Economic Reality and Government

Carolyn Phippen

“There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.”  Frederic Bastiat

The newly upheld healthcare bill, passed by a president who can’t get anything right and always has someone else to blame for his failures, is supposed to add 30 million Americans (or non-Americans) to the “insured” category while at the same time not hampering accessibility or quality, and decreasing costs.

In fact, just after the Supreme Court ruling declaring the mandate unconstitutional but upholding the ability of the federal government to tax non-participation in the US insurance industry, every interview I heard with a supporter of the bill still claimed that it would save the federal government $100 million, even though every recent indication is to quite the contrary.

China is having some government v. free enterprise conflict of its own.  In order to continue to grow the Chinese economy without causing inflation, which would be devastating to the 150 million Chinese living in poverty, the government has mandated that utility prices remain below market rates.  Of course, we all know that if the government says something must be, then it simply must be.

The result is that private companies in China, refusing to operate at a loss, have been supplying power for fewer hours and have shut down record numbers of power plants for maintenance during the hot summer months.  In some areas, power plants have stopped providing power for days at a time, leaving citizens without air conditioning, refrigeration or running water.

The chairwoman of China Power International has warned that if the government continues to enforce price controls, one-fifth of China’s 436 coal-fired power plants could face bankruptcy.

The fact is, there is a cost for goods and services, and a price below which no one will willingly produce or provide them.  China’s largest electric utility, Huaneng, says that prices charged to customers should have been 13 percent higher last year to remain in line with the increase in coal prices; this year, spot prices for coal are up 20 percent because of various world events.  All the while, the government is mandating almost no increase in the rate that utility providers can charge.

In order to deal with the lack of dependable power, some businesses have their workers come in at night or during odd hours when there are fewer blackouts, some restaurants have resorted to cooking over coals and hauling water by hand from wells.  Additionally, the government has put pressure on the mines to sell coal at below-market rates, causing the best and purest coal to be exported while selling high-sulfer, high-polluting coal to Chinese companies.

At the end of May, at least six cargo ships carrying loads of coal from abroad were affected by deferrals or defaults on contracts by Chinese buyers as those ships remained full and waiting in ports with no one to pay.  Of course, why would they when the government won’t allow utility companies to be adequately reimbursed for providing the electricity generated by that coal to consumers?

The Chinese economy is experiencing rapid deceleration and its potential growth is being hindered by bureaucrats who claim to honestly believe that their issuance of an edict will cause economic forces to fall into line behind their stated desires.

In the US, 83 percent of doctors who responded to a survey performed by a group opposed to Obamacare have considered leaving the medical profession as a result of “current changes in the medical system,” with 65 percent of those individuals pointing to government involvement as the main culprit.

We can look to Massachusetts to see that since the passage of state healthcare reform, there has been basically no difference in the usage of emergency rooms, doctor shortages abound and premiums shot up above the national average within two years and have only recently started growing at a slower rate.

In order to combat a nearly 50 percent cost overrun encountered with the implementation of the law, the state reduced costs by kicking almost 40,000 legal immigrants off of state health coverage and implementing free market principles which grant tiered health care plans to individuals based on, yes, their ability to pay. Free market principles are what finally brought down the rise in the cost of care in Massachusetts.

As for the rest of us, our president promised that with the passage of Obamacare we would see lower premiums, less federal spending and no additional federal debt, no taxes for anyone making under $250,000 a year, the ability to keep any current health plan if one were to so choose and greater access to health coverage.

Too bad saying it just doesn’t make it so.

Leave a Reply

Your email address will not be published. Required fields are marked *