The Healthcare Debacle

Truthdig editor Robert Scheer wrote a recent article that provoked a great deal of dialog on the current healthcare "debate." He went on to say that the debate has nothing to do with socialized medicine versus free-market choice. And, unfortunately, he is absolutely correct—but for reasons that may not be apparent initially. Why? Simply, because there is no free-market choice to speak of, as the big health and insurance companies have a monopolistic stranglehold on the marketplace. This is the antithesis of free-market principles. In a genuinely free-market a plethora of competitors would exist competing on quality of service, product offering, and price, instead of the current regulation-oppressed environment where a smaller competitor is prevented from entering the market due to the sheer compliance cost of innumerable rules, regulations and policies that have been largely advanced by the big health and insurance lobby to protect their financial interests under the guise of protecting the consumer.

Consider this question: how did we arrive at this pseudo-monopolistic situation where healthcare costs are spiralling out of control with no competition in the marketplace to bring prices back to sane levels? The answer is through government rules and regulation. All the required certifications, licenses, legal fees, board examinations, government approvals, etc., has made the current system what it is today. Much of this at the behest of the big health and insurance lobby, and the remainder due to the efforts of the often well-intentioned but misguided social welfare bureaucrats who erroneously believe they are performing a public service.

The solution is not more government, but less government. However, it is not enough simply to say: let government not be involved. The government must also undo the horrendous rules and regulations that keeps these monolithic institutions largely shielded from the competitive effects of the free marketplace and allows them to maintain their virtual monopoly status. The government must first undo the damage and protectionism, then they must step out of the way and let a genuinely free-market function. This is the quickest and most effective method of dispersing the big health and insurance monopolies.

Others say that incorporating a single-payer system would remove all unfairness and injustice and provide universal coverage at a price where industry could still make a reasonable profit. However, this shifts and magnifies the costs from direct consumer-level expenditures, to less apparent increases in taxes and almost completely hidden increases in inflation taxes through debt-based printing-press financing, which eventually destroys the middle class. Within a single-payer system how does one prevent healthcare providers from performing unnecessary procedures, treatments, or diagnostics? Just how does one control costs? The answer is: one doesn't. The consumer is not cost-conscious because cost is completely removed from view and from his or her decision-making process. Can there be any level of efficiency in such a system? "There are always government-controlled price-caps," some quip. Which provider would ever charge anything less than the maximum allowed? And is a price-fixed economy really the direction in which we wish to proceed? Have we really learned nothing from the failed economic policies of the former Union of Soviet Socialist Republics? In these questions, the economic absurdity of such a system quickly becomes apparent.

Many liberal-minded individuals seem to think that a genuine free-market approach to healthcare will leave the common people "for the wolves." This common characterization of the big health and insurance organizations may be accurate, but they have been given free reign precisely because of the protectionism they enjoy from government in the form of rules and regulations that prevent others from entering the marketplace. Remove this protectionism, and the wolves will be busy defending themselves from competitors, instead of gorging themselves silly in the hen house.

There are several alternatives that have not been given any attention in the current public debate, as they require greater individual responsibility, and therefore are politically unpopular. Thomas DiLorenzo, Professor of Economics at Loyola University, discusses the "facialistic" climate of the current healthcare debate, and Hans-Hermann Hoppe, Professor Emeritus of Economics at the University of Nevada, provides a thoughtful four-step solution to the healthcare problem. DiLorenzo also discusses Nobel laureate Milton Friedman's analysis of the history of healthcare supply in America in, "Socialized Healthcare vs. the Laws of Economics." Friedman's key conclusion was that, the more money that was spent on government-run healthcare, the less healthcare Americans received. Thomas DiLorenzo eloquently summarizes:

"The more money that has been spent on government-run healthcare, the less healthcare we have gotten. This kind of result is generally true of all government bureaucracies because of the absence of any market feedback mechanism. Since there are no profits in an accounting sense, by definition, in government, there is no mechanism for rewarding good performance and penalizing bad performance. In fact, in all government enterprises, exactly the opposite is true: bad performance (failure to achieve ostensible goals, or satisfy "customers") is typically rewarded with larger budgets. Failure to educate children leads to more money for government schools. Failure to reduce poverty leads to larger budgets for welfare state bureaucracies. This is guaranteed to happen with healthcare socialism as well."

