Must Reads For The Week 6/21/14

Posted June 21, 2014 by austrianaddict
Categories: Must Reads For The Week
Tags: , , , , , , , , , , , ,
The pen is mightier than the sword...

 The pen is mightier than the sword… (Photo credit: mbshane)

Video: Turning SWAT Teams Into Death Squads, at libertypenblog.blogspot.com, by John W. Whitehead. The Fourth Amendment states, ‘The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause….’ Law enforcement in the U.S. isn’t constrained by the Fourth Amendment anymore.

The US Government Doesn’t Want You To Know How The Cops Are Tracking You, by Trevor Timm, at the gardian.com. I saw this at libertypenblog.blogspot.com. Another example of Government abusing our Fourth Amendment rights.

US Captures The Benghazi Killings Mastermind (And Scapegoat), at zerohedge.com. Everything this administration does is for purely political reasons. We can’t possibly believe anything else. Excerpt from the article, “What is perhaps more curious is why it took Obama nearly two years to find a person who was openly living in Libya after the attacks, and in fact gave interviews several interviews with TIME magazine in 2012, but with AP in October 2013:” When this guy goes to trial, he can have President Obama, Secretary of State Clinton, and Ambassador Rice testify that what happened in Benghazi was a spontaneous attack because of an anti Islamic video shown on the internet. No one could possibly challenge the veracity of these three witnesses.

U.S. Government Trying To Force Washington Redskins To Change Name, by Rachel Blevins, at benswann.com. Two things going here. 1) Government officials exercising force over peoples property rights. 2) Government officials enforcing something that is completely meaningless to the well being of American Indians, but is very meaningful to the ego of the Government officials. I have one question for these Government officials. How did the creation of Indian Reservations, by Government officials, work out for the American Indians who live on them? Read here.

Marc Faber Explains The Fed’s Dilemma In 15 Words, at zerohedge.com. Faber’s words, “The more they print, the more inequality there is, the weaker the economy will become.” The Fed is creating the very problem it is trying to cure with its double edge sword of electronically printing counterfeit money and zero interest rates.

Bobby Jindal Pulls Lousiana Out Of Common Core, by Robby Soave, at reason.com. The more that is known about Common Core, the more it is being rejected. Virginia, Texas, Minnesota, and Nebraska never adopted Common Core. Louisiana just pulled out, just as Indiana, Oklahoma, and South Carolina, recently pulled out. North Carolina and Missouri look like they are next. Liberty minded people are winning on this issue, because they are fighting at the State level.

Right To Work States Now Dominate U.S. Automobile Manufacturing, by Mark J. Perry, at aei-ideas.org. Business seeks lower costs, and labor is usually one of their biggest. When labor is free from Union coercion, it chooses against unions. This benefits labor,business, and consumer.

Big Labor (And Socialists) Hate Tipping, at economicpolicyjournal.com. First of all, I thought big labor is a bunch of socialists. Here is a quote about tipping from the minimum wage queen, Seattle City Councilmember Socialist Kashama Sawant; “We don’t want any worker to be beholden to the mood of the customer on any given day.” This is the difference between free markets and central planning. The consumer rules in a free market, and the planners rule in a socialist system. Seattle you are getting exactly what you deserve by electing this jewel into office.

Flight Attendant Makes Best Pre-Flight Speech Ever, at economicpolicyjournal.com. This is good.

 

I saw these cartoons at theburning platform.com.

149763 600 Obama Student loan plan cartoons

 

149652 600 VA Backlog cartoons

 

149531 600 Midas touch cartoons

 

 

149734 600 Tea Party Topples Eric Cantor cartoons

 

 

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Gov. Kasich: God Wants Ohio To Expand Medicaid. Seriously?

