Category Archives: Economics

Why Does Health Care Cost So Much?

Posted on June 18, 2011 | Leave a comment

The United States consistently ranks as one of the lowest advanced nations when it comes to health care.  To add further to the poor ranking of the US is the fact that we spend so much more money on our medical care than do other nations.  In terms of GDP, we outpace most, if not all, nations in the world.  We simply spend too much money.

The cost of medical care is one of the driving forces behind the call for this reform.  And for the most part, I’m all for that.  Generally speaking, reducing the amount of money we spend for a service or product is a good thing.  A good thing with one caveat:  Unless spending more on that thing is reported incorrectly.

For instance, suppose I enjoy minor league baseball.  And I spend $200 this year but will end up spending $400 next.  That can sound like a bad thing.  Unless, of course, it really means I went to twice as many games, in which case it’s a GREAT thing!

So, what are we spending all this money on and how can we fix it?

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Posted in Economics, Government, Health Care, Politics: National

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Unintended Consequences: California Style

Posted on June 17, 2011 | 5 comments

There are some good things in California.  For example, I can think of two:

1.  California Pizza Kitchen

2.  That little corner store on Inter-State 8 East just before you hit the Arizona line.  How can’t you like the last thing in California?

But seriously, California must be a nice place to live.  It HAS to be, or so many otherwise sensible people wouldn’t live there.

But that doesn’t mean business find it a nice place to live.

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Posted in Economics, Economy, Government, Politics: National, States Behaving Badly

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Government Can’t Get Too Large

Posted on June 17, 2011 | Leave a comment

Because really, nothing should go unregulated.

In an age where we believe that the only valid unassisted choice a person can make is to abort or not abort a child, the government continues to restrict our liberties.  In the name of “safety” the government, and those who are government fan-boys, march toward the regulation of every movement and decision we make.

Buy too big a house and can’t afford the payments?

Regulate it.

Wanna consume cheap energy?

Regulate it.

Wanna sell flowers in New Orleans?

Regulate it.

And now this.  Kids selling lemonade to people who are hot.  Regulated:

BETHESDA, Md. (WUSA) — You can make a fortune selling parking spots outside the US Open, but don’t even dream of setting up a lemonade stand.

A county inspector ordered the Marriott and Augustine kids to shut down the stand they set up on Persimmon Tree Rd., right next to Congressional.

Yup.

Some kids set up a lemonade stand and were told they needed a $300 permit.

No regulation is too big to save us from the next Wall Street greed induced bubble!

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Posted in Economics, Government, Liberty, States Behaving Badly

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Thought Experiment

Posted on June 14, 2011 | 6 comments

Okay, okay.  For a second, close your eyes and follow along.

Wait.

Doesn’t work in this medium.

Read this and THEN close your eyes and think through the scenarios.

Or whatever.

Consider dinner.  Fine dining at a fancy schmancy restaurant.

Over the course there will be 1000 people served.  They can come in tables of 2 or or 4.  1 or more even.  Doesn’t matter.  Now, consider these two scenarios:

  1. The price of dinner will be carried by the individual.  That is, when the meal is over, the waiter will bring the check.  One check for each individual.
  2. The price of dinner will be carried by the group.  That is, when the meal is over, the waiter will charge the account.  When all 1000 people have eaten, the total bill will be divided by 1000 and each person will recieve a bill in the mail.

These two methods of payment are going to cover the cost of the whole experience.  Appetizers, desserts, cocktails and even valet parking – heck, coat check too.

Now, here is the question:

Under which scenario would you expect the restaurant to sell more desserts in?

How about appetizers?

For extra credit, explain your answer.

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Posted in Economics

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Free Checking Accounts: This For That

Posted on June 13, 2011 | 5 comments

There was a time, not so long ago, that people were free to choose.  They could do a thing, and, based on that thing, expect a specific outcome.

This was as true in banking as it is in everything in life.  There is no free lunch.

However, then came along lawmakers.  Those people who think they can institute “fairness” and legislate morality.

These people felt they could pass laws that would limit banks and limit ill begotten profits all in the name of “the common man”.

