The Bureaucracy Problem - David Osterfeld - Mises Institute

The Bureaucracy Problem - David Osterfeld - Mises Institute: "It is not surprising, therefore, that the Soviet Union is regularly plagued by gluts of some items and acute shortages of others. When quotas for the shoe and nail industries were set according to quantity, for example, production managers in the nail industry found that it was easiest to meet their quotas by producing only small nails, while those in the shoe industry made only small shoes. This meant gluts of small nails and children's shoes and shortages of large nails and adults' shoes. But setting quotas by weight meant the opposite: gluts of large fat nails and adults' shoes. Similarly, since dress-makers don't have to sell their products they don't have to worry about style preferences. The result is periodic warehouses full of unwanted dresses. And at another time the Soviet Union found itself in the embarrassing position of having only one size of men's underwear and that only in blue.[5]

Thus it is not surprising that the quality of consumer goods in the Soviet Union is notoriously low, the average standard of living is about one-quarter to one-third that of the United States, and so many goods are in short supply that one must stand in line three to four hours each day just to get the basic necessities.[6] While capitalism can function with a minimum of bureaucracy, we have seen that socialism, far from eliminating it, requires a host of bureaucratic agencies. These are necessary in order to (1) collect the data for the construction of the plan, (2) formulate the plan, and (3) inspect the plants to insure that the plan is being carried out."

"This problem became evident in the only attempt to establish a pure socialist, Le., non-market, economy: The "War Communism" period in the Soviet Union from 1917 to 1921. By 1920, average productivity was only ten percent of the 1914 volume with that of iron ore and cast iron falling to 1.9 and 2.4 percent of their 1914 totals. In the early 1920s "War Communism" was abandoned and since that time production has been guided by means of restricted domestic markets and by co-opting the methods determined in the foreign Western markets."

"Perhaps the absurd lengths to which attempts at central planning can be carried is illustrated in an incident reported by Joseph Berliner. A plant inspector, with the job of seeing why a plant had fallen behind on its delivery of mining machines, found that the "machines were piled up all over the place." When he asked the manager why he didn't ship them out he was told that according to the plan the machines were to be painted with red paint but the manager only had green and was afraid to alter the plan. Permission was granted to use green, but only after considerable delay since each layer of the bureaucracy was also afraid to authorize a plan change on its own and so sent the request to the next highest agency. Meanwhile, the mines had to shut down while the machines piled up in the warehouses.[12]"

Let Customers Control The Money And Market Will Cure Health Care | Michael F. Cannon | Cato Institute: Commentary

Let Customers Control The Money And Market Will Cure Health Care | Michael F. Cannon | Cato Institute: Commentary: "Experts suggest that one-third of U.S. health care spending, or about 6% of GDP, is pure waste. The reason is simple: Government controls half of our nation's health care dollars, and lets employers control an additional quarter. And nobody spends other people's money as carefully as they spend their own.

Office of Management and Budget director Peter Orszag told Congress last year: 'Imagine what the world would be like if workers (understood) that today it was costing them $10,000 a year in take-home-pay for their employer-sponsored insurance, and that could be $7,000 and they could have $3,000 more in their pockets today if we could relieve these inefficiencies out of the health system.' Nothing will increase consumers' understanding like giving them that $10,000 directly."

Why Obamacare Can't Work: The Calculation Argument - Gabriel E. Vidal - Mises Institute

Why Obamacare Can't Work: The Calculation Argument - Gabriel E. Vidal - Mises Institute: "Obama assures us that this is not government-run healthcare, that this is not a single-payer system, that the only consequence to these reforms is that healthcare will cost less and that anybody who denies this is misleading or does not understand the facts. Without his reform, he insists, costs will grow unsustainably, which will threaten reimbursements and the stability of the healthcare system.

Unfortunately, since Obama uses faulty logic to diagnose the problem, his solutions will only make matters worse faster. The correct framework within which to diagnose the problem is to admit that costs are out of control because they do not reflect prices created by the voluntary exchange between patients and providers, between customers and producers, like every well-functioning industry."

"But it is theoretically and practically impossible for a bureaucrat — no matter how accurate the cost data, how well intentioned and how sophisticated his computer program — to come up with the correct and just price. The just price of a health service can only be determined by the voluntary exchange of a patient with his hospital, physician, and pharmacist. The relationship between the patient and his private provider has been corrupted by the intrusion of government and its intermediaries (HMOs, for example) to such an extent that we can no longer speak of a relationship that can produce meaningful pricing information."

"Billions of dollars have already been invested in HIT. Some systems have worked, while others have not. Billions more will need to be allocated until the best systems are adopted. But the idea that somehow a government agency with no shareholders at risk will help us better coordinate the allocation of capital and the experimentation necessary to develop these solutions is laughable, especially when one of its agents, the Department of Veterans Affairs, in all likelihood has the record for the most expensive failed HIT experiment to date, the $467 million computer system at its Bay Pines hospital in Florida."

Banning Alcohol Ads Won't Cure Alcoholism | Patrick Basham and John Luik | Cato Institute: Commentary

Banning Alcohol Ads Won't Cure Alcoholism | Patrick Basham and John Luik | Cato Institute: Commentary: "The US Surgeon General's warnings about the risks to pregnant women from drinking have been mandatory since 1989. A study of alcohol consumption by pregnant women reported by the US Centers for Disease Control noted that almost eight years after the implementation of the warning labels the number of women drinking during pregnancy had risen. As Dr Janet Hankin in a review of fetal alcohol prevention discovered, only the lighter drinkers who were less at risk of having children with fetal alcohol syndrome followed the warning. 'Among high-risk drinkers', Dr Hankin noted, 'the label law clearly has not affected drinking behaviour'."

"The World Health Organisation's 2003 study on alcohol noted that warnings failed to increase young people's perceptions of alcohol risks and had 'no direct impacts' on consumption. Studies have also found that heavy drinkers, while aware of the warnings (they see them more frequently), are more likely to consider them less believable and to discount them more than other drinkers."

Do Anti-Smoking Programs Work to Reduce Smoking? | Michael Marlow | Cato Institute: Commentary

Do Anti-Smoking Programs Work to Reduce Smoking? | Michael Marlow | Cato Institute: Commentary: "Statistical analysis that I've conducted shows that there is a very tenuous link between cigarette sales and state anti-tobacco spending. At best, spending large amounts of money on anti-tobacco programs seems to produce a trivial drop in cigarette sales — less than a pack a year per capita. States would be better advised to put these resources toward other public health policies that produce larger results."

Why the Obama Stimulus Plan Must Fail | Richard A. Epstein | Cato Institute: Commentary

Why the Obama Stimulus Plan Must Fail | Richard A. Epstein | Cato Institute: Commentary: "Congress passed the President's $787 billion package this past February with no Republican support in the House and only three Republican defections in the Senate. At the time, brave presidential words promised that this package could create some 4 million new jobs, so that the unemployment rate would top at around 8%. Alas, there are 2.6 million fewer jobs today than when the bill passed, with an unemployment rate of 9.5%, which is still inching upward."

"One component of these programs is to funnel cash in the form of one-time rebates or tax cuts to particular individuals. But that money has to come from somewhere else."