The Rules

These are the rules.  Learn them.  Follow them.  There will be a test.  It's called life.

You don’t create wealth by taxation.  Taxation just takes wealth away from some and gives it to others.  Redistribution is not creation.

You get more of what you subsidize and less of what you tax.   If you tax those who create wealth, you get less wealth creation.  If you subsidize illegitimacy and poverty (which go sadly and frequently together) you get more poverty and illegitimacy.  In other words, if you punish success, you get less success.  If you reward those who do not contribute their hard work, you get fewer folks willing to contribute hard work. 

Wealth creation happens more easily and more often in a stable economic environment.  Before folks lay their time, effort, and money on the line starting a new business and creating new jobs, they need to know that the rules of the game will be fairly and predictably applied and that the government won’t be tilting the playing field against them or doing magic tricks with currency, like flooding the marketplace with fiat dollars, thus making every dollar of every person worth less and less.

The condition of an apartment tends to follow its price.  If, by some legislative connivance, you put a price-ceiling on an apartment in order to keep down its rent, its condition will go down to that price point.  Virtually every rent-controlled housing project proves it.  Rent control is the parent of squalor and danger, not thrift or great neighborhoods.

The fundamental building block of a society is the family, not the allegedly autonomous individual.  Whatever undermines traditional families and traditional family roles tends to undermine the society as well.  Poverty tends to circle around broken homes.

The key to financial success is now what it always has been:  work harder than those above you; save your money; invest your money; and keep your family intact.

Whether you are a family or a government, don’t spend what you don’t have; make a budget; stick to it.  Good governments and good families are characterized by prudence and self-discipline.  Learn the important difference between a desire and a need.

To act wisely, you first must know wisely.  You must think with your head, not your heart.  Good intentions don’t mend the matter of foolishness at all.   

A Review of John Taylor's "Getting Off Track: How Government Actions . . . Worsened the Financial Crisis"

         In his small and incisive book Getting off Track:  How Government Actions and Interventions Caused, Prolonged, and Worsened the Financial Crisis, John B. Taylor argues that, contrary to the period called “the Great Moderation,” which began in the early 1980s, monetary policy in the early 2000s became too loose, too easy.  This easiness led to the housing boom and, eventually, to the housing bust.  That policy, Taylor explains, was “essentially discretionary government interventions” (p. 3) and those interventions “deviated from the regular way of conducting policy” (p. 4).  “[B]y slashing interest rates . . . the Fed encouraged a housing price boom,” he says (p. 5).

         According to Taylor, other nations mimicked the Fed’s eccentric interest policies, which encouraged the problems we later faced to surface elsewhere also, in places like Spain and Greece.  Among the problems we eventually faced were falling house prices, delinquencies, and foreclosures, which had their expected deleterious effect on financial markets.   The bottom line, Taylor argues, is that a strong connection exists between monetary excesses and risk-taking excesses:  “the rapidly rising housing prices and the [initially] low delinquency rates likely threw the underwriting programs off track and misled many people” (p. 13).  But, as housing prices fell, folks began to wonder of it was worthwhile to continue making payments on houses not worth what was still owed on them.  Too many borrowers decided they were not, and simply stopped paying.  Government backed agencies like Freddie Mac and Fannie Mae instituted policies that made balance sheets even worse.  Securitization, meant to be a source of financial strength and stability, served more to undermine the whole system.  As is often the case with government programs, they were more a part of the problem than of the solution.

         Taylor argues that three types of government intervention served only to prolong the crisis rather than to cure it: (1.) the term auction facility, introduced in December 2007, designed to increase the flow of credit; (2.) temporary cash infusion of 100 billion dollars to the American public in February 2008 intended to jump start consumption and spending, but which was hoarded instead; and (3.) cutting interest rates, which led to a decline in the value of the dollar (pp. 19-24).

         But, as Taylor tells it, the crisis not only got prolonged, by October 2008 it got worse.  To Taylor, it worsened “by a factor of four” and became “a serious credit crunch with large spillovers” (p. 25).  TARP’s $700 billion, Taylor says, were by no means adequately overseen, the entire bill reaching only to 2 ½ pages, thus lacking sufficient oversight, restrictions, and structure.  The result of this lack of foresight and structure was widespread public uncertainty and the reluctant and timid investment that normally follows it.

         After delineating what went wrong, and why, in the 2008 financial crisis, Taylor examines what went right in the two decades preceding it.  “Getting economic policy on track,” he says, “is never easy” (p. 31).  Accomplishing it included “changes in monetary policy,” (p. 35), crisis prevention, primarily by means of a flexible exchange rate and predictability of policy (p. 39), and preventing the forces of globalization from reversing previous local accomplishments (p. 43).

