Bank of America (BAC) has rescinded its plan to charge customers a $5 monthly debit card fee. Shall we praise bank regulators for their swift action in preventing the exorbitant charge? Well, no. Then we'll credit politicians for legislating against greedy, big bank profiteering, right? Wrong again. The free market drove BAC to drop the debit card fee.
Several banks have floated similar debit card fees -- some already assess the monthly charge -- and each met the same fate as BAC. Customers informed their financial institutions that they would rather pull their assets than pay the fee. Banks responded in predictable fashion. Banks need customers to remain solvent; therefore they heed their customers' complaints and outrages, whether or not they are reasonable. That's the free market in action. Unpopular fees and programs are abandoned just as surely as profits are taken. Everything depends on what the market will bear.
The $5 debit card charge was never a product of free market capitalism. It was the result of political machinations, most notably on the part of Sen. Dick Durbin. Durbin's amendment to the Dodd-Frank bank reform legislation placed an arbitrary cap on debit card interchange fees, which banks impose on retailers for each swipe of a customer's card.
Banks collect this fee to maintain their electronic networks, retailers distribute the fee among their customers, and customers enjoy the convenience of cashless transactions. Such business-customer relationships aren't invariably perfect, but they are at least agreeable between the involved parties. Once politicians meddle in that relationship, as Durbin did, unintended consequences become the norm. Enter the debit card fee. Yet the fact that Durbin made matters worse didn't stop him from telling BAC customers to "vote with their feet."
Well, bank customers have voted with their feet, or at least threatened to do so. I'll wager that not a single disgruntled customer walked into their bank and said to the teller, "Dick Durbin told me to withdraw my money." Blowhard politicians aren't necessary for customers to decide what fees they should or shouldn't accept. Customers needn't occupy public parks for banks to hear their complaints. The only thing necessary to kill the monthly debit card fee was for customers to exercise their free choice in an open marketplace.
Markets compel businesses to please their customers or risk losing them to more amenable competitors. Banks couldn't collude on behalf of debit card fees, even if they so wanted, because they're more interested in retaining current customers and attracting new ones from institutions that assess unpopular charges. The mere threat of losing customers was enough to render debit card fees a poor business decision. When market forces reign there's no need for protests, tents, and signs, nor is there a need for pandering politicians with superhero complexes to deliver customers from corporate evil.
However, markets move both directions. Just as the market wouldn't tolerate debit card fees, which are noticeable, the market may tolerate other fees that aren't as noticeable, just as it once tolerated the higher interchange fees. No one considered the interchange fees retailers paid on debit card transactions until government placed price controls on them. The banks then looked to other areas to recoup the lost revenue, which led to the debit card fee. Since the market has rejected the debit card fee, banks will look for another way to boost revenue.
Frankly, a $5 debit card charge is benign in and of itself. If a customer uses their card 50 times per month the average cost per transaction is a paltry 10 cents, a rather innocuous expense for the convenience of using a debit card system. And make no mistake; customers aren't paying the banks for the privilege of using their own money, as the populist argument holds. Customers pay for the use of the bank's computer and network systems, all of which cost money to purchase, operate, and maintain.
There's little purpose in defending or criticizing the banks, their customers, or the debit card fee. The marketplace spoke and a verdict was rendered. Customers preferred to seek new institutions rather than pay their banks a monthly debit card stipend. Banks would rather have more customers paying smaller, less recognizable fees than have fewer customers paying larger, high-profile charges. Both entities weighed their options and arrived at a conclusion with which they could live. Markets may not always react as swiftly as they did in this case. But they will always react, and they will produce the best possible compromise in any given situation.
All businesses attempt to maximize profits while all customers seek the best value for their money. These interests combine in a free market, making astute businesses profitable while rewarding prudent customers with quality services, all at an agreeable price. Government interference upsets that balance, imposing undesirable results on everyone.
First Published at Mises Daily )http://mises.org/daily/5815/A-Case-for-FreeMarket-Bank-Regulation)
Showing posts with label free markets. Show all posts
Showing posts with label free markets. Show all posts
Sunday, November 27, 2011
Thursday, October 20, 2011
Occupy Wall Street protests capitalism and liberty
Opposition to crony capitalism, we're told, is motivating Occupy Wall Street. The protesters, we're told, are simply fed up with a business cycle wherein politicians push legislation to benefit large corporations, receiving campaign cash and other perks in return. In this the age of TARP bailouts, stimulus packages, and quantitative easing the complaint sounds reasonable, if we accept what we're told.
Many large corporations are unquestionably in bed with the federal government. Strange as it sounds, onerous government regulations offer some benefits to big businesses. For instance, regulations hinder start-up companies, preventing competition. Established companies possess the regulatory and legal experience, along with the political connections, necessary to navigate government's red tape. Small companies struggle just to gain a toehold, much less keep pace. Therefore, large companies have opportunity to bury small competitors beneath bureaucratic compliance and regulatory paperwork, and it's easier than direct competition.
However, a longing for free market competition isn't driving Occupy Wall Street. A movement dedicated to restoring market forces to our economy and breaking the bond between government and business already exists. If the occupiers actually supported such worthwhile goals they would ally the TEA Party. Yet TEA Party activists are routinely demeaned as racist, sexist, and obsessively phobic.
Pundits can compare Occupy Wall Street (OWS) to the TEA Party if they want. But the proof is in the pudding; occupiers have little in common with TEA Partiers. OWS may indeed hold corporate welfare in disdain, as does the TEA Party. But the similarity ends there. TEA Partiers also oppose the personal welfare state, the entitlement mentality that perpetuates said state, and the lack of personal responsibility that forms its foundation. Occupiers revel in entitlement, irresponsibility, envy, and wealth redistribution.
The occupations represent a segment of Americans diametrically opposite the TEA Party, a segment that is either oblivious to its surroundings or can't comprehend what it sees. Their motivations are similar to the demonstrators we've seen in European socialist democracies, notably Greece and Britain, where the economies crumble under entitlement's weight while the marchers demand even more.
Huddled in their de facto communes, the occupiers have no qualms with government choosing winners and losers, or funding more entitlement programs. They consider social spending obligatory and student loans are a basic human right. Punitive taxation on the "1-percent" is a matter of economic justice and everyone should have the job they like at the wage they desire. In short, occupiers expect Utopian results from more of the same irresponsible government spending and regulatory burdens that created the current budgetary and economic chaos.
