Property Rights and Contracts

Posted by PITHOCRATES - March 26th, 2012

Economics 101

We put a lot of Money and Time into Maintaining Property we Own so we can Enjoy it Exclusively

Have you ever bought the Brooklyn Bridge?  I hope not.  For if you have someone probably conned you.  Unless you bought it from the New York City Department of Transportation (DOT).  Because they currently own the Brooklyn Bridge.  And are the only ones who can sell it.  But the last I checked they weren’t selling.  So I doubt they sold it to you.  If you are about to enter into negotiations to buy the Brooklyn Bridge I suggest you do a title search first.  To verify that the seller in fact owns the property.  Has the right to sell the property.  And that the seller is selling the property ‘free and clear’.  To make sure you don’t have to pay any outstanding construction bills for work completed on the bridge that the DOT didn’t pay.  Then and only then should you buy your bridge.  So you can enjoy the pride of bridge ownership.  While charging tolls.  And getting rich.

This illustrates a central point about buying and selling things.  Property rights.  Which lets us buy things.  And sell them.  For to sell something we must first own it.  And to buy something we must know that we can own it.  Because if we’re not sure we can own it we’re not going to exchange our hard-earned money for it.  And once we own something we’re going to use it however we wish to use it.  At least that’s what we expect to do.  If we buy a house with a pool in the yard we’re going to want to use that pool exclusively.  Because we paid for it.  And keep it clean.  By maintaining the pool filters and pumps.  Adding chlorine.  Vacuuming the bottom.  We’re going to put a lot of money and time into maintaining that pool so we can enjoy it.  Our little tropical paradise in our own backyard.  But we’re not going to do all of that if just anyone can walk into our yard and use our pool whenever they damn well please.  For if that were the case we wouldn’t spend the time and money in the first place.  We’d look for a pool we could use for free.  Like everyone else who thought they could walk into our yard and use our pool whenever they damn well please.

Or would we?  Let’s say someone in your neighborhood just moved in.  They put in a nice in-the-ground pool.  Spent a fortune on it.  Kept it pristine.  And used it exclusively.  They were happy.  Until the subprime mortgage crisis hit.  And all of a sudden they owed far more on their mortgage than the house was worth.  So one night they just disappeared.  And let the bank have the house.  Once you notice their house is empty you think about that pool.  And decide what could it hurt if you went over for a swim?  You go there.  Notice they left the pumps and filters on.  And the pool is still pretty clean.  So you enjoy a swim or two.  Others find out.  And go over for a swim.  A lot of them.  The pool is crowded.  And not so clean anymore.  No one is skimming the garbage out of it.  Or maintaining the chlorine level.  Some of the kids are even peeing in the pool instead of getting out of it.  Soon the pool begins to smell bad.  Algae is growing.  The filters plug up.  With the water flow blocked the pumps strain and trip the circuit breaker.  Stopping the pumps.  And the filtering.  The crud they filtered out backs up into the pool.  Soon the water turns a greenish gray.  And looks more like a stagnant pond where dead fish float on the surface than the pristine tropical paradise it once was.

We can trace most Pollution and Environmental Damage back to the Tragedy of the Commons

Economists call this the Tragedy of the Commons.  Which is what happens when we poorly define our property rights.  In our example the pool was clean and enjoyable when someone owned the pool.  When no one owned the pool (after the previous owners abandoned it) the pool became dirty and no longer enjoyable.  Why?  Because when we own something we have an incentive to take care of it.  For our long-term enjoyment.  When no one owns it no one has an incentive to take care of it.  Some may try but others will continue to pollute.  Because they don’t own it.  And have no incentive to spend the time and money to keep it clean.  Especially when others are still polluting.  So no one tries to keep the pool clean.  They’ll enjoy it while they can.  And when the pollution gets so bad they will move on and find something else to enjoy. 

We can trace most pollution and environmental damage back to the Tragedy of the Commons.  If you love the beach so much that you buy a house on it you will keep your beach clean.  You’re not going to litter it with cigarette butts, empty bottles, food wrappers, used condoms, etc.  A public beach, on the other hand, is a different story.  Just as people will take their trash to a public field to dump it.  Because they don’t own that land and have no incentive NOT to pollute it.  And it’s cheaper than taking their trash to the private landfill that charges a fee.  Who helps to keep America beautiful by burying our trash.  And when the landfill is full someone else will buy it and make a beautiful golf course out of it.  Or something else.  As long as someone owns it something nice will happen with that land.  To maintain the value of that land to the landowner.

When you own something it has value to you.  Such as a logging company cutting down trees on land they own.  Because this land has value they will not over-log it.  And when they cut down trees they will plant new seedlings.  So the land continues to have value.  Because they will be able to cut down these seedlings after they grow into trees.  Or the future owner of that land will be able to.  Who will buy that land because it has value.  Whereas there is no incentive for a private logger working on public land NOT to over-log it.  Or to plant seedlings.  Because they don’t own that land.  Anything they don’t cut down some other logging company will.  And without any property rights to that land they won’t plant any seedlings.  Because nothing will prevent anyone else from cutting these down once they grow into trees.

