The Free Market Project

Promoting personal freedom & free market economics.

Union worker pay is often based on the minimum wage, as in, workers will be paid 2x minimum wage, or whatever. When Democrats say they are going to raise the minimum wage, they must know that people earning minimum wage are not people trying to support a family. They must know that raising it makes starter jobs more scarce. They have to know that money to pay people does not magically appear in a mom and pop operation, or any other business just because the government says they have to pay people more. What else explains this insistence on a policy that has the exact opposite effect on job creation that they say they want? 

My friend Coyote at Coyote blog has an article from the Wall Street Journal that explains it (linking to Coyote Blog is better here than linking to the WSJ because the article is behind a paywall):

http://www.coyoteblog.com/coyote_blog/2014/01/another-possible-reason-for-obamas-minimum-wage-push.html

Listening to Mark Levin the other day I heard him playing a speech by Gov. Andrew Cuomo in which Cuomo prattled on and on about all the things government does for us. It was reminiscent of the Elizabeth Warren comments and Pres. Obama comments about how “You didn’t build that…” You know the argument: government builds roads, government provides education, government builds airports, blah blah blah. The argument is always made as if government doing something is prior to the good things that result.

I expected Mark Levin to make the following point, but he didn’t (he made other good points).

Here’s the point that doesn’t get made, but it’s the main damn point in my opinion: Anything government does it can ONLY do because of money it has taken from the private sector. For those things that government does well (if usually wastefully) like build roads and run schools, it can do so only because it collects the funding to do them from the productive private sector. Otherwise, government would have no means to do it. The private sector is the first link in the chain.

Moreover, without the private sector, there is no reason to do the things government does. The Interstate Highway system, always one of the things the leftists point to as a “socialist” enterprise because government did it, was not done so that your family can take a vacation and have an easier drive from your house to the beach. It was done to make transportation of goods and services more efficient. It was paid for with tax dollars generated through the wealth producing private sector and the reason for doing it was to enhance the ability for more wealth to be created. Your vacation is a pleasant side-benefit. The same thing holds true for “educating the workforce” (which Cuomo and his ilk always point to as though the government does that without anyone paying for it but the government, out of the goodness of their hearts), and building and maintaining roads in cities, etc. The things government does it can do because of money generated by the private sector and government does them to benefit the private sector. Yes, some of it is paid forward by the private sector, as their tax dollars paid today are building roads that benefit some other private sector business and its employees tomorrow. But that does not mean that government did it without the private sector paying for it out of some foresight regarding what that future business would need. The successful private sector that provides the wealth is always prior to the government action because the government can’t do a damned thing without the tax revenue that pays for what it does.

Why do people like Cuomo never acknowledge this simple fact? Why does anyone not intuitively understand it?

Is there a life lesson in this?

1 comment

As I’m working on my prototype, something keeps coming up that seems to be a life lesson.

When I’m building something, using Plan A, I will run into a stumbling block. I go to Plan B, which is generally created on the fly, using lessons learned from Plan A, but sometimes the only lesson is, “Well THAT didn’t f-ing work!” Plan B is generally simpler than Plan A. Most importantly, Plan B usually works.

I am one guy, experimenting with how to build something that is effective and efficient. I can look at what I’ve done, or sometimes catch myself in the middle of doing it, and have a realization, shift my plan, and get the job done.

What happens when Plan A is decided by someone in a huge organization (the Federal Government, for example), and literally billions of (taxpayer) dollars are spent implementing it, and hundreds or even thousands of people are employed to implement it, and reputations are on the line? If it doesn’t work, or is clearly not working, who in that scenario is even capable of saying, “Crap! We need to scrap Plan A and shift to (or create) Plan B.” It seems far more likely to me that what the big organization would do is to double down on Plan A. Add more stuff, not simplify. Make that round peg fit in that square hole. This is true even if the “square hole” happens to be people who you are going to have to endeavor to change whether they want to or not. 

The entire scope of the project would change. Instead of merely trying to solve Problem A with Plan A, now more resources would be devoted to somehow trying to make Problem A and Plan A align in some way, or in convincing people either that Plan A really does work or that Problem A is not what they thought it was, it’s really something that Plan A actually does solve. For example, the federal government’s meddling in education with top down oversight and money. Problem A was trying to improve the education of K-12 students. Plan A was Federal involvement in curriculum and funding. Problem A was demonstrably NOT solved by Plan A, but billions of dollars and thousands of people were involved in trying to solve the problem that way, so the bureaucracy and politicians had to convince people that the real problem is not enough of Plan A. We need more Federal oversight and (ALWAYS) more money thrown at the problem. The option of a Plan B (like simplifying by closing the Department of Education, putting control back at the state and local levels, and letting people close to the problem figure out how to solve it) is off the table. Too many people are involved and too much money has been spent. We HAVE to solve Problem A with Plan A, which can be tweaked, but never abandoned.

