• Tag Archives capitalism

  • Socialized Medicine Is “Free” But Leads To Really, Really Long Wait Times

    Posted on by Azrael Comment

    Last November, CTV News in Canada ran this incredible story about growing wait times for medical care in Canada due to its socialized medical system: “‘It’s insane’: Ont. patient told she’d have to wait 4.5 years to see a neurologist.” Here’s a slice:

    An Ontario doctor says health-care wait times have reached “insane” lengths in the province, as one of her patients faces a 4.5-year wait to see a neurologist. When Dr. Joy Hataley, a family practice anesthetist in Kingston, Ontario, recently tried to send a patient to a neurologist at the Kingston General Hospital, she received a letter from the specialist’s office telling her that the current wait time for new patient referrals is 4.5 years. The letter said that, if the delay is “unacceptable” to Dr. Hataley, she should instead refer the patient to a neurologist in Ottawa or Toronto.

    Dr. Joy Hataley said she was shocked when she received this letter from a neurologist’s office. Dr. Hataley, who has been outspoken about wait times and other issues plaguing Ontario’s health care system, said the wait time “shocked” her. She wanted to shock others as well, so she tweeted a photo of the letter above and tagged Ontario Health Minister Eric Hoskins and Kingston-area MPP Sophie Kiwala. Dr. Hataley said she’s used to hearing back from specialists who are unable to see her patients for months, and even up to 2.5 years.  But a 4.5-year wait is “insane,” she told CTVNews.ca in a telephone interview. “This is an alarm bell,” she said. “What it is to me is a red flag to the system.”

    “When Dr. Hataley first pulled up the response from the referral, both of us were just seeing the wait time first hand, I was just in disbelief and shocked,” Wooldridge, a 40-year-old developmental service worker, told CTVNews.ca in an email. “The more I thought about it after leaving her office I was just annoyed and felt that this is ridiculous and not in any way okay.” Wooldridge said she will continue to live with chronic pain and be cared for by Dr. Hataley until she can see a neurologist. She said she shouldn’t have to travel outside of Kingston to see a specialist.

    “I don’t honestly feel that I should have to go to another city when we have a neurologist 4.5 minutes up the road and I’m a resident of the city in which my taxes help go towards,” she wrote. “I don’t think it’s right or fair to drive to another city…it’s financially not easy for me to just pick up and go, as much as I would like to.”

    (h/t Peter Krieger)

    Related: This is from the executive summary of Canada’s Fraser Institute’s most recent annual report “Waiting Your Turn: Wait Times for Health Care in Canada, 2017 Report” (emphasis added):

    Waiting for treatment has become a defining characteristic of Canadian health care. In order to document the lengthy queues for visits to specialists and for diagnostic and surgical procedures in the country, the Fraser Institute has—for over two decades—surveyed specialist physicians across 12 specialties and 10 provinces. This edition of Waiting Your Turn indicates that, overall, waiting times for medically necessary treatment have increased since last year. Specialist physicians surveyed report a median waiting time of 21.2 weeks between referral from a general practitioner and receipt of treatment—longer than the wait of 20.0 weeks reported in 2016. This year’s wait time—the longest ever recorded in this survey’s history—is 128% longer than in 1993, when it was just 9.3 weeks (see graphic above).

    In the video below, Ronald Reagan tells the joke about waiting ten years to get a new car in the Soviet Union. Here’s my variation of that joke for the Canadian medical system.

    A patient in Canada is told by a hospital administrator that there will be a five-year wait for an appointment with a neurologist. The patient asks, “Will that be in the morning or the afternoon.” The hospital administrator asks, “What difference does that make, it’s not until five years from today.” The patient says, “Well, I have my next dental appointment on that day in the morning.”

    Reprinted from the American Enterprise Institute.


    Mark J. Perry

    Mark J. Perry is a scholar at the American Enterprise Institute and a professor of economics and finance at the University of Michigan’s Flint campus.

    This article was originally published on FEE.org. Read the original article.




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  • Amazon Should Stick to Capitalism and Avoid the Crony Game

    Posted on by Azrael 1 Comment

    I explained back in 2013 that there is a big difference between being pro-market and being pro-business.

    Pro-market is a belief in genuine free enterprise, which means companies succeed or fail solely on the basis of whether they produce goods and services that consumers like.

    Pro-business, by contrast, is a concept that opens the door to inefficient and corrupt cronyism, such as bailouts and subsidies.

    It basically means big business and big government get in bed together. And that’s going to mean bad news for taxpayers and consumers.

    Washington specializes in this kind of cronyism. The Export-Import Bank, ethanol handouts, TARP, and Obamacare bailouts for big insurance firms are a few of my least-favorite examples.

    But state politicians also like giving money to rich insiders.

    State Governments Are Providing Incentives to Big Companies.

    A report in the Washington Post reveals how states are engaged in a bidding war to attract Amazon’s big new facility, dubbed HQ2.