Well Defined Property Rights allow Buyers and Sellers to Enter into Contracts with one Another

To do all of this buying and selling we need well defined property rights.  Clearly spelling out what the seller owns.  And what exactly the buyer is buying.  For example, a logging company buying a tree farm may want to drill an exploratory well to see if there is oil or natural gas under that land.  So he or she will want to make sure that the terms of the sale include all mineral rights.  Paying additional for these rights if necessary.  Or getting the tree farm at a lower price than other comparable tree farms because the seller wants to retain the mineral rights.

Well defined property rights allow buyers and sellers to enter into contracts with one another.  Contracts clearly state the terms of sale and any other special provisions.  Such as the seller retaining his or her right to have his or her pick of one tree anywhere on that land once a year in the month of December.  As long as buyer and seller freely enter into these agreements they expect each other to honor the terms of the contract.  And only when both parties honor the terms of the contract does the ownership of property transfer from one party to another.

Property has value.  Even the Brooklyn Bridge.  And well defined property rights protect that value.  Because the DOT owns that bridge they spend money to maintain that bridge.  A well-maintained bridge provides value for those who want to cross the East River.  Currently the various taxes they pay to the city and state make their way to the DOT.  To pay for that maintenance.  But if the city of New York found itself in serious financial trouble they could sell the Brooklyn Bridge.  To a private person.  Who wants to put up toll booths on the bridge.  The city gets a large sum of money to help with their financial trouble.  And the new private owner gets a revenue stream in the form of tolls.  And the city of New York will, of course, screw those crossing the East River.  Because they’ll now have to pay a toll to cross the Brooklyn Bridge.  But they won’t get any of their taxes back.  Because governments rarely if ever cut their taxes.  The city and the private person do well because they both have well defined property rights.  And a contract.  The people using the bridge don’t.  They had no contract with the city that clearly stated the terms for their use of that bridge.  And will continue to pay the taxes that paid their crossing fees.  As well as the new tolls.  Which is business as usual.  Because government always screws the taxpayers.  Who are always at a disadvantage when it comes to property rights and contracts when dealing with the government.  For government has the power to break contracts and take property.  Unlike private persons entering into contracts.  Who only transfer the ownership of property by mutual consent.

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The Best Polio Vaccine is Free Market Capitalism

Posted by PITHOCRATES - March 25th, 2012

Week in Review

India is polio-free.  Pity the same can’t be said about her neighbors (see Effort to stop polio aims to vaccinate 111 million children in four days posted 3/23/2012 on the Los Angeles Times).

Polio, a viral disease that invades the nervous system, cannot be cured, only prevented. It mainly affects children under the age of five, leading to paralysis and even death.

The disease has been cut by more than 99% since the global campaign to eradicate polio was launched in 1988; India, which once had half of the polio cases in the world, recently marked a year without a case…

Last year, 650 cases were reported worldwide, with persistent pockets in Nigeria and along the border between Afghanistan and Pakistan. The virus resurged in Cote d’Ivoire, Guinea, Mali, and Niger.

If you follow the link you will see a map.  In that map you can see the three countries India, Pakistan and Afghanistan.  India, the most populated of the three, is polio-free.  Pakistan and Afghanistan, less populated, are not polio-free.  One would think that the sheer numbers would have made India the country with the most cases of polio.  But no.  Why?  What’s different between India and Pakistan/Afghanistan?  India is a country growing more modern by the day.  With a bustling economy.  And a rising standard of living.  Pakistan and Afghanistan, on the other hand, aren’t much different than they were a millennium ago.  Especially in the border region between these two countries.  They are not modern countries.  And suffer from diseases more modern countries have already eradicated.

Are their campaigns to eradicate polio in the United States?  Canada?  The United Kingdom?  Europe?  South Africa?  Australia?  New Zealand?  No.  Because these are advanced First World nations.  Where childhood includes the dreaded vaccinations.  Kids hate getting their shots.  But they get them.  And are healthier for it.  Unlike the kids in the border region between Pakistan and Afghanistan.  Who suffer Third World poverty.  And infectious disease.

The best medicine for children?  Free market capitalism.  That produces a wealthy middle class.  A high standard of living for all.  And a social safety net for those who fall on hard times.  Where there is no Third World poverty.  And the children suffer little from infectious disease.

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Sir Tim Rice drops Support for Conservatives because they Support and Subsidize Wind Farms

Posted by PITHOCRATES - March 25th, 2012

Week in Review

Sir Tim Rice is one of the greatest lyricists to ever write a lyric.  Yes, Lord Lloyd-Webber can write a catchy tune.  But it was Sir Tim’s lyrics that really made Joseph and the Amazing Technicolor Dreamcoat, Jesus Christ Superstar and Evita come alive on stage.  Which is a very big reason why these shows still tour.  The man is brilliant.  And as it turns out, in more ways than one (see Sir Tim Rice on his new musical and working with Andrew Lloyd Webber by Roya Nikkhah posted 3/25/2012 on The Telegraph).

