Blue Cross is giving money back to its customers in the individual market (including me). Supporters of the federal Patient Protection and Affordable Care Act (PPACA) say this is just one of many good things to come from the law. But the real reason for the refund seems to be that many of us won't be able to keep our policies under the new law, despite the president's promises. From ModernHealthcare.com
The refunds come from reserves set aside for these policyholders. Some premiums in certain policies build up reserves to even out the cost of premiums over the life of the policy. The health reform law will provide new versions of these plans starting in 2014, so the current policies will end sooner than originally expected.
Economists can tell us whether the actions we take and the policies we pursue are likely to maximize our economic benefits, but their analysis can miss key elements of human nature.
That was one of the points economics professor Petur Jonsson of Fayetteville State University made during his presentation today to the John Locke Foundation's Shaftesbury Society, titled "On Virtue, the Pursuit of Happiness, and Economic Behavior."
Jonsson contends an element of virtue can lead us toward decisions that appear irrational to the economist. This notion has consequences for public policy and business practices, as Jonsson explains in the video clip below.
3 p.m. update: Click play below to watch the full 46:10 presentation.
You'll find other John Locke Foundation video presentations here.
My Local Government Update newsletter stirred up a hornets nest last week. I re-posted Donna Martinez's blog post about a global warming resolution in Apex. Councilman Bill Jensen proposed the resolution that encouraged developers and builders plan for future solar installations. Two problems, resolutions that "encourage" are often changed to requirements and the factual "Whereas" statements were anything but factual. Here is my newsletter with a link to Donna's post on Right Angles.
This is my analysis to Councilman Jensen's "Whereas" statements.
All of the “Whereas” statements are contested by current
scientific or economic research and the second one contains a serious factual
global warming is a worldwide problem that is exacerbated by manmade pollution
such as carbon dioxide and other heat-trapping gasses.
Many highly qualified scientists, including Richard Lindzen,
Alfred P. Sloan Professor of Meteorology at MIT, dispute the assertion of a
direct cause and effect relationship between “manmade pollution” and global
warming. The idea that
warming continues is simply not correct. According to Phil Jones director University of East Anglia’s Climatic
Research Unit and chief advisor to the IPCC, there has been no significant
warming over the last 15 years.
From UK’s Daily Mail:
also conceded the possibility that the world was warmer in medieval times than
now – suggesting global warming may not be a man-made phenomenon. And he said
that for the past 15 years there has been no ‘statistically significant’
carbon dioxide, sulfur dioxide and other heat trapping gasses are a byproduct
of coal and oil fired power plants, automobiles and other carbon burning
The IPCC list of greenhouse gasses does not include sulfur
dioxide. In fact, the IPCC argues
that sulfur dioxide aerosols primarily from electric power plants produce
continued global warming will raise the sea level to the extent that
substantial portions of the North Carolina coastline will be engulfed.
As noted above, there has been no “statistically
significant” warming for the last 15 years. Also very recent research has shown that Greenland ice is
melting at half the previously predicted rate, thus calling into question sea
level rise predicted by global warming alarmists.[ii]
In addition, there is no evidence that the increase in sea level in North
Carolina is caused by recent global warming, that is pre-1995 warming. North
Carolina’s sea level has been rising at the same rate for well over a century.
consumable fuels such as coal, oil and natural gas continue to increase in
price each year as they become less and less available.
This statement is an example of junk economics. Since 1946 there has been no consistent
upward trend in inflation adjusted crude oil prices. The June 2008 price spike at $125 per barrel was followed by
a drastic decline to about $30 per barrel. There is no economic basis to support your prediction that
the current price of about $70 per barrel will consistently trend upward.
the development of renewable energy resources will assist the United States in
becoming energy independent from foreign energy sources.
Many economists argue that using very expensive “renewable”
energy (solar and wind) when much cheaper energy is available will further
damage the economy and destroy jobs. When it comes to electricity generation,
we do not rely on foreign oil. According to the U.S. Energy Information Agency, only 1.5% of all
petroleum used in the U.S. goes toward electricity production.[iii]
It should also be noted that almost all of the wind turbines being installed
today are imported.
the installation costs of renewable energy systems continues to decrease each
The installation cost is irrelevant. The question is what
is the cost of electricity produced by renewable systems compared to the
conventionally produced electricity. For example, the United States Government Accountability Office
estimates that electricity from solar costs to be about 18-23 cents per
KWh. This is about five to six
times more expensive than coal generated electricity—to put it another way,
consumers would have to pay about 600% more for electricity that comes from
the plug-in electric automobile is already available and will become common in
the near future.
