Re-writing the laws of economics

I wrote some time back about the religion of change. We are finding out more and more about what the candidates are proposing for change. Barak Obama being the leader on the left is interesting. He is so far to the left and most of his supporters won't admit it or don't know it.

Lets take a few of the things he has proposed in his advertisements I have seen in Ohio this week.

1. He will reduce the cost of health care premiums by $2400 per year. A classic mistatement. He as a politician can have no effect on cost. He can affect price. This is what he is referring to. By subsidizing certain people he can reduce the price of their health care insurance. We should not buy into the statement that this is their health care. No one can be denied health care. Only insurance is the issue in this campaign. The Dems can show where they would pay for the initial system they are proposing. A demand curve tells us that as the price of a good or service goes down the quantity demanded will go up. Unless Senator Obama has a way to change the fundamentals of economics, this will of course happen. There will initially be no restrictions so the quantity demanded will go through the roof. This will of course expand the needs of the system. To cover this demand one of two things will happen(probably both).
A Taxes will be substantially raised.
B Restrictions on services will be put in place. This is where it gets scary. The same type of government officials who fail miserably at veterans hospitals, FEMA, the post office etc will now be in charge of deciding who gets their services cut. Just as with Social Security the taxes and or the rationing will make our heads spin.

2. Education. Senator Obama is promising $4,000 per child per year. I just looked up this benefit and he will require these people to do community service. Nice idea. I have two general problems with this

A More government money with none or very little restriction on the receiving institutution leaves it up to the institution what to do with tuition rates. This windfall of cash will cause increases in tuition of course as it always has. Remember when a large influx of money comes into a market with very limited competition prices go up every time.

B All of these people will need to have their community service will need to be tracked to be sure they perform community service, to make sure they don't get the stipend more than once and many other things. I smell a government agency. Government agencies don't go away and the costs go up astonomically after established.

3. Removing the tax breaks for businesses that export jobs. There is indeed a tax break for mutinationals that open plants overseas. This of course was caused by the Congress trying to fix a problem. In the eighties the cry was that the playing field was not level for American companies to sell to Europe and Asia. Many of these nations had laws that to sell in their nation a certain percentage has to be created in their country. The congress tried to compensate for this with tax break. Nice idea. This of course encouraged to businesses to open plants overseas. This became known as exporting jobs. This break can be removed. It will be a tax increase to the related companies. Since we have among the highest corporate tax rate in the industrialized world this would further raise the incentive for companies not to keep jobs here, but to move corporate citizenship offshore. That doesn't sound like a great idea. Here is a thought that both parties could get in on. Remove the break, but reduce the corporate tax rate substantially. The increntive to open plants off shore will be gone and the lower corporate rate will encourage multinationals to move here. That of course would not play with the nut-roots in the Democratic party.

My challenge is this. What idea of Barak Obama is different that Ted Kennedy and Joe Biden and other far left wingers have not been pushing for forty years. The specifics are different, but the truth is he has a government solution for anything that ailes anyone. This plus the surrender plan is the same as George McGovern. So much for change.