Tag Archives: free market

Net Neutrality Politics: Moving Us Away from a Free, Open Internet

With the help of corporate sponsors like Netflix and Google, net neutrality has gone from being an unknown issue to garnering national attention. Like most fads, though, net neutrality’s popularity has grown far more rapidly than the public’s understanding of it, and people do not realize how unnecessary and destructive net neutrality policies actually are.

“Net neutrality” refers to a principle under which all types of information on the internet are delivered at equal speeds. In a neutral internet, an email from your grandmother will download to your computer at the same rate as a Netflix video. In a non-neutral internet, by contrast, some information could get prioritized, necessarily slowing the rest. Content producers (such as Netflix) and end-users tend to be in favor of net neutrality because they benefit from a vast diversity of content on the internet, and no one wants to run the risk of having their preferred content throttled (slowed).

Opponents of net neutrality tend to include internet service providers (ISPs), such as phone and cable companies, who believe that tailoring their networks to fast-track certain types of content could lead to better end-user experiences and cost savings.

The net-neutrality principle has been invoked in several pieces legislation and proposed administrative rules over the past eight years. Each of these acts would, to varying degrees, restrict the autonomy of ISPs. As a result, the term “net neutrality” now denotes a specific set of public policies, and not just a principle.

Like the proponents of many government regulations, net neutrality supporters will often invoke the public interest, the protection of some disadvantaged group, and/or the promotion of economic efficiency. Touchy-feely catchphrases like “keep the internet free and open” and “all bits are created equal” abound, along with the assertion that net neutrality will bolster marketplace competition by relieving the burden of bandwidth costs for startup tech companies. Proponents also assert that net neutrality will prevent ISPs from arbitrarily censoring (competitors’) content on their networks.

The proponents of such regulation seem to concede the benefit of market competition—a refreshing sign—but they fail to see the contradiction created by invoking it. Net neutrality is properly seen as a hindrance to competition, not a facilitator.

In order to compete in a market, companies must differentiate themselves in a way that satisfies the consumer. This is innovation. One method ISPs have to satisfy the wants and desires of their customers is to expedite the information their customers consume. The net neutrality regulations proposed by the Federal Communications Commission (FCC)—recently struck down in January—would have prevented this, stifling innovation in the provision of internet services. As Larry Downes noted in November:

In all, the FCC’s Open Internet order itself cataloged a dozen major non-neutral technologies, protocols, and business arrangements that have long been necessary parts of the Internet. Sensibly and of necessity, the agency granted exceptions from the rules for each and every one of them, recognizing that the “open” Internet, at least from an engineering standpoint, was anything but. For the Internet to continue functioning at all, the rhetoric had to give way to reality.

But there was no way for the rules to preemptively grant similar permission to any future network optimization technologies, other than to caveat all of the rules with exemptions for “reasonable network management.” That term couldn’t be defined, however, meaning that any future innovations will require FCC approval before large-scale implementation.[i]

In other words, such an obstacle to innovation and experimentation in network management could spell higher costs and a far lesser quality of service for end-users and content providers alike. This seems like a terrible tradeoff, since even an absence of government net neutrality regulations would not prevent ISPs from adopting net-neutral practices; if consumers demanded such practices, they could simply switch from a non-neutral ISP to a neutral one. The same is true for content providers—not only the giant companies like Facebook, Netflix, and Amazon; smaller companies and (yet-to-exist) startups may also switch among ISPs if they believe that their content is being discriminated against. This would be a system of true market competition.

In response, net neutrality advocates quickly (and rightly) point out the monopolistic state of the broadband internet market. The FCC has reported that of the 132 million households in the United States, only 47 million (roughly 35%) have access to four or more video programming distributors (i.e., cable, satellite, and telephone companies); cable companies alone have a market share of 56% among these distributors, and of the roughly 1,100 cable companies in the United States, the top five of them (in market share) account for nearly 82% of all video programming subscribers.[ii] Given that all of these companies also provide broadband internet services to many of their customers, the ISP market looks incredibly uncompetitive.

The uncompetitive nature of the industry would seem to refute the argument that net neutrality stifles innovation—there’s no need for companies to innovate anyway if the market is cornered. Since Comcast and similar companies so effectively control their respective markets, there is virtually no recourse for a dissatisfied customer, which removes the normal incentives for companies to improve services and cut costs.

For most people, unfortunately, this is where the debate ends. Although many will concede the benefits of competition among ISPs, they dismiss those benefits as immaterial, since an effective monopoly exists in the largest markets. Now the only available option they see for ensuring fair or neutral business practices is for government to impose net neutrality upon the industry.

But this disregards the important question of how the industry became so uncompetitive in the first place. If the ISP market is naturally and inevitably monopolistic, it might lend support to net neutrality advocates. But if it is not, then net neutrality may unnecessarily stifle innovation and raise costs. Before we propose policies, we need to ask, “Why is there effectively a monopoly in internet service markets?”

Basic economic theory informs us that monopolies can only endure as long as no new companies enter the market to provide the same (or better) service at a lower price. So why haven’t more companies entered the market to upend the entrenched giants?

There are a number of up-front costs associated with starting a cable company and/or entering a cable market. Building the initial cable infrastructure is one of these costs, but another significant, yet often unmentioned cost is that of acquiring cable franchises. In most states, cable companies must obtain a cable franchise from each and every municipality in which they want to do business. Large companies can easily expand into new markets because they have lots of cash with which to pay licensing fees; but for smaller/startup companies, the licensing requirements present an insurmountable barrier to market entry. Encouragingly, 21 states have passed cable franchise reform bills, meaning that cable companies need only obtain one license to operate within the entire state. In the 29 remaining states, however, cable companies must still work through the old, inefficient system.

Evidence indicates that the entry of companies into previously uncompetitive ISP markets does reduce cable prices and provoke efforts from the incumbent cable companies to improve services. In response to entry by AT&T, which offers video services over telephone lines (and is thus not subject to cable franchise requirements), Comcast of Santa Rosa, CA, rushed to deliver “new features [video-on-demand, more channels] in Santa Rosa […]” In Houston, similarly, Comcast pledged to offer more “linear and high-definition channels, video-on-demand titles and digital phone features” following potential AT&T entry.[iii] A Bank of America study also observed basic cable price reductions of between 28% and 42% in areas of Virginia, Texas, and Florida where Verizon rolled out its FiOS video service.[iv]

The lesson from these stories is clear: Wherever ISPs are able to circumvent onerous cable franchise requirements and enter the market, services and pricing improve. The solution to the lack of market competition, therefore, is not to implement new government regulations, but to repeal the regulations we already have. Getting rid of cable franchising would abrogate the need for net neutrality while also improving consumer choice and quality of services. These reforms, not innovation-stifling net neutrality, will be a crucial step toward a truly free and open internet.

