Uncommon Sense

politics and society are, unfortunately, much the same thing

The left seems to prefer demonizing the right to confronting the facts

original article: Why The Left Smears Conservatives Instead Of Engaging Their Ideas
May 8, 2019 by David Weinberger

Get your facts firstand then you can distort them as much as you please.”—Mark Twain

The left routinely distorts conservative ideas, but it is not always clear whether their misrepresentations are deliberate or simply due to unfamiliarity with conservative thought.

Consider, for example, the left’s characterization of supply-side economics as “trickle-down economics” or “tax cuts for the rich.” Despite having been shown to utterly defy the facts, politicians and media continue arming themselves against these caricatures with invincible ignorance.

Indeed, never has a major marginal income tax rate reduction over the last 100 years slashed tax burdens for merely “the rich.” Every major tax cut—whether during the 1920s, the 1960s, the 1980s, the 2000s, or most recently under President Trump—has benefited all income groups. Furthermore, these cuts have made the tax code more progressive.

Following the tax cuts of the 1920s, for instance, historian John Steele Gordon writesthat: “The distribution of the tax burden became radically more progressive, not less. In 1921 those earning less than $10,000 had paid $155 million in taxes, 21 percent of person income tax revenues. In 1926 they paid only $33 million, or 5 percent. Mellon himself boasted in 1928 that a bachelor with a $4,000 income in 1920—enough to make him comfortably middle class—would have paid $120 in tax that year, but in 1928 would owe only $5.63.”

NBC News has concluded that the same pattern followed the cuts of the 1960s, 80s and 2000s:

The income tax burden is being carried to a greater extent today by upper-income people than it was 30 years ago, according to an analysis by the non-partisan Congressional Budget Office which tracks data going back to 1979.

In 1979, the top 10 percent of households, as measured by income, paid 40.6 percent of all federal taxes; other ninety percent paid 59.4 percent.

But by 2005, the top 10 percent accounted for nearly 55 percent of all federal tax revenues, while the rest of the population paid about 45 percent.

Part of the reason for the increased burden at the top is that many lower- and middle-income groups have been removed from the tax rolls entirely. So, how does the left justify its “tax cuts for the rich” canard? Here’s how.

Imagine that under a supply-side tax cut proposal $500,000 earners have their tax burden cut by 10 percent and that $100,000 earners have their tax burden lowered by 20 percent. While the larger cut in fact applies to lower earners, those on the left typically choose to ignore that, twist language, and frame tax cuts in raw dollar terms.

First, the left describes tax cuts as “giving” or “redistributing” money—as if income first belongs to government rather than the income earner. Second, they disregard the steeper percentage cut for lower earners and instead hype that $50,000 is “given” to high earners (10 percent of $500,000). According to this rationale, since less money is “given” to middle-income earners (20 percent of $100,000, or $20,000), tax cuts are for “the rich.”

That this may be the most superficially reasoned argument since the memory of man runneth not to the contrary. First, describing tax cuts as “giving money” is an abuse of language. Income first belongs to the income earner, not government. Tax cuts therefore “give” nothing, but merely allow people to keep more of their own earnings.

Second, a smaller tax cut on higher incomes tends to yield more dollars than a larger tax cut on lower incomes, even though lower earners are in fact benefiting from a deeper cut. Under President George W. Bush, for example, the top income tax rate was lowered from 39.6 percent to 35 percent—a 13 percent reduction—while the lowest rate was reduced from 15 percent to 10 percent—a 33 percent reduction.

Even though a smaller tax cut translated into more dollars for those with higher incomes and tax burdens, in fact the steepest cuts applied to the lowest earners. But to acknowledge these facts would mean confronting supply-side policy on its own terms, not demonizing straw men for political gain.

The same misrepresentation applies to the left’s usual depiction of entitlement reform. One distinguished left-wing politician thundered that conservatives want to “take an axe to public assistance, Medicare and Social Security. We can’t let them get away with this blatant theft from working families,” she railed. Influential left-wing websites have also bemoaned the right’s alleged desire to “gut entitlements,” while House Speaker Nancy Pelosi peevishly warned of the right’s “devastating cuts.”

Here again these characterizations have no basis in reality. No major right-leaning entitlement reform proposal has called for cuts to entitlements, much less for “gutting” them. Reforms put forth from Paul Ryan, the Heritage Foundation, the American Enterprise Institute, the Cato Institute, and others called for cutting not a single dollar, but for slowing their rate of growth.

But that didn’t prevent New York Times writer Paul Krugman from demagogically writingthat “the usual suspects like Paul Ryan were talking about the need for ‘entitlement reform’ — meaning cuts in Medicare and Medicaid — to reduce deficits” (emphasis added). How could a supposedly well-informed commentator at arguably the most influential left-wing outlet in the country get away with such deceit?

The answer may be provided by Krugman himself, who admitted he doesn’t read conservatives:

Some have asked if there aren’t conservative sites I read regularly. Well, no. I will read anything I’ve been informed about that’s either interesting or revealing; but I don’t know of any economics or politics sites on that side that regularly provide analysis or information I need to take seriously.

When those paid to be well-informed are uninformed, small wonder mischaracterizations of conservative ideas pervade public discourse. But perhaps nowhere is distortion of conservative thought more pronounced than with regard to social issues, where conservatives are routinely disparaged as bigotedhatefulracist, or otherwise morally repugnant human beings.

Take, for instance, the left’s caricature of a rule President Trump recently passed, which empowers the Department of Health and Human Services (HHS) to protect health care providers from being forced to perform services that may violate their religious convictions, such as abortion or transgender surgery. The Democratic National Committee maligned supporters of the rule as “want[ing] to allow health care workers to discriminate and rip away access to medical care.”

A local left-wing politician fulminated that “this is hateful,” adding that the “rule would protect a doctor who refused to treat a trans person in the ER for appendicitis or a broken leg simply because the patient is trans.” Not to be outdone, Slate depicted it as an “insidious form of bigotry.”

These charges, however, are unsubstantiated by the facts. According to HHS, “Conscience protections apply to health care providers who refuse to perform, accommodate, or assist with certain health care services on religious or moral grounds” (emphasis added). Nowhere does language allow for doctors to refuse to treat “appendicitis” or a “broken leg,” or for health care workers to arbitrarily “discriminate.”

Rather, the issue concerns whether medical professionals who have objections to performing optional procedures like abortions or transgender surgeries must be forcedto do so, as they have been in the past. This rule protects their choice to opt out. But to recognize that fact requires reading and engaging conservative ideas.

The left, however, seems to prefer demonizing the right to confronting the facts. That may be because, as Margaret Thatcher once famously observed, the facts of life are conservative. Little wonder the left is loathe to point them out.

abortion, bias, economics, health care, hypocrisy, ideology, indoctrination, intolerance, left wing, liberalism, lies, progressive, propaganda, public policy, taxes

Filed under: abortion, bias, economics, health care, hypocrisy, ideology, indoctrination, intolerance, left wing, liberalism, lies, progressive, propaganda, public policy, taxes

Socialism ethically compromised

original article: Unitarian leftist: Socialism is not ethically superior to capitalism
April 26, 2019 by REV. BEN JOHNSON

Socialism has made a resurgence in this generation, not least because of its deceptive moral appeal. Secular Millennials join liberal priests, pastors, and rabbis in saying that profits corrupt, unequal outcomes are immoral – and perhaps even Jesus would have been a socialist. Yet numerous people, secular and faithful, have weighed collectivism in the balance and found it wanting.

One of the people who found socialism ethically inferior to capitalism came from an unlikely source: the Unitarian Church.

His verdict? Socialism “is the necessary outcome, not of religion but of irreligion,” he said. Redistribution of wealth slows moral development and creates evils worse than capitalism.

The minister in question, A. Powell Davies, was once one of the most influential church leaders in the United States. He crusaded for civil rights as pastor of All Souls Church in Washington, D.C. He counted Supreme Court Justice Hugo Black among his friends, and Justice William O. Douglas edited a book of his sermons. The Religious Left leader was honored by the liberal Americans for Democratic Action posthumously.

Reverend Arthur Powell Davies (1902-1957) was a British-born Methodist who converted to Unitarianism – if “convert” is the proper noun for such a change. Davies embodied William F. Buckley Jr.’s caricature of the Unitarian who believed in “at most” one God. “This ancient God of miracles and interventions … is really dead,” wrote Davies, who styled himself a “theological radical,” in his 1946 book The Faith of an Unrepentant Liberal. “There is no God in the sky,” he wrote in another context. “There is no army of angels, no hosts of seraphim and no celestial hierarchy. All this is man’s imaginings.” Any belief in the supernatural, he believed,“represses growth. It keeps the mind always childish.”

