ObamaCare and Model T Fords: Give Free Exchange a Chance

Who made more money and became a household name around the modern world: Henry Ford or the guy who started the Rolls Royce company?  (See, I have no clue who the latter is.) 

Now that Obamacare has been back in the news it is a good time to consider why Ford became so rich and renowned.  What's the connection?  When it comes to health care we reflexively assume it is a political problem and not an economic one.  Being that it is a heart an economic issue, what would be the best way to delivery affordable health care to 300+ million Americans who, presumably, actually want affordable health care?

Ford found a way to provide millions of Americans with something they wanted.  He dropped the price of an automobile from $850 in 1909 to $290 in the 1920s.  By "dropped the price" I mean he saw that  economy of scale and selling more cars to more people would make him more money so he decreased the cost of production through greater efficiency.  This profit mongering made the horseless carriage available to more and more people at a cheaper price.  

Ford operated in a vastly freer and broadly less government controlled environment.  Providing affordable automobiles to millions of Americans was also not a politically-charged endeavor wherein politicians demagogued the car industry at every turn and people assumed they had a "right" to not have to pay for one. There were no government subsidies, Motorcare, or Motorcaid getting in between Ford and his goal of delivering affordable and reliable Ts to his customers.   

In short, Ford did not have the government stopping him from providing Americans with what they want. 


For decades now the health care system has become increasingly entangled in cumbersome state and federal regulations and mandates.  Add to this efficiency-killer the insurance problem: for generations Americans have become accustomed to the third party model of paying for services.

Were Ford alive today and interested in turning his time, talents, energies, and capital towards providing Americans with more affordable health care he would have a much more difficult time delivering lower costs.  Actually given all the restrictions, regulations, government intervention, and insurance cartels provided by ObamaCare, he probably would not even give it a go.  Government is simply in the way.

The 2,700+ page health care law that will get piled onto all this mess (What could go wrong?!) will compound the very problems that have led to unnecessarily high prices in health care: increased bureaucratization, increased governmental command, and less consumer control.

So the Republicans have symbolically repealed Obamacare in the House.  That's nice, but how about publicly discussing that whole freedom in the market place thing that's worked somewhat well for us since the colonial days?  In every market that is unsubsidized and not controlled through the regulatory regimes in DC, Americans enjoy affordable and quality products and services. 

Milton Friedman makes the case:
   
Pro-freedom policies are a proactive, forward-looking approach to lowering the price of

health care.  Insisting on more central planning, corporatism, and government control of our lives is a turning back of the clock to the times that predate free markets and prosperity in modern society.   

We don't need to resurrect Henry Ford.  We need to resurrect the free market environment in which he made his millions by lowering the costs of a product Americans desired.  Now that's a progressive policy for health care. 

Think of Freedom of Religion and Speech, Then Keep Going

"Hence the familiar fact that the more the state 'plans,' the more difficult planning becomes for the individual."~~~F.A. Hayek  The Road to Serfdom
 
Most Americans dearly hold to their rights articulated in and protected by the First Amendment.  Put another way, few Americans would quietly abide the unwarranted government violation of the following:

• Not having a state-mandated religion
• Their right to freely worship or not worship God as they see fit without government intervention
• Speaking freely, with no state prevention or persecution thereof
• A free press, neither controlled nor manipulated by government
• The right to peacefully assemble
• The right to petition government for correction of government abuses

When it comes to our First Amendment "rights" we have little toleration for government meddling; this is a very good thing.  Our dogged adherence to these limitations on the power of government is almost like a political and cultural religion.  Here we are and there is government, and we correctly cry Thou Shall Not! at the appropriate times.

So why, then, don't we get all wrapped around the axle when government intrudes upon other very personal and private matters?  If we've so jealously fenced off our religion, speech, and press from the meddling of the state on the one hand, why are we so indifferent to state interference of our private, peaceful interactions on the other hand?

Every time government intervenes in "the market" it interferes and adversely affects you in an intimate way.  Why?  Because you are the market!  What else is "the market" but 300 million plus people making millions of decisions on a minute-by-minute basis and acting freely and cooperatively upon those decisions in pursuit of their respective self-interests?  This amazing process occurs successfully when people are free enough to make it all happen; conversely, every time government takes it upon itself to plan, manipulate, order, and coerce the market into prosperity the opposite of prosperity occurs---I give you the Soviet Union, Cuba, North Korea, and the United States during the Great Depression.