Falling out of love with the Conservatives, for starters. Once a stalwart party donor and fundraiser, his support has waned as the Tories’ enthusiasm has grown for “insane” policies such as supporting and subsidising wind farms.

“I recently declined to support a Conservative function because I’m so incensed about these wind turbines. Like all so-called climate-change doubters, I am very pro the environment, but I strongly believe that it is something that can only be cured locally. Some insane overall scheme isn’t going to cure all the problems. And the money that is wasted! As a landowner in Scotland [Sir Tim owns the 33,000-acre Dundonnell estate in Wester Ross on the west coast], I’ve been offered vast amounts of money to stick up wind turbines, which not only will make me richer, it will make less well-off people poorer, and will damage the environment. These schemes aren’t doing any good – just making rich people richer, and it’s depressing to see great areas of these useless objects up there.

“It’s a scam – a con – and until the Government has the brains to actually say, hang on, we’ve got it wrong, this is a total economic and environmental error, then I find it hard to give total support to them.”

It is so refreshing to hear someone in the arts community speak out against silly environmental policy.  Which is rather rare.  For people in the arts pursue their passions.  Their love of art leaves little room for much else.  So they don’t spend a whole lot of time studying the issues of the day.  Their industry as a whole has a position on these issues.  Which many artists simply endorse.  Thinking they are well thought out positions.  But they’re not.  And are usually guided by their desire for further government funding.  Requiring higher taxes on businesses.  And as a result artists tend to be anti-business.  Because they ‘take money away’ from the arts.  Even though they accept grants from them and will display their names prior to a performance.  But in general they don’t much care for business.  And tend to come down on the side in favor of environmental regulation and green energy.  But not Sir Tim.  Who apparently has studied the issues.  And has made an informed decision. 

The reason why we use coal, natural gas and nuclear power is because these sources of energy are highly concentrated sources of energy.  A little of them will produce a lot of electricity.  And they are reliable.  They’ll produce electricity rain or shine.  Day or night.  Wind or no wind.  Wind power is none of this.  It is not a concentrated source of energy.  So it takes a lot of windmills to produce a little electricity.  And if the wind doesn’t blow they don’t produce any electricity.  So this is a lot of money to produce a little electricity.  It is not cost-efficient.  A terrible waste of investment capital.  And taxpayer money.  Which is the point Sir Tim is making. 

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Despite Strict Abortion Laws some UK Doctors provided Abortions for Women who didn’t Like the Sex of their Fetus

Posted by PITHOCRATES - March 25th, 2012

Week in Review

The UK has law governing abortion.  Unlike the US.  Who has no law on the books.  Well, there were many laws on the books in the several states.  But Roe v. Wade made these moot.  Perhaps the most contentious Supreme Court ruling of all time.  And what many call legislating from the bench.  For this decision didn’t interpret law.  It made new law.  For there was no law on the federal register to interpret.  And that’s how abortions became legal in the United States.  Whereas the UK actually debated the issue.  And used their legislative body to write it into low.  A novel use of the legislature.  Legislating.

Roe v. Wade was based on an abortion that never was.  The ‘Jane Roe’ in Roe v. Wade was Norma McCorvey.  Who had her baby and gave it up for adoption.  Converted to Catholicism in later life.  And became pro-life.  She regrets her part in Roe v. Wade.  And now works to overturn that decision.  The only ‘law’ on the books for abortion in America.  Granting full access to abortion without any legislative debate whatsoever.  Which they probably didn’t want.  For they did have that debate in the UK.  And their law placed some restrictions on abortion (see Abortion forms being ‘pre-signed’ by Press Association posted 3/23/2012 on the guardian).

Spot checks at more than 250 abortion clinics this week found evidence of blank forms being signed in anticipation of patients seeking a termination.

The law states that, except in emergencies, two doctors must agree for a woman to have an abortion.

Although doctors do not have to see the woman in person, they must certify that they are aware of her circumstances and why she wants to go ahead with the procedure…

The news comes after a Daily Telegraph investigation last month uncovered allegations that doctors at three clinics had agreed to terminations based on the sex of the baby.

The General Medical Council (GMC) has suspended or placed restrictions on these doctors and the claims are being investigated by the Metropolitan police, Greater Manchester police and West Midlands police…

In the UK, abortions are allowed on certain grounds, including that continuing with the pregnancy would be a greater risk to the woman’s life, physical or mental health than ending the pregnancy, continuing would be more of a risk to the physical or mental health of any of the woman’s existing children and there is a real risk the child would have a serious physical or mental disability.

Apparently China isn’t the only nation that has aborted a pregnancy based on the sex of their baby.  This is perhaps the greatest concern to those on the pro-life side of the argument.  This selective breeding.  Just how far will people go in making their decisions in terminating their pregnancies?  An identified birth defect?  The sex of the baby?  The color of their hair (some kids pick on redheads in school).  If the fetus shows an obesity gene?  A short gene?  A premature bald gene?  An ugly gene?  A homosexual gene?  Just how far will parents go to have ‘perfect’ children?

