Whoop Whoop Whoop

The incompetence of government-run systems cannot be overstated, and we cannot belabor that point enough. Today, a look into just three (out thousands of potential candidates) of ridiculous government practices set to the theme of the Three Stooges.

"Any resemblance between the Three Stooges and regular human beings is a dirty shame."
- Opening scene caption from Threes Stooges feature "Don't Throw That Knife"

Larry:

Don't blame the Uninsured
By John R. Graham, The Chicago Tribune
https://www.chicagotribune.com/news/opinion/chi-0703050148mar05,0,5711751.story?coll=chi-newsopinioncommentary-hed

The problem of spiraling costs in today's US healthcare system isn't because uninsured costs are going up…that's a symptom, not a cause. It's happening because people pay flat rates for healthcare through a system run and negotiated by the government. As an example of how ridiculous this is, let's say you have negotiated a flat rate for electricity at your home. You pay $100 a month regardless of usage because you've struck a deal with the government. Do you think you'd worry about turning the lights out or plugging in space heaters everywhere???? Of course not! You'd just use electricity profligately because consumption and cost are almost completely de-linked.

"I shoot an arrow into the air, where it lands I do not care: I get my arrows wholesale!"
- from the Threes Stooges feature "Cactus Makes Perfect"

What rational private healthcare entity would engage in such business practice? The answer is: none. This is the work of government mandate. As a result, the healthcare system is used and abused and costs skyrocket and become more unaffordable for everyone. Many, if not the vast majority, of consumer goods in the world have been deflating in price and becoming more affordable over the last 25 years or so, yet, healthcare isn't. Now you know why.

Moe:

Bernanke Hits Fannie
By Editorial Staff, The Wall Street Journal (*Site requires registration)
https://online.wsj.com/article/SB117323944548229259.html?mod=opinion_main_review_and_outlooks

Like Moe smacking Curly and Larry upside the head, Bernanke has been trying to smack some sense into the government's handling of Freddie and Fannie Mac. As we just saw in the case of healthcare, there are few things less sensible than a government/private business hybrid.

From today's Wall Street Journal Editorial: "the tale of Fan and Fred, the ‘government-sponsored enterprises' that have grown like Topsy thanks to an implicit government subsidy and now pose a systemic risk to the entire financial system. Mr. Bernanke put it this way: ‘The perception of government backing allows Fannie and Freddie to borrow in open capital markets at an interest rate only slightly above that paid by the U.S. Treasury and below that paid by other private participants in mortgage markets.'"

"Completely illogical, preponderantly impracticable, and moreover - it stinks!"
- from the Threes Stooges feature "Half-Wits' Holiday"

Fannie and Freddie use their government subsidies to buy gargantuan quantities of mortgage-based securities and, according to Bernanke, "can enjoy profits of an effectively unlimited scale… and [Fannie and Freddie] appear to have no material effect on the cost or availability of residential mortgages." That is, their presence is not helping society at large, only creating huge financial anomaly for no good reason. The two have a combined total of $5.2 trillion in debt and MBS obligations, eclipsing the entire $4.9 trillion in publicly held U.S. government debt. Preposterous.

Or, as the WSJ editors put it: "Socialism can be a great business for the lucky few who game the political system."

Curly:

"If at first you don't succeed, keep on suckin' til ya do suck seed!"
- from the Threes Stooges feature ""Movie Maniacs"

The government, in its pervasive wisdom and omniscience, simply isn't going to let you save money no matter what you do. Their wonky accounting practices have essentially disallowed it.

You've probably heard that the personal saving rate in America has turned negative. This is true. The official US saving rate turned negative in 2005. The weird thing is that US household net worth has been climbing steadily for years. How can we be getting wealthier if we spend all of our money and then some?

"I'm a victim of coicumstance!"
- from the Threes Stooges feature "Disorder in the Court"

The problem with the official US saving rate is that it's government data, which makes it worthless. We don't have enough space to go through this entire statistical nightmare here, but we can point one item out: owner's imputed rent.

Here's the concept: if you're a homeowner—it doesn't matter if you don't have any mortgage whatsoever, you could own your home outright—the government in its infinite wisdom will figure out what your home is worth and what you would have to pay in rent if you didn't own the home, and counts that fictitious number as a debit to the personal savings rate. No cash changes hands. It's completely made up! This is not a trivial amount of money. That one item alone accounts for $1 trillion of negative savings per year. If we expressed that as a percentage of GDP—if we just wiped out that one line item—the official saving rate would go from minus one percent of GDP all the way up to about positive seven percent. It's a preposterous accounting trick.

"What's that for? I didn't do nuthin'!" "That's in case ya do and I'm not around!"
- from the Threes Stooges feature "Hoi Polloi"

So keep the skepticism alive. Free markets and global free trade are not perfect, but they're infinitely better than governmental beatitudes of social policy.

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Sources: https://www.the3stooges.net/; The Bureau of Economic An