[i] Downes, L. (2002). What Verizon’s Net Neutrality Challenge Is Really About. Forbes. Retrieved from: http://www.forbes.com/sites/larrydownes/2013/09/11/what-verizons-net-neutrality-challenge-is-really-about/

[ii] Federal Communications Comission. (2013). Fifteenth Report. Retrieved from: https://apps.fcc.gov/edocs_public/attachmatch/FCC-13-99A1.pdf

[iii] Singer, H.J. (2007). The Consumer Benefits of Telco Entry in Video Markets. Retrieved from: http://www.justice.gov/atr/public/workshops/telecom2007/submissions/228100.htm

[iv] Bank of America Equity Research. (2006). Battle for the Bundle: Consumer Wireline Services Pricing.

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Another Reason to Like Rich People

They don’t just create jobs…

One of the most common complaints of a free market system comes from consumers who, while desiring a nascent product, are too in-affluent to buy it. I frequently see this sentiment emerge while reading the various technology and automotive blogs across the internet, where new products are introduced several times each day. Experienced bloggers and commentators are adept at shrugging off their disappointment in these situations; they know that consumers need only wait, and the product will eventually become affordable. Many people, however, don’t seem to understand how this occurs, and their bewilderment too often turns to impatience. To alleviate this problem, let me attempt an explanation of how a good or service becomes affordable.

First, an entrepreneur/producer has an idea for a product, either to create a new one or to improve upon an existing one. Because the product is relatively new and strange, the cost of building it is high. It requires lots of investment, research, time, and labor to create. The high cost of production necessarily translates into a high sale price.

Because the initial sale price of the new product is so high, relatively few people will be able to buy it outright—this small group of people consists of the most affluent among us. However, if the rich buy enough of the product, potential producers will interpret this as evidence of growing demand, and they will enter the market to capitalize on it. The subsequent combination of increased product supply from numerous competing firms, and streamlined production lines, causes prices to fall until profit margins can no longer support a growing number of producers. At this point, the market has reached the equilibrium of supply and demand, and the product is now affordable for the greatest number people.

Rich people are incessantly demonized by the envious and the despotic, but consider how our economy would be different if they were suddenly absent. Without rich people, new and expensive products would never be purchased. This would send a signal to potential entrepreneurs and producers that there is little likelihood for a return on their investments, which would seriously hamper the research and development of new products. It is difficult to imagine a world in which the shelves of our stores aren’t constantly being stocked with new products—a world where a better life is just out of reach—but such a world is possible when affluence is erased.

New products are risky. There’s a substantial chance that a new product will fail upon reaching the market. It is thanks to entrepreneurs and producers, who risk their time and resources on ideas, that we have an abundance of ever-improving tools and technology. However, we also owe thanks to the most affluent consumers who help determine if a product is viable. Because they’re willing to take a risk in buying a new product, the rest of us are eventually able to afford a higher standard of living.

Understanding ’80s Economics

With the resurgence of American conservatism and the advent of the Tea Parties, politics in the United States has become increasingly polarized. Often cited as evidence of superior fiscal/economic policies is the economic record of Ronald Reagan. Ronald Reagan has become a quasi-religious icon of the American conservative movement and on some practical levels he appeals to politicians of all ideologies. Even Barack Obama, considering himself to be like Reagan in manner and appeal, has invoked Reagan in order to garner support for his leftist policies. Nevertheless, Reagan’s popularity makes him a common target for criticism by the left. Unfortunately, too much of that criticism seems to go unanswered, and pundits on the right seem to take the soundness of Reagan’s policies for granted. I hope to give some support to conservative economic policies by providing some simple answers to questions and comments I’ve heard about our 40th president.

Question: Ronald Reagan is often lauded as a staunch fiscal conservative, but is he not responsible for an increase in U.S. debt by two trillion dollars?

It is true that the debt rose by $1.86 trillion under the Reagan administration, and it is also true that the debt ceiling was raised more often under the Reagan administration than under any administration in U.S. history.[1][2]

How was all this debt accrued? Wouldn’t a lack of budgetary restraint of this magnitude suggest fiscal liberalism, not conservatism?

It might suggest that, if we only look at total spending; but not all spending is created equal, and it is necessary to examine the components of federal spending as well. Federal outlays increased by $466 billion during the Reagan years—from $678 billion in 1981 to $1.1 trillion in 1989.[3] “Human Resources” spending (which includes spending for Social Security, Medicare, Medicaid, and other entitlement programs) accounted for 44 percent of the increase; defense spending accounted for another 31 percent; and every other form of spending (infrastructure, government payroll, general operations, etc.) took up the remaining 21 percent.[4] As we can see, entitlement spending was the primary driver of all federal outlays (a trend consistent with previous presidencies). Spending on the largest entitlement programs is not discretionary, meaning such spending is not affected by the government’s annual budgets, and fundamentally reforming these programs is extremely difficult without a unified government, something America did not have during any years of the Reagan presidency.[5][6] Ultimately, Reagan’s credentials as a conservative will be determined by your view on the effectiveness and necessity of the military buildup which he advanced. We should not lose our sense of perspective, however: Even if defense spending had remained at 1980 levels throughout Reagan’s presidency, the country would still have been running a $6.6 billion deficit in 1989 due to the increase in entitlement spending, something over which Reagan had minuscule control.[7]

Question: Setting aside the country’s fiscal status, what were the economic outcomes of the 1980s?

Under the Reagan administration, the United States began the longest sustained peacetime economic expansion in its history, and the second-longest during either peace or war. Real GDP grew by 33 percent from 1981 to 1989, averaging 4.13 percent annual growth.[8] Real per capita income grew by 22 percent over the same period.[9] There was a net gain of 16.2 million jobs, slashing the unemployment rate from 7.5 percent in January of 1981, to 5.4 percent in January of 1989.[10] The rate of inflation was cut from 11.82 percent in 1981 to 4.67 percent in 1989.[11] Private sector savings increased by $85 billion, and domestic private investment surged by a magnitude of $369 billion.[12] In short, Americans were working more, producing more, earning more, and benefiting from monetary appreciation, all at a faster rate than any other peaceful time in U.S. history.

How was all of this brought about?

