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Tag Archives: Government

Healthcare: Ask The Wrong Question, Get The Wrong Answer

“There’s a sucker born every minute.”
-P. T. Barnum

Engineering Thinking teaches us to challenge our assumptions, because if they are wrong, then our subsequent analysis and decisions will be wrong.

The healthcare challenge — it is commonly assumed — is this: how can the government best ensure that the weakest members of society receive adequate health care?

This is the wrong question. The reason it is wrong is that it is based on the flawed assumption that the government should be making our health care decisions. As discussed previously (see “Feedback, Prices, And Sullen Spouses“), the government is inherently inefficient, and is therefore the last organization that one should ever select to provide a service.

But what is the alternative?

First, remove health care from the tasks assigned to governments at all levels: federal, state, and local. This will substantially eliminate the tremendous waste of dollars caused by having inefficient bureaucrats positioned between patients and their doctors, and — just as importantly, if not more so — eliminate the moral hazard created by providing “free” services to those who may not deserve them, at the expense of diligent and hard-working taxpayers.

So who takes care of the poor, the unlucky, the out of work?

We do. But we do it through our local communities, through our churches and charities and civic associations. This was done before the advent of Big Government and worked well (see “What Would Happen If The Government Didn’t Take Care Of Us?“), and it can work well again. Local communities will be able to evaluate best who deserves help and how much and on what terms, eliminating the moral hazard. The rest of us will continue to pay for our own medical coverage. Government’s function will be reduced to its proper function, that of ensuring that insurance companies operate transparently and honestly in a competitive environment.

Does this sound simple? It is simple. Politicians and their special-interest allies (whose prestige and livelihoods depend on fooling you into providing your tax dollars for their grand and impractical ideas) would prefer that you think that all of this is too complex for you to understand, and that fairness can only be assured by putting your faith in the government.

Are you not yet convinced of my analysis? If so, I doubt I can change your mind, and respect your right to your opinion. But I would ask you one question:

Have you ever been asked by a relative or a friend for a favor, such as loaning them some money? If so, I’m sure that you based your decision on your personal knowledge of that friend or family member. But what if someone on the other side of the country that you don’t even know asked you for a loan? Would you give it to them? No? Then why on earth are you so willing to give your tax dollars to anonymous bureaucrats to give to anonymous people who may or may not deserve those hard-earned dollars?

-Ed Walker

 

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The Economic Literacy Of The GOP Presidential Primary Candidates

As mentioned previously (It’s Just A Systems Thing: An Engineering Thinking Review Of Government As A System), there are compelling scientific reasons to minimize the size and functions of the federal government. Which of the GOP presidential primary candidates best seem to appreciate this?

(Quotes paraphrased):

Newt Gingrich: “I’m a really fascinating and smart and brilliant guy.” Newt thinks he can dream up unique ways to make the federal government run better.

Mitt Romney: “I’m a really fantastic business manager.” Mitt thinks he can manage the federal government better.

Rick Santorum: “I know how to work with Congress to get things done.” Rick thinks he can get congressional representatives to work together to better run the federal government.

Jon Huntsman: ” — おれや分からないスよ.” (Jon likes to speak Mandarin; not sure what he thinks about the economic role of the federal government.)

Rick Perry: “My goal is to make the federal government as inconsequential in your lives as I possibly can.” Rick wants to shrink the size and power of the federal government.

Ron Paul: “The federal government is out of control and we must cut its budget by a trillion dollars.” Ron wants to shrink the size and power of the federal government.

There are many issues to consider when electing a president, but if the economy were the only one, then Rick Perry and Ron Paul are the only candidates who have clearly expressed an understanding of the inherent limitations of government. The other candidates, typical of those with over-sized egos and/or a lack of understanding of basic economics, suffer from the delusion that — if only they were in charge — the federal government would finally be able to do grand things.

-Ed Walker

 

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What Would Happen If The Government Didn’t Take Care Of Us?

As discussed previously, (e.g. “Feedback, Prices, and Sullen Spouses“), the federal government is not, and cannot be, an efficient provider of goods or services. Yet, some folks ask, what would happen without it? Wouldn’t the poor starve?

No. And here’s one of the best and most concise summaries of why this is so: “America Before The Entitlement State” (by Yaron Brook and Don Watkins, 18 Nov 2011 Forbes.com).

Excerpt:

“After all, the world before the twentieth century–before the New Deal, the New Frontier, the Great Society–was a dark, dangerous, heartless place where hordes of Americans starved in the streets.

“Except it wasn’t and they didn’t. The actual history of America shows something else entirely: picking your neighbors’ pockets is not a necessity of survival. Before America’s entitlement state, free individuals planned for and coped with tough times, taking responsibility for their own lives.”

-Ed Walker

 

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More Thoughts On Forcing The Rich To Pay “Their Fair Share”

As mentioned previously, the quality of our decisions is largely dependent upon their underlying assumptions (see “Why Can’t We All Just Get Along“). If our assumptions are wrong, then any subsequent analysis will very likely be incorrect. This post examines assumptions about wealth, and suggests how popular notions based on incorrect assumptions can yield grossly incorrect conclusions.

