Tag Archives: Milton Friedman

What Has Happened To Health Care Costs?

Posted on by

Economist Milton Friedman once said, “If you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand.” We have seen what the government takeover of the student loan program did to the cost of college tuition. Now we are seeing what the government takeover of healthcare has done to healthcare and healthcare insurance costs.

On September 29th, The American Thinker reported:

In 2009, when the average cost of an individual health policy was under $100 and family coverage was under $400, democrats decided that health insurance cost too much, and too many didn’t have coverage.

Therefore, without any Republican support, they wrote a 1,000-page bill. They called the bill the “Affordable Care Act,” a misnomer intended to mislead the American people into supporting the bill. The mostly compliant media went along and chastised those who dared question the bill.

…In fact, the bill took away freedom of choice and reduced competition. It got rid of lifetime and annual limits, so small and medium-sized companies couldn’t afford the risk. There was also no incentive for medical providers to control costs.

As prices soared, instead of limiting the scope of their promises about how the government would fix healthcare costs, the Democrats have instead worked to increase subsidies and increase the income levels of individuals and families who can get the subsidies. They needed more people to sign up to make it seem as if the ACA is popular and necessary. This just increased premiums even more and made insurance more unaffordable.

Something the Democrats intentionally left out of the bill that could have potentially reduced premiums and medical costs was any limits on punitive, not compensatory, damages in lawsuits. They left it out because Democrats receive significant sums of money from trial lawyers. Consider that Democrats put severe limits on profit margins for insurers, reducing the number of competitors, but they refuse to put any limits on lawsuits. The potential of unlimited lawsuit damages clearly raises prices.

The article notes the results of this law:

After 15 years of the ACA or Obamacare, the average cost of individual coverage is over $600 per month, up over 500% and family coverage is up to over $2,000 per month, which is up over 400%. Meanwhile, overall inflation was 41.60% for this time period, even including the disastrous Biden years.

Please follow the link to the article for further details. It’s time to get the government out of healthcare and let doctors do their jobs.

Those Who Fail To Learn The Lessons Of History Are Doomed To Repeat Them

Posted on by

Presidential candidate Kamala Harris has announced her economic plan to stem inflation. She has stated that her goal is to make life in America more affordable for everyone. Her intentions may be noble, but her knowledge of economics and human nature leaves a lot to be desired.

On Friday, Fox News reported:

A liberal economic columnist criticized Vice President Kamala Harris’ proposal to control prices on food and groceries as “totally unworkable” and compared it to failed efforts by communist governments.

“It‘s not going to be markets, it‘s not going to be supply and demand that’s determining how much your grocery store charges you for milk or for eggs, it‘s going to be some bureaucrat in D.C., which seems like totally unworkable,” Catherine Rampell said on CNN on Friday.

Rampell, a columnist for the Washington Post and a CNN economics and political commentator, argued the plan was “bad” for various reasons, from practicality to effectiveness.

“Well, first of all, nobody can explain what price gouging means,” she said on CNN, saying the idea of “excessive” prices or profit margins is subjective and thus “very hard to pin down what this would actually mean.”

The article also notes:

“We’ve seen this kind of thing tried in lots of other countries before; Venezuela, Argentina, the Soviet Union, et cetera. It leads to shortages, it leads to black markets, you know, plenty of uncertainty,” she said.

“And beyond that, the specific way this bill is written might actually increase prices because of some of the other language in it, things like requiring companies — public companies to disclose in their quarterly reports, their quarterly earnings reports, how they’re setting prices, which is a great way to help them collude, which normally we don’t want them to do,” she explained.

If you want to bring down inflation, the first thing you need to do is cut government spending and regulation. After that is done, open up America’s energy resources and loose the free market on all areas of our economy. The return to the free market will make economic success available to anyone who is willing to work for it. That should be everyone’s goal.

Milton Friedman is credited with saying, “If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand.” Kamala Harris needs to consider that quote when planning her economic program.

The Monster Under The Bed

Posted on by

I guess screaming that President Trump is a threat to our democracy has not worked as well as predicted (we are a representative republic) since he is not the one jailing his political opponents and ignoring the rulings of the Supreme Court, so the Democrats need a new fear. The new monster under the bed is Project 2025. Project 2025 is simply a conservative wish list put out by the Heritage Foundation that would bring America closer to the country our Founding Fathers envisioned.

The Project 2025 website notes:

“Mandate for Leadership: The Conservative Promise” offers both specific proposals for addressing every major issue facing the country and a blueprint for how to restructure each agency to solve those issues.

