Monday, April 21, 2008
Tuesday, April 8, 2008
Health Care
Well, it's been a while since I posted. I have decided to look at Health Care today, and what we should do about it.
One thing that I think almost all people would agree on in the United States is that our health care situation is not good, and something should be done. But what? The left want universal health coverage, but what will that cost? The right want free market solutions, but doesn't that leave the poor even worse off?
Let's talk about both situations. First, free market solutions.
While the libertarian in me wants the government out of the picture, is this really a good idea? The answer I will always give.... it depends.
What would happen if we completely got rid of government oversite, and even insurance companies. If I have to go to the doctor, it's just like anything else. I shop around, and find the best deal for me. The problem is that if something really bad happens (cancer for instance), most of us do not have the hundreds of thousands of dollars to pay for it. My son was born with heart problems, and he has racked up $250k of medical bills. I can't afford that, so my son would have died. Anyone want that to happen to them?
What about universal health care? Everyone gets covered, no matter what. That sounds great! The problem is in the details. Because it is "free", I can go to the doctor whenever I want, which costs more. Instead of deciding to wait a day, to see if I feel better, I can go as often as I want. And, what does the health care cover? As politically incorrect as it is to say, there is a price for a human life. There is a finite amount of resources, and we can't do everything for everyone. What if the time and money spent on my son could have saved 10 other people. Well, it's cold hearted to save my son rather than the 10 others, isn't it? And what about non-life threatening problems. I've mentioned before "The Undercover Economist". Great book. The author has a chapter about health care, which is interesting. He talks about the British health care. They have a finite amount of money to spend, so they have to decide what procedures to cover. How can you decide which is better, getting cataract surgery so that someone can see, vs getting a prostetic arm. Neither is life threatening, but will make the quality of life better for the recipient. What about spending millions of dollars to save someone who is 98 years old. Is it worth it???
In a free market, people can make individual choices on what is important to them. Sure, it's not really fair.... The rich can do what they want, while the poor suffer. But, on the whole, more people get what they want because they have to pay for it.
So, what do we have now? The worst of both worlds? The government has highly regulated the insurance industry. Insurance can only be sold at the state level, not federal. Because most insurance is given through someone's employement, you don't get to choose the best plan for you. You don't really have much of an incentive not to use the insurance (you only have a $25 co-pay). On the other hand, many poor people don't have access to the same quality of care that those with good insurance do. The government is already subsidizing lots of people, and spending lots of our money doing it...
So, what is to be done? Here's my solution to our health care problems in the US. I have taken a lot from "The Undercover Economist", so I can't claim most of these ideas as my own.
First, I think insurance is a good thing, but we need to drastically change how that happens. Currently, most people get insurance from their companies because it is tax free. The company would have to give you much more for you to buy the same health insurance, because you have to pay taxes on all your income. So, the first thing I would do is make the first, say $10k of money you spend on health insurance tax deductable. That way it doesn't cost any more for you to get your own health insurance plan. Just tell your employer you would rather have the money to make your own insurance decisions.
This will allow there to be much greater competition in the insurance business. No more catering to large companies. It will have to be more like car insurance, where you can shop around for the best deal. That way an insurance company can taylor a plan for you.
The next thing I would do, which is not what libertarians would like to hear, is get the government involved. I would have the government sponser all catastrophic health insurance. And catastrophic means catastrophic. If your bill is over, say $250k a year, the government picks up the rest. That way normal health insurance would have upper limits, and the premiums would go way down.
I would get rid of medicaid and medicare, and have the government help those people by helping them get normal health insurance.
How does that sound? Any comments? What else would we do to make the system better? I will try and post more frequently, and maybe come back to this subject, but I have to run now.
He points out that health care will not follow the normal economic models that would make free market solutions work. The problem is information. If I am healthy, it shouldn't cost too much to insure me. If I have cancer, than it will cost a lot to take care of me. I have information about myself, that the insurance company doesn't have, ie if I am sick or not.
One thing that I think almost all people would agree on in the United States is that our health care situation is not good, and something should be done. But what? The left want universal health coverage, but what will that cost? The right want free market solutions, but doesn't that leave the poor even worse off?
Let's talk about both situations. First, free market solutions.
While the libertarian in me wants the government out of the picture, is this really a good idea? The answer I will always give.... it depends.
