A competent leader can get efficient service from poor troops, while on the contrary an incapable leader can demoralize the best of troops.
General of the Armies John J. Pershing
China Currency Bill? Trade War? Thumbs DOWN!
There are a few things I really despise and detest from a political standpoint, issues that have popular support among the American people, but reflect badly on proponents, are bad public policy, and are against traditional American values:
- tax the other guy / "soak the rich".
- push back against illegal immigration.
- attack the other country's "unfair trade tactics".
The Hill has a post up about an anti-China "currency manipulation" bill. The real story here has to do with the concepts of free trade and comparative advantage; a lot of the jobs we've lost in manufacturing deal are where the labor costs amount to a significant cost component offsetting other advantages American suppliers have in being able to fulfill an order more quickly, integrate business/production functions, etc.
But the yuan has been slowly gaining against the dollar: moreover, American labor productivity is higher (justifying a wage differential) and due to local supply and demand of relevant skilled labor, Chinese wages, according to BCG, are increasing 15 to 20% a year; there's an estimate that the gap could close within 4 years in certain right to work states, and already some companies, winning compensation concessions from American workers, are starting to insource (e.g., Wham-O, NCR, etc.).
This proposed law is fundamentally protectionist and hence anti-consumer. It will result in retaliatory trade actions against one of our strongest growing import partners, resulting in lost business income and jobs. China has also been one of the largest purchasers of US debt, realizes the vulnerability of its economy's dependence to American trade, is working to develop its middle class and is looking diversify its trading base and investment in foreign markets.
So, Senator Schumer, you and your fellow bipartisan demagogues had better be careful of what you wish for: you just might get it. We may just find that China will no longer support the Democrats' addiction to feckless, unprecedented, unsustainable spending binges; I don't expect them to dump their securities overnight because they know such an action would have an adverse effect on the prices of their remaining holdings in American bonds and it's not consistent with how they've approached floating their currency against the dollar. America may find itself largely shut out of marketing to China's coveting emerging middle class, and China may well decide to expand its already increasing influence, particularly with American adversaries.
The Hill article suggests that vulnerable Democratic Senators facing reelection next year, e.g., Sherrod Brown (OH), Casey (PA), and Stabenow (MI), representing states which have lost manufacturing jobs, think this is a good election year issue to run on. There is no doubt that this type of legislation appeals to provocative economic illiterates like Donald Trump, whom has been quite outspoken about his anti-China views. Kudos to the Club for Growth for holding true conservatives/Republicans' feet to the fire on the principle of free trade; there are also some signs that the White House is distancing itself from this issue, no doubt worried about the international dynamics.
RomneyCare v ObamaCare
I've touched upon this in a few commentaries already, although I want to explore it a little more deeply here. I have always thought that the biggest Achilles heel for Mitt Romney was RomneyCare. The first thing a politician should know is his audience. ObamaCare has been unpopular with the vast majority of Republicans and moderates/independents months before Scott Brown, a GOP state senator who had voted for RomneyCare won election for the late Ted Kennedy's Senate seat. (Ted Kennedy's long-sought ideological goal during his 40-odd years in the Senate was universal health care.) Scott Brown's opposition to ObamaCare was a signature issue during the January 2010 special election: he openly campaigned as filibuster-sustaining vote #41.
Now let me summarize the core talking points: ObamaCare is said to be essentially the same legislation as RomneyCare: both of them call for a regulated health insurance exchange with some variation of mandatory individual participation; both of them subsidize insurance for less financially able participants and allow for immediate coverage, including for relevant preexisting conditions.
I'll be clear myself: I oppose both RomneyCare and ObamaCare, both on structural and context-driven grounds which I'll discuss shortly. But there are very definite reasons why RomneyCare is preferable to ObamaCare. Let me point out interim Senator Paul Kirk (D) voted for the corrupt Senate ObamaCare bill; Martha Coakley, the Democratic opponent to Scott Brown, also supported ObamaCare. Yet even Massachusetts citizens rejected ObamaCare by 15% and more than 60% considered it too expensive for Washington. Now surely some of that reflected dissatisfaction with the partisan nature of the bill and the corrupt bargains like the Cornhusker Kickback, the Louisiana Purchase, and Gator-Aid.
