Archive for the 'Liberty' Category

RATIONING MEDICAL CARE

July 12, 2010

RATIONING MEDICAL CARE

Our resources are limited. We have to make choices, to get the things we want most with our limited resources. That is rationing. Individually, we must make these choices within our individual resources.

With insurance, we pool our risks with others to provide for occasional extreme expenses. We pay regular premiums, spreading out the cost of major calamities over time and among a group of people within the same insurance program.

Back in the 1930s, medical insurance was rare, if it existed at all. When a medical emergency arose, we went to the County Hospital, supported by local taxes. The quality of care was not the best. I have a stiff elbow to show for it.

I take a dim view of any involvement of government in medical insurance. At the very least, it will add a level of bureaucratic inefficiency to the costs of medical care. At the worst, it will just reduce even more of whatever freedom is left in the medical care market. Say what they may, government involvement means medical care rationing driven by political considerations.

I believe the greatest problem with our medical care is the monopoly (granted by government) which enables the AMA to limit the supply of doctors, and to set rules by which doctors must treat patients. The result is not health care but rather medical care, suppressing symptoms by prescribing drugs. Prevention and cure are not part of the system.

A secondary problem is the close relationship of the AMA, the drug companies, and the FDA, which results in millions of routine prescriptions for expensive, ineffective, unsafe drugs. Prime examples are bisphosphonates, statins, and coumadin.

Providing by law for universal health care insurance will automatically assure that only AMA approved procedures will be covered by insurance. All existing health insurance already does that, but universal health insurance will even eliminate the option to pay as you go for your own health care. Of course, the automatic result of any socialist scheme like universal medical care is to reduce our freedom.

Insurance is an obvious solution to protect yourself from huge occasional unforeseen medical bills. On the other hand, insuring to cover routine office visits and checkups simply adds bookkeeping costs and red tape to your medical expense.

Pay as you go for health care forces you to make economic choices. The result is that you would spend less than you do under full medical insurance. You do your own rationing, according to your own priorities. Doctors and insurance companies prefer the full medical coverage; they earn more that way, and you and I pay for it.

Britain has its own version of universal health care. Through the years the government has tried many ways to limit the ballooning cost. Ultimately, as in Canada, the most effective rationing is the waiting list. When I lived in Britain, in 1999, I needed a knee replacement. The waiting list for that was 20 months. Fortunately, I had private health insurance and had it done immediately.

I feel that total medical insurance coverage, plus the conviction that “doctor knows best”, plus the conviction that the USA has the best health care system in the world, relieves us of responsibility for our own health. We fall in with the medical notion that sickness just happens, regardless of nutrition and lifestyle, and only an M.D. can fix it.

Take charge of your health. Invest some time and effort to learn about, and get, good nutrition. Get up from your couch and TV long enough to get some healthy exercise. Find one of those rare doctors who offer real health care and can see beyond their prescription pad. If you take out medical insurance, take the plan with the maximum deductible and co-pay to keep the incentive to look after your own health.

FREE MARKET PENSIONS

July 1, 2010

FREE MARKET PENSIONS

The welfare state is under threat by demographics. Many people are now living for many years beyond retirement age. The US social security pension system is an ever growing government obligation. Financially, it is a pyramid scheme which is doomed to collapse. We badly need something better. The free market can always provide the best answer. The Social security system is a major and growing government intervention into the economy of each household. It’s time to retire the government pension scheme.

Following current US trends, we have people spending fewer years in productive work, more years preparing for work, and living more years after retirement. The number of people living past 100 is growing rapidly. I retired in 1991. Since then, my children’s generation has supported me. Now my grandchildren’s generation is also supporting me. If I live to 100, my great-grandchildren’s generation will be supporting me and also supporting my children. Perhaps I should do them all a favor and die now.

But what happened to all the money I paid into the social security fund? Wasn’t it invested so that the proceeds of the fund would support me now? No, it was “loaned” to the US government. But the US government doesn’t pay its debts. It spent the money and just kept on “borrowing” from the social security fund. The “fund” is a fiction. My pension is paid out of the social security contributions of the present working generations.

