Mark W. Hendrickson
Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are republished from V & V, a website of the Center for Vision & Values.
The Healthcare Reform Fiasco
Barack Obama ran a brilliant campaign for president. Unfortunately for him, that strategic brilliance did not carry over to his campaign for healthcare reform. His push for greater government control of healthcare has struck a majority of Americans as radical, arrogant, and not so subtly lethal.
Obama is backtracking, trying to salvage some increase in government control. He dropped the proposal for government end-of-life counseling.
Hello, Mr. Smith ? I'm your government counselor. Tell me about yourself. How badly do you want to live? I'm sorry I can't come over and meet you in person, but I have thousands of clients. Can you help me out and tell me why you should have priority in receiving life-prolonging treatment?
Obama now claims to have dropped the "public option." He is playing word games here. His explicitly stated ultimate goal (shared with virtually all liberal Democrats in Congress) is to nationalize healthcare, and he is still working to increase government control of healthcare as much as is politically possible.
Obamacare is not "socialized medicine," as some critics claim, but this is a semantic technicality. My late economics mentor, Dr. Hans Sennholz, grew up in Nazi (national-socialist) Germany. He explained that the difference between socialism and fascism was that socialists seize ownership of businesses, whereas fascists let owners retain title to businesses, but wield dictatorial control over them. When it comes to healthcare, we see echoes of this in Obama's August 16 New York Times op-ed, in which he proposed that Uncle Sam regulate which people health-insurance companies insure, the generosity of those benefits, and the prices those companies charge.
The fundamental flaw in the proposed healthcare reform is encapsulated in Nancy Pelosi's assertion that the reform would mean "a cap on your costs, but no cap on your benefits."
Well, that would be grand. But that's not how the world works.
It is an elementary economic truth that price ceilings produce an excess of demand over supply -- i.e., a shortage. Shortages breed political rationing, as happens regularly in Canada, Britain, and other countries with government-provided healthcare.
The prospect of being at the mercy of government bureaucrats for access to healthcare can make one feel as queasy as looking into the barrel of Dirty Harry's .44 Magnum and hearing him taunt "Are you feeling lucky, punk?"
The Nuts and Bolts of Cap and Trade
The purpose of cap and trade (C&T) legislation is to reduce Americans' consumption of fossil fuels -- coal, oil, and natural gas -- and to speed up the transition to alternate forms of energy, such as wind and solar power. The "cap" part would be a legislated limit to the quantity of carbon dioxide that Americans would be permitted to put into the atmosphere from the burning of fossil fuels. The government would then issue permits that it would sell or give (details are being worked out) to businesses who could then either emit CO2 up to the amount stipulated in their permit, or, if they can curb CO2 emissions below that amount, could sell or "trade" the permit to the highest bidder in the after-market.
The stated overarching goal of proposed C&T is to save the planet from human-caused climate change, which C&T proponents attribute to human emissions of greenhouse gases, primarily CO2 from fossil fuels. These proponents truly believe (despite considerable scientific disagreement) that such measures are necessary to save the earth. Others have a political agenda: If government can regulate energy consumption, then government has great control over economic activity and people's lives -- an irresistible lure to central planners, social engineers, utopian visionaries, and megalomaniacs.
Still others have economic incentives: companies that generate electricity from non-CO2 sources, such as nuclear and hydropower, would gain a windfall cost advantage against their competition; alternative energy businesses would stand to receive billions of dollars in additional subsidies; and Al Gore, who met behind closed doors with congressional leaders to plan the C&T strategy earlier this year, has reportedly invested millions of dollars in alternate energy companies and stands to profit enormously from C&T-generated government subsidies.
