Posts tagged with State
Here's the Libertarian solution for stopping massacres. It costs the taxpayers no money, works everywhere, deters violent crime, is employed in as little as five seconds, is easy to learn, requires no police, and most importantly, protects innocent lives.
Well, I've read around about this decision and the details of the bill and apparently there is a loophole in the law that will sow the seeds of its own destruction. We all know the most controversial part of the law which requires that everyone purchase health insurance or else pay a penalty. The Supreme Court ruled that this law was constitutional because this penalty is a tax. They ruled that Congress cannot mandate that people buy health insurance, but that they can tax you if you do not. They ruled that this is a tax and not a penalty because the tax is so small. Vertigo has mentioned a figure around $95 several times in the forums. Now obviously $95 is a lot less per year than it would cost to buy health insurance. The Court did say, however, that if the tax was so high and burdensome that it would basically ruin you if you did not buy health insurance, that would be unconstitutional since that would be forcing people to buy health insurance via the tax code. Here are some more key facts: the bill has several features which are meant to protect people from not having insurance such as no longer allowing insurance companies to deny coverage based on pre-existing conditions. One more thing, the IRS is not allowed to use aggressive methods in collecting the penalty/tax for not buying health insurance.
So, what's the loophole? Don't buy insurance, don't pay the penalty, and then only buy insurance when you get sick since they can't deny you coverage. The penalty/tax is so small that it's a lot cheaper than buying insurance, and the IRS is likely not going to be able to collect it from you anyway. Not only that, you can wait until you are sick and then buy insurance and be fully covered. And here's the kicker: since the Court ruled that the law is constitutional only so long as the penalty/tax remains small enough to be considered to not force people to choose to buy health insurance, they can't raise it without risking the bill being overturned!
Obviously this is not going to work if enough people exploit this loophole since then there won't be enough healthy people paying insurance premiums to pay for the care of the sick. The government will have to step in to cover the costs and they won't be able to raise the penalty to force people into the system. The insurance companies will still have to cover tons of extra costs and will likely go out of business without government help.
Monopolies are a creation of the government. This occurs when the government prohibits competition like patent monopolies or cable monopolies. On the market there can be no monopolies without government protection. If there was only one airline, that airline would still have to compete with train, car and bus travel. There are almost always substitutes. So for example, the supposed Alcoa aluminum monopoly never charged monopoly prices. Why? Because there are substitutes for aluminum. They were competing with other firms--firms in other industries who were making products that could be substituted.
Harvard economist Dominick Armentano did a study of the 55 most famous antitrust cases, and in all 55, in every single case there was no evidence that a monopoly had been created. In fact, the evidence showed that they were operating competitively. Antitrust law is a cudgel for non-competitive businesses to hamper their successful rivals.
The whole reasoning behind the "need" for antitrust law, that monopolistic companies or cartels will cut production and raise prices, is a complete myth. Before the Sherman Act from 1880 to 1890, the industries accused of antitrust violations were all increasing production at rates greater than the economy was growing. Steel production--258%; zinc--156%; coal--153%; petroleum--79%; sugar--75%. In other words, these "monopolistic" industries were increasing production on average at a rate seven times that of the economy as a whole.
Prices also were falling faster in these industries than in others. Steel rail prices fell 53%; sugar was 22% cheaper; zinc fell 20%, coal, kerosene, and others either fell or stayed the same.
There is no evidence whatsoever that monopolies or cartels existed on the free market or that large businesses and trusts are harmful to consumers or require government intervention. None.
Antitrust is built entirely upon a myth. It is nothing more than propaganda at its worst. The American Can example proves that it is impossible to create a monopoly on the free market. They tried to do it--buying up all their competition and shutting them down so as to increase their market share. It completely and utterly failed. Every time they bought and shut down a competitor, two more sprang up. Soon, people were making cans in their barns using old equipment. Everyone was making cans and American Can had to quit trying to monopolize the industry because they ran out of money. It simply was impossible. Monopoly can only happen when a government creates it.
The real purpose of antitrust law is government protection for firms that are not competitive but are politically well-connected. It is just another form of welfare for the wealthy. Consumers are harmed the most because they are denied the benefits of lower priced goods and services. General Motors had a specific policy of never having too large of a market share. Thus they intentionally made products that were either of lower quality or higher cost than they otherwise would have. This directly lead to the huge gains that Japanese and German car makers achieved with their low-cost or high quality vehicles.
In a global economy, we must stop hamstringing our most successful firms. We are shooting ourselves in the foot and the ones hurt the most are those who lose jobs because our firms are less competitive, and the consumer who has to pay higher prices.