Economics

Obama Embraces Nixonomics

The folly of imposing wage and price controls

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Barack Obama has often modeled his policies on Franklin Roosevelt. Lately, though, he's been coming across more as Richard Nixon Lite.

In 1971, fed up with the steady rise of wages and prices, Nixon had a big idea: Attack inflation by imposing strict controls on wages and prices. A federal board was created to establish guidelines and enforce compliance, on the assumption that government officials were wise enough to decide the correct price for millions of products and the right wage for millions of workers.

The main result was to prove the folly of such intervention. Nixon's own chief economist, Herbert Stein, admitted that the administration eventually had to give up because the program was "a total disaster." Among the unwanted side effects: "Cattle were being withheld from market, chickens were drowned, and the food store shelves were being emptied."

Motorists had to wait in line for hours to buy gasoline. At one point, Americans faced a nationwide shortage of toilet paper. Yes, toilet paper. Oh, and the inflation rate didn't fall. It rose.

So how does Obama intend to make health insurance affordable? He wants the federal government to regulate premiums from coast to coast. He unveiled the proposal shortly after a California company owned by WellPoint raised charges on some individual policies by as much as 39 percent.

Obama will not stand for it. Under his plan, says the White House, "if a rate increase is unreasonable and unjustified, health insurers must lower premiums, provide rebates, or take other actions to make premiums affordable."

I have a better idea. If a rate increase is unreasonable and unjustified, customers can head for greener pastures. Among the several dozen competing insurers in California, some presumably will leap at the chance to grab their business. If other companies decline to offer lower rates, however, it's a surefire sign that the increase is both reasonable and justified.

The administration thinks WellPoint has no reason to raise prices because it had billions in profits last year. But the company says it lost money on individual policies in California, because medical prices rose and many customers dropped their coverage, leaving the company with a sicker and more expensive clientele.

Obama may fantasize that WellPoint will keep furnishing its product forever while stoically swallowing losses. It's more likely to devise ways to curtail benefits, make it harder for applicants to qualify, and raise the hassle factor so unprofitable customers go elsewhere. If things get bad enough, it can abandon the market—leaving consumers to pay the low rate of nothing while also getting nothing.

Such ostentatiously noble but naive schemes are becoming the pattern in Obama's economic policy. A law he signed last year regulating credit card companies, which took effect this week, was supposed to save consumers huge sums. But it has suffered a bruising collision with the real world.

The Associated Press reports that in recent months, "credit card companies jacked up interest rates, created new fees and cut credit lines," while shutting down many accounts entirely. The law, says AP, "has helped make it more difficult for millions of Americans to get credit, and made that credit more expensive."

This administration, like Nixon's, has also elected to override the private sector when it comes to setting pay scales. Last year, attacking Wall Street bonuses as "shameful" and "obscene," Obama issued an order limiting executive pay to $500,000 a year at companies getting taxpayer help. He even appointed a pay czar to decide compensation for managers in that sector.

His approach presumes the government can deduce the correct level and structure of pay for hundreds of jobs in a complex industry. It can't, any more than it can know the correct price for gasoline or toilet paper. That's the function of markets, which adjust as needed to keep supply and demand in balance.

When the government starts fixing wages or prices, it practically guarantees economic malfunctions. Not to mention that it deprives citizens of the right to choose the terms on which they are willing to do business with each other, which happens to be a key to liberty as well as prosperity.

All this is bound to end in tears. Obama has forgotten the lesson of Nixon's experiment: You can tell a farmer what to charge for a chicken. But you can't keep him from drowning the bird.

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  1. Good Morning reason!

  2. I have to admit: I’ve never been a huge fan. That being said, you’ve knocked one out of the park Steve.

  3. Obama needs to read Henry Hazlitt’s “Economics in One Lesson”.

    Government price controls ALWAYS create shortages.

    1. That’s the entire purpose, my friend. Make it impossible for the insurance companies they despise so much to provide reasonable services and make money, put them out of business, then take the whole thing over by imposing a single payer system.

