Tuesday, May 26, 2009

WSJ.com - Why Government Can't Run a Business

WSJ.com - Opinion: Why Government Can't Run a Business

The Obama administration is bent on becoming a major player in -- if not taking over entirely -- America's health-care, automobile and banking industries. Before that happens, it might be a good idea to look at the government's track record in running economic enterprises. It is terrible.

There are a number of reasons why this is inherently so. Among them are:
1) Governments are run by politicians, not businessmen. Politicians can only make political decisions, not economic ones. They are, after all, first and foremost in the re-election business. 

2) Politicians need headlines. And this means they have a deep need to do something ("Sen. Snoot Moves on Widget Crisis!"), even when doing nothing would be the better option. Markets will always deal efficiently with gluts and shortages, but letting the market work doesn't produce favorable headlines and, indeed, often produces the opposite ("Sen. Snoot Fails to Move on Widget Crisis!").

3) Governments use other people's money. Corporations play with their own money.   

4) Government does not tolerate competition. 

5) Government enterprises are almost always monopolies and thus do not face competition at all. But competition is exactly what makes capitalism so successful an economic system. The lack of it has always doomed socialist economies.

Cost cutting is alien to the culture of all bureaucracies. Indeed, when cost cutting is inescapable, bureaucracies often make cuts that will produce maximum public inconvenience, generating political pressure to reverse the cuts.

6) Successful corporations are run by benevolent despots. The CEO of a corporation has the power to manage effectively...  But American government was designed by the Founding Fathers to be inefficient, and inefficient it most certainly is. 

7) Government is regulated by government. 

It is government's job to make and enforce the rules that allow a civilized society to flourish. But it has a dismal record of regulating itself. 

Tuesday, May 19, 2009

WSJ.com - How Washington Rations


WSJ.com - Opinion: How Washington Rations

A case study in 'cost-control.'

The problem is that what "works best" isn't the same for everyone. While not painless or risk free, virtual colonoscopy might be better for some patients -- especially among seniors who are infirm or because the presence of other diseases puts them at risk for complications. Ideally doctors would decide with their patients. But Medicare instead made the hard-and-fast choice that it was cheaper to cut it off for all beneficiaries. If some patients are worse off, well, too bad.

Medicare is already the country's largest purchaser of health care. Private carriers generally adopt its rates and policies, and the virtual colonoscopy decision may run this technology out of the marketplace. Now multiply that by the new "public option" that Democrats favor, which would transfer millions of patients to a new insurance program managed by the federal government. Washington's utilitarian judgments about costs would reshape the practice of medicine.

…scarcity forces choices. As the Medicare trustees note in their report, the tax increases necessary to fund merely the current benefit schedule for the elderly would cripple the economy. The far more expensive public option will not turn into a pumpkin when cost savings do not materialize. At that point, government will clamp down with price controls in the form of lines and rock-bottom reimbursement rates.



Monday, May 18, 2009

WSJ.com - Earmark Nation


WSJ.com - Opinion: Earmark Nation


The Founders never imagined spending such vast sums.

Mocking this presumed hypocrisy is good sport, but the Murtha example deserves a closer look. You just might find that you are staring at a Pogo problem: We have met the enemy, and he is us.

When we speak of public corruption, we normally mean an official has been convicted of breaking a law. The bad pols did it. We are at the point, though, where it is hard to say that the corruptions of government are only about the politicians.

Murtha may be right. We are all earmarkers now.

We the people have concluded that if we don't use the Honorable John or Nancy or Ted in Congress to get our piece of it, someone else will get it.

For the longest time, we were able to believe that these corruptions were the inevitable but petty price of politics. But I agree with John Murtha. It isn't petty anymore. It isn't just about amusing "pet projects." The whole system has become an earmark. The politicians have been shaping the system so that more and more people have to buy in to the earmark philosophy -- we pay, they decide -- or get left out.

Barack Obama isn't a reformer. He's the president of Earmark Nation. We are about to enact the Obama federal health-insurance entitlement, which on top of all the other entitlements and their limitless liabilities will require pulling trillions of dollars more into the federal budget. Whatever nominal public good this is supposed to achieve, it means that they, these 535 pols, most of them gerrymandered for life, will decide in perpetuity the details of how to dole it out.


Friday, May 15, 2009

WSJ.com - Chrysler and the Rule of Law


WSJ.com - Opinion: Chrysler and the Rule of Law

The rule of law, not of men -- an ideal tracing back to the ancient Greeks and well-known to our Founding Fathers -- is the animating principle of the American experiment. While the rest of the world in 1787 was governed by the whims of kings and dukes, the U.S. Constitution was established to circumscribe arbitrary government power. It would do so by establishing clear rules, equally applied to the powerful and the weak.

