Thursday, December 24, 2009

In Honor of the Vote to Increase Socialism Today - Greed

This was forwarded to me in email, and I think Mr. Friedman's remarks are particularly pithy in light of today's vote on so-called healthcare reform, but really is designed to enslave millions of people to the Government.

Andrew Wilkow covered this very well today, and the idea is thus:
The difference between Government attempting to do something, such as provide lower cost healthcare, and private enterprise is simply self-interest, or "greed".

A businessman who sets out to perform a task for the public does so out of the want to earn money or prestige for themselves. Their want for better living conditions for themselves and their family drive them to take the risk of putting up their own money (and quite often that of other investors, who are also "greedy" to receive a return for their offering) to provide a good or service to people that need that good or service.

If the product is something that is actually needed by the public at large, and the businessperson can provide it at a cost that is below that which others are willing to pay, they receive income from that product. A successful product, with proper and careful management of the costs of manufacturing that product, results in success for that "greedy person". The greed actually provides a great incentive to improve the product, streamline the process it takes to manufacture that product, and even impetus to branch out and provide additional related products. The act of expanding that product's offering creates jobs and benefits many other people.

An additional pressure that requires better performance in the creation and provision of the product is competition. Attempting to charge a price above what the market will bear (e.g. what people will pay for that product) will either result in the public not buying the product, or a competitor seizing upon the opportunity to provide a similar product at a lower price. In both cases, subject to the limitations of technology and innovation, there is no way to provide a product (for an extended time) at a price below the total price of creating that product. Any attempt to do so requires additional investment by the person or other investors who, again, are motivated by a greedy want to receive a return on the money that they invest in that product.

Except in certain rare cases, it is very nearly impossible for a private entity to force the public at large to buy their product. Competition and public indifference are excellent motivators to stay as lean and mean as possible.

The Government, on the other hand, works thusly:

Like the private entity, the impetus for politicians to act is also greed. This greed is still defined as the urge to generate additional wealth and prestige for oneself, however, there are a number of key differences in the how a good or service is produced and provided to the public at large.

Unlike a private enterprise, a politician simply puts a gun in the face of a private citizen and demands the money it will take to provide that good or service. The politician (or bureaucrat) risks nothing themselves (except, perhaps, the risk of being voted out of office). This lack of risk also assumes that the pol is acting in a legal manner.

"Now hold on!" you might think, "nobody is robbing me at gunpoint for my tax dollars!" Think again, what happens if you do not pay whatever taxes the Government decides to levy on you this year? You get audited, and then fined. Don't pay the fine, guys with guns come to take you away. Resist being taken, and you can be shot.

So now, the Government is offering a product. Costs of creating that product are immaterial. If there's not enough money to create it, the pol just gets more to cover the overage. If the product isn't making any profit, that's ok, there's always more money available to ensure its longevity. In fact, because nobody in charge of creating that product has any real personal stake in its success/failure, there is absolutely no incentive to ensure that costs of provision and manufacture are kept streamlined and tight. What's better, since the cost of providing this product is "free" so far as the pol is concerned, the Government can even price competing products right out of the market. When you think your cost is effectively $0, and your competitors all have to pay for workers, facilities, equipment, etc. out of their own pockets (and consequently watch their own fortunes and bank accounts increase and decrease with success/failure), it's incredibly easy for a Government product to simply run everyone else out of business.

How about supply and demand? Recall that the private entity has to ensure that there is a need for their product. People must want to consume their product, and have enough money to purchase it at a price that exceeds the cost of creating it. What do you do as a Government in this situation? Simple, you require that people purchase it. After all, you're the Government, if they refuse you, you can simply fine them. If they don't pay the fine, well, then you get to arrest them. And if they don't want to be arrested, you simply shoot them and move on with life.

So what does this have to do with so-called Healthcare Reform?

Simply this:
A group of people who are totally unaccountable for their success/failure, grows ever closer to passing a law that says you must purchase a product - healthcare. This product's composition will be controlled by those politicians (it must be an "approved" plan), and you will at all times be enrolled in that approved plan or the IRS will fine you. If you persist in being uncovered, and do not pay your fine, you will go to prison for 5 years. If you refuse to go to prison, you will be shot. If this were China, they'd do all of the above just the same, except they'd send the bill for the bullet to your family afterwards.

Meanwhile, this group of unaccountable people will be effectively in charge of the insurance companies. Without any personal stake in the success/failure of of these companies, they will mandate how much profits those companies can make, how much they can pay their executives, how much profit goes to stock holders, and what plans they can offer. In effect, those politicians will be able to control whether an insurance company survives or not, on an unaccountable whim. Their irresponsible behavior, driven by bribes and lobbyists, will cause companies with "connections" to prosper, while companies that are looked upon less favorably (or whose superior product offering presents a threat to established, inferior companies) will rot on the vine and be driven out of business.

Ultimately, the consumers of Healthcare, "common" Americans, will be bankrupted and killed in droves whilest waiting to see a Doctor for serious ailments such as Cancer. There will be no market forces ensuring innovation, controlling the costs of provision, and ensuring wasteful actions are punished. Costs will rise sharply, premiums will rise sharply, and service will fall off as more and more money is dumped into increasingly bureaucratic management structures and unchecked spending.

So what is greed? When tempered by personal risk, greed is literally the engine of human innovation, the suppressor of costs, and the creator of jobs and opportunities. When a method of greed is found where a greedy person has no risk of failure, however, exploitation and ruination of everyone involved will surely follow.

As Friedman stated, in summary, greed is good, and the Government can, in and of itself, create nothing. Only Private Parties have the proper motivation to invent, create, and provide goods and services.

No comments:

Current Quote

"I would rather be exposed to the inconveniences attending too much liberty than to those attending too small a degree of it." – Thomas Jefferson