      1. Isn’t this how the City of New York ended up taking over the subways? Tale as old as time.

    2. Funny, I was just thinking he needs to read “Time Will Run Back”.

    3. No, sometimes they create unsold surpluses, due to minimum prices rather than maximum prices.

      Minimum wage is a classic example, creating an oversupply of workers who are employable at wages below the minimum wage.

      You may have noticed this oversupply recently after Congress raised the minimum wage and unemployment went into double digits. Other contributing factors, but this surely made the situation worse.

    4. Not just shortages.

      When the gov’t tells Producer A what his price must be, all other producers will raise their prices to that newly-sanctioned level.

      Pointy headed bureaucrats ALWAYS think they’re setting a price ceiling. When, in fact, they’re creating a price floor…no producer is going to sell for less after the gov’t sets the price.

  4. Wow, makes pretty good sense to me dude. Seriously. I mean like wow.

    Jess
    http://www.true-privacy.es.tc

    1. Anon Akabot!

  5. You sound surprised.

  6. But you guys don’t understand, the right guys are in charge this time. Just look at how well the economy is doing since they took over.

    1. Exactly. We all know the problems the economy is facing is because of the last administration. If the good guys hadn’t did what they done, think of how much worse it would be.

      1. uhh… i think NotAnEconomist was being facetious… also, this is a policy problem that is not specific to any particular administration… it has been ongoing for some time (longer than i’ve been alive) and won’t be fixed in a single presidential term.

        which party is in the white house is actually less important than who’s got the senate majority.

        no political party has _the_ answer. stop acting like it’s “the other guy’s fault” and support people who are advocating action not merely placating constituencies…

        1. ” stop acting like it’s “the other guy’s fault” and support people who are advocating action not merely placating constituencies…”

          good point dorkrock…we need to admit that this is nobodies fault. We need to support people who advocate action. If we could only get the democrats and republicans to cooperate more and finally get some legislation passed. Hopefully we will also get more cooperation between big busines and government as well. If we don’t start working together then we are going to have some really bad times. Compromise, cooperate and act …the three keys to turning this country around.

          1. How do you compromise with statists who want the government to take over everything? Nuts to that.

      2. Mr. Archer,

        Both Bush and Obama and done exactly the wrong things in response to the financial meltdown. The result is that we are in far worse shape than we would have been otherwise.

  7. Not to mention that it deprives citizens of the right to choose the terms on which they are willing to do business with each other, which happens to be a key to liberty as well as prosperity.

    O’Bambi doesn’t particularly care about liberty – or hadn’t you heard?

  8. he’s been coming across more as Richard Nixon Lite

    It’s fitting, though. Before Obama’s ascendancy, Nixon was The One.

  9. All this is bound to end in tears.

    Yep. And then the Obama administration and all its apologists will blame the evil, greedy corporations for still sticking it to the little guy even after Obama told them not to.

    1. Liberals are only responsible for their intentions and never the consequences of their actions.

      Pretty much like a five year old.

      1. What did we ever do to you?

        1. You refused to grow up and become an adult but as you got older you decided you knew better than us…the adults.

          Find me a liberal and I will show you parents that didn’t raise their kids right.

          1. +12

  10. Many good points on many fronts. The writer spelled out all too clearly why more intrastate competition is needed when it comes to health insurance. Expansion of intrastate health insurance competition is paramount and should be the first item of business Congress should pursue.

    I did want to chime in on the following, though. What’s with taking a jab at the salary cap on executives whose companies are receiving our money? Granted, I’m no fan of Nobama, but sticking it to corporate welfare feels slightly redeeming. A comparison of executive pay limits to full blown Nixonian controls isn’t really apples to apples; I’m fully with ya’ on the health insurance front, though.

    1. You’re right. If you willingly accept a government handout, then you should be subject to restrictions as to how you spend that money. This sinister part is when you consider how the administration resisted the repayment of TARP funds. Or how it pressured BoA to buy Merrill Lynch, then had to bail out BoA because it went through with the bad merger.

