With the health care debate so fresh in our minds, and with the recent nationalization of General Motors, there’s been a lot to think about in regards to how a private entity can compete with Uncle Sam. The President keeps saying that his health insurance reform plan won’t muscle out private insurance, but simply provide coverage for those who don’t currently have it. Now, unlike many of President Obama’s opponents, I actually believe that this is his intent. I really think he’s trying to just “fill in the gaps” in our current system.
It’s just a damn shame that it’s almost impossible to compete with Uncle Sam in any business field.
First, let’s just talk in the general terms. Let’s take Walter. Walter owns a widget factory. He’s a hard worker and pays his employees pretty well, both to keep out the unions and because the best workers require great compensation. However, his primary competitor is Larry’s Widgets. However, they’ve been run poorly financially and in this economy, the government has stepped in to “bail out” Larry.
After bankruptcy, the United States owns 65% of Larry’s widgets. That’s OK though, because Walter is making a great product and selling it at a good price, so he’s not worried about it. Unfortunately, this start to take a turn for the worse.
First, Larry’s Widgets is no longer motivated by profit. It’s motivated by Larry’s union worker’s satisfaction and by government mandates. In addition, while Walter has to fund his entire operation himself, Larry’s Widgets has a trillion dollar fund that they could theoretically draw from…the United States budget.
Larry’s increases wages to ridiculous levels and requires less work, per the union. As unemployement reaches new heights, nationalized companies like Larry’s is required to hire more and more people. However, Larry’s product isn’t selling. It wasn’t selling before, and that’s how Larry got into trouble. Walter is still making the better product, so Congress steps in and passes new “widget reform”. This requires new tooling for Walter’s widget factory, and he is subjected to new EPA tests and standards as well.
Now, Walter had a good reserve set up, so he weathers this just fine all in all. However, the government has to sell Larry’s widgets, so they drop the price. It’s OK though, because Larry’s Widgets isn’t profit motivated, so they drop them below what Walter can afford to charge. To respond, Walter eventually has to cut wages for his workers. They’re not to thrilled about this. His best jump ship, which Walter can’t really blame them for. After all, they have to do what’s best for them.
Now, Walter is stuck with a less stellar work force, and his product suffers. However, it’s still better than the widgets from Larry’s Widgets, so he continues. However, this cycle continues. Larry’s lower prices (which aren’t profit motivated so they can go as low as they want) coupled with government regulation eventually drives Walter out of business. He files for bankruptcy, and the government steps in and “bails out” old Walter…by taking 70% of his business, effectively nationalizing it.
This is just one possible scenario for nationalizing entire industries, but it’s based on my feelings from listening to what the plan is for General Motors.
In health insurance though, the plan will probably be a little different. You see, with health insurance, everything will start off exactly as the President describes. It’ll be offered so that those who don’t have insurance can get coverage. However, many jobs offer insurance as a perk. It’s a way to help attract bright, talented workers. Unfortunately, now everyone can get health insurance from the government, so the companies will need to do something to attract that talent.
Many of them will drop their health insurance coverage in exchange for other forms of compensation like higher wages or perhaps company paid car insurance. Who knows. Health insurnace, however, will go away in many workplaces and people will find themselves enrolled in Obama’s health plan. Over time, this will happen in more and more businesses, and health insurance companies will die out one by one.
Eventually, we’ll wake up one morning to the news of the last health insurance company’s death. Perhaps they offer other kinds of insurance so they’ll still be afloat, but private health insurance itself will be a thing of the past or at the very least, a tool of the rich. America is now in a single payer system, and then the real fun begins. The rationing of health care.
Is this a done deal? No, it’s not. There’s thousands of points along this path we’re currently heading down where we can derail the coming trainwrecks. While it’s to late to prevent the nationalizing of GM and AIG, there’s still time time to save the industries as a whole. What I outline above will take years, if not decades, to do and there’s plenty of time to fix it.
We will need to elect officials who have the vision to get us off the tracks as soon as possible. We need industrialists who are ready to step in and revamp companies to make them profitable again. We need a citizenry who understands that a hand out from the government is inferior to what you can earn yourself. And, most of all, we need the fortitude to push forward even in the face of defeat.
Make no mistake folks, we’re losing right now. But the game is still close. Let’s rally together and push back. We can stop this incursion into capitalism if we only have the fortitude to handle the criticisms that will be coming.
Personally? I tell them to bring it on. I’ve been called worse than they can muster against me.
