The Baptists

I find the Baptists in this country to be a considerable nuisance. When I think of Baptists, I am not referring to the church denomination (though as with any group thinkers, they can be annoying too), but rather to all the people in this country who think that it is acceptable to restrict and limit the liberty of others. There seems to be a growing sentiment that all the "ills of society" should be officiated over by the government. What I find entertaining about this is that I believe these problems are actually caused by the government, rather than solved by them. My particular bone to pick right now is obesity.

The Baptists think that there are too many fat people in this country cluttering up the landscape and sucking on our healthcare system. Obesity comes with its own set of punishments though...a lack of energy, constant health problems, and shortened life expectancy to name a few. Add to this the fact that most employers (equal opportunity or otherwise) are not going to hire a fat man or woman wheezing during an interview over a fit man or woman who is active and energetic. So, why would anyone want to be fat with all of these drawbacks?

Let's start with unemployment...If you are too fat to get a job, the government will pay you monthly to sit at home. If that isn't good enough, let's go for healthcare. Obamacare aside for the moment, it is free to go to the hospital emergency room when your heart gives out or your thyroid goes completely off the grid. Now with Obamacare, you can not only go to the hospital for free, but to any doctor as well, and if the doctor prescribes such care, you can get surgeries, such as gastric bypass to make you skinnier, compliments of the American taxpayer dollar. Maybe if people couldn't extend their lives for free, they might stop to consider before buying 3 double cheeseburgers and skipping the gym. Perhaps there is also something to be questioned about what qualifies as obese? Who determines what falls under this label? At one point in history, plump indicated wealthy because you could afford to eat well, while skinny was an indication of poverty and lack of sustenance.

Now, if a person is outside a specific weight bracket, determined by nutritionists hired by the government to say so, then you are obese. These numbers are then taken and applied to test groups of people and an aggregate number is thrown out that says people in America are too fat.

I don't think that people are hungrier now than they used to be, so perhaps the culprit really is the food that is being sold. So, what changed to make food so unhealthy? Perhaps it is the government regulations that favor some food markets over others. For instance, purchasing organic food which has not been subjected to the pesticides and antibiotics that are required by government in most food markets, is unbelievably more expensive than buying antibiotic and hormone filled foods. Why? The answer is fairly simple. In order for a farm to be able to produce "organic" food, the USDA has imposed a number of regulations that make its production cost much higher than the cost of the average pound of meat. For example, in order to call itself "organic" and thereby be able to sell in that market, a farm must be pesticide free for 7 years. In combination with the other regulations that raise the cost of producing organically, this is a severe limitation as these organic producers are not able to place the organic label that assures it's consumers of the growth processes. Without this assurance many consumers will not buy the product, particularly at the higher price, thus protecting the normal food market and those already producing organically. This severely limits the amount that can be produced and therefore the amount that can be purchased and also the ease of accessibility to many products as most traditional supermarkets carry a very limited amount of organic food.

It is true that some food, such as corn syrup, is more difficult for our bodies to process, but corn, in general is more difficult for the digestive tract to process, so that may be the source of that problem rather than the innovation that has allowed the corn market to diversify. Or perhaps the reason that corn syrup and other products like it that are being touted as fat people producers is because they are cheaper than things like sugar due to tariffs and other government regulations that protect them from price competition. This enables the foods to enter the market that are supposedly responsible for making everyone fat. How, though, does this account for people making the choice to consume? And if people are making the choice to consume, why should they be stopped from purchasing, or forced by the Baptists to look at the calorie count on the menu?

I would theorize that if enough people keel over from heart disease or diabetes, and others can't afford healthcare because they are too fat and unhealthy to work, the problem would likely work itself out at some point. After all, people are generally self interested and act for their own gain in one way or another. I would be interested to know what the Baptists hope to gain from a skinnier society. Perhaps just a little more space to walk on the sidewalk or through the supermarket aisles.... maybe it just makes them feel good to point and say "you're too fat! Eat a carrot". Perhaps this increasingly government sanctified discrimination is actually perpetuating the problem as obese people are criticized by their skinny counterparts. Who can say for sure? But the answers to these and other questions will never have an undisputed answer because it will never be a matter of fat vs. thin as the government has appointed itself the nanny of both sides and will keep these two kids from battling it out by telling them what to do instead. One thing I would bet, menu calorie counts aside, Mcdonald's isn't going out of business, and healthier food isn't going to get cheaper. Sorry, Baptist people, I believe you have once again been outsmarted by the bootleggers.

What to Do with All This Darned Corn

Expanding on the previous blog about corn...

For all of those who don't know, corn is synonymous with the USA. Due to an accident of geography, culture, and history, the entire middle 50% of our nation is essentially one giant food factory.

In fact, they really should merge everything from South Dakota to Oklahoma together into one big super-state called "The Federal Food Factory." (I exclude the State of the Godforsaken Heckhole of North Dakota since, as we all know, vegetation is impossible in this place).