    2. Granted, I’m no fan of Nobama, but sticking it to corporate welfare feels slightly redeeming.

      I’m sure it feels great. The problem with Obanomics, though, is that bad ideas often feel great to those inflicting them on others.

      Price controls — pretty much ANY price controls –have unintended yet entirely foreseeable bad consequences.

      1. I don’t quite understand how imposing wage controls on companies who receive our money, is a free market no-no. As soon as the process of corporate welfare is introduced into the picture, free-market comparisons go out the window.

        Here is a local example. I reside in NJ. In NJ, government employees/state workers are the beneficiaries of extremely lavish contracts complete with posh pensions and overtime/vacation benefits that most of us would drool over.

        (http://www.dailyrecord.com/article/20100225/UPDATES01/100225075/Report–NJ-pension-system-gap-grows-to–46-billion-) Said benefits are running the state dry and causing serious problems.

        Following the logic of “all wage controls are bad”, it would seem to me that fighting the corporate welfare system in NJ to save the citizens would be a plain-old bad idea. But why? Why are the voters not to dictate how and where our money is spent?

        Again, a comparison between wage controls for a Goldman Sachs CEO who is the beneficiary of citizen loot and the non-functionality of broad Nixonian price/wage controls is apples to oranges.

        Why don’t we get government out of corporate welfare in the first place? If such was the case, I wouldn’t be typing this response this evening.

        Darn sure I feel great when some sleazebag on wall street is told he can’t have any more of my money. This isn’t Obamanomics…it’s plain common sense.

        1. I wish it was common sense, but really, you’re conflating separate issues; the only question that’s germane is: is it possible to artificially affect what you get out of a company? The answer is yes, and it applies in both cases, independently: in the one where you’re bailing them out, and in the one where you’re capping their salaries. Assuming that a person thought it was a good strategy to prop them up, the assumption from that point on would have to be that you want to get the best bang for your buck. So you have to ask, what’s the strategic move?

          It’s one thing to punish your kids — they’re not expected to turn a profit. Try punishing your car sometime though…it really ticks you off, so go ahead, bash a few sensors under the hood. That’ll teach it, right? And this, when what you really should’ve done was to send it to the crusher years ago…

          1. “Best bang for the buck”

            To be sure, attracting the best talent to run companies in the most profitable manner is a most costly endeavor (easily exceeding the caps that the Obama administration is pushing for).

            There are chilling realities, though. These bankers have no regard for the every day schmo. The phrase red-herring comes to mind quickly. We all remember tales of how the sky was going to fall if TARP wasn’t passed. Look at the scenario today. Banking institutions have used only a very small percent of TARP money to help balance so called toxic-assets. Credit is still hard to get. We’ve been hoodwinked.

            Supposedly insolvent institutions that “needed” our money are now raking in huge profits. It’s time to collect what was given to them. I have no problem with letting millionaires be millionaires for doing millionaire things, just not on my dime. This is corporate welfare at it’s worst.

            1. Hence the counterintuitive need for absolute deregulation and removal of all explicit and implicit backing — in other words, actual implementation of a free market. On their own dime, they could never leverage like they did, and like they will again. A regulator’s hubris assumes he can control the dynamics artificially, but he will never be able to develop a code that Wall Street won’t be able to game to its advantage. Under the current framework, they beat you at the lobby-a-legislator stage, the leverage-a-loophole stage, and the grab-the-bailout-loot stage. In nature, predators get no such favors from their prey.

    3. Yes, because buying unregulated uninsurance from some post-office box in North Dakota (which will quickly be the only choice anyone has) will surely cure our ills.

      1. Yes, because libertarians have no problem with fraud. Chad, shut your cocksucker around your betters.

      2. Weak, dude. Even for you.

      3. Right, Chad… Because I get my car insurance from a post office… Oh wait.

        1. *box… damn typing fail, where’s the preview button?

  11. I’ve got an idea on how to stop beach erosion. Why doesn’t Obama head down to the ocean and command the waves to stop coming in.

    I think King Canute would have something to contribute to this discussion.