The free market alternative is obvious. Instead of investing in the fictitious government fund, you could invest it in some free market institution, which will be legally obliged to deal honestly with you.

If you pay into an annuity during your working years, you will have a pension for as long as you live.

A mutual fund of stocks and bonds can provide your pension in your old age. If you spend only the dividends in your retirement, you can leave the fund to your children to build up their pensions.

In each case your savings are invested in something productive which will earn dividends and interest for you by producing goods for consumption.

Paying into the social security retirement was easy when I started work back in the 1940s. As I remember it, my deduction was 3%, including the matching payment from my employer. Now, the total would be 33% if I were still working.

Phasing in a free market system, while still paying enough to cover the entitlements already committed to, will mean even greater taxation for the next working generation. The politicians haven’t yet found the political courage to start the transition. Will they ever? They may just paper it over with inflation, the stealth tax.

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HEDGING AGAINST INFLATION

June 29, 2010

HEDGING AGAINST INFLATION

Behind each currency stands a central bank. Each central bank, guided by Keynesian economic theory, is inflating the currency. Money supplies in all countries are always increasing. As a result, prices increase as money loses value. That’s inflation. If you have any savings, the value of your savings is decreasing. What to do? How can you protect your savings from the erosion of inflation?

One answer is, don’t have savings. Go into debt. Spend as fast as you can to acquire real goods instead of bad money. Real goods will keep their real value. This is what our governments, also guided by Keynesian economic theory, encourage us to do. Keynes said that this is the road to prosperity.

Since the 1930s, in the USA, this has been good advice, if you’re borrowing to buy a home. The US government set out in the 1930s to make home-buying irresistible with subsidies, loan guarantees, and tax breaks. In the long run, for most people, a mortgage to buy a home has proven to be a good investment. Many of those who lost out in the recent housing bubble were those who bought a house they really couldn’t afford.

This happened because the government pressured the banks to lower their standards for credit worthiness. Others were caught out because of the euphoria of a boom. The oft-repeated statement “you can’t lose” was the consensus until the bubble broke. Home prices were much higher than the cost of building them. People paid such prices because they “knew they couldn’t lose”.

Of course the incentives to buy a home heaped on by the government pressured many to tie themselves down geographically. It limited their options to find new jobs in a recession, when it was harder to sell your home to move to a new job. Otherwise, the risk was small and the long-term gains were great because the government was subsidizing your purchase with loan guarantees, low interest rates, and tax breaks.

Supposedly, the zero risk option to escape the erosion of your savings by inflation was to buy US government bonds. You can believe that if you trust your government. But if the government decides to default on its debts, who can prevent it? And government has the option of repaying you with cheap money by inflating the currency.

In fact that is already happening. The debasement of the dollar by inflation is more than enough to wipe out the value of the interest that the bonds supposedly pay for the loan. You’ll lose a bit less than you might lose if you keep your money under your mattress. After all, this is the same government that stole all the gold that backed the dollar when we were on the gold standard back in 1930.

So what other options are there to escape the theft by inflation? Many investments can pay much higher interest than government bonds. The more interest an investment pays, the more risk of loss goes with it. Perhaps corporate bonds are the safest. The stock market can pay much more, but it takes expertise to know which stocks or bonds to buy.

I have twice invested small sums in mutual stock funds with fair success. For a modest fee (less than 2% per year) a specialist manages the fund for some goal: maximum earnings, maximum growth, minimum risk, etc. This is fairly safe in the long run (several years) and can pay with growth in excess of inflation. In the short term, the value of your fund will bounce around a bit. Just sit tight, ignore the daily static, and leave your fund to grow until you need the cash. Find a fund with a record of growth over many years, including bubbles and recessions.

