While watching Senator Obama on the stump this morning in Pennsylvania, he kept talking about working families and their right to health care.
Hmm, a right to another tax-payer picking up the tab for your health care? I don't recall reading anything about health care in the Constitution / Bill of Rights. That's because you do not have the right to health care. The founding fathers never intended that the President of the United States would sponsor a program that takes wealth from one tax-payer in order to pay for a welfare program for another citizen. That's redistribution of wealth...fine for China, not for the United States.
Moreover, the very idea that government can administer an efficient and low cost health care program is laughable. I can't think of a single industry in which government got involved and the price went down. Nor can I think of one industry where the level of service remained the same as in the private sector after government got involved...ever been to the Department of Motor Vehicles?
Election Integrity Seminar, January 17, 2023
1 year ago
So, if you don't think everyone should have health care, do you also not believe in fire departments and police departments who provide services to all and are government operated? Do you really feel that individuals should provide their own private fire protection, police protection, sewers, road maintenance, bridge building, education, etc??
ReplyDeleteAnd, if you don't think government is able to provide such services, check out Canada, France, Britain, Sweden, Norway, and nearly every other established country in the world.
Police and fire provide for the "general welfare" as opposed to healthcare which provides for individual welfare.
ReplyDeleteJellen,
ReplyDeleteJohn hit the nail on the head. We aren't talking about a project for the "general welfare" of the population. We are talking about a program that provides individual welfare. It provides a service for someone which they could provide for themselves.
Also, each one of the countries you added in your second paragraph are countries that have a tax rate as which cap out over 50% (VAT + income) versus the US which is caps out at about 35% federal income tax. (take a look at http://www.worldwide-tax.com/).
So the question then becomes are you getting what you paid for?? The free market could provide us most of those services cheaper, at equal or higher quality and provide the opportunity for competition, which further drives down price. We had a free-market health care system in the 50s that was the envy of the free world. Most people only carried coverage for catastrophic situations, which is what every other type of insurance does. Then government regulation got involved "to save us" which drove the price up, opened the door to lawsuits and drove the medical decisions in to the hands of bureaucrats and medical case workers instead of doctors.
While the founding fathers did not include "health care" in their original framing of our country (A concept that was non existent at the time) they did say we had the right to Life, Liberty, and the Pursuit of happiness.
ReplyDeleteWell, health care in this day and age is almost necessary for life to be lived in a quality manner.
Or, you could argue that it an inalienable human right to have access to tat which enables you to live free of disease and illness.
In any case, the loss and lack of health care in this country is one of the largest contributing factors to our economic declines. The majority of bankruptcies filed every year are done so due to large medical problems and life long or terminal illness.
This issue doesn't just affect the individual, but everyone as industries lose valuable employees, families lose income earners, and companies must write off yet more losses because of the bankruptcies.
It's much more complicated and integral than each individual getting a yearly exam "for free".
And no, the health care plan that Obama proposes doesn't actually mean that some people will be getting health care off the backs of others tax dollars any moreso than they do now. It works on a sliding scale, and like any group policy, the more people paying in, the cheaper it costs.
Health care did exist when our founding fathers were framing the country. Did they not get sick and require doctors? Health care back then was comprised of paying for services rendered by a doctor. No insurance company revoking your claim. No bureaucrat managing what care type of care you got. It was the patient and the doctor deciding how to care for an illness.
ReplyDeleteIt was like that until about the 1950s...then HMOs and government regulation reared their ugly heads in the health care industry. With regulation came lawsuits against doctors. With lawsuits came liability insurance. With liability insurance came doctors charging higher prices to offset costs. That's the situation we are in today.
I am shocked that people actually believe that a government managed health care system will make things better. They've done such a great job with all the other programs they manage...hey, how's that Fannie Mae operating lately?
Anok, here's a question for you: If an apple costs $2, you have $1 and I have $3. If I am forced to give you a $1 so you can have an apple too, isn't that you mean that you are getting an apple of the backs of others?
