Category Archives: Current Events

by | July 23, 2009 · 6:42 am

The One Minute Case Against Healthcare Reform

What does the government mean by healthcare reform?

When the Obama administration talks about healthcare reform what they are really talking about is using the coercive power of the government 1) to force healthcare providers to provide services at lower costs 2) to force individuals to choose the least expensive healthcare and 3) to force people who are not receiving those services (aka taxpayers) to pay for them.

Does everyone have a right to healthcare?

Not in the colloquial sense. Everyone does have a right to healthcare, but not in the sense that the administration uses it. The right to healthcare means that man had the right to take the actions necessary (e.g. working) in order to earn money and spend that money as he sees fit – in this case, on his healthcare. It does NOT mean that other people (or the government) must provide him with healthcare.
Thus, we see that the administrations proposed actions will secure the supposed “right” of everyone to have healthcare paid for by other people by undermining the actual, moral, right of individuals to choose, and pay for, their own healthcare goods/services.
“The end does not justify the means. No one’s “rights” can be secured by the violation of the rights of others.”
“The Cashing-In: The Student Rebellion” Capitalism: The Unknown Ideal, 256.

Should the government use force against its own citizens?

No. The purpose of the government is to protect the private property of its citizens against other citizens (the police) and against foreigners (the army). Any further expansion of the governments power beyond this mandate is not only immoral, but unconstitutional. The simple fact that some group of people chosen by the government (in this case, those without healthcare) would benefit from the governments use of force does not create a moral right to use force. This precept is DeToqueville’s “Tyranny of the Majority” in a practical sense, and is exactly what the Founding Fathers intended to protect us against by founding the USA as a republic backed by a bill of rights, instead of as a direct democracy.

Why is the government’s initiation of force immoral, if the goal is to benefit the “public good”?

“Just as no individual has the right to initiate force against anyone, neither does any group of men, in any private or public capacity. It is immoral to initiate force against any individual for any reason. This includes the initiation of force for “the public good.” The “public” is merely a collection of individuals, each possessing the same rights, and each being an end in himself. Any attempt to benefit the “public good” is an immoral attempt to provide a benefit to one group of individuals at the expense of another. In a free society, no individual benefits at the expense of another: men exchange the values they create in voluntary trade to mutual gain. The rule of law in a free society has just one purpose: to protect the rights of the individual.”
The One Minute Case for Capitalism: HeroicLife

Regardless, can the government lower prices of healthcare services?

Prices are determined by the marginal value of a good/service, not a government edict. If the government forces providers to set the price of a good/service below its cost, providers will no longer provide the good/service. If the government forces providers to lower prices, but not to lower them below cost, the government will be redistributing the profits of the HC provider to the HC consumer – thereby starving the R&D engine of modern medicine of its much needed fuel, capital.

Well then, how can the prices of healthcare be lowered?

The price of HC, like any other good/service, can only be lowered through increased productivity and innovation. Productivity in the production of healthcare goods comes directly from the concerted rational effort of those companies who stand to profit from that productivity – big pharma, providers, payers, etc. Stripping away the reward for their productive achievements – profit – severely dampers the incentives for the companies who provide HC goods/services to continue improving productivity and driving innovation. Thus, the only way to properly incentivize lower HC costs is by allowing entrepreneurs and businessmen alike the freedom to fully profit from the risky investments they make in healthcare innovation and productivity improvements.

What will be the direct results of the governments actions?

First, on taxation. The increased taxes proposed to finance healthcare reform, especially those on the rich (who create most of the value in the USA) will serve to disincentivize productivity and innovation.
Second, on providing healthcare. The proximate result of the governments proposal will be rationing, in its purest sense put forward by Ayn Rand in a letter to a friend “[Rationing means] to distribute [goods and services] in a certain particular manner–by the decision of an absolute authority, with the recipients having no choice about what they receive.”
Rationing, it must be made clear, is not the same as the distribution mechanism that occurs in a free market – where the price of a good determines how it is distributed – primarily because in a free market distribution decisions are made by individuals volitional choices, whereas in a rationed market distribution decisions are made by government edict. The government’s actions, in this case, will effectively eliminate some (if not all) of the choices you have in determining the way in which you receive healthcare.

What, then are the real drivers of our health care problems?

Primarily, that no free market currently exists in healthcare. Massive amounts of regulation by the FDA and other government bodies result in dramatic increases in the cost of medicine. Using Big Pharma as an example, the government has two quantifiable impacts. Directly, the cost of developing a drug in compliance with FDA processes costs roughly ~$1 billion per drug, money that would otherwise be used to fund further innovation or be passed on to consumers in the form of lower prices. Indirectly, the extended time it takes for the FDA approval process (roughly 10 years from patent application to market introduction) cuts the effective life of a pharmaceutical patent in half – stripping the PharmaCo of half of its potential profitability. (Barrons, June 2, 2003 Editorial Commentary: Gary Hull: Patent Piracy.)

Further reading

 

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by | March 13, 2009 · 6:11 pm

The One Minute Case for Bankruptcy

What is bankruptcy?

