Bernie, the Bad Guy

Bernie bad guy

This gem appeared on my Facebook timeline this morning. It is a testament to the depth of Bernie Sanders’s supporters’ misunderstandings.

The fact that Sanders wants an education, health care, good jobs, and good pay for everyone distinguishes him from virtually no one. Wanting those things does not make him the bad guy. Everyone who does not want those things for everyone is a bad guy.

A problem with the list of wants is that it is too constrained. In addition to the things listed, all good people would want everyone to be happy, in good health, knowledgeable, and wise as well. Good and knowledgeable people know that no government has a magic wand that can wave all of those things into existence. Learned and wise people know that pursuing an impossible dream would be a waste of resources that could have been used to do good. Activist people who do not understand that and people who do understand that but can profit from the fact that most people do not realize that are called “socialists.” Those in the latter group are not only bad, but they are also evil. (Bernie strikes me as smart enough to know that his proposals are not in the best interest of the American people. I cannot tell if he is wise enough to see that the demise of America is not in the best interest of the world.[i] A case can be made that one who seeks power over a people in order to lead those people to their demise exhibits the essence of evil.)

So, Bernie is not a bad buy because he wants the listed things for Americans. He is a bad guy for his (1) self-righteous, and self-serving skills at persuading people to believe (or validating people’s errant beliefs) that socialism is a viable economic system for the U.S. (unlike all the other more socialist countries in the world, the U.S. has no sugar daddy for their daily inventions, defense, funds for pet projects, high-price customers for medical and other research and development companies, and many other goodies upon which it can rely), (2) fanning the self-defeating flames of envy, resentment, and revolution, and (3) providing debilitating false hope to millions of people.


[i]Medicare For All? At What Cost To Us and The Rest Of The World?

About All The Planned Government Spending

AUTHOR’S NOTE:

I hate to be the bearer of this news, but the plan for the federal government to spend more trillions is current and a big deal. Because economics is a primary topic of this blog, I believe that I owe it to my readers to address the issue. The last thing we all need right now is something else to worry about, but the issue is too huge to be ignored. On the other hand, if you cannot handle more bad news right now, my advice is to find something else to read for the time being.

🙛

For many years (1) Republicans have donned somber faces and spoken in ominous tones about the national debt—as they did essentially nothing about it and have routinely voted for things that have exacerbated the problem, and (2) Democrats have scoffed at the national debt as unimportant except when it can be used to justly bash Republicans as hypocrites—as they have continuously proposed and voted on new spending, tax, and other proposals that increase debt and diminish the economy’s ability to produce enough wealth to service the debt.

Prior to the pandemic, the levels of national debt and unfunded liabilities were untenably high,[i] ineluctably growing, and the political will to slow the growth was nonexistent. Given the mal-informed public’s indifference to debt and pleas for more spending, for a politician to actually do anything to slow the growth of spending, much less reduce the country’s spending would have been an act of political suicide.

Worse, even if there had been such a political will, no plausible theory to reduce the debt to a tenable level exists (with the possible exception of a pandemic or other disaster that would wipe out a high percentage of people drawing social security and welfare benefits—which, of course, would be beyond terrible). There are plenty of reasons to believe that moves to reduce the debt would result in destructive civil unrest. Yet, Congress is in the process of passing a spending plan that will vastly increase the debt and the Federal Reserve is printing money with unbridled abandon. Here are a few images from Venezuela showing what the end of the above process looks like.

As a result of the history described above, the country may have already created such a powerful black hole of debt that being sucked into its vortex (i.e., suffering a financial collapse) is unavoidable. The closer mounting debt pushes the country toward the black hole, the more powerful its pull.

In light of the above, one might conclude that bailing out companies, sending checks to individuals, and “printing” money to deal with the current crisis is a mistake. After all, there is no question that each move will take the country closer to the black hole and will fortify the populous’ errant belief that government spending is excellent, unlimited, and harmless—thereby making it even harder to turn back from the brink.

Nevertheless, one would be wrong to conclude that spending and “printing” should not be done.

The country’s chances of avoiding a financial collapse in the (hopefully distant) future were low before the impending spending splurge. However, unless the country’s economy can be revived, its chances of avoiding an economic collapse in the near term are almost certainly zero. The economy weakens with every hour that it remains mostly shut down. The business interruptions have placed many large and most small businesses at or beyond the point of no recovery. Without a significant recovery by most businesses, the economy will surely collapse soon. If desperate people have no hope of receiving cash for an extended period, civil unrest could bring the whole thing to a stop. Keeping enough companies and desperate people afloat will not be possible without federal government action. The planned measures are desperate and unwise in non-desperate situations. Sadly, we are in a desperate situation.

Let’s hope and pray the bitter pill of more spending will allow us to have a chance gain a footing that will enable the country to push the economic collapse well into the future and that the country finds a way to convince a solid majority of voting Americans that socialism is both unsustainable and a huge step in the wrong direction. The alternative is too bleak to discuss.


[i] As I write, the reported national debt is almost $24 Trillion, is growing, and the clamor for more spending may be at an all-time high, not counting the $2 – 3 Trillion additional spending Congress is trying to get passed right now. The government’s commitments to pay money in the future are over five times larger than the reported debt.

Preventing Stock Buy Backs—A Bad Idea

In yesterday’s daily press briefing, Trump said his administration would figure out how to prevent any corporate bailout money being used to buy back stock. The country is facing many problems right now. Spending time and effort in these times on a non-problem is a bad idea.

Companies buy back their stock when they have more cash on hand than they have ideas, skills, or capacities to produce things people need or want. If those companies keep such excess money, the money won’t be used to provide goods or services people want or need. Idle cash helps no one. Money put to productive use helps everyone.

If a company buys back its stock, the stockholders who receive the money will use most or all of the part of the money (leftover after capital gains taxes are paid) to invest in companies that have good ideas as to how to make stuff people need or want.

Consequently, whether or not the bailout money is used to buy stock, that money will be invested in making new or more stuff people want or need. Workers and consumers win no matter which company profitably invests the money. Idle cash in companies with insufficient ideas as to how to deploy it effectively prevents the money from being put to better uses.

The bailouts of corporations will be either a good idea or a bad idea independent of what any individual corporation does with the money.

Another relevant observation is that few companies reject the corporate finance theory of an “optimal debt/equity ratio.” A rule of thumb is: “The optimal D/T ratio varies by industry, but it should not be above a level of 2.0” (i.e., company debt should not exceed twice the value of its stock).

So, almost all companies have debt. Given how much the value of corporate stocks have fallen recently, most companies have an unusually, probably dangerously, high debt ratio (the higher the debt/equity ratio is, the greater the risk of going out of business. Given how much riskier doing business is now than it was two months ago, the best use of some or all of any bailout money could be paying off debt to stay in business (rather than buying back stock or being thrown into bankruptcy).

Concerning companies that do not have too much debt right now, if Trump precludes companies from buying back stock with bailout money, nothing would prevent them from paying off debt.

The worst alternative would be for Trump to disallow the use of bailout money either to buy back stock or to pay off debt. In that case, the funds would be far less likely to be put to productive use.

The idea that the government dictating how companies use their resources will either work or is a good idea is a bad idea.

The fact that leftists are in constant fear that someone somewhere might be making a profit is making the adoption of sound economic policies harder. That the general public thinks it knows more than it does about corporate finance or how a company can increase its chances of continuing to provide jobs and to serve the wants and needs of the people isn’t helping either.

COVID-19 and the Economic Reality of Preparedness

Italy’s universal healthcare system is experiencing the harsh reality of living in a world with scarce resources, as all real worlds are. Italy, like every other country, has a limited number of doctors, nurses, hospital beds, medical devices, medicines, test kits, etc. When the demand for those “scarce resources” exceeds their supply, the resources must be rationed. No matter what rationing scheme is used, some people will get some or all the care they need as others get little or none at all.

