Tariffs

Posted by PITHOCRATES - September 9th, 2013

Economics 101

The Proponents of Tariffs say they will Protect Infant Industries and Domestic Jobs

Tariffs.  What are they?  And what are they for?  A tariff is a tax.  Or a duty.  The government applies tariffs to imported goods.  Making them more expensive.  So people have to spend more money for them.  Leaving them less money to spend on other things.  Which seems counterintuitive to trying to increase economic activity.  Increasing prices the consumers pay, leaving them less money to buy other stuff.  So why do they do it?

The argument for tariffs is typically to protect ‘infant’ industries.  To give them a chance to get off the ground and establish themselves.  So they can later compete with this more developed and less costly foreign competition.  Which they couldn’t do if those foreign competitors can sell goods just as good if not better at lower prices.

Another argument is that tariffs protect domestic jobs.  A lot of imported goods are less costly than the same domestically produced goods.  Because of less costly labor in these other countries.  Often developing economies.  Unlike the developed economies who pay their people more.  And give them more benefits.  All paid for with the higher prices the people pay for their goods.  Tariffs raise the prices of foreign goods so they are not less costly than the domestically produced goods.  To get people to buy domestic goods.  Thereby saving domestic jobs.

Americans have to Pay about $1.25 more for a Bag of Sugar than the Rest of the World

These arguments make tariffs sound noble and good.  For they’re helping the little guy.  And protecting middle class jobs from cheap labor in foreign countries.  But they also hurt the little guy.  And poor families.  Because tariffs raise the price of the things they have to buy.  For example, tariffs on sugar imports raise the price Americans pay for sugar higher than people can buy sugar outside of the United States.  So the sugar they buy, and anything that contains sugar as an ingredient that they buy, is higher than it would be if the sugar tariffs weren’t there.

The US population in 2012 was 313,914,040.  Let’s assume the adult population is approximately 250 million.  And that half of them buy sugar.  How many sugar producers are there in the United States?  Far, far fewer than 125 million.  The Washington Post noted in 2007 that there were only about 6,000 sugar farmers.  About 0.002% of the population.  While the sugar buyers are closer to 40% of the population.  Or more if you include the things we buy that have sugar in them.  The numbers are approximate but the point is clear.  The people helped by tariffs are an infinitesimally small number while the people hurt by tariffs are a much, much larger number.

Let’s crunch some numbers.  While people outside of the United States can buy a bag a sugar for $1 Americans have to pay $2.25.  Or $1.25 more.  To protect American jobs in the sugar industry.  The 6,000 sugar farmers.  Let’s triple this number for the corn farmers (for high fructose corn syrup) and the sugar companies.  Rounding it out to an even 20,000 jobs that sugar tariffs protect.  If half of all adults buy a bag of sugar that’s $156 million pulled out of the economy that goes to, for lack of a better term, Big Sugar.  Let’s say these adults buy two bags a year.  Bringing the transfer from the 125 million (sugar consumers) to the 20,000 (Big Sugar) to $312.5 million.  Let’s double that number to include everything we buy that includes sugar as an ingredient.  And then double that number to account for all the sugar and corn subsidies.  Bringing the total annual wealth transfer from consumers to Big Sugar to approximately $1.25 billion.

Tariffs transfer Wealth from the Many to the Few and Reduce Economic Activity

That’s an enormous amount of wealth transferred from less rich people to richer people.  From consumers to Big Sugar.  But is it accurate?  Well, according to an article published in the Washington Post, yes.  The article states:

The Government Accountability Office has estimated that the sugar program costs consumers and food processors between $1 billion and $2 billion annually in higher prices for sugar and a vast array of products that contain it. Meanwhile, the new sugar subsidy would cost taxpayers tens of millions of dollars a year, according to economists and U.S. officials.

So our crude calculation may be on the light side.  This is a lot of money taken out of the pockets of hundreds of millions of consumers to protect 20,000 or so well-paying jobs.  Nearly half of the US population supporting less than 0.02% of the population.  And those tariffs paid that 0.02% very well.  Because Big Sugar is very profitable.  And can pay their people very well.  As they have tariffs to increase their selling prices and subsidies to lower their costs.  Which greatly fattens the bottom line.