Bringing up Milton Friedman's ideas is always sure to excite widely disparate and passionate responses. One colorful poster retorts: "I'll ask you to indulge me and help me understand why I should not dismiss Milton Friedman as a eunuch engaged in the universal effort of fourth graders to steal each other's lunch money?" The brief yet entertaining 1979 interview of Milton Friedman by Phil Donahue on Socialism vs. Capitalism should give one a cursory idea. The uniquely informative and highly educational unabridged version of this excerpt is also available in several parts.

Many believe that the principles of a free-market system go against humanitarian ideals. But this is simply not the case. Consider, in a free-market system, enterprise would be freer to address the needs of the less privileged, not because they would be directly involved in humanitarian activity (though this possibility is not precluded), but instead through the pursuit of their own self-interest. They would provide products and services to meet the needs of those less fortunate segments of the population. And this is the fundamental point: it’s through the pursuit of self-interest (contrast to selfishness) that we automatically provide for the needs of others. The underlying idea here is that self-interest can produce an orderly society benefiting everyone. Bringing Adam Smith’s ideas to the forefront of discussion, it's as though there were an invisible hand at work. In the words of Milton Friedman discussing Adam Smith’s Invisible Hand (from his 1979 PBS television series, "Free to Choose"):

“It is as though individuals who intended only to pursue their own separate interest were lead by an invisible hand to promote the public welfare which was no part of their intention. Adam Smith was talking about the economic market: about the market in which people buy and sell. He pointed out that in order for a butcher, a baker, or a candlestick maker to make an income, he had to produce something that others wanted to buy. Therefore in the process of promoting his own interests and looking to his own profit, he ended up serving the interests of his customers.”

One famous and commonly used quote to justify welfare state policies comes from John Kenneth Galbraith:

"The modern conservative is engaged in one of man’s oldest exercises in moral philosophy: that is, the search for a superior moral justification for selfishness."

But consider this: is it really “unselfishness” to have one's choice of being altruistic taken away and instead having it forced upon the individual by legislative edict? Who’s really engaged in a superior moral justification for selfishness? The person who wants to leave people free to choose, out of a deep respect for individual choice and liberty—even when they disagree with those choices—or the person who wants to force others to conform to their own views, through rules, regulations, and legislation because they believe they occupy the morally superior higher-ground?

You decide.

"I think there has been one underlying basic fallacy in the whole set of social security and welfare measures. And that is the fallacy that it is feasible and possible to do good with other people's money. That view has two flaws. If I'm going to do good with other people's money, first I have to take it away from them. That means that the welfare state philosophy of doing good with other people's money, at it's very bottom, is a philosophy of violence and coercion. It's against freedom because I have to use force to get the money. In the second place, very few people spend other people's money as carefully as they spend their own." — Milton Friedman

"With respect to the two words "general welfare," I have always regarded them as qualified by the detail of powers connected with them. To take them in a literal and unlimited sense would be a metamorphosis of the Constitution into a character which there is a host of proofs was not contemplated by its creators. If the words obtained so readily a place in the 'Articles of Confederation,' and received so little notice in their admission into the present Constitution, and retained for so long a time a silent place in both, the fairest explanation is, that the words, in the alternative of meaning nothing or meaning everything, had the former meaning taken for granted." — James Madison, Letter to James Robertson, 1831

"Congress has not unlimited powers to provide for the general welfare, but only those specifically enumerated." — Thomas Jefferson, Letter to Albert Gallatin, 1817

"Charity is no part of the legislative duty of the government." — James Madison

"When the people find they can vote themselves money, that will herald the end of the republic." — Benjamin Franklin

