The Nonsensical Debt Limit Debate

July 26, 2011 · Posted in Government · Comment

Tags: debt limit

False Dichotomies of Borrowing More vs Fewer Goodies; The Cost of Federal Regulations and Who Shoulders It

June 23, 2011 · Posted in Government · Comment

Tags: federal regulations

Public Health Care in the US; Comparison of Countries by Public Health Expenditures

June 13, 2011 · Posted in Government · Comment

It is important to pay attention to the premises that people base their assertions on. If an entire math paper is predicated upon the theory that 1 + 1 = 3, and that theory is applied throughout the paper, then there is really no need to read on or to take the writer serious as a mathematician.

A good example in the realm of economics that I just came across is this guy who writes an article that is in large parts predicated upon the following assertion:

The United States has the most privatized health care system in the advanced world; it also has, by far, the most expensive care, without gaining any clear advantage in quality for all that spending.

So he makes the assumption that spending on health care in the US more privatized in the US than in any other industrialized nation. And from that he concludes that there is no clear advantage in quality for “all this spending”.

Now, if “all this spending” was indeed more privatized than anywhere else in the world then he may have indeed supplied a valid argument for more government involvement in the realm of health care.

If, however, this assumption were to be proven incorrect, then he would have unwittingly supplied an argument for less government involvement.

Let’s look at the facts on Health care in the United States:

Public spending accounts for between 45% and 56.1% of U.S. health care spending. Per-capita spending on health care by the U.S. government placed it among the top ten highest spenders among United Nations member countries in 2004.

Government health spending in the US in 2005 was at 7.2 percent of US GDP. In a comparison of 188 countries worldwide the US ranks at position 18. If we exclude third world countries, the US ranks at position 9, ahead of such supposed big government health care paradises as Canada or even Cuba!

