From the Presidents latest health care policy speech:
Despite all this, the insurance companies and their allies don’t like this idea. They argue that these private companies can’t fairly compete with the government. And they’d be right if taxpayers were subsidizing this public insurance option. But they won’t be. I’ve insisted that like any private insurance company, the public insurance option would have to be self-sufficient and rely on the premiums it collects. But by avoiding some of the overhead that gets eaten up at private companies by profits and excessive administrative costs and executive salaries, it could provide a good deal for consumers, and would also keep pressure on private insurers to keep their policies affordable and treat their customers better, the same way public colleges and universities provide additional choice and competition to students without in any way inhibiting a vibrant system of private colleges and universities.
There’s a lot that’s revealed in this paragraph about how Obama views the world. Most importantly, I think his statement about profits being inefficient reveals his crypto-Marxist model of economics.
Crypto-Marxism is not an ideology but rather a phenomenon in which Marxist concepts and assumptions get renamed and reused in ways that disguise their Marxist roots. Most crypto-Marxists are completely unaware of the origins of the ideas and concepts they espouse. Marxism made its way into American universities during the ’60s, and almost everyone educated in the liberal arts got a strong dose of it in its disguised form. I feel confident that Obama is one of those people.
The idea that profit represents inefficiency in the economy is a concept originated by Marx himself, but it arguably has roots in the idea, common to most cultures, that all economic exchanges should be done at cost for both parties. Marx created an elaborate fantasy construct in which profit arose purely from the exploitation of both workers and consumers. In Marxism, profits were not only not a necessary part of the economic system, they were an actual flaw that reduced the standard of living for everyone.
Unfortunately, this appears to be the model that Obama is working from at some level.
The more sophisticated modern view holds that profits are part of the signalling mechanism by which we coordinate our efforts across the whole of the economy. Profits indicate that a good or service is needed and at what price. Perhaps more important, profits route resources to those who can make the best use of them. Historically, the biggest profits have come from people who produced innovative new technologies or services that radically raised the standard of living for everyone. The history of the computer industry is a good example of an industry in which incredible profit margins drove fantastic innovation and radically reduced cost.
If you read the other parts of the speech that touch upon insurance companies, it is quite clear that Obama believes that insurance companies’ profits come from denial of care. This is untrue. Insurance companies make most of their profit on investments they make using the pool of money that comes from premiums. Indeed, in many jurisdictions, it is illegal for insurance companies to extract profits from premiums, because doing so puts the company’s ability to make payouts in jeopardy. Even where it is not illegal, underwriters prevent the practice because it puts them on the hook for any shortfalls. They charge companies who dip into premium revenues heavily for doing so.
The premium pool is the mutually maintained resource of all of a company’s policy holders. Restricting payouts to only those conditions contracted and paid for prevents the first policy holders who become ill from sucking out all the money from the premium pool and leaving the others high and dry. This why non-profit insurance companies are just as quick as for-profit companies to deny claims. Somebody has to play the bad guy and say what will and will not be covered. In a socialized system, the people who do this sit on the “death panels.”
Even if insurance companies’ profits did come exclusively from the difference between premiums and payouts, confiscating all of their profits would not provide much benefit. Most insurance companies have profit margins in the low single digits. Taking all of their profits would provide only a minor savings in the big picture.
Obama is also clearly working from a crypto-Marxist perspective when he seeks to blame insurers for both high cost and denial of care. Marxism 101 says always blame the capitalist. Expect to see “profits” from insurance companies in terms of hundreds of millions of dollars, with no context as to the percentage of the companies’ revenue all that money represents.
Obama clearly believes in the essential Marxist idea that the freedom in the free market leads to gross inefficiencies and exploitation without any significant benefit. He clearly believes that these inefficiencies are so huge that he can greatly expand coverage and levels of care, without spending any more money, if he can just use the coercive power of the state to eliminate those inefficiencies.
This is the old Marxist dream that has arisen again and again in many guises. But no matter the form it took, it has always been proven wrong. Profits are neither exploitation nor inefficient, and the government has never been able to manage any system at the same performance level for less cost than do profit-driven systems.
It should disturb everyone that Obama appears to work from such an archaic and simplistic economic model. It should cause us to doubt his commitment to preserving even limited free-market mechanisms in health care. He certainly appears to lack the intellectual justification for doing so.
No, it’s not “crypt-Marxist” or any kind of Marxist. He didn’t get this from Marx. He’s just fucking stupid. He doesn’t get it. He’s never been out in the real world. He’s a moron.
Repeat after me: The president of the United States is too fucking stupid and pig-ignorant to comprehend even the most basic facts about the way we produce and distribute all of the goods and services that we consume every day of our lives.
The president is so fucking stupid he is not capable of feeding himself without assistance.
He is not a Marxist. He is, in effect, a vegetable.