What would happen if we completely got rid of government oversite, and even insurance companies. If I have to go to the doctor, it's just like anything else. I shop around, and find the best deal for me. The problem is that if something really bad happens (cancer for instance), most of us do not have the hundreds of thousands of dollars to pay for it. My son was born with heart problems, and he has racked up $250k of medical bills. I can't afford that, so my son would have died. Anyone want that to happen to them?
What about universal health care? Everyone gets covered, no matter what. That sounds great! The problem is in the details. Because it is "free", I can go to the doctor whenever I want, which costs more. Instead of deciding to wait a day, to see if I feel better, I can go as often as I want. And, what does the health care cover? As politically incorrect as it is to say, there is a price for a human life. There is a finite amount of resources, and we can't do everything for everyone. What if the time and money spent on my son could have saved 10 other people. Well, it's cold hearted to save my son rather than the 10 others, isn't it? And what about non-life threatening problems. I've mentioned before "The Undercover Economist". Great book. The author has a chapter about health care, which is interesting. He talks about the British health care. They have a finite amount of money to spend, so they have to decide what procedures to cover. How can you decide which is better, getting cataract surgery so that someone can see, vs getting a prostetic arm. Neither is life threatening, but will make the quality of life better for the recipient. What about spending millions of dollars to save someone who is 98 years old. Is it worth it???
In a free market, people can make individual choices on what is important to them. Sure, it's not really fair.... The rich can do what they want, while the poor suffer. But, on the whole, more people get what they want because they have to pay for it.
So, what do we have now? The worst of both worlds? The government has highly regulated the insurance industry. Insurance can only be sold at the state level, not federal. Because most insurance is given through someone's employement, you don't get to choose the best plan for you. You don't really have much of an incentive not to use the insurance (you only have a $25 co-pay). On the other hand, many poor people don't have access to the same quality of care that those with good insurance do. The government is already subsidizing lots of people, and spending lots of our money doing it...
So, what is to be done? Here's my solution to our health care problems in the US. I have taken a lot from "The Undercover Economist", so I can't claim most of these ideas as my own.
First, I think insurance is a good thing, but we need to drastically change how that happens. Currently, most people get insurance from their companies because it is tax free. The company would have to give you much more for you to buy the same health insurance, because you have to pay taxes on all your income. So, the first thing I would do is make the first, say $10k of money you spend on health insurance tax deductable. That way it doesn't cost any more for you to get your own health insurance plan. Just tell your employer you would rather have the money to make your own insurance decisions.
This will allow there to be much greater competition in the insurance business. No more catering to large companies. It will have to be more like car insurance, where you can shop around for the best deal. That way an insurance company can taylor a plan for you.
The next thing I would do, which is not what libertarians would like to hear, is get the government involved. I would have the government sponser all catastrophic health insurance. And catastrophic means catastrophic. If your bill is over, say $250k a year, the government picks up the rest. That way normal health insurance would have upper limits, and the premiums would go way down.
I would get rid of medicaid and medicare, and have the government help those people by helping them get normal health insurance.
How does that sound? Any comments? What else would we do to make the system better? I will try and post more frequently, and maybe come back to this subject, but I have to run now.
He points out that health care will not follow the normal economic models that would make free market solutions work. The problem is information. If I am healthy, it shouldn't cost too much to insure me. If I have cancer, than it will cost a lot to take care of me. I have information about myself, that the insurance company doesn't have, ie if I am sick or not.
Tuesday, March 18, 2008
A small economic example
I finally have the time to write another post here. I have decided to write about the general theory of economics. I have been reading "The Undercover Economist" and it has been very enlightening. I have read other economic books, but this one really explains the fundamental aspects of economics.
First of all, I think that most people don't really focus on what really happens with economics... Our economy is so big, so complex, that we lose sight of what is really happening. So, I want to use an example to explain my ideas, and then we can expand that out to the US and then global economy. I'm going to make this really confusing and add in my comments about the real economy with the simple example. I'll try and put the comments in red. I might forget....
Lets say we are on a deserted island with 20 people. We know we are there for life, and no one will ever come and find us. It's okay, because there are trees, water, fruit, etc.
We have slightly more than 20 people on the earth, but the ideas are the same. We are here, and we have to work together.
