Health Care Costs and Supply/Demand
If there’s one thing I agree with Obama about, it’s that health care costs have gotten out of control. But it stops there. The health care inflation is just nuts, but it’s reflective of our system. The way our system is structured is that it jacks up the costs by overproviding. Basically,t he system artificially jacks up demand, which jacks up the price. Here’s how:
1. The group of people that see the doctor the most are the elderly. They are also the ones with totally free health care. Great. Instead of health care, imagine the price of pizza. If pizza lover, fat people, and college kids all had a permanent ‘all you can eat pizza for free’ card that was paid by the US government, how much do you think pizza would cost for the rest of us! The supply couldn’t keep up; the price would just skyrocket.
2. Medical liability lawsuits force doctors into overtesting. Have a cough? They’ll run an intense panel and send you to a specialist. Easier to just lay the cost on your insurance company (and ultimately to ther est of us with higher premiums) than risk a lawsuit.
3. Health insurance companies are just a fiasco. No way else to say it. Some beaurocrat at teh end of the line looking at every procedure to seee if it is necessary to do.
Obama wants free care for all, which will just exacerbate the first issue. He won’t do anything about number 2, and number 3 is something no one knows what to do. We need a system where people pay a flat 20-30% for everything up to a certain limit. Seniors need to not get totally free care unless they are poor; otherwise they need to share the cost in their treatment like the rest of us. Efficiencies need to be found, but I just don’t trust the government will be the ones that will find it.
Above all else, we just need less doctors in our lives. If your diet consists of hamburgers, fried chicken, soda, and beer, you’re going to have to deal with the consequences.
GM Going Busto
It’s refreshing to see the Obama administration is just letting the GM fiasco end. The company is officially going into bankruptcy, as it becomes clear paying 3X market price for an employee-intensive operation is not a viable business model long-run.
The only caveat to this is that I think Obama’s true intentions is to turn GM into a government-run company. This way he can crank out a bunch of hybrids and other small cars that no one wants and will not want to pay exorbitant prices for…..unless they find ways to jackup the price of oil (cap and trade anyone).
Anyways, if anything, seems like a good time to buy a car since dealers are so desperate to have any sales right now. Here’s some tips on buying a car that I found on the Internet.
Obama’s Stimulus Plan Is A Complete Joke
In November, America wanted a change, any change. Boy, looks like we are getting one, and for the worse. With the S&P 500 now down 12% already for the year in 2009, Wall Street seems to be seeing through the democrats fraudelent attempt at a ’stimulus.’
Let’s go back to the root of the problem real quick. Americans went crazy in the housing market, buying home they couldn’t afford at prices that greatly overvalued the home. Wall Street took on this risk by making these loans and through CDOs, proliferated and polluted this risk throughout the system.
If this weren’t bad enough, the banks overleveraged themselves making these loans, essentially making them insolvent. So a lot of capital and manpower was devoted to an inefficient good…a lot. Now, with the credit crisis, capital is having a harder time being put towards actual efficient projects, such as small business loans for real, profitable businesses.
Japan had a similar property investment bubble in the late 80’s that led to similar bank failures, so this sort of situation isn’t new. Heck, our property asset bubble looks tame by comparison. Just before the bubble broke, the Japanese were valuing a small commercial district around the Imperial Palace as being worth more than the entire state of California! The Nikkei index reached its all time high just shy of 39,000 in 1989.
The Japanese tried multiple efforts at reviving their failing economy. The cornerstone were Keynsian-style economic stimulus programs, much like ours. Theirs focused more on bridges and tangible investments, unlike ours which are more just pure pork.
The Japanese result? A recession lasting more than a decade. Economic growth was flat throughout the 90’s. The Nikkei is at 7650. Did I mention the Japanese debt/GDP ratio is now about 180%
The democrats are trying to frame this entire situation as a short term problem brought on by a sudden drop in credit and spending power of the American consumer. Their view of the problem tries to boil it down to a high school economics course viewing that ‘aggreggate demand’ is artificially small so ‘pump priming’ through government spending will cut down on unemployment. Even if the government spending is a bit wasteful, the added spending power of people with government jobs will cause that money to be respent wisely, thereby increasing demand.
Wishful thinking. If government spending was so great, then Europe would be the world’s leading economic powerhouse and the Soviet Union’s economy would have been decent. What we have and have had is a massive misplacement of capital and labor. Too much capital was put towards home construction, property investments, investment banking, etc. Too much white collar labor in these sectors was created.
We have other problems too. We have too many lawyers; we spend too much time in school. We have the highest years of schooling of any country and can you say you really learn anything vitally important in higher education? Remember, we’re spending massive amounts of money and putting a large part of our labor force towards a fundamentally inefficient industry. The amount of education we get keeps going up and up, yet our retirement age isn’t budging. This means people are working less as a percentage of their life. So we have less people working but more entitlement spending, not exactly a recipe for economic growth
We have some massive underlying issues in the economy that ’stimulus’ isn’t going to help. Wasting money doesn’t create efficient jobs and encourage innovation. Rather, by delaying taxing cuts and scheduling in tax increases (as the Japanese did), we discourage innovation and push capital overseas. America and Japan have the two highest corporate tax rates; new, mobile industries that emerge over the next few years will find themselves choosing to make a country besides ours home.
We need to get back to basics. We need companies that make a product efficiently and make money. We don’t need to save and subsidize corporate behemoths that are too big for their own good. We need to stimulate small businesses by keeping tax rates low for both corporations and at the individual level (yes, those evil $250k+ people are often small businesses that create real jobs). We need to let the free market determine how much education is useful, not keep people in school until their 30’s. We need entitlement programs that won’t bankrupt the country.
By borrowing a bunch of money to waste on government projects, we are just emulating Japans moves in the mid 90’s…and look where it got them.