Tag Archives: political economy

Union Favoritism

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The Wall Street Journal tells the tale.

Washington, DC has an 8.5% unemployment rate, and it has come up with an ingenious plan to keep it high: the city council voted 8-5 late last month to require a $12.50 an hour “living wage” for certain big retailers, well above the current national minimum of $7.25.

The wage floor applies to stores with 75,000 square feet of space and $1 billion in parent-company revenues….

[T]he proposed law exempts companies operating under collective-bargaining agreements.  …supermarket chains like Safeway and Giant get a pass because they have union workforces.  So paying a non-living wage is fine as long as it also finances union dues.

Meanwhile, the unions keep jobs scarce and available only to union members.  And union power intact.

Hmm….

Government-Mandated, Privately-Funded Welfare

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Healthy consumers could see insurance rates double or even triple when they look for individual coverage under the federal health law later this year, while the premiums paid by sicker people are set to become more affordable, according to a Wall Street Journal analysis of coverage to be sold on the law’s new exchanges.

And

The exchanges, the centerpiece of President Barack Obama’s health-care law, look likely to offer few if any of the cut-rate policies that healthy people can now buy….

At the same time, the top prices look to be within reach for many people who previously faced sky-high premiums because of chronic illnesses or who couldn’t buy insurance at all.

And

Several big provisions in the law taking effect in six months affect rates for the estimated 20% of Americans who don’t have coverage through an employer, Medicare or Medicaid.  Plans must be available to consumers regardless of their health and must cover certain items such as hospitalization, maternity care and prescription drugs.

This is naked wealth redistribution—welfare—paid for, in part, on the backs of the young and healthy, who need no insurance.  Moreover, these young, as all Americans, ought to be able to choose for themselves the risks they’re willing to run; Government has no role to play here.

The rest of this welfare is paid for by the insurers: those policies that are required to be available to all comers, in the emergency rooms, must be provided by the insurers under Obamacare, at premiums that have nothing to do with the risk being covered—including the actual now-prior existing condition diagnosed in those ERs.  Watch the losses mount as these policies are canceled as soon as the emergency is past.

The Wall Street Journal article goes on, but these are the highlights.

There are other redistribution facets to Obamacare that are nor mentioned in the article, also.  Unmentioned here is another massive welfare payment suite, paid for by insurers: all of that coverage, all of those plans “that must be available…regardless of health,” must be available in hospital emergency rooms, and they must be buyable in real-time.  Watch the insurers’ losses mount as these policies are canceled as soon as the “emergency” is past.

Another thing that’s missing is the availability to the poor and much of the middle class of Health Savings Accounts.  True enough, these folks don’t have much money to put aside, but they are functionally prevented from putting away any of what they do have for their future health problems by the requirements for having HSAs at all.  Government won’t allow these except for those with a high-deductible policy—typically in the $3,000 and up range.  Our poor and much of our middle class can’t afford that much out of pocket expense, so they’re denied the opportunity to save for their own future health.  Deeper into the middle class, individuals and families still have other imperatives that limit their willingness to spend that much to get an HSA.

Certainly, with actual insurance in a free market, high risk pools will have higher premiums, but they’ll be able to get policies—even those with preexisting conditions.  But the rest of the rates will go down, and the market as a whole will go down, even with the higher premiums for higher risks.  A broader range of policies will exist, also.

These are the wages of welfare dishonestly masqueraded as insurance.

Effect of Quantitative Easing

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Martin Feldstein, Council of Economic Advisers Chairman under President Ronald Reagan, described some in a recent Wall Street Journal op-ed.

  • unemployment has declined to 7.6% from 8.2%
  • there has been no increase in the ratio of employment to population
  • no decline in the teenage unemployment rate
  • virtually no increase in the real average weekly earnings of those who are employed
  • decline in the number of people in the labor force in the past 12 months…exceeded the decline in the number of unemployed

And

The Fed’s forecast of substantial employment gains rests on the assumption that real GDP will grow by about 2.5% during the four quarters of 2013 and by more than 3% in 2014.  That would represent a substantial rise from the growth rates of less than 2% in 2012, 1.8% in the first quarter of 2013, and a likely 1.7% in the second quarter.

And

Meanwhile, low interest rates are generating excessive risk-taking by banks and other financial investors.  These risks could have serious adverse effects on bank capital and the value of pension funds.

Additionally, these moves have hurt our seniors, who depend on fixed income instruments for their income.

On the flip side, we have gained a substantially increased risk of high inflation.

In sum, cut it out.

Now’s the Chance

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President Barack Obama has admitted what Senator Max Baucus said a month ago: that his Obamacare is a train wreck coming down the tracks.  Obama has delayed until 2015—i.e., until after the midterm elections—the implementation of the employer mandate.  With this mandate, large employers would have been required to provide health “insurance” for all of their full-time-equivalent employees or face a fine of $2,000 per employee.  (Note that the existence of that fine puts a floor under the per-employee cost of insurance of some $2,000 per covered employee.)

