Obamacare—A Plan only a Government could Formulate

August 21, 2016

   Do not think about, write about or deal with  human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.

    Wherein we see that the Elite got together and decided what was best for the public. That’s what Elites do. The public had a different opinion.

An Insurance Giant Has Rung Obamacare’s Death Knell
Diana Furchtgott-Roth

American consumers figured out from the beginning that Obamacare wasn’t worth buying. Now insurance companies are wising up. Aetna is withdrawing from Obamacare exchanges in 11 states, following United Healthcare Group’s decision last April to leave 34 states. Which will be the next domino to fall?

In a well-functioning insurance market, such as for automobile accidents, insurance carriers craft countless plans to meet exactly the needs of millions of different individuals. Typically, only catastrophic unexpected events are covered, not the predictable oil changes. Automobile insurance is real insurance, and automobile owners as well as insurance companies eagerly participate.

Not so for Obamacare, which is not insurance at all. Under Obamacare annual physicals, which are predictable and routine, are covered without charge, but major surgery requires payment of a $6,000 to $12,000 deductible.

Like a Sinking Ship

Aetna spokesman T.J. Crawford said on August 16, “This is a business decision based on higher-than-projected medical costs that resulted in a second-quarter pretax loss of $200 million in our individual products, which we project will grow to in excess of $300 million by the end of the 2016.”

Insurance companies are making losses because fewer Americans are signing up for Obamacare than were predicted, and these Americans are sicker than average. Premiums rose in some markets by 20 percent in 2016, leading to more healthy people dropping out of plans or not enrolling, accelerating the financial imbalance. Premiums are expected to rise by a similar amount—or more—in 2017.

The Obamacare model is not workable.

Fewer than 13 million people signed up for Obamacare in the 2016 enrollment period, compared with the 22 million predicted by the Congressional Budget Office in May 2013.

Young, healthy people are not signing up in great numbers for the expensive policies, even with the threat of penalties. Insurance companies and politicians thought that the premiums from these young people, who do not use much health care because they are rarely sick, would be used to pay for the care of the old and the chronically-ill.

Rather, young people are either on their parents’ plans, or on employer plans, or going without insurance and paying the penalty.

So far Congress has not bailed out the insurance companies. Last year the Department of Health and Human Services moved $362 million to insurance companies to cover losses, rather than the $2.9 billion that they requested. The Congressional Research Service and the U.S. Government Accountability Office have ruled that a congressional appropriation is required before federal agencies can bail out insurance companies for their Obamacare losses.

That Which Cannot Last

The Obamacare model is not workable, as I wrote in a 2009 column. It requires an expensive, comprehensive plan that obligates participants to purchase coverage for maternity care even if they have finished having children, pediatric dental care even if they are childless, mental health coverage even if they do not need it, and drug abuse coverage even if they have never taken any drugs.

<insert>

     This is the kind of nonsense only the government would dare require.

Obamacare is collapsing as health insurance companies continue to withdraw from the exchanges.

People are not allowed to buy a simple plan that covers major illnesses such as heart disease, cancer, or falling off a bike in traffic. Furthermore, the deductibles—the amount that has to be spent before people can use the insurance—are so broad as to make coverage practically useless. For 2016, the average deductible for singles for the lowest-cost bronze plan is $5,700, and for families, it is $12,000.

That is why those who are on the exchanges are disproportionally sicker than average and have chronic health conditions that make them more expensive to insure.

Obamacare is collapsing as health insurance companies continue to withdraw from the exchanges. What then? Congress will either convert Obamacare into a public plan—such as Medicare for all—or repeal it altogether.

How Insurance Is Supposed to Work

The path to repeal and reform has been laid out by Speaker Paul Ryan and Republican presidential candidate Donald Trump. Both plans include returning flexibility to insurance companies over what plans are offered while insuring that once people are in the insurance system, they cannot be dropped.

When real insurance is outlawed, neither consumers nor insurance companies benefit.

Rather than hire the same academic consultants who designed the non-insurance program called Obamacare, the next administration would be well advised to listen to the real expert on medical insurance: the American consumer. That consumer is very happy with a wide range of well-functioning insurance markets such as automobile insurance, home-owners insurance, and life insurance. So too are the insurance companies that provide the insurance, all without a dime of federal subsidy.

There is a simple logic to insurance markets. Let businesses freely compete to provide services to consumers with sensible regulations but without government support, and both consumers and insurance companies are well off. In contrast, when real insurance is outlawed, and only non-insurance can be sold, neither consumers nor insurance companies benefit. That’s where America is today.

<end>

    If one wants something done right, keep the government as far away from it as possible.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Power Teaching: How to Find Someone to Teach Your Child when the Education System has Failed.
Cui Bono–Cherchez les Contingencies

Regulate Something–Get Higher Prices

August 20, 2016

    Do not think about, write about or deal with  human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.