When government intervenes and places top-down decrees as to how goods are to be made, at what price transactions occur (like minimum wage laws), subsidies one producer and places other producers at a competitive disadvantage, bails out failing companies, and artificially affects the market forces and prices (which always go up--think of college tuition, health care services, and housing), the prices of goods and services have to match up to the actual costs involved and those costs go up.

And who pays for the increase in costs?  You, the consumer who is always on the receiving end of unnecessarily high costs reflected in prices and you, the taxpayer who has to fund the regulatory regime that continues to expand with the ever-expanding size of the federal government. 

If we were limited to the churches we could attend due to some government mandates would e sit by in quite acquiescence?  If government limited what we could say and when we could say it would we not be openly outraged?  If only we held all our liberties as dearly as we hold our right to free speech and freedom of religion. 

The federal government has the constitutional authority and responsibility to regulate interstate commerce but no authority, neither constitutional nor moral, to directly interfere with the workings of that commerce, that is, our free assembling cooperatively and freely in pursuit of our respective self-interests and---gasp!---profits.  Perhaps if such a restriction were included in the First Amendment and not Article 1 we'd jealously keep government out of our market affairs, too.

As they say in New Jersey, I'm not sayin,'  I'm just sayin'...

So What's So Wrong About Scrooge? A Free Market Perspective on "A Christmas Carol"

"The much decried 'mechanism' of the free market leaves only one way open to the acquisition of wealth, viz., to succeed in serving the consumers in the best possible and cheapest way."~~~Ludwig von Mises Liberalism: The Classical Tradition

You've probably watched it and you'll probably watch it again.  A Christmas Carol is looping on cable along with the other classic Christmas movies.  

Over the years I've watched the George C. Scott version several times.  Something always unsettled me about the story, and I just now can put my finger on it: the entire premise that Scrooge and his dead partner, Marley, did not provide good for their fellow creatures is just wrong.   The underlying theme is economically unsound and historically inaccurate.  It all adds to our general misunderstanding of free market capitalism. 

That theme?  Whenever we focus too much on our own material welfare we cause harm to or deprive others of good.

To this we can assuredly reply, Bah-Humbug!

The scene with the apparition of Marley, Scrooge's erstwhile business partner, sets this errant premise upon which the entire transformation of Scrooge takes place. 

Here is a clip of the scene:


Leaving aside the complete lack of Biblical evidence of Marley's quasi-purgatorial punishment (introduced, in all places, in a literary work constructed around the celebratory season of Christ's incarnation), think about what Marley conveys to Scrooge about his time on earth as a successful businessman of market enterprise:

"Business?!  Mankind was my business!  The common welfare was my business...The dealings of my trade were but a drop of water in the comprehensive ocean of my business!"

We are being told Marley's life of pursuing a profit and focusing his energies primarily therein neglected mankind. 


Bah-Humbug!  As Walter E. Williams says, if you want to help your fellow man go earn a profit providing them what they want and need.

Dickens' A Christmas Carol has been viewed as a rebuke of the industrial capitalism of the 1800s.  Marley's ill-founded remarks could easily be the reason for this view. 

Given that Marley and Scrooge's efforts took place during a relatively free period in English history wherein countless hordes of people were further removed from the hand-to-mouth existence that had plagued society for, well, ever, their business activities contributed a great deal of good to society, even if that good was not directly observed.  Dickens' novel takes place in Victorian England, a time when a burgeoning population had its material welfare provided by the workings of industrial capitalism.  That "comprehensive ocean" of business involved many thousands of unseen affects; a market, after all, involves more people, decisions, actions, and ripple effects than immediately meets the eye. 

Marley seems to believe his efforts and time were compartmentalized and not part of a larger whole out of which many thousands of positive economic activities took place.  In short, he focused on himself and thereby did not help mankind.  Since no one earns a profit in a bubble,  Marley and Scrooge got "rich" by devoting their time to facilitating one part of the larger mechanism of the market of satisfying the wants and needs of the consumers. 

And who were the consumers in Victorian England after which businessmen scurried to satisfy in their respective pursuit of individual wealth?  The masses of people who in the pre-capitalist times were doomed to life sentences of serfdom and beggary.  And the first thing the masses wanted were to no longer be masses of poor, wretched serfs.  (Indoor plumbing, leisure time, electricity, and cheese-filled hot dogs all came along later.)

In 2010 we consumers want new apps for our Apple I Phones; back then they wanted apples to keep from starving.  What's the difference between then and now?  Capitalism has continued to allow some of us to provide the rest of us what we want, resulting in unbelievable standards of living, in spite of all the government intervention.   

