You Wokies Have No Clue
it's all the government's fault
I don’t know if the guy arrested in connection with the shooting of UnitedHealthcare CEO Brian Thompson is the real murderer. But that’s not my point.
Here’s an opinion piece on the murder that talks up a “class divide.” And it’s not just lefty types that hate UnitedHealthcare and their denials of benefits. It’s right-wing commentators too.
My point is the big wokey social media surge about Big Health Insurance and denial of benefits is Clue Less. And I saw a commenter bringing the bailing out the Big Banks into the conversation. If you think that the 2008 crash was the fault of Big Finance then you are Clue Less.
I have a word for you activist types. If you are going to have a society where the government spends 35 percent of GDP, like ours does, then your society has created a huge feeding frenzy over all that money. It’s like throwing fish food into a lake. The fish will go crazy. And that’s just the spending. Guess what. All the regulation that goes with big government creates another feeding frenzy.
And while we are on the subject, let us bring up three of my Four Laws.
Law One: Socialism cannot work because it cannot compute prices, wrote Ludwig von Mises back in 1920. But let’s extend that just a little. Once you have a government program it is messing with prices. And that means that production and consumption will be distorted by the government intervention. Maybe even to the extent of denial of benefits.
Law Two: The administrator in any government program cannot not know enough to compete with the collective wisdom of millions of consumers and producers in the marketplace. That’s Hayek in The Road to Serfdom. I like to say that this is a bandwidth problem. The point is that once you have a government program — say for health care — then you do not have a health care system that is driven by consumers and what they are willing to pay for health care. Instead you have programs and subprograms devised by congressional committees and administsrative bureaucrats and they don’t have a clue. Except to hand out goodies to their supporters. Hey, if someone gets their benefits denied, that’s just noise in the system.
Law Three: Regulation cannot work because of “regulatory capture.” That’s from George Stigler. We see this all over the place, and I’ll bet that’s the big thing in the UnitedHealthcare situation. UnitedHealthcare knows how to play the game with the bureaucrats and the regulators and the congressional committees and, guess what, it’s smarter than they are, and smarter than you are. The point is that if you are someone that believes that the answer to “windfall profits” and “price gouging” is government regulation, then you are clueless. Because once the government and the regulators and the corporations get in a dance together the consumer goes to the back of the line.
Do you see the point? Once you have a government program you have grifters and corruption and just the fact that government just does not have a clue where the economy is concerned. The only thing that government does is fight world wars and feed goodies to its supporters. Everything else is a failure.
Big Health Insurance companies denying coverage is a consequence of government regulated health care.
Let me be clear, as Vice President Harris likes to say. The health care field is completely dominated by government programs. There are government programs that provide health care, like Medicare and Medicaid, and there are government programs that regulate health care, like Obamacare. And forget about the drug companies, just for a moment.
Now let’s talk about Big Banks and bailouts. Big Banks getting bailed out in 2008 was a consequence of the gigantic government presence in mortgage lending. First of all, government has been in the mortgage business since the 1930s when Fannie Mae was created. Fannie Mae converts mortgages issued by banks and S&Ls into 30-year fixed-rate government bonds. But then government decided to allow low-down payments, sometimes even zero-down payments. And then government decided to extend mortgage loans to people with bad credit. No problem, right? Wrong.
Guess what. There is science on this. It was created in 1873 by Walter Bagehot in his book Lombard Street: a Description of the Money Market. Bagehot developed a Real Simple understanding of credit. If the credit system is to work then loans must be properly collateralized, so that if a borrower fails to pay the loan can be paid off by selling the collateral. But in the case of a low-down loan it’s possible that the value of the collateral has gone down and can’t pay off the loan. Also, if the credit system is to work then borrowers must pay their monthly payments. So, for a credit system to work two things are needed: the borrowers must be creditworthy and the collateral must be good enough to pay off the loan.
But what if there is a credit crisis anyway? Then Bagehot is clear. The central bank — in our case the Federal Reserve System — must act as “lender of last resort” and lend enough to the banks so that they don’t fail. Guess what: in the 1929 credit crisis the Federal Reserve System did not act as lender of last resort. In 1929 659 banks failed; in 1930 1,350 banks failed. And it got worse. So the Fed failed to act as lender of last resort. In the 2008 crash Lehman Brothers, which was heavily into bad mortgages, failed because Fed Chairman Ben Bernanke felt that he didn’t have the authority to bail out Lehman Brothers because it wasn’t a real bank. So the Fed didn’t act as “lender of last resort.”
Do you see the point, wokies and all the ships at sea? If there is a problem and all the usual suspects are wailing about “price gouging” or “greedy bankers” or “malefactors of great wealth” or “economic royalists” or “racists” then ten-to-one the problem is government, not the price gougers and the rest of the monsters.