Topic: Economic Policy
Government Gone Mad Americans are getting politics as usual, which means corrupt, dysfunctional government as usual.by Joel S. Hirschhorn
(libertarian)
Tuesday, July 21, 2009
Perhaps most Americans deserve the federal government they have. A government that, contrary to the lofty rhetoric of Barack Obama, is pure politics as usual. A government that is as corrupted by moneyed interests as ever. A government that is as dysfunctional and inefficient as ever.
A government that should have prevented the current recession but did not and now has spent horrendous amounts of money that has largely been wasted. A government that has put many future generations in debt. A government that makes a mockery out of the concept of democracy.
As Robert J. Samuelson has aptly said, the federal $787 billion stimulus package is "mostly a political exercise, designed to claim credit for any recovery, shower benefits on favored constituencies and signal support for fashionable causes. As a result, much of the stimulus's potential benefit has been squandered."
The result is that most Americans hit hard by the recession have seen very few meaningful benefits. Unemployment not only has mounted, but will surely keep increasing and may well approach 15 percent nationally. Indeed, it is already that bad in some places, like Michigan.
If there was ever something that should have sparked a Second American Revolution it is the Goldman Sachs story in this recession. Goldman Sachs reported that it earned $3.44 billion in the second quarter, and is preparing its largest bonus payout in history. Did this company with so many former executives running the federal government's financial system manage this strictly on its own merits? Not exactly. It received a $10 billion injection of TARP funds to help it handle the fiscal crisis. It was allowed to convert itself into a commercial bank and member of the Federal Reserve system, gaining access to low or zero cost capital at the Fed Discount window and access to federally guaranteed borrowing through the FDIC Temporary Liquidity Guaranty Program. And it had the good fortune (literally) to receive a $13 billion payout of federal dollars at one hundred cents on the dollar for its outstanding credit default swap contracts with AIG.
Was all this recession garbage the change we were waiting for? Have we seen anything other than politics as usual? No.
The whole Obama story and the Democratic control of Congress are a disgrace. Progressives who eagerly supported Obama should be ashamed of themselves. They should be leading a revolution, not make excuses for Obama and the Democrats.
The icing on the corruption cake will probably be phony and delusional health care reform, as stupid and deceptive as all the federal efforts at reversing the recession. It could not be clearer that most Democrats are totally under the thrall of the health insurance industry. How do you explain the incontrovertible fact that even though the US spends more money per capita on health care than any other nation we have some of the worst health statistics of any nation? Simple. A huge fraction of the national spending on health care goes to the private health insurance industry. Does the US offer some of the very best health care in the world? Yes, but unless you are wealthy or have terrific health insurance, like members of Congress have, you will not have affordable access to that terrific health care. So our national statistics stink because such a huge fraction of the population does not get the first rate health care.
When he campaigned Obama said he supported single payer universal health care. But not now. Unless we get rid of the dominant private health insurance industry and replace it with an extension of Medicare, we will not get true and necessary reform. Nor will we really see decreases in health care costs. Nor will all people get effective health insurance.
As I feared, Obama and the Democrat controlled Congress are giving us government gone mad, exactly what most Americans deserve. Don't hold your breath for the populist revolution.
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Posted By: Walt Thiessen
Date: 2009-07-21 04:20:34
You wrote:
"How do you explain the incontrovertible fact that even though the US spends more money per capita on health care than any other nation we have some of the worst health statistics of any nation? Simple. A huge fraction of the national spending on health care goes to the private health insurance industry.
Any time the cost of something is higher in one country than it is anywhere else, it can mean only one thing. It means that more currency value is available to, and more specifically, publicly allocated to spend on that thing than anywhere else. This seems to be a gaping hole in your understanding. The reason U.S. health care costs keep soaring is that the federal government keeps passing laws that put more and more money to spend on health care in the hands of the people.
It's not like health care costs have been absurdly high all along. There was a time when health care costs in this country were quite low, as little as 50 years ago. Yet, the private sector had plenty of money at that time in this country. Your broad brush fails to take this fact into account.
This issue illustrates supply and demand at its most basic and fundamental level. The rising cost of health care cannot, therefore, be explained by "the private health insurance industry" because the increase in available currency for health care did not come from what is left of the private economy. It came primarily from the public, government-managed economy. Blaming private enterprise (or rather, what is left of it these days) for what the public has wrought is absurd. Having said that, I do not mean to suggest insurance companies have played no role in the problem. Clearly, they have. But honesty must lead us to acknowledge that most of the evils the insurance industry has wrought derive from absurd governmental regulations and policies imposed upon that industry.
