Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at intelligent and rational individuals, whose comments are very welcome.

"No matter how vast your knowledge or how modest, it is your own mind that has to acquire it." Ayn Rand

"Observe that the 'haves' are those who have freedom, and that it is freedom that the 'have-nots' have not." Ayn Rand

"The virtue involved in helping those one loves is not 'selflessness' or 'sacrifice', but integrity." Ayn Rand

For "a human being, the question 'to be or not to be,' is the question 'to think or not to think.'" Ayn Rand

17 August 2011

Socialized Medicine and a Doctor's Moral Obligation

A friend asked this question:
One of the arguments I have heard from proponents of socialized medicine is that it is immoral to stand by while someone dies, and therefore society is obligated to help when someone is facing a life threatening illness but can't afford the treatment. Although there is much to refute in this type of statement, I am wondering about the more difficult refutation. As a personal decision of each doctor, is it rational to make the decision to deny treatment based upon the fact of a patient's inability to pay?
The moral argument against socialized medicine, or ObamaCare in particular, is based on our equal, sovereign individual rights. It is not dependent upon whether a particular doctor decides that he must act to save a life independent of remuneration or not. It is an important moral principle that he is free to either be benevolent or not be benevolent. Now, I do believe benevolence is an important virtue, but benevolence is virtuous in the context that the person helped has value to the doctor.  Benevolence is not about self-sacrifice, since that would hardly be benevolent to oneself. 

If the person has an entitlement mentality, then the doctor generally has no rational reason to help that person without remuneration. It is perfectly moral for him to walk away. In the context of a society of largely productive and benevolent people, a doctor may be rationally inclined to provide help to those who cannot afford to pay for their care, especially if they have become ill or hurt through no great fault of their own. But, even that depends on context, such as the expense the doctor will have in helping him and whether his helping the unfortunate person means that he is not able to help someone else who can pay. He is not obliged to save the poor man, while letting the financially prepared man die! If he gives too much of his time to helping the poor, he may not be able to generate enough income to buy the medical equipment that will enable him to save many lives in the future or he may simply go out of business. The doctor must make difficult moral decisions based on a very complex context. Some may appear to make a greater effort in benevolent acts than others, but still may not be saving the most lives possible.

Rational men are going to balance these difficult decisions differently and we should be careful in our appraisals of their morality.  A doctor may be willing to give his services free in a given case, but he may be unable to convince a nurse and other assistants to give their time free.  Or the hospital may be unwilling to make an operating room available.  Now the proponent of socialized medicine will want to use force to make all of these needed experts and facilities available, but this is a violation of everyone's rights and cannot be tolerated in a civilized society.

My grandfather was a physician in the Great Depression. He was a surgeon who operated in the Mayo Clinic and all of the hospitals of Minneapolis and St. Paul. He did a very unusual number of operations on people who could not pay for them. But, people were different back then. A farmer might not have any money, but he would give Harry Christianson a chicken, which to the farmer was his fortune. Then very likely for 20 years after, when he could, he would stop by grandpa's home and leave a bag of potatoes or a bushel of corn. This was very welcome when rationing was going on in WWII for instance. Harry and his wife Bess always had free food and there was so much that Bess and her daughter Betty organized ways to get it into the hands of those in need in the city. One man decided he would paint grandpa's house in payment for an operation, but while he was painting the upper part of the exterior, union thugs knocked him off the ladder and shattered his leg. The man was not a union painter. He was just a farmer who wanted to pay a debt he believed he had. Harry and Bess put him up in one of their rooms until he was healed. The union later burned down their home because they did this.

So this is another important issue of context. There is value in helping people who put value on the help they receive. There is value in helping people who fundamentally believe that one should trade values for value.

There is little value in helping the ungrateful, however. Any deserving person, any person whose welfare one has reason to care about, will recognize the value they have received and will not presume that they have the rights of a master, while the doctor who worked so hard to develop his healing skills and knowledge is treated as his slave.  A doctor or any other service provider has the right to choose his own values and to pursue his own happiness in terms of his values.

The need of a poor person does not deprive him of this equal individual right to pursue his happiness.  Every man, whether poor or rich, whether a professional or a low-skilled worker, has this magnificent right to pursue his happiness.  No one has the right to dictate the values or the moral code which will define what his happiness will be.  All that can be required of another is that they are not allowed to initiate the use of force as a means to pursue their happiness.

This is very adequate for each of us when we exercise our freedoms and act within the private sector of our society.  In the private sector we have a wealth of potential opportunities to cooperate with others whose values are sufficiently similar to ours or in some way complementary so that each of us can pursue our goals defined by our individually chosen values.  When our values are not approved of by others, they are free to choose not to associate with us.  This is the realm of the voluntary and is relished by those who want rich choices and who abhor being forced to bend to the will of others.

In contrast to this natural realm of freedom, we have the realm of the government.  The principal property of government is its monopoly on the use of force in a society.  Because a wise society seeks to minimize the use of force and seeks to maximize individual freedom of choice and association with others, such a society has a minimal government.  Such a limited and legitimate government uses force only for the purpose of protecting the equal, sovereign rights of the individual to life, liberty, and the pursuit of happiness.

