Another Example Of The FDA Driving Up Drug Prices

Posted by Jason | Posted in Economics, Health Care | Posted on 23-10-2010

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While everyone complains about the rising cost of health care, most Americans look to the government for the solution. It’s sort of like asking your dealer to help you kick your drug habit. All one needs to do is look at the daily examples where the government steps in and distorts the free market. This intervention is what drives up prices, and here is one of the millions of examples of how the government does this.

ViroPharma Inc. said U.S. drug regulators declined to approve an expansion of the company’s manufacturing of the drug Cinryze, which treats a hereditary disease, as the agency asked for more information.

Cinryze was approved by the Food and Drug Administration in 2008 to treat hereditary angioedema, or HAE, a rare genetic disease involving potentially deadly swelling of various parts of the body.

ViroPharma, of Exton, Pa., has sought to more than double the supply of Cinryze. Earlier this year, the company applied for FDA clearance to commercialize Cinryze manufactured using a certain industrial-scale process that’s different from the current process.

ViroPharma had expected to receive FDA approval of the industrial-scale product by the end of this year, helping sales beginning in 2011.

But the company disclosed Friday that the FDA sent a so-called complete response letter, requesting additional details about the technical process and ViroPharma responses to “quality observations” from an FDA inspection.

“The questions raised in this complete response letter are answerable in a timely manner,” ViroPharma Chief Executive Vincent Milano said on a conference call with analysts. ViroPharma plans to schedule a meeting with FDA officials as soon as possible, but Mr. Milano said it was too soon to provide a more specific timeline for next steps.

Mr. Milano said ViroPharma would proceed with plans to begin manufacturing industrial-scale lots “at risk” in the first quarter of 2011, with the hope inventory will be ready for shipment soon after FDA approval.

ViroPharma’s currently approved manufacturing process alone yields up to 60,000 doses of Cinryze annually. The industrial-scale process would add another 100,000 doses.

Cinryze generated sales of about $75 million for the first half of 2010, or about 38% of total company revenue.

via FDA Rejects Expansion Of ViroPharma Drug – WSJ.com.

I would sure hate to be inflicted with this disease, because you just got screwed by the government. The company, in pursuit of more profits, wanted to more than double the supply. In case there are any bureaucrats on here, let’s revisit our trusty Supply and Demand curves again. What happens when supply is increased without the demand curve changing? Prices go down. So with this government action alone, prices will not be driven down, which is what would have been the result of the company’s actions.

No, instead our benevolent dictators decided those inflicted do not need the extra doses at a lower cost. I’m sure they think they have their reasons. After all, this red tape is there to protect us (or strangle us). So, now not only does this extra supply not make it to the market, but ViroPharma has had to have the extra cost of paying off the mafia in hopes of doing business. Sorry, I meant the government, not the mafia. Do you think they are going to just eat that extra cost? Of course not. It’s going to be passed on to the consumer.

This example doesn’t even take into account the original FDA process that drug manufacturers have to go through to bring their drugs to market. If we had no FDA, that supply curve would shift dramatically, lowering prices.

On top of that, who knows how many people are going to die now that the extra supply won’t make it to the market. Oh well. The government has to get its cut. If someone’s got to die, then someone’s got to die.

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Another REASON Bill Maher Is An Idiot, Profits

Posted by Jason | Posted in Economics | Posted on 13-10-2010

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Always wanting to hear the viewpoints of those who disagree with me, I always watch Bill Maher’s show when I get a chance. Typically, I end up asking myself the same question every time, “Why the hell am I even watching this?”  The reason I get so frustrated is Bill Maher states his opinions as if they have only reasoning behind them. You know, Bill Maher, the guy who says people that believe in God are idiots and don’t believe in reason. As most free market advocates would point out, Bill Maher too has a religion. That religion is statism, and it is based on faith, not reason.

Here is an example from this weeks round table discussion, which had a NY Times columnist, Andrew Ross Sorkin, conservative, S.E. Cup, and libertarian, P.J. O’Rourke (Am I using too many commas?) when discussing the Tennessee firemen standing watching a guy’s house burn down.