The "99-percenters" aren't marching for freedom; they're clueless on the concept. Private property rights are a cornerstone of personal liberty. Yet they are anathema to the occupiers' worldview. The New York protesters see no contradiction in squatting on private property, dishonoring the desires of the owner, and refusing to recognize the property owner's legal and moral right to tell the occupiers to pack up their autumn of love and head for the hills. Despite an agreement that zoned Zuccotti Park for public use, the park remains privately owned. Occupiers can chant, shout, and drum about freedom until the cows come home, but it means nothing until they've shed their open contempt for property rights.
The occupiers just can't grasp the contradiction in marching for freedom while demanding more government. As previously stated, Occupy Wall Street is about government growth. The only way to achieve their goals is to centralize authority, redistribute wealth, expand the entitlement attitude, and trust in a false promise. In the name of freedom the Wall Street occupiers are demanding cradle-to-grave collectivism. They're serving government at the expense of liberty, both for their fellow citizens and themselves.
The concept is unpopular, but you can judge people -- or in this case, a gathering of people -- by the company they attract. A quick glance at organizations aligning with OWS reads like a who's who of collectivism, from labor unions and MoveOn.org to the Communist Party USA. Some of the world's most repressive regimes are lending support, too. A general in Iran's Revolutionary Guard endorsed the OWS movement as a means to end Western capitalism. And Venezuela's socialist dictator Hugo Chavez has nothing but kind words for the occupiers.
Doubtful the typical occupier is a genuine, card-carrying communist. Most occupiers would likely balk at the idea of promoting communism, or even socialism. But progressivism, labor unions, militant strongmen, and dictators don't line up on the side of human liberty, and each has cast its lot with OWS. Can we then conclude that authoritarians see Occupy Wall Street's true nature much clearer than do the occupiers themselves? I think so.
The "99-percent" are a deluded bunch. First, 99-percent of our country isn't consumed with class envy or "economic justice," however it's defined. Second, OWS protesters are simply the fertilizer from which state control of our economy, our culture, and the population overall will continue to grow. Occupy Wall Street is an instrument, a means to an end, with the typical occupier personifying everything Vladimir Lenin could've wanted in a useful idiot.
Many large corporations are unquestionably in bed with the federal government. Strange as it sounds, onerous government regulations offer some benefits to big businesses. For instance, regulations hinder start-up companies, preventing competition. Established companies possess the regulatory and legal experience, along with the political connections, necessary to navigate government's red tape. Small companies struggle just to gain a toehold, much less keep pace. Therefore, large companies have opportunity to bury small competitors beneath bureaucratic compliance and regulatory paperwork, and it's easier than direct competition.
However, a longing for free market competition isn't driving Occupy Wall Street. A movement dedicated to restoring market forces to our economy and breaking the bond between government and business already exists. If the occupiers actually supported such worthwhile goals they would ally the TEA Party. Yet TEA Party activists are routinely demeaned as racist, sexist, and obsessively phobic.
Pundits can compare Occupy Wall Street (OWS) to the TEA Party if they want. But the proof is in the pudding; occupiers have little in common with TEA Partiers. OWS may indeed hold corporate welfare in disdain, as does the TEA Party. But the similarity ends there. TEA Partiers also oppose the personal welfare state, the entitlement mentality that perpetuates said state, and the lack of personal responsibility that forms its foundation. Occupiers revel in entitlement, irresponsibility, envy, and wealth redistribution.
The occupations represent a segment of Americans diametrically opposite the TEA Party, a segment that is either oblivious to its surroundings or can't comprehend what it sees. Their motivations are similar to the demonstrators we've seen in European socialist democracies, notably Greece and Britain, where the economies crumble under entitlement's weight while the marchers demand even more.
Huddled in their de facto communes, the occupiers have no qualms with government choosing winners and losers, or funding more entitlement programs. They consider social spending obligatory and student loans are a basic human right. Punitive taxation on the "1-percent" is a matter of economic justice and everyone should have the job they like at the wage they desire. In short, occupiers expect Utopian results from more of the same irresponsible government spending and regulatory burdens that created the current budgetary and economic chaos.
The "99-percenters" aren't marching for freedom; they're clueless on the concept. Private property rights are a cornerstone of personal liberty. Yet they are anathema to the occupiers' worldview. The New York protesters see no contradiction in squatting on private property, dishonoring the desires of the owner, and refusing to recognize the property owner's legal and moral right to tell the occupiers to pack up their autumn of love and head for the hills. Despite an agreement that zoned Zuccotti Park for public use, the park remains privately owned. Occupiers can chant, shout, and drum about freedom until the cows come home, but it means nothing until they've shed their open contempt for property rights.
The occupiers just can't grasp the contradiction in marching for freedom while demanding more government. As previously stated, Occupy Wall Street is about government growth. The only way to achieve their goals is to centralize authority, redistribute wealth, expand the entitlement attitude, and trust in a false promise. In the name of freedom the Wall Street occupiers are demanding cradle-to-grave collectivism. They're serving government at the expense of liberty, both for their fellow citizens and themselves.
The concept is unpopular, but you can judge people -- or in this case, a gathering of people -- by the company they attract. A quick glance at organizations aligning with OWS reads like a who's who of collectivism, from labor unions and MoveOn.org to the Communist Party USA. Some of the world's most repressive regimes are lending support, too. A general in Iran's Revolutionary Guard endorsed the OWS movement as a means to end Western capitalism. And Venezuela's socialist dictator Hugo Chavez has nothing but kind words for the occupiers.
Doubtful the typical occupier is a genuine, card-carrying communist. Most occupiers would likely balk at the idea of promoting communism, or even socialism. But progressivism, labor unions, militant strongmen, and dictators don't line up on the side of human liberty, and each has cast its lot with OWS. Can we then conclude that authoritarians see Occupy Wall Street's true nature much clearer than do the occupiers themselves? I think so.
The "99-percent" are a deluded bunch. First, 99-percent of our country isn't consumed with class envy or "economic justice," however it's defined. Second, OWS protesters are simply the fertilizer from which state control of our economy, our culture, and the population overall will continue to grow. Occupy Wall Street is an instrument, a means to an end, with the typical occupier personifying everything Vladimir Lenin could've wanted in a useful idiot.
