Can China Change? A Lot?

Why China will never be as rich as America

[...] The odds are against China ever becoming a rich nation by U.S., European, or Japanese standards. Since World War II, South Korea is the only large country to get rich for the first time. Once promising up-and-comers like Argentina and Thailand have fallen victim to the "middle-income trap," stuck in an economic halfway house between poverty and first-world wealth. China is a likely addition to that list, according to my AEI colleague Derek Scissors:

It would not be unusual if there were cities in China with income levels similar to, say, France. It would be highly unusual for China as a whole to reach French levels of income. … The single most likely result is that China will share the fate of many other economies and fall far short of being wealthy. [AEI]

That's why the Chinese Professor ad was actually pretty stupid. It imagined an American economy that eventually loses out to China's because Uncle Sam embraces big government. But it is actually China that is increasingly favoring state intervention over market reforms as the path to greater national prosperity. And it isn't working out so well for them. China needs to shrink the state sector if it is to have any chance of generating broad-based wealth. And if a more market-driven capitalism drives a new era of economic growth for China, it also means a China where there is a lot more economic freedom — and probably political freedom, too — than exists today. And that would be a great thing for global prosperity and peace — not something for economic populists to rage against.

To quote Ronald Reagan, "Never say never." If the state sector backs off enough to allow market-driven growth, and that resulted in more political and economic freedom, we could see very big changes in China indeed. Read the whole article for embedded links and more.

     

Dems want to kill consumer-driven health care

The End of HSAs

About the best that can be said about the Senate health-care bill that Harry Reid revealed this week is that it's marginally less destructive than the House monster. By a hair. Its $1.2 trillion cost (more like $2.5 trillion if you discount the accounting gimmicks), multiple and damaging new taxes, and new regulations will make health insurance more expensive for most Americans while reducing the quality of medical care.

We'll dissect the damage in the days to come. But for today let's focus on the damage the bill would do to consumer-driven health plans—the kind that give individuals more control over their health dollars and insurance choices. The 2,074-page bill crushes them with malice-aforethought. [...]

It goes into detail. I have an HSA, and it's wonderful. It allows me to buy insurance with a high deductible. I can then use the HSA to pay for uncovered costs, and to choose the kind of health care I want.

As the article clearly points out, the Democrats want to eliminate our choices, and force us to take what they choose for us, on their terms, not ours. Congress of course, will have their own insurance, and won't be forced to use what they force on us.

It's time for a revolution, time to get rid of the dictators.

     

The Free Market CAN Fix Health Care

Yes, Mr. President: A Free Market Can Fix Health Care

In March 2009, President Barack Obama said, "If there is a way of getting this done where we're driving down costs and people are getting health insurance at an affordable rate, and have choice of doctor, have flexibility in terms of their plans, and we could do that entirely through the market, I'd be happy to do it that way." This paper explains how letting workers control their health care dollars and tearing down regulatory barriers to competition would control costs, expand choice, improve health care quality, and make health coverage more secure.

First, Congress should give Medicare enrollees a voucher and the freedom to choose any health plan on the market. Vouchers would be means-tested, would contain Medicare spending, and are the only way to protect seniors from government rationing.

Second, to give workers control over their health care dollars, Congress should reform the tax treatment of health care with "large" health savings accounts. Large HSAs would reduce the number of uninsured Americans, would free workers to purchase secure health coverage from any source, and would effectively give workers a $9.7 trillion tax cut without increasing the federal budget deficit.

Third, Congress should break up state monopolies on insurance and clinician licensing. Allowing consumers to purchase health insurance licensed by other states could cover one-third of the uninsured without any new taxes or government subsidies.

Finally, Congress should reform Medicaid and the State Children's Health Insurance Program the way it reformed welfare in 1996. Block-granting those programs would reduce the deficit and encourage states to target resources to the truly needy.

The great advantage of a free market is that innovation and more prudent decisionmaking means that fewer patients will fall through the cracks. [...]

Precisely! The current healthcare system is hamstrug with government regulations that prohibit the free market from working. The free market hasn't failed healthcare; it hasn't had a free hand to work.