Bankruptcy is a financial state that occurs when a person or business can no longer repay its debts. In the legal sense, bankruptcy begins when a court recognizes that the financial state of bankruptcy exists. The bankruptcy court takes charge of the bankrupt entity and disposes of its assets or reorganizes it to pay off as much of the debts as possible.

A bankruptcy proceeding recovers money for the creditor, but both parties benefit.

The purpose of a bankruptcy proceeding is to facilitate the maximum recovery of the money owed to the creditor. But it also benefits the debtor. After the debtor pays off what he can, his remaining debt is extinguished. This is not a “get of jail free” card; the debtor, whether a person or business, must face the damage to its reputation and a greater difficulty in obtaining credit for a long time into the future. Rather, it is an acknowledgement that the debtor simply cannot repay his debt. For both parties, bankruptcy offers timely resolution to an otherwise unsolvable dilemma. The creditor regains a portion of the money owed, and the debtor, relieved from the burden of a debt he cannot pay, can move on with his life.

Bankruptcy is economically valuable.

In economic terms, a speedy and fair process of bankruptcy allows both assets and people to resume being productive as quickly as possible. The creditor regains cash that it can redeploy as it sees fit. If it is a bank, it has regained funds that it can loan out again to more productive businesses or creditworthy individuals. The creditor can also redeploy the assets of the bankrupt entity into the hands of a more capable manager.

Take the financial malaise of General Motors as an example. Although effectively bankrupt, there has been no legal recognition of this fact (as of this writing in March 2009). As a result, its factories and workers continue to be tied up inefficiently making mediocre cars. General Motors is a drag on the American economy.

Bankruptcy would free General Motors’ factories and employees to be more productive. Once a court legally acknowledges General Motors’ bankruptcy, it could allow General Motors’ new owners, its creditors, to appoint a more competent manager. Or the creditors could sell the plants to a superior car manufacturer, such as Toyota. Either way, after reorganization under bankruptcy, the plants would be used to make cheaper, more attractive cars that customers want to buy.

The creditors may also choose to shut down some or all of the plants and sell them for scrap. But recycling the old plants into new steel that becomes the girders of modern, efficient factories is a better use for those plants if they are obsolete. No party is in a better position to make these judgments than General Motors’ creditors, who have their financial self-interest at stake.

While General Motors is just a single, albeit enormous, example, speedy and fair bankruptcies end the bleeding of money-losing operations across the economy, and re-direct inefficiently utilized assets and capital to more productive activities. In sum, bankruptcy facilitates economic recovery. A failure to permit bankruptcy prolongs stagnation.

Some fallacies about bankruptcy

Bankruptcy always means shutting down a business. This is not true. Creditors, in consultation with the bankruptcy court, decide whether to shut down and liquidate, or to operate under new management. Creditors have every incentive to make the decision that maximizes their pay-out over time, not just the amount of cash that can be had right now.

Bankruptcy is bad for employees. Considered in full context, bankruptcy is good for employees. An economy with speedy and fair bankruptcy procedures is one where healthy, growing companies predominate. Healthy companies can pay employees more because their labor is worth more to them. Therefore, employees benefit from bankruptcy, even if someone occasionally faces dislocation or the uncertainty of working for new management. But, even if employees dislike such occasional dislocation, there is no alternative to bankruptcy if their employer is not financially viable.

Bankruptcy allows deadbeats to avoid meeting honest obligations. When bankruptcy laws are properly drafted and applied, this is the exception rather than the rule. Bankruptcy laws are designed to protect the rights of all parties, not to unfairly favor debtor or creditor. Bankruptcy acknowledges a fact, that the debtor cannot repay all his debts, and it facilitates the repayment of all debts that can be repaid.

Government should stop bankruptcies. During financial panics, governments sometimes try to prevent bankruptcies by putting moratoriums on them, subsidizing bankrupt entities, or changing the laws governing bankruptcy to favor debtors. Such interventions are both unjust and impractical. They are unjust because they deny the legitimate right of the creditors to collect what they are owed. The money they are owed is their property, and they have the right to collect it, to the extent it is reasonably possible. Such interventions are unjust and impractical because they attempt to deny reality. “Stiffing” the creditors or forcing innocent third parties to bail out the bankrupt entity through subsidies does not change the fact that the bankrupt entity cannot repay its debts.

Bankruptcy is moral.

Bankruptcy is just, if resolved through a fair and speedy judicial process. A bankruptcy proceeding acknowledges the actual state of affairs that exists, that the bankrupt entity cannot repay its debts. It resolves this dilemma for the maximum benefit of the creditor, but in so doing allows both parties – debtors and creditors – to resolve this matter with finality, and move on with their lives. Bankruptcy only involves the parties to the debt obligation. It does not require that innocent, third parties be forced to subsidize or bail out creditors or debtors. In doing so, it respects the rights of all concerned.

A just process of bankruptcy is also economically practical. Bankruptcy removes assets from those who have mismanaged them, and puts them into the hands of those who are most capable of putting them to productive and financially responsible use.  The institution of bankruptcy is an essential part of a prosperous and just capitalist society.