Sunday, September 18, 2011
Lemonade Wars: The State battles entrepreneurialism
The United States is a nation of cultural icons. Some places, symbols, and activities shout "America" with the voice of three-hundred million citizens: the Statue of Liberty, Yankee Stadium, an Independence Day cookout. High on the list of those iconic symbols is the front yard lemonade stand. It represents the essence of budding entrepreneurialism and self-reliance.
Only the heartless can deny the joy of buying a lukewarm glass of "ice-cold" lemonade from an enterprising youth. The lemonade stand, and similar entrepreneurial adolescent pursuits, is the stuff of Americana, pure Norman Rockwell. Not only are the young shopkeepers cute, they're participating in an activity as old as mankind. The lemonade stand proprietor has entered the world of capitalism, where merchant and customer voluntarily exchange items of value. Tragically, the child's lemonade stand, like capitalism, finds itself increasingly in the State's regulatory crosshairs.
Governments are targeting neighborhood lemonade stands throughout the land of the free. The reasons behind these "lemonade raids" are similar no matter their location. Young businessmen and businesswomen, like their mature counterparts, are running afoul of local codes and health ordinances, lacking required permits and licenses, or tripping over bureaucratic red tape. When even the childhood entrepreneur can't escape the overbearing and burdensome tentacles of government's regulatory octopus, what chance has the adult?
The Massachusetts State Police closed a 12-year-old boy's green tea stand because he didn't secure the requisite permits. Coralville, Iowa conducted a veritable raid on unsanctioned lemonade stands. Police in Midway, Georgia closed a lemonade stand because the three girls who operated it failed to obtain licenses and permits that cost $50 a day. A similar instance occurred in Appleton, Wisconsin. Villa Rica, Georgia police sent a Girl Scout troop home because they didn't have a peddler's permit to hawk their cookies. In New York, a city councilman summoned police to an unauthorized cupcake shop.
As would be expected, the various government agencies responsible for protecting the public from these snack food speakeasies defended their decisions, as well as the regulations that preceded them. The New York councilman, Michael Wolfensohn, said all vendors must conform to local ordinance, even if the "vendors" are two kids with a pan of brownies. Wolfensohn called police because they're "trained to deal with these sorts of issues."
And all this time you and I thought police were trained to deal with suspected criminals, not with people trying to make an honest dollar. Unless selling brownies for profit is a crime, or the teenage dealers were pushing hashish brownies, there's no reason for the police to be involved, save to investigate Councilman Wolfensohn for impersonating an intelligent human being.
A spokesman for Villa Rica defended the town's ordinance as a safety issue, enacted after a previous incident where a child seeking charitable donations ran into traffic. While no one wants a youngster to become a traffic statistic, the official explanation defies logic. Are we to assume a peddler's license would prevent an exuberant child from rushing into the street? Children chase balls, pets, and other objects into traffic every day. The presence of a permit will do nothing to curb potential harm to children. Parental supervision and oversight will further safety far more than will a peddler's permit, and parents were present when the Girl Scout cookie sale was shuttered.
One side affect of the crusade against lemonade stands is the fear of police each incident instills in children. Subjecting children to police questioning over trivial incidents, like unlicensed lemonade stands, compromises the trust for police officers we attempt to teach our children. In defense of the officers themselves, most weren't enthused with confronting the treat-bearing scofflaws. In both the Villa Rica and Appleton cases the responsible police departments issued apologies and made amends.
If the examples offered were isolated events we might let them pass. But they're not isolated. There must be an explanation for government's hostility toward adolescent entrepreneurs. Liberty certainly isn't served when police departments are transformed into lemonade stand task forces. But is there benefit to the State? It would appear so. Over time, children will become accustomed to such bureaucratic meddling, and police presence, in their daily business. The cause of liberty is curtailed while the power of the State intensifies.
Children aren't becoming wealthy selling lemonade by the drink. Nor are their lemonade stands a threat to established businesses, which shouldn't expect protectionist policies in a competitive market anyway. But a child gains valuable lessons in capitalism and self-reliance when they operate a lemonade stand, or any similar part-time business. There lies the problem for the State. Self-reliance is the antithesis of collectivism, as collectivism relies on an ascending State.
Doubtful there's a widespread government conspiracy to socialize the under-16 lemonade market. The lemonade stand per se isn't a threat to government power. However, genuine independence -- learned in youth -- is a danger to the State's authority. The State's natural bent is to restrain self-reliance, and the easiest way to accomplish that goal is to stifle individualism before it starts.
The State has examined the neighborhood lemonade stand and, through necessity rather than conspiracy, deemed it a menace. In fact, the State has examined entrepreneurialism and found it dangerous, except for those entrepreneurs who are willing to play ball with the State. The message is clear. Anyone desiring to enter the business world must do so with the State as a not-so-silent partner. Otherwise, their enterprise will be fined, regulated, egregiously taxed, or closed outright. The decision rests less on the rule of law than on the State's arbitrary and heavy hand decisions.
What better way to prepare tomorrow's entrepreneurs for the collectivist marketplace than to deny them the ability to operate the simplest of businesses today? Certainly boys and girls can't afford the permits, licenses, insurance policies, and health code upgrades that would put them in compliance with government regulations. However, introducing youth to the bureaucratic swamp is a lesson that serves the State long term. Children become indoctrinated to the concept of the State meddling in all affairs, personal and private. It's a highly effective tactic, for the State.
Some youth will realize the road to business success in America's increasingly socialist economy is to grease the palms and oil the skids of various government councils, boards, and commissions. These few learn to grant deference to the State in earning their individual livelihoods. Others will become discouraged with entrepreneurial pursuits. They will see bureaucracy for the monolithic obstacle to economic advancement it has become, and consider the regulatory burden too heavy to bear.
The State wins in either circumstance. Those willing to conform to the State's mandates acknowledge the State's authority over the individual's ability to exercise life's most basic liberty: the right to earn a living. The nonconformist entrepreneur, who rejects both the idea of begging a bureaucrat for the right to earn a living and being subject to the State's burdensome regulatory oversight, withdraws from the proprietor sector of the marketplace, becoming a wage-earner.
Both the willing conformist and the resigned nonconformist are easier to influence, regulate, and control than the self-reliant entrepreneur. Properly indoctrinated, people view the State as the ultimate arbiter of the ability to earn a living. Whether that authority is considered just or amoral is inconsequential, as long as the State's authority is acknowledged. And it all starts at the lemonade stand.