It’s crazy that we have for-profit healthcare. As crazy as it would be if we had for-profit fire departments or for-profit police departments. I didn’t expect people to take that and go the other way and make the fire departments for-profit. I’m saying none of them should be for-profit. – Bill Maher

I thought this was a t-ball for O’Rourke. Surely an intellectual libertarian like O’Rourke would hit this one out of the park. He’d explain how profits benefit society, they aren’t a bad word, and every government service should work “for-profit”. Not even close. O’Rourke seemed more like he had tourettes, shouting out stupid statements in an attempt to be funny. Unfortunately for him and his fellow libertarians, he wasn’t even funny, as the weird looks by the other panelists pointed out.

So what is it that Bill Maher doesn’t seem to get about profits? I mean, he’s obviously such a logical guy since he’s an atheist. He just goes where logic, proof and reasoning take him. Well, let’s lay out the proof and reasoning. Obviously, Bill Maher won’t be reading my little ole’ blog, so we’ll just do it for grins and giggles.

As I’ve stated in a previous post, the Tennessee fiasco had nothing to do with the free market. It was still government run, and the government could care less about profits. They don’t need no stinkin profits. They got the guns.

Next let’s analyze the common criticism of all lefties, profits. Aaaahhhh, profits! What is it about profits that are so evil, and why do liberals not get that profits are what drive our civilization forward?

Profits are nothing more than what results from trading one item for another freely, where both parties agree that the item they are getting is more profitable to them. For example, if I produce a bag full of apples in my back yard, but I can only eat a quarter of the bag, it would be profitable for me to trade them. Another person may have made flour, but can only eat so much bread. They would find it profitable to trade some flour for my apples. We both then can make apple pies. It was profitable to both of us.

As every economics book will tell you, this is how trade begins, but it gets very difficult to trade when you have to track down people all the time that want apples or flour. Instead, you trade them for money. Money is no different than the other commodity in the previous example, except it is accepted by everyone.  The reason I traded some apples for the flour is I more highly valued the flour than I did the apples. The other side valued the items the opposite way. This does not change when money is introduced. Say I sell my apples for a dollar each. I obviously value that dollar more than my apples. The person buying the apples values the apple more than his dollar. We both profited.

Now that we’ve laid out what profits are, what role do they play in an economy? Profits are what tell entrepreneurs what society wants and needs. They basically tell entrepreneurs, “Hey, we need more resources on this demand, and we are willing to reward you for it.” Let’s say I’m producing my apples and I decide to trade them. It cost’s me 25 cents to produce each apple. When I take it to the market, I find the going price is $1.  Obviously, that is a pretty good margin. Society is telling me that they demand more apples, and they are willing to reward me quite handsomely for it. Now, because I have unlimited wants, what am I going to do with a return like that? I am going to direct my resources at producing more apples. Other competitors will see those profits and start making apples in order to get in on the action. After all, society obviously wants more apples.

What happens next? Eventually more supply is brought on the market, which decreases what society is willing to pay for the apples. Unless something increases demand at the same rate as supply, prices will drop. If the cost to produce the apple remains the same, then the profits will decline as well. What is this decrease in profits telling the producers? It’s telling them that they are approaching the point where they are making enough of what society is demanding in regards to apples at the given price. Eventually, if they don’t change something and prices continue to fall, profits will work their way to zero and then turn into losses. What is the loss telling the producers? It’s telling the producers that the given product is being produced too much at the given price. Society would rather he direct his resources elsewhere to provide them with what they value more than apples.

The entrepreneur then does one of two things. They will either try to lower their costs, which will increase their profits and give them more market share, or they will move into another product or service, where the profits are larger, which tells them people want resources directed there.

If they find a way to lower their costs, say by inventing a machine or improving their production techniques, they will lower the cost of production. This will drive out competitors who aren’t as productive, because they won’t be able to lower prices as low as our innovative entrepreneur without taking losses. They will then leave and go into a more profitable business given their resources. The profits or the lack their of, told this business that society doesn’t want what it’s offering at this price and instead would prefer them to use their resources where they can be more efficient than they were at producing apples. Society is basically saying, “Look if you want us to reward you, you have to produce something else.” Now think about this, and you’ll see how this creates prosperity. One entrepreneur innovates, which allows him to lower price and maintain profits. The other cannot, so slowly the innovators takes more market share. Society still gets the apples they want at the given price, but as the less efficient apple producer moves into producing something else, they are now getting apples plus the new product or service. If price was driven down to 25 cents, which forces one producer to lower production cost and another out of the production of apples, society now is then getting one apple plus 75 cents of another product for the same dollar they originally spent on apples.

