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A Slave to the Seen?

Xerographica

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Don Boudreaux recently shared a letter he wrote to Forbes...A Slave to the Seen. In his letter he destroys Bob Deitrick's argument that the US government made a smart decision in bailing out the auto manufactures. Here's a snippet from Boudreaux's letter...

Mr. Deitrick’s concept of “worked” is too lax. No one doubts that companies can be kept afloat with enough special privileges from government. In contrast, when the concept of “worked” requires improvement of the overall economy, the mere continued operation – or even thriving – of subsidized corporations is insufficient evidence that such subsidies have worked. What industries are kept smaller because government is directing resources artificially to auto producers? What jobs are not being created because auto jobs are protected? What excessively risky decisions are auto executives now taking, confident that their firms likely will be bailed out again when trouble strikes?
The outcome is invariably the inefficient allocation of resources. We minimize the amount of value we derive from our limited resources.

Over at the Bleeding Heart Libertarian Blog...Jason Brennan described the unseen with regard to paying Walmart employees higher wages...

What happens if Walmart starts offering to pay cashiers and shelf stockers $22/hr? As it raises wages, the kind of people who compete for Walmart jobs changes. As wages go up, workers with greater skill, human capital, and experience start to compete for these jobs, and, being better workers, they will beat out the kind of workers who are currently getting Walmart jobs. Call this phenomenon job gentrification. If Walmart increases its wage significantly, this will be very good for the people who end up working at Walmart. But that doesn’t mean it will be good for the kind of people who currently are getting the low-paying jobs at Walmart.
Again it should be clear that the outcome would be an inefficient allocation of resources. There will be greater unemployment among people with lower skills...which is more "seen" for the government to try and "fix". It's a vicious cycle that results in the destruction of value.

Here's Bastiat describing the unseen...

But, besides all this, there is something which is not seen. The fifty millions expended by the State cannot be spent, as they otherwise would have been, by the tax-payers. It is necessary to deduct, from all the good attributed to the public expenditure which has been effected, all the harm caused by the prevention of private expense, unless we say that James B. would have done nothing with the crown that he had gained, and of which the tax had deprived him; an absurd assertion, for if he took the trouble to earn it, it was because he expected the satisfaction of using it, He would have repaired the palings in his garden, which he cannot now do, and this is that which is not seen. He would have manured his field, which now he cannot do, and this is what is not seen. He would have added another story to his cottage, which he cannot do now, and this is what is not seen. He might have increased the number of his tools, which he cannot do now, and this is what is not seen. He would have been better fed, better clothed, have given a better education to his children, and increased his daughter's marriage portion; this is what is not seen. He would have become a member of the Mutual Assistance Society, but now he cannot; this is what is not seen. On one hand, are the enjoyments of which he has been deprived, and the means of action which have been destroyed in his hands; on the other, are the labour of the drainer, the carpenter, the smith, the tailor, the village-schoolmaster, which he would have encouraged, and which are now prevented - all this is what is not seen. - Frédéric Bastiat, The Seen vs the Unseen
So are you a slave to the seen? Most people are. For example, my gf was talking on the phone today with a friend. They were both pretty happy about the Affordable Care Act because they both have pre-existing conditions. The "seen" here is "affordable" healthcare which is basically a free lunch. At the risk of sounding like a heartless prick, I tried to explain that there's no such thing as a free lunch. Subsidizing healthcare will invariably come at the expense of other goods/services that they might value even more. Except, I couldn't effectively and quickly show them the unseen. It's just a given that the resources have to be taken from other places. And if consumers aren't free to choose between X or Y...then how could the most valuable option possibly be selected? Therefore, the result will be an inefficient allocation of resources...the destruction of value.

If we want to derive the maximum amount of value from our limited resources...then consumers must be free to indicate how much they value the various uses of our limited resources. Minimum wages, subsidies and price ceilings all have to be eliminated in order for resources to freely flow. If resources can't freely flow...if they are damned up and misdirected...then entrepreneurs will waste their resources chasing mirages.

Garbage in...garbage out.
 