This article first appeared at American Thinker.
Only the heartless can deny the joy of buying a lukewarm glass of "ice-cold" lemonade from an enterprising youth. The lemonade stand, and similar entrepreneurial adolescent pursuits, is the stuff of Americana, pure Norman Rockwell. Not only are the young shopkeepers cute, they're participating in an activity as old as mankind. The lemonade stand proprietor has entered the world of capitalism, where merchant and customer voluntarily exchange items of value. Tragically, the child's lemonade stand, like capitalism, finds itself increasingly in the State's regulatory crosshairs.
Governments are targeting neighborhood lemonade stands throughout the land of the free. The reasons behind these "lemonade raids" are similar no matter their location. Young businessmen and businesswomen, like their mature counterparts, are running afoul of local codes and health ordinances, lacking required permits and licenses, or tripping over bureaucratic red tape. When even the childhood entrepreneur can't escape the overbearing and burdensome tentacles of government's regulatory octopus, what chance has the adult?
The Massachusetts State Police closed a 12-year-old boy's green tea stand because he didn't secure the requisite permits. Coralville, Iowa conducted a veritable raid on unsanctioned lemonade stands. Police in Midway, Georgia closed a lemonade stand because the three girls who operated it failed to obtain licenses and permits that cost $50 a day. A similar instance occurred in Appleton, Wisconsin. Villa Rica, Georgia police sent a Girl Scout troop home because they didn't have a peddler's permit to hawk their cookies. In New York, a city councilman summoned police to an unauthorized cupcake shop.
As would be expected, the various government agencies responsible for protecting the public from these snack food speakeasies defended their decisions, as well as the regulations that preceded them. The New York councilman, Michael Wolfensohn, said all vendors must conform to local ordinance, even if the "vendors" are two kids with a pan of brownies. Wolfensohn called police because they're "trained to deal with these sorts of issues."
And all this time you and I thought police were trained to deal with suspected criminals, not with people trying to make an honest dollar. Unless selling brownies for profit is a crime, or the teenage dealers were pushing hashish brownies, there's no reason for the police to be involved, save to investigate Councilman Wolfensohn for impersonating an intelligent human being.
A spokesman for Villa Rica defended the town's ordinance as a safety issue, enacted after a previous incident where a child seeking charitable donations ran into traffic. While no one wants a youngster to become a traffic statistic, the official explanation defies logic. Are we to assume a peddler's license would prevent an exuberant child from rushing into the street? Children chase balls, pets, and other objects into traffic every day. The presence of a permit will do nothing to curb potential harm to children. Parental supervision and oversight will further safety far more than will a peddler's permit, and parents were present when the Girl Scout cookie sale was shuttered.
One side affect of the crusade against lemonade stands is the fear of police each incident instills in children. Subjecting children to police questioning over trivial incidents, like unlicensed lemonade stands, compromises the trust for police officers we attempt to teach our children. In defense of the officers themselves, most weren't enthused with confronting the treat-bearing scofflaws. In both the Villa Rica and Appleton cases the responsible police departments issued apologies and made amends.
If the examples offered were isolated events we might let them pass. But they're not isolated. There must be an explanation for government's hostility toward adolescent entrepreneurs. Liberty certainly isn't served when police departments are transformed into lemonade stand task forces. But is there benefit to the State? It would appear so. Over time, children will become accustomed to such bureaucratic meddling, and police presence, in their daily business. The cause of liberty is curtailed while the power of the State intensifies.
Children aren't becoming wealthy selling lemonade by the drink. Nor are their lemonade stands a threat to established businesses, which shouldn't expect protectionist policies in a competitive market anyway. But a child gains valuable lessons in capitalism and self-reliance when they operate a lemonade stand, or any similar part-time business. There lies the problem for the State. Self-reliance is the antithesis of collectivism, as collectivism relies on an ascending State.
Doubtful there's a widespread government conspiracy to socialize the under-16 lemonade market. The lemonade stand per se isn't a threat to government power. However, genuine independence -- learned in youth -- is a danger to the State's authority. The State's natural bent is to restrain self-reliance, and the easiest way to accomplish that goal is to stifle individualism before it starts.
The State has examined the neighborhood lemonade stand and, through necessity rather than conspiracy, deemed it a menace. In fact, the State has examined entrepreneurialism and found it dangerous, except for those entrepreneurs who are willing to play ball with the State. The message is clear. Anyone desiring to enter the business world must do so with the State as a not-so-silent partner. Otherwise, their enterprise will be fined, regulated, egregiously taxed, or closed outright. The decision rests less on the rule of law than on the State's arbitrary and heavy hand decisions.
What better way to prepare tomorrow's entrepreneurs for the collectivist marketplace than to deny them the ability to operate the simplest of businesses today? Certainly boys and girls can't afford the permits, licenses, insurance policies, and health code upgrades that would put them in compliance with government regulations. However, introducing youth to the bureaucratic swamp is a lesson that serves the State long term. Children become indoctrinated to the concept of the State meddling in all affairs, personal and private. It's a highly effective tactic, for the State.
Some youth will realize the road to business success in America's increasingly socialist economy is to grease the palms and oil the skids of various government councils, boards, and commissions. These few learn to grant deference to the State in earning their individual livelihoods. Others will become discouraged with entrepreneurial pursuits. They will see bureaucracy for the monolithic obstacle to economic advancement it has become, and consider the regulatory burden too heavy to bear.
The State wins in either circumstance. Those willing to conform to the State's mandates acknowledge the State's authority over the individual's ability to exercise life's most basic liberty: the right to earn a living. The nonconformist entrepreneur, who rejects both the idea of begging a bureaucrat for the right to earn a living and being subject to the State's burdensome regulatory oversight, withdraws from the proprietor sector of the marketplace, becoming a wage-earner.
Both the willing conformist and the resigned nonconformist are easier to influence, regulate, and control than the self-reliant entrepreneur. Properly indoctrinated, people view the State as the ultimate arbiter of the ability to earn a living. Whether that authority is considered just or amoral is inconsequential, as long as the State's authority is acknowledged. And it all starts at the lemonade stand.
This article first appeared at American Thinker.
Sunday, March 6, 2011
Government sharks feed on Big Tobacco
Sharks are among nature’s most amazing creatures. They are quick, graceful and superior hunters. But above those qualities they are relentless. The scent of blood can drive sharks into a feeding frenzy that continues until their hapless victim is totally consumed.