In the United States the price of sugar is so high that businesses have turned to high fructose corn syrup for their sweetener.  Which our tax dollars also subsidize.  Making it a very profitable industry.  And as an added bonus for Big Sugar, some studies have indicated that high fructose corn syrup doesn’t satiate your appetite like regular sugar.  Causing us to overeat.  Which lets the soda pop industry sell more soda pop.  The (sweetened) food industry sell more food.  And, of course, Big Sugar sell more sweetener.  Making them richer.  And the people poorer.  As well as obese.  All of this to protect a very few jobs in some very old industries.  Transferring wealth from the many to the few.  And reducing economic activity.  Pretty much the exact opposite of what the proponents of tariffs say tariffs will do.  But what they in fact do.  Help the few.  At the expense of the many.

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Cane Sugar, Crystallized Sugar, Sugar Trade, West Indies, Wealth and War

Posted by PITHOCRATES - May 7th, 2013

History 101

As Muslim displaced Christians from the Lands of the Roman Empire Sugar moved West

There is a war on sugar.  It’s making us fat.  And it’s making us sick.  Because it tastes so damn good.  We crave it.  And always have.  Since the first days we chewed on sugarcane.  Sucking out the juice.  Which was where that sweet delight was.  It was so good that the people in New Guinea (just north of Australia) learned how to plant it and raise it themselves.  Instead of just looking for it in the wild.  Around the eighth millennium BC.  From there it spread.  North.  To Southeast Asia.  Southern China.  And into India.  Where they took sugar to the next level.  They didn’t just chew on sugarcane to suck out the juice in India.  They refined it into a crystallized substance.  Around 350 AD.  Concentrating that sweetness.  And making it portable.  Then the Arabs entered the picture.

The Arabs took the Indian sugar-making technique and made it into big business.  They established plantations to grow it in tropical climes.  Where the two things that made sugarcane grow best—heat and water—were plentiful.  They built the first sugar mills to refine the cane.  Basically presses to squeeze out the juice.  Which they then boiled the water out of.  Leaving behind sugar crystals.  And added it to their foods.  As Muslim Arabs displaced Christians from the lands of the Roman Empire sugar moved west.  The Arabs introduced sugarcane plantations as far west as southern Spain.  When Christian Crusaders returned from fighting Muslims in the Holy Land they brought back crystallized sugar to Europe.  And they quickly fell in love with those white crystals.  By the late 13th century even England had grown a sweet-tooth.  Who would go on to consume so much of the stuff that they would rot their teeth away.

Then the Europeans entered the sugar business in the 15th century.  At first it was just the wealthy that enjoyed sugar.  Then it spread to the common people.  As demand grew they established new plantations to meet that demand.  In southern Spain.  The Atlantic island of Madeira.  The Canary Islands.  The Cape Verde islands off the west coast of Africa.  All had good growing climates for sugarcane.  And each plantation had its own processing plant.  For a ship’s hold full of crystallized sugar was far more valuable than a ship’s hold full of harvested sugarcane.  Making these plantations labor intensive endeavors.  And working the fields was backbreaking work.  To step up production required a larger labor force than was available.  And to meet that demand they turned to using African slaves.

Sugar was a Turning Point from an Agrarian World of Slaves and Indentured Servants to the Modern Industrial World

By the 16th century the Europeans were taking sugarcane across the Atlantic.  And African slaves.  The Portuguese, Spanish, Dutch, French and British brought sugarcane and slaves to Brazil, Cuba, Jamaica, Barbados, the Virgin Islands, Guadaloupe, Saint-Domingue (present day Haiti) and elsewhere in the Americas.  With the Caribbean Islands becoming the sugar capital of the world.  France’s Saint-Domingue being the single largest producer in the world.  Until their slave uprising.  It was France’s wealthiest possession in the Western Hemisphere.  And its loss changed French ambition in the New World.  For Napoleon had his eyes on rebuilding the French Empire in North America that was so rudely interrupted by France’s loss in the Seven Years’ War.  But with the loss of Saint-Domingue and all that sugar wealth Napoleon lost all interest in the New World.  And sold the Louisiana Territory to the United States.  To prepare for war with Britain.  Again.

