French Socialized Health Care Struggles

France is experiencing problems with its government run health care program. Similar problems may plague a US system if Obama’s health care reform plans are passed

Financial Regulation

The Obama administration, and some sections of the public, have an obsession with regulating the financial world. Their desire to do this stems from the belief that it is the financial industry which holds the blame for “creating” this recession through its boundless greed. To people like these Wall Street is home to wizards and magicians who watch trend lines and grow money. Finance is a complex industry, its fast moving, uses a different language, and is often seen as a lecherous career path in which greed rules the day. This last assumption is particularly worrisome, because few pay attention to the necessity of stock and bond trading or its impact on the macro economy.

I believe it was villain Carmine Falconi in Batman who said “you always fear what you don’t understand.” No where is this more true than in finance. What do you do with things you don’t understand, what do you do with things you fear? Well, you try to get rid of them. The public wants to regulate Wall Street because they want the risk of trading removed. They want their cake and to eat it too. They want the perceived easy profits and glamour with out the risk of loss and ruin. Government liberals want to regulate Wall Street because they believe it is the epitome of corporate greed, a shadowy black world where traders make huge profits at the expense of the common worker.

The market shouldn’t be totally void of regulations, it is my belief that the government exists to protect life, liberty, and property, and certainly the government has a role in preventing fraud and abuse, but shakling the institutions which fund fledgling businesses and drive the innovation of the country is a serious mistake! Risks spawn rewards, the greater the risk the greater the reward and the greater the loss. America rewards calculated risk with uncalculable wealth, and punishes foolishness with ruin.  This is the best regulation method.

Cash for Clunkers

I’m curious about how this bill is going to save the US auto industry–The Big Three that is.   After all, it is foreign owned companies that are producing the most fuel efficient cars–Honda, Toyota, etc.

Additionally, the bill does not allow people to trade in cars that are older than 25 years, cars which use the most fuel.

The fact that “efficiency” must be subsidized through the government ominously indicates that the fuel-efficiency is not a driving factor in new car purchases.  Products should not need government subsidies; the quality of a product should speak for itself.

Health Care Reform

HHS Secretary Backs Public Health Insurance

There are a few important points to take from this Wall Street Journal article.

1.  Sebelius says,  “In many areas in the country, the private market is monopolized by one carrier.” This is misleading.  The McCarran-Ferguson Act of 1945 allows state governments to regulate the business of health insurance.   While “monopolies” may exist in many markets, it is not because of lack of competition; in actuality, the over regulation of an industry prevents small start-up firms from competing.  Instead of implementing a massive new government program which will cost billions, if not trillions of dollars, law-makers could rescind the McCarran-Ferguson act and open up markets to free-market competition.

2.  Ms. Sebelius says  “A new public health insurance plan would benefit consumers by …holding down costs.” Historically, public health insurance has failed to curb cost growth. Both federal health plans–Medicaid and Medicare–experience cost growth similar to private sector cost growth.

Over 16% of the U.S. GDP is spent on health care, double the amount of other industrialized countries.  Implementing a new government health insurance program does not seem like a viable method of providing health care.  A new insurance program would likely result in healthy individuals–the majority of the population–paying for the less healthy.  Additionally, if an individual is not responsible for their own health care costs–i.e. they get free health care on tax-payer’s dollars–there is little incentive to use services wisely.

Fooling citizens into believing the only avenue for health care reform is through the federal government is treacherous policy.  There are many free-market options which promise to lower costs; Health Savings Accounts, HMOs, and Regulatory reform are a few such solutions.  Additionally, America needs to rethink the way it provides care.  Reform focused on preventive medicine and public health campaigns could reduce unnecessary surgeries.

The problems are many, but the best course is to engage in a robust discussion about all the options.  Misleading the public into expanding the federal bureaucracy unnecessarily is dishonest.

Summer Spend-a-thon

The Obama White House has indicated that 600,000 jobs will be created this summer by ramping up stimulus spending.

The new summer strategy is aimed to quiet Republican criticism of the February stimulus.  Republicans charge that unemployment has continued to grow,  reaching a new high in May.