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So are you a slave to the seen? Most people are. For example, my gf was talking on the phone today with a friend. They were both pretty happy about the Affordable Care Act because they both have pre-existing conditions. The "seen" here is "affordable" healthcare which is basically a free lunch. At the risk of sounding like a heartless prick, I tried to explain that there's no such thing as a free lunch. Subsidizing healthcare will invariably come at the expense of other goods/services that they might value even more. Except, I couldn't effectively and quickly show them the unseen. It's just a given that the resources have to be taken from other places. And if consumers aren't free to choose between X or Y...then how could the most valuable option possibly be selected? Therefore, the result will be an inefficient allocation of resources...the destruction of value.
No but there is a much cheaper lunch than the lunch is now, when you take profit out of the picture, which is why EVERY SINGLE INDUSTRIALIZED COUNTRY has universal not for profic public healthcare and it works better and costs less then the US private for profit system.

The expense being taken is private profits, I can live with that.

The article is total ****.

1. "Mr. Deitrick’s concept of “worked” is too lax. No one doubts that companies can be kept afloat with enough special privileges from government. In contrast, when the concept of “worked” requires improvement of the overall economy, the mere continued operation – or even thriving – of subsidized corporations is insufficient evidence that such subsidies have worked. What industries are kept smaller because government is directing resources artificially to auto producers? What jobs are not being created because auto jobs are protected? What excessively risky decisions are auto executives now taking, confident that their firms likely will be bailed out again when trouble strikes? "

It's the old "but it might have been better if we did something else .... we don't know" argument, it's unempirical and irrational, pure speculation.

"What happens if Walmart starts offering to pay cashiers and shelf stockers $22/hr? As it raises wages, the kind of people who compete for Walmart jobs changes. As wages go up, workers with greater skill, human capital, and experience start to compete for these jobs, and, being better workers, they will beat out the kind of workers who are currently getting Walmart jobs. Call this phenomenon job gentrification. If Walmart increases its wage significantly, this will be very good for the people who end up working at Walmart. But that doesn’t mean it will be good for the kind of people who currently are getting the low-paying jobs at Walmart. "

Nonsense, people with greater skill are still giong to compete for the jobs that require greater skill ... because they have them and those jobs are more fulfilling and still generally pay more ... what makes people with greater skills compete for the low skill jobs are lack of availability for jobs with the skill set they have.

"But, besides all this, there is something which is not seen. The fifty millions expended by the State cannot be spent, as they otherwise would have been, by the tax-payers. It is necessary to deduct, from all the good attributed to the public expenditure which has been effected, all the harm caused by the prevention of private expense, unless we say that James B. would have done nothing with the crown that he had gained, and of which the tax had deprived him; an absurd assertion, for if he took the trouble to earn it, it was because he expected the satisfaction of using it, He would have repaired the palings in his garden, which he cannot now do, and this is that which is not seen. He would have manured his field, which now he cannot do, and this is what is not seen. He would have added another story to his cottage, which he cannot do now, and this is what is not seen. He might have increased the number of his tools, which he cannot do now, and this is what is not seen. He would have been better fed, better clothed, have given a better education to his children, and increased his daughter's marriage portion; this is what is not seen. He would have become a member of the Mutual Assistance Society, but now he cannot; this is what is not seen. On one hand, are the enjoyments of which he has been deprived, and the means of action which have been destroyed in his hands; on the other, are the labour of the drainer, the carpenter, the smith, the tailor, the village-schoolmaster, which he would have encouraged, and which are now prevented - all this is what is not seen. - Frédéric Bastiat, The Seen vs the Unseen "

A HUGE chunk of the story here is missing ... i.e. WHO's being taxed and what would they have spend the money on, and WHO/WHAT is recieving state funding. You can't just have generic private citizen vrs generic state project.
 

Xerographica

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A HUGE chunk of the story here is missing ... i.e. WHO's being taxed and what would they have spend the money on, and WHO/WHAT is recieving state funding. You can't just have generic private citizen vrs generic state project.
What's the difference between individual valuation in the private sector...

Time is a limited resource for Rina because she only has so much of it it in which she has to do all the things she wants. This is the basic economic problem of scarcity -- having unlimited needs and wants and limited personal resources to cover them (money/income, skills and time). Scarcity means that Rina must make choices about what she wants to do: she could work at the local cafe or she could spend time with her family, but not both -- she hasn't got enough time. These are her choices and she must make a decision on which she wants to do. If she decides she will work at the cafe, spending time with her family becomes the opportunity cost -- the next best option forgone. She has to make a decision because she hasn't got enough of the personal resource of time to do both.
...and individual valuation in the public sector?

