Tag Archives: Free Market

Capitalism – Not Bernie – Reduces Poverty

Global Poverty

With Bernie Sander’s most recent campaign it would be easy to believe that we are poor and getting poorer.  And that the only salvation available to us is to beg government to save us.

Let us never forget – the natural state of man is poverty and the only cure to date, the ONLY condition where the lot of the everyday man has improved, is freer and more open markets:

Despite the recent recession in the West, absolute poverty is continuing to retreat in fast-growing developing countries. The escape from poverty that was once limited to the industrialized countries of the West is also happening in “the rest.”

Unfortunately, many people remain unaware of the dramatic decline in global poverty, let alone the reasons for it.

According to an announcement released this week by the World Bank, “less than 10% of the world’s population will be living in extreme poverty by the end of 2015.”

The bank has “used a new income figure of $1.90 per day to define extreme poverty, up from $1.25. It forecasts that the proportion of the world’s population in this category will fall from 12.8% in 2012 to 9.6%.”

Now, to be sure, 9.6% is still high  – higher than it should/could be.  So whence came you?

Grinding poverty was the norm for most ordinary people throughout human history. As recently as 1980, the World Bank estimated that 50% of the global population lived in absolute poverty.

Even in the most economically advanced parts of the world, life used to be miserable until relatively recently.

At the end of the 18th century, to give one example, France had the fourth highest standard of living of any country in the world, behind the U.S., Great Britain and the Netherlands.

Yet, 10 million of France’s 23 million people relied on some sort of public or private charity to survive, and 3 million were full-time beggars.

All of this occurred, of course, with not a single Commissar in charge of this phenomenal growth.

Cast off the chains of regulation and throw open the doors of the freer market!

Walmart vs FEMA

Market Efficiency

Walmart every time.  Why?  Because, mostly Walmart is about selling things people want more than they are about retain power – which is what FEMA, and every government agency, is about.



“Commerce civilizes us.   It makes us more peaceful.  It makes us want to treat each other better.”


Free Market Face Palm

Face Palm

This has been in my stack for near 2.5 months now.  The good Dr. Greens writes:

Wow.  Really, really good Washington Post story about how there’s a $50 treatment for a serious eye disease that affects the elderly, but doctors regularly choose the $2000 treatment, bill Medicare, and we all pay.  Ugh.

The story goes something like this:

Two equal treatments, one sells for $50 and the other for $2,000.  Docs prescribe the more expensive one because they make more money.

The complaint?

And another great example of why health care is so much more expensive in the US than the rest of the world.  Other countries simply don’t get lobbied into wasting money on Lucentis when Avastin will do the trick nor are their doctors financially rewarded for doing so.

Right – greed.

Wanna know how to fix it?

Expose the patient to the cost of the treatment.

Obamacare – The Benefits

Health Care

This past Friday I posted on the problems that Obamacare is facing:

One of those problems is counter-intuitive.  The ACA is going to  force policies to rise.

These prices are only going to continue to rise as Obama’s target market shuns the the law opting for a fine that might not ever be levied – the young and the healthy are fleeing the scene of the crime.  This results in only the older and the sicker enrolling; the most costly of the people covered.  The only result is a rise in policy costs.

In addition to the costs associated with rising policies, there will be rising costs in other places as well.  However, these costs are GOOD costs:

 “The real big surprise was how much out-of-pocket would be required for our family,” said David Winebrenner, 46, a financial adviser in Lebanon, Ky., whose deductible topped $12,000 for a family of six for a silver plan he was considering. The monthly premium: $1,400.

While the health law makes many preventive services free — such as vaccines, blood pressure screening and mammograms — most medical care is paid out of pocket until the deductible level is reached. Some of the new plans offer limited coverage for certain services before a patient has met the annual deductible. These services can include primary care, some prescription drugs and routine care for common chronic conditions such as high blood pressure and diabetes.

We are never, EVER, going  to control the costs of medical care until we expose such care to the market.  Wanna have people spend less on health care?  Ask them to spend their own money.

“But Pino, if we allow the government to negotiate prices for the goods and services, we’ll SAVE money!”

Exhibition A:

Defense SpendingAnother industry where the government is the only player, and we can’t contain it either.

No, the answer isn’t government control of the health care industry – the answer is the exposure of the health care industry to the free market.  And high deductibles is the very best way to do that.

Medical Doctor Alternatives


I think that one of the reasons our medical care system is so expensive is that the system is not built to match procedure to appropriate expert.

For example, there are very skilled landscapers in this world capable of designing and building stunning works of art in the natural world.  And then there is the need to have your lawn mowed.  Imagine how expensive it would be to obtain a contractor to mow your lawn if you were required to hire that highly skilled, trained and often time licensed landscape designer.