Even an atheist has to admit this is getting too much like playing God.  A lot of women making these decisions are not in the best frame of mind.  A lot of them are young, too.  Who will have a lifetime ahead of them to think about this decision.  Which is why the British require counseling.  Because some women may change their mind.  Like Norma McCorvey did.  And if you do that would be a terrible thing to have to live with.

Often when it comes to an unwanted pregnancy the choice is to destroy a women’s life now by having a baby that she is ill-prepared to raise.  Or ruin her life later as she dwells on what she did when she was ill-prepared to raise a child.  Some may be burdened by this in later life.  Some may not.  But most would agree that they would much rather not ever be in the position to have to make this decision. 

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Elderly Cancer Patients are not Worth the Cost of Health Care they Consume so the Policy of the NHS is to Let them Die

Posted by PITHOCRATES - March 25th, 2012

Week in Review

Proponents of Obamacare attack the profit-oriented private health insurers, medical device and drug manufacturers and hospitals.  Putting profits before people is wrong and shameful they say.  And just plain wrong.  No, the better way is to do like the Canadians.  And the British.  Adopt a health care system that puts people before profits.  Where everyone can smile and enjoy life.  Content in a perfect world where everyone gets whatever health care they need.  Not just the rich who can afford it.  So, with that in mind, let’s take a look at that health care utopia in the United Kingdom.  And see how wonderfully just, kind and generous their health care truly is (see Elderly dying due to ‘despicable age discrimination in NHS’ by Rebecca Smith posted 3/25/2012 on The Telegraph).

A lack of treatment or insufficient treatment is contributing to 14,000 deaths a year in people over the age of 75, Macmillan Cancer Support has found, in what it called an ‘unacceptable act of discrimination’.

Deaths from cancer are reducing in most age groups but at a slower rate in those aged 74 to 84 and are increasing in people aged 85 and over, the report said.

The report, The Age Old Excuse: the under treatment of older cancer patients, said treatment options are too often recommended on the basis of age rather than how fit the patient is…

Few clinical trials involve older people so clinicians are lacking evidence of how effective drugs may be in elderly people and few cancer specialists have had training in care of older people, the report said.

A survey found six in ten trainee oncologists had not received training in the additional care needs of the elderly such as preventing falls and incontinence management. This is despite half of all cancers occuring in the elderly, the report found…

“The NHS and social care providers must wake up to the specific issues older people face and ensure treatment decisions are based on their overall health not just their date of birth. Writing people off as too old for treatment is utterly shameful.”

This is the future of Obamacare.  This is what happens when the government pays for health care.  The government decides.  They decide who lives.  And who dies.  Who gets treatment.  And who is not worthy of treatment and should consider themselves lucky if they get a pill to dull their pain until they die.  When they finally stop being such an inconvenient and inconsiderate burden to government.

Why is the NHS like this?  Are the British cruel?  No.  It’s just business.  Health care costs continue to rise despite the power of government to stop these costs from rising.  Their population is aging.  And they have a massive budget deficit.  Made up primarily from the budget deficit in the NHS.  Taxes are already high.  And the economy is not doing as well as it once did.  Which means you can’t raise taxes anymore.  Unless you want to crash the economy and reduce tax revenues even further.  And with a massive deficit you can’t borrow anymore.  So if you can’t tax and you can’t borrow and you have an aging population consuming an ever larger share of the health care budget what do you do?  Why, you do what the NHS is doing.  You ration health care.  By making life and death decisions.  And the NHS has made a decision.  Old people over a certain age shall die of cancer.  And they will take that health care and give it to someone else who is more worthy of it.

Bureaucrats making life and death decisions for cost reasons?  Kind of sounds like a death panel, doesn’t it?  Now Obamacare doesn’t include anything called a ‘death panel’ but there will be a death panel.  Because there always is when you ration health care.  Which is what will happen as the government tries to rein in health care costs.  Because that’s the only way they can control costs.  By cutting costs.  And how to you cut costs?  You spend less on life-saving health care services.  And ration these services.  Deciding who has enough value to save.  And who doesn’t and should die.  By authority of the death panel.  The secretary.  Or some other bureaucrat.  Who you hope their life and death decisions are based on costs alone.  And not your politics.

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Rich Doctors say Tax Them More to Help Fund the Canadian ‘Obamacare’ System that Makes them Rich

Posted by PITHOCRATES - March 25th, 2012

Week in Review

People distrust rich people.  That’s why they want to tax them more.  Because they have more than enough money.  No matter what they say about earning their money or how they invest their wealth to create jobs.  People don’t want to hear any of this.  For they ‘know’ that these rich fat cats are lying just to keep from having to ‘share’ their wealth.  But whenever a rich guy says ‘tax us rich people more’ everyone hangs on to their every last word.  For if they are talking about raising taxes on the rich then these are not your typical rich.  They’re the good kind.  Like these doctors in Canada (see Tax us more, doctors urge (Are the lawyers listening?) by Michael Babad posted 3/22/2012 on The Globe and Mail).