Matt, the "health care" that our founding fathers knew of was, erm...not exactly what we know of today - in terms of care or otherwise. And it wasn't readily available to the majority of people. And yes, health insurance did exist prior to the fifties. What you are talking about is HMO's, Health maintenance Organizations that work like PPO's, or insurance companies scratching the backs of preferred providers, and Pharmaceuticals, which didn't really hit full swing until the 80's and amazingly enough operate as private, deregulated industries.
ReplyDeleteAlso, Fannie mae et al was a private loan company. Obviously, deregulated privatization didn't work well for them, or their partners. SO I'm not really sure what point you're trying to make with that.
Anok, here's a question for you: If an apple costs $2, you have $1 and I have $3. If I am forced to give you a $1 so you can have an apple too, isn't that you mean that you are getting an apple of the backs of others?
That's not how the insurance industry works - government, national, or otherwise.
It works like employee based health care. Everyone pays in a premium, at a directed price (the larger the group pool, the lower the premium) and everyone receives a determined amount of care, in dollar amounts.
Government run health care works in the same way - with taxes and sliding pay scales (Just like the insurance premiums at employer based rates differ from premiums at individual pay rates for the same company, yet, everyone receives the same care).
Your annual premiums NEVER add up to the amount of health care you are entitled to, annually. You pay in less than you can take out. That's what insurance is, and, how they do it goes like this:
They get premiums at varying rates from varying groups. They pool the premiums together, and invest it, creating a surplus to cover all possible claims (by law) and a profit for the company. Doing this with the government would actually mean that some of your tax dollars go into it, and you pay the difference on a sliding scale (just like every other insurance program privatized or otherwise).
Obama's actual plan retains the private companies - and employer based health care. The regulation comes into play with regards to what the companies can and can't do, standardizes rates, payments, and premiums, and makes it illegal to deny someone coverage for pre-existing conditions.
Get it? No one is "getting a free ride" and no one is taking your dollar to buy their apple anymore than they already are.
The last employee you worked with with the same employee based care as you who had a stroke and has used up all and then some of his insurance - guess what - your dollars went towards that. Doubly so, if you invested in the same stocks as the provider.
Hope that clears a few things up.
Anok,
ReplyDeleteI respect your position, however there is a lot here that I would like to refute.
First point, HMOs & PPOs do run as private organizations however I completely disagree that they run as deregulated industries. HMOS and PPOs are not health care. They are insurance corporations. The reason you buy insurance is to protect against catastrophic occurrences, but not medical insurance. You file an insurance claim for every single visit to the doctors office. So this begs the question, why is every day medical care so expensive. The answer: government regulation. The difference between the 1950s and today is the massive amounts of regulation on doctors and insurance companies alike. By its very nature, regulation drives up cost in business. My wife is a Benefits Director for a mid-sized financial corporation. In their office, they have a team of 10 employees (including 3 attorneys) who's sole job is to make sure this corporation complies with HIPPA regulations. There's half a million dollars in employees to make sure they are complying with just one of the government's health care regulations..and they are a brokerage firm, not a health insurance provider.
Secondly, Fannie mae et al are NOT private loan companies and its definitely not unregulated. It is a Government Sponsored Enterprise (GSE) put into place during FDR's Raw Deal program of the 1930s. Many people argue that it's status as a GSE along with Barney Frank's brain-child to ease qualification conditions in order to put low income people into mortgages is the prime reason we are facing the so-called credit crunch we are facing today...but that's a different conversation for a different thread. My point in bringing them up is the fate of Fannie Mae is exactly what happens when government meddles in an industry that should be allowed to operate within the free market.
The insurance industry doesn't work the way you are describing. That would imply that for life insurance a 400 lb man who smokes three packs a day would pay the same premium for $500k in life insurance as a marathon runner who has 3% body fat. That is simply not the case. Insurance premiums are set based on risk. If the insurance company thinks you are a lower risk, they give you a better price. That's the way health insurance should work too, but it doesn't.