But as a result of this, we have way too much corn, and have had way too much for at least 60 years. If we let the market have its way and took away all of the Ag Bills and regulation and aid and subsidies, corn would essentially have no value because there's so much of it and agriculture without market regulation is almost perfectly competitive, or at least about as close as we can get. We literally couldn't shovel it out of our country fast enough; we already give away tons and tons and tons of it and still have too much.

So instead of letting the market work, the US has engaged in some of the most blatant abuses of the free market ever seen. We tried paying farmers to not grow anything in the '50's. The more they did not grow, the more money they got. That worked for a while.

Then in the '70's we slapped barely-legal tariffs on sugar that border on criminal (and certainly violate the WTO). We did this because Big Ag started inventing new uses for the corn and discovered that through a complex process it can be distilled into concentrated fructose, which is supposedly "chemically the same as sugar!" But to make it economically viable, we had to make sugar more expensive by a significant margin. So we did.

Then in the 90's all the rage was corn-based ethanol. Why not use our huge surpluses to help save the environment!

Except that all these things have caused more harm than good. There's a mountain of evidence that links America's unique obesity problem is due primarily to the fact that we're the only nation in the world to use HFCS to sweeten everything instead of sucrose. You see, the body can't process fructose exactly the same way it can sucrose, and the result is that it wreaks havoc in the long term on the body's ability to regulate and produce insulin.

This is why people of similar racial and ethnic makeup in Europe consume literally just as much or more calories, fat, cholesterol, sweets, etc. on average as Americans, and yet aren't obese and don't have diabetes.

And corn-based ethanol is stupid. It requires huge amounts of petroleum to actually process the stuff, and it takes like 10 times more of the stuff to yield the same amount of energy as a gallon of gas (or an equivalent amount of sugar-based ethanol, which actually is efficient).

Luckily the government backed away from its huge initiative for corn-based ethanol. But still, everything we eat is loaded with HFCS. And if it's not HFCS, it's xanthia gum, sorbitol, and all sorts of funny-sounding chemicals that we throw in our food that come from corn in some way.

So.... I was thinking.

WHY DON'T WE USE ALL THIS DARNED CORN FOR CORN-BASED PLASTICS?!

Here's my proposal:

1) Ban HFCS and many other corn-derived food ingredients. And remove all tariffs on sugar.

2) Abandon corn-based ethanol for any applications in New Energy due to its gross inefficiency.

3) When the farmers all come to Washington to burn down and take over the government, have a mild-mannered spokesman come meet them and inform them that not only can they keep growing corn, but that they should grow more corn. They should go and repopulate North Dakota and use that for corn too (perhaps by first constructing a giant dome over the state to make it habitable). And they can even keep many of the price controls and regulations that help keep them in business!

Every day Americans discard thousands of tons of non-biodegradable plastic bags and soft packaging plastics. In the process of touching these bags they have exposed themselves to estradiol, a chemical that binds to the same receptors as estrogen and has thus resulted in a measurable and significant feminization of men in first-world nations.

These plastics blow around and pollute rivers, streams, and landfills, and will over the course of thousands of years leak toxic chemicals into the environment as they slowly break down (unless we recycle them, which is a separate note).

But..... recently scientists actually stumbled onto a use for corn that makes a lot of sense: plastics. It is possible to create plastics out of corn.... that biodegrade in about 14 weeks and don't (at least as far as I know) use estradiol as an additive. I'm not sure how efficient the process is, but I have to imagine that the net benefit to the environment would far outweigh the negatives of even a very inefficient process of corn-based plastics creation.

4) Start regulating and phasing out most uses of soft plastics and replace them with corn-based alternatives, just like we did with CFC's. Eventually, make many of these plastics illegal.

It seems Pareto-optimal to me. American farmers can keep growing corn until it's coming out of their ears. We can curtail significantly exposure to chemicals that have feminized men. And we can save the environment. And countries could sell sugar to us again at profitable rates, thus improving the economies of many sugar-producing, poor nations.

And best of all, it seems like Hayek et. al. would approve as well.

Small Banks Say They Can't Win in Small Lending

There was an article in USA Today yesterday about banks being unable to freely lend to small businesses because of increased pressure from government examiners. These examiners come from the FDIC and are deployed to make sure that banks are following newer, stricter guidelines in their lending practices in an effort to avoid another lending crisis. While these regulators don't deny or approve loans, they will downgrade the rating of performing loans, including when collateral, mainly commercial real estate, has fallen in value. I believe this is misguided policy because oftentimes, collateral value has no effect on a company's ability to repay a loan. Granted, the loan must be secured by a reasonably valued asset, but it would be wholly impractical to constantly revalue loans based on the current market value of the collateral, especially when the fundamental financials of the business who took out the loan hasn't changed. In trying to keep banks from overextending themselves, regulators in this situation are requiring banks to hold higher minimum capital reserves to make up for the loss in collateral value. In turn, this decreases the money banks have to lend.
It is well established that small businesses fuel growth in this country and are responsible for two thirds of new job growth by some estimates. Since small businesses are not able to utilize capital markets to get funding, the banks are a critical part in this process, and therefore, the recovery of the economy. This government intervention with the intent of making lending practices more sound in order to help bolster the economy has the effect of stifiling small businesses, the very thing that fuels growth. In light of this unexpected result, regulators have issued more guidance (3 times in the past 15 months) encouraging banks to lend to creditworthy borrowers, as well as now not to lower ratings simply because collateral value has fallen. However, the more "guidance" lenders have to wade through, the more cumbersome and restrictive the process will become. So maybe the answer is less, not more.

