Wednesday, September 28, 2011

Mitt Romney: Forced to flip-flop?

In a 1994 debate with Ted Kennedy, Mitt Romney stated that although he was personally opposed to abortion, he was "committed to the belief that we can believe as we want, but we will not force our beliefs on others on that matter." He also revealed that a close relative of his had died at the age of 21 after a botched illegal abortion.

As recently as 2006, Romney guaranteed by law that Planned Parenthood would appoint a member of the advisory board for Massachusetts' health care system.

Then in 2007, just in time for the Republican primaries, Romney began proclaiming his firm opposition to abortion. This has probably contributed to some people's view of him as a "flip-flopper," a "chameleon," or a "hypocrite." Certainly, however, he is not the first presidential candidate to be tagged with this label.

There are two questions that must be asked here. First, is Romney being completely honest now when he says he is firmly pro-life? I think the answer is no--the timing and suddenness of his change just seems too obvious. (For the record, I support abortion rights in most cases; I am commenting solely on his quick change of position).

Secondly, how much can we blame Romney for his flip-flop? His 1994 stance on abortion is not an extreme position--a clear majority of Americans think that abortion should be legal under at least some circumstances. Furthermore, I think that a fiscally conservative candidate with moderate pro-choice views would have a good chance against Obama in a general election. However, Romney must have realized in 2007 that because of his abortion views, he had almost zero chance of winning the Republican nomination. In order to have a chance at becoming President, he had to flip-flop.

I am in no way trying to argue for or against Mitt Romney as a presidential candidate. All I am saying is that, sadly, pro-choice Republicans or fiscally conservative Democrats or (in the past few elections) anti-war Republicans have almost no chance of becoming President. The current partisan primary system basically guarantees that every nominee will more or less follow the Republican or Democratic party line. If they deviate even a tiny bit, they usually have to pretend like they are more conservative/progressive than they really are in order to win the nomination. This is why so many candidates seem like flip-floppers.

In Year 1 of Obamacare, family insurance premiums rise 9%

Despite the many flaws in our healthcare system, one positive trend in the 2000-2010 decade was that family health insurance premiums increased by smaller and smaller amounts each year, as you can see in the chart on the right. In 2002, premiums rose by an eye-popping 13.3%. By 2010, however, the annual increase in health premiums was down to 2.9%. It seemed that insurers were finally figuring out how to keep costs down. And Obama promised that his new healthcare plan would also help to lower insurance premiums.

Except that in the year after ObamaCare, insurance premiums rose by 9.5%, the highest annual increase since 2004.

Some ObamaCare defenders are blaming "bad forecasts," although it's hard to imagine why the forecasts would be that much worse in 2011 than in 2010. More likely is that Hewitt Associates and the AARP was correct in predicting that ObamaCare would cause substantial premium increases. After all, if Obama's plan did actually lower costs, then why would he need to hand out all those waivers?

Sunday, September 25, 2011

Want to start a business? Sorry, not unless it's OK with your competitors.

In 2009, St. Louis entrepreneur Michael Munie wanted to expand his moving business to operate throughout the state of Missouri, and asked the state for a permit. However, under a 70-year-old law, the Missouri Department of Transportation cannot issue a permit without notifying the existing moving companies and giving them a chance to object. Of course, four of them did object, arguing that a new moving business could result in a "substantial diversion of traffic" from their own businesses. If I'm not mistaken, we used to call that "competition," and it used to be considered a good thing because it brought lower prices and economic opportunity.

After the existing companies submitted their objection, Munie was forced to go to a hearing and prove to a panel of bureaucrats that there is a "public need" for a new moving company. Sadly, I am not making this up. For the Missouri Department of Transportation, competition is apparently a bad thing, and it is only permissible to start a business if there is a "public need" for it.

This is not unique to the moving industry, either. The Florida House of Representatives recently tried to end heavy-handed licensing requirements that made it extremely hard for people to set up shop as interior designers. A fierce battle ensued in the legislature. Licensed interior designers warned lawmakers that ending license requirements for interior designers would result in "88,000 deaths every year" from poor fabric selection. "Do you know the color schemes that affect your salivation, your autonomic nervous system?" inquired one professor.

The state attorney general's office, however, has admitted that unlicensed interior designers pose no actual threat to public safety. Floridians need not worry about fatal color schemes.

With the help of government, Missouri moving companies and Florida interior designers have basically formed cartels, making it next to impossible for new people to enter those fields. Unless government gets out of the way, other cartels will be sure to follow.

Thursday, September 22, 2011

A second Gilded Age?

For those unfamiliar with the Gilded Age, it was an era of government dysfunction that lasted from about 1877 to 1900. The gap between rich and poor was enormous. Partisan gridlock in Congress was the norm. Powerful political organizations got out the vote for their candidate and were rewarded with generous favors once the candidate was elected. Large monopolies or near-monopolies wielded enormous power over the government and were said to have bought certain senators. And corruption and crony capitalism were rampant and bipartisan. In fact, as Pittsburgh Tribune-Review columnist Salena Zito argues, it was very much like the political situation today.