      Wherein we see that, in keeping with every thread of history, the more the government regulates and monopolizes an industry the higher the cost, some of it hidden, the scarcer the product and the worse the product. If politicians want to help us, they should stop trying to help us.

Why Luxury TVs Are Affordable when Basic Health Care Is Not
Richard N. Lorenc

Imagine this. You are feeling under the weather. You pull out your smartphone and click the Rx app. A nurse arrives in 20 minutes at your home. He gives you a blood test and recommends to the doctor that she prescribe a treatment. It is sent to the CVS down the street, which delivers it to your door in 20 minutes. The entire event costs $20.

<insert>

     What would the current cost be? 465?

Sounds nuts? Not so much. Not if health care were a competitive industry. As it is, medical care prices are up 105% in the last 20 years. This contrasts with the television industry, which is selling products that have fallen 96% in the same period.

Take a look at this chart assembled by AEI. It reveals two important points. First, there is no such thing as an aggregate price level, or, rather what we call the price level is a statistical fiction. Second, it shows that competitive industries offer goods and services that are falling in price due to market pressure. In contrast monopolized industries can extract ever higher rents from people based on restriction.

Consider each product or service shown. College is heavily subsidized, regulated, and exclusionary, and the costs are soaring. The textbook industry is hobbled by extreme copyright regulation, and can depend on captive buyers. Childcare is one of the most regulated industries in the country. Not just anyone can enter. Every aspect of childcare provision is controlled by the state.

On the other hand, software, wireless service, toys and and TVs (see: free trade) exist in relatively freer market settings. The price pressure is down.

It’s not that complicated, folks. If you want good services, good products, innovative ideas, and low prices, you need competitive markets. The more you control, the higher the prices and the worse the results.

<end>

    There you have it. The more the government is involved the worse everything gets, but, on the socialist positive side of the ledger, the cost is really high.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Power Teaching: How to Find Someone to Teach Your Child when the Education System has Failed.
Cui Bono–Cherchez les Contingencies

Liberal Assumptions about Economics so wrong their Opposites are Correct

August 19, 2016

    Do not think about, write about or deal with  human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.

     Wherein we see the liberal myths of government intervention being a good thing, benefitting everyone. All the government has to do is intervene and everything will be betterJust more examples of government magic.

The new “free lunch” economics

by Tyler Cowen on August 19, 2016 at 3:58 am in Economics, History | Permalink

From Scott Sumner:

    …what’s happened since 2009 involves not just one, but at least five new types of voodoo:

    1. The claim that artificial attempts to force wages higher will boost employment, by boosting AD.

<insert>

   Just give everyone a raise and we’ll all be better off. This is one of the ridiculous beliefs that allows government to say giving government workers more money will make us all better off.

    2. The claim that extended unemployment benefits—paying people not to work—will lead to more employment, by boosting AD.

<insert>

     Just stick money in anywhere and we’ll all be better off.

    3. The claim that more government spending can actually reduce the budget deficit, by boosting AD and growth. Note that in the simple Keynesian model, even with no crowding out, monetary offset, etc., this is impossible.

<insert>

     Spend more money and get even more back.

    4. More aggregate demand will lead to higher productivity. In the old Keynesian model, more AD boosted growth by increasing employment, not productivity.

<insert>

  This is a doozy. If more government spending, then higher productivity. The more government spending, the lower productivity.

    5. Fiscal stimulus can boost AD when not at the zero bound, because . . . ?

<insert>

     More money available, more aggregate demand.

    In all five cases there is almost no theoretical or empirical support for the new voodoo claims, and lots of evidence against. There were 5 attempts to push wages higher in the 1930s, and all 5 failed to spur recovery. Job creation sped up when the extended UI benefits ended at the beginning of 2014, contrary to the prediction of Keynesians. The austerity of 2013 failed to slow growth, contrary to the predictions of Keynesians. Britain had perhaps the biggest budget deficits of any major economy during the Great Recession, job growth has been robust, and yet productivity is now actually lower than in the 4th quarter of 2007.

<snip>       

    These assumptions, being government assumptions are all wrong, yet form the basis of government intervention throughout the Western World.  No wonder we’re all getting poorer.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Power Teaching: How to Find Someone to Teach Your Child when the Education System has Failed.”

Cui Bono–Cherchez les Contingencies

Regulate Until There’s Nothing Left to Regulate

August 18, 2016

   Do not think about, write about or deal with  human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.

     Wherein we see that the New Elite do well however the rest of us do.

The Regulatory Industry Is Growing Faster than the Real Economy

Matthew Andrews
James L. Gattuso

Want to work in a field that has more than quadrupled in size since 1960? Consider being a regulator for the federal government. Even during the last recession, the regulatory agencies were hiring.

In 2015, the U.S. government employed more than 277,000 regulators. To put that number in perspective, it’s 50,000 more workers than General Motors Co. employs throughout the entire world.

It has cost our economy over $100 billion during the Obama administration.