Among the recommendations in this edition:

    • Restore the integrity of the Department of Justice to ensure accountability by giving the FBI a hard rest, ensuring consistent litigation decisions, and enforcing immigration laws.
    • Solidify our border by restructuring the Department of Homeland Security and its priorities in ways that streamline the immigration process, end unclear immigration visas, and create a more secure immigration process.
    • Break up the Department of Education to strengthen education freedom, enhance parental rights in education, and protect taxpayers from student loan “forgiveness.”

Which of those ideas is objectionable?

The Heritage Foundation posted an article about the effectiveness of the Department of Education in 2019. The article states:

Federal government efforts to improve education have been dismal.

The fact that Common Core didn’t catalyze improvements in the U.S. isn’t surprising. Large-scale government programs rarely, if ever, do. 

The sooner we can acknowledge that improvements will not come from Washington, the sooner we’re likely to see students flourishing in learning environments.

…Heritage’s Jonathan Butcher and I detail Yuval Levin’s theory of government failure in “The Not-So-Great Society.” Levin explains that large-scale government programs fail for three reasons:

    1. “Institutionally, the administrative state is ‘dismally inefficient and unresponsive, and therefore ill-suited to our age of endless choice and variety.’”
    2. “Culturally and morally, government efforts to ‘rescue the citizen from the burdens of responsibility [have] undermined the family, self-reliance, and self-government.’”
    3. “Fiscally, large-scale federal programs supporting the welfare state are simply unaffordable, ‘dependent as it is upon dubious economics and the demographic model of a bygone era.’”

Federal government efforts to improve education have been dismal. Even if there were a constitutional basis for its involvement—which there isn’t—the federal government is simply ill-positioned to determine what education policies will best serve the diverse local communities across our vast nation.

The sooner we can acknowledge that improvements will not come from Washington, the sooner we’re likely to see students flourishing in learning environments that reflect their unique needs and desires.

Let’s restore “equal justice under the law,” secure the border, and bring education back to the local district where it can be properly guided. These are not radical ideas, but don’t expect the mainstream media to tell you that.

Anything the government touches gets worse.

To quote Milton Friedman:

“If you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand.”

While We Were Looking Elsewhere?

Posted on by

Politicians are shifty creatures. Some are more shifty than others. The Friday night news dump occurs when an administration wants to reveal news they are hoping won’t get a lot of attention. Other information is lost behind the screen of a major story.

On Wednesday, Red State reported the following:

Biden Quietly Forgives Student Loans for Thousands of Government Workers While Millions of Others Remain Crushed by Debt

Seems a little unfair. Where does the money come from to forgive these loans?

The article reports:

While tens of millions of other Americans remain burdened with massive student loan debts, government and other nonprofit workers have enjoyed substantial amounts of student debt forgiveness, and at a rate we’ve never seen before, thanks to a combination of policies most voters know very little about.

Under the Public Service Loan Forgiveness (PSLF) program, which was created by the College Cost Reduction and Access Act of 2007, federal student loan borrowers who work full-time for a nonprofit organization, including a government, can have their entire student debt balance discharged after making 120 qualifying monthly payments, a requirement that takes at least 10 years to complete, but could take longer.

Prior to receiving forgiveness, many of these borrowers enroll in a federal income-based repayment plan, which ties student loan payment amounts to income, allowing borrowers to “pay” as little as $0 per month without penalties, and as much as 15% of a borrower’s monthly discretionary income.

The article concludes:

The average loan amount forgiven for borrowers under the PSLF program in the 2020-2021 period was $94,907, while those enrolled in Biden’s smaller Temporary Expanded Public Service Loan Forgiveness program received an average of $44,324 in loan forgiveness.

When President Biden promised to help solve the student debt crisis and reduce the cost of attending college, I wonder how many voters knew only a relatively small group of borrowers, most of whom work for the government, would benefit from his pledge.

Come this November, we may find out.

This is government interference in contract law. When the students took out those loans, they signed a contract to pay them back.

Milton Friedman famously said, “If you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand.”

Lendedu.com, reminds us of the history of government involvement in the student loan process:

1993: The Student Loan Reform Act officially implements the Direct Lending program. Under this program, the government can now directly lend to student loan borrowers, instead of through a private institution, which had been the only system since 1965 (FFELP).

Below is a chart that illustrates the impact of that program on college tuition:

As you can see, the cost curve increased when the government got involved in the student loan program. At that point the colleges had no incentive to keep costs down because students were taking out loans to pay for school. This began a vicious inflation cycle in higher education that we are still seeing today. For the 2019-2020 academic year at Harvard, the cost of tuition and living expenses was $73,800. The cost of sending a child to the University of Massachusetts – Dartmouth as a resident of Massachusetts is about $30,000. That is ridiculous.