From 1981 to 1989, Ronald Reagan signed a series of bills that lowered taxes overall and simplified the tax code. These bills, known collectively as the “Reagan Tax Cuts”, lowered the marginal rate on all income tax brackets—including a drop in the top marginal rate from 70 percent to 28 percent—reduced the capital gains tax from 28 percent to 20 percent, and indexed for inflation marginal tax rates at every income level.[14] They also reduced the Alternative Minimum Tax rate from 25 percent to 21 percent, and they repealed the Add-On Minimum Income Tax altogether.[15] Lastly, they cut the number of income tax brackets from fifteen to four, expanded personal exemptions, and limited deductions to make the tax code flatter and more fair.[16][17] In addition to the significant changes in the tax code, Ronald Reagan also heavily curbed the regulatory reach of the federal bureaucracy. Since its creation in 1936, the Federal Register—which annually chronicles the publication of all new federal regulations—has grown by thousands of pages. These executive edicts, which carry the force of law, saddle Uncle Sam with tens of billions of dollars per year in administrative costs alone, and they produce manifestly detrimental effects for the economy.[18] Up until 1980 this growth was exponential, but under Ronald Reagan the Federal Registry actually shrank from almost 90,000 pages to about 50,000 pages.[19] Although the steep upward trend resumed after Reagan left office, the vast combination of tax cuts and regulatory relief produced an economic climate of unprecedented strength throughout the decade.

Question: It seems that tax cuts of this magnitude would bankrupt the U.S. Treasury. Are these the policies that contributed to the huge amount of added U.S. debt accrued during the Reagan years?

No, in fact, the opposite is true: total federal tax receipts grew drastically, from $599 billion in 1981 to $991 billion in 1989.[20] If the economic growth of the 1980s hadn’t occurred as rapidly or persistently as it did, it’s safe to say that the debt would have been much greater than it was.

Question: How do we know that the economic growth is not attributable to well-timed monetary policy along the Keynesian vein of economics, rather than broad-based tax cuts?

Some have argued that Paul Volcker, Chairman of the Federal Reserve from 1979-1987, is chiefly responsible for the economic boom of the 1980s because of his monetary policies: Specifically, they claim that Volcker’s raising of the Federal Funds rate in the late 1970s reduced inflation, and although this policy caused a recession in 1981 and 1982, the eventual lowering of interest rates in 1982 allowed the economy to take off in 1983. While it is true that Volcker’s actions, which were actually endorsed by Reagan in 1979, greatly helped to curb inflation and the cycle of stagflation characteristic of the 1970s, it is incredible to say that these monetary policies caused the post-1982 boom. Interest rates actually fell twice between the summer of 1979 and the implementation of any of Reagan’s fiscal policies, but contrary to what Keynesian monetary theory would suggest, employment and gross private investment never rebounded to above-1979 levels until 1983 when the Economic Recovery Tax Act had almost been fully implemented (inflation never rebounded to 1979 levels during Reagan’s presidency, which also contradicts Keynesian economic theory because the increased demand should have caused inflation).[21][22][23][24] While it’s safe to say that Volcker’s monetary policies facilitated the economic growth of the 1980s, it’s erroneous to conclude that those policies spurred the growth.

Question: One of the most significant of the Reagan Tax Cuts was the Tax Reform Act of 1986, which decreased the marginal income tax rate for the highest income bracket and increased the rate for the lowest income bracket. Did the subsequent tax relief and economic growth only benefit the rich?

No. If anything, the poor benefited more than the rich. Between 1981 and 1989, the second-lowest and lowest income quintiles saw a drop in effective tax rates by 39.6 percent and 420 percent respectively.[25] This is only possible due to a doubling of personal exemptions and a tripling of the earned-income tax credit, which would have been impossible without the vast new revenue generated by economic growth. These changes effectively abrogated the tax liability of over 4 million low-income taxpayers. Conversely, the middle, second-highest, and top income quintiles saw more modest drops in their effective tax rates of 27.7 percent, 25.2 percent, and 6.3 percent respectively.[26]

We see similar trends when we look at the distribution of the federal income tax burden over the period. In 1981, the bottom 50 percent of income earners paid 7.45 percent of all federal income taxes, but in 1989, they paid only 5.83 percent.[27] By contrast, the top 1 percent of income earners paid 17.58 percent of federal income taxes in 1981, but by 1989 they paid 25.24 percent.[28] Clearly, the poor benefited demonstrably more than the rich in terms of tax liability.

Question: The change in the distribution of the federal income tax burden seems to outright contradict the change in nominal and effective income tax rates. How is this possible?

There are only two ways such a change in tax liabilities could occur after the aforementioned tax acts of 1981 and 1986: one way is if there were more people within the highest group of income earners in 1989 than 1981; the other is if the people in that group were making more money in 1989 than in 1981. The fact is that both occurred: from 1979 to 1986, the real average family income of the bottom income quintile rose 77 percent, 37 percent for the second-lowest quintile, 20 percent for the middle, 10 percent for the second-highest, and 5 percent for the highest.[29] In addition to the benefits of rising real incomes, individuals also benefited from huge amounts of economic mobility: according to a 1992 U.S. Treasury study, 86 percent of individual income tax filers in the lowest income quintile in 1979 had moved to a higher quintile by 1988, and 15 percent of them had moved to the top quintile. For the second-lowest quintile in 1979, 61 percent moved up, and 11 percent moved to the top. For the middle quintile, 47 percent moved up, and a little less than one-third of them moved to the top. For the second-highest quintile, 35 percent moved to the top, and in the top quintile, 65 percent of earners remained there after the 10-year stretch.[30]

Conclusion

The data would seem to confirm what we’d theoretically expect: Reducing the growth of government, cutting taxes, reducing regulation, and limiting inflation with sound monetary policy does in fact lead to economic growth. In a time today when the country is torn about how to get the economy moving again, we may want to look on the 1980s and the accomplishments of Ronald Reagan with a favorable light.