Posted June 20, 2014 by austrianaddict
Categories: Government and Politics
Tags: , , , , , ,

File:Way-of-salvation-church-militant-triumphant-andrea-di-bonaiuto-1365.jpg

When I heard what Governor Kasich said about Medicaid expansion, all that went through my mind was John McEnroe’s famous proclamation, “You cannot be serious”. I found what Kasich said in this article, Gov. Kasich: God Wants Ohio To Expand Medicaid, by Jason Hart, at redstate.com. The article quotes him as follows, “….. I had a conversation with…… one of the members of the legislature the other day. I said, ‘I respect the fact that you believe in small government. I do too. I also happen to know that you’re a person of faith. Now, when you die and get to the, get to the, uh, to the meeting with St. Peter, he’s probably not gonna ask you much about what you did about keeping government small, but he’s going to ask you what you did for the poor. Better have a good answer.’”  Kasich’s statement sounds like the social justice canard that “people of faith” use as a bludgeon to shame people into conceding before there can be any rational argument about a policy.

First of all society can’t be charitable, only individuals can be charitable. Individuals own the goods and services they produce. Individuals also own their labor and therefore own what they receive in exchange for their labor.  Individuals decide whether they will consume, save, exchange, or give away what they’ve produce. Charity is simply an individual deciding to giving away what he has come to own because of  his production.

Government can’t be charitable because it is not an individual. Individual politicians and bureaucrats in Government cannot be charitable because what they give away they neither produced nor owned. Individuals in Government have to first steal, through taxation, the wealth that they distribute. Redistributing what has been stolen, after pocketing a portion of it, is not charity. I’m willing to bet God doesn’t think theft is charity, based on his commandment, “Thou shall not steal”.

God gave each of us free will, which allows us to do what we please. If God doesn’t force us to accept him, or his word, why would a man of faith, like Gov. Kasich, think he knows more than God when it comes to charity being voluntary or forced. This violates his commandment, “Thou shall have no other gods before me”.

I don’t think Gov. Kasich’s meeting with St. Peter will go as well as he thinks based simply on theft and hubris.

One more observation: Why isn’t the left hammering Kasich for forcing his morality on them? Probably because the left always forces their morality on everybody through Government power, and in this case they want Government to expand.

Whats the difference between John McEnroe and John Kasich?  John McEnroe isn’t sanctimonious.

 

Related Article – We Can’t Recreate The Garden Of Eden, by austrianaddict.com.

 

 

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Scandals, or Fundamental Transformations?

Posted June 17, 2014 by austrianaddict
Categories: Government and Politics
Tags: , , , , , ,

This article, Was Benghazi a Scandal? by Victor Davis Hanson, answers this question. The President has gone about ignoring the rule of law in so many cases it is hard to remember them all. Dr. Hanson catalogues many of these in his article. The President said he was going to fundamentally transform the United States of America, on the campaign trail in 08.

He is moving closer toward keeping his promise every day, as each new scandal/transformation comes and goes. We are being conditioned to accept this as the new normal because of the sheer volume of his usurpations of power. Why should anyone be surprised by anything he has done, if you consider his progressive radical back ground that anyone could have uncovered with a small amount of effort. Our founders said, “Eternal vigilance is the price of freedom“. In retrospect eternal vigilance seems like a bargain compared to the price, in time and effort, we are going to have to pay to get this ever-growing Government back inside of its constitutional borders.

Here are some excerpts from the article.

“In sum, what many Americans see as scandals are not scandals to the Obama administration. Our president believes instead that the law is fluid. Statutes are mere constructs dressed up by those with inordinate power to paper over race, class, and gender biases.”

“For the nobly progressive, the desired equality of result at home and greater fairness toward nations abroad require a sort of deconstruction of “settled law.” Liberal elites may be forced to emasculate their enemies, if need be, by politicizing the IRS, or by ignoring the law through executive orders, or by sending out officials to peddle untruths, or by doing almost anything necessary to enact social justice here and abroad. Some call it scandalous, but others see it as empowering and long overdue.”

“The more such scandals occur in the next two years, the more they will not be seen as scandals, but as mere bothersome hurdles to fundamentally changing America. In the age of Obama, you win the race not by playing by the fossilized rules of jumping over the track’s hurdles — but instead by running right through them to reach the finish line first.”