The part of the article I've quoted here is just the beginning. If you follow the link, there is a PDF file with the entire policy analysis in detail.

All this could be done without creating TRILLIONS of dollars of debt, and without creating new government programs that can't be sustained.
     

The French pay less taxes than we do?

What! Socialist France, less taxes? Take a look:

Is France Doing Better Than The U.S.?

Why does it appear France is bouncing back more quickly from the recession than the United States?

France has long been known for having an economy that suffered from too much government interference, too-high taxes and destructive union activity. Yet it grew 1.4 percent in the second quarter of 2009, while the U.S. economy continued to decline.

The United States and Britain have had the largest "stimulus" programs of the major economies (as measured by increases in government spending and deficits relative to gross domestic product) and yet they are not moving toward recovery as rapidly as most other countries that had far smaller stimulus programs or none.

[...]

... France has sharply reduced its corporate income-tax rate so it is lower than the U.S. rate. France also has been reducing its individual tax rates so that many Frenchmen now pay a lower maximum tax rate than do the taxpayers of New York, California and many other states.

If the tax-rate increases proposed by the Obama administration and the Democrat Congress are passed into law, all upper-income Americans will be paying higher personal tax rates than the wealthy in France.

[See the table in article for a tax and finances comparison]

However - the economic reforms in France have not been sufficient to keep large numbers of wealthy French from moving much of their savings and investment to other countries.

Rather than make their tax laws sufficiently competitive to keep their capital at home, the French have been on a crusade to force other countries to raise their tax rates and engage in widespread tax information sharing.

These bad habits have been picked up by many in the U.S. Congress as it pushes for legislation to discourage the free movement of capital along with the destruction of financial privacy. The result will be slower economic growth throughout the world, less job creation and more economic misery. [...]

As the French make changes in their own economy, perhaps we should emulate their successes, rather than their failures. The article goes on to say that other countries offer more attractive models, but that France is continuing to work on theirs to make it more workable and attractive, thanks to French think-tanks like the Institute for Economic Studies-Europe and other groups too.

There really is a lot be learned here from the French. Is our government paying attention? Or are they too busy maintaining and orchestrating a crisis, as an "opportunity" to further their agenda of expanded government control and interference in our lives?

The energy policies of France, and the protection they afforded France from the effects of the recession, are also worth noting.

     

Health Care: How to do it right

The following article from Shawn Tully at CNNMoney.com, looks at REAL health care reform, by diagnosing the problems correctly, and then removing the obstacles:

Designing the ideal health care system
One Fortune editor explores the ups and down of Obamacare - and poses his own solution.

NEW YORK (Fortune) -- --This is the first installment in a series of health care columns by Fortune editor at large Shawn Tully.

Let's dream for a moment: Imagine that our nation could start with a clean slate and invent the best possible health care system to replace the current wobbly machine -- one that everybody agrees needs fixing.

Let's design a market-based, consumer-driven plan based on the belief that the same free-flowing forces that bring us the world's finest groceries, cars, and private mail delivery can also deliver high-quality health care at bargain prices.

In that world, put simply, the best way to spread coverage to the maximum number of Americans is to make it as affordable as possible, not by disguising the true cost through lavish subsidies, but by allowing the market to bring the benefits of real competition and consumer choice.

That will have two tremendous benefits. First, millions of Americans who lack insurance would buy it for the most basic of reasons -- they can afford it. And second, people who now have coverage would get to keep far more of their future incomes, instead of sacrificing their raises to soaring health care premiums.

So how do we get there?

The solution is to attack both sides of the problem -- inflated demand created by a system that encourages consumers to overuse and waste medical services, and restricted supply that pushes up the prices of those MRI exams, dialysis treatments, and physician visits.

These issues don't exist because the laws of supply and demand won't work in medicine, a misperception that's gained a shocking degree of credence. Once unshackled, they always work. But the market is blocked from working by a web of laws, regulations, and monopolistic restrictions. The solution isn't to add to them, as the Obama plan dictates, but to eliminate as may of these barriers as possible.

Hence, the goal is to put the consumer in charge by freeing Americans to spend their own money on health care, shop for the best prices, and keep what they don't spend. That's the way markets are supposed to behave. [...]