Also, if a company offers health insurance, they do not offer the same health care plan at a different price for an executive than they would for a mailroom worker. In fact, it is illegal for them to do so actually. Everyone who elects that plan, pays the same price. That's NOT how national health care would work. Everyone gets the same coverage but the price is based on the sliding scale which you are discussing. So we are back to my $2 apple example.
National Health care is absolutely a scheme to redistribute wealth from the haves to the have-nots.
Post-script: I'd still buy you the apple because I am a nice guy, but only if we never have national health care. The good news is, an apple a day keeps the doctor away....or so the adage goes.
Matt, Actually, yes that is how the industry works (I'm a licensed agent who is well versed in the laws, regulations, and practices) HMO's have everything to do with health insurance, and no, Fannie mae et al is not a government funding. If they were government funded there wouldn't be such a debate about the government taking them over as a bail out.
ReplyDeleteAnd I never said it was unregulated, I said it was deregulated. There is a difference.
What your friend's wife does in a brokerage firm has nothing to do with how health insurance providers or agencies must comply with laws, nor does it have anything to do with the so called costs of insurance.
Also, insurance companies barter their prices with medial industries. Only non insured people pay full price.
The insurance providers pay a fraction of the costs - which is what is driving up medical costs, not the other way around.
You have mixed up several different industries here, and haven't got a clue about how any of them operate.
Not fer nothin - as I like what you have to say on much of everything else on your blog - but the "free market" or deregulated businesses Reagonomics, and other capitalistic ideas of that styling are what have been creating the crisis here.
Unethical companies doing business in the name of greed protected by the "free market" have recreated the economic divide that we say in 1928 and 1929. The unequal distribution of wealth in a unregulated and over confident economy, borrowing on the margin (by private industries and individuals alike) and fast money made on illegitimate investments with a health dash of corrupt business practices = Great Depression.
The government bailed them out, but not in time. Kinda like now. The government had to come back in, and create new laws to keep this country from going under - otherwise, left to it's own devices, the free market implodes.
Every. Time.
You want a free market for regular goods and services? Go ahead.
Leave the necessities out of it though. Utilities, firefighters, Police, Insurance, medical care, housing and food.
Everything we need to survive.
Damn, forgot (sorry)
ReplyDeleteYes, different packages are offered to different employees (save for very small companies) in employer based health care.
And, not all employees are eligible for insurance in the same company.
Part timers pay different rates than full timers, employees pay different rates than management, and/or depending on who or what packages were purchased by the employer - different varieties of packages, all at different costs can be offered simultaneously.
Just like any other employee benefits package. They are not all equal.
Inhale...exhale...here we go:
ReplyDelete1) Fannie Mae....this is from their website.
"Fannie Mae was created in 1938, under President Franklin D. Roosevelt, at a time when millions of families could not become homeowners, or risked losing their homes, for lack of a consistent supply of mortgage funds across America.
The government established Fannie Mae in order to expand the flow of mortgage funds in all communities, at all times, under all economic conditions, and to help lower the costs to buy a home."
Also I never said they were government funded, I said they are a quasi-government agency (GSE)...and the bailout was to subsidize the sub-prime loans they were directed to issue to folks who couldn't pay them back. Thanks for nothin' Barney Frank!
2) "Unethical companies doing business in the name of greed protected by the "free market" have recreated the economic divide that we say in 1928 and 1929. The unequal distribution of wealth in a unregulated and over confident economy, borrowing on the margin (by private industries and individuals alike) and fast money made on illegitimate investments with a health dash of corrupt business practices = Great Depression."
Wow, you've memorized your socialist economic policy manifesto to the letter. I'd be happy to debate the causes of the Great Depression in another thread, but I would suggest before we do you consider reading Dr. Murray Rothbard's book "America's Great Depression" first.