The Fourth Branch of Government

We’ve all heard of the regulatory agencies that constitute the “fourth branch” of government. It has cost our economy over $100 billion during the Obama administration.

But it wasn’t always like this. We haven’t always lived in a world where unelected bureaucrats could fine a man $55,000 for taking photos of his friend’s art project.

Thankfully, Susan Dudley from George Washington University in Washington, D.C., and Melinda Warren from Washington University in St. Louis, Missouri, have tracked the growth of federal regulatory agencies, allowing us to see how we got into the predicament we’re in now.

Using data from the annual federal budget, Dudley and Warren have recorded the number of federal regulators and the amount of taxpayer money given to them for each year since 1960. All monetary figures that they report are in inflation-adjusted 2009 dollars.

Tip of the Iceberg

While their data show federal regulation has exploded since 1960, it’s important to realize that they included only regulatory agencies that explicitly restrict business transactions in the private sector.

That means the 277,000 regulators they recorded in 2015 didn’t include anyone from the Internal Revenue Service, Social Security Administration, Defense Department, or the Centers for Medicare and Medicaid Services—even though these agencies account for roughly one-third of all final rulemaking actions in a typical year.

From 2014 to 2015, the economy grew by only 2.6 percent, while the regulatory business grew by 4.3 percent.

<insert>

     When the rider gets heavier than the horse, the horse dies.

However, even without these agencies, it’s apparent that the size of federal regulation is massive compared to what it once was. From 1960 to 2015, the amount of taxpayer money allocated to federal regulators increased by more than 1,800 percent, from $3.06 billion to $57.05 billion.

The growth of federal regulatory agencies has not been limited to any particular field or industry.

From 1960 to 2015, the budget of the Federal Aviation Administration increased from $241 million to $1.36 billion, the budget of the Comptroller of the Currency increased from $63 million to $1.13 billion, and the budget of the Federal Energy Regulatory Commission increased from $40 million to $286 million. Since its beginning in 1970, the Environmental Protection Agency added over 10,000 employees to its payroll.

Even when the rest of the country is doing poorly, the regulators do well.

From 2014 to 2015, the economy grew by only 2.6 percent, while the regulatory business grew by 4.3 percent. So if you’re looking for work and the private sector isn’t hiring, you can always try finding work as a bureaucrat in the industry that never shrinks.

<end>

      The cost of regulation goes far beyond the outrageous salaries and benefits paid to those of the New Elite, the government workers. The multiplier of real costs lies in the inefficiency, lost time and cost of compliance. It takes a lot to suppress free enterprise, but the government does its best.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Power Teaching: How to Find Someone to Teach Your Child when the Education System has Failed.
Cui Bono–Cherchez les Contingencies

Teach Black and Hispanic Students Better

August 16, 2016

Displaying

   Do not think about, write about or deal with  human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.

  Wherein we see that in the new media as in the old: Good news is no news.

Does Black Success Matter?
By Thomas Sowell

We keep hearing that "black lives matter," but they seem to matter only when that helps politicians to get votes, or when that slogan helps demagogues demonize the police. The other 99 percent of black lives destroyed by people who are not police do not seem to attract nearly as much attention in the media.

What about black success? Does that matter? Apparently not so much.

We have heard a lot about black students failing to meet academic standards. So you might think that it would be front-page news when some whole ghetto schools not only meet, but exceed, the academic standards of schools in more upscale communities.

There are in fact whole chains of charter schools where black and Hispanic youngsters score well above the national average on tests. There are the KIPP (Knowledge IS Power Program) schools and the Success Academy schools, for example.

Only 39 percent of all students in New York state schools who were tested recently scored at the "proficient" level in math, but 100 percent of the students at the Crown Heights Success Academy school scored at that level in math. Blacks and Hispanics are 90 percent of the students in the Crown Heights Success Academy.

The Success Academy schools in general ranked in the top 2 percent in English and in the top 1 percent in math. Hispanic students in these schools reached the "proficient" level in math nearly twice as often as Hispanic students in the regular public schools. Black students in these Success Academy schools reached the "proficient" level more than twice as often as black students in the regular public schools.

What makes this all the more amazing is that these charter schools are typically located in the same ghettos or barrios where other blacks or Hispanics are failing miserably on the same tests. More than that, successful charter schools are often physically housed in the very same buildings as the unsuccessful public schools.

In other words, minority kids from the same neighborhood, going to school in classes across the hall from each other, or on different floors, are scoring far above average and far below average on the same tests.

If black success was considered half as newsworthy as black failures, such facts would be headline news — and people who have the real interests of black and other minority students at heart would be asking, "Wow! How can we get more kids into these charter schools?"

Many minority parents have already taken notice. More than 43,000 families are on waiting lists to get their children into charter schools. But admission is by lottery, and far more have to be turned away than can be admitted.

