The Affordable Care Act creates a new health insurance marketplace (the exchange). But because of the great uncertainty about what buyers will enter the market and who will buy what product, the law creates three vehicles to reduce insurance company risk.
Politicians and bureaucrats are notorious for manufacturing euphemisms -- clever but deceptive substitutes for what they really mean but don’t want to admit. That’s how the phrase “revenue enhancement” entered the vocabulary. Some of our courageous friends in government couldn’t bring themselves to say “tax hike.”
It’s easy to be negative about the U.S. economy these days. Find a glint of silver, and folks come running to point out all of the dark clouds looming about. This, of course, is what we got last week when the monthly jobs report was released from the U.S. Department of Labor (DOL). Folks pooh-poohed the number of jobs and whining that they’re not enough or that it’s less than a bunch of economists thought that it might be. But you know what? Stuff ’em.
Facts are easy. You can check facts. What supporters of the Affordable Care Act are doing, on the other hand, transcends factual bungling. It’s far more advanced: a warping of reality so debauched it looks like something out of a tale by H.P. Lovecraft.
The east coast and parts of the southern U.S. were to varying degrees paralyzed by blizzards a few weeks ago. The snow as expected rendered the roads treacherous, and in anticipation of slick streets, shoppers flocked to the grocery stores in advance.The rush into grocery stores, and its aftermath, offers worthwhile lessons in economics.First up, […]
The highest form of charity, argued the 12th-century Jewish philosopher Maimonides, is when the help given enables the receiver to become self-sufficient.But our systems of state charity — aka welfare — have too frequently had the opposite effect: They have actually created dependency. It is time to rethink the way we help people.I’m going to […]
Last year was quite the year for Bitcoin. We’ve seen exponential growth in Bitcoin’s exchange rate and extensive coverage in the media. Another phenomenon we have witnessed is the proliferation of alternative cryptocurrencies, five of which we’ve provided below.What all of these cryptocurrencies have in common is that they rely on a decentralized network to […]
President Obama crowed in his State of the Union speech about the economy, even mentioning “a rebounding housing market.” Maybe he was referring to friends in high places, like the seller of Penthouse One in New York, which just closed for $50.9 million, all cash. Millions of mere-mortal homeowners likely wanted to throw something at […]
The nonpartisan Congressional Budget Office is acting in a bipartisan way to cover up the biggest single threat to the bipartisan political alliance that is stripping America of its wealth: the United States Congress.There is no question that the following policy is bipartisan. Democrats and Republicans in Congress are completely agreed that the following information […]
Recent difficulties with implementing the Affordable Care Act have increased opposition to the program. A majority of Americans now oppose it. Problems with the HealthCare.gov website are in all likelihood temporary. However, there are serious long-term problems, particularly considering long-term finance and labor supply issues. Given the mounting difficulties with and growing concerns about the […]
The faces of the Detroit bankruptcy are the thousands of pensioners whose promised benefits are suddenly part of the restructure negotiation. When Motown filed for Chapter 9 last July, the city had $11.5 billion in unsecured liabilities. The vast majority of this was pension and health care benefits owed to retired city employees.The images of […]
“Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.”As the inequality gap grows, there is an ideological battle unfolding in the West.On the one hand, there are those who think government can fix things. It must do more, tax more, […]
On Feb. 7 the United States will once again reach its statutory debt limit, meaning it cannot legally borrow any more money. Since the obvious option of cutting spending to match the amount of revenue that the government collects is off the table for some inexplicable reason, Congress will have to pass a new, higher […]
The New York Times published an interminable article on health care recently. Plenty of facts — how scrupulous are these journalists! — but the article displayed absolutely no comprehension of the basics of cause and effect. I was left wondering about the whole point.The article details how the health care system rewards specialists to an […]
The Largest Company in History:“The United States Corporation of Government (USCOG)”I follow global social and commercial networks, looking for entrepreneurial opportunities.Innovation surges when industry and government models change. Buggy whips. Landline phones. Railroads. The Soviet Union. Apartheid South Africa. All marked social and commercial innovation, both bad and good.We are witnessing a new form of […]
We’d like to give the banks in Australia some credit. They’ve finally gone and done it. They have caught up with 1960s technology. They’ve figured out how to use PIN numbers.How to only use PIN numbers, that is. They’re considering scrapping signatures on credit cards to cut down on fraud. Apparently, having to verify your […]