Killing A Growing Economy One Law At A Time

Posted on by

On January 4th, Investor’s Business Daily reported:

Since President Donald Trump took office nearly two years ago, some 4.8 million new payroll jobs have been created. That’s more than four times as many as created during President Obama’s first four years.

Hold on, you say, didn’t the unemployment rate jump from 3.7% to 3.9%? It did. Yes, but not because more people were unemployed, but because more people entered the labor force, seeking opportunities that didn’t exist before.

It’s actually a bullish sign. Some 419,000 people entered the workforce during the month, driving the labor force participation rate to 63.1%, up from 62.7% a year ago. That bellwether employment figure declined pretty consistently during the job-poor Obama years, from 65.7% when Obama entered office to 62.9% when he left. It stabilized under Trump. Last month’s 63.1% tied for the highest point since September 2013.

This rapidly improving economy is the result of President Trump’s deregulation and tax cuts. Cutting the corporate taxes and regulations resulted in manufacturing jobs returning to America (after President Obama told us they were never coming back). So why is the Democrat House of Representatives trying to undo this progress?

The Hill reported yesterday:

Rep. John Yarmuth, the new House Budget chairman, said his chamber’s budget blueprint will aim to claw back lost revenue by boosting the corporate tax rate from its current 21 percent to as high as 28 percent, with rate increases also possible for high-earning individuals.

The Kentucky Democrat said Friday he wants to mark up a fiscal 2020 budget resolution, which will outline his party’s vision for taxes and spending over the next decade, in time to reach the House floor in early April. Yarmuth said Democratic leaders have told him they want to be ready so they can set the procedural stage for passage of all 12 appropriations bills before the August recess.

Are they simply economically badly informed or is there another motive? Well first I would like to mention my favorite Milton Friedman quote, “If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand.” I think there are two forces at work here–first of all the Democrats love taxes. They believe that the more of everyone else’s money they have to spend, the more powerful they are. Second of all, Democrats with brains realize that increasing taxes will slow economic growth. Slowing the Trump economy is the only chance the Democrats have of taking the presidency in 2020. That is the plan. Hopefully the Senate will not pass the House of Representative’s budget plans. They will be harmful to average Americans. President Trump has helped average Americans economically. President Obama helped Wall Street but ignored Main Street. The House Democrats seem determined to go back to that model which ignored average Americans.

About That Recovery

Posted on by

Yesterday The Wall Street Journal posted an article illustrating the timeline of the economic growth our country is currently experiencing. The article deals with the recent claims by former President Obama that he is responsible for the current economic growth and that the growth began under his leadership. In February 2018 The Washington Times reminded us that Obama Democrats told us that what looked like long-term stagnation under President Obama’s economic policies, with growth stuck at 2 percent on average for his whole eight years in office, was the New Normal that the American people were going to have to get used to, the best we could do now.

The Wall Street Journal reports:

Milton Friedman was the first economist to notice a pattern in American economic history: The deeper the recession, the stronger the recovery. The economy has to grow even faster than normal for a while to catch up to where it would have been without the recession. The fundamentals of America’s world-leading economy are so strong that the pattern held throughout the country’s history.

Until the past decade. The 2008-09 recession was so bad, the economy should have come roaring back with a booming recovery—even stronger than Reagan’s boom in the 1980s. But Mr. Obama carefully, studiously pursued the opposite of every pro-growth policy Reagan had followed. What he got was the worst recovery from a recession since the Great Depression.

Before Mr. Obama, in the 11 previous recessions since the Depression, the economy recovered all jobs lost during the recession an average of 27 months after the recession began. In Mr. Obama’s recovery, dating from the summer of 2009, the recession’s job losses were not recovered until after 76 months—more than six years.

The article concludes:

Obama apologists argued America could no longer grow any faster than Mr. Obama’s 2% real growth averaged over eight years. Slow growth was the “new normal.” The American Dream was over. Get used to it. Hillary Clinton promised to continue Mr. Obama’s economic policies. America’s blue-collar voters rose up.

The recovery took off on Election Day 2016, as the stock market communicated. Mr. Trump’s tax cuts and sweeping deregulation—especially regarding energy—fundamentally changed course from Mr. Obama. These policies have driven today’s boom, increasing annual growth to more than 3% within six months and now to over 4%.

Will Democrats ever figure out what policies create jobs, economic growth and rising wages? If not, they’ll wake up some Wednesday morning to find they have been routed in a fundamental realignment election, in which they have permanently lost the blue-collar vote—once the backbone of their party.