         To Taylor, because banks and government misdiagnosed the problem as one of liquidity rather than uncertainty, their policies not only proved ineffective but actually prolonged and deepened the crisis.  The Fed provided liquidity to ease the problem, yet the financial cancer grew.  Not all economists fell into the diagnostic trap.  Some saw the real problem early on; Taylor was one.  His colleague John Williams was another.  They focused on three things, Taylor says: (1) credit default swaps -- the probability of banks defaulting on their debts; (2) Libor-Tibor spreads -- roughly a counterparty risk measurement between yen and dollar based banks; and (3) Libor-Repo spreads -- a comparison of risk between secured and unsecured lending in the interbank market (p. 53-55).

         Taylor affirms strongly that we “should base our policy evaluations and conclusions on empirical analyses, not ideological personal, political, or partisan grounds” (p. 63), seeming not to recognize the ideological basis of believing that such data and analysis can ever constitute (or arise from) an ideology-free zone.

         Taylor rightly warns us against thinking that frequent and large government actions and interventions are the only answer to our current economic problems” (p. 62).  They are not.  By thus declaring himself, Taylor stands against both George W. Bush and Barack Obama, Bush’s successor.  The former said that he abandoned free market principles in favor of government intervention in order to save the free market.  The latter said that only government can break the vicious cycles that cripple our economy.

         In opposition to them both, Taylor declares (and this quotation serves as a suitable summary of his book’s argument:  “Government actions and interventions caused, prolonged, and worsened the financial crisis.  They caused it by deviating from historical precedents and principles for setting interest rates that had worked well for twenty years.  They prolonged it by misdiagnosing the problems in the bank credit markets and thereby responding inappropriately, focusing on liquidity rather than risk.  They made it worse by supporting certain financial institutions and their creditors but not others in an ad hoc way, without a clear and understandable framework” (p. 61).

         Taylor’s quotation above obviously shows that he is not against all government involvement in such matters.  Perhaps he ought to be more so.  But at least he is not dazzled by the expertise of the reputed experts, whose track record says that they are better at getting things wrong than at getting them right. 
        One last point:  the question and answer session at the end of the book is so good that it alone is worth the price of entry.                 

MyRA: The Ugly Truth

        When I want to know what will happen in the wake of a particular piece of legislation, I don’t listen to those who proposed it or who voted for it.  That just tells me what they want me to think.  I don’t let them tell me what to think.  Neither should you.

         When I want to know what will happen with a particular piece of legislation, I don’t bother with the stated intentions of those who proposed it or who voted for it.  Good legislative analysis is not rooted in good intentions.  I don’t care a whit about their stated intentions; that’s just acting; that’s just a pose.  I care about results.  I look at what actually has been done in the past with legislation of this sort.  History, not histrionics, tells the tale.

         When I want to know what will happen with a particular piece of legislation, I don’t even read it.  The executive branch, the legislative branch, and the judicial branch do not think themselves constrained by mere words.  They are not led around by legislative language.  They lead legislative language around.  (Hint:  remember John Roberts.  He is the Chief Justice.  He can change laws by judicial fiat in order to make them Constitutional in ways he sees fit.  Remember Barack Obama.  He thinks the three branches of government are himself, his pen, and his phone.)  No, those folks aren’t constrained by language.  They make language do whatever they wish, and have done so for decades.   You remember:  “It all depends on what the meaning of “is” is."  So, why should I feel constrained by legislative words when no one else does?  I don’t care what it says.  I care what they’ve done with similar language and legislation in the past.  I read them, not the text.  We do not live under the rule of law but of law twisters.

         This is not cynicism; it’s realism.  Actually, it’s both.  Cynicism is where realism leads.

         So now, MyRA:          

         MyRA is the worst political idea I've heard in many years.  It's government applying the alleged pseudo-wisdom behind Obamacare to your retirement:
         "Like your IRA? You can keep it.  Like your investment counselor, you can keep him.  Period."

         Sounds familiar, right?  You already know the words and intonations by heart.  You can play them over and over at will in your head.  You already know the rule of thumb -- the government makes promises and does not keep them.  It works like this:  When you lie to Congress, it’s a crime.  When Congress (and the president) lies to you, it’s politics.  Get it?

