You and I already know that rent control means fewer and worse housing options for the poor and middle class, but this is such a nice, clear video, I couldn’t resist sharing it anyway:
For Barack Obama, Nelson Mandela’s death came like manna from heaven. After all, until Mandela’s passing sucked all the oxygen out of any other news stories, the headlines, even from Obama’s staunchest cheerleaders, were about Obamacare. The cheerleaders printed stories bravely admitting that the exchange is still bedeviled with problems, but assuring Americans that it’s way much, super-de-dooper, extraordinarily, wonderfully better and will soon be functioning perfectly. The naysayers not only pointed out flaws in the system, and told heartrending stories about on the people consigned to death because of those flaws, but also warned that the worst is yet to come. Newspapers and TV news stories were no longer happy places for our president.
Before Mandela’s timely passing, Obama attempted to change the subject by pivoting, yet again, to “economic inequality.” (Or as Ed Driscoll nicely said, “It’s Deja Pivot All Over Again.“) Boiled down to its essence, this Progressive (read: communist) world view says that there are poor people in America and there are rich people in America, and that’s simply not fair. All people should be poor!! Okay, the Progressives don’t actually say that last sentence, but one only has to look at every communist experiment in the history of the world to know that this is the reality behind heavy-handed government “correction” of “economic inequality.”
The Occupy movement, which nobody remembers now, was supposed to be the protest to end all protests when it came to economic inequality. Americans were expected to rise up against the evil one-percent. Only that didn’t happen. Too many Americans were unimpressed when they saw computer-toting Ivy League students making common cause with drug addicts, felons, rapists, all of them complaining that a tiny percentage of Americans are very, very rich. This cavalier response worsened when Americans realized that the Progressive/Democrat party is rife with one-percenters (Obama, Kerry, the Clintons, Pelosi, Reid, etc.), and reached a peak of disgust when the Occupy camps become rat-ridden cesspools that cost cities tens of thousands of dollars to clean up.
While a certain percentage of Americans, when polled, will reliably say they hate that the rich are so rich while their incomes are stagnating (although too few realize that Obama’s statist economic policies cause this stagnation), the reality is that, to Progressives’ (and Obama’s) despair, Americans just can’t get all that worked up about “economic inequality.” This reality lies in the fact that Americans know something Obama, Democrats, Progressives, and other Leftists refuse to recognize: America does not have a roach motel economy and that’s despite the Left’s best efforts to turn it into one.
What’s a “roach motel economy,” you ask? It’s one in which people are frozen in place, with minimal economic or social movement. That is, they check into an economic stratum, but they don’t check out. Or, as a spoiled prince says to Aladdin in the eponymous movie, “You are a worthless street rat. You were born a street rat, you’ll die a street rat, and only your fleas will mourn you!”
One doesn’t have to look to Disney to see what a roach motel economy looks like. In all non-free market societies, whether we’re talking ancient Mesopotamia, medieval Europe, or Castro’s Cuba, it’s not just that, as the Bible says, “the poor you always have with you.” What’s common to all these societies is that the same people are always poor. Check into Mesopotamia, 16th century France, or Cuba, and you’ll see that if the father was poor, then his father was poor, and his father was poor . . . going back to time immemorial (or the Cuban revolution). In each of these stagnant, stratified societies, there were always a few who managed to claw their way up the hierarchy, and another few who carelessly squandered their way down the hierarchy, but class and economic status were fixed. Likewise, in communist countries, everybody’s poor together, world without end, amen.
