Sunday, February 26, 2012

On ObamaCare’s manipulation of markets

Imagine this:

Obama—”We need to bend the health care cost curve. I want the food industry to cut chocolate sales by 25 percent."

Industry—“But we would lose $100 million from the cutback.”

Obama—“Just raise the price of celery to recoup the $100 million.”

Industry—“Nobody will buy celery at the inflated price.”

Obama—“Not to worry. We'll impose a fine on any family that doesn't buy a sufficient quantity of celery.”

Sounds ridiculous, doesn't it?

Try this:

Obama—“A lot of sick people can't get insurance. I want the industry to cover pre-existing conditions.”

Industry—“But we would lose a fortune if we did.”

Obama—“Just raise the premiums paid by healthy people and sell more policies to those who aren't insured.”

Industry—“If we have to cover pre-existing conditions, healthy people won't buy policies until they're sick.”

Obama—“Not to worry. We'll impose a fine on any family that doesn't buy a policy now.”


[Thanks to Robert Levy in the “Cato Policy Report” (March/April 2010)

18 comments:

Asher Bond said...

The dollar seems like a pretty lame attempt to quantify value at this point.

Asher Bond said...

Besides it's a market, everyone is supposed to manipulate it if it's a free market.

Asher Bond said...

Next thing you know someone is going to say China is manipulating currency... as if there's an official global currency. (Sorry it's still not the U.S. dollar)

RDCushing said...

Quantify it relative to gold, if you wish to make the translation.

In the long run, free markets are not subject manipulation without the collusion of government power. What you are referring to as "a free market" is one subject corporatism and crony capitalism--which is exactly what ObamaCare turns out to be.

And, yes, China does artificially control the value of its currency on the world market--in a different way than the U.S. does via the Federal Reserve System.

Thank you for your comments.

Asher Bond said...

The best way to manipulate currency is to keep it in your hand. I often quantify value based on ideas and potential productivity, but that's perhaps a bias. I wear gold shoes and a gold watch, but only my dad owns gold in any significant way. What was the lesson about the gold standard? Why not diamonds? Why not silver? Do you think China is unfair in how they control their currency value?

Asher Bond said...

Also thanks for your response I enjoy this blog.

RDCushing said...

I really don't have a problem with what commodity is used as "the standard," as long as there is a standard. Gold or other specie metals have long--for thousands of years--been used as this standard. But pick another, if you like.

RDCushing said...

I don't think government manipulation of currency values is ever a good idea. But China is no more or less fair in their manipulation of their currency value than is the U.S. or the EU in the manipulation of theirs.

Asher Bond said...

I think government regulation of natural monopolies can be valuable and I consider federal currency to be a natural monopoly. I guess you could call this "government manipulation of currency" but I understand that many times the administrative overhead of government involvement costs everyone a significant amount.

Asher Bond said...

I think the Gold standard is perhaps the most universal standard historically... we got away from this international standard and liquidity changed from a global perspective.

Asher Bond said...

or did liquidity change, rather, from only a national perspective in many nations?

RDCushing said...

You and I will just have to disagree on fiat currency and the government's monopoly on currencies. We also must disagree that there is any such thing as a "natural monopoly." There are no "natural monopolies"--and certainly not in currency--or there would be no need for government enforcement of it. The government doesn't enforce the "natural" law of gravity, last I heard.

Asher Bond said...

Would you consider a railroad or telecommunications infrastructure to be a natural monopoly?

Asher Bond said...

I'm trying to assert that within the framework of government or mutual agreements of some sorts or consorts ... that it could be possible for a monopoly (in terms of one entity... being a government or something) naturally owns a shared infrastructure. I guess MUNI and Bart are examples I'm trying to use to make this argument. The scale of the economy is within the regional/local government's control based on a somewhat democratic process... but within the framework of politics or social contracts there's this natural monopoly or naturally monopolistic? How would you describe it?

Asher Bond said...

I'm leaving a lot of comments but don't intend to build a railroad next to your fine railroad.

RDCushing said...

No. I don't consider a railroad or telecommunications infrastructure to be a "natural monopoly." If it were, we wouldn't have competing entities such as highways, airlines, buses, bicycles or the internet, wireless, UPS, and so forth. There is only government interventions versus a free-market. There are no natural monopolies.

RDCushing said...

Neither MUNI or BART required government interventions. If they were economically viable, they would have been built anyway. If they are NOT economically viable, the taxpayers should not be burdened with supporting them.

Our local light-rail is built a huge cost to the taxpayer ($100 million per mile in round figures) and then runs by continuing to burn bales of taxpayer money (even though the politicians want everyone to believe it runs on electricity).

RDCushing said...
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