Economics is the utilization of scarce resources. That's all it is. Currently, on this island, our scarce resource is man power. We have to decide what is most important. Should we all work at building houses? Should some work at gathering food? We have a limited amount of time, and we can't do everything at once.
This is where socialism breaks down in real life. If there are only 20 of us, we can decide what is the best use of our time, all together. We can truly work together and get more done than if we were competing... but, with Billions of people, it's impossible to work like that. The best way is capitalism, but that's another post for another day.
So, say we all divide up, and get lots of stuff done. One person's job (Hannah) is to fetch water and carry it to our settlement. Well, that's a hard job, and takes Hannah all day, every day. Someone decides that if they make a sluce, we can have water run straight to the settlement, and Hannah won't have to waste the time getting the water. That seems like a great idea, right? Hannah can now do something else to be productive. (I bet you see where this is going...)
So, Hannah just lost her job because of innovation. Isn't that sad? I think we shouldn't allow that to happen. Let's start subsidizing Hannah so she can keep hauling water.... It doesn't make sense, does it? But that's what we do. We talk about people losing their jobs because of better technology, better business practices, more streamlined processes. GM can make more cars with less people, but we complain about the employees losing their jobs. What it really means is GM is more productive, so now those workers can do something else which will help society.
Then something horrible happens. There's a hurricane, and most of the trees are blown away. We do some math, and decide that we can only use 20 trees a year.... We now have a dilemma. What should we use the trees for.... We could make nicer huts, so we don't get as cold at night... We could make some boats so it's easier to fish. How about some plumbing fixtures, those would be useful. In our society, we all sit down together and decide what is best. 5 people want plumbing fixtures, 5 people want nicer huts, and 9 want fishing boats, and 1 thinks we should let the trees grow so that in the future we can have more. Somehow we come to an agreement on what we use the trees for.
Everything is a scarce resource, whether we think it is or not. We have a limited number of trees, apartments in NYC, oil, people, etc. We have to decide what to do with them. How do we decide? How can we decide who should get the apartments in NYC? Maybe the government should decide, isn't that what socialism says? We'll decide for you what is best for the country... But, how do we know it's actually best for the country? Maybe we should just divide it up evenly... But what if I would much rather have an apartment in DC rather than NYC? How do we determine what it's worth.... Why don't we let the people decide? It's hard enough making it "Fair" when there are only 20 people.... what about when there are 300 million? That's where capitalism comes into play. We let our desires chose for us. Sure, it's selfish, but we use that selfishness to better society.
Hannah is out of a job. Everyone wants her to work, and she does to. She looks around, and sees Aaron fishing. Aaron is a great fisherman. He can catch 30 fish a day, plenty for the entire settlement. But, Aaron is not very good at picking stawberries. He eats almost all of them before he puts them in the bag. Hannah is very good at picking stawberries, but can only catch 3 fish a day. Well, Hannah thinks she would really like to be a fisherman, that was her secret desire when she was carrying water. So, she decides she is going to fish. Well, the whole community tells her that it is better if she picks strawberries rather than fish, because it helps out society.
What if I wanted to be a cowboy. I like the outdoors. Of course, I don't know how to ride a horse, or raise cows. How does society allocate the scarce resource of my man power? The government can tell me what I should do.... But how do they do that? Do they ask me what I'd like to do? Then I'd be an inefficient cowboy, rather than the engineer that I am. How about they determine the benifit to society. And pay me that amount. If I would be a really bad cowboy, I would make much less than if I were an engineer. That would encourage me to do what I do best... If very few people have the ability to do a certain job, than because of the scarcity of people, it will be more valuable.
So, what has our little example shown us about economics? What drives economics is scarcity. We didn't have to worry about trees until there weren't enough. We had to worry about manpower. Who did what is very important. We had to focus the scarce resources to what people wanted most. How do you compare the benifits of having a bathroom to having a boat to go fishing.... Everyone has their own criteria. Some might want it one way, other's another way. With 20 people, you can probably get something to work, but not with 300 million. If you have a free, capitalistic society, than people will pay what it is worth to them. If having an ipod is more important to someone than having a nice toilet seat, then that's what they will buy, and that is what will be built, because it's not profitable to build the toilet seat.
