Religious perspectives on money-lending

So, I had an encounter with a rather unreasonable libertarian atheist who insisted the Church held back economic development for centuries by outlawing usury, which he said to be a clear indicator of an anti-capitalist worldview. This position is simplistic, contains error in basic facts, and a possible example of anachrony in narrating historical events.

While there existed since Gratian a broad principle that the lending of money for profit is sinful, often overlooked is the fact that canon lawyers used the word “interest” to mean a lawful charge for the loan of money. Generally this was seen as a fair charge to cover factors like risk and opportunity cost. “Usury” then and today has connotations of an unreasonable charge on borrowing money. In the Church, the law on this was often unclear and for a long time not systematized. Many inveighed against charging interest on personal loans, but not commercial ones. Some condemned both.

The Medieval Church proclaimed blanket prohibitions on usury in the 9th, 10th, and 11th centuries. However, this must be seen in light of the economic structure of the time. Borrowing prior to the twelfth century was almost entirely for consumption rather than production or investment. In an agrarian society, tillers of the soil tend to simply borrow to get through hungry periods before the harvest.

With the rapid development of commerce in the 11th and 12th centuries, however, the Church began to properly systematize the law on usury and declared many for-profit financing operations and credit devices as non-usurious. The Church and the Papacy were themselves borrowers and lenders of large sums of money at interest, and Church institutions themselves pioneered strategies for investing the large sums of money they had lying idle in deposit.

Today, governments are borrowing large amounts of money to cover day-to-day operations, like the welfare bill, that they cannot pay off with direct tax collections in the course of a fiscal year. That cannot be justified like borrowing for large, expensive infrastructure projects with long-term benefits. So we might want to consider the nuances of the Medieval Church’s position on borrowing and debt.

The Jewish perspective on this is very similar with some interesting differences. Rabbi Baruch Epstein of Belarus, writing in the early 20th century, says that with economic development in the latter Middle Ages, offering a loan to a neighbour was no longer only to offer him some of your surplus to get him through bad days. It was now handing over capital and ultimately the main tool by which one earns a livelihood. This can be classed as an investment, which enjoys greater esteem in Jewish law than the acceptable interest-free loans and the totally forbidden act of usury.

However, Jewish law, unlike the Church and other systems, never drew a distinction between taking interest and usury. Thus there is the legal category called iksa, where the lender becomes a silent partner in the business so it is not considered a loan at all but an investment.

As is said in the Talmud:

He who lends money is greater than he who performs charity; and he who forms a partnership is greater than all (Talmud Shabbat 63a).

I used to disparage the iksa system as a legal fiction to justify usury but lately I see a beautiful consistency in it.

Good sources on this are Law and Revolution: The Formation of the Western Legal Tradition by Harold Berman, and Judaism, Law, and the Free Market by Joseph Isaac Lifshitz.

Mass Immigration and its Discontents

Is there an economic case against open borders, and not just a cultural one? Certainly, warnings about labor shortages from open-borders advocates like Paul Ryan strike me as rather hollow at a time of increasingly advanced automation and robotics. The collision course that is the welfare state and affirmative action on one hand, and mass immigration on the other, has been explored quite extensively.

But there is plenty of room for reservation about open borders if you just believe in something called supply and demand.

That’s what the always interesting Ron Unz argued recently in a debate against libertarian economist and pundit Brian Caplan. I was surprised to hear a few days ago that an Intelligence Squared audience, predictably very much in favor of mass immigration according to polls taken at the beginning of the debate, subsequently swung massively to Unz’s restrictionist side.

Now, my view is that the wants and needs of western countries, even with their aging populations, are vastly outnumbered by the wants and needs of the pools of potential migrants in poor countries. Eight out of the ten most fertile countries in the world are in the dysfunctional region that is sub-Saharan Africa. Conceivably, we may need some of their labor, even if the unemployment rate in Spain and Greece remains in the mid to high twenties. But the fact that 44% of Somalians are under the age of 15, for instance, should be giving us pause for thought before we even consider throwing the borders open. The supply and demand situation here is incredibly skewed. Greece, certainly an economic basket-case at present, still looks tempting enough from the perspective of a young person from Eritrea, where per capita GDP stands at $600.  My money would be on major economic and social upheaval if unfettered movement of people were actually adopted as it stands.