Opponents of C&T are more concerned about its massive costs -- both economic and political. In January 2008, candidate Barack Obama stated plainly that under his C&T plan, electricity prices would "necessarily skyrocket" as utilities using fossil fuels would pass along the costs of CO2 permits to consumers. Significantly raising the cost of power would not only hammer Americans' utility bills, but would make it more expensive for businesses to power their operations. This would shut down marginal businesses and leave the survivors less competitive against foreign businesses -- especially since China and India, for example, have announced they won't curtail CO2 emissions at all.
Indeed, from an economic standpoint, the C&T bill should be titled the "Raise the Cost of Living and Ship Jobs Overseas Act of 2009."
Even though studies cited by advocates of C&T show that American CO2 reductions would shave only a few hundredths of a degree off future temperatures, they still believe that this is worth the considerable costs. Thus, when the House of Representatives approved cap and trade legislation at the end of June, a majority rejected proposed amendments that would have limited the program's economic damage by suspending C&T if gasoline rose to $5.00 per gallon or unemployment reached 15 percent.
Most Americans aren't concerned about global warming and certainly don't want to get poorer (especially now, at a time of acute economic distress), so one might think that C&T legislation would be doomed. But this is where things get really interesting.
Originally, government was going to sell the CO2 permits, raising hundreds of billions in revenue. Now, though, congressional leaders are reshaping the program to give permits to various utility companies in exchange for their endorsement of the plan (and perhaps their lobbying dollars). So much C&T money is now slated to be given to Big Business that members of Team Obama admit that this program could become the largest corporate-welfare program ever.
So, will C&T pass in the Senate so that an eager President Obama can sign it into law? Probably not, if the bill is openly and deliberately debated. However, Senate Majority Leader Harry Reid may duplicate what House Speaker Nancy Pelosi did to get a C&T bill through the House -- rush it through before members could read it, and bestow billions in favors to "persuade" undecided members to support it. Despite the overall negative impact of such a bill, the special interests -- both environmentalists and corporations -- may still prevail.
The Obama/Pelosi/Reid axis will not initially get as much revenue or as deep cuts in fossil-fuel consumption as they would like, but if they can establish the principle that the government should decide how much energy Americans can consume, they will celebrate.
We the people, though, should reckon the cost to our liberty.
If this principle becomes law, we may face a day when a federal bureaucrat will grant permission to Al Gore to jet around to preach the evils of CO2 emissions while denying Joe Sixpack the right to fly cross-country to see his girlfriend once a month. Might we emulate the Brits, who currently are devising a "para-police" force to monitor energy consumption?
There is much at stake in the C&T debate. This is one of the major issues of our time. Become informed.
Remembering July 20, 1969
For those of you above a certain age, do you remember where you were on July 20, 1969? I certainly do. Just as many of us will never forget where we were when we learned about 9/11 or heard President Kennedy had been shot, many of us will always remember where we were on July 20, 1969, when Neil Armstrong and Buzz Aldrin became the first humans to walk on the moon.
Reminiscing about the first moon landing has triggered in me a flood of vivid memories about various milestones in "the space race" against the Soviets -- a race in which they took the early lead, but the United States caught up and surpassed them.
1957, the beginning: Standing in our driveway and watching Sputnik twinkle in the sky as it passed overhead.
May 5, 1961: Sitting on the gym floor with all my classmates and Mr. Grant in Longfellow Elementary School. We set aside all thought of running and playing as we listened on radio to history being made as Alan Shepard became the first American to journey into space.
January 27, 1967: Stepping through the front door into our living room and hearing the television blare the stunning report of the launch-pad fire that took the lives of astronauts Gus Grissom, Roger Chaffee, and Ed White.
Christmas Eve, 1968: In the same living room and on the same television set, I recall the profound feeling of eeriness, wonder, and mystery when Apollo 8 first passed behind the moon, completely removed from all contact with planet earth.
July 20, 1969: The crowning achievement -- Apollo 11's successful moon landing. I was in Mexico. In hushed anticipation, a group of us -- Mexicans and gringos alike -- gathered around a black and white television in the lobby of the Hotel Acueducto in Morelia to watch Neil Armstrong climb down the ladder of the lunar landing module and safely step onto the moon's surface. Awestruck, we applauded the surreal image on the television screen.