If, on the other hand, you have the government decide.... Then you might have a beurocrate decide that an ipod is a want, while a toilet seat is a need, so everyone will get new toilet seats....
Throughout this blog, this idea of scarcity will come up quite often, because it is so vital to everything we do. It affects health care, global warming, national defense, pretty much everything. Please share comments or thoughts. I will answer comments in the comment section, so be sure to go back to other posts to see what is new.
First of all, I think that most people don't really focus on what really happens with economics... Our economy is so big, so complex, that we lose sight of what is really happening. So, I want to use an example to explain my ideas, and then we can expand that out to the US and then global economy. I'm going to make this really confusing and add in my comments about the real economy with the simple example. I'll try and put the comments in red. I might forget....
Lets say we are on a deserted island with 20 people. We know we are there for life, and no one will ever come and find us. It's okay, because there are trees, water, fruit, etc.
We have slightly more than 20 people on the earth, but the ideas are the same. We are here, and we have to work together.
Economics is the utilization of scarce resources. That's all it is. Currently, on this island, our scarce resource is man power. We have to decide what is most important. Should we all work at building houses? Should some work at gathering food? We have a limited amount of time, and we can't do everything at once.
This is where socialism breaks down in real life. If there are only 20 of us, we can decide what is the best use of our time, all together. We can truly work together and get more done than if we were competing... but, with Billions of people, it's impossible to work like that. The best way is capitalism, but that's another post for another day.
So, say we all divide up, and get lots of stuff done. One person's job (Hannah) is to fetch water and carry it to our settlement. Well, that's a hard job, and takes Hannah all day, every day. Someone decides that if they make a sluce, we can have water run straight to the settlement, and Hannah won't have to waste the time getting the water. That seems like a great idea, right? Hannah can now do something else to be productive. (I bet you see where this is going...)
So, Hannah just lost her job because of innovation. Isn't that sad? I think we shouldn't allow that to happen. Let's start subsidizing Hannah so she can keep hauling water.... It doesn't make sense, does it? But that's what we do. We talk about people losing their jobs because of better technology, better business practices, more streamlined processes. GM can make more cars with less people, but we complain about the employees losing their jobs. What it really means is GM is more productive, so now those workers can do something else which will help society.
Then something horrible happens. There's a hurricane, and most of the trees are blown away. We do some math, and decide that we can only use 20 trees a year.... We now have a dilemma. What should we use the trees for.... We could make nicer huts, so we don't get as cold at night... We could make some boats so it's easier to fish. How about some plumbing fixtures, those would be useful. In our society, we all sit down together and decide what is best. 5 people want plumbing fixtures, 5 people want nicer huts, and 9 want fishing boats, and 1 thinks we should let the trees grow so that in the future we can have more. Somehow we come to an agreement on what we use the trees for.
Everything is a scarce resource, whether we think it is or not. We have a limited number of trees, apartments in NYC, oil, people, etc. We have to decide what to do with them. How do we decide? How can we decide who should get the apartments in NYC? Maybe the government should decide, isn't that what socialism says? We'll decide for you what is best for the country... But, how do we know it's actually best for the country? Maybe we should just divide it up evenly... But what if I would much rather have an apartment in DC rather than NYC? How do we determine what it's worth.... Why don't we let the people decide? It's hard enough making it "Fair" when there are only 20 people.... what about when there are 300 million? That's where capitalism comes into play. We let our desires chose for us. Sure, it's selfish, but we use that selfishness to better society.
Hannah is out of a job. Everyone wants her to work, and she does to. She looks around, and sees Aaron fishing. Aaron is a great fisherman. He can catch 30 fish a day, plenty for the entire settlement. But, Aaron is not very good at picking stawberries. He eats almost all of them before he puts them in the bag. Hannah is very good at picking stawberries, but can only catch 3 fish a day. Well, Hannah thinks she would really like to be a fisherman, that was her secret desire when she was carrying water. So, she decides she is going to fish. Well, the whole community tells her that it is better if she picks strawberries rather than fish, because it helps out society.
