Tag Archives: economics

Nationalizing Companies

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The Wall Street Journal editors are badly mistaken here.

Mr Trump accused Kamala Harris of being a socialist, but the Biden Administration never nationalized companies.

Routine political polemics on the first part of that; functionally, and obviously, wrong on the second part.

Nationalizing individual companies is piffle. The Obama reign nationalized a whole industry—our health care “insurance” coverage industry via Obamacare, which required all of us to buy an Obamacare policy whether we wanted to or not, whether we needed one or not.

It’s true that the Biden administration didn’t formally nationalize any companies, but it functionally nationalized far more industries than that piker Obama with the Biden administration’s excessive regulation: ICE-powered vehicles and our energy production industries, our banking industry with its pressure to lend to these types and refuse to lend to those types, and even our press with its pressure to spike these news reports and to push those news reports, all the while pushing for editorials that favored administration ideologies while panning or ignoring policies of which Biden and his minions disapproved.

None of this is to suggest that the Federal government taking an ownership stake in Intel or any company is a good idea or even an acceptable one. It isn’t. But it’s telling that these opinion writers can make such an obviously wrong claim at the outset of their piece.

An Alternative

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Or two. The Trump administration is kicking around the idea of taking a stake in companies that receive Federal funds pursuant to the 2022 Chips Act (formally the Chips and Science Act), 10% in Intel being one of the ideas in play. I have an alternative, although it likely would require a legislative modification to the Chips Act: structure the funding as a loan, the [10%] stake as collateral, and dissolve the stake when the loan is repaid.

Another alternative, also likely necessitating modification to the Chips Act, would be to structure the funding as a grant, with the stake dissolved after a [five] year period on satisfactory performance under the grant—suitably boosted domestic research and manufacturing.

Either of these alternatives would mitigate the risk of government-run “capitalism” by getting government back out of these enterprises once performance has been confirmed durably established. They’re similar, too, to the government bailout program of the Panic of 2008, with the critical addendum of a hard withdrawal of government on clearly measurable achievement of tightly defined milestone.

False Comparison

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In their letter to the Tuesday Wall Street Journal Letters section, Professors Amy Finkelstein, of MIT, and Matthew Notowidigdo, of the University of Chicago, argued for the necessity of Obamacare.

…because millions of Americans “don’t use” their subsidized insurance, they therefore “don’t need” it. Yet as we teach our students every year, this misunderstands the purpose of insurance. Not filing a claim doesn’t mean you didn’t need insurance. We’ve never had to use our oxygen masks during decades of flying, but that hardly means they’re not essential.

The professors, as educated as they seem to be, should know better than to make such a false comparison. Folks die if they don’t have access to those oxygen masks in the realization of the once-in-a-lifetime likelihood of needing one. Folks without insurance always can get at least life saving care, and usually more than that for a variety of non-life threatening ills, in any hospital ER.

The professors also cynically conflate “need” with “useful.” Having insurance against this or that outcome usually is a useful backstop to have, IFF the accumulated premiums paid are worth the Expected [sic] cost of a realized outcome. Underlying the distinction between “need” and “useful” is the individual’s own assessment of those risks and that value. With Obamacare, though, folks are required to buy the insurance, however bad it is, and to do so wholly independently of any cost/benefit tradeoff that actually exists and equally independent of the individual’s assessment of his risk, or of his need. Risk assessment has been taken out of the individual’s hands altogether.

12 Million Don’t Use The Health Insurance They Have

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The lede lays out the background.

ObamaCare really is a gift that keeps on giving—for insurers. The law forces Americans to buy pricey plans with benefits they don’t need. And now the Paragon Institute reports that taxpayers are subsidizing insurance for nearly 12 million people who never use their coverage.

As the WSJ puts it, here’s the wild part:

More than a third of all enrollees generated no medical claims last year, according to Paragon’s analysis. That includes 40% of those in plans that are fully subsidized. Between 2021 and 2024, the number of enrollees who didn’t use their health coverage more than tripled to 11.7 million from 3.5 million.

There are a couple of reasons for this. One is that being forced to buy something that isn’t needed or wanted bit. The other is that “purchasers,” after paying those enormously high premiums, or having the government pay those premiums with OPM, still would have to pay out of their own pockets for any health care throughout the year because of the enormously high deductibles those ObamaCare plans hide behind.

Forgive us for being old-fashioned, but why should taxpayers subsidize insurance for healthy people who don’t need or use it?

Indeed.

Raise Those Taxes

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Progressive-Democrat-run States are looking at ways to cover putative budgetary shortfalls.

  • Minnesota State Representative Aisha Gomez, a Democrat…sponsored legislation that would implement a higher tax rate for joint filers in Minnesota making over $1 million a year if federal Medicaid cuts take effect
  • Connecticut legislators have proposed a bill that would raise income-tax rates on couples making at least $500,000 and individuals making at least $250,000
  • Washington Governor Bob Ferguson, a Democrat, in May signed into law a budget that includes an increase in the capital-gains tax, among other things
  • Maryland Governor Wes Moore, a Democrat, in May signed into law his tax proposal, which includes higher income-tax rates for state residents making more than $500,000 a year
  • Rhode Island in June imposed a new tax on certain vacation homes valued at $1 million or more

And this:

Many states face projected budget deficits after increasing spending and cutting taxes in the flush postpandemic years….

Notice that. Profligate spending leads to revenue shortfalls, so—raise those taxes, especially on the rich, who Owe Us. That’s akin to a business losing money, so it raises the prices it charges for its products.

Nowhere in there is any Progressive-Democrat-run State reallocating its spending to stay within existing revenues, much less cutting spending to do so.

I repeat a long-standing challenge of mine: can any Progressive-Democratic Party politician even say the words, “Cut spending?”