Money is a limited resource for Rina because she only has so much of it to spend on all the things she wants. This is the basic economic problem of scarcity -- having unlimited needs and wants and limited personal resources to cover them (money/income, skills and time). Scarcity means that Rina must make choices about what she wants to buy: she could spend a dollar on the EPA or she could spend a dollar on public healthcare, but not both -- once a dollar is spent it can't be spent again. These are her choices and she must make a decision on which one she values more. If she decides to spend her money on the EPA, spending her money on public healthcare becomes the opportunity cost -- the next best option forgone. She has to make a decision because she hasn't got enough of the personal resource of money to do both.
 

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1) The author is wrong, and quite dishonest, to define "worked" as requiring the overall economy to improve. The fact is, the auto companies, instead of going out of business, are still in business and doing very well without any govt assistance. So well, that they paid off their debt to the govt.

2) There is no evidence that increasing minimum wages increases unemployment. The evidence shows the opposite.
 

Xerographica

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1) The author is wrong, and quite dishonest, to define "worked" as requiring the overall economy to improve. The fact is, the auto companies, instead of going out of business, are still in business and doing very well without any govt assistance. So well, that they paid off their debt to the govt.
So companies, like individuals, should never be allowed to fail? So I take it that you don't agree with the expression that capitalism without failure is like Catholicism without hell. I also take it that you've never heard of moral hazard before.

2) There is no evidence that increasing minimum wages increases unemployment. The evidence shows the opposite.
A minimum wage does not reflect how much an employer values labor. Does it matter how much the employer values labor? No? So it doesn't matter how much the employer values any of the other inputs he need to produce his product/service?

Take, for example, Mr. Baker. What does he need to produce baked goods? He needs a location, employees, equipment (bakers racks, ovens, refridgerators, etc, ), dozens and dozens of ingredients (flour, sugar, salt, oil, et) and many other inputs.

Just like Mr. Baker can get the ingredients wrong with a recipe...he can also get the inputs wrong for his business. So a successful business, just like a successful loaf of bread, depends on getting the balance of inputs just right.

The market works because if you and other people don't like how Mr. Baker is using society's limited resources...if you think his bread is too salty and he fails to pay his employees enough...then you have the freedom to withhold your positive feedback. In other words, you can boycott Mr. Baker and give your money to his competitor. This will decrease Mr. Baker's influence over how society's limited resources are used. This is the process by which we try and ensure that we maximize the amount of value that we derive from society's limited resources.
 

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So companies, like individuals, should never be allowed to fail? So I take it that you don't agree with the expression that capitalism without failure is like Catholicism without hell. I also take it that you've never heard of moral hazard before.
So I take it that when you can't refute what someone has said, you'll make up BS just so you have something to post. I also take that you've never heard of integrity before


A minimum wage does not reflect how much an employer values labor. Does it matter how much the employer values labor? No? So it doesn't matter how much the employer values any of the other inputs he need to produce his product/service?

Take, for example, Mr. Baker. What does he need to produce baked goods? He needs a location, employees, equipment (bakers racks, ovens, refridgerators, etc, ), dozens and dozens of ingredients (flour, sugar, salt, oil, et) and many other inputs.

Just like Mr. Baker can get the ingredients wrong with a recipe...he can also get the inputs wrong for his business. So a successful business, just like a successful loaf of bread, depends on getting the balance of inputs just right.

The market works because if you and other people don't like how Mr. Baker is using society's limited resources...if you think his bread is too salty and he fails to pay his employees enough...then you have the freedom to withhold your positive feedback. In other words, you can boycott Mr. Baker and give your money to his competitor. This will decrease Mr. Baker's influence over how society's limited resources are used. This is the process by which we try and ensure that we maximize the amount of value that we derive from society's limited resources.
And I'll take it that when you can't refute what I said, you'll try to distract attention from how I utterly destroyed the authors point with a totally irrelevant point.
 