Fleecing lenders to pay off politically powerful interests, or governmental threats to reputation and business from a failure to toe a political line? We might expect this behavior from a Hugo Chávez. But it would never happen here, right?

Until Chrysler.

By stepping over the bright line between the rule of law and the arbitrary behavior of men, President Obama may have created a thousand new failing businesses. That is, businesses that might have received financing before but that now will not, since lenders face the potential of future government confiscation. In other words, Mr. Obama may have helped save the jobs of thousands of union workers whose dues, in part, engineered his election. But what about the untold number of job losses in the future caused by trampling the sanctity of contracts today?

The value of the rule of law is not merely a matter of economic efficiency. It also provides a bulwark against arbitrary governmental action taken at the behest of politically influential interests at the expense of the politically unpopular.


Thursday, May 14, 2009

WSJ.com - How ObamaCare Will Affect Your Doctor


WSJ.com - Opinion: How ObamaCare Will Affect Your Doctor

Republicans and Democrats agree that the government's Medicare scheme for compensating doctors is deeply flawed. Yet Mr. Obama's plan for a centrally managed government insurance program exacerbates Medicare's problems by redistributing even more income away from lower-paid primary care providers and misaligning doctors' financial incentives.

Like Medicare, the "public option" will control spending by using its purchasing clout and political leverage to dictate low prices to doctors. (Medicare pays doctors 20% to 30% less than private plans, on average.) While the public option is meant for the uninsured, employers will realize it's easier -- and cheaper -- to move employees into the government plan than continue workplace coverage.

The 60% of doctors who are self-employed will be hardest hit. That includes specialists, such as dermatologists and surgeons, who see a lot of private patients. But it also includes tens of thousands of primary-care doctors, the very physicians the Obama administration says need the most help.

Doctors will consolidate into larger practices to spread overhead costs, and they'll cram more patients into tight schedules to make up in volume what's lost in margin. Visits will be shortened and new appointments harder to secure.

There are measures available that could fix structural flaws in our delivery system and make coverage more affordable without top-down controls set in Washington. The surest way to intensify flaws in the delivery of health care is to extend a Medicare-like "public option" into more corners of the private market. More government control of doctors and their reimbursement schemes will only create more problems.


Wednesday, May 13, 2009

WSJ.com - What a Mom Wants

I’m not commenting here, just passing along an article that made me raise my eyebrows…


WSJ.com - Opinion: What a Mom Wants

The study's authors, W. Bradford Wilcox and Steven L. Nock, expressed surprise at finding that even self-described feminist women are happiest when their husbands do most of the breadwinning. Though the study resulted in a great deal of clamor among commentators who objected to its seemingly outdated conclusions, it differs little from the work of many evolutionary psychologists. David Buss, one of the founders of the field, conducted the largest investigation to date into the subject of human mating. After studying more than 10,000 subjects in 37 countries in the late 1980s, Mr. Buss and his team found that "women more than men in all 37 cultures valued mates with good financial prospects…."

Of course, this is one of those observations likely to elicit a "well, no kidding" from average people. The idea that most moms would rather not work full time and that most wives want their husbands to provide for their families is news only in the news business. Yet Capitol Hill continues to focus on women's employment. The House added a section to the Troubled Asset Relief Program that creates an "Office of Minority and Women Inclusion" to, among other things, ensure that companies receiving TARP money maintain an adequate (though unspecified) percentage of female workers.

If our media and our government really want to show support to mothers, they might consider actually listening to them. What they're saying is quite clear: If you want to help us, help the men we're married to.


Tuesday, May 5, 2009

WSJ.com - The Real Culture War Is Over Capitalism


WSJ.com - Opinion: The Real Culture War Is Over Capitalism

There is a major cultural schism developing in America. But it's not over abortion, same-sex marriage or home schooling, as important as these issues are. The new divide centers on free enterprise -- the principle at the core of American culture.

Despite President Barack Obama's early personal popularity, we can see the beginnings of this schism in the "tea parties" that have sprung up around the country. In these grass-roots protests, hundreds of thousands of ordinary Americans have joined together to make public their opposition to government deficits, unaccountable bureaucratic power, and a sense that the government is too willing to prop up those who engaged in corporate malfeasance and mortgage fraud.

Still, the tea parties are not based on the cold wonkery of budget data. They are based on an "ethical populism." The protesters are homeowners who didn't walk away from their mortgages, small business owners who don't want corporate welfare and bankers who kept their heads during the frenzy and don't need bailouts. They were the people who were doing the important things right -- and who are now watching elected politicians reward those who did the important things wrong.