Another example I came across was during a conversation with my mother-in-law.  We were discussing health care and costs and I mentioned that it’s unfortunate that I need to see an MD to have a finger reset, x-rayed and cast when I’m sure it could be done by a PA at most and perhaps a nurse at worst.

[ there may be cases where this is possible – i was using the specific example to make the larger point ]

She objected claiming that if it was her, and had she the insurance that she indeed has, she would insist on not only a doctor but then an orthopedic specialist.

Why the editorial?  I saw this and was confronted that without allowing price to act as a signal, we may not be getting optimal results:

Midwives, nurse practitioners, physician assistants and other non-doctors do as good a job as MDs in the care they deliver — and patients often like them better, a World Health Organization team reported on Thursday.

These non-physicians are especially effective in delivering babies, taking care of people infected with the AIDS virus, and helping people care for chronic diseases such as diabetes and high blood pressure, the team reported in a WHO bulletin.

The findings extend from the poorest nations to the United States and Europe, they said. While some physician groups have resisted wider use of such professionals, they should embrace them because they are often less expensive to deploy and are far more willing to work in rural areas, the WHO experts said.

“There are some obvious advantages in terms of relying on mid-level health workers,” WHO’s Giorgio Cometto told NBC news in a telephone interview.

“They take less time to be trained. Typically, they cost less to remunerate. In some countries they are more likely to be retained in rural areas.”

David Auerbach, a researcher at the Rand Corp., says other studies have shown the same thing. “There’s really not much difference you can find in the quality,” he said.

But we don’t allow the delivery of medical services be exposed to the market.  And so people are not going to shop their needs on said market.  Additionally, we have special interest groups, read AMA, that lobby to create legislation that make it illegal to see anyone BUT a doctor for such commoditized services.


New York Yankees And Free Market


This past Father’s Day I was in Minnesota where I took my 7 year old son to his first major league baseball game.  The Twins got beat by the Tigers but seriously, we could have been “10 run ruled” and I wouldn’t have cared.

It was a magic moment for me – a time in my heart that I’ll be able to revisit for the rest of my days.

However, my son is a Yankee fan – I HATE the Yankees- and it’s been HIS dream to see the Yankees.  Well, now that “the first game” is over, I relented and took him to Yankee Stadium this past Saturday.

Pettitte won, “Enter Sandman” played and Mariano saved.

Of all of it, I have to admit, “Enter Sandman” was moving.  Perhaps the greatest reliever in baseball was coming to go to work.  Pretty cool.

However, the story is about before the game.

Because the Yankees price their fan base out of the stadium, they never sell out.  And because I didn’t know where I wanted to sit, I bought tickets at the game.

We were in the ticket queue when a middle aged guy in his late 50’s approached us and asked if we were going to the game.  When I told him that, indeed, we were, he asked if we wanted to buy two of his 4 season tickets; he and his son were going and they had two extra.  “$125 tickets for $50 each.”


We left the queue and stood in line at the gate.  We chatted.  His wife went to Duke – my son was wearing his Duke blues- and he and his family now lived here in New York.  The day was looking to be wonderful – nice guy, great weather and a Yankee game.

While standing there I reached into my wallet and gave him his hundred bucks.  Within 5 seconds we were surrounded by 3 NTPD officers.

The guy, shocked and stunned, tried to make the case that he didn’t “scalp” the tickets, we bought them for less than half value.  The officer became irritated and reversed the sale, taking the tickets out of my son’s hand and forcing the gentleman to give me back my money.  He further insulted him by making me count it not once, not twice, but three times “directly in front of me”.

I was free to go but the man was to be removed from Yankee stadium, arrested and fined.

God I hate the New York and the Yankees!

Obama’s Legacy

Barack Obama

I think that Harsanyi is on to something here:

One of the most seductive parts of President Barack Obama’s political message (and the message of progressive Democrats in general) is sympathy for the poor and a willingness to talk about the disparities of capitalism — about the rich being too rich and the poor being screwed. In some ways, it’s the predominant message of the Obama era.

Now, if you’re heavily invested in the market, life is peachy. A confounding fact, no doubt, when one considers that nearly every economic indicator known to mankind has been pretty abysmal of late. We are experiencing high unemployment, a shrinking labor force, stagnant gross domestic product growth and rickety consumer confidence. A disconnected market, though, has been on a historic boom. So if we need any more proof that life really isn’t fair, think about this: The rich have the Federal Reserve, and you have Harry Reid.

What does it mean in substance? According to a new Pew Research Center analysis of Census Bureau data, thanks to a robust stock and bond market, coupled with a lousy housing market, the recovery has meant that households with a net worth in the upper 7 percent have seen their net worth rise, on average, by nearly 30 percent in the years after the recession and that everyone else’s net worth has dropped by an average of 4 percent.