Just like Black Flag’s famous “Roach Motel,” poor people check in, but they don’t check out, nor do their children or grandchildren. Economic status (and class status) are fixed:
Up until Obama and his cohorts came along, the American view was very different. Class was mostly determined by economic status, and economic status was open to anyone who had the discipline and wits (and sometimes the gambler’s instinct) to make it happen. As the wonderful Tenement Museum in New York shows through census studies, immigrants lived in poverty, their children became working class, and their grandchildren were middle class or beyond. If you’re born into poverty in America, neither you nor your descendents are likely to become Bill Gates, but in a generation or so, unless you’ve become hooked on Welfare-crack, you’ll have left the slums behind. In a free-market society, with maximum individual freedom, social and economic mobility are a reality:
America hasn’t had a revolution because, Leftist propaganda to the contrary, the socio-economic boxes are not roach motels from which no one escapes. Instead, they’re stops along the road of one person’s life, or a family’s generations. People can check in and they can leave. Sometimes they move up and sometimes they move down, but movement is constant.
Of course, Obama and his crew are doing their damndest to halt this free flow of socio-economic movement. With true leftist instincts, through economic leveling, they want to consign this entire nation to the poverty box, subject to a few overlords who get to enjoy the nation’s vast resources. What these leftists don’t realize, though, is that America’s greatest resource has always been her people. Imprison them in poverty, and the overlords’ wealth will quickly vanish.
Charlie Martin, who has a real knack for simplifying fairly complex mathematical concepts, has a post today about the fact that, when it comes to Obamacare versus math, math wins every time. I’d like to add my mite to that, which is that, when you have no dog in the fight, you don’t care how expensive the fight is. As you’ve gotten used to, I’m going to make the journey from the specific (that would be me and my experiences) to the general (a wholesale condemnation of big government, which is the same as bad economics.)
I go to a different dentist from the rest of my family, because I started going to him 15 years ago, and never saw any need to change when they jumped ship to a different guy. I like the man, I like his office staff, and I like the care I’ve been getting there.
Because we have dental insurance, I’ve never once written a check to my dentist’s office. I get my teeth cleaned twice a year, like clockwork, and I have no idea how much it costs.
I went recently for a cleaning (you’d be dazzled by my smile) and, as always, didn’t pay. My husband also went recently and, as always, didn’t pay. The insurance statements for both our treatments came in on the same day. These statements revealed that both dentists charge more than our coverage allows for a cleaning, and that both dentists accepted as payment in full the coverage maximum, even though it was less than their “official” charge. One could say that this proves that insurance works, since the dentists’ willingness to cut their price to the insurance maximum shows that dental insurance controls costs. Maybe….
What was just as interesting, though, was the fact that my dentist charges $36 more for a cleaning than my husband’s dentist does. (If that dollar amounts sounds interesting to you, that’s also the recent decrease in food stamp money for a family of four over the course of a month.) My husband was upset that my guy charges more. I wasn’t: (a) I’m not paying it and (b) the insurance company “stiffed” both guys, so it’s the dentists who should care.
The really important point, and the one that completely eluded my husband was that — and I’m repeating myself here — I didn’t care. I get the services, but I don’t pay. I have no incentive whatsoever to shop around for a cheaper, yet still good, dentist, and my dentist has no incentive to change his prices. Either the insurance pays him his rate or it doesn’t. If it does pay his rate, his high charging gamble paid off; if it doesn’t . . . well, he tried, so no harm no foul.
This is a marketplace distortion, where there is no connection between services rendered and money paid. The problem isn’t greedy insurance companies; it’s disinterested consumers. As for the insurance companies, they don’t negotiate either. They just set caps and that’s the end of it.
I had the same situation years ago, when Kaiser paid for a jaw guard for me because I was grinding my teeth to dust. I made two visits to the dentist, the first to get a mold for the jaw guard, and the second to get the jaw guard fitted. The total time I spent there was about 40 minutes. I saw the dentist for less than ten minutes, total. I paid for the guard myself ($250 in lab costs). Kaiser just paid for the dentist’s time and services. I should add that this took place in the early 1990s, when money had more meaning. The dentist charged Kaiser $800 for his time and service — and Kaiser paid every cent. I actually called Kaiser to complain. I was pleased with my jaw guard, but this was still highway robbery. Kaiser was unmoved. The dentist’s charge fitted into its chart, and that was the end of that.