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Must Reads For The Week 6/14/14

Posted June 14, 2014 by austrianaddict
Categories: Must Reads For The Week
Tags: , , , , , , , , , , , , , ,
The pen is mightier than the sword...

 The pen is mightier than the sword… (Photo credit: mbshane)

 

Rehypothecation Evaporation Concerns Grow, As Copper Plunges Most In Three Months, at zerohedge.com. Rehypothecation is simply selling claims on a commodity, a good, a product, etc, above the amount that exists. If the owner of the Mona Lisa wants to store the painting in your art warehouse, you give him a receipt for the painting. This receipt is a claim on a particular painting by the owner, to be redeemed at any time. What if you make a counterfeit receipt and sell it. There are now two claims on the Mona Lisa. If you own a grain elevator, farmers will store their corn, measured in bushels, in your bins, and you give them a receipt for X amount of bushels to be redeemed at any time. You don’t have to give the farmer back the exact bushels of corn he brought in because bushels of corn are homogenous, unlike the Mona Lisa. What if you started selling counterfeit receipts for the corn? What if you have twice as many claims on bushels of corn as you have bushels of corn in your grain bins?  Your theft will remain hidden until such time that you don’t have enough corn to cover a receipt that is presented. The rehypothecation of copper, and the examples of the Mona Lisa and the bushels of corn, are examples of  how our Fractional Reserve Banking System works. Banks can loan out 10 times the amount of money they hold in reserve. If they have $1million in reserve, they can loan out $10 million. Money never exchanges hands, it is transferred electronically when a check {warehouse receipt} is presented. Its a sweet deal for the banks because they get to collect interest on the electronically printed counterfeit money {warehouse receipts}. Unfortunately this counterfeit money has been released in the market and is causing the unintended consequences of misallocating scarce resources and inflation. Read  more about this topic in my article here.

Texas Mom Outraged Because Her Daughters School Won’t Allow Sunscreen, by Rebecca Klein, at huffingtonpost.com. I love it when the rules central planners make come into conflict with each other. In this case officials at the district banned sunscreen because it is a toxic substance. But what about the central planners who have regulated tanning bed use by minors because of the possible danger of skin cancer. Central planners are all or nothing rule makers. They don’t understand that life consists of tradeoffs. But more importantly they don’t understand that decisions concerning these kinds of trade offs should be made by each individual or in this case the parent.  In this case the individual has to trade off one danger, the risk of the toxicity of the sunscreen against the risk of getting skin cancer. As I have learned from reading Thomas Sowell, their are no categorical solutions, just incremental trade offs. Central planners don’t understand that the more incremental decisions they take away from individuals, and make them categorical decisions for everybody, {except for themselves} the more strife they create between us and them.

LET’S LOOK AT MINIMUM WAGE REALITY

1) A Report From The Bakken Oil Fields, Where The Jobless Rate Is 0.9% And WalMart Is Paying 2.4 Times The Minimum Wage, by Mark J. Perry, at aei-ideas.org. The Federal minimum wage rate is $7:25, as is North Dakotas minimum wage rate. Will the central planners, at the federal and state levels, mandate that the wages of these workers at the bottom of the wage scale be dropped to $7:25 an hour just to be “fair” to the other minimum wage workers in other states?  Or should the central planners pass a law that mandates a maximum level of the minimum wage? These planners apparently have more knowledge about what wages should be than the knowledge the market can bring to bear on wage rates. The market in North Dakota is obviously wrong for paying these low skilled workers over double what the mandated minimum wage is. Don’t these central planners exist to correct the inequalities produced in the market?

2) Seattle Business Charges “Living Wage” Tax In Response To $15 Minimum Wage Hike, by Jessica Chasmar, at washingtimes.com. Plans by central planners can’t work like the planners planned. Why? Because there is still enough of a free market remaining that businesses have options other than just paying the new minimum wage rate. They can raise prices like this company, they can replace labor with technology. they can replace low skilled low wage labor with more productive higher skilled higher wage labor, or they can look to cut costs elsewhere in the production process. If raising the minimum wage for low skilled labor would increase production and profit, businesses would already be paying a higher wage, just like what is happening in North Dakota because of the oil boom.

