I keep saying that the tax structure unfairly harms those who invest in school because it targets people who condense their income into short careers.  Doctors, lawyers and other professionals are in this camp. After further consideration I feel that I owe a clarification.  It is not those professionals that are the first to suffer it’s a little different pattern then that.  The people who suffer first are the consumers of those services.  The high taxes force a pass through to doctor’s patients and lawyers clients and students at colleges and other consumers of these professional goods.   The reason is due to supply and demand and due to investment these people with this level of investment must require a certain standard of living which will be judged in take home pay not pre-tax income which means that they will raise their prices as taxes go up and pass that along (not intentionally they don’t often realize that they are doing this it feels much like inflation it just happens you don’t think about it).  Now this then harms people like poor patients, clients, and students as these taxes pass through.  Eventually this leads to decreased demand and IF supply holds going forward… that is assuming that these tax structures don’t chase off future doctors and lawyers and professors before they make such a large investment in the uncertain realm of class warfare through taxes then the eventual damage to them comes in the form of lower demand.  The final result is less access to doctors, lawyers and professors and other professionals to poor Americans and more access to the wealthy.  So my previous statements while accurate in a sense where not complete and now I have elaborated on them.
The reason the US has been the top economic power house is because of inovation, education and capital.  The biggest threat to the future of the american economy is the problem of a negative national savings!  Capital investment and savings was a major key to our growth.  Capital is a major component of income.  A seperate major issue is the level of regulation on saftey, output, polution, labor laws... these are all great things but at some point we need to realize that these laws add costs to the base of our cost structures and make us less competative in a global market.  The final problem is an unjust and inefficient tax system that punishes good decisions and forces poor choices.  If we don't change these fundamental short comings can we keep our spot at the top of the global economy?  What will happen if we lose that place while sitting trillions in debt to foreign nation
If a market moves towards recession because our capitol stock has grown too small to support our consumption then the necessary response of the economy is to recess and limit consumption until the capitol stock is rebuilt and then resume consumption at the previous rate.  This keeps the market sustainable and prevents a small discrepancy or miscalculation in the economy from causing a full scale collapse. 

If  every time a move away from spending towards capitol stock creates a response from government which offsets the net savings and loss of consumption by consuming and taking on debt then the capitol stock and consumption not only will not ever equilibrate but they will perpetually drift further and further apart until one part of the system can no longer sustain itself, in this case most likely the government’s ability to borrow and consume on a large enough scale to prevent adjustment, this necessarily prevents small recessions at the expense of a currency collapse.

Anytime the government moves from a policy of propping up aggregate demand through debt to allowing a drop in aggregate demand we will have a depression and any time government isn’t willing or able to spend enough quickly enough to slow the fall we will have a depression.  If however, government did not interfere then we would have periodic recession but because the miscalculation would be caught prior to the creation of a major bubble there simply will not be enough error to create a depression and the worst case scenario is then a short recession followed by a stabilized economy.

I say all that to reiterate what Austrian economists have been saying since Keynes really became popular and that is this:  From this point forward all recessions and depressions will be mathematically created by the Federal Reserve.  I say that because they act like a damn on a surging river.  They can control the flow and prevent a flood for a certain amount of time but because there is no outlet it is always only a matter of time before the strain gets to great and bursts the bulwarks flooding those below.   Like a damn with no outlet the actions of a federal reserve to prevent periodic corrections to correct the aggregate supply and demand functions across time will lead to disaster.  
I have no right to influence your social decisions in any forceful or coercive way unless I bear some risk or danger from those choices which you make.  I only bear consequences from individual social choices you make when I am economically liable for them under a social justice theory or when I am a party in some way to the transaction.  Therefore as a matter of property law I am covered and protected from the latter and therefore the former is the only issue of significance.  This means that a social justice theory when it comes to economic responsibility to or fellow citizens for “necessities” or needed luxuries as I call them such as premium health care must necessarily to be just have a corresponding theory  f social justice relating to the social decisions those beneficiaries of the original social justice theory. Those who are aided under social justice theory impose on me a direct cost through my pocketbook which gives me the right to regulate their activity.   Therefore you can either have an economic social justice system mixed with no choice on issues such as who you sleep with or what type of sex you have to the type and quantity of food you place in your mouth or we can abandon that theory and allow both social and economic liberty. 

This will occur through rent seeking regardless of acceptance because the wealthy who happen to be those who make good choices will be rent seeking to limit their liability under the theory thereby attempting to reduce expenditures while reducing social liberty.  On the other hand the poor and those who make bad choices will wish to expand their individual liberty while maximizing the shift assets from the wealthy to them.  This spirals through cycles of encouraging heavy government regulation in social and financial life while also leading to increased rent seeking and irresponsible and inefficient behavior by all!


