Double Whammy

The following comes courtesy of Peter Schiff from www.lewrockwell.com

June 27, 2009

Misguided government policies have already dealt vicious body blows to our economy, but that hasn’t stopped politicians this week from launching two new kicks to the groin: a national health insurance plan and a carbon emissions regulation system called “cap and trade.” Even if these plans could achieve their desired ends, which is highly unlikely, I would have hoped Washington would refrain from throwing more monkey wrenches into the economy until it shows some signs of resurgence. The last thing we need right now is to further encumber our economy with higher taxes and additional regulations.

The meteoric rise in health care costs, which has become an unending nightmare for U.S. businesses and consumers, is not an accident. This painful condition has arisen from excess government involvement in the system, tax provisions that encourage the over-utilization of health insurance, and government support of an out-of-control malpractice industry. Rather than allowing more bad policy to drive health care costs further upward, we should be looking at ways to allow market forces to rein them back in.

If left alone, the free market drives quality up and costs down. Government programs produce the opposite result. Despite the president’s claim that a federal plan will bring costs down, there is no historical precedent for such faith.

Simply providing more widespread health insurance, as the Obama plan offers, is not a solution. In fact, it will aggravate the problem. Since consumers no longer pay for routine medical expenses out of pocket, comprehensive health insurance creates a moral hazard for both patients and doctors. To maximize the value of the health insurance “benefit,” most workers opt for low deductibles and co-pays. Therefore, doctors learn that their patients are not concerned with the cost of care, and so they are free to bill insurance companies at the maximum allowable rates.

Given our current tax code, the simplest way to bring down medical costs would be to fully tax health care benefits as wages and simultaneously increase the personal deduction by an amount significant enough to neutralize the effect of the tax increase. This would do two things. First, the uninsured would get a huge pay increase, enabling them to buy reasonably priced catastrophic policies. Second, those currently insured could opt out of expensive employer-provided plans, trading premiums for extra wages, then buy a more economical plan. The savings would go right into their pockets.

The bottom line is that aggregate medical costs will never come down unless services are rationed more wisely. Rather than being used as a pre-payment plan for routine care, insurance should only cover unpredictable, catastrophic costs.

As a comparison, homeowners often carry fire insurance, but seldom maintenance insurance. You buy fire insurance to guard against a catastrophic loss, which is a low probability but high cost event. As a result, fire insurance is relatively affordable, since premiums paid by all those homeowners whose houses do not burn down more than pay for the losses on those few whose houses do.

On the other hand, no one carries home maintenance insurance to pay for a clogged drain or broken garage door. If insurance paid for the plumber visit every time a toilet overflowed, we would now have a plumbing crisis, and Congress would be looking to rein in runaway plumbing bills with “national plumbing insurance.”

In his press conference, President Obama claimed that government insurance would not drive private providers out of business. This is absurd. As the government provider will not have to produce a profit or accurately account for its contingent liabilities, it will provide insurance on an actuarially unsound basis. With taxpayer subsidies, the government provider can run losses indefinitely. If private insurers did this, they would either be shut down or go bankrupt. Therefore, the cost of government-provided health insurance will not be confined to the premiums paid, but will include the taxpayers’ bill to continually bail out the government provider.

When Medicare was first proposed back in 1966, it cost $3 billion per year, and the projection was for inflation-adjusted annual costs to rise to $12 billion by 1990. The actual cost in 1990 was $107 billion, and the 2009 estimate is a staggering $408 billion! So much for government estimates on health care.

As if this were not bad enough, today the House votes on “cap and trade” legislation. Disguised as an environmental bill, this proposal would merely be another gigantic tax. The lion’s share of the new revenue is already committed to politically connected special interests that will reap windfalls at everyone else’s expense. To make matters worse, the bill before Congress amounts to a blank slate, with the EPA empowered to draft the details in any manner they see fit. If Congress is going to shoot the economy in the knee, they should at least be required to pull the trigger themselves.

“Cap and trade” will do nothing to reduce pollution, yet it will drive up production costs throughout the economy – rendering us even less globally competitive that we are today. In addition to the huge cost of paying the tax, its enforcement involves the creation of an entire new bureaucracy, the costs of which will be borne by American consumers in the form of higher prices.

Years of reckless borrowing and spending have left us in a gigantic hole. Getting out of it requires that we make the most effective use of all available resources. We need labor and capital to operate as efficiently as possible so we can save and produce our way back to prosperity. Unfortunately, national health insurance and “cap and trade” are two steps in the wrong direction. Rather than getting us out of this hole, they will merely cave in the walls around us.

Court Affirms 4th Amendment Protection

“The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.” Amendment IV, US Constitution

The protection against “unreasonable searches and seizures” is fundamental to a free society and a stalwart defense against the advancements of tyrants. The Framers of our Bill of Rights understood this well. Under British rule they had become all too familiar with infringements on individual security in person and possession and sought to remedy such occurrences in the new United States.