However, his lack of faith (from a traditional perspective) underscores the point. Although there is a high correlation between secularism and socialism, Davies revealed at least a few of socialism’s failures.

Davies, who provided weekly analyses of national issues from his pulpit, turned his glance upon socialism in an address titled “Is Socialism More Ethical Than Capitalism?” which was delivered on October 16, 1949.

Despite the title of his address, Davies actually explored only the morality of compulsory wealth redistribution as was practiced by Labour government-era Britain. But even a radical non-theist found that the welfare state did not pass muster as a moral economic system.

“Socialism is not an ethical advance; socialism is an ethical compromise,” he said.

First, Davies rejected Marxism because of its belief that human nature could not be improved. Socialism compels people to redistribute wealth from the rich to the poor, something Davies supported. But compulsion “is not ethically nobler” than choosing to give one’s own goods to the poor. “[E]thically they are better for what they do voluntarily than for what they are compelled to do, even though they themselves consent to the compulsion,” he said.

The very decision to turn to the state implies that people cannot be trusted to exercise their freedom responsibly. Socialism comes about “not because of idealism, but because of despair.”

Davies also denied socialism is more ethical than capitalism for a second reason, which echoed the most famous dictum of Lord Acton:

From the viewpoint of religion, there is no more evil in the profits of a capitalist than in the vanity of a socialist politician. The one seeks money, the other, notoriety. … [H]uman nature under either system would exploit the weaknesses of that particular system, and I fear the weaknesses of compulsory systems more than those of voluntary ones.

In 1949, the Unitarian lamented that Americans “would even give away a part of their freedom because they could not trust themselves and each other to act fairly on a voluntary basis.”

But collectivism’s greatest harm is its view of human character, Davies said.

Ultimately, socialism retards humanity’s moral progress:

[C]apitalism leaves more room for liberty and encourages ethical maturity and voluntary righteousness. Compulsory systems, paternalistic and authoritarian, foster attitudes which are ethically not grown up.

Since socialism is an ethical retreat from free moral action, it cannot embody the goal of any religion:

When therefore, churchmen draw closer to socialism and say it is the necessary outcome of religious idealism, they are mistaken. It is the necessary outcome not of religion but of irreligion; that is to say, it is the necessary outcome of the evils of the human heart which prevent us from doing voluntarily what we are therefore obliged to do from compulsion.

Traditional Christianity taught for millennia that believers should diligently cultivate wealth so that we can freely distribute it to those in need. Almsgiving, a pillar of all three Abrahamic religions, benefits the giver by freeing him from greed and allowing him to express love for the recipient.

The notion that it is morally superior for Christians to ask the government to forcibly redistribute others’ possessions is so fatuous that it was once exposed by a non-believer in the pulpit.

capitalism, christian, culture, economics, ethics, government, ideology, left wing, philosophy, progressive, socialism

Filed under: capitalism, christian, culture, economics, ethics, government, ideology, left wing, philosophy, progressive, socialism

How a committed socialist gave up the faith

original article: The Bolivarian God That Failed
February 1, 2019 by Clifton Ross

The day after Venezuela’s National Assembly voted to declare its president, Juan Guaidó, interim President of the Republic, I received a text from a former friend. “If the U.S. topples Vz [Venezuela],” he wrote, “I will hold you responsible.” I would have been happy to accept this responsibility had I done anything important enough to deserve it. But the idea was absurd and he knew it. If the Venezuelan regime falls—and I hope that it does—it won’t even be possible to credit (or blame) the United States. It is the Venezuelan people who finally are taking their destiny in hand and rejecting an intolerable status quo.

The message was not a serious attempt to apportion responsibility for Venezuela’s current upheaval; it was an attempt to shame me for my treacherous betrayal of the Bolivarian cause. An early supporter of the Revolution, I had traveled to Venezuela in 2013 to cover the April presidential elections. By the time I returned to the US, I was disillusioned and depressed. I decided I needed to start writing and speaking about what I had seen there. In an article I wrote for the radical magazine Counterpunch around that time, I argued that “the so-called ‘Bolivarian Revolution’ is bankrupt: morally, ideologically, and economically,” and I asked what we, as leftist solidarity activists, should do in response. “Should we continue to make excuses for incompetence, corruption, and irresponsibility and thereby make ourselves accomplices?” I asked. “Or should we tell the truth?”

I had resolved to tell the truth. Having been so wrong about something so consequential, I felt it was the least I could do. By then, Venezuela was already in a terrible mess. Many of those I had helped to convince of the possibilities offered by Bolivarian socialism were deeply suspicious of the mainstream media and deserved to hear what was going on from a writer they trusted. But, as it turned out, the people I wanted to reach didn’t want to hear such things. And the people I asked to publish my articles didn’t much want me to write about them either. As a result of my voltafaccia, former comrades and friends contacted my editors and publishers in (occasionally successful) attempts to have my articles spiked. I was denounced and slandered online and in print. Phone calls and emails to people I had thought of as friends now went unanswered. On those occasions when I encountered one of them in public, they looked the other way. Abruptly, I found myself excommunicated, and people I’d known for 30 or 40 years made it clear that they no longer wanted to be part of my life.

*     *     *

I’d originally come to California from the Bible Belt in the mid-’70s in search of enlightened neighbors. I knew what it was to live an isolated life. It had been lonely on my father’s farm in Southern Oklahoma. I had endured farm life for five years but, having grown up in the military, I longed for the company of diverse, worldly-wise people one often found among military brats. Having become a Christian a few years before, I hoped Berkeley would offer a deeper faith than I’d found in fundamentalist churches.

I hitchhiked west and in Berkeley I joined the “radical Christian” community of the House Church of Berkeley that had grown out of Christian World Liberation Front (CWLF). From the margins of that community I gradually found my way, through liberation theology, into the secular Left. For nearly a decade I did solidarity work with the Sandinista Revolution until that process came to a halt when its “vanguard” Sandinista National Liberation Front (FSLN) was removed from power in the elections of 1990.

Following the collapse of communism, I ended up with the other “dead-enders” in Berkeley, scratching around in the depleted soil of radical politics for any worm of hope that might emerge. Those were desperate years. I soon hitched a ride on the Redwood Summer bandwagon, the joint IWW (Industrial Workers of the World, “Wobblies”) and Earth First! project to protect the last stands of old growth redwoods in Northern California from logging companies. I played a very minor role in that campaign, printing the flyers announcing the actions, but I was quickly drawn into working in the IWW. I was briefly an editor for the Bay Area Branch Bulletin and a co-editor of the Industrial Worker, and then I spent ten years in an IWW union job shop (New Earth Press) where my partner and I did a lot of ecological printing for local community organizations.

After we sold the business, I went to graduate school at San Francisco State University for a couple of very dismal years in academia. Then, after graduation, I spent the summer of 2004 in Nicaragua interviewing ex-Sandinistas who were now in opposition to the FSLN, the “glorious revolutionary vanguard,” which had been reduced over time to the status of a populist party serving the caudillo (strongman) Daniel Ortega. During the years of the Nicaraguan Revolution (1979-1990), I had translated and published the revolutionary poetry and writings of Sandinista militants—mostly farmers, low-ranking militia members, and even young children. As I was a poet, it seemed appropriate work to help spread the word about a process I found hopeful, and endangered by the hostile policies of the Reagan administration. I knew very little at the time of the Sandinistas’ responsibility for generating the war that would eventually tear their country apart. Most of us on the radical Left distrusted the media, and it was only recently that I returned to that period (in Chapter 11 of my 2016 memoir) to uncover details I had ignored during the years of that brutal civil conflict.

Foremost among the poets I’d translated during the years of the Sandinista Revolution was Ernesto Cardenal, a revolutionary priest and the Sandinista Minister of Culture. Cardenal and other “liberation theologians” were preaching a synthesis of Marxist revolutionary ideology and Christian theology, and they were my inspiration back then. By 2004, I no longer identified with Christianity, and my faith in Marxism was also in doubt. Nevertheless, I still considered myself some kind of socialist, and I thought Cardenal might be able to reassure me that there were embers of socialism still burning somewhere in Latin America. He duly obliged. Towards the end of our interview, when I asked him to name the projects in Latin America today which gave him hope, he didn’t mention (as I thought he would) the Zapatistas. “The Bolivarian Revolution,” he announced. President Hugo Chávez was doing some very interesting things down in Venezuela, he thought, and he encouraged me to visit and see for myself.

So, that December, eager to learn more, I flew down to Venezuela on Christmas break from Berkeley City College where I had been working as an adjunct English instructor. I immediately fell in with like-minded leftists in the small Andrean city of Mérida, who introduced me to a good part of the Bolivarian community there. I was so inspired by what I found that I decided to take a year off from teaching so I could follow the Bolivarian process first-hand.

