Chick-fil-A outsells KFC and proves that there is no such thing as Monopolies in Free Markets

Posted by PITHOCRATES - March 30th, 2014

Week in Review

A lot of people fear big corporations.  And fight hard against them.  Especially the big ones that provide a wide variety of goods and/or services at lower prices than the competition.  The kind that put Mom and Pop stores out of business.  Opponents of these big corporations say those low prices are only a dirty trick to put the competition out of business.  To make themselves a monopoly.  And once they get rid of all competition with their unfair low prices there will be nothing to stop them from raising their prices.  Higher than even the Mom and Pop stores they put out of business.  Of course, if that were true then you wouldn’t read stories like this (see Chick-fil-A Stole KFC’s Chicken Crown With a Fraction of the Stores by Venessa Wong posted 3/28/2014 on BloombergBusinessweek).

The days when fried chicken was synonymous with a certain white-haired southern gentleman are over, at least in the U.S. A new champion has claimed KFC’s long-held chicken crown: Chick-fil-A…

Anyone in the northern half of the U.S. is likely scratching her head and wondering why she hasn’t seen Chick-fil-A outlets opening in the neighborhood. Last year Chick-fil-A only had about 1,775 U.S. stores to KFC’s 4,491, and most are in the South. Yet in dollar terms the Colonel is coming up short even with that much larger footprint: Chick-fil-A’s 2013 sales passed $5 billion, while all of KFC’s U.S. restaurants rang up about $4.22 billion, according to Technomic. And that’s with zero dollars coming in to Chick-fil-A on Sundays, when every restaurant is closed.

Chick-fil-A has fewer outlets than KFC.  Yet they have a greater sales volume.  Why?  Because they sell at higher prices than KFC.  According to those who fear big corporations this is not supposed to happen.  KFC should be able to sell at lower prices than the smaller Chick-fil-A.  So low that Chick-fil-A should go bankrupt trying to match the unfair lower prices of KFC.  But that isn’t happening.  Because there is no way any corporation can monopolize any industry without the government first creating a monopoly for them.  As Chick-fil-A has proven.  They thought they could offer food people would prefer over KFC.  And did.  Despite KFC dominating the industry.  And the people liked the food so much that they were willing to pay more to eat Chick-fil-A over the less expensive KFC.

The only way you can shut someone out of an industry is by raising the barriers to enter that industry.  Such as with costly licensing, permitting, fees, restrictive regulatory policies, etc.  Things only the government can force on the competition wishing to enter a market.  Thus limiting competition in that market to protect their crony friends.  But if there is no government protection of established businesses that are monopolies or quasi monopolies anyone can enter the market and compete against them.  As Chick-fil-A proves.

People shouldn’t fear big corporations.  They should fear government.  The only entity that can create and enforce a monopoly.  For it is only with the government’s help that a monopoly can gouge customers with their high prices.  Because in a free market with low barriers to enter it will be impossible to gouge customers as the competition will keep all pricing competitive.  Because if some try to gouge their customers those customers will just go to the lower-priced competition.

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Blended Winglets prove the Superiority of Free Market Capitalism over a Managed Economy

Posted by PITHOCRATES - March 15th, 2014

Week in Review

Too many people still feel that government knows better than market forces.  As if the lessons of the Soviet Union, Eastern Europe, the People’s Republic of China, North Korea, Cuba, the Obama administration, etc., have never been learned.  A managed economy produces inferior results compared to one left to free market capitalism.  Even in achieving the goal of an activist, interventionist government (see Airlines embrace winglets as fashionable fuel savers by Gregory Karp, Chicago Tribune, posted 3/10/2014 on The Seattle Times).

Boeing calls the odd-looking, upturned wingtips on aircraft “blended winglets.” Airbus calls them “sharklets.” And Southwest Airlines, in ads, simply calls them “little doohickeys.”

Whatever the name, these wingtip extensions have become prevalent in aviation, saving airlines billions of dollars in fuel costs…

While winglets could cost $1 million or more per aircraft to install and add several hundred pounds to a plane, they pay for themselves in a few years through fuel savings — about 4 percent savings for the blended winglet and an additional 2 percent savings for the split scimitar…

United expects the new and older wingtip designs on its 737, 757 and 767 fleets to annually save it 65 million gallons of fuel, $200 million worth, and the equivalent of 645,000 metric tons of carbon-dioxide emissions.

That’s not government doing this.  This is the free market.  A design comes along that offers to save airlines money by reducing fuel consumption and the airlines spend money to add it to their fleets.  Thus reducing 645,000 metric tons of carbon-dioxide emissions.  And they do this voluntarily.  This is how free market capitalism works.

Fuel is the greatest cost of airlines.  So there is an incentive for airlines to spend money to reduce fuel consumption.  This one-time investment will reduce fuel consumption in the years to follow.  Making it a very good investment.  Because it is they spend their own money to make this investment.  Unlike solar and wind power.  These are very poor investments.  For the only way anyone builds solar arrays and wind farms is with taxpayer subsidies.  Because the return on investment is so poor they will not spend their own money to build these things.

Good things happen with free market capitalism.  While bad things happen (the Solyndra bankruptcy, for example) when the government interferes with free market capitalism.  Which is why the government should not interfere in the market place.  As blended winglets demonstrate.  Which have reduced far more carbon-dioxide emissions than Solyndra ever did.

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The Austrian School of Economics

Posted by PITHOCRATES - March 3rd, 2014

Economics 101

(Originally published February 27th, 2012)

Because of the Unpredictable Human Element in all Economic Exchanges the Austrian School is more Laissez-Faire

Name some of the great inventions economists gave us.  The computer?  The Internet?  The cell phone?  The car?  The jumbo jet?  Television?  Air conditioning?  The automatic dishwasher?  No.  Amazingly, economists did not invent any of these brilliant inventions.  And economists didn’t predict any of these inventions.  Not a one.  Despite how brilliant they are.  Well, brilliant by their standard.  In their particular field.  For economists really aren’t that smart.  Their ‘expertise’ is in the realm of the social sciences.  The faux sciences where people try to quantify the unquantifiable.  Using mathematical equations to explain and predict human behavior.  Which is what economists do.  Especially Keynesian economists.  Who think they are smarter than people.  And markets.

