Tag Archives: free-market

Constituent Service Gone Wild

Toll Road pay upFootball fans everywhere are indebted to Virginia Delegate Joe May (R–Leesburg) whose invention of the electronic first down marker added much needed precision to watching the game on TV. Unfortunately, May’s understanding of the free market is much less precise and is in danger of throwing taxpayers for a significant loss.

According to Liz Essley in a series of stories from Washington Examiner, May wants the state to buy the privately–owned, 14–mile–long Greenway toll road located west of Washington Dulles Airport. He is joined by Randy Minchew (R–Leesburg) and David Ramadan (R–Prince William), who also confuse the role of constituent service in conservative governing philosophy. It’s a troika of Republicans who should know better.

May wants the Commonwealth to issue hundreds of millions of dollars worth of bonds to buy the Greenway from the Macquarie Group. Joe contends this would be good news for commuters because he believes the state will be reluctant to raise the tolls, which is not been the case with private ownership where peak period tolls can run as high as $5.80.

And why not? The government body that runs the Dulles Toll Road doesn’t even bother to bill 90 percent of the drivers who use their pavement but refuse to pay. Let them annex the Greenway and commuter’s troubles are over, as the taxpayer’s are just beginning.

Plus everyone knows overall operations for a government–run toll road will be so much more efficient than in the free market. Just look at the pioneering work done at Metro. During the past twenty years the Metro bureaucracy has discovered that escalators installed outdoors without protection from the elements have a tendency to break down and need replacement. Metro’s study of the effects of failing to conduct even routine maintenance on subway infrastructure led to the discovery that the system will become unreliable and subject to unpredictable shutdowns and track work that will consume most of the coming decade.

And don’t overlook the Smithsonian parking lot where attendants stole over $1 million in parking fees with management none the wiser.

And of course government involvement means low prices, which is why the IRS estimates the lowest priced insurance policy under Obamacare will cost a family of five $20,000 a year. If you want a policy that lets you see an actual doctor, as opposed to a Jiffy Lube professional, that will cost extra.

So what could go wrong with Virginia buying the Greenway? If it becomes too expensive to operate without raising the toll, they can just shut it down on Saturday, like the Post Office wants to do with mail delivery.

Del. Minchew echoes May, “I really want to protect our citizens from having tolls reach higher amounts than they should,” he explained.

And Ramadan wanted to try something called “distance–based tolling,” but says Macquarie was not interested.

And there it stands, constituents complain about the price they pay to speed their commute and they want government to “do something!” Followed to its logical conclusion, this type of activist, meddlesome thinking regarding the role of government lead us to the door of Nancy Pelosi’s office. Conservatives do not rush to meddle in a situation the market is uniquely qualified to handle.

The Greenway has been a troubled project from its inception with wildly inflated traffic estimates justifying too much spending. Fortunately, government wasn’t involved, so the first set of owners took a financial bath on the project and sold the tub, ring and all, to Macquarie.

The cost to taxpayers was zero.

Average daily trips on the Greenway peaked in 2005 with a bit over 61,000 with the average toll was just over $2.00. Proving the economic demand curve is alive and well and living in Virginia, as the price for tolls has gone up, traffic volume has gone down. Until in 2012 average daily trips are about 46,500 and the average toll is $3.93.

Yet with traffic down 24 percent, Greenway management was still able to increase average daily revenue by almost $61,000. So the toll is obviously not too high. Otherwise market forces would mean fewer drivers AND less money. Now the price is obviously too high for at least 14,500 drivers because they are now taking another road to work.

And that’s how the market operates; consumers balance cost and benefit and make their choice. Democrats and confused Republicans run to government and plead with them to intervene.

I wonder if any of the esteemed troika members has priced a rib roast at Wegmans lately? Driving on the Greenway is mere transportation, but eating is life itself.

I haven’t had a rib roast in the last year, because they are too expensive and the Philistines at my house can’t tell the difference from a pot roast anyway. But if the state buys the Greenway, I may start talking about the cattle cartel at the next town meeting.

And what makes those particular Greenway drivers so special? How about, God help them, Metro riders? Or Virginia Railway Express passengers? Everybody has a gripe about something.

Del. May is “optimistic we’re going to find a deal that works for both sides” and believes buying the Greenway could cost Virginia nearly $1 billion (which is $21,500 per current trip or 14 years worth of toll charges), making the road green in more ways than one. Hard–bargain Joe’s $1 billion is an interesting figure, because according to TollRoads News the owners carry the Greenway on their books as a net liability of $490 million dollars, meaning the road is worth almost half a billion dollars less than it cost.

As the reporter points out, Macquarie could PAY Virginia $450 million to take the road off its hands and have the books come out $40 million to the good.

It’s time to throw the challenge flag in front of Del. May. Having the Commonwealth buy the Greenway is a bad idea, bad economics and profoundly anti–conservative. In this case what’s private sector should stay private sector.

Please, Don’t Let Another Congressional Staffer Go to Bed Hungry

An underpaid Congressional staffer huddles for warmth during a cold Washington winter.

In some corners of elite opinion working on Capital Hill means one is laboring in the political equivalent of Wal–Mart. Hill workers have their pity while toiling in a crowded ideologyshop for chump change.

Yet, just like Wal–Mart, each time an election or retirement causes a new Congressional store to open the line of applicants typically extends around the corner.

How to explain it? Don’t these serfs know they’re being exploited?

You expect this reasoning in the WaPost, but surprisingly enough, this expose was in the Washington Times. The premise is Capitol Hill staffers are grossly underpaid and as a result the nation is being run by penniless Facebook addicts who are subject to an employment revolving door of tornadic force.

The pitiful few newbies that do manage to cling to their position are utterly at the mercy of rapacious lobbyists up to no good.

I am indebted to the author of the story, Luke Rosiak, for sharing his employee turnover numbers with me for comparison purposes. Frankly, if the situation had been reversed I don’t know that I would have been so gracious. Still, Rosiak’s generosity does not prevent me from disagreeing with his conclusions.

He begins by painting a picture of ignorant amateurs: “High turnover and lack of experience in congressional offices are leaving staffs increasingly without policy and institutional knowledge…leaving a vacuum that is usually filled by lobbyists.”

As a result: “When Americans wonder why Congress can’t seem to get anything done, this could be a clue.”

Once we get past the irony that after finally identifying jobs where federal salaries are equal to or less than the private sector the WT sees fit to complain; a comparison shows the analysis is flawed. First because salary numbers leave out the excellent health insurance that Hill staffers receive and secondly, because it ignores the nature of work in a Congressional office.