The British and the French both had lucrative sugar plantations in the West Indies.  When the American Revolutionary War turned into a world war the British and French squared off once again.  Especially in the West Indies.  Where they wanted to protect their possessions producing that valuable sugar.  And take the other’s possessions.  So they could expand their holdings.  And their wealth from the sugar trade.  As well as put down any slave uprisings.  Such as would later happen in Saint-Domingue.  Some say the reason the British lost the American Revolutionary War was because they diverted too much of their military resources to the Caribbean.  But the French were diverting a lot of their military resources to the Caribbean, too.  Which is one reason why the war lasted 8 years.  As the French were more interested in taking the British possessions in the West Indies than American independence.  Their first efforts fighting alongside the Americans (Rhode Island in 1778.  Savannah, Georgia, in 1779) did not help the cause.  It was only when the French fleet could be spared from the action in the West Indies that they joined General Washington in trapping General Cornwallis at Yorktown in 1781.  With Cornwallis’ surrender effectively ending the war.  Even though they wouldn’t sign the final peace treaty until 1783.

By the end of the international slave trade Europeans sent approximately 10 million Africans to the New World.  Mostly to Brazil and the Caribbean.  To work in the sugar plantations.  Where slave ships left Africa.  They unloaded slaves in the New World.  Loaded the sugar these slaves grew.  Shipped the sugar back to the Old World.  Unloaded the sugar and loaded on finished goods.  Then sailed back to the African slave stations.  Where they traded their finished goods for more slaves.  There was big money in The Trade Triangle (trade from Africa to the New World to the Old World and back to Africa).  But sugar also helped to kick off the Industrial Revolution.  For the iron industry grew to make the machinery of the sugar mills.  As each plantation processed their sugarcane into crystallized sugar that was a lot of cast iron gears, sprockets, levers, axles, boilers, etc.  Basically a turning point from an agrarian world of slaves and indentured servants.  To the modern industrial world and wage-earners.

There is a Correlation between America’s Obesity Problem and the Switch from Cane Sugar to Corn Sugar

By the 19th century technology was making better sugar at lower costs.  The British designed a low-pressure boiler.  As water boils at a lower temperature when at lower pressure they were able to refine sugar with less energy.  Cutting production costs.  And waste.  As higher temperatures caramelized some of the sugar.  Though caramelized sugar can be delicious on crème brûlée you don’t want it when you’re producing crystallized sugar to sell.  Then the Americans improved this process by creating the multiple-effect evaporator.  A multi-stage device where the pressure is lower in each successive stage.  They use steam to boil water in the first stage.  This vapor then provides the energy to boil water in the next stage.  Which is at a lower pressure.  And, therefore, has a lower boiling point.  That vapor then boils water in the next stage which is at a lower pressure.  And so on.  Where one energy input creates a lot of useful work cost-efficiently.

With the advance in refining equipment refinery plants grew more complex.  And expensive.  So instead of building one on every plantation they built fewer but larger ones.  And shipped raw product to them.  Modern ships and economies of scale made this the new business model.  Companies grew and opened other refineries.  And expanded vertically.  Growing sugarcane as well as refining it.  One of the best at this was the American Sugar Refining Company.  That at one point controlled 98% of the sugar processing capacity in the United States.  Which earned it a spot on the original Dow Dozen.  The first 12 industrial stocks the Dow used in calculating their Dow Jones Industrial Average in 1896.  And remained a component of the Dow Jones Industrial Average until 1930.

