Archive for November, 2013

On J.F.K.

November 21, 2013 Leave a comment

Obviously, lots of hullabaloo about Kennedy recently because of the fiftieth anniversary.  There’s one thing that’s always puzzled me. Conservatives love the line “ask not what your country can do for you, ask what you can do for your country.” I don’t want to get into whether Kennedy was a good or bad president or whether he was a conservative or a “liberal.” I just want to point out that both questions are fundamentally collectivist. What can you do for the country is actually indicative of a later stage of progressivism that what can the country do for you. If it had been me, the line would have been “ask not what your country can do for you, ask what you can do for you.”

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November 14, 2013 Leave a comment

Most of the ground I will cover here I have been over already on this blog but I want to revisit the issue just to point out that it is playing out exactly the way I have predicted and to point out a few important points that some people may be missing about Obamacare.  I wrote this post over three years ago explaining how this bill was meant to destroy the private insurance market.  It deals with the specifics in more detail.

As most people know, a lot of people are losing their plans and experiencing dramatic rate increases in spite of the President’s numerous emphatic promises that this would not happen.  The line from the administration now is that these plans are being cancelled because they are substandard plans which don’t offer all of the coverage that people need.  Leaving aside the fact that the President never once promised that if you like your plan you can keep your plan as long as the government considers it adequate, this is still a complete lie.

It is true that plans are being cancelled because they don’t meet the minimum requirements set forth in the bill.  But these requirements are not in there to protect you from substandard insurance plans.  They are there because the point of the bill is to transfer wealth from the healthy to the unhealthy.  The way this is done is by forcing everyone to buy certain coverage even if they don’t need it and forcing them to all pay (more or less) the same price.  In this way the insurance companies lose money on the sick people but make it up by charging the healthy extra.  This wouldn’t be possible in a free market because companies would compete over the healthy people.  This is why insurance companies support the law, it creates a price-fixing cartel by which they can extract money from their customers without having to worry about that pesky competition.

In light of this it looks like there aren’t going to be enough healthy people signing up to be the cash-cows in this system.  This seems to be engendering a sense of comfort among many conservatives who think that Obamacare will collapse without these people supporting it.  This is a gross misunderstanding.  If you believe that, when healthy people don’t sign up and insurance companies start losing money, the government will wake up and say “hey, maybe our attempt to take over and micromanage the health insurance industry was misguided, I guess we better just let the free market handle it” you haven’t been paying attention for the last hundred years.

It won’t be Obamacare that collapses.  There is no provision in the bill saying that if it doesn’t work, it will go away.  It will be the insurance companies that collapse.  And this is exactly what progressives want because then they will simply say that the evil private insurance companies failed us and the government has to, reluctantly, move in and take over the whole industry.  But don’t worry this means everyone will get all the healthcare they “need” and it will be cheap and easy and provided by pixies and unicorns with breath that smells like sunshine.

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Breaking Bad

November 9, 2013 Leave a comment recently did a very short piece about the AMC show Breaking Bad of which I am a fan. One commenter said he (or she) was expecting something longer and as it turns out this is a subject I have put a lot of thought into so I figured I would step into the gap.

Part of what I liked about Breaking Bad was that it was secretly (perhaps unintentionally) a lesson about property rights.  When you really get down to it, on a fundamental level there is only one thing we need government to do.  All governments do this thing in some way and any entity that does this can be considered a government.  This is the establishment and enforcement of property rights.  Read more…

Credit Expansion

November 8, 2013 3 comments

In the previous two posts I tried to explain how currency, credit and banking come about organically in a free-market economy.  This post deals with the expansion of credit in such an economy.  This should help one better understand the relationship between the quantity of credit in circulation, velocity, and interest rates.  Next, I will delve into the role banks would naturally play in this process.

Credit Expansion

When the butcher and the baker use credit to trade, it is important that they sell as much as they buy. It is not necessary that they issue notes less than or equal to the amount of gold they have on hand. (Recall that we can have credit without having money at all.) The logic behind this is fairly simple. If the butcher issues 100 oz. worth of gold-notes but only has 50 oz. of gold, it is possible that these notes could come back to him for gold and he would have a problem. But if he is also producing meat worth 50 oz. of gold, he can sell the meat to cover the difference. If he produces 100 oz. worth of meat he can issue 150 oz. of notes and if he produces 1000 oz. of meat, he can issue 1050 oz. worth of notes before he has a problem. This, of course, assumes that he is always able to sell his goods at a certain market price. If this is not the case, he could run into trouble but I will deal with this possibility in more detail later on. Read more…