	Country	Public health spending % of GDP
1	Marshall Islands	15
2	Micronesia, Fed States	12.4
3	Timor-Leste	11.9
4	Kiribati	11.7
5	Maldives	10.6
6	France	8.9
7	Malawi	8.7
8	Palau	8.7
9	Lesotho	8.5
10	Sao Tome & Principe	8.3
11	Germany	8.2
12	Iceland	7.8
13	Austria	7.7
14	Denmark	7.7
15	Norway	7.5
16	Sweden	7.5
17	Portugal	7.4
18	United States	7.2
19	United Kingdom	7.1
20	Luxembourg	7
21	Belgium	6.9
22	Cuba	6.9
23	New Zealand	6.9
24	Canada	6.8
25	Italy	6.8
26	Switzerland	6.8
27	Japan	6.7
28	Ireland	6.5
29	Malta	6.5
30	Czech Rep	6.3
31	San Marino	6.3
32	Colombia	6.2
33	Montenegro	6.2
34	Slovenia	6.2
35	Croatia	6
36	Netherlands	6
37	Australia	5.9
38	Spain	5.9
39	Finland	5.8
40	Serbia	5.8
41	Hungary	5.5
42	Macedonia, FYR	5.5
43	Costa Rica	5.4
44	Turkey	5.4
45	Bosnia and Herzegovina	5.2
46	Slovakia	5.2
47	Belarus	5
48	Panama	5
49	Seychelles	4.9
50	Israel	4.8
51	Jordan	4.8
52	Bulgaria	4.7
53	Grenada	4.7
54	Cape Verde	4.6
55	Argentina	4.5
56	Botswana	4.5
57	Djibouti	4.5
58	Guyana	4.5
59	Iran, Islamic Rep	4.4
60	Liberia	4.4
61	Andorra	4.3
62	Barbados	4.3
63	Bolivia	4.3
64	Greece	4.3
65	Poland	4.3
66	Dominica	4.2
67	Moldova, Rep	4.2
68	Nicaragua	4.1
69	Rwanda	4.1
70	Burkina Faso	4
71	Lithuania	4
72	Samoa	4
73	Solomon Islands	4
74	Swaziland	4
75	Latvia	3.9
76	Romania	3.9
77	El Salvador	3.8
78	Estonia	3.8
79	Honduras	3.8
80	Lebanon	3.8
81	St. Vincent & Grenadines	3.8
82	Tonga	3.8
83	Ukraine	3.7
84	Papua New Guinea	3.6
85	South Africa	3.6
86	Zimbabwe	3.6
87	Brazil	3.5
88	Namibia	3.5
89	Saint Kitts and Nevis	3.5
90	Bahamas	3.4
91	Gambia	3.4
92	Monaco	3.4
93	Uruguay	3.4
94	Mongolia	3.3
95	St. Lucia	3.3
96	Antigua and Barbuda	3.2
97	Haiti	3.2
98	Qatar	3.2
99	Russian Federation	3.2
100	Turkmenistan	3.2
101	Iraq	3.1
102	Korea, Rep	3.1
103	Benin	3
104	Ethiopia	3
105	Gabon	3
106	Korea, Dem People’s Rep	3
107	Fiji	2.9
108	Mali	2.9
109	Mexico	2.9
110	Tanzania	2.9
111	Belize	2.8
112	Bhutan	2.8
113	Chile	2.8
114	Vanuatu	2.8
115	Mozambique	2.7
116	Paraguay	2.7
117	Zambia	2.7
118	Albania	2.6
119	Algeria	2.6
120	Saudi Arabia	2.6
121	Bahrain	2.5
122	Cyprus	2.5
123	Kazakhstan	2.5
124	Kyrgyzstan	2.5
125	Suriname	2.5
126	Trinidad and Tobago	2.4
127	Tunisia	2.4
128	Uzbekistan	2.4
129	Egypt	2.3
130	Jamaica	2.3
131	Libyan Arab Jamahiriya	2.2
132	Mauritius	2.2
133	Thailand	2.2
134	Ecuador	2.1
135	Ghana	2.1
136	Kenya	2.1
137	Oman	2.1
138	Peru	2.1
139	Syrian Arab Rep	2.1
140	Venezuela	2.1
141	Yemen	2.1
142	Guatemala	2
143	Madagascar	2
144	Uganda	2
145	Malaysia	1.9
146	Morocco	1.9
147	Niger	1.9
148	Sierra Leone	1.9
149	Sri Lanka	1.9
150	United Arab Emirates	1.9
151	Armenia	1.8
152	China	1.8
153	Dominican Rep	1.7
154	Eritrea	1.7
155	Georgia	1.7
156	Guinea-Bissau	1.7
157	Kuwait	1.7
158	Mauritania	1.7
159	Senegal	1.7
160	Brunei Darussalam	1.6
161	Comoros	1.6
162	Nepal	1.6
163	Angola	1.5
164	Cambodia	1.5
165	Cameroon	1.5
166	Central African Rep	1.5
167	Chad	1.5
168	Congo, Dem Rep	1.5
169	Viet Nam	1.5
170	Sudan	1.4
171	Togo	1.4
172	Equatorial Guinea	1.3
173	Nigeria	1.2
174	Philippines	1.2
175	Singapore	1.1
176	Tajikistan	1.1
177	Afghanistan	1
178	Azerbaijan	1
179	Burundi	1
180	India	1
181	Indonesia	1
182	Congo	0.9
183	Bangladesh	0.8
184	Ivory Coast	0.8
185	Guinea	0.7
186	Lao People’s Dem Rep	0.7
187	Pakistan	0.4
188	Myanmar	0.3

So if, furthermore, said guy were to ignore or deny the fact that what he put out there is a blatant falsehood and cling on to his preconceived theories no matter what … well then we have ourselves a good old fashioned, bigoted, boring, predictable, laughable, and paid-off pseudo economist, potentially of the Keynesian specimen, who will cowardly defend the notion that his masters need more power, more money, more credit, more taxes for all eternity, no matter how much they have already been given.