Eventually the Americans couldn’t compete with foreign sugar producers any more.  They enlisted the help of Congress to impose tariffs on cane sugar imports.  Forcing Americans to pay more for their sugar.  Then they started making sugar out of government subsidized corn.  High-fructose corn syrup.  Which pretty much sweetens anything manufactured in the United States today.  That some say causes more health problems than cane sugar.  Including obesity.  Those in the high-fructose corn syrup business vehemently deny this.  But there is a correlation between America’s obesity problem and the switch from cane sugar to corn sugar.  Because of the different way the body metabolized corn sugar it did not satiate our appetite.  Leading us to over consume.  Such as with sugary drinks.  Which have gotten so large in size that New York City Mayor Bloomberg tried to make these large sizes illegal.  Because America’s over consumption of sugar was making us obese.  While Britain’s over consumption of cane sugar only rotted their teeth away.  It didn’t make them obese.  Which makes the case that corn sugar is less healthy than cane sugar.  Despite what the corn sugar lobby says.

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The Government made us Obese by making us Eat and Drink High-Fructose Corn Syrup

Posted by PITHOCRATES - January 5th, 2013

Week in Review

The study of sweeteners can be confusing.  Once upon a time people used sugar made from sugar cane grown in tropical climates.  Then we found we could make sugar from sugar beets grown in cooler climates.  These are pretty much pure sucrose.  Then there is high-fructose corn syrup (HFCS) which is a combination of glucose and fructose, heavy on the fructose.  Made from, of course, corn.  Today this is the dominant sweetener in the United States.  Because of intensive lobbying by the HFCS lobby.  Who had their friends in government place a quota on domestic sugar production, subsidize U.S. corn producers and slapped an import tariff on foreign produced sugar.  Artificially raising the price of sugar in the U.S.  To force those buying sweeteners to buy the higher priced HFCS.  Create great profits for the HFCS business.  And their friends in government.  While increasing the cost of the sugar millions of Americans add to their coffee.  And water else they like to sweeten.

As bad as this manipulation of the market economy is it gets even worse.  Due to the greed of those in government this rise in HFCS use may have caused another problem.  Our obesity epidemic (see Fructose makes people think they’re still hungry: Study by QMI Agency posted 1/3/2013 on the Toronto Sun).

A new study may provide a clue to North America’s obesity problem.

Fructose — a very cheap and sweet sugar found in North American staples — may be tricking people’s brains into thinking they’re hungry when they’re actually full.

The study, published in the Journal of the American Medical Association, used magnetic resonance imaging (MRI) to track the blood flow in the brains of 20 young men of normal weight before and after they drank beverages with fructose or glucose, another type of sugar.

They found glucose suppressed activity in the areas of the brain that control reward and a desire for food. Not so with fructose…

The study’s authors acknowledge the study is small and doesn’t prove a link between fructose and obesity. But the journal’s editors, Dr. Jonathan Purnell and Dr. Damien Fair, note the findings mirror those from previous studies on animals.

What’s more, the study’s participants also reported feeling less full after consuming the fructose drinks, lending credibility to the MRI results.

Of course, the only reason why HFCS is ‘cheap’ is because the government artificially increased the cost of the competition.  Sugar.

While the food purists on the Left are telling our parents they’re making their kids fat because they don’t make them watercress sandwiches for lunch they’re surprisingly silent on the chemically produced HFCS.  They don’t attack those in government that have put HFCS in so many of our food products.  Giving us our obesity problem.

HFCS started entering our foods from 1975 to 1985.  And it was following this period that we started jumbo-sizing everything.  Because we just didn’t feel full like we did when we ate and drank food products made with sugar.  So we overate.  And became obese.  Apparently.

Perhaps we should look at the government as the cause for our obesity problem.  Not the 32 ounce soda.  For we used to feel full when drinking a 12 ounce soda before the government forced us to start drinking and eating HFCS.

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LESSONS LEARNED #63: “There is no such thing as a monopoly in free market capitalism.” -Old Pithy

Posted by PITHOCRATES - April 28th, 2011

Even the mighty Coke-Pepsi Duopoly can’t stop People from Drinking Tap Water

Coke and Pepsi have a near monopoly in the cola market.  Or a duopoly.  They dominate.  And they’re bitter enemies.  Few brands are locked in such a bitter struggle that we call it war.  The Cola Wars.  They are archenemies.  Even though they may cooperate by alternating their discounting to limit their losses.  One month Coke may be on sale.  The following month, Pepsi.  They’re big and their powerful and when you ask for a Coke at a restaurant you’ll either get a Coke.  Or they’ll ask you if Pepsi is okay.  Or vice versa.  Because they own the market.