  12. It didn’t work when Nixon did it, it didn’t work when Roosevelt did it, and it didn’t work for anyone else, all the way back to Diocletian (and probably a couple of idiots before him).

    -jcr

    1. It didn’t work when Nixon did it, it didn’t work when Roosevelt did it, and it didn’t work for anyone else, all the way back to Diocletian (and probably a couple of idiots before him).

      Price controls are what led to health insurance being tied to employment, as Howard Dean had admitted .

      1. “Price controls are what led to health insurance being tied to employment, as Howard Dean had admitted .”

        So your saying there are some good reaons for implementing price controls?

        I still think it is more likely that Volcker, Goolsbee and Obama have just never been exposed to some of these crazy theories regarding price controls. They probably think this is just a good way to get health care costs down and help out all the people. If only we could be more understanding of each other instead of always assuming the worst we would be able to accomplish so much more.

        1. So your saying there are some good reaons for implementing price controls?

          Only if you think it is good for health care to be tied to employment.

          1. Which it ain’t — at all.

      2. “Price controls are what led to health insurance being tied to employment, as Howard Dean had admitted .”

        So your saying there are some good reaons for implementing price controls?

        I still think it is more likely that Volcker, Goolsbee and Obama have just never been exposed to some of these crazy theories regarding price controls. They probably think this is just a good way to get health care costs down and help out all the people. If only we could be more understanding of each other instead of always assuming the worst we would be able to accomplish so much more.

  13. Obviously, Obamas has not heard about what price controls can do. Austan Goolsbee currently serves under President Barack Obama as a member of the Council of Economic Advisers and as chief economist of a new federal panel, the President’s Economic Recovery Advisory Board. I know this guy went to MIT, taught at Chicago, was a Fullbright scholar and joined Skull and Bones while doing a thing at Yale, but there is just no way he could have heard about the esoteric fringe views regarding the real effects of Price and Wage controls. Perhaps we here at reason can write some more articles on this topic and when Austan reads the articles he will realize his mistake and then inform Obama that price controls are not a good idea.

    Sure the cynics and tinfoil set out there will tell you that Paul Volcker and Austan Goolsbee and even Obama actually do know that price controls are not a good idea for the average persons economic future, but this is ridiculous.

    1. Granted they are brilliant men who have all the credentials. Even ignoring the freedom aspects of the argument, history says even the brilliant can’t control the economy. Have you ever heard of the sin of hubris?

      1. Obama is not brilliant.

    2. Volcker knows it, but I wouldn’t count on any other clown in the administration knowing it.

      -jcr

  14. I suppose you are a worshipper of free market fundamentalism? we all know where that got us. Face it you do not have the academic training of a Paul Volcker or Austan Goolsbee, you should be thankful that they are helping come up with ideas to protect you. The integrity of these guys is unreproachable, for measely little you to lecture them on economics is the ultimate height of hubris. Chapman should apologize.

    1. …you should be thankful that they are helping come up with ideas to protect you.

      The big protective government is coming to protect poor little me.

      Yessuh, thank you massa.

    2. To be a little less snarky, my father was out of work for 9 months due to the brilliant economists in the Nixon administration. I was out of work for 3 months partially due to the ever so carefully crafted (by the best economic minds) Clinton Telecom sort of deregulation in ’96.

      Even the brilliant can’t control the future. When they are taking away my freedom as part of the bargain, I do not buy it.

    3. Help me out here: is this sarcasm, or do you really believe that we should all place our trust in those with the most degrees after their name?

      I have three, by the way.

    4. Yeah, this has to be sarcasm…there’s no other explanantion for this folly of a statement.

      Chapman is right. Okay, he was wrong the other day, but today he is right. I wouldn’t say I am a worshipper of free market fundamentalism, but I know this…the more you regulate and control something the less it can dynamically respond to stimuli. I don’t need one or three degrees to know that…I am a grown man. An adult. I have been held down and I know I couldn’t respond to anything. I figured Musashi Myamoto was right: “As it is with one man, it is with ten thousand. As it is with ten thousand it is with one man.”

      cl

    5. I’m gonna give Cosmotarian Overlord an 8 trolling ranking. Some subtlety, bad ideas wrapped up with appeals to authority, but in the end falling a little short of satisfying one’s taste for vigorous, unrestrained trolldom. A mild dish with some charm, but not quite as flavorful as Red Meat Trolldom TM.

