Republicans and Democrats argue over the best brand of tissues while our defective healthcare system is in the infirmary with a government-induced infection.
According to a July 30 Rasmussen Reports poll, 59% of likely US voters favor the repeal of Obama's Healthcare Law that was rammed through Congress just four months ago. Despite the rhetoric, healthcare reform was not a bipartisan effort. Alternatives were presented to the president and categorically ignored in favor of pushing through the Democratic agenda.

During Obama's first year in office, Democrats successfully framed the healthcare debate as “reform versus the status quo.” As Sheldon Richman noted in his March 2010 article featured in The Freeman, A far better framing of the issue would have been: “real reform versus the status quo on steroids.” The Democrat plan is essentially a “doubling down on the system’s existing perversities” and “ extension of the current force-based bureaucratic system.”

Almost 6 out of 10 US voters realize, the 2500+ page healthcare bill Obama signed into law is a terrible plan. Besides the fact that the law requires people to buy a private service and impose fines on those who do not (a gross encroachment on human rights by the Federal Government), the plan is also likely to increase the nation's already massive debt over the course of the next decade. According to CBO estimates “...if the Medicare cuts were used to help shore up the effectively bankrupt Medicare trust fund...then the Democrats health care bill would run $260 billion in deficits over the next decade.”
  • Let's take a quick second to remember how accurate government healthcare cost estimates have been in the past: Medicare costs were approximately $3 billion at the start of the program in 1966. The House Ways and Means Committee conservatively estimated that Medicare costs would increase to $12 billion by 1990. The actual cost of Medicare in 1990 was $107 billion – 792% more than the government estimate. Today, Medicare alone costs the nation over $408 billion/year!
Obamacare does not address the root cause of the healthcare problem and will likely only make our nation's precarious economic situation all the more dismal. That being said, the Republican party has neither addressed the healthcare issues at the root nor provided any real alternative either. In principle, the Republican alternative is a merely a water-downed version of the bad medicine prescribed by the Democrats. Throughout the last half century the Republicans have served as no more than a speed bump slowing the progress of socialized medicine.

And, while it is true Republicans did present alternative proposals to Obamacare, the focus of the GOP for the last year was first and foremost to fight against the Democrats' baleful plan.

In 1994, Republicans successfully fended off Clinton's healthcare proposal. After taking back control of Congress, for a decade and a half Republicans did nothing to fix the tangled regulatory mess caused by government bedevilment in healthcare. Instead of unwinding the crippling interventionist programs and regulations, Republicans complacently let the costly errors of an inherently flawed government-orchestrated system compound. Republicans had their chance and stood idle.

In the game of politics it might make sense for the minority party to steer clear of from rallying around an alternative that has no chance of passing, but it is not enough for the Republicans to simply oppose bad policy when they've had years to address the root of the problem.

Ok. So we've witnessed a furious debate around healthcare reform in America. In typical fashion, the media and politicians (both Republicans and Democrats) directed our attention to arguing over detached, surface-level issue instead of the real problems. Here's the deal: Republicans and Democrats have both shown they support socialized, government solutions to healthcare – only varying by degree. Democrats are just a more consistent and explicit in their message, but there is really not a material difference when it comes to basic principles.
Democrats were able to win the political game this time around. But “ best this was a triumph of wishful thinking over sound thought.”

The system of delivering and paying for medical care in the United States is broken. The Republicans did nothing to fix it. Obamacare is a complete and utter failure - economically and morally.

To borrow a quote from economist Thomas Sowell, “The strongest argument for socialism is that it sounds good. The strongest argument against socialism is that it doesn't work.”

What is the solution? Stay tuned for a real alternative in Part 2.

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The 2010 graduating class of Coxsackie-Athens high school in New York witnessed Valedictorian, Erica Goldson, blast our modern day “schooling” system in a speech she titled Here I Stand. Erica Goldson is an inspiration. She courageously demonstrates the power that can be achieved by those who choose to think.

Below is a brief excerpt from Here I Stand. As you read this remember this is from an address from the Valedictorian to her fellow graduating high school class, parents, teachers, and administrators. Amazing!

....School is not all that it can be. Right now, it is a place for most people to determine that their goal is to get out as soon as possible.....”

....And now here I am in a world guided by fear, a world suppressing the uniqueness that lies inside each of us, a world where we can either acquiesce to the inhuman nonsense of corporatism and materialism or insist on change. We are not enlivened by an educational system that clandestinely sets us up for jobs that could be automated, for work that need not be done, for enslavement without fervency for meaningful achievement. We have no choices in life when money is our motivational force. Our motivational force ought to be passion, but this is lost from the moment we step into a system that trains us, rather than inspires us....”.