         So, how did they talk and what did they do the last time they tried to manage our retirement, with Social Security?  They argued that everyone needed to be secure.  They would supply the security.  They said that folks couldn’t be trusted to save money for their own retirement.  They said that individuals and their families could not be trusted to make their own way through life.  They said we all needed government to do it for us.   They’d take money out of our paychecks and save it for us.  They’d keep it securely in a lockbox so that when we needed it, it would be there.  And we were comforted.

         Then somebody picked the lock.  Like crooks, like thieves in the night, somebody snuck into your lockbox, took all your money, and spent it on their favorite political items.  Shockingly, the “somebody” who stole and spent all your locked up retirement money turned out to be the same government folks who said they’d lock your money away.  They did.  They locked it away from you.  They spent it.  But they left you a chit, an IOU.  No, really, they did.  There really are paper chits promising to pay.   Really.  It’s guaranteed.  How do I know?  The government said so.  The crooks promised.  They left a chit.  You doubt a chit?

         The money they swiped went for all sorts of keen projects, like shovel ready jobs that either didn’t exist or were not needed; shovel ready jobs for which there were no shovels and no jobs.  We can only hope, even while we deeply doubt, that they got your money’s worth.

         But you’ve got a chit.  Be happy.         

         Do not ask yourself this troubling question:  If they are trying again to fix my retirement, then doesn’t it mean that they failed to fix it last time?

         Yes, that’s exactly what it means.

         And don’t ask yourself this question:  How well did the government do wiping out poverty when it declared a war on it?  If you do ask that question, here’s your answer:  They lost.  They’ll do as well wiping out your poverty in the future as they did wiping out poverty in the past.  Look at Detroit and see your retirement’s urban metaphor. 

         Regarding MyRA, I’m telling you this:  Pay no attention to what they say or write.  It’s all part of the ploy.  “We’re the government.  We’re here to help you.  We’ll take your money and we’ll manage it for you, or else we’ll pick someone to do it for us.  We’ll make sure that we reduce the risk of loss for you.  Trust us; don’t trust market volatility.  We’ll guarantee results.  We’re the government.”

         So, what sorts of companies does the government invest in?  To date, they’ve invested in at least 34 green energy companies, 17 of which have already gone bankrupt, despite the enormous influx of government, i.e. taxpayer, money:  Evergreen Solar (25 million dollar loss), Solyndra (535 million, or a million dollar loss for every Senator and Representative in Congress), Sun Power (1.2 billion), Fisker (529 million), and A123 Systems (279 million), just to name a few.  With genius investments of that sort, you can forget about Charles Schwab or Edward Jones.  You don’t need them.  You’ve got an ideologically deranged community organizer making your investment decisions.  You’ve got the government, and you’ve got those companies they will pick to handle investments.  Who will they pick?  Probably those companies like AIG, into which Washington already has its hands deeply plunged, companies so bad at investment and foresight that they had to be bailed out, and who owe their life to government.  They will play along.  I haven't seen hands that deeply involved since I witnessed a heat transplant.  The government's hand-picked lackeys will direct your money wherever the politicos desire.  Don’t worry.

         Even though government bureaucrats are human beings, and even though human beings are creatures of incentive, don’t bother yourself to think about the incentives this program entails.  Ignore this:  With private investment companies, the incentive is for you to stay alive and stay invested.  They get their money when you stay invested year after year.  When you die and your money is withdrawn, their profit dies.  With government-run programs, however, their incentive is for you to die sooner so they can keep your money.  They can’t give it back to you because it’s already spent.  If they give you money at all, it’ll come from one of two sources, both bad:  (1) higher taxes, which means you pay you to replace the money government confiscated and spent, or (2) inflated money, the value of which has been drained by fiat dollars, which they are printing 24/7.  Inflated money is also a tax.  It’s the unspoken tax that shrinks every one of your dollars every moment of every day.  And if the money itself doesn’t materialize, they will give you a chit.  But if they don’t really want to give you either money or a chit because you are a Tea Party constitutionalist, they won’t pay.  Either they’ll sick the IRS on you and make you pay, or (because they control health care) they have the means to their desired end, which is not paying you by removing you from the scene, once you get old and more expensive.  Even when you die, your beneficiaries will not get all your money, much of which will be eaten up in various taxes and fees.  Remember, there’s even a death tax.  Dying isn’t free.  Dying won’t free you from Uncle Sam’s long arms.

         Even after you die, they’ll have lots of pet projects to fund and an unsustainable debt to pay off or to service with your cash.  Even dead, you will do the paying and the servicing.  OK, forget about paying off the debt.  They don’t really intend to pay it off.  All they intend is for you to cash in your chips.  And if you think government doesn’t kill its own citizens by the hundreds of millions, you’ve got a reading assignment:  R. J. Rummel’s Death by Government.