  15. fat gabacho Cato institute dick-rider embraces corporate cock!

    1. Either a douche Buchananite or a douche liberal. I cant tell

  16. It is almost as if you think Volcker works for some secretive zillionaire and Goolsbee is part of some shady elite club and they are actually working on behalf of those people instead of you. I swear I can’t take all these conspiracy nuts invading our once logical group.

  17. So Japan is very well known for its superb healthcare system, its success being measured in regard to both customer satisfaction and statistical performance. Yet Japan’s intensely capitalistic society fully embraces a healthcare industry strictly controlled by government regulations. Could this be the first successful demonstration of government price control?

    1. It only works because Japanese people have no souls. Haven’t you seen south park S9E4?

    2. Excellent point. Price contols actually do work in many places and I think Obama deserves a chance to prove his economic theories.

      1. His economic theory is the same that the last group tried. They have been trying this theory all around the world and it has failed every single time. How many times do we need quassi or full socialism for you guys to recognize that it doesn’t work.

        I am not sure about the Japanese system, my understanding is that they aren’t in very good economic conditions either and have spent the last 20 years spending more and in more in stimulus packages.

        How about you let us try some real Free Market action for once? Oh…I know why…you don’t wanna be responsible for your own actions and you wanna blame everyone around you for your failures. Sorry…I keep forgetting.

        cl

      2. Dear God – this guy actually believes the crap he’s trying to peddle..

      3. “Price contols actually do work in many places and I think Obama deserves a chance to prove his economic theories.”

        If you want to volunteer to be a guinea pig in Obama’s experiment, go right ahead. Just don’t drag the rest of us into it.

  18. I read an interesting Nixon biography by Richard Reeves. The way price controls all came about is interesting story.

    Nixon didn’t give two shits about whether price controls were constitutional or even economically useful. It was pure politics. The Democrats running the Congress had voted the President powers to impose “temporary” price controls, but more as a political stick (Nixon COULDA helped the economy!) to use on Nixon in the election…they assumed he’d never use the popular measure.

    Nixon surprised the Donks by taking the bait with the NEP…which in addition to price controls also trashed the gold window (for good). By running more to the left than the left, he basically forced the Democrats way into left field and McGovern. Nixon’s “plan” worked in that sense, but it was all politics.

    The NEP itself was cooked up over a weekend at Camp David, with hardly any of Nixon’s cabinet there. Who was there? Aha, Paul Volcker was there. So was George Schultz (Reagan’s SecState). Alan Greenspan was hovering around this social circle. The very next week, Nixon was meeting with his Enemies List goons, one of whom was Donald Rumself. Cheney worked in his White House.

    These assholes never go away until Father Time punches their ticket; spending decades fucking shit up and making millions from it…ugh.

    1. Volcker is a saint, he saved this country. This conspiracy crap is ridiculous. Next you’ll tell us Volcker was selected to be Fed Chairman by David Rockefeller.

      Sure some of the geniuses on this board now know that price controls aren’t a effective economic tool, but how can you expect these ignorant politicians to have read about price controls. This is all new research. We just have to hope that Volcker reads Chapman’s article and figures out how bad price controls are before it is too late. I’m sure Volcker will do his best. Maybe you guys should start a petition?

      1. Regarding my earlier reply to your earlier comment: I now see that you are not being sarcastic, and truly are an imbecile.

        Please, google “appeal to authority”.

        1. Oh, no. He’s being sarcastic. He’s being so sarcastic it’s difficult to figure how to respond to it.

        2. ok it looks like we have found a real crank guys. Let me guess, you think you have come up with a new monetary system better than John Maynard Fucking Keynes thought of?

          Please don’t quit your day job of shuffling paper.