In this 1890's political cartoon, a number of bloated figures--representing the "Iron Trust," "Standard Oil Trust," "Copper Trust," "Steel Trust," and various other monopolies--have taken over the Senate. Today the cartoon is just as true; all that needs to change are the names on the figures' bellies. Instead of the Oil Trust and the Steel Trust, we have Giant Banks, Fannie Mae/Freddie Mac, the Military-Industrial Complex, Public Employee Unions, Giant Hedge Funds, Trial Lawyers, et cetera.

In response to the corrupt excesses of the Gilded Age, a populist movement--the Progressive movement--formed in the 1900's. This movement was the driving force behind several important changes: antitrust legislation, direct election of senators, state-level referendums, and (somewhat unfortunately) the income tax. The people largely blamed local and state-based political machines for the corruption, and thus enacted reforms that strengthened the federal government and made all levels of government more responsive to the people.

Similarly, the Tea Party is a populist response to the partisan bitterness and special-interest power that characterize today's politics. In contrast to the Progressives of the 1900's, the Tea Party blames most political problems on the federal government, and thus their goal is to weaken the federal government and give more power to the states and the people. Even outside of the Tea Party, independents in general are fed up with government (as shown by the record-low approval rating for Congress). In 2006 and 2008, independents angrily threw Republicans out of office. Since 2010, the voters have turned their anger towards the Democrats. One has to wonder how long this political ping-pong will continue before someone finally enacts meaningful reform.

Wednesday, September 21, 2011

Social Security: A Ponzi scheme that must be saved

When Rick Perry referred to Social Security as a "Ponzi scheme," he was right on. As Charles Krauthammer explains in the New York Daily News, in a Ponzi scheme, investors eventually get their money back with interest--but what they get back consists entirely of money put in by later investors. Eventually, the scheme runs out of investors and collapses, and everyone remaining in the system loses everything.

In Social Security, the same thing happens. A 75-year-old beneficiary is not getting her money back--that money went to pay someone who retired years ago. Instead, she is getting the money that is paid into the system by current workers. It works exactly like a Ponzi scheme.

The difference, of course, is that people are required by law to invest in Social Security. Thus it is assured that the system will never completely run out of investors, which is why Social Security has not collapsed. The thing is, even if it never completely runs out of investors, it will still fail if there aren't enough people paying into the system to support the current beneficiaries.

Fixing it, however, is not hard to do according to Krauthammer:

"Three easy steps: Change the cost-of-living measure, means test for richer recipients and, most important, raise the retirement age. The current retirement age is an absurd anachronism. Bismarck arbitrarily chose 70 when he created social insurance in 1889. Clever guy: Life expectancy at the time was under 50.

When Franklin Roosevelt created Social Security, choosing 65 as the eligibility age, life expectancy was 62. Today it is almost 80. FDR wanted to prevent the aged few from suffering destitution in their last remaining years. Social Security was not meant to provide two decades of greens fees for baby boomers.

Of course it's a Ponzi scheme. So what? It's also the most vital, humane and fixable of all social programs."

Wednesday, September 14, 2011

NLRB vs. jobs

In the words of the Chicago Tribune: "You have to wonder about a federal agency that sticks it to an American manufacturer creating thousands of good-paying jobs inside the nation's borders, instead of overseas.

Last week, President Obama gave a long speech about job creation. Boeing, however, has done more than give speeches: it is trying to create thousands of jobs--and not minimum wage jobs, either--by opening a new 787 assembly plant in South Carolina. Those jobs are in some danger, however, because of charges brought by the NLRB under the direction of the very same President Obama. The NLRB's complaint? Boeing is opening its new plant in South Carolina, a right-to-work state, rather than Washington where it has its headquarters. Never mind that no workers in Washington are going to be fired. The NLRB somehow thinks that it can tell companies where to build new plants.According to a poll by the Tarrance Group, 78% of Americans disagree and side with Boeing.

This leads one to wonder how much Obama actually does want to create jobs. If it was a priority of his, then it seems he would at least make sure that no part of the executive branch did anything to hinder job creation. Based on the actions of the NLRB, power, not jobs, seems to be Obama's chief concern. He seems to only be interested in creating jobs if the jobs are somehow under his control.

To stop the NLRB's overreach, Republicans in Congress have introduced legislation that prevents the NLRB from ordering employees to close plants or relocate employment. If that is vetoed or falls in the Senate, they may resort to stall tactics. According to the same Tribune article, Obama's recess appointment of board member Craig Becker runs out Dec. 31. and his departure would leave just two of the board's five seats occupied. So in the absence of any new appointments — which Republicans have vowed to block — the board will fall short of a quorum.

So what we have here is a federal agency trying to blatantly overstep its bounds and destroy thousands of jobs in the middle of a recession. Furthermore, Congress may not be able to stop it without effectively shutting the NLRB down completely, preventing it from performing its legitimate functions of investigating unfair labor practices. What a mess.