Back to Ron Unz, who calmly advanced a common-sense argument against a typically smarmy Brian Caplan. Unz simply states that allowing an unlimited number of additional workers from everywhere in the world to come to America, as Caplan advocates, would massively increase the supply of labor. This would tremendously disadvantage labor, to the tremendous advantage of capital. Ordinary workers would not benefit at all. True, there would be a huge increase in economic production, productivity, and GNP on paper. All of it, however, would be captured by capital. America’s minimum wage would quickly become the maximum wage.

This would exacerbate the bifurcation of American that has taken place over the past 40 years. While technology has increased living standards, real earnings for most have been stagnant during this time. Yet the wealthy have gotten much wealthier. The top 1 percent of American society has reached the point where it has as much wealth as the bottom 95 percent. Mass immigration and mismanagement of the currency have been the main culprits here. Female entry to the workforce has payed its part, though the wage sectors that have experienced the sharpest declines are not the ones that have seen massive influxes of women.

A recent cover piece at The Spectator described the American and British middle classes as “shrinking and sinking”. This may constitute the single most disturbing social trend of our age, and a true tragedy for the adults of tomorrow, who will not be able to enjoy the trappings of life their parents and grandparents did. Not to mention it is potentially destabilizing politically.

If libertarians like Caplan and mainstream conservatives (or more accurately, perhaps, Wall Street conservatives) are not helping to stop and reverse this trend, they are on the wrong side of history. Recent talk of a ‘libertarian populism‘ or ‘labor Republicanism‘ may indicate a growing awareness that conservatives and libertarians must speak the language of exurban Ohio rather than midtown Manhattan.

The policies of previous decades, focusing on tax cuts and privatization, will no longer cut it. We now have huge numbers of working poor and people earning under £1500 a month in Britain. They may pay no direct tax apart  from an £85 National Insurance contribution. They gain significantly more from government services than what they pay in. They have no incentive to vote for the Mitt Romneys of this world.

So we are going to have to find ways to genuinely improve the average man’s standard of living, economic mobility, and purchasing power. My first step would be an end to all immigration unless of a highly skilled, specific variety. Its not the only step that could be taken, but I am willing to say it is the most important one.

I have said to a colleague on Facebook that open-borders libertarians, and the editorial writers at outlets like the Wall Street Journal and the FT, are because of their adherence to this idea now as dangerous to the middle class and prosperity as any Bolshevik. I stand by it.

The Allsop Auction: No Rule of Law In Ireland

Yesterday, Dublin bore witness to an act of opportunistic thuggery and mob rule. A lawful auction was disrupted, and a company was forced to close its premises on Pembroke Street. No arrests were made; Gardai were happy to look on and cede authority to a group of mouth-breathing bandits.

Mouth-breathers may be too generous a description. Here’s Tom D’Arcy of Direct Democracy Ireland. The factual errors combined with the confidence of his delivery make for 20 seconds of comedy greatness:

In fairness, he may be confusing Countess Markievicz with his contemporary fallen rebel, Janice Connolly. An easy mistake.

Its fun to laugh at jackasses telling auctioneers to ‘go back home to England’, or calling them Black and Tans, or belting out the national anthem. Yet there may be a more sinister element here. The event in question was an auction of repossessed investment properties, including holiday homes. Now, the Irish don’t like repossessions. They probably bring back bad memories from the 19th century (hence, the bizarre evocation of nationalism by the protesters). This aversion to seeing anybody lose their property was stretched to absurdity last year, when Ireland’s Occupy movement came to protest the eviction of a millionaire couple in the exclusive neighborhood of Killiney, even though this couple owned dozens of other properties in Ireland and no less than 13 apartments in London. They also happened to owe over €2 million to a recently nationalized bank, a.k.a. the taxpayer, but the irony was lost on the Occupy crowd.

But who would be motivated to come out for an emotional protest where no families have lost their homes and no tenants have found themselves on the streets? Who was really behind this farce?