Another safe long-term investment is in gold. This will show even more short-term static than stocks, but gold has inherent value and in the long run is a very good hedge against inflation. However, you earn no interest on gold, you may have to pay storage fees, and transaction fees when you buy and sell. And there’s always the chance that the government may confiscate it. They have done it before.

Let’s face it. We are powerless against the total power of government. We are their only means of support, and they will take it from us , somehow.

BYPASS GOVERNMENT

June 27, 2010

BYPASS GOVERNMENT

As I said in a previous blog, it’s not impossible to reform the government, but very unlikely. The parasites, the politicians and bureaucrats, who benefit from the current statist system, have a great stake in its continuance and expansion. They will strongly resist any reform.

There are ways, however, that we can bypass some of the burdens of government by employing competing free market substitutes. We might find enough support for freedom in Congress to prevent interference with the competing services. I’m thinking in terms of private schools, private arbitration courts, and private police,

Our justice system is very costly. Its only aim is to “bring the criminal to justice” with no attempt to bring justice to the victim. Arbitration courts are much cheaper. A victim would prefer arbitration, because he can claim compensation for his loss. A criminal might prefer arbitration because he can avoid imprisonment, and instead earn the money, to pay compensation to the victim, in relative freedom.

We already have private schools. We would have many more of them, and many more students attending private schools, if their parents were relieved of the tax burden of supporting public schools as well as paying tuition to private schools. Home schooling or private schooling would enable parents to choose the values to be taught to their children.

The chief obstacle to competition with government agencies and services is the inclination of government to claim or grant monopoly privilege. For many years private shipping companies have competed successfully with the US post office, with the single exception of letters. The post office survives today only by virtue of the remaining monopoly for delivering letters.

Perhaps you can think of other government functions that could be supplanted by private enterprise.

COMPETITION VS SECURITY

June 26, 2010

COMPETITION VS SECURITY

The free market provides us with ever more clever goods at ever decreasing cost. This seems to please each of us, as a consumer. Like everything though, this comes with a cost; it requires each of us to compete, as a producer.

Many try to game the system by shutting out competition. It often doesn’t work, but whether it works or not, it requires coercion. 100 years ago, the unions used violence, coercion, and intimidation to organize workers and force employers to negotiate for wages and working conditions. Police and governments turned a blind eye to this blatantly illegal coercion.

In the course of the 20th century, governments passed laws empowering unions to organize and forcing employers to negotiate. However, by the end of the 20th century, American workers, feeling that competition suited them better had largely lost interest in unions. What union power remained was mostly in unions of government employees.

Individualism and meritocracy are fundamental to the American culture. Many immigrants chose to come here because individualism was in their nature.

Other lands have other cultures. A Japanese worker traditionally has worked for one employer all of his working life. Employment is like joining a family for life, and loyalty and security replace the competition of US workers. I believe adaption of American attitudes is causing a lot of cultural stress in Japan.

Many Asian cultures tend to be more communal in nature than European cultures. In deed, European cultures tend to be more communal than the American culture. There should be opportunity everywhere, but especially in America, for people with all sorts of cultural attitudes to exist and cooperate.

Economics is about individuals doing what they can, within their means, to satisfy their particular wants. Their ultimate goal is not goods, but satisfaction or happiness. If they are happier living without the stress of having to compete, they should be free to do so, so long as they don’t resort to coercion (including coercion by government).

They may find that this means settling for less in material wealth. This is what economics is all about, setting priorities and living within your means. I don’t expect civilization to evolve into one “best” culture, but rather into one world where many different cultures can freely mingle and cooperate in trade together.

Personally, I have taken the individualist, competitive approach in my work. I have worked for many employers, given each one my best efforts, but stayed within the type of work I could truly enjoy. I acquired a breadth of experience far greater than I could have found with one employer, and found that each time I left a job, I was qualified for a greater choice of jobs than the time before. In an inflationary economy, I have twice taken significant pay cuts to move to a new job. Each time I felt that I would be happier with the move, and I was.

In a free market, there is a place for each individual. Now, where can I find a truly free market?