But there is a school of economic thought that doesn’t believe we can quantify human activity.  The Austrian school.  Where Austrian economics began.  In Vienna.  Where the great Austrian economists gathered.  Carl Menger.  Ludwig von Mises.  And Friedrich Hayek.  To name a few.  Who understood that economics is the sum total of millions of people making individual human decisions.  Human being key.  And why we can’t reduce economics down to a set of mathematical equations.  Because you can’t quantify human behavior.  Contrary to what the Keynesians believe.  Which is why these two schools are at odds with each other.  With people even donning the personas of Keynes and Hayek to engage in economic debate.

Keynesian economics is more mainstream than the Austrian school.  Because it calls for the government to interfere with market forces.  To manipulate them.  To make markets produce different results from those they would have if left alone.  Something governments love to do.  Especially if it calls for taxing and spending.  Which Keynesian economics highly encourage.  To fix market ‘failures’.  And recessions.  By contrast, because of the unpredictable human element in all economic exchanges, the Austrian school is more laissez-faire.  They believe more in the separation of the government from things economic.  Economic exchanges are best left to the invisible hand.  What Adam Smith called the sum total of the millions of human decisions made by millions of people.  Who are maximizing their own economic well being.  And when we do we maximize the economic well being of the economy as a whole.  For the Austrian economist does not believe he or she is smarter than people.  Or markets.  Which is why an economist never gave us any brilliant invention.  Nor did their equations predict any inventor inventing a great invention.  And why economists have day jobs.  For if they were as brilliant and prophetic as they claim to be they could see into the future and know which stocks to buy to get rich so they could give up their day jobs.  When they’re able to do that we should start listening to them.  But not before.

Low Interest Rates cause Malinvestment and Speculation which puts Banks in Danger of Financial Collapse

Keynesian economics really took off with central banking.  And fractional reserve banking.  Monetary tools to control the money supply.  That in the Keynesian world was supposed to end business cycles and recessions as we knew them.  The Austrian school argues that using these monetary tools only distorts the business cycle.  And makes recessions worse.  Here’s how it works.  The central bank lowers interest rates by increasing the money supply (via open market transactions, lowering reserve requirements in fractional reserve banking or by printing money).  Lower interest rates encourage people to borrow money to buy houses, cars, kitchen appliances, home theater systems, etc.  This new economic activity encourages businesses to hire new workers to meet the new demand.  Ergo, recession over.  Simple math, right?  Only there’s a bit of a problem.  Some of our worst recessions have come during the era of Keynesian economics.  Including the worst recession of all time.  The Great Depression.  Which proves the Austrian point that the use of Keynesian policies to end recessions only makes recessions worse.  (Economists debate the causes of the Great Depression to this day.  Understanding the causes is not the point here.  The point is that it happened.  When recessions were supposed to be a thing of the past when using Keynesian policies.)

The problem is that these are not real economic expansions.  They’re artificial ones.  Created by cheap credit.  Which the central bank creates by forcing interest rates below actual market interest rates.  Which causes a whole host of problems.  In particular corrupting the banking system.  Banks offer interest rates to encourage people to save their money for future use (like retirement) instead of spending it in the here and now.  This is where savings (or investment capital) come from.  Banks pay depositors interest on their deposits.  And then loan out this money to others who need investment capital to start businesses.  To expand businesses.  To buy businesses.  Whatever.  They borrow money to invest so they can expand economic activity.  And make more profits.

But investment capital from savings is different from investment capital from an expansion of the money supply.  Because businesses will act as if the trend has shifted from consumption (spending now) to investment (spending later).  So they borrow to expand operations.  All because of the false signal of the artificially low interest rates.  They borrow money.  Over-invest.  And make bad investments.  Even speculate.  What Austrians call malinvestments.  But there was no shift from consumption to investment.  Savings haven’t increased.  In fact, with all those new loans on the books the banks see a shift in the other direction.  Because they have loaned out more money while the savings rate of their depositors did not change.  Which produced on their books a reduction in the net savings rate.  Leaving them more dangerously leveraged than before the credit expansion.  Also, those lower interest rates also decrease the interest rate on savings accounts.  Discouraging people from saving their money.  Which further reduces the savings rate of depositors.  Finally, those lower interest rates reduce the income stream on their loans.  Leaving them even more dangerously leveraged.  Putting them at risk of financial collapse should many of their loans go bad.

Keynesian Economics is more about Power whereas the Austrian School is more about Economics

These artificially low interest rates fuel malinvestment and speculation.  Cheap credit has everyone, flush with borrowed funds, bidding up prices (real estate, construction, machinery, raw material, etc.).  This alters the natural order of things.  The automatic pricing mechanism of the free market.  And reallocates resources to these higher prices.  Away from where the market would have otherwise directed them.  Creating great shortages and high prices in some areas.  And great surpluses of stuff no one wants to buy at any price in other areas.  Sort of like those Soviet stores full of stuff no one wanted to buy while people stood in lines for hours to buy toilet paper and soap.  (But not quite that bad.)  Then comes the day when all those investments don’t produce any returns.  Which leaves these businesses, investors and speculators with a lot of debt with no income stream to pay for it.  They drove up prices.  Created great asset bubbles.  Overbuilt their capacity.  Bought assets at such high prices that they’ll never realize a gain from them.  They know what’s coming next.  And in some darkened office someone pours a glass of scotch and murmurs, “My God, what have we done?”

The central bank may try to delay this day of reckoning.  By keeping interest rates low.  But that only allows asset bubbles to get bigger.  Making the inevitable correction more painful.  But eventually the central bank has to step in and raise interest rates.  Because all of that ‘bidding up of prices’ finally makes its way down to the consumer level.  And sparks off some nasty inflation.  So rates go up.  Credit becomes more expensive.  Often leaving businesses and speculators to try and refinance bad debt at higher rates.  Debt that has no income stream to pay for it.  Either forcing business to cut costs elsewhere.  Or file bankruptcy.  Which ripples through the banking system.  Causing a lot of those highly leveraged banks to fail with them.  Thus making the resulting recession far more painful and more long-lasting than necessary.  Thanks to Keynesian economics.  At least, according to the Austrian school.  And much of the last century of history.