References
1. U.S. Department of the Treasury. Bureau of the Public Debt. Historical Debt Outstanding – Annual 1950 – 1999. Treasury Direct. Accessed 3 Aug. 2011. http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo4.htm

2. U.S. Office of Management and Budget. Statutory Limits on Federal Debt: 1940-Current. Table 7.3. Accessed 2 Aug. 2011. http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/hist07z3.xls

3. U.S. Office of Management and Budget. Fiscal Year 2014 Historical Tables: Budget of the U.S. Government. Table 1.1, p. 23, Apr. 2013. Accessed 7 Feb. 2014. http://www.whitehouse.gov/sites/default/files/omb/budget/fy2014/assets/hist.pdf

4. Ibid. Table 3.1, p. 55-56

5. U.S. House of Representatives. Office of the Clerk. House History. Accessed 12 Aug. 2011. http://artandhistory.house.gov/house_history/

6. U.S. Senate. Senate Historical Office. Party Division in the Senate, 1789-Present. Accessed 12 Aug. 2011. http://www.senate.gov/pagelayout/history/one_item_and_teasers/partydiv.htm 

7. OMB. Historical Tables. op cit. Table 1.1, p 23. Table 3.1, p. 55-56. 

8. U.S. Department of Commerce. Bureau of Economic Analysis. National Income and Product Account Tables. Table 1.1.6, 29 Jul. 2011. Accessed 13 Aug. 2011. http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1

9. U.S. Department of Commerce. Bureau of the Census. Current Population Survey: Income: Total CPS Population and Per Capita Income. Table P-1. Accessed 13 Aug. 2011. http://www.census.gov/hhes/www/income/data/historical/people/

10. U.S. Department of Labor. Bureau of Labor Statistics.  Labor Force Statistics from the Current Population Survey. Accessed 14 Aug. 2011. http://www.bls.gov/data/

11. U.S. Department of Labor. Bureau of Labor Statistics. Consumer Price Index. Accessed 14 Aug. 2011. http://www.bls.gov/cpi/

12. Bureau of Economic Analysis. Account Tables. op cit. Table 1.1.6.

13. Freddie Mac. Monthly Average Commitment Rate and Points on 30-Year Fixed-Rate Mortgages Since 1971. Accessed 15 Aug. 2011. http://www.freddiemac.com/pmms/pmms30.htm

14. Board of Governors of the Federal Reserve System. Selected Interest Rates (Daily) – H.15: Historical Data. Accessed 15 Aug 2011. http://www.federalreserve.gov/releases/h15/data.htm

15. The Library of Congress, Thomas. Bill Summaries and Status. 97th Congress (1981-1982). H.R. 4242. Accessed 4 Aug. 2011. http://thomas.loc.gov/cgi-bin/bdquery/z?d097:HR04242:|TOM:/bss/d097query.html

16. The Library of Congress, Thomas. Bill Summaries and Status. 97th Congress (1981-1982). H.R. 4961. Accessed 4 Aug. 2011. http://thomas.loc.gov/cgi-bin/bdquery/z?d097:H.R.4961:

17. The Library of Congress, Thomas. Bill Summaries and Status. 99th Congress (1985-1986) H.R. 3838. Accessed 20 Aug. 2011. http://thomas.loc.gov/cgi-bin/bdquery/z?d099:H.R.3838:

18. Tax Foundation. Federal Individual Income Tax Rates History: Income Years 1913-2009. Accessed 4 Aug. 2011. http://taxfoundation.org/sites/taxfoundation.org/files/docs/fed_individual_rate_history_nominal%26adjusted-20110909.pdf

19. Dudley, Susan, and Melinda Warren. 2006. “Moderating Regulatory Growth: An Analysis of the U.S. Budget for Fiscal Years 2006 and 2007.” Weidenbaum Center on the Economy, Government, and Public Policy 28. Figure 1, p. 7. Accessed 16 Aug. 2011. http://wc.wustl.edu/files/wc/2007RegReport.pdf

20. Ibid. Figure 3, p. 9.

21. OMB. Historical Tables.  op. cit. Table 1.1, p. 22.

22.  Board of Governors. op cit.

23. U.S. Department of Labor. Bureau of Labor Statistics. Labor Force Statistics from the Current Population Survey. Accessed 14 Aug. 2001. http://www.bls.gov/data/

24. U.S. Department of Commerce. Bureau of Economic Analysis. op cit.

25. U.S. Department of Labor. Bureau of Labor Statistics. Consumer Price Index. Accessed 14 Aug. 2011. http://www.bls.gov/cpi/

26. U.S. Congress. Congressional Budget Office. Historical Effective Tax Rates, 1979 to 2005: Supplement with Additional Data on Sources of Income and High-Income Households. Table 1, p. 7. Accessed 24 Aug. 2011.

27. Ibid.

28. Heritage Foundation. 2011 Budget Chart Book. Percentage of Federal Income Taxes (2008). Accessed 3 Aug. 2011. http://www.heritage.org/BudgetChartBook/top10-percent-income-earners

29. Ibid.

30. Hubbard, R.G., J. Nunns, and W. Randolph. Household Income Changes over Time: Some Basic Questions and Facts. 1992. U.S. Department of the Treasury, Office of Tax Analysis. Table 6. Accessed 10 Jul. 2010. http://www0.gsb.columbia.edu/faculty/ghubbard/Articles%20for%20Web%20Site/Household%20Income%20Changes%20Over%20Time_Some%20Basic%20Questions%20and%20Facts.pdf

31. Ibid. Table 1.

Taxation: The Unsung Civil Rights Issue

I recently had a discussion with one of my “moderate” friends about the nature of the federal income tax system. He expressed the commonly held sentiment that those who make more money should pay a higher percentage of their income to the government simply because they can afford to, and that they somehow have a moral obligation to do so. Setting aside the fact that such a policy creates a society of freeloaders who feed off the productive, I pointed out to him that a progressive income tax relies on income discrimination, and arbitrarily grouping people into income classes.

It is odd that almost sixty years after the onset of the Civil Rights Movement, after a plethora of court cases and statutes outlawing discrimination based on attributes like race, color, ethnicity, religion, and gender, we still have widespread discrimination in this country, practiced by the federal government itself, with regard to a policy that affects all working men and women. If those other forms of discrimination are so lamentable, and I believe they are, why should we continue to allow equally insidious discrimination in our tax policy? My friend pointed out that those other attributes are not matters of choice because, for example, one cannot change their race or ethnicity, while level of income is a matter of choice. I think he’s one-hundred percent correct, but it creates a couple of problems for his overarching argument.

If it is the case that there is significant income mobility in the economy (i.e., income is a matter of choice), then people have the power to either increase or decrease their income at will. But one of the main points in favor of a progressive income tax is that there is a lack of income mobility in the economy to the extent that income must be redistributed in order to compensate for what people are unable to earn by working. Therefore, if level of income is a choice, then there is no need for a progressive income tax in the first place. However, if it is not a choice–a concept I reject–then according to my moderate friend, that is even more reason why it should not be subject to discrimination. Either way, a progressive income tax is unjustifiable.

The concept of income as a choice also leads to a more traditional argument against the progressive income tax. If you arbitrarily tax the “rich” at a higher rate than the “poor,” then the rich will choose to work less than they normally would because their work would no longer be worth the amount of money they got to keep after taxes. As a result, they will not aspire to high-earning jobs, and their new work will be less meaningful and useful. In effect, you will see a decrease in productivity within the economy. And when that happens, where does that leave the poor who benefit from the progressive income tax’ redistribution of income?