Although located in august structures and surrounded by the echoes of history, Congressional offices are basically 535 mom and pop operations with the elected official serving the role of mom or pop, as the case may be. None of these offices are governed by the rules and regulations that pamper civil service employees. Officeholders are political entrepreneurs building a brand on the taxpayer dime.

Some Congressional offices are well run organizations that rival an Apple Genius Bar for motivation and expertise. Others limp along like a poorly managed Dollar store where are all the toys are from China and contain extra lead.

But regardless of how the office is managed, the jobs are an example of an efficiently functioning employment marketplace. If the salary for Congressional office jobs was too low, there would not be enough qualified applicants to fill the positions. It would be necessary to follow in the footsteps of agribusiness and hire illegal aliens. Yet that’s not happening.

If the officeholder was dissatisfied with the quality and performance of the employee the salary was attracting, he is free to increase the amount paid for the position, but that’s not happening either. Instead we have market equilibrium: plenty of well–qualified applicants at the advertised salary.

Even at the existing salaries the WT disapproves of the turnover in these jobs is better than in comparable private sector positions. According to the figures developed by the WT, in 2006 there was 24 percent turnover on Capital Hill. The Bureau of Labor statistics for the same year finds the voluntary quit rate in “professional and business services” was 33.7 percent, a figure that is almost 10 percentage points higher.

Median experience levels for Congressional offices were also higher than in the private sector. For staff assistants — mostly equivalent to receptionists and entry–level office workers — the median was 2 years and for legislative assistants it was 4 years. In the private sector the BLS figures for workers ages 20 to 24 (entry–level jobs) the median experience was 1.5 years. For workers 25 to 34, closer to the legislative assistant level, the median was 3.1 years.

Besides, when one considers a great legislative mind like Nancy Pelosi just celebrated 25 years at the Congressional trough, experience past a certain point begins to look overrated.

Many of these jobs are viewed as stepping stones to a better position. Just as no one expects to be taking orders in a drive–through the rest of their life, few Hill receptionists expect to be tracking down errant Social Security checks until they retire.

Some are promoted inside the same office, some go to better jobs in other offices, some leave for the private sector and some run for office themselves. Some even leave to become lobbyists, although that’s seen as a bad thing in the context of the article: “It means that young workers have proximity to enormous power while surviving on a meager budget — dual forces that come together to push congressional staffers through the “revolving door” to highly paid K Street lobbyists.”

But again, statistics point to a much smaller “problem.” Between the years 2005 and 2011 a total of 161 staffers became registered lobbyists. That represents 5 percent of the total, which is more than the number of people who become murderers and less than the 7 percent who become alcoholics.

The ability to change jobs, in this case voluntarily, is a feature of the marketplace, not a bug.

Besides, increasing salaries for these jobs does not mean that substantive legislation will start whisking it’s way through the Capital. Taxpayers would just have an overpaid group of true believers. Elected officials aren’t looking for the next Steve Jobs, they are looking for Donald Segretti: someone who is loyal, takes orders without question and gets the job done.

Members of Congress are getting the employees they want courtesy of our tax dollars. The problem is conservatives aren’t getting the government we want because the officeholders we elect lack the courage. And salaries large enough to launch staffers into the 1 percent aren’t going to change that.

Over-Regulation Nation

Liberals love to cite how tax rates are at their lowest in recent memory, ballooning corporate profits, and how Bush era policies caused the financial meltdown.  They seem to think these are ample reasons to argue why we shouldn’t deregulate our over-regulated economy.  However, it is becoming harder for the political left to argue this point  since we are witnessing the worst recovery in American history.

The depth of the 2008 meltdown was shocking, but to lust to curb “reckless” capitalism from the political left was not only irresponsible, but also detrimental to America’s long-term economic health.  We are an over-regulated nation.  Florida requires its residents to file reports if a vending machine label is missing.  The Federal Railroad Administration mandates that a letter “F” be painted on the front of a locomotive to indicate which end of the train you are on. Bethesda officials closed a lemonade stand run by children because they lacked a trading license.

If markets are over-regulated, capitalism cannot flourish, entrepreneurship stalls, and the innovative cream that is inherent in the fabric of this nation cannot rise.  Free market enterprise is the only system that has achieved remarkable benchmarks in society.  Take China for example.  When Deng Xiaoping took over following Mao’s death, he gravitated more market-oriented reforms, especially in the rural parts of the country to help farmers.  The loosening of regulations on private business allowed them to flourished and outpace state-run enterprises.  He instituted Special Economic Zones, which allowed capitalism to flourish and attract foreign direct investment.  In short, China is an economic tiger  today because of Mr. Xiaoping.  I remember my East Asia Studies Professor, David Strand, stating in lecture that in this period the middle class of china grew from 5-15 million to nearly 300 million during this economic restructuring.

By loosening regulation, China was allowed to grow.  America’s political left should consider this.  Instead, we roll out disastrous financial regulations, like Dodd-Frank, which is a monstrous 848 pages long!  It contains 400 new mandates, of which only 93 are law and intelligible enough to follow.   The new law is a mess, whose difficulty has been cited by firms. The regulatory leviathan is worse when you look at health care.

On average, one hour spent on a patient is equivalent to thirty minutes of paperwork.  The number of federally mandated reimbursements for hospitals for various ailments will increase from 18,000 to 140,000 that range from parrots, burns, and flaming water skis.  In the Obama’s administrations huge power grab with Obamacare, it only adds more red tape, paperwork, and headaches.  It is the wonder of socialized medicine. In all, the cost of these regulations is staggering.  A study from the Small Businesses Administration found that our over-regulated economy costs an employer $10,585 dollars.

America’s overregulation derives from big government.  President Obama’s desire to increase the welfare state has proven to be expensive and killing America’s potential to have robust economic growth.  His reforms and new mandates costs employers capital that could be used for investment to grow their businesses.  These aren’t fat cat bankers.  Small businesses employ the most workers in America and make less than $250,000 a year, but suffer at the behest of President Obama’s intransigent liberalism.   Government involvement, and the resulting ineptitude that is killing America’s middle class, can best be summarized in the words of Milton Friedman, “If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand.”

Capitalist America, to Be or Not to Be Free

According to Barack Obama, the Democrat party and Occupy Wall Street, society’s ills are primarily the fault of the entrepreneurial class.  The rich and greedy.  Those evil corporations who sap the life blood out of working class men and women.  For maximum profit.  Servants to the god of mammon, capitalists defraud their workers of time and energy compensating them only as much as required to keep their work force at work and generating fat profits for the fat cats.  The poor get poorer and the rich get richer.  Business owners obscenely profiting off of the noble sweat of their enslaved and powerless labor force.  The exploitation of the common man.

This is the worldview of the liberal/progressive.  The socialist, Marxist and anti-capitalist.  And the President of the United States.