As the Boston Globe reported[i] about a Bergamo, Italy hospital’s response to the COVID-19 outbreak, “the intensive care unit was already at capacity, and doctors were being forced to start making difficult triage decisions, admitting people who desperately need mechanical ventilation… making clear that the “first come, first served” criterion that had been used among patients with the same illnesses and level of risk in ordinary times was not appropriate in dealing with the current emergency… How do we decide who gets an ICU bed and who doesn’t? Age? Life expectancy? How many kids they have? Their special abilities? Is the patient’s profession a relevant factor? Is it right to save a middle-aged doctor who will save more lives if he survives as opposed to a younger person who’s been unemployed for the last 12 months?”

When faced with an overabundance of patients and scarce medical resources, no rationing scheme is a solution, i.e., all the available options involve agonizingly terrible tradeoffs. If the severity of America’s (or anywhere else’s) COVID-19 outbreak approaches that of Italy’s, some people will get medical aid while others do not. Equality is not a solution. If available medical care were divided equally among all patients, a higher number of patients would die.

Those who have insufficient knowledge or understanding of economics will fault politicians, hospitals, drug companies, or [you name it] for having failed to ensure that the country was fully prepared for the pandemic. Some of the chronic critics will cluelessly theorize that vastly more resources could and should have been poured into training doctors, inventing and stocking tests kits and antidotes, building enough hospital rooms and medical equipment, etc. to handle the worst-case scenario of any conceivable emergency. In theory, that could have been done. In reality, however, preparing for the worst-case scenario of every possible emergency would be terrible public policy.

First, realize that only a fraction of the foreseeable potential emergencies will strike, and few that do will be as severe as the worst-case scenario. As a result:

  • The amount of money necessary to achieve such preparedness would be colossal;
  • A high percentage of that stuff acquired by the enormous sum will never be used (i.e., a high portion of the investment will have been wasted), e.g., statistically, if the country pays for preparedness for adverse effects that, on average, have a 50/50 chance of happening, half of the money spent on preparedness will have been wasted; [An example.]
  • The money spent on the underutilized or unused preparedness stuff could have been invested in projects that could have done a lot of good, i.e., the opportunity cost of wasting money is large;
  • Having wasted money on unneeded preparedness would leave the country with far less wealth and fewer resources to other pressing human needs and wants that exist or could arise, e.g., every dollar spent on healthcare is a dollar not available to spend on the environment; and
  • Perhaps most importantly, given that not all future emergencies are foreseeable, the country would have wasted wealth that could have otherwise been used for unforeseen emergencies.

Consequently, draining the country of some of its capacity to address specific problems as they arise by paying for tens of thousands of unused hospital rooms and supplies for disasters that may not come for decades, if ever, is a profoundly unwise use of resources.

It is also self-defeating. During the time between a preparedness investment is made and the time that a worst-case emergency happens, only so many doctors are required to cover the normal state of affairs.  With the hyper-preparedness demanded by chronic critics, many more doctors would be trained and added to the system. Those newly trained doctors would vie for the available doctor jobs, i.e., the doctor jobs required to serve non-emergency demand for medical services. As in all supply and demand situations, that excess supply of doctors would drive down doctors’ compensation.[ii] If, due to the overabundance of doctors, doctors pay is less than it currently is, fewer people to be willing to go to the trouble and expense of becoming a doctor. In the long run, training doctors who must sit on their hands until a catastrophe strikes would result in fewer doctors, not more doctors. That’s no solution.

The colossal amount of money necessary to chase the phantom of ultimate preparedness would require much higher taxes. Every tax dollar collected suppresses wealth creation.[iii] Worse, a noticeable fraction of the tax money the government receives is spent on running the government and placating or lining the pockets of politicians, rather than on things people need or want. [Does anyone believe that we are getting our money’s worth out of the dollars paid to or for Congresspeople and their staff?] Running money through the government to address a problem destroys wealth. Less wealth creation means that there will be less wealth to address problems than would otherwise be the case.

The complaints and demands of the clueless chronic critics are unfounded and misguided.


[i]A coronavirus cautionary tale from Italy: Don’t do what we did.”

[ii]Investment Income and Universal Basic Income Are Not ‘Basically The Same’

[iii]/sup>Tax Cuts and Employee Compensation.”

The Right Time to Invest In the Stock Market

AUTHOR’S NOTE: This post about investing is out of the ordinary for this blog. It is prompted by the recent stock market “crash,” and the subsequent volatility. Over many years of observing coworkers and friends in the midst of stock market “crashes,” like the one underway now I’ve witnessed people doing very unwise things. Hopefully, this post will reduce the likelihood that my readers will make those mistakes in the future.

Rely on the following observations and comments at your own risk. I have no formal training in stock trading and have never been a stock analyst. I have, however, read and thought about the buying and selling of publicly traded stocks a great deal over the 50 years since I graduated high school. More important, during my long career and since, I’ve observed co-workers and friends reacting to “crashes” in ways I believe were monumental missteps—with no apparent ability to learn from their prior experiences. I have done reasonably well with my own investments using a different strategy, but that is largely because I have studiously paid little attention to my stock, bond, or money market holdings and have not paid people to guess what securities or when I should buy or sell. [Past performance is not necessarily indicative of future results.] Let’s sort out why paying little attention and not paying people to guess which or when you should buy or sell stocks or bonds can make sense.

🙛

First, the obvious: Saving and investing what the guessers would have charged for making guesses for me, rather than wasting the money on investment analysts, adds up to real money over time. Now let’s move on to sort out the less obvious, but very valuable other reasons not to pay for those “services.”

Consider these headlines about the “crash” that started on February 21, 2020:

The S&P 500 is now 12% below the all-time high it set just a week ago. This is now the stock market’s worst week since October 2008…,” intoned the AP on February 27, 2020. [Yet, the recent low (3167) was 4.7 times higher than the low in 2009 (677), which was 6.3 times higher than the S&P 500 in 1980 (106). See charts below.]

Long-term stock investors still shouldn’t buy the dip, says El-Erian…” That’s economist and investor Mohamed El-Erian updating his previous blanket call to refrain from the previously tried-and-true strategy of reflexively buying stock-market dips.” [Note: The “tried-and-true strategy” is often tried, but not always true. Such is the hallmark of every investing strategy. One should be wary of people who say that their previous “tried-and-true” strategy should not be followed.]

Coronavirus stock market crash may have created a once in a lifetime buying opportunity: strategist.” [“May”? Why can’t they say, “did” or “didn’t”? Note: Using the word “may” is an admission that the author doesn’t know whether the crash created a “lifetime buying opportunity.” The reality is that the author does not know whether or not it even is a buying opportunity, much less a once-in-a-lifetime opportunity.]

The U.S. financial industry employs about 8.5 million people. A goodly percentage of those employees hold themselves out to be (and appear to believe they are) people who can reliably predict whether a publicly traded stock or bond will be worth more or less tomorrow (or next week, quarter, year, or decade) than it is now. The number of analysts that actually have that skill is zero. The fundamental reasons for this fact are (1) not all of the facts that need to be known to accurately predict the future value of any security are knowable, (2) the impact of the unknowable facts can overwhelm the impact of the known facts, and (3) excrement happens.