This is true only if the huge taxpayer subsidies
continue. These subsidies divert
funds from the private sector where they would be invested in projects that
produce economic growth.
[iii] Total United States petroleum consumption data can be
found on the EIA site at www.eia.doe.gov/neic/quickfacts/quickoil.html; total
petroleum consumption for electricity generation can be found on the EIA site
[iv] United States Government Accountability Office. “Advanced
Energy Technologies: Budget Trends and Challenges for DOE’s Energy R&D
Program,” Testimony Before the Subcommittee on Energy and Environment,
Committee on Science and Technology, House of Representatives, p. 10,
That's what historian Robert Higgs calls our current situation: investment is going down while government power and spending are going up. Read his article here.
We have been through similar episodes in the past, most notably the 1930s.
Statists like to chatter about "economic growth" but you only get that when production of goods and services rises. Production only rises when investment increases. Everything Obama has done decreases the level of private investment and expands government power. Of course the economy remains moribund.
I am on the Wake County Sustainability Task Force. The task of the group is to provide the county commissioners with recommendations that will make Wake County more "sustainable" in water, energy and solid waste. In other words, what actions will facilitate the county using fewer resources.
We tackled solid waste first. I have tried and tried but it seems that many of the Task Force members cannot or will not understand this fundamental economic axiom so simply expressed at Cafe Hayek by George Mason University economist Don Boudreaux in a letter to the Boston Globe.
Here’s a letter to the Boston Globe:
Bravo for Jeff Jacoby’s clear-eyed assessment of recycling (“Get excited about recycling? Not me,” Sept. 19). When materials are worth recycling, markets for their reuse naturally arise. For materials with no natural markets for their reuse, the benefits of recycling are less than its costs – and, therefore, government efforts to promote such recycling waste resources.
Everyday experience should teach us this fact. The benefits of recycling clothing, for example, are large enough to prompt us to buy costly clothes-recycling machines that we routinely use to recycle for tomorrow the clothes we wear today. We call these machines “washers and dryers.” And when American families no longer want their clothing, organizations such as Goodwill come by to gather the discarded garments to recycle them for use by poor people.
People also recycle their homes. The one I own and live in was previously owned by a family who recycled it – which included refurbishing it – rather than simply discarded it when they moved to another town. Many people also drive recycled (“used”) cars, stock their homes with recycled (“antique”) furniture, listen to recycled (“used”) CDs, and read recycled (“used”) books.
Markets promote conservation when it’s worthwhile; government promotes it when it’s wasteful.
In the latest TIME, you have to read quite a bit about the mysterious “network of little-known conservative political outfits based in D.C.” that are helping Republicans in the fall campaign before writer Michael Crowley admits:
Democrats may condemn these Republican efforts. But in truth, they would love to match them. Some party operatives have been trying but with little success. "Our donors just haven't been interested" in big outside-group ventures, laments one Democrat with experience in such groups, "at least not yet." This strategist points to several factors: Wall Street donors who gave generously to the party in recent years now feel burned by Barack Obama's condemnations of the big banks; voters who were inspired by the prospect of the first African-American President have disappeared this cycle; and Democratic donors motivated by U.S. support for Israel are frustrated with Obama's policies toward the Jewish state. Democrats may also be the victims of their own success. The Obama campaign was so eager to neuter aggressive Republican outside groups in 2008 that it discouraged party donors from supporting independent liberal outfits, like a 527 operation run by MoveOn.org, which shut down as a result. Meanwhile, it's Republicans who can assure their donors of real bang for their buck. "A lot of [liberal] donors are smart business people, and the perception that Democrats are going to lose is chilling them from contributing," says Tom Matzzie, a former top official with MoveOn.org. "Why throw good money after bad?"