The next day, we took a bus trip. The driver stopped for a quick break in the center of a poor village. I was overwhelmed by the incongruity of two concurrent realities -- the shoeless, dirty vendors rushing out of their crude, primitive stalls to hawk their mysterious, unidentifiable, supposedly edible merchandise to us through the windows of the bus, while two men were walking on the moon a quarter of a million miles above us. It was disorientating. How could there be such poverty and primitiveness in one corner of planet Earth while another human society had achieved such wealth and technological advancement as to put people on the moon?
This was a defining moment in my life. My heart yearned to bridge the gap between the haves and have-nots. That desire impelled my youthful foray into socialism. Later, having learned socialism's shortcomings and fallacies, the quest that Apollo 11 had kindled in my heart in July 1969 culminated in my embrace of free markets as the best, though imperfect, way to uplift mankind from poverty.
The space program has provided other indelible memories. Nothing ever surpassed the intense, protracted drama of bringing the Apollo 13 crew home after nearly losing them in space. I doubt that the world has ever been more united in prayer than it was during those several days in April 1970.
In more recent years, the wonder of the space program seems to have diminished. Our strongest memories are of the Challenger and Columbia disasters. However, I think we are weighed down by something more somber and depressing than those two horrible, but isolated, tragedies.
When the dream of landing a man on the moon was fulfilled 40 years ago, there was a prevailing sense of hope and optimism. If we could achieve this, what couldn't we achieve?
Alas, like those who built the tower of Babel in Genesis, perhaps we made the mistake of thinking we could build a better world without God's guidance. Instead of reaffirming our country's Judeo-Christian roots and principles, we opted for a secular salvation. We placed our faith in Big Government, thinking that democratic politics could eradicate poverty, end injustice, and usher in a new age of Aquarius, or Peace and Prosperity, or Heaven on Earth, or whatever you wish to call it.
We erred. We were wrong. Forty years ago, we put men on the moon. Today, our streets, bridges, and electricity infrastructure are decrepit and decaying; our body politic is riven by distrust and hostility; we teeter on the edge of national bankruptcy and economic abyss.
Are we doomed? Never! The same spirit that overcame multiple "can't-be-done" obstacles can attain a better and brighter future for mankind. But only with the help of a merciful God. If we reconsecrate our lives to Him, just think what glorious heights we will be able to celebrate 40 years from today.
Detroit: A Glimpse into America's Future?
Wouldn't it be wonderful if, like Ebenezer Scrooge, we could have a preview of the future so that we could change our course if necessary? This can happen in real life. Such a dispensation was granted to me 35 years ago. It happened while I was studying literature at Oxford University in England.
At the time, I hadn't yet outgrown my youthful flirtation with socialism. The United Kingdom appeared to me to be about 30 years ahead of the United States on the path toward socialism.
Living for a while with a teacher and his young family, I saw up close and personal how bleak life under socialism would be. The government owned most of the primary industries. The economy was stagnant. The homeowners' monthly mortgage payments were adjusted upward to keep pace with inflation -- that insidious, impoverishing monetary cancer that crops up wherever government grows too large. The outlook for a middle-class family was hopeless. The overall atmosphere was suffocating.
This experience opened my eyes. More government control was not a desirable future for the United States, and I've been in the free-market camp ever since. And fortunately for the United Kingdom, in 1979 Margaret Thatcher became prime minister. She privatized many of the nationalized industries, reinvigorated the market economy, dispelled the economic gloom and stagnation, and revitalized a great country.