         Government will sell this bill of goods to you by convincing you that the market is too volatile to be trusted.  But if your investments are doing really well without the government, they know you won’t believe them and won’t want to give them your money, which, to them, is a problem.  In a prosperous market place, what’s an Alinskyite like Obama and his ilk to do?

         Create a crisis, that’s what, a really big one, which they determine will not go to waste.  If you think government doesn’t create financial crises and make them worse, you have another reading assignment:  John Taylor’s Getting off Track:  How Government Actions and Interventions Caused, Prolonged, and Worsened the Financial Crisis.   In the wake of the government’s manufactured crisis, they’ll promise to protect you against losses, against the evil wiles of the greedy fat cats on Wall Street, the notorious 1%, whom they will blame for what went wrong.  Once enough folks are sufficiently scared that they agree to participate in the government program, government will move forward.  “Forward” means that what was sold as voluntary will be managed as required.  You will participate because you must.  You will give your money over, one way or another.

         They’ll guarantee good results, even if they can’t guarantee to put up a working website.  They’ll protect you.  They’ll make so it’s always a bull market.  And if they fail, they’ll give you a chit.   Bull chit.

Government and the Rising Cost of College

In his speech in Buffalo, President Obama declared his intention to bring down rising college tuition costs.

His speech makes plain three things:  (1) He thinks rising tuition is caused by colleges; (2) He thinks government is the solution to the problem, not one of its chief causes; and (3) He thinks he knows how much tuition all colleges and universities ought to charge and, therefore, which ones are charging too much;

He is triply wrong:

(1) As everyone who ever studied economics ought to know:  All other things being equal, when the demand for a good or a service rises, its price rises as well.  By providing grants and low interest loans to millions of students, the government has driven up the demand for college enrollment dramatically, thereby driving up the price as well.  When colleges educate more students, they must build new classrooms in which to teach them, new dormitories in which to house them, new dining halls in which to feed them, new health facilities in which to care for them, new athletic facilities in which to keep them fit and entertained, and new parking lots for their cars.

Colleges also must hire new admissions counselors to handle their applications, new campus police to keep them safe, and new maintenance crews to keep them comfortable.

They also must hire new faculty members.  Those faculty members require competitive salaries, health insurance, retirement funds, research sabbaticals, offices, parking lots, and secretarial staff.  Like the faculty, the secretarial staff requires salaries, retirement funds, insurance, vacations, offices, and equipment.

Did I mention that a larger student body requires bigger libraries, more books, and more librarians?

What money colleges cannot get from donors to cover these crushing new expenses, they must get from students. 

Of course, government intervention and the rising costs it entails are not limited to the demands of expanding enrollment.  Government intervention also includes government regulations that tell colleges and universities whom to hire, whom to enroll, and what to teach.  If colleges do not comply, federal funds are cut off.  To avoid that cut off, institutions of higher learning must hire whole departments full of educational bureaucrats to implement, to assess, and to enforce government mandates.  Those departments of compliance must be housed and supplied.  The bureaucrats who administer them require salaries, retirement funds, insurance, and vacations, as well as expensive, well-equipped and air-conditioned office buildings in which to do their work.  If colleges opt out of hiring and housing teams of bureaucratic overlords to manage the rigors of government compliance, they run the risk of falling afoul of the laws, in which case they invite not only the loss of government funds but also possible lawsuits, the costs of which are rising along with everything else.

The heavy expense associated with meeting the needs of more and more students -- and the heavy cost of government mandates on colleges and universities -- can exceed many millions of dollars per campus, depending upon the size of the school.  The aggregate costs to colleges and universities nationwide are perhaps incalculable.  In order to meet the rapidly expanding financial burdens that government intervention places upon them, colleges must raise tuition, sometimes dramatically.

In other words, government itself has done things that drive college costs into the stratosphere.  And now that it has, the President wants to punish colleges for the soaring prices he and his ilk helped produce.

Please note:  I am not saying that by opening up access to college for millions of service men and women via the GI bill that the government did wrong.  That is not my point.  I am saying that by doing so it has cost colleges and universities enormous amounts of money.

(2) Expensive as those forms of government intervention are for colleges, they are not alone, and they are perhaps not the worst.  By printing many billions of dollars in fiat money every month, and thereby shrinking the value of every American dollar on the planet as a result, the government makes it necessary for colleges and universities to charge ever greater amounts of money for the services they provide just to break even.  Because it takes more newly shrunken dollars to buy what old dollars used to, more dollars are needed.  Even if all colleges and universities decided against raising tuition in order to cover the costs involved in servicing more and more students, the government’s monetarist chicanery still drives up prices dramatically over time. 

