Thus, we're getting the worst of all worlds. Incredibly, the Fed -- contrary to its reputation -- has been tightening since December. Its balance sheets have shrunk by several hundred billion dollars since its year-end highs. This is deflationary. Its non-Treasury assets are maturing faster than the Fed is purchasing Treasury securities. And buying Treasurys does no good. Banks are loaded with cash. Adding to that cash hoard -- which is what the purchase of Uncle Sam's paper effectively does -- is useless. Indeed, it feeds fears that the Fed will monetize Obama's ballooning budget deficits, which would mean future inflation. The Fed refuses to take rifle-shot steps to help revive the credit markets for mortgages and for small business and consumer loans. Bernanke keeps promising to do this via purchasing mortgage-backed securities and pools of credit card debt and car loans. But, as they say in Texas, he has been all hat, no cattle. Hence, the economic recovery during the second half of this year will not be as robust as it could have been.
In addition to the unstable dollar, markets are fearful of the consequences of the Administration's excessive spending. After all, all this check writing -- the greatest binge in U.S. history, with the exception of the Civil War and World War II -- is unfolding before the wave of baby-boomer-generated entitlement spending that will crush Medicare and Social Security. If President Obama still wants Keynesian-style stimulus for ideological reasons, he should do it the right way -- cut the FICA tax in half for 18 months. The virtue of this would be two-fold: The money would quickly get into consumers' hands, and the cost of hiring and employing people would be lower.
The Administration would set off another stock market surge if it swore off tax increases, particularly since the 2003 cuts are set to expire at the end of 2010; abandoned its attempts to nationalize health care; gave up cap-and-trade, which will dampen future growth through big increases in energy costs; allowed its forced unionization legislation to die a quiet death; and quickly disgorged itself of banks, insurers and auto companies. But these things won't happen. While the White House is currently incorrigible on taxes -- in fact, it is broaching the idea of a European-style value-added tax, which will substantially increase the price of everything -- there is no reason that it can't reverse its course on the volatile dollar. There is ample Democratic precedence here. Clinton was a strong-dollar President, and JFK proclaimed that the dollar should be as good as gold.
While the odds of an immediate government takeover of health care are receding, Congress will likely feel it necessary to do ''something,'' and that something will mean more government involvement, paving the way for a future de facto nationalization. To avoid this deadly fate, we need to grasp that today's hybrid system is not truly a capitalist one. President Obama's worthy aims of universal and affordable medical care are achievable by bringing genuine free enterprise to the system, not more government. Today there is a disconnect between providers and consumers. Almost all health insurance is covered by third parties -- either insurance companies or governments -- so patients rarely know what most health care services cost. If you go to a hospital and ask about prices, the staff's immediate reaction is that you must be uninsured. Why else would you want to know what something costs? Yet in just about every other aspect of our commercial lives the price of things is known.
No wonder health care doesn't experience the kind of productivity gains found elsewhere. For example, the cost of food as a proportion of one's income is a mere fraction of what it was decades ago. Twenty years ago cell phones were bulky and expensive; today they have become cheap virtual computers with easy access to the Internet. They even take pictures and videos. There are 4 billion cell phones in use around the world. In 1900 the automobile was a toy for the rich and cost the equivalent of about $100,000 today. Henry Ford's moving assembly line turned autos into something that any working person could afford.We could attain similar and ongoing miracles in health care. We are already seeing some in a few areas. Conventional Lasik eye surgery costs a third of what it did ten years ago. And there has been virtually no inflation in the prices of cosmetic surgery, even though there have been enormous technological advances, and the demand for these procedures has increased sixfold since the early 1990s.
Special hospital facilities in India, Thailand, Singapore and elsewhere that engage in medical ''tourism'' have infection rates a fraction of those found in most U.S. hospitals. These positive results are driven by the fact that patients write the checks and are thus fully conscious of the costs, as well as by the fact that providers are under pressure to make their offerings more enticing and affordable. Here are some helpful and constructive measures that can move us to a more genuinely free-enterprise health care system.
1. Equalize the tax treatment of individuals and businesses. If the company you work for doesn't provide insurance or you don't like the plan offered, you are forced to try to buy a policy with aftertax dollars. If an individual wishes or needs to buy health insurance on his own, why shouldn't he get a tax refund of, say, $4,000, and a family, $8,000?Genuine free-market reforms in health care will slash the number of the uninsured and lead to the same kinds of innovations and efficiencies that are experienced in most of the rest of the economy.
2. Allow consumers to shop for health insurance across state lines. Today it's illegal for someone in Dallas to buy a health insurance policy that someone in L.A. can buy.
3. Encourage the use of Health Savings Accounts. That way consumers -- not government bureaucrats or employers -- would control the purse strings, or a portion of them.
4. Permit small businesses to form pools so they can increase their pricing leverage with insurers.
5. Remove state-imposed obstacles to allowing routine medical care to be offered in, say, Wal-Mart stores.
6. Remove the obstacles that prevent entrepreneurs from setting up new clinics or hospitals. Some states make this extremely difficult by demanding that such entrepreneurs obtain a certificate of need. In fact, in some jurisdictions hospitals must get permission to make major purchases.
Dit stuk van Steve Forbes verscheen oorspronkelijk in Forbes.
Meer opinieteksten van deze auteur op www.forbesmagazine.com.
4 Reacties:
- At 03:33 Vincent De Roeck said...