Is Obamacare any different? Is the EPA any different?

People wonder why conservatives/libertarians are always preaching about Federalism. The smaller the operating unit is, the easier it is to shift from Plan A to Plan B. I’m one guy working on a prototype and I can make the decision instantly. A skunk works in a company working on a new product has to have a meeting, but they can make a change quickly. Big companies that have become bureaucratic are far slower to change, which is why they need to become cronies of government in order to have a partner that can fend off the smaller, more agile competition. Government works in roughly the same way. A municipality is more agile than the state, the state is more agile than the Federal government, and the Federal government has no agility at all.

How many big government Plan A’s are there that need to be scrapped in favor of Plan B? How much money could be saved by doing so?

Update on Prototyping

1 comment

A quick update on my progress, which was slowed by the holiday.

The first thing you realize (or remember, in my case) is that prototyping is hard work. The vision is in my head, and on a piece of paper, but translating that into reality is not easy. I’m working with steel, which is very unforgiving, and time consuming to work with. For example, my design calls for height adjustable catches, which means that I need to drill holes in the uprights in order to be able to move the catches up and down. These holes have to be very precise and perfectly consistent, because if they’re off, the catches won’t fit when you try to adjust them. Drilling the holes required precise marking of 72 holes per upright (two uprights for a total of 144 holes). I then had to drill each hole 3 times, increasing the size of the hole each time. Then I had to drill out both the front and the back holes (for a total of 144 holes PER upright) to the exact diameter I wanted (3/8 was too small, 7/16 was too big, so I decided on 13/32 for which I needed to use a stepped bit). In case you haven’t followed the math, that’s a shit-load of drilling. In production, all that drilling would be done by a machine, but in prototyping, all that drilling had to be done by yours truly, hoping that I could get everything perfect by hand.

In the meantime, whilst drilling all of those holes, I had time to think about the design of the catches. Naturally, I changed how I was going to do them. So I had to figure out how to get the new plan to work on the fly, which necessitated going to buy more steel. 

There are tools I would REALLY like to have to make this go faster, but I’m on a shoestring budget and I need to take the long, time consuming route instead of the faster “right tool for the job” route. I have to trust myself to do some things by hand that could be far easier and more efficiently done with the right tool.

“Why don’t you have someone else who has the right tools build it for you?” you ask. Because creativity doesn’t work that way. I need to be able to change designs if I think of something better, or realize something won’t work the way I thought it would. You can’t get someone else to do that for you, or, if you could, it would cost an arm and a leg. AFTER I work it out myself and get the prototype finished, I can have someone else do it the next time. 

One thing I’ve realized is that I’m over-building the crap out of this thing. I could use far less robust steel for the uprights, for example. However, to find exactly what thickness would work and be safe, I’d need a mechanical engineer… Again, something I can’t afford at this point, so I will consciously over-build for safety and pare it down with the help of an engineer when (if) I am going into production.

Oddly, this is the fun part. At least for me. It’s creative. I’m taking something from inside my brain and making it real in the world. Then I get to use it, find the flaws, refine the design, and build it all over again. Awesome!

Putting My Money Where My Mouth Is

1 comment

I’m starting a new project. Actually, I’m starting a new business.

One of my goals, as yet unrealized, for this blog was to chronicle stories of entrepreneurial success. I wanted to interview entrepreneurs and talk about how they started, what they’ve done to get where they are, and what they’ve accomplished (money made, employees hired, etc.).  I just have not had the time to get around to it, though I still think it’d be a great idea.

What I will now do is blog about my own story of starting a business. 

Right now I have an idea… Two ideas, really, but they are being combined into one business. Both are ideas I came up with while trying to solve my own problems. I am now at the point of prototyping them, and then I will test the prototypes.