Now, if they can’t lower cost, they will not be able to continue producing the same level of apples. This is a good thing. Society is telling them, “We don’t need more apples given the cost to produce them.”  They will instead direct resources to where society wants as our less competitive producer above had to do. They may continue to produce apples but only to the point of it being profitable. Their excess resources will be diverted to a more profitable venture. Society is telling this entrepreneur, “Look, we want apples, but we don’t want all these apples given the cost. Please give us other products.”

I’m getting a little long here, and hopefully not being too confusing, but now ask yourself how does this take place without profits, which means the government takes it over.  The government has no competition to drive down price or encourage innovation. It has nothing to tell it that it is using it’s resources efficiently, or to tell it what society really wants at a given price. This is what leads to the proverbial $600 toilet seat and Big Dig boondoggles.

Now, as one pro-government advocate told me, resources are never really wasted. Really? What does this $600 toilet seat really mean? Remember our example of apples and flour. $600 would constitute $600 worth of production, in our example apples. That $600 of production, what many people are given for their entire week of production (their paycheck), is exchanged for a toilet seat instead of being exchange for $10 worth of production, which is more along the lines of what it should cost. Is this wasteful? Of course. It would be like me trading 600 apples (if apples are $1/each) for a toilet seat that should only cost 10 apples. Instead of being able to buy other products totaling $590 in production, meaning another $590 in production took place, I only got $10 in production.  Does this sound like resources are being put to their best use to increase the amount of production in an economy? It is production that makes prosperity, and it is PROFITS that direct producers to produce what society wants, what society deems best for society, not our corrupt overlords.

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John Lennon debunks Malthus’s centuries-old myth in seconds

Posted by Jason | Posted in Economics, Technology | Posted on 10-10-2010

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Thanks to some great friends on Facebook, I came across this video of John Lennon addressing overpopulation, which was posted as a tribute to Lennon on his 70th birthday on the LewRockwell.com Blog.

What I love is Lennon’s simplicity of explaining this. I don’t know whether he is familiar with the originator of this idea, Thomas Malthus, or not, but he pretty much explained why Malthus and modern day environmental disciples were wrong about over population.

In the late 1700s, Thomas Malthus published Essays on the Principles of Population, in which he argued that population would grow exponentially resulting in food supplies not being able to sustain it. What Malthus and modern day environuts miss is the human minds ability innovate.

When free markets are not hindered by government dictates, the economics of scarcity spurs the entrepreneur to address these concerns with solutions such as better farming techniques in Malthus’s day or living on the moon as Lennon so nonchalantly puts it. With that little quip, Lennon highlights the entire problem with Malthus’s thesis. Technological advances push back the day of Malthus’s catastrophe.

Because current generations cannot anticipate what future innovations will come, it would be completely immoral for them to decide they must do something now in the current generation to prevent population growth of the future.

The whole premise of this catastrophe prescribes government action as the solution, which would be the exact opposite of what you would want. What you would want to avoid this catastrophe is a free market, where capitalistic profits could direct resources to the most pressing needs.

Let’s say we are approaching the the supposed malthusian catastrophe. As this approaches, what would happen? The demand for food or whatever resource we are talking about would steadily out pace supply. What happens when demand rises while supplies decrease or stay the same? Prices climb. Now, there are two things that would cause the price to rise. 1) The amount of production taking place isn’t sufficient. The total cost of production is unchanged, but the amount of production isn’t keeping up with the growing demand. In this case, profits would rise. As profits rise, competitors would enter the food production business, bringing more food to market. The other scenario 2) is that production is taking place at the highest level with the given resources and profits have shrank to the point of leaving only the most efficient producers. Now, this sounds horrible, but what way could an intelligent entrepreneur increase his profits? He could innovate. He could develop a new way of producing food that would lower his cost of production. Keep in mind that some outsider could produce this innovation as well in hopes of reaping profits when he sells his idea to food producers.