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Amity Shlaes van de "Council on Foreign Relations" en auteur van het boek "A New History of the Great Depression" had deze week een best wel interessante column in Forbes Magazine over "public choice".
Zie link voor "The New PC"
Acronyms change with the times. For a while "PC" stood for "personal computer." In the 1990s it stood for "political correctness," the uniformity of the progressive doctrine promulgated at colleges and elsewhere. This era brings yet another PC: "public choice" theory.
The name is awkward. Who is the public and what is the choice? The theory originated with Nobel Prize-winning economist James M. Buchanan and is actually quite simple. It says that the laws of economics aren't suspended at the door to City Hall. Government reformers view themselves as morally superior, but that is an illusion. They are just like private-sector operators, who do things that are in their own interest, not society's, first. Those things include taking advantage of an economic crisis to aggregate power for themselves and their offices.
Many decades ago a younger Buchanan read an article by Knut Wicksell of Sweden arguing that taxes must be unanimously supported by voters in order to become law. A universal vote would mean that the lowly taxpayer would never be forced to carry a burden he had not voted for. With fellow scholar Gordon Tullock, Buchanan penned, among other texts, The Calculus of Consent: Logical Foundations of Constitutional Democracy, which forms the basis of public choice. Public choicers have since built up an influential center of economic thought at George Mason University.
But if public choice is so germane, why haven't we heard of it? Partly because PC is not categorizable. It contains something of the views of Friedrich von Hayek, who used the image of serfdom in The Road to Serfdom to describe the inexorable dominance of government. But PC also reflects Karl Marx, who saw colonial empires as crustaceans--big claws, reflexive brains and the habit of eating anything in their path. To understand what makes citizens sanction untenable levels of taxation and outlay, for example, PCers have looked to Amilcare Puviani, a perspicacious scholar of the Italian colonial empire, pre-Mussolini. Puviani posited that crafty governments use artful marketing to create "fiscal illusion"--a false picture--to hide from taxpayers how much they pay, where the money goes and what the true long-term costs will be. - At 03:33 Vincent De Roeck said...
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Het vervolg van Shlaes' "The New PC":
In PC terms FDR's New Deal represented a decade of contest between an ambitious public sector and a dazed private sector. In the name of its financial emergency, deflation, the Roosevelt Administration captured more control of the currency by ending private ownership of gold. It also gained power with new taxes that hit both rich and poor. And in a disguised bid to own the country's future the New Dealers also went after the country's most promising industry, utilities, squeezing out the private players.
Public choice also works to explain the effects of mineral wealth on a nation. In traditional economics wealth is wealth, a good that can and should be shared. Nigeria's oil, for example, was long viewed as a bonus, as per the sunny 1980 headline in the New York Times: "Nigeria's Oil Income Is Fueling Large-Scale Economic Growth." PC theory says that mineral wealth merely fosters an especially violent power struggle. Today's poverty and trash along the Niger River Delta and the kidnapping activities of speedboat pirates suggest the theory has some validity.
The tragedy of many known State incursions is that once started they're hard to stop. But the first defense against them is to identify the government advance for what it is: a power grab.
A telltale feature of PC behavior is when government reformers disingenuously impugn the motives of those who call them on the implications of their actions. President Obama demonstrated this dynamic at a press conference in June when someone posed the reasonable question of whether a larger government presence in health care might challenge private providers. "If they can't compete against a public plan as one option," the President said, "with consumers making the decision what's the best deal, that defies logic." Perhaps, but not the logic of public choice. - At 03:45 Vincent De Roeck said...
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Drie andere interessante artikels uit Forbes Magazine deze week:
James McWilliams analyseert in "The Locavore Myth" de idiotie van "buy local" in de strijd tegen de opwarming van de aarde. Volgens hem is het om een velerlei aan redenen net beter voor het milieu om massaproducten uit verre oorden te kopen dan nicheproducten uit de buurt. Hij berekende dat de "carbon footprint" door de schaalvoordelen en door het milieuvriendelijker telen in arme landen lager ligt dan bij lokale producten. Ook maakt hij een mooie case voor het vegetarisme omdat vlees een veel grotere "carbon footprint" heeft dan groenten of fruit.
Edward Green gelooft niet in condooms als beste AIDS-beletter in Afrika. In "A Jihad on the AIDS Maffia" toont hij met tal van voorbeelden en analyses aan dat condooms in Afrika hun doel voorbij schieten en dat enkel onthouding en echtelijke trouw échte oplossingen genereren. Green is géén conservatief, maar een progressieve liberaal, en tracht het taboe rond dat thema te doorbreken. Ook stelt hij (volgens mij terecht) dat de AIDS-condoomwereld een echte industrie en lobbygroep geworden is die meer aan de eigen fondsen denkt dan aan het écht oplossen van het probleem.
Rich Karlgaard staat nogal sceptisch tegenover de "groene energie"-plannen van Hussein Obama en consorten. In "Waxman-Markey Flunks Math" houdt hij een bevlogen pleidooi om de waanzin in het energiedebat te stoppen. Hij toont met cijfers en statistieken op meesterlijke wijze aan dat groene energie géén duurzame oplossing is voor de toekomst. Zelfs in de beste scenario's zouden amper 10-20 miljoen Amerikanen tegen 2020 hun energie uit hernieuwbare bronnen kunnen halen. De rest zal kou lijden en in het donker leven. - At 23:25 SoundMoney said...
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Kijk naar de nieuwe informatieve economische website
http://www.soundmoney.be