Capitalism: Foreign Versus Domestic

News of Michael Moore’s new documentary on capitalism makes me want to explain how the government and the unions have done most of the damage. Michael Moore’s first documentary was blaming the CEO of GM for closing factories in Flint, Michigan.

Let’s take a hypothetical scenario: an American company is building units that sell for $100 and cost $90 and is of top quality. A foreign competitor is also selling something for $100 that costs $90 and is of top quality. The American government or the company’s union then comes in raises the costs for the American company. Here are four typical scenarios

1. The Government raises taxes. There is payroll taxes, corporate income taxes, local property taxes, carbon emissions, etc.
2. The Government increases mandates to employers: i.e., companies must give one month paternity leave.
3. The Government increases regulation: i.e., car company factory has to reduce NOx emissions by 50%. To accomplish this they need to add capital equipment that cost big bucks that has to be paid for by the company.
4. The union threats strike that they want an extra money in pay or benefits.

All of those things raised the costs for the American company alone. The foreign company is unaffected. Let’s say all of those things raise the cost from $90 to $98/unit. Now the company has three choices:

1. Raise the price of the unit to $108. However, when consumers go to the store they will see the same quality product for cheaper that was made overseas for $100. More people will start to choose the unit that is cheaper.
2. Lower the quality of the unit. Now the American unit which was top quality is of mid-quality but once again costs $100. However, consumers see the foreign product costs the same but is of better quality. So more people choose the foreign product
3. Do nothing. The American company does not change its pricing or its quality and now only makes $2 per unit. However, when the company tries to raise money for capital investment, they only can promise 2% return. No sane investor wants to invest in a risk-bearing business that is promising a 2% return when there a lot of uncertainties whether they would receive their 2% or even get their money back. Alternatively the investor would put his money into another investment, such a bank CD that would be risk-free and pay 3% interest. Additionally there is no guarantee that the rise in cost isn’t’ $11 instead of $8. Even liberals know you can’t sell something for $100 that costs $101 and stay in business.

In all three scenarios, the American company would find it hard to compete against the foreign company. Many people like the idea of buying American, but not if it is at greater cost or less quality. In order to stay in business, companies are forced to move out of country.

The Real Reason for Cash for Clunkers

Cash for clunkers is the poorly devised program for the government to buy older cars for $4500 if people purchase a new car. The government then destroys the older car.

So what's the driving force of a program that destroys value, hurt charties, and hurts business (the used car market, auto parts dealers, etc)?

Answer: The government takeover of GM. They want to show good results after the takeover, so they devise an incentive program to boost sales. They want to show that the government takeover has succeed in increasing sales (at least temporarily). Who cares about long term aggregrate economic effects. Who even cares about the long term implications for the car companies. It's all about the soundbite in 6 months about how successful the government takeover has beeen.

Obamacare's other consequences

Rationed care, the long lines, the inefficiencies, the lack of choice, the shorter life expectancies, are just some of the delights that a nationalized healthcare has to offer.

1. The one consequence that even diehard liberals have not realized is the amount of control the government will have on your daily life. If you are overweight, and thus more likely to have health problems, perhaps the government will tell you what you can and cannot eat. Maybe they will require you to go to mandatory fat camps or you will have to show an ID at McDonalds allowing you to have a hamburger. After all, it's quite unfair that due to your poor eating habits, you are using more resources than others.



2. The budget for healthcare will compete with the budget for everything else. Every dollar that is spent on healthcare is a dollar that cannot be spent on anything else. Since many of the other government budgets are static, there will be a lot of incentive to cut proceedures in healthcare to free up money for whatever the poltiicans desire.

All Cultures are Equal.... All Cultures are Equal

Just keep repeating that and you won't be disgusted by the below story.

A Muslim part-time model will become the first woman to be caned in Malaysia after pleading guilty to drinking beer, a prosecutor said today.
An Islamic court ordered that Kartika Sari Dewi Shukarno, 32, be lashed six times with a rattan cane after she was caught drinking alcohol in a raid on a hotel night club in eastern Pahang state last year.



Read more: http://www.dailymail.co.uk/news/worldnews/article-1207643/Muslim-model-woman-Malaysia-caned-caught-drinking-beer.html#ixzz0OdVKMyRf

NHS Watch - The Splendors of British National Healthcare

Why would a government healthcare system in the US be any different?


Father turned away from hospital with pregnant wife delivers baby on bathroom floor


Women gives birth on pavement after being refused ambulance

They rushed to St Mary's Hospital in Manchester, but Rebecca was told she wasn't ready, despite being 38 weeks into the pregnancy.

The couple, of Newbury, Berkshire, went back to the house - but three hours later, Rebecca was doubled up in pain on the bathroom floor.
Tony said he called the hospital to ask what to do and could not get any response.

Read more: http://www.dailymail.co.uk/femail/article-1207371/Father-turned-away-hospital-pregnant-wife-delivers-baby-bathroom-floor--saves-daughters-life.html#ixzz0OdT02tP8

A young mother gave birth on a pavement outside a hospital after she was told to make her own way there.

Mother-of-three Carmen Blake called her midwife to ask for an ambulance when she went into labour unexpectedly with her fourth child.
But the 27-year-old claims she was refused an ambulance and told to walk the 100m from her house in Leicester to the city's nearby Royal Infirmary.

NHS workers call in sick 150% more than private sector.

As the old Soviet saying went, "We pretend to work and they pretend to pay us"


Family told by NHS: Alzheimers is not a health issue

What a Difference a Year Makes

While reading the below story today, I realized what a difference a year makes. A year ago, Bush was President. Now, suddenly, our enemies are enemies again and the press doesn't seem too eager to take their side anymore.

Pakistani Taliban head's death a blow to militants

(AP) ISLAMABAD – Pakistan's Taliban chief was killed by a CIA missile strike, a militant commander confirmed Friday — a severe blow to extremists threatening the stability of this nuclear-armed nation and a possible boost to U.S.-Pakistani cooperation in fighting insurgents who wreak havoc along the Afghan border.

Pakistani officials vowed to dismantle the rest of the network run by Baitullah Mehsud regardless of who takes over, a move seen as essential to crippling the violent Islamists behind dozens of suicide attacks and beheadings in the country....

This is how the story would have run last year:

Pakistani children killed along side tribal leader

Islamabad - A CIA missile slammed into a tribal village killing scores of civilians, including several local children. The CIA has stated that this attack targeted and killed an alleged Taliban chief, but local sources say that the target, Baitullah Mehsud, was only a goat herder. The attack represents a severe blow to efforts by the European Union to pursue peaceful diplomacy. Sources say that the attack could also strain any hope of U.S.-Pakistani cooperation in fighting alleged insurgents along the Afghan border.

Pakistani officials insist that continued indiscriminate U.S. military attacks in the region could be used to recruit moderate Muslims to Taliban's cause. The presence of the American military in the region is seen as essential reason behind the promenance of the Taliban in the country....