Evidence of the unpredictability of individual stock and bond prices over time is abundant. In a Forbes-conducted 14 year, 100 round contest between stock “experts” and dart-throwing monkeys, the stock “experts” eked out a statistically insignificant win (51% to 49%) concerning Dow Jones Industrial Averages (“DJIA”) predictions, before brokerage fees and expenses were applied (on average, people lost money paying analysts). On average, stock “experts” won 61% to 49% concerning predictions of individual stocks (before fees, etc.), but from one round to the next, individual “experts” sometimes won and sometimes lost,[i] i.e., their clients got wins and losses over time, which brought their average return closer to 50/50 (which was what the monkeys were achieving). That result is also skewed because some of the “winners” obtained advanced notice of soon to be published articles that artificially and temporarily boosted individual stock results (which cannot be consistently obtained by individual “experts”).[ii] Another indicator is that Morningstar, a “highly respected” mutual fund performance predictor” regularly publishes ratings of mutual funds that, it is reported, that do not correlate with how the rated funds perform.[iii] (My, perhaps faulty, recollection is that, during at least for some periods of time, Schwab’s rating system produced palpably poor results for investors who relied on it.) [I don’t know if Schwab paid Google to bury those stories or my memory is faulty, but I’d bet on my memory on this one because I was delighted at the time to see my theory validated.]

More fundamentally, however, if your stock analyst could predict rises and falls in stocks, your analyst would always advise you to withdraw your investments in stocks and bonds before they fall. Do you know anyone whose stock analyst consistently prevents their clients from ever losing money? I don’t. After crashes, analysts usually say something like, “No one saw that coming!”—as if that is an acceptable excuse for being not giving you the advice you needed, i.e., predicting future stock prices so that you can make money.

The mistake I’ve seen coworkers and friends make is this: They become frightened by sudden drops in the stock market and pull their 401K or other investments out of the market after the drop. Even when the market starts to rise, they remain too scared to put their money back in—lest they are burnt again. Only after an extended period of the market going up, they regain the confidence to put their money back into the market. Of course, at that point, the market has not only recovered all the previous losses it is on its well on its way to the next crash. Worse, when they muster the courage to get back in, they dump all their money back in all at once or over a short period of time. Sadly, that usually coincides with other people gaining similar confidence, i.e., the herd is arbitrarily increasing demand and pushing stock prices higher than is warranted. One would be hard-pressed to identify a worse strategy, but it is as common as it is bad.

Consequently, there is no “right time” to put all your money in the market. Even if there were a right time, there is no way to confidently know when the right time is. That, however, does not mean that people should not put money in the stock market. Quite the contrary. Let’s sort out that apparent contradiction.

The following charts reveal what is as knowable as anything can be known about stock prices.

Markets Hisitory

The charts reveal that, at least in the past, stock prices go up over the long haul. There is no guarantee that the broad markets (e.g., DJIA, S&P 500, and NASDAQ) will continue to go up over the long haul, but the history of the U.S. markets provides reasons to believe they likely will. [With the looming risk Americans might elect more socialistic governments across the country, the likelihood is significantly less than it would otherwise be.

Sidebar: If the trend toward socialism is not turned back, no investment strategy will work and much of your gains, if you get any, will be confiscated anyway. Not investing and making less money between now and then will not save you. They will take from you whatever they determine you don’t need as much as others (especially the politicians and bureaucrats) need it—no matter how much you have.]

The huge short-term swings in the markets shown in the above charts also reveal that there is no way to predict when to invest or when to sell. Nevertheless, they do suggest a strategy (described below) that can work.

Investing in individual stocks is vastly riskier than investing in funds that track broad markets. Individual stock prices are much more volatile than averages of many stocks and the value of market indices going to zero is practically impossible. Which companies might go bankrupt is not easily predicted. Consider these companies that went bankrupt: General Motors, Chrysler, Braniff Airways, Enron, WorldCom, Conseco, Sears, ToysRUs, Kmart, CIT Group, Washington Mutual, Lehman Brothers, Circuit City, Sports Authority, and Kodak. Some of those companies are still in business but, upon bankruptcy, their stock and bondholders were wiped out or nearly so (sometimes unfairly so[iv]). In short, unless you have inside information, are into rolling the dice, or want to support a company for non-financial reasons, investing in individual stocks should be kept to a minimum.

The supposedly “sage” advice is to “diversify your investments.” A truly diversified portfolio of investments is impossible for at least two reason: (1) Many investment opportunities are “private” investments, i.e., not available to the ordinary investors (and even if they were, it is impossible to know enough to invest wisely in a wide array of ventures—so people tend to have too many eggs in any private investment basket, which is the opposite of diversity), and (2) The best mix of each kind of available investments is unknowable and unpredictable as well. For example, how much of your portfolio should be invested in South African Krugerrand coins, Russian icons, or the thousands of other esoteric possibilities? Absent some of each, you are not diversified. Nevertheless, more diversification is better than less. Shooting for (much less paying for) a perfect allocation is a waste of time (or money).

On the other hand, the charts above show that the DJIA, S&P 500, and NASDAQ have had a very good track record of increasing in value over the long haul. That streak might come to an end but predicting what might have a better chance of rising over time is unlikely to succeed and is almost certainly a riskier strategy. To reduce risk more, one would buy shares in multiple EFTs or mutual funds (carefully consider the charges of each to find ones with low fees and charges) for each of the broad market indexes. One would also not put all of her eggs in stock index funds. One would buy some bond indexes as well. (That is currently hard to do given the low yields they now create, but you will be glad you did when the stock market crashes from time to time.) I go even further and keep a very noticeable percentage of money in the even lower-yielding money markets.

What percentage of each kind of investment should you buy? It depends on your appetite for risk. The more money you put in stocks over bonds or bonds over money markets, the more money you will likely make over the long haul (if you live long enough), and the more likely you will have less investments to cash out if you happen to need to draw money out during a crash. Beyond that, there are nearly as many theories on what the mix should be as there are theorists. Rest assured, however, if you ask an investment adviser about investment allocation, she will likely give you the answer that creates the largest fees for her and/or her firm. [I’m not suggesting they are all unethical. Some surely are, but I believe most investment counselors who interface with the public do not know that the advice they have been taught to give is not worth the price charged for the advice or is unwise.]

Lastly, none of the above investing should be done all at once. Steady, consistent investing over time will result in you having bought stocks and bonds in up markets and down markets, i.e., you are likely to have a reasonably averaged purchase price, which, on average, will be lower than the price at which you will sell the investment (assuming the market continues to perform roughly as it has in the past).

The above advice may be worth exactly what you paid for it, i.e., nothing. If you look for them, you will find many articles that defend what stock analysts do. For the reasons above, I believe modern stock analysis for ordinary investors to be one of the biggest waste of human brainpower and talent (“human capital”) ever. Many will protest that some stock analysts have had long streaks of being at or near the top of stock analysts. That is true. It is also true that such streaks are a low probability occurrence. Here is a description of a similarly improbable event: “What is the probability of rolling a pair of dice 154 times continuously at a craps table, without throwing a seven? The answer is roughly 1 in 1.56 trillion, and on May 23, Patricia Demauro, a New Jersey grandmother, beat those odds at Atlantic City…

In “Fooled by Randomness,” Nassim Taleb posed the following situation and question:

If one puts an infinite number of monkeys in front of (strongly built) typewriters, and lets them clap away, there is a certainty that one of them would come out with an exact version of the Iliad. Upon examination, this may be less interesting a concept than it appears at first: Such probability is ridiculously low. But let us carry the reasoning one step beyond. Now that we have found that hero among monkeys, would any reader invest his life’s savings on a bet that the monkey would write the Odyssey next?[v]

In short, a normal “bell curve” of random events will include very unlikely events, and bell curves of streaks will produce very unlikely streaks. Those who happen onto a winning streak make the news and often truly believe and claim the random event was due to their diligence and brilliance. Only a fool would be fooled by such randomness.

