Socialism for Bankers-- a Libertarian's view

Donald Luskin claims to be a libertarian. However, his own words would indicate something else. In a recent blog post, he rails against both the limitation on pay and bonuses to TARP receiving bank executives and the federal money going to those home owners facing foreclosure. In other words, money going from the Treasury to a stupid home buyer who paid too much for a house is bad policy that rewards people for poor decisions. However, money going from same Treasury to a stupid banker who created the financial tools of our own destruction is money well spent, and we should not limit their pay to something under the millions.

Donald Luskin already has revealed himself to be an idiot when he announced that we were not heading for a recession the day before Lehmen brothers went bankrupt:

"Anyone who says we're in a recession, or heading into one — especially the worst one since the Great Depression — is making up his own private definition of "`recession.'"

The Washington Post, Sept. 14.

Now he exposes himself as bourgeois, elitist, and socialist. Government bailouts are only good for the extremely rich, not anyone else.

Solar stimulation by Obama

Good news on the solar front.

The Obama stimulus package includes some stimulus for the solar photovoltaic industry. It is particularly good to be buying solar photovoltaic in Colorado now. The federal tax credit--which we would have had to wait until 2010 to claim--now can be taken as a grant from the US Treasury. Furthermore, there is language in it that states that there is a 30% grant payable from the Treasury to the Kubec household and that that 30% is based off of the total cost of the system. In Colorado that is huge because we get some subsidies from XCEL and the state.

Here are the basic numbers: The total cost of the system is $23K. XCEL will rebate $4.5 per watt, which works out to $12.7K. So we are under contract to pay our installer $10.3K. Before the stimulus package was signed on Tuesday, we would have been eligible for a 30% federal tax credit, payable in 2010 for 2009 taxes, based on either the $23K or the $10.3K. According to my solar installer, it was the bigger number. However, I was worried that this was not the case. Now, the question is clearly resolved in the language of the new law, and we will get 30% as a grant payable from the US Treasury withing 60 days of installation.

Birthing--where capitalism and healthcare fail

Pure capitalism is most simply described microeconomically as being driven by marginal revenue/cost and macroeconomically as being driven by demand and supply.

If there is a great enough demand for a product or service, generally new providers of that product or service will enter the market. Prices are determined by supply and demand, which has a degree of predictability. Markets operate best with 'perfect' information. There is no such thing in reality, but this phrase generally describes the idea that the more all parties know, the more efficient the market operates, and the better off all parties are. There may be localized and temporal losers. However, as long as free markets are allowed to operate, the losers are not institutionalized and will eventually benefit from the open markets. Also markets in which the participants are allowed to succeed and fail of their own genesis generally will be most efficient, as long as the players have a balance of power amongst themselves and are not impeded.

But medicine provides some challenges. Markets are collapsed. Instead of markets being allowed to operate free of other markets, markets are legislatively chained to other markets, causing huge inefficiencies. If it does not make sense that I would have to buy a tie because and when I am selling a weed-wacker, why does it make sense to have to buy health insurance when I am selling my labor services through taking a job? Further, the health insurance has an incentive not to cover you, but to have you pay as high a premium as is possible. Then you have a medical devices and pharma industry that pays doctors--through golf, trips to vegas, gifts, etc.--to have them proscribe their gear so as a consumer you must buy their gear. You buy and you never know the price. And it is always going to be expensive because the medical devices and pharma industry want you to buy the new expensive shit they just made at considerable expense, even though the old cheap stuff may work as well or better.

As evidence, look at how we, as the US, basically suck medically at our first experience of life: birth.

We are #28 in infant mortality, tied with Poland and Slovakia. However, we spend twice as much on birth as everyone else.

Most bankruptcies in the US are tied to a medical incident. Due to a job change and a change of providers by the job, I have been covered under 3 insurance providers over the last 16 months, and will change at least once--maybe twice--more over the next 4 months.

Bottomline here is that if we are spending twice as much as other countries on birth, but only get half the results, there is something not working with the markets for buying and selling healthcare.

None who really understand what Adam Smith really meant by 'free markets' would argue that our healthcare market is operating efficiently. However, powerful lobbiests representing doctors, insurance companies, and trial lawyers might.