We put in a good-citizen call to the SEC the other day.“There’s a massive scheme to manipulate stock prices,” we told the friendly agent.“I have to tell you that your call is being monitored so that we can better serve the public,” he replied.“Oh, don’t worry about that. The NSA is tapping our call anyway.”“Are […]
Dr. William C. Padgett is a retired optometrist who has been trying to bring an elderly care facility to Beaufort County, North Carolina, for over a decade.“Our senior citizens,” he laments, “are finding that it is difficult and in many cases impossible to find an appropriate long-term care facility locally.” Though he has received several […]
If you don’t have the angst out of your system concerning Wall Street banksters, Government Sachs, and the Affordable Care Act, settle in with Matt Taibbi’s Griftopia to make your blood boil one more time.Investors should be reminded of 2008 as they shrug their shoulders and put their money back in the stock market. The […]
What do 8 of the 10 wealthiest people in the U.S. have in common?Aside from being able to fly in private jets, the common thread is that each of them has made their fortune thanks to a start-up.Let me explain…From tech titans like Bill Gates and Larry Ellison (founders of Microsoft and Oracle, respectively), to […]
“Inequality is the defining challenge of our time,” according to President Obama. It’s certainly the topic of the day for Paul Krugman, Joe Stiglitz and a whole raft of liberal pundits.But have you noticed that hardly anyone else is talking about it? When is the last time you heard a shoeshine person or a taxi […]
In December of last year, I left my career to travel the world for one year.My plan was to visit as many countries as possible on my Star Alliance Around-the-World ticket in the first nine months, then, for the remaining three months, return back to the country that most caught my eye and my curiosity.Nine […]
Economic history is primed to repeat in the nastiest of ways unless the government stops distorting the price of something we use every day.Every product, good, or service has a price, which is essential to rational decision-making. We use prices every day as vital data that guide us. Without true prices, prices not distorted by […]
A new survey from Harvard University found a large majority of young Americans do not believe the law will save them money, do not believe it will improve their health, and do not intend to sign up for insurance through the new exchanges.
Uh-oh!The new pope, Francis from the Pampas, has just warned us to beware the “tyranny” of capitalism.Each man worships his own gods. Some worship at the altar of Jesus of Nazareth. Some at the altar of the Almighty Dollar. The capitalists don’t bad-mouth Francis’ god. You’d think he would cut them the same slack.Bad-mouthing Catholicism […]
The market has selected different things as money throughout history. Some of these items have served as money in isolated places for specific periods of time — for instance, cigarettes in prisoner-of-war camps. Cigarettes continue to be a currency in prisons if allowed, but if not, according to Wikipedia, “postage stamps have become a more […]
A president stands disgraced. Congress is scattering. Bureaucrats are baffled. Pundits are reaching. Industry is scared. Politicians are scrambling to do something, anything, to make it better. One political party is in meltdown and the other loving every minute of it, hoping to ride the calamity to electoral gains.The so-called Patient Protection and Affordable Care […]
In the Gilded Age of the late 19th century, the American rich walked tall. They dressed the part. Top hats, canes, tails, spats, you name it. They built glorious mansions for all the world to see. They traveled in style, and did so publicly. They were profiled in popular magazines. Indeed, they were idolized and studied and emulated.
Today, the rich are different. They wear jeans and sneakers and ratty-looking sweaters. If they build large homes, they make sure they are inaccessible and nearly invisible. They talk like the people. They affect the way of the common folk. They pretend to be like everyone else. If they are famously rich, they give vast sums away, sometimes to dubious causes. They even call for taxes on themselves.
Here’s one theory: Property rights are weak today. This came to me in looking at the Index of Economic Freedom and how the U.S. is slipping further and further. The main reason given in the survey is that property rights are no longer secure here. The government can enter your factory and shut it down anytime. It can freeze your bank account. It can prevent mergers and acquisitions. It can slap on regulations that make your product unmarketable. Civil forfeitures are common.
The more property is vulnerable to looting by any source, the more people have the incentive to hide their wealth. In extreme cases, the rich might have a reason to publicly destroy their own wealth as a signal to would-be looters: I am not worth what you think I’m worth. This might be why so many among the rich are aggressive in their push for higher taxes. It’s a way of saying, “My money doesn’t matter to me, so it should not matter to you either. Leave me alone.”