The truth is in the numbers. All of us need to be aware that what former Presidents say about today’s economic growth may not be true. Economic policies make a difference, and President Trump has illustrated that.

What Happens When Expectations Are Raised Too High?

Posted on by

The Daily Caller posted an article today that illustrates the problem with teaching children to expect things they didn’t earn.

The article reports:

Nearly half of all America’s college students have deluded themselves into believing that the federal government will graciously forgive their student loans despite the fact that the federal government forgives only a very low percentage of student loans.

LendEDU, a student loan marketplace website, documented this startling disparity between belief and reality in a nationwide survey of 500 students currently attending America’s colleges and universities, reports the New York Post.

The survey shows that 49.8 percent of the students surveyed think they will be eligible for federal student loan forgiveness.

In reality, only about 10 percent of all college graduates will ever see any portion of their student loans forgiven under current loan forgiveness law.

Under President Obama, the government took over the student loan program in 2010.

Yesterday Fox Business reported:

According to the New York Federal Reserve, U.S. student loan debt has soared to $1.3 trillion becoming the second highest consumer debt category, more than both credit cards and auto loans.

In an exclusive interview with FOX Business’ Liz Claman, Washington College President and former Federal Deposit Insurance Corporation (FDIC) Chair Sheila Bair said the student loan debt crisis could spark next financial crisis, since it is a “tremendous drag” on the U.S. economy.

During the financial crisis of 2008–09, excessive mortgage debt collapsed consumer spending as more families opted to pay off debt. Bair said the same dynamic could be seen if the student debt bubble bursts.

When the housing bubble burst, there were assets that could be sold (although at a loss). There will be no assets to sell if the student debt bubble bursts–a lot of the people with the debt are living in their parent’s basements.

The Daily Caller reports:

Of the $1.31 trillion in outstanding student debt, some $31 billion, is “seriously delinquent,” meaning the debtors are at least 90 days past their payment dates.

Well known economist Milton Friedman is credited with saying, “If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand.” I think it’s time to get the government out of the student loan business and give that business to the banks. Banks are better judges of how to lend money and how to get paid back. I have a strong suspicion that the taxpayers may get stuck holding the bag on this one.

I’m From The Government And I’m Here To Help

Posted on by

“I’m from the government, and I’m here to help.” Those words should strike fear in the hearts of every American. As Milton Friedman one stated, “If you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand.” Someone equally knowledgeable in the ways of government amended that statement slightly–“Yes, but if you put Congress in charge from the start, they would start a federal sand reserve to store up most of the sand from the very beginning. Then the sand shortage would start in one year, but when glassmakers needed more, they could dole out the stored sand to their political contributors and claim they did it to ‘keep prices down’.”

Obviously, either way there is a problem. Where am I going with this? The Environmental Protection Agency (EPA) has just declared war on most of the cars in America. On Tuesday, Investor’s Business Daily posted an editorial about the latest move by the EPA.

The editorial explains:

The EPA’s proposal to increase the amount of ethanol that must be blended into gasoline is a trifecta of regulatory abuse. It will do nothing for the environment, it will do nothing for energy security, and it could wreck millions of car engines.

…The EPA’s proposal would require refineries to blend in almost 19 billion gallons of ethanol and other “biofuels” by 2017, which is 700,000 gallons more than they do now.

But there’s a problem. Americans aren’t consuming enough gasoline. In fact, consumption this year is well below the 2007 forecast, both because cars are more efficient and because people are driving less than expected.

So, if oil refiners are to pump 19 billion gallons of ethanol into their gasoline supplies, they won’t be able to keep ethanol ratio below 10%.

 Why does that matter? Because ethanol is corrosive and can degrade plastic, rubber and metal parts. And the more ethanol in gasoline, the most likely this damage will occur. So going above 10% can wreak havoc with car engines — as well as those in motorcycles, lawnmowers, power boats, you name it — that aren’t built to handle the higher ethanol levels.

The first thing to consider here is that the EPA is not legally entitled to make laws–only Congress can do that. The EPA is not elected and is therefore not accountable to the voters–therefore they do not have the right to enact laws.

The article also points out that increased use of ethanol drives up food prices, which actually hurts the poor. So why in the world isn’t Congress fighting back? If you were running for office in a farm state, would you want to tell the farmers in that state that the price of corn will be going down because ethanol has not been the wonderful thing you thought it was?

The editorial concludes:

So why is the EPA pushing ethanol? Does it help fight global warming? Does it help cities fight smog? Does it help the U.S. become more energy independent?

The answer is: None of the above.