Among the protesters I spotted in the pictures in today’s newspapers is Jerry Beades. Beades is a property developer well connected to the Fianna Fáil party and former Taoiseach Bertie Ahern. He’s currently being pursued by Ulster Bank for €3.5m in unpaid loans. Members of the Dáil involved include Michael Healy-Rae and Mattie McGrath. Hardly paragons of integrity. McGrath is a cute hoor who cynically left his disgraced party to run as an independent in 2011, but still curries favor with them at every opportunity. Healy-Rae’s parliamentary office made €2,600 worth of phone calls to RTE to make sure he won a reality show.

It is being said that most of the protesters were dragged from another demonstration in front of the Anglo-Irish Bank HQ on the same day. Were people being cynically manipulated here?

I do hope the auction goes ahead. These things are necessary in order to bring Irish property values back to their normal market rate. I also hope the Gardai will have the good sense to make some arrests and uphold the rule of law if this happens again. In this time of economic hardship, I find it disturbing to see the Gardai persistently gawking at flagrant demonstrations of contempt for the law. It is ranging from comparatively minor incidents involving illegal turf-cutting to allowing paramilitary funerals and demonstrations go unhindered in Dublin’s northside. To borrow some terms from Yeats, describing the atmosphere of Europe after WWI, if the centre cannot hold, mere anarchy will be loosed upon the world. Ireland should endeavor not to be a new Weimar.

The ESB and the Culture of Entitlement

I note that hundreds of ESB workers gathered today outside the ESB headquarters on Dublin’s Lower Fitzwilliam Street. They don’t want to pay a €78.4 million annual dividend they owe to the exchequer, because the ESB pension fund is in a €1.6 billion shortfall and this would be hard. The unwashed workers of the private sector can only dream of the day they can say this to their creditors .

Forgive me for not shedding a tear for some of the best paid workers in the country (average salary: €85,000 before pension contributions).  These are people who enjoy almost unparalleled job security in a semi-state company that operates in a tightly regulated market ensuring that they have no effective competition.

This is the organisation that demanded an old lady in Offaly, Teresa Treacy, be thrown in jail for refusing the ESB access to her own land where she tended a plot of native trees. Contrast this with the widely loathed outfit that is Shell. Shell in fact pleaded for the Rossport Five to be released from prison after they had violated a court injunction and interfered with  Shell’s pipeline in Mayo.

ESB workers, admitted Brendan Ogle, secretary of the ESB group of unions, are “spoiled”. Undoubtedly a man of the left, he added:

“The trade union movement collaborated in the creation of the wealth stroke debt and we made sure that the gap between that those who have and those who haven’t in society grew through the eighties, through the nineties, into the noughties to the day the IMF arrived on the door.

And the trade union movement and the Labour party collaborated in that for 25 years and none of us did anything about it.”

I disagree with the popular idea that the gap between rich and poor increased in Ireland during the boom years. But there are different kinds of equality and inequality. Public sector and semi-state unions created a protected caste of workers before the 1990s, and they still cushion their clientele from market forces today.

The power of Ireland’s unions was well symbolized in Dublin’s unattractive Liberty Hall, for a long time the country’s tallest building. For decades, unions  made sure that companies were run for the benefit of their workers, and not the customer. This led to absurdities like all banks being closed at lunchtime, the only time when most working people could actually go to the bank. Their power has diminished somewhat, but that sense of entitlement, that led the puzzlingly beatified union leader Jim Larkin to beat workers who refused to go along with his strikes in their own homes, is still with us.

RomneyCare vs. ObamaCare

As expected, Obama dropped the fact that his Patient Protection and Affordable Care Act is modeled  on Romney’s 2006 healthcare overhaul in Massachusetts during last night’s debate (see 56:45 onward). Traditionally, when challenged on this point by Republicans, Romney has responded with the single most most irritating phrase of this election cycle: “why didn’t he call me?”. Romney barely avoided those words this time around. He instead emphasized that his plan was passed with more bipartisan consensus, with only two members of the state legislature voting against it. Obama drove PPACA through without the support of a single Republican. He ignored the remarkable victory of Republican Scott Brown in the Massachusetts Senate race, which Romney claims was largely a protest against Obamacare.