    Maryland Gov. Larry Hogan (R) will offer more than $3 billion in tax breaks and grants and about $2 billion in transportation upgrades to persuade Amazon.com to bring its second headquarters and up to 50,000 jobs to Montgomery County. …It appears to be the second-most generous set of inducements among the 20 locations on Amazon’s shortlist. Of the offerings whose details have become public, either through government or local media accounts, only New Jersey’s is larger, at $7 billion.

    Richard Florida, a professor at the University of Toronto, explains to CNN why this approach is troubling.

    …there’s one part of Amazon’s HQ2 competition that is deeply disturbing — pitting city against city in a wasteful and economically unproductive bidding war for tax and other incentives. As one of the world’s most valuable companies, Amazon does not need — and should not be going after — taxpayer dollars… While Amazon may have the deck stacked in picking its HQ2 location, the mayors and elected leaders of these cities owe it to their tax payers and citizens to ensure they are not on the hook for hundreds of millions and in some cases as much as $7 billion in incentives to one of the world’s most valuable companies and richest men. …The truly progressive thing to do is to forge a pact to not give Amazon a penny in tax incentives or other handouts, thereby forcing the company to make its decision based on merit.

    It’s not just a problem with Amazon.

    Here’s are excerpts from a column in the L.A. Times on crony capitalism for Apple and other large firms.

    State and local officials in Iowa have been working hard to rationalize their handout of more than $208 million in tax benefits to Apple, one of the world’s richest companies, for a data facility that will host 50 permanent jobs. …the Apple deal shows the shortcomings of all such corporate handouts, nationwide. State and local governments seldom perform cost-benefit studies to determine their value — except in retrospect, when the money already has been paid out. They seldom explain why some industries should be favored over others — think about the film production incentives offered by Michigan, Louisiana, Georgia and, yes, Iowa, which never panned out as profit-makers for the states. …the handouts allow big companies to pit state against state and city against city in a competition that benefits corporate shareholders almost exclusively. Bizarrely, this process has been explicitly endorsed by Donald Trump. …politicians continue to shovel out the benefits, hoping to steer their economies in new directions and perhaps acquire a reputation for vision. Nevada was so eager to land a big battery factory from Tesla Motors’ Elon Musk that it offered him twice what Musk was seeking from the five states competing for the project. (In Las Vegas, this is known as “leaving money on the table.”) Wisconsin Gov. Scott Walker gave a big incentive deal to a furniture factory even though it was laying off half its workforce. He followed up last month with an astronomical $3 billion handout to electronics manufacturer Foxconn for a factory likely to employ a fraction of the workforce it forecasts.

    And here’s an editorial from Wisconsin about a bit of cronyism from the land of cheese.

    The Foxconn deal…should be opposed by Democrats and Republicans, liberals and conservatives. There are no partisan nor ideological “sides” in this debate. The division is between those who want to create jobs in a smart and responsible way that yields long-term benefits and those who propose to throw money at corporations that play states and nations against one another. The Foxconn deal represents the worst form of crony capitalism — an agreement to transfer billions of dollars in taxpayer funds to a foreign corporation. …Walker offered the company a massive giveaway — discussions included a commitment to hand the Taiwanese corporation nearly $3 billion in taxpayer funds (if it meets hazy investment and employment goals), at least $150 million in sales tax exemptions…the Legislative Fiscal Bureau, which analyzes bills with budget implications…pointed out that Foxconn would receive at least $1.35 billion and possibly as much as $2.9 billion in tax incentive payments even if it didn’t owe any Wisconsin tax… This is a horrible deal.

    Amazon Gets Priority with the Postal Service.

    Let’s now circle back to Amazon and consider how it gets preferential treatment from the Post Office.

    I don’t feel guilty ordering most of my family’s household goods on Amazon. …But when a mail truck pulls up filled to the top with Amazon boxes for my neighbors and me, I do feel some guilt. Like many close observers of the shipping business, I know a secret about the federal government’s relationship with Amazon: The U.S. Postal Service delivers the company’s boxes well below its own costs. Like an accelerant added to a fire, this subsidy is speeding up the collapse of traditional retailers in the U.S. and providing an unfair advantage for Amazon. …First-class mail effectively subsidizes the national network, and the packages get a free ride. An April analysis from Citigroup estimates that if costs were fairly allocated, on average parcels would cost $1.46 more to deliver. It is as if every Amazon box comes with a dollar or two stapled to the packing slip—a gift card from Uncle Sam. Amazon is big enough to take full advantage of “postal injection,” and that has tipped the scales in the internet giant’s favor. …around two-thirds of Amazon’s domestic deliveries are made by the Postal Service. It’s as if Amazon gets a subsidized space on every mail truck.

    Privatization Is the Key to Removing Subsidies.

    In this last example, the real problem is that we’ve fallen behind other nations and still have a government-run postal system.

    The way to avoid perverse subsidies is privatization. That way, Amazon deliveries will be based on market prices and we won’t have to worry about a tilted playing field.

    And that last point is critical.

    Cronyism and Corporate Welfare Is an Economic Issue.

    Yes, cronyism and corporate welfare are an economic issue. It is bad for long-run growth when political favors distort the allocation of capital.

    But an unlevel playing field is also a moral issue. It simply isn’t fair nor right for politicians to give their buddies special advantages.