Massachusetts Governor Deval Patrick (D) was on Meet the Press today and pointed out that RomneyCare accounted for only a tiny percentage of the state's budget. But there are some cost containment issues, some eligibility issues, and the law has resulted in some rationing of health care resources because it can be difficult to find a physician or get an appointment.
Romney has responded to conservatives on this issue in a vague way, arguing "personal responsibility" for an individual mandate and state mandates are more equal than federal mandates. He has (or could) make reference to how the GOP, in response to HillaryCare in the early-mid 1990's, had crafted alternative legislation with a mandate. (I recall Senator Bob Dole suggested a catastrophic health care plan, which is something I've pushed multiple times on this blog).
But both the HillaryCare alternative and RomneyCare need to be thought of mostly in terms of a tactical than strategic approach. The statist approaches/alternatives were far more bureaucratic and expensive. By that I mean, Romney didn't run for governor on RomneyCare. At some point the federal government argued that they would not pick up their share of Medicaid money because the state of Massachusetts had too many uninsured people getting free services. (I have not read a good explanation as to how upper middle-class, according to Romney, were allowed to freeload.) What Romney said was let's take this money we are giving to hospitals to handle invoices which go unpaid and instead use it to subsidize the remaining uninsured. In other words, this was mostly an accounting gimmick.
Romney really didn't want to require buying insurance, but it was forced on him. What he wanted to do was to allow those people whom effectively show that they are good for covering the cost of their treatment off the hook, but the legislature overruled him. Also, Massachusetts from the get-go had over 90% of their citizens in a health insurance plan to begin with. That's a fraction compared to other states (e.g., Texas, with less than 80% enrolled). I've always stated: I don't think it's right to dictate the form of paying one's health care bill. How can Romney argue it's perfectly acceptable for people to wait until the last minute to enroll for insurance? Is that recognizing "personal responsibility"? It constitutes moral hazard of the highest order, forcing other policyholders to absorb the high costs of procrastinated health care issues of others. You should be forced to pay some sort of penalty so you do not profit by waiting until you are sick to buy insurance, thus socializing your losses.
But clearly, we know if Massachusetts is struggling to contain costs of its program, some states, like Texas, may have up to triple the percentage not being covered. Medicaid is a nontrivial program, and the ObamaCare plan significantly increases the eligiblity of Medicaid, which is cost-shared between the state and federal governments. There is a vast new bureaucracy. The subsidies are coming from a number of new taxes/surcharges plus an already all-but-insolvent Medicare program is being cut in terms of already below-cost reimbursements.
As to nuances between the programs and Massachusetts residents' assessment of their RomneyCare system: I think Gov. Deval Patrick and others, as usual, have sought to add mandates to coverages which make insurance more costly than it needs to be. High costs and waiting times continue to be issues for a large plurality, if not majority of Massachusetts' residents.
What I believe the key problem has always been, counter to all the delusional Democrats on this issue, including Barack Obama, how to handle catastrophic costs, resulting in household bankruptcies, NOT their predictably incompetent micromanagement of the health care sector. I personally think that government should reinsure individuals and/or insurance programs for expenses beyond some aggregate cost standard (say, $25,000 a person). Whatever that deductible is could be covered through means-tested grants or loans. I might allow for deductibility of preventive care, e.g., an annual checkup. But I think that individuals should be vested for most ordinary health care expenses. I would also see a function in terms of providing improved pricing information (e.g., prescriptions, packaged health services (e.g., pregnancy cycle)) where existing pricing information is deficient.
I reject both ObamaCare or RomneyCare or any other artificial, super-regulated health care exchange as being little more than crony capitalism as usual: you would have thought by now, after governments repeatedly screwing up bank regulations almost from the start of the republic, people would realize the predictable, inherently corrupt relationships between Big Government and Big Business. (For example, Thomas Jefferson was vocal about banks while serving in the Washington Administration. Members of the party he founded, modern-day Democrats, of course, were responsible for vastly expanding the GSE's, i.e., Fannie Mae and Freddie Mac, and the relevant risks to the American people of federally guaranteed bubble-priced real estate.)
Musical Interlude: My Favorite Groups
Fleetwood Mac, "Everywhere"
