Thursday, November 17, 2011
Random ruminations from your resident curmudgeon...
One of the pretenses of Obamacare is that once the socialized healthcare program was implemented, there would be little to no effect on private insurance coverage.Do you think that is the case? During the debate over this program, one concerned voiced by those in opposition was that the federal government's intrusion into the marketplace was that it would drive out private health insurers. Guess what? That is exactly what is happening. According to the Gallup organization, the percentage of Americans that are getting their health insurance from an employer ha declined substantially. Currently, only 44.5% of working Americans are receiving coverage from their employer. Why is this happening? More and more employers are dropping private insurance and opting to let employees get coverage from the government. The problem with this is that the price of healthcare insurance and the quality of the insurance offered are not comparable to what the private sector had provided. More employers are choosing not to offer healthcare insurance as a benefit because of rising costs of providing that benefit as more insurers are forced to raise rates because of government intervention in the marketplace.The end game of Obamacare was to drive private insurers out of the marketplace, solidifying the government's control over healthcare. It's working.
When tempted to fight fire with fire, remember that the fire department uses water.
Keynesian economics was born in the 1930's during the great depression. The central tenet of Keynesian economics, promulgated by its namesake John Maynard Keynes, was that free markets needed government intervention to produce a healthy economy. You should know that most government economists are Keynesian economists. Why is this important? Simply for this reason: every swing in the economy or the business cycle became a problem that the government has to "fix". This line of reasoning over the years, and in particular the last three years, has led our country to a level of unsustainable debt. How bad is our debt level? Currently, we are in the hole to the tune of 400% of our nation's Gross Domestic Product (GDP). Throughout the history of our country, we have averaged debt at a level of approximately 150% of GDP. In simple numbers, to return to normal debt levels, we must reduce our federal debt by $30 TRILLION. Because of the attitude that the government must do "something" to prevent normal downturns in our economy we have created an unsustainable level of debt that will burden our nation for generations to come. Remember that the next time a politician tells you that the government must do "something" to help the economy.
We have enough gun control. How about some idiot control?
Watch closely the unfolding scandal in the "green industry". Solyndra and Beacon Power are just the tip of the iceberg. These companies, and more, received sizable government guarantees that are now being called by lenders since the companies have either failed or filed bankruptcy. These green companies would not have survived as long as they did without the government backing. The free market had already decided that their products either were too expensive or did not perform as advertised. Ultimately, the cost of these government guarantees will be born by you and me, the taxpayers. Risk has been shifted from a company that could not successfully compete in the free market to you and me. This is the problem with government intervention into the marketplace: it skews the normal forces that decide winners and losers and takes away risk from the supposed entrepreneurs and gives it to the taxpayer. In effect, there is no risk for investors in those companies because that risk has been transferred to us. I would love to offer my clients investments with absolutely no risk. Unfortunately, that is not the way investment markets work. The business market should be no different.
Some people say "If you can't beat them, join them." I say "If you can't beat them, beat them." They will be expecting you to join them, and you have the element of surprise.
And that, my fiends, is my view.