The first problem I am trying to solve is this: My son is a pitcher and, as he’s gotten older, it has become increasingly dangerous for dear old dad to catch for him when he practices. When a kid is young, throwing 40 miles per hour, even if he puts one in the dirt and it ricochets off of your body, it’s not a big deal. Small bruise. When suddenly that same kid is six feet tall, has man muscles, and is throwing 70 to 80 miles per hour or more, that ball in the dirt hurts like hell. In the meantime, as he’s aged and grown, dear old dad has also aged and may not be quite as spry as he once was. Secondarily, when kids are catching for other kids during practice (no batter, just pitching practice) teams are limited by the number of catchers and catcher’s gear they have. A ball in the dirt hurts a kid just as bad as it hurts a dad. Few teams have anywhere near the number of catchers as they do pitchers, and time to rotate all the pitchers through a practice session when there is one or two kids who can catch is a problem. It isn’t easy to pitch, and you need to practice.

My simple solution is to build what amounts to a shield with a built in face mask. The shield sits on the ground, and the dad can kneel behind it (find me a dad who still goes into a catcher’s crouch and I’ll show you a young father). It has a cut out so the arm with the glove can reach around the shield. It has a built-in face mask so the dad can see the pitch, but his face is protected. It allows him to catch any pitch that is catchable, and to simply stay behind the shield and let it take the blow when one hits the dirt in front of him. Obviously, this could also be used by other kids in practice. (NEVER with a batter, though. It’s OK for balls coming at the catcher from the pitcher, but is not designed for taking foul balls off of a bat… that’s the warning label/liability issue). 

The second problem I am solving is this: I like to work out at home, as well as at the gym (I do CrossFit). I work out in my garage and I need a weight rack (for doing squats, pull-ups, presses, dips), but I’d still like to park my car in the garage (which is already crowded). 

My solution is to build a foldable weight rack, that mounts to the wall. Hinges allow it to folded up so it takes up less than a foot of wall space, but when unfolded from the wall it is a heavy duty, three foot deep by four foot wide by seven and a half feet tall weight rack, complete with accessories (which can obviously be removed and stored next to the wall) for pull-ups, dips, and even  lat-pull downs. The big name in CrossFit weight racks has a tag line on their home racks that is, “We believe in street parking.” I don’t. I believe in having great equipment and still being able to get the car in the garage.

I am literally about to go out and start building the prototypes in my garage. I know there are a lot of steps I need to take, aside from prototyping, including patent applications (I’m trusting y’all who read this blog not to steal my ideas). My hope is that, working in my garage, building the prototypes, and then, after a bunch of intermediate steps including finding a way to manufacture the products (in the good ol’ USA), to begin selling them online, utilizing relatively cheap website and social media to begin with, then grow the business. (I can give you a lot of reasons why I’m taking this approach, and probably will in subsequent posts).

I know my ideas are good. They solve problems that are not merely problems for me, they are problems for many other people like me. (How many dads are in my position with their kids pitching? And CrossFit, as well as simply weight training, is a large and growing market.)

As I chronicle this entrepreneurial adventure, I will post about what I’m doing, I’ll post pictures, and I may even post video. I hope you enjoy observing the process. Advice is welcome! 

Is “The Hunger Games” Possible?

No comments

I went to see “Catching Fire”, the second movie of The Hunger Games series. The person I saw it with asked, after the movie, if I thought people could really sit back and allow that to happen. (For those not familiar with The Hunger Games, the premise is that the people live in a country divided into 13 Districts and a Capitol. Each district makes a different product–some districts mine, some grow staples, some manufacture, etc.–and all of the products are redistributed by the Capitol to the other districts so everybody has enough–not really enough–of everything, and the people who live in the Capitol live a comfortable, if not gaudy, lifestyle. There was a revolution, won by the Capitol (before there were “districts” which appear to be a construct of the victors in the Capitol), years before and every year they celebrate it by having a contest–The Hunger Games–where one male and one female (generally young, late teens, but it could be a child) from each district is picked to compete in a game where they kill each other until there is one survivor.)

My answer was, “You’d have to ask a German circa the 1930s.” Or a Roman while the Christians were being fed to lions, or slaves were fighting gladiators in the arena. 

The thing about the Hunger Games that gets me, even more than the games, is the exposure of elitism. The elites in the Capitol suppress the people in the Districts, and they do it by giving them just enough (not enough, really) to survive so they can do their jobs. The people in the Districts are really enslaved by the Capitol. The people in the Capitol think they are better than the troglodytes in the Districts. The people in the Districts are wholly dependent on the Capitol which produces NOTHING. The people in the Capitol are completely helpless, unable to do anything for themselves, except be cronies of the people with power who direct the goods, but their cronyism has them living like kings.