On the other hand, please note that there is a big difference between stock analytics and investment services. Some people are unwilling or incapable of carrying out any investment strategy, including the one described above. For those people, the services of an investment firm can be very valuable. Those valuable services include:

  • Construction of a financial plan;
  • Basic investment advisory services [excluding picking investments], e.g., helping you identify which funds have the lowest fees;
  • Tax-efficient investing consulting;
  • Rebalancing portfolio investments to maintain the desired mix of stock, bond, and money market investments;
  • Holding investments, which are in your name, in a secure and reasonably safe place; and
  • Maintaining and providing access to good accounting and tax records concerning your investments.

As I said above, use these observations at your own risk. If nothing else, I hope they are food for thought.


[i] See “The Truth About Top-Performing Mutual Fund Managers.”

[ii] See “Can Monkeys Pick Stocks Better than Experts?” for the source of the cited numbers and, for greater wisdom on the general topic, see or listen to “Taleb on Black Swans,” or read the mother loads, “Fooled by Randomness” and “The Black Swan.” See also, “Analysts Do A Great Job Predicting The Past. The Future? Not So Much.”

[iii]A plethora of studies have examined Morningstar, such as Blake and Morey (2000) who study the rating system to determine if they predict future fund performance for U.S. equity funds. They find no compelling evidence of significant outperformance.”

[iv] See “Auto Bailout or UAW Bailout? Taxpayer Losses Came from Subsidizing Union Compensation.”

[v] See, Part II, “Monkey’s on Typewriters – Survivorship and other Biases” Location 2320 Taleb, Nassim Nicholas. Fooled by Randomness (Incerto). Random House Publishing Group. Kindle Edition.

Medicare for All Americans—The Balance of Power.

The eternal and most essential question for political scientists is how best to achieve and sustain a good balance of power between the governors and the governed. Let’s sort out the implications of ceding to the government the power to control healthcare.

Governments with too little power are unable to create sufficient structure (lawmaking, judicial systems, police, defense, rights protections, etc.) to facilitate human flourishing or stave off anarchy, chaos, and misery. Governments with too much power become tyrannical, which, until the tyrants are toppled, first impede and ultimately destroy human flourishing by the vast majority of the population. Moreover, too little power in the hands of the people ultimately leads to the governors aggregating too much power.[i] Too much people power leads to mob rule (e.g., democracy, something akin to a group comprised of five wolves and four sheep voting on what’s for dinner). A good balance keeps tyranny at bay, preserves human rights, facilitates advancement in standards of living, promotes morality, and can facilitate sufficient freedom for people to pursue happiness. Bad balances deliver the opposite, e.g., Mao’s China, Lenin’s and Stalin’s U.S.S.R., Hitler’s Germany, Chavez’s Venezuela, Kim Jong’s North Korea, etc.

Ceding some powers to the government, e.g., the power to collect taxes, set speed limits, incarcerate people after they have been found guilty beyond a reasonable doubt in a fair trial of a non-trivial crime, etc., is necessary and appropriate and most people gain much more opportunities to pursue happiness than they lose as a result of ceding that much power. History has shown that as potentially dangerous as ceding such powers is, prosperous and good societies can be sustained with the government having a great deal of power.

On the other hand, history has also shown that ceding too much power to the government is a sure path to disaster. The amount of power that can be safely ceded depends on, among other things, the charter of the people being governed. In general, the greater a people’s work ethic, self-reliance, honesty, prudence, capabilities, civility, political and economic astuteness, and wisdom, the greater the amount of power can be safely ceded to their government. A sad, but true reality is that people who, as a group, are too lazy, dependent, dishonest, low skilled, uneducated (or miseducated or mal-educated, which are typically worse than uneducated), and/or gullible will not be able to fend off tyranny even if those people luckily found themselves ruled by a non-tyrannical government.

America was fortunate to have been founded by knowledgeable, moral, civil, civic-minded and, wise men—despite many of them having some ideas and practices that, by today’s standards, are considered to be deeply immoral. America’s founder and second president, John Adams, sagely said, “Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.” As a governed people become less moral/virtuous, they become less able to prevent their ever more government from becoming tyrannical.[ii] Consequently, the character of the people affects the location of the tipping point for ceding power beyond which disaster is inevitable.

Given that reality, it is best not to broach the edges of a country’s tipping point. Sadly, however, history cannot reveal where a country’s tipping point is. One reason for that is that the character of the people greatly affects how much power they can safely cede to the government and how the character of a people will change over time cannot be reliably predicted.[iii] Even if America’s populous today has sufficient character to cede as much power to the government as they currently have, the amount already ceded can become too much if their character changes for the worse. History does tell us that the more the people demand the government adopt more collectivist policies, the less virtuous the populous will become.[iv]

A country having people with sufficient morality and civility to run and sustain a democratic republic is rare in human history. As imperfect as the results of America’s democratic republic have been [hopefully, humans will devise a better system someday], it has enabled human flourishing in greater quality and quantity than all other systems yet devised. Having the history to sustain a democratic republic as long as America has is a blessing. Sadly, having a good enough history to enable people to flourish is as rare as it is precious.

Nobel Laureate in economics, Douglas North, observed that the reason many countries are unable to escape the mire of corruption and poverty (despite the availability of the knowledge, resources, and people wanting to help) appears to be that they and their ancestors did not have a history that engenders the ethics and mores necessary to envision, establish, and run a country as a capitalistic democratic republic (which, for the time being, is the best alternative humans have devised). When asked what a poor country could do to get out of the vicious cycle of tyranny, corruption, and poverty, North ruefully responded that they would need to get a new history.[v] Even if the country miraculously obtained a new history similar to the one gifted to America, it could squander that beneficial gift if it replaced the wise and good ideas of their new-found past with hip, new bad ideas, i.e., that hip, new idea of the 60s (1867 to be precise), socialism or MFA (although it could work for a while as it has in some developed countries because America has subsidized their freeloading[vi]). America squandering its historical blessings would damage both Americans and essentially everyone else in the world. Such squandering would be immoral.[vii]

Because of the pain, suffering, and lost opportunity to thrive that result from ceding too much power to the government is so devastating, ceding enough power to the government to approach the edges of a tipping point would be reckless and dangerous.

The Constitution created a governmental scheme designed to help the people keep the government from becoming tyrannical. The scheme’s checks and balances between the three branches of government, division of power between federal government and the states (enumerated rights, the 10th Amendment, and the power to appointment Senators), the electoral college, congressional super-majority vote requirements for especially important matters, the Bill of Rights, and the people’s power to hold politicians accountable has worked for a long time to keep tyranny at bay. Leftist politicians and judges have already repealed much of that framework and emasculated much of what is left. As a result, the government is already more tyrannical than the founders believed to be prudent.

Compelling cases are routinely made that the U.S. federal government has too much power already,[viii] i.e., that the people and states no longer have sufficient power to keep federal officials in check. The best course for the people to take at this juncture is to trim the powers of the federal government. MFA would be a gigantic step in the wrong direction. In fact, one would be hard-pressed to identify a greater ceding of power than empowering federal politicians and bureaucrats the power to provide, delay, or withhold the healthcare needed to relieve suffering or the saving of everyone’s life.

MFA is a collectivist’s dream. In practice, that dream eventually becomes a nightmare. As William Easterly observed, “…I’m just drawing on a lot of the recent academic literature which is kind of exploding literature on value and culture and economic looks at very, very long run trends and data. And the basic idea that emerges from that literature that’s relevant to this discussion is there’s this kind of vicious circle between a history of autocracy and collectivist values.” The circle is vicious because (1) autocracy suppresses much of that which enables human flourishing, and (2) adoption of collectivist values typically, if not inevitably, leads to more autocracy.[ix]

Ceding that gigantic and ominous power would, at a minimum, be one giant leap toward, the tipping point to tyranny. That leap could easily land well beyond the tipping point, thereby ensuring that our children and grandchildren will have a much worse life than we have had. Worse, as discussed in “Medicare For All? At What Cost To Us and The Rest Of The World?,” if America, fails, so goes the world.