I’m no fan of ObamaCare. I believe the program is not sustainable will cause massive economic turmoil. When I say this, people often ask why this chaos hasn’t occurred in Massachusetts with RomneyCare. Well, I’m no fan of RomneyCare either. Firstly, its a model that cannot be replicated nationwide, and secondly, it hasn’t done any good in Massachusetts in the first place.

Massachusetts is one of the wealthiest states in the Union, always ranking in the top five by median household income. Before RomneyCare was enacted, about 94% of the state’s population already possessed  health insurance. Massachusetts is also heavily Democratic: about 87% of the state legislature was such when Romney was Governor,  and both the legislature and general population were overwhelmingly in favor of expanding coverage. This is somewhat feasible in a state like Massachusetts. Its much less so in states like New Mexico or Texas, where the uninsured number over 25% of the population. That’s where the system will start to crack.

The uninsured population is a diverse one, including the poor, illegal immigrants, young working men and women who could afford insurance but feel they don’t need it for the moment, and even wealthy people who just choose not to get it. Federal and state laws ensure that all of the uninsured in America are able to receive emergency care when they require it. When some ignoramus like Ireland’s President Michael D. Higgins claims the tens of millions of uninsured in America have no healthcare, he is the w*nker whipping up fear.

Romney says in his 2010 book No Apology that realizing these facts about the uninsured in his own state persuaded him that universal health insurance was possible. Under his plan, the poor were moved into the state’s Medicaid program, and everyone else was required to purchase insurance or pay a fine, with some receiving subsidies to do so. While its virtually the same as ObamaCare, Romney’s signature legislation stood at 70 pages. The PPACA is  around 2700 pages.

But have the results been good? About 98% of the Massachusetts population now has health insurance. Its not an impressive leap. 80% of the newly covered are receiving subsidies from the state. Yet Romney insists that he built a system based on personal responsibility. There has been no decrease in the amount of people receiving free hospital treatment under the already existing laws. In fact, the cost of that has shot up 15% in a single year.

Predictably with government programs, the cost of RomneyCare is projected to run over the prior official forecasts: $2 billion more over the course of ten years. Suffolk University’s Beacon Hill Institute reports that over a five-year period:

  • State health care expenditure has risen by $414 million
  • The federal government has spent an additional $2.418 billion on Medicaid for Massachusetts
  • Private health insurance costs have risen by $4.311 billion

RomneyCare has failed. Gains in the number of insured have been absolutely minuscule  The costs have been enormous. Romney’s successor, Democrat Deval Patrick, is admitting that more taxes need to be introduced to cover the expenses. Experts say the survival of the program is in doubt. And this is in the most fertile ground for such a project.

America had been warned.

Obama, Romney, and Dependency

Only a few days ago, the Daily Caller obtained a complete audio recording of a speech in 1998 by then Illinois State Senator Barack Obama. He was speaking at a Loyola College forum on community organizing and policy-making  Loyola refused all requests to release the full tape or transcript of the talk. Some good soul in Chicago who got permission to view the existing videotape recorded the full speech secretly.

The most disturbing aspect of Obama’s speech is his idea that welfare recipients and “the working poor” form a coalition -“a majority coalition”, he says – that can be mobilized to advance “progressive” policies and continually elect the Democrats.

Obama at Loyola, 1998.

The speech is an interesting accompaniment to the now notorious words of Romney in Boca Raton, Fla., where he said that the 47% of the population who are net gainers from the welfare state will vote for Obama “no matter what”.

The consensus in the media is that these words uttered at a private fundraiser amounted to a “gaffe”, and Romney has been apologetic about the whole thing. I for one believe that Romney has nothing to be sorry for (although his “47%” would include students and retirees, and that certainly needs to be clarified). Indeed, Obama hints that his dream coalition would be over 50% of the voting population.

The issue of massive dependence on state welfare should be what the 2012 election is all about, and I hope it now dominates its final stages. Its hugely important for libertarians to be involved in this debate, even those of us disenchanted with a race between two men who can both reasonably claim to have invented Obamacare. Obama and Romney are correct on one issue: people who appear to gain more from the welfare state are not likely to support the people who agitate for smaller government. Its fair to say that Obama and many Democrats are deliberately seeking to make the majority of the population dependent on handouts. This will ensure permanent victory for the “party of government”. That will make Americans poorer and less free as long as the charade can be propped up, and it all turns into Greece.