A group of doctors is taking a page from Warren Buffett’s tax-the-rich call, urging the Canadian and Ontario governments to tax higher-income earners more…

Doctors for Fair Taxation plan to announce their scheme in Toronto this afternoon, calling for additional taxes on people earning more than $100,000. You’d be hit with an additional 1 per cent if you earn between $100,000 and $170,000, 2 per cent if you earn up to $640,000, and 3 per cent for up to $1.85-million. Above that it would be 6 per cent.

“We feel that this is a moral argument,” Dr. Michael Rachlis, who founded the group that so far boasts more than 50 physicians, told The Canadian Press.

“We cannot talk about throwing people out of work and cutting needed programs for people,” said Dr. Rachlis, an associate professor at the University of Toronto.

Wow.  Sounds very selfless, doesn’t it?  These rich guys asking to be taxed more to help their country?  At least on the surface it does.  But the question that begs to be asked is what are they spending so much money on that they have to raise taxes?  And when you learn what that is it puts these doctors into a different light.

Here’s an article from 2010.  About two years ago.  Talking about a budget crisis.  Where spending is out of control.  Spending that the Canadians just can’t sustain.  And where is this out of control spending?  Why, it just happens to be in the industry that pays these doctors.  Canada’s single-payer health care system.  Talk about coincidences.  These doctors asking rich people everywhere to help pay the nation’s bills.  Where the biggest bill is the one that pays these doctors (see Soaring costs force Canada to reassess health model by Claire Sibonney posted 3/31/2010 on Reuters).

Pressured by an aging population and the need to rein in budget deficits, Canada’s provinces are taking tough measures to curb healthcare costs, a trend that could erode the principles of the popular state-funded system.

Ontario, Canada’s most populous province, kicked off a fierce battle with drug companies and pharmacies when it said earlier this year it would halve generic drug prices and eliminate “incentive fees” to generic drug manufacturers.

British Columbia is replacing block grants to hospitals with fee-for-procedure payments and Quebec has a new flat health tax and a proposal for payments on each medical visit — an idea that critics say is an illegal user fee.

And a few provinces are also experimenting with private funding for procedures such as hip, knee and cataract surgery.

It’s likely just a start as the provinces, responsible for delivering healthcare, cope with the demands of a retiring baby-boom generation. Official figures show that senior citizens will make up 25 percent of the population by 2036.

Proponents of national health care in America blame the private health insurers, the pharmaceuticals and the hospitals for out of control health care costs.  What they say we need is a system like Canada.  Where they put people before profits.  And yet here they are.  The Canadians.  With a health care system suffering from out of control costs.  Which they are trying to fix with higher taxes.  Additional fees.  Even a little Americanization (that is, privatization).  Makes you wonder why we’re going forward with Obamacare while the Canadians are finding that type of a system is unsustainable.  Especially when our retiring baby boomers outnumber their retiring baby boomers. 

Canada, fretting over budget strains, wants to prune its system, while the United States, worrying about an army of uninsured, aims to create a state-backed safety net.

Healthcare in Canada is delivered through a publicly funded system, which covers all “medically necessary” hospital and physician care and curbs the role of private medicine. It ate up about 40 percent of provincial budgets, or some C$183 billion ($174 billion) last year.

Spending has been rising 6 percent a year under a deal that added C$41.3 billion of federal funding over 10 years.

But that deal ends in 2013, and the federal government is unlikely to be as generous in future, especially for one-off projects.

Wow.  Look at that.  Almost half of provincial budgets pay for the ‘free’ health care of Canadians.  Which is causing budget deficits at the provincial level.  And at the national level.  Well, up until 2013, that is.  When the national government is going to address their budget deficits by cutting their health care payments to the provinces.  Increasing the provincial budget deficits in the process.  Leaving the provincial governments to tax and spend more.  Or ration care and cut spending more.  Including doctor pay.  Could this have anything to do with those selfless physicians asking that their government tax the rich more?  Perhaps.

Brian Golden, a professor at University of Toronto’s Rotman School of Business, said provinces are weighing new sources of funding, including “means-testing” and moving toward evidence-based and pay-for-performance models.

“Why are we paying more or the same for cataract surgery when it costs substantially less today than it did 10 years ago? There’s going to be a finer look at what we’re paying for and, more importantly, what we’re getting for it,” he said.

Other problems include trying to control independently set salaries for top hospital executives and doctors and rein in spiraling costs for new medical technologies and drugs.

Ontario says healthcare could eat up 70 percent of its budget in 12 years, if all these costs are left unchecked…

The province has introduced legislation that ties hospital chief executive pay with the quality of patient care and says it wants to put more physicians on salary to save money.