This idea that the free-market and greedy corporations are the cause of these bubbles is the exact populist nonsense that socialists and progressives (and unfortunately both Obama and McCain) use to scare citizens, so they can suck away their economic freedom with programs like welfare, social security, the Federal Reserve system and now health care. Anyway, this really is a different topic for a different thread.
3) I am talking about MY wife....if you think having to spend $500k-$1M to retain employees just to manage health care regulation has nothing to do with costs, you need to go back to business school my friend. Corporations aren't in business to lose money. When you levy cost against them, they pass it down to their consumers. It has EVERYTHING to do with cost. Regulation = Higher Cost. ALWAYS. How many employees do you think United Health Care has hired to manage compliance to government regulations?
4) So wait, are you telling me that my example of life insurance risk is not correct? You're actually trying to say that a 400lb man who smokes 3 packs a day pays the same premium for life insurance as a marathon runner in perfect health? WOW!
5) I want a free market for EVERY industry. Even industries that are necessities, I want governments role to be oversight on the private company that delivers the service...
6) Lastly. I concede that part-timers and full-timers don't get the same benefits offerings. My point was among full-time employees at a company, if you offer health plan A, it has to be the same price for employees in the mail room as it is in the board room...otherwise it is a discriminatory program and the IRS will slap you.
What Fannie Mae was, and what it is now are two different things - however that not withstanding it was their own practices - not regulation - that caused their downfall.
ReplyDeleteI have read Rothbard et al, and I am 100% against privatization, 100% against capitalism, (unregulated) and am 100% in disagreement with Rothbard's assessment of the Great depression, and other economic policies. As are the vast majority of Economists who studied the Depression at great length. Rothbard's the only one who completely disregards the unequal distribution of wealth (due to unregulated markets, and excessive wealth gains by a small percentage of people).
I prefer a gift economy over all - but will settle for a well regulated industry. We have centuries of proof that "free markets" in the capitalist sense does not work.
Sorry, I didn't realize it was your wife :) Why companies spend millions of dollars on some things but not others (like CEO salaries) is an prime example of why these unregualted businesses don't work.
Why your wife's company has chosen to spend a million dollars on employees for only one aspect of the company isn't something i can comment on, as I don't know the business, the size, profits, Competence of employees and so on. But I highly doubt that following laws that regulate ethical business practices warrants $1 million per year.
That's the company's choice, however.
And yes, I am telling you that a man who smokes 4 packs a day and weighs 400lbs can pay the same premium for life and health insurance as a healthy man - and for several reasons.
1) If he has his insurance through his employer, and the company is very large the underwriters do not asses individual risk, as all risk is pooled.
2) If he got his plan Prior to, or without and health conditions, he would pay the same or similar premium as a healthy man because at that time, he was healthy, or deemed as such.
3) Most insurance companies will now attach risk waivers and riders to polices that state any pre-existing conditions will not be covered, and any health problems as a result of said condition will not be covered. SO he pays the same premium, but with stipulations.
See? That's how it works.
Finally, the laws that regulate how insurance can or cannot be offered differs from state to state. Level of employment can and often does dictate what plans are offered.
And here's my question;
What correlation between stock/ investment failures do you see with the failure and need to bail out the insurance company AIG?
And, why is it so important that the government bail out AIG?
You are talking about large institutional insurance plans where the employer pools their employees to mitigate risk and negotiates insurance contracts without pre-existing conditions. That's all well and good, but it's NOT the majority of workers in America. The majority of workers are employed by or own small businesses.
ReplyDeleteHow about for those, like me, who don't have an employer. I am a small business owner and as such purchase insurance from the open market. I don't have the leverage a large corporation has to say to an insurance company, "if you don't take my employees without pre-existing conditions, I'll take my multi-million dollar contract away". I can negotiate somewhat but ultimately, they have a bottom line and if it isn't financially beneficial for them to do business with me, they will decline my business. Which is how commerce should always work.