A Growing Government

There is an article in Newsweek titled “Make it Stop: How Obama can fix our runaway government.” in which the author Jacob Weisberg addresses current concerns about the size and scope of our government. Many people fear that government may begin to grow without limits. This worry is in part because of the recent recession and because of the wars that our country is currently fighting. In responding to these events the author believes that our public sector may become more intrusive and expansive and in turn make the private sector less free and dynamic.
I completely agree with the author of this article on the potential for unwanted government growth and the terribly negative effects an expansive government would have on society. Weisberg suggests that President Obama can help to alleviate these fears at least slightly if he addresses dangers. Thus far Obama has not addressed these concerns and has made them even worse by keeping his view on what government’s role should be very vague. He has not identified himself as being someone who wants to provide a wiser and more responsible government.
Weisberg quotes Obama as saying “The issue isn’t how big government is but weather it works.” This statement caught my attention immediately because Austrian economics addresses not only big government but also addresses weather certain government practices “work” or not. If Obama truly only cares that government “works” then he would see that the size of government does matter. In our readings we read numerous examples of how expanded government intervention is a bad thing. The more government attempts to over step its bounds into the private sector the more problems it creates. An Austrian economist would not make value judgments about these policies but simply ask one question: Did government accomplish what they intended to accomplish? We saw in numerous cases that the answer was no. Government was not successful in accomplishing what it intended to. There are many things that government simply cannot do and should not attempt to do. If Obama really doesn’t see the size of government as being an issue then I think that our country certainly should be worried.

cOnGrEsS' SChiZoPhReNic tUmMy

It's late and I'm hungry. So, if the wellspring of human action really is dissatisfaction, then please allow me a few cathartic moments to remove it as I seek a relation between two seemingly unrelated government interventions. I've been on a gluten-free kick for a month now, with good results - more energy to write late-night blogs, specifically. Normally a midnight Taco Bell run would satisfy my amygdala's urges, but removing fast food options from my diet cleared my mind of the governmental schizophrenia that helps produce my 4 for $1 tacos. Why schizophrenic? Because while one agency preaches that good eating habits are central to successful health care reform, another lavishes billions of tax dollars on the primary culprits of American society's obesity: corn and sugar.

I happened upon this idea watching the Ellis and Cheney documentary King Corn. While the filmmakers highlighted the demerits of a high-fructose corn syrup diet, a relatively minor point stuck with me ever since. Human actors, in this case a majority of Congressional men and women, authorize funds for the United States Department of Agriculture to pay farmers to produce corn and sugar beets, among many other agricultural products. There are various reasons for this, including a pledge to maintain low-cost food available to the citizenry, stabilizing farmers' incomes, and the reelection of the aforementioned human actors.

Market intervention always results in undesired effects - this is not a revelation of the Austrian School as much as a reminder that unintended consequences occur when force is brought to bear on free exchange, no matter how benevolent the intention. When the Federal Treasury outlaid $2.5 billion to corn producers in 2008, it (read: We The People) assumed the role of the largest corn consumer. And corn is a wonderful product. With current technology, American industry successfully produces a wide variety of goods from this plant, including highly effective food sweeteners, feedstock for the majority of U.S. cattle and ethanol fuel. (Digression: earlier this month our Environmental Protection Agency changed its mandate for biofuel production by vastly increasing the amount of advanced biofuel technology required in combustion fuels sold in the U.S., while decreasing its requirements for ethanol fuel production, as ethanol is now regarded as more a effective source of greenhouse gas than even gasoline. This may come as an unpleasant surprise to the thousands of farmers who chose to produce corn this year in anticipation of the formerly-mandated demand for this fuel source.)

As young adults, we are considered by advertisers to be "easy prey" for impulse purchases. Gastronomically speaking, such choices include ready-to-consume prepared food, often in fast food and convenience store forms. The menus of the largest fast food restaurant chains consist primarily of beef (corn-fed), soft drinks (flavor-enhanced by high-fructose corn syrup) and bread (subsidized wheat and sugar-laden.) These businesses are often cited by another human actor in government - Kathleen Sebelius, Secretary of the Department of Health and Human Services - as culprits in the increased levels of obesity (34%!) and diabetes among Americans, due to their highly desirable, fat and sugar-endowed products. Oddly enough, these same foods are also subsidized by our taxes.