That event, incidentally, was when I figured out that the problem with America’s healthcare market wasn’t rising medical costs or greedy insurance companies (although both are factors). It was that the customer doesn’t pay, so the customer has no incentive to shop around or strike bargains. Because the person getting the services couldn’t care less about the price (it’s other people’s money), there is no competition and there are no cost controls.
My realization about medical costs twenty years also started my turn towards conservativism. That’s because I figured out that the more things that the government pays for, the worse the market distortion. The government is not using its own money, it’s using your and my money. We care about our money, but the government doesn’t. If it overspends, it just uses its police power to demand more money from us. That’s its nature, just like the scorpion’s nature. The only way to control this is to make sure that government is responsible for paying for the smallest number of things possible.
What frustrates me is that people in my neck of the woods don’t get it. I suspect we have one of the highest concentrations of MBAs in the world right here in Marin, and that we’ve probably got a fair percentage of American’s with STEM backgrounds too. But try to explain market realities (engaged consumers, competition, and distortion) to them, and you can see the moment that logic flees and faith takes over. Their eyes start whirling in their heads and they say “No, government is big enough to force price cuts.” Worse than this economic lunacy is the fact that they don’t recognize that they are advocating tyranny by applauding government’s coercive power to force free citizens to offer services to the government for lower than market prices. (In this regard, please note that Democrats now want to force doctors who, last I checked, weren’t slaves, to accept patients who will bankrupt them.)
If you want more information about government’s deleterious role in the marketplace, check out Wolf Howling, who calls Obamacare the “mother of all market distortions.”
AJ Strata, who knows complex computer systems, has a few choice words about the administration’s recent statements regarding its plans to fix the exchange.
Also, here’s something I’m not seeing discussed anywhere:
As you’ll recall, the anti-corporate Left concluded that GM was too big to fail and that banks are too big to fail (although not to big to shake down). However, the same Leftists seem perfectly good with the collapse of the insurance industry. When I say “collapse of the insurance industry,” I’m not just talking about the fact that Americans will be uninsured. For the Left, that’s an outcome devoutly to be wished, since they can then socialize medicine. I’m speaking, instead, about the actual collapse of companies that employ tens of thousands of people and have billions of dollars in pension plans.
Because insurance companies are no longer providing insurance (i.e., pricing their services using actuarial risk tables) but instead are simply being forced to pay for products by taking from the rich and giving to the poor (which makes them sound like Robin Hood, except they’re a Robin Hood who’s acting only because the Sheriff of Washington has a bow and arrow pointed at his back), they will go broke eventually. And if the young and healthy refuse to buy insurance, the companies won’t just go broke eventually, they’ll go broke immediately.
What happens to the American economy when Blue Cross and Blue Shield and AETNA and Kaiser and all the other insurance companies collapse in a distempered heap and, at the same time, hand their tens of thousands of employees pink slips, along with the assurance that all their retirement benefits are gone with the wind?
I’m thinking that, when that day comes around, 2008 will look like a trial run for total and complete economic collapse in America. I have no contingency plans for that eventuality. I can only hope that my family can salvage something from the wreckage, so that my last days aren’t spent at a level of poverty rivaling that of the average Calcutta street dweller.
UPDATE: Yuval Levin is on the same page as AJ Strata when it comes to the problems associated with the “best and the brightest” swooping in to help out.
I understand that the Dow Jones average consists of a very cherried-up bunch of stocks. Nevertheless, it usually is at least somewhat tied to what’s going on in the real world. That doesn’t seem to be true lately.
In the face of Middle Eastern instability; Iran being months away from having a nuclear bomb; a stagflation economy; a potential shutdown and, if Obama ignores the 14th Amendment, a default; and the Obamacare exchange’s disastrous, with all the future trouble that portends, the stock market keeps going up. That seems very counterintuitive.
I have to believe that what’s going on with the stock market now is a bubble. After all, because a stagnant job market, a weak economy, and unstable national security are all inconsistent with a strong, healthy market. Add in the fact that the constantly-changing Obamacare rules, regulations, and crony exemptions keep employers and investors befuddled and cautious, there should be no reason for the market to rise. And yet it’s rising. . . .