To give you an example, I just purchased a term-life insurance to get some additional coverage for my family. The life insurance company, sent a medical assistant to my house to give me a physical, including blood work, to confirm that I am in good health BEFORE they agreed to issue me a policy. That's mitigating risk. If I was 350lbs and a crack smoker, they wouldn't have been too excited to write me a policy.
You are assuming I believe that the government SHOULD have bailed out AIG. Quite the contrary, I think they should have suffered the same fate as Lehman Brothers, as should have Bearn Stearns. Not only do I think they shouldn't be bailing out these companies, I believe that GOVERNMENT is the cause of this credit crisis in the first place.
In the mid 1990s, the Clinton administration revised the Community Reinvestment Act, a bum piece of legislation to begin with, which increased the number of loans to small businesses and to low-income Americans for home loans. This change also permitted the securitization of these loans, which got the ball rolling on this bad-debt being traded as if it had some sort of value. Enter 2008, when folks who weren't credit worthy to begin with, default on their loans. Now a piece of paper for a $300k loan is now worth near nothing. Loans backed by the Government agencies Freddie Mac and Fannie Mae which cause them to need help from Uncle Sam. Any monkey with a calculator can figure out that the net result wouldn't be good. I blame corporate greed to an extent sure, but that ignores the root cause => Government intervention in financial markets.
Lastly, on Rothbard: Rothbard doesn't claim that there weren't a group of wealthy men who profited from the Great Depression. Quite the contrary, he clearly points at folks like JP Morgan, Paul Warburg, Rockefeller et al. as culprits in slamming in the Federal Reserve Act through Congress 1913 and those same men being involved in many of the bank runs that occurred that triggered the market crash in '29. Also, I refute that there Rothbard is the only one who "completely disregards the unequal distribution of wealth (due to unregulated markets, and excessive wealth gains by a small percentage of people)." The great economist Milton Friedman put out an entire study on the topic in which he conclude the vast majority of the blame should be directed at largest tax increase in peacetime history (1930-31) and the Federal Reserve system.
Anyway, thanks for the healthy debate. I am encouraged that two people of the polar opposite political and economic view can debate with civility. Such is not the norm in the sound-bite, media driven political climate today.
Thanks, Matt, I am enjoying the debate as well.
ReplyDeleteNo, with regards to the insurance policies - you're right,if you are purchasing individual policies you will face the most discrimination, and, will pay the highest amounts. Hence the call for nationalized care - why should you (a healthy man) pay more probably double, what an extremely unhealthy man has to pay for health or life insurance?
That's sort of the point. (But anyway, you had asked about an unhealthy man VS a healthy man, and there are more than a few examples to show that they can in fact, pay the same or less under certain circumstances)
About Rothbard, Friedman they are all of the Mises school of economics. So, it would stand that they would have the same opinion about the causes of economic meltdowns ;)
However, the businesses and trade prior to the Great Depression were not, in fact regulated so I have yet to see why people insist on blaming regulation when time and time again we see deregulated economies crumbling. (Barring, of course, 100% State owned economies as well - the extreme and polar opposite, and just as bad for business).
Furthermore, the government did not twist the arms of companies to give out "bad loans" Clinton et all did not start our current economic problems by way of negating the value of the dollar (Reaganomics) and they certainly didn't force companies to pay the CEO's 300 times the salaries of average employees, or make bad investments.
The problem with these companies isn't that they have been regulated by labor, wage, and product standards. It's bad accounting and business practices based on greed.
Imagine how well they would be doing now if they didn't make poor investment choices, and stopped paying enormous salaries at the top, and kept that money in the business for good, use, or to keep the company in the US, or to keep Americans employed so that we could afford to buy or invest in their products?
And, while I do agree with you somewhat that companies like AIG just simply be left to crumble on their own - unfortunately they insure so many people, companies, and other insurance companies that when they go, the domino effect will cause an economic collapse.
It's the inherent problem with Capitalism. So now they cry about regulation (which isn't what caused their demise whatsoever) and then turn to the very government they blame for help.