Is this why we have the Left wanting less economic liberty and more social liberty and the Right wanting more economic liberty and less social liberty?  Each is representing one side in the Social Justice theory?

Wouldn’t both side be better off if the right gave in on social issues and the left gave in on economic issues?
So we talk a lot about the policy costs of different healthcare reform.  Personally I have said before that my solution and the solution that makes sense to me is that government can most lower the cost of insurance by deregulating instead of increased regulation.  A nationwide marketplace with a single set of regulatory laws would go a long way in reducing the cost of both med-mal for doctors (something I’ll bring up later) and health insurance for individuals.  Both through increased competition but also decrease administration costs at insurance companies who spend fortunes on state by state compliance with very complex state specific law and code.  Secondly, the federal governments push towards employer purchased healthcare through various incentives and laws like ERISA and the tax code on deductions are a couple of major problems.  The employer based health care is a nice idea but it takes the choice of coverage away from individuals and hides the true cost making it difficult for people to make their own choices based on their own needs and often leads to costs for coverage individuals don’t need and often gaps where they would like more coverage leading to a lot of inefficiencies.  But the issue with rising costs isn’t just an insurance issue we need to do more than just defeat the big bad insurance companies because remember the doctor bills are what is climbing as well and with rising claims insurance has to go up to cover the costs so there is a medical cost component as well as an insurance market component.   


But what else is there in this issue?  Well a lot.  1 big concern is why we are here in the first place.  I think that government tends to create many of the very problems they debate fixing.  For example when we consider why we are in this mess to start with let’s define the mess.  The mess is rising cost of healthcare at a rate twice the increase in wages and three times inflation for the most part.  So let’s analyze why this is happening.


From a simplistic point of view this problem is a simple supply and demand issue mixed with a high fixed cost problem so let’s address both separately and then perhaps together.  The supply demand issue is multi-pronged but can be boiled down to a few simple mistakes.  

1.)   Medicare and Medicaid.  These are great programs but with a rising number of covered individuals not bearing their own costs for medical procedures the demand for medical care increases greatly and has been since the programs where started.  I’m not saying they are good or bad, right or wrong, only that they are a major contributor to the problem.  What is the solution to that problem, well, when government budgets for programs like this they should consider the externalities which in this case is increased demand and ultimately higher costs to non-Medicare patients competing for limited services and try to compensate in some way such as never inventing government programs of that nature because they are unconstitutional or more simply subsidize supply as part of the budget to increase supply to match the new demand and eliminate that negative effect to everyone else.   

2.)   Tax incentives.  People who want to be doctors have choices to make and our tax system discourages people from going into fields like medicine.  Doctors incomes are based on massive initial investments of ¼ - ½ Million dollars in debt and the sacrifice of 8-12 years depending on the level of specialty.  That’s years where they could be working earning an income and having a life or starting a family all forgone.  When they finally start earning that income it is a high income but our tax system taxes based on income without regard to the investment they initially put in.  They might be able to write off the interest on the debt but not the debt or the lost time or the lost enjoyment of their youth.  Most doctors start and end their careers in a very high if not the highest tax bracket which means it is naturally less profitable than a job that makes a steady income over a longer period of time such as those initial 10 years that the doctor was in college because when you spread income out you pay a lower percentage in taxes.  Also doctors have a short career because involuntary retirement is a real threat.  A surgeon for example could have a vision problem, a stroke, tremors in his hands, o even something as simple as a broken wrist or hand that could limit or destroy their ability to continue that career.  This leads to an extremely short career.  Finally under tax law careers that require 40+ hours a week such as doctors who typically put in over 60 are punished for doing so because once they break certain thresholds they pay higher taxes as a percent of their income because government doesn’t care if you work 30 hours a week or 90 they only look at the paycheck and think people who make more should pay more regardless of the time, effort or investment involved.  This discourages people from entering the field and increases prices for 2 reasons.  The first is because supply is lower than it should be and so doctors charge more because their time is limited and it’s a market rationing mechanism but secondly doctors have to charge more to make a living plus pay their loans and other expenses with after tax income so a lot of that tax gets passed on to patients in the form of higher medical bills. 

3.)   Tort Costs.  In many states it is almost impossible to sue doctors because they are protected a million different ways to prevent discovery of mistakes.  We need to make discover easier and make more openness in the process but we also need to change the law so that doctors don’t face 10 million dollar pain and suffering verdicts.  I’m in favor of a comprehensive tort reform to make the process more open but also limit the top side risk to doctors in a way that will bring down the risk of doing business without removing protection from patients. 