In a report released last week, TD Bank said Ontario should consider other proposals to help cut costs, including scaling back drug coverage for affluent seniors and paying doctors according to quality and efficiency of care.

So the power of government inserted into the health care system has done nothing to lower the cost of medical procedures in Canada.  Makes you scratch your head, doesn’t it?  Because the proponents of Obamacare say that’s exactly what the power of government can do.  But in practice it has failed to do what these theorists say it can do.  Cut costs.  Through bureaucratic management.  And ‘turning of the screws’ on the medical device and drug manufacturers.  Despite this very practice NOT working in Canada.  Which means that the proponents of Obamacare think the Canadian bureaucrats simply aren’t smart enough to make their health care system work efficiently.  That the system of government-managed health care is a flawed system when it comes to costs and efficiency.  Or that government-managed health care is not about costs or efficiency.  But about the bureaucracy itself.  The control and power it offers the politicians.  And the votes it can buy them.

“Many of the advances in healthcare and life expectancy are due to the pharmaceutical industry so we should never demonize them,” said U of T’s Golden. “We need to ensure that they maintain a profitable business but our ability to make it very very profitable is constrained right now.”

Scotia Capital’s Webb said one cost-saving idea may be to make patients aware of how much it costs each time they visit a healthcare professional. “(The public) will use the services more wisely if they know how much it’s costing,” she said.

Wait a minute.  To fix the government-managed system they need to make the patients aware of the costs so they can choose wisely?  There’s a name for such a system.  We call it capitalism.  The very thing missing from government-managed health care.  And the very reason why government-managed systems (the Canadian health care system, the American Medicare/Medicaid programs, the UK’s National Health Service, etc.) fail to control costs.  And why Obamacare will fail to control costs.  Because they exclude the one thing that controls costs best from government-managed systems.  Capitalism.  Where people make spending decisions based on cost.  Which will never happen when someone other than the patient pays for the costs for the medical services a patient receives.  For no one ever asks ‘how much’ when they’re not paying the bill.

So when a rich doctor says to tax the rich more is this selfless?  Or selfish?  You decide.

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Our Favorite Athletes are Part of the 1% and try to Minimize the Taxes they pay just like those on Wall Street

Posted by PITHOCRATES - March 25th, 2012

Week in Review

Don’t think high taxes influences behavior?  Of course, no one cares about the evil 1%.  Those greedy Wall Street types that don’t pay their fair share of taxes.  But you know who else is in that greedy 1%?  Your favorite athletes.  And guess what?  They want to hold on to their earnings just like those greedy Wall Street types (see Professional Athletes’ Big-League Tax Bills by Jay MacDonald posted 3/15/2012 on Yahoo! Finance).

Behind every sports star who’s hauling down the big bucks is a keen-eyed certified public accountant quick-stepping through a maze of state and local income taxes imposed on nonresident athletes, commonly known as the “jock tax.”

Professional sports players get taxed by pretty much every city and state in which they play, says Ryan Losi, CPA and executive vice president of Piascik & Associates, a Glen Allen, Va., accounting firm that represents more than 70 professional athletes.

“NFL players typically file in 10 to 12 jurisdictions. NBA is somewhere between 16 and 20. MLB is somewhere between 20 and 26, and the NHL is between 14 and 16,” says Losi.

Professional sports players are great big cash piñatas to these city and states that chronically over spend.  They all want a piece of these guys.  To make sure they pay their ‘fair share’ of taxes.  While they can before some career-ending injury puts an end to this gravy train.  But because these players could lose millions in future career earnings because of a career-ending injury, they want to keep their money.  For they may never be able to get another job.  Sure, some may move into the front office.  Some may move on to coaching.  But few will earn the kind of money they did during their short careers.  So they want to keep as much as they earn.  To take care of their wife and kids.  And have enough for their retirements.  Which can be rather long for these worn out and injured bodies.  So they just don’t sit by passively while every taxing authority is shaking them down for everything they’re worth.

The lion’s share of most players’ income, their salary, is taxed in the city and state where the team is based. But income from other sources, including endorsements, personal appearances, dividends and interest income, is taxed in their state of residence.

This is the reason New York Giants quarterback and Super Bowl MVP Eli Manning lives in Hoboken, N.J., instead of in the Big Apple. It’s simple arithmetic, says Raiola.

“If he were a resident of New York, he’d pay 8.97 percent New York state tax and another 3.78 percent New York City tax on top of that, not only on his wage income but also his endorsements and investment interest,” he says. “In New Jersey, he only pays 8.97 percent…”

Taxes — or the lack of them — may also have had something to do with NBA all-star and 2010 free agent LeBron James’ choice to play for the Miami Heat instead of the New York Knicks. Losi points to Florida’s lack of a state income tax.

“That may have been one of the factors that led LeBron to choose Florida versus New York,” says Losi. “Ten percent of his first contract was going to be the difference. For him, it was an extra 5 (percent to) 9 percent difference in tax. That’s real money.”