    And it’s both economically harmful and morally harmful to create a system where the business community views Washington as a handy source of unearned wealth.

    For what it’s worth, I also think it should be a legal issue. For those of us who believe in the rule of law, a key principle is that everyone should be treated equally. Heck, that principle is enshrined in the Constitution.

    So I’ve always wondered why courts haven’t rejected special deals for specific companies because of the equal-protection clause?

    Then again, maybe I shouldn’t wonder. After all, the Supreme Court twisted itself into a pretzel to miraculously rationalize Obamacare.

    But none of this changes the fact that it’s time to wean big business off corporate welfare.

    P.S. Just in case you harbor unwarranted sympathy for big companies, remember that these are the folks who are often keen to undermine support for the entire capitalist system.

    Reprinted from International Liberty.


    Daniel J. Mitchell

    Daniel J. Mitchell is a Washington-based economist who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review.

    This article was originally published on FEE.org. Read the original article.




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  • You Can’t Regulate Away Crony Capitalism

    Posted on by Azrael Comment

    In a time of political polarization, it can be reassuring when the left and the right agree on an issue. One such area of consensus is the recognition of crony capitalism where big business and government work together for their own interests through systems of reciprocal favors.

    The Taxi Industry Is a Prime Example of Crony Capitalism

    An example of crony capitalism can be seen in the conflict between rideshare companies, like Uber and Lyft, and the taxi industry. Because Uber poses a competitive threat to the taxi business, the taxi industry has pushed hard to ban Uber from cities across the country by lobbying local governments with varying degrees of success.

    The taxi industry has enjoyed a monopoly for a long time thanks to their close relationship with government. By creating occupational licenses and charging what is often several hundred thousand dollars for a medallion, the taxi industry posed massive barriers to entry on their competition. Now, this government-sanctioned monopoly is facing an inevitable dissolution because of the innovation of ridesharing companies.

    Although both sides of the political spectrum may agree that relationships like the one between the taxi industry and local governments are a problem, they often disagree on the solution.

    The Solution of Increased Regulation Is No Solution at All

    The solution usually proposed by the left is to give the government more power to regulate business. The theory is that if we can increase the scope of the government, then government can clamp down on big business. But although this may sound good initially, it ignores the incentives created by government regulations.

    When government has more power to regulate business, businesses will respond by shifting more of their resources towards influencing the government to intervene in their favor. Businesses are incentivized to twist the law to their own advantage. Put simply, when the government has the power to control businesses, businesses will end up controlling the government.

    Increasing the scope of government over business accelerates the problem of crony capitalism in a cyclical manner which resembles a positive feedback loop. The government is given more power to regulate business, so businesses shift more resources towards gaining advantages using government power, and on and on it goes. Although many people who want the government to regulate business may have good intentions, in reality, this proposal ends up contributing to the very problem it seeks to solve.

    Another costly effect of regulations is that they disproportionately harm small businesses. Bigger businesses often have the resources to deal with costs from regulations (or to twist regulations to their own advantage), but small businesses frequently do not. Regulations impose costs on businesses in the forms of both time and money, neither of which small businesses can afford to re-allocate if they want to remain competitive in their market.

    Zero-Sum, Rent-Seeking Behavior

    Regulations, then, decrease competition and shift the market towards monopoly in two ways. Not only do they incentivize companies to use government power to their own advantage and to the detriment of competitors, but regulations also bury small businesses in compliance costs.

    Government regulations lead to what economists call “rent-seeking.” Rent-seeking, in this case, is when businesses divert their resources towards capturing a bigger portion of the existing wealth in a market instead of using their resources to create new wealth.

    One of the defining characteristics of a free market is that it allows for the creation of wealth instead of merely the spread of existing wealth. In a free market, people can trade resources in a way that is mutually beneficial and produces a net gain for each party. But the introduction of government force into the equation shifts things towards a zero-sum game where one party benefits at the expense of another.

    Government force in the form of regulations incentivizes this zero-sum, rent-seeking behavior. What this then leads to in a market is inefficiency, corruption, and less competition.

    Economist Frederic Bastiat may have summed it up best when he said, “As long as it is admitted that the law may be diverted from its true purpose—that it may violate property instead of protecting it—then everyone will want to participate in making the law, either to protect himself against plunder or to use it for plunder.”

    The solution to crony capitalism that logically follows from all of this is quite simple. The solution is to decrease and limit the scope of government power. The less power the government has to regulate businesses, the less incentive businesses have to get in bed with the government. If government intervention is decreased and limited to only what is absolutely necessary, we will see the problem of crony capitalism radically diminish in both frequency and severity.

    Proposals for government regulations are a classic case of why policies must be based on more than merely good intentions. If one wants to evaluate a proposed policy, one of the best ways to do so is to consider the incentives that it will produce and the effects those incentives will have. Government regulations are a case where, although unintended, the results are very often negative.


    Sam Dugan

    Sam Dugan is a fourth-year undergraduate student at West Chester University of PA, studying economics and philosophy.

    This article was originally published on FEE.org. Read the original article.


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