People like this guy never talk about hugely important things like the state enforced special privileges and monopolies granted to the AMA that allow its members to keep prices for health care services high and supply of doctors low.

He also seems to avoid the topic of the state imposed restrictions on importing drugs from abroad unless I’m missing something, but even if he had talked about it somewhere for sure he avoids it where it matters, which would be right in this article.

He also didn’t point out that “Medicare Part D” prohibits Medicare to negotiate with drug companies, as any other entity on the free market can do.

He also passes in silence the fact that there is this institution called FDA that makes it almost impossible for innovative entrepreneurs to bring new potentially lifesaving drugs to market at a cheap price. I heard that 80% of the cost of a drug in the US covers expenses for compliance with FDA regulations.

He also avoids the fact that health insurance providers are not allowed to compete across state lines in most if not all US states.

If you ignore the root causes of why prices are so high, namely state intervention from start to finish, then there is little sense in complaining about the high cost of insurance or the supposedly insufficient level of tax extortion & enslavement of the young generation on whose backs all those outrageous expenses will fall in the end.

If on top of all that, after having been supplied all this information, you ask for EVEN MORE state intervention than we ALREADY have, then you are nothing but yet another abhorrent enabler of a system that year after year claims more and more sick people’s happiness and energy and you do indeed deserve nothing but the deepest scorn and contempt from all those who truly care to make this world a healthier and happier place to live for everyone, and not just for a privileged few who can afford the high cost of medicine and insurance in this country!

Tags: health care

Waterboarding … can you last 15 sec under the most favorable conditions?

June 6, 2011 · Posted in Government · Comment

Tags: torture, waterboarding

Adam Kokesh Arrested for Dancing

May 30, 2011 · Posted in Government · Comment

Tags: adam kokesh, police, police brutality

Parks and Recreation – Ron on the Government

May 29, 2011 · Posted in Government · Comment

Parks and Recreation – Ron on the government from Shoaib Akhtar on Vimeo.

Happy Memorial Day weekend everyone! :)

Tags: Government, parks and recreation, tax

I pledge allegiance …

May 28, 2011 · Posted in Government · Comment

This is brilliant!

Tags: pledge of allegiance

US Public Debt Limit Reached

May 16, 2011 · Posted in Government · Comment

The AP reports Debt limit reached, US halts 2 pension investments:

Treasury Secretary Timothy Geithner said Monday that he will immediately halt investments in two big government pension plans so the government can continue to borrow money.

Geithner informed Congress of his decision in a letter stating that the government had officially reached its $14.3 trillion borrowing limit. He repeated a warning that if lawmakers do not increase the borrowing limit by August 2, the government is at risk of an unprecedented default on its debt.

The debt limit is the amount of money the government can borrow to help finance its operations. The nation has reached its debt limit because the federal government has grown accustomed to borrowing massive amounts of money. The latest estimate is that it borrows 40 cents for every dollar it spends.

Republicans have said they will not vote to raise the borrowing limit until Congress and the White House agree on a plan to reduce the deficit through spending cuts. House Speaker John Boehner last week those cuts should be larger than any increase in the debt ceiling.

The deficit is the difference between what the government spends and what it takes in through taxes and other revenue. The Congressional Budget Office projects that this year’s deficit will total $1.4 trillion. That’s would nearly match 2009’s record imbalance and mark the third straight year in which the federal deficit has exceeded $1 trillion.

Vice President Joe Biden is holding negotiations with lawmakers over the types of deficit-cutting measures that need to be approved to win congressional approval of a higher debt limit.

Even though the government has reached its official borrowing limit, Geithner said unexpected revenue and bookkeeping maneuvers will allow the Treasury to continue auctioning debt for another 11 weeks.

Geithner has suspended pension payments in the past when Congress has held off raising the debt limit. The money that the two pension funds will lose will be replaced when Congress votes to raise the borrowing limit.