As the world’s foremost anti-capitalist, Barack Obama promises to punish “the rich.”  Though the top 1% of Americans pay 37% of America’s tax revenue, Obama claims they should pay more.  They should “pay their fair share.”  As defined by Obama.

Instead of celebrating achievers as examples to follow, Obama has spread a malignant contagion of class warfare, deep resentment and good old fashioned envy.  This manipulation of the darker side of human nature is the most sinister and ruthless kind of political tactic.  Turning brother against brother.  Blaming “the haves” and inciting the “have-nots.”  Scapegoating is nothing new.  Class envy and racial hatred are tried and true tools of despots and dictators.  The world has seen this drama played out before.  In Turkey, Germany, Cambodia and Bosnia.  With horrific consequence.

Since William Bradford introduced market forces into the Plymouth Colony, America has been the land of capitalism.  And capitalism favors the industrious.  The risk-takers.  The American economy was designed to provide a greater reward to those who innovate, invest, build, develop, create and hire.  And when success is achieved, all Americans benefit.

Early American entrepreneurs grew the economy and in the process, grew the new nation.  They provided innovative products and services.  They created jobs and in some cases entire new industries.  As a result of their efforts, tax revenues increased as the employers, employees, vendors, consumers and investors all participated in free market capitalism.  The positive ripple effect in America and throughout the world is hard to overestimate.

This is the economic template that built America.  And it can build America again.

But, business owners today face a grim reality.  Innovation, risk-taking, investment, growth and hiring used to result in higher profits.  Profits, of course, being the incentive for being in business in the first place.  Higher profits resulted in further investment and growth.  More jobs.  More production.  More profits.  Leading to more investment, growth and jobs.  It’s a neat little cycle.  And it works.  However, with Obama’s promise to increasingly “tax the rich,” there is no incentive to grow and increase profits.  With the burden of Obamacare and the punitive costs associated with compliance, there is no incentive to hire more employees.  Businesses and business owners want to grow.  But, they will not invite punishment.

These thoughts have been clearly expressed by big and small business owners alike.  Steve Wynn, Las Vegas casino mogul, was very clear in July of this year when he said, “… I’m telling you that the business community in this country is frightened to death of the weird political philosophy of the President of the United States.  And until he’s gone, everybody’s going to be sitting on their thumbs.”  Small businessman Bill Looman, the owner of U.S. Crane LLC, gained recent notoriety as he proclaims loud and clear from his company trucks, “We are not hiring until Obama is gone.”

Such is the world of Ayn Rand’s famous 1957 novel, Atlas Shrugged.  As the Atlas of Greek Mythology bore the world on his shoulders, Rand’s novel portrays business owners and entrepreneurs holding up the financial world while simultaneously supporting the non-productive members of society.  Her words seem prophetic as she describes a world where the job-creators have finally had enough.  Punished by excessive taxation and regulated to the point of extinction, the producers of society go on strike.  Ceasing production, eliminating jobs and bringing the economy to its knees.

So, what if today’s producers and job-creators decided to slow down or stop producing?  What would happen if American entrepreneurs and business owners refused to take risks, spend money, expand their businesses and hire new employees?  The unemployment rate would shoot up.  Jobs would be in short supplyProduction would diminish.  Construction jobs would grind to a halt.  The economy would slow to a crawlTax revenues would diminish.  State, county and city governments would struggle to meet their obligations.  Some would be pushed into default.  The federal government, given the ability to print money out of thin air, would continue to spend indiscriminately.  Federal printing presses would go into overdrive, increasing the money supply and eventually resulting in massive inflation.  Rapidly climbing food and energy prices would hurt those least able to afford it.  Welcome to America, 2011.  Like Rand’s Atlas, American businesses are beginning to shrug.

The reason is clear.  Business owners and entrepreneurs are afraid.  Of the President of the United States.  And they have good reason.  Obama is a socialist.  A Marxist.  A redistributionist.  He lives and breathes “social justice.”  His core beliefs are at odds with the economic structure and foundational truths that made America the greatest economic power in world history.  And he’s not going to change.

And that’s the problem.  American businesses do not face a problem of “uncertainty” as is often claimed.  The problem is, they are quite certain about the future they face under Barack Obama.  Punishing  taxes and burdensome regulations.  A future of government intrusion and interference in the free market.  A future where government exacts such harsh penalties for doing business that it squelches the entrepreneurial drive and creates a disincentive for any new businesses or ideas to be born.

As a capitalist nation, the U.S. economy does indeed rest on the shoulders of those brave adventure seekers among us.  Those bold innovators who choose to risk their time, energy, ingenuity and capital in pursuit of profit by producing something that the world wants and needs and at a price that the world is willing to pay.

As the American economy teeters on the brink of depression, American businesses wait and watch.  The presidential election of 2012 will be the tipping point for the American economy.  If Barack Obama wins a second term as President of the United States, capitalism will be fighting for its very survival.  If capitalism cannot survive in America, it cannot survive anywhere for long.  And where capitalism cannot survive, political freedom cannot exist.

“The record of history is absolutely crystal clear. There is no alternative way, so far discovered, of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system.” Milton Friedman

Wanna See A Breakdown In Society? Look No Further Than Your Nearest Grocery Store


While CDN is primarily considered to be a political website, I contend that mundane aspects of our culture can sometimes be a part of the equation that get overlooked.  One of the issue that’s been on my mind lately is how we treat each other publicly.  If the last couple of decades were known for being overly “P.C.”, then I fear this next decade could be the decade of “naked aggression” towards one another.

An act as simple as going grocery shopping has become stressful and unpleasant for many over the last few years.  Our fellow motorists on the road have long been a topic of discussion in our country, but now I see hostilities and conflict extending beyond the pavement and the stoplights.  Now the grocery store and even the parking lot itself seem to be unsafe havens in our world today.

Last Saturday, I began my (weekly) show, Married to the Game, with observations on what it’s like to go shopping in Southern California.  Below, I’ve combined some of that commentary with pictures and video that I took from a Walmart parking lot, both out of frustration and in an attempt to share with other people what I’ve been witnessing.  Ultimately, I’d love to get a conversation started in this country about how we can go back to better conducting ourselves and being “better citizens” in public.  But until then, you can find entertainment in my pain in this video below.

So what are your thoughts?  Am I just crying over misplaced shopping carts?  Are there bigger problems in the world?  Or is this video indicative of our “EBT” and “OWS” culture?

Also… In the video, I discuss how this has encouraged me to do more shopping online, thus costing local stores my business.  As more and more people seem to shop online, what effect do you think this has on our communities?

Let us know in the comments below. (or on Facebook)  This is a topic I believe we should all think more about.

