Tag Archives: freedom

Expanding Government Dependency

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Who benefits from government benefits?

This is what we have today:

  • 49.1% of the American population lives in a household where at least one member received some type of government benefit in the first quarter of 2011.  This is an increase of two-thirds since the end of the Reagan era:
  • 45 million people in 2011 received Supplemental Nutrition Assistance Program benefits, a 70% increase from 2007 according to a CBO report.  That report also  said that the number of people receiving the benefits, the food stamps, would continue growing until 2014 and would not, in the foreseeable future, revert to anything like the Clinton/Bush era lows.
  • The median number of weeks before someone unemployed leaves the labor force is 21.4.  That’s about five months—a long time.  But then it seems to be final.  Out of work too long, and employers view that person as damaged goods.  Out of work too long, and skills are eroded, and employers are less interested.  That person needs more government benefit payout.

Again, I ask: who benefits from this?  The answer is: follow the money to the source.

Some Thoughts on Freedom

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The Archdiocese of New York, headed by Cardinal Timothy Dolan; the Archdiocese of Washington, DC, headed by Cardinal Donald Wuerl; the University of Notre Dame; and 40 other Catholic dioceses and organizations around the country announced on Monday that they are suing the Obama administration for violating their freedom of religion, which is guaranteed by the First Amendment to the Constitution.  The problem, as described on the DC Archdiocese’s new Web site PreserveReligiousFreedom.org, is this:

It is not about whether people have access to certain services; it is about whether the government may force religious institutions and individuals to facilitate and fund services which violate their religious beliefs.

President Obama’s Health and Human Service’s mandate, which is intended to facilitate his Patient Protection and Affordable Care Act and is the proximate object of the suit, forces religious organizations, against their most fundamental beliefs, to provide access to, or to make access available through their insurance programs, contraceptives, abortifacients, and sterilization procedures.

These drugs and services, and many of the behaviors that “need” these drugs and services, are held by a host of religions (Catholicism and Baptist congregations are only the most well-known) to be sinful.  It is, then, not only morally wrong for a religious entity holding these beliefs to provide these things, it is impossible for that entity that is true to its beliefs to do so, or to wink at their insurance programs that do so.

Take careful note: this problem is not about whether such things are, in fact, sinful.  This problem is not about whether Catholic women, by regularly going to Mass and then to their neighborhood pharmacy for contraceptives, seemingly give the lie to Catholicism’s position.  (Indeed, the existence of sin is a raison d’être for churches of all types—to help those sinners.)  This problem is not about “free” access to these services. (In fact, they are not free: by the government’s mandate, if the recipient isn’t paying for them, you and I are—whether it violates our religious teachings or not—through higher prices to us to pay for the subsidy.)

No, this problem is about whether government can define for religious entities what is sin.  It is about whether government can dictate to a religious entity what its religious tenets are.  It is about whether government can dictate to a religious entity what its practices in furtherance of its fundamental tenets are.  It is about whether government can dictate to us individually what our beliefs, what our private decisions, must be, and whether we must sin at government’s behest.

As a practical matter, which patients are being “protected” under the Act of that name?  Plainly only those of whom Obama approves.  Certainly not those with beliefs with which he disagrees.

As a matter of freedom, what is being protected by this government diktat?  Certainly not the fundamental freedom of conscience that Christian religions teach.  Certainly not the fundamental freedom of religion—a part of our Creator’s endowment—that is codified in our Constitution.

“Tin Cups,” Is It?

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An AP article certainly makes one attitude plain.

In a piece otherwise about US efforts to get other nations to help pay for the costs of developing, training, and equipping an indigenous Afghan army, the AP’s anonymous writer says,

U.S. officials have had their tin cups out for months.  Marc Grossman, the top State Department official for Afghanistan, recently hit up European nations….

While there is an element of begging in the manner of President Obama’s entreaties to other nations that they honor their obligations; it’s hardly a matter of tin cup-holding to insist that those nations do, in fact, honor their obligations.

The writer also notes that

…someone has to pay for that army in an era of austerity budgets and defense cutbacks.

