysander Spooner started the American Letter Mail Company and almost drove the USPS out of business in a matter of months. The USPS used government force to shut him down and have done the same to several companies since. Could letter mail be delivered to remote places without the USPS? Of course. Remote places are provided with the necessities of life, yet there is no government office in charge of distributing food to everyone in the nation (yet…).
You might laugh at the previous paragraph, but you do not live in fear of bread not being available tomorrow, yet the government does not provide such things. Who does? Individuals in the marketplace. Production of bread is a staple of almost all Americans’ lives, but no one is worried about it being provided, even though firms on the market provide it. Would first class mail be any different? Of course not. The postal monopoly is unnecessary. It is only government coercion backed up with poor arguments, which shield other political reasons for its existence.
It is time to amend Article I, section 8 of the U.S. Constitution, striking the claus that says “Congress shall have power to establish post-offices and post roads.” Though I am in favor of getting rid of the USPS entirely, that is unnecessary since it will most likely not be able to compete with other firms once the force-backed barrier to entry is lifted.
If you have any questions or concerns, or disagree with me, I would love to hear it, so email me or post a comment. My email address: cagrimmett [at] gmail [dot] com
Here are some sources to read on this topic:
Why Not Abolish the Postal Monopoly? by Jacob G. Hornberger
Postal Commissars to Raise Rates. Don’t Complain. by Ted Roberts
The Unconstitutionality of the Laws of Congress, Prohibiting Private Mails by Lysander Spooner
The Last Dinosaur: The U.S. Postal Service by James Bovard
- Day 48 – ARRA Signed Into Law
Today, President Obama signed the American Recovery and Reinvestment Act into law in Denver. The final version was 132,974 words, cost $787 billion dollars, and the amended version was passed in a matter of days. The picture above says what I think – this is going to destroy the dollar. Inflation will continue to rise and even speed up. Before you know it, you will be better off burning dollar bills to keep warm than using the dollar bills to pay for natural gas heat. It is about time to pick a better medium of exchange than fiat currency (Federal Reserve Notes) backed by the “full faith and credit of the United States Government.” Want a stable currency?
The irony of the photo above is that if the government was burning money, the currency would essentially deflate. Luckily for us (not) the government is creating more money, which lowers the purchasing power of each dollar.