A lot of folks today (based on sensational news reporting of the Occupy Wall Street “movement”) seem to think that it is morally wrong and unjust for some of our fellow citizens to have more income (or more wealth) than we average folks do. So let’s apply some engineering thinking and see just how upset we should be at the rich, and whether or not we should make them our slaves. You can do your own analysis, but here are some things for the Wall Street Occupiers to consider:

1. Do you understand the difference between income and wealth? Income is the flow of money to an individual based on their work (or from investments, which flow from prior work effort, or perhaps due to inheritance or luck). Income does not stay resident in a rich person’s home (assuming they don’t burn their money or stuff it under a mattress), it largely flows through them to other folks who provide goods and services. This is why average folks like to be located near wealthier folks; so they can be closer to the flow of money.

Income, if not squandered, can also accumulate through savings and investment in wealth (real estate, money in the bank, autos, jewelry, etc.). Wealth can also be inherited, or obtained by luck (Wow! I won the lottery!), but wealth is much more likely to be obtained by many years of sacrifice and hard work.

Okay, so if you want life to be “fair,” what would be a fair way of taking the extra wealth or income from those folks who have more than you or me? How do you account for the effort and risks they have applied to their lives? What if they were just lucky? (If you won the lottery, would you like the government to redistribute it to everyone else who was not as lucky as you?) If you have a student loan, should wealthy folks who paid for their loans also pay for yours?

2. Do you understand that rich and poor people, for the majority of cases, are not stuck in those positions? Rich people frequently lose their wealth through bad business decisions or bad luck, while poor people frequently obtain great wealth due to hard work or luck. The important point is that “rich” and “poor” are typically not static; they change dramatically with time. Someone rich (or poor ) today is often poor (or rich) tomorrow. So how do you define “rich”? Is it someone who today has more than you or me, or should we take into consideration how long they’ve had their wealth? After all, we should be careful to be completely fair before we make someone our slave.

3. With regard to forcibly taking money from the rich to give to ourselves (via the federal government), how do we justify this? As described previously (“Why PIzzanomics Is Immoral“), government services are no different than any other service. But if we decide that rich people should pay more than you and me, then why shouldn’t they always pay more? When a wealthy person hires a plumber, shouldn’t they pay two or three or more times as much for having their leak fixed? But if so, who should determine the added amount, and how much should it be?

The decision to make someone our slave should be carefully considered, because — at least for now — they aren’t completely our slave, because they can leave. And (although the government doesn’t publicize it) this is happening: millions of Americans are leaving, fed up with being slaves, and they’re taking their money, talent, and job-creating abilities with them.

So who do we get to make our slaves, once they have all gone?

-Ed Walker

 

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ET EXTRA: Is Social Security A Ponzi Scheme?

fire Engineering Thinking Extra Is A Short Review Of A Current Hot Topic
 
 
 
Analysis: Using the generally-accepted definition of a Ponzi Scheme from this article…

The Williams plan to avert Social Security disaster” by Walter Williams, 10/03/11, washingtonexaminer.com

…and considering the following data from the article…

According to a 2002 Congressional Research Service report titled “Social Security Reform” by Geoffrey Kollmann and Dawn Nuschler, workers who retired in 1980 at age 65 got back all they put into Social Security, plus interest, in 2.8 years.

Workers who retired at age 65 in 2002 will have to wait a total of 16.9 years to break even. For those retiring in 2020, it will take 20.9 years. Workers entering the labor force today won’t live long enough to get back even half of what they will put into Social Security.

…then yes, it is reasonable to refer to Social Security as a Ponzi Scheme.

-Ed Walker

 

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Paying Their “Fair Share”: Should The Rich Be Our Slaves?

As mentioned in a recent post (“Where Is Eliot Ness?”), making decisions based simply on public pronouncements is extremely difficult, because such pronouncements are often false and misleading.

Today, for example, we hear a lot of talk about “the rich” needing to pay “their fair share” in order to reduce the U.S. deficit.  If you accept that statement at face value, it implies:

1. The rich are not presently paying their fair share.

2. Taxing the rich will reduce the deficit.

3. Taxing the rich is acceptable because they have more money than we do, and it is morally okay to take it from them and give it to the rest of us.

Even though all of the above implications are arguable, “the rich need to pay their fair share” is spoken as though it is gospel, a classic example of evoking powerful emotions (primarily envy) that bypass the brain, in order to dishonestly advance a policy position.

What can be done? Demand serious discussion based on evidence and logic. Write your congressional representative, compose a letter and send it to the editor of your local newspaper, stand up during a town hall meeting and respectfully challenge talking-point blather, or express your views (with careful research and analysis) in your own blog.

-Ed Walker

 

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ET EXTRA UPDATE: Man-Made Global Warming? Apparently Not

Scientists at the CERN particle-physics laboratory in Geneva have recently presented results that tend to confirm that the Big Gorilla affecting the earth’s temperature is — the sun. The results appear to be based on good science, and accordingly have created a commotion amongst the “man is causing global warming” crowd that appears to be motivated more by a lust for government money than the search for the truth. (Also see the earlier ET post, “Globaloney Warming,” and “Global Warming” in the 3rd Quarter 2008 DACI Newsletter).

A nice summary of the reactions to the CERN results can be found here: “Sun Causes Climate Change Shock” by James Delingpole, 27 Aug 2011, The Telegraph

-Ed Walker

 

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