(3) Finally, I cannot imagine upon what possible basis Barack Obama thinks he can calculate how much tuition every college and university in America ought to be charging, or how much that tuition ought to go up each year.  But if, as he indicated in the past, he plans to punish colleges whose tuition rises too quickly or too much, then know it he must.  But know it he does not.  No one does. 

Suffice it to say that I am continually amazed at how much community organizers know, or think they do.

A Record of Prodigious Failure

It is a record of prodigious failure:

(1) the promise to close Gitmo in the first year -- failed

(2) the 800 billion dollar stimulus package intended to fund shovel-ready jobs and to fix both unemployment and a staggering economy -- failed

(3) the promise to provide the most transparent administration in history -- failed

(4) the promise to push the reset button regarding our relationship with Russia -- failed

(5) the promise to set US-Islamic relations on a better footing than under Bush -- failed

(6) the promise to restore American prestige in the world to new heights -- failed

(7) the promise to reduce the income gap between rich and poor in America -- failed

(8) the promise to use the Arab Spring to promote better regimes and relations in the Arab middle east – failed

(9) the promise to be the post-partisan and post-racial president who healed America and closed its divisions – failed

(10) the promise to reduce the deficit and the national debt -- failed

(11) the promise not to raise taxes on the poor and the middle class -- failed

(12) the promise to pass a budget, any budget, any year -- failed

(13) the promise not to let Detroit go bankrupt -- failed

(14) the promise to put all pending legislation on line for at least five days prior to voting so that the American people can read it and debate it -- failed.

No doubt you recall your own set of Obama’s failed promises.  There are so many, it’s hard for one person to remember even the most important ones, let alone remember them all.

Why Obamacare Cannot Possibly Work -- Ever (re-post)

President Obama says he wants to control health care costs, on the one hand, and to bring millions upon millions of new persons into the health care system, on the other.

Seen together, the president’s goals are contradictory and mutually exclusive.  Here’s why:  If you intend to introduce tens of millions of new health care consumers into the system, then the demand for health care products and services will rise dramatically.  When demand rises dramatically, prices rise dramatically as well.  If the president wants to achieve his first goal, that of reducing health care costs, then achieving his second goal will make it impossible.  What his left hand gives, his other left hand takes away.

But suppose he succeeds.  That is, suppose he succeeds not at both these goals, which is impossible, but at just one of them.  What happens when the government drives down prices, and what happens when demand for health care products and services rises dramatically?   

When the government tries to control health care costs, the consequence for health care providers like drug companies, medical instrument manufacturers, and doctors, is to drive some of them out of health care altogether.  That is, if Washington restricts the profits of health care providers, some of those providers will re-allocate their quite considerable investments in directions away from health care, to places where government interference does not hinder or limit their financial success.  They simply leave.  In the wake of the coming government-induced exodus from the tyranny of price controls, fewer health care providers can or will remain.  Fewer providers mean fewer products and fewer services.  In your very first economics lesson, you learned that when the supply of a thing goes down, its price goes up.

In other words, the president’s program to control health care costs will produce the opposite result.  I promise you, health care after the president’s reform goes into effect will not be cheaper than it is today.  Health care after his reform will be more expensive than ever, far more expensive.

The costs faced by a pharmaceutical company to develop new and effective drugs are staggering.  Laboratories and equipment are staggeringly expensive.  Outstanding scientists demand high salaries.  The path to FDA approval is arduous, time consuming, and fraught with uncertainty.  The advertisement and distribution of the drugs that win approval are more costly still.  The upshot of all that expensive research, certification, and advertisement is dicey at best, and massive sums of money can be -- and have been -- lost.

In order to pay for the development, approval, advertisement, and distribution of new drugs and the cures they might make possible, therefore, drug companies must make enormous amounts of money on existing drugs.  If they do not, the development of new drugs will be stymied and cannot well continue.  Thus, by holding down prescription costs, by prohibiting what it considers exorbitant drug company profits, the government is, therefore, also prohibiting future drug development and future cures -- perhaps the one that will save your life or the life of a loved one.  We will never know what things could have been accomplished and would have been accomplished in health care if the government puts a lid on prescription costs.  If Obama’s health care reform passes, more people will get sick, more people will stay sick, and more people will die.