ECONOMICS IN ONE LESSON

June 25, 2010

ECONOMICS IN ONE LESSON

The best book I know of to learn the essentials of free market (Austrian) economics is: “Economics in one lesson” by Henry Hazlitt. It is written in plain English without jargon, graphs, charts, statistics or math. Even I can understand it. I believe it is essential that we all understand economics, for it is in this battlefield that governments rob us of our income, wealth, and freedom. The book is available at http://mises.org/store/ for $12

The book teaches simply that to understand any economic choice, it is necessary to consider all effects on all people, both short-term and long-term. This is not much of a problem for you and me in our own individual economies; we generally do it automatically. The problem arises in macroeconomics, when government intervenes with some law or ruling which affects many people. Most such interventions are driven by pressure from lobbyists for special interest groups who hope to benefit from a change.

Here are some government policy fallacies exposed and explained in the book:
Public works to relieve unemployment.
Taxes that discourage production.
Cheap Credit that diverts production.
Spread-the-work schemes.
Protective tariffs.
Mercantilism.
Saving the X industry.
Commodity price stabilization.
Price controls.
Rent Control.
Minimum wage law.
Inflation.
The assault on saving.

INTERVENTION

June 24, 2010

INTERVENTION

Why does our Government insist on tinkering with the free market economy? Don’t they trust us to handle our own affairs? Or is it just lust for power and wealth? Politicians have certainly increased their power through the years, ignoring all the limitations on Government power written into the U.S. Constitution. Politicians are also under pressure from lobbyists, pressure groups, and campaign contributors to intervene in the economy in their favor, or to support their pet projects.

But Government has really botched all interventions intended to improve our economic affairs. First, what they do to the economy violates our freedoms. Moreover, they never succeed in achieving their stated purpose. And, worse yet, they cause disastrous, unforeseen problems. But worst of all, with each failure, and each resulting problem, instead of backing off, Government blames the free market, and adds more interventions in a vain attempt to fix the problems that the earlier interventions have caused.

The free market gives each person the opportunity to achieve the maximum satisfaction with the means at his disposal. In the free market, every exchange involves two people, and each of them profits by the exchange. Each one has acquired something he wants more than what he gave up.

Any interference with the free market can only inflict a loss on one or both people, either by preventing the exchange, or by forcing it to be made on terms that harm one or both people involved in the trade. Government intervention can only reduce the satisfaction of the people affected.

When intervention blocks people from their own priorities, they will seek other ways to achieve their goals. People are ingenious at solving problems, and many will find unforeseen ways to get around these interventions, or to use the interventions in unforeseen ways to their own advantage. Many others will soon follow suit. Unfortunately, those who try to control the destiny of others always fail to foresee this. They always underestimate the ingenuity of man.

WHY FREEDOM?

June 23, 2010

WHY FREEDOM?

Here’s a philosophical question I’d like you to consider; we each tend to make judgments on the basis of several more or less fundamental philosophies. Which is most fundamental with you?

My list includes the following:
Religious law, the rules of your religion.
Cultural law: the rules and traditions of your cultural group.
Egalitarianism: Does everybody get “fair” or “equal” treatment?
Libertarianism: Maximum freedom for each person.
Utilitarianism: The greatest good for the greatest number.
The golden rule: Do unto others as you would have them do unto you. Live and let live.
If you have a philosophy that differs from all of these, please contribute a comment.

These fundamental philosophies tend to overlap more than they conflict. Of course, each person has his own interpretation of each of them. And it seems that many religions initially were dogmatic and claimed precedence over any philosophy.

I’m libertarian, but I try to justify liberty as the best solution to the requirements of all other philosophies. Is this necessary? Can liberty stand alone, fully justified without reference to any other measure of right or wrong? I’ll give it a try

Liberty, like the golden rule, is not imposed from above, but is a simple rule each individual imposes on himself; “I will not violate another person’s liberty”. Perhaps this is the foundation of common law. It is the self government which makes anarchy workable.