Now, if you live in the Capitol and you live a grand lifestyle due to the labors of the poor schlubs in the Districts, but even more directly, due to the power exerted over the schlubs in the Districts by the government, are you likely to question the methods of the government, or are you more likely to go along with it because you benefit directly even though others (who you’ve been convinced are lesser beings) are being hurt? 

That is how cronyism works. That is why elites don’t mind screwing people over to gain power and keep power. They do just fine. The schlubs who are hurt? They’re lesser beings. Minorities in America should keep that in mind when they are given a government check that allows them just enough. The mindset behind the check is always, “You are a lesser being, and I know this check does two things: First and foremost, it enslaves you to me and my whims so you are obligated out of necessity to keep me in power; Second, it deceives you into believing that I am magnanimous because (even though we won’t say it out loud, in fact we’ll say the opposite out loud, but we’ll both know the truth) you are, in fact, a lesser being and need my help.”

The movies, because of the limitations of film in terms of providing complete context (it’d take too long), don’t go into the depth of the tyranny of the Capitol, or the system which allows it. My friend wondered if people could allow that to happen. I already see it happening. What other result is possible from a mega-state ruled by an elite? The Hunger Games is simply our burgeoning crony-elitist-big state-welfare state taken to a possible conclusion, but any conclusion it reaches will share the same basics. There will be a rich elite made up of the powerful bureaucrats and politicians and their cronies, and there will be the rest of us schlubs. The elites will increasingly see anyone who is not one of their own class as lesser beings. That is inevitable. Hell, it happens in high school when there are cool kids and “dorks”. The non-elite are always viewed by the elite as being deficient. So much for, “All men are created equal.” The people who are actually productive (us schlubs) will increasingly work to keep our “betters” living the lifestyle to which they’ve become accustomed and they will be rich, not as a result of productivity, but as a result of proximity to power. We will eventually just do as we’re told, so we can get whatever scraps our “betters” will give us… the leftovers we get after having done all the producing to begin with.

I don’t know the politics of the author of The Hunger Games, but what she wrote was a call for small government conservatism. If you haven’t read the books, read them. Leftists are unlikely to understand the corollary between the government in the books and progressivism. But they will have loved the books and the movies. It gives you an opening for dialog with those people. 

If you jump in bed with a giant, don’t be surprised when you get crushed when it rolls over. I don’t know if that’s a saying or not, but it accurately describes insurance companies’ situation today.

The insurance industry was on board with Obamacare. The government was going to mandate that everyone buy insurance. “Everyone” included the elusive (to insurance companies) young and healthy people–the “invincibles”–who tended not to buy health insurance. They didn’t buy it, because they knew they were young and healthy and they were taking a calculated risk that they wouldn’t need it, or would need only a cheap, catastrophic care policy. The insurance companies wanted them because the addition of people who don’t utilize their insurance adds money to the risk pool that they can then spend on someone who uses more health care dollars than their insurance premium provides to the company to cover their care. If everyone has to buy insurance, including the young and healthy, it had to appear to insurance companies that they would be able to make more money. Viola’, the decision to get into bed with the giant.

Unfortunately, the giant is rolling over.

First, the “invincibles” are not jumping on board with the plan. The cost of the policies is far greater than the cost of the fines for not purchasing one, so the young and healthy are doing simple math (amazing, given the state of education today) and realizing that they still have the same choice, pay a lot of money for a policy they won’t use, or don’t get insurance (and pay a minor fine that they can actually avoid simply by adjusting their withholding so that the IRS isn’t writing them a check–which it can deduct the fine from–at the end of the year). Additionally, the young and healthy are also the most tech savvy, and have the shortest attention span. A website that doesn’t work is a total turn off to these people. They’re also the most likely people to be aware of whether or not a website is secure and is a safe place to enter information that can be used to steal their identity. So, most of the people signing up for the insurance offered on the exchanges (excluding those going straight to Medicaid, which doesn’t help insurance companies at all) are the older, sicker, and less tech savvy people who will cost the insurance companies more than the cost of their premiums in health care claims. Oops.

Secondly, it turns out that the government, particularly this administration which believes that once passed a law is settled law and can’t be changed or repealed except those parts of it the administration itself decides it can unilaterally change at a whim in a press conference, is rather random in its decision making and doesn’t really have any clue how a business operates, or that there is a cost to paperwork. (Governments actually love paperwork, because it doesn’t cost the government anything–in terms of it actually “losing” money in the private sector sense–and it allows bureaucracy to expand which gives it more power and more happy little public employees who will vote for the party that loves expanded government.) So the insurance companies find themselves unable to plan as the government changes things without warning. One day, the insurance company must cancel plans that don’t meet the mandated coverage standard, but the next day the President announces at a press conference that they should not deny that coverage. The insurance companies, who actually have to go through a lot of work to create insurance plans, are told that what they were just commanded to scrap should now be resurrected even though everything that went into the planning for those plans has been completely changed by what the government told them they had to do prior to that little press conference. 

