31 July 2012
Two Economies Are The Normal Way We Solve Our Problems
Public vs. private economies is a false dialectic. The public economy in our democracy is only the portion of the people's wealth that we choose to spend as a community for our common welfare; the private economy, as Mr. Henninger (an ageing baby boomer himself) defines it in his WSJ column on 26 July, 2012, is that part of our wealth that we retain as individuals for our personal or our businesses' use.
In some cases, individuals use their personal wealth for the common welfare. In some cases, businesses use their wealth to improve the common welfare, too. But these have proven not to be enough to provide the standard of living that most of us believe we should assure to the least well-off among us.
Everyone agrees that the common defense, roads and bridges, etc. merit the existence of a "public economy" in order to cover those expenses. Most of us also agree that the common welfare should also be provided for by community programs. Mitt Romney comes from a tradition of religious organization for that purpose, as do many of his supporters. Barack Obama and his supporters come from a tradition that uses the government for that purpose.
The public provision of those services is probably more efficient and less controversial than charity from religious or other sectarian organizations. In any case, this is not an issue in this election. The President is not telling us that the private economy must be subordinated to the public one. After all, they both come from the same source of wealth. "You didn't build that" means that the community did it through its chosen instrument--the government.
Our founding fathers believed that government is a community benefit, not an enemy of private enterprise. Responsible citizenship will continue to require devotion of a segment of our resources to our common needs. The growth of the size of that requirement is not the consequence of demanding a larger government; it is the result of our success in extending lifespans as well as of our profligacy in exploiting the earth’s natural resources. Using the government to address the problems that we have caused makes the public economy bigger. Those problems won’t go away by themselves. Finding another solution through private sector programs will indeed reduce the growth of the public economy, but it won’t solve the problems without transforming our system into a more sectarian society than we are accustomed to.
Public vs. private economies is a false dialectic. The public economy in our democracy is only the portion of the people's wealth that we choose to spend as a community for our common welfare; the private economy, as Mr. Henninger (an ageing baby boomer himself) defines it in his WSJ column on 26 July, 2012, is that part of our wealth that we retain as individuals for our personal or our businesses' use.
In some cases, individuals use their personal wealth for the common welfare. In some cases, businesses use their wealth to improve the common welfare, too. But these have proven not to be enough to provide the standard of living that most of us believe we should assure to the least well-off among us.
Everyone agrees that the common defense, roads and bridges, etc. merit the existence of a "public economy" in order to cover those expenses. Most of us also agree that the common welfare should also be provided for by community programs. Mitt Romney comes from a tradition of religious organization for that purpose, as do many of his supporters. Barack Obama and his supporters come from a tradition that uses the government for that purpose.
The public provision of those services is probably more efficient and less controversial than charity from religious or other sectarian organizations. In any case, this is not an issue in this election. The President is not telling us that the private economy must be subordinated to the public one. After all, they both come from the same source of wealth. "You didn't build that" means that the community did it through its chosen instrument--the government.
Our founding fathers believed that government is a community benefit, not an enemy of private enterprise. Responsible citizenship will continue to require devotion of a segment of our resources to our common needs. The growth of the size of that requirement is not the consequence of demanding a larger government; it is the result of our success in extending lifespans as well as of our profligacy in exploiting the earth’s natural resources. Using the government to address the problems that we have caused makes the public economy bigger. Those problems won’t go away by themselves. Finding another solution through private sector programs will indeed reduce the growth of the public economy, but it won’t solve the problems without transforming our system into a more sectarian society than we are accustomed to.
27 July 2012
LIBOR Manipulation?
LIBOR stands for London Interbank Offered Rate. It has always been a negotiated interest rate set by money traders of the largest commercial banks in the world’s most important financial center. Of course this rate, the price of money borrowed and lent among the institutional handlers of most of the world’s cash balances, is manipulated so as to maximize the balance of returns each of those banks earns over time on its most important business—handling the excess cash of its depositors.
It is laughably ironic that politicians who argue all year that the free market better serves our economic welfare than government regulation should investigate “manipulation” of the benchmark LIBOR. What do they expect bankers to do? Bankers will always set a price for their main product that keeps enough customers and still assures a steady and profitable cash flow. This is probably one of the few markets that has traditionally been exempt from anti-trust regulation. Why is that?
One of the things that banking sector cash flow allows is support for politicians who will minimize government regulation. But politicians know that staying in office means convincing voters that they can be tough on fat-cats like bankers. So they resort to making a show of investigating the process of setting LIBOR as if it resulted from a diabolical conspiracy. The bankers play along because they know that those politicians won’t enforce antitrust regulations on bankers for fear of jeopardizing funding for their next political campaigns.
LIBOR stands for London Interbank Offered Rate. It has always been a negotiated interest rate set by money traders of the largest commercial banks in the world’s most important financial center. Of course this rate, the price of money borrowed and lent among the institutional handlers of most of the world’s cash balances, is manipulated so as to maximize the balance of returns each of those banks earns over time on its most important business—handling the excess cash of its depositors.
It is laughably ironic that politicians who argue all year that the free market better serves our economic welfare than government regulation should investigate “manipulation” of the benchmark LIBOR. What do they expect bankers to do? Bankers will always set a price for their main product that keeps enough customers and still assures a steady and profitable cash flow. This is probably one of the few markets that has traditionally been exempt from anti-trust regulation. Why is that?
One of the things that banking sector cash flow allows is support for politicians who will minimize government regulation. But politicians know that staying in office means convincing voters that they can be tough on fat-cats like bankers. So they resort to making a show of investigating the process of setting LIBOR as if it resulted from a diabolical conspiracy. The bankers play along because they know that those politicians won’t enforce antitrust regulations on bankers for fear of jeopardizing funding for their next political campaigns.