The Qwikster Joins the Dead

I’ve been wondering how many of the Occupy Wall Street squatters are actually enraged Netflix subscribers or retirees with Netflix stock in the 401K?

The timing is about right. In August Netflix increases the fee for plans that include video streaming and DVDs by a shocking 60 percent. In September the company announces it’s amputating the DVD side of the business and naming the new entity Qwikster. And in October Netflix was planning to introduce beer commercials during streaming programming for everyone not subscribing to the new ‘premium plan.’

No wonder protesters are preparing to punish capitalists and any corporate employees above the level of ‘barista.’ But participants in the March for Generalized Outrage are too late. The market has worked its magic and bulls bearing sell orders got there first.

Netflix stock was at $300/share last July. After investors had more time to evaluate the inspiring leadership of CEO Reed Hastings, the stock price dropped to $111.62 in early October — a plunge of 60 percent in value, strangely mirroring the August price increase.

Try to match that economic damage by dressing like zombies, pooping in the shrubbery and hoping Congress will invite you to a hearing.

It’s rare that a company becomes suicidal in such a brief period of time, but Netflix appears to subscribe to the theory that any publicity is good publicity, even if customers are burning car tires in the street outside corporate headquarters.

The first signs of a management woefully out of touch actually appeared months ago, way before the price increase and Qwikster cwazyness. The tipoff was testimony before a House–Senate hearing on the elimination of Saturday mail delivery.

Netflix is the USPS’ largest customer, spending over $600 million yearly. In my business our largest customer has amazing clout, up to and including “is it OK if I use my tongue to shine your shoes?” Yet Netflix appears to believe USPS is doing it a favor by taking the money.

In fact Netflix sent a representative to the hearing to cheerlead for the post office, claiming that eliminating Saturday mail delivery would have little, if any, impact on subscribers.

I’m sure it won’t bother Hastings — a lackey delivers his DVDs before Reed leaves the office. But for customers, eliminating Saturday delivery means no mailing a DVD back on Thursday and getting a new one in time for the weekend. Customers lose 17 percent of the delivery service with no corresponding decrease in price.

This sort of tone–deaf decision making is only possible if you are an “industry thought leader” that reads too many of his own press clippings. Lucky for Netflix government will bail it out, because elected officials are not going to give up Saturday mail delivery as long as elections are held on the next Tuesday.

Netflix mistakes should be instructive for those confused about the free market, starting with the ‘Occupy’ crowd. After the August price increase I didn’t call Uncle Sam and demand government intervention. In September, when the new billing rate began, I called Netflix to cancel the DVD portion of the plan.

In addition to being unaware that his customers like new movies on Saturday for weekend viewing, Hastings is also evidently unaware of competition from Redbox (he really must do something about the tint level on the limo windows).

Redbox rents a new movie for only a buck a day, without requiring a visit from the postman. In fact I would have to rent 17 movies a month to equal what my old Netflix plan cost. And I was not alone in this decision. Over one million other customers dropped at least a portion of their Netflix service in response to the price increase.
When management followed the price increase with the Qwikster stupidity, Netflix made the fatal mistake of complicating something that was already simple: making two websites, two passwords, two lists of movies, two sets of recommendations, two bills.

Before another million or so customers jumped to Amazon, iTunes or other streaming services, Netflix backed off and Qwikster joined the dead. Although even then Hastings did something foolish when he said, “While the July price change was necessary, we are now done with price changes,” a statement that will haunt the company in the future.

A big corporation offends customers. The media covers the controversy. Customers punish the company by dropping its service and choosing an alternative product. Investors punish the mistake by selling the company’s stock. The company learns from the mistake or it falls by the wayside.

Proof that a free market offers options — and competition, not government, is your best protection in the marketplace.

Mike Yost to Take On Corrine Brown for U.S. Congress in 2012 – Florida District 03

Pictured to the left is 2012 Congressional candidate Mike Yost,  with wife Debbie, whom is running against long-term incumbent Democrat Corrine Brown in Florida’s District 03 race. This race boils down to a very simply-defined characterization:  Mr. Yost is a solidly conservative candidate who firmly believes in our Constitutionally mandated form of limited government while Corrine Brown represents not the people, but special interest groups who fund her career, and the irresponsible big government debt spending commonly found in the Liberal ideology of today’s Democratic Party. Mike Yost is basically a Patriotic concerned citizen and former neighborhood mechanic, while Corrine Brown is a career special interests funded politician, as you will see below.

First, let’s take a closer look at nine-term Congresswoman Corrine Brown. Right from her start in Florida politics, Corrine Brown has been embroiled in corruption controversy as detailed here  , and is currently trying to continue her long time district gerrymandering-to-retain-power agenda, when she filed a lawsuit against Amendment 6 ( The  Fair District Amendment of FL 2010) which was voted into law in the 2010 elections,  here.  Corrine Brown represents everything that is wrong with our government today, as you can see in the above links. The people of Florida voted for The Fair District Amendment and Corrine Brown basically tells them to go to hell by filing a frivolous lawsuit in a blatant attempt to ignore the will of We The People.

Florida’s  congressional District 03 shows us just what Corrine Brown’s pattern of gerrymandering district lines- to-retain-your-house-seat looks like in the following map.

 

Look at the district lines there!  District 03 currently contains portions of  Alachua, Duval, Clay, Lake, Marion, Orange, Putnam, Seminole and Volusia counties. No wonder Corrine Brown doesn’t bother to actually hit the pavement much to talk to the people in that district, but instead relies on Church gatherings,  BBQs, and other already put together social events to garner her votes. Also of note is the fact that Brown’s campaign office sits right on top of a polling station. This district was created in 1903 ( and gerrymandered ever since) and has never had a Republican win this seat. EVER.  108 straight years of Democratic rule. This could explain why this has been one of the poorest districts throughout Florida’s history, year, after year, after year.  Conservative  Republican candidate Mike Yost would like to change things for the better for all Floridians in district 03, mainly by creating a business friendly environment that will lead to more jobs and prosperity for everyone. That means less of the big government nanny-state agenda, of which Corrine Brown has had Florida’s District 03 mired in for almost two decades.

Corrine Brown isn’t working for the people of Florida, in fact, as we see here,  she is beholden to special interest groups such as CSX railroad.

From our friends at propublica.org: The Hidden Hands in Redistricting: Corporations and Other Powerful Interests  About half way down in that article we see this section: Florida, railroads and friends, with a picture of Congresswoman Corrine Brown, whom Mr. Yost plans to unseat in 2012:

Congresswoman Corrine Brown, an African-American Democrat from Florida, appears to be a case in point. Brown represents one of the most irregularly shaped districts in the nation. It is 150 miles long but only the width of a highway bridge at its narrowest point and scoops heavily African-American neighborhoods out of Orlando, Gainesville and Jacksonville. The result of a deal between Republicans and minority representatives in the state legislature, the district and ones like it helped elect a more diverse congressional delegation but also ensured that the remaining districts would be whiter—and more Republican—because minority voters, who tend to vote for Democrats, had been carved out. Redistricting professionals call that ‘bleaching’.