The Austrian school believes the market should determine interest rates.  Not central bankers.  They’re not big fans of fractional reserve banking, either.  Which only empowers central bankers to cause all of their mischief.  Which is why Keynesians don’t like Austrians.  Because Keynesians, and politicians, like that power.  For they believe that they are smarter than the people making economic exchanges.  Smarter than the market.  And they just love having control over all of that money.  Which comes in pretty handy when playing politics.  Which is ultimately the goal of Keynesian economics.  Whereas the Austrian school is more about economics.

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FT210: “Vanity, thy name is liberalism; Liberty, thy name is capitalism.” —Old Pithy

Posted by PITHOCRATES - February 21st, 2014

Fundamental Truth

Christians believe in the Reward of Hard Work and Shun Idleness for it tends to Invite Trouble

Liberals are very confident people.  As well as arrogant.  Narcissistic.  And condescending.  Which is why they are so secular.  Wanting to take the separation of church and state argument to the extreme.  Attacking and mocking Christianity every chance they get.  As they don’t like anyone judging them.  Or setting some moral standard.  For liberals are a sinful people.

The Seven Deadly Sins are wrath, greed, sloth, pride, lust, envy, and gluttony.  Christians try to avoid these.  They forgive their enemies instead of getting angry at them.  They tithe to their church instead of keeping all of their money greedily for themselves.  They believe in the reward of hard work and shun idleness for it tends to invite trouble.  They are humble and don’t strive for attention.  They have strong self-control and make sacrifices for a better future instead of giving in to current wants and desires.  They tend to be happy with what they have however modest their lives may be.  Instead of being envious of others.  They don’t eat, drink or live to excess, preferring to do everything in moderation.  Things you just don’t associate with liberals.

Now think of some liberals you know of.  Think of the vicious things liberal Democrats say about Republicans (such as a campaign commercial showing a Republican pushing ‘Grandma’ off a cliff).  The vulgar things some liberal commentators say about Republican women.  And the ridicule of conservatives on late-night television.  Rich liberals who want to raise taxes on the rich (which includes the middle class) to pay for a generous welfare state while giving little to charity themselves.  As they are far more generous with other people’s money than with their own.  And never risk their own money in risky investments such as Solyndra.  Preferring to risk the taxpayers’ money.

Liberals attack the Rich because they are Envious of their Hard Work and Success

Liberals always want a bigger federal government with an ever-growing bureaucracy.  So they can be career politicians without ever getting a real job where they have to work hard to earn a living.  Liberals like to brag about how smart they are and how brilliant their legislation is.  Taking credit for things they didn’t even do.  Such as President Obama taking credit for the surge in natural gas production done on private land by private companies.  Or boasting how their economic policies are working even though the real unemployment rate is in excess of 13% (when you count those who have left the labor force and those who can only find a part-time job).  And their refusal to admit they wrote a terrible law.  Such as Obamacare.

Liberals never want to wait for anything.  They don’t believe in hard work.  They believe in early retirement and generous pensions.  For their friends in the union.  Like the UAW.  In the public sector unions.  And those in government jobs.  They attack the rich because they resent their hard work and success.  Are envious of them.  And want to punish them because they were never as good as they are.  With higher tax rates.  And punishing regulations.  Hollywood celebrities and the Washington elite live the most extravagant lives.  In some of the most expensive homes which are filled with the finest food, drink and toys.  And when that’s not enough some further their excess with drugs.

These are things you just don’t associate with Christians.  In fact, these are things Christians frown upon.  Even telling their congregation not to live lives like these in their church services.  For these are not Christian lives.  Some people could have everything they could possibly want or desire but are still not happy.  Or are bored because it came too easily.  Or too soon.  Turning to other outlets to excite them.  Alcohol and drugs.  Drag-racing in expensive sports cars on neighborhood streets.  Partying all night in the hottest clubs.  Or blowing a lot of money gambling.  Anything to escape the boredom of an idle life.

For a Better Life we should Shun Liberalism and Embrace Free Market Capitalism

This is why liberals attack Christianity so much.  As well as one other reason.  Because they don’t like believing in a higher being.  For they are so arrogant and narcissistic that they can’t stand the thought of some being that is greater than themselves.  For they hold liberalism sacred.  And if anyone worships anything they want the people to worship them.  Because they believe they are the smartest and the most insightful people in the universe.  Yes, vanity, thy name is liberalism.  Which is why they believe they should control government.  And our lives.  Because they’re smarter and wiser than business owners.  Bankers.  Entrepreneurs.  And market forces.  For they are the higher being.  Not what those silly Christians worship.

A lot of people have felt like this throughout history.  Adolf Hitler.  Mao Zedong.  Saddam Hussein.  Benito Mussolini.  Muammar Gaddafi.  Kim Il-sung.  Kim Jong-il.  Kim Jong-un.  Fidel Castro.  Supreme leaders and ruthless dictators who preferred their people to worship them like a god.  And imposed socialism, fascism or communism on their people.  Using their supreme intelligence and insight to make the state a better place for the people.  Making the state supreme.  While subordinating the individual.  And elevating the supreme leader above everyone.  Something liberals have been trying to do all their lives.  Only without the torture and genocide.

But their efforts share a similar trend with these ruthless dictators.  The quality of life declines under their rule.  Some of the worst places to live when it comes to human rights have been in Nazi Germany, the People’s Republic of China, Iraq, Fascist Italy, Libya, North Korea and Cuba.  While some of the best countries to live in are the United States, Canada, the United Kingdom, Australia and Hong Kong.  All once part of the Christian British Empire.  An empire that embraced free market capitalism.  And when people practice self-control and make sacrifices for the future engage in free market capitalism they make a better place to live.  At least this is what history has shown us.  So if we want a better life we should shun liberalism.  And embrace free market capitalism.  For liberty, thy name is capitalism.