So what happens when this new cost lowering innovation is put into place? Profits rise! What happens when profits rise? More product is produced either by the current producer or competitors looking to get in on the action. All result in more food for the masses, pushing Malthus’s catastrophe further out into the future when another free market entrepreneur can save mankind.

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Economic Ignorance At The Health Care Summit

Posted by Jason | Posted in Health Care | Posted on 26-02-2010

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Yesterday, Obama held his health care summit with both parties. While working, I had it playing in the background. Unfortunately, I found my self laughing and yelling at the TV more often than I’d like to admit.

What the summit highlighted to me is the complete ignorance of Obama when it comes to economics. He can bring out his laundry list of sob stories, but it still doesn’t change the fundamental economics that I outlined in a previous post on root causes.

Here is a sample of Obama’s ignorance.

Tom Coburn:

“So when you break down the costs, what we know is 33 percent of the costs in health care shouldn’t be there.

And how do we go about doing that? And what are the components of that cost? And when you look at, when it’s studied, if you look at what Malcolm Sparrow from Harvard says, he says 20 percent of the cost of federal government health care is fraud. That’s his number.

If you look at Thomson Reuters, when they look at all of this, they say at least 15 percent of government-run health care is fraud.

Well, when you look at the total amount of health care that’s government run, you know, you’re talking $150 billion a year.

So tomorrow, if we got together and fixed fraud, we could cut health care 7.5 percent tomorrow for people in this country.”

“So it seems to me if cost is the number one thing that’s keeping people from getting care, then the efforts of us, as we go after cost, ought to be to go to those areas where the cost is wasted.

And there’s a philosophical difference in how we do that. One wants more government-centered approach to that. I would personally prefer a more patient-centered, market-orient approach to that. But nevertheless, there’s where we can come together, just on those two areas, where we could cut costs 15 percent tomorrow. And that’s for everybody in the country.

What would — what would happen to access in this country if tomorrow everybody’s health care costs went down 15 percent? Access would markedly increase.”

Obama:

“So that’s an example of where we agree. We want to eliminate fraud and abuse within the government systems.

Let’s recognize, though, that those savings in the government systems, which will help taxpayers and allow us to do more, doesn’t account for the rising costs in the private marketplace.”

via Sen. Tom Coburn discusses cost containment at the White House health summit – washingtonpost.com.

Can you believe how ignorant Obama is about markets and the economy? I guess based on his performance so far, you are probably can.  Coburn explains that based on the best case numbers 15% of all government spending is waste. The government accounts for 50% of all heath care spending already, so that 15% would count for 7.5% of all health care spending. Obama seems to think that there are two separate and unrelated markets and says that explains rising government costs but not the private sector costs. WHAT? Are you serious Mr. President?

This would be like dividing up a bathtub into half private and half government with the faucet on the governments side. When the tub starts overflowing, Obama would say, “Well the faucet explains why the government side is overflowing, but that doesn’t explain why the private side is as well.”

There is one health care market. It doesn’t matter where the money comes from. If more money is thrown at the same resources, prices go up. What Coburn is saying is you have 15% of all the government’s money as waste thrown into the market which is chasing the same resources as the private sector. That is one of the reasons costs are going up on both sides.

This one statement should highlight why government involvement in anything is a complete disaster. They have absolutely no concept of economics or reality for that matter. Democrats want to legislate based on feelings and wishes. Well, I may wish everyone was a millionaire, but that doesn’t mean it’s good policy. It doesn’t matter how many stories I tell about poor people.

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Meltdown by Thomas E. Woods Jr – The best explanation of our current financial crisis

Posted by Jason | Posted in Economics, Video | Posted on 28-01-2010

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This is from a lecture Tom Woods gave about his book, Meltdown. Tom is an awesome presenter and makes boring topics entertaining. By the end of the lecture, you will understand exactly who caused the mortgage meltdown, the financial crisis and our current recession.

