How Government Grows
Wednesday, October 14, 2009 at 01:38PM In the feedback of one of my other articles a discussion began about how government grows. If you look back at nearly every thing government does it was done for one of three reasons. Either a politicians wanted to grow his or her power and did so by giving things to people to win their votes, the majority used government to force their morals onto the minority or a combination of those two.
The founding fathers knew of these dangers and were very strong in their words about the dangers of a pure democracy.
I think we have more machinery of government than is necessary, too many parasites living on the labor of the industrious. -Thomas Jefferson
"Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself." - John Adams
"Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote!" - Benjamin Franklin
"It is the duty of the patriot to protect his country from its government." - Thomas Paine
Government should be limited to protecting you from others and that's it. If you wish to place yourself in danger it's not the government's job to protect you from yourself. Nor is it the governments job to force you to follow the morality of others if your actions cause them no harm.
Drug laws are pefect examples. If you read up on the history of why marijuana became illegal it had more to do with racism then anything else. You'll find a good write-up on the history of such laws HERE.
Here's a quote directly from Anslinger's Gore files:
“There are 100,000 total marijuana smokers in the US, and most are Negroes, Hispanics, Filipinos, and entertainers. Their Satanic music, jazz, and swing, result from marijuana use. This marijuana causes white women to seek sexual relations with Negroes, entertainers, and any others.”
“…the primary reason to outlaw marijuana is its effect on the degenerate races.”
“Reefer makes darkies think they’re as good as white men.”
That was the justification used to outlaw drugs in this country. We've used this to build entire government divisions dedicated to fighting and stopping out drugs and with what results? Drugs are even found in prisons where people are watched 24/7 and yet we continue pumping millions into punishing people for crimes that harm no one. Over time the original reasoning was forgotten and new justification is presented by politicians who seek to keep the government growing.
Then there are the secondary problems that arise as well, example being the cost of health care.
Health care costs in America continue to rise but have you really stopped to think why? Most sources claim that the premiums have more then doubled in the past 10 to 15 years alone so stop for a second and ask yourself why? What happened within the last decade to cause this? It doesn't take too much research to find out why, HIPAA regulations were passed in 1996 and began slowly taking effect over the following few years. With the new regulations came new costs and those costs were passed along to consumers.
Now politicians to win votes offer to solve the problems they themselves created, but rather the fix the root cause they simply seek to provide the solution that gives them and the government more power over us. They seek to cover our health care which of course will win the votes of those who fail to understand why we have the problems in the first place and who simply don't care that they live off the backs of others. Either way it continues the cycle and gives more power to the few who government and less to the people who are governed, the complete opposite of what our founders envisioned.
This is the cycle that brings government after government from freedom to tyranny and will be the future of America unless something is done to stop it.
This can best be summed up with the balance of force.
Government is needed to prevent my neighbor from using force against me. Without government to help protect my rights, the person with the biggest gun would rule by force. Might makes right.
But when government is allowed to grow unchecked, government becomes that force. We've gotten to that point now where politicians are able to use the force of government against individuals to prevent them from doing what they want without causing others harm.
Founding Fathers, government in Constitution
Reader Comments (16)
Your "analysis" of how government grows is equally fact-free. How about "the majority decidd that they wanted government to undertake function X because the market wasn't doing it or was doing it badly"?
"How about "the majority decidd that they wanted government to undertake function X because the market wasn't doing it or was doing it badly"?" - nonplussed
And when government does it equally as bad or worse what then?
The market can and does self adjust. Restaurants for instance, that give bad service or cost too much for what they deliver eventually go out of business while those that do a good job thrive.
When the government costs too much or provides bad service the tax payers are forced to continue to fund it and have no alternatives.
The problems you see in the business market are usually because government closed that industry and created the problems that cause the bad service. Those who ask WHY is industry X providing bad service rather then simply looking at the surface of the bad service without asking why usually see and understand this.
Here are some facts for you to chew on. The Gartner Group estimated the cost of HIPAA at less than $4 billion for the 6 year period 2003 to 2008. The hospital industry's lobby said the cost could be $22 billion over 5 years. During that time, we spent about $10 trillion. HIPAA represents between .04% and .2% of healthcare costs.
The rest of your post is blissfully fact free, so I won't bother to respond. You might want to study the issue of economic externalities and think how the market will deal with them.
The $22 billion over 5 years has been showing factually incorrect.
http://searchsecurity.techtarget.com/news/article/0,289142,sid14_gci1144096,00.html
"A study earlier this year by AMR Research found that when all is said and done, companies are projected to have spent almost $15.5 billion on compliance programs in 2005."