"I consider the foundation of the Constitution as laid on this ground that 'all powers not delegated to the United States, by the Constitution, nor prohibited by it to the states, are reserved to the states or to the people.' To take a single step beyond the boundaries thus specially drawn around the powers of Congress, is to take possession of a boundless field of power no longer susceptible of any definition." — Thomas Jefferson, 1791

References:

1. Thomas DiLorenzo, "American Healthcare Facialism"
2. Hans-Hermann Hoppe, "A Four-Step Healthcare Solution"
3. Thomas DiLorenzo, "Socialized Healthcare vs. The Laws of Economics"
4. The Phil Donahue Show with Milton Friedman (1979)
5. Milton Friedman, "Free to Choose" (1979 PBS Series)
6. Adam Smith, "The Wealth of Nations"
7. Ludwig von Mises Institute, "A Free-Market Guide To Healthcare"

Shock Doctrine: Banking Crisis and Fabian Socialism

"Hyman Minsky—an economist largely ignored during his lifetime and now held up as something of a prophet—argued that speculative bubbles, and the financial collapses that follow them, are an inevitable consequence of unregulated capitalism. Minsky, an economics professor at Washington University in St. Louis who died in 1996, warned: “The normal functioning of our economy leads to financial trauma and crises, inflation, currency depreciations, unemployment and poverty in the middle of what could be virtually universal affluence—in short … financially complex capitalism is inherently flawed.” He called for socialized banking and stimulus packages to protect workers." — Chris Hedges, Obama Has Missed His Moment

Hyman Minsky got it part right. Yes, much of the current economic mess is the inevitable consequence of unregulated capitalism in our existing system. But one very important point that escapes the notice of most people is that our existing system is not a free market system. Our current system is a centrally-planned system. Free market systems do not have central planners à la Volcker, Greenspan, and Bernanke. The root of these problems goes deeper than most people are willing to look.

Our existing economic system is fundamentally flawed. How so? It is based on a fiat currency system with no intrinsic value, a currency that is not backed by anything other than public confidence. Thought experiment: what would happen if the U.S. dollar was backed by a commodity such as silver or gold? Would it be possible for the arguably well-intentioned but misguided Federal Reserve/government to print money according to their whims? No. Would it be possible for the Fed/government to set interests rates artificially low, thereby allowing for cheap and widespread credit, in turn facilitating the housing bubble and subsequent collapse? No.

The reason we are in this financial mess is not due solely to deregulation. Yes, there was ill-conceived deregulation that took place, but there were equally terrible regulations enacted. For example, regulatory changes to the Community Reinvestment Act (1999, 2005), enactment of the Financial Services Modernization Act (1999), and amendments to the Federal Deposit Insurance Act (1999). The problem is not deregulation and overly free markets, but misguided regulation. The Fed made artificially cheap credit available, and the government encouraged and even compelled banks to extend that credit to poor-credit borrowers through many of the regulatory changes/additions mentioned above. As a result, housing prices climbed about 50% in 7 years while all the traditional market forces were trying to pull these prices down through higher interest rates. But the Fed prevented this natural correction from happening through their forced low interest rate policy in addition to bad government regulation and de-regulation. Couple this to massive leveraging of these bad debts (20x-30x, up to 100x in some instances), and we have the current economic crisis.

The root of the problem stems from our debt-based fiat currency system. This system facilitates derivatives, leveraging, and fractional reserve banking. In our current debt-based system, the markets need to be very carefully protected from manipulative/interventionist forces (i.e., artificial interest rates), and greedy casino-style banking interests (i.e., derivatives, leveraging, and fractional reserve banking). These are the excesses pandemic in our current debt-based financial system. Hence the need for regulation. But regulation would not be necessary if the financial system was a real asset-based system, as none of these "casino" capitalism activities would be possible.

The truth is that government knuckleheads (Democrats/Republicans--same difference) haven't the slightest clue what they are doing, nor do they appreciate the repercussions their actions will have on the economy. Why do we trust these people with either regulations or de-regulations that moves us towards increased central economic planning and unmitigated disaster?

