Saturday, February 06, 2010

Quotes of the Day: Politicians in Wonderland

Thomas Sowell
1. The big question that seldom— if ever— gets asked in the mainstream media is whether these are a net increase in jobs. Since the only resources that the government has are the resources it takes from the private sector, using those resources to create jobs means reducing the resources available to create jobs in the private sector.

So long as most people do not look beyond superficial appearances, politicians can get away with playing Santa Claus on all sorts of issues, while leaving havoc in their wake— such as growing unemployment, despite all the jobs being "created."


2. Whatever position people take on health care reform, there seems to be a bipartisan consensus— usually a sign of mushy thinking— that it is a good idea for the government to force insurance companies to insure people whom politicians want them to insure, and to insure them for things that politicians think should be insured. Contrary to what politicians expect us to do, let's stop and think.

Why aren't insurance companies already insuring the people and the conditions that they are now going to be forced to cover? Because that means additional costs— and because the insurance companies don't think their customers are willing to pay those particular costs for those particular coverages.

It costs politicians nothing to mandate more insurance coverage for more people. But that doesn't mean that the costs vanish into thin air. It simply means that both buyers and sellers of insurance are forced to pay costs that neither of them wants to pay. But, because political rhetoric leaves out such grubby things as costs, it sounds like a great deal.


12 Comments:

At 2/06/2010 10:35 AM, Anonymous Anonymous said...

Thomas Sowell is brilliant and should be mandatory reading for all politicians. What Obama and the democrats in congress do not get is, that to the 80%-90% of Americans who are satisfied with their health insurance, the "reform" they want to see is bringing the price down (or at least not increasing it) for the coverage they currently have. While increasing availability to those with pre-existing conditions (How many of those people passed on the opportunity to obtain health insurance before they got the now pre-existing condition?) and allowing the really sick who have expensive medical conditions unlimited access are noble, most people do not want to contribute to paying for this nobility. While some may argue this unwillingness to pay is selfish or un-American, I disagree. Individualism and taking care of one's self and family are the true characteristics of a free society, and only then contributing to the less fortunate with excess money and only to the extent that the individual wishes to contribute (and Americans are generous people). Again, what it is all about to most people is taxes and insurance premiums they do not want to see increase. The Obama-Reid-Pelosi reforms are all about increasing both of these costs to the people currently carrying their own weight by adding the weight of the currently uninsured to their burden (in other words, redistribution of wealth).

 
At 2/06/2010 10:59 AM, Anonymous Anonymous said...

Insurance companies refuse to cover preexisting conditions because the cost of insuring such a condition exceeds the actual cost of treatment. Insuring against an event with a 100% probability is the cost of the event plus expenses and profits. Insurance makes absolutely no economic sense for either the insurer or the customer.

 
At 2/06/2010 12:41 PM, Anonymous Anonymous said...

Fairness is in the eye of the beholder, but nothing about a government-run health care system strikes me as fair. I have yet to see any legislation that promotes innovations in health care delivery or increasing the number of providers.

I don’t think insurance is the answer. Insurance, whether private or a government Ponzi scheme like Medicare, means third parties pay the bills. When someone else pays, costs always go up.

The message is clear. If companies lobby hard enough they will be able to protect themselves.

 
At 2/06/2010 1:35 PM, Anonymous EscapedWestOfTheBigMuddy said...

"Fairness is in the eye of the beholder"

Well, sorta.

Any deal that both sides agree to without force or the threat thereof has positive fairness; it might not be maximally fair, but it meets the minimum qualification.

 
At 2/06/2010 2:37 PM, Blogger sethstorm said...


The message is clear. If companies lobby hard enough they will be able to protect themselves.

...and hide behind lesser individuals that agree with their position?


Why aren't insurance companies already insuring the people and the conditions that they are now going to be forced to cover?

Because they are customers they can afford to lose. They can drop them as a weight against their competitor until there is nobody that will insure them. Outsize premiums can be used to wage a war of attrition against said undesired people.

Once enough insurers do it, even risk pooling won't help.

1. The big question that seldom...
Mistaking government for business is his problem.

 
At 2/06/2010 4:57 PM, Anonymous Anonymous said...

Because they are customers they can afford to lose.

More leftist drivel. As was pointed out, it costs more to insure a preexisting condition than it would cost for the suffering party to pay for the treatment themselves. The only way that this would not be true is if the insurers passed the costs onto their other customers in the form of higher premiums in order to subsidize the treatment of a person with a preexisting condition, something that they rightly see as unfair. That, and not some evil conspiracy to deny coverage, is why insurance companies do not want to cover people with preexisting conditions.

I guess in sethstorms fantasy world corporations must willingly submit to confiscatory taxes or be labeled "traitors", and no one need pay for insurance until they have gotten sick, at which time insurance companies should be forced to pay for their treatment.

 
At 2/06/2010 5:24 PM, Blogger juandos said...

I wonder if sethstorm is still having a problem with this part of reality as Dr. Sowell explains it: It is of course no secret that there is no free lunch?

 
At 2/06/2010 10:38 PM, Blogger Ron H. said...

@Anonymous #1 has it exactly right. I agree completely that "Thomas Sowell is brilliant and should be mandatory reading for all politicians."

This, however, assumes several thing that aren't in evidence:
1. Politicians can read
2. Politicians who can read can comprehend what they read.
3. Politicians who comprehend what they read will realize how much damage they have caused, and begin at once to repair that damage, or at the very least, throw themselves off the nearest high bridge.

 
At 2/07/2010 1:44 AM, Anonymous Lyle said...

Ok if we want to take on insurance subsidies we need to remove reguation on insurance rates on the East Coast so they go up to where the should be on the beaches. Likewise tell folks in earthquake prone areas that if a quake comes there will be no government assistance coming (Even in 1906 the army brought every tent it had to San Francisco). Both of these are socialized insurance, and I assume you don't want to pay for them. Likewise of course for floods. Luckly otherwise in the mid continent all other disasters are able to live with the law of large numbers so insurance works.
BTW note that after the fire at the MGM grand the company bought a liability policy, and it was sold because it would be a few years until it had to pay off and in addition the damages were not clearly set, so here is one example where insurance was sold when the loss was already had. (It sounded strange when I read about it, but its essentially buying defense and better investment managment of the insurance company, sort of like buying a swap where you pay the insurace company what you think the loss will be plus some premium and the insuance company takes the up and down side risk.

 
At 2/07/2010 11:40 AM, Anonymous Anonymous said...

Likewise tell folks in earthquake prone areas that if a quake comes there will be no government assistance coming (Even in 1906 the army brought every tent it had to San Francisco). Both of these are socialized insurance, and I assume you don't want to pay for them.

Get a grip.

 
At 2/08/2010 7:40 AM, Anonymous geoih said...

Quote from sethstorm: "Mistaking government for business is his problem."

Mistaking government as some sort of force for good is your problem.

 
At 2/08/2010 10:54 AM, Blogger Xavier Onassis said...

"Mistaking government as some sort of force for good is your problem."

No. Sethstorm's problem is that he is commenting on an Economics blog and making statements about business and industry, when it is clear that he doesn't know the first thing about econommics, and his acumen for business is non-existent.

 

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