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Marx, Lenin, Trotsky, Stalin and the Soviet Union

Posted by PITHOCRATES - February 18th, 2014

History 101

Marx called for a Dictatorship of the Proletariat where the Workers controlled the Means of Production

Karl Marx did not like capitalism.  Or middle class people that used money to make money.  The bourgeoisie.  Who exploit the working man.  The proletariat.  The bourgeoisie used their capital to exploit the labor of the working man (i.e., taking a risk and investing in land, factories, machinery, labor, etc.) to make money.  While the working man slaved away at slave wages creating all the great things we have in the world.  Of course, the proletariat could not do any of this unless others took risks and invested in land, factories, machinery, labor, etc.

This was just not fair to Karl Marx.  Because the industrial bourgeoisie had all the power.  And their exploitation of the proletariat was nothing more than a dictatorship of the bourgeoisie.  So Marx created a socio-economic philosophy to address this dictatorship.  Marxism.  And called for a social transformation.  For working men everywhere to unite.  And break the chains that bound them in the dictatorship of the bourgeoisie.  Calling for a dictatorship of the proletariat.  For the workers to control the means of production.  In a new system that replaced capitalism.  Socialism.  Until they could usher in the true ideal.  Communism.

In capitalism the bourgeoisie get rich creating neat things people discover and want to buy.  In communism there would be no bourgeoisie using the means of production to make a buck.  Instead, wise and selfless people would determine what was best for the people.  Instead of free markets allocating scarce resources economic planners would.  And they’d do it better.  Because they are selfless.  Creating large surpluses that would go not into some rich capitalist’s bank account.  But they would fairly distribute this surplus among the working class.  So society as a whole would be better off.  Sounds great.  But if the market didn’t make the decisions of what to produce who did?  As it turned out for Marxism that was a very difficult question to answer.

Leon Trotsky was a Like-Minded Marxist and the number two Communist behind Lenin

The Russian people were growing tired of World War I.  And Tsar Nicholas.  In fact they had it with the Russian Empire.  Even before World War I.  Although serfdom was abolished in 1861 the lives of peasants didn’t improve much.  There was still famine.  And the serfs had to pay a lot to their former landlords for their freedom.  So there was revolutionary fervor in the air.  And a few peasant uprisings.  As well as a few revolutionaries.  Such as Vladimir Ilyich Lenin.  Who was a Marxist.  His anti-Tsarist political activity got him arrested and exiled a few times.  In fact, during World War I he was living in exile in Switzerland.  Hoping that the Germans would weaken Tsarist Russia enough to kick off a socialist revolution in Russia.

When revolution did break out Lenin was anxious to return to Russia.  But being in Switzerland posed a problem.  It was surrounded by warring countries.  Lucky for him, though, the Germans were anxious to close the eastern front of the war.  And a little revolution in Russia could do just that.  So they transported Lenin through Germany and helped him return to Russia.  They travelled north.  Took a ferry to Sweden.  Then by train to Petrograd.  Formally Saint Petersburg (Peter the Great’s new capital on the Baltic Sea).  Which was later renamed Leningrad.  And then later renamed Saint Petersburg.  Where he would lead the Bolshevik Party.  And the world-wide socialist revolution against capitalism.

Leon Trotsky was a like-minded Marxist.  And an anti-militarist.  He had a falling out with Lenin but eventually reunited.  With Trotsky becoming the number two communist behind Lenin.  Trotsky addressed a problem with Marxism for Russia.  Socialism was to be the final step AFTER capitalism.  Once there was a strong industrial proletariat.  Russia didn’t have that.  For it was one of the least advanced countries in the world.  An agrarian nation barely out of the Middle Ages.  So Russia had to industrialize WHILE the proletariat took over the means of production.  Which brought up a big problem.  How could a backward nation industrialize while having a revolution?  How could they do this without other advanced capitalistic countries coming to the aid of the bourgeoisie?  Which Trotsky answered with his Permanent Revolution.  For the Russian socialist revolution to be successful there had to be socialist revolutions in other countries, too.  Thinking more in terms of a worldwide revolution of industrialized states.  And not just in Russia.  Something another Marxist disagreed with.  Joseph Stalin

Communist States have Guards on their Borders to prevent People from Escaping their Socialist Utopia

During these revolutionary times workers’ councils were appearing throughout the country.  Soviets.  Which helped stir up the revolutionary fervor.  In 1917 the imperial government fell.  The Bolsheviks killed the Tsar and his family.  And Russia fell into civil war.  Which the Bolsheviks won in 1922.  And formed the Soviet Union.  Or the Union of Soviet Socialist Republics (USSR).  That stretched from Eastern Europe to the Pacific Ocean.  Under the rule of Vladimir Ilyich Lenin.  Until he died in 1924.  Then Joseph Stalin took over after a brutal power struggle.  Even exiled Leon Trotsky.  And established totalitarian rule.  Stalin created a planned economy.  Rapid industrialization.  And collectivization.  As well as famines, forced labor, deportation and great purges of his political enemies.  To strengthen his one-party rule.  To protect the socialist revolution from a return of capitalism.

The Russian Revolution was the only successful socialist revolution in Europe.  The dictatorship of the proletariat did not happen as Lenin and Trotsky had envisioned.  So Stalin abandoned the idea of Permanent Revolution.  And adopted Socialism in One Country instead.  To strengthen the Soviet Union.  And not support a world-wide socialist revolution against capitalism.  In direct opposition of Trotsky.  To aid in the USSR’s industrialization Stalin made a pact with the devil.  Adolf Hitler.  And entered an economic agreement that would allow Hitler to build and test his war machine on Soviet soil that he would use in World War II.  Then came the Treaty of Non-aggression between Germany and the Union of Soviet Socialist Republics.  And the secret protocol.  Where Nazi Germany and the Soviet Union agreed to conquer and divvy up the countries located between them.