Insurance companies are planners. That’s damned near ALL they are. Based on actuarial tables and history and projections of costs, they put together plans that, at the end of the day, take care of their customers, cover their costs, and leave some profit. Now they are in bed with an entity that changes things at random, headed by someone who thinks only of politics and not of practical answers. One day, they are putting together plans for companies because there is a mandate that coverage for everyone, including employees of companies that provide insurance, meet a particular standard by a date certain, and the next day that date certain is a year later. Most of the work the insurance companies did to prepare for that have to be scrapped because the situation in a year may be very different than the situation they were planning for. And, given that people don’t seem particularly happy with what’s going on, the companies can have no certainty that things won’t change again between the new date certain and today. How do you plan?

Third, the political nature of government means that scapegoats will be found. With the current administration, those scapegoats will be businesses in the private sector. So, when they are not trying to put the blame on Republicans who had nothing to do with the content of Obamacare, they will turn on the insurance companies. The insurance companies thought they had a partner in the government. It turns out that the insurance companies are going to play the part of whipping boy in an effort by people who play politics with everything to deflect blame for their own incompetence. 

The final thing I’ll mention is a result of that incompetence. The insurance companies, it turns out, are not getting the information they need to enroll people in the plans they’ve selected on the website, and there is no method available for the insurance companies to know how much of the policies they are supposed to provide are being subsidized by the government. They don’t know if their partner, Uncle Sam, is picking up the tab or not. They don’t know how Uncle Sam plans to pay. What do they do with policies that are not subsidized, but the enrollee doesn’t pay (which should nullify the coverage), but the company doesn’t have any clue whether that means that the person didn’t really want to get the coverage, if the person forgot to pay, or if the person thought that 100% of the payment was subsidized. Between getting bad information from the website that they have to try to figure out how to verify and dealing with a system that doesn’t give it information about how much of a premium is going to be paid by the government (the subsidy), insurance companies now have a huge additional and completely unanticipated cost. (The government’s answer, by the way, to the problem with not knowing how much subsidy a particular enrollee is supposed to be getting is to have the insurance company estimate how much the government owes and to square it up later. Seriously. That’s the solution. Three years in the making. Brilliant.)

The insurance companies got into bed with the giant state, and they are getting crushed as the giant rolls over. Some would say they deserve it. The problem is that their being crushed is a big problem for the rest of us who are now dependent on the insurance industry to pay for our health care. 

Tough Sell

1 comment

I heard Dennis Prager say something on his radio show the other day that was so simple, and so full of wisdom that it boggled my mind. I’m going to paraphrase, because I can’t remember the exact words, but this is close: Conservatives are at a distinct disadvantage because we don’t want power. The left wants power and is willing to give stuff away to get it. Conservatives just want freedom. It’s a tough sell when your opponent wants to give people stuff and all you want to give them is an intangible like freedom.

Think about it. Obama and the Dems are seen giving people welfare checks, food stamps, disability, unemployment, Obama phones, Social Security, Medicare, Medicaid… They spend money to “stimulate” the economy. They’re trying! Conservatives on the other hand have to make the argument that people are actually hurt by all of those give-aways. It traps people in poverty. They’d be far better off if government got out of the way, stopped pulling money from the private economy, stopped strangling business with the red tape of regulation, and allowed the private sector to flourish and create more and more opportunities for people. 

People don’t even understand that Social Security is actuarially broke, and that a privatized program (like programs that work beautifully in other countries) not only yields more money for the retiree, but makes their retirement money an asset that can be passed to succeeding generations, and keeps their retirement out of the hands of politicians who have lied about the Ponzi scheme nature of Social Security since just after it’s inception.