It is as difficult as it is uncomfortable to enter into a previous state of mind from a later, more “evolved” or developed state. I don’t like to admit that I once believed Jesus rose from the dead, but I did. I also believed that socialism would make everyone brothers and sisters and end what my comrades and I called “capitalist oppression.”1 The available scientific and statistical evidence (not to mention common sense) weighs strongly against belief in bodily resurrection from the dead. History has delivered a verdict of comparable finality about socialism. This verdict is routinely dismissed on the grounds that only corrupted iterations of socialism have been tried; if socialism is designed to unite mankind, but all previous versions of socialism have failed to do so, then it follows that true socialism has yet to be successfully attempted.

Rarely do true believers stop to consider that there may be something wrong with the logic of socialism itself. In his 1993 book Post-Liberalism: Studies in Political Thought, the English philosopher John Gray wrote that Soviet socialism forced its subjects into a “vast Prisoner’s Dilemma, with each being constrained to act against his own interest and, thereby, directly or indirectly, to reproduce the order (or chaos) in which he is imprisoned. Thus Soviet subjects are compelled to compete with each other in climbing the rungs of the nomenklatura, pursuing the ordinary goods of life by party activism or, in extremis, by informing or denouncing one another, and so renewing daily the system that keeps them all captive.” These are not exactly optimal conditions for building community.

By 2004, I was already well aware of what Marxist-Leninist socialism had done to the twentieth century. So why did I fall for the socialism that Hugo Chávez proposed in Venezuela? The reasons were part push, part pull. The push came from the American invasion of Iraq less than two years earlier. After a rapid battlefield victory, the news from the Middle East seemed to be growing more dire by the day. A little over a month before I left for Venezuela, allegations began to emerge that the US military were committing war crimes in Fallujah. Surely a better way than this remained possible? As I wandered around Venezuela that December I was desperate for an alternative I could believe in, no matter how fragile.

The pull was what Hugo Chávez was proposing. He acknowledged the problems of  twentieth century socialism, and claimed to be offering something different—the Bolivarian version of “twenty-first century socialism.” This would be the “socialism with a human face” and quite unlike the repressive, totalitarian bureaucratic behemoth of Marxist-Leninism. As Chavista Gregory Wilpert insisted in his 2007 book Changing Venezuela by Taking Power, under Bolivarian socialism “ownership and control of the means of production must be collective and democratic.” Cooperatives were to play a large part in this and, after 2006, so would the local communal councils.

The money from the 2004 oil boom had saved Chávez from a recall referendum as he distributed the revenue flooding into the country among his followers. In this way, Chávez was able to fund his “revolution” from 2005 onwards. He ensured that the oil wealth would bypass the government, which he characterized as “corrupt” and (naturally) “counter-revolutionary.” Instead, money would be funnelled directly into a non-state-controlled corporate entity known as Fonden, the National Development Fund, over which, of course, Chávez personally presided. Fonden then parceled money out to cooperatives and the so-called “Missions” to the poor. During the oil boom, petroleum prices went from $10 a barrel to $100 and peaked at around $150 over the course of a decade. Given the astonishing amount of wealth generated, Chávez had a lot of money to throw at his pet projects. And, predictably, as the wealth trickled down, corruption increased since everyone had to get his or her piece of the patronage.

The cooperatives and community councils were among the many promising and inspiring initiatives dreamed up by Chávez in the early years of the boom. I witnessed these developments and documented them in my feature film, Venezuela: Revolution from the Inside Out. There really did appear to be great enthusiasm for these initiatives at the grassroots, especially as Hugo Chávez pushed them forward with massive funding. I quickly joined the chorus of supporters, first as invited poet to the Second World Poetry Festival of Venezuela in July 2005, then as a freelance (that is, unpaid) journalist for various left-leaning websites. When Chávez appeared on the scene, there were under 2000 cooperatives in the country. Once he came to power, that number skyrocketed to nearly 200,000, and I was there to document their ups and downs. I attended a few community council meetings and “political formation” training sessions, as well as a number of oil-funded projects like community kitchens, cultural events, and community development programs. It felt like something was really happening and that a fairer society was being built.

After the year I spent living in Venezuela (2005-2006), I returned as frequently as my schedule would allow, sometimes twice a year. Between 2008 and 2011, however, I became preoccupied with traveling across Latin America and conducting interviews with social movement activists for a book entitled Until the Rulers Obey that would be published in 2014. During that time, I was forced to become a “generalist” and didn’t have much time available to keep a close eye on what was happening in Venezuela. Nevertheless, from people who were watching, and from what I saw on my two visits there in 2011, I gathered that the situation was taking a bad turn. As even supporters were pointing out a few years later, by 2007 only about 15 percent of the 184,000 remaining cooperatives were active. If the distinction between earlier socialism and the Bolivarian version was that in the latter the “ownership and control of the means of production must be collective and democratic,” the new version wasn’t faring well at all.

Big questions began to arise about the financing of the community councils. Critics charged that these organizations were simply instruments that Chávez (and then Maduro) used to fund their supporters while denying access to the opposition. It was classic populism in the style of the Mexican PRI, which Mario Vargas Llosa once called “the perfect dictatorship.” By 2008, Chávez had suffered his first electoral defeat in a referendum that he had hoped would drive his socialist agenda forward. In response, he adopted a new approach to building twenty-first century socialism, and it looked very much like the twentieth century variety: nationalization of industries followed by the expropriation and redistribution of wealth and property. The “Bolivarian Revolution” was starting to look like any other rentier or petro-state—burgeoning corruption, a politics of clientelism, and a growing gap between the elite in control of the state (and, of course, the oil revenues) and the increasingly desperate mass of people at the bottom.

When the Arab Spring swept Gaddafi from power, I argued with my Venezuelan friends and felt the beginnings of a great divide opening up between us. I didn’t like the company Chávez was keeping—Gaddafi, Putin, Hezbollah, etc.—but neither was I ready to denounce him and his project as a fraud. Meanwhile, as my wife and I compiled the interviews with the social movement activists in Latin America, we began to notice themes and threads that confirmed what Raul Zibechi had told us when we visited him in Montevideo, Uruguay in the spring of 2012.

Zibechi was an astute analyst of Latin American politics with a focus on social movements. He explained that the so-called “Pink Tide” of leftwing governments that had risen to power on the wave of the commodities boom were in fact following the prescription of Robert McNamara, the former president of the World Bank and architect of the Vietnam War under Lyndon Johnson. In this scenario, moderately progressive governments were far more useful than their rightwing homologues to the world elite, because they provided a buffer between the transnational corporations and the social movements protesting the impact of resource extraction on communities and the environment. The testimony of our interviewees seemed to bear out Zibechi’s thesis. But surely this couldn’t be true of the more “radical” processes, like the one unfolding in Venezuela?

As I was writing the introductions to the Nicaraguan and Venezuelan chapters of our book, I investigated further, and what I discovered in the academic literature and reports by investigative journalists on both countries confirmed my doubts. By the mid-1990s, I’d already given up on the FSLN reforming itself. When I met Ernesto Cardenal again in 2004, he argued that there was no hope of any positive change from the “Ortega dictatorship.” My introduction to the Nicaragua chapter of our book was therefore fairly easy to write, since the direction the country was going under the Ortega mafia seemed clear. I quoted Dennis Rogers’s description of the Somoza dictatorship the FSLN had overthrown and remarked that it also described the present Ortega regime quite well: “A venal oligarchy run by a small elite satisfied to promote a form of what might be termed ‘hacienda feudalism.’” But Venezuela? Chávez? I had grown more critical, but I still believed in Chávez. As so many Chavistas in Venezuela had reassured me, “Chávez is clean, but all those surrounding him are corrupt.” This was a cult of personality—a One Man faith.

*     *     *

On the afternoon of March 5, 2013, I’d just finished another draft of my introduction to the Venezuela chapter when the phone rang and a friend told me that Hugo Chávez had died. I wrote a eulogy for Counterpunch that now, nearly six years later, I find embarrassing. I then decided to go back down to Venezuela for the elections. On the flight I caught up on my reading, including a fascinating biography of Hugo Chávez written by two well-known Venezuelan journalists, and some analyses of the massive problems in the Venezuelan economy, including the missing $29 billion dollars from the Fonden budget over which Chávez had presided.

Chávez, in the style of Latin American autocrats from time immemorial, had hand-picked his successor, Nicolás Maduro. Maduro was a fairly hard-core Leninist with a soft spot in his heart for Sai Baba, the Hindu guru-huckster accused of child molestation before he died in 2011. Compared to Chávez, Maduro is wooden and utterly lacking in the warmth and charm of his political “father.” But he had close relations with Cuba and was part of Chávez’s trusted inner circle and, most importantly, he was Chávez’s choice. Y punto, end of discussion.