Today, a similar preview of the damage of an overbearing government can be gained by spending some time in Detroit, my hometown. Detroit was arguably the most prosperous city in the world in the 1920s. Today, however, whole neighborhoods are abandoned; still-occupied neighborhoods are in a frightful state of decay; some of the streets are so rough you would think that the military used them for target practice. Most startling is that the median sale price for a house in the once-thriving city of Detroit this January was $7,500. Yes, 75 hundred, not "thousand." You can buy two or three houses in Detroit today for the price of one new car.
What happened? What explains this sad decline? In the simplest economic terms, the ultra-low prices of houses in Detroit are explained in terms of supply and demand. Specifically, there is little demand. Few people want to live in this former boomtown. Why?
Here is what friends and neighbors told me over the years: Starting in the 1960s, governance in Detroit started to deteriorate. The mayor and the city council began to view government as a mechanism for redistributing wealth, primarily to one's friends and political constituencies. Detroit became known for abnormally corrupt politics, rife with nepotism and favoritism. Leaders appeared to care more about their own self-enrichment than about implementing constructive policies. (Let me say that Detroit's current mayor -- successful businessman and erstwhile Detroit Pistons star Dave Bing -- is highly respected for his integrity, and I wish him every success in improving conditions in Motown.)
Taxes were raised. Productive tax-paying citizens moved out of the city, commuting into the city to work. In an attempt to recapture lost revenues, the city imposed a tax on income commuters earned in the city limits. Consequently, many businesses uprooted and relocated, reducing tax revenues further.
Members of public employee unions -- close allies of city hall -- profited handsomely, even while the quality of municipal services declined. Detroit's once-respected public schools went into a tailspin -- a trend exacerbated by Uncle Sam's welfare policies which perversely promoted single-parent households, resulting in restless and undisciplined children.
Crime soared. The city of Detroit failed to discharge the primary function of government -- protecting the life and property of citizens. As a result of the lawlessness, more and more businesses fled, and the downward spiral accelerated.
The failures of Detroit's city government were compounded by misguided policies imposed by the federal government. Decades of Uncle Sam's costly meddling with the Big Three -- forcing these corporations to become healthcare agencies and retirement planners, in addition to the already formidable economic challenge of trying to survive in a highly competitive industry -- has brought down GM and Chrysler, two pillars of Detroit's economy. Now the devastation has rippled out to the surrounding counties, where many fine homes have plunged into negative equity and foreclosure in recent months.
Detroit's decline was not caused by natural disaster. There was nothing mysterious about it. Detroit is a casualty of the "government disease." Instead of bigger, more activist government solving problems, as its advocates had hoped, the foreseeable result was a government that has done what it should not do (e.g., redistribute wealth to political allies) and hasn't done what it should (i.e., defend life and property).
Detroit may be the most advanced case of "government disease" in the United States today, but signs of suffering are widespread. Compared to glistening, modern airports in cities like Shanghai and Bangkok, Los Angeles International seems like a Third World airport. The whole state of California is suffering from a Detroit-like exodus of thousands fleeing the economic devastation wrought by Big Government.
We should keep these self-inflicted tragedies in mind in considering whether to assent to the massive expansion of government that President Obama and his congressional allies are seeking. We don't want the whole country to share the fate of Detroit.
The U.S. Constitution: Living, Breathing Document or Dead Letter?
In the concluding paragraph of my article about President-elect Obama's constitutional philosophy, I opined: "Our Constitution has been terminal for a long time." President Obama's nomination of Sonia Sotomayor to the Supreme Court provides a timely opportunity for me to explain what I meant.
Liberals and progressives believe that the Constitution is a living, breathing document that should evolve with the times. They want Supreme Court justices to be flexible in interpreting the Constitution and adapting 18th-century language to 21st-century applications. Conservatives, on the other hand, are said to believe in "the original intent" of the Constitution. They oppose Supreme Court justices' creative interpretations of the Constitution.