New York City may be the greatest city in the world but the rich pay an enormous amount of taxes to live there.  So many chose not to.  In fact, a lot of athletes chose where they live and raise their families based on their total tax burden.

Professional golfers, tennis players and other athletes who compete on the world stage often leave a third or more of their earnings in the local coffers.

“Whenever they play in foreign countries, they have to pay taxes in that jurisdiction, and the tax liability is much bigger than the 5 (percent) to 10 percent state tax. It’s usually in the 30 (percent) to 40 percent bracket,” says Losi. “Usually it’s withheld in their prize money, and they can file a nonresident return if they think they might have a refund coming.”

Because the United States is one of the few countries that taxes all personal income regardless of source, some pro sports stars who compete internationally actually have a financial disincentive to make their home in America.

“If they’re (not U.S. citizens or green card holders) and they’re not planning to stay here more than 183 days out of the year, from a tax perspective it absolutely makes sense to not live in the U.S.,” says Losi. “All the foreign golfers who come here to play, if they want all of their foreign prize money and endorsement money to be taxed, all they have to do is hang out here for 183 days.”

Being an athlete competing at the level that makes them millionaires is not an easy life.  While others look forward to weekends, holidays and vacations to kick back and relax and recharge their batteries with copious amounts of alcohol and enormous quantities of fattening foods these athletes don’t.  They often work on weekends and holidays.  And when they’re not working they’re practicing.  Where their practice is often more intense than their competition.  This is their life.  This is how they become elite athletes.  And their reward?  To be whacked open like a cash piñatas by the taxing authorities so the politicians they serve can take their money and spend it to buy votes for the next election.  And forcing them to choose where to live based on who will penalized them the least for being really good at something.

This is not a meritocracy.  Where we reward people for achievement.  This is out of control government spending to maintain a privileged class.  Politicians.  And government workers.  Who live and feed off of taxes.  To fund their class warfare that makes these privileged few secure in their class.

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East German Katarina Witt’s Privileged Life in her Socialist Paradise was not as Good as the Life of the Average Western Capitalist

Posted by PITHOCRATES - March 24th, 2012

Week in Review

Katarina Witt was young and beautiful during the Olympics.  Italian great Alberto Tomba was even smitten with her.  But even the suave and debonair Tomba got the cold shoulder from Witt when meeting her during the games.  For they may have both been superstars.  But her star shined brighter.  Few could ski like Tomba.  But no one could skate like Katarina.  She was just beautiful on the ice.  Poetry in motion.  Which is why the Stasi (East German secret police) took such great interest in her.  She could prove the superiority of communism.  And bring home the medals.  For that she lived a privileged life in East Germany.  But even that privileged life couldn’t match what she saw outside of her socialist utopia (see The Stasi watched my every move: Dancing on Ice star Katarina Witt reveals East German secret police spied on her since the age of eight by Katarina Witt posted 3/24/2012 on the Daily Mail).

Of course I became aware of international differences as I grew older. I remember my first trip abroad to compete in Vienna when I was 12.  I looked at one shop window after another, crammed with goods.  Everything was so much more  colourful than shops at home in Karl Marx Stadt (which has now reverted to its original name of Chemnitz). Every Viennese street felt like a candy store, but an expensive one. I must have spent five hours trying to find an outfit I could afford.

In later years, I went on international exhibition tours alongside skaters from other countries. We became friends and, in the evenings, we would all get together in one or other of our hotel rooms and talk – with the Americans, the Russians, the West Germans. The Russians brought the vodka, naturally. The Americans ordered French fries.

Looking back, two decades later, it is as if we were living on a different planet, but we never questioned it  at the time. The constant control,  particularly when it came to travelling abroad, just became a part of my life. ‘We want to  protect you,’ was the message. ‘We want to make sure you’re safe and sound.’

The rhetoric was all rather comforting in its way. I believed we were a country of fairness and good social values. Would I have wanted to live in another country? A free country? The question never occurred to me.

In fact, I probably had even less reason to question than most as I was well treated. Like other leading athletes,  I was given rewards for winning. There were financial bonuses, for example, and  I was allowed to rent an  apartment of my own, even  though I was only 19 and not married!

They let me jump the queue to buy a Russian-made Lada instead of going on the  ten-year waiting list like  everyone else.

This is communism.  Karl Marx’s socialism.  The caring, loving state.  In a country of fairness.  And good social values.  And when one of the privileged got a taste of Western capitalism she saw that life was better in the West.  And what they were protecting her from was that better life in the West.

This is the path the U.S is on.  For Obamacare is all those things.  And will help us become what East Germany was.  Free stuff but no liberty.  A caring government but a life that’s dull and gray.  So much so that people risked their lives to escape it by climbing over the Berlin Wall.  A life that is fair where everyone is equally miserable.  Where the government provides everything but everything is un-colorful and even less plentiful.  Where life is not being in a candy store.  But more like being in grade school.  Where you do as you’re told and someone is always watching you for your own good.  But without the good social values.  For the left gave those up long ago to get the youth vote.