NOW LETS HAVE SOME LAUGHS

12 Things Men Do Differently Than Women, at economicpolicyjournal.com.

Pee Wee Obama, at theburningplatform.com. I’ve been trying hard not to do this, but I can’t help myself.

Compare this video of President Working Out In Polish Gym, to this, Olivia Newton John, Physical video.

I saw these cartoons at theburningplatform.com.

WHEN THESE POWER PLANTS CLOSE, WHERE WILL THE ELECTRICITY COME FROM?

149321 600 Rates Skyrocket cartoons

 COAL POWERED CARS, I PADS, AND I PHONES

149426 600 Coal Industry cartoons

SOCIALIZED MEDICINE BY ANY OTHER  NAME…..

149459 600 Making Obamacare Look Good cartoons

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Winning The Triple Crown Is Rare, Because It’s Difficult

Posted June 9, 2014 by austrianaddict
Categories: Miscellaneous
Tags: , ,

I watched California Chrome attempt to win the Triple Crown at the Belmont Stakes Saturday. The only horse race I watch is when a horse has a chance to win the Triple Crown in the Belmont Stakes. The reason for this is because Secretariat won the Triple Crown in 73 when I was in high school. Winning the Belmont by 31 lengths and setting the record by over 2 seconds left an impression on me that lives on today. Whenever I see something that is not just rare but done in a way that seems other worldly I say “that’s a Secretariat moment”.

To this day, I still get goose bumps when I watch this.

California Chrome wasn’t quite good enough to win the Triple Crown, let alone have a “Secretariat” moment while doing it. The horses owner Steve Coburn made some comments after the race that make me ask two questions. 1) Why does anybody do an interview immediately after a loss?  2)  What does “Fair” really mean. Fair is one of the most ill defined and over used words in our society today. If  the word “Fair” is trotted out every time someone doesn’t get the outcome he wants, than it becomes a meaningless word. As soon as I hear someone say, “that’s not fair”, I stop listening. The reason winning the triple crown is rare is not because it isn’t fair, it is because it is very difficult. If the triple crown was won every year, no one would think it had value. I can name the last three triple crown winners, but I can’t tell you who won the last three Belmont Stakes. Triple Crown’s are rare, winning the Belmont happens every year.

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Must Reads For The Week 6/7/14

Posted June 7, 2014 by austrianaddict
Categories: Must Reads For The Week
Tags: , , , , , , , , , ,
The pen is mightier than the sword...

 The pen is mightier than the sword… (Photo credit: mbshane)

Libertarian Candidate For Governor Arrested For Gathering Signatures, by Ben Swann, at benswann.com. Self interested government employees don’t like candidates who want to reduce the size of government. This is, “The Tyrany Of The Status Quo.”

How Fracking Has Saved Obama, by Richard Rahn, at washingtontimes.com. I saw this at Carpe Diem /aei-ideas.org. As hard as they might try the administration can’t even kill the goose that’s laying the golden egg.

Lefty Logic Confusion On Taxes, at economicpolicyjournal.com. Leftists have no understanding of economic reality even when the consequences of their actions hits them square in the face. If ignorance is bliss this lady is the happiest person you will ever meet.

European Central Bank Institutes Negative Interest Rate, at economicpolicyjournal.com. What is the consequence of a negative interest rate on savings? If you said individuals will spend money not save it, go the head of the class. This is the Keynesian idea that spending drives the economy when in fact spending is consumption, and consumption is the destruction of what has been produced. Savings allows an economy to produce more. Interest rates coordinate production across time, and artificially setting interest rates disrupts the production process. Central Bank {especially The Feds} manipulation of interest rates and money printing has created this economic mess, it is not the cure for the mess.