And if they don't get help, we all go down.
Fantastic.
In away, I wish it would happen. My husband and I are the types who could easily survive a depression - so it won't bother us any. (maybe a little). But in a way, I'd like to see these big greedy corporations go down, and the economy with it so that maybe people will wake up and realize that it isn't working.
Let me ask you this...what regulations do you feel are the cause of our current economic demise? Specifically.
Because the testing and records regulations that had originally been set into place for lenders like Fannie and Freddie Mae were removed and/or changed in 2005. Which is when the problems started - not before.
And the CRA was designed to prevent banks from discriminating against their communities by only looking towards wealthy customers, and not to push banks to dole out unsecured subprime loans (of which about half were not even regulated by CRA, nor required to do anything by the law).
So, which regulations in business do you think are causing problems?
Anti-discrimination regulations? Labor standards? Unionization laws? Wage standards? Taxes?
"Hence the call for nationalized care - why should you (a healthy man) pay more probably double, what an extremely unhealthy man has to pay for health or life insurance?""
ReplyDeleteI should pay what an unregulated market will bear based on supply and demand. Without regulation, the insurance companies would have lower costs, which would help them lower prices to compete. Without regulation, more companies would move into the health-care space, which would increase competition and lower the price too. Health care would be more affordable in an unregulated free market..even moreso, I'd wager than what it would be under a national health care plan.
Moreover, this doesn't address my fundamental opposition to national health care and the actual initial point of this thread. Under what authority does the federal government tax the citizens of the country in order to implement this individual welfare program? This isn't like the fire department, police departments, road maintenance or the military...which are programs designed to benefit and protect the general welfare. Nationalize health care is designed to benefit the individual welfare, more over it is anti-competitive and unconstitutional. I can pay for health care even under today's conditions. It is not responsibility to ensure that you can too.
Two other points of contention:
My friend, it is not an accurate statement to say the businesses before the Great Depression were not regulated. In fact, the Federal Reserve Act had been in place for a decade and a half, so monetary policy was not controlled by the market. If the money supply is artificially controlled by a central bank, regulation has already run amuck. The same is true today, except on a way greater scale.
Clinton's revision to the CRA absolutely DID twist arms to write bad loans. It REQUIRED banks to loosen creditworthiness guidelines so that low income folks could get mortgages. I do concede that not all of the sub-prime loans are result of the revision to the CRA, but the CRA did open the door to stretch the definition of a qualified applicant. Which is why I can't place all the blame on Washington. Some of this is about greed, and those companies should be punished by letting them go out of business.
Post-script:
One other small thing, while Rothbard is of the Austrian economic school, Milton Friedman was not. He was a Keynesian who came to his senses. In fact, Rothbard's writings were quite critical of Friedman because he believed his viewpoint too pro-government and less individual liberty.
To answer your questions: it is easier to say the types of regulation I DO support. Those being regulations which prevent anti-competitive or predatory business practices and those that force full-disclosure from business to consumers. Almost everything else gets a thumbs down.
Are you saying that preventative health care doesn't benefit the people as a group? People with no access to health care and those with restrictive policies wait too long to get proper care, and thus when catastrophe strikes, they cost much, much more causing the cost of health care to go up - because, quite frankly, they probably can't afford to pay it anyway. And if they do have a small amount of insurance, the companies are notorious for stalling payments beyond reasonable time frames - thus causing costs to rise even higher.
ReplyDeleteHealthy people also mean less sick days at work, or less sick workers at work. That means more productivity, and more income earned, which all helps out the economy.
And, that would lower the amount of bankruptcies filed every year by families who lost a battle with a catastrophic or terminal illness. Which comprises the majority of bankruptcies, which affects other industries 9mortgages, loans, credit cards and cost of living bills).
We don't live in a bubble. and psst, the price of insurance isn't regulated now. The companies set their prices based on the market, risk, and estimated return. The government does not tell insurance companies what they can and can't charge - and prices are all over the board. I'm not sure why people keep thinking that it is.