Perhaps one of the best things about the dreadful failure of Obamacare is that the curtain is being lifted from a lot of people’s eyes. The government is being exposed as being the incompetent, wasteful, uncaring bureaucracy, and, for that matter, untruthful institution that it is. The soft hearted, soft headed economically ignorant people that make up the vast number of low information Democrat voters (the people who have bought the lie that the Democrats’ programs help people) are suddenly being rudely awakened to how full of crap those who have assured them that big government has the answers really are. They can ignore how Democrat programs keep people stuck in poverty as they feel good about voting for the party that promises that the exact opposite will happen because they don’t know real poor people. They can ignore that Social Security, Medicare and Medicaid are going bankrupt, because the checks keep going out… For now. They can ignore the fact that the debt is far too high because the government can put off the collapse for a while. What they can’t ignore is the fact that everything they were told about Obamacare is a lie (you can’t keep your insurance, your doctor, and your premium is going to go way up, not save you $2500 per year). They can’t ignore the notice that comes in their mailbox from their insurance company (or, eventually from their employer explaining why they’re no longer covered at work) telling them that they’re now screwed. Tangible pain is now being felt by people who supported the other give-aways. Suddenly the conservative argument for the intangible (freedom and how the free market works) seems to be a better argument. This may be the first time that most soft hearted, soft headed Democrats are actually tangibly effected by Democrat policies. (This is mostly because they don’t understand economics well enough to know that they are already paying higher prices for goods and services and more taxes than they need to pay as a result of Democrat policies… But those things aren’t a big enough hit, taken all at once. Doubled and tripled insurance rates for worse coverage–higher copays and deductibles–is a hit that is big enough to wake them up.)

Prager is right. Conservatism is a tough sell. As I said in my book, The Tamarack Conspiracy, no Senator or Representative wants to tell their constituents that they went to Washington and successfully left people alone. We don’t want power (power over people), we want to give people power over their own lives. There are no goodies to hand out, because that intangible thing is the goodie: freedom. To give out goodies, you have to want the power to control people’s lives. Hopefully, there are enough people being rudely awakened right now to the fact that the “goodies” they get from giving politicians and bureaucrats control over their lives have an enormous cost… They are candy with which the pedophile lures the child into the van. You know what happens once the child is in the van.

I have to say this, because I haven’t heard anyone else say it: No matter who or what Obama exempts from Obamacare this year, the same problems will occur next year. Giving people in the individual markets and employees in the group (business) markets a pass until 2014 just means that all the millions of cancellation notices will go out next year. What has been gained other than to take some heat off right now? 

The problem with Obamacare is that it can’t work. I’m not saying that it might not work, or that it’ll make things worse. I’m saying that it simply can not work. There are many places in the 2000 page law and the 20,000 pages of regulations that simply make it unworkable. We’re not merely seeing the tip of the iceberg, we’re seeing the snowflake at the tip of the iceberg. The economics of it don’t work, the assumptions about human behavior don’t work… Nothing about it works. It defies reality. It is the five year old who thinks if he jumps high enough he can fly; it’s a decent theory and a really fun theory, but it defies the law of gravity.

The economics don’t work for the individual, the insurance companies, doctors, or the tax payers. Obviously, if people have to buy coverage for things they don’t need (let alone want) they are going to pay more for coverage. Pile on top of that the fact that premiums for people paying out of pocket have to subsidize the policies of others who can’t afford them, and again premiums have to go up. As surely as 2+2=4, people will be paying more (not the promised “$2500 less”) for insurance. The only way they can mitigate that somewhat is to have the policies have high deductibles. At a certain point, for most common illnesses and injuries, a high deductible means that getting sick or injured will break you financially (in contrast with Obama’s big selling point that the great thing about Obamacare policies is that illness and injury won’t break you). The people who can afford the lower deductibles  (the “gold plans”) are the exact people who would not be broken by high deductibles, while the people pinching their pennies with bronze and silver plans are the people paying the highest out of pocket costs. What it amounts to is that people are paying through the nose for coverage they don’t want and are getting, in effect, catastrophic policies that leave them vulnerable to financial ruin anyway, which is exactly what happens with the far lower cost catastrophic insurance policies currently available that Obama decries as not really being insurance at all.

For insurance companies, the big selling point of Obamacare was that everyone would be forced to buy insurance, increasing their potential market, including the precious young and healthy who don’t use their insurance so their premiums offset the costs associated with the older and sicker insured. The problem is that the fine for not having insurance is smaller than the premium. Why would someone who is young and healthy pay high Obamacare premiums when the fine (which is practically unenforceable anyway) is less money? This leads to the “insurance death spiral”. The insurance companies must insure the old and sick, and at prices that aren’t adjusted for their age and illness, with no support from vast numbers of young and healthy people. When insurance companies pay out more than they take in, they go bankrupt. 