No matter who you are or how you look at it–whether you work or don’t work, or whether you consider yourself rich or poor–taxation is a civil rights issue. It’s time we as a country started to treat it like one. Now is the time to end discrimination in our income tax policy, oust the progressive income tax, and replace it with a system that treats all earners and producers equally.

December 2010: Unemployment Statistics Explained

The Bureau of Labor Statistics recently reported a decrease in the unemployment rate by four points during the month of December of 2010–from 9.8 percent to 9.4 percent. This would seem like good news, since the unemployment rate has been hovering at around 9.8 percent for many months. But when we look at the raw data, we see that the situation isn’t as optimistic as first indicated, and that the reasons for the drop in unemployment are far more insidious than we’d like.

For the month of December, the BLS reported a growth in the number of employed by 297,000 people. However, the number of unemployed decreased by 556,000 people. If you find these numbers a bit puzzling, you’re not alone. Where did those remaining 259,000 unemployed people go? It turns out that the civilian labor force, the total number of people currently either working or looking for work, decreased. The BLS refers to those people who left the labor force as either “marginally attached workers,” people who had looked for a job within the last 12 months but had stopped within the last four weeks, or “discouraged workers,” who have been without work for so long that they no longer believe there to be any jobs in the market. These people are not counted in the labor force, and their exodus from the labor force allows for the four point drop in the unemployment rate with only a surprisingly slight increase in the number of employed.

At the same time, the Civilian Non-institutional Population (anyone 16 or older and not in an institution such as a prison) increased by 174,000, offsetting the growth in employment so that the employment-population ratio only increased by a tenth of a percentage point. We can assume that none of these newcomers to the population actually joined the labor force, because the labor force decreased by 434,000–almost an exact sum of those who left, and those making up the population increase.

All this goes to show that we shouldn’t take all statistics at face value. The news media out there generally only report on the unemployment rate. Even though that rate went down, which is good, we shouldn’t lose sight of the story behind it. The rate would drop to zero if everyone simply left the labor force, but that wouldn’t solve the problem of unemployment. All this means is that we have a lot more work to do in terms of consistent job creation in this country.

A Leftist Misconception: Income Inequality

One of the most important issues to Americans is the economy. The state of the economy is something all Americans have a stake in, and there are a number of indicators we use to know how it’s fairing. GDP, unemployment rates, income, interest rates, and stock market returns are probably the most well-known indicators used by economists today. But there’s one lesser known indicator that leftists prefer to use for measuring the health of the economy: income inequality. While the previously mentioned indicators all measure efficiency in the economy, income inequality measures its equity. In other words, it’s a measure of one person or group’s economic welfare in relation to another. Leftists believe that the income divide between the rich and the poor in America has been widening. This is the misconception.

The main reason for the propagation of this misconception is a misreading of data from the U.S. Census Bureau. The Current Population Survey, the Bureau’s monthly survey of demographic information on roughly 50,000 people, has facilitated the collection of labor statistics for over 50 years. In the year 2000, the Census Bureau published a report summarizing the survey’s findings on income statistics over that time period, with special attention given to the disparity between the concentrations of household income within certain arbitrary statistical ranges. In order to quantify disparity, the report used the Gini Coefficient: a point on a 0 to 1 scale, where at 0 income is equally shared among all people, and at 1 all income resides with one person. According to the report, the Gini coefficient has been increasing steadily from 1968 to 1998, meaning that America has been becoming more unequal. Leftists like to take these data at face value because it justifies their egalitarian tendencies.

Unfortunately, there are some problems with measuring inequality this way. The first is the use of household incomes instead of individual incomes. The average household size for all Americans, according to Current Population Survey, has been steadily decreasing since before 1968, and that downward trajectory continues to this day. As we would expect, this has allowed the concentration of income in each quintile of households to change despite contradictory changes in median individual income over the same time period. Unfortunately, individual incomes cannot be effectively used to calculate the Gini Coefficient because of factors like unearned income, the earned income tax credit, government in-kind transfers, and countless other variables which can only be measured individually.

The main problem with the Gini Coefficient, however, is that it relies on measuring the concentration of incomes within statistical ranges. When you do this, income stops being a characteristic of a person, and starts being a characteristic of a given statistical range. Statistical ranges such as quintiles only outline boundaries, however, which are superimposed onto an income scale to capture multiple units of data. Looking only at these boundaries instead of looking at the people within them is going to give us a distorted view of the economy. The simple reason for this is that the statistical ranges of income on which the Gini Coefficient relies do not change: the bottom income quintile will always be the bottom income quintile, no matter how much income the people within that quintile individually earn over time.

This fact approaches the heart of the problem. What if a person within one income quintile begins to make so much money that he/she moves to a higher quintile? Likewise, what if a person takes such a sharp pay cut that he/she moves to a lower one?

The Gini Coefficient cannot measure these occurrences. In other words, the Gini Coefficient cannot measure income mobility.  We should all be concerned with the phenomenon of income mobility (the ease with which one can change their own income) because it is the free-market remedy for inequality, and it is one of our most important traditional values as Americans. It can be contrasted with redistribution, which is the leftist remedy for inequality.

We’ve now established that the Gini coefficient is inadequate for ascertaining the state of income mobility, so we need another measurement to use in its stead. What happens when we abandon the Gini Coefficient’s reliance on measuring household income concentrations within quintiles, and focus instead on the changes in individual incomes over time? Do we still see the growing disparity between the rich and poor in this country like the Census would suggest is occurring? No! In fact, the opposite has been occurring! In 2007, the U.S. Department of the Treasury published a report of trends in income mobility in the decade of 1996 to 2005. Using data from a sample of tax returns for over one-hundred and sixty thousand primary and secondary taxpayers, the Treasury finds that

There is considerable income mobility of individuals in the U.S. economy over the 1996 through 2005 period. More than half of taxpayers (56 percent by one measure and 55 percent by another measure) moved to a different income quintile between 1996 and 2005. About half (58 percent by one measure and 45 percent by another measure) of those in the bottom income quintile in 1996 moved to a higher income group by 2005.

In addition to reporting on income mobility, the report offers some insight on the overall strength of the economy. Also, the poor benefited more from income mobility than did the rich:

Median incomes of taxpayers in the sample increased by 24 percent after adjusting for inflation. The real incomes of two-thirds of all taxpayers increased over this period. Further, the median incomes of those initially in the lowest income groups increased more in percentage terms than the median incomes of those in the higher income groups. The median inflation-adjusted incomes of the taxpayers who were in the very highest income groups in 1996 declined by 2005.

