Stanley Feld M.D. ,FACP, MACE
President Obama is trying to make changes in many areas. He is making changes in the healthcare system, the financial system, the system producing energy, the system we use to protect the environment.
During his Presidential campaign he promised us change. He never told us the details of this change. Many people voted for him because they felt we needed change. They were right, America needed to repair its many defective systems.
Sixty years of revising government regulations and government growth plus the cold war and four other wars have created dysfunctional systems in many areas.
Many have complained that the growth of government and its bureaucracy has resulted in so much complexity and expense that government doesn’t work. Some have written books suggesting how to fix government so it works
In formulating a solution to the problems one needs to outline three approaches;
1. A concept of the goal
2. A philosophy to apply to the concept.
3. A mechanism to reach the goal.
I believe President Obama and his administration have the three approaches in mind. Some would disagree with one of the elements of President Obama’s three approaches. Some would not agree with any of the elements.
Conceptually, President Obama has the right idea. He wants to provide universal coverage at an affordable cost and increase the quality of care. I do not believe anyone would disagree with the concept.
The disagreement comes with the philosophy and mechanics.
President Obama’s philosophy is mixture of economics and modern socialism. In their pure form both are intellectually compelling. In practice history has proven that neither work as they are theoretically supposed to work. President Obama’s stimulus package has proven it.
Keynesian economics advocates a mixed economy—predominantly private sector, but with a large role of government and public sector—and served as the economic model during the latter part of the Great Depression, World War II, and the post-war economic expansion (1945–1973), though it lost some influence following the stagflation of the 1970s. The advent of the global financial crisis in 2007 has caused a resurgence in Keynesian thought. Barack Obama and other world leaders have used Keynesian economics to justify government stimulus programs for their economies.
When combined with modern socialism it distorts Keynesian success even further
In a socialist economic system, production is carried out by a public association of producers to directly produce use-values (instead of exchange-values), through coordinated planning of investment decisions, distribution of surplus, and the use of the means of production
Contemporary social democrats propose selective nationalization of key national industries in mixed economies, while maintaining private ownership of capital and private business enterprise. They also promote tax-funded welfare programs.
President Obama is in the process of taking over several industries in order to save our economy. Those industries are not stimulating the economy because they are trying to repay the government and take their industries back. This creates more unemployment and worsens the recession. The creation of larger entitlement programs will result in increased taxes further decreasing consumer spending and deepening the unemployment.
The government with large deficits at the beginning of President Obama’s term of office has doubled it in the last year and a half.
Friedrich Hayek is a Vienna-born, Nobel Prize-winning economist largely forgotten by mainstream economists. Friedrich Hayek championed four important ideas in the 1930’s and 1940’s. His philosophy was a foil to John Maynard Keynes’ philosophy.
“When Federal Reserve Chairman Ben Bernanke zealously expanded the Fed’s balance sheet, he was surely remembering Milton Friedman’s indictment of the Fed’s inaction in the 1930s. On the fiscal side, Keynes was also suddenly in vogue again. The stimulus package was passed with much talk of Keynesian multipliers and boosting aggregate demand.”
Hayek ideas in his book "The Road to Serfdom" are being highlighted now that President Obama’s stimulus package has barely dented the unemployment rate and government spending and deficits are soaring.
Budget office director Doug Elmendorf warned;
“Under all but the rosiest economic scenarios, significant changes in tax or spending policy, or both may be needed to control the long-term debt and avert a crisis.”
“The federal debt will reach 62 percent of the nation’s economic output this year – the highest level since shortly after World War II”
- Hayek believed that the economy was simply too complex for the government to attempt to manage its ups and downs. He argued that economist John Maynard Keynes’s recommendation that government spend money to allay an economic downturn could actually make the downturn worse, as well as lead to an inflation problem later.
- Hayek highlighted the government and the Federal Reserve’s role in the business cycle. It should not artificially lower rates that could result in inflating a bubble such as the housing bubble distorting other investment decisions. “Current monetary policy postpones the adjustments needed to heal the housing market.”
- Hayek contends, “Political freedom and economic freedom are inextricably intertwined. In a centrally planned economy, the state inevitably infringes on what we do, what we enjoy, and where we live. When the state has the final say on the economy, the political opposition needs the permission of the state to act, speak and write. Economic control becomes political control.”
- Even when the state tries to steer only part of the economy in the name of the "public good," the power of the state corrupts those who wield that power.
“Hayek pointed out that powerful bureaucracies don’t attract angels—they attract people who enjoy running the lives of others. They tend to take care of their friends before taking care of others. And they find increasing that power attractive. Crony capitalism shouldn’t be confused with the real thing.”
- The fourth timely idea of Hayek’s: “By increasing the size of government, government leaves fewer resources for the rest of us to direct through our own decisions.
President Obama has expanded federal control of health care. He is on his way to making physicians indentured servants.
He would like to do the same with the energy market. The government owns Fannie and Freddie and controls the mortgage market.
The government is in control of GM, Chrysler and many banks. America is headed straight for the fiscal wall. President Obama better make a right turn before it is too late.
The mechanism used to pass the healthcare reform bill is deplorable. President Obama used back room deals in his proclaimed transparent administration. He dropped the public option only to have it slip in by default.
President Obama is not doing anything to repair the healthcare system. He is adding layer upon layer of bureaucracy to the disadvantage of patients and physicians who are the primary stakeholders.
The CBO reevaluated the cost of defensive medicine at $50 billion dollars a year. It is still a long way from the real cost of about $750 billion dollars. President Obama believes the cost is insignificant.
None of President Obama’s healthcare reforms get at the major problems in the healthcare system. America will not be able to afford another entitlement program.
President Obama will not accomplish his goals of universal coverage at an affordable price with increased quality.