Of the difficulties I faced over the next few days attempting to enter the country and cover the April 2013 presidential election between Maduro and Henrique Capriles, I have written elsewhere. Suffice it to say that I wasn’t granted entry until the day after the elections. Even then, due to the massive nationwide protests, I only managed to get to Mérida thanks to the generosity of oppositionists who gave me a ride. Over the course of the trip, they filled me in on the details of why Maduro had only won the elections by only slightly more than a single percentage point. This was despite using all the state resources at his disposal to (illegally) pay for and promote his campaign, including the state oil company PDVSA’s buses which drove state employees to the polls to vote for him. Chavistas simply hadn’t come out in large numbers to vote for him, and clearly many of the faithful had already gone over to the opposition.

Over the next few days and weeks, as I traveled through Venezuela, I began talking to the “counter-revolutionaries” and they offered evidence of their country’s deep problems to which my Chavista friends could only respond with rhetoric. In the industrial region of Guayana in the state of Bolívar, I interviewed union workers in the nationalized industries about the collapse of those industries. I was able to confirm their claims with secret footage shot for me by a worker using my own video camera, which showed the ruined interior of an enormous state factory where not a soul was to be seen on this particular work day.

In Caracas, I met with opposition human rights activists, union leaders, and leftwing academics for interviews. As the missing pieces of the puzzle began to fall into place, the reality of the Bolivarian catastrophe overwhelmed my resistance. Emilio Campos, then Secretary General of Carbonorca, the nationalized industrial coke plant, described the Bolivarian Revolution as nothing more than “a media show.” He called himself “a revolutionary for a plurality of ideas where a country seeks balance, not just for a party, or one sector of society. I believe in freedom of thought, in a diversity of ideas. But the hegemony of power makes you narrow-minded.”

The real turning point for me, however, was the interview I conducted with labor journalist Damian Prat, whose extraordinary book Guayana: El milagro al revés (Guayana: The Reversed Miracle) I had read over the two or three days it took me to get to Guayana from Merida by bus. The interview took place within a day or two of the shocking beatings of several prominent opposition National Assembly deputies by Chavista deputies during an official session. The state television cameras were turned off during the violence and afterwards, as the wounded were taken to the hospital. I was still shaken by the footage some brave parliamentarians had captured on their cell phones and leaked to the press.

I met Prat at his office at the Correo del Caroní, the Guayanesa daily paper. As I turned on my video camera, Prat smiled wryly. “Some of you in the critical, intellectual circles of Europe and the United States seem to think it’s fine that in the countries of our Latin America there are arbitrary governments and processes full of abuses that in your countries you wouldn’t consider allowing for a minute. No, in your own country you’d militantly reject the same things you seem to feel are perfectly fine to take place down here, so far away, where it’s exotic and interesting…” I felt my face redden with shame, and I suddenly felt my whole world capsize.

It would be months before I was able to return to Guayana to interview Rubén González, the former Chavista and Secretary General of Iron Mine Workers Union of the Orinoco (Sintra Ferrominera del Orinoco) about his own experience of imprisonment without trial “just for doing my job in the union and defending the rights of workers.” Referring to the claims of “sabotage” as the reason the industries were failing in the country, González told me that those in government “never thought of governing, but rather of enriching their little group in power. They never invested in these businesses, but totally bled them dry. They themselves are the saboteurs.” At the time of this writing, González is back in jail for organizing on behalf of workers in the state ironworks.

*     *     *

All of a sudden, I found myself in a strange world. I had drifted—at first gradually, but then definitively—into the camp of my former “enemies,” persuaded by their narrative and by the evidence before my own eyes. And, as I did so, I discovered that the editors of the news sites where I’d published my passionate defenses of the Bolivarian project for the past few years no longer responded to my pitches or my queries or my emails. As Venezuela disintegrated, I was lost and confused and alone.

And then, while I was grieving the loss of my innocent old life and its many friendships, something curious and unexpected began to happen. I discovered a great sense of excitement as I investigated “new” ideas for which I’d previously had nothing but contempt. I found myself reminded of Herbert Spencer’s quote at the end of the Alcoholics Anonymous Big Book: “There is a principle which is a bar against all information, which is proof against all arguments, and which cannot fail to keep a man in everlasting ignorance—that principle is contempt prior to investigation.”

For the next two years, I delved into the literature on Venezuela with renewed interest. Javier Corrales and Michael Penfold’s book, A Dragon in the Tropics, it turned out, was particularly well-researched and compelling. Since I could no longer get my writing published in any of the outlets for which I’d previously written, I redirected my energies into making a new film entitled In the Shadow of the Revolution with the help of a Venezuelan filmmaker and friend, Arturo Albarrán, and I wrote my political memoir for an adventurous anarchist publisher. But what preoccupied me more and more were the larger questions of socialism versus capitalism, and the meaning of liberalism.

I’d visited Cuba twice—in 1994 and again in 2010—and now, with my experience of Venezuela, I felt I’d seen the best socialism could offer. Not only was that offering pathetically meagre, but it had been disastrously destructive. It became increasingly clear to me that nothing that went under that rubric functioned nearly as well on any level as the system under which I had been fortunate enough to live in the US. Why then, did so many decent people, whose ethics and intelligence and good intentions I greatly respected, continue to insist that the capitalist system needed to be eliminated and replaced with what had historically proven to be the inferior system of socialism?

The strongest argument against state control of the means of production and distribution is that it simply didn’t—and doesn’t—work. The proof, as they say, is in the pudding—and in this case, there was no pudding at all. In my own lifetime, I’ve seen socialism fail in China, fail in the Soviet Union, fail in Eastern Europe, fail on the island of Cuba, and fail in Nicaragua under the Sandinistas. And now the world is watching it fail in Venezuela, where it burned through billions of petro-dollars of financing, only to leave the nation worse off than it was before. And still people like me had insisted on this supposed alternative to capitalism, stubbornly refusing to recognize that it is based on a faulty premise and a false epistemology.

As long ago as the early 1940s, F.A. Hayek had identified the impossibility of centralized social planning and its catastrophic consequences in his classic The Road to Serfdom. Hayek’s writings convinced the Hungarian economist, János Kornai, to dedicate an entire volume entitled The Socialist System to demonstrating the validity of his claims. The “synoptic delusion”—the belief that any small group of people could hold and manage all the information spread out over millions of actors in a market economy—Kornai argued, leads the nomenklatura to make disastrous decisions that disrupt production and distribution. Attempts to “correct” these errors only exacerbate the problems for the same reasons, leading to a whole series of disasters that result, at last, in a completely dysfunctional economy, and then gulags, torture chambers, and mass executions as the nomenklatura hunt for “saboteurs” and scapegoats.

The synoptic delusion—compounded by immense waste, runaway corruption, and populist authoritarianism—is what led to the mayhem engulfing Venezuela today, just as it explains why socialism is no longer a viable ideology to anyone but the kind of true believer I used to be. For such people, utopian ideologies might bring happiness into their own lives, and even into the lives of those around them who also delight in their dreams and fantasies. But when they gain control over nations and peoples, their harmless dreams become the nightmares of multitudes.

Capitalism, meanwhile, has dramatically raised the standard of living wherever it has been allowed to arise over the past two centuries. It is not, however, anything like a perfect or flawless system. Globalization has left many behind, even if their lives are far better than those of their ancestors just two hundred years ago, and vast wealth creation has produced vast inequalities which have, in turn, bred resentment. Here in California, the city of Los Angeles, “with a population of four million, has 53,000 homeless.” Foreign policy misadventures and the economic crash of 2008 opened the door to demagogues of the Left and the Right eager to exploit people’s hopes and fears so that they could offer themselves as the solution their troubled nations sought to the dystopian woe into which liberal societies had fallen. In his fascinating recent jeremiad Why Liberalism Failed, Patrick Deneen itemizes liberal democracy’s many shortcomings and, whether or not one accepts his stark prognosis, his criticisms merit careful thought and attention.

Nevertheless, markets do work for the majority, and so does liberal democracy, as dysfunctional as it often is. That is because capitalism provides the space for ingenuity and innovation, while liberal democracy provides room for free inquiry and self-correction. Progress and reform can seem maddeningly sluggish under such circumstances, particularly when attempting to redress grave injustice or to meet slow-moving existential threats like climate change. But I have learned to be wary of those who insist that the perfect must be the enemy of the good, and who appeal to our impatience with extravagant promises of utopia. If, as Deneen contends, liberalism has become a victim of its own success, it should be noted that socialism has no successes to which it can fall victim. Liberalism’s foundations may be capable of being shored up, but socialism is built on sand, and from sand. Failures, most sensible people realize, should be abandoned.