My question is twofold, I guess: Am I right that this is a bubble? And if I’m right, what the heck is causing it? Nothing I look at today signals to me that investors should be cheerful and optimistic.
It looks as if someone at Mayor Michael “the friendly fascist” Bloomberg’s eponymous report needs some education in basic economic principles. Bloomberg Views’ Matthew Klein took it upon himself to comment upon a New York Post story about several burglaries in a high-end New York building. Klein suggests that there’s no reason to be upset because — hey! — the targets are wealthy:
When the thief fences $10,000 or $100,000 in jewelry from an heir who barely knows what he owns, the thief will feel much richer and spend most of that money. Maybe he will buy a new car, or go on a bender at strip clubs, or rent a villa in a beleaguered European country. The heir might be somewhat upset, but it’s hard to believe that he will suddenly cut back on his spending because he needs to recoup a relatively small loss. In fact, the heir might end up spending more money as he tries to make his apartment safer from future robberies.
You can understand a lot about America’s dire economic straits if you realize that this kind of idiocy shows up in one of the country’s premier financial publications. What Klein says is a variation of the “broken window fallacy,” which Frédéric Bastiat’s wrote about in 1850, albeit with a soupcon of Marxism thrown in for good measure:
Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son has happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation—”It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?”
Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.
Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier’s trade—that it encourages that trade to the amount of six francs—I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.
But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, “Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen.”
It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.
I understand that Klein would say that he’s not describing the “broken window” fallacy because there’s no preliminary destruction involved here. There’s just the transfer of wealth from the undeserving rich to the somewhat deserving, albeit criminal, poor, with a substantial decrease in value along the way. But what Klein does is to assume that the rich contribute nothing to the economy, while the poor — even the poor burglars – do.
Klein’s error lies in his belief that only feelings matter: the rich don’t feel the pain of deprivation, while the poor do. That’s true, but it has nothing to do with economics. Lost in that emotionalism is Klein’s fallacious economic point: redistribution (from rich to poor at the point of a gun) will spur the economy. It’s more likely that the diminution in value of the goods as they travel (forcibly) from rich to poor will hamper the economy. The rich man who spends $1 million on a diamond is certainly conspicuous in his consumption, but he’s undoubtedly sending more money into the economy than the poor man who reduces that diamond to $1,000 in cash, much of which we can assume will be spent on drugs and prostitutes. (And even there, assuming the target is decadent, the poor man pours less in the economy buying pot and a $50 a night girl, than would the target who spends on designer drugs and high-end call girls.)
The above ruminations, of course, involve private wealth. Government expenditures (such as Obama’s lavish vacations, all of which require millions in travel and security expenses that the taxpayers bear) simply rob Peter the taxpayer, while paying only a small cut back to Paul the taxpayer.
Hat tip: Best of the Web
We have Sirius satellite radio in our cars. I often have mine tuned to current hits channels, both because I ferry kids and because I too like a lot of the music. This morning, my daughter was running late, so I gave her a quick ride to the bus stop, so I wouldn’t have to give her a long ride to school.
On the way back, I flipped on the radio — and heard the three early morning talk show hosts on the “Hits 1″ channel saying that they and their listeners were the first American generation since the Depression that had it harder than their parents. The three lightweight talking heads said that their parents got out of college, got jobs, and could have a life where dad worked and mom stayed home with the children, and that this was impossible to imagine for the current crop of young people leaving high school and college.
The bit about stay-at-homes isn’t exactly true, because even in my generation, a stay-at-home mom was a luxury. Nevertheless, their perception — and the one that they wanted their radio audience to have — is that this young generation is well and truly shafted. And even if the bit about stay-at-home moms is wrong, everything else is correct. These young people don’t leave college for a job, especially a job reflecting their degrees. If they get a job at all, it has nothing to do with their studies, and that’s true even if their major wasn’t Womyn’s Studies or Puppetry.