This is a Youtube playlist, so the next part will automatically start. It’s a little over an hour for the full lecture.

httpvp://www.youtube.com/view_play_list?p=CB9B817C147AEC7B

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Captain Capitalism takes on GDP

Posted by Jason | Posted in Economics | Posted on 13-01-2010

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Captain Capitalism has a great post today on the merits of GDP. GDP is just a formula of economic output, but it does not take into account actual prosperity. If a city is destroyed by a tornado and we rebuild the city, GDP will increase. The problem is you are no better off than you were before the tornado even though GDP tells you there has been economic growth. Actually, you are worse off because the resources that went into getting you back to square one would have been used otherwise to increase your standard of living.  If you’ve studied economics, this is known as the broken window fallacy. Stimulus and government programs are nothing but the broken window fallacy on steroids.

Here’s part of the Captains post. I highly recommend reading the entire article. Even the commentors have great comments. Read those too.

In the video I posted below about China essentially building a city that nobody is living in, the reporter kept emphasizing the importance of GDP. That the government wanted to boost “GDP.” However, given this “stimulus” plan of Ordos as well as the “stimulus plan” here in the US to boost GDP, I think it's high time we have a simple economics lesson in GDP.

Understand the goal of economics is NOT to increase GDP, but rather to increase standards of living. We simply USE GDP as a measure of all the goods and services produced within an economy, ASSUMING those goods and services when consumed help increase our standard of living. That by eating the grapes we produce and watching the movies we produce, we get utility from that, enjoyment from it, and therefore we enjoy our lives more, thus increased standards of living.

This is a logical assumption in that typically, TYPICALLY, we produce what we want to consume. We produce things that are only going to benefit us. Nobody produces ebola for consumption on account that why would we? Nobody produces styrafoam dogs. Nor do we make our roads out of cake. It not only would not benefit us, it just plain doesn't make sense.

However, this assumes an INCREDIBLY important assumption about how we go and produce things. We ASSUME that the free market is going to be in charge of what is produced. We assume that a free people, in control of their own money, is going to decide how many Big Macs we should make, how many I-Pods we should produce and how much sushi we should make. But what if this assumption is faulty?

The reason why it is faulty is the progressively less and less money is being spent by the people. A higher and higher percentage of our economy is being spent by the government. Going from essentially 3% of GDP in 1900 to 46% today.

Read the full article at  Captain Capitalism: There is No Merit to GDP Unto Itself.

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Venezuela rationing energy… Go figure

Posted by Jason | Posted in Economics, Government | Posted on 13-01-2010

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Another one bites the dust…..

The Venezuelan government, already facing power and water problems and a shaky economy, is including scheduled power outages nationwide as part of its ongoing electricity rationing efforts, the state-run news agency reported.

Electricity Minister Angel Rodriguez said the latest energy-saving measures are meant to prevent a power collapse that could occur if water levels in the Guri dam system continue to drop, the Bolivarian News Agency reported. Oil-rich Venezuela relies heavily on hydroelectric power, which has been hurt by drought.

Officials with the state electric utilities in Caracas, the capital, and two other western states today announced plans for four-hour outages every other day, the Associated Press reported.

Venezuela started the year with new government restrictions on power consumption, including a limit on the hours commercial centers may use the electricity grid.

via Venezuela expanding electricity rationing to include scheduled power outages nationwide | La Plaza | Los Angeles Times.

Gotta love socialism! Seriously, why did we elected a socialist again? And why do these idiots think we can make socialism work? Oh, that’s right, “Because we are Americans”. Even though we are all humans, the adjective American apparently means we can defy all historical evidence, economic science, and who knows maybe gravity.

This is what happens every time government is the decider of any economic matter. It does not matter what it is. In the US we are only prosperous to the point of which government isn’t involved in the economy. Our prosperity would be so much more if the government wasn’t involved at all, and it’s going to be so much less now that they have involved themselves so much more.

While I don’t have to say this for my regular readers, for all the new folks, the free market always allocates resources to their highest and best use. That is why you do not have shortages in something that your country has in abundance like you do in oil rich Venezuela. Anytime, and I mean anytime without exception, the government changes the way the free market functions, you get resources being allocated in a less useful way. The bottom line is that means the standard of living is decreased. Venezuela is a perfect example of standards of living being decreased by the government’s misallocation of resources. Now something as simple as energy is going to be rationed. If food rationing has started yet, it will be as will many other things. Producing and distributing of goods requires energy, so what do you think is going to happen now that energy is being rationed?