Why? Because the teachers’ unions are opposed to charter schools — and they give big bucks to politicians, who in turn put obstacles and restrictions on the expansion of charter schools. These include politicians like New York’s "progressive" mayor Bill de Blasio, who poses as a friend of blacks by denigrating the police, standing alongside Al Sharpton.

<insert>

     The logic of public employee unions is “Public schools are better even when they’re far worse.”

The net result is that 90 percent of New York City’s students are taught in the regular public schools that have nothing like the success of charter schools run by KIPP and Success Academy.

That makes sense only politically, because it gains the money and the votes of the teachers’ unions, for whom schools exist to provide jobs for their members, rather than to provide education for children.

If you want to understand this crazy and unconscionable situation, just follow the money and follow the votes.

Black success is a threat to political empires and to a whole social vision behind those empires. That social vision has politicians like Bill de Blasio and Hillary Clinton cast in the role of rescuers and protectors of blacks from enemies threatening on all sides. If politicians can promote paranoia, that means bigger voter turnout, which is what really matters to them.

That same social vision allows the intelligentsia, whether in the media or in academia, to be on the side of the angels against the forces of evil. That’s heady stuff. And a bunch of kids taking tests doesn’t look nearly as exciting on TV as a mob marching through the streets, chanting that they want "dead cops." Black success has very little to offer politicians or the intelligentsia. But black children’s lives and futures ought to matter — and would, if politicians and the intelligentsia were for real.

<end>

   Teaching better than public education is easy. Setting up the situation in which it can occur is very difficult.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Power Teaching: How to Find Someone to Teach Your Child when the Education System has Failed.
Cui Bono–Cherchez les Contingencies

Government Union—High Absenteeism

August 15, 2016

Fyvush Finkel, who played an immortal, irascible teacher on Boston Public has passed at 93. R.I.P.

    Do not think about, write about or deal with  human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.

    Wherein we see the inevitable result of government unions. The data say high absenteeism. The union says the data are wrong.

 Lavishly Paid Cleveland Teachers Lead America In Days Off

Aug 15, 2016 by Daily Caller

‘If the teachers don’t come to school, how do you expect the students to come?’

The public school system in Cleveland, Ohio leads the nation in teacher absences.

A report from the National Council on Teacher Quality shows that public school teachers in Cleveland manage to miss an average of 15.6 school days each year, reports local NBC affiliate WKYC.

Just over a third of Cleveland teachers fail to show up for their taxpayer-funded jobs 18 days — or more — each school year.

A typical student who attends public school in the city from kindergarten through 12th grade will suffer the second-rate instruction of a substitute teacher for a number of days that adds up to a full year.

Despite their chronic failure to work, teachers in the Cleveland Municipal School District receive a handsome median salary of $76,652 annually, according to The Plain Dealer, Cleveland’s main newspaper.

<insert>

   Yet the union propaganda says teachers are underpaid.

“If the teachers don’t come to school, how do you expect the students to come?” parent Twyonia Cooper told WKYC. “They see that you’re not there so why should I be coming to school.”

Cleveland public schools say they aren’t happy about the highly dubious honor of leading the nation in teacher absences.

“We don’t want to be No. 1 in that area,” chief academic officer Michelle Pierre-Farid told WKYC. “We want to be No. 1 for student achievement.”

Pierre-Farid added that administrators have “looked at different ways” to try to drag the city’s teachers to school on something approaching a daily basis. Among those ways is an incentive program.

“You’re not going to be a great teacher if you don’t come to work,” she observed.

Nevertheless, the school district coughs up over $9 million each year to pay substitute teachers — in addition to the generous salaries and benefits packages full-time teachers receive.

David Quolke, the president of the Cleveland Teachers Union (and the vice president of the American Federation of Teachers), responded to the National Council on Teacher Quality study by arguing that it isn’t true.

“It was a pretty poor and blatant attempt to continue the anti-teacher rhetoric,” Quolke told the NBC affiliate. He suggested that Cleveland would be totally average for teachers failing to teach students if the study added professional development days.

<insert>

      Ah yes, professional development days. The only profession which gets days off to learn its craft. In my jurisdiction, these days are held on Fridays. Coincidence?

Pierre-Farid, the school district executive, suggested that the study’s numbers for teacher absences are accurate.

“That is a part of our data and, once again, we are not happy about that data point,” she told WKYC.

Cleveland’s teachers union has been threatening to strike — and miss even more school days at the expense of students — since the end of the most recent school year.

The teachers are mainly upset because they object to teacher evaluations — and having their lavish median salaries of $76,652 subjected to teacher evaluations. They also object to various incentives designed to improve classroom instruction and a policy which would allow the school district to fire taxpayer-funded teachers regardless of their seniority.

The union has rejected a contract endorsed by a federal fact-finder which endorses the pay-related evaluations.

The federally-recommended contract “is not acceptable to me,” Quolke told The Plain Dealer, Cleveland’s biggest newspaper, in May.