Sirius 1 never gets into political attacks, so I didn’t hear any “and it’s all Obama’s fault” during the two or three minutes I listened to the talking heads exclaim over the fact that they and their generation face a dismal economy with equally dismal prospects. One does wonder, though, if they or anyone in their audience is thinking “Obama promised us the moon and the stars, and all I get when I sent him to the White House was this lousy unemployment check.”
This generation will be the next Yorkshiremen:
Dad works hard at a job that pays reasonably well and Mom runs the house. She’s an okay manager, but somewhat careless. On Dad’s salary, which includes a 4% raise every year, she provides all the basics, such as feeding, clothing, and educating their two children. Every year, without fail, the family heads to Disneyland, and has some great memories and a nice photo album to show for these annual jaunts. But she’s also a bit careless. She periodically pays the mortgage and credit card bills late, incurring penalties and interest. She leaves unnecessary lights burning whenever she leaves the room. She’s an excellent cook, but she occasionally buys some expensive food and then forgets to use it, so she has to throw it out when it spoils. She’s an impulse shopper, so her closet has clothes that she wore once and then never again. She always forgets to put money in the meter, so she has a backlog of parking tickets. That kind of thing. None of them are a big deal, but taken together, they definitely drain away a small, but solid percent of the family’s money.
One day, Dad comes home and says, “Mom, the boss told me that, because of the recession, instead of getting my 4% annual raise, I’ll only get a 3% annual raise. We’ll still be bringing in more money than last year, but not quite as much more as we had expected. We may have to retrench a little.”
Mom is livid. “How dare your boss do that! You’ve been a great employee. Well, if we have to retrench, I’ll show him! And I’ll make you suffer too for working for such a cheapskate.”
Here’s what Mom does not do: Mom does not pay her mortgage or credit bills on time; she does not pay attention to turning out the lights; she does not make sure to buy food she wants and then use that food; she does not curb her occasional impulse clothes spending; and she makes no effort to pay attention to parking meters.
Here’s what Mom does: she tells the kids they’re never going to Disneyland again; she starts serving only Mac ‘n Cheese from a box; she only buys the family clothes from goodwill; and she constantly tells them that it’s not her fault that their lives have become so miserable. She’s just responding to Dad and his mean boss.
Keep that parable in mind the next time you don’t get to see the Blue Angels fly, or you don’t get a tour of the White House. And keep it in mind as the government continues to spend money on studies about condom use and monkey poop and whatever else stupid thing it keeps funding with your dollars.
And that ends today’s lesson….
(And for those of you who think it’s sexist that Dad works and Mom is the vicious, greedy harpy who keeps the house please feel free to make up whatever gender roles you like: working Mom and housekeeping Dad; working Mom and housekeeping Mom; or working Dad and housekeeping Dad. Gender isn’t the point.)
Caped Crusader sent me a wonderful squiblet that puts the sequester in perspective:
If the Federal budget weighed 200 pounds and went to see Dr. Michelle Obama (world renown weight expert and fat butt reduction subspecialist) would she say losing 3 pounds is so severe it would cause death or permanent impairment? Think about it!
That is what all the caterwauling is about! A government so necessary and efficient they cannot find 1 1/2 % that is not necessary!
The fact that the sequester has actually been in effect for two weeks without the world coming to an end reveals how accurate this little story is and how reprehensible the Democrat Chicken Littles were (and are).
Obama is demagoguing the sequester like mad. David Angelo provides a pleasant breath of common sense:
Incidentally, to the extent Obama says that the sequester will result in federal prosecutors having to abandon cases, that may be a very good thing. The news lately has too many stories about federal prosecutors run amok. Here are just a handful of links:
US attorney Carmen Ortiz strikes yet another sleazy deal.
Prosecutor aids DEA as it tries to seize a $1.5 million building over a $37 pot deal.
Oh! Carmen Ortiz is in the headlines again for prosecutorial overreach.
And then there’s the corruption….
(Thanks to Earl for all these links. He has been appropriately concerned for years about prosecutorial abuse.)