25 July 2012
Distinguishing the Obama and Romney Messages
The President of the U.S. provides leadership to the nation; he isn’t elected to perform the nation’s duties alone. Obama’s message is, as it should be, how the public should act in order to maximize the welfare of the nation. Romney understands this, but he criticizes Obama’s vision by saying that business knows better how the public should act than the people do. Liberal critics of Obama do not understand the role of the President. They believe that the government should perform the peoples’ functions instead of themselves.
There are actually three opposing parties in the 2012 election: those like the Republicans and Romney’s supporters who say that what benefits business is best for the country; those like the liberal Democratic establishment who say that the federal government should run the affairs of the country in order to protect the interests of the disadvantaged; and those like Obama (and, as is generally realized, Clinton) who seek to inspire the public to take responsibility for their own fortunes and who believe that the government’s role is to clear the path for individuals to overcome obstructions to their happiness while allowing them to contribute to society’s fairness to everyone else.
The President of the U.S. provides leadership to the nation; he isn’t elected to perform the nation’s duties alone. Obama’s message is, as it should be, how the public should act in order to maximize the welfare of the nation. Romney understands this, but he criticizes Obama’s vision by saying that business knows better how the public should act than the people do. Liberal critics of Obama do not understand the role of the President. They believe that the government should perform the peoples’ functions instead of themselves.
There are actually three opposing parties in the 2012 election: those like the Republicans and Romney’s supporters who say that what benefits business is best for the country; those like the liberal Democratic establishment who say that the federal government should run the affairs of the country in order to protect the interests of the disadvantaged; and those like Obama (and, as is generally realized, Clinton) who seek to inspire the public to take responsibility for their own fortunes and who believe that the government’s role is to clear the path for individuals to overcome obstructions to their happiness while allowing them to contribute to society’s fairness to everyone else.
08 July 2012
Obamacare ‘s Insurance Exchange Logic
There are those like Michael Tanner of the Cato Institute (cf. The New York Post, July 2, 2012) who profess that the provisions of the Affordable Care Act that give the states the option to refuse to set up healthcare insurance exchanges make it likely that Obamacare will result in higher cost healthcare for the country than what we currently have. It is obvious that those provisions were adopted by a Democrat-controlled Congress, however, to concede rights to the states, limiting federal government power unilaterally to impose the exchanges on the healthcare system. This was probably done because no one believed that any state government would refuse to set up an exchange when its result would be to allow the most risky of the potentially insured to obtain affordable coverage—after all, they also vote. Some have called this a form of political blackmail.
Of course, ideologues like Mr. Tanner find it difficult to lend credence to the fact that most people make decisions regarding the expense they incur to take care of their own and their loved-ones’ health on the basis of economic considerations rather than the dictates of dogma. It is perhaps a weakness of liberals to believe that voters will support politicians who act in their rational interest. It may be more realistic to believe that voters will elect politicians who command the financial resources and powers of persuasion needed to convince the public that a free market policy best serves the whole country’s health care needs.
It may require a strong public relations campaign to prevent a collapse of the Obamacare program for the lack of the state-instituted insurance exchanges that will allow the federal government to subsidize insurance rates and make them that truly affordable for everyone. Those subsidies will ideally be financed by cuts elsewhere in the federal budget in order to reduce its fiscal deficit. The growth of healthcare costs, too, will have to be brought under control. It’s a tough challenge—nobody seems at first to win--that is, except the taxpayer.
What’s more important? Is it the supposed military strength and strategic political position of the country internationally, or the health and welfare of its aging population? Is it the freedom of individuals to make choices permitted by their disparate abilities to earn an income or the fulfillment by members of a community of their collective responsibility for the general welfare? Are these goals mutually exclusive? It’s not a black and white, Manichean question; it’s only a matter of degree.
There are those like Michael Tanner of the Cato Institute (cf. The New York Post, July 2, 2012) who profess that the provisions of the Affordable Care Act that give the states the option to refuse to set up healthcare insurance exchanges make it likely that Obamacare will result in higher cost healthcare for the country than what we currently have. It is obvious that those provisions were adopted by a Democrat-controlled Congress, however, to concede rights to the states, limiting federal government power unilaterally to impose the exchanges on the healthcare system. This was probably done because no one believed that any state government would refuse to set up an exchange when its result would be to allow the most risky of the potentially insured to obtain affordable coverage—after all, they also vote. Some have called this a form of political blackmail.
Of course, ideologues like Mr. Tanner find it difficult to lend credence to the fact that most people make decisions regarding the expense they incur to take care of their own and their loved-ones’ health on the basis of economic considerations rather than the dictates of dogma. It is perhaps a weakness of liberals to believe that voters will support politicians who act in their rational interest. It may be more realistic to believe that voters will elect politicians who command the financial resources and powers of persuasion needed to convince the public that a free market policy best serves the whole country’s health care needs.
It may require a strong public relations campaign to prevent a collapse of the Obamacare program for the lack of the state-instituted insurance exchanges that will allow the federal government to subsidize insurance rates and make them that truly affordable for everyone. Those subsidies will ideally be financed by cuts elsewhere in the federal budget in order to reduce its fiscal deficit. The growth of healthcare costs, too, will have to be brought under control. It’s a tough challenge—nobody seems at first to win--that is, except the taxpayer.
What’s more important? Is it the supposed military strength and strategic political position of the country internationally, or the health and welfare of its aging population? Is it the freedom of individuals to make choices permitted by their disparate abilities to earn an income or the fulfillment by members of a community of their collective responsibility for the general welfare? Are these goals mutually exclusive? It’s not a black and white, Manichean question; it’s only a matter of degree.
