Category Archives: Capitalism

The Miracle Of Free Markets

Ann Coulter, Capitalism, Democrats, Free Markets, Government, Healthcare, Uncategorized

Ann Coulter: “There are roughly 1 million examples of the free market doing a better job and the government doing a worse job. In fact, there is only one essential service the government does better: Keeping Dennis Kucinich off the streets.

So, naturally, liberals aren’t sure. In Democratic circles, the jury’s still out on free-market economics. It’s not settled science like global warming or Darwinian evolution. But in the meantime, they’d like to spend trillions of dollars to remake our entire health-care system on a European socialist model.

Sometimes the evidence for the superiority of the free market is hidden in liberals’ own obtuse reporting.

In the past few years, the New York Times has indignantly reported that doctors’ appointments for Botox can be obtained much faster than appointments to check on possibly cancerous moles. The paper’s entire editorial staff was enraged by this preferential treatment for Botox patients, with the exception of a strangely silent Maureen Dowd.

As the Times reported: ‘In some dermatologists’ offices, freer-spending cosmetic patients are given appointments more quickly than medical patients for whom health insurance pays fixed reimbursement fees.’

As the kids say: Duh.

This is the problem with all third-party payor systems – which is already the main problem with health care in America and will become inescapable under universal health care.

Not only do the free-market segments of medicine produce faster appointments and shorter waiting lines, but they also produce more innovation and price drops. Blindly pursuing profits, other companies are working overtime to produce cheaper, better alternatives to Botox. The war on wrinkles is proceeding faster than the war on cancer, declared by President Nixon in 1971.

In 1960, 50 percent of all health-care spending was paid out of pocket directly by the consumer. By 1999, only 15 percent of health-care spending was paid for by the consumer. The government’s share had gone from 24 percent to 46 percent. At the same time, IRS regulations made it a nightmare to obtain private health insurance.

The reason you can’t buy health insurance as easily and cheaply as you can buy car insurance – or a million other products and services available on the free market – is that during World War II, FDR imposed wage and price controls. Employers couldn’t bid for employees
with higher wages, so they bid for them by adding health insurance to the overall compensation package.”

More.

Update III: Dollar Doubts

Business, Capitalism, Debt, Economy, Free Markets, Socialism, The State, Uncategorized

“[D]iscussion on the greenback is heating up,” notes Peter Schiff. “And while real insight on the topic is hard to find, the debate centers on the battle between two conventional opinions—both of which are wrong.”

“The first camp, which is generally supportive of government intervention in the economy, argues that dollar’s decline is a positive for both the economy and the stock market. The second camp, which tends to fall on the more conservative end of the political spectrum, views the dollar’s decline as a problem but feels that tough talk and slightly higher interest rates are all that is needed to restore ‘King Dollar’ to its throne.”

“First of all, a weak dollar is no better for Americans than a lower paying job is for a worker. And although I would prefer that the dollar remain strong, I know that currency values are a function of supply and demand, not wishful thinking. The past years of reckless monetary and fiscal policy have created conditions that must push the dollar down. Vastly expanded debt levels and monetary expansion have created a greater supply of dollars, while poor investment performance and diminished industrial capacity have lessened the demand for dollars.

The regrettable truth is that while the weak dollar will help rebalance the global economy, it is not a panacea for the U.S. The fall is no more worthy of celebration than a student celebrating falling grades on his report card. If the dollar does not recover eventually, Americans will suffer diminished living standards. To avoid this we must make difficult reforms now. If we continue our current policies, we run the risk of a complete dollar collapse. Far from helping to solve our problems, this would be a true nightmare scenario.”

More.

I am not as confident as Mr. Schiff that the dollar can be rehabilitated. The country is moving away from markets and toward the central control of the economy and the rearranging of the income curve. What with the daily growth of debt and unfunded liabilities, I hate to be cynical, but could Mr. Schiff’s optimism have anything to do with his political aspirations?

Update I (Oct. 26): Involvement in politics invariably means convincing the masses that there is a panacea to what are intractable problems. Politics are about peddling hope against all hope. Pollyanna sentiments notwithstanding—comments about waving the wand of liberty to dissolve $60 trillion in growing government liabilities are worse than useless.