 

Then the article goes on to show how Brown created a group called Protect Your Vote, in which this is disclosed: Though Protect Your Vote had little support from representatives of the minority groups whose rights it was supposedly trying to protect, it had a lot of support from corporate donors, who gave nearly $800,000. Last year, Honeywell International PAC gave Protect Your Vote $25,000. The same year, the PAC gave Corrine Brown’s campaign $10,000. Also in 2010, Honeywell hired a former Brown aide as a lobbyist, according to federal lobbying disclosures. And many of the company’s government contracts fall under the purview of Brown’s membership on the Transportation and Infrastructure and Veterans’ Affairs committees. Another $25,000 donation to Protect Your Vote came from CSX Transportation Corp., a Jacksonville-based railroad and trucking company. Brown championed the controversial SunRail commuter rail project, using her position on the subcommittee to help secure federal funding that made the $1.2 billion project possible. The SunRail deal is worth more than $600 million to CSX.

 

Corrine Brown represents everything that is wrong in politics today, and I,d like to introduce you to the person who would like restore honesty, integrity, and true representation of the people in Florida’s district 03 in 2012,  Mr. Mike Yost.

I recently interviewed Mr. Yost here in Florida to discuss why he decided to run for Congress, what he would represent if elected, and just how he plans to unseat the heavily entrenched Congresswoman Corrine Brown in the 2012 elections. For a detailed look at just who Mr. Yost is, and what he stands for,  please visit his website at http://yostforcongress.com/ .

 

In  my first question for Mr. Host, I asked him to define his conservative principles.  Mr. Yost stated that he believes conservative principles to mainly consist of three main components: 1- Restoring America to the  principles defined by the U. S. Constitution, Bill of Rights. and the rule of law. 2- Scale back our government by operating under sound fiscal policies that line up with  the same way American households do:   Spend less than you take in, budget wisely for the betterment of all in the household/country and the strict avoidance of irresponsible  debt-spending that leads to bankruptcy/insolvency. Mr Yost also stated that this is more common sense “household economics” than it is “Harvard elitist Keynesian economic theory.”  One has proven to work in countries throughout the world, the other has resulted in the total collapse of economies of once-powerful countries that experimented with the failed European Socialism model.

Next up, I asked Mr. Yost for his views on the present tax rate hikes proposed in the current “Tax the Rich scheme” of President Obama and his liberal minions in Congress today, and how he would  address the apparent problems within out current tax code structure.   Mr. Yost stated that he supports a Fair Tax policy in which  the income tax is abolished and goods are taxed at one steady rate of  an all inclusive 26%. This would prevent politicians from being influenced by corporate lobbyists who seek to influence legislation that includes tax code loopholes and subsidies for the entities they represent.  Mr. Yost also stated that The Fair Tax plan would open up the true free market system by encouraging competition, and which most economists estimate  would double the U.S  estimated GDP in a very short time when implemented properly. Mr. Yost explained the fair Tax plan this way:  The fair tax would consist of an all encompassing consumption tax of 26%, thereby eliminating the personal and corporate income tax completely. Mr. Yost explained that big corporations are effectively buying legislation that provides tax loopholes for the entities they represent, in exchange for political contributions and other favorable treatment. The fair tax ends that charade immediately. When you tax consumption and not production, it opens the door for more competition which in turn creates a better economic environment and more jobs, all the while keeping prices affordable. With the implementation of a fair tax, Mr. Yost explained,  politicians would not be so easily coerced into prostituting their principles in the form of forcing bad legislation onto the people just to remain in office by appeasing lobbyists. As a final note on the fair tax, Mr. Yost explained that we already pay an embedded 22% tax on everything we buy today, and that the 26% Fair tax would leave people with a lot more money in their pockets if their paychecks did not have the income taxes taken out of them, which in turn leads to more spending, which also leads to more revenue across the board. Eliminating the corporate taxes would encourage growth in the economy simply by making more working capital available for expansion and innovation. This would also reverse the massive trade deficits we currently run,  as Mr. Yost pointed out the fact that we have now become a country that is more of an importer than an exporter.  ” We have become a service economy, moving money from one sector of the economy to another, instead of the worlds leading producer of  exports,”  Mr. Yost explained.

Mr. Yost currently serves as his own campaign manager, and when I asked him about it, he stated that he has one picked out, but at the moment does not have the finances to bring them on board. That led us into a conversation about campaign finances in which Mr. Yost informed that he neither received any support from the RPOF, nor the RNC in 2010, when he also ran for the Fl-03 House seat.  ( Republican Party of Florida, and Republican National Committee) Not a dime of  support for a true conservative candidate.  Their main excuses for not helping Mr. Yost unseat Corrine Brown was the usual negative attitude that he can never win that seat because she she is too heavily entrenched in a gerrymandered district that has never voted Republican. Times are changing, and Mr. Yost just happens to be the exact kind of candidate that can unseat Brown in 2012.  How about showing a little can-do attitude like the voters did in the two special elections recently  held, where Democrats were drummed out of office by Republicans in New York and Nevada?  Mr Yost is showing the courage and tenacity  to take on Corrine Brown a second time, so how about the RPOF and RNC helping him out here and doing the same thing ?  Mr Yost stated that he did receive support from Dick Morris and several Tea Party groups in 2010, and when people actually get to know Mr. Yost and his unwavering conservative principles of limited government, his belief in our Creator, and American exceptional-ism that leads to freedom and prosperity for all based on the U.S. Constitution,  he will be seen as a Marco Rubio-type Tea Party candidate and is very electable.

While discussing the topic of campaign finances,  Mr. Yost said he would like to see serious campaign financing reform enacted that would stop the special interests from influencing our elected officials through unlimited funding through super PAC’s, non-profits and lobbyists. ( Community organizers will surely hate to hear this idea)  In Mr. Yost’s own words he simply put it as,  “If you can not vote, you should not be allowed donate to political campaigns.”  Individual voters can show support for their candidates with campaign contributions, while big corporations, Super PACS and lobbyists buying politicians poses a serious threat to our Republic.  G.E, just to name one, is not a registered voter, and therefore should not be allowed to donate to political campaigns, period.  Likewise for all the fake non-profit political action committees and assorted special interest groups.  As Mr. Yost stated, “Imagine the kinds of legislation that would get enacted if politicians were not beholden to any special interest groups, but instead were beholden to “we the people” to remain in office, as our founding fathers intended?