It is unfortunate that the fundamental difference in constitutional philosophy -- what used to be called "loose construction," (favoring expanded government powers) vs. "strict construction" (favoring limited government powers) -- has been cast in these terms. The left cleverly has employed a winning straw-man argument -- a truism -- in asserting that America should not be trapped by the past. Of course we shouldn't. By contrast, paying homage to the Founding Fathers, and invoking their "original intent" of the Constitution, makes the right seem backward-looking.
If today's Americans knew their history better, they would realize how wise the Founding Fathers were, and that we depart from their principles of governance at our peril. Nevertheless, the Founders themselves would heartily agree with the left that times change, and so do constitutions. That is why they included a provision in the Constitution for amending it.
Constitutional mischief occurs when ambitious, impatient politicians appoint activist justices who willfully defy, disregard, and reinterpret the Constitution, rather than insist that it be changed lawfully, i.e., through the amendment process.
Conservatives rightly oppose such judicial activism. But the right's focus shouldn't be so much on trying to preserve an 18th-century worldview that -- for all its wisdom -- included treating women and racial minorities as less-than-full citizens. Instead, conservatives' main argument should be to insist that Supreme Court justices uphold the principle that all laws and policies conform to the letter of the Constitution. If 1780s vintage phraseology is ambiguous or opaque to modern usage, then amend the wording to make explicit its objective meaning; don't let nine people (actually, five) divine implicit, subjective meanings as if the Constitution were so many tea leaves. Such judicial malfeasance over many decades has led to laws, policies, and government programs that clearly contradict the plain language of the Constitution.
Here are some examples:
1) Article I, Section 8, Paragraph 5 of the Constitution grants Congress the exclusive authority "to coin Money [and] regulate the Value thereof." Article I, Section 10, Paragraph 1 stipulates, "No State shall coin Money; . . . make any Thing but gold and silver Coin a Tender in Payment of Debts." When is the last time your state income tax refund was payable in gold or silver coin? We all use unconstitutional money. (Eventually, we will suffer the pain of hyperinflation, just as the Founders did during the Revolutionary War due to the continental dollar debacle, despite our Founders' best effort to spare us that hell.)
2) The Tenth Amendment plainly states, "The powers not delegated to the United States [i.e., the federal government] by the Constitution . . . are reserved to the States respectively, or to the people." Article I, Section 8 enumerates the several powers of the United States government. No authority is given there for government programs in agriculture, education, energy, health, housing, etc. The Constitution was never amended to authorize these unconstitutional federal activities.
3) Both the preamble and Article 1, Section 8, stipulate that Uncle Sam is to perform only those few functions that provide for the "general welfare." There is no constitutional authority for "special interest" legislation, yet the latter comprises most federal action today.
Clearly, the plain language of the Constitution has not kept ambitious officeholders from expanding their powers. Those who have regarded the constraints of the Constitution as inexpedient have simply ignored them. This should alarm any Democrat or Republican who values liberty. If the Tenth Amendment can be bypassed today, who is to say the First Amendment (free speech, religious freedom, etc.) won't be trampled underfoot tomorrow?
The egregious examples of constitutional mutilation cited above are the fruit of the left's doctrine that the Constitution is a living, breathing document. There is grim irony in this. Treating the Constitution like a living, breathing document has rendered it a dead letter. A Constitution whose provisions can be selectively ignored is a weak guarantor of anyone's rights. We are no longer governed by the impartial, objective rule of law, but by partial, subjective and capricious men and women. Justice has given way to privilege; our constitutional republic has decayed into a dangerous democracy; the primacy of individual God-given rights has been supplanted by the primacy of government power.
Going forward, we may wonder which of the three branches of government is most likely to slow the expansion of government power by honoring the letter of the United States Constitution. President Obama and the executive branch? The Pelosi/Reid Congress? Hardly. And with one more Obama appointment, neither will the Supreme Court. Sad to say, there will be no brakes left to prevent a constitutional train wreck. *
"Too bad the only people who know how to run the country are busy driving cabs and cutting hair. --George Burns