4.) Illegal Immigrants.   Another way to help correct supply and demand as well as overall costs would be to remove the 15 million of those “un-insureds” we have who happen to be illegal aliens or the dependent children of illegal aliens.  That would take a huge burden off of our hospitals and lower the costs of services like Neonatal care across the board by a HUGE margin since treating illegals who are pregnant and their children is a major budget item! These are people here against the law who increase demand as well as cost because they have to be given care and they can't pay

So let’s look at the real problem.  Regulation creates both direct costs and indirect costs while also throwing supply and demand out of wack so isn’t it fair to say that government involvement is mostly responsible for where we are now?  I recommend that Medicare and Medicaid make an investment in doctors paying for their school in exchange for services.  This helps lower the cost to Medicare because they can require services far greater than the cost of medical tuition in repayment from the doctor while helping the supply side through reducing the upfront risk the potential doctor’s face.  There should also be a committee convened to look into making Medicare more efficient and to reward seniors for opting for their own medical coverage in lue of Medicare.  We need to lower the administrative costs of state by state regulation while increasing competition by making it a national market instead of a state market and we need to reduce the risk to doctors through smart tort reform.  Finally we need to address the inherent disincentive for higher education created by our tax system which punishes people who have a large part of their lives earnings cut into 15 or 20 year careers like doctors, lawyers, researchers and professors just to name a few.  There are many ways to do this but the best would be addressing it like a business allowing people who have long education to write off a little of that investment each year like a business would depreciate a building.  This lets them spread that cost over their career and makes it less of a disincentive.  Also I’m an advocate of setting any progressive tax to be based on hours worked and not annual salary because if I earn twice as much as you because I work twice as many hours as you we should pay the same tax rate.  THAT’S EQUITABLE!  I can’t imagine an argument that says we both earn $25 an hour but person A works 40 hours and person B works 80 hours so it’s fair that since person B makes twice as much as person A person B should pay 30% of his earnings in taxes and person A should pay 15%... that just sounds like punishing the person who wants to work hard and advance a very un-American idea.

So that’s my 2 bits on how to fix healthcare costs and health insurance costs without taking on more debt and without letting government have say in our health choices.  I think it is a win win. 

What chills me the most about the health care reform issue is not the clear loss of choice and liberty that will arise out of this bill and it’s not the economic problems, though they will be vast, that will arise from manipulating this market and spending on this level.  The real danger that chills my core is that these folks are willing to disregard fundamental rights to accomplish this illegal goal.  It’s bad enough that healthcare reform in almost all forms (there are a few legal ways to fix things that are being ignored) is unconstitutional but the real kicker is the attempts to squash debate through restriction of free speech!

The courts have been clear that government cannot burden or chill free speech under the 1st amendment and that such speech can be anonymous.  These government officials and their supporters are not debating this issue but instead attacking the speakers who this time happen to be normal Americans and not public figures!  Politicians are so use to trashing whoever opposes them under the guise that public officials are fair game that they don't know how to respond to valid concerns by the people!

The people are not public figures and do not deserve and in fact are protected from such aggression under the first amendment and yet the Obama administration is calling for supporters to report those who stand against them and forward to the Whitehouse a list of dissenters.  The congresswoman from California has called those who oppose her unpatriotic and others call them fear mongers and other horrible names.  These are citizens exercising their free speech!  Now they are being demonized and put at risk through public assault by political officials, pushed around by police and security on tax payer dimes... this is the government using our money to silence us and it is a scary prospect that not even the first amendment is sacred if it threatens their agenda!  

Americans need to wake up and smell the roses.  This government and the Democratic Party (and many in the republican party for that matter) have decided that our rights are granted as favors from their hand to be repealed or ignored and oppressed at will.  That is not rule of law!  That is not protection.  We must stand now and forever and tell them that we will give in and we will shut up.  We will stand and claim those rights that are higher than any government and that any government which opposes those rights is subject to be ignored and if the situation becomes extreme overthrown for their disregard of natural rights of man.  They must know that we have the courage to do whatever necessary because if we don't have that courage we will lose those rights.  The founders warned us again and again... it's time to head the warning.


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    Ludwig von Mises: 'Used to the conditions of a capitalistic environment, the average American takes it for granted that every year business makes something new and better accessible to him. Looking backward upon the years of his own life, he realizes that many implements that were totally unknown in the days of his youth and many others which at that time could be enjoyed only by a small minority are now standard equipment of almost every household. He is fully confident that this trend will prevail also in the future. He simply calls it the American way of life and does not give serious thought to the question of what made this continuous improvement in the supply of material goods possible.' - Economic Freedom and Interventionism
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