Can the Republic of Jefferson be prevented from becoming the Hellenic? Whats most worrying is that we are fairly close to this situation already: almost half of all U.S. wage-earners pay no income tax. 70% get more in dollars from the government than they pay in with taxes. That half and their dependents will receive a plethora of benefits: “free” education from K-12, Pell Grants, Medicaid, rent supplements, food stamps, unemployment checks and many, many more. Why should these people throw their lot in with conservatives and libertarians who will reduce taxes they don’t even pay, while cutting or abolishing their benefits? As George Bernard Shaw said, a government that robs Peter to pay Paul can always depend on the support of Paul.

John C. Calhoun, America’s scariest-looking Vice President but a towering intellectual, foresaw this situation centuries ago:

The necessary result … of the unequal fiscal action of the government is to divide the community into two great classes; one consisting of those who … pay the taxes … and bear exclusively the burden of supporting the government; and the other, of those who are the recipients of their proceeds, through disbursements, and who are, in fact, supported by the government; or, in fewer words, to divide it into taxpayers and tax consumers.

He added:

This would give rise to two parties and to violent conflicts and struggles between them, to obtain the control of the government.

We are there, Mr. Calhoun. We are already there.

The Unexpected Joys Of Working 2-11

In recent months I have been working in a particularly dull Mossad safe house, in shifts alternating between 9am-6pm and 2pm-11pm. The former is the roughly the conventional workday we all experience at some stage, while the latter brought some opportunity for reflection and comparison.

Why is the average workday shaped like it currently is? To make use of daylight. Today, it still makes sense for farmers and many in construction, but not the modern day post-Edison office worker.

Exposure to sunlight makes us happy and healthy. Sunlight is at its strongest between 11am and 3pm. How horrible it is to spend the loveliest hours of the day stuck in an office or classroom! I felt like that for much of this summer. I feel that way every summer.

And if we exclude time spent sleeping, people simply don’t spend much time in their homes on workdays. Perhaps as little as four hours, morning and evening. So when we are not working, we are left in the dark or the dullest hours of the day, and usually rushing or exhausted.

If the average workday was between 2-11 or 2-10, these drawbacks can be avoided. My total commute to work is about one hour. It would be much less if I had my own car, which is one reason why for most people in London its 37.8 minutes per journey

I come home from work around midnight, do some bodily maintenance, get my eight hours, and rise around 8:30. It leaves me with four and a half free hours before I have to go to work again. These hours are the best of the day. Here’s one good week for me working 2-11: One day, I was able to lounge around outdoors, read an interesting collection of economic essays as well as an entire Spectator under the sun. The day after, I went to an afternoon piano recital before work. Another day, I attended a public lecture. The day after that I had wine and cheese in a lovely park with a student friend. We lay about like peasants in Pieter Bruegel the Elder’s Land of Cockaigne before I was obliged to leave.

It would have been better to have more friends around doing this, but unfortunately most were at work during the nicest hours of the day. There was also the fact I couldn’t join my companions for sushi or cocktails after work because our hours were so mismatched, but this could change if we all gave up this 9-5 rule-of-thumb. The only exception were full-time student friends, who do jackshit most of the time anyway. Yet I still hadn’t felt better since my time working in an Israeli factory between the hours of 6am and 2pm. That was due to a good Israeli diet, Mediterranean-style napping, and the fact that it stayed warm and bright well after work.

Working ‘normal’ hours, I would have been rushing about in the morning, and perhaps too tired to bother pursuing a challenging book or activity after coming home. That’s when most people get sucked into the demonic trash of television, because its there and its easy. If its been tough going at work all day, a man may not be in the mood to embrace his wife and children the way he should, and relationships suffer. If you or the kids don’t need to be at work and school until 2pm, you can play ball in the sun, or you can engage in some afternoon delight with your loved one.

Admittedly, this system works best if one goes to bed immediately after coming home from work, so you can make the best of the late morning/early afternoon. Mealtimes need to be adjusted. However, If you want to get sloshed or go to the movies after work, no problem: you might not have to wake up until 12:00 the next day. This leaves you with five or even six hours for drunkenness and other nighttime activities, and you can still get a  full night’s sleep.

