Economics & Finance

If Only Soylent Green Was an Option

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I’ve written about Detroit’s financial woes in these pages. High taxes, an anti-business mindset, and a surplus of government meddling has caused the city to lose residents at an alarming rate. Losing taxpayers results in reduced money for government budgets. When faced with such a situation, the only sane response is to make hard decisions and cut back on non-vital programs. If these decisions aren’t made, then eventually even vital government services will be overwhelmed.

The political leaders in Detroit have failed the test of their sanity. Things just keep sliding into the crapper, with no end in sight.

The latest chapter in this tale of woe is a doozy. It would seem that people in and around Detroit don’t have the cash to make arrangements for their deceased loved ones, and the city doesn’t have the cash to cremate the bodies which are now choking the morgue.

I don’t want to be anywhere near the place if they have a power blackout for a few hours!

Ghost Fleet of the Recession

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From the Daily Mail.

The biggest and most secretive gathering of ships in maritime history lies at anchor east of Singapore. Never before photographed, it is bigger than the U.S. and British navies combined but has no crew, no cargo and no destination – and is why your Christmas stocking may be on the light side this year.
 
It is so far off the beaten track that nobody ever really comes close, which is why these ships are here. The world’s ship owners and government economists would prefer you not to see this symbol of the depths of the plague still crippling the world’s economies. So they have been quietly retired to this equatorial backwater, to be maintained only by a handful of bored sailors. The skeleton crews are left alone to fend off the ever-present threats of piracy and collisions in the congested waters as the hulls gather rust and seaweed at what should be their busiest time of year.

Ghost Fleet

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An Important Qualifier

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Via Instapundit comes a major  (albeit British) media report that the Tea Party protest in Washington turnout could be as high as two million.

As impressive as that no doubt upper-limit estimate is, I think that the raw number leaves out an important qualifier.  To be    truly accurate, the report should say:

Two million people with jobs…

Getting hundreds of thousands of kids, the professionally unemployed  and government workers to show up isn’t that hard (especially if someone buys the bus tickets). Getting two million middle-class, middle-aged people with jobs, careers, children and businesses is way, way more impressive.

We can safely assume that for every individual who made it to the protest that there are dozens of people whose grown-up obligations prevented them from attending.

That thought should keep Obama and Pelosi up at night.

[update (2009-9-13 10:17pm): I should point out that I don’t think anyone really believes that two million people showed up in Washington. One percent of the entire U.S. population is 3 million people so two millions gets you two thirds of the way to one percent of the entire population. I don’t think there is a city in world that could handle that big an influx of people. Washington D.C. itself only has a population for 590,000 so having nearly four times the population of the city show up is really not credible no matter what the senior Democratic leadership thought. On the other hand, having hundreds of thousands of people, most who have never protested before, show up is significant and puts the tea party in the big leagues no matter how you cut it.]

[update (2009-9-13 6:53pm): For unknown reasons, all comments by Hippeprof were deleted from the thread below. This issue is being investigated and we will try to recover the comments. If anyone else saw their comments disappear please email me at the link to the upper right.]

[update (2009-9-13 8:02pm): 20 comments were found to have been removed by the spam filter. We have restored them and I will be cleaning up duplicates and removing the “hey, what happened to my comments?” post in order to keep the thread clean.]

[update (2009-9-12-10:16): The technical problems have resurfaced. Your posts may not show properly. We may have to freeze the comments. If you have an important point to make  you can email at the link to the upper right and I will add your comment to thread manually as time permits.]

Health Care and the Crypto-Marxist Model

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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.

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“In the United States of America, no one should go broke because they get sick.”

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Thus spake President Obama.

What remained unsaid was that he thinks it’s OK if insurance companies go broke.

Whatever you may think about insurance companies, they provide insurance. If they are driven out of business by government mandates that raise their costs — and Obama’s expansive, intrusive program will raise their costs, significantly, if it’s implemented — health insurance will be less available from the private sector. This means that under his scheme health insurance will become increasingly and inevitably a government-provided service.

Obama also said that he isn’t against insurance companies. Maybe he’s not, I don’t know. But he wants them to change their behavior in ways that will increase their costs and reduce their profits. Whatever he says he wants to do, and wants other people to do, he can’t force anyone to provide goods or services. Companies will eventually choose to go out of business if their alternative is to lose money in perpetuity. And on the margin a future of money-losing alternatives is what President Obama offers to health-insurance companies (and perhaps also to drug companies, medical-device manufacturers, hospital operators and many physicians) under his plans.