A couple weeks ago I sent out an email with some of my thoughts on the Supreme Court’s Obamacare ruling. From one thoughtful and well-meaning couple, I got a less-than-enthusiastic response. And while they did disagree with my position, they seemed less concerned with that than with the idea that I would bring politics into a business communication at all.
It was a fair objection, and I think I gave it fair consideration as I answered it. I thought it might be helpful to include that answer here in a broader forum.
Here’s my response:
Thanks to you both.
Indulge me as I explain my reasoning here.
First, because my investment approach is based soundly on Free Market Principles, I am not shy about telling my clients (new, old, and prospective) where I stand in matters that relate to investing. Sometimes those matters cross with politics. Essentially, if the politicians are going to argue about Free Markets, then from time to time, I must argue about their politics.
Second, I am reticent to align myself with any political party because I am, frankly, disgusted by the false choice (Ds and Rs) that I’ve been forced to accept. The two parties are essentially the same on the main issues anyway (monetary policy, foreign policy, social programs, etc.). They differ some on social and religious issues, but one could argue that these should, for the most part, be left alone anyway for states to decide (e.g. abortion, marriage, etc.).
So, rather than say I like Obama or I like Romney or I like Paul (all of which come with baggage unique to each reader), I decide to let folks know where I stand on some of the main issues, certainly not all, as they come up. And because nationalized healthcare has such far-reaching implications for long-term investors, I need to weigh in.
I would also add here that to a certain extent I’m not concerned if my view of the world is offensive to some. I need to be who I am in the context and “space” that I occupy. Anyone who leads will ruffle some feathers from time to time. This is not something I can spend too much time thinking about.
So with respect to healthcare, I maintain that the free market will always deliver a better product to more people at a reduced cost than government ever could. I further think that we have not had a free market with respect to healthcare since the mid 60s. Thus, it is not free markets that should be on trial here but government. And yet the politicians on both sides continue to convince more and more voters of the necessity of government’s involvement. We have so much evidence to support government’s inability to deliver on its promises that it astounds me that we are still arguing about it. I pray someone will have the voice to make this clear. It will take someone who is willing to be despised by both parties. This kind of leadership is hard to find, however, which is one reason the battle may be lost in the meantime.
And this is government’s pathway to control.
They see an industry that has issues they feel need to be resolved. Usually because some people (the poor normally) are not getting as much as others (who are less poor), government begins participating in that industry. They lower prices and steal the business from the free-market producers. The producers predictably stop producing which creates a monopoly by the government. Then the government controls that industry. The industry slowly begins to fail those they were trying to help.
It happened to home loans. The government decided that everyone should own a home (not just dems mind you—Bush 41, Clinton, Bush 42 all said the same thing—neither side is clean on this issue). Rates were reduced and qualifications were lessened so that everyone could buy a home. A bubble was created, which later burst. The banks and brokers were blamed. Today, no lenders lend their own money on homes. All of the money (98% of it) is lent by Fannie, Freddie, FHA, VA, RD. All of these are government departments. The price of money today is artificially low. A bubble is being created again, just like the one that hit us in 2008, and when it bursts inflation will result. The rich will benefit from the inflation. The poor will pay the most because they have no investments and spend every dollar they make just to exist. The government did this to them after promising them a home, which since then has probably been lost to foreclosure.
It happened to student loans. The government decided that everyone should have a college degree. Even those who did not want it, and even those who did not work to save money to pay for it. Once the money became easy to borrow, the cost went up. Colleges get artificially rich on government subsidized (less committed) students. The price rose because there were more college applicants and cheaper money, which is what happens in a society where people act in their own best interest. The government made the money cheap because of their push to get everyone educated. There are now more broke, college-educated 20 and 30 somethings than ever before. But broke isn’t even the half of it. They have on average just over $30,000 in student loan debt. These 25-year-olds bought into the lie that a college degree was the key to greatness. It’s not turning out that way. This is not a temporary problem. The government did this. Now, college is five times more expensive than it needs to be. Guess who’s locked out again—the poor. Unless the government gives them money to go to college, which they will likely do in the form of loans, which makes poor people even poorer. The government did this to them after promising them a college education. The government has made a college education worth less today than ever before.
It’s happening now with health care. The government will say that it wants to work WITH the insurance companies and hospitals. “To get that last 30 million people covered,” they say. “See how much the Government cares!” They won’t stop there. They will squeeze out the competition. Then they will control the entire thing. Then the care will lose value the same way homes did and the same way a college degree did.
It’s not that our politicians (most of them) don’t care. It’s that they don’t get it, or they have no spine and won’t stop it. You need to say no sometimes. Some people just don’t get to buy a home. Some people just don’t get a degree. It’s not nice every time it happens, but when you give someone a low price and a lot of freedom to do what they want (two conditions our government is slowly killing), then those who really want these things will make them happen.
In the 60s a lesser percentage of our country struggled to find health care than since the government started their slow takeover (Medicare, Medicaid, etc.). More wealthy persons gave freely to Christian hospitals that freely cared for the poor. This kind of giving, once required by taxes will not be better for folks. There is no longer giver and receiver. There is the victim and the entitled.
I think the ACA is a VERY bad idea for our country, for investors, but worst of all for the poor. The more government controls, the more life will cost them. They can barely afford all the free stuff they’re getting now, and they’re having an increasingly difficult time feeling good about it.
How would you feel, after all, if everything you had was handed to you?
Thanks for listening,