While some will say that the complaints about ØBAMACARE (I am making this Øbama’s trademark, since there is a move to restrict the use of the term in political advertising) are “future hypotheticals”, there are aspects of ØBAMACARE that are occurring as we speak, and they do not bode well.
The Wall St. Journal recently printed an editorial titled The Bush-Øbama Rx Shortages. It indicates that a number of lifesaving cancer drugs are in short supply due to price controls. ØBAMACARE us all about “keeping prices low”, i.e. price fixing. As we learned during the Nixon years, price controls do little but cause supply to decrease.
We are seeing analogous effects in the number of physicians that will accept Medicare patients when challenged by more and more payment cuts. More cuts, fewer doctors. In this case, cut the price, less medicine. To be sure, as the title indicates, this legislation started with Bush, and to his credit, Øbama has actually recognized this growing problem, but the proposed fixes are as incompetent (read it: government based) as the original legislation.
The inevitable problem arises from the fact that ØBAMACARE’s solutions are all based in government control of prices and services, and as this “anecdote” indicates, the unintended consequences of these price controls are certainly not unforeseeable. Couple this with FDA delays on drug approval extending as long as two and a half years, you have a perfect storm of legislative stupidity that will effectively destroy a system that was, at least as far as these drugs were concerned, working well. But politicians always think they know best, and will continue to monkey with a system that had worked out a price/supply balance for effective cancer drugs. Isn’t it better to have available but expensive drugs rather than unavailable inexpensive drugs?
As the article concludes, this is a problem that leads to compromised care and will allow people to die. If you think ØBAMACARE will fix this, you are laboring under an unsupportable misconception. It will do nothing but make the situation worse, in the short and long run.
Politicians simply don’t know what they are doing, and should not be allowed to tinker, excuse me,and effectively nationalize the country’s healthcare system.
In today’s world, almost every single person is a victim of the loan scam. While it is undoubtedly helpful, it is equally burdening too. Many people who owe loans to more than 1 person have begun to take out trust deeds as it is in today’s world the only safest option which allowed them to pay off their loan without calling out bankruptcy. Payday loans can be an instructive topic since we’ll be able to discuss the difference between the conservative and liberal approach. Liberals may point out moral objections and struggle with logic, while conservatives may take a more logical approach while struggling with the moral aspects. Read more
Economics is the study of the use of scarce resources which have alternative uses. This definition comes from the text Basic Economics written by Thomas Sowell. Hugo Chavez – president of Venezuela – should read at least the first couple chapters of this book.
Venezuelan President Hugo Chavez sought to tighten his grip on South America’s third- largest economy as he ordered National Guard troops to seize rice-processing mills for allegedly failing to observe government price controls.
“Some companies are refusing to follow the government’s rules,” Chavez said yesterday on state television. “I’ve ordered the intervention in those industries to protect the people, not the bourgeoisie.”
Two questions come to mind. First, why did the government feel the need to implement government price controls and second, why did the rice-processing mills ignore imposed rules?
In response to rising inflation, Chavez ordered price controls – specifically implementing price ceilings on staples like rice and milk – to keep prices low for the people. The problem is that market forces quite easily move to cause more issues for those producing and consuming these products.
Pricing is a very important factor when it comes to product availability. Quite simply, prices rise when demand exceeds supply at the current price, and prices fall when demand is lower than supply at the current price. These facts are what the Soviet Union and now Chavez in Venezuela are totally missing.
Chavez has instituted price controls to keep prices lower than they would be if left to market forces. Because of this move, two things happen. First, the demand of rice increases since the price is low. People in certain areas of Venezuela are stockpiling rice at the low price even though they do not need it. Second, companies look for alternative uses for the rice they produce since they can not make a profit – and indeed loose money – at the set price.
Alternative uses for rice? You bet. As it turns out, flavored rice was not included in the Chavez price controls.
The government will seek to establish norms to determine what percentage of processed rice products can be sold as flavored rice, which isn’t subject to price controls.
So what caused inflation in Venezuela? Chavez increased the roll of the federal government when it comes to social programs, welfare and other support for the poor. This huge increase in government spending has caused staggering inflation, more than 30 percent last year alone.
That first colossal mistake has led to Chavez’s second mistake. Watch out… snowball coming down the hill.
Chavez may be beginning to realize it is impossible for the government bureaucracy to determine how resources should be allocated. Even a blue ribbon panel would not be able to efficiently figure out where they next ton of rice should be shipped or what the price should be.
