Laissez Faire Links: Rational Production, Debt Hysteria, Economic Ignorance, and Obamacare

Where does wealth come from?  The answer is simpler than you ever thought.  Washington’s antics over the current debt crisis and people’s ignorance of Obamacare’s deceptive design.

• Over at Objectivism for Intellectuals, the idea that wealth comes from action based on rational thought is not a new revelation, but simply a rebuttal to those who still maintain otherwise.  Wealth, according to the classical tradition in political and economic theory (i.e. Locke and Smith), is a product of one’s labor.  See my discussion here for elaboration on this point.  Wealth cannot be anything but a “product” of action, not wish or whim.
• Dan Mitchell from the Cato Institute points out the current debt hysteria in Washington as nothing more than political posturing.  The issue of raising the debt ceiling, lest the government default on its obligations, overlooks many aspects of U.S. fiscal responsibilities that point to a much less severe predicament.  His comments on the Treasury Report are particularly insightful:

“The Obama Administration is deliberately trying to blur the difference between defaulting on the debt, which would have real consequences, and “defaulting on obligations,” which is a catch-all phrase that includes mundane and uneventful matters such as postponing a Medicare payment to a hospital or delaying a grant disbursement to a state government.”

“The White House wants people to believe genuine default is likely even though tax receipts this fiscal year are expected to be more than $3 trillion and interest on the debt is projected to be only $237 billion. In other words, the Treasury will collect more than 12 times as much revenue as needed to pay interest on the debt….I want to reiterate that a default only would happen if the White House wanted it to happen.”

• The Objective Standard has an interesting, albeit bit depressing, piece on how many of the Americans who voted for Obama visualize how government, economics, and insurance markets actually function.  I highly recommend taking a minute or two to read this!
• On a related note, Laissez Faire Today provides a piece with particular insight into why health insurance markets are so difficult to understand and so expensive.  For example, what makes them different from life insurance markets?

“When premiums reflect expected costs, people are essentially paying their own way. When that happens, it really doesn’t matter very much who chooses to buy insurance and who chooses to self-insure and bear the risk themselves….Why are things so different in the market for health insurance? Because in this market, premiums are regulated, and that regulation is completely dominated by the idea that it’s unfair to charge real premiums. In fact, the most common belief is that everybody should pay the same premium for health insurance, even if everyone’s expected health cost is different.”

See the whole article here.