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Boudreaux has decontextualized the issue, a typical market evangelist tactic.

The fact is Bush's failed economic policies led to the largest macroeconomic event in 70 years, and threatened to drag down millions of jobs, potentially causing a deflationary spiral that could have harmed the lives of millions of workers for a decade.

In that context, making sure GM wasn't sold off for scrap was an important part of the recovery, since the destruction of GM would have resulted in the almost immediate layoff of a million workers in the auto and auto-related industries.

Obama did good. The market evangelists, as usual, were wrong, just like they were wrong in deregulating the financial industry and causing a bubble by giving tax cuts to billionaires and hedge fund managers.

By the way to claim that paying higher wages is bad for the economy is such typical rightwing dreck that it hardly even requires a response, except to say that maybe Boudreaux's employers should cut his pay to help the economy.
 
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So I take it that when you can't refute what someone has said, you'll make up BS just so you have something to post. I also take that you've never heard of integrity before
Naw, I refuted what you said. Regarding the importance of failure in a market system...let me have Milton Friedman spell it out for you...

The government should not help to save Chrysler, of course not. This is a private enterprise system. It's often described as a profit system but that's a misleading label. It's a profit and loss system. And the loss part is even more important than the profit because it's what gets rid of badly managed, poorly operated companies. When Chrysler loses money...it's got to do something. When Amtrak loses money it goes to congress and gets a bigger appropriation. [...] It's the stockholders of Exxon who ultimately are buying it. If they don't like what Exxon is doing with their money, they have a perfectly good alternative...they can sell the stock. And as the stock went down, if the stockholders didn't like it, they would pay somebody to change the policy which Exxon is following. We have a far greater degree of control over what Exxon does than we have over what a lot of our government corporations do.
Regarding Moral Hazard...let's have Wikipedia spell it out for you...

In economic theory, a moral hazard is a situation where a party will have a tendency to take risks because the costs that could incur will not be felt by the party taking the risk. In other words, it is a tendency to be more willing to take a risk, knowing that the potential costs or burdens of taking such risk will be borne, in whole or in part, by others. A moral hazard may occur where the actions of one party may change to the detriment of another after a financial transaction has taken place.
And I'll take it that when you can't refute what I said, you'll try to distract attention from how I utterly destroyed the authors point with a totally irrelevant point.
Naw, I did refute what you said, you just failed to realize it because you fail to understand basic economics. I tried to remedy that by explaining how and why markets work.
 

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Naw, I refuted what you said. Regarding the importance of failure in a market system...let me have Milton Friedman spell it out for you...



Regarding Moral Hazard...let's have Wikipedia spell it out for you...





Naw, I did refute what you said, you just failed to realize it because you fail to understand basic economics. I tried to remedy that by explaining how and why markets work.
Since I said nothing about the importance of failure in a market system or about moral hazard, your posts are once again shown to be dishonest
 

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Since I said nothing about the importance of failure in a market system or about moral hazard, your posts are once again shown to be dishonest
Given that Boudreaux said everything about the importance of failure in a market system and about moral hazard...and you admittedly said nothing about the importance of failure in a market system or about moral hazard...then your posts aren't even relevant. Why not address the arguments actually made?
 

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Given that Boudreaux said everything about the importance of failure in a market system and about moral hazard...and you admittedly said nothing about the importance of failure in a market system or about moral hazard...then your posts aren't even relevant. Why not address the arguments actually made?
I said nothing about "the importance of failure in a market system" so criticizing anything I've said about the subject is dishonest

I did refute his definition of success and his claim about how raising the minimum wage is not supported by reality, both of which are relevant

Your belief that I must refer to everything he said in order to refute some of the claims he made is as delusional as your belief that I said anything about the importance of failure in a market system
 

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I did refute his definition of success and his claim about how raising the minimum wage is not supported by reality, both of which are relevant
Is it me or are you attributing Brennan's claim to Boudreaux?
 

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Is it me or are you attributing Brennan's claim to Boudreaux?
It's you

From Boudreaux's letter:

Mr. Deitrick’s concept of “worked” is too lax. No one doubts that companies can be kept afloat with enough special privileges from government. In contrast, when the concept of “worked” requires improvement of the overall economy,
 

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It's you

From Boudreaux's letter:
In his letter, Boudreaux never made any claim about minimum wages. Yet, you wrote that he provided a definition of success AND made an argument about the minimum wage...

