Obama's Most Recent "Assault on Business Owners"

There are a lot of wealthy, successful Americans who agree with me -- because they want to give something back. They know they didn’t -- look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something -- there are a whole bunch of hardworking people out there. 

If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business -- you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.


-Excerpt from President Obama's speech on July 13, 2012


Many people on the right have already jumped all over this. But I thought I would put my two-sense in. Many conservatives are trying to paint this as an assault on business owners; an attack on the private sector. While without hearing the tone of the speech, or perhaps only reading a smaller chunk of this speech (many conservative outlets have used solely "If you’ve got a business -- you didn’t build that. Somebody else made that happen."), it may sound anti-business, but I believe it's more of an excuse for more government with pro-government sentiment. Other than that particular part of the speech being poorly worded, I believe Obama's overall message of the speech was that everyone uses the help of government at some point--whether it be through welfare, student loans, or merely using the roads paved by public employees, and that, in doing so, you did not build your business on your own. He uses this because of the brewing kettle of anti-government sentiment that is about to spill over out of the pot that is the Republican party. 


But who will pave the roads?


Anybody who has libertarian-leanings or has read the work of Murray Rothbard can surely appreciate the irony of the above question. This post is not about making a case for the privatization of our roads or highways, although that has been done many times, but the point really is--we don't need the benevolence of government to get things done. Contrary to what many of Obama's zombies may believe, the United States would not be some third-world country crawling with pollution and poverty, and no new innovation, even things as simple as roadways, without the help of government. I'm not in favor of total anarchy, I do believe law enforcement, fire departments, and things of that nature are best suited for the public sector. However, Obama is using rhetoric to help the members of his party believe that because the successful people could not get where they are today without government, more government is necessary. Two aspirin may help my headache, so therefore 25 aspirin will help my headache even more! 


The second part of this excerpt that really bothers me is what is said in the first paragraph. While I agree with him that there are a lot of hard working people out there--individuals who try to start a business (business owners often put in 65+ hours per week during start-up) and fail, single mothers with only a high school diploma who work three jobs to support their children, who don't succeed, to discredit the intelligence and drive of others who do is just wrong. It's almost as if, by his logic, if there is a group of 100 hard-working people, only a dozen or so will be successful, and that is because the success-fairy blessed them with successful dust and that's what creates success. As if it is total luck that smart or hard-working people become successful and it is government's job to bring down those who got lucky in order to help those who didn't. While "luck" is such a dangerous word to use, let me make it clear that I believe that to a certain extent, people create their own luck. They do so by surrounding themselves with the right people, making informed and well-timed decisions, and putting themselves in the right place. Yes, I agree with him that hard-work and intelligence does not guarantee success, but by making the right moves or doing the right things, or taking risks, success can be achieved. Yes, we've all had great teachers, great inspiration, and great role models to help us along the way. But is it fair that John Lennon give 10% of his profit to Dr. Hofmann for synthesizing LSD? 

Free Market vs. Universal Health Care

It's easy for most people to say "oh yeah universal coverage is great!" And by and large, when polled about current health care systems, Canadians, Brits, and the French tend to respond very positively about their own universal coverage systems. However what many do not take into account about these polls if that people will more likely respond in favor because people are in good health most of the time. Pair this with a "free" system of health care and why wouldn't most respond in a positive manner? However, what most people don't consider is the strict limitations put in place on both the medical professionals and the patients with a universal system. Not to mention the shortages/surpluses that go into effect when price controls are enacted.

We have all heard about the waiting times that come with a universal system. Often times for screenings, these waits can range from a couple months all the way up to eight or nine months. Want to pay out-of-pocket for a screening to get one sooner? Not an option under many universal systems, including the ACA, looks like you're stuck waiting for a screening that could be life-saving. Dr. Lee Kurisko, a radiologist who lived his whole life in Canada made the move to the United States some years ago, for a number of reasons. He cites the free-market as the best alternative to health care, and cites the numerous problems that occur within the Canadian health care system. Dr. Kurisko explains that in Canada, the government sets the prices, in place of the market. This causes shortages that wouldn't occur in a free-market.

 In Canada, when a doctor is paid, say, 20 dollars for a given service in downtown Toronto, and a doctor is getting the same thing in the remote community of Manitowage, the artificially set prices blunt the potential for movement of information. If there were a deficiency of doctors in Manitowage, and you allowed the marketplace to work, the prices would go up in Manitowage. The doctor in Manitowage might get to charge 50 dollars for a service that would be reimbursed in a free marketplace in Toronto for only 20 dollars. In such a scenario, doctors would start moving to Manitowage. Once there were more doctors in Manitowadge, the price would tend to correct back downward.

This market method of resource allocation would allow for more doctors to practice in remote areas, without long-term price increases. This opens up options for patients, allowing them to have greater and higher quality access to care without sacrificing higher prices. He goes on to state:

With Medicare, you get cost shifting. If, as a health care provider, you’re artificially reimbursed too low for some of your clientele, that means to cover your costs you jack up the prices for other clients. As those costs go up, you’re actually contributing to the number of the uninsured because insurance costs are artificially inflated, and fewer people can afford coverage.

However now, under the ACA, because everyone is insured, and physician reimbursement rates will no longer be set by the market, doctors will have to stop offering low-return services in order to continue to make money. This is just one more example of how government control leads to shortages, in this case, shortages of services.

The free-market approach is a consumer-driven approach. In any part of a free-market, a product or service provider must satisfy and meet the demands of the consumer in order to stay in business. These providers must compete against one another for service, and in doing so, drive down the fees they charge as well as improving the quality of their products, or else face bankruptcy. Health care should be no different, but it is treated differently due to government interference, malpractice insurance and doctors over-testing patients both due to the threat of litigation.

Another problem facing American health care is this use of insurance for every thing from a physical to a triple-bypass. While I believe the use of insurance for the latter is appropriate, the use of insurance for routine and expected services only drives up the cost of such procedures. As I mentioned in my former post "Why Free Market Medicine Works," using high-deductible health plans, in combination with health savings accounts for these run of the mill procedures allows the consumers to shop around for the best combination of low-cost/high quality doctor, which forces physicians to lower the cost of these procedures while simultaneously increasing quality in order to attract consumers.

HDHPs require that those covered pay higher deductibles (a minimum of $1,200/year or $2,300/year/family) but ultimately have lower premiums. These are required for a HSA and often times half of the covered's money goes into the HSA while the other half covers the insurance product. At the end of the year, the person likely had a few thousand dollars in the HSA and can use it on routine procedures, or choose to roll it over for the next year. By allowing individuals more control over their health-payments, it encourages them to take better care of themselves, and because HSA's are tax exempt and the money in them can be invested to collect interest, the money in one's HSA can grow.

As I've stated before, the problem is not that everyone must be covered by insurance, but that the cost of health care should be made more affordable. Many people do not realize that despite the name "Patient Protection and Affordable Care Act," the care is not made more affordable, nor are patients protected. Having a slip of paper that says you have insurance does not translate to actual health care. When doctors stop accepting medicaid and medicare patients, there will only be an increase in shortage of care. Not only that, but when government elects which procedures are appropriate in order to stay cost effective (such as the role of IPAB created under PPACA), not only are the patients options limited, but the option may not be appropriate for certain patients, and a physician doing what's best for that patient now becomes punishable by fine. Does that sounds like "patient protection" to you?