[i]  A topic that will be sorted out in an upcoming post.

[ii] Watch “Socialism Makes People Selfish.”

[iii] Compare the dependency on the government of Americans in 1920 to today.

[iv] Watch “Socialism Makes People Selfish.” Note that the rise in virtue signaling (which is the opposite of virtuous) is a sign of the decline in virtue by the American people.

[v] See or listen to “Morten Jerven on African Economic Growth.”

[vi] Id.

[vii] Consider the thousand year stagnation after the collapse of the Akkadian Empire (“1177 BC: The Year Civilization Collapsed”), the “Dark Ages” after Rome collapsed, and “Everything You’ve Ever Seen About Cuba Is A Lie.”

[viii] Foundation for Economic Education, Café Hayek, Reason Foundation, and Amity Shlaes’s “Coolidge” provide copious examples.

[ix] As William Easterly put it, “…I’m just drawing on a lot of the recent academic literature which is kind of exploding literature on value and culture and economic looks at very, very long run trends and data. And the basic idea that emerges from that literature that’s relevant to this discussion is there’s this kind of vicious circle between a history of autocracy and collectivist values.”

About the Trump Articles of Impeachment

The White House’s response to the Articles of Impeachment omitted an important argument against the Articles. The argument concerns the longstanding understanding by every just society that “ex post facto laws” are unjust.

An ex post facto law is one that retroactively criminalizes actions that were taken prior to the law’s adoption. Article I, section 9, clause 3 of the U.S. Constitution provides that Congress shall pass no ex post facto law—for good reason.

Thomas Jefferson’s take on ex post facto laws was this:

“The sentiment that ex post facto laws are against natural right is so strong in the United States, that few, if any, of the State constitutions have failed to proscribe them. The federal constitution indeed interdicts them in criminal cases only; but they are equally unjust in civil as in criminal cases, and the omission of a caution which would have been right, does not justify the doing what is wrong.”

A primary reason all U.S. laws are published is to give citizens fair warning of what they are prohibited from doing. Theoretically, ignorance of the law does not excuse the commission of a crime because remaining ignorant was a failure by the criminal to fulfill his duty to learn the law. That rationale for punishing people does not work if the law is unknowable. The destructiveness to social order and the villainy of ex post facto laws cannot be overstated.

For the reason explained below, if the alleged acts of “high crimes and misdemeanors” specified in The Articles of Impeachment against Trump are crimes or misdemeanors (something the White House’s response denies), they are ex post facto crimes or misdemeanors, i.e., they are prohibited by the Constitution. Consequently, the supporters of the Impeachment are violating and undermining the Constitution they swore to support and defend— while they don somber expressions and are otherwise acting as though they are bearing faith and allegiance to the Constitution.

The language of statutes is important, but the text alone is not the law. Among other things, courts interpret statutory language to make more explicit what the language was intended to mean or torture the language until it confesses a constitutionally permitted meaning (sadly, courts also too often find intentions or meanings that are either different from the ordinary meaning of a statute’s language or are simply figments of the judges imaginations, e.g., “emanations of the penumbras”). So, regardless of what a statute says, its language means whatever the courts say it means—which can be very different from the meaning of the actual language of a statute.

More important, “customs and usage” play an important role in how laws are interpreted and applied. For example, in 1986, the U.S. Supreme Court upheld Georgia’s sodomy laws that criminalized certain sexual acts that were common among homosexuals. [Bowers v. Hardwick] In 2003, however, asserting “that the sodomy statutes in colonial America in the 17th century were largely unenforced,” the Supreme Court declared that to enforce sodomy laws was unconstitutional. [Lawrence v. Texas] While the court cited equal protection and due process as the foundation of its ruling, as Bowers and Hardwick made clear, those foundations would not have been availing absent the changes in societal customs and usage between the two decisions and in Lawrence v. Texas the court relied on the fact that “the sodomy statutes in colonial America in the 17th century were largely unenforced” as a reason the law could not be enforced.

All federal employees take an oath of office to faithfully perform their duties. “Faithfully” connotes that the person swearing will put the interests of the people ahead of her own. Nevertheless, one would be hard-pressed to name any president or a member congress who has not used the powers bestowed on her to serve her personal and political purposes—with little, if any regard for the effects it might have on interests the people, the country, or the Constitution. In fact, members of congress regularly cast votes to increase their pay or benefits or to exempt themselves from the laws they impose on others—despite their clear and significant conflict of interest, and in derogation of their oath to uphold the Constitution’s requirement for the equal protection of laws. Custom and usage indicate that members of Congress are more equal than other people. Similarly, all presidents have used their presidential powers and privileges to advance their personal and political interests—at the expense of the people. In fact, it appears that most, if not all presidential utterances are designed to advance their political interests. In short, the use of power to advance a politician’s interests is commonplace and essentially never punished, especially against presidents. While it would be great if new laws were passed to prevent congresspeople and presidents from engaging in such self-serving, unfaithful activity, it would be patently unfair to ex post facto impeach all of them for having followed these longstanding customs.

When a usage becomes custom, justice dictates that the custom, rather than the dead letters on a page in a long-ignored statute book, must be the law. The fairness and justice of this rule are evidenced in every refereed competition. For example, each umpire or crew of umpires has his/its own way of calling a game. In baseball, some umps enforce larger strike zones than do others. In football or basketball, some referees prefer the strict application of the rules while others prefer to “let ‘em play.” Either style can be just—so long as the calls are within the bounds of what is customary and both sides are permitted/required to play by the same take on the rules. On the other hand, using one style for one team and the other style for the other team is patently unjust. Proof that humans naturally consider biased officiating to be unjust can be seen on the faces of the outraged fans, and the sheepishness on the faces of the honest fans who know their team was the beneficiary of injustice.

This argument is not “whataboutism.” It is not saying that Trump can do something because others did something similar. Neither is it saying that arguments in favor of impeachment must be rejected because of the hypocrisy of the people making the argument. This is an argument that if over a long period of time “everyone” is doing something contrary to a dead-letter law and “no one” is punished for doing it, then it is manifestly unjust to suddenly and without reasonable advance notice resuscitate the dead letter law and punish people in reliance on the revived zombie law.

Things would be much better if presidents and other politicians were not incautious in their exercise of power, but “…the omission of a caution which would have been right, does not justify the doing what is wrong.” The Articles of Impeachment are an unjustifiable wrong.

Medicare For All? At What Cost To Us and The Rest Of The World?

AUTHOR’S NOTE: Many positive things about Big Pharma and no negative things about government mal-regulation of Big Pharma (of which there is much of both) are discussed. Nothing in this post should be viewed as an endorsement of or excuse for the many negative aspects and consequences of Big Pharma or the federal government. Those are both big and important topics and many improvements could be made for both. Those matters, however, are not relevant to the points made in this post.

Similarly, this post focuses on many of America’s positive deeds that benefit all of mankind. Of course, over its history and recently, America has committed many detrimental deeds and will commit more. Those deeds, however, are likewise not relevant to the point being made.

🙛

The Immorality of Medicare For Less Than All” explained how policies that are motivated primarily by empathy often create more miseries than they relieve and that supporting policies that create more net misery is immoral—regardless of how much misery would be relieved. Condemning people who oppose a net negative empathy-motivated policy is a sign of ignorance or evil motives rather than a sign of superior empathy. Consequently, to support policies without a good understanding of the policy’s negative consequences is irresponsible and immoral.