Mr Yost and I also discussed the topic of Federal subsidies using taxpayer dollars for political gains. He proposes a phase-out of ALL federal subsidies  by a 20% reduction  a year for five straight years, thereby eliminating them all together. The federal subsidy scheme is nothing more than a pay to play vote buying scam for certain politicians to remain in power by handing out tax dollars to special interests in their states. Mr. Yost also pointed out that no where in our Constitution are federal subsidies authorized, and how it also stymies true competition which works against our free market principles. The free market and competition should decide what businesses succeed or fail,  not the U.S. Government. To quote Mr. Yost, ” We need to get our government out of our free market economy, and a true free market economy regulates itself.  Government involvement and over-regulation of businesses only serves to stifle the free market, leading to the current negative-growth economy we see today.”

In summary, Mr. Yost is a true Reagan conservative, and he closed our interview with the following quote from the President Reagan himself:  “Freedom is never more than one generation away from extinction. We didn’t pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same.”  To which Mr. Yost added his own quote:  “This {election} isn’t about Mike, this is about our children and grandchildren and the future of America.”

I found Mr. Yost to simply be a very knowledgeable, informed concerned citizen whom would like to see America restored to  the freedoms and prosperity that was envisioned by our founding fathers by following our very own founding document, The U.S. Constitution and enhancing our prosperity-inducing free market system. As one writer wrote during the 2010 elections when Mr. Yost challenged  8-term incumbent, Democrat Corrine Brown, that this battle indeed seems to be a David vs. Goliath episode in Florida politics. While that still holds true in describing the upcoming Florida U.S. House District 03 2012 election battle between these two candidates, it could be better described as a simple example of what is right ( Mike Yost) vs. what is wrong, (Corrine Brown) in American politics today.

 

 

 

 

 

 

 

 

 

 

Purely libertarian .. in Space

This post at Spaceflight Now about the possibility of the IIS space station going unmanned in November sparked this side commentary on The Other McCain delving into the deterioration of America’s commitment to win the science and technology race, and the federal task of providing for the national security.

The offshoot post by Chris Smith ( aka Smitty , aka @smitty_one_each ) is a short and sweet case for why the current state of the space program is a failure of Progressive politics and he may well be right on that point. What I found noteworthy ( and note, I did here), was the introduction of a supposition about “purely libertarian” opinion on the validity of the space program.

Smitty was kind enough to make a small change in his post after our exchange on twitter, but I did ask him if he would mind an answer of sorts to his query on libertarian views.

I have no idea if his use of the small “l” in libertarian was intentional, which begs the question about the term “purely libertarian”, but I will just assume he literally meant libertarian ( not Libertarian) and go from there. I re-read the post several times, and was really confounded at a reason for bringing in libertarians at all. Why not moderates or independents? The comments below the post answered my question. Most GOP variety conservatives don’t have any idea what the answer would be. They certainly don’t know WHY the libertarian answer is what it is. Most can’t see past the “provide for the national defense” any more than the Left can see past the “provide for the general welfare”. (please send hate mail directly to me and save my editor a lot of heartache, please.)

You see, a purely libertarian viewpoint on the space program would be relatively straightforward: Turn the space program into a REAL race for the top and let it be funded by private businesses. Let the funds come from investors and the jobs go to the massive range of employees possessing the hugely encompassing range of skills needed to launch a viable ( and profitable) program of exploration into space. National security? Well, currently the federal government has managed to launch a forty year long , ghastly expensive serious of failures to produce. Now, there is no doubt that space exploration is a worthy expenditure. I will even concede that there are likely legitimate national defense concerns with our ability to position ourselves as the forerunner in space exploration and technology development. Which begs just one last question from me: Since when is the federal government the leader in ANY race to efficient, productive, and profitable expansion of anything, except itself?

Please follow Smitty on twitter. Despite my response to this particular statement, I have found him to be insightful, dedicated, and an excellent source of information and wit!

What Failed Capitalism

The moniker of the Liberal Left is “Capitalism has Failed.” However when we had true capitalism and free market in this nation it did anything but fail. What the Liberals mean when they say Capitalism has failed, is that big “fat cats” have gobbled up all the money and left us garbling for their crumbs. Their arguments include famous enigmas such as Enron, Bernie Madoff, the Housing Market Crash, and our Health Care system. Frankly none of these were a product of a free capitalist market. In fact they are all cases against government regulation and oversight. Let’s use these very same examples to explain.
Enron was a company run amuck through gaming an artificial system aided by government regulations it helped to write. Had there been a “free market”, Enron would not have been able to capitalize to the point of a monopoly, building it’s own demand, not only for its energy products but for its stock by manufacturing grossly inflated numbers. Free market competitors would never have allow this to get so far out of hand.
Bernie Madoff flaunted his previously good name to peddle private investors into a ponzi scheme of enormous proportions. There were several private whistle blowers whose warnings would have naturally thwarted the Madoff scheme much earlier and saved many unwitting investors millions. However Bernie was legitimized by the very Federal agencies that were supposed to monitor, investigate and halt such a travesty of the free market.
The Housing Market disaster was literally created out of Federal meddling in the market. Explain? In short, Congress (led by Barney Frank with a literal bedfellow from Fannie May & Freddie Mac) began giving incentives to lending institutions to lend to low income families. Eventually this led to regulation that actually punished those who did not. Certainly the institutions are not guilt free, however the nature of the free market was perverted by the “well meaning” Congressmen who followed the lead of “compassion” and to “level the playing field.”  The result was a housing bubble that institutions could not help but inflate.
Our Healthcare system was touted as the best as witnessed by all who come here from all ends of the earth to receive care that is simply unavailable elsewhere. Yes, such healthcare is expensive. However it is easy to point out where governmental regulation caused coast heights. We enjoyed many levels of insurance options form “Catastrophic only” to “Fully Comprehensive Care” at premiums that varied accordingly. One of the incentives to success in American was the level of healthcare you could provide for your family. Somehow healthcare is being misconstrued as a right and that all rights being equal the rich have to lower their care to something mediocre that the poor ultimately drag everyone down to when there is no longer a motivation to succeed.
The “Health Care Debate” was a perfect example of government intervention that interferes with reform rather than aids it. Rather than having faith in the free market by allowing cross state competition to bring costs down, the then Liberal Congress under unprecedented pressure from the Executive administration took over 16% of our economy to be made unconscionably inefficient on a governmental scale and ridiculously ineffective on a bureaucratic scale.
In fact it seems impossible to uncover corruption within big business without uncovering governmental interference, incentives, meddling, ignorance, or downright collusion. Let’s take Monsanto for example. They may appear to be a very successful company who works closely with the FDA and other government agencies to increase crop production and our massive food requirements.
In reality Monsanto is another Enron in the making. We should expect to see a disaster that will make the Enron scandal appear insignificant. You as an aware citizen should know that many of the Monsanto developed and owned GMOs (Genetically Modified Organisms) are banned in most European nations.  An even worse long story short, Monsanto has infringed upon anyone who attempts to continue growing “organic crops.” Monsanto has sued those who buy and sell natural seed if even a small portion of the seed is found to have any Monsanto GMOs in them. Farmers who attempt to grow natural crops find GMOs from even distant farmers are infiltrating their crops via wind and insect pollination. The courts have upheld Monsanto’s ownership of these farmer’s crops just because it contains some Monsanto GMOs. Obviously the natural farmer should be the one suing the Monsanto farmer for contaminating his otherwise natural crop, but no! Monsanto continues to win and take over a greater and greater percentage of our food supply market. You may want to consider the fact that this includes the ethanol crop as well.
Free Market Capitalism has not failed. It is the lack of freedom and transparency that has failed. Unfortunately the carrier of the disease is vilified instead of the disease.
How important is economic freedom anyway? The ten most economically free markets in the world enjoy the greatest Income, Civil Rights, Life Expectancy, Employment, Healthy Environment, and the lowest Infant Mortality and Child Labor.
Economic Freedom means having Property Rights protected by impartial rule of law. It means Free Trade with minimum regulation and transparent transactions and operations. It means a stable national currency free of inflation and a minimally necessary government that allows natural market adjustments and even failures.
By those standards we’ve fallen from 3rd to 6th in economic freedom in the last ten years. It is no coincidence that Income, Civil Rights, Life Expectancy, Employment, a Healthy Environment, and Infant Mortality have followed suit.
The so-called good intentions of the current administration are to control our economy rather than let it prosper. This is called a lack of faith in the tried and proven, over controlling the market, which has always proven disastrous. Have they never noticed that?
Spread the word.