Now we see the fruits of their labor.

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Posted in Economics, Politics: National

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Too Big To Fail

Posted on June 12, 2011 | Leave a comment

HBO has the documentary “Too Big To Fail” playing right now.  Ive watched it twice now and I have some thoughts.

  1. The whole “For profit” meme is prevalent.
  2. There is a massive lack of backdrop regarding market incentives.

First, the show is top notch.  The acting is A grade and the quality of the production is excellent.  This is a great movie.

I’m a big believer in incentives.  People tend to look out for their own self interests.  Always have, always will.  And this isn’t bad – wolves and cows and sparrows and gophers do the same thing.  But we NEED to acknowledge that fact.

“Too Big To Fail” does a remarkable job at showing the thinking going on at the time of the failures.  But I get the feeling that the message is wrong.  That the message is “Greed”.

There is certainly enough to go around.  However, I think the message of intervention and policy is underscored.  Not one time in the show is it mentioned WHY these institutions would make these loans.  For sure, there is talk about Fan and Fred being nationalized….but there isn’t a whiff about the impact they had on the market thinking.

The movie is worth watching.  However, understand, it’s got a Left leaning slant.

And does a good job making that case.

 

 

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Posted in Economics, Economy, Politics: National

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Liberals And Economics

Posted on June 7, 2011 | 4 comments

Don’t mix.

Recently I posted about an Economics Literacy Test.  The Minneapolis Federal Reserve conducted a survey and asked people to answer 13 economic questions.  Those 404 people didn’t do so well.

While I took the test I wondered who would do well and who would do so well.  It occurred to me that some people will do better just because they want the answer to be something other than what it is.  For example, if asked, I suspect a vast majority of Liberals would say that the oil companies make too much profit.  Indeed, the oil companies rank 114 out of 215 industries in profits.  Hardly gouging, huh?

Then I was reminded of a post I blogged here about a year ago.  It described who did well and who did poorly on questions of economics:

Best to worst, with an average number of incorrect responses from 0 to 8:

Very conservative, 1.30

Libertarian, 1.38

Conservative, 1.67

Moderate, 3.67

Liberal, 4.69

Progressive/very liberal, 5.26.

Not so good if you are Liberal.

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Posted in Economics, Education, Politics: National

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Economics Literacy Test

Posted on June 7, 2011 | 2 comments

Mark Perry over at Carpe Diem continues to deliver the goods.  The most recent is his post where he links to an Economics Literacy Test.  This is a test administered in 1998 by the Minneapolis Federal Reserve.  There are 13 questions on the test.  Each question is multiple choice.

I took the test and finished in nearly 5 minutes; maybe a little more.

Take the test.

As an FYI, the average score for the test’s 404 participants was 45%.

I scored 92.3%.  12 out of 13.

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Posted in Economics, Education

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Jobs, Hiring and Uncertainty

Posted on June 3, 2011 | 2 comments

We all know how to mitigate risks.  We do it everyday in our everyday life.

We drive a car to work, or to school or to a bus stop.  Or we walk.  Across a street or next to one.

We swim.

Or buy a gun.

We know, as rational people, what our risks are.  And we are remarkable at acting in such a way, as a group, that our risks are minimized while our rewards are maximized.

We all do this.  All. Of. Us.

So don’t think for a second that business owners don’t do this as well.

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Posted in Economics, Government, Politics: National, Rocket Surgery

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Home Values: Government Regulation Doesn’t Work

Posted on June 1, 2011 | 4 comments

Government has no place in the market.  In so much that the government needs to spend money on things that constitute the proper role of government, there is nothing that the State does that is expressly efficient.

The State is unable to address the needs and/or wants of the populace well enough to signal an efficient use of scare resources; resources that have alternative uses.  The government can, by force of gun or sword, dictate where money is spent, to be sure.  But that government has neither the ability or will to intuit that “will of the people who is the mark of a dynamic market.

What does this mean?

It means the government is incapable of spending your money better than you are.

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Posted in Economics, Government, Idiots on Parade, Lobby/PAC, Politics: National

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