Is this not a little crazy?

The Economist January 21st article entitled "The Fat Plateau" quoted Secretary Sebelius as saying "fighting obesity is at the heart" of health care reform. Obese patients' bills average 42% more than those of "normal-weighted" patients. Yet human actors just across town from her, sworn to the same oath of duty to the country, send our money to the industries which provide the goods necessary to produce food these same obesity-causing foods. Interestingly, lower-income Americans have two things in common - higher than average consumption of fast food, and lower than average health care coverage. And now perhaps I begin to see the correlation between corn and sugar subsidies, and health care. One literally feeds the other.

This situation reminds me of Ludwig von Mises' 3d Lecture, "Interventionism," in which he stated that "isolated government interference brings about a worse situation than it sought to abolish." FDR's Secretary of Agriculture Henry Wallace called the original farm subsidies "a temporary solution to deal with an emergency" (the Dust Bowl), yet these subsidies apparently now increase our subsidized health care costs.

And The Force continues its schizophrenic spiral...

Moving in the right direction...

Recently Colorado Springs removed the trash cans in all parks but 15 selected parks. To me this looks like a classic example of government failing to do its part on city maintenance. People don't want to pay more taxes so the government will let the parks of our city die and become big trash holes. What is the solution to this problem? PETA has offered money to get the trash system working again. There is one catch though, they get to put logos on the cans that say eating meat destroys the earth with a lady in a lettuce bikini in the background. This solution is currently being considered by the city government.
This may not be the perfect solution to the problem, but this is a good start. Now if only big businesses like Coke or Pepsi could put logos on the cans and help pay for the service the problem of the trash would be solved. If I saw a Pepsi trashcan in the park I would think that the company cares about the environment and the people visiting the parks.
The PETA trashcans seem a little heavy on the political goals for my taste but the company would get a job done that the government has failed to do. If companies like Pepsi or Coke can figure out the opportunity of advertisement there could be good money made.
The start of private companies providing the trash services for the parks of Colorado Springs is a step to less government spending and control over the day to day services that the private market can provide.

What's a little oil between presidents anyway...

Let me start with some news that hasn't exactly hit the mainstream yet: According to Reuters, "The Obama administration is expected to announce by Wednesday its updated plan for oil and natural gas drilling in U.S. waters, including whether to allow exploration for the first time along the U.S. East Coast," (http://www.reuters.com/article/idUSTRE62T06520100330).

Now let me provide a bit of a flashback, for perspective; "Obama Administration Halts Bush Expansion of Offshore Drilling." A title can be telling I suppose, (http://www.huffingtonpost.com/2009/02/11/obama-administration-halt_n_165867.html).

Further, to provide a context for this discussion, journalist Matt Drudge revealed, "Administration sets 'embargo' on press leaks detailing oil plan; 11 PM ET release," (http://www.drudgereport.com/). Surely this must bear some resemblance to the "transparency" we were all promised?

In a stunning reversal of course, the Obama Administration, it has appeared, will be pushing forward with Bush's offshore drilling agenda. Just over a year after former U.S. Senator Ken Salazar promised "'a new way forward' in offshore energy development including new windprojects." The notion that this administration would therefore push forward with the predecessor's plans is very interesting indeed, as the past year has been filled with semantics hoping to move away from such a connection. Of course, actions will speak louder than words.

Let me say, too, that I am not wholly opposed to the idea of offshore drilling in the slightest. On a personal note, I feel that it is an excellent temporary solution while realistic alternative energy solutions can be formulated. The problem here is not that Obama is allowing a move like this, but moreso the underlying principle that has created it. I wonder if those that so adamantly opposed the plan when it was pushed by Bush will have the same feelings today when it is announced to the media. It is interesting, indeed, to note that this is not the first continuation of Bush policy that Obama has embraced; the stimulus package was quite complementary to the bailout, and the health care bill, while dwarving the latter in comparison, has further enabled dependency on federal government that president Bush was himself not terrified of. The social trends that got Obama elected prove that the masses who voted for him had a miniscule grasp of where he was coming from.

Anyways, I digress with such social commentary. The importance of this move here holds many economic ramifications to the country. It is no doubt that the process of offshore drilling is tedious and requires patience. That being said, it is a sure manner in which to guarantee positive step forward in greater economic independence for the United States. That being said, however, we are left with a very interesting predicament. How does this particular maneuver tie in with other notable moves by the president, and what are the implications of such?

This move is both perplexing and unsurprising. Strange in the fact that it is a blatant contradiction to the Obama policy of 2009, but unoriginal in the sense that, as previously aforementioned, Obama has not shied away from the Bush comparisons since his election, when scrutinized objectively. The onset of offshore drilling will, in time, allow a great amount of oil to be utilized domestically in the hopes of keeping prices down for Americans. Frankly, this could have come much sooner but I suppose it IS better late than never. The economic dynamic that comes into play at this point, though, is how this might fare in the shadow of the enormous spending that will be caused by the health care bill. The economic impact can not possibly offset the behemoth of the recent health bill, and I think that might be the intended reaction.