This isn’t even taking into account Obama’s new (an highly questionable) edict that insurance companies can still offer to let people keep their old plans. Think about how enormously ignorant of how business works you to be to stand there and basically say, “Oh… never mind. Even though I commanded you insurance companies to take years to alter your policies and your basic business model to conform to this law, you now have to also offer the same plans that I forced you to abandon (or you look like the bad guy). Am I doing this because it makes sense? No. I’m doing it to save my political ass.” What does this do to the insurance death spiral? The companies still have to insure the old and sick per Obamacare, but now they are being told that, unless they want it to look like they are the cause (rather than Obama and Obamacare being the cause) of people losing the coverage they liked and wanted to keep, they have to still offer policies that are not priced to account for the increased costs of paying for other insured people who are old and sick. Obama’s edict does nothing but put the insurance companies in an even more perilous position. It does this just to cover his own ass for the next year.

It doesn’t work for doctors, who will probably be paid even less, will have their relationship with patients controlled by the government, and who will have to do unbelievable amounts of paperwork in order to comply with the law. So the law ties their hands in patient care, has them paid less, and increases their costs. No wonder so many doctors are figuring out how to retire early. Rather than being a lucrative field, or even being a field in which young people can fulfill a goal of helping people, the medical profession will be far less attractive to young, bright people because they won’t see it as either a way make great money or to help people due to the fact that the government has so much control over the interaction. Pile on that more insured people will increase demand for doctor services, and there will inevitably be a doctor shortage.

Who picks up the tab as this thing crashes and burns? Somebody is going to subsidize these policies. Somebody is going to end up paying off insurance companies to avoid the death spiral (something that absolutely had to be in the conversation that Obama just had with insurance company execs). I’m betting that the cost of Obamacare to the taxpayers is going to be enormous. That it wouldn’t increase the deficit “one dime” was already a lie. Now, with all of this bullshit, the bill is going to be astronomical. 

Obama and the Democrats are whirling like dervishes trying to keep people on board with this completely unworkable scheme. I hope that people are not so stupid as to believe that his one year reprieve changes anything. (We won’t even get into the legality of the way he changes a law passed by Congress at his own whim.) It is designed to do one thing: shift blame from him for breaking his promise (for lying like a proverbial rug) to the insurance companies. Anyone in government with any limited amount of awareness knew that the cancellation notices were coming. The administration put out a report predicting how many people would lose their coverage. The Republicans tried to pass a bill in 2010 to stop that from happening and the Democrats killed it (love those party line votes). The one year reprieve given to companies, and (if it actually happens, which will be over the dying body of insurance companies) to individuals is simply a delay in the same damned thing happening next year. 

In my opinion, Republicans should not be trying to fix this now. They should simply be telling people the story of how they tried to stop it by repealing the law, and even by trying to make this fix in 2010. They should remind people that the same cancellation notices people are getting now are going to go out again in 12 months, plus cancellation notices to millions more people when companies have to bring their policies into compliance and thousands of companies choose not to pay that enormous expense and instead drop their employees onto the individual exchanges where they too can pay high premiums for policies that provide more coverage than they need with deductibles and co-pays so high that it’s barely like having any insurance at all.

The story of Obamacare is the story of the failure of government to deal with complex problems. It’s beyond the capability of government. You don’t put something as important as health insurance and health care delivery into the hands of the least efficient and effective thing known to man: government bureaucracy headed by politicians.

The Democrats are at it again: Trying to raise the minimum wage, this time to $10 per hour. 

Why? This time, I think it’s a distraction. It gives them a chance to vilify Republicans, who will oppose raising the wage.

Things are going bad for the Democrats right now. Obamacare is turning out to be the disaster that anyone with half a brain knew it would be. The website doesn’t work and isn’t secure. But that’s the least of the problems. In fact, I wish people would stop talking about it. The bigger issue is the policy cancellations, and, surprise surprise, the fact that the insurance offered by Obamacare is more expensive with higher deductibles. Interestingly, you can’t force people to buy broader coverage (far broader than they may need or want) and not have the price go up. You can’t cover older people and people with pre-existing conditions and not charge those people more for their policies unless you charge the young and healthy more for their policies. Shocking, huh? You can’t give some people subsidies for their insurance without getting that money from the policies of the un-subsidized. Why is this hard to understand?

What is going to happen when people, even people who got subsidized, figure out that a policy with a really high deductible (which is all that I’m hearing about) is so very much like having no insurance at all? Will it matter that you got your insurance subsidized so the cost won’t break you when you then have to use that insurance and the deductible breaks you anyway?