Speaking of correcting misperceptions, Bloomberg Business Week’s cover story included this enlightening exchange between Peter Orszag, President Obama’s recently departed Office of Management and Budget director, and Charles Calomiris, Columbia University professor of financial institutions:
Orszag: Over the long term, it is clearly right that entitlements are the key issue, and we should talk about health care because that is the core of the long-term problem. But if you are looking at the next five or 10 years, the nature of our problem is fundamentally different. I don't think you are going to be able to get the majority of the fiscal adjustment necessary in 2015 or 2016 on the spending side of the budget.
Social Security changes will be gradually phased in and will protect current and near-retirees, which means their impact by 2015 is very modest. Most of the politically feasible Medicare and Medicaid offsets were part of the health-care bill, so the [odds] you are going to get a lot more by 2015 are not overwhelming. If you look at nondefense discretionary spending, even if you cut 5 percent from that, that is 0.2'percent of GDP. So the majority is going to have to come on the revenue side for the medium term.
Calomiris: I disagree with Peter when he says we just can't get more than a 5 percent cut in nondefense discretionary spending. Nonsense! During the Bush Administration and in the last two years, we have substantially increased government expenditures. Government expenditures as a fraction of GDP are way too high. We need to go back and think about where we were 10 years ago and think about rolling back those programs, because we are broke.
Charlie Rose deserves credit for offering exposure to Wisconsin Rep. Paul Ryan’s “Roadmap for America’s Future.”
As a Bloomberg Business Weektranscript of their recent inteview shows, Rose could use a little help with his economics:
Stimulus doesn't work? There are better ideas that would help create jobs, such as keeping our tax rates low, reducing spending, and showing we are serious about our debt situation. That and more regulatory certainty would help us unlock private capital.
There's regulatory certainty now that we have financial reform. There are over 500 regulations that will come out of this new law that haven't been promulgated yet. We have a new health-care law, and many businesses don't really know what the consequences are. So the government has done a lot lately that is having a chilling effect on businesses. When I talk with businesses big and small, I get the same question every time: What is the government going to do to me next? What I really worry about is this class-warfare rhetoric we're getting from the White House and from others that is pitting people against each other, using the election-year moment to tap into the emotions of fear and envy. Those might make for good short-term politics. They make for rotten economics.
If you believe government does far too much — and the world would be a much better place if more people followed the motto “don’t just do something, stand there” — you might enjoy South Carolina Sen. Jim DeMint’s response to those who criticize his efforts to elect conservative candidates.
Bloomberg Business Week sought that response in its latest issue:
[Some Republican colleagues] argue that O'Donnell and other "DeMint disciples," as former Senate Republican leader Trent Lott calls them, are so conservative and inexperienced that they aren't likely to win in the general election. If that happens, they say, he will deny the GOP the 10 seats it needs to take control of the Senate. "We've probably just written off Delaware, and we're shocked and disappointed about it," says Ron Bonjean, a former top Republican Hill aide.
DeMint doesn't care. "I've been told by businesses that if we would stop the tax increases the best thing that could happen for business after that is complete gridlock. At least gridlock is predictable," he tells Bloomberg Businessweek, taking a quick break between TV appearances. His goal, he says, is to stop programs that violate his anti-Big Government ideology. "What happens in the Senate is the Republicans sink to the lowest common denominator," he says. "People want an alternative to some kind of watered-down Republican philosophy."
Swedes have “enviable cradle-to-grave benefits,” as Bloomberg Business Weekreminds us in the latest issue. But the Social Democrats who created Sweden’s “fabled” welfare state are in danger of losing a second straight general election. Why?
[T]he cost of such largesse kept rising. [Prime Minister Fredrik] Reinfeldt came to power by convincing voters that lowering income taxes and benefits would increase the number of jobs and actually boost the tax revenues necessary to keep the welfare state intact. Once in office, Reinfeldt's coalition cut income taxes by 70 billion kronor, or about 2.3 percent of gross domestic product; tightened the budget; and trimmed jobless benefits to nudge people back to work. …
The economy has cooperated. After contracting last year, GDP will probably grow 4.5 percent this year, making Sweden one of Europe's top performers.
Wow. Cutting taxes to boost the economy. Who knew that might work?