It’s true enough that times are tough for everyone.  They’re tough not only for the nations that have to be begged to honor their commitments, though; they’re also tough for the women and children—and men—of Afghanistan, and they’ll be especially so after the US, NATO, and other participating nations leave.

It’s also true enough, moreover, that these straits, while not the result of the original purpose of the US’ invasion of Afghanistan, have become obligations due to the mission creep in our involvement.

A lesson here, aside from the unseemly need to press NATO and others in the present involvement to satisfy their obligations—which shame is on those who must be pressed—is to not allow such coarse mission creep the next time.  And there will be a next time, since the terrorists don’t agree that the war is over, or there will be a new Dark Age descended.

A Greek Exit

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This is beginning to look possible.  Moreover, it would be beneficial for the remainder of the euro zone, the remainder of the European Union, and for Greece.  The Greeks have an entirely different set of social mores, economic goals, purpose of money, and purpose of government from, say, northern Europe, and the shotgun wedding that tried to meld the two sets was doomed from the start.

A Greek departure, aside from the benefits to all, is a theoretically simple thing to achieve.  There is no mechanism in the EU governance documents for handling—or preventing—a nation’s departure, and there is no mechanism in the euro zone governance documents for handling—or preventing—a nation’s departure, either from the euro zone while remaining in the EU, or from both the euro zone and the EU.  There is only for Greece, as an ironically named shoemaker’s ad has it, to just do it.

No, the departure would be an engineering task.  But like all engineering tasks, the devil is in the details, and a departure could be smooth and quickly done, or it could be a clumsy affair, stumbling on at great cost for years.

The Wall Street Journal has one set of possibilities for effecting a Greek withdrawal from the euro zone, but there are additional details that need consideration, also.

How does Greece leave the euro?
In one scenario, a Greek authority would have to agree on a date with the rest of the euro zone for its departure and for the introduction of a new currency (let’s call it the new drachma). It would say that from that date, all public salaries, contracts and pensions would be paid in drachma. Bank deposits would also be redenominated. The authority would likely decide an initial conversion rate on domestic contracts from euros to new drachma—say one-to-one—then it would likely let the exchange rate of the new drachma be decided by the currency market.

This is fine for internal matters, but Greece—its government entities, its private businesses, and lots of individual citizens—have international dealings, not least with Europe.  An initial exchange rate (and a pegging schedule, or timing for letting the “new drachma” float freely) with the EU, with Turkey, with China, with the US, et al., all would have to be worked out: the “Greek authority” would be in no position to impose its domestic exchange rate externally.  This negotiation will be no easy matter, either, especially in light of an expected free fall, but to unknown depths, in market value of the “new drachma.”

Among the things to be handled, for instance: euro-denominated Greek bonds, sovereign and corporate, held by the European Central Bank, by member nation central banks, by private enterprises external to Greece.   Also in the mix would be cross-border private enterprise contracts for delivery of goods and services to be paid for in euros.

Nor, after all, can we dismiss domestic private enterprise questions: the “Greek authority” can announce an exchange rate to its heart’s content; many of these domestic businesses still will feel sufficiently put upon—or will consider that they no longer have anything to lose, anyway—that they will sue.

A major new litigation industry will be spawned.

Moreover, the euro, as a “sound currency,” likely will still circulate widely in Greece; although any influx in euros would necessarily be dependent on actual commerce—just as the US$ circulates with some ease in Mexico and the Philippines (or did when I last was there some years ago), for instance.  The Greek government’s problem here is to manage the domestic exchange rate in this grey market, rather than to attempt to ban that market altogether.  The best way to eliminate that grey market is to better manage the Greek economy—which is to say, to get out of the way of the economy—so that it can recover and the “new drachma” can take its place as a usable currency.

What would the ECB do?
The ECB probably would no longer be able to lend to banks against Greek government debt as collateral.  With no euros available, this would be the moment when the government would have to distribute another currency as a means of exchange.

Timing is everything, but this is simply an exercise in clock watching—there’s no rocket science here.

