Thursday, September 10, 2009
Same Old Annoying Song
You know how every once in a while some song will become so popular that it is constantly on the airwaves? In the beginning, it was novel and fresh, but the more it gets played, the more you hate it. That's the level that ObamaCare has reached.

And, President Obama is to Billy Ray Cyrus as ObamaCare is to Achy Breaky Heart.

The President offered nothing new. Nothing.

He is still selling the same old bullshit, only this time he wrapped it in the arms of a dead Kennedy. Which, so you know, doesn't improve the smell.

He still has no substantial plan on how to pay for it.

He still hasn't addressed the fact that Medicare, Medicaid, and Social Security are already huge government-run programs of the same ilk that constantly on the brink of collapse.

He still hasn't given any thought to the majority of Americans who don't want this behometh of a fraud bankrupting them and their children.

The two big issues for me remain unresolved, namely tort reform and competition.

If you want a product to improve, you increase competition not increase demand artificially.

It doesn't matter what the product, competition makes us better. It makes us cheaper. Any idiot (except the President and key Democrats in Congress) knows this.

Let's go to the lemonade stand, shall we?

Imagine two little girls, Janie and Jenny, on the corner in any neighborhood. They are selling 8 oz. glasses of lemonade for $1.00.

Initially there is some interest as people like lemonade when it is hot outside. After a while, however, the two girls have a fight over what to do with their profit and Jenny leaves the enterprise and starts her own on the other side of the street.

Jenny knows the business and knows that the $1.00 price allows for a $0.90 profit on every glass sold. She offers her own glasses of lemonade for $0.80, deeply undercutting her former friend. Quite naturally, those that were flocking to the original stand begin to see the wisdom in paying less and Jenny's profits soar. In fact, she's selling more at the reduced price, with some people taking more than one cup on particularly hot days.

But, then Jenny's younger brother Max wants a new game for his xBox and sees his sister rolling in dough.

The next day, Max joins the girls on the sidewalk too, only he's offering more choices. You can now get pink or yellow lemonade for $0.70 and every second glass comes with a free brownie.

Janie is now virtually out of the market and must adapt her business model. She drops her price to $0.70 and adds water to the menu. Sales start to improve. What do you know, the laws of supply and demand work! She's still not doing as well as Max, but sales are improving.

Of course, Jenny is compelled to adjust as well. But, our girl Jenny completely rethinks her business model. Instead of the location she had previously claimed mid-street, she moves to the corner where she hopes she will draw more traffic. Second, she makes her lemonade stand a comfortable destination, adding an umbrella to provide shade and some lawn chairs. Her menu doesn't escape her notice either. She changes her cup size to 12 oz and moves the price to $0.60 - more for less. She's still raking in the dollars, even if she's cut her price and halved-again the quantity in every cup. Moreover, she brings out her Dad's fishing cooler, loads it with ice (a sunk cost), and starts selling fudgepops at $1.00 per unit. As a courtesy, she offers a free cup of water with every fudgepop sold.

What has happened here? Two things. First, competition has driven costs lower and required Janie, Jenny, and Max to do better or get out of business. Second, while benefitting from lower prices, the lemonade consumer has also benefitted from increased service (added comfort and menu items).

That's the way business works. It is a constant struggle to be better, faster, and cheaper than the other guy. You either compete, or you go out of business. There is no "right" to sales.

Why have I gone through this long-winded example?

Simply to point out that President Obama's big healthcare plan pretends that the immutable laws of economics don't apply to his magic carpet ride. He's wrong, and you and I will have to pay and pay and pay and pay for his mistake.

Obama's policies won't increase competition, it will force private insurance companies out of business. You need not take my word for it; Obama's healthcare plan architect has admitted as much and indicated that this is by design. That's the way they want it.

So, instead of having increased competition which will drive costs lower, Obama wants to limit supply. You know what happens when you limit supply? Prices increase. If Jenny and Max hadn't come along, Janie could have upped her price to $1.50 or $2.00 or more.

But, there's another problem with Obama's plan. While limiting supply, Obamacare also increases demand by insuring that people who don't want/need healthcare are required to get it and people who have no intention of paying into the system will draw from the services (read illegal aliens).

So, class, whether widgets or wood, what happens when you limit supply and artificially mandate an increase in demand? Anyone...anyone?

It is not a good thing for the taxpayer, let me assure you.

Obama's plan is the wrong plan at the wrong time. We can't afford it; our children can't afford it.

If you really want to drive down healthcare costs, a responsible plan would increase supply and cut costs. Tort reform. Increased competition. Competition will force improvements to quality and efficiency like it has in every other business.

But I guess Obama, Reid, Pelosi, et al were lighting up on the day they taught simply economics in high school.

The rest of us, those with brains in their heads, who now total a majority of Americans according to the polls, are going to have to pay for their bake time and it is going to cost us more than the money for the munchies.
posted by Phoenix | 10:15 AM


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