Tag Archives: markets

Stability vs Prosperity and Sovereignty

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It appears that Mark Carney, Bank of England Governor, prefers stability at the expense of British prosperity and national sovereignty. He said last Tuesday that

uncertainty surrounding the outcome of the coming referendum on Britain’s future in Europe is already being felt in financial markets, and that a vote in favor of leaving could cause a short-term hit to the wider economy.

A possible departure represents “the biggest domestic risk to financial stability,” Mr. Carney said, with potential consequences for Britain’s balance of payments with the rest of the world, its housing market, foreign investment and its banks.

“It is a risk to domestic financial stability, and it has some potential to amplify pre-existing risks to financial stability[.]”

Of course things will be turbulent during the transition from EU member, subject to lots of EU regulation that runs contrary to British law or what the Brits would prefer to be British law (things like being required to spend British taxpayer money as benefits to non-citizens and to non-citizen family members not even resident in Great Britain—Prime Minister David Cameron’s tentative agreement with the EU is only a temporary measure).

Don’t want the uncertainty of the outcome of the referendum? Then Carney should get behind the exit and reduce the uncertainty.

What would the British get from leaving the EU? Quite a lot. London’s financial district would be free to operate on free market principles, not EU rules. Great Britain’s tax laws would be set according to what’s good for Brits and British business and for attracting foreign businesses and investment, not according to protecting precious continental jurisdictions from the evils of tax competition. Great Britain’s private enterprises would be free to operate in accordance with British law and not EU regulation.

What would the British lose from leaving the EU? Those impediments. Not much else.

Staying in the EU would provide a strong measure of economic stability; those rules are established and well understood. But that stability is only intermediate; the EU will dissolve in the foreseeable future. The current refugee flow crisis is not the threat, though, for all the press it’s getting. No, the threat is exactly what the British would be avoiding if they succeed in leaving: economic dissolution. That threat was made manifest by the Panic of 2008 and emphasized by the Greek default crisis. These exposed the utterly differing and irreconcilable economic philosophies of the constituent members.

The transition ensuing from that dissolution will be far more destructive than any sneezes from a Brexit in the next couple of years.

Trump’s Plan for Replacing Obamacare

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Republican Party Presidential candidate Donald Trump finally has made public his plan for eliminating and replacing Obamacare. His plan consists of the following seven points:

  1. Completely repeal Obamacare. Our elected representatives must eliminate the individual mandate. No person should be required to buy insurance unless he or she wants to.
  2. Modify existing law that inhibits the sale of health insurance across state lines. As long as the plan purchased complies with state requirements, any vendor ought to be able to offer insurance in any state. By allowing full competition in this market, insurance costs will go down and consumer satisfaction will go up.
  3. Allow individuals to fully deduct health insurance premium payments from their tax returns under the current tax system. Businesses are allowed to take these deductions so why wouldn’t Congress allow individuals the same exemptions? As we allow the free market to provide insurance coverage opportunities to companies and individuals, we must also make sure that no one slips through the cracks simply because they cannot afford insurance. We must review basic options for Medicaid and work with states to ensure that those who want healthcare coverage can have it.
  4. Allow individuals to use Health Savings Accounts (HSAs). Contributions into HSAs should be tax-free and should be allowed to accumulate. These accounts would become part of the estate of the individual and could be passed on to heirs without fear of any death penalty. These plans should be particularly attractive to young people who are healthy and can afford high-deductible insurance plans. These funds can be used by any member of a family without penalty. The flexibility and security provided by HSAs will be of great benefit to all who participate.
  5. Require price transparency from all healthcare providers, especially doctors and healthcare organizations like clinics and hospitals. Individuals should be able to shop to find the best prices for procedures, exams or any other medical-related procedure.
  6. Block-grant Medicaid to the states. Nearly every state already offers benefits beyond what is required in the current Medicaid structure. The state governments know their people best and can manage the administration of Medicaid far better without federal overhead. States will have the incentives to seek out and eliminate fraud, waste and abuse to preserve our precious resources.
  7. Remove barriers to entry into free markets for drug providers that offer safe, reliable and cheaper products. Congress will need the courage to step away from the special interests and do what is right for America. Though the pharmaceutical industry is in the private sector, drug companies provide a public service. Allowing consumers access to imported, safe and dependable drugs from overseas will bring more options to consumers.

The first point seems confusing. Repealing Obamacare would include elimination of the Individual Mandate. However, would simply repealing the IM satisfy this candidate on this point? The rest of Obamacare is damaging enough separately from the IM.

The second point seems internally inconsistent. A plan that complies with one state’s requirements won’t necessarily comply with another state’s requirements, and so that plan could not be sold in both states. This failure, though, does not prevent a vendor from offering insurance in any state; there are a plethora of vendors—UnitedHealth, Blue Cross/Blue Shield, Aetna, for instance—already sell health coverage plans in any state; they just don’t sell the same plan across state lines.