What would happen to the debt [emphasis added]?
The debt would largely fall into two categories: money that the government owes to its bondholders and official creditors, and money that the banking system owes to the ECB.  As both of these types of debts are under international law, they would have to be restructured by negotiation. Domestic debt would likely be redenominated in new drachmas.

Here is the other nub of the problem.  The Greek bailout “negotiations” are exactly about how to deal with this debt.  After having left the euro zone, and especially after having left the EU, should it come to that, it would be far easier for the Greeks simply to repudiate that debt and walk away.  This is what Alexis Tsipras, head of the SYRIZA party (now Greece’s second most powerful party), wants to do.  However, such an outright repudiation would cause damage to perceptions of Greek reliability that would take decades—a rollover of generations—to redress.

No doubt, the transition period surrounding a departure will get ugly.  The Institute of International Finance thinks it would cost…somebody…€1 trillion ($1.29 trillion) for the Greeks to quit the euro zone.  Moreover, until things settle out, Greek businesses and banks will find it very difficult to obtain funds for cash flow—the sort of short term borrowing that is a part of the normal operation of businesses.  It’s in this period that the grey market of euros for “new drachmas” and euros for Greek goods and services—entirely within Greece, mind you—will get started.

The rest of the euro zone and of the EU have their own fears of a Greek departure: contagion and a run on the banks of many of the other nations—not stopping in southern Europe, but heavily damaging France, Netherlands, Belgium, even Germany, all of whom (and others) have loaded up on Greek sovereign debt in an effort to prop them up.  This fear of contagion is overblown.  Yes, there would be a brief run on the banking institutions of the rest of the PIIGS—mostly Spain, Italy, and Portugal—and of France, Netherlands, and Belgium because investors are cautious sheep.  Yes, actual losses, and sharp ones, will occur.

But the best way to get  a sheep caught in a fence out of that fence is to try to push it deeper in.  Walk now, and the storm will be harsh, but brief, and those other PIIGS, and the rest of Europe, will weather it.  Nor the euro zone nor the EU are at risk—although, as I’ve written elsewhere, a real fragmentation would benefit everyone.

Germany, the United States, and Mandatory National Healthcare

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Miriam Widman, writing last week in Spiegel Online, points up the fallacies of government-mandated national health insurance, although this wasn’t her intent.  Her lede:

In Germany, people are baffled by how hostile a country as religious as the United States can be to the principle of mandatory healthcare insurance.  Not even conservatives question the system, which businesspeople say gives Europe’s largest economy a competitive advantage.

Let’s look at her argument and German bafflement.

First, a minor point:

[Germans] also question the continued portrayal of US President Barack Obama and his health reform backers as socialists and communists, noting that healthcare was introduced in Germany in the 19th century by Otto von Bismarck, who was definitely not a leftist….

Terms like “Left” and “Right,” “Liberal” and “Conservative,” are terms whose meanings evolve over time—as they must.  No one would confuse today’s conservative, for instance, with the 18th century conservative who insisted on the supremacy of monarchist governments over the people they ruled; nor would anyone would confuse today’s liberal with that same century’s liberal, who demanded a limited government subordinate to, and responsible to, the Sovereign people who hired it.  Widman’s remark here is simply a non sequitur, borne of a sloppy conflation.

Moving on,

[M]andated coverage is something that is simply not questioned in Germany.  Furthermore, even the most pro-market politicians wouldn’t dare to dismantle the country’s health insurance system.

This is a trap into which Americans simply are loathe to fall, for the reasons outlined below.

The requirement that everyone buy health insurance is based on a simple concept, healthcare experts agree.  Allowing healthy people to opt out of having health insurance destroys the insurance community and leaves insurers covering only the sick.

Leaving aside the careful elision of who these “experts” are, this claim simply demonstrates a complete misunderstanding of what insurance is.  I’ve written here and here about the nature of insurance—a risk transfer industry—I won’t repeat that here.  I’ll just point out that what the Germans have, and what Obamacare is, are simply welfare programs.  Their connection to insurance exists only via a commonality of names.

