Listed below are 3 goals the new Democratic Congress has in its first 100 days:
- raise the minimum wage
- lower the cost of healthcare
- "take on" the oil companies (whatever that means)
All three of these initiatives sound great in theory, but in practice they are beholden to one, simple underlying fallacy: that prices and wages are set by employers, doctors, and oil firms; and that government can thus counterbalance them by intervening and setting those prices lower.
But the reality is that prices aren't determined by single individuals, but by markets. None of these actors, even if they tried their hardest, could manipulate these prices. I bet the gas station owner down the street from my apartment would just love to charge $7 per gallon, or even $700 per gallon for that matter, but he can't. Even a new $8 minimum wage, which is basically a scheme to protect union workers from having to compete with teenagers and Mexicans by pricing them out of the job market, won't work because you will always have low-skilled workers somewhere willing and able to accept lower pay. It also gives companies even greater incentive to outsource more jobs.
The problem we have is that somewhere around 80% of Americans fail to understand what I just wrote, and will whole-heartedly support the Dems' fruitless crusade to manipulate prices and further interfere with the same free-enterprise system that has made us so wealthy in the first place.
3 comments:
I wish EVERYONE was required to take Coach Yeckley's economics class before they are eligible to vote.
The most perfect example of how price fixing does not work is Canada's health care system. In hockey land, Parliament forced doctors to charge extremely low prices (if not forcing the doctors to perform for free) for medicine, surgeries, check ups, etc. Supposedly this system was designed perfectly by the government subsidizing the doctors for lost revenue. But as governments do, the funds ran short... but the fixed prices and free services were still kept.
Result; The quality of Canadian health care is the one of the worse in Western Civilization. Canadian doctors are refusing to perform complex and quality surgeries. Why?, because the doctors have no incentive to perform well.
Most interestingly is the black market health care system that has recently surfaced in Canada. Many "doc shops" have popped up in medical doctor's basements. The patients pay cold hard cash before the treatment.
What's funny is that the black market costs are less than what the government ends up paying, and the quality is much more superb.
This "black market" is also known better as "the free market."
I hope this ends up being a good thing for Republicans. I am kind of looking at this like a 15 year old girl after a bunch of gorditas and chaco tacos. Time to Purge!
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