You can’t win converts by talking that way. You have to be polite, and patient, and explain it over, and over, and over again, with simple, clear examples that even an imbecile or a liberal can with some effort begin to comprehend. We need to communicate with them and win them over, not alienate or insult them. Most liberals are capable of being trained to leave the grownups alone, so the grownups can provide for them without interference. Many are actually capable of learning to distinguish shit from shinola, given bright sunshine, a detailed description, and a little brass plaque plainly identifying each sample. We can’t shout or swear at these people.
But sometimes, by God, it’s tempting to just shake them and call them idiots. They love being stupid. They so love to wallow in it. Christ, it’s discouraging.
I’ll let your first comment stand but in the future I’d appreciate less cursing. It lacks any effective punch on the internet and frankly seems affected when you take the time to write it out.
I’m afraid I will have to disagree with you on a few points, especially your time frames.
The antipathy towards profit seeking private merchants is literally ancient. Since the prince in most of history was held to own everything, and everyone, and all priviledges, such as selling cloth or making parchment, etc., were a gift of his largess, the independent merchant who entered the economic picture and tried to do business without the lord’s license was an outlaw in a very real sense.
Later, of course, the bizarre beliefs of anti-jewish prejudice enhanced this conventional wisdom, and reinforced the suspicion that anyone making a profit was either in cahoots with some corrupt official, or was a jew, or both.
In modern terms, the hatred of those whose traditional lives, whether peasant or aristocrat, were disrupted by the innovator and entrepeneur converged on heads of the upstart business owners of the last few centuries who were constantly changing the way things were done, making fortunes that inspired the envy of the poor, and the disdain of the hereditary upper class.
There is a nice, funny little movie called “Mr Blandings Builds His Dream House” with Cary Grant, made in the late 40’s or early 50’s, about an advertising man who wants to move to the country with his family, “the country” being a delapidated old house in Connecticut. I mention this because of a scene early in the movie in which one of the daughters, about 12 years old, expresses her teachers’ sentiments which declare her father a parasite, and business in general something cruel and generally undesireable.
Why the animosity towards the insurance companies? They are merely the latest in the long line of “usual suspects”, from the ship owners and grain mill operators of a past century, to the railroads and steel companies of the progressive era, through the oil trusts and auto companies of the early 20th century.
I can remember when the auto companies were condemned because they were so powerful that the critics contended the markets no longer functioned, and only government was strong enough to bring them to heel, for the common good, of course. That was the song of the 50’s and 60’s.
When the various regulatory, competetive, and political storms capsized the auto makers’ Titanic in the 70’s and 80’s, suddenly the problem was that their cars were not good enough, safe enough, or economical enough, and only the state had the ability to force them to improve in all those areas.
Now, as they face the final destruction of the industry which was once too powerful to be left alone, the same statists demand the companies be kept alive to protect the jobs of the unions that supported the politicians who destroyed them in the first place.
Uninformed and fantasy-like beliefs about how the insurance companies function is nothing new. Facts would only complicate the basic purpose of all this—control, loot, and finally dispose of these troublesome privateers, and bring all they have and all they do under the control of the elites who truly believe they should control everything and everyone.
This is, as you point out, only incidentally crypto-marxist. It is thoroughly and wholeheartedly corporatist, in the spirit of those who defined the corporate state in the early part of the last century. Some Italian guy, if I recall correctly…
Great post, as always, although it looks as if it were typed in a hurry! Things are moving quickly these days!
Yep, years of ‘liberal’ indoctrination uncorrected by ever having to run a business will result in the sort of blithe ignorance Obama is just saturated in. It would be funny…
Veryretired: “The antipathy towards profit seeking private merchants…”. Yes, it’s envy.
The choice facing any society with a free market is always and forever: Do we support a system which allows unequal results but generates wealth for all, or do we allow envy to rule us and return to barbarism?
The idea that an insurance fund can be run without capital, or an implicit charge for capital, animated Fannie Mae and Freddie Mac. We should not be eager to repeat that experiment.
Shannon, this supports your observation about Obama’s economic knowledge:
Richard Epstein discusses Barack Obama
Richard Epstein is the James Parker Hall Distinguished Service Professor of Law at the University of Chicago, where he has taught since 1972. He was a colleague of Barack Obama when Obama taught as an instructor. Epstein had mutual friends with Obama, and talked to Obama about some issues. His main description is that Obama is under complete self-control
“Obama worked as a community organizer and was in many cases very constructive. He organized public/private partnerships to help the homeless and downtrodden.”
“But, the difficulty you get, for someone who has only worked in that situation, is that he believes the creation of private wealth is something the government cannot influence or destroy. He has many fancy redistribution schemes, in addition to his health plan and new labor laws, which are all wealth killers.”