America’s Health Insurance Plans…filed an amicus brief with the Supreme Court in January saying the required coverage mandate cannot be divorced from Obama’s healthcare reforms.  …it wrote: …

“A wide range of experts has consistently agreed that enacting guarantee issue and community rating has severe unintended consequences unless they are paired with a strong commitment to achieve universal coverage through an effective and enforced personal coverage requirement.”

In plain English, this means that if only sick people sign up for insurance it is impossible to insure people regardless of pre-conditions, or to limit insurance companies’ ability to set prices based on an individual’s history and risk.  Everyone has to take part—sick and healthy people—for the system to work.

AHIP is right on this.  However, with respect to “set[ting] prices based on an individual’s history and risk,” this is exactly what insurance is.  MOreover, as Milton Friedman showed in a 1991 Wall Street Journal article on the effects of federally inflating health care demand through government mandated participation in Medicaid, our first universal health care welfare program, such mandates simply inflate the cost of both health care and of the “insurance” that claims to cover those costs.

The right answer here is to allow free market forces to govern both a true risk transfer industry and the health care provision industry (an aside: these two industries too often are erroneously assumed to be one and the same).  Just as the breakup of the world’s best telephone system—Ma Bell—led to lower prices to consumers and an even better suite of communications services, so competition will lead to lower insurance—risk transfer—costs for the consumer, lower medical costs to the consumer, and an even better suite of services in both industries.

Widman cites a private business proprietor, who extolls the virtues of an employer providing at least some of her employees’ health insurance:

“As an employer I would never question hiring somebody and not insuring them,” says Seattle native-turned Berlin café owner Cynthia Barcomi. … The American entrepreneur said she’d offer health insurance to her employees even if she weren’t required to by law…because people are more productive if they think their employer cares about and believes in them.

Indeed.  This is one of many sound business solutions to a question of employee productivity.  For government to mandate that this particular solution must be used by all businesses, though, regardless of those business’ individual, unique circumstances is both immoral and inefficient.  It’s immoral because it takes away the responsibility of the business owner for the outcomes of her business decisions and arrogates that responsibility to government.  It’s inefficient because it mandates a one-size-fits-all solution whose costs of implementation—costs driven in part by the artificial demand created by the mandate—prevent that business owner from implementing other solutions that might be better in his business’ circumstance.

Then Widman plays the religion card.

“For me the US is a very religious country. It doesn’t matter which religion I look at—love thy neighbor is a very, very important point in religion,” [National Health Insurers Association spokeswoman, Ann] Marini says. … Wolfgang Zöller, a member of Bavaria’s conservative Christian Social Union party, argues that Christian principles support a national healthcare system and both are compatible with capitalism.

Here, too, the larger point is missed.  It’s certainly true that our Judeo-Christian ethos and morality levies on each of us individually a requirement to look out for the least among us.  But this is not a mandate on government to absolve us of that individual responsibility by arrogating the obligation to itself and applying a universal mandate to all of us.  That responsibility is levied by our Creator on each of us individually because each of us is unique and in unique circumstances.  The manner in which we satisfy our obligation must, therefore, be individual—even though many of us may adopt similar means.

Then, on what basis does government presume to dictate to each of us what our religious practice must be?  On what basis does government dictate to any of us how we must carry out our religious practice—or that an atheist or agnostic must carry one out at all (oh, wait—government has already made these arguments here and here)?

That larger point, though, is irrelevant to Marini, Zöller, and their ilk.  Zöller makes this clear:

The question of health insurance is a humane question.  I want every person—independent of age, independent of income or pre-existing conditions—to have the possibility to be helped when he is sick.

This is certainly a discussion we all should have.  But what Zöller is describing isn’t insurance at all—it’s welfare.

In the end, Americans and Germans must answer for themselves two questions.  First, we must answer definitively the question of whether we want insurance or welfare.

And then we must all answer the question of whether we want government to impose a one-size-fits-all solution (to a thus far misunderstood problem) on all of us, regardless of where our individual choices, our individual situations, might take our private businesses, or us.