          1. The funny thing their CO, is that we don’t have to come up with a better monetary system…it has already been done. You should red some Adam Smith. He pretty much summed it all up in the 18th Century my good man…

            Then perhaps when you are done with Adam Smith you can read some “The Forgotten Man” by Amity Shlaes. She pretty much takes Keynes to task and uses his own peers to show how mistaken he and the FDR crew were.

            cl

            1. cl, you are ridiculous. I suppose you think the “really good” monetary systems are all being kept secret from the public so that the joos can keep stealing all our money? let me guess you don’t have a PHD in economics do you?

              1. cl, I suppose your invisible hand sticking out of your adam smith altar is going magically give us all handjobs too right?

                We tried free markets once in this country and look what it got us? SLAVERY! a whole country full of slaves…that is what you goldbugs are trying to get back to. You racists can’t fool us again!

            2. You should blue some Ron Chernow. He explains that all the huge depressions we got in the 1890’s were ruingin this country and it wasn’t until we finally brought in the Federal Reserve system that we were able to bring this country true advances like cars, planes and computers. Without the federal reserve everyone would still be stuck plowing fields with their mules.

          2. Not to quibble but I believe that accepted usage is to put the f’ing before Maynard.

            1. Well you cannot argue that “Mother Fucker” doesn’t have a almost magical ring to it…kinda like 3.14159 or 2.71828….so I thought “Maynard Fucking” would mimic that same basic pattern. Disagree if you must. I am a stron believer in Intellectual Property and I have already got all the paper work in order so don’t you dare use my term. Intellectual Property rights is one property right that I think is essential to maintaining a secure world order.

        3. one key tip off that sarcasm may be involved is that David Rockefeller actually did get offered the Fed Chairmen job first when he was the Chairman and Chase(now JP Morgan Chase). David had better shit to do so he told them to hire his long time loyal employee Paul Volcker.

          If you read David Rockefellers book “Memoirs” you would know about this. Paul Volcker is still working for the Rockefeller Brothers fund, but that job probably sucks so I’m sure he would have never been tempted to even sorta hint at what his interest rate policy was going to be to David in private conversations(and even if he could David probably had no use for this info). Anyway even mentioning these names pretty much eliminates all my credibilty. This is all tin foil hat stuff, please disregard and go back to debating somebodies ridiculous joke.

          1. Clearly a UFO enthusiast. Pull the anal probe out of your mouth gabe, that is the most ridiculous crap I have ever read.

    2. I’ll paraphrase for Zeitgiest:

      “blah blah blah, bohemian groves, Illuminati, had a secret meeting and Rumsfeld decided to poison everyone with nutrasweet”

      Typical conspiracy nut. Please just focus on the facts zeitgeist. You really expect us to believe this “secret meeting” at some ridiculously posh secluded presidential retreat could have been kept secret all these years? oohh noes i bet they were all busy covering up the alien abductions too right?

  19. you can tell who the conspriacy nuts are, they come in here with biographies on all the advisors for the different political regimes over the last 40 years, reading their papers and boring books.

    The serious thinkers ignore all that irrelevant crap and just focus on the real issues, like what is Chris Matthews telling us versus what is Sean Hannity telling us. When you frame the debates in this way it allows you to really analyze the full spectrum of arguments and you can then intelligently decide which choice is better.

  20. I’m gonna give Cosmotarian Overlord an 8 trolling ranking. Some subtlety, bad ideas wrapped up with appeals to authority, but in the end falling a little short of satisfying one’s taste for vigorous, unrestrained trolldom. A mild dish with some charm, but not quite as flavorful as Red Meat Trolldom TM.

    What do the other judges say?