A study separate from the one conducted by the National Council on Teacher Quality shows that 27 percent of Ohio’s public school teachers fail to show up 10 or more days each year for work.

Ohio public schools typically have 180 school days each year. That’s 36 weeks. Thus, 27 percent of the state’s teachers take a day off just over once every 18 school days.

The average teachers in Cleveland fails to show up for work an average of once every 11.5 school days. Obviously, that’s roughly once every two weeks.

The National Council on Teacher Quality Washington, D.C supports better evaluation systems for public advocates teachers.

<end>

    Guaranteed job, union contract, lots of absences. One more reason the government should nver run anything.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Power Teaching: How to Find Someone to Teach Your Child when the Education System has Failed.
Cui Bono–Cherchez les Contingencies

When the Entitlement Hammer Comes Down, We’ll all be Under It

August 14, 2016

   Do not think about, write about or deal with  human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.

     Wherein we see, like many government programs, certain things are unsustainable. Many cities in the U.S. are bankrupt.

Sorry, Millennials: We’re The Ones That Are Going To Have To Rein in Entitlement  Spending
Matt Vespa

Denver, Colorado–We all know the ship of state is going to hit an economic iceberg called our entitlement state. Social Security and Medicare are going bankrupt. That’s a fact. At the annual RedState Gathering in Denver, University of Colorado Boulder’s Dr. Barry Poulson reiterated the usual problem: there’s been a growth in federal spending and a stagnation of incomes. Right now, our total debt is over 100 percent of GDP. Debt growth, coupled with economic torpor, spells disaster and Dr. Poulson said we have roughly two decades (maybe sooner) to turn this around. Baby boomers aren’t going to be the generation that solves this problem. They’ve failed. It’s now up to Millennials, who don’t have the best reputation regarding their contribution (and attitude) in the workforce, something that Compass Colorado’s Kelly Maher, who was on a panel with Poulson, touched upon when it began.

“I found it ironic that we we’re having a panel about Millennials at 8 a.m.,” she said, which drew chuckles from the crowd. Maher said she was an economy junkie, who wanted to be an economist until one of her college professors told her, “Kelly, what you don’t understand is that economics may be right, but politics always wins.”

<insert>

    Politics wins in the short run. The long run belongs to reality.

Well, that’s what shifted her from being an economist to winning the fight regarding freedom vs. free stuff. Everyone needs to get involved and start a conversation because the enormity of the economic issue we face with entitlements is biblical—and many people, especially young Americans, are ignorant of that. That means using various mediums to convey that message. Maher said to get on Facebook, Twitter, and Snapchat and use those social media platforms to launch an offensive against the dependency-based politics that seem to be firmly entrenched in Washington.

The time is ticking. Dr. Poulson added that Millennials are going to be the generation that could shoulder the brunt of the economic impact brought on by the unfunded liabilities from these programs that are just unsustainable. Spending and the adoption of fiscal controls must be adopted. Albert Downs of Generation Opportunity, who moderated the panel, said that young people are already seeing the writing on the wall. They’re saving earlier (starting at 22), they’re saving more than old people, and two-thirds know that Social Security will not be there for their retirement. Right now, 79 percent of young people are saving, 50 percent are saving five percent of more of their income, and 53 percent have specific benchmarks related to saving. In contrast, older generations start saving at 35, 37 percent have nothing saved, and only 38 percent have defined goals regarding saving in their financial plans. For young people, that’s great; the program will spend $106 billion more than it takes in through taxes.

On health care reform, Dr. Poulson drew Sweden as example of a socialized country that reformed its health care system, expanded choice, shifted health care decisions to the local level, and economized care. He said that we know what needs to be fixed, but politicians don’t get the message.

Maher said that this gets back to the messaging war of freedom vs. free stuff. She says that the new economy is another way to address the new economic reality regarding entitlement reform. The relationship between workers and firms is changing; more Americans have gone from employees to contractors. The new media consultant is one of the many new positions created from this shift. Taxes being withheld vs. having to pay them quarterly is now showing young Americans where their tax dollars are going. And it’s that change in the workforce in the relationship between government and Millennials that could induce many to ask questions about spending.

How do we implement change?

Well, don’t trust Congress to do the job. That’s one hope Dr. Poulson said everyone should shy away from, as government has promised much and done little regarding curtailing spending (no shocker there). He cited Switzerland, where referendums guide fiscal policy, they have balance budget amendments, and the people have a voice in controlling spending. We don’t have that here, but Article V states that Congress must hold a constitutional convention on amendments if 34 states agree. So, that’s one avenue for change.

Maher noted that at a local level, some states, like Colorado, have a Taxpayer Bill Of Rights (TABOR), which states that any tax increase, debt service, or expenditure that will likely increase the financial burden for residents must be voted on by the people. Legislation like this is a great first step, though Maher added that until young people turn out to voice their own economic interests, and don’t follow people like Bernie Sanders, we are not going to prevail.That’s a tall order, but it’s an assignment we’re going to have to do. It could be a smooth path to reform or one that brutally slashes benefits for millions because the house is burning down.