Also, the economy still sucks. You hear Democrats crowing about the stock market (as though the prices on NASDAQ actually reflect the experience of the average person in the economy), while trying really hard to ignore the number of people who have dropped out of the workforce, and absolutely turning a blind eye to things like the rise in people getting disability. QE is causing the market to stay high. The money being manufactured is sitting in the hands of the very people that the Democrats love to vilify (and accuse of being Republicans!) in a very weird and shady crony payoff (it seems to me). But, down here on the ground, wages are stagnant and jobs are scarce and the little guy is having an extremely difficult time bettering his lot in life. 

So… Given that conservatives were right about Obamacare and the O’conomy, the Democrats need something to vilify them with. You see, if conservative, free market capitalist answers were utilized rather than progressive answers to health care and economic problems, things would be better now instead of worse. Perhaps the poverty rate would not be sky high and rising. Maybe the minority unemployment rate would be falling instead of at incredibly high numbers. There’s even a chance that young people coming out of school could find work, or create companies, instead of being unemployed at the same time that the government is demanding that they buy expensive insurance they can’t afford on top of their expensive student loans they can’t pay off.

How do you vilify Republicans? You propose something that sounds good to a lot of people who don’t understand a damned thing about economics. It has to be something that absolutely reeks of compassion for the poor, whether it does anything positive for the poor or not, or even if it actually makes the problems of the poor worse. You propose a raise in the minimum wage! Economic morons love that one. 

I hardly need to explain why a raise in the minimum wage is damaging to anyone who would come to a website titled “The Free Market Project”, but in case a liberal/progressive stumbles onto this site, I will give the short version (any liberal/progressive that wants a more thorough treatment can Google “Thomas Sowell minimum wage” and get a lot more information). I’ll start with something simple: If you make something more expensive (especially without raising the quality) do people buy more of it, or less of it? The answer is “less,” in case you don’t know. So, while some workers will benefit from a raise in the minimum wage, many will lose their jobs, and many more will not be hired in the first place. Second, (this is a point Thomas Sowell makes very eloquently and backs up with great evidence collected by the IRS) while people talk about a “living wage” the truth is that minimum wage jobs tend to be starter jobs. They are where young people (primarily) and others go to gain a foothold in the job market. They are the first rung of the ladder. Very few people who start in a minimum wage job stay in a minimum wage job. Even if they stay with the same company, as they increase their skills and knowledge (as they become more productive and valuable to the company) their pay increases. Some jobs are just resume’ builders–the proof to a future employer that you can show up for work when asked, learn how to do a job, and do it at an acceptable level. If minimum wage is increased and employers hire fewer people, that means fewer people get their foot on that rung. Minimum wage jobs are not “career” jobs. If someone is making a career out of a minimum wage job (this has to be a REALLY small minority of workers, though I don’t have the stat) they can’t be particularly ambitious in the first place. If that is the only type of job available, shouldn’t you be looking to things that are a drag on the economy (ahem… like government policies) that prevent good paying jobs from being created, rather than trying to make employers pay workers more by force? And, speaking of employers, how does the government figure that they can raise a cost (and this is a particularly large cost increase we are talking about, since it raises the cost of employing a minimum wage worker over $2 per hour) without the employer having to figure out a way to compensate for that increase in cost? Of course they will. Raising the cost of labor does not result in extra money to pay that higher cost simply fall from the sky. So what are the options for the employer (many of whom actually work on tight margins)? Employ fewer people (causing unemployment to rise), go out of business (causing unemployment to rise), or raise prices, which gets you into a tricky situation where the poor people you were trying to help with raising the minimum wage are now paying more for what they buy (as is everyone else) which means that the increase in wages are actually washed out, and the poor suckers who thought the minimum wage raise was a good idea but now they can’t get a job are really screwed because what little money they could get now has less buying power. It’s a bad f-in’ idea. 

The economically ignorant “deeply compassionate” and the poor are once again being used by the Democrats to try to do political damage to the Republicans. The proposal (increasing the minimum wage) will actually damage the poor. This isn’t a theory, this is backed up by facts. The only reason I can think of to do it is to try to distract from the Democrats’ own disastrous policy results to focus on how mean Republicans (conservatives) are to the poor. (And there are many more of them as a result of Democrat policies!)

Note: One of the other reasons for raising the minimum wage is a payoff to labor unions, who often have as a part of their contracts, especially with the government, that union labor will be paid some multiplier of minimum wage.