Whats Wrong with Obamacare - Part 3 I’ve been thinking about an aspect of Obamacare that demonstrates just one of the many ways the concept is flawed. Success of the program depends on large amounts of money being fed into the system by younger people who are healthier and require less health care, so that the needs of older and less healthy people can be covered. This is the main purpose of the provision of the law that requires every American to buy health insurance. In theory, this is good logic (although, as my previous post pointed out, the minimal penalty of $95 for failing to comply makes it unlikely enough young people will participate to allow the program to be successful). What many people may not be aware of is that in order to collect the amount of money that is required, younger people are being charged larger premiums than older, unhealthy people. This decision/practice is in direct opposition to the most fundamental principle of basic economics – the law of supply and demand, which when unimpeded by other factors, will always determine an optimal price for a product. The principle works within segments of a stratified market (one where the price is allowed to change for various levels of demand) as well as products with a single price point. Because younger people have less need of the product’s benefit (health care), the supply and demand principle should drive the price for that market segment downward. Instead, the law requires that the price for young people be higher than the demand should dictate. Artificially forcing the price for young people higher represents, in my view, one of the most flagrant examples of Keynesian manipulation of the economy in the history of our country. For those unfamiliar with Keynesianism, it is a theory introduced by John Maynard Keynes, who was one of FDR’s most trusted economics advisors. The most basic principle of the theory is that desirable outcomes of an economic system can only result from government involvement in and manipulation of fiscal and monetary policies, as well as other aspects of the economy. FDR began implementing a number of programs that were based on this theory in an attempt to help the country recover from the Great Depression – a goal, by the way, that was achieved, not by his programs, but by the advent of World War II. The introduction of Keynesianism was a direct departure from the principles that had been formulated by Adam Smith in mid-1700’s and that our nation had been built on – Free Market Capitalism that is as unrestricted by government interference as is reasonably possible. (By the way, Keynes lived and promoted his theory during the early part of the 20th century, leading up to his relationship with FDR as the Depression began in 1929. This was a time when Socialism was growing in popularity in many countries, and was strongly supported in the U.S., with a Socialist candidate receiving well over 2% of the popular vote in the 1932 presidential election. Although John Maynard Keynes disavowed claims that he was a Socialist, his thought processes were clearly influenced by many of the theories of Marxism, the parental theory of Socialism.) So, what’s wrong with government manipulation of the economy? Well, in my opinion a lot … but without going into details, I believe that one of the negative consequences of Keynesianism is that it introduced in this country a mentality of reliance on government – not just for economic policies, but for supporting many of the fundamental foundations of our societal infrastructure – providing for the needy (rather than relying on individuals and charitable organizations), supporting failing companies (via bankruptcy laws), and in general bailing out individuals and companies who have made bad decisions. This mentality has all but eliminated the understanding that a person is responsible for accepting the consequences of his or her own choices, and as such has become a cancer that is slowly eating away at the very fiber of what makes us strong. A very large segment of our population view “living off the government” as a normal way of life. An alarmingly growing percent of voters view Capitalism as an evil system, and believe in this principle of redistribution of wealth that we’ve heard so much lately. I believe that continuing down this path will result in the eventual destruction of our country, and that in order to avoid this collapse we need to strongly advocate returning to those fundamental principles our Founding Fathers believed in – Free Market Capitalism, supported by reasonable and sound economic principles that promote free enterprise and fair competition, while protecting citizens and enterprises from unfair and malicious practices by others who are interested only in their own welfare. While I recognize that a purely Smithsonian system with zero governmental control (also known as laissez-faire) would result in two-class system, with much of the middle class being driven downward in status, I think that history (including that being written now) shows that the less government involvement in our lives the better. Obamacare - just another giant step in that government takeover many of us so sincerely fear.
Posted on: Tue, 29 Oct 2013 19:30:33 +0000
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