When government attempts to do more, it must necessarily do violence to the rights of the individual as it imposes values and moral codes upon the People.  With this loss of freedom to choose one's values, one loses many of the freedoms to use one's own mind.  One loses the choice of one's own goals.  With the loss of one's own goals, one loses all hope.  It is no accident that unfree societies become depressed societies with large increases in drug use, excessive alcohol use, and increased numbers of suicides.  Big governments do much harm to individuals and are notable in the brutally of their violence against their people should any insist on exercising their sovereign rights.  We see the party of biggest government verging close to a desire to let loose the hounds of hell upon the Tea Party people for just this reason.  Over and over they have tried to label the Tea Party people who simply want to preserve some of their individual rights as terrorists and subversives.  This makes the brutal nature of unlimited government all the more clear in our time.

15 August 2011

Actions Speak Louder than Words: Obama Hates Small Business

For each of the last five months, the National Federation of Independent Businesses (NFIB) has found that the business optimism of small business owners has fallen.  With First Quarter 2011 GDP growth dropped to 0.4% and Second Quarter GDP growth presently said to be 1.3%, some earlier optimism that this never-ending Great Socialist Recession was showing some signs of recovery has vanished.  Indeed, it is not even clear that if price inflation were taken into account properly that the so-called growth of the first two quarters of this year was not really a contraction of the economy.  We may very well actually have had the second dip of this recession already.  The Manufacturing Index has also been very disappointing.  Real estate values show no sign of recovery and consumer spending is still limping along.

Every time Obama and the Democrats push to provide extended unemployment benefits to the unemployed, the states have to continue using much higher than normal unemployment tax rates on the employees of businesses.  My company's rate in 2010 and 2011 is 7.33 times higher than it was 2008, despite our never having let an employee go who was eligible to collect unemployment insurance benefits.  This is not an incentive to small businesses to hire more employees and makes it harder to keep the employees they have.  Being forced to let a good employee go is definitely an optimism killer when you are running a small business.

Small businesses are also hit by the increased costs and bureaucracy they will have to expect with ObamaCare.  The Dodd-Frank financial industry reform bill has especially cut them off from the big lenders with assets in excess of $100 billion.  The increased regulatory burdens imposed by Obama's EPA, FDA, FTC, DOD, FDIC, Consumer Protection Agency, the NLRB, and the restrictions on oil and gas drilling have been hardest on small businesses who cannot afford legions of lawyers to deal with the government bureaucracy.  When the FDA or DOD require a business to become ISO-certified as proof of quality controls, that cost is proportionally much greater on a small business than on a larger business.  This is a very real discrimination against small businesses and often has only cosmetic effects on real quality controls since the business owner and upper management in a small firm are much more likely to be on top of quality issues than the corresponding management is in a big business.  New FDA oversight of small food retailers and producers is another major cost escalator for many small businesses.  Since few people were dying of food poisoning, there is no significant benefit to this new Obama cost.

Falling demand has been the biggest problem for small businesses which are less likely to participate heavily in the export markets as the large multinational companies do.  There are better opportunities for profits and sales abroad in many areas than here in the U.S., thanks to the Obama administration economy-wrecking policies.  Small business owners are also very worried about the uncertainties caused by excessive government spending and the rapid increase in the national debt.  The more spending government does, the more it interferes with business activity.  Since 2001, the GDP has grown by 46%, but the national debt has grown by 146%!  The Federal Reserve bought about three-quarters of U.S. Treasury Bonds in 2009 and 2010, thereby increasing its balance sheet from $896 billion in August 2007 at the start of the housing bubble collapse to $2.9 trillion now.  This is clearly not sustainable, yet there is no end in sight to this method of "covering" the absurd spending of the government.  The excessive spending and debt both cause pressure of increased taxes or inflation in the near future.  Business taxes are already much too high.

While only about 8% of small businesses name access to credit as their primary problem in NFIB surveys, it is clear that the credit needs of many small businesses are not being met.  Interest rates were increased on many lines of credit, business loans, and business credit cards.  40% of small businesses attempting to borrow in 2009 were able to meet their credit needs, 10% had most of their needs met, 21% had some, and 23% had none of their credit needs met.  With the gathering worries of satisfying the Dodd-Frank finance reform bill, this situation is becoming worse as this recession drags on and on and on.  Small businesses commonly do not have the resources to last through multiple years of recession.  Banks are especially refusing to lend money to fill in cash flow problems.

Small business owners generally own real estate.  In the NFIB 2009 study, 95% had real estate.  The fact that most real estate has lost considerable value has deprived many small business owners of the collateral they would commonly use to secure credit.  13% of small business owners had at least one property worth less than what they owed on it.  The loss of property values has left many small businesses much more vulnerable.