No doubt burning in the minds of our Framers were a number of domestic and English cases like Entick v. Carrington (1765) and Wilkes v Wood (1763) in Britain and the famous revolutionary James Otis’s cases defending colonial smugglers against the King’s "writs of assistance" here at home. John Adams, later reflecting on Otis’ battles would claim, “Then and there was the child ‘Independence’ born.” Moreover, the details of Entick and Wilkes reveal much about the reasoning behind the Fourth Amendment. In each of the cases, pamphleteers who were critics of the government were arrested and all their books and papers were seized for no better reason that their unhappiness with the Crown. (In the case of Wilkes forty-nine of his friends also had their papers seized.) Of course, the Founders’ exposure to search and seizure abuses was not confined to these few cases. On a daily basis, during the Revolutionary Period, there were search and seizure abuses by the Crown…abuses designed to reinforce statist rule…abuses that would warrant the protections of the Fourth Amendment.

In a society lacking the protection we are granted in the Fourth Amendment, government intrusion and intimidation can more easily occur. The individual is burdened by unjust infringements on his rights to property and privacy, and the state can easily use force to crack down on dissonance. In order to protect against these abuses and foster an environment for a free people, the Framers thankfully included protections against “unreasonable searches and seizures” in our Bill of Rights.

Since the adoption of the Fourth Amendment, it has been one of the most prolific sources of constitutional litigation in our nation. At times the Court has firmly ruled on the side of individual rights. At other times, the Court has ruled the other way. Today we lovers of liberty and lovers of the Constitution have reason to celebrate.

As Cato reports:

"The Supreme Court’s decision today in Safford Unified School District #1 et al. v. Redding was a victory for privacy and decency. The Court held that a middle school violated the Fourth Amendment rights of a thirteen-year-old girl by strip searching her in a failed effort to find Ibuprofen pills and an over-the-counter painkiller…

…The Fourth Amendment exists to preserve a balance between the individual’s reasonable expectation of privacy and the state’s need for order and security. Unnecessarily traumatizing students with invasive and humiliating breaches of personal privacy upsets this balance. Today’s decision restores reasonable limits to student searches and provides valuable guidance to school officials."

Every Constitutionalist should praise the Court’s decision for two reasons.

First, it rightfully recognizes the protection we are promised under the Fourth Amendment. Though this was an issue involving school officials searching a young girl for medication, there is a broader importance contained in the ruling. Today the issue was of what some may consider minor importance, but tomorrow it could involve protecting political advisories and others against the government. If our freedoms are lost in one facet of the law, loses elsewhere will be soon to follow. Moreover, this decision reminds us of the preciousness of our privacy rights and how often they are under attack.

Secondly, this decision by the court affirms the protection—as it is stated in the text—belongs to “people,” not merely adults. I once had a teacher to refute this claim. She was an open liberal, not a Con Law professor, and frankly on the wrong side of most constitutional arguments. One day as we were having a class discussion, the topic of students’ rights came up. I quickly pointed to the aforementioned constitutional protection, when she informed me that students do not have constitutional rights, claiming that the Court had a number of times denied students certain constitutional protections thus making it so. I, admittedly a little angered, began to tell her how the Court cannot and does not affect the truth behind the document and how rights exist whether they are recognized or not. Therefore, because of the willingness of those in society to protect the rights of some and not others, the fact that the Court (save for J. Thomas) stood up for the rights of an often overlooked segment of society gives us a reason to be thankful.

What we should take from both the Court’s recent ruling and from what we know about the Fourth Amendment is this. We need to be protected against “unreasonable searches and seizures” in order to limit the governing bodies, from principals to principalities, from infringing on our rights and freedoms. Moreover, in order for us to freely express our views and truly live lives of liberty, the Fourth Amendment must be protected. If a student cannot be protected from an unreasonable search by school officials, we can have no hope in being protected from a tyrannical government trying to silence voices of opposition.

For now, it seems that that the Court is willing to stand up for our rights, but let us not fall into complacency. Let us remain vigilant, and let us continue to demand protection from “unreasonable searches and seizures.” It could be the difference in our being a free society or a police state.

*Some historical information in this post came from The Heritage Guide to the Constitution 2005.

The June 09 Edition of the Christian libertarian Blog Carnival!

Please take the time to visit the June 09 edition of the Christian Libertarian Blog Carnival, a collection of blog submissions by Christian libertarians. I have a post featured this month and would like to thank Greg for his kind words and hard work.


The June 09 Edition of the Christian libertarian Blog Carnival!

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Which Price Will We Pay?

"Timid men prefer the calm of despotism to the tempestuous sea of Liberty."

– Thomas Jefferson

Free people are nothing more than those who refuse to be enslaved…in neither body nor mind. They crave freedom, desire the protection of their God-given inalienable rights, and will fight to the death to defend them. Most of all, these people will not sacrifice liberty for security or freedom for comfort.

Sadly, if these are the markers of free people, free people are disappearing at an alarming rate in our society.

Too often we settle. Too often we willingly place our necks in the noose of tyranny for the promises of its false security. This “security,” however, goes beyond a mere call for liberty to be sacrificed in the interest of “national security.” It exists on a much more subtle level. Subtle to the masses, but blatant to the eyes of the patriot, who looks upon such encroachments as what they truly are—attacks on freedom of the individual…attacks on the very cravings for liberty burning within Man’s soul.