Within liberty, each person is free to belong to any group, religion, or culture, and free to give up some liberty to live by the rules of the group. However, he is still bound by the rule of liberty; he shall not violate the liberty of any other person.

Trade is essential to our survival if we are to sustain our present population. Within liberty, all trade is free, within groups, and between members of different groups. Liberty is the only framework which assures that all groups, cultures, and religions can live together in peace and prosperity.

MICRO VS MACRO ECONOMICS

June 22, 2010

MICRO VS MACRO ECONOMICS

Microeconomics is what you and I practice every day. We live within our means. We earn what money we can with our skills and effort. We try to spend it wisely on our most important wants. We save for a rainy day, to put the kids through college, and to build a retirement fund.

Macroeconomics is about the bigger picture: the sum total of the microeconomics of all the people and businesses in a city, county, state, or nation, or the whole world. It is only important as a guide for governments in their interventions into our microeconomics.

The interventions which affect our personal microeconomics are taxes, subsidies, money supply, credit supply, international trade agreements and embargos. All of these interventions shackle the free market, reducing the satisfaction of people’s wants.

The intervention with the most far-reaching consequences is the control of the supply of money and credit; it affects every sale and every purchase, and every choice between present wants and savings for the future. It is the cause of the business cycle with its eternal sequence of boom, bust, depression, and recovery.

If we had real money, we would have no more business cycles. We could save for the future with confidence that our nest-egg wouldn’t evaporate in inflation.

If we abandoned all the other interventions as well, there would be no need for macroeconomics. If then we each live within our means, the total amounts of balance of trade, exchange rates, and such would be unimportant. Prices would give us all the information we need to direct our efforts to provide our most urgent needs most efficiently.

DEMOCRACY ISN’T FREEDOM

June 21, 2010

DEMOCRACY ISN’T FREEDOM

We frequently hear the terms, democracy and freedom, used as if they were inseparable, or even synonymous. Certainly, democracy is a step away from monarchy. But remember, Adolph Hitler was democratically elected to run Germany. Democracy is no guarantee of freedom.

Freedom is minimal restraint on your choice to do anything you want in any way you want. The minimal restraint prohibits using theft, fraud, or violence against others, to assure maximum and equal freedom for all.

Democracy is a means of governing a group. Decisions are made by majority vote of the voters, which may or may not include all members of the group. Democracy can give a majority the power to tyrannize the minority. Unless all members are voters, a minority of members can tyrannize all others in the group.

To quote once again Ludwig Von Mises; “Government is the negation of freedom”.

Under freedom, voluntary members of a group may practice democracy. Within a democracy, freedom lives or dies at the whim of the voters.

So what is the best form of government? There are good arguments in favor of monarchy. So long as there is a real likelihood that dissatisfied subjects may depose the king, he will feel the need to allow maximum freedom to his subjects. Kings have learned that contented subjects are the best source of taxes to support the monarchy.

However, a king, wanting to secure his power, can do so by building a loyal power base, by granting lands (and peasants or serfs) to a hierarchy of loyal lords, and by granting monopolies (Guilds) to merchants, bankers, and tradesmen. Soon, instead of just the royal family to support, the king’s subjects are groaning under the burden of supporting a huge aristocracy and greedy guilds.
A dictator may be voted into power, but then his first priority will be to perpetuate that power. That’s why it’s not good enough to choose good men to rule us; power not only corrupts, but it is also addictive.

Let’s face it; government is the negation of freedom. Government is the enemy of freedom. If we want freedom, we must either invent a form of government which has no power, or abandon government altogether. We must seriously think about anarchy, how to establish it, and how to make it work.

For those who do not want liberty, for whatever reason, and feel that some form of government, or some set of laws, or some enlightened rulers can build a utopia, nirvana, or paradise on earth, by all means subject yourself to such a government. But leave the rest of us free; don’t try to rule over or tax us or our land or property. We’re busy making freedom work. But first, we must find ways to escape from existing governments