You are mistaken if you believe that the health care industry, or indeed much of the economy at large, which the U.S. has today is private and free market. To the contrary, we have had no truly free markets of any significance in this country during the lifetimes of anyone alive today. If we had a truly free private sector unimpeded by government regulations and controls, then I might be able to give some credence to your antipathy for private enterprise.if it had produced the kinds of results we currently experience. But the fact is that not even the money supply itself today is governed by free markets. Health care is not governed by free markets. In fact, I find myself hard-pressed to identify any industry that is governed by free markets. How then can we conclude that free markets are to blame for ills experienced in any of these markets? Clearly, in all honesty we cannot.
Today's markets are not free. They are regulated, controlled, heavily influenced by government, and there is virtually no market that is not controlled in this manner.
You also utter a direct contradiction in that same paragraph from which I quoted. After stating that the U.S. has among the worst health statistics in the world, you state, "Does the U.S. offer some of the very best health care in the world? Yes...." Well, make up your mind. Is U.S. health care among the worst in the world, or is it among the best? This is what comes from uttering wild, exreme, generalized, unfounded statements.
Although I agree with Walt's remarks, I also agree with your description of the crash and the bailout on the whole. At the time of the crash and the original Bush bailout, I said that the crash was "predictable and preventable" and therefore must be regarded as deliberate. You have captured who benefited from the crash and how they have benefited.
Posted By: Joel S. Hirschhorn
Date: 2009-07-21 13:08:52
Unlike Walt, I stopped talking in terms of free markets a long time ago, because that concept no longer has any meaning, not when corporate interests use their money to corrupt government and get the public policies and regulations they want and benefit from. Industry more than any other sector controls government, NOT we the people. There is no contradiction between lousy national health statistics, which reflect what is true about the whole population, and saying that the US does, indeed, have the best health care available to those that can afford it. The two-party plutocracy provides the most benefits to the rich, wealthy and corporate elites, including the best health care, while the national statistics prove that the vast majority of Americans are not able to access all that wonderful health care.
Posted By: Joel S. Hirschhorn
Date: 2009-07-21 13:13:46
More food for thought:
From 2003 to 2007, the combined profits of the nation's major health insurance companies increased by 170 percent. William McGuire, the former head of United Health, several years ago, accumulated stock options worth an estimated $1.6 billion; CIGNA CEO Edward Hanway made more than $120 million in the last 5 years. CEO compensation for the top seven health insurance companies now averages $14.2 million. Over the last three decades, the number of insurance administrative personnel has grown by 25 times the number of physicians.
As Senator Bernie Sanders said, health care "special interests have spent hundreds of millions of dollars on lobbying, campaign contributions, and advertising, and with unlimited resources they can make out a check as big as they need. They will continue to spend as much as they need in order to preserve this dysfunctional health care system from which they profit so much."
And the New York Times was correct when it editorialized that "A public plan would have lower administrative expenses than private plans, no need to generate big profits, and stronger bargaining power to obtain discounts from providers. That should enable it to charge lower premiums than many private plans."
All Americans need to understand that everything you hear and read that criticizes a government administered health insurance system providing universal health care are outright lies. Every time you hear someone say that the U.S. has the best health care in the world your immediate reaction must be "but only some people can afford and access it." Private health insurance is the culprit.
Posted By: Joel S. Hirschhorn
Date: 2009-07-21 13:22:47
On corrupting government to maintain profits:
The medical, pharmaceutical, hospital and insurance industries together have spent more than $4.2 billion on lobbying during the last 10 years. A recent report in the Washington Post says that, in the current battle against a government insurance plan, the health industry is spending $1.4 million a day lobbying key figures in the capital.
Posted By: Joel S. Hirschhorn
Date: 2009-07-22 09:38:49
Corporate reality:
UnitedHealth, the nation's largest health insurer, had a huge increase in second quarter profit, $859 million, an increase of 155 percent over the same period last year; its revenues rose 7 percent to $21.66 billion. In contrast, Lockheed Martin, the world's largest defense contractor earned $734 million, a 17 percent decrease from a year earlier. Its sales were up slightly to $11.24 billion.
Boston Univ. professor Alan Sager got it right: Health insurers "give us very bad value for the 10 to 20 percent share of the health dollar they skim off the top."
"Does the US offer some of the very best health care in the world? Yes, but unless you are wealthy or have terrific health insurance, like members of Congress have, you will not have affordable access to that terrific health care. So our national statistics stink because such a huge fraction of the population does not get the first rate health care."