I’ve mentioned this before, but I still love that great logic behind threatening to vote not to raise the debt limit unless “significant cuts” are agreed upon. If significant cuts were to take place, there would be no need to raise the debt ceiling in the first place! :)

Another nice example for good old political hypocrisy is on this matter is of course Obama vs Obama on Raising the Debt ceiling.

All the threats about the US potentially defaulting in its national debt are rather unimpressive to me and the bond market is once again shrugging it off today with a drop of another 3 BP to currently 3.15 percent as these lines are written.

The US government is not going to default on its public debt, at least not before defaulting on virtually everything else as I outlined in The Government’s Insolvency.

The pension plans that payments have been suspended into (Service Retirement and Disability Fund) might give you a nice little snapshot as to who’s a low on the totem pole in terms of the seniority order I mentioned in that post.

Tags: debt ceiling, public debt, public debt limit

Obama vs Obama on Raising the Debt Ceiling

April 12, 2011 · Posted in Government, Politics · Comment

Senator Obama in 2006 when the debt ceiling was at $8,965 billion or 64.2% of GDP:

The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.

And of course as a standup and incorruptible agent of change, President Obama in 2011 (via spokesperson), with a debt ceiling at $14,294 billion or 92.1% of GDP:

Obama “thinks it was a mistake,” presidential spokesman Jay Carney told reporters. “He realizes now that raising the debt ceiling is so important to the health of this economy and the global economy that it is not a vote that, even when you are protesting an administration’s policies, you can play around with.”

Ah, the idiocy of politics in all its beauty …

I wonder if this is the kind of “CHANGE” he was talking about all along. ;)

Tags: debt ceiling, obama, Politics

The Government’s Insolvency

April 9, 2011 · Posted in Government · Comment

Insolvency in the voluntary market occurs when, due to a lack of long term profitability, an individual or a business are no longer able to meet monetary obligations to vendors, employees, creditors, etc. The outcome of insolvency is bankruptcy, a process in which the remaining factors of production are sold to people who mostly intend to use them in more profitable lines of production and in which remaining obligations are settled to the extent possible, based on the contractual and legal seniority of the debt obligations incurred.

Government bureaucrats, meanwhile, do not raise money by purchasing factors of production and selling the goods produced with them in voluntary transactions with voluntary buyers and sellers, respectively. Bureaucrats raise money via theft, that is by threatening and using aggression against those who do not pay the money they demand. This money is then distributed to those who invested in or voted for getting those bureaucrats in power.

To make a long story short: The government is now defaulting on its blood money commitments. But it’s not going not be a government default of the kind that people tend to think of. It’s not going to be a big announcement and proclamation of public debt insolvency.

It’s going to be a silent and creeping default. One that in fact has already been silently happening for years. When you get your SS statement once a year, does it nor plainly and obviously tell you that you will be getting less than what you paid in?

In any case, this is how I see the seniority in the realm of government expenses:

1. Public Debt Interest Payments
2. Military Spending
3. Domestic Law Enforcement (FBI, DEA, etc.)
4. Medicare/Medicaid
6. Social Security
7. Unemployment & Welfare
8. Minor budget items such as education, roads, environment, etc.

So as the bankruptcy of the US and other governments progresses and as higher items start eating up more and more of the budget, I believe that they will begin to axe the lower seniority items and work their way up bit by bit when they have to. To be sure, this doesn’t mean that there will be no cuts at all in higher priority items, but I suspect them to remain rather low and unsubstantial in the bigger picture of things so long as other programs leave room to cut big time.

Naturally, they will likely discard those programs that actually provide some kinds of tangible benefits to voters and taxpayers before cutting spending on any of the higher level expenses to bureaucrats or to corporations who have bribed politicians into power via campaign donations. This is always the best way to try and keep people in the mindset that the government is actually needed for something.

It’ll be an interesting and spectacular mess to watch …

Tags: government bankruptcy, seniority

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