But do they?  There’s always another choice.  At a restaurant, we can order ice tea.  Hot tea.  Coffee.  Orange drink.  Beer.  Wine.  A cocktail.  Or even water.  Ditto at the grocery store.  Walk down an aisle and there’s more to choose than Coke or Pepsi.  RC Cola, for one.  And then there’s the un-cola (7-Up).  VernorsA&W Root BeerSquirtDr. PepperCrushSnapple.  And other name brands that aren’t owned by the Dr. Pepper Snapple Group.  Not to mention all the store brands.  And, of course, tap water.  Which I personally drink with most of my meals.  Even though there’s nothing finer than a Coke or Pepsi to wash down a greasy pizza.

Try as they might Coke and Pepsi can’t limit entry into the beverage market.  The barriers they can erect are minimal.  They can offer a special price to a store or restaurant in exchange for keeping out their hated rival, but they can’t prevent people from asking for tap water.  Or from people simply going elsewhere to get the Coke or Pepsi product they want.  Or the million other options out there.  And if they raise their prices in their ‘duopoly’, people will just seek out those other options.  Yes, they may be able to tell the difference between Coke and Pepsi in blind taste tests.  But if the price isn’t right, they’ll enjoy RC Cola just fine.  Or even the store brand cola.

Go ahead and Tax our Tea.  We’ll just drink Coffee Instead.

You see, to keep out the competition, you need the power of government.  Just ask the sugar importers.  Who would love to sell to the cola companies.  But don’t.  Because government has erected a barrier to that market.  Now, we don’t know what their highly guarded secret recipes are, but we do know that they each use the same sweetener.  High fructose corn syrup (HFCS).  They don’t use sugar.  Why?  Because Big Ag lobbied Congress to slap high tariffs on imported sugar.  Which they have.  Now the price of sugar is so high the cola companies use HFCS instead.  Though that may be changing as of late with a new round of health concerns about HFSC.  But that’s a whole other story.

To limit consumer choice, you need government to step in.  Because only government can write laws to erect market barriers.  For example, the last straw of British oppression before America’s Declaration of Independence was about a British law that erected a market barrier.  British Americans, being of British stock, liked their tea.  But they didn’t like paying the high price of East Indian Company tea.  In the Mercantile economics of the day, everything bought and sold in the British Empire shipped on British ships through British ports.  Indian opium shipped on British ships to China (via Calcutta).  The British than used the proceeds from those sales to purchase tea.  Which they shipped on British ships back to London.  Where they paid a duty on it.  And then on to America.  Where the colonists paid a tax on it.  All these markups made their tea pretty expensive.

Famine and recession caused financial problems for the East India Company.  To help alleviate their problems, British Parliament stepped in.  Said they could ship their tea directly to British North America (without going through London).  And sell it tax-free in the colonies.  Which made all other tea more expensive.  Which did not go over well with the American tea merchants.  Or the colonists in general.  This led to the Boston Tea Party.  American Independence.  And the switch from drinking tea to drinking coffee in America.  Because even when there is only one tea that is legal to drink, there is always another choice.

Rockefeller benefited Consumers.  The ICC did not.

People love Teddy Roosevelt for his trust busting.  Attacking the big robber barons.  To help the little guy.  And one of the big guys the little guys loved to hate was John D. Rockefeller.  Of Standard Oil fame.  Rockefeller was richer than most nations.  And some people just hated that.  He made his wealth by making refined oil products affordable to the consumer.  And he was a great environmentalist.  He saved the whales by replacing whale oil with kerosene.  And his relentless research and development made every bit of refined oil into a useful product.  While his competitors dumped most of their waste back into the environment.  Not Rockefeller.  He hated waste.  He even experimented in finding the least number of welds it would take to hold an oil barrel together.  He invented vertical integration (controlling industries up and down the product pipeline from the collection of raw resources to the sale of a finished product).  He not only made refined oil products cheap.  He made them plentiful.  Which made America the world’s leading economic power.  Successful corporations follow his example today.