Consider the doctors:  If the government puts a cap on what a doctor can make for, say, intestinal surgery, then the very talented and intelligent folks who otherwise would have worked very hard to become wealthy surgeons will figure out how to make a very good living in other ways, perhaps in architecture, nuclear technology, or international trade.  In the shadow of government-restricted prices (and therefore government-restricted incomes), fewer and fewer of them will decide to undergo the long, difficult, and exceedingly expensive path through college, through medical school, through residency, and through certification in order to become doctors who can expect to earn less for themselves and their families than they would have earned had they turned their talents elsewhere and followed an easier and less restricted path to greater wealth.  The same thing will happen with the pharmacists.  If the president’s program goes into effect, the result will be fewer doctors and pharmacists serving the millions and millions more patients the president wants to get into the system.  In other words, there will be long lines -- very long lines -- at the clinic, at the emergency room, and at the pharmacy.

The lesson of price controls is not new.  Simply think of the government-imposed control on gas prices in the 1970s and the chaos, shortages, long lines, and rationing that followed in its wake  -- only substitute health care for gas and clinics for gas stations.

Or, to take a lesson from countries like Canada and the UK (where government health care plans have been in place for many years), waiting lines are unconscionably long and some people actually die waiting for their turn in surgery because there aren’t enough surgeons and operating rooms to meet the needs.  To avoid that fate, Canadians often cross the border to get medical care at their own expense in the US, in cities like Detroit or Buffalo, where medical care is far more readily available than in Canada.  In other words, they come to the system the president is trying to reform, and they leave the sort of system he is trying to emulate.  If the president’s counter-productive plan goes into effect, even Canadians will die. 

My point, if it’s not obvious, is that, judging by the incentives it creates and the consequences it generates, this is a health care plan from Hell.

But it’s worse than that, far worse.  By introducing millions more folks into the system at the same time that his cost control measures are shrinking that system, the president’s plan will strain our remaining health care resources enormously, perhaps to the breaking point, laying an unbearable demand upon what survives of a health care supply system shrinking under the effects of government price control policy.  The result for millions of Americans needing medical care will be catastrophic.  In order to meet the burgeoning demands that an expanding clientele puts on a shrinking system, the government will institute rationing.

Put succinctly, price controls lead to shortages; shortages lead to higher prices and to long lines; long lines lead to rationing; rationing health care leads to suffering and death.

When family and friends suffer or die because they couldn’t get the health care they required, Americans will begin to regret the votes they cast in recent years, and they will struggle to return to the system that served them better -- if by then a return is still possible.

My dire tale of higher prices, shortages, long lines and rationing is understated.  I have purposely left the most expensive and most dangerous part of the President’s health care reform until the end.  To this point, I have focused primarily on health care providers and health care consumers.  I turn now to health care bureaucrats -- perhaps the most wasteful and dangerous element of the President’s entire misbegotten scheme.

Depending upon precisely what sorts of things one includes in the equation, health care is approximately one-seventh of the entire American economy.  To bring that much business under the watchful (but myopic) eye of government requires a simply enormous army of bureaucrats.  To them will fall the power of evaluation and analysis of every sort, and the power to enforce their decisions.  Almost nothing could be worse – unless you decide to put it all under the IRS.

The notion that government tax bureaucrats and career politicians are competent to determine (from a distance, at a desk, or in a committee with other bureaucrats) what drugs “ought” to be prescribed, what tests “ought” to be conducted, what procedures “ought” to be undergone, and what “ought” to be the proper cost of every consultation, operation, test, or procedure in every American locality from Anchorage to Key West is unmitigated hubris and foolishness beyond measure.  Those bureaucrats do not even know or understand how little their own jobs and services are worth; they absolutely cannot know the worth of the jobs of medical researchers and neuro-surgeons in varied localities across the nation, and what they “ought” to be paid for doing them.  Nor will they know what things “ought” to be done for (or by) patients they have never met and never will meet.

Precious few of the apparatchiks empowered by the government to make these decisions will be medically trained.  Indeed, there aren’t enough properly trained bureaucrats in the world to make this program work.  Almost none will have seen face-to-face even one of the persons whose lives and health they hold in their red tape entangled hands.  Indeed, they will not be dealing with persons at all, as they see it, but with “cases” – cases that must be dealt with according to the case book, the standard operating procedures compiled by other bureaucrats in other parts of government who spend their professional lives doing equally impossible jobs with equally deleterious effect.

Consider the bureaucrats.  Like all other persons, bureaucrats are creatures of incentive.  Those with careers in the medical bureaucracy will wish to succeed.  They will wish to rise ever higher in the bureaucracy, to be in charge of ever increasing portions of taxpayer money and to exercise more power than now they do.  In order to rise up the bureaucratic ladder, they must preside well over the affairs inside their bailiwick.  They must follow the rules.  They must keep their departmental budgets balanced.  While I am in favor of governments living within their means, the implications of doing so in health care are staggering.