I did refute his definition of success and his claim about how raising the minimum wage is not supported by reality, both of which are relevant
If you had carefully read the original post, then you would have known that it was Brennan who made the claim about minimum wages.

Maybe I'm just being trifling...but incorrectly attributing claims is pretty sloppy.
 

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In his letter, Boudreaux never made any claim about minimum wages. Yet, you wrote that he provided a definition of success AND made an argument about the minimum wage...



If you had carefully read the original post, then you would have known that it was Brennan who made the claim about minimum wages.

Maybe I'm just being trifling...but incorrectly attributing claims is pretty sloppy.
Yes, I misattributed the remarks about minimum wages, yes it was sloppy, and yes it is trifling

Just more evidence that you can't refute any of the points that I've made.
 

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Yes, I misattributed the remarks about minimum wages, yes it was sloppy, and yes it is trifling

Just more evidence that you can't refute any of the points that I've made.
Let me clarify here, you don't refute Boudreaux's claim regarding moral hazard?
 

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Let me clarify here, you don't refute Boudreaux's claim regarding moral hazard?
I said nothing about any moral hazards

Will you ever address anything I actually said, or are you compelled to distract attention away from your inability to refute what I did say?
 

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I said nothing about any moral hazards

Will you ever address anything I actually said, or are you compelled to distract attention away from your inability to refute what I did say?
Ok, let me try again...

1) The author is wrong, and quite dishonest, to define "worked" as requiring the overall economy to improve. The fact is, the auto companies, instead of going out of business, are still in business and doing very well without any govt assistance. So well, that they paid off their debt to the govt.
If we're not better off as a result of the bailout, then why are you arguing in favor of the bailout? For example, if you spend $40,000 for an education, but are no better off as a result of your education, then why would you argue in favor of your decision?

I would think whether we're talking about individuals...or companies...or governments...that we evaluate the intelligence of an allocation based on how much of an improvement was made.

For example, if you had gambled that $40,000 on a business idea...and had become a millionaire as a result, then you could clearly argue that it was a good decision. But if you had gambled that $40,000 on a useless education, then you could clearly argue that it was a poor decision. Wouldn't you rue your decision and suspect that the money could have been better spent elsewhere?

2) There is no evidence that increasing minimum wages increases unemployment. The evidence shows the opposite.
Let's say that we got rid of minimum wages and in some sectors the wage dropped to $1. In essence this would be a red light. Except, right now that light is green...it's $7.25. How can labor be efficiently allocated when you motivate people to rush into the wrong sector of the economy?

If it's illegal to falsely shout "fire" in a crowded theater...then why shouldn't minimum wages be illegal as well? In both cases the information is false and in both cases the consequence are harmful.
 
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Let me clarify here, you don't refute Boudreaux's claim regarding moral hazard?
Pick me, I'll refute it.

Moral hazard is the term market evangelists use only when, after the rich have taken the benefits of regulation, they want the poor to take the burdens by opposing government intervention in a system that was skewed to benefit the rich from the start.

The time to worry about moral hazard is at the beginning, when developing a regulatory system that doesn't allow the rich to benefit without bearing the burdens (of higher taxes, higher risk, and higher regulatory costs). Not at the end, after the rich have sucked the system dry and now want the rest of us to suffer as an industry or company crumbles due to their mismanagement.
 

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Ok, let me try again...



If we're not better off as a result of the bailout, then why are you arguing in favor of the bailout? For example, if you spend $40,000 for an education, but are no better off as a result of your education, then why would you argue in favor of your decision?

I would think whether we're talking about individuals...or companies...or governments...that we evaluate the intelligence of an allocation based on how much of an improvement was made.

For example, if you had gambled that $40,000 on a business idea...and had become a millionaire as a result, then you could clearly argue that it was a good decision. But if you had gambled that $40,000 on a useless education, then you could clearly argue that it was a poor decision. Wouldn't you rue your decision and suspect that the money could have been better spent elsewhere?