Come to think of it, government is similar to a shark. That’s not to say the two are twin brothers mind you. Government moves quickly only when jumping to conclusions and embodies the grace of a blind, three-legged hippopotamus wearing snowshoes. Brothers they aren’t, but cousins indeed. Government is a relentless and thorough predator. Like sharks, government utterly devours wounded prey.
Government’s shark-like demeanor has been illustrated by its voracious appetite for tobacco companies. First blood was drawn when government determined when and where tobacco could be used. But government wasn’t satisfied. Legislation then dictated how, when and where tobacco products could be marketed, restrictions that predictably increased with time. But government wasn’t satisfied.
Through lawsuits and coercive settlements government forced tobacco manufacturers to compensate customers for healthcare costs and damages even though smokers continued to use a product the health risks of which have been common knowledge for 50-plus years. But government wasn’t satisfied. Government then forced the cigarette makers to fund campaigns designed to prevent people from using their perfectly legal, albeit unhealthy, products. Still it wasn’t enough; government’s feeding frenzy continues.
As long as scraps remain on Big Tobacco’s carcass the government shark will not relent. It will consume every bite: meat, gristle, fat, bone and all. Tobacco companies will next fund advertisements in which they’re forced to admit to committing fraud and mischaracterizing their products.
The Justice Department has devised a list of “corrective statements” that tobacco companies must publicly announce. In one statement the cigarette companies will disclose lying about light and low tar cigarettes in order to maintain their markets. Another government prepared statement compels the companies to acknowledge manipulation of nicotine levels so as to sustain addictions and create a perpetual customer base.
Each corrective statement- -in print or broadcast form- -will announce which tobacco manufacturer sponsored the ad and that it was released “under order of a federal district court.” A more fitting disclaimer would reveal that cigarette makers produced the ad under coercion, or direct threat, from a government more akin to the defunct Soviet Union than to the United States of America.
Tobacco companies are fighting the government’s dictates. But they have as much chance to avoid their fate as a wounded seal has to escape a Great White. Legal challenges are a dead end thanks to judicial activists such as District Court Judge Gladys Kessler. Kessler has publicly declared her desire to force the industry to fund the government’s “corrective statements.” Big Tobacco has no reason to think that Judge Kessler, or any judge of like manner, will grant them a fair shake rather than ruling according to predisposed attitudes?
It’s not my desire to defend tobacco companies or the use of their products. Tobacco in any form is a good habit to avoid and the health risks are the worst kept secret of the last half century. However, tobacco isn’t an impossible habit to kick; millions of people have done so, including me. I forsook smokeless tobacco cold turkey after using it for fifteen years. For a smoker to think light cigarettes mitigate the ill health effects of tobacco indicates a foolish person, or someone intent on rationalizing their habit.
We have far more to fear from government intrusions than from tobacco peddlers. Big Tobacco never forced a single soul to smoke; it was a personal choice for which the smoker bears ultimate responsibility. Conversely, government can force our actions through fines, imprisonment, or even death. We should be wary of government’s willingness to publicly vilify any private company, even one as politically incorrect as tobacco, just as a swimmer should be wary of doing the breast stroke in shark-infested waters. Just as government has denigrated tobacco it can denigrate any company or industry it chooses for any reason it deems necessary.
Actually, governments are more dangerous than sharks. Stay out of the water and the shark risk is mitigated. Where can one go to avoid government’s feeding frenzy?
George Washington said, “Government is not reason; it is not eloquent, it is force. Like fire, it is a dangerous servant and a fearful master.” Sharks or fire, the victim is consumed just the same.
Come to think of it, government is similar to a shark. That’s not to say the two are twin brothers mind you. Government moves quickly only when jumping to conclusions and embodies the grace of a blind, three-legged hippopotamus wearing snowshoes. Brothers they aren’t, but cousins indeed. Government is a relentless and thorough predator. Like sharks, government utterly devours wounded prey.
Government’s shark-like demeanor has been illustrated by its voracious appetite for tobacco companies. First blood was drawn when government determined when and where tobacco could be used. But government wasn’t satisfied. Legislation then dictated how, when and where tobacco products could be marketed, restrictions that predictably increased with time. But government wasn’t satisfied.
Through lawsuits and coercive settlements government forced tobacco manufacturers to compensate customers for healthcare costs and damages even though smokers continued to use a product the health risks of which have been common knowledge for 50-plus years. But government wasn’t satisfied. Government then forced the cigarette makers to fund campaigns designed to prevent people from using their perfectly legal, albeit unhealthy, products. Still it wasn’t enough; government’s feeding frenzy continues.
As long as scraps remain on Big Tobacco’s carcass the government shark will not relent. It will consume every bite: meat, gristle, fat, bone and all. Tobacco companies will next fund advertisements in which they’re forced to admit to committing fraud and mischaracterizing their products.
The Justice Department has devised a list of “corrective statements” that tobacco companies must publicly announce. In one statement the cigarette companies will disclose lying about light and low tar cigarettes in order to maintain their markets. Another government prepared statement compels the companies to acknowledge manipulation of nicotine levels so as to sustain addictions and create a perpetual customer base.
Each corrective statement- -in print or broadcast form- -will announce which tobacco manufacturer sponsored the ad and that it was released “under order of a federal district court.” A more fitting disclaimer would reveal that cigarette makers produced the ad under coercion, or direct threat, from a government more akin to the defunct Soviet Union than to the United States of America.
Tobacco companies are fighting the government’s dictates. But they have as much chance to avoid their fate as a wounded seal has to escape a Great White. Legal challenges are a dead end thanks to judicial activists such as District Court Judge Gladys Kessler. Kessler has publicly declared her desire to force the industry to fund the government’s “corrective statements.” Big Tobacco has no reason to think that Judge Kessler, or any judge of like manner, will grant them a fair shake rather than ruling according to predisposed attitudes?
It’s not my desire to defend tobacco companies or the use of their products. Tobacco in any form is a good habit to avoid and the health risks are the worst kept secret of the last half century. However, tobacco isn’t an impossible habit to kick; millions of people have done so, including me. I forsook smokeless tobacco cold turkey after using it for fifteen years. For a smoker to think light cigarettes mitigate the ill health effects of tobacco indicates a foolish person, or someone intent on rationalizing their habit.