Furthermore, the Federal Reserves is a private bank that works with the Government. Prior to Reagan, our money was backed by gold, so it had to be regulated - we couldn't print or put more money into circulation than we had the gold to back it up.
Unless you want companies to just print their own money? What worth would it have then?
And no, the CRA did not 'twist arms' to give bad loans. It "twisted arms" to stop discrimination. As I said, about half the companies who engaged in the sub prime mortgage weren't even part o fteh CRA or regulated by it - so how is that regulation the cause of it?
And, as cases are coming out and investigations are being made, we are finding that loan officers were intentionally sending through and approving FALSE applications - or fraudulent applications.
The CRA did not force them to make those bad moves, and, the CRA also states that:
The Community Reinvestment Act is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe and sound banking operations.
That's not saying give out bad loans - or act recklessly. That's a regulation stating that banks can't discriminate against small businesses (like yours), or people who aren't super wealthy - like my husband and myself. We are "poor" but make more than enough for a small mortgage, for a reasonable home. Without the regulation, we would have no chance at getting a mortgage, but with the regulation in place - and a credit check and proper research - we are fine.
The CRA also didn't force banks to give out huge loans to anyone - the banks decide that. They assess your debt to income ratio, your income, and tell you how much you can reasonably borrow.
And, which Friedman are you talking about? Milt or David? Milt was criticized for not being extreme enough for Rothbard, but David is right on track.
And one more note:
SO you don't support any legislation or regulation that protects actual people over corporations? Such as labor standards (no slavery, no child labor, equal pay for equal work, no discrimination based on race, gender, religion, sexual orientation, etc), minimum wage, child labor laws, the ability for workers to unionize and dictate the conditions of their work?
Corporate accountability with regards to the damage their products cause, or people they kill with it? Product standards such as making sure food and medicines aren't poisonous (like the milk in China right now)?
Safe working conditions... none of those regulations seem worthy to you?
They were put into place, after all, after people - the workers, human beings protested, acted, and fought to have better work standards and fought for change in the industries because left to their own devices - corporations don't do it on their own.
That simply amazes me.
"We don't live in a bubble. and psst, the price of insurance isn't regulated now. The companies set their prices based on the market, risk, and estimated return. The government does not tell insurance companies what they can and can't charge - and prices are all over the board. I'm not sure why people keep thinking that it is."
ReplyDeletePeople keep thinking that it is because they understand that operating costs have a direct relationship to the price of a good or service. I don't know how you can deny that. If you have to expend resources to comply with government regulation, then you are raising your operating cost. Corporations are in the business of making money, they won't eat the cost of compliance. They pass it on to their customers. That's business 101.
"The Community Reinvestment Act is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe and sound banking operations."
This statement from the CRA you quoted is actually illogical at face value. Help those who otherwise couldn't qualify to get a mortgage, but at the same time make sure this is a safe banking operation. Loaning money to people who otherwise couldn't qualify is never a safe banking operation. Moreover, the CRA wasn't optional; lenders were forced to comply. You are illustrating my point with this quote. This is a classic example of some good intentioned progressive writing a bill that meddles in the economy under the guise of 'doing the right thing for poor people' and really screwing the proverbial pooch for the people it was trying to help..to the tune of $700,000,000,000.
*****
I'm sure that this will shock you, but you and I both agree that health care is a real problem. The disagreement is in the solution. You think that government should come in, mandate and regulate health care to solve the problem. I am saying that government IS the problem.
You believe in the benevolence of government and their stewardship with my and your money. I say they have a long and illustrious record of overspending and corruption.
Moreover, I would argue that my choice of liberty is more siding with the people than your choice of welfare is. I don't value corporations over people. I give them equal respect. I don't want government in people's wallets deciding how hard they should work to take care of other people's responsibilities. Nor do I want them telling a CEO how to run his company. Nor do I want regulating any of the social issues either. I only want them to do the job that was outlined in the Constitution and NOTHING MORE.