What if I wanted to be a cowboy. I like the outdoors. Of course, I don't know how to ride a horse, or raise cows. How does society allocate the scarce resource of my man power? The government can tell me what I should do.... But how do they do that? Do they ask me what I'd like to do? Then I'd be an inefficient cowboy, rather than the engineer that I am. How about they determine the benifit to society. And pay me that amount. If I would be a really bad cowboy, I would make much less than if I were an engineer. That would encourage me to do what I do best... If very few people have the ability to do a certain job, than because of the scarcity of people, it will be more valuable.
So, what has our little example shown us about economics? What drives economics is scarcity. We didn't have to worry about trees until there weren't enough. We had to worry about manpower. Who did what is very important. We had to focus the scarce resources to what people wanted most. How do you compare the benifits of having a bathroom to having a boat to go fishing.... Everyone has their own criteria. Some might want it one way, other's another way. With 20 people, you can probably get something to work, but not with 300 million. If you have a free, capitalistic society, than people will pay what it is worth to them. If having an ipod is more important to someone than having a nice toilet seat, then that's what they will buy, and that is what will be built, because it's not profitable to build the toilet seat.
If, on the other hand, you have the government decide.... Then you might have a beurocrate decide that an ipod is a want, while a toilet seat is a need, so everyone will get new toilet seats....
Throughout this blog, this idea of scarcity will come up quite often, because it is so vital to everything we do. It affects health care, global warming, national defense, pretty much everything. Please share comments or thoughts. I will answer comments in the comment section, so be sure to go back to other posts to see what is new.
Friday, March 7, 2008
Friday, February 29, 2008
Minimum wage
To start my politic ranting, I thought I'd start with the minimum wage. Something controversial, yet not all that important, right?
One view of minimum wage (taken by the right) is that pure capitalistic economics show that having a minimum wage is bad, bad, bad. If you're not worth the wage, you shouldn't be making it. It's an artificial limitation on capitalism and should have no place in society. If you raise the minimum wage, you make it more difficult to higher someone.
On the oposite side, you have people who look at those making minimum wage and say they need a "living wage". Can you feed a family on $5.15 an hour?
Here's how I see it. Both are right. (How's that for compromise?) Having a minimum wage does in fact cost jobs. Everything in this world is about money. If I, as a business man, have to pay someone more, there are only a couple things I can do. I can charge my consumer more, to make up for the extra pay. I can fire an employee so that overall I spend the same on employees, and either force the other employees to work harder or to replace the employee with technology. Either way it either hurts consumers by increasing the price, or it makes it harder to find a job. If you make the slippery slope argument, why should you stop at having a minimum wage at $5.15, or $6.65... I'd much prefer to make $40 an hour. What would happen to the economy if the minimum wage was set to $40? Inflation would take over until $40 was worth $5.15, and it doesn't help anyone out.
What would happen if I went the other way? Minimum wage is abolished. There would be some people who made much less. Would someone work for $1.00 an hour? I don't know. Maybe some teenagers.... I guess if I had to make money, and there was nothing left for me to take, I would work for that. What really would happen if we got rid of the minimum wage?
I understand that it is hard to raise a family on very little money. I have been richly blessed, and know that I won't fall into poverty, but that doesn't mean everyone has had as good a time as I have. Why can't we help those people by increasing the minimum wage, so that they can survive?
Well, first, if you increase the minimum wage, who does it really help? Over half of all minimum wage earners (53%) are under the age of 23. Less than 5% of all minimum wage earners are the sole breadwinners in their families. You are mainly helping those who are working at their first job. I guess that's not a bad thing, but does it help more than it hurts?
Here are my solutions. First, I haven't decided if I would abolish the minimum wage. I would need to get specific arguments for the abolishment before I get rid of it. My reasoning is it is good to have some minimum so people aren't exploited. (The same thing with child labor laws... I'm not completely anti-goverment.) We as a society can handle a little excess here. I would tie the minimum wage to inflation, and keep it fairly low. What if we tied it also to some percent of workers.... right now there are about 1.6 million people making minimum wage in the US. So, let's say that the minimum wage is adjusted up or down so that approximately 0.5% of Americans are making minimum wage.
Now, my solution to those who are making minimum wage who are trying to support a family... Isn't that why liberals want a minimum wage? To help those families? A detour, if you will....