That's $15.5 billion in just one year after HIPAA had already been implemented. Remember HIPAA was passed in 1996, nearly 10 years PRIOR and in 2005 companies were still spending $15.5 BILLION to meet com pliancy.
Toss in Sarbanes-Oxley Act which I'm watching first hand destroy not just health related companies but all American companies right now and you'll see major impacts on the over all costs effecting consumers. From that same link...
"SOX topped the list with $6.2 billion on spending, followed by HIPAA with an anticipated $3.7 billion and change. "
"Even some software compliance solutions for small companies can range from $100,000 to more than $1 million."
These are SINGLE year figures. A couple billion here and a couple billion there and you've added a huge chunk to the $10 trillion over 5 years you mentioned as the TOTAL cost of health care. In fact if you figured the costs listed above were the same every year (which by 2005 they started to drop off for HIPAA) you're looking at $21.7 billion per year which comes to $108.5 billion over 5 years. That might be chump change in you view but not in mine. And as I said by 2005 the costs dropped significantly since companies already had more requirements meet by that time.
Those are all facts and I supplied the link to where they came from. Also as I said, I worked for a few years in the health care industry so I have first hand knowledge of what companies had to go through to meet the complacency.
Frankly, I am embarrassed to be debating you. You are numerically challenged and appear to be incapable of digesting facts from a simple article.
You may have worked in healthcare, but this obviously does not give you much in the way of insight into why costs have exploded so much.
Another fact-free assertion untethered to reality, courtesy of Richard Barnes.
Sarbanes-Oxley (SOX) was passed in 2002. In that year trailing 12 month profits for all of the companies that make up the SP500 were about $230 billion. In 2008, after 6 years of SOX destroying all American companies, corporate profits for the SP500 companies were almost $780 billion. I know numeracy is difficult, so here is a chart labeled S&P 500 Index and TTM Earnings as Reported (http://seekingalpha.com/article/149484-s-p-500-which-earnings-are-most-relevant-to-its-performance)
Your financial markets wizardry is rivaled only by your healthcare industry expertise. Do you ever get tired of being wrong?
"A new report published by the Information Security Forum (ISF) warns that the cost of complying with the Sarbanes-Oxley legislation is diverting spending away from addressing other security threats."
So yes, companies will still work to maintain profits but like anything else in this world outside of government, their budgets are not endless. Companies are spending money where government is forcing their hands and not spending it on things they truly need.
Regarding Health Care, even if you were to use your numbers over what I posted (which includes ALL compliances) we're talking BILLIONS in new expenditures. You're tossing around numbers of a billion here and a billion there as if it's nothing significant. You're not disproving the original point of my article in the least here. Government is only adding to costs and creating more government related jobs that produce nothing in return.
That is only the HIPAA costs and not all compliance costs. This doesn't change my overall point though. When you start adding up costs that government create you see a significant portion of your over all cost.
"A new report published by the Information Security Forum (ISF) warns that the cost of complying with the Sarbanes-Oxley legislation is diverting spending away from addressing other security threats."
This is true. Congrats, you have managed to correctly relate a fact. It is also true, altho the report failed to say so, that spending on pens, paper clips, and supermarket coupons is diverting spending away from addressing security threats. So what?
In case you forget, SOX was created as a way to hold miscreant CEOs and CFOs accountable for the information they provided shareholders, and was created in response to a crisis of false info from the likes of Enron, Global Crossing, WorldCom, etc. Without SOX, you would have a crisis of confidence in our financial markets.
Compliance costs were supposedly $15.5 billion per year, at least according to your source. I am pleased that you now understand the specifics of what you post. It may or may not be true. Companies have to spend money reporting their results to their shareholders, in order to give shareholders some idea of what is going on. It is par for the course to blame something they don't like- SOX- for the greatest share of these costs.
In any case, $15 B may seem like a lot to you, but in a $14.5 trillion dollar economy, it is a rounding error. For example, it's about 1/3 of what we spend on our pets each year, and nobody is saying that pets are destroying our economy. The spending on SOX is less than we spend on hair care. Are you worrried that we are coloring our hair into international bankruptcy? Me neither. If you really want to drive yourself crazy, go see what Big Pharma spends on advertising- more than $35 billion per year!
"As Milton Friedman said, often a congressional solution is worse than the problem. That's another one of those truisms that has been proved by Sarbanes-Oxley. Another one is that Congress tends to have two speeds—zero and overreact. In the case of Sarbanes-Oxley, we clearly overreacted. And most importantly, I think, Sarbanes-Oxley proves the rule that the unanticipated, unintended consequences of complex legislation are often much, much worse than the positive effects that you intended."