Oh, one other thing.....
ReplyDeleteReagan, while a great man and a great president in my view... did some very un-conservative things in his day. However, killing the Gold Standard wasn't one of them.
The gold standard started its road to extinction in the 40s with the inception of the Bretton Woods system and breathed its last breath in 1971 under Nixon.
Matt, listen, if you really believe that a multi-billion dollar private company like AIG went under (or is going under) because of HIPPA costs, you really are mistaken.
ReplyDeleteThe government does not regulate how they did business. They did not regulate how much they could or couldn't charge, they did not regulate which insurance policies they should purchase, or which policies they should allow policy holders to buy from them, and at what cost. (mainly other insurance companies).
All businesses have costs - blaming an entire meltdown on one cost is ridiculous. If the government had no basic regulations on the company, they would still have gone under.
Who would you blame then?
Right now these companies - and it's come to the news finally that companies like Fannie Mae were fluffing the books to try and bolster their purchasing power - are asking the government for $700 BILLION dollars or more without any stipulations.
The government did not force them to make the bad decisions they made. Now they want to not only blame the government, but have the government spend nearly a trillion dollars on them, and hope and pray they don't mess up again.
And Reagan was the one who decided the answer was to simply print more money. That choice started the serious devaluation of our dollar.
And one more thing, about the CRA. The policy makes perfect sense. Which is why I think you are confused as to what the policy actually is, and calls for.
There are people just like you and me who make more than enough money to borrow a reasonable amount of money for a mortgage who don't classify as "rich". A $150k Mortgage at 6% APR costs a mere $600 per month, give or take. I currently pay $1200 in rent.
Obviously, I can afford the mortgage as it would actually SAVE me money.
Rich and wealthy are what the average bank targeted for business leaving the average American out in the cold.
We couldn't buy homes, we couldn't start up businesses. The government decided to stop this discrimination.
WHat the policy didn't say was that banks should falsify information, take people with bad credit and poor payment histories or people who really couldn't afford to make a mortgage or loan payment with their current debt to income ratio.
And it's not just poor folks who fit into that category. There are plenty of middle class folks who make decent salaries so it looks good on paper, but the have so much debt they are just squeezing by. Underwriters have their job for the specific purpose of identifying, and rejecting such a risk.
Furthermore there was a speculation bubble that burst. Everyone though, Oh, the GDP is up! Jobs are being created! The economy is good!
They just expected everyone one would keep their jobs, and make consistently larger salaries.
Sound business decisions aren't made on speculations, and speculative lending was NOT a government regulation.
Honestly, the government is not to blame for this one.
HIPPA is a small dot on the health care regulation radar that drives up costs.
ReplyDeleteIt's a dry read, but you should have a peak at the paper on Health Care Regulations the Cato Institute put out. Granted it's a libertarian / conservative think tank, so right off the bat it might not be your cup of tea, but if you can look at it objectively it will give you a better idea of the cost of regulation.
http://www.cato.org/pubs/pas/pa-527es.html
Also,
"And Reagan was the one who decided the answer was to simply print more money. That choice started the serious devaluation of our dollar."
This is categorically false, I challenge you to present supporting data of this claim.
And it's not just poor folks who fit into that category. There are plenty of middle class folks who make decent salaries so it looks good on paper, but the have so much debt they are just squeezing by. Underwriters have their job for the specific purpose of identifying, and rejecting such a risk.
You are correct. There were middle class people who decided to take out loans that are much bigger than they can afford. In addition, there were those speculators who thought they could get rich quick by buying and flipping houses. These people all are to blame for this bubble as well and they should suffer the same fate that Lehman suffered. BUT, this wonderful situation was all made possible by the loosening of credit worthiness standards by your buddy Barney Frank and the Community Reinvestment Act, as well as the Federal Reserve artificially keeping interest rates low which flooded the market with credit.