Trotsky did not like what the Soviet Union became under Stalin.  An oppressive dictatorship of Joseph Stalin.  Not the dictatorship of the proletariat envisioned by Karl Marx.  And he didn’t like that pact with a militarist Nazi Germany.  He predicted that Stalin’s USSR would not last.  Either suffering a political revolution like Tsar Nicholas suffered.  Or it would collapse into a capitalist state.  Stalin disagreed.  And killed him and his family.  Getting rid of the last of the old Bolsheviks.  Leaving him to rule uncontested until his death in 1953.  Exporting communism wherever he could.  Where it killed more people than any other ideology.  Until the great and brutal socialism experiment collapsed in 1991.  For Trotsky was right.  It could not survive when a better life was just across a border.  Which is why all of the communist states have guards on their borders.  To keep their people from escaping their socialist utopia.

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Knowledge + Experience + Reason = Republican Votes

Posted by PITHOCRATES - February 13th, 2014

Politics 101

The Democrat Party is the Cool Uncle that buys Booze and Cigarettes for his Nieces and Nephews

People characterize the Republicans as being a bunch of old fogies.  Out of touch.  Who don’t have a clue about the world today.  Unlike their children do.  Who are wise beyond their years.  For they know there is nothing really bad with underage drinking and smoking.  Smoking marijuana.  Or doing other drugs.  And there is nothing wrong with casual sex.  Sexting.  Or nude selfies.

This is why the children of old fogies like the Democrat Party.  Because the Democrats get them.  Unlike their parents.  Their parents tell them they shouldn’t stay out late, drink, smoke, do drugs or have sex.  While the Democrats decriminalize marijuana and work to decriminalize other drugs.  Provide free birth control.  And abortion without parental notification.  Making the Democrat Party the cool uncle that buys booze and cigarettes for his nieces and nephews.  So is it any wonder that the youth vote goes Democrat?

The ironic thing, though, is that these old fogies were once young themselves.  And some were pretty wild in their youth, too.  But once they became parents things changed.  For when it’s their daughter they don’t want her being objectified.  Encouraged to explore her sexuality by having so much casual sex that she catches a sexually transmitted disease or gets pregnant.  Especially if they did in their youth.  Which is the last thing they want for their little girl.  Who is and will forever remain their little girl.

Keynesian Economics conditioned People to accept that Government knows Best

This is the rule.  Not the exception.  As kids grow up fighting their parents they reach a point in life where they realize that their parents were right all along.  That if they had only spent more time on their homework and less time partying things would have turned out better.  Life may have been less fun in the short-run but much better in the long-run.  They’d had an earlier start in their career.  A career with better pay and benefits.  They could have bought a house sooner.  Met someone to marry and start a family with sooner.  Instead of finding themselves at 25 buried under student loan debt for a degree that can’t get them a job.  And a decade or so of hooking up having conditioned men to shun any serious commitment.  Leading their daughters to turn to serial dating and online dating.  As they struggle to find someone else who has grown up, too.

This is what the old fogies know.  That their kids don’t.  You get wiser with age.  Thanks to education.  And experience.  Two things the young just don’t have.  And never will.  Because by the time they grow wise from education and experience they are no longer kids.  But well on their way to ‘old fogery’.  Which is, of course, a problem for the Democrat Party.  For a wise voting public will not help them win elections.  As their Keynesian economic policies have nothing but a long record of failure.  Giving us the Great Depression, the stagflation of the 1970s, the dot-com recession and the Great Recession.  To name a few bad economic times Keynesian economics have given us.  Things older people know from education and experience.  But the kids voting Democrat don’t.

Keynesian economics ushered in the era of Big Government.  And did something the Socialists could not.  Conditioned people to accept that government knows best.  Especially young people.  Uneducated and inexperienced young people.  Despite the Democrats’ horrible record concerning things economic.  Because of this record the Democrats use lies and deceit to attack free market capitalism.  That economic system that worked better than any other.  To get people who knew no better to mistrust free market capitalism.  And ask for the government to fetter unfettered capitalism.  To make the world a fairer place.

The Democrats use Public Education to teach our Kids to Distrust Capitalism and to Trust Government

It sounds good to the inexperienced and uneducated.  Because it feels good to think in terms of fairness.  And if there is one thing the young have are emotions.  They like to use their hearts.  Not their brains.  As they are idealistic and naïve.  Unlike those old fogies who are realists.  They can’t be fooled or swayed by the Democrat lies because they have learned and experienced a lot in their long lives.  And heard the same old Democrat lies all through those long lives.  Which is why the Democrats work so hard on the youth vote.  The War on Women, their lax drug attitudes, birth control, abortion, gay rights…all of these are to get the young to think in terms of fairness.  To tug on their heartstrings.  To get them emotional.  And keep them emotional.  As well as ignorant.

The more ignorant people are the easier it is to lie to them.  Anyone who knows the history of Western Civilization will understand how life became better for people as we moved closer to free market capitalism.  Anyone who knows classical economics will understand how thrift, savings, free trade, sound money, etc., made America the number one economy in the world.  While the Keynesian policies of today are threatening to knock America out of that number one spot.  People who understand these things are not going to vote Democrat.  Which is why the Democrats work hard to keep people from learning these things.  By constantly lying about them.  And not teaching them in the institutions they control.  Our public schools.  And our institutions of higher education.

The Republican equation for winning votes is a difficult equation.  Knowledge + Experience + Reason = Republican Votes.  It’s difficult because the Democrats have long controlled public education.  Thanks to their friends in the teacher unions.  And their friends running our institutions of higher education.  Which spend more time teaching our kids to distrust capitalism.  And to trust government.  To feel more.  And think less.  To live for today.  And not worry about tomorrow.  Making it very difficult for the Republicans to get young voters to vote for them.  As they are unknowledgeable (thanks to our public schools), inexperienced (because they are young) and prefer emotion over reason (because feeling is more fun than thinking).  Which is why old fogies (the knowledgeable, experienced and thinking) vote Republican and the youth vote does not.