We have far more to fear from government intrusions than from tobacco peddlers. Big Tobacco never forced a single soul to smoke; it was a personal choice for which the smoker bears ultimate responsibility. Conversely, government can force our actions through fines, imprisonment, or even death. We should be wary of government’s willingness to publicly vilify any private company, even one as politically incorrect as tobacco, just as a swimmer should be wary of doing the breast stroke in shark-infested waters. Just as government has denigrated tobacco it can denigrate any company or industry it chooses for any reason it deems necessary.
Actually, governments are more dangerous than sharks. Stay out of the water and the shark risk is mitigated. Where can one go to avoid government’s feeding frenzy?
George Washington said, “Government is not reason; it is not eloquent, it is force. Like fire, it is a dangerous servant and a fearful master.” Sharks or fire, the victim is consumed just the same.
Saturday, June 19, 2010
Bartering for healthcare isn’t as crazy as it sounds
Political opportunism reigns during election years. A candidate need make only one misstep, one errant statement, for an opponent to move in for the kill. Sometimes the blunder is real. Other times it’s a matter of spin and perception. Nevada’s ex-Senate candidate Sue Lowden, a Republican, learned this lesson firsthand.
Lowden became a target when she suggested that patients should barter for medical treatment. The fur really flew when she spoke of how our grandparents bartered chickens for their doctor’s services. Democrats seized on Lowden’s apparent silliness. They launched a “chickens for checkups” website and attended Lowden’s campaign events dressed in chicken suits.
Lowden’s detractors never considered her accuracy. Bartering was routine in bygone days. People traded their goods and services for needed goods and services, including medical attention. However, at face value it’s hard to imagine a barter system working in the contemporary healthcare market. Today’s physician couldn’t pay for student loans and malpractice insurance with roasting hens and bushels of corn. But what if we look beyond the surface of Lowden’s statement?
Thoroughly examining the situation--a rarity in contemporary political discourse--reveals that Sue Lowden’s bartering proposal wasn’t as foolish as grandstanding Democrat’s claimed. In fact, Lowden has touched upon a workable solution to soaring medical expenses.
Bartering is based on the principles of the free market. It is the voluntary exchange of a good or service that ultimately satisfies all involved parties. This is a common occurrence in all walks of life. For example, suppose a baseball team needs a left-handed pitcher in their bullpen. The team will trade unneeded players to a willing team for the needed pitcher. Both teams have actively participated in the voluntary exchange of held value in one area for needed value in another.
Trading a chicken for a dose of penicillin may not lower healthcare costs per se. But the free market principles that bartering represents will reduce healthcare costs significantly. Sadly, these standards have disappeared from the medical profession.
Few people know the cost of the medical treatment they consume; it has become an afterthought. We are conditioned to surrender our co-pay or file our claim and go about our business. With the consumer removed from the equation, there is no downward pressure on price.
What would happen if patients considered themselves as healthcare customers and doctors as distributors? Such a customer/provider relationship works to control prices in a host of other industries where transactions are subject to comparison shopping. Consumers naturally seek the greatest value, defined as the most return obtainable at the lowest practical cost. This process will establish median prices for various medical procedures, too.
Currently, there is no direct consumer pressure on healthcare prices. To assume a government run system will improve that situation is to believe in the tooth fairy. In fact, ample evidence has long existed to think that government involvement will only worsen the condition.
Medicare, Medicaid, the Veteran’s Administration and SCHIP are expansive, expensive, and unresponsive bureaucracies, rife with fraud and inefficiency. Another bureaucracy that further removes the patient from the direct cost of basic medical care won’t control costs. It will only mean less return for each expended healthcare dollar.
The quaint notion of swapping chickens for medical attention rings of nostalgia if not reality. But the basics behind old-fashioned bartering are real. Bartering represents direct involvement between market participants, in this case patients and healthcare providers. The subsequent competition between medical professionals for the patient’s business will reduce healthcare costs while ensuring that treatment remains readily available.
On our present course we can expect an exponential escalation in healthcare costs, and we’ll get less bang for each buck.
This column originally posted at American Thinker.
Lowden became a target when she suggested that patients should barter for medical treatment. The fur really flew when she spoke of how our grandparents bartered chickens for their doctor’s services. Democrats seized on Lowden’s apparent silliness. They launched a “chickens for checkups” website and attended Lowden’s campaign events dressed in chicken suits.
Lowden’s detractors never considered her accuracy. Bartering was routine in bygone days. People traded their goods and services for needed goods and services, including medical attention. However, at face value it’s hard to imagine a barter system working in the contemporary healthcare market. Today’s physician couldn’t pay for student loans and malpractice insurance with roasting hens and bushels of corn. But what if we look beyond the surface of Lowden’s statement?
Thoroughly examining the situation--a rarity in contemporary political discourse--reveals that Sue Lowden’s bartering proposal wasn’t as foolish as grandstanding Democrat’s claimed. In fact, Lowden has touched upon a workable solution to soaring medical expenses.
Bartering is based on the principles of the free market. It is the voluntary exchange of a good or service that ultimately satisfies all involved parties. This is a common occurrence in all walks of life. For example, suppose a baseball team needs a left-handed pitcher in their bullpen. The team will trade unneeded players to a willing team for the needed pitcher. Both teams have actively participated in the voluntary exchange of held value in one area for needed value in another.
Trading a chicken for a dose of penicillin may not lower healthcare costs per se. But the free market principles that bartering represents will reduce healthcare costs significantly. Sadly, these standards have disappeared from the medical profession.
Few people know the cost of the medical treatment they consume; it has become an afterthought. We are conditioned to surrender our co-pay or file our claim and go about our business. With the consumer removed from the equation, there is no downward pressure on price.
What would happen if patients considered themselves as healthcare customers and doctors as distributors? Such a customer/provider relationship works to control prices in a host of other industries where transactions are subject to comparison shopping. Consumers naturally seek the greatest value, defined as the most return obtainable at the lowest practical cost. This process will establish median prices for various medical procedures, too.
Currently, there is no direct consumer pressure on healthcare prices. To assume a government run system will improve that situation is to believe in the tooth fairy. In fact, ample evidence has long existed to think that government involvement will only worsen the condition.
Medicare, Medicaid, the Veteran’s Administration and SCHIP are expansive, expensive, and unresponsive bureaucracies, rife with fraud and inefficiency. Another bureaucracy that further removes the patient from the direct cost of basic medical care won’t control costs. It will only mean less return for each expended healthcare dollar.