If the trend in public and political sensibilities was toward liberty—decentralization and deregulation—I’d say hope is warranted.

On the theme of cynicism—and when all else fails—perhaps the Pollyannas among us can adopt the tack taken in this WSJ article; debt can hasten recovery:

“[H]ousehold debt, including mortgage debt, [is] at about $13.7 trillion, or 125% of annual after-tax income…. the U.S. government … is building up debt as fast as households are shedding it. Net U.S. government debt could reach 85% of annual economic output by 2014, up from about 58% now, according to the International Monetary Fund.”

The impetus is in the direction of serfdom.

Update II (Oct. 27): The Economist: “America needs a weak dollar to help revive its economy and reorient it towards exports and away from consumer spending.”

Would that it will. However, a weak dollar is a symptom of all these things it’s supposed to cure; it’s not a cause of over-consumption and under production.

Update III: À la Zimbabwe (and via Bloomberg): “Forty years ago, the U.S. government said the $100 bill would be the highest-denomination note. With the Federal Reserve now trying to print its way out of the financial crisis, it may be time to revisit that decision.

Reinstating $10,000 or $100,000 notes — which existed in limited fashion years ago — won’t cut it. In today’s, ‘Brother, can you spare a trillion dollars?’ economy, we need to think bigger — a $1 million bill may be in order.”

China At Sixty

Capitalism, China, Communism, History

“Assessing China at 60,” by Melissa Chan of Al Jazeera (one of the best news sources, incidentally):

Sixty years after Mao Zedong’s communists took power in Beijing, there are many reasons for China to celebrate.

China today has become the third-largest economy in the world – second, if you measure it by purchasing power parity – and is well on track to cement its place as the world’s foremost economic superpower.

And while it has been exciting to count the numbers of new millionaires – or billionaires – created every year, the country has also managed to pull 500 million of its people out of poverty over the last few decades.

Of course, we also hear much about China’s worsening wealth disparity: Not exactly everyone is sharing in the wealth.

China’s environment has paid a heavy price for economic growth.
And all these economic changes have come at a heavy price for China’s environment, in the form of dead rivers, poisoned land and toxic air.

Then there are the increasingly frequent reports of unrest and rioting. Frightening numbers of people – often in the tens of thousands – with their complaints.

After six decades of communist rule, there is much for the government to worry about.

They need to watch the mass migration of farmers who have deserted their lands to find work in the city.

There is the corruption, which many ordinary Chinese tell us is getting worse, not better.

It is a story of transformation in often too little time. For every miracle or success story, there is a counter example amongst the disenfranchised.

Growing pains

China’s rise is a complex story and often contradictory – a hallmark of the growing pains of this new world power.

The one thing that rose above all the din of contradiction, the one thing most Chinese can all agree on, is that life is better today than in the past.

On the road for our Long March series of reports, retracing a key episode in the communist’s rise to power, this is what the Chinese we met told us.

The founding of the People’s Republic on October 1, 1949 brought an end to a bitter civil war between Mao’s communists and the nationalist Kuomintang, led by Chiang Kai-shek.

The communist’s struggle has become the stuff of lore, particularly the epic Long March. Its importance is still emphasized every day.

Turn on the TV and you will almost always come across a documentary replaying the black and white footage from the 1930s and 40s: The Red Army fighting the Japanese, the Red Army fighting the Kuomintang, communist cadres talking to the people, Mao Zedong speaking to farmers.

But, the documentaries will tell you, there was no greater historic event than the Long March.

Spreading the message

The Chinese call it “the walk that lasted 25,000 li”, that is 12,500 kilometres.

No one can confirm the actual distance of the march, but it did take two years and killed about nine out of 10 participants.

It was a military retreat from their civil war opponents, and by most circumstances would have been considered a defeat.

But it allowed the communists to spread their message across a huge swathe of China, where they won the support of the peasantry – which was, and still is, the largest demographic in the country.

It was on the backs of the farmers then, that Mao’s communists rose to power.

We started our trip in Jiangxi Province where the communists declared the Chinese Soviet.

This was their own republic, their little world where they would experiment with what they had read in books, in theory, and now implement them in real life.

But the communists did not end up spending too much time here. They would abandon their Soviet, routed by the Kuomintang army, so beginning their Long March.