Regarding his sixth point, I’d add the requirement that those block grants be reduced by 10% of the first year’s grant (which would be taken as the baseline grant for a given state) every year until the grants reach zero. Simply block granting is a good start, though.

On the whole, the plan is based on free market principles, as Trump claims on his Web site. Subject to clarifying the two points of confusion, this outline looks like a good start to a candidate debate on competing health care reform plans. Marco Rubio has a somewhat less specific, but generally market-oriented plan, and John Kasich has one that’s centered on the health care and health cost coverage providers. The three plans should be explored in detail in the coming debates. The outcome then would form the core of a useful Congressional debate in the coming term about how to reform and salvage the health provision and health cost coverage industries that have been so heavily damaged by the Democratic Party and its Obamacare.

A Dangerous Precedent

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I’m hardly a Russian apologist; I’d as soon see the place cleared off and the land restored to the forest and steppe of an earlier era.

However.

Russia is setting up to issue $3 billion in bonds, and they’ve invited a number of European, PRC, and American banks to bid on the issue—a standard government bond issue process, except that these are Russian bonds. Aside from that, the bonds are highly risky, but like many high-risk plays, the payoff can be lucrative. The decision to run a risk of this sort ordinarily is a business decision, made in a free market by the business’ managers and owners.

However.

State and Treasury have

warned some top US banks not to bid on a potentially lucrative but politically risky Russian bond deal, saying it would undermine international sanctions on Moscow, people familiar with the matter said.

Our banks’ participation in the deal is entirely legal with those international sanctions in place. But State and Treasury don’t like them.

This isn’t a President using his bully pulpit to persuade Americans to do this, don’t do that, or support this other, though.

State in particular

warned of “reputational” risks of returning “to business as usual with Russia.”

This is an agency of the Federal government making sotto voce threats against an industry to force it to support a government policy that’s carefully not encoded in law or regulation.

The market, with its understanding of Russia, is fully capable of dealing “reputational” repercussions all by itself in a free economy.

Never mind that State and Treasury each have explicitly declined to set sanctions against Russian banking or the Russian government as a whole, or that either could, if such sanctions were useful. Never mind that Congress could legislate in that direction, if such a thing were useful.

That’s the dangerous precedent. Nice bank you got there. Be too bad if something happened….

Hypocrisy at the State Level

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Congresswoman Mary Lou Marzian (D, Louisville, KY) has proposed—and she’s serious about it—House Bill 396, under which

Kentucky men would have to visit a doctor twice and have signed permission from their wives before obtaining a prescription for Viagra or other such drugs for erectile dysfunction[.]

She insisted

it is merely an effort to protect men’s health and ensure they are informed about a drug with potentially dangerous side effects.

“I want to protect these men from themselves,” said Marzian[.]

She compounded her hypocrisy:

This is about family values[.]

Leaving aside the fact that it isn’t government’s role to protect anyone from himself—only a Democrat insists on so intrusive a government—the lie in her claim of concern about men’s health is shown in her subsequent comments about her purpose in proposing this bill.

[S]he acknowledged the bill is a pointed response to several anti-abortion measures in the current legislative session, including Senate Bill 4, which requires a woman seeking an abortion to get counseling 24 hours in advance of the procedure from a health professional.

This bill is about family values and about men’s health? She wrote in a related op-ed for the Louisville, KY, Courier-Journal:

A rash of anti-abortion bills have been filed, and one is now law, that places extreme hardship and emotional stress upon women and strips away their rights to make choices about their health, future and well being.

And

The conservative movement sweeping Kentucky has put women in the cross hairs of its battle to take over government at all levels, and it’s time we recognize this hypocrisy for what it is.

As these legislators and our governor increase efforts to mandate their presence in our doctor’s examining rooms I believe it is time we regulate men’s reproductive choices.

No, Marzian is simply railing at those who oppose abortion, and being logically inconsistent in her plaints—and as a highly intelligent and accomplished woman she knows she’s being inconsistent, hence her hypocrisy—and placing those who oppose abortion in Kentucky in the cross hairs of her battle to intrude government into the lives of Kentucky citizens—including Kentucky’s babies.

There’s nothing in opposing abortion that concerns women’s health or their reproductive choices, there’s only concern for a human’s life, that baby’s life who hasn’t yet been born. That tale takes up after the “reproductive choice,” made voluntarily or otherwise, already has been made. Now there’s a baby whose right to life must be addressed.

Family values? Nonsense. The baby is as much a part of that family as are the mother and father. Marzian’s bill is simply another Liberal shot at those who oppose abortion; it has nothing at all to do with family values. As far as she’s concerned, the unborn baby is unimportant; the baby’s extreme hardship and emotional stress, his choices about his health, future and well being are beneath her notice.