= = = = = =
It is partly defeating to use observations about signaling and sophisticated theory to argue that profits are good. (Of course, those ideas are interesting.) It is enough to observe that profits arise out of free interactions and the desire of all participants to earn an income, as large as possible within the law.
I will risk being boring. Profit is just the name for what some members of a productive group are paid. Some people get a “salary”, which is their personal profit for going to work. The owners and investors get whatever is left over, their profit. This analysis says that value is created each day and is divided among the participants according to their agreements. We call a guaranteed portion a “salary” and an unguaranteed portion a “profit”.
There is nothing “extra” about profit. It is merely what the owners and investors get paid for participating in the project, or what they lose by using up time and materials without producing things that are more valued.
The leftist criticism for everything is that someone is making a profit. From a government perspective, where most profits are handed out to co-conspirators, I understand how one could see profits as excessive handouts to disagreeable people.
But, it is laughable to think that government administrators are motivated only by altruism. They don’t consider their wages, expense accounts, vacation pay, per diem overages, medical care, and pension as their personal profit. No, that is an honest salary for hard work in a mind-numbing environment.
Most people regard profits as somehow unnecessary and “extra”. Without profit, things would be so much cheaper. Or, maybe not.
They Are Profiting From My Needs
I met a person who blamed a bakery for selling her a cake. You see, thay made a profit off of her.
Excellent points, Andrew, and it’s why it is not quite enough to have worked in the private sector. (Not that Obama has even done that). One has to have run ones own business to get the full picture.
Veryretiredm
The antipathy towards profit seeking private merchants is literally ancient.
I agree. I believe that Marxism itself is simply a branch on the tree of anti-profit behavior. Marx simply took a very old and probably genetically programmed antipathy towards profit and sculpted it a more modern form. The environmental movement is doing the same thing for Marxism.
However, I do think it safe to say that Obama belongs on the crypto-Marxist branch of the anti-productive idea tree given his educational and political backgrounds.
Shannon: You’re right about the cursing. That would’ve been a good time for that 24-hour email/comment delay Cass Sunstein proposed…
1)Andrew: “We call a guaranteed portion a “salary” and an unguaranteed portion a “profit””…not precisely. A commissioned salesperson and a factory worker on piecework have non-o guaranteed portions to their compensation, but this is not “profit.”
2)Much of the ancient hostility to trade was based on the idea that it is somehow nobler to get something by force than to have to negotiate for it. A southern plantation owner, shortly before the Civil War, asserted the superiority of his way of life over that of a northern factory owner: the factory owner had to be polite to people he might not like while he, the plantation owner, could be rude to whomever he chose. (this seems to ignore the existence of dueling…maybe the guy was an extraordinarily good shot)
3)I think a lot of people imagine “profit” as cash sitting around, a la the big bags of money owned by Scrooge McDuck. Actually, if a business has revenues of $200 million and spends $150 million on operating expenses…and spends the $50 million left over on a new factory…then the *profit* was still $50 million.
“I agree. I believe that Marxism itself is simply a branch on the tree of anti-profit behavior. Marx simply took a very old and probably genetically programmed antipathy towards profit and sculpted it a more modern form. The environmental movement is doing the same thing for Marxism.”
But what about Veryretired’s point that Obama is more in the camp of fascism than communism?
“Actually, if a business has revenues of $200 million and spends $150 million on operating expenses…and spends the $50 million left over on a new factory…then the *profit* was still $50 million.” said David Foster.
No, the monies were not taken as a “profit”, they were plowed back into the business. It could be the business wanted to expand or that it had to replace the old, obsolete, factory. The profit would be realized when the monies are put into the owner’s (or shareholder’s) bank account. If the factory was an expansion of business then certainly the company’s books would look good and a profit could be expected in the future but….
Don’t forget the laughable notion that somehow the government has the omniscience to allow it to “eliminate those inefficiencies.”
Hayek’s “The Fatal Conceit” should be required reading for any legislator. Although they may have to do a manga version for the denser legislators.
Tyouth…if you purchase plant & equipment, then generally speaking, they are not charged against income for that year, but depreciated over future years. The *free cash flow* of the business in the example will be reduced to zero by the purchase, but the *net income) (“profit”_ will remain positive.
Yes, Shannon, I would certainly place the current regime into the cstegory of being children of the “New Left” of the 60’s. But the ideas are the same warmed over collectivist nonsense that the progressives have been preaching since the 1800’s, only dressed up in new, dynamic language to obscure its derivation, and accompanied by all the confrontational tactics the counter-culture types love. (As long as they’re never used against them, ala Tea Party protests)
But the educational system has been so damaged by “Gramscian” burrowing that the various tenets of collectivism are now widely assumed, and don’t have to be spelled out, just referred to as default intellectual and moral positions, especially among the blue elites that populate this regime, and the larger blue audience that supports it with their votes.