Considering how stupid governments are, I would not be surprised to see Venezuela reallocate resources to energy, and then have an abundance of energy. The only problem is because it will be centrally planned by an idiotic government (and they are all idiotic), they will have over allocated energy resources and some other resource(s) will be under allocated. This is what happens when a few people, far away from the actual transaction decide what transactions should be taking place months if not years in advance. Think about how inefficient that is. The free market on the other hand adjusts resource allocations by the second based on the constant tweaking of millions of individual transactions.

There is no doubt that America will be facing the same issues soon. Our government is centrally planning the cost of money, the housing market, the auto manufacturers, the banking industry, schooling, energy, the food supply, travel, health care and the list goes on and on. Instead of resources being steered by the end consumer and producer, Washington thinks they know who need what and how much of it they need. While we have been the frog in the increasingly hot water for probably the past 100 years, it seems Obama increasing rate of socialization has caused us to realize the waters boiling. Hopefully, we can stop it before we become Venezuela. Hopefully, the people of Venezuela realize their folly and revolt against their dictorial government. It’s their only hope, and not to far it the future it may be our only hope as well.

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Here we go again….Alan S. Blinder: When Greed Is Not Good

Posted by Jason | Posted in Economics | Posted on 12-01-2010

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Alan S. Blinder wrote another half witted op-ed about financial regulation and Wall Street’s return to “greed”. As all half witted intellectuals, he recognizes a symptom, but never questions the source. Here is a paragraph where he talks about Adam Smith.

When economists first heard Gekko’s now-famous dictum, “Greed is good,” they thought it a crude expression of Adam Smith’s “Invisible Hand”—which is one of history’s great ideas. But in Smith’s vision, greed is socially beneficial only when properly harnessed and channeled. The necessary conditions include, among other things: appropriate incentives (for risk taking, etc.), effective competition, safeguards against exploitation of what economists call “asymmetric information” (as when a deceitful seller unloads junk on an unsuspecting buyer), regulators to enforce the rules and keep participants honest, and—when relevant—protection of taxpayers against pilferage or malfeasance by others. When these conditions fail to hold, greed is not good.

via Alan S. Blinder: When Greed Is Not Good – WSJ.com.

Binder says “in Smith’s vision, greed is socially beneficial only when properly harnessed and channeled”, and I’m guessing he thinks the geniuses in Washington should be the ones to do the harnessing and channeling. Is Binder really this ignorant, or is he so trapped in his own reality that he can’t see past his old ideas? By giving Washington the power to “harness and channel” Wall Street, the economy or anything else, you create the source of corruption. Washington has become Wall Street. Look at who occupies the White House staff. This isn’t just Obama. This was Bush as well.

Greed is only harmful to society when the negative results of greed are forced on society instead of the source of the greed. In this case, Wall Street’s greed led to subprime mortgages, but instead of them being harmed by the negative results, they used government force to dish the negative results on the tax payers.

People aren’t typically greedy, despite all the negative comments by the like of Blinder. Something usually entices you into greed. Someone sees the chance of unearned profits, and they get…. well “greedy” for it. In this case, Wall Street got greedy because the Fed was printing “free” money. Who benefits from this money? Well, the banks are the ones who get the money first before it’s devalued. They get to loan it out and make their profit before the damage is done. In their ability to do this, because of the Fed, would they not be making unearned profits? It would be no different than a man giving you $1,000 and saying go ahead lend that out at whatever interest rate you can to make a profit. You pay the man back one percent interest and keep the rest. You really don’t have any risk there. Inflation is typically three to four percent. Hmm, just think how much you can make with no risk if you make even more of these loans. What if you loaned out $1 million? Now you can see where greed comes from.

If we didn’t have the Fed in bed with Wall Street bankers, we wouldn’t have had the easy money that created the last bubble in which Wall Street so enriched themselves. Then when the bubble burst did Wall Street have to take their punishment? Nope. Because of government force and collusion, they were able to force all of America to pay the bill.