    1. You sir are annoying me I am no troll. I am the last true defender of what should be held sacred in this country.

      If we do not protect our country from the peacenik, communistic, monetary cranks and their contagious insanity then we will lose something more precious than a fine Rothko. Our shared history is a very important thing in this country. It has been handed down to us by the leading scholars of the millenium. If we allow these conspiracy theorist to destroy that history then civilization as we know it will be lost. Part of that history is a share espect for the universally agreed upon heros of the American century. Lincoln, Churchill, FDR, Wilson, Democracy, WW2 and by implication it’s holy predecessor the war to make the world safe for Democracy World War 1. Anyone who refuses to bow to these holy manifestations of all that is good is a dangerous evil person who has no business spouting off their crank job opinions. I also believe in a small government and free-markets but not like the dogmatic, unthinking, mindless, troglodytes that make up the teabagging Paultard community. I also care about spreading freedom around the world and in order to do that we need to bomb a lot of this world and we need to tax the hell out of America and make the american taxpayers understand that they need to thank me and my friends for their sacrifices.

  21. “I have a better idea. If a rate increase is unreasonable and unjustified, customers can head for greener pastures.” Who wudda thunk it?

    Mr. Chapman, bravo Sir.

  22. The administration thinks WellPoint has no reason to raise prices because it had billions in profits last year. But the company says it lost money on individual policies in California, because medical prices rose and many customers dropped their coverage, leaving the company with a sicker and more expensive clientele.

    Thank you for noting how adverse selection is spinning out of control in the CA market. Now, what is the libertarian solution for this market failure? Oh, you have none.

    I do. Universal coverage. Proven around the world.

    1. It’s not a market failure, dipshit. There’s a market solution, which is to deregulate and permit competition in the insurance market.

      -jcr

    2. Isn’t it awesome when Chad ascribes market failures in areas where there is almost literally *NO* legitimate market, what-so-ever?

      Dipshit, indeed.

  23. Slavery is the answer Chad. that way we don’t have to worry about all the little conspiracy theorist have to say about their “rights”. “but your forcing me to pay this money and I don’t blahh blahh blahh”. Chad and I are getting sick of this crap, pay up bitches!

  24. The real world is a harsh mistress.

  25. i say cosmotarian overlord deserves at least a nine.

    notice the way he leaps from one attack to another, nowhere is safe!

    chad, why do you insist on calling our health insurance industry a free market? its true we have a mixed economy, so no industry is truly purely market or government, but for the love of satan, you have to know that the health insurance industry is one of the least free. over 30% of insured americans have a gov plan. nearly 60% have it tied to their employer (not gov run, but certainly not free market).

    for fucks sake chad, though i disagree with you on how to deal with the potential threat of global warming, you do make a thoughtful case for what you think in those matters, far better than that charlaton gore.

    but then you say shit like this, and i understand why so many at reason hate you and enjoy slagging you.

  26. “If a rate increase is unreasonable and unjustified, customers can head for greener pastures.”

    There is no free market if you have a pre-existing condition. I am stuck with Anthem’s increase because no one else will insure me. There is no market remedy.

    1. “There is no free market if you have a pre-existing condition.”

      Sure there is. Get together with all the other people with your pre-existing condition, and negotiate a group rate. Might be a little more expensive, but it will surely contain special provisions for your specific condition.

      Oh wait, you can’t. That would be illegal.

      OK, then look for a policy among the hundreds of competing insurance carriers across the country.

      Oh wait, you can’t. That would be illegal too.

      1. Damn free market, making everything illegal!

    2. You could pay for your own costs.

      The debate about premiums and risk pools comes down to those who want to expand the pool to spread the cost out among a greater number of people, whether these new pool-initiates (some of whom might not know how to swim and others who will crap in the pool) want to be in the pool or not. This approach forces more people to subsidize the costly members. It does nothing to address the overall cost of care. It merely forces more people to share in the overall cost, thereby, in theory, reducing the premiums for some, but forcing others to subsidize known losses. It is farily accepted that we have a societal compact to subsidize some of the costs of others who cannot or will not provide for themselves, some of whom have costly or chronic health problems by pure bad luck, others by lifestyle choice, but the health care debate raises questions of degree.

      Artifically limiting premium increases, without concurrent artifical limitation on the reasons why the premiums are rising (medical costs), will result in the insurer going broke or leaving the market. Artificaly limiting medical costs, of course, will lead to the shortages that, as the author states, will “guarantee economic malfunction” akin to the gas lines of the 70’s, only this time at hospitals and clinics.