A 2011 study by the National Research Council found that ethanol use could boost overall CO2 emissions. An earlier study published in Science also found that, when you consider the impact of converting forests and grasslands to cornfields, ethanol sharply increases carbon emissions.

Meanwhile, a 2007 study by a Stanford University environmental engineer found that increasing ethanol levels in gasoline can lead to more smog.

The idea that we need ethanol to become energy independent might have made sense in 2007. But the fracking boom since then has unleashed massive new domestic supplies of oil and natural gas, rendering this argument entirely moot.

Here’s an idea. Rather than requiring oil refiners to pump more of this dirty and expensive fuel into gasoline supplies, the federal government should abandon the ethanol requirement altogether.

Big Corn might not like it, but millions of car owners will be grateful.

When the government gets involved in what should be the free market, bad things happen.

Green Energy Isn’t Really Cutting Carbon Emissions

Posted on by

Yesterday The Daily Caller posted a story about the impact of green energy policies on carbon emissions in various states.

The article reports:

There’s no link between the pro-green energy policies of states and falling carbon dioxide (CO2) emissions, but there is a statistically significant link between falling CO2 and natural gas electricity, according to statistical analysis conducted by The Daily Caller News Foundation.

Statistical analysis and regressions run by TheDCNF found no statistically significant link existed between the amount a state’s CO2 emissions fell since 2005 and the number of policies supporting green energy implemented by the state. The analysis showed there is an 81 percent chance there’s no link between CO2 emissions and the number of pro-green energy policies, meaning a link between the two likely doesn’t exist. The very small correlation between CO2 emissions and policies was going in the opposite direction from environmentalist claims.

Think about this a minute. According to data from British Petroleum, America ranks fifth in the world for the largest natural gas reserves. We now have a link between lower CO2 emissions and the use of natural gas. We can easily convert our electric plants to natural gas. This would be a big step toward making America energy independent and providing jobs for Americans instead of sending money overseas.

Please follow the link to the article in The Daily Caller to look at the charts which illustrate that the states with fewer green energy policies were the ones that were more successful in cutting CO2 emissions.

The article notes:

The DCNF’s (Daily Caller News Foundation) analysis found states like New Hampshire, Maryland, Maine, Georgia, Nevada and Alaska cut higher percentages of CO2 since 2005 than any others. These states had a combined average of 39 pro-green energy policies. The national average of all states was 51 pro-green energy policies. This suggests the more pro-green energy policies a state has, the less likely it was to reduce CO2 emissions.

This is another example of how excessive government involvement and interference in the free market makes a problem worse instead of solving it. There is a quote, generally attributed to Milton Friedman, that applies to this situation–“If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand.” I truly believe that.

The Answer To Social Security Is In South America

Posted on by

Investor’s Business Daily posted an article today about the success of private, personal retirement plans in Chile.

The article reports:

In 2012, the Chilean government invited a group of journalists to the South American country to show off its innovations — language programs, new uses for llama fur, greenie aquaculture, microfinance, quake-proof skyscrapers and the world’s most powerful telescope.

But there was one thing missing amid all these new ideas: recognition for Chile’s most spectacular innovation, the one that made the country’s development into a first-world country possible.

That concept? Chile’s 35-year old private pension program, which a new report confirms is working spectacularly well.

Sergio De Castro, the dean of Santiago’s Catholic University, became Finance Minister of Chile in 1976. He began a free market revolution in the Chile. Jose Pinera designed and implemented the profoundly innovative private pension system, which up until then had never been tried — and which was copiously praised Milton Friedman?

The article further reports:

Pinera, who was Chile’s labor minister in 1978, knew that the idea of private pensions would have to be sold to the public. Economic ignorance was widespread, and he utilized the most important media outlet of the day, radio broadcasting, to give five-minute talks for the citizens on savings, ownership, control, responsibility and wealth building — which are the pillars of the Chilean Model — and have as their ultimate reward a comfortable retirement, which Chileans now do.

His daily broadcasts led to sign-ups for the new private pension option that went well beyond expectations. At the time, Chile’s leaders had expected 4% of the population to sign up, but got 25% right off the bat.

I am somewhat convinced that the problem in America is not economic ignorance–it is people who are wrongly informed on the subject of economics.

So what were the results:

A Wharton professor, Olivia Mitchell, recently went down to Chile to sort the complaints out, and found that there was nothing to complain about — the system worked exactly as advertised, creating wealth and providing a dignified retirement for millions of people well beyond what the state could accomplish and, in fact, a much better one than Americans get with Social Security.

We need a leader with the courage to copy what has already proven successful rather than continue with the current ponzi scheme that we call Social Security.