No one was ready for employer mandate part of the train wreck.  Not the employers, although they have been variously cutting back on employees, employee hours, and/or hiring in order to hold their numbers to a bearable cost.  Not the IRS, which quite apart from the criminal aspects of its operation is wholly unprepared—employees or software—to manage its tracking and enforcement task.  Not HHS, which hasn’t even been able to write draft rules good enough for comment, much less for publication.

This represents a golden opportunity for the Republican Party.  They were handed a gift by the Supreme Court in the summer of 2012 when that body upheld the constitutionality of Obamacare.  Had it been struck, the Republicans would have been caught flat-footed with no viable alternative, and the Democrats would have had a field day beating them about the head and shoulders for being whiners without a solution.

Now’s the chance for the Republicans to recover from that unpreparedness.  In addition to voting to repeal Obamacare one more time, the House has from now through late summer 2014 to pass an actual alternative to Obamacare.  Such an alternative might be three bills: one to take down barriers and allow health insurance to be sold interstate, with no mandates for minimum coverage.  Let the doctors, patients, and market decide what policies (and there will be a lot of them) should be available, and a policy available for sale in New York ought to be saleable in California, also; only the market should make that determination, not any Know Better Government.  Moreover, these policies should be saleable for risk-based premiums, not community premiums.  One group of Americans should not be forced to subsidize another.

Another bill could be a sort of Truth in Advertising bill.  The House should pass a standard, plain English language policy format that mandates that each item to be covered or excluded is to be described in these terms, so that a potential insuree (and his doctor if desired) can compare policies from different insurers and be able to understand the tradeoffs he’s getting when he selects one policy over another.  All without having to talk to an insurance agent for the explanation (or even to view the policy at all), unless the insuree wants to.  This bill might also give the health insurance industry two years (say) to come up with their own standard language, or the House-passed format will go into effect.

A third bill could involve the health provision industry.  This one might center on the publication of performance statistics by hospitals and doctors: admission lengths vs readmission rates vs regional averages, surgery types vs success rates vs regional averages, treatment types vs re-treatment rates vs regional averages, and the like.

Senate Republicans should take up the matter, too, and either work to force a Senate (roll call) vote on their version or work to force a Senate (roll call) vote on the House version when it comes up.  Of course either version will fail in the Senate, and we can anticipate Obama veto threats, too.  But the Republicans will have the Democrats, in the runup to the 2014 midterms, on the record, ideally by name on the failed votes, as opposing serious, material health care reform.  Those Democrats can be called to account for their demonstrated preference for a train wreck that their constituencies—we Americans—have broadly and volubly disliked since before Obamacare was enacted.  We’ll also know who the RINOs were that contributed to blocking these reform bills; they can be dealt with in the primaries.

Social Engineering with the Tax Code

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Senators Max Baucus (D, MT) and Orrin Hatch (R, UT), Senate Finance Committee Chairman and Ranking Republican, respectively, had a thought, as described in a recent Wall Street Journal op-ed.  In a letter to their fellow Committee members, they suggested,

To make sure that we clear out all the unproductive provisions we plan to operate from an assumption that all special provisions are out unless there is clear evidence that they: (1) help grow the economy, (2) make the tax code fairer, or (3) effectively promote other important policy objectives.

In other words, they want to zero out all deductions, loopholes, subsidies, credits, carve-outs, and so on in the Federal tax code and start over, including only those that are explicitly defended and defended successfully.

Right idea; flawed execution.  Items 2) and 3) are mutually exclusive.  “Important policy objectives” can only come at the expense of this or that group.

Moreover, “policy objectives” through taxing is inherently ineffective and immoral.  If Congress can’t achieve the policy objective through legislation, it’s because the legislators and their bosses, the sovereign people, don’t want that objective, and so that objective is illegitimate.

Further, the circumscription created on this or that group by taxing for that or this objective limits arbitrarily the victimized groups, and it thereby immorally eliminates those groups’ equality of opportunity—which is supposed to be equal to the opportunities of other groups (vis., the opportunities of the tax-favored groups)—and their ability to exercise such opportunities as are left to them according to their own imperatives, not those dictated by government.

We’ll see how far even this idea gets, though, first in the Progressive-controlled Senate Finance Committee, and then in the Progressive-controlled Senate.

On the other hand, what’s happening along these lines in the Republican- (as opposed to Conservative-) controlled House?  Not much, mostly this year-old chit-chat.  Even on the matter of social engineering through the tax code, the Ways and Means letter and attachment merely identify the existence of damage done by social engineering, but they do not offer anything concrete to do about that damage or about the measures themselves.  At least the two Senators had that much.