Katarina Witt was one of the most talented people in East Germany.  And beyond.  And the Stasi rewarded her well for that.  So her life wasn’t all that bad compared to other East Germans.  But imagine their life.  Those who didn’t get financial bonuses.  An apartment.  A car without waiting 10 years.  Imagine that life.  Or, better yet, just wait.  For it will soon be upon us here in the U.S.  If we don’t repeal Obamacare.

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Volkswagen testing the Anemic American Electric Car Market

Posted by PITHOCRATES - March 24th, 2012

Week in Review

Volkswagen is testing the American market for an electric car.  They will lease 20 electric Golfs for a nine month period to determine that there is no market for electric cars in America (see Volkswagen to test electric Golf in U.S. by Chris Woodyard posted 3/23/2012 on USA Today).

Volkswagen, which has scored big with diesels in the U.S., is about to expand its horizons. It’s going to field about 20 Golf electric vehicles in a test, Automotive News reports.

It’s only a nine-month test, but it should be at least a start in trying to see how owners will deal with the notion of having to plug in their car every day and other issues. It’s a prelude to the e-Golf, which will arrive in showrooms sometime next year, the News says.

Diesel cars are successful for one simple reason.  They still use fossil fuels.  Just like gasoline cars.  So there is really no changing of one’s driving habits to go diesel.  For pretty much every gas station in America has diesel fuel.  Which means if you’re cruising down the highway enjoying a great American past time you can pull in any number of convenient gas stations.  Fuel up.  And get right back out on the open road.  Americans like that.  The freedom of fossil fuels.  Going wherever the road takes you.  Secure in knowing that you’ll always be able to get back home.

Contrast that with an electric car.  That won’t let you do any of those things.  Cruising the open highway.  Or going wherever the road takes you.  Instead you’ll be sweating bullets on the drive back home after work.  Praying you have enough charge to make it.  As you squint and shiver, driving in the dark with the headlights and the heater off.  To conserve what electricity you have left in your battery to make it home.  And heaven help you if you run out of electricity on that drive home.  Because you can’t walk to the gas station, borrow their gas can, fill it up with electricity and pour it into your battery.  Instead you’ll either have to tow your car home to an electrical outlet.  Or run one long-ass extension cord to your car and let it charge overnight.  So you can drive it home the next morning after the battery recharges.

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President Obama disagrees with Adults, Republicans, Independents and Democrats over Keystone XL Pipeline

Posted by PITHOCRATES - March 24th, 2012

Week in Review

Republicans are most in favor of the Keystone XL pipeline.  But they’re not the only ones in favor of it (see Americans Favor Keystone XL Pipeline by Elizabeth Mendes posted 3/22/2012 on Gallup).

A solid majority of Americans [57%-29%] think the U.S. government should approve of building the Keystone XL pipeline, while 29% think it should not. Republicans [81%-9%] are almost twice as likely as Democrats [44%-38%] to want the government to approve the oil pipeline. About half of independents [51%-35%] also approve…

The proposal from TransCanada Corporation for building a pipeline to carry crude oil from Canada down to the Gulf of Mexico, first made in 2005, needs approval from the U.S. president because it crosses an international border. The Republicans in Congress inserted a provision on the pipeline in the payroll tax extension bill late last year, but in January, President Obama rejected TransCanada’s permit entirely. However, the administration is allowing TransCanada to reapply for the permit it needs.

The pipeline would travel through the Midwest and the South, and Americans in those two regions are the most likely to approve of the project. Nearly 7 in 10 Midwesterners want the government to approve the building of the pipeline and 61% of those in the South do as well. There has been discussion in Washington and in the media about the potential new jobs the pipeline project would create, which may partly explain the higher support seen in those regions. Americans in the West and East are less likely to approve.

Did you catch that?  TransCanada Corporation has been working on this since 2005.  It’s now 2012.  This kind of gives you an idea of the regulatory hoops Big Oil has to jump through and how many palms they have to grease to get approval.  And then the president rejected their permit.  As a nod to his environmentalist base.  And now TransCanada Corporation is right back where they started.  After who knows how many millions of dollars they’ve spent to get to the Obama rejection.

What is really fascinating is that the people the president is protecting with his permit rejection, those in the route of the pipeline that may suffer the ‘horrors’ of environmental impact, are the ones most in favor of running the pipeline.  And the environmentalists who oppose it live where all the rich and connected environmentalists live.  In California and New York.  (Al Gore lives in a mansion on a beach in California despite global warming and rising oceans.  Yes, environmentalists are rich.)  The people who will be least impacted by any environmental fallout.  And the people that have the most to gain.  As California and New York have some of the highest gas prices in the nation.  Which tells you something.  Environmentalists are rich and can pay for gas whatever it costs.  And they don’t care about the poor and middle class who are hurt by high gas prices.  Which means, of course, that the president is protecting his rich fiends over the poor and middle class.  So much for the Democrat Party being the party that protects the working class.

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