Sure, he put a lot of his competitors out of business.  But it wasn’t because he was a monopoly.  It was because he was just that much better.  He produced refined products better and cheaper than his competition.  By the time the trust busters busted up Standard Oil, competition was coming into being on the Standard Oil model.  Which ultimately produced more refined products at lower costs.  He forced the competition to step up to his level which benefited consumers.  While the trust busters tried to bring Rockefeller down to his competitor’s level which benefited his competitors.  Not the consumers.  No, consumers did very well by John D. Rockefeller.  He created and produced at a relentless rate.  He didn’t ask for government help.  Unlike his competitors.  Who complained to the government.  (It is never a consumer that complains about predatory pricing).  Because when you can’t compete legitimately, you petition government for special favors.  Much like some of the railroads did.

Building a railroad is costly.  And takes a lot of friends in government.  At all levels.  Because you have to lay track through federal land, state land, county land as well as through cities.  Of course, everyone wanted that track to go through their land because the railroad was the way to ship goods.  And people.  So the system was ripe for corruption.  And it often was.  Once built some shippers complained about unfair shipping rates compare to what others got.  Rockefeller, for example, was highly criticized for getting better rates by far than any of his competitors.  Of course, he shipped by far more product than any of his competitors.  Which probably had a lot to do with his rates.  But the government saw that things were unfair in the railroad business.  So they stepped in.  And created the Interstate Commerce Commission (ICC).  Which was to right all the wrongs.  Which, of course, it didn’t.  It just made it easier for the big companies to fix things in their favor.  For they now had a single governing body to buy.  Which made it easier to buy political influence.

But none of this made a difference to save the railroads.  They started to die in the Fifties.  Of arrogance.  When people asked the big railroad executives what business they were in, they replied, “The railroad business.”  But they weren’t.  They were in the transportation business.  What’s the difference?  The ‘railroad’ business had only other railroads for competition.  The transportation business had cars, trucks and, eventually, planes, as competition.  So even though those who used the power of government to restrict other railroads from entering their markets, there was still competition.  The interstate highways and the automobile killed passenger rail.  And the trucking industry almost killed the freight railroads.  What saved them was realigning their operations into the transportation business.  Intermodal transportation combined container ships, railroads and trucks into a seamless and cost efficient transportation system.  Roadrailers took that concept to a higher level.  These are truck trailers that can be pulled by a locomotive without the need of a rail flatcar.  Trucks deliver these trailers to a rail yard.  They add a train bogey to the trailer.  Put it on the track.  Couple them together.  And attach them to a single locomotive.  Very little non-revenue weight.  Making it very efficient.  John D. Rockefeller would be impressed.

In a Free Market there is always a Choice

Wherever there is a market there is competition.  For any market where a profit can be made will attract others to that market.  Companies can try to restrict competitors.  But that’s all they can do.  Try.  Because if it’s a free market, it’s open to competition.  There are no barriers that a competitor can’t overcome.  Except one legislated by government.  And competitors can even crack that barrier.

And this is what it takes to make a monopoly.  Government.  Railroads had monopolies for awhile.  But creative business people found a way to crack their government-imposed monopoly.  Truckers came in and shipped at rates lower than the ICC said was fair.  Of course, fair is a relative term.  What’s fair to the railroad is not fair to the shipper.  Or the consumer.  But a trucker shipping at rate that he can cover his expenses and support his family is fair to everyone.  Except the railroad who depended on government instead of innovation for their business profits.

Coke and Pepsi can fight their cola wars but they can’t keep out competition.  There’s always root beer, ginger ale, orange drink, beer, wine, liquor, water, coffee or tea.  And even when government uses their full weight and power to create and maintain a tea monopoly, tea drinkers can simply become coffee drinkers.  For in a free market there is always a choice.  Always.