What Blinder doesn’t understand is the problem isn’t an unregulated “invisible hand”. The problem is because of government the “invisible hand” now has a gun in it. When there is a gun, this is when “greed is not good”.

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Keynesianism Delivers a Decade of Zero by Ron Paul

Posted by Jason | Posted in Economics | Posted on 05-01-2010

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Here’s a great piece by Ron Paul.

This past week we celebrated the end of what most people agree was a decade best forgotten. New York Times columnist and leading Keynesian economist Paul Krugman called it the Big Zero in a recent column. He wrote that “there was a whole lot of nothing going on in measures of economic progress or success” which is true. However, Krugman continues to misleadingly blame the free market and supposed lack of regulation for the economic chaos.

It was encouraging that he admitted that blowing economic bubbles is a mistake, especially considering he himself advocated creating a housing bubble as a way to alleviate the hangover from the dotcom bust. But we can no longer afford to give prominent economists like Krugman a pass when they completely ignore the burden of taxation, monetary policy, and excessive regulation.

After all, Krugman is still scratching his head as to why “no” economists saw the housing bust coming. How in the world did they miss it? Actually many economists saw it coming a mile away, understood it perfectly, and explained it many times. Policy makers would have been wise to heed the warnings of the Austrian economists, and must start listening to their teachings if they want solid progress in the future. If not, the necessary correction is going to take a very long time.

The Austrian free-market economists use common sense principles. You cannot spend your way out of a recession. You cannot regulate the economy into oblivion and expect it to function. You cannot tax people and businesses to the point of near slavery and expect them to keep producing. You cannot create an abundance of money out of thin air without making all that paper worthless. The government cannot make up for rising unemployment by just hiring all the out-of-work people to be bureaucrats or send them unemployment checks forever. You cannot live beyond your means indefinitely. The economy must actually produce something others are willing to buy. Government growth is the opposite of all these things.

In this last paragraph, Ron Paul pretty much captures everything that is wrong with government.

Bureaucrats are loathe to face these unpleasant, but obvious realities. It is much more appealing to wave their magic wand of regulation and public spending and divert blame elsewhere. It is time to be honest about our problems.

The tragic reality is that this fatally flawed, but widely accepted, economic school of thought called Keynesianism has made our country more socialist than capitalist. While the private sector in the last ten years has experienced a roller coaster of booms and busts and ended up, nominally, about where we started in 2000, government has been steadily growing, because Keynesians told politicians they could get away with a tax, spend and inflate policy. They even encouraged it! But we cannot survive much longer if government is our only growth industry.

As for a lack of regulation, the last decade saw the enactment of the Sarbanes-Oxley Act, the largest piece of financial regulatory legislation in years. This act failed to prevent abuses like those perpetrated by Bernie Madoff, and it is widely acknowledged that the new regulations contributed heavily not only to the lack of real growth, but also to many businesses going overseas.

Americans have been working hard, and Krugman rightly points out that they are getting nowhere. Government is expanding steadily and keeping us at less than zero growth when inflation is factored in. Krugman seems pretty disappointed with zero, but if we continue to listen to Keynesians in the next decade instead of those who tell us the truth, zero will start to look pretty good. The end result of destroying the currency is the wiping out of the middle class. Preventing that from happening should be our top economic priority.

via Keynesianism Delivers a Decade of Zero by Ron Paul.

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Senate Passes Health-Care Bill

Posted by Jason | Posted in Health Care | Posted on 24-12-2009

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Merry Christmas America. How do you like being raped and pillaged for Christmas? Our government, once this is signed into law, has cut the final string to it’s founding principle of protecting individual rights. No longer are we individuals. We are now part of the “public”. Anything thing that can be construed as harmful to the “public health” will used against the individual. We are all only one NIH study away from losing any right the government chooses to take away. Guns are first.

The Senate approved sweeping health-overhaul legislation on Thursday, a landmark moment for White House-led efforts to expand insurance coverage to more than 30 million Americans.

via Senate Passes Sweeping Health-Care Bill – WSJ.com.

Just as a reminder this bill does nothing to fix the problems as I explained in my post on root causes.

Might be good to re-read my posts on real free market solutions.

Part 1

Part 2

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