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by | June 4, 2007 · 12:30 pm

The One Minute Case Against Iran’s “Right” to Uranium Enrichment Technology

Iran is the global leader of Islamic Totalitarianism

During the Iranian Revolution in 1979 a group of militant university students stormed a United States embassy, taking 52 United States citizens hostage for 444 days. These students were not a violent, autonomous faction but a group that received the whole-hearted support of the post-revolution Islamic regime of Ayatollah Khomeini.

Ever since, Iran’s financial, ideological and political sanctions of terrorism have been numerous. Iran supports Hezbollah who, amongst many other attacks, have been responsible for the bombing of the U. S. Marine Corps barracks in Beirut in October 1983, the detonating of the Khobar Towers apartment complex in Saudia Arabia and the 1994 blasting of a seven-story building in Buenos Aires.1 Furthermore, Iran offers passionate ideological, political and in many cases economic support of both Hamas and Islamic Jihad, two Islamic militant organizations whose stated goal is the destruction of Israel.

Does the current Iranian President distance his administration from this recent history of fanatical bloodshed? Quite the opposite; President Ahmadinejad proudly identifies himself as a child of the (Iranian) revolution and has publicly rejoiced “God willing, with the force of God behind it, we shall soon experience a world without the United States and Zionism.” 2 Moreover, the Islamic Revolutionary Guard Corps (IRGC), the largest branch of the Iranian military, has been providing deadly weapons to radical Shiite insurgents in Iraq. 3

Iran’s motives are not peaceful

After taking office, President Ahmadinejad immediately transferred Iran’s nuclear program under military control and his administration has continued the clandestine relocation of nuclear technologies to fortified underground complexes. Furthermore, there are numerous, recently unearthed top-secret nuclear weapons components in Iran that are all simultaneously progressing. This includes a beryllium program, a metal commonly used in missiles and other aerospace products, an acquiring of a series of hot isostatic presses, which are commonly used to shape atomic weapons and a CMC production program, a graphite material commonly used in heat shields for nuclear weapons. 1 In addition, Iran has recently purchased 18 smuggled nuclear-capable cruise missiles on the Ukrainian black market. 4 Lastly, Iran has sought to bolster its defensive capability after agreeing to purchase 29 anti-missile defense systems from Russia. 5

Iran has also uniformly rejected all diplomatic approaches that involved any significant delay in their accelerated pursuit, including proposals to have their uranium enriched in Russia, which would have given the Islamic state access to a nuclear fuel cycle while the Russians would ensure the program is peaceful. 6

Power to weapons is just a matter of enrichment

Low-enriched uranium (LEU) is the fuel that is needed to run nuclear power reactors and high-enriched uranium (HEU) is what is needed for nuclear weapons. It is important to recognize that it takes significantly more resources to enrich uranium to LEU levels than it does to subsequently proceed to enrich uranium to HEU levels. By the time Iran can successfully mass produce LEU, it will have done 80 percent of the work in producing HEU for use in nuclear weapons. 1

Rights are forfeited after threatening to initiate force

A nation who protects, finances or endorses terrorists is a nation that encourages the violation of the inalienable rights of others. Such a nation has absolutely no right to any technology that will enhance its offensive capability.

The evidence that the Iranian Government has no respect for individual rights is undeniable. President Ahmadinejad has issued repeated unabashed threats to eradicate Israel and has insinuated that Iran will take appropriate military action if their pursuit of uranium enrichment technology is blocked. Iranian schoolchildren are taught to chant “Death to America” and are indoctrinated with anti-Western propaganda. Tehran is decorated with murals encouraging the destruction of the United States. Apostates are still threatened with the death penalty from the state.

If the Iranian government wishes to receive the right to uranium enrichment technology, it must issue a total renunciation of Islamic Totalitarianism, including a political condemnation of the activities of Hezbollah, Hamas and Islamic Jihad. In addition, Iran must impose a strict separation of mosque and state and it must embrace a constitution that protects individual rights. Until such overhauls are honestly completed, Iran has no rights to uranium enrichment technology.

References:

  1. The Iran Threat: President Ahmadinejad and the Coming Nuclear Crisis by Alireza Jafarzadeh
  2. Mahmoud Ahmadinejad threatens Israel with destruction. CNN, October 27, 2005
  3. Bush: Iran Involved in Sending Weapons to Iraq. ABC news, February 14, 2007.
  4. Cruise missile row rocks Ukraine. BBC News, March 18, 2005
  5. Russia Fills Iran’s Air Defense Missile Contract. Fox News, January 23, 2007
  6. Iran rejects Russia nuclear plan. BBC News, January 1, 2006

Further Reading:

  • “Iran attack debate raises nuclear prospect” BBC News, April 10, 2006.
  • “No Substitute for Victory”: The Defeat of Islamic Totalitarianism by Dr. John Lewis, The Objective Standard, Volume 1, Number 4.
  • In the Path of God: Islam and Political Power by Daniel Pipes

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