Harvard Grad Chuck Schumer Fails History, Credits Jefferson For Bill of Rights, by Stephen Dinan, at washingtimes.com. This reminds me of this clip from the movie Animal House.

Seattle Pacific University Student Tackles And Restrains Gunman During School Shooting, by Annabelle Bamforth, at benswann.com. Watch the four-minute press conference and see why I hate politics. After Police Capt. Fowler reports the facts, the rest is self aggandizing  political nonsense. Jon Meis, the student who stopped the shooter, was responsible for the safety of his fellow students  than the mayor, the police chief, or the fire chief. They are just trying to look important after the fact.

Skateboarding On Water With Sea-Do! People can do some amazing things.

The Fed Won’t Let Our Economy Heal, by Frank Shostak, at mises.org. I like how Frank Shostak explains abstract concepts. Here is an excerpt from the article, “Most commentators are of the view that the Fed’s massive monetary pumping of 2008 has prevented a major economic disaster. We suggest that the massive pumping has bought time for non-productive bubble activities, thereby weakening the economy as a whole…. To prevent future economic pain, what is required is the closure of all the loopholes for the creation of money out of “thin air.”

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D-Day Plus 70 Years

Posted June 6, 2014 by austrianaddict
Categories: Miscellaneous
Tags: , , , , ,

I saw a show on the History Channel this past weekend and it got me thinking about the men who were involved in the Normandy invasion code-named Operation Overlord, especially my uncle Bill. Staff Sergeant William Sackenheim, was a paratrooper in Company E  508th Parachute Infantry Regiment 82nd Airborne Division. He jumped into Normandy approximately 1:30 am on June 6 1944 with the mission to take the town of Ste.-Mere-Eglise.

When I was growing up I just knew my Uncle Bill as a man who seemed larger than life, was really funny, and lit up the room he was in. I was always laughing within seconds of seeing him. My mom told me he was a paratrooper in WWII and was awarded a purple heart, but I didn’t know much more than that until I was much older. About the time of  the 50th anniversary of D-Day in 94, my brother and I were talking to my uncle at a funeral, and a man named Earl came up and they started talking. My uncle said ” Earl remember where the hell we were 50 years ago.” And Earl smiled and said “yes”. So I asked if he was a paratrooper like my uncle, and he said “no”. My uncle said “Earl was in one of those ships he flew over crossing the channel to make his jump.” I said you landed on one of the beaches on D-Day and he said “yes, Omaha”. My uncle said Earl was captured by the Germans, and I asked “what happened”, thinking he had maybe been a prisoner the whole war, and Earl said “oh, I escaped, I had to get the hell out of there”. I’m thinking you just don’t leave, there has to be a great story here. But I didn’t get to ask any more questions because Earl had already started talking to other people.

So my brother and I talked to my uncle a little more about D-Day and then asked if we could come over to his house in a couple of days, and he could tell us about D-Day and the war. Two days later we talked with my Uncle Bill for four hours about the war. One theme that always came up was how soldiers next to him got killed. He would always say “why was it him and not me”. I finally understood why my uncle seemed larger than life, it’s because he actually was larger than life.

Not only did my Uncle Bill jump on D-Day, he jumped in Operation Market Garden in Holland, and was in the Battle of the Bulge in The Ardennes in Belgium. He also saw the atrocities at  Buchenwald. My uncle Bill passed away a few years ago, and soon the living monument that is the WWII generation will be gone, and we will only be able to read their stories. My brother and I were lucky that we got to listen and see our Uncle Bill tell us about  his experience.

TIME LAPSE MAP OF WWII IN EUROPE

AIRBORNE ASSAULT D-DAY

When I see historical footage like this I always think, my uncle did this.

 

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Must Reads For The Week 5/31/14

Posted May 30, 2014 by austrianaddict
Categories: Must Reads For The Week
Tags: , , , , , , , , , , ,
The pen is mightier than the sword...