We’ve got a perfect opportunity to watch what Chavez has done and will do in the future in his self-proclaimed move towards a “perfect” socialist society. Maybe those who did not learn from the Soviet Union’s experiment will learn from Chavez.
Gateway Pundit has more.
Gas prices go up. Gas prices go down. Those of you who think there is a daily 7 a.m. ET conference call where the executives from ExxonMobil, Chevron, Shell and Sunoco decide what the price of gas should be that day are wrong. Fuel prices, just like any other world commodity, are driven by the market. Primarily this would be the laws of supply and demand.
During the past couple of weeks, there has been plenty of discussion concerning price gouging, the evil act of gas station owners taking advantage of you during your time of need. This post will convince you that a quick rise in prices during a supply crisis can be a good thing.
That’s right, I’m going to buck the trend, got out on a limb and be politically incorrect; then you’re going to agree with me and use the E-mail This Post feature to send it to everyone you know.
Hugo Chavez is on a mission. A mission to destroy the country of Venezuela and crush the spirit of the people. Here we have an emerging socialist country, doing it’s best to emulate the failure of Castro’s Cuba, and Chavez may just be able to pull it off in record time.
In 2003, price controls on food staples were introduced in Venezuela to try to fight rising consumer prices. The list included all the basics: sugar, eggs, milk, beans, eggs, chicken, beef and more. Chavez has also demanded (it’s now the law) that banks provide loans to agriculture-related businesses at 15 percent, and extend the loan periods from an average three years, out to 20 years.
Since the current inflation rate in the country is upwards of 22 percent, and it’s becoming difficult to locate price-controlled food, the plan is not working out for Hugo. People are pissed off. The results have been disastrous.
These government decisions to, in effect, crush the Venezuelan economy, offer our readers an opportunity for another economics lesson.
Let’s say you’re a farmer in Kentucky. It costs you a certain amount of money to run the farm including planting, harvesting, employee costs, water, other utilities and maintenance of equipment. You grow corn, and the Commonwealth of Kentucky has instituted price controls that require you sell the corn for no more than $10 per bushel. The government feels that corn has gotten too expensive for the people. It’s just not fair, they had to do something.
As you review your costs, you calculate that it costs you $12 to produce a bushel of corn. Since the government has dictated the price of $10, you have to make some decisions. If you follow the new law, you’re going to loose your farm. Your choices are to stop farming, change your crop from corn to something else, or ship your corn out of state where you can make a profit. (The going rate in Virgina for corn is $13.50.)
This is exactly what’s happening in Venezuela, and is a clear example of what happens when a government institutes price controls on a product.
From CNNMoney.com (emphasis added):
Government officials have attributed the shortages to greed among retailers, accusing them of hoarding products for months to later sell them at inflated prices.
During Saturday’s meeting, Chavez said that “contraband” – illegal exports to neighboring countries – was partly to blame for the shortages.
Many foods fetch much higher prices in neighboring Colombia and the Caribbean, which has driven some businesses to sidestep customs requirements and smuggle goods over the border, Chavez said.
“This is a problem that we must remedy,” he said. “If the National Guard isn’t enough to patrol our border, I’ll have to deploy the entire army along the highways and byways to stop the contraband.”
What’s wrong with this picture? The farmers in Venezuela have a choice and they are making good decisions. If the farmers just stop producing anything, will Chavez deploy the entire army to all of the farms to demand that crops are planted, harvested and taken away? I’d call that slavery, pure and simple.
He’s also demanded that banks provide loans at rates lower than the inflation rate. From the same story as above:
“The law must be applied,” he [Chavez] said at a televised meeting with farmers on the weekend. Any bank that didn’t comply “should be seized”.
Mr Chavez also announced his Government had approved legislation establishing a maximum 15 percent interest rate on agriculture-related loans and extending payment deadlines from three to 20 years.
The same economics theory applies here. Since the banks are private entities – as they should be – they must be able to make a profit. We can discuss what a reasonable profit is at another time, but they still need to make a profit or they (bank shareholders) will simply close down the bank and find something better to do with their investments. Of course, Chavez has threatened to seize the banks that do not comply, so they better close the branches and accounts quickly and quietly.
But hey, with gas prices in Venezuela under a quarter per gallon – that’s right under 25 cents per gallon – who needs chicken?