<end>

   Some government pension  programs need a 7.5 percent return on investments to achieve sustainability. When they get .68 of a percent, they pretend they’re still on track. It’s pathetic, but that’s government for you.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Power Teaching: How to Find Someone to Teach Your Child when the Education System has Failed.
Cui Bono–Cherchez les Contingencies

Socialized Medicine–Unsustainable

August 13, 2016

   Glenn Yarbrough, a singer whose songs enriched my life, has passed at 86. His latter years were made difficult by problems brought about by an operation. “Movin’ on”

   Today is the 55th anniversary of the Berlin Wall. Socialism never works, but academics still love it.

    Do not think about, write about or deal with  human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.

     The socialized medicine Canada enjoys is unsustainable. Newly-minted nurses get $800.00 for special shifts. Unions get to increase costs by featherbedding. All the salaries and benefits are far above what is reasonable. The politicians don’t know it, but this is unsustainable.

    National Post –Editorial

Our great health-care spendfests

A new report from the C. D. Howe Institute offers an illuminating look at the cost trends in Canada’s healthcare system, and should be studied carefully as Ottawa approaches negotiations with the provinces on a new health accord.

Canada, it notes, has undergone two distinct periods of restraint in healthcare funding. The first, in the mid-1990s, resulted from a serious fiscal crisis facing federal finances, leading to cuts in health transfers to the provinces and four years of reductions in per- person spending. The second, starting in 2011, has seen a milder decline in per capita spending and results largely from pressure on provincial budgets, rather than federal finances. Having borrowed themselves into a corner, the provinces are struggling to make ends meet, and health care — as everyone’s biggest budget item — is feeling the effect.

Bracketed by periods of rapid growth, the trend depicts a roller- coaster effect: when Canada feels prosperous, health costs shoot up. When the bills arrive, governments struggle to pull in the reins. It’s not an efficient or effective way to run a business, much less the biggest annual cost facing Canada’s provinces. C. D. Howe notes that both periods of restraint coincided with painful national recessions.

Cutting back on health care only makes a recession more painful on people, of course. In the 1990s, the biggest impact was on hospitals, which were forced to delay or reduce maintenance, upgrades or expansion programs.

Today the squeeze is once again impacting hospitals, but is being felt as well in drug costs, capital expenditures and “other institutions” such as long-term care facilities. Governments may portray their efforts as “holding the line,” but they result from years of poor management and inadequate cost controls, and have a very real effect on the level of care Canadians can expect.

Once the 1990s recession ended, spending shot right back up again, at an even faster rate than before. C. D. Howe expects the same will happen again should the provinces return to a period of reasonable growth. That’s because expenses are largely being avoided or delayed, rather than eliminated. Hospital upkeep can only wait so long, demand for long- term care is only likely to increase, in most provinces physician costs continue to rise, and governments operating in a period of record-low interest rates will face a much-tougher squeeze when rates inevitably begin to rise.

The provinces’ strategy has been to demand more money from Ottawa, yet again. Under a 2004 accord, the Canada Health Transfer has increased at a rate of six per cent a year, well above inflation, almost doubling in size over the past decade. The pact expired in 2014, but the Conservative government agreed to maintain the six-per-cent annual increase until this year, after which it is to fall to a minimum guaranteed level of three per cent.

Although the new rate is still well above inflation or anticipated growth, the provinces greeted it with cries of dismay and bitter accusations aimed at Ottawa. At a recent federal- provincial conference meant to address the issue, Quebec Finance Minister Carlos Leitao characterized it as “a sudden and significant deceleration,” even though it represents a real increase and the provinces have known it was coming for five years.

The Howe report warns against yielding to the provinces’ demands. “There is evidence to suggest that provinces find it easier to spend federal money than to spend the revenues they raise on their own,” it notes dryly. Provincial leaders need to answer to their voters when they increase taxes, fees or levies due to their inability to control their spending urges, but face no such pressure if they can wheedle the money out of the federal treasury rather than their own.

The Harper government recognized that danger, and was willing to endure provincial outrage in the interest of forcing the provinces to take real measures towards containing costs. The Liberals, however, have promised negotiations towards a new accord, even as they rack up annual deficits to pay for their many other promises.
It’s fair enough for federal Finance Minister Bill Morneau to meet with his counterparts and discuss a new deal, but the government must make clear that a resumption of sky-high annual increases is not on the table. Never- ending budget hikes are not the answer to the strains on health care. If they were, the strains would have disappeared long ago.

<end>

     We’ll spend as much as we can with not a thought for the future. It’s the government way.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Power Teaching: How to Find Someone to Teach Your Child when the Education System has Failed.
Cui Bono–Cherchez les Contingencies

 

Big Government, Big Money, Poor Food

August 12, 2016

Displaying

   Do not think about, write about or deal with  human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.