Why Not Provide Medicare To Everyone In The World?” gave an example of a net negative policy—despite all of its extremely positive benefits to some. It explained how Medicare for Everyone in the world (“MFE”) could not possibly work and would cause everyone in the world, including Americans in every income bracket, to consume less healthcare than the poor in America do today. That case was made by focusing only on the stark and devastating math concerning MFE. As such, it only scratched the surface of the negative consequences of MFE.

The math of Medicare for Americans (“MFA”) is significant, but a case based solely on the math is less compelling than is the math-only case against MFE. One must do more than scratch the surface to sort out why supporting MFA is also immoral.

Nevertheless, noting the math of MFA give context and continuity to the discussion. About 330 million people live in America today.[i] America’s annual GDP[ii] is about $21.5 trillion.[iii] That means that Americans are producing about $65,000 per person/yr. ($180 /person/day) of goods and services. As is the case with world consumption discussed in a prior post, Americans cannot sustain consumption in excess of their production. America’s production is about six times more than the world’s average of $11,225/person/yr.[iv] Compare that to Europe’s 750 million[v] people producing $18.8 trillion[vi] ($25,000/person) and one might think that everything would be fine with the U.S. having less GDP/person.

THE ELEPHANT IN THE ROOM

As conceded in earlier posts, universal healthcare bestows great benefits on some people. For example, poor people receiving otherwise unavailable healthcare is large and an almost unalloyed benefit. While opponents to universal healthcare attack universal systems elsewhere as being inferior to the American healthcare systems (many of which attacks are quite persuasive), universal healthcare systems in other countries generally do deliver most of the benefits conceded above, people are not rebelling against their systems, and—so far—have been sustainable.[vii] (This post will overlook the fact that, by their constant need to tinker with their systems, those countries reveal that even people in those countries do not believe all is well with their healthcare systems.)

In light of the above, one might be tempted to conclude that those other countries’ experiences prove that America can afford to adopt a universal healthcare program and the benefits would be great. The elephant in the room (the thing about which nary a word is spoken) is that American plays a different role from all other countries in many important respects, including healthcare. In short, if America were to adopt a universal healthcare system, healthcare would not only be worse in America, healthcare everywhere would suffer and universal healthcare would become impractical essentially everywhere.

Let’s sort out why that is true.

THE INDISPENSABLE NATION-AMERICA’S ROLE IN THE WORLD TODAY

  • Funding of World Initiatives. Making the world a better place is expensive. Many international organizations have been formed to achieve global goals. For example, in 2000, the U.N. established the Millennial Development Goals to improve standards of living of the poorest people on earth by 2015. The most urgent of those goals were achieved well before the deadline. “As a founding member of the United Nations and the host for its headquarters, the United States has been a chief guide and major funder of the organization for more than seventy years…The United States remains the largest donor to the United Nations, contributing more than $10 billion in 2017, roughly one-fifth of the body’s collective budget.” ”Similarly, America’s 4.3% of world population funds over 12% of the operations of the World Bank, “that helps the world’s poorest countries.” The U.S. is a disproportionate supplier of direct foreign aid and is often the only country to play a dominant role in assisting other countries when natural disasters strike. Individual Americans contribute heavily and disproportionately to other global initiatives [viii] (because in America more than any other large country, it is possible to become rich enough to afford to make significant contributions to the world by inventing, developing, manufacturing, marketing, and delivering goods and services that other people value more than the money it takes to buy them).
  • Defense. The countries that have universal healthcare systems that Americans are urged to emulate are mostly NATO members. America’s population is only 35%[ix] of NATO’s, but its defense spending is 63% [x] of NATO’s total. When other wars come, as they inevitably will, the U.S. will likely pay a disproportionate share of the war’s costs (in both blood and treasure) as it has ever since most of her allies have become more collectivist, thereby leaving them with insufficient ability to afford to do their fair share.
  • America Keeps Sea Lanes Open. International trade has been crucial in enabling wealthy countries to thrive and impoverished countries to rise out of abject poverty. As discussed in “Exploitation—Part IV (c), Exploiting Exploitation−The Path To Prosperity,” what impoverished countries need most is a functional political/economic system. Such systems, however, are less likely to succeed without an ability to create wealth by trading what they produce with willing cash buyers outside their borders.[xi] The more markets they can reach, the greater and faster their rise out of poverty. The more pirates or blockades keep products from reaching markets, the less and slower they can take advantage of free trade.[xii] America has been the overwhelming leader[xiii] in enabling billions of people to rise from poverty by keeping trade routes open.
  • The World’s Customer. As mentioned above, to create wealth of their own, people in other lands need customers. In 2017, America imported $2.4 trillion of goods and services from abroad, which amount is about 1/3 of the top 20 importers total and twice the next two largest importers, China and Germany, respectively?[xiv] (2019 U.S. imports are projected to have grown to $2.9 trillion, while predictions for China show a slowing of imports.) Without American purchasers, wealth creation and standards of living of everyone in the world would be much lower.
  • Research and Development. With less than 4.3% of the world’s population, the approximate $510 Billion[xv] spent annually on R&D by Americans is 25% of all investments in R&D in the world, which is exceeded only by China at 27%, which is likely falling due to China’s financial woes.

Since this post is about healthcare, it is worth noting that “In 2004, U.S. medical R&D spending represented 57 percent of the global total. By 2014, the U.S. share had fallen to 44 percent with Asia [despite it having only 4.3% of the world’s population]… Once the undisputed center of global innovation in medicine, the U.S. is steadily losing ground to Asia and Europe [but is still the leader].”[xvi] Confirmation of the greatness of America’s contributions advancements in medical science is that the first many pages of a Google search yield no relevant data. Using Bing, I found a website that presented statistics concerning the quantity of “cited” American medical research on a “per person” basis.[xvii] Presented in that fashion, America’s efforts appear flaccid. For example, “Citable documents per million population” for Switzerland were over 70,000 compared to America’s 31,000. Doing the math, however, reveals that Americans produced 10 million cited medical papers while Switzerland produced 0.6 million. With less than half the population of Europe, America produced only slightly fewer “citable” medical science documents as Europe did, i.e., America’s citable medical science per person is twice that of Europe’s.

 

  • Drug Prices. Everyone who debates the merits/demerits of universal healthcare knows that Americans pay more for prescription drugs than other people. The difference is massive, e.g., three times what the Brits pay and 16 times the Brazilians.[xviii] Few, however, appear to know neither why that is true or what to make of that fact. Let’s sort out why drug prices are so high in America and its effects everyone in the world and their progeny.

Why not have the federal government negotiate with Big Pharma?

Hopefully, the answer is evident by now, but let’s leave no doubt about it. “One perennial proposal to reduce health care costs has been to have the federal government negotiate drug prices with pharmaceutical manufacturers.”[xix] This quote is from a persuasive article that argues that such negotiations would likely cause drug prices to fall, and “Artificially depressing prices is a sure way to depress future research and the stream of new treatments. Depressing future research would, of course, would enable drug prices in America to be lower but at the cost of human lives and suffering that could have been avoided. Because America is less collectivist than other wealthy nations, Americans are the only people left in the world wealthy enough to fund (via high prices) fulsome medical R&D, certification, and administrative costs for drug improvements. (BTW: I’ve seen no research or articles that give America credit for funding R&D and regulatory certification conducted by foreign companies that cash in on the inflated drug prices paid overwhelmingly by Americans.)

The international cost of Medicare for All in America.