The quaint notion of swapping chickens for medical attention rings of nostalgia if not reality. But the basics behind old-fashioned bartering are real. Bartering represents direct involvement between market participants, in this case patients and healthcare providers. The subsequent competition between medical professionals for the patient’s business will reduce healthcare costs while ensuring that treatment remains readily available.
On our present course we can expect an exponential escalation in healthcare costs, and we’ll get less bang for each buck.
This column originally posted at American Thinker.
Saturday, January 16, 2010
Taxing bonuses is flawed policy and bad precedent
You’d be hard pressed to find anyone passing the hat for “Big Finance” these days. But why do people assume that financial institutions are inherently evil while government is inherently good?
The mortgage bubble and resulting financial problems weren’t a free market problem. They resulted from government manipulation. Yet in many minds government is seen as the savior while banks are the drunks at the Baptist picnic. For that reason alone Rep. Peter Welch’s Wall Street Bonus Tax Act will garner some degree of support.
Welch’s bill (H.R. 4426) promises a 50-percent tax on excessive bonuses paid at banking institutions that received bailout money. It’s a classic leftwing tactic. Welch plays the class envy card, reminding financiers that they owe their reemergence to “hardworking Americans.” However, I would remind Mr. Welch that most “hardworking Americans” opposed TARP--the plan that provided the funding--from the outset. Yet Congress passed it anyway.
Hundreds of institutions became beneficiaries. Some have repaid the money; some haven’t. But banks had to practically beg the Treasury Department for permission to repay their TARP debt. And political connections played a role in the distribution of TARP funds from the start.
A University of Michigan study claims that banks in congressional districts where the representative sits on the finance committee were 26-percent more likely to get bailout funds. That figure is even higher if a bank’s executive is on a Federal Reserve Bank board.
Such backdoor shenanigans in Congress are nothing new. Representatives exchange favors with the well-connected every day. Therefore, how can anyone believe that in taxing bonuses Rep. Welch has any interest at heart other than his own?
I’ll win no popularity contest if I’m perceived as defending banks and their bonus packages. However, my goal isn’t to exonerate or condemn banks. I’m here to defend the free market process. There is a better method than congressional meddling for determining which financial executives deserve bonuses. There’s also much to fear when Congress uses the tax code to control compensation.
First, Rep. Welch only wants to tax “excessive” bonuses. Who is he, or the federal government as a whole, to decide what is and isn’t excessive? Basically, “excessive” means beyond a necessary or proper limit, which is an arbitrary concept at best.
What may seem excessive in one circumstance can be quite routine in another. Once Congress seizes the right to determine appropriate compensation for bank executives it has established precedent to set “proper limits” on salaries for anyone. Who will be next? Barbers? Truck drivers? Play-by-play announcers? Should healthcare reform include wage controls in the medical field? Don’t bet the farm that it won’t.
Such authority in the hands of government isn’t just dangerous to our liberty, it is fatal.
Does that mean I favor bonuses for bank execs? That depends. As stated, there is a better way to set wages. I prefer to see the free market, not pandering politicians who are seeking reelection, determine compensation.
If you’re unhappy with the bonuses paid at your bank you can do business elsewhere. If you stay, then bonuses must not bother you that much. In addition, government bean-counters shouldn’t force, cajole, or lure banks into nonsensical lending practices. Banks should operate on sound financial principles, not politically correct notions about social justice.
Good practice and due diligence are rewarded in the free market. Wise and prudent banks will prosper while depositors and investors will flee foolish institutions in droves. Government manipulation serves only to protect the irresponsible, defer risk and send the entire system tumbling like a house of cards.
Government’s market interventions have proven destructive. Allowing government an inroad to wage controls promises a similar, or worse, result. If Congress can punish banking executives for their compensation the door is wide open to do likewise to everyone.
The mortgage bubble and resulting financial problems weren’t a free market problem. They resulted from government manipulation. Yet in many minds government is seen as the savior while banks are the drunks at the Baptist picnic. For that reason alone Rep. Peter Welch’s Wall Street Bonus Tax Act will garner some degree of support.
Welch’s bill (H.R. 4426) promises a 50-percent tax on excessive bonuses paid at banking institutions that received bailout money. It’s a classic leftwing tactic. Welch plays the class envy card, reminding financiers that they owe their reemergence to “hardworking Americans.” However, I would remind Mr. Welch that most “hardworking Americans” opposed TARP--the plan that provided the funding--from the outset. Yet Congress passed it anyway.
Hundreds of institutions became beneficiaries. Some have repaid the money; some haven’t. But banks had to practically beg the Treasury Department for permission to repay their TARP debt. And political connections played a role in the distribution of TARP funds from the start.
A University of Michigan study claims that banks in congressional districts where the representative sits on the finance committee were 26-percent more likely to get bailout funds. That figure is even higher if a bank’s executive is on a Federal Reserve Bank board.
Such backdoor shenanigans in Congress are nothing new. Representatives exchange favors with the well-connected every day. Therefore, how can anyone believe that in taxing bonuses Rep. Welch has any interest at heart other than his own?
I’ll win no popularity contest if I’m perceived as defending banks and their bonus packages. However, my goal isn’t to exonerate or condemn banks. I’m here to defend the free market process. There is a better method than congressional meddling for determining which financial executives deserve bonuses. There’s also much to fear when Congress uses the tax code to control compensation.
First, Rep. Welch only wants to tax “excessive” bonuses. Who is he, or the federal government as a whole, to decide what is and isn’t excessive? Basically, “excessive” means beyond a necessary or proper limit, which is an arbitrary concept at best.
What may seem excessive in one circumstance can be quite routine in another. Once Congress seizes the right to determine appropriate compensation for bank executives it has established precedent to set “proper limits” on salaries for anyone. Who will be next? Barbers? Truck drivers? Play-by-play announcers? Should healthcare reform include wage controls in the medical field? Don’t bet the farm that it won’t.
Such authority in the hands of government isn’t just dangerous to our liberty, it is fatal.
Does that mean I favor bonuses for bank execs? That depends. As stated, there is a better way to set wages. I prefer to see the free market, not pandering politicians who are seeking reelection, determine compensation.
If you’re unhappy with the bonuses paid at your bank you can do business elsewhere. If you stay, then bonuses must not bother you that much. In addition, government bean-counters shouldn’t force, cajole, or lure banks into nonsensical lending practices. Banks should operate on sound financial principles, not politically correct notions about social justice.