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Government Bureaucrats are bad for your Health in the UK and in the US

Posted by PITHOCRATES - March 2nd, 2011

 To be Great be like Margaret Thatcher and Ronald Reagan

People have said that the British and the Americans are one people separated by a common language.  We’re very similar.  Even if we speak the Queen’s English a bit differently.  It turns out that’s not the only thing we share.  We also bend over backwards to compare ourselves with great conservatives from our past (see Look at what the Conservatives are achieving by Michael Fallon, MP for Sevenoaks and deputy chairman of the Conservative Party, posted 3/2/2011 on the UK’s Telegraph).

Yes, Thatcher abolished the dock labour scheme – 10 years after she was elected. Yes, she tackled trade union power: they finally lost their closed shop in 1988, nine years after she started. Yes, she set up grant-maintained schools, independent of local authorities. But when we left office, they comprised less than 5 per cent of the country’s total.

David Cameron’s Government has moved further and faster. Take the public finances: public borrowing, cyclically adjusted, will be 0.3 per cent of GDP by 2015, well below the 2.6 per cent it was in 1990, and the budget will be back in surplus. Corporation tax was 34 per cent when Thatcher left office; by 2015 it will be 24 per cent. Small business tax, 25 per cent in1990, will have fallen to 20 per cent.

Not only is David Cameron Thatcher-like, he’s even out ‘Thatchered’ her.  This speaks volumes about the greatness of Margaret Thatcher.  In America, it’s the other half of that dynamic duo.  Ronald Reagan.  Come election time, every candidate is trying to show how Ronald Reagan he or she is.  Even the Democrats.  Even Barak Obama as his poll numbers plunge.

For a first-term prime minister leading an entirely novel coalition, the essential tasks might be enough: growing the economy; weaning it off its over-reliance on public spending, financial services and an unsustainable property boom; and pulling our finances back from the brink over which Greece and Ireland plunged.

Yet far more significant is the quiet revolution that is turning government inside out – away from Whitehall and targets and regional authorities and back to councils, GPs, head teachers, police commanders, community groups and charities. Ending the state monopoly in almost all public services, encouraging new providers, ensuring competition and choice – these are the most radical reforms since the Attlee government.

And Obama couldn’t be any more un-Ronald Reagan-like if he tried.  He’s trying to take America in the opposite direction that David Cameron is trying to take the UK.  Cameron is trying to decentralize while Obama is trying to centralize.  Especially health care.

Poor Quality, High Cost and Rationing in the National Health Service

The National Health Service in the UK has high costs and quality concerns.  The costs have been addressed in the past by rationing services.  The quality concerns have been addressed by layers of bureaucracy that have often been the original cause of the quality concern.

The problem with the NHS is size.  It’s a behemoth.  And because of that, it has layers of bureaucracy.  Which results in bureaucrats making decisions for patients instead of doctors.  They’re trying to change all this by grouping together and empowering local general practitioners (GPs) into consortia (see Hospitals shake-up essential, says King’s Fund by Nick Triggle posted 3/2/2011 on the UK’s BBC).

The government has protected the NHS budget by giving it small above-inflation budget rises over the next four years.

But the report said it was still entering a “cold climate” because demands and costs were outstripping the settlement.

It said without change there could be a “downward” spiral of falling income, growing deficit and declining quality.

Will this fix all the woes of the NHS?

Scandals such as Mid Staffordshire, where an official report found hundreds of patients died needlessly because of poor care, could not be ruled out.

Probably not.  But it’s a step in the right direction.  For the patients, at least.

A Department of Health spokesman said GP consortia would strengthen the ability of the NHS to make the right decisions.

“We urgently need to modernise the NHS – that is why our plans include many measures to make services more responsive to patients and to consistently drive up quality.”

The key to good health care has always been the doctor patient relationship.  The more people that get in between the doctor and the patient the poorer the health care gets.  Because the focus shifts from quality to cost efficiency.