      Of course, if the goal is to guarantee economic malfunction to enable a true government take-over, limiting premium increases to less than actuarially justified is a politically rational first-step to take.

  27. In the future I will refer to this article as “The Redemption of Steve Chapman.”

    Seriously, this is really, really good. Not enought people are pointing out these basic realities.

  28. Kudos to Mr. Chapman for stating what should be obvious, but clearly is not.

  29. One of the incidents that pushed me from conservatism to libertarianism was when, in the earkly ’70s, I attended a seminar hosted by the Intercollegiate Studies Institute in which four out of five of the prominent, NR-affiliated conservatives on the panel defended Nixon’s wage and price controls. I wonder if conservatives will be as eager to defend “Il Dufe’s” wage and price controls. Probably the “Uncle Daves” (Brooks and Frum), T. Coddington Van Voorhees and the other “dinner-party” conservatives, always eager to please Massa ‘Bama and show they’re no threat to the Plantation, will rush to his defense.

  30. “If other companies decline to offer lower rates, however, it’s a surefire sign that the increase is both reasonable and justified.” I would rephrase this. It’s a surefire sign that the increase is necessary and that other insurance companies are operating under the same set of constraints. E.g., if they’re all doing business in a state that mandates coverage of all sorts of procedures, the rate increase may be necessary even though the mandate may be unreasonable and unjustified.

  31. FDR had price controls too. My great uncle was in charge of price controls for the city of Pittsburgh.

    1. No kidding, in fact he had a whole Office of Price Control… And it worked so ridiculously badly, that we not only continued to stagnate for the next 15 years, we have been saddled with an employer-tied health insurance system for the last 60 years.

      And of course, there’s the even worse aspect of unions figuring out that they could extract literally billions in non-payment compensation employment “benefits”, like the gold plated health care plans & 90% pensions that last for all eternity.

  32. Where’s my “WIN” button? I knew it would come in handy again someday!

    (WIN = Whip Inflation Now” – a Nixon campaign to support W/P controls, for you tots who don’t remember

    1. As I recall, WIN was a Jerry Ford brainchild:
      http://en.wikipedia.org/wiki/Whip_inflation_now

  33. truth,,,,obama people have no idea of the extent to which they have to be gulled in order to be led.”
    “The size of the lie is a definite factor in causing it to be believed, for the vast masses of the nation are in the depths of their hearts more easily deceived than they are consciously and intentionally bad. The primitive simplicity of their minds renders them a more easy prey to a big lie than a small one, for they themselves often tell little lies but would be ashamed to tell a big one.”
    “All propaganda must be so popular and on such an intellectual level, that even the most stupid of those towards whom it is directed will understand it. Therefore, the intellectual level of the propaganda must be lower the larger the number of people who are to be influenced by it.”
    “Through clever and constant application of propaganda, people can be made to see paradise as hell, and also the other way around, to consider the most wretched sort of life as paradise.”pelosi don’t see much future for the Americans … it’s a decayed country. And they have their racial problem, and the problem of social inequalities …obama feelings against Americanism are feelings of hatred and deep repugnance … everything about the behaviour of American society reveals that it’s half Judaised, and the other half negrified. How can one expect a State like that to hold TOGTHER.They include the angry left wing bloggers who spread vicious lies and half-truths about their political adversaries… Those lies are then repeated by the duplicitous left wing media outlets who “discuss” the nonsense on air as if it has merit? The media’s justification is apparently “because it’s out there”, truth be damned. STOP THIS COMMUNIST OBAMA ,GOD HELP US ALL .THE COMMANDER ((GOD OPEN YOUR EYES)) stop the communist obama & pelosi.((open you eyes)) ,the commander

  34. I like that saying, thanks!
    Thanks for posting this. Very nice recap of some of the key points in my talk. I hope you and your readers find it useful! Thanks again

  35. coming across more as Richard Nixon Lite

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