I am not opposed to helping those in need. In fact, I feel it is my Christian duty to help them. In the ideal world, we as a community would help people, even when it's not mandated by the government (through taxes). I wouldn't even have a problem with the government forcing us to help (because it does strengthen the country if everyone is doing well). What I don't like is the waste in government. Of all institutions, I really believe the government is the least efficient. That is why, I think, many conservatives are seen as heartless. Not because we don't want to help, but because we don't want the government forcing us to give money to them so they can waste it. I would propose that we still help people, through the government, because nothing else will be tolerated right now. There is too much momentum in the government to change that over night. But, what can we do to cut down on waste? That is where most of my solutions will come in....
Okay, I'm back on track. One thing we could do is to attach money to head-of-households. Let me explain. What the current rise in minimum wage is trying to do is help those households dependent only on minimum wage. But, having a universal minimum wage covers more than just those who really need it.
If, after a family is deemed "poor", the government can help out by increasing their wage. Say a family really should earn $10 an hour (I have no idea what the proper sum would be, but this is just to show the idea). If the family has been deemed "poor", than the government steps in and says, get a job at minimum wage if you must. We will suplement your income so you actually earn $10 an hour. So, at $5.15 the government chips in another $4.85. Now, we can have a scaled system so that if the person gets a raise, than the government subsidy goes down, but not by as much. (this would encourage people to still work hard to get a raise). So, say the person gets a dollar raise, now making $6.15 per hour, the government reduces their subsidy by $0.50, so the person makes $10.50, and this continues until some set amount ($15.00 an hour?)
This encourages work, because if you don't work, you don't get paid. It also encourages working longer hours, rather than some minimum amount that you have to. It doesn't hurt the employer, or employee. It helps the person work their way out of poverty, without just a handout.
So, final analysis, is keep the minimum wage, but tie it to inflation and/or percent of workers on minimum wage. (Better yet, let the states decide their own minimum wage. You can even have a federal law stating there must be a minimum wage, but the states set it...) To help those who really need it, and only those, have government help. This would really be a job for the welfare people, keep it with them to simplify things.
So, where are the problems with my analysis? (I know there are some). Please leave comments so we can talk about it, and I will revise as needed. Thanks.
One view of minimum wage (taken by the right) is that pure capitalistic economics show that having a minimum wage is bad, bad, bad. If you're not worth the wage, you shouldn't be making it. It's an artificial limitation on capitalism and should have no place in society. If you raise the minimum wage, you make it more difficult to higher someone.
On the oposite side, you have people who look at those making minimum wage and say they need a "living wage". Can you feed a family on $5.15 an hour?
Here's how I see it. Both are right. (How's that for compromise?) Having a minimum wage does in fact cost jobs. Everything in this world is about money. If I, as a business man, have to pay someone more, there are only a couple things I can do. I can charge my consumer more, to make up for the extra pay. I can fire an employee so that overall I spend the same on employees, and either force the other employees to work harder or to replace the employee with technology. Either way it either hurts consumers by increasing the price, or it makes it harder to find a job. If you make the slippery slope argument, why should you stop at having a minimum wage at $5.15, or $6.65... I'd much prefer to make $40 an hour. What would happen to the economy if the minimum wage was set to $40? Inflation would take over until $40 was worth $5.15, and it doesn't help anyone out.
What would happen if I went the other way? Minimum wage is abolished. There would be some people who made much less. Would someone work for $1.00 an hour? I don't know. Maybe some teenagers.... I guess if I had to make money, and there was nothing left for me to take, I would work for that. What really would happen if we got rid of the minimum wage?
I understand that it is hard to raise a family on very little money. I have been richly blessed, and know that I won't fall into poverty, but that doesn't mean everyone has had as good a time as I have. Why can't we help those people by increasing the minimum wage, so that they can survive?
Well, first, if you increase the minimum wage, who does it really help? Over half of all minimum wage earners (53%) are under the age of 23. Less than 5% of all minimum wage earners are the sole breadwinners in their families. You are mainly helping those who are working at their first job. I guess that's not a bad thing, but does it help more than it hurts?
Here are my solutions. First, I haven't decided if I would abolish the minimum wage. I would need to get specific arguments for the abolishment before I get rid of it. My reasoning is it is good to have some minimum so people aren't exploited. (The same thing with child labor laws... I'm not completely anti-goverment.) We as a society can handle a little excess here. I would tie the minimum wage to inflation, and keep it fairly low. What if we tied it also to some percent of workers.... right now there are about 1.6 million people making minimum wage in the US. So, let's say that the minimum wage is adjusted up or down so that approximately 0.5% of Americans are making minimum wage.