Maybe I am lucky, but every job where I have worked I have had terrific healthcare benefits. I am by no means wealthy or a government stooge.
BTW, if you take a look at cancer survival rate statistics, US outperforms Canada or any European Country. Our equipment is far superior and healthcare access is far quicker. Also, you don't have to wait monthes for an MRI and more monthes after that for treatment. I believe Canada averages 18 weeks of wait before treatment. In fact, b/c of a Supreme Ct ruling, Canada has now set up private care facilities which have gained in popularity because of the problem of government rationing (despite the fact it isn't free). Single Payer is a nightmare. I'll gladly pay my $250 a month for my family to avoid that catastrophy.
Joel, anyone can copy-paste from Opensecrets, but it takes more than that to discover what the numbers mean.
The free market system is based on logical deductions and expectations. So of course it makes sense that all market actors want to preserve their stake or success by increasing profits and keeping the little guy down. Guess what? So does the government. And in particular, tax-n-spend liberals such as yourself.
Of the almost $28 million the PhRMA spent on lobbying in 2008 and 2009, 54% of the money filled Democratic coffers. Now Pfizer, responsible for $18 mil of that #, opposes a public option, but supports mandates - why? Perhaps because on one end, they stand to gain artificially higher profits, while on the other, their cost-benefit ratio of a public option reduces their profits. Obviously, they hope to spend enough on Democratic lawmakers such as Chris Dodd in order to wedge through a universal mandate for insurance.
Now, you may not see why this is so obvious, or even why it's significant at all. Because to you, corporations are the oogey-boogeyman and government has no incentive to do no wrong thus they are going to take care of us all! But consider Pfizer is part of the largest biomedical industry in the world, whose international profits are 3x their American ones. Another piece to connect for you - they are the ones selling France and Canada technology and other treatments. They, are, in effect, subsidizing French and Canadian healthcare systems. I guess it's not too bad if we are socialized ourselves, because Asia will go on strong afterwards, with the world's 2nd largest biomedical industry in the world. That only means more jobs, more profits, and thus more prosperity for them... hey, we don't want our fancy schmancy, high-efficacy treatments. Singapore, you take em!
Also, your case in point that the healthcare industry has spent more money on lobbying in the last two years than any other industry. This is a natural reaction whenever Congress tackles legislation that may affect their operations. Consider the energy industry, which is 2nd in first half lobbying for the entire year - again, $11.3m in Q2 from justACCCE. $25 million in total! Not at all far from the $28m spent on healthcare lobbying. Look it up! The AP reported on it just today. I suppose the fact that Congress's recent passage of the cap'n'tax plan, which you also probably jumped on the bandwagon for, has nothing at all to do with this surge of activity.
Case in point, when you finally learn that corporations only endorse legislation that benefits them, it will come as no shock to you that they will spend a little change of their own trying to get certain bills through. Bills that make competition harder for them. But government, as FA Hayek explained, operates from the same principles of the free market as well. They are just as intentioned to preserve their status as king of the hill, so when you go off and shout about how great universal healthcare is because the government will provide it and they can do no wrong, perhaps you also need a history lesson as well as one in economics.
I really wish Mr. Obama had spent some time working in the real world, understanding what real workers, who have to budget, who DON'T want welfare, but want a job to make a living, support their families, and have a sense of pride - instead of getting government assurances that this spending spree will be good for all of us. I've never been so disappointed with a Democrat in all my life...
Joel makes some good points about the bailout, but his mid-column liberal rant of healthcare is, as always, folley. Too bad - he almost had a good article going. Fortunately, everyone else made good points, so I don't need to restate them.
@Dave: I completely agree. It's especially hard to watch this robbery committed upon America's youth as their futures are sold in order to save their boomer parents' lifestyle.
Posted By: Donna Maskell
Date: 2009-08-19 14:42:12
Joel --
After the rant about the trouble with private insurance, I was astonished to see you hoping for an extension of Medicare. Being against huge profits is a philosophical point, but Medicare runs up huge deficits. Personally, I'd rather see the insurance companies taking huge profits. I admit to a bit of envy of the profits, since I am never likely to see $120 million for a year's work. But the huge deficits incurred by Medicare wind up coming out of the entire country's pocket, for generations, if the government stays in effect. I am worried that our nation is not too big to fail, given the number of people who have worked over the last 80 years to destroy our economy. But I am becoming more of a mind to separate the insurance companies from the medical providers. At least we could get a stable price for a given medical service, not prices negotiated between every combination of medical provider and insurance provider. I think catastrophic insurance is the way to go, like with automobile insurance. But I don't have a perfect solution, not even to my own mind.
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