Let's say that we got rid of minimum wages and in some sectors the wage dropped to $1. In essence this would be a red light. Except, right now that light is green...it's $7.25. How can labor be efficiently allocated when you motivate people to rush into the wrong sector of the economy?

If it's illegal to falsely shout "fire" in a crowded theater...then why shouldn't minimum wages be illegal as well? In both cases the information is false and in both cases the consequence are harmful.
You can try to distract as many times as you choose, but it won't work.

If I spend a load of money on a life-preserving operation, and I end up after the operation being no healthier than I was before I got sick, I would not say that the money was wasted

WRT minimum wage, you can make up as many fairy tales as you like to explain why the minimum wage must be bad for the economy. The fact remains that there is no evidence that the minimum wage has a negative effect on employment, or the economy as a whole.
 

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What's the difference between individual valuation in the private sector...

...and individual valuation in the public sector?
Here's the difference, in the public sector you're vote is valued as much as everyone elses ... In the private sector, if you don't have a lot of money, you don't have a lot of votes, especially if other people have a ton more.

But my point stands, you can't say "tax and spend" because it makes a difference WHO you tax and WHAT you spend it on, don't dodge the point.
 

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Here's the difference, in the public sector you're vote is valued as much as everyone elses ... In the private sector, if you don't have a lot of money, you don't have a lot of votes, especially if other people have a ton more.

But my point stands, you can't say "tax and spend" because it makes a difference WHO you tax and WHAT you spend it on, don't dodge the point.
Are some people more wasteful than other people?
 

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Don Boudreaux recently shared a letter he wrote to Forbes...A Slave to the Seen. In his letter he destroys Bob Deitrick's argument that the US government made a smart decision in bailing out the auto manufactures. Here's a snippet from Boudreaux's letter...



The outcome is invariably the inefficient allocation of resources. We minimize the amount of value we derive from our limited resources.

Over at the Bleeding Heart Libertarian Blog...Jason Brennan described the unseen with regard to paying Walmart employees higher wages...



Again it should be clear that the outcome would be an inefficient allocation of resources. There will be greater unemployment among people with lower skills...which is more "seen" for the government to try and "fix". It's a vicious cycle that results in the destruction of value.

Here's Bastiat describing the unseen...



So are you a slave to the seen? Most people are. For example, my gf was talking on the phone today with a friend. They were both pretty happy about the Affordable Care Act because they both have pre-existing conditions. The "seen" here is "affordable" healthcare which is basically a free lunch. At the risk of sounding like a heartless prick, I tried to explain that there's no such thing as a free lunch. Subsidizing healthcare will invariably come at the expense of other goods/services that they might value even more. Except, I couldn't effectively and quickly show them the unseen. It's just a given that the resources have to be taken from other places. And if consumers aren't free to choose between X or Y...then how could the most valuable option possibly be selected? Therefore, the result will be an inefficient allocation of resources...the destruction of value.

If we want to derive the maximum amount of value from our limited resources...then consumers must be free to indicate how much they value the various uses of our limited resources. Minimum wages, subsidies and price ceilings all have to be eliminated in order for resources to freely flow. If resources can't freely flow...if they are damned up and misdirected...then entrepreneurs will waste their resources chasing mirages.

Garbage in...garbage out.
I see a lot of talk here about auto manufacturers being bailed out , but very little about the rest of the bailouts.
Like for example Bear sterns bank recieved taxpayer money from the government, as did AIG , Freddy mac, and Fanny Mae and others that were at the table to take their bailouts from government and dash out with no saying of maybe we can hire more Americans on unemployment or maybe not take the tax cut coming up in April or better service for a lower price or even to deny the bonus of the one responsible for the red ink of the company to start with?

In your post you say there is no such thing as a "free lunch" I agree .

However the closest thing you could get to a free lunch is to own your own private company and run it how you wish while getting bailouts when you need from the taxpayers through the government "public" , getting research money from taxpayers through the government "public" and calling your business PRIVATE., saying you are not responsible for providing jobs to American workers who just happen to be the taxpayers that paid for the bailouts of the private companies in trouble , and also taxpayers pay for the research money for these "PRIVATE CORPORATIONS".
Question; What does the average worker or working poor or poor get out of this, the ones that don't have investments?:peace
 
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