While SOX may have been started for good reason it is further proof of my point. We'd be better off without government reaching in in the first place.
Also from the link above...
"I would point out that Enron is the most recent one to come to trial. There were plenty of laws in place that ensured that members of boards of directors and officers of corporations acted in the best interest of shareholders and could not lie to people who were potential sellers or purchasers of their shares. There are very serious laws in effect, and in fact, we had 25 different convictions of Enron executives recently—all under laws that were in place before Sarbanes-Oxley."
The examples you pointed to above were already against the law but Enron for example broke them anyway. Your mentality here is similar to those who push for more and more gun laws after each major news story of a gun crime ignoring of course the fact that the laws we already had in place were broken.
What in my above statement do you disagree with?
Were there not already laws in place? Yes there were which makes that FACT #1
Did Milton Freidman actually make sure a comment? Yes, again that is FACT #2
Were there already 25 different convictions in the Enron case? Yes, FACT #3
In Liberal Land those may not count as facts but if a statement is true and can be proven which those can all be then that equates to being a fact.
Remind me again how this has anything to do with your ridiculous statement that HIPAA was responsible for the doubling of medical insurance premiums between 1996 and 2006. Or the equally silly assertion when that was proven to be untrue that really HIPAA and SOX were the twin villians of health care cost. A subject which you are an expert in because at some point in your life you worked in the industry in some undefined capacity. I seem to have lost the thread of what you were saying along the way.
Who's to blame? Politicians, Drug Companies and Insurance Companies. Brand name drug companies pit a war against generic brands and the marketing war begins, so do the contracts with insurance carriers. Unbeknownst to the the consumer who has been given a coupon voucher of 10.00 to spend on a Brand drug, the insurance company is billed, for example, 600.00 by the drug company and gets paid for a simple one time prescription. Machiavellianism at its best. Get the patient in on the Brand and plump up reimbursement. And so go the "drug wars".
Fast forward and we will spend another few billion in the realm of healthcare. The expanded medical code set ICD-10-CM is to be implemented nationwide (although some practices utilize some version of it now to track morbidity and mortality statistics) and the deadline is 2013. We have already out grown this one standard code set system. The standard format for the transmission of claims must be implemented first before the actual ICD-10 codes can be transmitted by each healthcare entity to insurance companies.
The purpose of this expanded code set is to report new diseases, procedures, services. Population growth and lifestyle choices prompt new diseases and accidents and need for treatment. New technology in performing procedures and new medical devices also make it necessary for a code expansion. Each time you receive any type of healthcare, whether it be surgery, doctor visit, durable medical equipment, and so on, a code is assigned to report statistics for use, also tracking death statistics and codes allow providers to get reimbursed.
Because each insurance company has varied criteria for receiving coded claims it becomes more costly to hire more staff; coders for the purpose of interpreting clinical narrative into assigned codes and hiring more billers to decipher how the insurance companies want to receive claims. And by the way, we all know the reason insurance companies exist is to find ways to reject a patients claim thus leaving him/her to pay out of pocket. We've all been there.
Here would be my guess of the 4 main drivers, in no particular order. I am no expert, however, and could easily be wrong:
- the aging of our population. The older you are, the more healthcare you need. Between 1995 and 2005, the number of people over 65 increase by 20%, and the number over 80 (the heaviest users of healthcare) increased by 30%.
- increased technology (drugs, procedures, equipment). This is a double-edged sword. It can extend our lives but is expensive. I have seen estimates that this may be responsible for as much as two thirds of the increase in health costs
- the increase in people with long term medical coditions that need care throughout their life. I think here of AIDS and diabetes, but there are many conditions that would qualify.
Things like insurance company profits, the shift to for-profit hospitals, increased gov't regulation, expanded insurance coverage mandates, and malpractice claims certainly increase medical costs, but none changed significantly in the period you asked about or is sufficiently large relative to overall medical care costs, so they weren't responsible for the doubling.
To give you an idea of why not, look at the shift to for-profit hospitals. They increased from 15% to 25% during the 10 year period, and costs on these hospitals are typically 25% higher than in non-profits. Since hospital costs are 1/3 of overall healthcare costs, this shift roughly increased costs by 1/3 x 1/4 x 1/10, or 1/120- about 1%. That's $10 billion per year- a lot, but not enough to move the dial on overall costs.
Hope this answers your question and is helpful in understanding that HIPAA and SOX are fairly minor issues, even through they amount to several billion in costs per year.