The economic gap between whites and minorities is even worse. According to the Urban Institute, whites, on average, have two times the income of blacks and Hispanics and six times the wealth, and that gap is accelerating.

This is going on, if you can imagine, even after a tax hike on the wealthy.

The brutal and bitter reality of liberal policy is that the very people they claim they are helping are getting hammered.  And just as those very folks who are getting screwed by the democrats go to vote, they are going to hear that it’s all because of the republicans.

In all of history, nothing has improved the lot of the ordinary man in the way that a freer and more open market has.  Increased government regulation leads only to the poor remaining poor.

Wherein Obama Discovers The Market


During the healthcare debate, one of the alternatives to a government based solution was one where the market would be more free to act.  Right now, whether through insurance, private or one of the Medi’s, people are really spending someone else’s money.  This leads to two bad results:

  1. Over consumption
  2. No shopping based on price

When I’m the one paying for the services, I’m more careful on the services I buy.  Take my vision [please!  ha] coverage for example.  As I’ve aged I’ve gone through 4 phases of vision:

  1. Needing no glasses
  2. Requiring glasses to read – though my vision remained stable
  3. My vision began to deteriorate requiring new glasses often
  4. Full on transitional glasses that allow for gradient lenses.

In the past, when my vision transitioned from great to merely “kinda bad” I wouldn’t need new glasses every time I had my eyes check; my eyes did not get worse.  But because I had insurance that covered the cost of glasses, I would get a new pair each visit.  One for the bedroom, the home office, the work office and so on.  Today, however, my vision is changing.  Each visit requires a new pair of glasses.  And the cost of the new glasses is significantly more than the cost of those glasses; I am paying the large share now.

The result?  I push my vision purchases out as long as a I can.  I don’t get new glasses each visit – I push my way through older glasses for as long as I can before buying new.

On top of no longer over consuming vision services, I shop on price.  Because I now care how much the glasses cost, I find the best value.  In the past, I couldn’t care less how much the frames cost because I wasn’t paying for them.  To me, convenience mattered and if the office I was at had a product I liked, I bought ’em.

No longer.

Why is this important?  Because the government recently released how much hospitals charge for services:  [Hat tip to Ryan Grace]

For the first time, the federal government will release the prices that hospitals charge for the 100 most common inpatient procedures. Until now, these charges have been closely held by facilities that see a competitive advantage in shielding their fees from competitors. What the numbers reveal is a health-care system with tremendous, seemingly random variation in the costs of services.

In the District, George Washington University’s average bill for a patient on a ventilator was $115,000, while Providence Hospital’s average charge for the same service was just under $53,000. For a lower joint replacement, George Washington University charged almost $69,000 compared with Sibley Memorial Hospital’s average of just under $30,000.

Virginia’s highest average rate for a lower limb replacement was at CJW Medical Center in Richmond, more than $117,000, compared with Winchester Medical Center charging $25,600 per procedure. CJW charged more than $38,000 for esophagitis and gastrointestinal conditions, while Carilion Tazewell Community Hospital averaged $8,100 in those cases.

Now, if we can just get a system that builds in market forces, the price of healthcare will come down without the need of a massive government solution.

Proof The Market Doesn’t Always Work

I may have to reassess my belief in the power of the free market:

LOUISVILLE, Ky. –  The producer of Maker’s Mark bourbon is cutting — likely permanently — the amount of alcohol in each bottle to stretch every drop of the famous Kentucky whiskey. The alcohol volume is being lowered from its historic level of 45 percent to 42 percent — or 90 proof to 84 proof.

The brand known for its square bottles sealed in red wax has struggled to keep up with demand that more than doubled the past seven years. Distribution has been squeezed and the popular premium brand has had to curtail shipments to some overseas markets.

“Over the last 100-plus days, there are many, many instances across lot of different cities where bars, restaurants, package stores have run low, run out,” Rob Samuels, chief operating officer for Maker’s Mark and grandson of the brand’s founder, said Monday.

“Given the surge in demand outstripping supply, what we’ve decided to do very carefully is to slightly reduce the alcohol volume.”

Of course, the other solution would have been to increase the price.

Market Adjustment

What’s the best way to increase English proficiency among a group of people who might otherwise have no need to speak English?

Create a market where English is important:

SAO PAULO –  Prostitutes in one of Brazil’s biggest cities are beginning to sign up for free English classes ahead of this year’s Confederations Cup and the 2014 World Cup.

Cida Vieira, president of the Association of Prostitutes in the city of Belo Horizonte, said Tuesday that 20 have already signed up for the courses and she expects at least 300 of the group’s 4,000 members to follow suit. The association is organizing the classes and seeking volunteer teachers.

When the market identifies a shortage, it will provide the solution.