   Wherein we see that feeding the poor means feeding the rich.

Big Agriculture Is a Glutton  for Food Stamps
Bernadette Barber

People generally think that food stamps (now called Supplemental Nutrition Assistance Program, or SNAP) is a program for the poor. But the driving force of the program is an impetus to subsidize the rich, particularly big agriculture and other legally privileged food producers.

The program guarantees these massive corporations a market at taxpayer expense. And these same interest groups, while celebrating the right of consumers to use SNAP, oppose the rights of individuals and small businesses to produce food freely. All this was made abundantly clear at the Republican National Convention.

Up with Junk Food

During the RNC platform discussions, Maine state senator Eric Brakey introduced an amendment to a plank that would allow states to have the power to take junk food off the menu for SNAP participants. The amendment was designed to be deferential to states’ rights, the use of tax dollars, and good health.

Noel Irwin Hentschell of California opposed the measure, saying, “We are supposed to be the party of individual freedoms, where people eat what they feel they need to eat… It’s not Republican.” Strangely, Hentschell’s concern for food freedom did not lead her to object to the federal raid of the Rawesome food private market that happened in her own town of Los Angeles.

Scott Johnson also opposed the amendment, warning that when we define things as junk food for purposes of restriction, we entangle retailers in a web of regulations. He noted that in his state of Georgia it was attempted and a problem arose concerning Oreos and chocolate covered Oreos. The former is considered allowable for SNAP and the latter is considered a candy which was unallowable. The measure was repealed after too much push back by retailers. It is also interesting that Coca Cola has a huge presence in Georgia and is a major snack food manufacturer.

Andy Puzder of California, CEO of Hardees, complained, “I hope we don’t become the party of the food police. This is something Bloomberg tried in New York and won’t be very popular with our voters.”

Talk about Policing Food

This is effective rhetoric. But factually speaking, far from consistently championing food freedom, GOP establishment politicians have a long history of violently policing food through draconian regulations against farmers, farmers markets, and any direct sales from farmer to consumer. Under the pretense of “food safety,” they have extensively criminalized fresh and local food production and sales.

For example, during the Reagan administration, the Food and Drug Administration (FDA) banned the interstate transportation of raw milk for human consumption. States have an uphill battle to fight on getting EBT cards accepted at farmers markets. USDA and FDA regulations vastly favor huge producers and processors at the expense of small, independent, and family farms.

Through heavy-handed policing and economically choking small producers, the Republican Party has long adhered to the industry’s wishes of destroying small farms and the cottage industries that branch from them: all this to favor a junk food industry that is slowly killing their constituents.

Cynthia Dunbar of Virginia agreed with the basic premise of the anti-junk food amendment, but believed it did not go far enough. She raised the constitutionality of the entire issue, saying, “there is no basis for the federal government to be funding welfare or regulating food consumption. It is not one of the eighteen enumerated powers within the constitution; therefore, it is reserved for the states and people under the Tenth Amendment.”

Senator Brakey wrapped it up with a strong argument: “These programs are supposed to be for helping people cover their basic necessities as they get through a tough time in their lives. They are not to enable people to live excessive or unhealthy lifestyles at the expense of the taxpayer. There is a big distinction to be made with someone spending their own money and spending taxpayer money that is designed to give people in poverty nutritional food. It is an abhorrent misuse of taxpayer dollars to let that money go to anything else.”

In a follow-up conversation with Mr. Johnson, president of Supermarket Bank, Brakey remarked that fulfillment of food stamp purchases are made through retailers because those retailers have efficient food distribution systems – much different than the original distributions through USDA channels of the past. Retailers must petition the government to be able to accept food stamps and receive a food stamp license. Modern updates have modified that for Electronic Benefits Transfer (EBT) cards. He also made the point that sodas are an allowable purchase on an EBT card.

Regarding Republican free market ideals, he said that although it seemed like corporate welfare, he welcomed tax incentives for grocery stores to move into “food deserts.” I asked him if he knew of any silver bullet national food solutions. He stated there possibly could be, but he was unaware of any. I asked him if he ever heard of the concept of food freedom, he replied no.

Who Controls Food?

It never occurred to me that food would be discussed on the national level at political conventions. I found that it is a major topic among many politicos. A “Great American Farm Luncheon” was hosted by major agribusiness firms and organizations to pitch their platform desires to the convention delegates. CropLife America president and CEO, Jay Vroom, was the Master of Ceremonies at this event. Many commissioners of agriculture from various states attended. Current and past members of Congress attended as well as the Agriculture Committee Chairmen from both the House and Senate and the House Agriculture Appropriations subcommittee chairman.

Those that sponsored the luncheon included the usual suspects, many of whom are some of the world’s largest privately held corporations.

<end>

     If you have government subsidies, you have corruption.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Power Teaching: How to Find Someone to Teach Your Child when the Education System has Failed.
Cui Bono–Cherchez les Contingencies

 

Want Higher Prices—Let the Government Run It

August 11, 2016

   Do not think about, write about or deal with  human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.