Now, my solution to those who are making minimum wage who are trying to support a family... Isn't that why liberals want a minimum wage? To help those families? A detour, if you will....
I am not opposed to helping those in need. In fact, I feel it is my Christian duty to help them. In the ideal world, we as a community would help people, even when it's not mandated by the government (through taxes). I wouldn't even have a problem with the government forcing us to help (because it does strengthen the country if everyone is doing well). What I don't like is the waste in government. Of all institutions, I really believe the government is the least efficient. That is why, I think, many conservatives are seen as heartless. Not because we don't want to help, but because we don't want the government forcing us to give money to them so they can waste it. I would propose that we still help people, through the government, because nothing else will be tolerated right now. There is too much momentum in the government to change that over night. But, what can we do to cut down on waste? That is where most of my solutions will come in....
Okay, I'm back on track. One thing we could do is to attach money to head-of-households. Let me explain. What the current rise in minimum wage is trying to do is help those households dependent only on minimum wage. But, having a universal minimum wage covers more than just those who really need it.
If, after a family is deemed "poor", the government can help out by increasing their wage. Say a family really should earn $10 an hour (I have no idea what the proper sum would be, but this is just to show the idea). If the family has been deemed "poor", than the government steps in and says, get a job at minimum wage if you must. We will suplement your income so you actually earn $10 an hour. So, at $5.15 the government chips in another $4.85. Now, we can have a scaled system so that if the person gets a raise, than the government subsidy goes down, but not by as much. (this would encourage people to still work hard to get a raise). So, say the person gets a dollar raise, now making $6.15 per hour, the government reduces their subsidy by $0.50, so the person makes $10.50, and this continues until some set amount ($15.00 an hour?)
This encourages work, because if you don't work, you don't get paid. It also encourages working longer hours, rather than some minimum amount that you have to. It doesn't hurt the employer, or employee. It helps the person work their way out of poverty, without just a handout.
So, final analysis, is keep the minimum wage, but tie it to inflation and/or percent of workers on minimum wage. (Better yet, let the states decide their own minimum wage. You can even have a federal law stating there must be a minimum wage, but the states set it...) To help those who really need it, and only those, have government help. This would really be a job for the welfare people, keep it with them to simplify things.
So, where are the problems with my analysis? (I know there are some). Please leave comments so we can talk about it, and I will revise as needed. Thanks.
Wednesday, February 27, 2008
Welcome Message
I have decided to start a blog on politics. (Original, I know). My main reason is purely selfish... The easiest way for me to make decisions is by talking to someone about all sides of the issue, and then deciding for myself. I think my wife is getting tired of my ranting, so I get to write it out here.
My purpose for this site is the examine random topics and determine exactly how I feel about it. Though I would consider myself a conservative, that does not mean I espose all conservative values. I also will try and be completely honest with myself. Why is it that I want government in my life for some things, but out of my life for others? I will try and reason out what I personally feel is the best compromise.
Most of all, I would love to read your comments. I do not want this to be political bashing... I want honest and open communication so that all sides of the issue come out. I realize that there is deep-seated hatred (is that too harsh of a word?) between political parties. I don't want that to show up here. I will delete any such comments.
I have been reading different books, and will try and post a book review, along with what I got out of it for people to comment on. If you would like to suggest a topic, please do.
Last of all, remember..... the gospel is true, and life is wonderful!!!!
My purpose for this site is the examine random topics and determine exactly how I feel about it. Though I would consider myself a conservative, that does not mean I espose all conservative values. I also will try and be completely honest with myself. Why is it that I want government in my life for some things, but out of my life for others? I will try and reason out what I personally feel is the best compromise.
Most of all, I would love to read your comments. I do not want this to be political bashing... I want honest and open communication so that all sides of the issue come out. I realize that there is deep-seated hatred (is that too harsh of a word?) between political parties. I don't want that to show up here. I will delete any such comments.
I have been reading different books, and will try and post a book review, along with what I got out of it for people to comment on. If you would like to suggest a topic, please do.