The solution to all this is not a move towards socialism and increased government regulation as Hyman Minsky would suggest. That's just putting more power in the hands of our short-sighted knuckleheaded government officials. In any case, would you really trust them with even more control and power over our lives? Perhaps, if they were truly enlightened oligarchs. Perhaps, if they were truly operating in our best interests. But that is far from the case, as any 21st century politically disillusioned socio-politico critic would tell you.

No, what we need to do is replace the existing debt-based fiat currency with an asset-based non-fiat currency. Otherwise the problem will simply repeat itself in a more magnified form at some point in the future. Why? Because, as Hyman Minsky (partly) correctly stated, this boom and bust cycle is built into the existing "casino"-style financial system. We must replace this little piece of valueless paper with a currency that has intrinsic value with mandatory full non-fractional reserve banking. A 100% commodity-backed currency using silver or gold. This would prevent governments and banking institutions from printing money when they wanted it, which includes any form of derivative and/or leveraging, and would be the greatest restraint on government spending, borrowing and bank lending, not to mention dramatically curtailing government's imperialistic prerogative. This would be the end of the military-industrial complex, the end of the welfare state, and the dawn of limited government and a genuinely sound financial system.

References:

1. Ludwig von Mises Institute
2. Works of Ludwig von Mises
3. Works of Murray Rothbard
4. Works of Friedrich Hayek
5. Works of Peter Schiff
6. Works of Ron Paul

Beyond Chutzpah: Israel's Crimes Against Gaza

I have several Jewish friends that are insistent on showing me the error of my ways. What error? What ways? Well, my tendency to almost single-mindedly focus on the truth and facts of the recent Israeli aggression against the people of Gaza, for example. They say, "It's the fault of the Palestinians and their incursions into Israeli territory." No. It's the fault of the Israeli and U.S. governments and their myopic, aggressive and reckless policies that are in contravention to international law.

Some basic facts:

1) The Israeli military committed the first act of aggression resulting in a termination of the 4-5 month ceasefire on Nov. 4, 2008, by going into Gaza and killing at least six Palestinian militants. According to the official Israeli website, Hamas then retaliated with missile launches (see Norman Finkelstein's quote below).

2) The Israeli blockade of Gaza is an egregious violation of international law and the Geneva Conventions.

3) The United Nations made a statement that 1.5 million Gaza residents are facing an 'alarming' humanitarian situation.

4) Political considerations that Israel will be holding National elections in February. Israel's elections are only a few weeks away, and Likud was leading until the air raids on Gaza began. Kadima and Labour are now up in the polls.

5) Political considerations of Barack Obama taking office in late January, and his plans to press Israel into withdrawing to its pre-1967 borders and sharing Jerusalem.

6) Israel's Gaza offensive is likely to destroy the current Saudi-sponsored peace plan, which had been backed by all members of the Arab League. The plan had called for Israel to withdraw to its 1967 borders and share Jerusalem in exchange for full recognition and normalized relations with the Muslim world. Arab governments will now be unable to sell the deal as they face a storm of criticism from their own people over their powerlessness to help the Palestinians of Gaza.

7) The United Nation's yearly vote on the two-state settlement consistently involves international consensus with Israel and the U.S. against about 160 other countries. This settlement stipulates Israel to return to its pre-1967 borders including the return of Jerusalem.

These are just some of the facts. See Eric Margolis' article for a more detailed analysis, or Norman Finkelstein's many scholarly works for a much more in depth and comprehensive analysis.

Look, I'm willing to accept that even the earth is round, that the earth is not the center of the Universe, or that governments do not always have our best interests at heart—if you can make a compelling case. Gather enough evidence, and I will seriously consider it, and even consider changing my views.

But the facts speak for themselves.