It goes on to show point by point, why this would be far superior to, and much less costly than, the Obama plan. The government does have an important role to play, but it's not the one they are reaching for currently. If they would simply do their part, and not overreach, we would all benefit. Read the whole thing, it's as clear as a bell, your must-read for the day.

There ARE viable alternatives that would work much better and cost much less than what the government is pushing on us. We need a Win/Win situation, not a situation that only benefits government expansion. We need a sustainable system that works efficiently. And we can have that by removing barriers in the current system, and keeping government in it's proper role.

Also see: True Health Care Reform: Reduce the "Wedge"
     

Economic Recovery & the Lessons of History

Jonah Goldberg on The Corner posted the following remark from one of his readers, along with an interesting chart. The chart shows how bold experimentation by the government after the crash of 1929 actually destabilized the stock market, and maintained the financial collapse for years afterward, which became known as the "Great Depression". Are we about to repeat this again?

Bold Experimentation

[...] Free market economics involves the application of immutable laws, and it's those laws that allow us to forecast the effect of current events on various companies and the stocks and bonds they've issued. But investors will only play the game if they believe the rules aren't going to change in the middle. When government begins 'experimenting', it makes it harder for investors to generate a long term forecast. This drives long term investors away from the market, or converts them into short term traders. The result is a massive increase in volatility as investors shorten their investment outlook because they can't predict what's going to happen far enough into the future.

Volatility is an indication of instability. It's not a sign of a healthy economy but of an economy which has lost its way. High volatility isn't what you expect from the worlds largest market, but from the emerging economy of a third world country. As you can see from the attached chart, when Roosevelt began his 'bold persistent experimentation' it drove away long term investors and that caused volatility to dramatically increase. It will almost certainly have the same effect when Obama does it. [...]

(bold emphasis mine) The big question is, what will Obama, and our Democrat controlled government, do? Learn from the mistakes of the past, or repeat them? When I hear some Democrats talking about the economic crisis as an "opportunity" that they must not "squander", I'm not hopeful that they are thinking about stabilizing market volatility. We shall see.


Related Links:

Looking Back Even Further

An Economic 9/11? A Depression? Trends...
     

Financial Crisis: a free-market solution?

Government has a role in "steering" the economy, but when it interferes directly it often causes more problems than it solves. A trillion dollar bailout is wrong in so many ways. So what, if anything, should the government do? Here is some ideas from Edwin Feulner at RealClearPolitics.com:

A Free-Market Fix

[...] Let’s begin by noting that there is a legitimate federal role in extraordinary circumstances. There are things Washington needs to do to keep our economy functioning. For example, it was a smart move for the Federal Reserve to pour $150 billion into the system. The Fed exists, after all, to make sure money keeps moving and credit remains available.

But as lawmakers debate buying up hundreds of billions in assets, they should realize that the government’s aggressive meddling in financial decision-making is what got our economy into this mess in the first place. The long-term answer isn’t more federal control, it’s a return to free-market principles.

One way to do so is to make sure that any bailouts are as limited as possible. If a private firm is so integral to the financial operations of the economy that it requires assistance, so be it. But in that case, the taxpayers’ should be investing as little as possible, and company employees and stockholders should suffer the consequences of their bad investments.

Also, lawmakers should avoid turning the rescue package into a Christmas tree, loaded up with goodies for special interests. One proposal in a Senate bill would require 20 percent of any profitable transaction to be deposited into a special fund that pays for low-income housing. That’s a silly idea that would, in the long run, only serve to make things worse. [...]

(bold emphasis mine) It goes on to demonstrate some "silly ideas" and shenanigans that have gotten us to this point, and allowed this to happen. If the government has a role to play at all, it should be watching out for the interests of taxpayers, not saving corrupt institutions at taxpayers expense.

We keep hearing about the projected costs of a bailout. What about the projected cost of no bailout? How can you make a rational judgement about the answer to the one question without also knowing the answer to the other?

What about a third option; a limited bail-out, that does some damage control, but does not protect the unscrupulous? We have more options than just a choice between a trillion dollar bailout, or nothing.