Today, the town of Ruijin is as comparatively quiet as it had been back then.

We stopped by Liang Chong Deng’s family. They have always been here, generation after generation. But now, Liang told us, he is not sure how much longer the family will stay on the land.

His son and daughter, he tells us, are not farmers but work in the city. They would not know how to grow anything if they ever returned to their plot of land.

Our next stop retracing the march was Sichuan province, in China’s southwest.

By the time the Red Army reached here, half the soldiers were gone, from death, desertion or illness.

Much of Sichuan is mountainous, deeply forested and even today access is often difficult.

Years ago, the Red Army soldiers would have gone through on nothing but shoes made of straw, or barefoot, in bedraggled uniforms, hacking their way through unmarked territory.

Today, Sichuan is a major tourist area, widely known as the home of that great Chinese icon, the giant panda.

But it would have been hard for any Red Army soldier to imagine it as a friendly place.

The tribes in the area – Tibetans and a minority group known as the Yi – used to doggedly ambush the line of marchers.

Unrest

Today, Sichuan still has large Yi and Tibetan populations, but the dynamic is a very different one than that from history.

It would be difficult to recognize someone from the Yi minority – they speak Chinese like everyone else. The Tibetans are easier to identify, many of them with their prayer beads.

When Mao set out to defeat the Kuomintang, he said he also hoped to unify the country – and that meant including these so-called ethnic minorities.

Most, like the Yi, have integrated into greater China relatively easily. But the Tibetans, as we saw in the recent outbreaks of unrest, remain deeply disenchanted with Chinese rule.

Other ethnic riots earlier this year in the western region of Xinjiang, home to Muslim Uighurs, revealed that, after 60 years of communist rule, some of the most entrenched obstacles to uniting China’s people remain untackled.

The final stop on our road trip was Yan’an, the resting place for the Red Army – the end of their Long March.

Tourists today swarm the caves where Mao Zedong and other top revolutionaries used to live.

They holed up here for years, rebuilding the army and refinancing their revolution using cash earned from the region’s oil wells.

Today, the area around Yan’an remains an important source of oil to fuel China’s booming economy. Wells are visible everywhere, dotting the brown hills.

At the end of the road, you wonder if the China of today is what the first generation of revolutionaries had in mind and whether they believed that they achieved their vision of utopia back in 1949.

China as it is in 2009 would hardly be recognizable to them.

But what the early revolutionaries would certainly agree with today’s Chinese about, is that China today is a strong and powerful country and one that the rest of the world should take notice of.

Updated: No Experience In Ruining The Country

Capitalism, Debt, Economy, Federal Reserve Bank, Foreign Policy, Political Economy, Politics

“My lack of experience is my greatest attribute. I have no experience in ruining the country,” said a witty Peter Schiff, who announced (on MSNBC’s “Morning Joe”) a run for the US Senate in his home state of Connecticut. After whipping the Republicans, we hope, Schiff will challenge Democrat Chris Dodd, the poster boy for the “experience” that has ruined this country.

Update (Sept. 19): Van Wijk is correct: As a financial analyst with a considerable clientele, Schiff has wisely steered clear from being excessively political. To me, this means that he is a careful man, who thinks hard before mouthing off. The more issues one expatiates upon as a commentator, the more people one risks angering and alienating. I should know. Why do you think that so-called “courageous” columnists such as Ann Coulter stick to a limited range of issues—“liberal this; liberal that, the wonders of war, and the horrors of abortion, etc.”—while avoiding the hard ones (immigration, the “national question,” the economy)? Because by being completely uncontroversial she never risks alienating the base.

I always come back to Kevin Michael Grace’s aphorism: “The secret to becoming a successful right-wing columnist,” quipped the Canadian conservative, “is to echo the mob while complimenting yourself on your daring.”

Schiff has been fearless on matters economical—fearless and correct. He is also a libertarian and a former adviser to Ron Paul. His positions—and he’ll come out with them in the fullness of time—would correspond with Paul’s.

Another thing: everything does boil down to an understanding that one cannot spend funds one doesn’t have. Think about the Republicans who ran in the primaries. Did you ever hear any of them say, “folks, I’d love to indulge your phony rah-rah-for-the-troops patriotism and keep the army in Iraq, but we’re out of money”?