Last of all, remember..... the gospel is true, and life is wonderful!!!!
Tuesday, February 26, 2008
Book: Supercapitalism
Supercapitalism is an interesting economics book written by Robert Reich. The main premise of the book is that starting in the 70's, the United States, and to some extent the world, started transforming economically into supercapitalism. From the 30's to the 60's, the US economic form was capitalism, (Reich terms it Democratic Capitalism), but a more benign form than what we have now. There were large oligopolies that cornered markets, and in so doing were able to obsorb costs which currently would not be allowed. During democratic capitalism, large companies could pay higher wages, better health insurance, etc. because they didn't have to fear competition. This allowed a large middle class, people who stayed at a job forever, etc. At this time, consumers and investors didn't have a lot of choice. There wasn't a lot of inovation because there wasn't the incentive to inovate like there is now. Reich contends that CEO's of companies were more like statemen, rather than the highly competitive leaders they are today.
With the advent of a truly global economy, faster travel, internet, and many firms competing for your dollar, supercapitalism was born. Now we have a choice where to buy things. We can shop around for a better price. Investors can quickly move their money in the stock market to a firm that will give them a better return. This has increased competition, which increases the need for the company to gain competitive advantage over others. This is done by lowering costs by being more efficient (a good thing, right?), cutting jobs (is that good or not?), pressuring suppliers to lower prices (like Walmart does on a large scale). Supercapitalism has increased our power as consumers (we get what we want when we want it) and also investors (we get a higher return on our money). It reduces the goodwill a company can have. For example, in the car industry. Originally GM could give great benefits to the unions, but once more competition came, they had to streamline. That meant better, cheaper, more efficient cars for us, as well as better return for investors, but it also meant layoffs and worse benefits for the employees.
Another problem with supercapitalism is that companies are trying to gain competitive advantage over others through politics. Industrial PACs (political action committees) have increased dramatically and there are more lobbiests than ever before. Even when legislation is debated that doesn't seem to deal with industry, they still get involved. If you remember in 2006 there was a debate over drilling off the coast of Florida and California. The oil companies lobbied for the drilling, and the main force against the drilling? You would think environmental groups, but it was actually the tourism industry. They were worried about potential oil spills that would ruin the tourism in those states.
With the advent of a truly global economy, faster travel, internet, and many firms competing for your dollar, supercapitalism was born. Now we have a choice where to buy things. We can shop around for a better price. Investors can quickly move their money in the stock market to a firm that will give them a better return. This has increased competition, which increases the need for the company to gain competitive advantage over others. This is done by lowering costs by being more efficient (a good thing, right?), cutting jobs (is that good or not?), pressuring suppliers to lower prices (like Walmart does on a large scale). Supercapitalism has increased our power as consumers (we get what we want when we want it) and also investors (we get a higher return on our money). It reduces the goodwill a company can have. For example, in the car industry. Originally GM could give great benefits to the unions, but once more competition came, they had to streamline. That meant better, cheaper, more efficient cars for us, as well as better return for investors, but it also meant layoffs and worse benefits for the employees.
Another problem with supercapitalism is that companies are trying to gain competitive advantage over others through politics. Industrial PACs (political action committees) have increased dramatically and there are more lobbiests than ever before. Even when legislation is debated that doesn't seem to deal with industry, they still get involved. If you remember in 2006 there was a debate over drilling off the coast of Florida and California. The oil companies lobbied for the drilling, and the main force against the drilling? You would think environmental groups, but it was actually the tourism industry. They were worried about potential oil spills that would ruin the tourism in those states.
Reich only had a few suggestions on what could be done about the bad side effects of supercapitalism. His main solution is that we need to stop treating companies like people. When there is criminal conduct, it's not the "company" who does wrong, it is the people who make the decisions. Companies should not be taxed, because they just pass it on to consumers. If we agree that a company is simply a legal contract between investors and workers, than you tax the investors, rather than "the company". With this definition, that a company is not an entity equal to a person, than rules could be inacted to limit the ability of companies to affect government. Reich states we need to seperate capitalism and democracy. Limit corporations from donating money to politicians (shareholders still can, because they are covered under the constitution, but companies have no constitutional rights), and then the government can make the rules without the influence of the corporations whose only focus is to make money for their shareholders.
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