 The pen is mightier than the sword… (Photo credit: mbshane)

Regulators Attack Dentist For Charging Too Little, at libertypenblog.blogspot.com. A Dentist trying to supply low-cost cleanings, for lower-income people, is told to stop by the Dental board after local dentists complained. If Government hadn’t usurped the power to regulate in this area, the price of dental care would obviously go down. The dental cartel doesn’t like the free market. It wants to use Government to prop up its monopoly prices.

Hookers And Blow: How Changing The Definition Of GDP Officially Jumped The Shark, at zerohedge.com. Prostitution and illegal drug sales are going to be figured in to the GDP number this year by the Italian Government. All Governments are good at changing the way statistics are calculated in order to make the Government look good. The US has changed the way they calculate inflation, unemployment, and the GDP. It reminds me of what has been said about voting in Chicago, “It doesn’t matter who votes, it only matters who counts the votes.”

SWAT Team Ambushes Innocent Man Working On Tractor In Driveway, at policestate.com. I saw this at libertypenblog.blogspot.com. Another example of Government officials abusing power, this time at the local level. Where are the Andy Griffiths of the world.

Third World Construction Techniques Without Machines, by Mark J. Perry, at aei-ideas.org. These are videos of construction workers doing some pretty amazing things. I love how people figure out how to get things done. OSHAA wouldn’t approve of these methods, and I bet these construction workers wouldn’t approve of  OSHAA .

The Concussion Summit, at usatoday.com, and Congress Should Worry About The VA, Not The Redskins, at fredericknewspost.com. The President and the Senate don’t have the constitutional power to make rules in these particular areas. Decisions concerning the risk of concussions, and the name of a Pro Football team are supposed to be made by the people who are directly affected. Political do gooders are always willing to pontificate on subjects without being asked to do so.

Go Pro: Epic Zipline BASE. People do some amazing and scary things. This guys margin for error is very small.

One World Trade Lowers Asking Rents By 10%; “The Market’s Not There“, at zerohedge.com. The World Trade Center is 55% leased and the owner is lowering rent. So much for a good economy.

Hospital/Medicare Games, at economicnoise.com, and Hospitalized But ‘Under Observation’? Seniors Beware, by Mark Miller at reuters.com. The same tactic used by the VA,  putting patients on a waiting lists in order to get on the real waiting list, is being used in another Government run health care system namely medicare. Nobody should be surprised by this because this is what happens when the Government tries to use legislative decrees to wish away the first rule of economics, scarcity. Health care is an economic good and Government can’t change that fact, as we have found out with Medicare and the VA, and as we all will find out in Obamacare. Read Incentives Matter.

Worst First Pitches. You Decide. 50 Cent, Cincinnati Mayor Mallory, Carly Rae Jepsen, President Obama,

The World’s Most Polluted Countries, at zerohedge.com. Why is it that the countries that are the highers polluters are centrally planned. The US produces more goods than any other country and it comes in at number 17 on the pollution countdown. Only countries that produce wealth can afford to clean up after themselves.

The Last Communist City, by Michael J. Totten, at city-journal.org. I saw this at mungowitzend.blogspot.com. This is our heavy lifting for the week. Here is an excerpt from the article, “I’ve always wanted to visit Cuba—not because I’m nostalgic for a botched utopian fantasy but because I wanted to experience Communism firsthand.” Mr. Totten gives us a tour of a communist utopia, and it isn’t a pretty sight. Here is another excerpt, “In 1958, Cuba had a higher per-capita income than much of Europe. “More Americans lived in Cuba prior to Castro than Cubans lived in the United States…” Cuba was one of the world’s richest countries before Castro destroyed it…” Just another example of how central planning, whether communist, socialist, fascist, or crony capitalist is the road to serfdom.