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Anchor/Passport Babies proof that People wished Britain/America had conquered the World

Posted by PITHOCRATES - February 8th, 2014

Week in Review

The problem with a generous welfare state and porous borders is that they attract a lot of foreign-born people to your country to cash in on those generous welfare benefits.  Some even make the journey while pregnant so their child is born in the country with the generous welfare benefits.  And not the cruel, cold-hearted benefit-free country they are escaping.  Giving them an ‘anchor’ in the country they’d much rather live in than the country they don’t want to live in.  Their native country.

The United States has a porous border with Mexico.  And many Mexicans give birth in the United States while in the country illegally just so their child doesn’t have to grow up in Mexico.  Which when you think about is a statement on how these Mexicans feel about the ‘imperial’ United States.  They must really hate them for not taking the rest of Mexico when they won the Mexican War.  Had the Americans done so there would be no need for anchor babies.  For they would already be enjoying American citizenship south of the Rio Grande.  Based on the number of Mexicans entering America illegally, at least.

The United States isn’t the only country people want to live in.  Canada, too, is a beautiful country with a generous welfare state.  The winters are a little colder, though.  But that doesn’t stop people from trying to become Canadian citizens with anchor babies.  Only they call them ‘passport babies’ in Canada (see Canadian citizenship bill to be tabled Thursday by Susana Mas posted 2/2/2014 on CBC News).

Alexander said the proposed changes to the Citizenship Act would also aim to reduce the current backlog of applications and change the conditions for eligibility.

The government is also considering changes to tackle the problem of so-called “birth tourism” or “passport babies,” but Alexander told CBC News they would not be included in this bill.

Americans and Canadians aren’t better people.  They just live in countries that allow their people to be better.  Which is the problem in Mexico.  Not the people.  As the Americas were colonized Britain was further along in representative government than Spain.  Free market capitalism replaced mercantilism quicker in British America than it did in Spanish America.  And democratic institutions were more developed in British America than they were in Spanish America.  Such that the foundation for representative government, free market capitalism and democracy was more robust in British American than it was in Spanish America.

Because of this when the Americans gained their independence great peace and prosperity followed.  A first following a civil war.  Allowing America and Canada (later granted their independence from the British Empire) to be lands of opportunity.  With strong human rights.  Ironically, in large part to the School of Salamanca.  One of the greatest gifts Spain gave to the world.  Which is why people want to have their babies born in these countries.  So they can be as great as they want to be.  Because only representative government, free market capitalism and democracy can make this possible.  At least based on history.

But you can’t have people entering your country unchecked.  Especially if they’re coming for the benefits.  And your country has annual deficits and a growing national debt.  For adding more people to the benefits roll when you can’t afford it will transform the country from that land of opportunity people want to come to into the country they are fleeing.  Countries with high spending and devalued currencies that lead to black markets and lawlessness.  The very things people want to get away from by having their babies in the United States and Canada.

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Health Care Economics

Posted by PITHOCRATES - January 20th, 2014

Economics 101

Because Obamacare Insurance pays for everything Under the Sun it is anything but Insurance

Do you know what the problem is with health care?  Insurance plans that give away free flu shots.  Not that flu shots are bad.  They’re not.  And it’s a good thing for everyone to get one every year at the onset of the flu season.  For it does seem to limit the spread of the flu virus.  It’s because we get a flu shot every year is why insurance shouldn’t pay for it.  Because we know about this expense.  And we can budget for it.  Just like we can budget for our monthly cellular bill.  Which is in most cases more than ten times the cost of one annual flu shot.

When Lloyds of London started selling marine insurance at that coffee shop they were selling insurance.  Not welfare.  Losing a ship at sea caused a huge financial loss.  And shippers wanted to mitigate that risk.  So every shipper paid a SMALL premium to protect against a LARGE loss.  A POTENTIAL sinking and loss of cargo.  Not every ship sank, though.  In fact, most ships did not.  Which is why that little bit from everyone was able to pay the financial loss of the few shippers that lost their ship and cargo.  But that’s all that Lloyd’s of London paid for.  They didn’t pay a dime to shippers whose ships didn’t sink.  No, those shippers paid every cent they incurred (crew, food, rum, etc.) to ship things across those perilous oceans.  Because they could expect those costs.  And they could budget for them.

This is how insurance works.  Which isn’t how our current health insurance system works.  No.  Today people don’t want to pay for anything out-of-pocket.  Not the unexpected catastrophic costs.  Or the EXPECTED small costs that everyone can budget for in their personal lives.  Like an annual flu shot.  Childhood vaccinations.  Annual checkups.  Childbirth.  Etc.  Even the unexpected things that aren’t that expensive.  Like the stitches required when a child falls off of a bike.  Things that would cost less than someone’s monthly cellular bill.  Or things that people can plan and save for.  Like a house.  A car.  Or a child.  Which is why Obamacare insurance is not insurance.  It pays for way too many expected costs that we can budget for.  And because it does it only increases the cost of our health insurance policies.  Which are now anything but insurance.

Free Market Forces and Insurance for Catastrophic Costs will Fix any Problems in our Health Care System

When we pay these things out-of-pocket there are market forces in play.  For a doctor is not going to charge someone they’ve been seeing for years as much as he will charge a faceless insurance company.  Even today some doctors will waive some fees to help some of their long-time patients during a time of financial hardship.  Because there is a relationship between doctor and patient.  And they want to help.  Which is why they sometimes overcharge insurance companies to recover costs they can’t recover in full from other patients.  (Which is why insurance companies are vigilant in denying overbillings).  Especially those things government pays for.  Medicaid.  And Medicare.  Which the government discounts.  Leaving health care providers little choice but to overbill others to pay for what the government does not.

When we pay out-of-pocket doctors can’t charge as much.  Because they need patients.  If they charge too much their patients may find another good doctor that charges a little less.  Perhaps a younger one trying to establish a practice.  These are market forces.  Just like there are everywhere else in the economy.  Even a cancer patient requiring an expensive miracle drug benefits from market forces.  If there was true insurance in our health care system, that is.  Cancer is an unexpected and catastrophic cost.  But not everyone gets cancer.  Just as every ship does not sink.  Everyone would pay a small fee to insure against a financial loss that can result from cancer.  Where that little bit from everyone buying a catastrophic health insurance policy was able to pay the financial loss of the unfortunate few that require cancer treatment.  Even one including a costly miracle drug.  Because only a few from a large pool would incur these financial losses insurers would compete against other insurers for this business.  Just like they do to insure houses.  And ships crossing perilous oceans.