If the conventional 9-5 workday no longer serves the interests of much of the modern working population, as much as another system might, its high-time to abandon it.

If you will it, it is no dream.

Support Free Trade? Support Israel? Just Want Cheaper Medicine? Then Support ACAA!

On Wednesday September 18th the International Trade Committee of the European Parliament met to discuss a trade agreement with Israel. The proposed bill is set to be voted on in October. If passed, the Agreement on Conformity Assessment and Acceptance of Industrial Products (ACAA) would remove barriers to trade between Israel and EU member states in industrial products, particularly pharmaceuticals.

The ACAA is a fantastic opportunity to cut healthcare costs for Europeans and generate economic growth in Israel by further opening the European market to Israel’s renowned pharmaceutical industry.

The ACAA can only benefit the European consumer and Israeli enterprise and foster more peaceful cooperation between our peoples. Who wouldn’t want cheaper medicine for our children, our elderly and the increasingly financially squeezed average worker?

The “Palestine solidarity” crowd, that’s who. Putting left-wing politics ahead of people, Labour Party MEP for Dublin and Chair of the European Parliament Palestine Delegation has urged “caution” in the EU in regards to ending protectionist practices against Israel.

So, it seems the likes of Costello are prepared to screw their own constituents and average folks all over the EU in order to further the foreign policy objectives of people like the United Left Alliance. Or perhaps the Baathist’s best buddy in Ireland, Chris Andrews. Lobby groups like the IPSC are set to go into overdrive to stop this agreement. Unfortunately, even with the demise of Chris Andrews, many politicians in Ireland seem to believe they were elected to represent Palestinians as much as or more than the Irish.

I urge everybody who cares free markets, Israel, or simply the interests of consumers everywhere to tell these people where to shove it. Perhaps we can also teach them that the operation of the free market and free trade is the most surefire way to promote global peace and harmony. Just ask Milton:

Debunking Clinton on Economic Recovery

Bill Clinton notably defended Barack Obama at the Democratic National Convention by saying that no president could have gotten the United States out of the recession in just one term. Yet he also claims Barack Obama might have been able to sort this mess out faster if it wasn’t for those darn Republicans and their obstructionist ways. Is this true?

The history of economic downturns and government reactions to them tells us otherwise. Thomas Sowell writes about this over at Townhall today. He notes that “for the first 150 years of this country’s existence, the federal government felt no great need to “do something” when the economy turned down”. Laissez-faire was the traditional rough guide in regards to economic crises before 1929. Lets compare recessions, then and now.

The first major financial crisis in America was the Panic of 1819. In his definitive work on the subject, Murray N. Rothbard writes that the federal government’s only action was to ease the terms of payment for its own land debtors. The Panic was history by 1923. That’s less than one full Presidential term, Mr. Clinton. Martin Van Buren, a highly underrated President, stayed the laissez-faire course during the Panic of 1837. That took five years to finally get over, but we wont quibble over a year or so, as Van Buren was a good fellow. Subsequent federal governments followed a similar approach, the occasional nasty exception being state governments which sometimes permitted insolvent banks to continue operating without paying their obligations.

The last of the real laissez-faire Presidents was Warren G. Harding. In the 1920–21 depression, unemployment hit 11.7 at its height. This is higher than its reached so far under Obama. Harding – the unsung hero of the day – did nothing, possibly because he was too busy boozing and fornicating. Wage rates were permitted to fall. Government spending and taxes were actually reduced significantly. This largely forgotten depression was over in one year. The Austrian School economist Dr. Benjamin M. Anderson called it “our last natural recovery to full employment.” Unemployment came to 2.4 percent in 1923.

Unfortunately, the laissez-faire tradition was abandoned after 1929 when progressive, Keynesian policies took hold of governments. This was true for both the Hoover and Roosevelt administrations. Some still perceive Hoover as a laissez-faire man, but let him tell the story in his acceptance speech for the Republican nomination in 1933:

[W]e might have done nothing. That would have been utter ruin. Instead we met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic. We put it into action. . . . No government in Washington has hitherto considered that it held so broad a responsibility for leadership in such times. . . . For the first time in the history of depression, dividends, profits, and the cost of living, have been reduced before wages have suffered. . . . They were maintained until the cost of living had decreased and the profits had practically vanished. They are now the highest real wages in the world.