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Tyranny Is Hidden Inside The Bureaucratic Maze

Posted May 30, 2014 by austrianaddict
Categories: Government and Politics
Tags: , , , , , , ,

I read in this article, Justice Departments “Operation Choke Point” Targets Businesses It Doesn’t Like, by Glenn Reynolds, at usatoday.com,  about how the Justice Department is using its power to force banks into targeting legal businesses that the DOJ {the admisistration} deems undesirable. It is pressuring banks to cut off the accounts of businesses in industries like ammunition sales, payday loans, coin dealers, firearm sales, online gambling, escort services, fireworks sales, pornography etc (read full list here). {Groups not on the list are abortion clinics, radical environmental groups, and marijuana shops}. The Justice Department threatens the banks with litigation or fines if they won’t do the bidding of their regulatory masters {Incentives matter}. This is how tyrants use the bureaucratic, administrative, and regulatory maze of Government to force their will on people. Instead of using force directly and meeting resistance, politicians hide their tyranny in the bureaucratic maze of Government, hoping nobody will be able follow the trail that leads back to them. But even if someone finds the evidence that points to the political perp, a lot of time has usually passed, and the passage of time allows the politician to lie, leak out information in drips, stonewall any investigation, and spin the truth, all with the help of the mainstream media {or as I like to call them the get away car driver}. If you want to see this cover up process in action  just look back at the Fast and Furious gun running program, the Benghazi debacle, and especially the IRS targeting of tea party and liberty groups just to name a few.

The size of Government has to be reduced, because whoever is in power will use the force of Government to move their political agenda forward. Those in power will also use the force of government to target groups who don’t agree with them. We can’t just put the “right” people in positions of power, and expect them not to abuse it. If you give your teen age son the keys to a 720 hp Lamborghini, would he drive under the speed limit. No chance. If you want your son to drive under the speed limit you can’t give him a vehicle that can go over the speed limit. We can’t give politicians the vehicle that can abuse the speed limit on our freedoms. Government power has to be reduced by an exponential factor if we are to remain a free people, because I assure you whatever power Government has, our political leaders will use it for their political advantage.

 

Related Article – What Is Tyranny? The President Should Know The Definition, at austrianaddict.com.

Related Article – Choking On The Administrative State, by Glen Reynolds and Todd Zywicki, at powerlineblog.com.

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Incentives Matter

Posted May 29, 2014 by austrianaddict
Categories: Econ. 101
Tags: , , , , , , , ,

File:VA hospital waco 2009.jpg

The recent revelations about VA hospitals shouldn’t surprise anyone. This problem isn’t peculiar to the VA, it’s systemic in all bureaucracies. The track record of central planning is less than stellar, whether It’s government intervention in a  free market economy like the U.S., or central planning in a communist economy like the former Soviet Union. Both systems create bureaucracies that have their own incentives under which the individuals inside these bureaucracies make decisions. We can’t look at bureaucracies from the stand point of how a business operates in the free market, because the incentive structure is totally different. We might think that these bureaucrats are not acting the way we would act, if we were in their position Don’t be too quick to judge, these bureaucrats are acting exactly how they should act if you consider the incentives they operate under. In a free market, prices ration scarce goods and services, and also pass knowledge to individuals and businesses. The incentives and constraints transmitted through the market, are totally different from the incentives and constraints transmitted to bureaucracies by politicians and administrators. In the market the incentive is to provide what the consumer wants which means you first must give before you receive. A bureaucracy is a monopoly on a particular service, which means the person using the service is an annoyance rather than someone who has to be pleased. In a free market the consumer can go somewhere else if he is not satisfied. At the DMV the consumer has no other place to go to get the service. In the case of the U.S. Postal Service, consumers are choosing better options for communicating and shipping packages, and the U.S. Post Office doesn’t care because it’s getting propped up by yours and my tax dollars.

PROBLEM SOLVING

Firing Eric Shinseki and replacing him with a better “angel” won’t solve the problem, {if the problem is making sure the veterans are being taken care of}, because the incentive structure will remain the same. If the problem is trying to find political cover, than firing him will help in solve the “political” problem, at the expense of veterans lives. Watch and see if the administration fires Shinseki and then claims the problem is being take care of. Remember Guantanamo Bay detention center in Cuba is still open today even though the President said during and after the campaign in 08, that he was going to close it, so we know political talk and actions are responses to political incentives.