It often happens that almost 90% of a person’s lifetime health care expenses occur in the last two or three years of life. When we get old, we get expensive. If the government is overseeing the program by which your health care costs get paid, and if that program is dangerously low on money, the bureaucrat in charge of your case, who knows that it’s cheaper to die than to live, who knows that his or her budget is nearly depleted, and who wants to look good to his or her superiors, will be sorely tempted to reason this way:  “At 76, old Joe has had a long life.  His country has been good to him for many years.  It’s time for Joe to pay the system back.  It’s time for Joe to cash in his chips.  That way, his own physical suffering is ended; my personal and professional burdens are eased; and others can move one step forward in the waiting line.  If old Joe dies, it’ll be better for everybody, including me and Joe.”

If you think I am making this up, I absolutely am not.  I have seen it with my own eyes and heard it with my own ears directly from government bureaucrats themselves. 

When government bureaucrats invade health care, the inevitable result is something much like veterinary medicine:  If your dog is sick and you take it to the vet, the vet examines it and says, “Spot has a problem, and it will cost $300 to fix it.  What would you like to do?”  The vet says it to you, not Spot, because you are paying the bills.  If you don’t have the money to pay for the necessary procedures, it’s bad news for Spot.  Spot might die.  When the government is in charge of paying the health care bills, and the bureaucrat in charge of your case doesn’t have the money, you’re Spot.

The Harvard Delusion

           Beware the political and philosophical buffoons who masquerade as statesmen, and who fool the ignorant masses into believing them with trite phrases no more profound than “hope” and “change.”  Beware of those whom Roy Campbell, in his poetic satire “The Botanocracy” described as

         “Statesmen-philosophers with earnest souls,

            Whose lofty theories embrace the Poles

            Yet only prove their minds are full of Holes.”

         Real statesmen are not philosophers or metaphysicians.  Rather, they are persons of wisdom, educated at the feet of our ancestors.   As Charles Kingsley explained in his essay “Ancient Civilizations,” the wise do not feed on the shame of our forebears, but on their honor and glory, on great times, noble epochs, noble movements, noble deeds, and noble folk, which mental feast Kingsley also points out, is the political implementation of St. Paul’s wise injunction for us to think about whatever things are just, pure, true, lovely, and of good report (Phil. 4:8).

         Those are not the channels in which most modern political minds now move.  If Alinsky, Marx, Keynes, or the latest New York Times poll are your mentors, you are a fool.  So are those who vote for you.  When you, your voters, and your schemes are finally shipwrecked on the rocks of reality, undeception follows, at least for a moment, until human nature and the noetic effects of sin again re-assert themselves and we unlearn the lessons of history and replace them with fantasies spun out nothing more substantial than the arrogance of the so-called experts and the attendant practical hubris and self-deception that they alone can do what all others failed to do:  namely, to escape the rule of reality.  For them, somehow (we know not how) bad ideas will not yield bad consequences.

         I call it the Harvard delusion. 

        

Fragments: An Anti-Regime Potpourri

(1.) The Obama administration has practiced no self-restraint when it comes to commandeering the auto industry, trying to control and limit our exercise of second amendment rights, trampling boldly and broadly on our first amendment rights, and hijacking health care.  This administration has no trouble at all extending its reach into broad areas of human life that the Constitution sequesters from it.  But it simply cannot find the will to do the things the Constitution requires, like securing the borders.  Indeed, it will sue the states that, desperate for the border control the federal government refuses to provide, try to provide it for themselves.

(2.) The number of those no longer in the work force has grown by more than 8 million under Obama.  Those millions hoped for change, but the change they got wasn't the change they hoped for.  Those 8 million aren't counted in the unemployment percentage, so even if their number grew to 18.5 million, government unemployment numbers might still actually improve, at which time the gov't would declare its pathetic record a rousing success, and the benighted American voters would reward the economic wrecking crew by sending them back into office.

(3.) At the moment, because of the staggering ignorance of the American voter, America is becoming Detroit.  Our electorate seems incapable of continued self-government.  I say this so that you will know what your public schools too often produce:  Relativistic sheep incapable of sustained logical, historical or economic analysis.  So let me put it plainly --  save your country:  home school.  If you are a Democrat, you don’t need to home school.  All you need to do is send Suzy and Johnny off each morning to the local socialist indoctrination facility where the teachers, the principal, and the NEA will produce millions of mind-benumbed little lefties for you.

