Courtney has a degree in Political Science and is an Iraq War Veteran.
Published Articles:
Please Let Them
Fail!
An open letter to
Congress and the President:
In a free market economy, a failing business is just as
important as a successful business. Not only does it help define the demand of
consumers for a particular set of goods and services, it also creates
opportunities for entrepreneurs to buy up any remaining assets of the failed
business and perhaps increase the value of those assets through proper
management. This is why it does not make any economic sense whatsoever for the
government to save a failing business. When a business fails, the market
(through consumers and investors) has decided that the business is not
efficient enough or in high enough demand to exist, therefore, it should and
must fail! To prop it up with taxpayer dollars is to take efficient money out
of the economy and place it in the inefficient hands of bureaucrats where half
of the money will be eaten up by the bureaucratic machine, and the other half
will be wasted on a business that the market has already decided must
fail. Furthermore, bailouts for politically connected industries also
create a moral hazard, whereby these businesses take risks in contravention of
market conditions, in anticipation that any miscalculation will be met with
government largesse.
In a free market economy it is natural that jobs will be
lost and gained and that homes will be foreclosed on and resold. It is an
arrogant mistake of the Keynesian economist to believe that he can centrally
plan the economy, through tax policy and government spending, to create
something that is somehow better than the free market at delivering goods and
services to consumers. In fact, it is this very central planning,
principally through the manipulation of interest rates and unsustainable
government spending that has caused this economic downturn.
The cheapest, fastest and most efficient way of delivering
the highest quality of goods and services to the most people is via the free
market and the free market only! Government intervention in the free market
through taxes, spending, and regulation only serves to hurt the market’s
ability to provide these goods and services. To prove this point one only need
study the history of two industries in the United States that are heavily
regulated: healthcare and education; and compare it to an unregulated industry:
electronics; such as computers, televisions, iPods, etc.
Every year electronic devices become cheaper and better,
but by contrast each year education and healthcare become more expensive and
the quality of service declines. Why?
One only need to take a stroll through Costco, Wal-Mart,
or any big box store to see how televisions keep getting bigger, better and
cheaper every year. Why is this? There are several hundred if not thousands of
television manufacturers world-wide. In an industry with so much competition,
it is impossible to survive without constantly making technological advances
that will make your product better than the competition. The industry is
practically regulation free when compared to the heavily regulated industries
in the United States.
The first thing we must realize when we discuss education
is that education is a service that can be delivered by the private sector just
as easily as lawyers, landscapers, gymnasiums, movie theaters and
restaurants. We must also take a look at education with a focus on logic rather
than emotion. Although the education of our own children can cause some natural
emotional responses, we must decide that a logical, rather than emotional
approach to the issue must be taken. If we take a look at education, we see
that the national drop-out rate continues to rise while the graduation rate
falls. The Federal Government is spending more money than ever before in
history on education, yet the value of an education in the United States
continues to decline. The government owns the monopoly called public education.
It is common knowledge these days that private schools will on average provide
a better education to students than a public school, and they can usually do
this at a much reduced cost per student. According to a 1996 Cato
Institute study, the average tuition for all private schools, elementary and
secondary, is $3,116; less than half of the average cost per pupil in the
public school, $6,857. If you need more proof, just look at the top
private colleges in the nation and compare them to the top public schools in
the nation. Harvard, Yale, Stanford blow the public competition out of the
water. While it is often the case that these upper echelon universities
have huge endowments and seemingly unlimited resources to provide the best
possible education, their financial strength is merely another benefit of the
private sector -- it creates innumerable choices for the consumer that wouldn't
exist in an exclusively public system. But not all parents can afford to
send their kids to private school because of the high price of tuition (the
high cost of public education is socialized and hidden, but is still very much
a reality). However, if the public education system was abolished, and all
schools were private schools, the tuition cost of private schools would reduce
dramatically and the quality of the education would also increase. A
completely privatized education system would allow for much more charity
through the reduction in necessary taxes. It has also been proven that
when taxes are reduced, charitable donations increase. Thus it would
be likely those parents without the means to pay the tuition for a private
school and do not have the ability to home school their children, would be able
to receive a charitable scholarship. High schools, like colleges, would soon
become interested in recruiting and offering scholarships to talented students
that can improve the reputation of their school, either through academics or
athletics. Without the government monopoly of free or nearly free education I
believe we would have a higher graduation rate and our high school and college
students would be some of the brightest in the world; much like we see at
private schools today (even with the unfair monopolistic competition of free
public schools).
As for healthcare, the government creates monopolies for
insurance companies by a law on the books that does not allow consumers to buy
health insurance across state lines. The government is forcing you to buy from
a pre-selected group of insurance companies that it approves of, limiting the
competition for these companies. With little or no competition, insurance
companies can now charge whatever price they want and decline all the coverage
they want and the consumer is powerless to do anything.
While the damage done by regulatory and licensing interference
in the market is almost limitless, another impediment to affordable and quality
healthcare is government socialized medicine, namely Medicare and Medicaid.
Sure, only the poor and elderly are covered by these government programs, but
those are the very people most likely to seek medical services -- particularly
when it is provided to them at no cost. Everyone else not only pays for
their own medical costs, but is violently coerced into subsidizing the care of
others. Just as federally subsidized education drives up costs for
everyone seeking an education, government subsidized medicine makes everything
more expensive for the productive. The bureaucrats running these programs
assign a code to every conceivable medical service and procedure. Each
code has its own monetary value. When a doctor treats a patient covered
by Medicare or Medicaid, the doctor does not decide how much to charge the
patient, the bureaucrats decide how much to reimburse the doctor. These
prices are arbitrary, mere guesses, because only the market, driven by supply
and demand, can determine prices. What results is that doctors are
undercompensated when they provide care to Medicare and Medicaid patients, and
to remain profitable, doctors will pass on these costs to patients paying their
own way. The solution is not to throw more money at the problem so that
Medicare and Medicaid services are fully paid for and doctors are fairly
compensated. Again, only the market can determine price, and any
non-market payment will necessarily be either too much or too little. The
solution is to jettison our over burdensome regulatory structure to allow
free competition, free entry into the industry and true prices in the
marketplace.
Now that we have examined how destructive the government
can be to our economy, we now only need to take the necessary steps towards
more privatization and less regulation in order to bail ourselves out of this
recession. Allowing bad businesses to fail and housing prices to drop is the
only thing that will save us for a long drawn-out depression that is certainly
on our horizon if we continue down this destructive path of nationalization and
pseudo-socialism.
Written by staff writers Marcus Schuff and Courtney Butler
