Sunday, November 29, 2009

Economic stimulus is just warming up

The Right rails against the stimulus package President Obama signed into law, citing indicators like the high unemployment rate as evidence that the stimulus did not work. Liberals cite the same indicator as evidence that the stimulus bill was inadequate and that we need another jolt of stimulus. The Left fails to recognize that over half of the funds in the $787-billion stimulus package remain to be spent when calling for a new stimulus bill. Conservatives fail to acknowledge the same when they already declare the stimulus bill a failure.

In the face of the evidence that economists have begun to recognize, there is a new consensus that sees the stimulus as a worthy step.

Projections Show It Could Have Been Worse

The truth of the matter probably lies somewhere between the two extremes. The stimulus bill has not yet had the full effect it will have had after all of the funding in it has been spent. Nonetheless, we probably do not need another stimulus bill at this time. The American people need to be patient and let the stimulus play out. Looking back in two years, they will see a substantial impact from the initial stimulus bill and decide we do not need the additional debt more stimulus would bring.

In fact, much of the benefit of the stimulus bill will not be realized until well after the last dollar is spent. The stimulus bill funded America's infrastructures with billions of dollars. Although the economy will get an immediate boost from that investment, the full return will be realized over the life of those infrastructures, which will be measured in decades. Furthermore, substantial portions of the stimulus are dedicated to emerging technologies that will require significant research and development before they become profitable sectors. But these are the sectors America will need to lead for her to continue to have a competitive economy.

America was once an agrarian society sustained economically almost entirely on agriculture. But then came the Industrial Age and America changed into an industrial society, leveraging it to become the most powerful nation in the world. When leadership in industry went offshore to Asia, America didn't lose her dominance. Instead she led the world into the Information Age and enjoyed economic prosperity from doing so.

Now America needs to leverage the stimulus package to help her lead the way into entirely new sectors where the competition is still minimal. For example, the US electrical grid gets a $3.4-billion jolt of stimulus funding. Modernizing our electrical grid will not only rebuild one of America's critical infrastructures and make her less dependent on foreign energy but it will also allow her to develop new 'smart' grid technologies that she will be able to sell to the world. Already California is the number one job-creating state for wind, solar, PV, and geothermal energy.

There are other emerging sectors that are bound to see the same long-term benefits from the stimulus package. It funds technologies like electronic health records and broadband with billions of dollars. If America turns these sectors into new markets of which she is the dominant supplier and technology leader, Americans will see returns on the stimulus funding for many years to come.

Sunday, November 22, 2009

Change is not necessarily reform

The Senate sent The Patient Protection and Affordable Care Act (this 2074 page, 2.5 MB PDF file might take a while to download) to the floor for debate. I support health care reform and I support universal health care. Since this Act is neither, I oppose it.

The root cause of our health care system's problems is the health insurance industry. Insurance adds zero value to the health care process, yet it still manages to consume thirty percent of the insured's health care costs. The most effective way to eliminate a large portion of the problems with our legacy health care system is to eliminate health insurance.

Unfortunately, instead of eliminating health insurance, this bill requires individuals to purchase it. The bill turns 94% of Americans into a captive market for the health insurance industry. The health insurance industry does not behave in the best interest of its insured when they have to compete to attact premiums. Consider how much less accountable the industry would be if Americans were forced by the government to buy their coverage.

The bill sets up an insurance exchange to create competition. But the industry already has an exchange: it's called the marketplace. As a free enterprise society, we believe that the free market is the most efficient of all exchanges. Yet, all the marketplace has done for health insurance is to provide worse service and higher premiums. I see no reason to think an arbitrarily contrived exchange would be any better.

The health care bill the Senate will debate is not reform; it's just change. As bad as our legacy health care system is, simply tinkering around the edges of it, as the Senate bill does, would most likely only result in an even worse system. The way to real reform of America's health care system is to implement a single payer system.