That is probably why Karl Popper advocated cautious, piecemeal reform of markets and societies because, like any other experiment, one can only accurately isolate problems and make corrections by changing one variable at a time. As Popper observed in his essay “Utopia and Violence”:

The appeal of Utopianism arises from the failure to realize that we cannot make heaven on earth. What I believe we can do instead is to make life a little less terrible and a little less unjust in each generation. A good deal can be achieved in this way. Much has been achieved in the last hundred years. More could be achieved by our own generation. There are many pressing problems which we might solve, at least partially, such as helping the weak and the sick, and those who suffer under oppression and injustice; stamping out unemployment; equalizing opportunities; and preventing international crime, such as blackmail and war instigated by men like gods, by omnipotent and omniscient leaders. All this we might achieve if only we could give up dreaming about distant ideals and fighting over our Utopian blueprints for a new world and a new man.

Losing faith in a belief system that once gave my life meaning was extremely painful. But the experience also reawakened my dormant intellectual curiosity and allowed me to think about the world anew, unencumbered by the circumscriptions of doctrine. I have met new people, read new writers and thinkers, and explored new ideas I had previously taken care to avoid. After reading an interview I had given to one of my publishers a year ago, I was forwarded an email by the poet David Chorlton. What I’d said in that interview, he wrote, “goes beyond our current disease of taking sides and inflexible non-thinking. I’m reading Havel speeches again, all in the light of the collective failure to live up to the post-communist opportunities. We’re suffering from a lack of objectivity—is that because everyone wants an identity more than a solution to problems?”

 

economics, foreign affairs, government, history, ideology, liberalism, poverty, public policy, reform, socialism

Filed under: economics, foreign affairs, government, history, ideology, liberalism, poverty, public policy, reform, socialism

What happens when no one asks whether insurance is really a good way to deal with health care costs?

original article: How Obamacare Hurts Millions Of Americans By Robbing Peter To Pay For Paul
May 10, 2017 by Scott Ehrlich

In my prior article, I tried to outline the pre-existing condition issue. I concluded the amount of people potentially affected by this issue ranged somewhere between 500,000 and 1.9 million and, due to political reasons, it is much likelier to be on the lower end of that spectrum.

So for this article, I will use 1 million people as my number. Based on this data from Avalere, it’s a pretty sensible estimate, if you only count states that are solely Republican-run and therefore likely to seek a waiver.

This 1 million people are adults covered by the individual market, at the moment largely through the federal exchanges. People on group insurance are not affected by pre-existing conditions laws, as those plans do not do individual underwriting. People in government insurance such as Medicaid, Medicare, and Tri-Care are guaranteed issue upon meeting certain conditions. Children under 19 who aren’t covered by Medicaid are covered by the Children’s Health Insurance Program, which has no pre-existing condition exclusions. Futher, people in Maine, Massachusetts, New Jersey, New York, Vermont, and Washington have state laws that mandate guaranteed issue.

So our at-risk people are made up of the remaining 7 million or so people in the other 45 states who choose to self-insure, have pre-existing conditions that stop them from getting insurance, have states granted waivers under the American Health Care Act (AHCA, if it passes Congress in its current form), and have failed to keep continuous coverage.

Assuming your eyes glazed over a quarter of a way through that sentence, that shows just how many safety nets one has to fall through to be at risk of being denied coverage at the market rate, or any rate, for pre-existing conditions. Recall that just because someone has a pre-existing condition or is denied by an insurance company for one, doesn’t mean he will be denied by all. So that is why my numbers are lower than many others being reported.

Let’s Pin Down How Much These Folks’ Health Care Costs

So let’s go with that 1 million number, which is still a lot of people needing help. What can we do with them? That is the challenge. When enrolling a random assortment of 1 million Americans in a pool, theoretically about 27 percent could have some sort of ailment requiring immediate treatment. Depending on the mix of other people, it’s possible to make that pool actuarily sound.

But high-risk pools don’t work that way. In that pool, 100 percent of enrollees have pre-existing conditions. Therefore, it’s impossible to provide them insurance and keep a stable pool. You can’t insure someone for a condition he already has any more than you can insure a house that is already on fire or a car that has already crashed. There is no ability to pool risk.

So this group of people is very expensive to cover, as they are already sick and use a lot of health care. Average costs in the PCIP federal high-risk pool, the one the Affordable Care Act set up as a bridge to the exchanges, averaged more than $32,000 per enrollee per year. Based on those numbers, at 1 million enrollees, we’d be looking at more than $32 billion annually in costs for high-risk people. That $8 billion that got Rep. Fred Upton to vote yes on House Republicans’ Obamacare tweaks? That would cover only three months of expenses at full enrollment.

If the entire amount appropriated in AHCA were applied to pre-existing conditions, a whopping $123 billion, we’d only have enough to make it through four years if that cost were accurate.

Luckily, That Cost Is Likely Overstated

Reading deeper into the report, you find that, fortunately, it may not be. Not all people with pre-existing conditions are created equally: “4.4 percent of PCIP enrollees accounted for over 50 percent of claims paid, while approximately two-thirds of enrollees experienced $5,000 or less in claims paid over the same period.” So while Avalere used the $32,000 figure, it probably vastly overstates the cost of a program like this. That’s because the people most likely to have been enrolled in PCIP would be the sickest, who need the most care immediately.

Someone with early-stage diabetes with no side effects, like myself, who may currently be tough to insure may ignore a high-risk pool like this since it costs more than I spend on treatment, while someone with advanced cancer requiring frequent doctor visits, expensive medication, and consistent chemotherapy would seek something like this out. Therefore, if the pool of 115,000 enrollees in PCIP were expanded to the 1 million people who have pre-existing conditions but couldn’t be insured, we’d likely see many more costing about $5,000 per year than the ones costing $100,000 and up.

Therefore, I prefer the number $12,000 as the cost per additional enrollee. This uses the average benefit used by a person enrolled in Medicare based on the total benefits paid divided by the total people covered. Since these people are older, sicker, or disabled and have high health utilization, I think it makes a good proxy for the sort of person likely to seek a high-risk pool who would not have jumped at the opportunity to sign up for PCIP.

Adding 900,000 people at that cost to the 100,000 people at $32,000 in PCIP gives us a total annual cost of $14 billion. That means if people in these pools were to cover about 10 percent of their own health-care expenses, the money AHCA appropriates could cover the entire affected population of the high-risk pools for the entire 10-year budget window.

This Is Still a Lot of Money

So now we’ve seen the numbers. About a million people may need help. Pooling them with the healthy has real costs to a lot of people to help a few. But we have decided as a society that we can’t just let those few suffer. Yet helping pay for their care will be staggeringly expensive. Even in my example, with this smaller pool and smaller assumed costs, we would burn through the entire pool of $123 billion in a decade. These people will still need help at the end of that decade. How do we take care of our sick population into the 2030s without busting our budget?

That is why people argue we should keep the Affordable Care Act provisions regarding pre-existing conditions, which are community rating and guaranteed issue. The benefits are obvious, as they have been blasted all over the media. People getting operations they might not otherwise have had, seeing doctors they couldn’t otherwise see, getting care they wouldn’t have otherwise received. Who would be so heartless as to take that away?

This is a classic example of concentrated and observable risk and diffuse and hard to see benefits. Remember what has happened to premiums since ACA was implemented. All these people were not covered without a cost. That cost comes out of the pockets of everyone else in the exchanges. While much harder to see, and much less heart-wrenching in a soundbite or a video or a tweet, those costs did make a difference.

Adding a few hundred dollars a month to health premiums can mean the difference between eating terrible food and eating healthy, not working out and a gym membership, scrimping and stressing over every dollar and rationing essentials which adds mental and physical health costs, or a budget that more comfortably covers your fixed expenses.

More severely, higher premiums for lower-quality policies may mean that some people who may have formerly been able to afford some form of insurance now are going without, causing exactly the sort of problem ACA was supposed to fix. To act like the days, weeks, months, and years taken off the lives of some people due to the costs ACA imposes to help others is without consequence is sadly mistaken.

When Compassion Is Cruel

Those realities aren’t purely speculative, either. Rates are rising year over year. Even with rising subsidies, the plans get more expensive to both buyers and the taxpayers. And there is no sign these rising rates will abate, as more people for whom insurance has a marginal value will choose to go without, leaving a sicker pool, causing not only rates to rise but insurance companies to lose more and more money on these policies.