As powerful support for what I'm saying I only need to to offer up the examples of Noam Chomsky, and Norman Finkelstein, both renown Jewish intellectuals who support much dialog directed at condemning Israeli government policy in the Middle East over the last half century. Their Jewishness does not blind them to the facts of the crimes of the Israeli government and many other governments the world over. It is somewhat akin to an American being able to despise the Bush administration and their reckless policies. Or even an American not becoming offended when others attack his government's reckless policies. This has nothing to do with anti-Americanism, and everything to do with anti-Bushitism and anti-Imperialism.

Many attempt to discredit reports from individuals who present the facts, by citing organizations that serve to attack the integrity of these individuals. These organizations typically engage in a disinformation campaign against an individual if that individual in any way portrays Israeli government policy in an unfavorable light. One example is the honestreporting.com website. The Google search on honestreporting.com returns the following banner statement which describes what honestreporting.com is all about:

"HonestReporting: monitoring mideast media anti-Israel bias. HonestReporting: a fast-action website that monitors Mideast media bias and ensures that Israel receives fair worldwide press coverage."

Anti-Israel bias? Fair worldwide press coverage? Translation:

"HonestReporting: censoring mideast media facts that place Israeli government policy in a negative but accurate light. HonestReporting: a fast-action website that censors Mideast media facts and ensures that Israeli government policy receives unfair and biased worldwide press coverage."

Given this, how confident can one be that the site and its content is truly honest and objective? Whenever I see an individual or organization attack another individual in an attempt to demonize them and destroy credibility, I immediately become suspicious of their motives and what they stand to gain or lose. Instead of attacking individuals or demonizing them, why not judge the statements in question on their own merits and factual content? It seems the honest and truthful thing to do.

Afterall, how does attacking or disparaging someone advance truth? It does not. It is a tactic of those who are emotionally identified with a position, and lack the ability to defend their positions honestly and factually in the court of informed public opinion. It is the tactic of those who wish to influence public opinion at all cost in order to advance their own agendas, irrespective of truth, fairness, and justice.

Some additional facts.

It is not the government of Israel that is concerned with providing aid for those suffering in Gaza. The Israeli government is the willful instigator of this aggression no matter how their mighty propaganda machines wish to portray events. It is intelligent, upright, honest, and thoughtful Israeli citizens (and other citizens) who are protesting their own governments policies, and as activists, feel the need to act in the face of so much injustice. Here is an example of Israeli citizens acting to help their Palestinian neighbors.

In this debate between Norman Finkelstein, prominent professor and author of several books on the Israeli-Palestine conflict, and former US ambassador to Israel, Martin Indyk, host Amy Goodman of Democracy Now! asks Norman Finkelstein to respond to the question on why Israel attacked Gaza:

"Well, the record is fairly clear. You can find it on the Israeli website, the Ministry of Foreign Affairs website. Mr. Indyk is correct that Hamas had adhered to the ceasefire from June 17th until November 4th. On November 4th, here Mr. Indyk, I think, goes awry. The record is clear: Israel broke the ceasefire by going into the Gaza and killing six or seven Palestinian militants. At that point—and now I’m quoting the official Israeli website—Hamas retaliated or, in retaliation for the Israeli attack, then launched the missiles.

Now, as to the reason why, the record is fairly clear as well. According to Ha’aretz, Defense Minister Barak began plans for this invasion before the ceasefire even began. In fact, according to yesterday’s Ha’aretz, the plans for the invasion began in March. And the main reasons for the invasion, I think, are twofold. Number one, as Mr. Indyk I think correctly points out, to enhance what Israel calls its deterrence capacity, which in layman’s language basically means Israel’s capacity to terrorize the region into submission. After their defeat in July 2006 in Lebanon, they felt it important to transmit the message that Israel is still a fighting force, still capable of terrorizing those who dare defy its word.

And the second main reason for the attack is because Hamas was signaling that it wanted a diplomatic settlement of the conflict along the June 1967 border. That is to say, Hamas was signaling they had joined the international consensus, they had joined most of the international community, overwhelmingly the international community, in seeking a diplomatic settlement. And at that point, Israel was faced with what Israelis call a Palestinian peace offensive. And in order to defeat the peace offensive, they sought to dismantle Hamas."