The Obama strategy is counterintuitive.  Many economists believe the trough of the recession was reached in mid March.  Though aggregate unemployment numbers are the highest in roughly 30 years, May’s unemployment statistics were lower than April’s.  This would indicate that the recession is easing, especially considering that employment is a lagging variable in economic calculations.

Why then, should we spend more?  If the economy is already showing signs of recovery what is to be gained by speeding up the pace of stimulus spending?  The answer is political advantage.  Only a small portion of the stimulus funds have actually been spent.  American voters have a notoriously short memory and many do not understand economic theory.  When things get better, it is easy to assume that the incumbent president and legislature are responsible.  It is sound political strategy to keep spending making any gains appear to be caused by the Democrat’s stimulus bill.  Therefore, the current administration wants to get as many funds out the door as possible.

The numbers do not add up.  The economy has started to improve, few stimulus funds have been spent, and the jobs the Obama administration promised during the campaign are failing to materialize–150,000 jobs created since February.

Wise policy would be to continue to spend at the same rate–or even slow down!– and if the economy recovers in the next few months, refund the money, or save it!

C-130J

This is a great contract win for Lockheed.

The Airbus A400M has been stumbling along through R & D now for several years with many costly setbacks and reworks.  The A400M project is like the European equivalent of America’s VH-71 presidential helicopter.

The C-130 is, and has been, the in theatre workhorse for the American military for decades.  It is one of the sturdiest and adaptable airframes in operation.

Aviation Innovation

All I need is a bit of hope hope hope, and some change change change…

The state of American air traffic control is perilous.  GPS in planes sounds like a pretty great idea!

Of course, I would like to see the free-market implement the technology, not a government regulation.

Quick and Clean

Monday marked a monumental event in American economics.  GM went bankrupt, the US and Canadian Governments bought in in a big way, and the Obama administration indicated its strategy to revive the company and reprivatize it quickly and cleanly.

Now, if I were Obama and if I were serious about getting GM back on its feet quickly, I would be reassuring the country that privatization is my first priority.  Instead, Obama takes a massively expensive trip to NYC with Michelle, and then leaves for the Middle-East.

Without a an “exit-strategy”, when will the government leave GM?

What are you thoughts?

You know its bad when…

Germany Blasts ‘Powers of the Fed’

The Germans–the inventors of social-corporatism–rebuke the U.S. and E.U. central banks for laying the groundwork for another financial meltdown…

Let GM Fail!

GM has long been hampered by laws, unions, and management trouble.

In the face of impending crisis, the current administration embarked on a plan to save the auto giant, which coincidentally  allows the company to quickly downsize; shedding debt, renegotiating contracts, and closing plants.

If the way to making a leaner, more manageable company is to allow it to bypass the constraints that have hampered it, it would seem that this should be the first available option to the company.  In other words, if it is laws, unions, and bureaucratic meddling which hamper the success of a company, why not rid the industry of these problematic interferences?

Many in America believe the free market has failed.  They point to the current recession and global credit crunch as examples.  However, it is impossible to say the free-market has failed when in reality, the market is not free.

Various actors influence and prohibit the market from being truly independent and dynamic.  Take the current GM situation as an example.  Instead of allowing a poorly performing company to succumb to its own poor performance and fail, billions of tax dollars are being pumped into a company that cannot guarantee it will be better off after the government bailout than before.

Government intervention is not the answer.  A corporation like GM is run by its board of directors and its stock holders.  They should be the controlling forces behind a restructuring, not the Federal Government.  By taking over GM the government enters uncharted territory.  As citizens we have no promise–other than Obama’s word–that the government will revive GM and leave the scene.

Tragically, I can see no quick exit for GM.  Congressional representatives will find it all too easy to continue their involvement in GM to ensure jobs, money, and commerce flow to their districts.  If GM does not quickly right itself, more money will be pumped into it because the current administration will not want to fail to keep GM viable.

Today should have been the end of an automotive giant; instead GM has entered a coma.  The doctors will keep GM breathing, pumping money into its lungs, checking its pulse, and giving transfusions of new leaders.   When will GM die? Maybe soon, but it will consume billions of dollars in resources before its final collapse.