Actually, to respond to another commenter above, I am of the opinion that the current regime most closely resembles the populist “Share the Wealth” programs of the Long autocracy in Louisiana. There also seems to be a resemblence to the level of political machine corruption in the Chicago environment in which many elements in the current power structure came of age, and the Louisiana political environment, most recently so gloriously on display as it stumbled through the Katrina episode.
Corrupt environments do not generally produce the kind of problem solvers with high levels of integrity that are needed during times of significant problems, instead tending to promote opportunists who are good at ducking responsibility and hiding behind scapegoats.
Any familiarity to persons currently identifiable by those characteristics is entirely coincidental, to paraphrase the common movis disclaimer.
“movie”, not movis. I don’t mind coining a phrase, but I generally try to avoid creating a whole new word.
“This is, as you point out, only incidentally crypto-marxist. It is thoroughly and wholeheartedly corporatist, in the spirit of those who defined the corporate state in the early part of the last century. Some Italian guy, if I recall correctly…”
“Actually, to respond to another commenter above, I am of the opinion that the current regime most closely resembles the populist “Share the Wealth” programs of the Long autocracy in Louisiana.”
Are you sure you read your first comment? Share the Wealth? Exactly with who? You mean share the wealth with the bankers, money changers, and political elites? Talk about skid-marks, now we are seeing flip-flops within one comment section.
Veryretired, I think you found yourself within the same “spirit” and became uncomfortable, I guess I don’t blame you. Kind of like “stupid is as stupid does”, a rose by any other name…
Dunbar—it would help your critique if you knew what you were talking about. There’s no contradiction in my two comments. Two versions of the same song.
Larry Dunbar…your comment is more ad hominem than we like to see here. Please try to avoid personal insults in the future.
Larry Dunbar,
But what about Veryretired’s point that Obama is more in the camp of fascism than communism?
Fascism and Communism are closely related. Indeed, in many respects there is no functional difference. For the most part, it is merely the labels and terminology adopted by each that differ, not how those labels covert to actual policy.
The idea that Fascism and Communism are polar opposites is an invention of Joseph Stalin. It is indicative of the silent influence of Stalinism on modern leftist’s thought that so many leftists today still adopt his view of Fascism.
“The idea that Fascism and Communism are polar opposites is an invention of Joseph Stalin. It is indicative of the silent influence of Stalinism on modern leftist’s thought that so many leftists today still adopt his view of Fascism.”
Thanks Shannon for clearing the problem I was having, and apparently no one else was, with what Veryretired was saying.
“ad hominem”, perhaps, and I apologize if this was the case. To me Veryretired was comparing the administration in power to both Communism and Fascism. While it very well could be, as Shannon says, that Fascism and Communism are not opposites, it seems to me an administration cannot be both. If they can, I would be interested in hearing this and was probably behind my near-personal attack, as you say, against Veryretired.
With all the comparisons in the media, not that I have read any in your articles, of Obama to an image of Hitler, the image of Fascism is easily distorted into some mustached crazy-man, and I don’t think that image is correct. However, I felt it was given a clearer image by Veryretired’s reference to “Some Italian guy, if I recall correctly…”. Apparently I miss-read the content or context he was referring to and got off on a tangent to this discussion.
As an apology to Dunbar for my snappishness in reply, I was being a bit obscure when I referred to both the state corporatism of Mussolini and the populist corporatism of Huey Long.
I think the main point of confusion was that Dunbar interpreted “Share the Wealth” as being a reference to communism. It is not. During the period of Long’s most pervasive national prominence, the 20’s and 30’s, the state corporatist model enjoyed a strong following in the US.
Roosevelt’s NRA programs, declared unconstitutional by the SC, were models of corporatist theory put into legislation, as was much else in the “New Deal”. Most put FDR on the left, and in some ways he certainly was, but left and right are often interchangeable when it comes to the methods taken to achieve increased state power, which is the final result sought by both theories.
All of the above is why I generally use statist and collectivist to refer to those usually called right or left. The former terms are more inclusive.
“Most put FDR on the left, and in some ways he certainly was, but left and right are often interchangeable when it comes to the methods taken to achieve increased state power, which is the final result sought by both theories.”
I have the same problem with people putting Obama on the left, and in some ways he certainly is, but as you say left and right are often interchangeable when it comes to the methods taken to achieve increased state power.
So, do you think most of the push-back against Obama is against his, to me obvious, attempt at increasing state power as a statist, which appears to be the agenda of both those on the republican and democratic side of politics, or do you think it is something else altogether?
I suppose if you are against Obama for his willingness to increase state power, then you would be for a policy that decreases state power. In that event, who do you put the power into the hands of, the people, the corporation, or the elites. As Neo-cons seem to be re-cycled Trotskyites, it would seem they would like this power to be transfered into the hands of the elites, but then would a statist be in favor of handing power over to the corporations and the collectivist would be for handing it over to the people?