Creating new jobs and giving to the whole system anew breath of life; nothing has ever been devised in our history which has done more for . . . “the common run of men and women.” Some of the reactionary economists urged that we should allow the liquidation to take its course until we had found bottom. . . . We determined that we would not follow the advice of the bitter end liquidationists and see the whole body of debtors of the United States brought to bankruptcy and the savings of our people brought to destruction.

Modern studies continue to prove that the interventionist policies of Hoover and Roosevelt only prolonged the Great Depression by several years. Well into Roosevelt’s second term unemployment stood at the terrible rate of 15 percent, indicating that the much-vaunted New Deal was an utter failure. Obama is making the same mistakes, prolonging a crisis that could have been over already if men like Van Buren and Harding were in Washington today. This was proven by Reagan. According to Sowell again:

Something similar [to 1920-21] happened under Ronald Reagan. Unemployment peaked at 9.7 percent early in the Reagan administration. Like Harding and earlier presidents, Reagan did nothing, despite outraged outcries in the media.

The economy once again revived on its own. Three years later, unemployment was down to 7.2 percent — and it kept on falling, as the country experienced twenty years of economic growth with low inflation and low unemployment…

Despite demands that Mitt Romney spell out his plan for reviving the economy, we can only hope that Governor Romney plans to stop the government from intervening in the economy and gumming up the works, so that the economy can recover on its own.

Amen to that.

Thoughts On ObamaCare, or: Why We Are All Doomed

The nastiest aspects of the Patient Protection and Affordable Care Act are the individual mandate, guaranteed issue and the partial community rating. The individual mandate survives thanks to the Supreme Court deeming it a tax today, even though Obama said it wasn’t. It stipulates that all persons not covered by an employer sponsored health plan, Medicaid, Medicare, or other public insurance programs, purchase an approved private insurance policy or pay a penalty.

So the government forces poor people to buy insurance from large companies. Just like they encouraged poor people to become homeowners and patronize banks, fueling a housing bubble and economic disaster. Just like how they feel that the maximum number of people possible need to go to college, because if 20% of the population go to college and get good jobs, then if 50% of the population go then 50% of the population will have good jobs. Few realize this is just diluting the value of a degree two-and-a-half times over, making the parchment increasingly expensive, causing our horrific levels of graduate unemployment/underemployment and creating yet another bubble.

Remember when insurance was a way of protecting against the risk of some low-probability/high-cost misfortune befalling you? It feels rather silly to point this out, but coming of child-bearing age and choosing to use contraception is not an insurable event. The United States is attempting an insane experiment that completely changes the nature of insurance. Americans are actually an over-insured people. This has been going on since World War II, when the Roosevelt administration decreed that compensation for labor in the form of employment-based health insurance does not count as taxable income, creating some very perverse incentives. Americans rely too much on third-party payment, whether by governments or private companies. Obamacare exacerbates this problem. Paying a third party  to cover the costs of predictable, routine health costs leads to prices shooting upwards.

The guaranteed issue and the partial community rating compel insurers to offer the same premium to all applicants of the same age and geographical location without regard to most pre-existing conditions. Obamacare will thus turn every large insurance corporation into the equivalent of Fannie Mae and Freddie Mac, requiring permanent taxpayer bailouts to stay afloat. When they fail, the corporations will be nationalized and unfettered capitalism will be blamed. Which I have always believed is Obama’s end goal.

Remember all those mortgages banks gave to people without the ability to pay back in recent years? This is the same thing, with insurance. How much hand-wringing do I have to do here, dammit? Why do we never learn?

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By the way, I suspect many of us will be arguing with our colleagues at work or university on the role of the state in healthcare. I recommend reading these articles to start pumping you with a little intellectual ammunition:

What Soviet Medicine Teaches Us, by Yuri N. Maltsev

Medical Care Facts and Fables, by Thomas Sowell