What’s wrong With the Rich

The rich are the least understood minority.  That fact lends them to be vilified by the very politicians at the root of our serious economic problems.

The facts are:

The rich take risks with their money.  When they invest their expendable income, they are risking the loss of that income.  Often the rich loose a great deal of money in failed businesses.  Most middle and lower income people would not take that kind of risk, even if they could.  Generally the greater the risk, the greater the potential reward as well as the potential loss.  There is nothing unfair about that equation.

The rich employ people.  They hire people to do a multitude of tasks for businesses.  This adds to the risk.  The wrong people can quickly destroy an investment.  They depend on effective employees and reward them accordingly.  Those who do not, suffer the consequences.  Basically, you get what you pay for.  As President Reagan pointed out, “nobody ever got a job from a poor man.”  Conversely the rich must not overcompensate.  Overcompensation easily leads to the demise of a business for the owner and eventual loss of employment.  Unions were originally designed to fairly compensate employees, and ensure unsafe working conditions.  However many unions have overstepped their principles and done harm to many businesses thus harming the very employees they supposedly intend to help.

The rich provide benefits, give to charities, and help employees save for retirement.  Monetary compensation alone has evolved to group insurance plans, 401K’s, other matching plans, and other perks and benefits.  The employer can provide group benefits far more efficiently than individuals can.  Choosing and managing these are another responsibility that the rich take on.  It is in their best interest to maximize what they can provide in order to draw and maintain effective workers.

The rich have to compete.  No business is without competitors who wish to capture a greater market share.  In order to do so, the business owner must run the business as efficiently and effectively as possible or risk reduced demand, thus a reduced workforce.  Basically the rich look out for their workers by looking out for the business.

The rich have headaches.  That’s a general expression for all that a business owner has to think about to make ends meet in his/her business.  These headaches come in the form of the economy, market fluctuations, suppliers, connected services, fashion or technical trends, political changes, taxes (many kinds), accounting, making changes, growth, retooling, human resources, discipline, establishing a corporate culture, advertising, etc, etc, to include balancing the priorities of all the above and more.  If the rich don’t address these carefully, they quickly suffer greater headaches.

The rich make large charitable contributions.  Often contributions provide tax breaks, but a tax break doesn’t exceed the contribution.

The rich hoard very little money, (percentage wise).  They understand that simply saving does not produce what investing can.  Therefore the money that the rich earn is recycled to do more of the same, employ more people, boost the economy, provide benefits, etc.  Most of their money creates more employment.  To blame the rich for having too much money is like blaming your heart for having more blood in it than any other organ.  The rich are the most effective stimulus to the economy.

When the rich stimulate the economy it is done effectively and efficiently for all the reasons above.  When the government attempts to stimulate the economy it is neither efficient nor effective because the government is not accountable.  Furthermore Government “stimulus money” is first removed from the economy through taxes, not earned by adding value to anything.  Government stimulation is like opening the refrigerator door in an attempt to cool a room.  The result is a net heating of the room because the heat expelled out the back of the refrigerator is always greater than the refrigeration it creates.

The rich spend their money.  Yes, they live extravagant lives; possess tremendous homes; and own luxurious yachts.  Consider all who are employed servicing those lives, building those homes, making and maintaining the yachts.  All that the rich spend is returned to the economy.

The rich pay taxes.  We hear of the huge tax shelters and deductions that “fat cats” get.  However it is their businesses that have such tax breaks not the individuals.  In fact due to our “graduated tax” system, the rich pay a much greater percentage of personal income.  Tax breaks are government incentives to influence how a business operates.  If there is any unfairness, it is the government (politicians) who are at fault, not the businesses who use such breaks wisely or else fail.

The rich sometimes fail.  With some wrongful exceptions of late, the rich run the risk of  “loosing everything.”   Safety nets such as the FDIC only insure losses up to a certain amount.  The rich do business that far exceeds those amounts; thus they often “work without a net.”  When a business fails, the rich often become devastated.  Interestingly enough, they often find their way back to wealth because once they have traveled the road to success they understand how to do it again, often with better results.  It is not money that creates money; it is knowing how to venture.

The rich are responsible.  When a poor man breaks something expensive, he walk away because he can not compensate the loss and there is no recourse.  When a person of means financially harms someone, they make restitution.  If not, they may find themselves paying court fees as well.

The rich are vulnerable.  No one files suit against a poor man.  However people take advantage of the rich in every way imaginable.  Because the rich have “deep pockets” they risk carrying the brunt of any conflict.  It is not uncommon for the rich to be found 1% at fault, yet assigned 99% of the financial burden for no other reason than the ability to pay.  So, do you still want to be rich?