Health care would work better in the free market.  It doesn’t today because government changed that.  Starting with FDR putting a ceiling on wages.  Which forced employers to offer generous benefits to get the best workers to work for them when they couldn’t offer them more pay.  This was the beginning.  Now the health insurance industry is so bastardized that it doesn’t even resemble insurance anymore.  It’s just a massive cost transfer from one group of people to another.  Instead of a pooling of money to insure against financial risk.  For the few unexpected and catastrophic costs we cannot afford or budget for to pay out-of-pocket.

Because our Health Care System is the Most Expensive in the World it is the Best in the World

The American health care system is the finest in the world.  When you have a serious health care issue and you have the wherewithal there’s only one place you’re going for your medical care.  The United States.  And the best costs.  And it’s because it is so costly that people enter into the health care industry to do wonderful things.  Such as pharmaceutical companies.  Who many rail against for charging so much for the miracle drugs only they produce.  It’s a free country.  Anyone could have created that miracle drug.  All they had to do was to spend a boatload of money for years on other drugs that were losers.  Until they finally found one that wasn’t a loser.  That’s all you had to do.  Yet few do it.  Why?

Because creating miracle drugs is an extremely expensive and often futile endeavor.  Which is why we award patents to the few who do.  Which is the only reason they pour hundreds of millions of dollars into research and development and pay massive liability insurance premiums for taking a huge risk to put a drug onto the market that may harm or kill people.  They do this on the CHANCE that they may develop at least one successful drug that will pay for all of the costs incurred to develop this one drug, the costs for the countless drugs that failed AND provide a profit for their investors.  Who took a huge risk in paying their employees over the many years it took to come up with at least one drug that wasn’t a loser.  Their investors do this only because of the CHANCE that this pharmaceutical will develop that miracle drug that everyone wants.  But most don’t.  And investors just lose their investment.  But it’s the only way miracle drugs become available to us.  Because of rich investors who were willing to risk losing huge amounts of money.

This is what the profit incentive gives us.  The best health care system in the world.  Why the countries based on free market capitalism have the finest health care systems in the world.  And why North Korea, Cuba, the former East Germany, the former Soviet Union, Venezuela, etc., have never given us miracle drugs.  There never was an economic incentive throughout the economy to do so.  Like there is in countries with free market capitalism.  Where everyone at every level pursues profits that result overall in a pharmaceutical industry that produces these miracle drugs.

There is an expression that says you get what you pay for.  Our health care system is the most expensive in the world.  And because it is it is the best in the world.  Trying to inhibit the profit incentive for research and development and forcing medical providers to work for less (steeper Medicaid, Medicare and now Obamacare discounts) will change that.  Because you do get what you pay for.  And those who live/have lived in North Korea, Cuba, the former East Germany, the former Soviet Union, Venezuela, etc., can attest to.

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Union Cabbies want you to wait Longer for a Ride

Posted by PITHOCRATES - January 19th, 2014

Week in Review

Today there is an app for everything.  Have smartphone will travel.  Literally.  Unless, that is, union cabbies want to make you stand in the rain/snow and cold for an hour in a bad neighborhood (see Why a taxi driver protest turned violent in Paris by Dylan Stableford posted 1/14/2014 on Yahoo! News).

The attacks by striking cab drivers on Uber cars in Paris on Monday — with protesters shattering windows, smashing mirrors and slashing tires — appear to be the first violent clashes in the ongoing battle between local cabbies and app-based car services.

But tensions, in Paris and elsewhere, have been brewing for months. Cab drivers say Uber and apps like it, which allow customers to hitch rides nearly instantly from their smartphones, create unfair competition and undermine the traditional cab-hailing business…

In Portland, Ore., Uber has urged lawmakers to change an ordinance requiring town cars to wait an hour before picking up would-be passengers.

In Paris, a “15-minute law” went into effect on Jan. 1, requiring all Uber drivers to wait 15 minutes after a request is placed to pick up a passenger — a move aimed at leveling the competition for traditional Parisian cabbies.

Nonetheless, hundreds of unionized cab drivers participated in Monday’s protests in Paris, demanding a 30-minute delay, minimum fares and a driver recruitment ban. At least 12 Uber cars were targeted, according to local reports.

Imagine that.  Because someone else found a better way to do things union cabbies want new laws to prevent that better way.  They want to make a person wait for an hour before anyone picks them up.  An Uber car could be around the corner when they get the request.  They could drive around the corner and pick this person up within three minutes.  But if the union cabbies get their way the Uber car will have to sit there for an hour before moving.  To give a union cabbie a chance to drive by and get hailed.  Leaving that person in the rain or snow.  Or in a bad neighborhood.  Just standing there.  Vulnerable.  Just so someone providing a poorer service can get his or her business.

This is the difference between free market capitalism and crony capitalism.  In free market capitalism the consumer is number one.  And gets the highest quality at the lowest price.  In crony capitalism unions, businesses and government are number one.  For they are cronies and look out for each other.  At the expense of the consumer.  Who gets lower quality and higher prices.  As unions, businesses and governments collude together to enrich themselves by forcing people to pay more for less.

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Abject Ignorance of things Economic is Destroying our Health Care System

Posted by PITHOCRATES - January 18th, 2014

Week in Review

The problem in America these days is the mass ignorance of the people.  Thanks to a public school system that does not educate but programs our children to be good Democrat voters.  Higher education taken over by the leftist radicals of the Sixties that forever changed the curriculum to teach our children to distrust capitalism and love government.  When controlled by Democrats, of course.  And people who are for some reason respected for their economic prowess who are absolutely clueless on things economic (see The Daily Show Nails Why Healthcare Will Never Work As A Free Market by Christina Sterbenz posted 1/18/2014 on Business Insider).