....The saddest part is that the majority of students don't have the opportunity to reflect as I did. The majority of students are put through the same brainwashing techniques in order to create a complacent labor force working in the interests of large corporations and secretive government, and worst of all, they are completely unaware of it.....”

Please visit Erica's blog for a complete transcript of her moving speech. Erica eloquently explains her feelings about her years of schooling and provides thoughtful perspective on society at large.

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Last night I had a conversation with a friend about his journey to discovering Libertarianism. My friend, we'll call him Alex, explained how he had started out as a self-described “Leftist”. As he debated politics with friends during his last year of college he started noticing inherent contradictions and blatant fallacies in his arguments. It wasn't that Alex was an unskilled antagonist to Conservative opinion. He was still winning arguments and came close to converting a few buddies (a significant feat at a university where the sons and daughters of upper-middle class Republicans comprise a large majority of the student body).

Though his arguments seemed convincing on the surface, as Alex learned more about politics and history, he became exceedingly skeptical about the merits of the political system he was advocating For example, he found it difficult to explain how liberals could support subsidies for tobacco farmers while simultaneously calling for increased taxes on tobacco products. He found it an even greater challenge to justify programs like those designed to fight the “war on poverty” that did far more to lock the poor into a state of perpetual dependence than achieve any of the stated aims. Alex started to think a political system that grants government privilege to special interests groups at the expense of everyone else is suspect at best.

In a noble quest to refine and support his view of how the world works, Alex took the initiative to study economics and political philosophy. It turns out that the journey led him down the road to Libertarianism. He now explains that while Libertarians and the Left share many of the same goals (e.g fighting against oppression), it has become apparent to Alex that the means the Left uses to promote liberal ends is usually incompatible with actually being able to achieve any of their desired outcomes. In fact, not only is the desired goal almost never met, we get a whole host of unintended consequences as a consolation prize – consequences that always seem to lead to cries for more of the same bad medicine.

It is very rare in the our society today that somebody “becomes” Republican or “becomes” Democrat. These positions seem to be the accepted default for those drifting in the breezes of unquestioned cultural or familial influence. Alex became a Libertarian; but it took the effort of conscious thought. He chose to question. He chose to learn. He chose to validate his beliefs and not blindly accept the messages we are conditioned to mindlessly accept.

My story to discovering Libertarianism is, I am confident, similar to many others. I was raised Republican but had a difficult time articulating my political beliefs. I had gut feelings, but couldn't support my feelings with any substance. I was frustrated with the political and economic turmoil of 2008. So, at the age of 26, I embarked on a journey of self-study to validate and support my Republican position. At this time mind you, I was fairly confident the Democrats were actually evil, and I thought Libertarians were just a bunch of crazy hippies.

For me it was reading Ayn Rand that served as both my inspirational spark to exploring a reason-based philosophy of liberty and my gateway to discovering other great thinkers, such as; Frederic Bastiat, F.A. Hayek, Ludwig von Mises, Murray Rothbard, and Henry Hazlitt. I found a wealth of free information available online at the Mises Institute, the Cato Institute, the Liberty Fund's Online Library of Liberty, and the Foundation for Economic Education.

To understand politics, you have to first understand economics, history, and philosophy. So, I attended a seminar program through the Institute for Humane Studies. I completed an economics course offered through Mises Academy. I attended lectures put on by the Foundation for Economic Education.

Of course the beliefs of self-prescribed libertarians vary greatly from one person to the next, but the core principles of libertarianism are far more internally consistent that of either the Democrats or Republicans. I learned that looking through the narrow Republican/Democrat spectrum is not sufficient for understanding politics. Needless to say, I have come to realize that Republicans don't actually stand for all of the ideals I thought they did (neither in rhetoric nor practice). I now identify far more with the philosophy of liberty than with the Republican platform.

After two years of self-study, my educational journey is still relatively new, but I have never been more excited to learn. Now that I've discovered the quality of information that is out there (that I was never exposed to in 16 years at government schools), I feel like I have some catching up to do. The concepts of liberty are not difficult to understand, but it requires significant effort to unlearn the years of conditioning that lead us to blindly accept the current state apparatus.

Thinking is a volitional process that requires from an individual both effort and purpose. The discovery of truth and the validation of knowledge is an active process that is only available to those who have the intellectual integrity to seek it. It requires a great deal of mental effort to validate these political concepts for yourself.