The announcement of this in such proximity to the recent bill passed does not seem coincidental to me. I have to think that the reasoning is as mechanical as the politics that caused it. The concept of offshore drilling will no doubt strike at the tightwad strings of Americans, in a desperate effort to win over the hearts and minds of those of us who just don't like big government spending. That, ultimately, is the reason for the timely manner of this announcement.

Anyways. The idea of offshore drilling has appealed to me for some time now, so I won't bash it simply to bash the president's doing. However, I believe this is something that must be put into context. In the long run it will serve very little. The presumption here being that alternative fuel technologies will, in our lifetime, replace petroleum fossil fuels and more importantly that the allowance of offshore drilling in the foreground of stimulus bills and health care is minuscule at best.

Ultimately, what can we do in the face of such economic events? Capitalism has been wonderful for its uncanny ability to provide relatively so much to so many people and naturally work things out through the failures of government and firms. With the onset of such increased government power, however, we are surely moving away from capitalism as a form of economy in our country and towards socialism. It is difficult for contemporaries to pinpoint with accuracy how far along then we are along the captialism-to-socialism scale, but it is certainly not boding well for a tried economic system that has remained true for over two hundred years now.

What can we do? Well for starters, we might as well allow offshore drilling to continue... At the very worst it won't hurt, and it has plenty of economic promise for our country. The point here is that it exists as a form of reference to where we are now, versus where we were two years ago, before bailouts and "change." The impact of offshore drilling will come and go, but it's hard to say how long it will take to recover from the trillions of dollars spent in the last 18 months, and if we will ever recover at all from the monster of a health care bill recently passed. All we can do is take from the lessons we have learned, as Americans have continually strived to do historically and vote based on this. Ultimately, great change can truly be wrought from such difficult situations and these times are no different.

I have no doubt that the re admittance of offshore drilling will help to affirm this in our society.

Sources: The Drudge Report, Reuters, and the Huffington Post

There's a Googalplex of information out there; Why hide it?

Since nobody else has talked about this subject yet, I will take the opportunity for myself. This being a blog, I will say what is on my mind, exactly how I want to say it: Way to go, Google.

The web search engine powerhouse, due to censoring activities of the Chinese government, moved operations of their Chinese-language services to Hong Kong, where users can search and download information uncensored by the government. This action comes shortly after cyber-attacks against the company believed to be aimed at collecting information on local human rights groups took place (Branigan, Jan 13). However, many also believe (me included) Google’s action was more strongly influenced by their principles of information freedom. Because of this action, Google has done it again. In this intricate act of principle and defiance, Google has not only re-established themselves as a leading innovator, as well as one of the strongest entrepreneurial centers in the world, they have provided economic benefit for the Chinese population, as well as the rest of the world, by acting to bypass this censorship.

After all, in the past 12 years, Google has achieved success of which many companies (Or, rather, individuals within companies) can only dream. Started in 1998 by Larry Page and Sergey Brin, two Stanford grad students, Google now grosses roughly $180 B in market capital, according to MSN Investing (MSN Investing). This success can only have occurred because Google offered something to people that no one else before had offered them. That something is stated right in Google’s mission statement: “to organize the world's information and make it universally accessible and useful” (Look for yourself). The keyword here, I believe, is useful; in those 12 short years, Google has developed a system of indexing information unmatched on the internet today. Even the advertising displayed on the engine webpage, the sole source of their tremendous profits, is designed to reflect the relevant information pertaining to particular search parameters. However, it is the terms universally accessible that may be the driving force behind the company’s radical action. In Google’s list of “Ten Things we know to be true,” True Thing #8 summarizes an almost philosophical standpoint:
“The need for information crosses all borders.”(Google's True Things)

It is exactly at this point that abiding by moral stance and operating under economic principle coincide. The standpoint to supply information “across borders” exemplifies a solid understanding of the network of information that exists around us. And, of course, who better to know about this network than the mighty Google?

In his Individualism and Economic Order, F.A. Hayek explains that the nature of information, specifically information upon which economic decisions are made, is dispersed amongst the minds of all people, and cannot be compiled into one place or body. In this way, the information that each person knows about is unique to him alone:

Practically every individual has some advantage over all the others because he possesses unique information of which beneficial use might be made, but of which use can only be made only if the decisions depending on it are left to him or made with his active co-operation. (Hayek, pg. 80)

The censorship put in place by the Chinese government effectively puts a limit on the breadth and detail of such a network. With less access to the network, decisions of an economic nature are hampered. Google, by moving operations to Hong Kong and sidestepping government censorship, allowed the information network to remain whole and strong, by allowing more pages to be accessed and more individual perspectives of information to be voiced.