The stark reality is that either America, the wealthiest and most prosperous nation on earth, funds robust medical R&D and drug certifications, and the overhead associated therewith, or R&D funding will be anemic. Slashing the prices drug companies can receive for drugs would not only slow to a crawl the pace of medical improvements, it would (1) put many highly trained and skilled researchers and other Big Pharma employees (of which there are currently about one million) on the streets looking for jobs—which will drive down salaries, and bump lower-skilled workers out of jobs, (2) slash Big Pharma’s market value, thereby hurting people’s investments and destroying wealth that could have been used for investment in all industries—which slows job growth, (3) cause people buy less of everything due to lower pay—which produces job losses, (4) increase the need for unemployment compensation and welfare payments, (5) reduce the amount of taxes paid, and on and on—with each problem making the other problems worse. The ripple effects through the economies around the world would be huge. The cost of lost opportunities to cure medical conditions is inestimable.

Significant shocks to America’s economy (which MFA would necessarily inflict) would reduce America’s ability to do all the positive things it does for the world. With the destabilization of the Western World and its allies that MFA would inflict, the relative strength of its enemies will increase.

The above discussion of the compounding problems that MFA would unleash at home and abroad are only snippets of the disaster that would unfold, but hopefully, the above is sufficient to make the case. MFA in America is a really bad idea.

🙛

AUTHOR’S NOTES:

Fairness. That America carries so much of the world’s burdens on her shoulders is patently unfair. However, complaints by U.S. politicians about other countries’ freeloading will do virtually nothing to enable those countries to reduce their wealth redistribution sufficiently to become wealthy enough to carry a fair share of the burden. Similarly, it isn’t fair that inventors earn nothing on their failed attempts to invent and, usually, only a small single-digit percentage of the value of successful inventions. Neither is it fair that honest people/companies that produce things of great benefit to consumers are penalized with high tax rates, while those who produce little or nothing are rewarded with the fruits of the labor of others. That, however, is how the world works and will likely change for the better very little absent considerable changes to the cultures. However, the fact that “the system” is unfair is not a reason to make the world a worse place for ourselves and our progeny.

The Big Pharma/Government Axis can and should be reformed. And we should get on with reforming it. On the other hand, because taking the profit out of Big Pharma would make matters worse, the key will be reducing Big Pharma’s costs, e.g., reductions in regulatory compliance costs and the “lobbying” cost of obtaining reasonable regulations.


[i]

World Population 2019

[ii] “[GDP] represents the total dollar value of all goods and services produced over a specific time period, often referred to as the size of the economy.

[iii] See, “FRED Gross Domestic Product.“ An interesting fact: With 4.3% of the globe’s people, America produces  25% of Global GDP. See “Global GDP (gross domestic product) at current prices from 2014 to 2024 (in billion U.S. dollars).”

[iv] See “Why Not Provide Medicare To Everyone In The World?

[v] See “World Population Review.”

[vi] See “European Union GDP.

[vii] See “Is Canada’s healthcare system as bad as Donald Trump says?

[viii] See “Should the Federal Government Negotiate Drug Prices?

[ix] See “NATO Countries | North Atlantic Treaty Organization Members 2019.”

[x] See “List of countries by military expenditures.”

[xi] See “Exploitation—Part IV (a), Exploiting Exploitation−The Cause.” ,” especially “Two Cheers for Sweatshops.

[xii] See “Trump’s Tariffs—A Sad Realization.”

[xiii] See “Securing the World’s Commercial Sea Lanes” and “At the most basic level, the mission of our Navy is to defend our homeland while keeping global sea lanes open and free. In fact, the latter actually helps us do the former, since so much of our nation’s prosperity and security comes for the free flow of maritime commerce.”

[xiv] See ““Leading import countries worldwide in 2017.

[xv] See “List of countries by research and development spending

[xvi] See “U.S. Slipping as Global Leader in Medical Research.”

[xvii] See “What countries have lead the world in medical research and innovation during the time period between 1995 and 2014?” (This is a bit dated, but is likely because Big Tech’s algorithms do not want this data to be found.)”

[xviii] See “From Scientific American, “How the U.S. Pays 3 Times More for Drugs,” “Researchers from Britain’s University of Liverpool also found U.S. prices were consistently higher than in other European markets. Elsewhere, U.S. prices were six times higher than in Brazil and 16 times higher than the average in the lowest-price country, which was usually India.”

[xix] See “Should the Federal Government Negotiate Drug Prices?.”

Why Not Provide Medicare To Everyone In The World?

The Selfish Leftist Heart” pointed out that Medicare for All (“MFA”) is a misleading moniker for proposals that provide health insurance coverage for only a select, relatively wealthy group of people who happen to live in America. “The Immorality of Medicare For Less Than All” explained how (1) MFA supporters give themselves too much credit for being empathetic when they sanguinely and uncritically condone proposals that deny billions of poorer people their “human right”[i] to healthcare, and (2) if the first point was brought to their attention, many of them would switch their demands to “Medicare For Everyone in the World” (“MFE”). The post ended with this: “However, neither MFA for Americans only nor everyone in the world is a moral proposition” and a promise to explain why that is true in this post. This post will sort out what is immoral about MFE.

🙛

Author’s Note: An essential premise for the following argument that support for MFA is immoral is the following:

No matter how positive the benefits of a policy are (e.g., every poor person in the world getting all the healthcare they need would be immensely positive), the policy is, nevertheless, bad if its negative consequences are greater than its positive consequences. Supporting proposals that do more harm than good is immoral.

🙛

Why not MFE? In a word, math.

About 7.75 billion humans are alive today.[ii] The sum of the annual GDP[iii] of every country totals about $87 trillion.[iv] That means that humans are producing goods and services of a mere $11,225 per person per year ($30/day). Over the long haul, humans cannot consume more goods and services than they produce. So, the average consumption per person per year cannot sustainably exceed $11,225. If some people consume more than that amount, there will be less than that amount available to be consumed by others. Just under one billion people live on less than $2/day (which is about one billion fewer than were living at that level in 1990).[v]

The average per-person consumption (which includes the consumption of healthcare) of Americans in the bottom 10% is over $15,000 per year.[vi] So, if world GDP were redistributed so that consumption by all the people of the world were equalized, the amount of consumption of “poor” Americans would fall about 25% from what they currently consume, i.e., MFE would mean more healthcare coverage for billions of desperately poor people, but vastly less healthcare for all Americans, including the about 11 million “poor” Americans to which MFA would provide healthcare coverage. Because food and shelter are higher human priorities than healthcare, the resources people would have to consume healthcare would be what is left over after sufficient resources are used to obtain food and shelter. Consequently, what would be available American poor people for healthcare would fall by more than 25%.

However, having healthcare coverage does not mean that healthcare, much less high-quality/timely healthcare, can be obtained. The infrastructure to deliver timely healthcare to most poor people in the world does not exist even if there were sufficient medical professionals to provide healthcare to everyone. Significant doctor shortages exist across the even wealthy parts of the world.[vii] Those shortages exist with billions of people having little to no access to healthcare. Nationalized healthcare systems typically impose long wait-times, do not provide the latest drugs if pharmaceutical companies refuse to slash their prices to near the cost of production (which drug companies will not always do), and decide not to provide healthcare when a bureaucrat determines that the cost/benefits analysis is not in the patient’s (or bureaucrat’s) favor. Passing a law to provide something does not magically cause the thing to materialize.

On the contrary, demanding the production of more of something (e.g., healthcare) typically causes the price of the thing demanded to rise. This is because the currently available volume of things is that which is economically feasible to deliver at the existing market price. In order to fund the motivation and means to produce more of the thing, the cost of the thing must rise.[viii] Demanding more healthcare be provided means either that the cost of healthcare will rise or the production system will become uneconomic/dysfunctional. For example, if providers are ordered to produce healthcare at a below-market price the number of people willing to stay in the healthcare business and the number of people deciding to enter the healthcare business will fall.