The composition of the very top income groups changes dramatically over time. Less than half (40 percent or 43 percent depending on the measure) of those in the top 1 percent in 1996 were still in the top 1 percent in 2005. Only about 25 percent of the individuals in the top 1/100th percent in 1996 remained in the top 1/100th percent in 2005.

The report also comments that

The degree of relative income mobility among income groups over the 1996 to 2005 period is very similar to that over the prior decade (1987 to 1996). To the extent that increasing income inequality widened income gaps, this was offset by increased absolute income mobility so that relative income mobility has neither increased nor decreased over the past 20 years.

Referenced in the study is a litany of prior research on income mobility dating back to the 1960s, all of which indicates that there was a large amount of mobility within past decades as well, especially in the decade of 1979-1988, where by one measurement, “86 percent of taxpayers in the lowest income quintile in 1979 had moved to a higher quintile by 1988 and 15 percent of them had moved all the way to the top quintile.”

Leftists and others looking at the Current Population Survey might suggest that more government regulation and more progressive tax policies are needed to improve equity in the economy, but if we’ve learned anything here, it’s that liberty and opportunity are the greatest equalizers. If we wish to promote equality of opportunity, we should ensure a free market economy, of which economic freedom and mobility is a central component. We should accordingly dismiss the policies that, in an effort to achieve equality of outcomes, must necessarily destroy that freedom and mobility.

A Piece on Health Care “Reform”

Here we have the champion issue of the Democrat Party, the Holy Grail of leftism, President Obama’s “Waterloo;” it is the quintessential form of federal government control over the lives of Americans in a modern world. This issue has recently been the centerpiece of mainstream, left-wing reporting, and every day we hear the latest propaganda supporting the so-called “healthcare reform” proposals circulating within congress. This is a large topic, so I will break the left’s arguments down in to its components of philosophy, and statistical rationale.

The ideological foundation for this debate is the question “Is health care a right?” The Democrat Party’s proposals rely on an affirmative answer, but in taking a closer look beyond its emotional appeal, we find that the question must first be broken down into two more basic questions: (1) What is health care? (2) What is a right?

Most people seem to have a good concept of what health care is. When patients are administered medicine, they are receiving a tangible good. When a patient visits a doctor or nurse, they are receiving the tangible services of those professionals. Regardless of what the particular good or service is, health care is something that professionals in the field own and provide at a cost to themselves.

Defining a right is a little bit trickier. The conservative perspective holds that a right is a product of natural law; natural law is based on morality, and morality is based on human nature. Still, the concept of rights seem nebulous and intangible, so it’s best to start with its most basic characteristics. Most people would agree that in order for something to be a right, it must be inalienable from an individual, undeniable to them by both other individuals and by government. If rights are inalienable from individuals, then the rights of one individual necessarily cannot contradict the rights of another. Given these stipulations, let us consider the example of health care.

If health care is declared a right, then the rights of those without health care must necessarily contradict the rights of those with health care. If I walk into a hospital and demand treatment, claiming it as my right, I am actually claiming as my right the service of whoever provides the treatment–if they are unable to refuse, it would render the health care provider a slave. Because this would contradict the rights of the health care provider, health care cannot be a right. The same is true for all other goods and services, such as food, clothing, and housing. These things are produced by individuals at a cost to themselves.

Rights are not something that can be granted or confiscated by government, but goods and services are. In its endeavor to provide health care for all, government has fostered a sense of entitlement in people that causes them to view goods and services as a right. The irony is that the government’s reforms aren’t even focused on health care, but rather health insurance coverage. Health insurance coverage is a promise, and nothing more. Promises are something the government has an abundance of.

I also want to address the left’s use of the word “reform.” Its adoption for this context is no accident, though the way they use it is dishonest. There are two types of large scale change: Reform and Revolution. Edmund Burke, known as the founder of modern conservatism, knew from his observations on the French Revolution and the surrounding time periods what the characteristics and effects are of each. Change through reform is a healthy practice to amend and refine current systems which are believed to be effective, but inefficient. Change through revolution (also referred to sometimes as change through innovation) radically alters a system to the point of being unrecognizable (or does away with a system altogether), based either on the assumption that the current system is horribly inadequate, or that the new system will be so wonderful that continuation of the current system in any way is unacceptable. The two types of change are mutually exclusive, with reformation producing results opposite to those of revolution, which often have unintended consequences, and as Burke put, “A spirit of reformation is never more consistent with itself than when it refuses to be rendered the means of destruction.” The healthcare proposals originating in the U.S. House and Senate are not reform. They are a complete short circuit and doing-away-with of the current healthcare system of America, including its positive aspects. It is revolution, and if implemented, will be disastrous.

The Problem According to the Left

Dearth of Insurance Coverage

By now, there’s no doubt you’ve heard the figure thrown around by Nancy Pelosi, Barack Obama, and several media pundits that there are at least 47 million uninsured Americans in this country. According to them, there is a crisis in the United States of such magnitude that you wouldn’t be able to walk down the street without seeing uninsured Americans sprawled out on the sidewalk, or spilling out of emergency rooms. They would have you believe that unless a great, new, federal government insurance agency is created, there will be a profusion of sickness, injury, and death in America for which we would all share blame.

The first problem with this is that I don’t see uninsured Americans sprawled out on the street. I assume this is because I live a very sheltered life, but still, one must be at least a little bit skeptical. 47 million Americans is over 15 percent of the current United States population, so one would think that this crisis would have been all over the news for years up to this point. 47 million uninsured Americans don’t just appear over night, but I seem to recall only hearing about this figure during the 2008 election as one of the Democrat Party’s talking points, so where did this figure come from? It turns out, the figure originates from the 2006 U.S. Census Report. As with most statistics, these require more than a face-value appraisal. In his book, Liberty and Tyranny: A Conservative Manifesto, Mark Levin digs deep into the report and points out a few problems with the Democrats’ conclusions:

“In 2006, the Census Bureau reported that there were 46.6 million people without health insurance. About 9.5 million were not United States citizens. Another 17 million lived in households with incomes exceeding $50,000 a year and could, presumably, purchase their own health care coverage. Eighteen million of the 46.6 million uninsured were between the ages of eighteen and thirty-four, most of whom were in good health and not necessarily in need of health-care coverage or chose not to purchase it. Moreover, only 30 percent of the nonelderly population who became uninsured in a given year remained uninsured for more than twelve months. Almost 50 percent regained their health coverage within four months. The 47 million “uninsured” figure used by Pelosi and others is widely inaccurate.”