Good practice and due diligence are rewarded in the free market. Wise and prudent banks will prosper while depositors and investors will flee foolish institutions in droves. Government manipulation serves only to protect the irresponsible, defer risk and send the entire system tumbling like a house of cards.
Government’s market interventions have proven destructive. Allowing government an inroad to wage controls promises a similar, or worse, result. If Congress can punish banking executives for their compensation the door is wide open to do likewise to everyone.
Sunday, October 4, 2009
How to save media news? A bailout, of course.
The most equitable way to determine successes and failures is a free market. Free markets reward efforts that meet or exceed the customer’s need. But in a socialized market goods and services are taxed and regulated until producers can no longer compete with the subsidized competition.
A producer’s funds are confiscated and used to prop up failing industries that have long since stopped pleasing their customers. Success is forced to relinquish its return so failure can receive reward. Furthermore, customers who won’t willingly patronize the failing industries are forced to subsidize them, too.
There’s nothing fair or equitable about it. Subsidies allow the government to choose winners that would lose if let to their own devices. It’s an utterly corrupt process.
Nowhere is the failure to please customers better exemplified than in the national news media, where the industry leaders have little more than contempt for their customers. So far the news media hasn’t been subsidized, if you don’t count public broadcasting. That could soon change.
Dan Rather has become a cheerleader for a subsidized media. It’s his view that the government should create a commission to establish innovative media business plans and preserve journalism jobs. This is necessary, according to Rather, because a free and independent press is the heartbeat of freedom. He has unwittingly revealed a fundamental reason for the public’s waning interest in his profession.
Hasn’t it occurred to Dan Rather that government involvement in the media is the antithesis of a free press? The purpose of the free press, as constitutionally protected, is to monitor government. When government is involved with the press, via subsidies or otherwise, the press is no longer a guardian of freedom but a tool of tyranny.
Thus far, President Obama has expressed some interest in a media bailout, at least for the print portion. But a bailout for one segment of the media would invariably lead to a bailout for all.
Not only would government subsidies force certain news customers to pay for a service they now reject, it would also be a deal with the devil for the media itself. Media personalities have their biases, which are apparent even when concealment is attempted. How much worse once government is funding the enterprise? The “free” press would become an overt tool for swaying public opinion, which would further disintegrate the public’s waning confidence in journalism. Ironically, Rather’s biases were instrumental in cultivating the public’s distrust for the media.
I respect a person’s right to their beliefs. But an opinion is just that, an opinion. When opinion comes packaged as unbiased reporting, well, news viewers and readers aren’t as stupid as media potentates seem to believe.
When will Dan Rather--and Katie Couric, Chris Matthews, Keith Olbermann and Andrea Mitchell for that matter--recognize the public’s weariness of left-wing puppets disguised as news anchors, reporters and journalists? There’s just so much mind-numbing propaganda that a reasonable person can take.
Similar bias is standard fare on the print media’s buffet as well. Small wonder Americans are turning to British newspapers while the domestic media wallows in sanctimonious denial and loathsome self-pity. News customers are speaking with their remote controls and subscription payments, and in a free market they are rejecting the media status quo.
The news media--whether broadcast, print, or electronic--doesn’t need to further prostitute itself to Washington in order to survive. The profession need only stop presenting spin as news. The majority of America really isn’t as stupid as the high-minded media pundits believe. Indoctrination and reeducation isn’t needed. Just report the news and spare us the alleged civics lessons. The First Amendment, journalism, media customers, and the prospects for a free republic will all benefit.
A producer’s funds are confiscated and used to prop up failing industries that have long since stopped pleasing their customers. Success is forced to relinquish its return so failure can receive reward. Furthermore, customers who won’t willingly patronize the failing industries are forced to subsidize them, too.
There’s nothing fair or equitable about it. Subsidies allow the government to choose winners that would lose if let to their own devices. It’s an utterly corrupt process.
Nowhere is the failure to please customers better exemplified than in the national news media, where the industry leaders have little more than contempt for their customers. So far the news media hasn’t been subsidized, if you don’t count public broadcasting. That could soon change.
Dan Rather has become a cheerleader for a subsidized media. It’s his view that the government should create a commission to establish innovative media business plans and preserve journalism jobs. This is necessary, according to Rather, because a free and independent press is the heartbeat of freedom. He has unwittingly revealed a fundamental reason for the public’s waning interest in his profession.
Hasn’t it occurred to Dan Rather that government involvement in the media is the antithesis of a free press? The purpose of the free press, as constitutionally protected, is to monitor government. When government is involved with the press, via subsidies or otherwise, the press is no longer a guardian of freedom but a tool of tyranny.
Thus far, President Obama has expressed some interest in a media bailout, at least for the print portion. But a bailout for one segment of the media would invariably lead to a bailout for all.
Not only would government subsidies force certain news customers to pay for a service they now reject, it would also be a deal with the devil for the media itself. Media personalities have their biases, which are apparent even when concealment is attempted. How much worse once government is funding the enterprise? The “free” press would become an overt tool for swaying public opinion, which would further disintegrate the public’s waning confidence in journalism. Ironically, Rather’s biases were instrumental in cultivating the public’s distrust for the media.
I respect a person’s right to their beliefs. But an opinion is just that, an opinion. When opinion comes packaged as unbiased reporting, well, news viewers and readers aren’t as stupid as media potentates seem to believe.
When will Dan Rather--and Katie Couric, Chris Matthews, Keith Olbermann and Andrea Mitchell for that matter--recognize the public’s weariness of left-wing puppets disguised as news anchors, reporters and journalists? There’s just so much mind-numbing propaganda that a reasonable person can take.
Similar bias is standard fare on the print media’s buffet as well. Small wonder Americans are turning to British newspapers while the domestic media wallows in sanctimonious denial and loathsome self-pity. News customers are speaking with their remote controls and subscription payments, and in a free market they are rejecting the media status quo.
The news media--whether broadcast, print, or electronic--doesn’t need to further prostitute itself to Washington in order to survive. The profession need only stop presenting spin as news. The majority of America really isn’t as stupid as the high-minded media pundits believe. Indoctrination and reeducation isn’t needed. Just report the news and spare us the alleged civics lessons. The First Amendment, journalism, media customers, and the prospects for a free republic will all benefit.
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