      

(4.) Confiscatory tax rates and other anti-business government policies stifle investment and, therefore, job production.  So, after Obama changes his policies, businesses will gladly invest the (literally) trillions of dollars they now prudently are holding in reserve.  But BHO won't do that.  He's too busy trying to put the coal industry out of business and investing in green energy offerings that keep dying.  He is anti-big business, and he's getting what he wants -- less and less big business.  And if, despite the currently bad investment environment, a number of courageous, insightful, and hard-working entrepreneurs still succeed growing a thriving business, he'll tell them that they didn't build that.

       He's bad for America in more ways than anyone can count.  Period.

Government Goes to College -- and Makes it Worse

In his 2012 State of the Union address, President Obama declared his intention to cut federal funding for colleges and universities where tuition rises too much.

His plan makes plain three things:  (1) He thinks rising tuition is caused by colleges; (2) He thinks government is the solution to the problem, not one of its chief causes; and (3) He thinks he knows how much tuition all colleges and universities ought to charge and, therefore, which ones are charging too much.

He is trebly wrong:

(1) As everyone who ever studied economics ought to know, all other things being equal, when the demand for a good or a service rises, its price rises as well.  By providing grants and low interest loans to millions of students, the government has driven up the demand for college enrollment dramatically, thereby driving up the price as well.  When colleges must educate more students, they must build new classrooms in which to teach them, new dormitories in which to house them, new dining halls in which to feed them, new health facilities in which to care for them, new athletic facilities in which to keep them fit and entertained, and new parking lots for their cars.

Colleges also must hire new admissions counselors to handle their applications, new campus police to keep them safe, and new maintenance crews to keep them comfortable.

They also must hire new faculty members.  Those faculty members require not only competitive salaries, but also health insurance, retirement funds, research sabbaticals, offices, parking lots, and secretarial staff.  The secretarial staff requires salaries, retirement funds, insurance, vacations, offices, and equipment.

Did I mention bigger libraries, more books, and more librarians?

What colleges cannot get from donors to cover these crushing new expenses, they must get from students.

Government intervention drives up college costs. 
Of course, government intervention and the rising costs it entails are not limited to the demands of expanding enrollment.  Government intervention also includes government regulations that tell colleges and universities whom to hire, whom to enroll, and what to teach.  If colleges do not comply, federal funds are cut off.  To avoid that cut off, institutions of higher learning must hire whole departments full of educational bureaucrats to implement, to assess, and to enforce government mandates.  Those departments of compliance must be housed and supplied.  The bureaucrats who administer them require salaries, retirement funds, insurance, and vacations.  If colleges opt out of hiring teams of bureaucratic overlords to manage compliance, they run the risk of falling afoul of the law, in which case they invite not only the loss of government funds but also possible lawsuits, the costs of which are rising along with everything else. 

The heavy expense associated with meeting the needs of more and more students -- and the heavy cost of government mandates on colleges and universities -- can exceed many millions of dollars per campus, depending upon the size of the school.  The aggregate costs to colleges and universities nationwide are perhaps incalculable.  In order to meet these rapidly expanding financial burdens, colleges must raise tuition, sometimes quite dramatically.

In other words, government itself has done things that drive college costs into the stratosphere.  And now that it has, the Obama administration wants to punish colleges for the soaring prices it helped produce.

I am not saying that by opening up access to college for millions of service men and women via the GI bill that the government did wrong.  I am saying that doing so costs colleges and universities enormous amounts of money.

(2) Expensive as those forms of government intervention are for colleges, they are not alone, and they are perhaps not the worst.  By printing many trillions of dollars in fiat money, and thereby shrinking the value of every American dollar on the planet as a result, the government makes it necessary for colleges and universities to charge ever greater amounts of money for the services they provide just to break even.  Because it takes more of the newly shrunken dollars to buy what old dollars used to, more dollars are needed.  Even if all colleges and universities decided against raising tuition in order to cover the costs involved in servicing more and more students, the government’s monetarist chicanery still drives up prices dramatically over time.

(3) Finally, I cannot imagine upon what possible basis Barack Obama thinks he knows how much tuition every college and university in America ought to be charging, or how much that tuition ought to go up each year.  But if he plans to punish colleges whose tuition rises too quickly or too much, then know it he must.
Suffice it to say that I am continually amazed at how much community organizers know, or think they do.

Finally, to ask the obvious question:  Where in the Constitution does the president have either the power or the responsibility to control college tuition?