A man-made law cannot change the natural laws of economics any more than a law banning hurricanes would change the incidence of hurricanes. (Unsurprisingly, laws that ignore the natural laws of economics usually create more damage than hurricanes, albeit of a different sort.)[ix]

Given these realities, providing the level of healthcare that is available to America’s poor to all the poor of the world would require more money than the world can produce.

No moral person who is aware of reality could support the MFE. The same is true of MFA. Let’s sort that out in the next post.


[i] Healthcare is not something to which people have a human right. More on that in a future post.

[ii]World Population 2019

[iii] “[GDP] represents the total dollar value of all goods and services produced over a specific time period, often referred to as the size of the economy.

[iv] See, “Global GDP (gross domestic product) at current prices from 2014 to 2024 (in billion U.S. dollars).”

[v] See “Poverty.”

[vi] See “Finance and Economics Discussion Series Divisions of Research & Statistics and Monetary Affairs Federal Reserve Board, Washington, D.C.,”pg. 39.

[vii] See “Europe faces a shortage of doctors,”U.S. faces 90,000 doctor shortage by 2025, medical school association warns,” “Poor salaries and overwork led to shortage of doctors in China,” “Dubious cure for doctor shortage. ‘The number of doctors per 1,000 people [in Japan] is 2.2 — about two-thirds of the average level in industrialized economies.,” “India suffering critical shortage of doctors…”

[viii] See “Wealth” and “Income Inequality Is More Than It’s Cracked Up To Be.”

[ix] The discussion in this paragraph highlights a major confusion that confounds the public debate about “the cost of healthcare.” Providers of healthcare incur costs to research, invent, develop, produce, and deliver healthcare and consumers of healthcare incur costs to purchase healthcare. These two kinds of “healthcare costs” have few things in common and, in many respects conflict with each other, yet when people argue for or against MFA, they mindlessly draw no distinctions between the two. This adds major irrationality and confusion to those debates. The topic is well worth sorting out in a future post.

The Immorality of Medicare For Less Than All

The Selfish Leftist Heart” pointed out that, despite presumed morality of their proposals and their apparent sincerity, viable American politicians never actually propose what they say they are proposing, “Medicare for All” (“MFA”). Instead, they propose MFA only for people who reside in America, all of whom are wealthy compared to the billions of vastly poorer people around the world (but, of course, those people cannot improve politicians’ election prospects).

With some exceptions,[i] few, if any non-politician Americans clamor for MFA in order to gain personal benefits (though many personally do benefit from supporting MFA,[ii] while others support MFA from immoral, fallacious or misguided reasons[iii]). On the contrary, many, probably a majority of those people believe they will have to pay some part of the cost of MFA. They are happy to sacrifice for the goal they presume to be laudable. Their motivation is typically a belief that they are supporting a good cause, i.e., MFA is the moral thing to do. (Although a review of a couple of pages of search results produced no article in which the author(s) actually attempted a moral argument that supports the morality of their stance. Rather, the authors merely asserted MFA’s morality and proceeded on the strength of their unsubstantiated premise[iv]—in so doing they also revealed that they do not understand what “moral” means.[v]) Nevertheless, in order to sort out an important issue about MFA, let’s assume that someone has made a case that MFA for Americans is the moral thing to do. What about the billions of poorer people left out in the cold?

It is commonplace for MFA supporters to condemn those who do not support MFA as having insufficient (if not no) empathy. If, however, empathy is the reason to support MFA for those who cannot afford healthcare, how can those condemners justify limiting their empathy to the lucky few who happen to reside within America’s borders, i.e., people who already have much more access to healthcare (e.g., ambulance services, world-class hospitals and doctors and many charitable organizations) than the bottom few of billions in the world? If funding MFA by fleecing millionaire and billionaire is a morally acceptable way to achieve the glorious goal of MFA, how can good people morally deny the “human right” to healthcare to the more desperate billions of poorer people in the world? Are the MFA proponents vastly less empathetic than they believe themselves to be? Are they tribalistic, America First people? Are they just pretending to be empathetic? Do they have no heart? Whatever the reason, if asked about their heartlessness toward poorer people, supporters of MFA for Americans only would have some explaining to do.

On the other hand, I’ve never seen MFA champions asked/challenged about this conundrum, and I suspect that the vast majority of them have never considered how constricted and discriminatory their empathy must be to support those proposals. (Full consideration of a topic is typically not a strong suit of champions.) Confronting this issue would surely create cognitive dissonance. How might they deal with the dissonance?

My guess is that most of them would respond by attacking the questioner, but some would grapple with the issue and ultimately relieve their cognitive dissidence (from realizing that they have been supporting a racially discriminatory and insufficiently empathetic proposal) and restore their empathetic self-image by switching their demand to “Medicare For Everyone in the World.”  After all, it was not long ago that no American politician would dare insist that America’s MFA cover U.S. inhabitants who did not follow U.S. immigration law to get here. Recently, when enough leftists realized that excluding “illegal aliens” from MFA caused cognitive dissidence, leftists began insisting that “undocumented immigrants” be covered, and Democrat politicians jumped to the front of that parade.[vi] If leftists believe, as many do, that healthcare is a human right and MFA is the moral thing to do, is there a reason to believe that they would not assuage their cognitive dissidence and restore their empathetic pose by demanding MFA for everyone in the world? I think not.

However, neither MFA for Americans only nor everyone in the world is a moral proposition. Let’s sort out why that is true in the next post.


[i] The 30.4 million (11.3%) U.S. inhabitants who do not currently have healthcare coverage expect to directly and immediately benefit. See “Health Insurance Coverage: Early Release of Estimates From the National Health Interview Survey, 2018.” [The 11.3 % figure adjusts the 13.3% figure presented in this report (which was the percentage of uninsured Americans younger than 65) to take into account the 15% of Americans who are covered by Medicare.]

[ii] Many, perhaps most, people who support MFA gain from combinations of the following:

  1. The dopamine rush from believing their support is doing something moral/noble,
  2. Reducing the risk that they will be vilified, shunned, derided, ridiculed, or fired from their job by the mob that favors MFA,

[iii] Some of the supports of MFA believe they will gain from some or all of the following reasons:

  1. They believe their desire for revenge against you name it, (e.g., drug or insurance companies, political opponents, the millionaires and billionaires who they believe will pay for it, all of the above) will be satisfied,
  2. A belief in the promises of politicians that MFA will lower their own cost of health insurance, and
  3. A reduction in their risk of destitution and lack of healthcare if they lose their job or otherwise run out of money.

[iv] See  “Ady Barkan makes a moral case for single payer at first-ever Medicare for All hearing” and “Bernie Sanders: Why We Need Medicare for All.”

[v]     Consider the following claim in WE CAN AFFORD TO HAVE HEALTH CARE FOR ALL IN THE U.S:  “The core argument in favor of universal health care is the moral one, especially for people of faith. 26-year-old Alec Smith of Minnesota died in 2017 because he could not afford insulin. That is immoral.” In light of Webster’s definition of “moral:”

1      a: of or relating to principles of right and wrong in behavior : ETHICAL

//moral judgments

b: expressing or teaching a conception of right behavior

//moral poem

c: conforming to a standard of right behavior

//took a moral position on the issue though it cost him the nomination

d: sanctioned by or operative on one’s conscience or ethical judgment

//a moral obligation

e: capable of right and wrong action

// moral agent

As you can see, “moral” has to do with a person’s behavior. The moral “argument” made about Alec Smith in the above quote was “That is immoral.” Who in the story about Alec Smith did the immoral act, and what wrongdoing was committed by that person? The correct answers are no one in the Alec story engaged in immoral conduct. If the cat, who has no capacity to be moral or immoral, or misfortune caused the woeful outcome, the outcome cannot be is immoral—outcomes are not acts.

[vi] See “Where Democrats Stand.”