Steven Brill, author of Time’s in-depth healthcare analysis “Bitter Pill,” appeared on The Daily Show this week to discuss his opinion of Obamacare.

Brill’s work exploded his career into a love-hate relationship with Obamacare, now leading to a book. Speaking with Jon Stewart, Brill certainly made his criticisms known but we also feel like he pinpointed exactly why healthcare just can’t work as a free market.

Brill told the story of a cancer patient forced to pay $13,700 out-of-pocket, up-front for transfusion of a drug. And that cost only constituted part of a greater $83,000 payment. Brill claims, however, the drug only cost the pharmaceutical company $300.

Stewart came back at Brill with the typical, conservative argument — creating a free market for healthcare where patients pick-and-choose their coverage to create competition and therefore, better options.

“Everyone says, well it’s a marketplace. That guy [the cancer patient] has no choice in buying that drug. His doctor told him, ‘This will save your life. You don’t take it, you’re gonna die,'” Brill responded.

He further argued free markets must host two aspects — a balance between buyers and sellers and secondly, knowledge — neither of which the current U.S. system offers.

“That cancer drug has a patent. That is a monopoly that the government has given the drug company. There is no other drug. That’s the drug,” Brill said.

Jon Stewart is a comedian.  So one can almost forgive his ignorance.  But you’d think a person writing for a publication with the word ‘business’ in its name would actually understand business.  But the author hasn’t a clue.  It’s not her fault.  It’s because of the politicizing of our educational system.  As her dual degrees in journalism and public affairs would have taught her squat about the classical, Austrian or the Chicago school of economics.  Instead filling her head with Keynesian nonsense.  The one economic school embraced by power-hungry governments everywhere that has a proven track record of failure.  For it was Keynesian policies that gave us the Great Depression, the stagflation of the 1970s, the dot-com bubble and recession of the late 1990s/early 2000s and the Great Recession.  Where massive government spending did not pull the economy out of recession but only made things worse.

Why does this pharmaceutical company have a patent?  Or perhaps a better question would be why do we have this one cancer drug?  Why is it that this one pharmaceutical company developed a cancer drug that works that no other pharmaceutical company or government developed?  Because of that patent.  The only reason they poured hundreds of millions of dollars into research and development and paid massive liability insurance premiums for taking a huge risk to put a drug onto the market that may harm or kill people.  They do this on the CHANCE that they may develop at least one successful drug that will pay all of their past costs for this one drug, the costs for the countless drugs that failed AND a profit for their investors.  Who took a huge risk investing, giving this pharmaceutical company the money to pay all of their employees over the years it took to come up with at least one drug that wasn’t a loser.

Does the author of this article work for free?  No.  Of course not.  She has bills.  As we all do.  Even the people working at pharmaceutical companies.  Who don’t work there for free.  Even if the vast majority of their work produces nothing that their employer can sell their employer still pays them.  Thanks to their investors who give them the money to do so until they can actually sell something.  But their investors do this only because of the CHANCE that this pharmaceutical will develop that miracle drug that everyone wants.  A miracle drug that would never come into being if it weren’t for investors who were willing to risk losing huge amounts of money.  Something only rich investors can afford to do.

Health care worked as a free market before General Motors made it an employee benefit thanks to FDR’s ceiling on wages.  Once people stopped paying for what they received all free market forces left the health care system.  And costs began to rise.  This whole “healthcare just can’t work as a free market” is a product of the dumbing down of our educational system.  One that produces people who don’t know the difference between insurance and health care.  Insurance protects our assets against a catastrophic and UNEXPECTED loss.  Like when Lloyds of London started selling marine insurance at that coffee shop.  Every shipper paid a small premium to protect against a POTENTIAL sinking and loss of cargo.  A POTENTIAL financial loss.  Not every ship sank, though.  In fact, most ships did not.  Which is why that little bit from everyone was able to pay the financial loss of the few that did.  For the ships that didn’t sink the shippers paid every other cost they incurred to ship things across those perilous oceans.

This is how insurance works.  Which isn’t how our current health insurance works.  Where people don’t expect to pay for anything out-of-pocket.  Not the unexpected catastrophic costs.  Or the EXPECTED small costs that everyone can budget for in their personal lives.  Childhood vaccinations, annual checkups, flu shots, childbirth, etc.  Even the unexpected things that have a low cost.  Like the stitches required when a child falls off of a bike.  Things that would cost less than someone’s annual cellular costs.  Or things that people can plan and save for (like a house, a car or a child).  When we pay these things out-of-pocket there are market forces in play.  For a doctor is not going to charge someone they’ve been seeing for years as much as a faceless insurance company.  Even today some doctors will waive some fees to help some of their long-time patients during a time of financial hardship.  Because there is a relationship between doctor and patient.

When we pay out-of-pocket doctors can’t charge as much.  Because they need patients.  If they charge too much their patients may find another good doctor that charges a little less.  Perhaps a younger one trying to establish a practice.  These are market forces.  Just like there are everywhere else in the economy.  Even a cancer patient requiring an expensive wonder drug would contribute to market forces if there was true insurance in our health care system.  Cancer is an unexpected and catastrophic cost.  But not everyone gets cancer.  Everyone would pay a small fee to insure against a financial loss that can result from cancer.  Where that little bit from everyone was able to pay the financial loss of the unfortunate few that receive a cancer diagnosis.  Because only a few from a large pool would incur this financial loss insurers would compete against other insurers for this business.  Just like they do to insure houses.  And ships crossing perilous oceans.

Health care would work better in the free market.  It doesn’t today because government changed that.  Starting with FDR putting a ceiling on wages.  Which forced employers to offer generous benefits to get the best workers to work for them when they couldn’t offer them more pay.  This was the beginning.  Now the health insurance industry is so bastardized that it doesn’t even resemble insurance anymore.  It’s just a massive cost transfer from one group of people to another.  Instead of a pooling of money to insure against financial risk.  For the few unexpected and catastrophic costs we could not afford and budget for to pay out-of-pocket.

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