There is little doubt that the Chinese government is slightly perturbed about this action by Google, even to the point of removing Google’s ability to use the “Google.cn.com” domain name. Even before the action took place, the U.S. State Department was notified as to Google’s intentions. So why would Google do such a thing, putting their stake in the Chinese market at risk, and cause international strain?

Why, that’s what entrepreneurs do! The function of the entrepreneur not only innovates and satisfies unmet desires, but also serves to, for lack of a better word, “fix” the economy when it…well….breaks. Why would the economy “break”? When government, ignorant to economic process, intervenes in such processes.

And now we wait and see the results. Speaking from a purely speculative point of view, it may come to be that, if Google is removed entirely from the Chinese market, there is a tremendous void of information available to the Chinese population: The best search engine was kicked out, and other companies would not challenge the government like Google did! For the time being, however, Google has still proven themselves both morally and economically. Way to go, Google; What will you do next?

Reference: Hayek, F.A. Individualism and Economic Order. 1948. University of Chicago Press, Chicago, IL

The Expansion of Power within Government

Recently, the passing of the controversial health care bill has got many people in an uproar. A majority of the people opposed strongly disagree with the plan mainly because, under this bill, the government will grow in size, power and reach. From the Austrian econ perspective, one can examine this situation and confidently state that in many ways, the government is increasing its use of “force.” For example, under this bill, the IRS will make a person prove that he has health insurance and specifically, the "right kind" of insurance- as they define it. And he doesn’t meet their standards and their rules, he will have to put up with the wrath of the IRS. Furthermore, the bill also states the following:

The Internal Revenue Service will function as the government’s chief enforcer for health care reform... monitoring both businesses and individuals to certify whether they have the insurance coverage the government requires.

The [IRS] will [monitor and enforce] compliance with the individual and employer insurance mandates... how and when health care is paid for, when health insurance is purchased... [and] minimum level[s] of health insurance.... [The] IRS [will] monitor individuals and employers and punish those who do not comply.

Every individual and most businesses [will be] required to report to the IRS, on their tax returns, whether they have purchased or provided the required level of coverage and disclose to the IRS which months, if any, in which they failed to do so....

If the above information does not reflect the government’s expansion of power or “force,” then what does? If that information alone is not enough to convince a person of the far reaching power of the government, consider this: In order to enforce above rules and regulations, the “Congressional Budget Office estimated that the IRS will need $10 billion in additional funds… to fund an additional 16,500 new IRS agents and other personnel to monitor and enforce the new mandates” (CNS News). This means that the government, via the IRS, now has the legal right to poke their nose into our businesses, our homes, our families and our very lives. Various polls suggest that a large portion of Americans do not support the bill. This bill was, therefore, pushed or forced upon the American people against their will. With the government growing in size, scope, and control, it’s no wonder that many people are angry with the recent passage of the healthcare bill.

In another case very similar to the healthcare example, a recent article in Business Week entitled “A Caribbean Tax Holiday” provides some insightful information regarding recent investigations being done by the U.S. internal revenue service into the “$100 billion a year in retail credit-card receipts is escaping taxation” (Silver-Greenberg 46). Here, like with the healthcare bill, the government is seeking to increase its power in order to crack down on tax evasion by individuals and corporations.

The article explains how some business owners are choosing to minimize U.S. tax bills by “sending credit-card receipts to Panama, Nevis, Aruba, the Cayman Islands, and other business havens” (Silver-Greenberg 46) in order to payout less in sales and income taxes. While significant portions of the article suggest that most of these businesses are acting legally and within the legal bounds the law, it is interesting to note that in its effort to crack down on corporate tax minimization strategies, the IRS has begun to meddle within private businesses and their practices. The IRS began looking into international payment processors that help U.S.-based businesses export their card receipts. In order to search company records, the IRS issues a subpoena and demands the “names of all U.S. merchants that have retained the company to help them deposit credit-card receipts is foreign banks” (Silver-Greenberg 48). In doing so, the IRS can then determine whether or not a certain company is facilitating tax evasion.

IRS leading agent Daniel Reeves declined to talk to Bloomberg Business week about the investigation and the IRS declined to “provide specifics about the continuing probe” (Silver-Greenberg 46). Some might discount this statement as just an interesting bit of information, but such an action does beg the question, “What does the IRS have to hide?” It’s not to say that they are doing something wrong, but rather that those within the agency realize they are blurring the lines of their duties and may in fact be operating outside of its bounds. These actions may be entirely plausible, especially in light of the administration’s increased need to collect taxes. Whether it be the case of healthcare reform or the offshore tax havens, these real-life examples within the IRS agency display the latest increase in interference within American life and economy and give us a glimpse of how the government has used its growing power to “force” the American people to act how it thinks it best.

Works Cited

Cover, Matt. "IRS Needs $10 Billion to Be Nation." CNS News. N.p., 23 Mar 2010. Web. 30 Mar 2010. .

Silver-Greenberg, Jessica. "A Caribbean Tax Holiday." BusinessWeek. 22 Feb 2010: 46-49. Print.