How is a failing economy the fault of the rich not being taxed enough? First they are taxed more.  What they aren’t taxed, they reinvest, thus stimulating the economy more effectively than through the government.  What they don’t invest, they spend, which is also good for the economy.  There is almost nothing the rich can do with their money that isn’t good for everyone.  Even if they store it away in a bank, it provides liquidity for the bank to invest.

God bless the rich man because he carries the real burden of our economy.

The Country Needs a Plan for Growth and Texas Has the Answers

Texas Flag on MapThe Lone Star State is a symbol of success for free-market policy. Austin Local Me reported in May that Texas created more jobs than the eight other states that created any jobs at all combined according to Bureau of Labor Statistics.

Nine states, including Texas, had more jobs in March 2011 than in that month five years earlier. And Texas’ gains far outpaced the combined total for the other states: 539,500 vs. 134,400.

Texas created more than a half million jobs and the other eight states that had any growth at all could not measure up when their totals were combined. What is Texas’ secret?

The article was intended as a fact-check of Rick Perry’s statement that Texas created more jobs than all other states combined. The fact check came out TRUE.

The foundation’s claim that Texas “created more jobs than all other states combined” stands up — considering only those states that had net job gains over five years. That’s the methodology usually used to define job creation in public discourse.

In a nutshell, Texas has a strong history and current policy of allowing the free market to remain free. Government is kept minimal, regulation only where necessary, no income tax and keeping corporate taxation favorable to the economy. These are exactly the opposite of policies coming from states like California and New York and from the Obama administration.

Rick Perry is the epitome of Texas-style governance (Ann Richards not withstanding). He turned down Obama’s federal education money saying that the program “smacks of a federal takeover of our public schools”.

As Texas is irrefutable proof that Obama’s policies are wrong and that free markets work, it is no wonder that he has a visible anti-Texas policy. However, he should realize that without most prosperous state in the union, Obama’s economic and unemployment numbers would be far worse than they already are.

God Bless America, God Bless the great state of Texas.

 

Dodd-Frank: A Nightmare On So Many Levels

Barney FrankSenators Barney Frank and Chris Dodd put together yet another progressive nightmare for our marginally free-market system. Granted the thought of those two alone in a dark corner is nausea-inducing, that’s not where I’m going. The Dodd-Frank bill, otherwise known as the “Wall Street Reform and Consumer Protection Act” neither reforms Wall Street nor protects consumers (who should really need no protection from anyone but themselves).

This is yet one more instance of self-aggrandizing, big-government bureaucracy all wound together to hopefully get another pair of party-line idiots re-elected. It’s populist in nature but elitist in execution.

Chriss DoddOne of the less analyzed provisions may very well serve to push jobs oversees – yeah, really. The problem begins in the quizzically-utilized math in the bill. Section 953(b) of this monstrous affront to free-markets:

    (A) the median of the annual total compensation of all employees of the issuer, except the chief executive officer (or any equivalent position) of the issuer;

    (B) the annual total compensation of the chief executive officer (or any equivalent position) of the issuer; and

    (C) the ratio of the amount described in subparagraph (A) to the amount described in subparagraph (B).

Basically, the average pay of all workers in a company, the wage of the CEO/President and a ratio comparing the two.

The intent of this bill is to show income inequality, which is only so great because of liberal initiatives.  Unfortunately, it will cause more inequality, but their stats will look better.

Understand the mindset of the American business leader.  If this regulation is truly enforced, the only course of action for them to take is to make sure this ratio does not end up higher than their competitors.  To do that, they will simply lay-off every single one of their lowest wage earners.  They will then outsource that work (the easiest to outsource by far) to Mexico (take a gander at what GM is doing with your bail-out money), China, or India.

This also means those companies won’t have to deal with oppressive health care mandates, ridiculous corporate taxes or whatever new populist garbage comes out of Washington.   You have nothing to worry about, heck, 1 in 6 Americans rely on the government for income as it is .. this will just add a few million more.

Health Care Reform Does Not Increase Competition

For months we have been fed several mis-truths, myths, and outright lies about health care.   It is certainly worthwhile to evaluate all the individual frauds, but we may be missing the forest for the trees.

The major reform that the President and Congress are proposing is to reduce costs by increasing competition.  Unfortunately, nothing they are planning will increase competition at the point of delivery at all.  In-fact it will diminish it as costs will be even further hidden from actual consumers.

Liberals are stating that the free market has failed to keep costs low.  Our health care industry is nothing close to free market.  In a free market system, the consumer (patients) would evaluate how effective a producer (doctors, hospitals, care facilities) is and measure them against competitors.  As most people under standard insurance plans pay their set co-pay regardless of what the provider actually charges, they have no incentive to shop around based on value and hence, the providers have no market-based incentive to control costs.

Imagine a health care system where we had to decide how to spend our own health care dollars.  Doctors would have to compete on service and price.  They would be forced to find efficiencies within their own offices and hospitals to be able to be competitive in the marketplace.  That is not how it works today – at all.

High-deductible health plans paired with Health Savings Accounts (HSAs) put many health care consumers in the driver’s seat.  Because they are spending real money out of an account that they manage, these consumers tend to shop for their health care services, abuse the system far less, and consider less-expensive drugs and treatments that are as effective.  This kind of health plan is certainly closer to showing how a free market health care system might work.  Unfortunately, not everyone is responsible enough to manage their own health care costs.

In our current system, insurance companies work as an insulator between the consumer and producers.  The providers might perform tests or treatments that are more-expensive because the insurance will pay for them.  If they had to sell the cost to the consumer, the patient might actually push back and ask for alternatives and evaluate them all based on effectiveness and cost.

The reform packages attempt to do this value-based evaluation by setting up 10’s of bureaucracies to evaluate the cost and effectiveness of treatments.  Unfortunately it will work just like insurance.  They will have fee schedules that say that they will pay for those treatments and what they will pay.  The only one making a decision at the point-of-care will be the doctor and if the expensive treatment will get paid for, the doctor could use it.  The patient will pay their co-pay regardless if the most or least expensive treatment is proposed.

If the person making the health care choices (patients) is not making those choices based on cost, there will be no downward pressure on health care costs.  If hospitals and providers knew that patients might choose less-expensive, but effective, institutions, they would be forced to use the most cost-effective solutions, not the solutions they could charge the insurance company the most for.

The health care reforms proposed will hide the costs of care even more.  Smaller co-pays, no maximums, etc.  That money has to come from somewhere.  It will come from the premiums of everyone that is not too poor to pay.  If a government-run plan is added, it will come from taxes as well just like Medicare and Medicaid.  Health care won’t get cheaper this way, it will just be less obvious to us that it’s more expensive.

Other Articles on Health Care Reform:

Health Care Reform Analyzed: The truth about HR3200

Baucus’ Bill Revealed