Mises reminds us:

"The greatness of the period between the Napoleonic Wars and the first World War consisted precisely in the fact that the social ideal after the realization of which the most eminent men were striving was free trade in a peaceful world of free nations.  It was an age of unprecedented improvement in the standard of living for a rapidly increasing population.  It was the age of [classical] liberalism." 

The movie ends with Scrooge merrily contributing to philanthropic ventures.  The narrator comments that Scrooge went on to be society's foremost benefactor and so on and so on.  That's all good but what is left open-ended is whether or not he resumed his business enterprises and continued to provide for a common good not immediately seen and tangible.  If he quit cold turkey under the assumption he could do more good by dissipating his accumulated wealth for philanthropic good before his eyes, much unseen good would have been withheld from society at large.

And if that were the case, Scrooge well deserves our hearty Bah-Humbug!

Video: Whose Property Is It, Anway?

"Side by side with the word 'property' in the program of [classical] liberalism one may quite appropriately place the words 'freedom' and 'peace.' "~~~Ludwig von Mises  Liberalism: The Classical Tradition

Have you ever wondered if your property is, well, actually your property?  Silly question, right?  By definition, if something belongs to you that something is your "property"; the word, "property" denotes ownership by someone somewhere.  So the phrase "your property" is somewhat redundant, a bit like "wet fish."

All fish are wet so why, then, are you being asked to doubt ownership of your property?  

Because pundits and politicians are talking about income and estate taxes!  I've found people generally do not think of their income and their estates---the products and fruits of their labor, time, and talents---as their property.  Your income is your property; it is the monetary compensation of your time and efforts.

Our vote-fishing representatives in Congress never refer to your income as property.  If they were to refer to property as "property," they would have a terribly difficult time explaining why you are being permitted to keep x% of your property versus y% for blah, blah, blah reasons.  Chances are their reasons would come across as thinly-veiled demagoguery. 

More difficult still would be the job of justifying the noxious and logically flawed premise that underpins the income and estate tax. That premise?  If government has a moral right to 1% of your property it has a moral right to 100% of our property.  All the public wrangling is simply about numbers and details.

Consider all the political claptrap that orbs around the income tax debates as you view this commentary by Brit Hume.  And this holiday season, please don't thank your government for the gift of your own property, whatever the tax schedule for 2011.

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It's The Market, Not a "Sector"

"Human society is an association of persons for cooperative action."~~~Ludwig von Mises,  Liberalism: The Classical Tradition  

Talk of the "private sector" is just irksome.  When I hear it tossed around I wince, much when the phrases a whole nother, suposebly, or anywho crops up within earshot.  Fingernails down a chalkboard would be an euphonious melody if said fingernails were raking and slashing these phrases on the chalkboard, starting with "private sector." 

There is no such thing as a "private sector" of the economy.  The phrase implies the economy has parts and that private free enterprise is just one part of the overall economy.  Further implied is that the economy would be incomplete or unbalanced if "the private sector" was responsible for all economic activity.

Private enterprise and the market---you, me, and every other individual voluntarily participating as producers, consumers, and savers---is the economy.  The market is the sum total of the free actions of individuals who participate and contribute to its existence and movement.  Without individuals seeking their self interests there would be no market.  This is no mere sector of the economy. 

(Did one day, deep in the past, government authorities somewhere declare, "Let an economy come forth from nothingness, and we shall determine which sector will be private"?  Or did individuals, respectively seeking their own self interests and making mutually beneficial transactions voluntarily cooperate themselves, and thus their societies, out of hand-to-mouth existences?) 

Furthermore, when individuals voluntarily participate in the market, of which they are by definition a part, they can only contribute to the the economy.  By contrast, when government "participates" in the economy, it, by definition of being outside the market that is had nothing to do in creating, can only interfere with the operations and voluntary interactions of individuals, that is, the market.  And when it interferes, it does so using the force of law and regulative coercion, something individuals in the market cannot do, minus the legislative assistance of the government.  (Think of GE lobbyists stealthily working for Cap and Trade legislation.)

Basically, individuals create wealth, therefore economic activity.  Government confiscates, retards, and interferes with wealth creation, therefore creating uncertainty and instability in the economy.  These two mutually opposed entities cannot therefore constitute two sectors of the same enterprise.  There is the market and there is the government. 

Yes, government has a role in the economy, but that role is always from outside, hence its role is interference. How much interference is desirable, just, counterproductive, etc. is a matter for another time.  One might even say it is a matter for a whole nother Chalk Talk.