Economic Growth in Peru

It is often said that “beauty is in the eye of the beholder.” I would suggest that everyone's perception of the world is dependent on his or her beliefs. People look at the world and see it different ways, and sometimes our preconceived notions keep us from seeing the truth. The average person in Peru does not have the same quality of life as the average person in America, but this does not mean that economic growth is not occurring in Peru.

In the last 30 years Peruvians have overcome many hardships including hyperinflation. Despite difficulties the people of Peru have not given up hope, and as Marvin Olasky writes in “Peru Poco A Poco,” they are experiencing “economic improvement little by little.” Many of the ideas that are changing Peru come from the Peruvian economist Hernando de Soto. His support of private property and entrepreneurship has helped revitalize Peru.

Hernando de Soto suggested allowing Peru's poor to build homes on unused land. Once a group of homes is established the owners can legalize their claims by proving they are a community. Peruvians have done this by setting up churches, small libraries, and even community centers. Private property creates stability for these individuals and helps cement entrepreneurship by providing the foundations for businesses.

People in Peru have begun to start small businesses with the help of micro-loans. A micro-loan can range from 100 to 1,000 dollars. A small loan like this allows new entrepreneurs to buy supplies and begin working. Micro-loans allow people to become self-sufficient unlike other types of charity which can lead to dependence, if the charity does not lead to the development of a useful skill. Furthermore microloan groups are improving the community by offering business classes for members and providing support for those taking out new micro-loans. As we discussed in class one benefit of entrepreneurship is that the entrepreneur pays wages to laborers thereby bettering life for those workers. As these new business leaders use micro-loans to get started and grow, capital is beginning to accumulate in the slums of Peru.

Hernando de Soto believed that the individuals of Peru could revitalize the country by entering the market as property owners and entrepreneurs. As he said when referring to the complexities of Peru, “with millions of people whose specialization makes them interdependent, with complex systems of communication between producers and buyers... with competition and a daily flow of information from other countries, it is physically impossible to be familiar with and directly run even a small fraction of national activities.” Like Austrian economists, Hernando de Soto believes in the individual. He recognizes that a central planner cannot know everything, and that therefore an economy is more successful when individuals make decisions with the knowledge that they possess. A person in Peru many not have what I have, but the only reason I have what I have is because of the capital accumulation of previous generations. Hernando de Soto's ideas have started Peru along the path of capital accumulation, and the people of Peru have hope because of it.

Reference:
Olasky, Marvin. “Peru Poco A Poco.” World Magazine. 13 March 2010.

There goes the economy...

I was a little frustrated a few days ago when it was announced that the new health care hoopla passed the vote. I don’t mind that idea behind it is to help those without coverage. But is that really the purpose of this bill? I would submit unto you Nay!

1) Why put into effect a health care plan that will affect 100% of Americans, when only approximately 10% of Americans are without coverage? It just doesn’t compute! And that’s including the large number of 18 – 30 year-olds who choose not to get coverage because they feel they don’t need it. They would rather buy a big screen TV, than “waste” their money on an intangible good like insurance. Why not come up with a plan that will benefit just those that are without coverage, and can’t afford it?! Congress should be smart enough to come up with such a solution. Maybe I’m giving them too much credit. After all, this is the same group that couldn’t find a way to put the bill on the internet. Give me a break!

2) Do the individuals that voted on this bill understand that well over 60% of Americans did not want this bill passed, let alone the effects it would have on the economy? NAY…One would think.


Rahm Emanuel stated in 2009, “You never want a serious crisis to go to waste - and what I mean by that is it’s an opportunity to do things that you didn’t think you could do before.” The American people in a clear majority, through polls, tea parties, etc., do not want this. Yet the White House is taking advantage of the current recession to push through something that will break down America even more. With unemployment already at 16%, including those who have just given up on looking for work, the government wants to cause even more people to lose their jobs. Oh, but they are creating 16,000 new jobs in the IRS to monitor this program. The only sector in which there seems to be growth now days is in the government. Maybe all the poor individuals who will be losing their jobs in the health care and insurance industries can go work for the IRS.

Well, if they know how detrimental it would be to affect 1/6 of the economy, then you’d think they would keep their conniving little hands to themselves. That’s not the case. The goal of this administration is to break down and eliminate the private sector, when it comes to insurance. This will lead to even more reliance on the government than people already have.
The government is effectively offering the option to wait until coverage is needed, buy it, and when it is no longer needed, get rid of it. This is a cheaper option to everyone than to own private coverage. By offering a fine to those who do not have coverage, it is intentionally cheaper than the cost of coverage itself, and by eliminating the preexisting conditions clauses, it allows for individuals to easily take advantage of the system. In doing this, definitionally, the government is no longer providing insurance; it’s providing welfare.