This is a step in the right direction, but it’s still a heavy bureaucracy.  There is another way to ensure quality, though.  Competition.  When my dad had his first heart attack the paramedics gave us a choice of two hospitals they could take him to.  One had a bad reputation.  The other didn’t.  We chose the one with the good reputation. 

That other hospital continued to do poorly for years and eventually had financial troubles.  Then a big hospital bought it and brought it up to their standards.  And many years later, both of these hospitals are now providing quality care.  You see, competition makes everything better.  Even health care.

Using High-Fructose Corn Syrup instead of Sugar making us Obese?

The British and Americans have something else in common.  We like our sweets.  While one of us loses their teeth to this indulgence, the other has gotten obese (see The Fight Over High-Fructose Corn Syrup by Sharon Begley posted 2/28/2011 on The Daily Beast).

Now a stream of studies shows that sugar and corn sweeteners differ in important ways, including how they affect the appetite-control centers in the brain. That suggests that [High-Fructose Corn Syrup] HFCS may be partly responsible for the obesity epidemic…

The new study is too small to decide the question—it included only nine people—but it fits with other research on both humans and lab animals.  Scientists led by Jonathan Purnell of Oregon Health & Science University gave fructose, glucose, or salt water to volunteers and then measured brain activity with functional MRI scans. Over several regions of the cortex, activity increased in people given glucose but decreased in those given fructose, the scientists will report in Diabetes, Obesity and Metabolism. Cortical regions that responded differently included the orbital prefrontal, a key player in the reward circuit, and regions that process the pleasurable effects of food. “It’s evidence that fructose and glucose elicit opposite responses in the human brain,” says Purnell…

Rats eating equal calories from the two gained significantly more weight on HFCS than on table sugar, scientists led by Bart Hoebel of Princeton reported in 2010. The HFCS-fed animals also had increases in abdominal fat and triglycerides. And in a 2010 review, scientists at the University of California, Davis, noted that, in people, fructose added to abdominal fat and other measures “associated with increased risk for cardiovascular disease and type 2 diabetes.” HFCS is not the sole culprit in obesity. But the body and brain don’t seem to treat it as an innocent bystander, either.

Great Britain’s early Caribbean colonial possessions sent shiploads of cane sugar back to England for their tea.  And to make their chocolates.  They so liked their sweets.  And, as a consequence of this sugary indulgence, their bad teeth are legendary in the world of dental hygiene.  George Harrison even wrote a song about a fellow Brit with a chocolate addiction.  Eric Clapton.  Who he warned that he’ll have to have all his teeth pulled out after the Savoy Truffle (a song on the BeatlesWhite Album).

So the British are the butt of many a dental hygiene joke.  But they aren’t obese.  Like the Americans are.  Who also have a sweet tooth.  But we don’t eat sugar.  We eat HFCS.  Why?  Not because we prefer it.  But because of our government.  Big Corn lobbies Congress for sugar tariffs.  And Congress delivers.  Which makes imported sugar more expensive than HFCS.  So we eat HFCS not by choice.  But by government fiat.  And it now appears it may be part of the cause for the explosion in obesity and diabetes in America.  How about that? 

Yet another reason to keep government bureaucrats out of our health care system.

Conservatism Works every time it’s Tried

Bureaucrats are good at shuffling paper.  They aren’t good research scientists.  Or doctors.  So it’s best to keep them shuffling paper.  And let the professionals determine what we should eat.  What we probably shouldn’t eat.  And take care of us when we get sick.  I’m sure we’d all live a longer and healthier life if we do.

The dynamic duo of Margaret Thatcher and Ronald Reagan knew this.  Their conservatism worked.  It made the UK and the US great again.  And this is why everyone bends over backwards to show how much they are like these great conservatives from our past.  Even those who couldn’t be more opposed to their philosophy.  Because they know that conservatism works and has worked every time it’s been tried.  And they’re willing to admit that (a little) at election time.  Even if they’re lying through their teeth.  That is, if they haven’t been pulled out yet after the Savoy Truffle.

www.PITHOCRATES.com

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