I’m thinking about this whole subject because I just read an extremely interesting paper by economist Peter Leeson. It is called “Human Sacrifice.” He actually seeks to come up with an economic explanation for the persistence of human sacrifice in certain tribal conditions. It’s not such a surprising topic for him. He is, after all, the author of The Invisible Hook: The Hidden Economics of Pirates, a book that became one of the most praised and admired historical books in the last few years. It is also a fantastic read.
His new paper looks into the economics of human sacrifice. He focuses on the 19th-century experience of the Konds, an indigenous Indian people located in the eastern province of Orissa, India.
It was an agricultural community that variously prospered depending on weather conditions. Here, annual ritual sacrifice of human beings from other tribes, purchased with money collected from within the tribe, was practiced to great fanfare in opulent ceremonies. It was brutal and ghastly. The number of lives lost is uncountable, but very large, judging from every available report.
The whole thing was justified on religious grounds. But might have there been another reason?
Consider a seemingly unrelated fact: The great problem that vexed the Konds was intertribal relations. Within their own communities, they had peace and security. But outside of them, there was insecurity and chaos. It was not uncommon for the Konds to invade other tribes and steal what they could, nor was it uncommon for outsiders to do the same to them. All the tribes lived in fear of each other. Property rights were always vulnerable to invasion.
Professor Leeson tries to connect the dots here and make sense of the sacrifice in light of the insecurity of property rights. By putting on a hugely conspicuous display of disregarding something as valuable as a human being paid for with community money, Leeson theorizes, the tribe was attempting to broadcast the idea that there really was nothing of value to be stolen from them. This was a public act to ward off envy and invasion.
Tellingly, the sacrifice would take place in the middle of the agricultural season. “By sacri…ficing humans between the sowing and harvesting of crops, Kond communities destroyed wealth preemptively,” Leeson writes. “By sacrificing humans during the agricultural cycle but not appreciably after its completion, Kond communities destroyed wealth before other communities realized their output values and, in the event that those values incentivized aggression, before communities could mobilize for such aggression.”
Now, to illustrate the thesis, Leeson looks at the experience of how the practice came to end. Understandably, British colonial powers did everything they could to stop it. They tried moral suasion. They tried threatening violence They tried pure monetary payoffs. But nothing worked. The human sacrifices continued.
Finally, the colonial powers tried something more creative. They offered negotiation and justice services that would bring about peace and trade between tribes, provided that the Konds would stop the ritual sacrifice of human beings. The Konds readily accepted and the practice came to an end.
Professor Leeson briefly speculates on the implications here. How many others have made a show of poverty and wealth destruction as a means of disincentivizing violence? He suggests that this helps account for why monks in the Middle Ages made poverty part of the religious discipline. The Middle Ages were dangerous times to be rich, and monasteries were often exactly that. To avoid attracting looters, pillagers, and invaders, the monks took vows of poverty. (This is not to belittle the religious motivation, but only to say that it had a practical purpose as well.)
This makes a tremendous amount of sense to me.
And the applications of this idea are all around us. I know people who drive old cars when they could easily afford new ones because they want to avoid incentivizing theft. The same is true of people who could live in large houses in the center of town, but instead choose small apartments and keep their large real estate holdings out of public view.
This also explains what have come to be called “self-hating billionaires,” who conspicuously parade their attachment to welfare ideology and redistributionist politics. It’s all an effort of self-protection in times when property rights are so insecure. Better make a display of your disregard for wealth than tempt the state to disgorge you of all you own.
So think of this the next time that you see a sweater-clad Bill Gates giving hundreds of millions to far-flung charity causes that you know probably won’t amount to much. And consider that this might be a reason that CEOs of very successful companies like to follow Steve Jobs’ lead and dress in jeans and sneakers. They might even forgo the large house in favor of a minimalist apartment.
People do what they do to survive. When property rights are not secure, the well-to-do make public acts of self-immolation in order to survive.
Should the time come when property rights are secure again, we will see the behavior change. None of us will be truly safe until the rich again walk the streets with pride, live in huge houses in full view of the hoi polloi, and dress proper to their station in life.
After all, a world that is not safe for the rich is not safe for the rest of us either.