The Inexorable Force of the Market and the Unbearable Weight of Government

In the ongoing debate regarding the Democrat's nationalization of health care, precious little time is being focused on a discussion of the actual market changes that will occur as a result of the passage and implementation of this unconstitutional piece of legislation.

What today’s Democrats, and believers in Government action of all stripes, believe is that the market is like a giant Sta-Puft Marshmallow Man – giant, lumbering, and able to withstand nearly any amount of central committee diktats without really changing either its nature or behavior. Of course, the real-life evidence is that the market is agile, responsive, demanding, fickle, and smarter than bureaucrats.

Tinkering with reimbursement rates on socialized medicine programs in an effort to realize “savings” to government bodies already occurs. The effect of the tinkering is that it shrinks the supply of goods and services being bought by the socialized medicine program recipients.

In a self-regulating market, a decrease in supply will result in an increase in prices, which will decrease the total demand for the product or service, and the market will find its equilibrium at the new higher price. However, in a world of government price controls, such as the reimbursement rates for prescription drugs in a Medicare plan, while the supply is decreasing, the price cannot change which inevitable leads to rationing or shortages. Demand will outstrip supply.

What the government relies on in this scenario is a belief that businesses are irrational – they will conduct their primary business in a way that causes financial loss. As we are seeing now in Washington state, several pharmacy chains are ceasing to fill new Medicare prescriptions because they lose money on the deal.

What is a Democrat to do when her great economic schemes wash up on the rocks of reality? Step 1 is denial. “Doug Porter, the state's director of Medicaid, said Medicaid recipients should be able to readily find another pharmacy because "we have many more pharmacy providers in our network than we need."

Step 2 is anger. “Insurance profits are bad for my health.” And we are being defrauded by “fly by night operators.”

Step 3 is more government diktats. Hey, “we won the election.”

Soon, Washington state will make accepting Medicare prescriptions mandatory for a pharmacy license. Democrats are happy to force people to do things as a “cost of doing business.” In practical respects, this means costs for things that are not Medicare prescriptions will go up. This is an indirect tax on all consumers at the pharmacy, including food and medicine brought to you by enlightened bureaucrats.

More philosophically, being forced to do business in a manner that is not a purely voluntary transaction is slavery. Being forced to do things because the government says you should (like buying health insurance whether you want to or not) is slavery. Even a fifth grader knows the 13th Amendment prohibits slavery. The question is: are Democrats smarter than a fifth grader.

Marxist Action in the Senate Today

Longing for the good old days of Jimmy Carter’s gas shortages and cars lining up for blocks for empty gas pumps, the Democrats in the Senate brought a bill to the floor to day to levy additional, higher taxes on the “unreasonable profit” of the oil companies.

The stench of socialism, communism, and Marxism is all over this bill. When people engage in an arms-length transaction, there is no such thing as a reasonable or unreasonable profit. While the intellectually crippled elitist John McCain believes there may be such a thing as an “obscene” profit, I contend that in economics, the only obscenity is bankruptcy. Profits do not put people out of work; profits do not harm people’s retirement accounts; profits do not fall on businesses that are managed poorly. Losses are harmful and obscene. Profits are good.

Of course, Congress does was doing what it knows best – engaging in subterfuge. The fundamental cause contributing to the rise in the price of oil is Congress! For Congress to point a finger at any other body (let alone punish any other party) for oil prices is the pinnacle of hypocrisy. Congress prohibits United States energy independence by their overbearing environmental laws and regulatory morass. Congress makes more profit on a gallon of gasoline than the oil companies do. Congress permits illegal cartel price setting for oil.

Furthermore, the concept that the leftists could raise taxes on producers and somehow lower the price of the product flies in the face of all common sense.

Of course, the real goal of the socialists and communists in Congress is that they wanted to further increase the price of gasoline, in order to further enrage the populace, and then move on following their hero Hugo Chavez’s move to nationalize the oil companies. This from a Congress that cannot manage its own dining facility in a break even manner!

Yes, the socialists and communists in Congress are exposing themselves over oil. Maxine Waters D-CA told oil execs “This liberal will be about socializing; would be about -- about -- about basically -- taking over and the government running all of your companies!”

There you have it, the Democrat/socialist/Communist/Marxist agenda of the majority party in Congress laid bare for all to see.

If Congress’ reckless deficit spending had not so devalued the dollar, oil prices would not seem so high, but that is a subject for a different post.

Marxist Quote of the Day

“The oil companies need to know that there is a limit on how much profit they can take in this economy,” said Sen. Dick Durbin D-IL.