Into this sorry picture of woes for small businesses, the Obama administration FDIC has been squeezing banks to loan less money to small businesses, which it regards as less credit worthy as a group.  On that they may be right, but as is the rule with government, the assessment is a one-size-fits-all assessment.  Main Street Bank of Kingwood, Texas specializes in small business loans.  Main Street Bank has a $175 million loan portfolio and 90% of it goes to small businesses.  Most of these businesses have annual revenue less than $1 million.  The average loan size is $100,000.  Main Street had a profit of $1 million in the Second Quarter and wrote off 1.25% of its loans as bad.  The failure rate of loans in the FDIC insured banks in the First Quarter was 1.82%.  The FDIC has not released the bad loan rate for the Second Quarter yet.  Government is slow.

Despite the success of Main Street Bank in its small business loan strategy, the FDIC slapped it in July 2010 with an order to increase its capital and reduce the proportion of its small business loans from 90% to 25%.  The bank was also ordered to hire another bank executive.  It had to sell a business and shrink its loan portfolio to meet the increased capitalization requirement.  This increase in capitalization was a large one, from 9.5% in June 2010 to 17.3% in June 2011.  As a result of this FDIC interference in their business, Main Street Bank is working hard to turn in its bank charter.  A new company is being set up, Ascentium Capital, which will have backing from a private group of investors and will no longer take customer deposits.  This business will not be regulated and will be able to continue to specialize in small business loans.  They plan to increase the loan portfolio to $500 million.

The reduction from 90% of Main Street Bank loans to 25% for small businesses, removed $114 million of small business credit from the market.  Now imagine this kind of thing happening all over the country as the FDIC goes from bank to bank and prescribes lowered small business loan exposure.  The impact on small business credit will be huge.  This is very important, because a large fraction of American workers are employed by small firms and much innovation occurs in these companies.  A lack of access to credit during an extended recession makes these myriad small businesses more likely to fail.  The Obama administration policy is clearly to subsidize and bailout big businesses, but to slash and plunder small businesses.

Interestingly enough, the Small Business Administration has been repeatedly cited for guaranteeing lenders loans at 85% of the loan for which the lenders are considered to be at high risk in 80% of SBA 7(a) loans.  Their loan failures run many times higher than those of Main Street Bank!  While their loans go to only 0.2% of small businesses, they have an outlandish failure rate of 19.4%.  Perhaps the Obama crew should be more concerned with controlling this loan failure rate than that of a private bank which knows its business very well.

That tendency to plunder small business could not be made more clear than by Obama's constant effort to raise taxes on those earning more than something between $200,000 and $250,000 a year.  His efforts to widen the death tax is another indicator of his evil intentions with respect to small businesses.  It is politically much easier to plunder small businesses than it is to tackle big businesses with their many savvy lawyers and lobbyists.  It is also easier to over-regulate small businesses.  Socialists do not like business owners and managers.  They are equated with labor exploiters, no matter how many goods and services they produce for free consumers and no matter how many jobs they may provide.  Obama and his crew of insiders are nothing if they are not true socialists.  Small businesses are made to pay a heavy price as a result of their present power.

07 August 2011

A Glacial July Employment Growth

Amid the chaos and the great effort of our federal government to sabotage the private sector, that often heroic and under-appreciated sector of our society struggled to create a few jobs.  The number of missing jobs fell from 13.30% to 13.21%.  This continues the pattern throughout the Great Socialist Recession of worsening and then briefly bettering job growth, but with the job creation never vigorous.

The number of missing jobs decreased by 132,000 jobs in July.  At this rate of net job creation, the number of missing jobs will be as few as the 11,023,000 of December 2007 in a mere 78.4 months or 6.5 years.  Of course, that assumes that even this anemic rate of job creation can be sustained.  Between now and the 2012 election, I doubt that it will be.

The job statistics table is given below.  The missing jobs are calculated in comparison to January 2000 when there are plenty of good jobs available for those who wanted to work.  At that time, 67.49% of the total non-institutional civilian working age population was working or looking for work.  The unemployment rate was only 4.04% then.  Many of the unemployed were actually just switching jobs with a little time off in between. How we long for those times!

I would expect the August jobs report to show some deterioration based on the fact that from the time a company decides to hire someone to the time they have and that person starts work, is usually a number of weeks.  Four weeks prior to mid-July was a time when the growth in GDP in the First Quarter was still thought to be 1.9%, not the second revision downward to 0.4%.  The Second Quarter disappointing growth rate of 1.3% was also unknown.  That was also a time when many major corporations, many of whom are doing better than most small businesses, were reporting fairly good earnings, largely made abroad.  The effort of Obama and the Democrats to once again raise taxes in the debt ceiling negotiations and their winning of a nearly blank check to continue mad government spending levels, will further discourage business activity.  Many a small businessman has simply decided to wait until after the 2012 election to see if there will be any hope for expansion of their business.

Obama's continued talk of creating jobs with high speed trains, green energy projects, electric cars, stimulus spending on infrastructure, extended unemployment benefits, and job training programs is just a continuation of ruinous transfers of wealth from the private sector to the government sector.  The actions are all job-destroyers. 

It is not a help to businesses to hire if extending jobless benefits means that states will continue the high unemployment insurance rates charged to companies on every employee they have.  Because of these unemployment funds, my company tax rate went up by a factor of 7.33 in 2009 and has continued there since.  This is not the way to encourage companies to hire more people.  But it is among Obama's crazy prescriptions.