Defaulting to blind acceptance as a shortcut to forming one's belief system doesn't require effort. In fact, there is a certain feeling of security in following the herd as it relieves the individual from responsibility if they were simply mirroring the actions and catch phrases of somebody else. Perhaps this is one of the major reasons that most all societies throughout history have existed in one form or another as groups of men ruled by other men. For some, it is just safer and easier not to think.

Although the path to Libertarianism remains the road less traveled for now, I am confident we will see increased numbers embark on educational journeys similar to that of me and Alex. As we continue to endure the economic crisis brought on by our political system, more and more people are going to start looking for answers. People from both the Left and the Right are becoming more aware that the current system doesn't work. There is a viable solution, one that I think most people favor once they are made aware of it: A political philosophy that consistently advocates the abolishing of forceful oppression in all issues – social, civil, economic, and environmental. It has existed for decades. The biggest challenge is simply getting people to realize an alternative is out there.

As the metaphorical highways of our state leviathan continue to crumble, we face two options: One, we can sit back and accept our fate, like most societies throughout history, as another group of rulers step in to fill the void. Or two, we can fight for liberty, the single most important ingredient in a prosperous society.

I cared enough about my life and lives of others to question the status quo and discover the only known road to human flourishing.

Will you take the path to discovering the philosophy of liberty?

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Every economic exchange is an exchange involving property. Since money is a medium of exchange that enables economic calculation, money is a measure of the amount of total property available for production. Printing pieces of paper does not bring more property available for production into existence.

Thomas Taylor points out in an
Introduction to Austrian Economics:

  • "What is important to understand is that the capital in a society is not a vague notion to be calculated as a total amount, rather capital goods are parts in an interlocking structure of individual plans."

  • "The essential difference between rich societies and poor societies does not stem from any greater effort the former devote to work, nor even from any greater technological knowledge the former hold. Instead it arises mainly from the fact that rich nations possess a more extensive network of capital goods wisely invested from an entrepreneurial standpoint. These goods consist of machines, tools, computers, buildings, semi-manufactured goods, software, etc., and they exist due to prior savings of the nation’s citizens. In other words, comparatively rich societies possess more wealth because they have more time accumulated in the form of capital goods, which places them closer in time to the achievement of much more valuable goals."

Capital is not homogeneous and capital exists only as part of an individual's plan.  Another important concept to understand is the time structure of production.  The capital structure broadens and lengthens in an economy similar to a formation of a coral reef.  It is a process that requires time, and it requires saved capital.

If you haven't done so already, read
I, Pencilby Leonard E. Read before you go on. Read's I, Pencil was referenced above in the section about Specialization and Knowledge, but this short essay is also a great illustration about how lengthening the structure of production benefits an economy.
For an easy to understand illustration of capital formation and the structure of production,
please see Robert Murphy's article from titled the
Importance of Capital Theory. Robert Murphy situates the lesson humorously on an island where sushi production is the sole function of the economy. Paul Krugman lands on the island and tries to 'help' fuel the economy by introducing interventionist policy to increase demand.  What results is an excellent lesson on capital theory.

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Interest is an economic concept pertinent to any scenario where present goods are exchanged for future goods. All things being equal, humans subjectively value present goods more than a claim to identical goods in the future.  It is this subjective individual time preference that explains interest. Interest is the difference between the monetary value of future goods and the monetary value of present goods. Correspondingly, the interest rate reflects the ratio of the monetary value of present goods to the monetary value of future goods.

The market rate of interest is essentially the aggregate of all the individual time preference rates of the market participants. It is the vital signal that coordinates the time preferences of consumers, producers, savers, and investors. The market interest rate indicates the amount of resources that may be devoted to the production of capital goods without frustrating current consumption based on available savings. Because capital investment requires foregoing current consumption, the interest rate signals to entrepreneurs the availability of real savings accumulated to undertake capital investment projects. In short, the interest rate is a measure of the market's preference of present goods in relation to future goods.

In our next lesson we will begin to see why artificial distortion of this signal is particularly harmful to an economy.
Significant damage results when the government pursues a cheap credit policy in order to drive down the interest rate below market levels. The artificial expansion of credit has the ability to set the Boom/Bust business cycle in motion...

Two good essays for additional reference:

Böhm-Bawerk’s Critique of the Exploitation Theory of Interest - Robert Murphy

Why Do Capitalist Earn Interest Income? - Robert Murphy