Unbelievable…

Ignorance and lies lead to failure

It is very obvious that the current administrations posturing on the policies affecting the future of the United States economy is lacking the support of the majority of U.S. citizens. It seems as though the more we protest the less the government listens. This ignorance by our government has the unfortunate similarities of past socialistic governments that have failed. It has been documented and proven by the essay's we are currently discussing in this course that there is no future for the people if the government has too much control and continues to grow. We as Americans have to ask ourselves how much more of the lies and corruption can we take until we reach a breaking point? The politicians continue to string the believers along but they are slowly loosing support. The breaking point is finally being reached.

This is a epic moment in history. It is obvious that the left realizes its radical agenda will be short lived. That is the exact reason why they are trying to pass all of these socialist ideas before the November elections. They are like sheep being lead to the slaughter house. By not recognizing what the majority of people want and the fact that America became so wealthy because of the lack of government in the system, they will fail. So let them continue to disregard the peoples wishes, press on with a socialistic agenda and continue to lie. The truth has come out, they will be voted out, and destroy the Democratic party.

From what I have read the November elections are gaining support by the people to elect individuals with a business background, not a political one. Where taking responsibility for your actions and decisions will have merit over the governing parties agenda. Once again our representatives will reflect the voices of the people not the government in power. This cleansing of our government will provide a base for the entreprenural spirit and lead to a prosperous economy vs. a prospering government.

Vote the liars out.

Healthcare: A Little Common Sense

In my myriad of researching, opinion-creating, and philosophy-searching, one thing is clear:

I still remain confused as to how to solve our healthcare dilemma.

But the question remains: how does the US outspend everyone else on healthcare but still rank behind literally every other developed country on life expectancy and survival rates from pretty much everything other than cancer, something that the Conservatives like to spout off about like it's some sort of one-stop refutation.

Read: Great Britain and most other European nations have GREATER survival rates for most other chronic diseases other than some cancers. And in some, like France, the wait times are actually competitive with ones in the US for procedures. Wait times are not nightmarish in every socialized healthcare country like they may be in Canada.

My general guiding philosophy is that socialized healthcare obviously and without dispute results in much more positively valued macro-scale health indicators for the population of a nation as a whole. Also, I know from economics that healthcare is a sui generis good, and profit incentives in healthcare are directly in line with denying as much of the product as possible, unlike most tangible goods.

This is troubling because healthcare is a good that determines life or death at a fundamental level. Most socialized countries pay between 2 and 5 cents per dollar per capita on administrative overhead and bureaucracy, a word Republicans love to use. We spend 29 cents per dollar on our private bureaucracy, out of a per capita amount that's twice as high as the next highest nation. Talk about stupidity and inefficiency.

Also, from the perspective of insurance, it is Econ 101 that insurance, in any form, is most efficient when the risk is diluted as much as possible per a population. This is the entire point of the idea. Insurance, private or public, cannot be efficient or effective when you are not required to pay into the system or to have it. You are required to have car insurance for the same reason; if car insurance were optional for car owners, the whole system would break down.

Healthcare is the same, except as a good it applies to everyone universally, since everyone has a mortal body subject to harm. Therefore it only makes sense that everyone has it, without the option to opt out. This is especially important with health because the current optional system conflicts directly with societal morals; if you willfully choose to not have insurance and get into a a bad accident, you still must be treated according to the law and according to morality and decency. So we either change morality to be logically consistent, i.e.- don't treat those who have chosen not to get insurance no matter what unless they wish to pay out of pocket up front, or we change the universality of insurance. And one is much easier and more morally palatable to do than the other.

However, I also know that even though it is a sui generis good, it is still a good that is subject to scarcity, and I am swayed that socialized healthcare, at least in the classical sense, does fail at the margins and does fail to effect innovation. Yes, it is true that 5 out of the 10 largest pharmaceuticals are based in socialized-healthcare countries, but these companies rely on the profits from the US market in order to innovate. This is a fact.

Having said all this, my position is that I'm all right with private healthcare, as long as everyone is required to have it under penalty of law, it can be sold across state lines, and it is price regulated to a small extent. However, I'm also all right with completely socializing the system, for the greater good and in the name of efficiency.

I also desire tort reform and believe it is an essential step as well.

But I'm not convinced that the healthcare bill does any of the above. Bill Mahrer has joked that it is essentially a [naughty word] to the insurance industry, and I think he's right as far as I know. However, I also feel that even if it is a severely flawed bill, it is our only shot at actually changing anything. Heaven knows a Republican won't do it.

So I'm torn. I don't know what's going to happen to healthcare reform, but I just want to believe that the current proposal will be the start in making some changes, despite its huge flaws. I don't know if I can though.... I wish they would just rewrite the whole thing, Democrats would let tort reform and interstate competition happen, and we mandate universal coverage under penalty of law. Heck, I'd even be in favor of getting rid of Medicare and Medicaid completely...

To get efficiency we need to focus on ONE approach, whether it be public-insurance for all, Medicare for all, or private insurance for all. I don't care. The key is to make it universal.

Then the system would be fixed. Period.

©2010 Drew Willsey.