We are told that for the price of our docile acceptance and the fruits of our labor we will have much reward. For, nothing shall be of want. All needs will be met, and some needs will be met that we didn’t even know we had. Our government protector will provide for our food, shelter, health, equality, etc. Moreover, this “benign” government will tell us what we can do…what we can say…what we can think (though we may not be willing to admit as much).

And why should we complain? Criticize false comfort, false security, and a lack of real responsibility? Better our government be responsible for our choices…our resources…our everything. When we give up our liberty, we cast off our responsibility. And to some, this on its surface seems liberating. For, the slave holds nothing in want. All his needs are met by his master. All his cares are cast aside.

To what am I referring in all this? I am referring to the constant willingness of people from both sides of the political aisle to neglect true individual responsibility and true individual liberty. I am referring to a nation so fearful of responsibility and individualism, that they would willingly lose the very republic our Fathers fought to establish and keep.

These encroachments exist at all levels. At times you are told what you can consume from food...to information…to drugs. At other times you are told that the government will meet your responsibility to provide for your healthcare, housing, etc. They even take your money and decide how to spend it for you.

Of course, those who step in to meet the demands of the community, realizing it is their responsibility (not the government’s), are told to step aside and are regulated out of existence. The fruits of our labor are taken from us, either through taxes or government-created inflation, and used to finance projects and programs not agreed upon in our Constitution, violating covenantal obligations. As our freedom documents are cast aside, those who step up to defend and protect the Constitution are treated like enemies from within.

Though we many not realize it at face value, when corporatism increases, individual liberty decreases. And when the government picks winners, there are also losers. Tyranny comes a bit at a time, and liberty is taken just the same.

The most striking revelation is that these encroachments upon our liberties are often welcomed as we look to short-term illusions of comfort. Freedom does not come without great cost, and certain inconveniences, certain burdens must be endured to live peacefully in a free society.

But, like Thomas Jefferson, “I would rather be exposed to the inconveniences attending too much liberty than those attending too small a degree of it.”

Jefferson also said that "the price of freedom is eternal vigilance.” Regretfully, if any price is to be paid, many are unwilling to pay it. What they don’t know is this: a price will be eventually have to be paid, and if we continue on our current path, that price will be a grave one.

Let us pay the price of responsibility and liberty now. For, I fear we cannot afford not to.

Socialized Medicine: A Threat to the Constitution and Responsibility

This morning President Obama gave a speech to the American Medical Association in which he pitched his plan for healthcare reform. The speech is problematic on a number of levels as it makes promises that cannot and will not be kept, it incorrectly diagnoses the problem, and it will not work and cannot be paid for.

The president’s plan is obviously deeply flawed, but these practical troubles are not of main importance to me. If the administration’s plan, actually would work (it won’t)…If it didn’t mean the creating of yet another insolvent government program (it does)…if it were the true and economically beneficial solution to our health care system (it is not), I would still oppose it. Why? Is it that I am a blind partisan or an ignorant and foolish analyst? No. My concern is not merely with the practicalities, partisan makeup, or ideological backing of the issue. My concern, first and foremost, finds its ground in one issue: the president’s plan is unconstitutional.

Nowhere in the Constitution does one find the authority for the government to provide healthcare for the public. In fact, the constitution provides an environment that encourages government out of businesses like healthcare (something that has been neglected and therefore has led to higher costs). So what solution does a constitutionalist believe the Constitution provides for the issue?

The Constitution is a document firmly grounded in the individual—protection for the rights and liberties of the individual, creation of an environment for individual achievement, and also a fostering of individual responsibility. The president’s plan touches on all of these issues. It inhibits the first two and neglects the former.

One might not realize this if he only listened to President Obama’s call for personal responsibility on the parts of individuals and parents early in his speech as he diagnosed the roots of many of our health problems. He neglects, however, that same call for personal responsibility when he calls for the adoption of his healthcare plan.

There is no question that, even in a true market economy, some will always fall beneath the cracks and need assistance when it comes to paying for healthcare. But we must ask, “Whose responsibility is it to pick up this slack?” The answer is individual, and not by compulsorily government pillaging of the taxpayer. Rather, individual charity and concern should provide for those who cannot afford proper healthcare, and this provision should be of one’s own choosing. There is nothing wrong with showing human compassion and charity. In fact, there is something very right about it. But no humanity and no since of right can be found in the forcing of one to meet his own responsibility to help his fellow man through government mandates and through the barrel of a gun. (If you don’t understand what I mean by “barrel of a gun,” refuse to pay your taxes.)

In sum, the Obama plan is the wrong type of change. It is immoral and inhumane because it divorces responsibility from the citizenry and forces the taxpayer into reluctant charity. If we are truly concerned for our fellow man, let us take the responsibility—not pushing it off on others and the government. Most of all, however, we should oppose this government encroachment because it is unconstitutional!