The existence of 10-15 million truly uninsured people is no small problem, but when we honestly consider all the facets of the data, we must seriously question the exigency of overhauling our entire health care system. The coverage of non-citizens and people who, for whatever reason, abstain from purchasing health insurance, all in hopes of helping a small percentage of truly disadvantaged Americans, is not wise, and we must give fair examination to less drastic policy alternatives.

The Insurance Companies

How did this problem start? If and when one accepts the “47-million-uninsured-Americans” figure as accurate (ignoring the facts mentioned earlier), one must wonder where all these uninsured Americans came from and how they got to be in their current situation. The talking heads on the left, including politicians such as Barack Obama, Nancy Pelosi, and Harry Reid, seem to have decided upon private insurance companies as the culprit. They constantly re-iterate the horror stories of how people cannot acquire health insurance through their employer, or how skyrocketing health insurance premiums are preventing individuals and employers from purchasing a policy or prescription drugs, or how they are denying coverage to people with pre-existing conditions, etc. The fact is that some of these stories have some elements of truth to them, and there are a few cases in which people more or less fall “victim” to these situations. The health insurance system in this country is far from perfect, and it could stand to be reformed in many ways.

However, this leaves out an important aspect of the debate, and fails to explain the behavior of the insurance companies other than through words like, greed, malevolence, and selfishness. The purpose of health insurance is not to act as a buffer zone for the entirety of a population. As much as it pains some people to hear, it was never designed to provide for all people and cover all medical conditions. The way all insurance works is that the participants pool against risk–in this case, the risk of sickness or injury. When an individual requires treatment for some affliction, the insurance company is required by contract to pay out the premiums it collects according to a payment schedule. We are most familiar with such schedules through car and home insurance. When accidents occur, certain damages are covered, whereas others are not. Even compensation for similar damages may vary depending on other circumstances, such as who was at fault.

There is a big difference with health insurance, however, in that participants are not always pooling against risk. Since the advent of health insurance, the coverage of most insurance plans has grown to grotesque proportions to the point that insurance companies are no longer insuring only against risk–regular check-ups and procedures, weight-loss surgeries, and prescription drugs are but a few of the litany of covered treatments today (this is the main reason health care costs are so high). Given this overabundance of coverage, it would not make sense for a healthy person to participate, because instead of paying only for the unlikely, occasional, catastrophic illness or injury–which health insurance was originally designed to cover–their premiums would instead be going to pay for the near constant claims of people looking to fund their own lifestyle. The system would basically become a transfer payment. As a result, we have 18 million young people who wisely choose not to buy health insurance.

Given the lack of premiums from healthy people to subsidize perpetually sick people, insurance companies have to be discriminatory in deciding whom to cover. An insurance company would go broke if it had to provide for every single sick person or every pre-existing condition because there simply are not enough healthy people to pay for them all, and this would ultimately defeat the purpose of having health insurance in the first place. This is the sad, ultimate truth about the current health insurance system, and although it is sometimes a painful truth, it is the only way the insurance system can function to provide for the truly needy.

The Solution As They See It

Nationwide Private Insurance Mandates

Here’s what the Democrat politicians plan to do about the problem: Because they believe the insurance companies to be acting out of greed, selfishness, and discrimination, denying coverage purposefully because it would diminish their profits, they intend to solve this problem by punishing the insurance companies in a variety of ways. First and foremost, they intend to use the law to prevent insurance companies from denying coverage based on pre-existing conditions in individual insurance markets. The problem with this proposal is not hard to understand. I just explained why insurance companies do not cover all people and conditions, and to force them to do so would be to force them out of business. Besides, the federal legislation HIPAA which was passed in 1996 already mandates insurance companies to sell coverage for groups such as businesses regardless of the health of its employees. They also wish to prevent insurance companies from dropping coverage of those who become sick, but this problem is pretty much imaginary, as HIPAA already prevents this for groups as well as individuals, and no business in their right mind would charge for a product and not deliver the goods. They would go out of business in an instant. They also plan to prevent insurance companies from “watering down” plans and paying only for a limited supply of drugs and medical procedures. Although I actually believe this to be a noble endeavor, I also believe an insurance company that did this would not last long in a free market, and it is because of current federal law that these companies are able to perform such practices and still retain consumers, but I’ll address this subject later. They also intend to disallow “arbitrary cap[s]” on coverage after certain time periods. Again, in a free market, this would not occur, and it is because of federal law that this problem occurs, though it even sounds preposterous in itself. They also want to limit how much a person can be charged for “out-of-pocket expenses,” which I’ll assume to mean co-pays for medicine, check-ups, and non-covered expenses. This has less to do with insurance coverage (although it does revisit the problem of forcing coverage for everyone) than it does with simple economics. You cannot limit the price of those health services and medical supplies through law without causing vast, negative repercussions for the companies and clinics that provide those commodities.

Public Health Insurance Entity

Here is the tricky part of the Democrat plans in congress: The “public option,” as the politicians evasively describe it. It has had many names over the months and been talked about by many people. It has been called names like “government co-op,” “public option,” “health insurance exchange,” “universal healthcare,” oh, and don’t forget “Hillary-Care.” As much as the left wants to deny it, they are all means to the same end: socialized medicine. Every name, every government plan described, takes the power of health insurance away from the private sector, and gives it to a government entity. Here’s what will happen: The government plan, if it doesn’t immediately become the only insurance provider by law, will gradually become this. It may start out as a “government co-op,” or a “health insurance exchange,” both of which are designed to compete with the private companies in the free market. Eventually, the private companies will go out of business, as they will not be limitlessly funded by the federal or state governments, and they will not be able to compete with something that is. This is simple economics. Anyone who says that people may retain their private coverage in this newly created, government monopolized environment with no negative consequences are simply lying. If the government does not immediately force people to sign on to the government plan, then those people who retain their private coverage will see dramatically increasing premiums, and soon their plan and their company will cease to exist.

