Someone must pick the winners and losers in an economy. The marketplace always does a better job than government–especially over the long term–but Washington refuses to get the message.
Consider GM. When the carmaker was headed for reorganization through bankruptcy, President Obama had a better idea. Rather than let the process take its course and force the UAW to reorganize its contracts, the administration decided to mandate its own solution. Although the President touts “saving GM” as a huge success, taxpayer losses in the tens of billions are forgotten. Meanwhile, GM struggles to sell Volts even with taxpayer subsidies, and the firm is planning to produce more cars outside of the United States in the coming decade. So much for saving American jobs.
Now consider Medicare. The President shifted $716 billion from “waste, fraud, and abuse” in the behemoth to help finance Obamacare. However, according to Medicare’s chief actuary, these cuts will–among other things–make 15% of hospitals serving Medicare patients unprofitable. When asked about healthcare providers going out of business as a result, administration officials claim that such providers are just inefficient. Put another way, it’s not government’s fault if private firms cannot survive price controls.
It seems that Obama wants it both ways. When GM is unable to deal with market pressures, the President sees nothing wrong with intervening to dictate the terms to reorganization. When healthcare providers struggle with government pressures, they must either adapt or dissolve. The underlying assumption is that markets are inherently evil and unfair, while government is the lone source of justice for the common man. Of course, there’s also political gain in propping up the unions in the name of “saving GM,” as well as beating up physicians, big pharma, and other players in the healthcare arena, many of whom are presumed to be part of “the 1%.” It’s all about government control.
Welcome to the new economy. Free markets have been replaced by a mix of Marxism, fascism, and populism.
There is no clear economic theory behind Obama. It is as you say all about government control
GM was never lost and it was not saved. GM would have been restructured anyway if Obama stayed on the sidelines. There would be some lost jobs in the industry but the new GM would have been stronger and less dependent on government support. Instead GM is more dependent on the government and no more competitive, but we are all poorer.
The savings in Medicare is smoke and mirrors. I have heard politicians talk about eliminating “waste, fraud and abuse” for years. This is a program owned and controlled by the Federal government. If they wanted to eliminate waste, fraud and abuse, it shouldn’t take an act of Congress to act on it. Our question should be: what kind of government do we have that would permit $700 billion of waste in one of its largest programs?