Israeli government and Israeli citizens are not synonymous. In fact, I would argue precisely the opposite. Israeli citizens are increasingly realizing themselves to be the victims of their own government's policies. In higher truth, the Palestinian and Israeli peoples are on the same side of this conflict that has been raging for over a half century. They are both led to believe that they are each other's enemies, and that each threatens the existence of the other: enter the fear, carnage, barbarism, and ultimate need for strong central and increasingly totalitarian governments. This thought sends Orwellian shivers down my spine.

For a very comprehensive analysis of all the madness, watch the three part documentary aired some time ago on PBS entitled: "The Power of Nightmares: The Rise of the Politics of Fear (2004)." This single very impartial documentary gets to the root of these issues, and what it is that we really need to be concerned with: the rise of the politics of fear.

Governments the world over are corrupt institutions. They are not representative of their people nor do they serve the interests of their people as many would like to believe. They are oligarchical institutions controlled by a few very powerful individuals. The Israeli government is no exception. The greatest enemy of the people of Israel is their own government. It is largely because of Israeli government, and those in charge of policy decisions in that government, that so much suffering exists today in the Middle East. This does not imply that Arab governments are any better by comparison. They suffer from the same oligarchical organization where their people think they are represented. They are not. They too are controlled through propaganda and misinformation. These are the basic tools of oligarchs everywhere. Until we understand this, there can be no lasting peace.

I often hear arguments moving the dialog away from the real issues, and instead bringing the conversation back to ant-Semitism or a reminder of the atrocities committed under the Nazis as a way to justify any and every Israeli policy. Norman Finkelstein deals with this dishonest tendency in his recent books "Beyond Chutzpah: On the Misuse of Anti-Semitism and the Abuse of History," and "The Holocaust Industry: Reflections on the Exploitation of Jewish Suffering."

Governments cannot be trusted. Indeed, they must be kept on an exceedingly short leash. The founding fathers of the United States knew this, which is why they fashioned a constitutional republic with a very limited form of government. Today, people all over the world have come to fear their increasingly powerful governments. It is not right for people to fear their governments; it is government that ought to fear it's people. And until citizens the world over wrest control of their government from the hands of the oligarchs, the world will not know peace.

"Arabs and Israelis are basically the same. We've been beaten on by the world, and now we are beating on each other. We are a group of countries full of good people who listen to leaders who convince us to do terrible things to each other. The truth is nothing but a cycle of ugliness, and the people who started it all are dead." — Anonymous, Danish Jew who survived WWII


"When the people fear their government, there is tyranny; when the government fears the people, there is liberty." — Thomas Jefferson, U.S. President

References:

1. Eric Margolis, "Israel's 'Fait Accompli' in Gaza"
2. Democracy Now! Debate Between Author Norman Finkelstein and Former Amb. Martin Indyk.
3. Film: "The Power of Nightmares: The Rise of the Politics of Fear (2004)"
4. N. Finkelstein, "Beyond Chutzpah: On the Misuse of Anti-Semitism and the Abuse of History."
5. N. Finkelstein, "The Holocaust Industry: Reflections on the Exploitation of Jewish Suffering."

Other:

6. Collected political works of Noam Chomksy.
7. John Mearsheimer & Stephen Walt, "The Israel Lobby and U.S. Foreign Policy"
8. Jimmy Carter, "Palestine: Peace Not Apartheid"
9. James Petras, "The Power of Israel in the United States"
10. Ilan Pappe, "The Ethnic Cleansing of Palestine"
11. Norman Finkelstein, "Image and Reality of the Israel-Palestine Conflict"
12. Michael Neumann, "The Case Against Israel"
13. Paul Findley, "They Dare to Speak Out: People and Institutions Confront Israel's Lobby"
14. Rashid Khalidi, "The Iron Cage: The Story of the Palestinian Struggle for Statehood"
15. Alexander Cockburn, "The Politics of Anti-Semitisim"
16. Ilan Pappe, "A History of Modern Palestine"