That leads to insurers dropping out of markets entirely. This is why doing it the “compassionate” way has not only costs for people whose rates will rise, but also costs for those this is supposed to help, as this adverse selection will result in many of them also having no insurance options. Guaranteed issue and community rating do very little good if no one is willing to sell policies because the cost risk is too high.

That is why, whichever way you lean politically, both the ACA and AHCA seem to be just a band-aid. Neither are sustainable, needing significant federal money pumped into them to survive. ACA will need it to subsidize the cost of policies to get healthy people to sign up while also subsidizing the losses insurance companies suffer in an effort to keep them on the exchanges when they don’t.

AHCA will need massive continued subsidies to fund high-risk pools, all as health-care gets more individualized and potentially more expensive. This is in addition to the increasing burden Medicare will put on state and federal budgets as baby boomers retire and live to a ripe old age, while higher birth rates among poorer Americans, in addition to ACA expansion, should cause a massive increase in Medicaid spending.

This is why any comprehensive health insurance reform is doomed to fail. Americans want great quality care at cheap prices that is abundantly available. At best, we can get two of those three. At worst, we get very expensive plans that provide very little real health care for the most vulnerable while making things worse for everyone else. That is why our efforts should focus on ways to provide better health care for everyone, increasing the size of the pie of good-quality, available health care rather than locking in the worst parts of our current system and merely fighting about who should pay for them.

crisis, culture, economics, government, health care, legislation, nanny state, public policy, reform, regulation, spending, tragedy, unintended consequences

Filed under: crisis, culture, economics, government, health care, legislation, nanny state, public policy, reform, regulation, spending, tragedy, unintended consequences

Confusion between care and insurance guarantees costs will rise

original article: When Replacing ObamaCare, Remember Health Insurance Isn’t Health Care
March 7, 2017 by WILLIAM M BRIGGS

Big Louie whispers to you, “Say, Mac. The fix is in. The Redskins are throwing it to the Browns. It’s all set. Guaranteed.”

“No, kiddin’, Louie?”

“I’m tellin’ ya. Now listen. I want you to bet me the Skins win.”

Wha…? But you just told me ….”

“You aren’t paying attention. What’s wrong with you, Mac? You want trouble? I said the Skins will lose and you will bet they’re going to win. Now gimme sixty bucks that says the Skins will win.”

“Hey! You don’t have to be so rough …”

“Say, these twenties are new! Considerate of you. Listen. Don’t be so glum. You’re contributing to a good cause: me.”

What Insurance Is

Any of this remind you, Dear Reader, of the insurance business? It shouldn’t. Yet the word insurance has undergone a strange metamorphosis, which is caused, as you won’t be surprised to learn, by government.

Insurance used to be a bet you would make that you hoped you wouldn’t win. You went to an insurer and made a bet that something bad would happen, say, you got cancer or your house would burn down. The insurer figured out how much it would cost to pay you to fix the bad thing. He then said, “Okay, gimme Y dollars, and if the bad thing happens, I pay you X.” If you didn’t like Y or X, you negotiated with the insurer until a pair of numbers were mutually agreeable — or you agreed to part ways.

But suppose you told the insurer, “I have cancer. It will cost X to treat. I want to bet with you that I get cancer. What’s the minimum Y I should pay you?”

The insurer would either laugh you out of his office, as he commiserated with you about the sad state of your health, or he would pick a Y greater than X. Why? Because it was guaranteed that the insurer would pay out X. Why would he ever take an amount less than X?

The Government “Fix”

Because government, that’s why. Because your cancer is a “pre-existing condition” and it was seen as cruel and heartless for the insurer not to lose money on your behalf. But government forced the insurer to lose money. Government enjoyed playing Robin Hood. Hood as in criminal, crook, confidence trickster (did you not know that? Big Louie knew).

However, because the entities that comprise government move in and out of insurers (and their banks), the government also took pity. Government knew insurers had to make up their forced deficits. So it mandated that citizens who did not want to make a bet with any insurer had to give the insurer money for bad things that would almost never happen. ObamaCare became Big Louie muscling twenty-somethings to insure themselves against Alzheimer’s.

Thanks to Supreme Court Justice Roberts, you being forced to fork over funds to a private entity was called a tax. (Same thing Big Louie calls it!) Thus, not only was the word insurance gutted of most of its actual meaning, so was tax. Orwell lives.

Of course, insurers assisted in their own demise. They, like everybody else, were happy to let folks conflate the incompatible terms health insurance and health care. Once people could no longer keep these separate in their minds, the end of insurance was guaranteed.

What Insurance Isn’t

Insurers blurred these distinctions by separating themselves from the purely betting side of business, by dealing with people’s employers and not people (a condition ensconced by further Government mandates), by paying doctors and hospitals and not people, and by writing blanket instead of specific contracts. It came to be seen as normal for a person to expect “insurance” to pay for their kid’s visit to the doctor for sniffles.

Having the sniffles is almost guaranteed; it is thus numerically no different than a pre-existing condition. Having an insurer pay out on these “sure bets” meant that an additional layer of bureaucracy had to be built to handle the paperwork and shuffle funds around. Insurers unwisely moved to make a profit on these sure bets, which caused them to be penurious when paying out on large claims. Doctors had to increase their staff to handle the busywork. Monies that would have gone to pay for “bettable” diseases had to be diverted to pay for aspirins and bandages. Every step along the way caused premiums to be driven higher.

Now no one understand’s the true cost of care. Worse, we’re at the point where the true meaning of insurance is under active attack. A recent article in Bloomberg complains that it would be better if insurers used data to calculate a person’s chance of this or that disease — which is exactly what insurers should do. The author of that article also frets that insurers might “once again [be] allowed to charge extra for pre-existing conditions, an idea currently being debated in Congress.” In other words, the author is worried that insurers might once again be allowed to do what insurers are supposed to do, and what they must do if insurance is to work.

When Congress scraps ObamaCare, they must not replace it with any scheme that confuses insurance and care. This confusion guarantees that costs will go up and the bureaucracy will grow.

bureaucracy, crisis, cronyism, economics, government, health, health care, nanny state, politics, reform, unintended consequences

Filed under: bureaucracy, crisis, cronyism, economics, government, health, health care, nanny state, politics, reform, unintended consequences

Flawed anthropology leads to flawed economics

original article: We’re all Dead: How J.M. Keynes – And His Critics – Went Wrong
June 29, 2016 by Liz Crandell

“Critics of John Maynard Keynes were so determined his economics were wrong that they allowed Keynes to dictate the terms of the debate,” says Victor Claar, professor of economics at Henderson State University, in his Acton University lecture. He continues to describe Keynes flawed anthropology with respect to classical economists and the Great Depression. Key observations of human nature include the principles of work, property, exchange, and division of labor. We can survive and prosper, take ownership of our work, support and rely on each other through exchange, and specialize in exchange at an opportunity cost. Furthermore, these observations are linked to moral imperatives.

Work allows us to combat sloth, we can practice good stewardship, serve other people, and provide richer options for all. Keynes, who was focused on how consumption worked rather than what human life looked like, did not understand these things. Maynard, like his father, Neville, was a large proponent of the Cambridge method, and the distinctions between positive and normative economics laid out by John Stuart Mills. The great legacy and wide scope of this method still exists today, as most economists continue to try and steer clear of normative statements, and try to stick to descriptive value judgments. However, by the nature of the problems we face, dealing with poverty, unemployment, and development, we inherently deal with positive statements and issues.

Supporters of Keynes’ theories use The Great Depression and post-World War eras as evidence of their effectiveness. Claar grants insight into the attractiveness of such policies, saying that such a recession created pessimism about the ability of market forces to self-correct, and since government management worked “reasonably well” after World War I, state management became tempting again. There is fault in this, since Keynes “focuses on the inherent instability of the market and the need for active policy intervention to achieve full employment of resources and sustained growth.” Keynes maintains that recessions and high unemployment are due to the fact that firms and consumers in the private sector do not spend enough on new capital and equipment and goods and services due to insecurity and nervousness about the future. As such, the remedy lies in the public sector, with the government spending using deficit financing if necessary. Ideally, after people get back to work, revenues will increase and the budget will balance once more. The obvious downside to this thought is that reducing pain in the short run, putting a band aid on the problem, leads to inflation and slower rates of long-term growth. Claar draws students’ attention to a revealing quote from Keynes that creates a moral dilemma: “In the long run, we’re all dead.” Keynes is perfectly happy to allow future generations pay off the debt that his creates.