    Wherein we see that, although electricity costs less to generate, the government agency sells it for a much higher price. That’s government for you.

    National Post
    Ross McKitrick Ross McKitrick, Professor of Economics at University of Guelph, is Research Chair, Frontier Centre for Public Policy.
    Financial Post

Cheapest power, highest bills

THE MORE THE WIND BLOWS, THE BIGGER THE LOSSES AND THE HIGHER THE HIT TO CONSUMERS.

You may be surprised to learn that electricity is now cheaper to generate in Ontario than it has been for decades. The wholesale price, called the Hourly Ontario Electricity Price or HOEP, used to bounce around between five and eight cents per kilowatt hour (kWh), but over the last decade, thanks in large part to the shale gas revolution, it has trended down to below three cents, and on a typical day is now as low as two cents per kWh. Good news, right?

It would be, except that this is Ontario. A hidden tax on Ontario’s electricity has pushed the actual purchase price in the opposite direction, to the highest it’s ever been. The tax, called the Global Adjustment ( GA), is levied on electricity purchases to cover a massive provincial slush fund for green energy, conservation programs, nuclear plant repairs and other central planning boondoggles. As these spending commitments soar, so does the GA.

<insert>

    Green energy is the biggest component, but let’s not forget the rich salaries and benefits paid to those modern-day saints, the government employees.

In the latter part of the last decade when the HOEP was around five cents per kWh and the government had not yet begun tinkering, the GA was negligible, so it hardly affected the price. In 2009, when the Green Energy Act kicked in with massive revenue guarantees for wind and solar generators, the GA j umped to about 3.5 cents per kWh, and has been trending up since — now it is regularly above 9.5 cents. In April it even topped 11 cents, triple the average HOEP.

So while the marginal production cost for generation is the lowest in decades, electricity bills have never been higher. And the way the system is structured, costs will keep rising.

The province signed longterm contracts with a handful of lucky firms, guaranteeing them 13.5 cents per kWh for electricity produced from wind, and even more from solar. Obviously, if the wholesale price is around 2.5 cents, and the wind turbines are guaranteed 13.5 cents, someone has to kick in 11 cents to make up the difference. That’s where the GA comes in. The more the wind blows, and the more turbines get built, the bigger the losses and the higher the GA.

Just to make the story more exquisitely painful, if the HOEP goes down further, for instance through technological innovation, power rates won’t go down. A drop in the HOEP widens the gap between the market price and the wind farm’s guaranteed price, which means the GA has to go up to cover the losses.

Ontario’s policy disaster goes many layers further. If people conserve power and demand drops, the GA per kWh goes up, so if everyone tries to save money by cutting usage, the price will just increase, defeating the effort. Nor do Ontarians benefit through exports. Because the renewables sector is guaranteed the sale, Ontario often ends up exporting surplus power at a loss.

The story only gets worse if you try to find any benefits from all this spending. Ontario doesn’t get more electricity than before, it gets less.

Despite the hype, all this tinkering produced no special environmental benefits. The province said it needed to close its coal- fired power plants to reduce air pollution. But prior to 2005, these plants were responsible for less than two per cent of annual fine particulate emissions in Ontario, about the same as meat packing plants, and far less than construction or agriculture. Moreover, engineering studies showed that improvements in air quality equivalent to shutting the plants down could be obtained by simply completing the pollution control retrofit then underway, and at a fraction of the cost. Greenhouse gas emissions could have been netted to zero by purchasing carbon credits on the open market, again at a fraction of the cost. The environmental benefits exist only in provincial propaganda.

<insert>

    Statists just don’t like coal, regardless of the facts.

And on the subject of environmental protection, mention must be made of the ruin of so many scenic vistas in the province, especially long stretches of the Great Lakes shores, the oncepristine recreational areas of the central highlands, and the formerly pastoral landscapes of the southwestern farmlands; and we have not even mentioned yet the well- documented ordeal for people living with the noise and disturbance of wind turbines in their backyards. We will look in vain for benefits in Ontario even remotely commensurate to the damage that has been done.

The province likes to defend its disastrous electricity policy by saying it did it for the children. These are the same children who are now watching their parents struggle with unaffordable utility bills. And who in a few years will enter the workforce and discover how hard it has become to get full time jobs amid a shrinking industrial job market.

Electricity is cheaper to make than it’s been for a generation, yet Ontarians are paying more than ever. About the only upside is that nine other provinces now have a handbook on what not to do with their electricity sector.

<end>

    Anyone still believe that the government must be in charge of “essential services?” Government employees will benefit, favoured firms will benefit and you and I, benighted taxpayers, will foot the bill.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Power Teaching: How to Find Someone to Teach Your Child when the Education System has Failed.
Cui Bono–Cherchez les Contingencies


Follow

Get every new post delivered to your Inbox.

Join 155 other followers