But what will this new government insurance entity look like, and how will life change with it? Most likely the newly created entity will be a bureaucratic agency, far away in the distant realm of Washington D.C. It will be large, of course, and inefficient as most bureaucratic agencies are, and it will be expensive to run. Many people have listened to the president’s rhetoric, and come away thinking such a system would be benevolent, down to earth, and even cost effective. The biggest misconception today, however, is that the government can actually provide healthcare for us at all. The government does not produce anything; it only rearranges things. The politicians will say they have achieved “healthcare for all,” but what does that really mean? When you go to the doctor for a checkup, you’re not getting the insurance you bought. You’re getting the tangible services of another human being. When you buy and use a pharmaceutical drug, it’s not the health insurance that makes you healthier, it’s the tangible effect of medicine. Of course the government will provide free health insurance coverage to all people in America (including illegal immigrants), but what will we really be getting? The only thing the government can deal with is money–your taxpayer money: You will be using it to buy health insurance once again, only this time there won’t be any private insurance companies to blame for lack of care. There will only be the government. You won’t be paying for your own health insurance, nor will you be paying for the insurance of a group of people associated with a private business. No, this time, you will be paying for the insurance of everyone, whether they be sick or well, whether they pay taxes or not. The government will not discriminate in providing coverage. Everyone will get it, but only a few will pay for it. If you are healthy and don’t feel the need to buy insurance, that’s too bad. You have to pay taxes, and taxes are not a selective matter.

Now, it’s bad enough having to pay for the care of others in a totally cost-ineffective system, but what if you’re sick? The proponents of government run healthcare tout the excellent quality of socialized medicine. But what happens when the only window you have to obtaining state of the art healthcare is a cost-ineffective system? As the number of people who would require healthcare treatment by law would increase exponentially, and as healthcare costs continue to rise due to inflation, the government will inevitably be forced to ration care. This is where the “death panels” you hear about come in to play. The left-wing media uses that term to mock the opponents of socialized medicine, but when there is only so much healthcare to go around, and too many people to be treated, someone is going to be neglected. The bureaucracy, in its unending quest to be cost effective will have to start cutting healthcare options from the plan until costs can be met. This means the people with the most expensive ailments will be neglected first: People with heart conditions, trauma disorders, cancer patients, mental disorders, asthma patients, etc. These are the people that the far off bureaucratic agency in Washington D.C.—with no regard for the thoughts of the patient, the doctor, or the spirit of life that each patient holds—will cut first. These are what the “death panels” are for. They are to decide who is the most inefficient; who has the least bang for the buck. It doesn’t stop there, though. Coverage will continue to deteriorate until there truly are millions of people (most of them being senior citizens and the disabled) without healthcare in America. When there is no one else to blame but the government, it will be too late. Private insurance will be long gone, the deficit will have ballooned, and millions will have suffered.

Then there are always those proponents of socialized medicine that refer to the success of government plans in Britain, Canada, and other countries. I don’t understand exactly how they would define success, but if they mean substandard care, long waiting lines, and higher mortality rates than the U.S., then yes, I would say they’re successful as well. Here are a few examples of the many “success” stories coming out of those countries:

http://www.liberty-page.com/issues/healthcare/socialized.html

Even though we actually have the best healthcare system on the face of the Earth, and many people from other countries flock here because they are prevented from even purchasing privately state-of-the-art medical care, herds of drones on the left still rant about revolutionizing the healthcare system here. There are plenty of countries around the world with socialized medicine. If those countries are the wonderful utopias that they are purported to be, why don’t huge quantities of Americans flock to nations like Great Britain and Canada? Just leave here, and stop trying to ruin our system for generations to come. Here’s something for those who say that the healthcare system in terms of quality here in America is miserable:

http://www.ncpa.org/pub/ba649

The Problem As We See It

Misguided Federal Regulation

As for the proponents of new federal laws and increased federal regulation to solve the problems with America’s healthcare system (mostly Democrats and soft Republicans), it seems that the 1996 law HIPAA would be at least mostly satisfying. It provides for nationwide guaranteed issuing of coverage in group/business cases, and guaranteed renewability of coverage for groups/businesses and individuals. But apparently this doesn’t go far enough, hence the need for government run healthcare, and the inevitable destruction of the private insurance market. What most people fail to realize is that the laws of HIPAA already existed in many of the states to varying degrees. For example, by the mid 1990’s, 36 states had laws requiring guaranteed issue, and 46 states had laws requiring guaranteed renewability. I would see this as another strength of federalism, as it should promote national competition and give insurance shoppers more choices when it comes purchasing affordable plans that work for them, no matter their geographical location. Unfortunately, many states also have laws and regulations restricting which policies can be bought where.

The Solution As We See It

Tax Credits

Offering federal tax credits to individuals and families would significantly reduce the number of uninsured United States citizens, with a decreased risk of illegal immigrants or anyone else less inclined to pay taxes getting a free ride. It would also increase insurance participant pools overall, offsetting the spikes in premiums due to expensive, pre-existing, or other specifically designated conditions.

National Insurance Market

As of now, the tangle of state and federal regulations prevent individuals from shopping for insurance across state lines. Some policies and packages are only available in certain geographical areas. Reconciling state regulation through federal law could open up a national insurance market, increasing competition, driving down prices, and increasing levels of customization among plans.

Block Grants

If federal subsidies for insurance are absolutely necessary, they should be issued through block grants that allow states to control how much money goes to individuals and companies, and not waste money when it’s not needed.

Tort Reform

One of the biggest factors in the rise of healthcare costs in the United States is a plethora of malpractice lawsuits against doctors, hospitals, clinics, and HMO’s. Most of these cases are frivolous. Some experts say that 10-15% of the increases in healthcare costs are due to frivolous lawsuits, and federal law needs to be changed to limit them.

Where are the Republicans?

Although the left-wing media would have you believe that all the Republicans in Congress are a bunch of stubborn naysayers who only oppose real healthcare reform because they hate the president and want him to fail, the Republicans between June and the present day actually have had three pieces of legislation introduced in Congress (all three of them combined are smaller than any of the Democrat bills, and add to the deficit much less as well). None of them are really going anywhere, and they likely won’t because the Democrats have the majority in Congress. At least the rapid push to ram the government run healthcare bills down the throats of the American People is being slowed by the Republicans (besides Olympia Snowe and a few others), right?

I guess what the debate boils down to is this: If you support a destroyed private health insurance market, a government run health leviathan, rationed care, “death panels,” a ballooned federal deficit, substandard quality of care, long waiting lines, coverage for illegal immigrants, and higher mortality rates all for the sake of 10-15 million long term uninsured who will end up worse off than now anyway, then the Democrat proposals fit your bill. But if you believe that the system we have here, albeit imperfect, is the greatest healthcare system on the face of the Earth, and can be made better in a low cost and efficient way, without endangering the lives and prosperity of Americans for generations to come, while preserving and streamlining federalism, and while preserving coverage and quality of care for the most people possible, then not only do the Democrat proposals need to be opposed, but the Republican proposals need to be championed.

We do not elect our representatives or our president to authorize a cost-benefit analysis on the lives of their constituents, the American People. We elect them to preserve our freedom to choose the best path for our own lives.