Claar concludes there are three keys to understanding Keynes: The classical model’s predicted equilibria are mere special cases and are rarely satisfied in practice; hubris, or that the State is more capable of managing the economy that we ourselves are; and consumption is the purpose of all economic activity. This “flawed anthropology leads to flawed economics,” and “caught hold in the same period that men and women of science began to believe that systematic management of human beings was both possible and useful in all areas of society.” Keynes himself declared eugenics to be “the most important, significant and, I would add, genuine branch of sociology which exists.” Claar leaves students with a hopeful message that we can combat this dangerous line of thinking with well-functioning markets that let prices send strong signals to all of us regarding where our services may be needed most by others; clearly defined and enforced property rights that lead to good stewardship; and influential institutions, such as churches and families, to share wisdom.

bias, economics, elitism, eugenics, government, history, ideology, nanny state, philosophy, progressive

Filed under: bias, economics, elitism, eugenics, government, history, ideology, nanny state, philosophy, progressive

Obamacare Premium Hikes Expected in 2017

original article: Get Ready for Huge Obamacare Premium Hikes in 2017
April 21, 2016 by Eric Painin

Amid rising drug and health care costs and roiling market dynamics, the spokesperson for the nation’s health insurers is predicting substantial increases next year in Obamacare premiums and related costs.

Without venturing a specific percentage increase, Marilyn Tavenner, the president and CEO of America’s Health Insurance Plans (AHIP), said in an interview with Morning Consult that the culmination of market shifts and rising health care costs will force stark increases in health insurance rates in the coming year.

“I’ve been asked, what are the premiums going to look like?” she said. “I don’t know because it also varies by state, market, even within markets. But I think the overall trend is going to be higher than we saw previous years. That’s my big prediction.”

If Tavenner is right, Obamacare will jump dramatically—last year’s premium for the popular silver-level plan surged 11 percent on average. Although Tavenner didn’t mention deductibles, in 2016, some states saw jumps of 76 percent, while the average for a 27-year-old male on a silver plan was 8 percent.

The warning to consumers from Tavenner, the former administration official who headed the Center for Medicare and Medicaid Services (CMS) and oversaw the disastrous launch of HealthCare.gov, the Obamacare website, comes at a time of growing uncertainty about the evolving makeup of the Obamacare health insurance market. With many insurers struggling to find profitability in the program, the collapse of nearly half of the 23 Obamacare insurance co-ops and this week’s announcement that giant UnitedHealth Group intends to pull out of most Obamacare markets across the country, anticipating future premiums and copayments is largely risky guesswork.

Premiums for the current 2016 season rose on average by 8 percent over the previous year, with 12.7 million Americans enrolling for coverage and government subsidies, according to CMS. Federal officials stress that the average rate doesn’t tell the whole story, and that in many cases after consumers shop around for the best price and government subsidies are applied, the actual premium increase is lower.

The Department of Health and Human Services did a study looking at what consumers were estimated to pay based on initial filings compared to what they actually paid. The study found that last year, the average cost of Obamacare marketplace coverage for people receiving tax credits went from $102 a month to $106 per month, a 4 percent change — despite warning from some of double-digit hikes.

Tavenner’s prediction may well be an opening gambit in the negotiations between the industry and insurance regulators about the 2017 premiums. As Morning Consult noted, many insurers have begun submitting opening bids on raising their premium rates and copayments, which will then be reviewed by the government and finalized this fall.

With a major presidential and congressional election looming this fall, the administration is doing all that it can to tamp down fears of major hikes next year in Obamacare insurance premiums and related out-of-pocket costs. Benjamin Wakana, a Department of Health and Human Services spokesperson, said on Thursday that changes in health care insurance rates are “not a reliable indicator” of what typical consumers on average will pay. “Marketplace consumers would do well to put little stock in those initial numbers,” he said in an email.

But Tavenner outlined several factors that she could put considerable pressure on premium prices next year. Those include:

  • A general rise in the nation’s health care tab. Overall, U.S. health care spending grew by 5.3 percent in 2014 – reaching an historic level of $3 trillion, after years of relative cost stability. Medical costs rise from year to year and will certainly affect the next round of premium hikes.
  • Soaring prescription drug prices. Insurers as well as government health care programs have been struggling to keep pace with rising drug prices, especially newer specialty drugs to treat the Hepatitis-C virus and cancer. Pfizer Inc., Amgen Inc., Allergan PLC and other companies have raised U.S. prices for scores of branded drugs since late December, with many of the increases between 9 percent and 10 percent, according to the Wall Street Journal .
  • The combination of market forces and limitations imposed by the Affordable Care Act will put enormous pressure on insurers to up their premiums. Under the law, there is a cap on insurers’ profits, companies are obliged to insure anyone regardless of their general health or pre-existing conditions, and the insurance plans must be structured in a certain way that often lead to losses.
  • Finally, two of three federal “risk mitigation” programs created under Obamacare are due to expire in 2017. Those programs were set up to protect insurers from huge, unexpected losses from providing health insurance on the Obamacare exchanges. UnitedHealth and other major insurers have found it difficult to accurately anticipate their costs in providing coverage to sicker or older Americans, and set premiums that were inadequate to cover their risks. Without those programs to fall back on, many companies likely will seek to jack up their premiums.

“It’s kind of a myriad of factors,” Tavenner said in predicting rising premium costs. “It’s not one factor.”

Clare Krusing, director of communications for AHIP, said in an interview on Thursday that health insurance companies “are working through” these factors right now in setting rates for the coming year and deciding whether to participate.

“Plans are just beginning to file their rates, and it’s a long process with state and federal regulators, until those are approved,” she added. “Certainly plans are going to evaluate market conditions and regulatory approvals, and that will all impact their participation overall” in Obamacare.

bureaucracy, crisis, economics, government, health care, legislation, medicine, nanny state, public policy, reform, tragedy, unintended consequences

Filed under: bureaucracy, crisis, economics, government, health care, legislation, medicine, nanny state, public policy, reform, tragedy, unintended consequences

Do Democrats really realize how difficult it has been on working-class Americans to finance Obamacare?

original article: Watch: Mom Says The 15 Words No Democrat Wants To Hear Right To Hillary’s Face On Live TV
March 15, 2016 by Warner Todd Huston

One woman at CNN’s recent Democrat town hall seemed to sense the possible dangers of voting for a left-leaning candidate, and shocked Hillary with what she had to say about Obamacare.

During the CNN televised town hall Teresa O’Donnell of Powell, Ohio, stood to ask a question of the former Secretary of State, first explaining how Obamacare has seriously hurt her and her family due to the exorbitant costs it has inflicted upon them.

“I would like to vote Democratic,” O’Donnell said, “but it has cost me a lot of money.”

She went on saying, “And I’m just wondering if Democrats really realize how difficult it has been on working-class Americans to finance Obamacare.”

O’Donnell told the audience that since the President’s signature Affordable Care Act went into effect the monthly premium for her family healthcare costs has “skyrocketed.” She says her costs have soared from $490 a month to $1,080.

The woman did note she hadn’t purchased her insurance through an Obamacare exchange so, in an effort to rescue Obamacare from the bad publicity, Hillary said the woman should check out the exchange avenue for her insurance.

This Ohio woman isn’t alone in her distaste over Obamacare. As Independent Journal noted, a recent Rasmussen poll found that 54 percent of respondents do not like Obamacare.

Hillary, though, has made Obamacare a major plank in her campaign noting she was for “Obamacare” before it even existed since she tried to get universal healthcare put in place when she was First Lady during her husband Bill’s presidency in the mid 1990s.

“What we have to do, I think, is defend the Affordable Care Act and fix it,” Hillary said in a recent campaign video. Late last year Clinton said, “I’m not going to let them tear up that law, kick 16 million off their health coverage and force the country to start the healthcare debate all over again.”

She has also attacked insurance companies for “predatory pricing” and said that they are “gouging” Americans with their rates.

Her Democrat opponent, self-avowed socialist Sen. Bernie Sanders, wants to go even farther by proclaiming healthcare a “right.”

“My view is simple,” Sanders says on his website, “health care is a right, not a privilege.”

campaign, Democrats, economics, government, health care, nanny state, progressive, public policy, reform, tragedy, video

Filed under: campaign, Democrats, economics, government, health care, nanny state, progressive, public policy, reform, tragedy, video

Seattle’s Minimum Wage Hike Is Underway. Hiring Has Slowed Already

original article: Seattle’s Minimum Wage Hike Is Underway. A Damning Chart Shows How That’s Working Out…
October 26, 2015 by PARKER LEE

Since Seattle, Washington’s Minimum Wage Ordinance went into effect on April 1, many have looked to the city as a sort of litmus test, specifically how the local economy is able to bear the weight of a $15 minimum wage.

Though the ordinance allows for the changes to become fully implemented over the next 3 or 7 years, depending on the size of the business, it has already proven to be too much for some owners to handle.