CREATING INCENTIVES

Here are a few examples of Governments creating incentives that individuals respond to.

I will quote from Thomas Sowell’s book Basic Ecomomics. “During the Stalin era in the Soviet Union, there was a severe shortage of mining equipment, but the manager of an enterprise producing such machines kept them in storage after they were produced, rather than sending them out to the mines. The reason was that the official orders called for these machines to be painted with red, oil-resistant paint and the producer had on hand only green, oil-resistant paint and red varnish that was not oil-resistant. Disobeying official orders in any respect was a serious offense and “I don’t want to get eight years,” the manager said. When the manager appealed to a higher official to use the green, oil-resistant paint, this official’s reaction was “Well, I don’t want to get eight years either.” ….None of these people were behaving irrationally. They were responding quite rationally to the incentives and constraints of the system in which they worked. “

Remember the Deepwater Horizen oil drilling rig that exploded and spilled oil into the Gulf of Mexico in 2010. Well here is what you need to know about the incentives that government created to push oil drilling farther out in the gulf. I will quote from this article Bashing BP at mises.org. “In 1995, President Bill Clinton signed into law the Deepwater Royalty Relief Act (DWRRA), which was “intended to encourage natural-gas and oil development in the Gulf of Mexico in waters at least 200 meters (656 feet) deep by offering royalty relief on qualifying natural gas and oil lease sales.” This act has since expired, but there remain continued incentives for drilling in deep water.”

“In other words, the government specifically passed laws that gave the oil companies incentives to drill far offshore — that is, in deeper water where risk is presumably higher. In addition to the higher risk of accidents, the cost of solving any problems are necessarily greater in five thousand feet of water than in, say, 250 feet of water…..Who could blame a company for trying to achieve a minimum relief volume, which would guarantee billions of dollars in royalty-free sales of petroleum and natural gas?”

“Additionally, a liability cap of $75 million for the oil companies was put in place by law. This is an incredible use of the control of the political means to make favorable dealings for oneself in the economy.[1] In fact, it is the very definition of corporatism: First, individuals within a company work to get laws passed to reward companies for taking risks previously deemed unworthy of the time, energy, and capital expenditures. Then, those same individuals within the company work to get other laws passed to limit liability when things go wrong.”

CONCLUSION

The VA is a totally Government run healthcare system. Considering it treats veterans, it is relatively small compared to the amount of people Obamacare will affect. Since Government can’t manage the VA’s small sample size; how is it going to handle the amount of people in Obamacare? The short answer is, it can’t, and here are the two main reasons why.

The first is you can’t legislate abundance into existence. The first rule of economics is scarcity. We live in a world governed by scarcity and health care is not immune from this rule, no matter how much politicians want to legislate it out of existence. Scarcity means that healthcare has to be rationed in one of three ways, by prices in a free market, by fighting each other for the scarce good in a lawless society, or by an administrator or a board in a government-run system. If healthcare existed in abundance, it would not be an economic good and therefore would not have to be economised.

This reality of scarcity leads to very different incentives and constraints being created in a free market, a hampered market, or in a centrally planned socialist economy. People are self-interested individuals and will respond to the incentives and constraints created by each economic system. The consumer is sovereign in a free market system, and bureaucrats and their rules are sovereign in a centrally planned system. Think of the 2500 pages of rules in the Obamacare bill, and the 300 plus million individual citizens it is supposed to cover and ask yourself; will it work? If the end sought is to provide quality healthcare the answer is no. If the end sought is to prop up and grow government. The answer is yes. Always look for the incentives and ask; how will a self interested person respond?

Related Article – Central Planners Don’t See The Consequences Of Their Actions. Or Do They? at austrianaddict.com

Related Article – Human Action Reveals The Reality About Political Decisions, by austrianaddict.com.

 

 

 

 

 

 

 

 

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