Now, as financial experts get a look at the newest hiring data from Washington, it appears that one particular Seattle sector is feeling the pinch of the historic measure in an eye-catching way.

Image Credit: AEI

Image Credit: AEI

Using employment data from the last five years, the American Enterprise Institute found that Washington state as a whole has seen an increase of about 5,800 restaurant jobs thus far in 2015, while Seattle has seen a decrease of 700 in the same time period.

It’s worth noting that Washington has one of the highest state minimum wages at $9.47, though it’s still significantly lower than Seattle’s.

Proponents of Seattle’s ordinance argue that the move is the correct course of action to address income inequality and to make the city’s high cost of living more manageable. But business owners like Ritu Shah Burnham would be likely to disagree.

Burnham was forced to close the doors of her Z Pizza restaurant because she simply couldn’t afford to stay open, despite her best efforts:

“I’ve let one person go since April 1, I’ve cut hours since April 1, I’ve taken them myself because I don’t pay myself..

I’ve also raised my prices a little bit, there’s no other way to do it.”

Though it’s too early to make a definitive call on the data, it certainly seems telling that Seattle’s seeing a decline in restaurant employment in a state that appears to otherwise be experiencing an industry boom.

economics, economy, government, left wing, liberalism, nanny state, progressive, public policy, reform, regulation, socialism, unintended consequences

Filed under: economics, economy, government, left wing, liberalism, nanny state, progressive, public policy, reform, regulation, socialism, unintended consequences

This is how cronyism works

original article: New York’s Taxi King Is Going Down
October 26, 2015 by Jared Meyer

People don’t deserve to be millionaires because they can get government to let them pick people’s pockets.

Evgeny “Gene” Freidman is no fan of Uber. The increasing popularity of this vehicle-for-hire (or ridesharing) company has lost him millions of dollars. He has even asked New York City taxpayers for a bailout. As difficult as bailing out the big banks was to swallow, bailing out a taxi mogul—who at one point owned more than 1,000 New York City taxi medallions—is an even harder sell. A bailout would be especially outrageous considering that Freidman and his financial backers are actively working to make consumers pay more for fewer options.

Freidman reluctantly took over his father’s modest yellow taxi business as a young man. He brought his experience in Russian finance to the industry, and started to accumulate increasing numbers of taxi medallions using highly leveraged financing. Freidman expanded a company with just a few taxis into a conglomeration of three- to five-car mini-fleets.

As Freidman’s taxi empire grew, he expanded into other cities, including New Orleans, Philadelphia, and Chicago. He gained control of hundreds more medallions that are also now in financial trouble. His willingness to bid on practically any medallion that came up for sale helped drive a rapid increase in medallion prices across the country.

Subprime Taxi Medallions

This model can work when times are good but, as the housing crisis showed, it has its dangers. It works until another technology emerges, consumers move on, and funding dries up.

This is where Uber comes in. Competition from Uber has left investors wondering how much the company will grow and what further effects its growth will have on taxis’ market share. While yellow taxi medallions were selling for $1.32 million as recently as May 2013, now they may be worth as little as $650,000.

This drastic drop in price has made the banks and credit unions that fund Freidman’s vast enterprise nervous. For example, his companies still owe around $750,000 for each medallion financed by Citibank. Without new loans to meet existing obligations and expand his fleet, Freidman’s companies became insolvent. This is why he sought the bailout and wants the government to support the medallion market by offering taxpayer-guaranteed loans.

Adding to this financing crunch, the lease rates Freidman now can charge taxi drivers who rent his cars have declined. Many taxi drivers switched to Uber, which offersincreased earning potential, flexible work schedules, and improved driver safety. Competition led Freidman to complain that he is no longer able to charge the city’s legal maximum lease rate. This is promising news for drivers, but problematic for Freidman’s income.

There’s Not Much Argument for a Monopoly

Medallions commanded such astronomical prices in New York because yellow taxis had, and still do have, a monopoly on street hails in Manhattan south of the northern boundary of Central Park. Ubers come rapidly, but they are not street hails, because people summon them beforehand with a smartphone. In cities across the country that also use a medallion system, the same reasoning applies. Government restricts the supply of taxis below the level of demand, and medallion owners reap the profits—all at the expense of consumers.

It is not just Freidman’s companies that are in trouble. The banks and credit unions that funded him and other medallion owners are also worried. Just four credit unions hold security interests in over 5,300 medallions, for which they are on the hook for about $2.5 billion. In the face of greater potential losses, these companies have resorted to calling people who work in policy (myself included) to try and convince researchers that Uber is illegal and needs to be banned.

The credit union argument progresses as follows:

  1. Yellow taxi medallion owners were granted a monopoly on street hails.
  2. For-hire vehicles are only allowed to offer pre-arranged rides.
  3. Uber uses street hails, not pre-arranged rides, to connect riders with its driver partners.
  4. Therefore, Uber is illegally using street hails, and this infringes on yellow taxi medallion owners’ government-granted monopoly.

If the third premise is true, this argument could hold some rule-of-law water. It is not.

The law governing New York City’s street hails date back to the Haas Act of 1937. This law restricted the number of New York yellow taxi medallions to 16,900, which was lowered and now stands at 13,437—even though the city’s population has grown byover 20 percent since 1940.

The Haas Act also set the stage for other common carrier regulations that apply to the taxi industry. These regulations place substantial limits and requirements on taxi owners and drivers in exchange for their monopoly privileges. For example, the city’s Transportation and Limousine Commission sets fare prices, and fares cannot change with increased demand for rides. This is one of the main reasons it is so difficult to hail a taxi in the rain or at the beginning of rush hour.

Updating regulations takes time, but New York City taxis were finally granted the ability to accept ride requests from smartphones (e-hails) early this year. Once taxis were allowed to accept e-hails, something they needed to compete with new technologies, four credit unions argued that the technology was now off-limits for Uber—the company that had popularized e-hails. They sued New York City for infringing upon medallion holders’ monopoly privileges.

This makes no sense. How can a decades-old law covering street hails be construed to cover ride requests made through smartphones? Anyone who has tried to hail a taxi on the side of the road, and then used Uber, knows that the two experiences are vastly different. Simply put, holding your hand up is not the same as pressing a button on your phone.

How to Save Taxis Without Squeezing People

The path forward is not to ban ridesharing or bail medallion owners out. It is to make taxis more like Ubers. This takes more than simply allowing taxis to accept e-hails. Rather, the only ways to save taxis are greater flexibility in pricing and service and increased competition.

As Uber’s rise has made obvious, when the crucial aspect of competition is missing from markets, established companies do not have to worry about improving their services to attract and keep customers. Regulations need to be continually modified and updated in light of new technology.  There is no reason to require New York taxis to have expensive (and annoying) Taxi TVs. Pointless mandates such as this only increase the cost of taxi rides.

Even with a relaxed regulatory framework that embraces ridesharing and competition, taxis will still have an advantage. No one is talking about taking away New York City’s yellow taxi monopoly on street hails. Applying antiquated laws and regulations to new technology is what laid the groundwork for the rise of Uber and other ridesharing services in the first place.

Everyone Shouldn’t Pay for Some People’s Bad Bets

Credit unions oppose allowing Uber to grow because they want to protect their investments. The Queens County Supreme Court ruled against the credit unions last month. The court found that the credit unions did not have a cause of action against the city and its Transportation and Limousine Commission. This was a major win for Uber and consumers, but a death-knell for Freidman’s business and its financers.

The whole yellow taxi financing model is crashing, along with medallion prices. After the ruling, Montauk Credit Union, one of the plaintiffs, was seized by the New York State Department of Financial Services because of “unsafe and unsound conditions.” The day that New York City’s proposed cap on Uber’s growth was defeated, 22 of Freidman’s mini-fleet companies filed for bankruptcy.

Even if medallion holders such as Freidman lost a lot of money, it does not follow that the public should subsidize their losses. The returns from a yellow taxi medallion in cities such as Philadelphia, Chicago, or New York far outpaced the stock market or gold for many years. The values of these medallions about doubled in each city from 2009 to 2013.

Investments carry risk, as Freidman knows from his background in finance. He made a poor calculation that the Manhattan yellow taxi street hail monopoly would continue to provide him enough future cash flow to satisfy bankers, who would loan him more money to expand his fleet. Freidman and his investors have no claim to a taxpayer-funded bailout to cover their poor business decisions. Perhaps they should consider investing in Uber instead.

bailout, corruption, cronyism, economics, funding, government, greed, hypocrisy, law, nanny state, public policy, regulation, taxes

Filed under: bailout, corruption, cronyism, economics, funding, government, greed, hypocrisy, law, nanny state, public policy, regulation, taxes

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